Higher tuition fees and fierce job competition have made students demand a top-notch education. Scores of schools and universities have turned to Tribal (TRB), a leading provider of student management systems, in response. But the group was mired in contract negotiations in the first half, which together with delayed payments pushed adjusted operating profit down 57 per cent to just £2.4m.
Exclude acquisitions and sales fell in all four of Tribal's divisions. Delays in renegotiating a major contract in New South Wales eroded profit in the key product segment and depressed sales of implementation services. Meanwhile, exiting the careers advice market and the conclusion of Ofsted work weighed, respectively, on its professional and quality assurance divisions.
More positively, higher-margin software and analytics revenue made up 60 per cent of total turnover. Recurring software maintenance revenue rose strongly, reflecting a larger installed customer base and two previous acquisitions in Australia. Tribal also landed its first systems deal in Malaysia.
Management hopes to hit full-year targets by cracking down on costs while bolstering the sales, marketing and product development teams. It also expects to finalise the SALM contract and notch up revenue from two major contracts with universities in New Zealand and Botswana.
Broker N+1 Singer slashed its EPS forecast by 13 per cent to 10.8p this year, rising to 12.4p in 2016 (11.3p in 2014).
| TRIBAL (TRB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 150p | MARKET VALUE: | £142m | |
| TOUCH: | 146-150p | 12-MONTH HIGH: | 188p | LOW: 139p |
| DIVIDEND YIELD: | 1.3% | PE RATIO: | na | |
| NET ASSET VALUE: | 48p* | NET DEBT: | 51% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 63.4 | -8.4 | -9.0 | 0.6 |
| 2015 | 58.0 | -6.0 | -6.6 | 0.7 |
| % change | -8 | - | - | +17 |
Ex-div: 17 Sep Payment: 16 Oct *Includes intangible assets of £92.9m, or 98p a share | ||||
