Final Results

RNS Number : 2167S

Tribal Group PLC

16 March 2016

Tribal Group plc

16 March 2016

Financial results for the year ended 31 December 2015

Tribal, a leading provider of software and services for education management, announces its financial results for the year ended 31 December 2015.

FINANCIAL PERFORMANCE

· Challenging year with slower sales momentum and major contract changes leading to deferral of significant contract revenues

· Adjusted operating profit¹ of £2.9m (2014: £14.5m) on revenue of £106.7m (2014: £123.7m)

· Statutory loss before tax of £47.3m (2014: £6.3m loss) after impairment charges related to goodwill and capitalised development costs of £46.8m (2014: £15.5m)

· Adjusted earnings per share of 1.2p (2014: 11.3p)

· No final dividend recommended, but progressive policy remain in place once financial performance returns; full year dividend of 0.7p per share (2014: 1.8p)

RESTORING BALANCE SHEET STRENGTH

· Proposed disposal of Synergy business for £20.25m announced on 1 March 2016, subject to shareholder approval

· Proposed 1 for 1 rights issue, announced separately, seeking to raise gross proceeds of £21m

STRATEGIC PROGRESS

· Internationalisation continues, with 32% (2014: 30%) of revenues outside the UK

· Software and analytics-related revenues now represent 58% of total revenues (2014: 63%)

· Recurring software revenues increased by 23% to £30.3m, including the contribution of the Callista acquisition.

· Acquisition of Callista significantly extended the Group's presence in the Australian university market

OPERATIONAL PROGRESS

· Preferred supplier in relation to a number of universities

· SALM programme now remobilised

· TAFE Queensland programme discussions ongoing

· Predictive analytics product ("Student Insight") starting to gain momentum

· Contract extensions in Quality Assurance in the US and Middle East

· Proposed de-listing from main market and admission to AIM

LEADERSHIP

· New Chief Executive appointed 1 March 2016

· New Chairman and new Senior Independent Director appointed 17 November 2015

Ian Bowles, Chief Executive, commented:

"2015 was a challenging year for Tribal. However, following my recent appointment, I have now had the opportunity to take an early look at the opportunities available to the Group. Tribal serves a strong installed software customer base including many leading universities and colleges, and its services are used by high profile institutions and government agencies around the world. The proposed Rights Issue and disposal of Synergy will significantly strengthen our balance sheet, enabling us to look to the future with confidence. We must now bring greater focus to ensure we deliver value for our customers, enhance our operational efficiency, target our investment programmes to enable our long term success and drive returns for shareholders."

Financial summary

Year ended 31 December	2015	2014	Change

Revenue	£106.7m	£123.7m	(14)%
Adjusted EBITDA²	£8.2m	£19.7m	(59)%
Adjusted operating profit¹	£2.9m	£14.5m	(80)%
Adjusted operating profit margin	2.7%	11.7%
Adjusted profit before tax¹	£1.9m	£13.4m	(86)%
Adjusted diluted earnings per share¹	1.2p	11.3p	(89)%
Statutory operating (loss)/profit	£(45.2)m	£(4.3)m
Statutory loss before tax	£(47.3)m	£(6.3)m
Statutory (loss)/profit for the year	£(45.5)m	£(7.9)m
Statutory basic and diluted loss per share	(48.2p)	(8.4)p

Dividend per share	0.70p	1.80p	(61)%
Net debt	£32.5m	£11.7m	278%
Cash conversion³	(387)%	109%

^1.Adjusted operating profit and adjusted EPS are in respect of continuing operations, excluding intangible asset amortisation of £1.7m (2014: £1.7m), net other costs (including impairment of goodwill and other intangible assets) of £46.4m (2014: £17.1m) and in the case of adjusted EPS unwinding of discount on deferred contingent consideration of £0.6m (2014: £0.9m), fees associated with the waiver of loan covenants of £0.5m (2014: £nil) and the related tax credit of £2.6m (2014: £1.3m).

^2. Adjusted EBITDA is calculated as adjusted operating profit but before deducting depreciation of property, plant and equipment of £1.5m (2014: £1.4m) and amortisation of development costs and business systems of £3.8m (2014: £3.8m).

^3. Cash conversion is calculated as operating cash flow from underlying operations before other cash flows and after capital expenditure, divided by adjusted operating profit.

Further information

A presentation of these results will be made to analysts and investors at 9.30am today at the offices of Weber Shandwick, 2 Waterhouse Square, 140 Holborn, London, EC1N 2AE. A copy of the presentation will be made available later this morning on the Tribal Group website: www.tribalgroup.com.

Tribal Group plc Tel: 020 3402 3540

Richard Last, Chairman

Ian Bowles, Chief Executive

Steve Breach, Group Finance Director

Weber Shandwick Financial Tel: 020 7067 0000

Nick Oborne

Tom Jenkins

Investec Bank PLC

Rowena Murray Tel: 020 7597 4000

Nplus1 Singer Advisory LLP

Shaun Dobson Tel: 0207 496 3000

Links: Tribal Group plc website: www.tribalgroup.com.

FORWARD LOOKING STATEMENTS

This announcement includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "anticipates", "believes", "estimates", "expects", "intends", "may", "plans", "projects", "should" or "will", or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this announcement and include, but are not limited to, statements regarding Tribal's intentions, beliefs or current expectations concerning, amongst other things, results of operations, prospects, growth, strategies and its expectations.

By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Forward-looking statements are not guarantees of future performance and the actual results of Tribal and the development of the markets and the industry in which it operates or is likely to operate may differ materially from those described in, or suggested by, the forward-looking statements contained in this announcement. In addition, even if the results of operations and the development of the markets and the industry in which Tribal operates, are consistent with the forward-looking statements contained in this announcement, those results or developments may not be indicative of results or developments in subsequent periods. A number of factors could cause results and developments to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, those risks in the Principle Risks and Uncertainties section of the Tribal Annual Report & Accounts, as well as general economic and business conditions, industry trends, competition, changes in regulation, currency fluctuations or advancements in research and development.

Forward-looking statements speak only as of the date of this announcement and may, and often do, differ materially from actual results. Any forward-looking statements in this announcement reflect Tribal's current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to Tribal's operations, results of operations and growth strategy.

Tribal does not undertake any obligation to update the forward-looking statements to reflect actual results or any change in events, conditions or assumptions or other factors unless otherwise required by applicable law or regulation.

CHAIRMAN'S STATEMENT

As a leading international provider of student management systems to universities, colleges and schools, Tribal has been successful in winning and delivering substantial software and services contracts in recent years. We serve a strong installed customer base, including some of the world's leading universities, colleges and schools, from which we generate good recurring annual support revenues.

However, despite being appointed preferred bidder with several important new customers, during 2015 we were adversely affected in two key areas - slower sales momentum and significant changes to timelines on certain key customer contracts. Impacts included increased delivery costs and revenue deferrals into 2016. Additionally, with Keith Evans retiring from his position as Chief Executive in May 2015, the absence of a permanent Chief Executive for the remainder of 2015 caused uncertainty within the Group's customer base and employees. This, together with some weakening in our markets, affected sales performance in the second half.

As a result, 2015 has been a disappointing year. Our adjusted operating profit was significantly below the Board's earlier expectations, and our borrowings increased as operating cash flow was held back.

Looking to the future

Clearly, firm remedial action is needed. The search for a permanent Chief Executive has been underway since May 2015. As previously announced, I am pleased that Ian Bowles joined Tribal on 17 February 2016 and became Chief Executive on 1 March 2016.

Ian will need time to fully evaluate our capabilities and markets, and to develop a strategic plan that reflects our ambitions for the business. Whilst Ian will develop a plan in the coming months, at this stage I expect our future strategy broadly to build on existing strategic themes. As we have previously set out, we expect to continue to extend the capabilities of our software and services portfolio, meet customers' growing aspirations to deploy cloud-based platforms and their increasing interest in adopting software-as-a-service, and working towards an increasingly predictable and sustainable recurring subscription revenue model.

To provide financial stability to take our business forward, in December 2015, the Board proposed a Rights Issue in the first quarter of 2016. On 1 March 2016, we announced that we had agreed to sell our Synergy children's services management information system business to Servelec Group plc for £20.25m, subject to shareholder approval. We will use the proceeds from this and from the proposed sale of Synergy to reduce net debt.

2015 has been very challenging, but I look to the future with confidence. We have market-leading products, a very strong customer base, and are now moving forward with plans to streamline and simplify our operational structure and to re-build momentum.

We see attractive opportunities in existing markets. Institutions across the world continue to look for ways to improve their educational impact and operating efficiency. Increasing and more effective use of fast-developing technologies provides a solution to these problems. Cloud computing is progressively being adopted across education to reduce the total cost of ownership of technology. The use of education analytics is growing as institutions strive to improve student recruitment and retention. Institutions are extending their technology platforms to enable better student engagement, more flexible education delivery, and curricula which respond to students' needs.

We see strong potential in our international markets. At present Tribal has a market-leading position in the UK, Australia and New Zealand, which account for only a small per cent of global higher education enrolment, so we have considerable further opportunity; in this light during the year we won significant new customers in Southern Africa and Malaysia and we continue to build on our presence in North America and the Middle East.

Board changes

The Board changed significantly during the course of 2015. Keith Evans retired as CEO in June, and John Ormerod stepped down as chairman in November and latterly as a non-executive director on 31 December 2015. Katherine Innes Ker and Robin Crewe also stepped down from the board towards the end of the year. Duncan Lewis was appointed to the board in June, and myself and Roger McDowell joined the board in November. On 9 March 2016, it was announced that Steve Breach had informed the board that it was his intention to stand down as Group Finance Director and leave the Group in order to pursue other interests. The process to appoint his successor has already commenced."

Proposed admission to AIM

Following completion of the Rights Issue, the Board proposes to cancel the listing of Tribal's ordinary shares on the Official List and their admission to trading on the Main Market, and to apply for admission to the Alternative Investment Market (AIM). The Board believes that AIM is a more appropriate market on which to develop the company, bringing the benefit of lower costs, and administration and regulatory requirements more appropriate to a company of our size. Though moving to AIM, we will continue to meet our current high standards of governance and reporting.

