Interim Results
Tribal Group PLC
25 November 2003
Embargoed for release at 7.00am 25 November 2003
25 November 2003 PRESS INFORMATION
Tribal Group plc
Interim results for the six months ended 30 September 2003
Tribal Group today announces its interim results for the six months ended 30
September 2003. The results reflect the excellent progress made during the
period across all areas of the Group.
Financial highlights:
Unaudited Unaudited
six months six months
ended ended
30 September 30 September Percentage
2003 2002 change
Turnover £78.7m £38.3m +105%
Gross revenue £64.4m £38.3m +68%
Operating profit* £8.2m £4.7m +74%
Profit before tax * £7.0m £4.2m +67%
Profit on ordinary activities before taxation £2.0m £0.4m +400%
Adjusted diluted earnings per share * 7.8p 5.6p +39%
Loss for period after goodwill amortisation of £(0.1)m £(0.8)m
£4.6m (2002: £2.8m)
Operating cash flow £7.2m £5.0m +44%
Operating profit*to cash conversion 88% 106%
* Operating profit, profit before tax and diluted earnings per share are stated
before goodwill amortisation, employee benefit trust costs and exceptional items
(see page 8 of the interim statement).
- Strong growth during the period, with profit before tax* up 67 per cent
to £7.0m
- Adjusted diluted earnings per share up 39 per cent to 7.8p
- Underlying organic sales growth of 17 per cent
- Operating profit* to cash conversion rate of 88 per cent
- Secured income for 2004 over 75 per cent of forecast turnover
- Hacas acquisition integrating well
- Important NHS contract win
- Maiden interim dividend of 1p per share
Henry Pitman, Chief Executive of Tribal Group plc, commented:
'I am delighted to be able to announce another set of strong results today.
Tribal Group has continued to make excellent progress, further consolidating its
position as a leading provider of consultancy and professional support services,
predominantly to the UK public sector. The Group has developed a significant
position in its key markets of education; local government, housing and
regeneration; health and social care; and central government.
In September, we announced the appointment as preferred bidder of our subsidiary
Mercury Health on a NHS contract to design, set up and manage a national network
of diagnostic and treatment centres. The value of this contract is expected to
be in excess of £300 million over a five year period and represents a major
milestone in the development of the Group and is the first step in developing a
substantial UK healthcare delivery business.
We have made a number of excellent acquisitions during the period, including our
largest acquisition to date, Hacas Group plc. At the same time, the Group has
continued to deliver significant organic growth. Tribal Group is very well
placed to take advantage of rapidly increasing opportunities in our buoyant
markets. We expect this to be another successful year and believe that our
future growth will remain strong.'
For further information contact:
Henry Pitman, Chief Executive, Tribal Group plc Tel. 01285 886020
Simon Lawton, Group Finance Director, Tribal Group plc Tel: 01285 886020
Tribal Group plc
Unaudited interim results for the six months ended 30 September 2003
Interim Chairman's and Chief Executive's joint statement
We are pleased to report on the interim results of Tribal Group plc for the six
months ended 30 September 2003. During this period, the Group has further
consolidated its position as a leading professional support services and
consultancy business, predominantly operating in the UK public sector. We have
strengthened our market position in education and, through our recent
acquisition of Hacas, established a leading position in housing, local
government and regeneration. We have made substantial strides in the health and
social care market and announced in September our appointment as preferred
bidder on a major NHS treatment centre contract. We have also made good
progress in developing our central government business.
Results In the period ended 30 September 2003, the Group produced another set
of excellent results with turnover up to £78.7m (2002: £38.3m). Excluding
amortisation of goodwill, exceptional items and the costs associated with
employee benefit trusts, operating profit was £8.2m (2002: £4.7m); operating
margins were 12.8 per cent (2002: 12.2 per cent), a strong performance given the
level of growth during the period; profit before taxation was £7.0m (2002:
£4.2m); and adjusted diluted earnings per share was 7.8p (2002: 5.6p). Profit
before tax and after the above charges improved from £0.4m to £2.0m. During the
period, the Group generated operating cash flow of £7.2m (2002: £5.0m),
representing an operating profit to cash conversion rate of 88 per cent. Net
debt at 30 September 2003 was £48.7m, representing gearing of 30 per cent, and
interest cover was 6.6 times.
