Prelims & Move to Main Market
Tribal Group PLC
26 June 2002
Embargoed for release at 7.00am 26 June 2002
26 June 2002
Tribal Group plc
Preliminary results for the year ended 31 March 2002
STRONG GROWTH AND MOVE TO THE MAIN MARKET
Highlights:
- Strong growth during the period, with profit before tax up 326% to £8.1m;
- Fully diluted earnings per share up 106% to 14.2p;
- Turnover increased by 161% to £45.7m (2001: £17.5m) with underlying organic
growth of 42%;
- Operating margins improved to 18.3% (2001: 18.0%);
- Operating cash flow £9.5m (2001: £2.9m), operating profit to cash conversion
rate of 114%;
- Committed income for 2003 over 50% of budgeted turnover;
- A number of important contract wins;
- Acquisitions successfully integrated;
- Major move into health and social care;
- Good start to the current year's trading;
- Transfer to the Official List.
David Telling, Chairman of Tribal Group plc, commented:
'I am delighted to be able to announce these excellent results today. The Group
has consolidated its position as a leading professional support services and
consultancy business, predominantly delivering services to the UK public sector,
with particular focus on the education, local authority and health sectors. We
have made some outstanding acquisitions during the year; continued to deliver
very strong organic growth and have won several important contracts. The Group
has the right skills, services, management and customer relationships to take
advantage of the rapidly increasing opportunities in our markets. We expect
this to be another successful year and believe that future growth will remain
strong.'
Financial highlights:
Year ended 31 March
2002 2001
Turnover £45.7m £17.5m up 161%
Operating profit before interest and taxation £8.4m £3.1m up 171%
Operating margins 18.3% 18.0%
Profit before taxation £8.1m £1.9m up 326%
Fully diluted earnings per share 14.2p 6.9p up 106%
Operating cash flow £9.5m £2.9m up 228%
Note: Profits and earnings per share are stated before goodwill amortisation and
employee benefit trust costs
For further information contact:
Tribal Group plc Tel 01285 886020
Henry Pitman, Chief Executive
Tribal Group plc
Preliminary results for the year ended 31 March 2002 and move to the Official
List
Chairman's statement
I am pleased to report on the results of Tribal Group plc for the year to 31
March 2002. During this period, the Group has further consolidated its position
as a leading professional support services and consultancy business,
predominantly delivering services to the UK public sector, with particular focus
on the education, local government and health sectors.
Results In the year ended 31 March 2002, our first full year as a public
company, the Group produced excellent results. Excluding amortisation of
goodwill and the costs associated with employee benefit trusts, turnover was
£45.7m (2001: £17.5m); operating profit was £8.4m (2001: £3.1m). Operating
margins were 18.3 per cent (2001: 18.0 per cent), a strong performance given the
level of growth during the year. Profit before taxation was £8.1m (2001:£1.9m)
and fully diluted earnings per share were 14.2p (2001: 6.9p). During the
period, the Group generated operating cash flow of £9.5m (2001: £2.9m),
representing an operating profit to cash conversion rate of 114 per cent. In
line with our previous policy, the directors are not recommending the payment of
a dividend. Net debt at the year end was £3.0m representing gearing of 6 per
cent.
Growth There are three strands to our growth strategy. First, we have
increased capacity in our existing businesses and enhanced their organic growth
potential. This is supported by our focus on delivering the benefits of
cross-selling between the businesses and capitalising on our national coverage.
Secondly, we are now successfully using the skills and customer reference sites
across the Group to secure major contracts that increase the level of our long
term committed income. Thirdly, we have continued to make strategic
acquisitions that add value to shareholders and either strengthen the Group's
position in existing markets or extend our services into new, complementary
skill or market areas.
Over the year, on a like for like basis, the businesses within the Group have
increased headcount by 31 per cent. and demonstrated revenue growth of 42 per
cent. Without exception, all businesses have broadened and strengthened their
management teams since acquisition. During the year, a number of contracts have
been won and increasingly these are involving more than one part of the Group.