Dividends

The Board continues to believe that paying dividends is important. It has pursued a progressive dividend policy in recent years, and it is our intention to continue this policy in the future once financial performance justifies payment of a dividend. However, as a result of trading performance during the year, the Board is recommending no final dividend for 2015. An interim dividend of 0.7p per share was declared and paid earlier in the year.

Outlook and current trading

We expect the wider market backdrop for education management systems and services to be stable in 2016.

While the timing of order completions and the achievement of major customer contract milestones remains difficult to predict, we are well positioned to participate in continuing international demand for student management systems and upgrades. We have secured a number of software and service contract wins in the early part of the current year, including a significant system upgrade programme with the University of Bristol. Discussions in relation to the TAFE Queensland contract are ongoing and it is uncertain as to whether any amounts will be received in respect of past or future work. No revenues or cash receipts have been assumed to be received by the Group in its forecasts.

During this year we will focus on reducing our cost base and improving operating efficiency. While delivering long term benefits for the Group, actions to change our cost base are likely to result in restructuring costs during the year. Given the factors described above, and after allowing for the effects of the disposal of Synergy, we now expect improvement in our underlying profitability during the current year, and we expect our overall results for this year to be weighted strongly towards the second half of the year.

Richard Last

Chairman

BUSINESS REVIEW

2015 in summary

Tribal continued to grow its customer base during 2015. New customers included Massey University, the largest university in New Zealand, University of Technology Petronas in Malaysia, Hull University in the UK and an important framework contract with JISC (the UK higher education and vocational learning not-for-profit body which supports better use of technology in education) to enable the deployment of our Student Insight analytics tool across up to 15 universities in the UK.

Our presence in the Australian university market also extended significantly with the acquisition of Callista, a leading provider of student management systems, serving approximately 25% of Australian universities. Callista is the third acquisition completed by Tribal in the last two years. In 2014, the Group acquired Sky Software (now re-named Tribal Campus) which brought a new Cloud-ready, multi-tenant student management software into the Group's portfolio, and Human Edge, which established our position as a leading provider of schools student management systems in Australia.

However, during 2015, progress has been adversely affected in a number of operational areas, compounded by events arising during a difficult period associated with changes in leadership. These include the retirement of the Group's former Chief Executive, Keith Evans, in May 2015, the extended search for his permanent successor, and further changes including the appointment of a new chairman in November 2015. These changes have caused uncertainty within the Group's customer base and employees, which has adversely affected customer confidence as well as strategic clarity within the business.

The Group has been engaged in delivering complex, state-wide student management systems in Australia for the New South Wales, Queensland and Tasmanian governments. During 2015, programme timelines on these major contracts were extended, resulting in the deferral of revenue, higher project delivery costs and delayed cash receipts. The scale of these programmes had previously contributed to strong profitability, but has more recently absorbed significant resources and senior management time, distracting from other development efforts within the Group.

During the course of 2015, the Group also experienced loss of momentum in certain parts of its sales activities. The impact of this began to be felt particularly strongly in the second half of the year, with unexpected losses of new customer bids where previously win rates had been high. Tribal's customer base typically uses public tendering methods to procure new student management information systems and performance improvement services. These processes often extend over a relatively long period of time, and timing and potential success can be difficult to predict. During the year, it also became increasingly evident that prospective customers were exploring an increased range of software deployment models, with more consideration being given to Cloud-hosting and Software-as-a-Service models. Tender requirements also increasingly demonstrated a more cautious approach to commitment by customers, affecting the timing of software licence revenue recognition and cash receipt profiles.

The expectations of universities, colleges and schools continue to evolve, and this has attracted the interest of new competitors, particularly in the university market. This has introduced new uncertainties into competitive procurement processes, extending procurement timelines as universities explore alternative options, and creating increased competitive pressure.

During 2014, Ofsted confirmed it would not be renewing or extending one of its contracts (for the inspection of schools and colleges in the UK). In addition, we closed our Specialist Learning Solutions business as a result of changes in its market; it provided services to Further Education colleges, which have experienced significant government funding uncertainty and cuts.

As a result of these difficult circumstances, we fell well short of our targets in 2015. The Group's financial performance weakened significantly, resulting in reduced profitability, lower operating cashflow and increased net debt.

Geographic development

Revenues generated in Tribal's key geographic markets were as follows:

Year ended 31 December	2015 £'000	2014 £'000
UK	72,350	86,599
Asia Pacific	23,699	25,972
North America and Rest of World	10,676	11,132
	106,725	123,703

Tribal's operations in the UK have reduced in scale as part of its contracted work for Ofsted expired in the period, and as the Specialist Learning Solutions business was closed. In Australia, although revenues arising from the large SALM contract reduced, the acquisition of Callista resulted in incremental revenues of £6.3m.

Product and service development

We have continued to enhance our product and service portfolio during 2015. We are focused on delivering to our product roadmaps, which address the priorities identified by our customer user groups across our markets. Our analytics offering is gaining momentum, and by combining offerings in analytics and case management, we are able to create a unique solution to support education managers as they seek to assist students through their time within a school, college or university.

In 2015, we have enhanced our Cloud capabilities. Alongside our Tribal Campus and ebs products which are already well represented in the Cloud, the shift of our SITS product into the Cloud is a response to changing university customer expectations. As we move forwards, we will also simplify our offerings, and bundle functionality to create more compelling customer solutions. Increasing integration between our products will support existing and future customers' ability to migrate across our products and therefore to upgrade as their needs develop.

Strategy

Tribal's current strategy was established in early 2015, prior to the resignation of the former Chief Executive. Following the recent appointment of Ian Bowles as Chief Executive, a further focussed review will be undertaken. However, the following themes are expected to continue to feature:

· Continued extension and enhancement of the existing product portfolio

· Embedding rich analytics functionality within Tribal's student management systems

· Growing recurring and subscription-based revenues

· Focused regional investment

· Cost reduction, efficiency and clear accountability

The new Chief Executive's review of the business is expected to be completed in the coming months.

DIVISIONAL PERFORMANCE

The Group operates as four divisions, aligned to the functional elements of the business. Tribal's software-related activities sit within the following divisions:

· Product Development and Customer Services (PD & CS)

· Implementation Services (IS).

The Group's service activities are contained within the following divisions:

· Professional and Business Solutions (PBS); and

· Quality Assurance Solutions (QAS).

Product Development & Customer Services

The PD & CS division delivers software and related software support. Its work includes the enhancement and development of existing and new software products. The principal revenues generated in this division are either software licences or recurring maintenance and support revenues associated with the installed software customer base.

Year ended 31 December	2015 £'000	2014 £'000
Revenue
Licence and development fees	14,203	21,820
Maintenance	30,296	24,542
Other	1,632	3,313
	46,131	49,675
Of which:
UK	58%	60%
International	42%	40%
	100%	100%

Adjusted segment operating profit	2,023	11,192
Adjusted operating profit margin	4%	23%

Capitalised product development investment	4,083	4,837

In 2015, the hiatus on the SALM programme has materially reduced software revenues arising from the programme. At the same time, although we have secured a number of new university customers, including Hull University, Massey University and University of Technology Petronas, the level of large new software licence revenues has reduced compared to 2014, and some of these revenues have not yet become recognisable due to the implementation profile of these contracts.

As a result of review of the licensing arrangements of a number of our existing university customers, we agreed adjustments to licence fees totalling £1.3m (2014: £0.1m) relating to increases in the size of these universities' student populations.

We generated 23% growth in maintenance revenues through uplifts in the maintenance base from new customer wins, and through the full year contribution of Human Edge and the contribution of Callista for part of the year, each of which brought well-established installed customer bases to the Group.

In the SALM project, our software is now operational across all 138 Technical and Further Education (TAFE) campuses in New South Wales, and is being introduced progressively across New South Wales' school network. In April 2015, we embarked on a major renegotiation and restructuring of the contract, which led to a considerable slowing down in activity. Day-to-day commercial and operational relationships moved away from centrally orientated contacts to new leaders more closely associated with the management of schools and colleges. We chose to keep our team of UK developers together - this team having spent three years working on SALM - and also our local SALM project implementation team. In doing so, we retained project know-how, and also the ability to quickly re-mobilise engagement with the SALM programme after the renegotiation.

Negotiations which we anticipated would take two months actually continued for six months, and we successfully concluded the contract renegotiation in early October 2015. During this process, the Group earned no significant revenue and received no new orders. Since October 2015, activity levels have recovered, but revenue was lower as new work orders associated with the programme had in some cases not been committed by 31 December 2015. Total revenues in this division relating to the SALM programme were £5.3m in 2015 (2014: £8.4m).

During late 2014, we entered into a contract to provide a cloud-based student management system to support all 48 TAFE college campuses in Queensland. Due to changes in the scope of the customer's programme, we incurred additional costs during 2015. At 31 December 2015, uncertainty relating to this project meant that we determined that it would be prudent to defer revenues (amounting to more than £2.4m) relating to our work on this project during 2015.

Tribal's more recently acquired software businesses are included in this segment. We acquired Sky Software (now Tribal Campus) in March 2014, and Human Edge in June 2014. In 2015, revenues generated by Tribal Campus and Human Edge were £5.8m. We acquired Callista in March 2015. Revenues generated by Callista in 2015 since acquisition were £6.3m.

Divisional operating margins fell from 23% in 2014 to 4% in 2015, primarily as a result of reduced new customer wins and larger contract challenges, including those described above. In addition, we made provisions of £0.6m in the period in relation two smaller (non-core) programmes, where we consider overall costs to complete these projects will exceed related revenues.

We have continued to invest in our products over the period, in line with development roadmaps. In light of operational issues encountered in the second half of 2015 there was a deterioration in trading performance which has impacted on expected forecast cash flows into the future. Additionally there have been changes to management and to the Board in the second half of the year with the new team reconsidering the strategy of the Group and its future forecasts in conjunction with the assessment of the group's future funding requirements. As a result, we have recorded impairment charges against certain capitalised development costs where forecast cash flows do not support the carrying value, or where there are decisions not to complete the development. Total impairment charges of £8.0m (2014: £2.6m) include £0.6m (2014: £0.1m) of costs incurred in the year.

Implementation Services

The IS division delivers the technical implementation of our software products at customer sites, typically working alongside customer teams. Implementation projects vary in length, and may range from a small number of days, to more than two years for more complex projects. IS revenues are typically based on day-rate fees, although we sometimes operate under fixed fee contracts for defined implementation scopes.