Dividend In line with our previous announcement, the board is recommending the
payment of a maiden dividend for the period ended 30 September 2003 of 1p per
share. This dividend will be paid on 16 January 2004 to shareholders on the
register on 19 December 2003.
Activities Our services are now grouped into six divisions:
• management consultancy - an extensive range of sector specific
services
• IT and information management - products, systems development, managed
services and document management
• HR services - resourcing and recruitment advertising
• training - training delivery and publishing
• property services - project management, architectural and surveying
services
• communications and PR services
It is our intention to build each of these divisions so that they become market
leaders and substantial businesses in their own right. We have already achieved
these aims in a number of areas.
A seventh division will be healthcare delivery, following our success in
becoming preferred bidder on a major NHS contract to design, set up and manage a
national network of treatment centres.
Markets We continue to operate in buoyant markets and to benefit from
increasing government expenditure, particularly in education and health. We are
now operating in sectors that account for over £120bn of government spending.
The public sector needs support with the modernisation of estate, equipment, IT
and working practices. There is an increasing acceptance across government that
the private sector has a significant role to play in reforming and delivering
public services. We believe that this change in approach towards the private
sector is the main driver in our markets.
In the period ended 30 September 2003, 96 per cent (2002: 96 per cent) of our
revenues were from the public sector and we expect to retain this focus in the
immediate future. However, we are starting to see opportunities to leverage on
our specialist skills in related private sector areas. For example, our health
expertise is opening up potential support services opportunities in the
pharmaceutical market.
Growth There are now four strands to our growth strategy. First, we have
increased capacity in our businesses and enhanced their organic growth
potential. This is supported by our focus on delivering the benefits of
cross-selling 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 open up new business streams and increase the level
of our long-term committed income. Thirdly, we have continued to make strategic
acquisitions that add value for shareholders and strengthen the Group's position
in existing markets or extend our services into new, complementary skill or
market areas. Finally, we are developing start-up businesses that fill gaps in
our service offering and enable us to recruit high quality and ambitious
individuals and teams.
Organic growth Over the period, on a like for like basis, the businesses within
the Group have increased headcount by 17 per cent and demonstrated underlying
organic revenue growth of 17 per cent. Without exception, all businesses have
broadened and strengthened their management teams since acquisition, with an
ever increasing number of high quality senior managers joining us from
competitors. We have within the Group an extensive range of services which are,
in most cases, applied to one market sector only. We are now placing increased
emphasis on applying those skills to other parts of the public sector. We are
seeing an acceleration of cross-selling across the Group, with many examples of
companies winning business in conjunction with other Tribal businesses.
We have formalised our approach to cross-selling by establishing four core
industry groups (education; health and social care; local government, housing
and regeneration; and central government). The industry groups are responsible
for developing sector strategy and co-ordinating the presentation of a well
structured offering to our customers. Cross selling initiatives have been
supported by continuing improvements to the Group's website, intranet and
marketing materials and the establishment of four Tribal hub offices.
Contract wins During the period, a number of important contracts have been won
and, increasingly, these are involving more than one part of the Group. In
April 2003, our schools inspection contract with Ofsted (now valued at £6m) was
renewed and extended. In May, we announced that, through a consortium led by RM
plc, we had been awarded a £4.2m contract to provide e-learning services to the
South Yorkshire e-learning partnership. In July, we won a £4.4m basic skills
contract with the Adult Basic Skills Agency and, in August, we were awarded a
three year contract as the NHS Franchise Partner at Good Hope Hospital, the
first time the private sector has been brought in to manage a failing hospital
trust. This type of turnaround contract is an area where the group has
developed significant expertise. Over the last two years, we have been
contracted to provide strategic management in education at Swindon LEA; to
restructure social services in Cardiff; and to manage the library service in
Haringey. In addition to these contract wins, the Group has also been selected
as a framework provider by a number of Government departments and agencies.
