Insert text Second level Third level Tribal Group plc 24 November 2009 Peter Martin Chief Executive Introduction Turnover ~ £250m Profitable, well financed, cash generative Professional services that deliver improvements in public services Business focus: UK-based but increasingly international Strategic objective to increase committed / repeatable income Competitive advantage: domain expertise allied to technology capability Education Health Government 2 Market Analysis 2009 H1 Revenue : £125.2m Education Government Health UK Public Sector International Other 37% 36% 17% 90% 6% 4% 100% 3 Government Spending Budget 2009 CSR07 March 2011 - £5bn efficiency savings / assumed in 10/11, but... - Real growth over period of 46% April 2011 March 2014 - Total spending -0.1% real per annum - Adjusting for ‘known’ increases (debt interest, welfare costs, etc.) -2.3% real decline per annum Source: IFS 4 Government Spending Even assuming no deterioration in government estimates, financial pressures on public sector organisations will increase significantly Period of healthy real increases However, pressure to maintain quality / improve outcomes will remain Anticipated response: - Reduce costs - Increase productivity - Improve efficiency - More competitive tendering - Further outsourcing opportunities - Collaboration / innovation several years of real cuts 5 Education Technology services (33% of revenue) - Student administration systems Web portals Inspections (14%) - Schools, colleges, etc Learning materials (9%) - Training and education materials E-learning / m-learning Programme management (31%) - National Maths Centre Greater Manchester Challenge Consultancy services (13%) BSF / Academies - 6 Education Opportunity International opportunities: - Middle East, Australia, China - Software, Inspections, School Improvement, Professional Development New initiatives: - “Inspirational Schools” - International Schools Contract opportunities: - Early Years Inspections - Employability 7 Health Operating at all levels within health - Department of Health Strategic Health Authorities Primary Care Trusts (PCTs) Acute Trusts Range of professional services - Strategy (DH commercial strategy) Informatics (National Patient Database, CIO Programme Office) Commissioning (PCT support) Wellness (Healthy FE) Analytics (clinical coding support for hospitals) Service design (productivity / efficiency) 8 Health Opportunity Cost reduction / transformation: - PCTs (commissioning, invoice validation) - Hospitals (turnaround) New initiatives: - Care management (partnership with McKesson) - Outsourcing (clinical coding) International opportunities: - Canada, Qatar Acquisitions: - Analytics, business intelligence Increasing levels of committed income 9 Government Principal markets: - Central government Local government Social housing / RSLs International donor organisations (World Bank, EU) Principal services: - Cost reduction Public sector reform Commissioning / procurement Strategy / innovation and financial management Programme management 10 Government Opportunity Cost reduction / transformation - Local authorities Client side advice - Outsourcing - Procurement strategy Shared services agenda International development / public sector reform Internal reorganisation will deliver: - Improved effectiveness - Reduced costs 11 Committed Income / Sales Pipeline At 30 June 2009 Committed Income Sales Pipeline 2009 : £74m 2010 : £63m £4m 2011 and beyond : £80m £217m £258m 12 Trading Outlook Underlying PBT in 2009 in line with last year Closure of Regeneration business by year end Acquisition of outstanding minority interests by year end Corporate reorganisation to focus on three areas: - Education - Health - Government Cost reduction will deliver significant savings in 2010 Recent contract wins provide encouragement for 2010 13 Financial Performance Full year Interim Note: Historic figures stated for continuing operations only † Before amortisation of intangibles, goodwill impairment and financial instrument costs 15 H1 09 Business Review Progress in a challenging trading environment Continued strength in many sectors Difficult conditions in specific areas Restructuring programme largely completed Substantially