In May 2001, we were awarded a £7m contract by London Underground Limited to
provide document management and other services; in March 2002, we were awarded a
£1.1m contract by the Department for Education and Skills to develop and deliver
on-line literacy and numeracy training and, in May 2002, we were awarded a three
year contract to provide strategic management services to Swindon local
education authority. We expect to announce further contract wins in the coming
weeks.
The acquisitions we have made both in this and in previous years have exceeded
our expectations and the incentivisation of management through equity
participation has proved very successful in creating a stable yet dynamic
culture. During the year, we have attracted high quality companies into the
Group, thereby extending our cross-selling potential and our capability to bid
for larger scale contracts. We made a number of acquisitions in the year for an
aggregate initial consideration of £36.8m paid for by a combination of cash and
shares. Deferred consideration of up to £25.4m is payable, primarily in shares,
based on the respective performances, of the businesses acquired, over the next
three years. These acquisitions were funded in part through a Placing and Open
Offer in November 2001 raising £20.9m. In addition, in April 2002, we signed new
banking facilities with BoS, including a £35m revolving facility.
We continue to identify high margin, cash generative companies with strong track
records and excellent growth potential, all of which have skills and services to
add to our overall proposition. Since the year end, we have made two further
acquisitions for an initial consideration of £10.0m, satisfied in cash and
shares, with further deferred consideration of up to £10.4m, to be satisfied
primarily in shares.
Our services are now grouped into four areas: management consultancy; IT and
information management services; HR and training services; and property
services. Education is still our major area of activity but, in line with our
strategy, we are now increasing our presence in the local authority sector and
have recently entered the health and social care markets. We are now operating
in sectors that account for over £100bn of government expenditure. Over time,
we will extend our services into other parts of the public sector and increase
our presence in the private sector.
People We are a business that relies on the quality and commitment of our
people and our success is thanks to the hard work and professional integrity of
our 950 staff. We have created an environment in which individuals at all
levels are given a high degree of autonomy within a supportive Group framework.
We have established a clear set of values which encourage entrepreneurialism,
profit focus and a dynamic culture within a strong ethos of customer service,
integrity and social awareness.
We have a strong tier of middle and senior management across the Group - high
quality, able individuals who, in many cases, are nationally leading figures in
their specialist areas. A key ingredient of our strategy is to incentivise
these individuals through an equity interest in the Group.
In November 2001, we introduced a Save As You Earn scheme, the take-up of which
was 56 per cent, unusually high for first time schemes of this kind. We intend
to offer employees another opportunity to join the scheme later this year.
I would like to put on record the thanks of myself and of the Board to our
employees at all levels. Their efforts have ensured that Tribal is one of the
most exciting and successful young companies in the UK today.
Move to the Official List
The Board is pleased to announce that it intends to publish listing particulars
later today to effect the transfer of the Company's shares to the Official List
of the London Stock Exchange, as indicated in our announcement of 13 May 2002.
The Board believes that the move will increase the profile of the Group, provide
a stronger platform for bidding for new contracts, assist in the recruitment and
retention of experienced and high quality staff and attract new investors.
Prospects Tribal Group has now established itself as a major supplier of
professional support services and consultancy to the public sector. The Group
has the right skills, services, management and customer relationships to take
advantage of the rapidly increasing opportunities in our markets. We have had a
good start to this year's trading and committed income already exceeds 50 per
cent. of this year's budgeted turnover. In addition, we are currently
short-listed for several important new contracts and have a pipeline of further
high quality acquisition prospects.
Our intention is to maintain the momentum we have achieved throughout the coming
year for the benefit of all employees and shareholders. The Board expects this
to be another successful year and believes that future growth will remain
strong.