Mercury Health In September, we announced that our subsidiary Mercury Health
had been appointed as preferred bidder for a five year contract to design, set
up and manage a national network of up to ten treatment centres. The value of
the contract is still to be finalised, pending confirmation of the guaranteed
procedure volumes, but is expected to be in excess of £300 million.
The contract represents an opportunity for Mercury Health to obtain a
significant share of a substantial new market in UK healthcare delivery. The
contract guarantees a minimum level of caseload for five years. However,
Mercury Health will also be seeking, during the initial contract term and
beyond, additional procedure volumes from both the NHS and from the private
medical and insurance sectors and a number of opportunities are currently being
reviewed. In support of this strategy, we will be establishing over time a
comprehensive national network of treatment centres.
The new treatment centres will perform a range of in-patient and out-patient
elective surgery and diagnostic procedures for non-acute conditions. The NHS'
objective is to increase capacity and effect a sustained reduction in waiting
lists through securing new capacity from the private sector. Similar
initiatives internationally have been very successful. For example, in the US,
more than 3,000 treatment centres have been developed over the past twenty
years.
We have now made the key appointments to the Mercury Health senior management
team. Mark Aichroth, previously with HCA, Humana and Blue Cross Blue Shield, as
Chief Executive; Mark Smith, formerly Chief Executive, Portsmouth NHS Trust, as
Business Development Director; and Steve Breach, previously a Director at Ernst
& Young, as Finance Director. They will be supported by our US clinical
partners, Ascent Health, formerly part of Johnson & Johnson, who have in total
commissioned 150 treatment centres in the US.
Contractual negotiations are continuing and it is now expected that financial
close will take place in the Spring of 2004. We will update the market on the
capital investment required and the funding arrangements when the final contract
terms are confirmed. Currently, it is the Group's intention to fund this new
business using a combination of equity, debt finance and asset finance. The
centres are expected to be operational from Spring 2005.
Acquisitions Our acquisition strategy has been fundamental to the success of
the Group and the incentivisation of management through equity participation has
created a stable yet dynamic culture. During the period to September 2003, we
have attracted more high quality companies into the Group, thereby extending our
cross-selling potential and our capability to bid for larger scale contracts.
In July, we completed the acquisition of Hacas Group plc for a consideration of
£45.1m. Hacas is the leading consultancy business in the social housing sector,
working with 120 local authorities and over 500 registered social landlords, as
well as a number of central government departments and agencies. The acquisition
has considerably strengthened our consultancy capability and Tribal Consulting
is now established as one of the leading consultancy practices in the public
sector. We are making good progress with the integration of the Hacas business.
In addition to Hacas Group, we acquired Foundation Software Solutions, Kinetic
Technologies and Geronimo Public Relations. Together with Hacas, these
acquisitions cost an aggregate initial consideration of £64.3m, paid for by a
combination of cash and shares. Deferred consideration of up to £13.5m is
payable in respect of these acquisitions, principally in shares, based on
increases in operating profit. At 25 November 2003, our total estimated
earn-out liability was £27.5m, of which approximately £24.0m is expected to be
satisfied by the issue of shares through to November 2006. Although these
liabilities are primarily to be satisfied by the issue of new shares, the
Group's policy is to retain sufficient headroom in its banking facilities to
finance at its option the next two years earn-outs in cash (currently estimated
to be approximately £10.6 million).
Although there are now a reducing number of good quality consolidation
opportunities in some of our markets and skill areas, we continue to identify
high margin, cash generative companies with strong track records and excellent
growth potential, which have skills and services that can add to our overall
proposition.
Start ups We are currently seeing good opportunities to attract talented
individuals and teams who have become disillusioned with the major organisations
for which they work. This is particularly the case following some of the mergers
in the global consultancy market, which have changed the focus and culture of a
number of large organisations. We are finding that individuals are attracted to
Tribal because of our public sector focus and our established structures for
providing equity participation in start up companies.