Year ended 31 December	2015 £'000	2014 £'000
Revenue	16,910	19,495
Of which:
UK	54%	45%
International	46%	55%
	100%	100%

Adjusted segment operating profit	1,140	2,871
Adjusted operating profit margin	7%	15%

Implementation services relating to the SALM programme fell significantly in 2015 to £1.8m (2014: £5.7m). Whilst implementation services revenues excluding SALM-related work grew from £13.8m to £15.1m in 2015, this was insufficient to offset reduced SALM activity. Operating margins were reduced during 2015 particularly as a result of the slowdown in revenues on the SALM programme and the deferral of revenue on the TAFE Queensland.

Professional and Business Solutions

The PBS division provides a range of services for managers of universities, colleges and schools, so they are able to assess and enhance the quality of the education they provide, and improve their operational performance. Services provided by this division include:

· Student experience analytics

· Operational benchmarking and analytics

· Transformation and change advisory services

· Information management services

· Specialist learning management solutions

· Specialist support services to enhance the provision of education and training.

This division's activities have increasingly focused on those skills and tools that closely relate to our student management systems. Increasingly, we integrate these activities with our software offerings.

Year ended 31 December	2015 £'000	2014 £'000
Analytics	4,865	4,352
Careers advice and guidance	808	6,559
Other	8,098	9,466
Revenue	13,771	20,377
Of which:
UK	88%	96%
International	12%	4%
	100%	100%

Adjusted segment operating profit	229	515
Adjusted operating profit margin	2%	3%

We have reduced activity levels in areas which do not offer the potential to complement and enhance our student management systems. Tribal has now withdrawn from its work in careers advice and guidance for the National Offender Management Service as our contracts expired in 2014. Likewise, our Specialist Learning Solutions business, which generated £3.5m of revenue (2014: £4.1m) in the period was closed in October 2015.

Quality Assurance Solutions

QAS provides inspection services used by the Office of Standards in Education, Children's Services and Skills (Ofsted), the UK government agency responsible for monitoring quality in settings such as colleges, schools and nurseries. These services have also been purchased by government agencies in the US and Middle East. Typically, we provide these services under multi-year contracts, with fixed and variable pricing elements. We also provide complementary services including training for prospective quality assurance inspectors, training and software tools for school leaders to prepare for inspections, online professional development tools for teachers to enhance their professional development, and other similar offerings.

Year ended 31 December	2015 £'000	2014 £'000
Ofsted contract revenues	19,610	23,254
Other	10,872	11,367
Revenue	30,482	34,621
Of which:
UK	80%	84%
International	20%	16%
	100%	100%

Adjusted segment operating profit	2,900	4,039
Adjusted operating profit margin	10%	12%

Over time the scale of our activities has reduced as Ofsted is progressively bringing this work back inside Government. Total revenues relating to work on behalf of Ofsted in 2015 were £19.6m (2014: £23.3m). Our school inspection contract for Ofsted expired in August 2015, and contributed revenues in 2015 of £8.4m (2014: £13.6m). During 2015, accruals relating to subcontracted activities on this contract in prior years were released with a value of £0.5m. Our Early Years inspections contract for Ofsted brought revenues of £11.2m in 2015 (2014: £9.6m) and was extended up to March 2017, with effect from September 2015. Ofsted has now confirmed its intention to bring Early Years inspection activity back inside Government from April 2017.

Our complementary work in the US and Middle East has continued in line with expectations. In November 2015, our contract with the Abu Dhabi Education Council was renewed for two further years. In December 2015, our contract with the New York State Education Department was extended until July 2017.

FINANCIAL REVIEW

Group Profit and Loss

Set out below is a summary of Tribal Group's results for the two years ended 31 December 2015.

Results of operations

		2015	Total £000		2014	Total £000
	Adjusted £000	Other items £000	Total £000	Adjusted £000	Other items £000	Total £000
Revenue	106,725	-	106,725	123,703	-	123,703
Operating profit / (loss)	2,884	(48,106)	(45,222)	14,509	(18,808)	(4,299)
Profit / (loss) before tax	1,850	(49,147)	(47,297)	13,418	(19,684)	(6,266)
Effective tax rate -(charge)/credit	(38%)	5%	4%	(21%)	7%	(24)%
Diluted earnings per share from continuing operations	1.2p	(49.3)p	(48.1)p	11.3p	(19.7)p	(8.4)p

Overview

In the year ending 31 December 2015, the Group's revenue from continuing operations was £106.7m (2014: £123.7m). Adjusted operating profit was £2.9m (2014: £14.5m) and our adjusted operating profit margin was 2.7% (2014: 11.7%). Adjusted profit before tax was £1.9m (2014: £13.4m) and adjusted diluted earnings per share were 1.2p (2014: 11.3p).

The Group's statutory revenue from continuing operations was £106.7m (2014: £123.7m). The statutory operating loss was £45.2m (2014: loss of £4.3m), arising from a number of non-recurring charges, in particular impairment charges relating to goodwill and other intangible assets. The statutory operating margin was (42.4)% (2014: (3.5)%). Statutory loss before tax was £47.3m (2014: loss of £6.3m) and statutory diluted loss per share from continuing operations was 48.1p (2014: statutory loss per share of 8.4p). The statutory loss for our continuing business after tax was £45.4m (2014: loss of £7.7m).

Further analysis and commentary on the Group's consolidated trading performance, and information about items outside the adjusted profit measures, is set out below. Commentary on the performance of each of the Group's segments is set out within the Business Review.

Revenue

Revenue from continuing operations decreased by 14% to £106.7m. As a result of the operational and sales execution challenges experienced during the period, our student management systems activities (comprising our Product Development and Customer Services and Implementation Services segments) reduced by 9% in 2015, supported by £6.3m of revenues generated by Callista, which we acquired in March 2015. Recurring support and maintenance revenues generated in our software activities grew to £30.3m (2014: £24.5m).

Our performance improvement tools and services revenues (comprisingd our Professional and Business Solutions and Quality Assurance Solutions segments) reduced by 20% as our schools inspection contract for Ofsted expired during the year, we withdrew from the Careers Advice and Guidance market, and we closed our Specialist Learning Solutions business in response to weak market conditions.

Our international customer base continues to increase its share of our overall revenues, representing 32% of revenues (2014: 30%).

Adjusted operating profit

Our adjusted operating profit decreased by 80% year-on-year to £2.9m, including the effect of deferring revenues of more than £2.4m in relation to the TAFE Queensland programme. In our student management systems activities, our Product Development and Customer Service division saw operating profits reduce to £2.0m from £11.2m as a result of the matters described above. Implementation Services divisional operating profit also fell as a result of these factors to £1.1m (2014: £2.9m).

In our performance improvement tools and services activities, our Quality Assurance Solutions business achieved an operating margin of 10% (2014: 12%) despite revenues falling by 12% as one of the Ofsted contracts ended in the year. Operating profits of this segment were £2.9m (2014: £4.0m). Operating profit in our Professional and Business Solutions division reduced from £0.5m to £0.2m as a result of the closure of the careers and Specialist Learning Solutions businesses.

Operating profits generated by Callista since acquisition in March 2015 were £0.8m.

Our central costs were £3.4m (2014: £4.1m), or 3.2% of revenue (2014: 3.3% of revenue). This was within our target range of less than 4% of revenue.

Items excluded from adjusted profit figures

Tribal's income statement identifies separately any underlying ('adjusted') performance measures, and non-underlying items. The following sets out those items excluded from the adjusted profit measures in the period.

	2015 £'000	2014 £'000

Impairment of development costs and related provisions	(7,989)	(2,630)
Impairment of goodwill	(38,802)	(12,849)
Impairment charges	(46,791)	(15,479)
Costs associated with CEO recruitment and strategy review	(537)	-
Property relocation	210	(543)
Operating loss from closed businesses	-	(100)
Closure of Specialist Learning Solutions business	(823)	-
Onerous contracts	294	(788)
Acquisition-related expenses	(198)	(397)
Movement in deferred consideration	1,020	228
- Gain on bargain purchase	405	-
- Amortisation of IFRS3 intangibles	(1,686)	(1,729)
Other costs	(1,315)	(3,329)
	(48,106)	(18,808)
- Fees associated with covenant waiver	(456)	-
- Unwind of discount on deferred consideration	(585)	(876)
Total other items	(49,147)	(19,684)
Tax `on other costs	2,558	1,348
Total other items, net of tax	(46,589)	(18,336)

Impairment of development costs

The Group continued to invest in its portfolio of student management systems during 2015. However, in light of operational issues encountered in the second half of 2015 there was a deterioration in trading performance which has impacted on expected forecast cash flows into the future. Additionally there have been changes to management and to the Board in the second half of the year with the new team reconsidering the strategy of the Group and its future forecasts in conjunction with the assessment of the group's future funding requirements. As a result capitalised investments and enhancements in product development with a value of £8.0m have been written down in the period. Impairment charges have arisen across the product portfolio, but are focussed particularly on enhancements to the ebs product which may now be superseded by development of the Tribal Campus product, and the K2 asset management system and the Synergy EIS product, which remain key products but for which our forecast revenues are now lower than previously expected.

Impairment of goodwill

Total impairment charges of £38.8m have been recognised in respect of goodwill in the year (2014: £12.8m). These reflect impairments across the PD & CS segment of £23.6m (2014: £nil), PBS segment of £5.5m (2014: £3.6m) and QAS segment of £9.7m (2014: £9.2m).

The PD & CS impairment has resulted from the disappointing trading performance in 2015 combined with a the Group's most recent cash flow forecasts adjusted for forecasting volatility and known operational challenges.

PBS closed both its Careers and SLS business during the course of 2015, and has continued to take a conservative position on future growth and opportunities for the division in its impairment calculations. As a result, a further impairment has arisen during the course of 2015 of £5.5m (2014: £3.6m).

During 2014, Ofsted announced its intention to in-source its schools inspection contract held by the Group's QAS business, with the contract ceasing in August 2015. The remaining Ofsted contract, relating to Early Years inspections, was extended a further 18 months during the prior year to March 2017. During the second half of 2015, Ofsted have confirmed that they will in-source the contract at this date; cash flow assumptions for this contract therefore cease at this date. As a result, a further impairment has been recognised in the period of £9.7m (2014: £9.2m), resulting in the full impairment of goodwill in respect of this cash generating unit.

