Trading Statement

RNS Number : 7745Z

Tribal Group PLC

20 January 2011

 



Tribal Group plc

Trading update

Tribal Group plc ("Tribal" or the "Group"), a leading provider of public sector services in the UK and internationally, provides the following update in advance of the preliminary announcement of its results for the year ended 31 December 2010.

Current trading

The trading performance of the Group improved in the final quarter of the year and adjusted profit before tax for the year ended 31 December 2010 will be in line with the Board's expectations.

Following the announcement of the Comprehensive Spending Review on 20 October 2010, we have seen some improvement in market conditions in the UK and an encouraging increase in the level of new business activity, although demand for advisory work in central government has remained subdued.  We have continued to see a strengthening in our international pipeline.

Our Education business has continued to make progress in the higher education and further education software markets, recently winning its first software clients in New Zealand (University of Otago and Wairiki Institute) and in China (Xi'an Jiaodang - Liverpool University in Shanghai).  We have also won our first contract in Tennessee to provide school improvement services and, together with our Government business, a £4.6m EU-funded contract to support the implementation of Special Education Needs provision in Turkey.

In Health, we have now signed a formal letter of intent for the £22m NHS South West workforce development programme announced last month, which will be delivered jointly with our Education business.  We have seen continued demand for our hospital support services and we have recently been appointed by Milton Keynes NHS Foundation Trust. 

In Government, overall demand has remained at low levels but we have seen an encouraging improvement in the sales pipeline, both in our UK government advisory business and our international development activities.

We have fully implemented our plans to establish an integrated approach to our technology activities and we are already seeing the benefits of a more co-ordinated approach to software and product development.  

Across the Group, we have largely completed our cost reduction programmes. We have entered 2011 with a current cost base in our continuing businesses that is more than 15% lower than 12 months earlier (equivalent to an annualised benefit of £27m).  We have also identified additional opportunities to improve operational efficiencies which we expect to realise during the course of the year.

We have continued to explore strategic options for our Resourcing activities, the one remaining business within our former Support Services business stream.  We expect to provide a further update on progress shortly.

Financial position

As a result of an increased focus on working capital management and the benefit of favourable creditor terms, the Group's net debt at the end of December 2010 was £18.5m.  As the benefit of those creditor terms unwinds, the level of net debt will increase during the early months of 2011.  The Group's bank facilities total £48m, of which £40m are committed until 2015.

We are undertaking a review of the carrying value of goodwill on our balance sheet and will provide further detail in our preliminary statement.

Corporate update

We announced last month that we had been approached regarding a possible offer for Tribal.  There is no certainty that an offer will be made.  Further announcements will be made as appropriate.

Outlook

At 1 January 2011, Tribal had approximately 52% of 2011 planned revenue committed (1 January 2010: 55%), with a further 18% of 2011 revenue at preferred bidder stage.  Total committed income stood at £216.8m at the start of the year (2010: £202.9m) and the sales pipeline totalled £289.0m (2010: £223.7m).

While we have seen signs of improvement in market conditions in the UK, the environment for advisory work is likely to be characterised by continued uncertainty.  Tribal remains well-positioned to take advantage of longer-term opportunities to support change and reform across the public sector and to deliver technology and service solutions that promote efficiency.  International demand for Tribal's products and services continues to improve.  The level of committed income and the continued strength of the sales pipeline, together with the benefits of our cost reduction programmes, provide a sound basis for the Group to make progress during the course of 2011.  

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For further information, please contact:  

Tribal Group plc                                                         Telephone: [phone] 

Peter Martin, Chief Executive  

Steve Breach, Group Finance Director  

Weber Shandwick Financial                                       Telephone: [phone] 

Nick Oborne

Stephanie Badjonat

Clare Thomas                                        

Editors' note:  

Tribal is a leading public sector services company.  We provide service delivery, advisory and technology solutions focused on improving the quality and effectiveness of public services in the UK and internationally. Tribal's core markets are education, health and government.  

Our people are sector experts and we work in partnership with a wide range of organizations, including schools, hospitals, local authorities, housing associations and government departments. Tribal has around 1,800 staff and our work spans 40 countries across the world. Tribal's shares are quoted on the London Stock Exchange (TRB). Links: Tribal Group plc website: www.tribalgroup.com

This Statement has been prepared for and is addressed only to our shareholders as a whole and should not be relied on by any other party or for any other purpose. Tribal, its directors, employees, agents or advisers do not accept or assume responsibility to any other person to whom this Statement is shown or into whose hands it may come and any such responsibility or liability is expressly disclaimed.

This Statement may contain forward-looking statements. Any forward-looking statement has been made by the directors in good faith based on the information available to them up to the time of approval of this Statement and should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying such forward-looking information. To the extent that this Statement contains any statement dealing with any time after the date of its preparation, such statement is merely predictive and speculative as it relates to events and circumstances which are yet to occur and therefore the facts stated and views expressed may change. Tribal undertakes no obligation to update these forward-looking statements.

 

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