Management and board In June, we announced that Dominic Collins had agreed to
join our board from 1 July 2003 as non-executive Deputy Chairman. In September,
we announced that David Telling, our non-executive Chairman since December 2000,
was retiring due to continued ill health. With great sadness we report that
David died on 31 October 2003. We are very grateful to David for his great
support in the early years of the Group's development. At Tribal, we have
developed a similar culture to that which David developed at MITIE, encouraging
operational autonomy and providing opportunity for equity participation wherever
possible. Dominic Collins has been appointed as interim Chairman whilst a
permanent appointment is sought.
We expect to be announcing new appointments to our Main Board before the end of
the financial year.
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 1,550 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 exceptional individuals amongst our middle and senior management teams,
many of whom are nationally leading figures in their specialist areas. During
the period, we have been fortunate to have recruited many able managers and
consultants to the Group.
In September of this year, we launched the Tribal Management Development
Programme, in association with Henley Management College. Twenty four of our
senior managers are now participating.
Our Save As You Earn scheme is offered to employees annually. Currently half of
our employees have chosen to participate in this scheme, a high proportion for
schemes of this kind.
We would like to put on record the thanks of the board to our employees at all
levels. Their efforts have ensured that Tribal is one of the most dynamic and
successful young companies in the UK today.
Prospects Tribal Group is firmly established as a major supplier of
professional support services and consultancy to the public sector. The Group
has the right business model, as well as the skills, services, management and
customer relationships required to take advantage of the rapidly increasing
opportunities in our expanding markets. We have had a good start to the year's
trading and secured income already exceeds 75 per cent of forecast turnover. We
are currently short-listed for several important new contracts and are
investigating a small number of high quality acquisition prospects.
We are continuing to invest in people and infrastructure in order to lay the
foundations for sustained profit growth. We will also be increasing the
resources devoted to bidding for major contracts, an important source of
longer-term organic growth. The board expects this to be another successful
year and believes that future growth will remain strong.
Dominic Collins Henry J Pitman
Interim Chairman Chief Executive
25 November 2003
Consolidated profit and loss account
For the six months to 30 September 2003
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2003 2002 2003
£000 £000 £000
Turnover
Continuing operations 72,445 38,275 105,659
Acquisitions 6,235 - -
78,680 38,275 105,659
Direct agency costs (14,273) - (7,295)
Gross revenue 64,407 38,275 98,364
Cost of sales (27,692) (16,202) (42,249)
Gross profit 36,715 22,073 56,115
Net operating expenses before
amortisation of goodwill, employee benefit
trust costs and exceptional items (28,466) (17,401) (39,430)
Operating profit before amortisation of
goodwill, employee benefit trust costs and
exceptional items 8,249 4,672 16,685
Amortisation of goodwill (4,640) (2,826) (6,288)
Amortisation of shares held by
employee benefit trust (38) (37) (75)
Contribution to employee benefit (286) (252) (505)
trust
Exceptional items 2 - (702) (702)
Operating profit
Continuing operations 2,438 514 6,730
Acquisitions 847 341 2,385
3,285 855 9,115
Net interest payable (1,244) (443) (1,260)
Profit on ordinary activities before 2,041 412 7,855
taxation
Taxation - current tax at 30% 3 (2,108) (1,222) (4,737)
(Loss)/profit on ordinary activities after
taxation (67) (810) 3,118
Minority interest (53) - -
(Loss)/profit attributable to ordinary
shareholders (120) (810) 3,118
Dividends 4 (680) - -
Retained (loss)/profit for the period (800) (810) 3,118
(Loss)/earnings per share
Basic 5 (0.21)p (1.74)p 6.4p
Diluted 5 (0.21)p (1.74)p 5.5p
Adjusted basic before amortisation of
goodwill, employee benefit trust costs and
exceptional items 5 8.48p 6.26p 21.4p
Adjusted diluted before amortisation of
goodwill, employee benefit trust costs and