David M Telling
Chairman
26 June 2002
Consolidated Profit and Loss Account
for the year ended 31 March 2002
2002 2002 2001 2001
£'000 £'000 £'000 £'000
Turnover
Continuing operations 34,285 7,431
Acquisitions 11,366 10,034
45,651 17,465
Cost of sales (19,975) (8,477)
Gross profit 25,676 8,988
Administrative expenses
Amortisation of goodwill (2,903) (1,156)
Other administrative expenses (17,810) (5,907)
Total administrative expenses (20,713) (7,063)
Operating profit
Continuing operations 2,882 716
Acquisitions 2,081 1,209
4,963 1,925
Interest receivable and similar income 801 394
Interest payable and similar charges (1,084) (1,620)
Profit on ordinary activities before taxation 4,680 699
Taxation (1,851) (648)
Profit for the financial year 2,829 51
Earnings per share
Basic 7.6p 0.3p
Diluted 6.6p 0.3p
Adjusted basic before amortisation of goodwill
and employee benefit trust costs 16.3p 7.1p
Adjusted diluted before amortisation of goodwill
and employee benefit trust costs 14.2p 6.9p
There are no other recognised gains and losses in the current or prior year and,
accordingly, no separate statement of total recognised gains and losses has been
presented.
Consolidated Balance Sheet
at 31 March 2002
2002 2002 2001 2001
£'000 £'000 £'000 £'000
Fixed assets
Intangible assets - goodwill 92,697 36,235
- development expenditure 244 -
Tangible assets 2,261 601
Investments 71 -
95,273 36,836
Current assets
Stock - work in progress 1,030 130
Debtors 18,063 5,872
Cash at bank and in hand 35,784 12,649
54,877 18,651
Creditors: amounts falling due within one year (25,938) (6,069)
Net current assets
Due within one year 4,481 2,202
Cash collateralised beyond one year 24,458 10,380
28,939 12,582
Total assets less current liabilities 124,212 49,418
Creditors: amounts falling due after more than one year (39,414) (11,353)
Net assets 84,798 38,065
Capital and reserves
Called up share capital 2,261 1,707
Share premium account 39,596 9,748
Capital reserve 9,545 9,545
Profit and loss account 2,795 (34)
Shares to be issued 30,601 17,099
Equity shareholders' funds 84,798 38,065
Consolidated Cash Flow Statement
for the year ended 31 March 2002
2002 2002 2001 2001
£'000 £'000 £'000 £'000
Cash inflow from operating activities 9,502 2,937
Returns on investments and servicing of finance
Interest paid (863) (1,349)
Interest element of finance lease payments (3) (2)
Debt issue costs - (139)
Interest received 975 207
Net cash inflow/(outflow) from returns on
investments and servicing of finance 109 (1,283)
Taxation
Corporation tax paid (1,994) (210)
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (1,088) (325)
Payments to acquire intangible fixed assets (60) -
Proceeds from sale of tangible fixed assets 115 -
Net cash outflow for capital expenditure and
financial investment (1,033) (325)
Acquisitions
Purchase of subsidiary undertakings (6,935) (4,951)
Net cash acquired with subsidiary undertakings 3,599 725
Net cash outflow from acquisitions (3,336) (4,226)
Net cash inflow/(outflow) before financing 3,248 (3,107)
Financing
Issue of ordinary share capital less issue costs 20,881 10,097
Proceeds from loan conversions into ordinary share
capital - 5,362
Proceeds from exercise of share warrants into
ordinary share capital - 217
Repayments of borrowings (951) (11,700)
New secured loans less issue costs - 11,331
Capital element of finance lease rental payments
(42) (4)
Collateralised cash (14,079) (10,380)
Net cash inflow from financing 5,809 4,923
Increase in cash in the year 9,057 1,816
Reconciliation of net cash flow to movement in net debt 2002 2001
£'000 £'000
Increase in cash in the year 9,057 1,816
Cash (outflow)/inflow from movements in debt (13,094) 555
Change in net debt resulting from cash flows (4,037) 2,371
Finance leases acquired with subsidiaries (235) (28)
New finance leases (38) -
Loans converted into share capital in the year - 300
Reclassification of contingent consideration falling due after one
year - 6,337
Movement in net debt in the year (4,310) 8,980
Net funds/(debt) at the start of the year 1,282 (7,698)
Net (debt)/funds at the end of the year (3,028) 1,282
Reconciliation of movement in shareholders' funds for the year ended 2002 2001
31 March 2002 £'000 £'000