CEO replacement and strategy review costs

Following Keith Evans' retirement in the first half of 2015, a search has been underway to identify his successor. Alongside this replacement process, the Board has undertaken a review of aspects of the Group's strategy. Costs arising from these activities have been excluded from our underlying profits in the year ending 31 December 2015.

Property relocation

During 2014, the Group relocated its Head Office to more suitable premises. In doing so, it secured a significant incentive to enter into the lease of the new premises, the cash value of which offset the costs of exiting the previous premises. The accounting charge of £0.5m in the year ending 31 December 2014 relates to the onerous lease cost of the previous premises. In the year ending 31 December 2015, a credit arises on the amortisation of the related incentive.

Amortisation of IFRS 3 intangibles

The amortisation charge in relation to IFRS 3 intangible assets arose from separately identifiable assets recognised as part of our acquisition programme, principally in relation to the software and customer relationships in the respective businesses at completion.

Adjustments to deferred and contingent consideration

The adjustment to deferred contingent consideration represents changes in expectations of total contingent consideration payments, in respect of the acquisition of i-graduate and Sky Software (now renamed Tribal Campus) based on the Directors' forecasts of expected performance over the earn-out period at the relevant balance sheet dates.

There is an associated financing charge arising from the unwinding of the discount applied to the deferred contingent and non-contingent consideration on the acquisition of i-graduate, Callista and Sky Software, reflecting the fact that payments are expected over a number of years.

Discontinued activities

	2015 £'000	2014 £'000
Profit attributable to Resourcing	-	115
Profit attributable to Health and Government	-	74
Profit attributable to Kindred	-	(9)
Loss attributable to Nightingale Associates	(80)	(361)
Attributable tax credit/(charge)	-	(15)
Net loss attributable to discontinued operations	(80)	(196)

Since Tribal's major disposal programme, which was initiated in 2010 and completed in 2011, certain deferred consideration payments remained receivable. The Group also undertook a programme to mitigate residual property lease obligations that remained with Tribal. In these respects, the Group recovered significant portions of the receivable amounts by disposing of residual property and securing deferred contingent consideration in excess of our previous expectations. In one instance, connected with Nightingale Associates, residual litigation for which Tribal had a remaining liability within the disposed of business, necessitated an increased provision. The provision was increased in the year ending 31 December 2014, and settled in the year ending 31 December 2015 to cover costs to the extent that they were not fully addressed by insurance arrangements.

Finance costs

	2015 £'000	2014 £'000
Investment income	(49)	(58)
Interest payable on bank overdrafts and loans	695	510
Amortisation and write off of loan arrangement fees	272	577
Other interest payable	116	62
Adjusted finance costs (net)	1,034	1,091
Fees associated with covenant waiver	456	-
Unwind of discount on deferred consideration	585	876
Total finance costs (net)	2,075	1,967

Underlying interest payable on the revolving credit facility and other borrowings increased to £0.7m (2014: £0.5m) as a result of higher overall drawings on the facility during 2015 due to payments made in relation to acquisitions, and the weaker operating cash flow position experienced in the period..

Tax

The corporation tax charge on adjusted continuing operations was £0.7m (2014: £2.8m), and the adjusted effective tax rate was 38% (2014: 21%). This includes the impact of higher rates of taxation arising in overseas jurisdictions, as well as a conservative position in respect of overseas tax losses and transfer pricing, given the Group's performance in the year.

As the Group continues to grow its activities in international jurisdictions that operate with a higher rate of corporation tax, it is anticipated that the tax charge on profits in the near to medium- term future is likely to be higher than the standard UK corporation tax rate.

The total tax credit of £1.9m (2014: charge of £1.5m) includes a credit of £0.3m in respect of previous periods, but offset by the impact of goodwill impairments, which are not deductible for tax purposes.

Earnings per share

Adjusted diluted earnings per share from continuing operations before other costs, the results of closed businesses and intangible asset impairment charges and amortisation, which reflects the Group's underlying trading performance, reduced from 11.3p to 1.2p.

Basic and diluted losses per share from continuing and discontinued operations were (48.2)p (2014: loss per share of 8.4p).

Shareholder returns and dividends

The Board continues to believe that paying dividends is important, and has pursued a progressive dividend policy in recent years. It is the Board's intention to continue this policy when it is justified by financial performance. However, adjusted operating profit for the year was £2.9m, the Group generated weak operating cash flow, and the statutory loss before tax for the year was £47.3m (2014: loss of £6.3m). As a result of the Group's poor financial performance in 2015, action is being taken to strengthen the balance sheet, in respect of which the Board has proposed a Rights Issue and disposal of the Synergy business.

On this basis, and taking into account the financial performance of the Group in 2015, the Board has not proposed a final dividend for 2015. An interim dividend of 0.7p per share was declared and paid in the year and therefore the total dividend for 2015 is 0.7p per share (2014: 1.8p). The full-year dividend is covered 1.7 times by adjusted earnings per share (2014: 6.3 times).

Analysis of net funds / (debt)

As at 31 December	2015 £'000	2014 £'000
Cash at bank and in hand	3,896	9,345
Overdraft	(2,160)	-
Syndicated bank facility (net of bank arrangement fees)	(34,207)	(21,023)
Net debt	(32,471)	(11,678)

Group net debt increased to £32.5m (2014: £11.7m), primarily as a result of acquisition-related payments and significant adverse working capital movements during 2015.

As at 31 December 2015, cash at bank and in hand included restricted advance cash receipts in relation to customer programmes of £0.2m (2014: £6.6m).

Cash flow analysis

	2015 £'000	2014 £'000
Net cash from operating activities before tax and before other cashflows	(4,119)	22,254
Capital expenditure (net)	(1,679)	(1,345)
Capital expenditure on product development and business systems	(5,138)	(5,156)
Operating cash flow from continuing operations after capital expenditure before other cashflows	(10,936)	15,753
Other cashflows	(390)	(1)
Operating cash flow from underlying operations after capital expenditure	(11,326)	15,752

Operating cash flow from discontinued operations after capital expenditure	(80)	34
Net interest	(762)	(513)
Tax	(1,827)	(2,571)
Free cash flow	(13,995)	12,702
Acquisitions and deferred consideration	(4,510)	(15,100)
Disposal of discontinued operations	-	321
Dividends paid	(1,794)	(1,587)
Financing	12,912	5,619
Net (decrease)/increase in cash	(7,387)	1,955
Effect of foreign exchange rate changes	(222)	(165)
(Decrease) / increase in cash and cash equivalents in year	(7,609)	1,790

Operating cash flow

During the year ending 31 December 2015, the Group's underlying activities experienced significant adverse working capital movements.

At the start of the year, the Group anticipated some negative working capital movements associated with contracted changes to payment schedules in relation to its Ofsted contracts, and the expiry of a non-core contract associated with which £6.6m of advance cash receipts was recorded at 31 December 2014.

Additional key negative working capital movements arose associated with the SALM contract renegotiation where, despite contractual completion in early October 2015, significant cash receipts remained outstanding at 31 December 2015. Since the end of the year, all outstanding invoices relating to the SALM programme have been settled.

There were also significant delays in cash receipts relating to the TAFE Queensland contract during 2015; the Group's invoicing schedule on this programme is linked to milestones that had not been met fully at 31 December 2015 due to changes in the customer's programme timeline, and as a result, significant anticipated cash receipts of approximately AUD6m were deferred beyond 2015.

Capital expenditure

Capital expenditure totalled £6.8m (2014: £6.5m), comprising £4.1m (2014: £4.8m) on software product development,  and £2.7m (2014: £1.7m) on enhancing office premises and replacing IT systems and equipment.

The Group will continue to enhance and extend its product suite. However, whilst it expects to continue to invest strongly, it is now anticipated that lower levels of capitalised costs will arise as adjustments are expected to be made to accounting methods in this respect.

Acquisitions and deferred consideration

Cash payments relating to acquisitions comprised:

	2015 £'000	2014 £'000
Acquisition of i-graduate	-	2,858
Acquisition of Sky Software (now renamed Tribal Campus)	5,592	1,082
Acquisition of Human Edge	-	11,160
Acquisition of Callista	737	-
Cash acquired with acquisitions	(1,819)	-
Net acquisition payments	4,510	15,100

Order book

The total forward order book of the Group as at 31 December 2015 was £121.3m (2014: £102.7m). Our order book relates to business we expect in the next five years, but includes only two years of software maintenance income.

Pension obligations

As a consequence of certain contract awards, some employees participate in defined benefit pension schemes - the largest of which relates to the Ofsted Early Years inspection contract we entered into during the year ending 31 December 2010. Across these pension schemes, the combined surplus calculated under IAS 19 at the end of the year totalled £0.1m (2014: surplus of £0.1m) (with gross assets of £8.7m and gross liabilities of £8.6). Under the terms of our recently announced contract extension with Ofsted, we benefit from an arrangement whereby Ofsted will protect Tribal from significant additional pension costs relating to employees currently engaged in this activity, in the event that Ofsted's approach to future inspections work requires changes to its workforce requirements.

Acquisitions

On 7 March 2015, the Group acquired the entire issued capital of Callista Software Services Pty Ltd (Callista), a company incorporated in Victoria, Australia, which provides student management systems to the Australian university market. Total consideration for the entire issued share capital was AUD3.6m, payable in cash in equal instalments over a three-year period. The unaudited revenue of Callista for the year ending 31 December 2014 was AUD15.9m, and operating profit was AUD1.6m. The value of gross assets at 31 December 2014 was AUD14.1m.

In March 2015, we amended the deferred contingent consideration agreement with the vendors of Sky Software Pty Limited to increase the maximum consideration from AUD17m to AUD18m, and to amend the timing and calculation of these payments to better incentivise the creation of a long-term sustainable business.

Post balance sheet event - disposal

On 1 March 2016, the Group announced that it had agreed to dispose of its Synergy children's services management information systems business to Servelec Group plc for total consideration of £20.25m.