exceptional items 5 7.80p 5.58p 18.6p
The results for the period disclosed in the profit and loss account are on a
historical cost basis. 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 30 September 2003
Note Unaudited Unaudited Audited
30 September 30 September 31 March
2003 2002 2003
£000 £000 £000
Fixed assets
Intangible assets
- Goodwill 6 208,259 126,307 142,315
- Development expenditure 235 185 308
Tangible assets 5,584 2,539 3,549
Investments 690 50 86
214,768 129,081 146,258
Current assets
Stock - work in progress 2,942 1,500 1,618
Debtors 38,527 20,875 33,856
Cash at bank and in hand 28,315 37,240 29,671
69,784 59,615 65,145
Creditors:
Amounts falling due within one year (54,943) (59,524) (60,737)
Net current assets 14,841 91 4,408
Total assets less current liabilities 229,609 129,172 150,666
Creditors:
Amounts falling due after more than one (67,251) (24,869) (36,225)
year
Net assets 162,358 104,303 114,441
Capital and reserves
Called up share capital 3,305 2,405 2,624
Share premium account 102,753 48,236 59,216
Capital reserve 9,545 9,545 9,545
Profit and loss account 5,113 1,985 5,913
Shares to be issued 40,723 42,132 36,367
Minority interest 919 - 776
Equity shareholders' funds 162,358 104,303 114,441
Reconciliation of movements in consolidated shareholders' funds
At 30 September 2003
Unaudited Unaudited Audited
30 September 30 September 31 March
Note 2003 2002 2003
£000 £000 £000
(Loss)/profit for the period (120) (810) 3,118
Dividends (680) - -
New share capital subscribed 44,218 8,784 19,983
Shares to be issued 4,070 11,279 5,261
Minority interests 143 - 776
Credit in relation to share related awards 286 252 505
Net addition to shareholders' funds 47,917 19,505 29,643
Opening shareholders' funds 114,441 84,798 84,798
Closing shareholders' funds 162,358 104,303 114,441
Consolidated cash flow statement
For the six months to 30 September 2003
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 September 30 September 31 March
Note 2003 2002 2003
£000 £000 £000
Net cash inflow from operating activities 7 7,240 4,975 20,411
Returns on investments and servicing of
finance
Interest paid (1,902) (1,422) (3,173)
Interest element of finance lease
rental payments (7) (16) (30)
Interest received 501 785 1,343
Net cash outflow from returns on
investments and servicing of finance (1,408) (653) (1,860)
Taxation
Corporation tax paid (3,343) (1,476) (3,722)
Capital expenditure and financial
investment
Payments to acquire tangible fixed (1,722) (635) (2,150)
assets
Payments to acquire intangible fixed
assets (11) (75) (329)
Payments to acquire investments - - (5)
Sale of tangible fixed assets 60 175 168
Net cash outflow for capital expenditure (1,673) (535) (2,316)
and financial investment
Acquisitions
Purchase of subsidiary undertakings (50,352) (15,641) (30,681)
Net increase in cash from
acquisition of subsidiary undertakings 6,919 1,205 2,613
Net cash outflow from acquisitions (43,433) (14,436) (28,068)
Cash outflow before financing (42,617) (12,125) (15,555)
Financing
Issue of ordinary share capital less
issue costs 20,079 - (21)
Repayment of borrowings (9,809) (11,124) (26,479)
New secured loans less issue costs 31,058 24,843 36,180
Capital element of finance lease
rental payments (67) (138) (238)
Net cash inflow from financing 41,261 13,581 9,442
(Decrease)/increase in cash in the period (1,356) 1,456 (6,113)
Consolidated cash flow statement (continued)
For the six months to 30 September 2003
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2003 2002 2003
£000 £000 £000
Note
Reconciliation of net cash flow to movement in net debt
(Decrease)/increase in cash in the period (1,356) 1,456 (6,113)
Cash outflow from movements in debt (25,276) (16,484) (12,828)
Change in net debt resulting from cash flows (26,632) (15,028) (18,941)
Finance leases acquired with subsidiaries - (12) (75)
New finance leases - (23) (39)
Movement in net debt in the period (26,632) (15,063) (19,055)
Net debt at the start of the period (22,083) (3,028) (3,028)
Net debt at the end of the period 8 (48,715) (18,091) (22,083)
Notes
1 Accounting policies
The unaudited interim accounts have been prepared on a basis consistent with the
accounting policies adopted in the Annual Report and Accounts for the year ended
31 March 2003. The unaudited interim accounts were approved by a duly appointed
committee of the Board of Directors on 24 November 2003. The auditors have
carried out an interim review and their report is set out on page 16.