Profit for the financial year 2,829 51
Other recognised gains and losses relating to the year
New share capital subscribed (net of issue costs) 30,402 10,097
Shares to be issued 13,083 17,099
Credit in relation to share related awards 419 30
Loans converted into issued share capital (net of issue costs)
- 9,645
Net addition to shareholders' funds 46,733 36,922
Opening shareholders' funds 38,065 1,143
Closing shareholders' funds 84,798 38,065
Notes to the preliminary announcement
for the year ended 31 March 2002
1. Earnings per share
2002 2001
Basic
Earnings for year (£'000) 2,829 51
Weighted average number of shares outstanding (number) 37,341,790 17,702,995
Basic earnings per share (pence) 7.6 p 0.3p
Diluted
Earnings for year (£'000) 2,829 51
Weighted average number of shares in issue including
dilutive shares:
Basic weighted average number of shares in issue (number) 37,341,790 17,702,995
Employee share options (number) 1,416,272 -
Shares to be issued in respect of deferred consideration
(number) 4,155,763 638,838
Adjusted number of shares outstanding 42,913,825 18,341,833
Diluted earnings per share (pence) 6.6p 0.3p
Adjusted basic before goodwill amortisation
and EBT costs
Earnings for year (£'000) 2,829 51
Goodwill amortisation (£'000) 2,903 1,156
EBT costs net of tax (£'000) 346 58
Adjusted earnings before goodwill amortisation and EBT 6,078 1,265
costs (£'000)
Weighted average number of shares in issue
(number) 37,341,790 17,702,995
Adjusted basic earnings per share (pence) 16.3p 7.1p
Adjusted diluted before goodwill amortisation
and EBT costs
Adjusted earnings before goodwill amortisation and
EBT costs (£'000) 6,078 1,265
Weighted average number of shares in issue
including dilutive shares (number) 42,913,825 18,341,833
Adjusted diluted earnings per share (pence) 14.2p 6.9p
The two additional adjusted earnings per share figures shown on the profit and
loss are included as the directors believe that they provide a better
understanding of the underlying trading performance of the group.
2. Analysis of net debt
At beginning Cash flow Arising from Other At end of
of year acquisitions non-cash Year
(excluding changes
cash)
£'000 £'000 £'000 £'000 £'000
Cash at bank and in hand 12,649 23,135 - - 35,784
Overdrafts - - - - -
Cash collateralised (10,380) (14,078) - - (24,458)
2,269 9,057 - - 11,326
Debt due after one year (11,331) (24,971) (243) - (36,545)
Debt due within one year - (2,000) - - (2,000)
Finance leases (36) 42 (235) (38) (267)
Cash collateralised 10,380 14,078 - - 24,458
Total 1,282 (3,794) (478) (38) (3,028)
Included within cash at bank and in hand is £24,458,000 (2001: £10,380,000) of
cash collateralised representing committed facilities that are specifically
allocated to repay loan liabilities in respect of non-convertible loan notes
issued to the previous owners of certain entities acquired. This cash is not
available to Tribal Group Plc for any other use and is not sufficiently liquid
to meet the definition of cash and cash equivalents set out in FRS 1.
3. Preliminary Announcement
A duly appointed and authorised committee of the Board of Directors approved the
preliminary announcement on 25 June 2002.
The financial information set out above does not constitute the Group's
statutory accounts for the years ended 31 March 2002 or 2001, but is derived
from those accounts.
The financial information is prepared on the basis of the accounting policies as
stated in the previous year's financial statements with the exception of those
that have been changed to comply with FRS 19 which requires full provision to be
made for deferred tax. It replaces the 'partial provision' rules previously
allowed under Statement of Standard Accounting Practice No. 15.
This change had no material impact on the company and hence there is no
restatement of the opening reserves.
Statutory accounts for 2001 have been delivered to the Registrar of Companies
and those for 2002 will be delivered following the company's annual general
meeting. The auditors have reported on those accounts; their reports were
unqualified and did not contain statements under s237 (2) or (3) Companies Act
1985.
End
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