During 2015, the Synergy business generated revenues of £6.3m (2014: £6.6m), of which £5.2m (2014: £5.6m) related to the Product Development and Customer Services segment, and included £4.1m (2014: £4.0) of recurring software maintenance revenues. Other revenue generated by the Synergy business of £1.1m (2014: £1.0) related to the Implementation Services segment.

The Synergy business delivered an operating profit £2.7m in 2015 (2014: £3.2m), stated before allocation of costs of central support services which will not transfer to Servelec Group plc. These non-transferring activities include IT services, HR, finance, legal, marketing and head office costs. Additionally, the operating profit for 2015 is stated before exceptional charges of £1.0m (2014: £nil).

On a consistent basis with the above, other than expensing all development expenditure incurred in the period, the Synergy business generated EBITDA of £2.9m (2014: £3.2m). Management estimates that the cost of non-transferring support activities relating to the Synergy business was approximately £0.6m (2014: £0.6m). On this basis, the Synergy business generated an indicative standalone EBITDA of £2.3m (2014: £2.6m).

Subject to shareholder approval, completion of the disposal is expected to take place at the beginning of April 2016.

Funding arrangements

On 28 January 2014, Tribal entered into a revolving credit facility (the "Facility") with Lloyds Banking Group, HSBC and Clydesdale Bank (collectively "the Banks"). This facility is committed until June 2018, subject to compliance with covenants. Under the terms of the facility, £45m is available under a revolving credit facility and £5m is available as an overdraft facility. Pursuant to an agreement reached on 21 December 2015, the Banks agreed to waive the financial covenant tests that would otherwise have been applicable under the Facility on 31 December 2015.

In addition to the Facility, the Group has bilateral bank guarantee facilities with HSBC and Lloyds Banking Group of £8.5m as at 31 December 2015. During the course of January 2016, these facilities were extended to 31 December 2016.

Going concern

The Group's business activities, recent trading performance, key performance indicators, and principal risks and uncertainties are described within the 2015 Annual Report and Accounts. As a result of the challenging trading environment in which the Group is currently operating, the Group's profitability has weakened, and its net debt has increased. As at 31 December 2015, the Group had net debt of £32.5m, funded by a revolving credit facility (the "Facility") provided by Lloyds Banking Group, HSBC and Clydesdale Bank (collectively "the Banks"), which is committed until June 2018. Under the terms of the Facility, non-contingent deferred consideration relating to historic acquisitions is deemed to fall within the definition of net debt for covenant purposes. Including these amounts, net debt as defined under the terms of the Facility was £34.9m as at 31 December 2015. The Group generated adjusted EBITDA of £8.2m for the year ended 31 December 2015. The Group's leverage ratio (measured as the ratio of net debt to EBITDA) as at 31 December 2015 was 4.2x, compared to a maximum permissible under the Facility of 3x. Pursuant to an agreement reached on 21 December 2015, the Banks agreed to waive the financial covenant tests that would otherwise have been applicable under the Facility. Had this waiver not been provided, the Group would have been in breach of the terms of the Facility. However, this waiver only represents a "one-time alleviation" that does not fundamentally address the Group's future funding requirements. As part of an assessment of the Group's working capital and financing position, the Group has prepared a detailed bottom up two year trading budget and cash flow forecast for the period through to December 2017, being at least 12 months after the date of approval of the financial statements. This is in addition to consideration given to the Group's longer-term strategic planning during the second half of 2015. In assessing the forecast, the Directors have considered:

· the timing of delivery, milestones and cash flows arising from key contracts, in particular the TAFE Queensland, SALM and Ofsted Early Years contracts;

· the Group's sales pipeline and order backlog, and in particular larger new customer deal flow and likely timing of related revenue and cash receipts arising from these potential deals;

· the progress made by the Group in re-establishing momentum in sales performance;

· competitive pressures and trends in technology usage in the education management markets in the UK, Australia and New Zealand, and (to the extent that it provides a leading indicator of trends elsewhere) the US;

· the status of the Group's existing financial arrangements and associated covenant requirements;

· trading risks presented by economic conditions in the education market, particularly in relation to national and state government budgets and spending levels in the UK, Australia and New Zealand; and

· the availability of (and costs of) mitigating actions should business activities fall behind current expectations, including the deferral of discretionary overheads and restricting cash flows.

Additionally, detailed sensitivity analysis has been performed on these forecasts to consider the impact of severe, but plausible, reasonable worse case scenarios on the Group's bank facility headroom and covenant requirements. The scenarios, which sensitised the forecasts for specific identified risks, modelled reduction in anticipated levels of underlying EBITDA, delays in contract milestone cash receipts, and an associated increase in net debt. These scenarios included significant delays and / or terminations of important contracts, and slippage of larger new business opportunities which are currently in the sales team's pipeline, and continued loss of sales momentum over an extended period. These sensitised scenarios included modest allowance for mitigating actions that can be taken if needed. Based on the application of these scenarios, the analysis shows no headroom on covenant test dates for the foreseeable future.

The Directors have acknowledged the latest guidance on going concern. They have made appropriate enquiries and taken into account factors which are detailed in the Strategic Report within the 2015 Annual Report and Accounts. The Group has agreed to sell its Synergy business for £20.25m (the Disposal). The Group is also seeking to raise £21 million (gross of estimated costs of £1.8m) via a Rights Issue in order to achieve a more appropriate capital structure which will eliminate its indebtedness, and thereby to create headroom on its near-term covenants to an acceptable level and is necessary to support the going concern principle. The Rights Issue is fully underwritten by Investec Bank PLC. As a consequence, the Directors believe that the Group is well placed to manage its risks. The Rights Issue and Disposal are, however, subject to shareholder approval.

In making these statements, the directors have made the following key assumptions:

· the Disposal is approved by shareholders;

· the Rights Issue is approved by shareholders;

· the Rights Issue completes during March or April 2016;

· suitable bank facilities continue to be available to the Group on normal market terms; and

· the net proceeds from the Rights Issue and Disposal will be used to reduce indebtedness arising under the Facility during April 2016.

If the Rights Issue and Disposal do not proceed to completion, as there is no headroom the Group is forecast to exceed the maximum leverage ratios permitted under the existing Facility as at 30 June 2016 and subsequent test dates. In this case, there is no guarantee that the Banks would agree to a subsequent waiver or amendment of the covenants in the future, and in the event that the covenants were breached the Banks would be entitled to demand repayment in full of the Facility. In such circumstances, the Group would not have sufficient cash resources available to repay the Facility, without:

· borrowing money from other sources (which might not be available at that time, or might not be available on as favourable terms as the existing Facility); or

· selling assets of the Group at a time which is not of the Group's choosing, and therefore this might result in a failure to realise the full value of such assets, or may not be possible at all.

Adoption of the going concern basis

The Directors, having considered the forecasts, the risks, associated mitigating actions, and the probability of both the Rights Issue and Disposal being approved by shareholders and proceeding, have a reasonable expectation that adequate financial resources will continue to be available for the foreseeable future. Thus, they continue to adopt the going concern basis in preparing the financial statements. However, as both the Rights Issue and Disposal have not yet been approved by shareholders there remains a material uncertainty which may cast significant doubt over the Group's ability to continue as a going concern and therefore it may be unable to realise its assets and discharge its liabilities in the normal course of business.

16 March 2016

Responsibility statement of the directors on the annual report

The annual report contains the following statements regarding responsibility for the financial statements and business review included in the annual report:

"The directors confirm that, to the best of their knowledge:

· the financial statements, prepared in accordance with the relevant financial reporting framework, give a true and fair view of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in the consolidation taken as a whole;

· the strategic report includes a fair review of the development and performance of the business and the position of the company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and

· the annual report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the company's performance, business model and strategy."

By order of the Board

Ian Bowles Steve Breach

Chief Executive Group Finance Director

16 March 2016

Consolidated income statement

For the year ended 31 December 2015

	Note	Adjusted £'000	Other items (note 3) £'000	Year ended 31 December 2015 Total £'000	Adjusted £'000	Other items (note 3) £'000	Year ended 31 December 2014 Total £'000
Continuing operations
Revenue		106,725	-	106,725	123,703	-	123,703
Cost of sales		(68,676)	-	(68,676)	(74,028)	-	(74,028)
Gross profit		38,049	-	38,049	49,675	-	49,675
Other administrative expenses		(35,165)	(46,420)	(81,585)	(35,166)	(17,079)	(52,245)
Amortisation of IFRS 3 intangibles		-	(1,686)	(1,686)	-	(1,729)	(1,729)
Total administrative expenses		(35,165)	(48,106)	(83,271)	(35,166)	(18,808)	(53,974)
Operating profit/(loss)		2,884	(48,106)	(45,222)	14,509	(18,808)	(4,299)
Investment income	4	49	-	49	58	-	58
Finance costs	5	(1,083)	(1,041)	(2,124)	(1,149)	(876)	(2,025)
Profit/(loss) before tax		1,850	(49,147)	(47,297)	13,418	(19,684)	(6,266)
Tax		(697)	2,558	1,861	(2,830)	1,348	(1,482)
Profit/(loss) for the year from continuing operations		1,153	(46,589)	(45,436)	10,588	(18,336)	(7,748)
Discontinued operations
(Loss)/profit from discontinued operations		-	(80)	(80)	-	(196)	(196)
Profit/(loss) for the year		1,153	(46,669)	(45,516)	10,588	(18,532)	(7,944)
Earnings per share
From continuing operations
Basic and diluted	7	1.2p	(49.3)p	(48.1)p	11.3p	(19.7p)	(8.4p)
From continuing and discontinued operations
Basic and diluted	7	1.2p	(49.4)p	(48.2)p	11.3p	(19.7p)	(8.4p)

Consolidated statement of comprehensive income
for the year ended 31 December 2015

	Year ended 31 December 2015 £'000	Year ended 31 December 2014 £'000
Loss for the year	(45,516)	(7,944)
Items that will not be reclassified subsequently to profit or loss:
Re-measurement of defined benefit pension schemes	(169)	(773)
Deferred tax on measurement of defined benefit pension schemes*	34	155
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations	(720)	(674)
Total comprehensive loss for the year attributable to equity holders of the parent	(46,371)	(9,236)

* The prior year comparative has been restated to reclassify a deferred tax charge of £359,000 on share option charges taken directly to equity