increased committed income Healthy sales pipeline International development progressed 16 H1 09 Financial Highlights Six months ended 30 June 2009 2008 Change £125.2m £113.3m +11% Profit before tax* £8.5m £9.1m -7% Underlying profit before tax** £9.3m £9.1m +2% Earnings per share* 6.7p 7.4p -9% Dividend per share 1.85p 1.7p +9% £12.3m £20.6m 153% 207% Revenue Operating cash flow Operating cash conversion * : Before amortisation of intangibles and financial instrument costs ** : Profit before tax* restated before restructuring costs of £0.8m 17 Income Statement Six months ended 30 June 2009 £m 2008 £m Growth % Turnover 152.8 143.6 +6% Revenue increase of 11% Revenue 125.2 113.3 +11% Operating profit* down 5% to £9.0m 9.0 9.5 -5% Restructuring costs of £0.8m 7.2% 8.4% Revenue investments of £0.5m Operating margin lower at 7.2% Low effective tax rate due to one-off benefit from prior year release Earnings per share down 9% to 6.7p Continuing Operations Operating profit* Operating margin Interest Profit before tax* (0.5) (0.4) 8.5 9.1 (1.9) (2.5) 6.6 6.6 Adjusted fully diluted EPS* (p) 6.7p 7.4p -9% Weighted average shares in issue up 6% No of WA diluted shares (‘000) 90,169 84,988 +6% Interim dividend 1.85p Tax Profit after tax* * Before amortisation of intangibles and financial instrument costs -7% 18 Balance Sheet June 2009 £m December 2008 £m 224.7 217.5 11.3 11.2 Net debt (15.8) (19.7) Net working capital (18.6) (13.6) Net assets 201.6 195.4 Share capital 85.6 83.1 Profit and loss reserves 49.2 45.9 Minority interest 2.1 1.8 Other reserves 64.7 64.6 201.6 195.4 Intangible assets Other non-current assets Total equity and reserves Intangible assets increased by £7m due to acquisition of Newchurch Net debt decreased by £3.9m Gearing of 7.8% (December 2008 : 10.1%) Minority interest held in three businesses; bought out one in July 2009 19 Group Cash Flow Six months ended 30 June 2009 £m 2008 £m 13.8 19.6 1.9 3.8 15.7 23.4 Interest (0.4) (0.4) Tax (3.0) (2.4) Net cash flow before investing & financing 12.3 20.6 Capital expenditure (2.6) (2.0) 9.7 18.6 Acquisitions (net of cash acquired) (4.7) (13.0) Minorities and deferred consideration (1.1) (5.0) - (1.2) (1.5) 6.8 2.4 6.2 Operating cash flow - continuing operations - increase in restricted cash Free cash flow Dividends paid (Repayment) / increase in loans Net increase in cash Operating profit to cash flow conversion of 153% (2008 : 207%) Seasonally strong working capital management Tax paid in 2009 included payment of £0.7m for acquired tax balances Capital expenditure comprises: Tangible assets £1.2m (2008:£1.2m) Product development £1.4m (2008: £0.8m) Newchurch acquisition completed for £7.9m (£2.5m in shares) 20 Group Net Debt June 2009 £m December 2008 £m Group net debt 19.6 21.7 Less : restricted cash (3.8) (2.0) Group debt 15.8 19.7 Bank revolver facilities (to 2012) Working capital facility Bank headroom 40.0 40.0 6.0 3.0 30.2 23.3 £40m bank facility until June 2012 with HBoS and HSBC Actual Covenant Interest cover x14.9 >x3.0 Debt to EBITA x0.7 <x3.5 Interest rate swap in place over £25m of debt through to 2013, providing interest rate certainty at 2.9% until 2010, 4.45% thereafter. Current margin 75 bps 21 Tribal Group plc This presentation is intended only as a summary of certain information already announced or published by Tribal Group plc ("Tribal"), and accordingly reference should be made to the relevant announcement/publication and not to this presentation. Tribal, its directors, employees, agents or advisers do not accept or assume responsibility to any person to whom this presentation is shown or into whose hands it may come and any such responsibility or liability is expressly disclaimed. This presentation may contain forward-looking statements. Any forwardlooking statement has been made by Tribal in good faith based on the information available up to the time of approval of this presentation and should be treated with caution due to the inherent uncertainties, including economic, business and political risk factors, underlying such forward-looking information. To the extent that this presentation 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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