Disposal

Tribal Group PLC
26 March 2007


Tribal Group plc

26th March 2007


                  Tribal Group plc ('Tribal' or the 'Company')

                              Sale of Mercury Health

SUMMARY

-        Tribal has agreed to sell Mercury Health to Care UK Plc for a gross 
         enterprise value of £77 million.

-        Tribal to receive estimated net cash proceeds of £52 million at 
         completion after deducting transaction costs and net third party debt 
         that will be transferred with the business.

-        Post the sale, Tribal will be a focused provider of high value 
         consultancy and support services and, increasingly, service delivery 
         solutions to the UK public sector.

-        Tribal intends to use all of the net cash proceeds to pay down debt, 
         providing Tribal with a strong platform to grow both organically and, 
         as appropriate, by acquisition.

-        The current dividend is to be maintained with a progressive dividend 
         policy expected going forward.

-        The sale is conditional, inter alia, on shareholder approval and on 
         Department of Health consent. The circular to shareholders and notice 
         convening an Extraordinary General Meeting of the Company recommending 
         approval of the sale will be dispatched to shareholders shortly.


Commenting on the sale, Henry Pitman, Chief Executive of Tribal, said:

'We are very pleased that we have achieved such a good outcome for shareholders
and for the continuing Tribal Group.

As a result of this sale, which will considerably strengthen Tribal's balance
sheet, the Group will now re-focus its efforts on delivering consultancy,
support services and, increasingly, service delivery solutions to education,
health and other public sector markets.

I would like to thank the management team at Mercury Health for their efforts
over the last few years, during which time they have created, from a standing
start, one of the most successful and exciting healthcare businesses in the UK.
I have no doubt that Mercury Health will build on this success as part of Care
UK.'


For further information please contact:

Henry Pitman, Chief Executive, Tribal Group plc             Tel: [phone]
Simon Lawton, Group Finance Director, Tribal Group plc      Tel: [phone]
Colin Browne, Maitland                                      Tel: [phone]


Introduction
------------

Tribal, a leading provider of consultancy and professional support services to 
the UK public sector, is pleased to announce that it has conditionally agreed to 
sell its healthcare delivery division, Mercury Health Holdings Limited ('Mercury 
Health'), to Care UK Plc ('Care UK') for a gross enterprise value of £77 
million. On completion of the sale, Tribal will receive estimated net cash 
proceeds of £52 million after deducting transaction costs and net third party 
debt that will be transferred with Mercury Health. The Board intends to use all 
net cash proceeds of the sale to reduce Tribal indebtedness.  Following the 
sale, Group net debt is expected to fall below £15m.


Background and reasons for the sale
-----------------------------------

To date, Mercury Health has prospered as part of Tribal, having had significant 
success in bidding for and securing major contracts in the first and second 
phases of the Department of Health's Independent Sector Treatment Centre 
procurement programme. However, Mercury Health's contracts require substantial 
implementation expenditures and sizeable guarantees to the Department of Health 
which must be supported either by way of parent company guarantee or cash 
collateral. As Mercury Health has grown, this has placed increased pressure on 
Tribal's financial resources and has become a constraint on the development of 
both the continuing Tribal Group and Mercury Health. Therefore, the Tribal 
Board believes that Mercury Health has reached a stage in its development where 
it would be in the best interests of Tribal shareholders for Tribal and Mercury 
Health to be operated as separate businesses.

The Board has decided to sell Mercury Health for, inter alia, the following 
reasons:

-        to crystalise the value generated by the development of Mercury Health;
-        as noted above, the capital requirements and balance sheet structure of 
         Mercury Health are expected to differ significantly from those of the 
         continuing Tribal Group. The Board believes this will increasingly 
         impact the organic and acquisition growth strategies of the two 
         businesses and, therefore, their long term values; and
-        there are no material operating synergies between Mercury Health and 
         the continuing Tribal Group and the operating activities of Mercury 
         Health are fundamentally different to those of Tribal's other 
         businesses.


Continuing Group strategy
-------------------------

Post the sale of Mercury Health, Tribal will continue to provide a wide range of
high value consultancy and support services and, increasingly, service delivery
solutions to the UK public sector, with a continued focus on the growth areas of
education and health.

The continuing Tribal Group will offer an integrated solution, thereby enabling
the business to bid for complex contracts which often require the combination of
consultancy and service delivery skills. Such contracts offer multi-year terms
which should increase the visibility of the continuing Tribal Group's revenues
going forward.

The business expects to deliver long term, sustained organic growth through:
strong account management of the existing customer base; increasing capacity in
the areas of highest growth potential; diversifying into new niche markets; and
increasing the level of committed revenue by successfully bidding for
multi-year, service delivery contracts.

To augment the benefits of revenue growth, the continuing Tribal Group aims to
deliver margin improvement through: strong performance management; a selective
approach to both clients and contract opportunities; improved project and
programme costing procedures; and robust control of the operating cost base.
Significant progress has been made in this regard with operational and
performance management already strengthened considerably, a number of
underperforming businesses recently exited and the centralisation of procurement
and support functions nearly complete.

The continuing Tribal Group intends to support organic growth by making selected
bolt-on acquisitions as and when appropriate opportunities arise. Such
acquisitions would be expected to strengthen the continuing Tribal Group's
position in its existing markets and to add skills and complementary services
which reinforce its integrated service offering.


Current trading and future prospects
------------------------------------

Since the update on current trading and the prospects for the Company provided
in the interim statement on 28 November 2006, there has been no material change
to the Board's expectations for the continuing Tribal Group. As previously
indicated, March is forecast to be a significant contributor to the full year
results. In addition, the timing and achievability of reaching financial close
for the Peterborough PFI hospital scheme by 31 March year end remains uncertain.

The sale will result in a profit on disposal of £27 million and is expected to
be earnings dilutive in the first financial year following completion.

It is intended that the current dividend will be maintained and the Board would
expect, in the absence of any significant capital expenditure requirements for
future contracts or developments, that the dividend policy going forward should
be progressive.


Information on Mercury Health
-----------------------------

Mercury Health, which was established in 2003 and is incorporated in the UK, is 
one of the leading independent providers of a wide range of elective (planned) 
surgery and clinical diagnostic services, provided under the Department of 
Health's Independent Sector Treatment Centre programme, and primary care 
services to NHS patients.

For the year ended 31 March 2006, Mercury Health generated revenue of £14.6 
million and profit before taxation of £0.3 million. As at 31 March 2006, net 
liabilities and gross assets of Mercury Health were £2.6 million and £50.6 
million respectively.

The members of the executive board of Mercury Health are as follows:

Keith Evans             Mercury Health Group Managing Director
Steve Breach            Mercury Health Group Finance Director
Mark Smith              Mercury Health Group Strategy Director
Jeanette McMillan       Managing Director, Elective Surgery
Paul Hobson             Managing Director, Diagnostics
Mark Hunt               Managing Director, Primary and Community Care
Hilary Thomas           Mercury Health Group Medical Director




                      This information is provided by RNS
            The company news service from the London Stock Exchange