The unaudited interim accounts do not comprise statutory accounts within the
meaning of section 240 of the Companies Act 1985. The information for the year
ended 31 March 2003 is an extract from the statutory accounts to that date which
have been delivered to the Registrar of Companies. Those accounts included an
audit report which was unqualified and which did not contain a statement under
Section 237 (2) or (3) of the Companies Act 1985.
Under certain circumstances, the former owners of acquired businesses may redeem
loan notes in advance of their set maturity dates. In order to reflect this
potential early redemption, loan note liabilities of £7,746,000 have been
included within current liabilities. The amounts at 30 September 2002 of
£28,324,000 have been reclassified to disclose the corresponding amounts on the
comparable basis. Collateralised cash will be used to settle these loan note
liabilities and is included within current assets. This cash is not available
to Tribal Group plc for any other use. It is considered to be sufficiently
liquid to meet the definition of cash as set out in FRS1 and so these bank
account transfers of £6,498,000 (30 September 2002: £5,813,000) are excluded
from the cash flow statement. This has the effect of increasing the net cash
inflow from financing as disclosed in the period ending 30 September 2002 from
£7,768,000 to £13,581,000. These reclassifications bring interim balances onto
a comparable basis to those reported as at 31 March 2003.
2 Exceptional Items
The exceptional items of £702,000 relate to the costs of moving from the
Alternative Investment Market to the official list on the London Stock Exchange
in July 2002.
3 Taxation
The taxation charge is calculated by applying the forecast rate for the full
year (adjusted for goodwill amortisation) to the interim profits before goodwill
amortisation.
4 Dividends
The interim dividend of 1p per share, which will absorb
£680,000, will be paid on 16 January 2004 to ordinary shareholders on the
register on 19 December 2003. The shares will be quoted ex-dividend on 17
December 2003.
5 Earnings per share
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2003 2002 2003
Basic
(Loss)/earnings for period (£000) (120) (810) 3,118
Weighted average number of shares
outstanding (thousands) 57,139 46,660 49,030
Basic (loss)/earnings per share (0.21)p (1.74)p 6.4p
Diluted
(Loss)/earnings for period (£000) (120) (810) 3,118
Weighted average number of shares in issue
including dilutive shares:
Basic weighted average number 57,139 46,660 49,030
(thousands)
Employee share options (thousands) - - 1,563
Shares to be issued in respect of
deferred consideration (thousands) - - 5,892
Adjusted number of shares
outstanding
(thousands) 57,139 46,660 56,485
Diluted (loss)/earnings per share (0.21)p (1.74)p 5.5p
FRS 14 requires presentation of diluted earnings per share when a company could
be called upon to issue shares that would decrease net profit or increase net
loss per share. For a loss making company, net loss per share would only be
increased by the exercise of out-of-money options. Hence, no adjustment is made
to diluted earnings per share in the six months ended 30 September 2003 or the
six months ended 30 September 2002.