Consolidated balance sheet at 31 December 2015

	Note	2015 £'000	2014 £'000
Non-current assets
Goodwill	8	38,311	77,810
Other intangible assets	9	14,784	23,249
Property, plant and equipment		3,431	2,983
Retirement benefit surplus		88	121
Deferred tax assets		3,213	2,469
		59,827	106,632
Current assets
Inventories		133	611
Trade and other receivables	10	25,985	28,137
Cash and cash equivalents		3,896	9,345
		30,014	38,093
Total assets		89,841	144,725

Current liabilities
Trade and other payables	11	(7,043)	(15,076)
Accruals		(9,671)	(12,228)
Deferred income		(22,376)	(23,684)
Current tax liabilities		(169)	(3,368)
Borrowings		(2,160)	-
Provisions		(3,845)	(10,170)
		(45,264)	(64,526)
Net current liabilities		(15,250)	(26,433)
Non-current liabilities
Borrowings		(34,207)	(21,023)
Deferred tax liabilities		(2,119)	(2,631)
Provisions		(2,091)	(1,898)
		(38,417)	(25,552)
Total liabilities		(83,681)	(90,078)
Net assets		6,160	54,647
Equity
Share capital		4,743	4,743
Share premium		21	21
Other reserves		20,503	25,757
Retained earnings		(19,107)	24,126
Total equity attributable to equity holders of the parent		6,160	54,647

Consolidated statement of changes in equity

For the year ended 31 December 2015

	Share capital £'000	Share premium £'000	Other reserves £'000	Retained earnings £'000	Total equity £'000
Balance at 1 January 2014	4,685	-	28,042	35,503	68,230
Total comprehensive income for the year	-	-	-	(9,236)	(9,236)
Acquisition of own shares	-	-	(2,735)	-	(2,735)
Issue of share capital	58	21	-	-	79
Dividends	-	-	-	(1,587)	(1,587)
Use of own shares to settle share-based payment scheme vesting	-	-	768	-	768
Charge to equity for share-based payments	-	-	(318)	(195)	(513)
Tax on charge to equity for share-based payments*	-	-	-	(359)	(359)
Balance at 31 December 2014 and 1 January 2015	4,743	21	25,757	24,126	54,647
Total comprehensive income for the year	-	-	-	(46,371)	(46,371)
Dividends	-	-	-	(1,794)	(1,794)
Use of own shares to settle share-based payment scheme vesting	-	-	1,970	-	1,970
Charge to equity for share-based payments	-	-	(904)	(1,364)	(2,268)
Tax on charge to equity for share-based payments	-	-	-	(24)	(24)
Transfer from merger reserve	-	-	(6,320)	6,320	-
Balance at 31 December 2015	4,743	21	20,503	(19,107)	6,160

* The prior year comparative has been restated to reclassify a deferred tax charge of £359,000 on share option charges taken directly to equity

Consolidated Cash Flow Statement

for the year ended 31 December 2015

	Note	Year ended 31 December 2015 £'000	Year ended 31 December 2014 £'000
Net cash (used in)/from operating activities	12	(6,216)	19,717
Investing activities
Interest received		49	58
Proceeds on disposal of discontinued operations		-	321
Purchases of property, plant and equipment		(1,679)	(1,345)
Expenditure on product development and business systems		(5,138)	(5,156)
Acquisitions and deferred consideration		(4,510)	(15,100)
Net cash outflow from investing activities		(11,278)	(21,222)
Financing activities
Interest paid		(811)	(571)
Purchase of own shares		-	(2,735)
Proceeds on issue of shares		-	21
Equity dividend paid		(1,794)	(1,587)
Fees for waiver of loan covenant		(200)	-
Draw down of borrowings and loan arrangement fees		12,912	8,332
Net cash from financing activities		10,107	3,460
Net (decrease)/increase in cash and cash equivalents		(7,387)	1,955
Cash and cash equivalents at beginning of year		9,345	7,555
Effect of foreign exchange rate changes		(222)	(165)
Cash and cash equivalents at end of year		1,736	9,345

Notes to the financial statements

1. General Information

The basis of preparation of this preliminary announcement is set out below.

The financial information in this announcement does not constitute the Company's statutory accounts for the years ended 31 December 2015 or 31 December 2014.

The financial information set out above does not constitute the company's statutory accounts for the years ended 31 December 2014 or 2015, but is derived from those accounts. Statutory accounts for 2014 have been delivered to the Registrar of Companies and those for 2015 will be delivered following the company's annual general meeting. The auditors have reported on those accounts: their report on the year ended 31 December 2015 was unqualified but did draw attention by way of an emphasis of matter to a material uncertainty related to the company's ability to continue as a going concern details of which are included in the Financial Review above. The audit report for the financial statements for the year ended 31 December 2014 did not draw attention to any matters by way of emphasis and was again unqualified. The audit reports for both years did not contain statements under s498 (2) or (3) of the Companies Act 2006.

Whilst the financial information included in this preliminary announcement has been completed in accordance with International Financial Reporting Standards (IFRSs), this announcement itself does not contain sufficient information to comply with IFRSs.

The financial information has been prepared on the historical cost basis, except for financial instruments.

Copies of this announcement can be obtained from the Company's registered office at King's Orchard, 1 Queen Street, Bristol BS2 0HQ.

The full financial statements which comply with IFRSs will be posted to shareholders on or around 8 April 2016 and are available to members of the public at the registered office of the Company from that date, and are now available on the Company's website: www.tribalgroup.com.

2. Business segments

Information reported to the Group's Chief Executive for the purposes of resource allocation and assessment of segment performance is focussed on the nature of each type of activity. The principal activities are product development and customer services, implementation services, professional and business solutions and quality assurance solutions. The Group's reportable segments under IFRS 8 are therefore as follows:

Product Development and Customer Services ("PD & CS"), representing the delivery of software and subsequent maintenance and support services;

Implementation Services ("IS"), representing of activities through which we deploy and configure our software for our customers;

Professional and Business Solutions ("PBS"), representing a portfolio of performance improvement tools and services, including analytics, benchmarking and transformation services; and

Quality Assurance Solutions ("QAS"), representing inspection and review services which support the assessment of educational delivery.

In accordance with IFRS 8 'Operating Segments', information on segment assets is not shown, as this is not provided to the Chief Operating decision-maker. Inter-segment sales are charged at prevailing market prices.

Year ended 31 December 2015

	PD& CS £'000	IS £'000	PBS £'000	QAS £'000	Eliminations £'000	Consolidated £'000
Revenue	46,131	16,910	13,771	30,482	(569)	106,725
Adjusted segment operating profit	2,023	1,140	229	2,900	-	6,292
Unallocated corporate expenses						(3,408)
Adjusted operating profit						2,884
Amortisation of IFRS 3 intangibles						(1,686)
Other items						(46,420)
Operating loss						(45,222)
Investment income						49
Finance costs						(2,124)
Loss before tax						(47,297)
Tax						1,861
Loss for the year from discontinued operations						(80)
Loss after tax and discontinued operations						(45,516)

Revenues of approximately 18% (2014: 19%) have arisen within our QAS segment from the Group's largest customer and revenues of approximately 6% (2014: 10%) have arisen within our PD & CS and IS segments from the Group's second largest customer.

Included within other items is goodwill impairment of £38.8m (of which £23.6m arises in respect of the PD & CS segment, £9.7m arises in respect of the QAS segment, and £5.5m arises in respect of the PBS segment) and impairment of development costs of £8.0m, which relates solely to the PD & CS segment. Prior year amounts included £12.8m and £2.6m of impairment charges related to goodwill and development costs respectively.

Year ended 31 December 2014

	PD& CS £'000	IS £'000	PBS £'000	QAS £'000	Eliminations £'000	Consolidated £'000
Revenue	49,675	19,495	20,377	34,621	(465)	123,703
Adjusted segment operating profit	11,192	2,871	515	4,039	-	18,617
Unallocated corporate expenses						(4,108)
Adjusted operating profit						14,509
Amortisation of IFRS 3 intangibles						(1,729)
Other items						(17,079)
Operating loss						(4,299)
Investment income						58
Finance costs						(2,025)
Loss before tax						(6,266)
Tax						(1,482)
Loss for the year from discontinued operations						(196)
Loss after tax and discontinued operations						(7,944)

Geographical information

Revenue from external customers

	2015 £'000	2014 £'000
UK	72,350	86,599
Asia Pacific	23,699	25,972
North America and rest of the world	10,676	11,132
Total adjusted revenue	106,725	123,703

Non-current assets

	2015 £'000	2014 £'000
UK	40,162	85,624
Asia Pacific	19,655	20,980
North America and rest of the world	10	28
	59,827	106,632

The Group's revenues from its major products and services were as follows:

Continuing operations

	2015 £'000	2014 £'000
Licence and development	14,203	21,820
Implementation	12,585	19,495
Maintenance	30,304	24,542
Other Systems related	5,949	3,313
Performance & Business Solutions	13,771	20,377
Quality Assurance Solutions	30,482	34,621
Eliminations	(569)	(465)
	106,725	123,703

3. Other items

	2015 £'000	2014 £'000
Operating loss from closed businesses	-	(100)
Other items as (charges)/credits to income statement
- Acquisition costs	(198)	(397)
- Gain on bargain purchase	405	-
- Movement in deferred consideration	1,020	228
Acquisition related costs	1,227	(169)
- Impairment of goodwill	(38,802)	(12,849)
- Impairment of development costs and related charges	(7,989)	(2,630)
Impairment charges	(46,791)	(15,479)
- Onerous contracts	294	(788)
- Costs on closure of SLS business	(823)	-
- Property related	210	(543)
- Strategy & recruitment costs	(537)	-
Other exceptional items	(856)	(1,331)
Other administrative costs	(46,420)	(17,079)
- Amortisation of IFRS3 intangibles	(1,686)	(1,729)
Total administrative costs	(48,106)	(18,808)
- Unwinding of discount on deferred contingent consideration	(585)	(876)
- Fees associated with waiver of loan covenant	(456)	-
Exceptional financing items	(1,041)	(876)
	(49,147)	(19,684)
Tax on other items	2,558	1,348
	(46,589)	(18,336)

IAS1, paragraph 97 requires separate disclosure of such items that are considered material by nature or value, that they require separate disclosure in the financial statements. As such, 'other items' are not part of the Group's underlying trading activities and include the following:

Acquisition costs: items include the gain on bargain purchase of Callista (2015 - £0.4m; 2014 - £nil), costs directly related to the acquisition of subsidiary undertakings (2015 - £0.2m: 2014 - £0.4m) and movements in deferred consideration arising subsequent to the expiration of the one year measurement period post acquisition.

