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Tribal's restructuring pays-off

RESULTS: Tribal's restructuring efforts are paying off and the shares remain fairly undemandingly rated

Schools inspection and university admissions specialist Tribal (TRB) has been busy reorganising itself into a smaller and less indebted operation. Judging by these full-year results, that effort is beginning to pay off - adjust for £2.87m of exceptional costs and underlying pre-tax profit rose 27 per cent in 2012 to £12.8m.

IC TIP: Buy at 135p

The main growth area is student management systems for universities and Tribal saw a good mix of contract wins during the year. These included wins in the UK, at the Royal Melbourne Institute of Technology in Australia, and at the University of Canterbury in New Zealand. This helped boost sales at the systems business division by 23 per cent to £55.5m, while the divisional operating profit jumped by £2m to £12.1m. The schools inspection business, meanwhile, is still suffering from government cuts and Ofsted-related work is falling - accordingly, the solutions business saw revenue fall 6 per cent to £59.3m. But tight cost controls helped boost the operating margin there by a percentage point to 9 per cent; keeping the operating profit largely unchanged at £5.3m. Tribal also boosted its investment in software by 72 per cent to £6.2m and increased it research and development spending by £0.5m to £1.3m.

Broker Canaccord Genuity expects adjusted pre-tax profit of £13.5m for 2013, giving EPS of 11.1p (from 10.9p in 2012).

TRIBAL (TRB)

ORD PRICE:135pMARKET VALUE:£126m
TOUCH:134-137p12-MONTH HIGH:136pLOW: 69p
DIVIDEND YIELD:0.9%PE RATIO:16
NET ASSET VALUE:60p*NET DEBT:18%

Year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
200822717.113.44.35
2009194-17.8-23.94.60
2010104-0.41-0.502.50
20111083.743.501.00
20121159.978.501.25
% change+6+167+143+25

Ex-div: 12 Jun

Payment: 2 Jul

*Includes intangible assets of £83m, or 88p a share