5 Earnings per share (continued)
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2003 2002 2003
Adjusted basic before goodwill amortisation,
exceptional items and EBT costs
(Loss)/earnings for period (£000) (120) (810) 3,118
Goodwill amortisation (£000) 4,640 2,826 6,288
EBT costs net of tax (£000) 324 202 406
Exceptional items (£000) - 702 702
Adjusted earnings before goodwill
amortisation, exceptional items and EBT costs
(£000) 4,844 2,920 10,514
Weighted average number of shares in issue
(thousands) 57,139 46,660 49,030
Adjusted basic earnings per share 8.48p 6.26p 21.4p
Adjusted diluted before goodwill amortisation,
exceptional items and EBT costs
Adjusted earnings before goodwill
amortisation, exceptional items and EBT costs 4,844 2,920 10,514
(£000)
Weighted average number of shares in issue
including dilutive shares (thousands):-
Basic weighted average number (thousands) 57,139 46,660 49,030
Employee share options (thousands) 2,121 1,455 1,563
Shares to be issued in respect of deferred
consideration (thousands) 2,871 4,168 5,892
Adjusted number of shares outstanding
(thousands) 62,131 52,283 56,485
Adjusted diluted earnings per share 7.80p 5.58p 18.6p
The adjusted basic and adjusted diluted earnings per share figure shown on the
profit and loss account is included as the directors believe that it provides a
better understanding of the underlying trading performance of the Group.
6 Intangible assets: Goodwill
£000
Net book value at 31 March 2003 142,315
Goodwill arising on acquisitions 71,177
Fair value adjustments relating to prior year acquisitions (593)
Amortisation (4,640)
Net book value at 30 September 2003 208,259
7. Note to the cash flow statement
Reconciliation of operating profit to operating cash flows
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2003 2002 2003
£000 £000 £000
Operating profit 3,285 855 9,115
Depreciation 957 744 1,513
Amortisation of goodwill 4,640 2,826 6,288
Amortisation of development expenditure 85 134 265
Provision for impairment of investments - - 35
(Profit)/loss on disposal of fixed assets (6) 18 (1)
Contribution to employee share awards 286 252 505
Amortisation of employee benefit trust 38 37 75
Decrease/(increase) in debtors 1,293 890 (6,137)
(Decrease)/increase in creditors (2,872) (611) 8,957
Increase in stocks (466) (170) (204)
Net cash inflow from operating activities 7,240 4,975 20,411
8 Cash Management
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2003 2002 2003
£000 £000 £000
Cash at bank 19,316 6,969 14,174
Cash collateralised deposits 8,999 30,271 15,497
28,315 37,240 29,671
Loan notes - cash backed (8,999) (29,465) (14,692)
Other loan notes (717) (859) (739)
Bank loans (67,238) (24,843) (36,180)
Finance leases (76) (164) (143)
Net debt (48,715) (18,091) (22,083)
9 Acquisitions
Since 31 March 2003 Tribal Group plc has acquired 100% of the following
principal subsidiary undertakings:
Date Subsidiary acquired
April 2003 Foundation Software Solutions Limited
July 2003 Kinetic Technologies Limited
July 2003 HACAS Group plc
August 2003 Geronimo Public Relations Limited
Independent review report to Tribal Group plc
We have been instructed by the company to review the financial information for
the six months ended 30 September 2003 which comprises the consolidated profit
and loss account, the consolidated balance sheet, the consolidated cash flow
statement and related notes 1 to 9, together with the reconciliation of
movements in consolidated shareholders' funds and the reconciliation of net cash
flow to movement in net debt. We have read the other information contained in
the interim report and considered whether it contains any apparent misstatements
or material inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as test of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom auditing standards and therefore
provides a lower level of assurance than an audit. Accordingly, we do not
express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 September 2003.
Deloitte & Touche LLP
Chartered Accountants
Bristol
25 November 2003
Notes: A review does not provide absolute assurance on the maintenance and
integrity of the website, including controls used to achieve this, and in
particular on whether any changes may have occurred to the financial information
since first published. These matters are the responsibilities of the directors
but no control procedures can provide absolute assurance in this area.
Legislation in the United Kingdom governing the preparation and dissemination of
financial information differs from legislation in other jurisdictions.
End
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