Impairment charges: impairment charges have arisen in respect of goodwill (2015 - £38.8m: 2014 - £12.8m) and other intangible assets (2015 - £8.0m: 2014 - £2.6m). Further detail is provided around the assumptions and basis of the goodwill impairment charge in note 8. The impairment of other intangible assets relates solely to development costs, and results chiefly from the Group's review of its product portfolio as at the year end date, and specifically their expected ability to generate future revenue. Given the lower than anticipated performance in the current year, this review has identified a number of modules that are no longer considered to generate sufficient revenue to justify their carrying value and therefore they have been impaired. Such impairment charges include £0.6m (2014 - £0.1m) relating to costs arising in the current period, capitalised as part of the Group's ongoing development roadmap, and subsequently impaired at the date of the annual impairment review.

Other exceptional items: in addition, certain other costs are presented outside of adjusted profit, as they are considered sufficiently unusual and/or material to warrant separate disclosure. These include the following:

- A property related credit of £0.2m (2014: charge of £0.5m), related to the rent free period on relocation of the Group's head office (2014 - onerous lease charge arising on the exit of the previous property).

- In October 2015, the Group made a decision to close its SLS business. The operation provided services to Further Education colleges. As a result, the Group has recognised a charge of £0.8m (2014 - £nil) related to closure costs for this business, which principally relates to redundancy costs, onerous lease charges and the impairment of related assets.

- A £0.3m credit (2014 - £0.8m charge) relating to adjustments to onerous contract provisions arising on withdrawal from those markets where we are committed to multi-year maintenance deals which necessitate a minimum level of staffing which will not be covered by revenue.

- £0.5m related to costs associated with the recruitment of executive management and also a detailed strategy review undertaken in the period (2014 - £nil).

Amortisation of IFRS intangibles - amortisation arising on the fair value of intangible assets acquired is separately disclosed as other items (2015 - £1.7m: 2014 - £1.7m)

Financing charges - consistent with the treatment of movements in deferred consideration, the unwind of the discount on deferred consideration is separately presented as other financing charges in the income statement (2015 - £0.6m: 2014 - £0.9m). In addition, costs of £0.5m were incurred in respect of obtaining the waiver of the covenants on the Group's Revolving Credit Facility.

Taxation - the tax charge or credit arising on the above items is presented on a consistent basis with the underlying cost or credit to which it relates and therefore is also presented separately on the face of the income statement.

4. Investment income

	2015 £'000	2014 £'000
Net interest receivable on retirement benefit obligations	34	54
Other interest receivable	15	4
	49	58

5. Finance costs

	2015 £'000	2014 £'000
-Interest on bank overdrafts and loans	695	510
-Amortisation and write off of loan arrangement fees	272	577
-Other interest payable	116	62
Financing costs	1,083	1,149
-Unwinding of discount on liabilities	585	876
-Fees associated with waiver of loan covenants	456	-
Other financing costs	1,041	876
	2,124	2,025

6. Dividends

	2015 £'000	2014 £'000
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 December 2014 of 1.20 pence (year ended 31 December 2013: 1.10 pence) per share	1,133	1,031
Interim dividend for the year ended 31 December 2014 of 0.70 pence (year ended 31 December 2014: 0.60 pence) per share	661	556
	1,794	1,587
Proposed final dividend for the year ended 31 December 2015 of nil pence (year ended 31 December 2014: 1.20 pence) per share	-	1,138

The interim dividend for 2015 was approved by the Board on 11 August 2015 and was paid on 16 October 2015 to ordinary shareholders who were on the register on 18 September 2015. No final dividend has been proposed.

7. Earnings per share

Earnings per share and diluted earnings per share are calculated by reference to a weighted average number of ordinary shares calculated as follows:

	2015 thousands	2014 thousands
Weighted average number of shares outstanding:
Basic weighted average number of shares in issue	94,435	94,061
Employee share options	-	-
Weighted average number of shares outstanding for dilution calculations	94,435	94,061

Diluted earnings per share only reflects the dilutive effect of share options for which performance criteria have been met. Current share incentive schemes vest based on cumulative EPS for a three year period with the earliest vesting based on the Group's results for the three years to 31 December 2015. None of the 804,416 of the remaining share options that were issued in 2013 met the performance criteria.

The maximum number of potentially dilutive shares excluding the 2012 grant, based on options that have been granted but have not yet met vesting criteria, is 1,531,955 (2014: 1,712,593).

The adjusted basic and diluted earnings per share figures shown on the consolidated income statement are included as the Directors believe that they provide a better understanding of the underlying trading performance of the Group. A reconciliation of how these figures are calculated is set out below:

2015

2014

Continuing

£'000

Discontinued

£'000

Total

£'000

Continuing

£'000

Discontinued

£'000

Total

£'000

Net loss

(45,436)

(80)

(45,516)

(7,748)

(196)

(7,944)

Earnings per share:

Basic and diluted

(48.1)p

(0.1)p

(48.2)p

(8.2)p

(0.2)p

(8.4)p

Adjusted earnings per share:

Basic and diluted

1.2p

11.3p

	(Loss)/profit for year		Earnings per share
	2015	2014	2015	2014
Loss for the year attributable to equity shareholders	(45,516)	(7,944)	(48.2)p	(8.4)p
Add back : discontinued operations	80	196	0.1p	0.2p
Loss for the year from continuing operations	(45,436)	(7,748)	(48.1)p	(8.2)p
Add back:
Amortisation of IFRS 3 intangibles (net of tax)	1,197	1,233
Impairment of goodwill	38,802	12,849
Gain on bargain purchase	(405)	-
Impairment of development costs (net of tax)	6,323	2,028
Unwinding of discount on deferred contingent consideration	585	877
Other items (net of tax)	1,107	1,577
Movement in deferred contingent consideration	(1,020)	(228)
Total adjusting items (net of tax)	46,589	18,336	49.3p	19.5p
Adjusted earnings	1,153	10,588	1.2p	11.3p

8. Goodwill

	2015 £'000	2014 £'000
Cost
At beginning of year	120,239	108,232
Additions	-	12,513
Exchange differences	(697)	(506)
At end of year	119,542	120,239
Accumulated impairment losses
At beginning of year	42,429	29,580
Impairment	38,802	12,849
At end of year	81,231	42,429
Net book value
At end of year	38,311	77,810
At beginning of year	77,810	78,652

Goodwill acquired in a business combination is allocated, at acquisition, to the cash-generating units (CGUs) that are expected to benefit from the business combination. The carrying amount of goodwill has been allocated as follows:

	2015 £'000	2014 £'000
Product development and customer services	25,808	50,063
Implementation services	8,969	8,969
Professional and business solutions	3,534	9,073
Quality assurance solutions	-	9,705
	38,311	77,810

The Group is organised into four business segments - Product development and customer services ("PD & CS"), Implementation services ("Implementation"), Professional and business solutions ("PBS") and Quality assurance solutions ("QAS"). These segments represent CGU groups for the purposes of goodwill testing. The additions to goodwill in the prior period arise entirely in relation to the PD & CS segment (£7.5m in relation to the acquisition of Sky Software and £5.0m in relation to the acquisition of Human Edge. The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired.

The recoverable amounts of the CGU groups are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates, longer term growth rates, and expected changes to selling prices, sales volumes and direct costs during the period. The assumptions made reflect a cautious view of the short term position, and incorporate certain sensitivities and risks, over and above those incorporated in management's base case budgets. This is considered appropriate given current performance and the risks apparent in the business during 2015. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGU groups. The growth rates are based on internal two year budgets and general market rates thereafter. Changes in selling prices, sales volumes and direct costs are based on past practices and expectations of future changes in the market.

The Group prepares cash flow forecasts derived from the most recent financial budgets approved by management for the next two years and updated for latest expectations in the light of the outturn results for 2015. Cash flows forecast for 2017 have been extrapolated into perpetuity based on an estimated growth rate of 1% for all CGUs, except PBS and QAS where a 0% rate has been used (2014: 2%, except PBS where a 0% rate has been used). A lower rate has been used in PBS and QAS to reflect the maturity of certain businesses within the PBS portfolio, as well as the anticipated conclusion of the remaining Early Years inspections contract with Ofsted in March 2017, resulting in greater uncertainty in the remaining business subsequent to this date. These rates do not exceed the average long term growth rates for the relevant market.

The rate used to discount the forecast cash flows is 14% across all CGUs (2014: 14%, except for PBS where 16% was used). This rate has been chosen to reflect the directors' assessment of risk associated with the Group. A consistent rate is considered appropriate across all CGUs, give risk incorporated into the underlying forecast position and the level of risk adjustment incorporated into this discount rate, compared with the Group's underlying weighted average cost of capital. The rate used for PBS has decreased in the current year given more stability in the underlying business, subsequent to the closure of the SLS and Careers business units.

The significant downturn in the Group's performance over the course of 2015 , coupled with conservative estimates of the future trading of the Group have led to material impairments being recorded to a value of £38.8m (2014: £12.8m) across the PD&CS, PBS and QAS CGUs:

PD&CS: An impairment of £23.6m has been recorded in respect of the PD&CS CGU. Remaining goodwill is £25.8m. The impairment charge is based on the Group's most recent cash flow forecasts, adjusted for forecasting volatility and known operational challenges. If the sale of the Synergy business completes (see note 15 - Post balance sheet events), it is estimated that goodwill of £15.4m will be allocated in arriving at the profit on disposal of the business. The CGU will then have residual goodwill of £10.3m. The underlying CGU, excluding Synergy, was loss making in 2015. Average cash flows of £3m per annum are required in 2016 and 2017 to support the carrying value of goodwill. If the profitability of the business does not recover in 2016 and 2017, the residual goodwill of £10.3m is impaired. This is considered to be a reasonably possible change. However the Directors consider the carrying value to be their best estimate of the recoverable value.

