21st Aug 2024 11:55
(Clarifying the restructuring costs and costs related to the lapsed offer were cash outflows in the first half of 2024, not new charges against first-half earnings.)
(Alliance News) - Tribal Group PLC on Tuesday said it expects to report annual results in line with market expectations, despite lower profit in the first half of the year as costs outpaced revenue growth.
The Bristol-based educational software and services provider said pretax profit dived to GBP1.0 million in the first half of 2024 from GBP5.9 million a year prior.
Revenue edged up 3.5% to GBP44.9 million from GBP43.4 million, but cost of sales came in 12% higher at GBP23.1 million from GBP20.7 million. Total administrative costs increased 21% to GBP20.1 million from GBP16.7 million, while the cost of exceptional items increased to GBP3.4 million from GBP366,000.
"We delivered a steady overall financial performance in the first half of the year, while achieving our principal aims of resolving the Nanyang Technology University contract and refocussing the business following the end of the offer period," said Chief Executive Officer Mark Pickett.
"We have introduced initiatives to accelerate the transformation of Tribal into an EdTech software as a service business, with a view to growing annual recurring revenue, safeguarding our operating profit margins, increasing cash flow generation and enabling the ongoing reduction in our debt."
The company said it was hurt by a pause in new sales conversations while it was in an offer period, amid ongoing caution among universities potentially facing a lower international student numbers. However, it noted that its sales pipeline was improving in the second half.
Jenzabar Inc, Tribal's largest shareholder, back in November raised its stake in Tribal to block a takeover offer by Ellucian Co LP that had been recommended by Tribal's board.
At the time, Jenzabar held a 26.5% stake in Tribal. This was up from just below 21% before the increase. Jenzabar is software company based in the US state of Massachusetts-based and focused on a technology suite for higher education.
Tribal had received a planned takeover offer worth GBP172.3 million from Ellucian, a Virginia-based software provider to the education sector, in early October.
The proposed takeover required approval from at least 75% of Tribal shareholders. As just 73.55% of Tribal shares were not held by Jenzabar, it was able to block the planned takeover.
Tribal made no mention of Jenzabar on Tuesday, but it recorded exceptional cash outflows of GBP1.4 million for restructuring costs and GBP300,000 for costs relating to the lapsed offer from Ellucian in the first half of 2024. The restructuring costs had been taken against 2023 earnings.
Tribal said it intends to pay an interim dividend of 0.65 pence per share, compared to none a year ago. The company highlighted its settlement with Nanyang Technology University being finalised as well as an improved cashflow performance so far in 2024.
Looking ahead, Tribal expects 2024 results in line with market expectations, anticipating revenue to edge up 0.1% to GBP85.8 million from GBP85.7 million in 2023, while adjusted earnings before interest, tax, depreciation and amortisation is expected to remain flat at GBP14.4 million.
Net debt is anticipated to increase 31% to GBP9.4 million by year-end from GBP7.2 million at the end of 2023.
CEO Pickett said: "Our growing suite of sophisticated cloud-based solutions, market leading position in multiple geographies and foundation of recurring revenues provide us with a strong position as we seek to empower the world of education with products and services that underpin student success."
Tribal shares were down 2.3% to 54.71 pence each on Wednesday morning in London.
By Tom Budszus, Alliance News slot editor
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