Implementation Services: The Implementation Services CGU is the only segment with headroom remaining against the value in use calculated. Goodwill is £9.0m and headroom is £1.7m, based on the Group's most recent cash flow forecasts, adjusted for forecasting volatility and known operational challenges. If the sale of the Synergy business completes (see note 15 - Post balance sheet events), goodwill of £3.7m will be allocated in arriving at the profit on disposal of the business. The CGU will have remaining goodwill of £5.3m. The underlying CGU, excluding Synergy, generated operating profit (which approximates cash flows) of £0.6m. A reasonably possible change which assumes cash flows continue at this level in 2016 and 2017 would lead to an additional £4.1m impairment. However the Directors consider the carrying value to be their best estimate of the recoverable value.

PBS: PBS closed its Careers business during the first half of 2015 and its SLS business during the second half of 2015 and has used the most recent cash flow forecasts for the division in its impairment calculations. As a result, a further impairment has arisen during the course of 2015 of £5.5m (2014: £3.6m). Cash flow forecasts assume underlying profitability to remain consistent with 2015. A reasonably possible downside scenario of a 5% decrease in profitability and cash flows would result in an increase in the impairment charge of £0.1m.

QAS: during 2014, Ofsted announced its intention to in-source its schools inspection contract held by the Group's QAS business, with the contract ceasing in August 2015. The remaining Ofsted contract, relating to Early Years inspections, was extended a further 18 months during the prior year to March 2017. During the second half of 2015 Ofsted have confirmed that they will in-source the contract at this date; cash flow assumptions for this contract therefore cease at this date. As a result, a further impairment has bene recognised in the period of £9.7m (2014: £9.2m) resulting in the full impairment of goodwill in respect of this CGU.

9. Other intangible assets

	Software £'000	Customer contracts & relationships £'000	Development costs £'000	Business systems £'000	Total £'000
Cost
At 1 January 2014	-	3,785	24,874	4,440	33,099
Additions	7,035	2,948	4,837	319	15,139
Disposals	-	-	(78)	(24)	(102)
Exchange differences	(288)	(133)	-	-	(421)
At 1 January 2015	6,747	6,600	29,633	4,735	47,715
Written off	-	-	(3,268)	(11)	(3,279)
Additions	292	185	4,083	1,055	5,615
Disposals	-	-	(403)	(86)	(489)
Exchange differences	(405)	(172)	(30)	(5)	(612)
At 31 December 2015	6,634	6,613	30,015	5,688	48,950
Amortisation
At 1 January 2014	-	2,618	10,220	3,529	16,367
Charge for the year	924	805	3,303	514	5,546
Impairment loss	-	-	2,583	-	2,583
Disposals	-	-	(4)	(24)	(28)
Exchange differences	-	-	(2)	-	(2)
At 1 January 2015	924	3,423	16,100	4,019	24,466
Written off	-	-	(3,268)	(11)	(3,279)
Charge for the year	1,248	438	3,364	398	5,448
Impairment loss	-	-	7,989	-	7,989
Disposals	-	-	(359)	-	(359)
Exchange differences	(44)	(61)	5	1	(99)
At 31 December 2015	2,128	3,800	23,831	4,407	34,166
Carrying amount
At 31 December 2015	4,506	2,813	6,184	1,281	14,784
At 31 December 2014	5,823	3,177	13,533	716	23,249

Software and customer contracts and relationships have arisen from acquisitions and are amortised over their estimated useful lives, which are 3-6 years and 3-12 years respectively. The amortisation period for development costs incurred on the Group's product development is 3 to 7 years, based on the expected life-cycle of the product. Fully amortised development costs with a gross book value of £3.3m have been written off in the year.

Amortisation of development costs is included in cost of sales; the amortisation for software, customer contracts and relationships and business systems is included within administrative expenses.

An impairment of £8.0m (2014: £2.6m) has been recognised in the current year in respect of development costs. , in light of operational issues encountered in the second half of 2015 there was a deterioration in trading performance which has impacted on expected forecast cash flows into the future. Additionally there have been changes to management and to the Board in the second half of the year with the new team reconsidering the strategy of the Group and its future forecasts in conjunction with the assessment of the group's future funding requirements. As a result, certain modules or products have been impaired, to align their carrying values with current expectations relating to the ability of such modules or product to generate probable future economic benefits. This assessment has been based on a review of future sales pipeline and identified opportunities, which have sufficient current probability of deal completion to support the costs deferred on the balance sheet. In certain cases, external factors, such as change or deferral of government policy, have also triggered an impairment review of certain ongoing development work. The resultant impairment charge has been recognised as 'other administrative costs' and separately disclosed given their nature and value (see also note 3). Of the £8.0m impairment recognised, £0.6m (2014: £0.1m) relates to costs incurred and capitalised in the current reporting period.

10. Trade and other receivables

	2015 £'000	2014 £'000
Amounts receivable	17,700	13,217
Allowance for doubtful debts	(655)	(153)
	17,045	13,064
Amounts recoverable on contracts	42	115
Other receivables	263	294
Prepayments	2,845	3,822
Accrued income	5,790	10,842
	25,985	28,137

11. Trade and other payables

	2015 £'000	2014 £'000
Trade payables	2,274	2,774
Other taxation and social security	3,405	4,834
Other payables	1,364	7,468
	7,043	15,076

12. Notes to the cash flow statement

	2015 £'000	2014 £'000
Operating loss from continuing operations	(45,222)	(4,299)
Operating (loss)/profit from discontinued operations	(80)	79
Depreciation of property, plant and equipment	1,532	1,446
Impairment of goodwill	38,802	12,849
Amortisation and impairment of other intangible assets	13,437	8,129
Other non-cash items	(1,834)	25
Operating cash flows before movements in working capital	6,635	18,229
Decrease in inventories	478	177
Increase in receivables	5,701	5,780
Decrease in payables	(17,203)	(1,898)
Net cash (used in)/from operating activities before tax	(4,389)	22,288
Tax paid	(1,827)	(2,571)
Net cash (used in)/from operating activities	(6,216)	19,717

Net cash (used in)/ from operating activities before tax can be analysed as follows:

	2015 £'000	2014 £'000
Continuing operations (excluding restricted cash)	2,045	20,401
(Decrease)/increase in restricted cash	(6,354)	1,853
	(4,309)	22,254
Discontinued operations	(80)	34
	(4,389)	22,288

Analysis of changes in net debt:

	2015 £'000	2014 £'000
Opening net debt	(11,678)	(4,559)
Net (decrease)/increase in cash and cash equivalents	(7,387)	1,955
Effect of foreign exchange rate changes	(222)	(165)
Increase in bank loans and overdrafts	(12,912)	(8,332)
Loan arrangement fees and similar charges	(272)	(577)
Closing net debt	(32,471)	(11,678)

13. Acquisition of subsidiaries

On 6 March 2015, the Group acquired 100% of the issued share capital of Callista Software Services Pty Ltd ("Callista"), a company incorporated in Australia that is a leading provider of student management systems to the Australian university market.

This transaction has been accounted for by the purchase method of accounting. The total expected cost of acquisition is £1.7m, with payment deferred and payable over a three year period.

The provisional carrying amount of each class of Callista Software Pty Limited's assets before combination is set out below:

	Book value £'000	Alignment of accounting policies £'000	Provisional fair value adjustments £'000	Provisional fair value £'000
Intangible assets	_	_	477	477
Tangible assets	335	_	_	335
Deferred tax asset	_	316	_	316
Trade and other receivables	3,176	_	_	3,176
Cash and cash equivalents	1,819	_	_	1,819
Trade and other payables	(3,905)	_	_	(3,905)
Deferred tax liabilities	_	_	(143)	(143)
Total identifiable assets	1,425	316	334	2,075
Gain on bargain purchase				(405)
Consideration				1,670
Satisfied by:
Initial cash consideration				_
Deferred consideration				1,670
				1,670

The acquisition led to a net cash in-flow, taking into account the cash acquired, of £1.8m and resulted in a gain on acquisition of £0.4m. This gain reflected the low price paid for acquisition, which arose because of the maturity of the technology which Callista supplies to its customer base.

Intangible assets arising on acquisition are in respect of software (£0.3m) and customer relationships and contracts (£0.2m).

Callista Software Pty Limited contributed revenue of £6.3m and operating profit of £0.8m to the Group for the period between the date of acquisition and the balance sheet date. Acquisition related costs amounted to £0.2m.

Had the acquisition occurred on 1 January 2015, the Group's revenue would have increased by £1.2m and its operating profit by £0.1m.

15. Post Balance Sheet Events

On 29 February 2016, the Group announced that it had agreed to dispose of its Synergy children's services management information systems business to Servelec Group plc for total consideration of £20.25m. It is noted that two of the Group's directors, Richard Last and Roger McDowell, are also directors of Servelec Group plc; given the conflict thus arising, neither directors has participated in the Board's consideration of the disposal of Synergy. During 2015, the Synergy business generated revenues of £6.3m (2014: £6.6m), of which £5.2m (2014: £5.6m) related to the Product Development and Customer Services segment, and included £4.1m (2014: £4.0m) of recurring software maintenance revenues. Other revenue generated by the Synergy business of £1.1m (2014: £1.0m) related to the Implementation Services segment.

The Synergy business delivered an operating profit £2.7m in 2015 (2014: £3.2m), stated before allocation of before allocation of costs of central support services which will not transfer to Servelec Group plc. These non-transferring activities include IT services, HR, finance, legal, marketing and head office costs. Additionally, the operating profit for 2015 is stated before exceptional charges of £1.0m (2014: £nil).

As at the year end date, assets held in respect of the Synergy business amounted to £0.5m of capitalised product development costs, £0.2m of property, plant and equipment, and current assets of £1.4m. Current liabilities amounted to £2.6m. In addition, it is anticipated that on disposal, an allocation of goodwill arising in the PD&CS and Implementation segments will be allocated to the Synergy business (see note 8).

The disposal is expected to complete, subject to shareholder approval, by the beginning of April 2016.

This information is provided by RNS

The company news service from the London Stock Exchange

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Small cap Mobile Tornado sees its share price spiral higher after striking a deal with a Middle East client, Oxford Cannabinoid slumps off news of delisting and OSB leads the FTSE-250 on well received earnings news.

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