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Annual Report and Accounts 2020
Empowering
the world of
education
Our purpose:
To enable student
success through
expertise, software
and services.
Our vision:
To empower the
world of education.
We strive to research, develop and deliver
the products, services and solutions needed
by education institutes across the world to
support their primary goals of educating
students, providing optimum learning
experiences and ultimately delivering
successful outcomes.
Our goal:
To be a pure-play Education Technology
SaaS company, expanding to a global reach
as the market leader.
For more information see our website:
www.tribalgroup.com
Overview
Strategic Report
Governance
Financial Statements
1
Revenue
£73.0m
Adjusted Operating Profit
(EBITDA)
Statutory Operating Profit/
(Loss)
£14.9m
£9.1m
2020
2019
£73.0m
£78.2m
2020
2019
£14.9m
£15.4m
2020
£9.1m
2019 £(2.4)m
Financial
Performance
20.4%
12.5%
Adjusted Operating Margin
(EBITDA)1
2019: 19.6%
4.1p
Statutory Operating Margin
2019: (3.1)%
3.1p
Adjusted Earnings per Share1
Statutory Earnings/(Loss) per Share
2019: 4.6p
2019: (1.5)p
£9.5m
Net Cash
2019: £16.5m
122%
Cash Conversion2
2019: 105%
1. Adjusted Operating Profit, Adjusted Operating Margin and Adjusted Earnings per Share
is in respect of continuing operations which excludes ‘Other Items’ charges of £2.7m
(2019: charge of £14.1m).
2. Cash Conversion is calculated as net cash from operating activities before tax from
continuing operations, less expenditure on intangible assets and property, plant and
equipment, as a proportion of adjusted operating profit.
Operational
Performance
£47.5m
Annual Recurring Revenue3
2019: £42.3m
£144.4m
Committed Income
(Backlog)4
2019: £133.6m
3. Annual Recurring Revenue is defined as the software related Support and Maintenance
fees and recurring Cloud Services together with Subscription License fees.
4. Committed Income (Backlog) refers to the Total Contract Value of booked sales orders
which have not yet been delivered (including two years Support and Maintenance, where
it is contracted on an annual recurring basis).
Overview
01 Highlights
02
Investment case
04 Chairman's statement
06 Chief Executive's review
Tribal's growth strategy
Strategic Report
10 Our business model
12 Our markets
14
16 Tribal Edge
18 Financial review
28 University of Sydney case study
30 Principal risks and uncertainties
31 Section 172 statement
32 Environmental, social and
governance report
Governance
36 Board of Directors
38 Executive Committee
40 South Devon College case study
42 Corporate governance
46 Quoted Companies Alliance
Code (QCA)
54 Robert Gordon University Aberdeen
case study
56 Audit Committee report
57 Remuneration report
62 Directors’ report
65
Independent auditor’s report
to the Members of Tribal Group plc
Financial Statements
72 Consolidated income statement
Consolidated statement of
73
comprehensive income
74 Consolidated balance sheet
Consolidated statement of
76
changes in equity
77 Consolidated cash flow
statement
78 Notes to the financial
statements
123 Company only balance sheet
124 Company only statement of
changes in equity
125 Notes to the Company
balance sheet
Company information
130 Company information
2
Tribal Group plc Annual Report and Accounts 2020
Investment case
A growing
EdTech SaaS
business
Tribal Investment Case – in summary
1. Tribal occupies an industry leading position in the EdTech sector
2. We are delivering powerful, next-generation, cloud-based Student
Information Systems
3. We are meeting the evolving needs of the higher education sector
4. We are expanding our addressable market and geographic reach
through a clearly defined growth strategy
5. We are generating increasing levels of recurring revenue, improved
margins and quality of earnings
6. Tribal has an increasingly positive outlook
“ Making sure we have the most effective systems
in place is crucial to the commitment we make to
support our students. Tribal has been a fantastic
partner to work with, delivering a robust and
streamlined student system which will enhance
our offering for students and applicants alike.”
Ravensbourne University, London, UK
Industry leading
position in the
EdTech sector
Tribal is a world-class, education-focused
company, providing the expertise,
software and services needed by
education and business organisations
across multiple territories, to underpin
student success.
• #1 provider of Student Information
Systems to universities in Australia,
New Zealand and the UK, with an
expanding footprint in South East Asia
• Work with over 300 further education
and work-based learning providers in
the UK
• Over 1,400 universities and colleges
use our student barometer
Generating increasing
Generating increasing
levels of recurring
levels of recurring
revenue, improved
revenue, improved
margins and quality
margins and quality
of earnings
• Our focus on growing recurring
revenue has resulted in increased
committed Annual Recurring Revenue,
to over £47.5m
• Within this we have a growing level
of cloud revenue
• We are profitable, with a net cash
position and healthy balance sheet
• The quality of our earnings can be
seen in our cash conversion rate of
greater than 100%
Overview
Strategic Report
Governance
Financial Statements
3
Meeting the evolving
needs of the higher
education sector
Changing student expectations and
the increasingly competitive nature of
the higher education market are driving
change in our market. Universities need
to deliver more engaging services,
increase student experience but at
lower costs and with greater efficiency.
Market drivers include:
• Thriving in an increasingly competitive
market, recruiting not just the
'quantity needed' but the right
students and ensuring a personalised
experience from first enquiry to first
week, and beyond
• Meeting increasing student
expectations through a digital
engagement strategy which connects
with a modern digital consumer
• Ensuring success across the student
life cycle, taking a much more
proactive role in providing care for
the students. Smarter, data-driven
decision-making can improve student
outcomes, increase retention rates,
and help welfare teams by identifying
students at risk and actively
supporting student wellbeing and
mental health
Expanding our
addressable market
and geographical
reach through a clearly
defined growth strategy
We have a clearly defined growth
strategy, which will see the business
evolve to become a pure-play provider
of education technology solutions
to customers globally, as a service.
We believe that transitioning to the
delivery of a broader set of solutions,
via the ‘as a service’ model will increase
our addressable market, drive revenue
and margin expansion, while enabling
universities to deliver a better all-round
service to their students.
We will achieve our objective through
three key areas of product innovation
and potential M&A:
1.
2.
3.
Existing on-premise product
innovation
Tribal Cloud: delivering our existing
products 'as a service'
Tribal Edge: delivering a next-
generation expanded product
set, fully in the cloud
With the potential to accelerate our
strategy through select M&A.
Delivering powerful,
next-generation
cloud-based Student
Information Systems
Our portfolio consists of market-
leading, cloud-enabled Student
Information Systems and a broad range
of Education Services. These underpin
the student journey from recruitment to
successful outcomes and cover quality
assurance, peer review, improvement
and inspections, and institution
benchmarking and analysis.
Through our investment into our platform,
our Student Information Systems are
now available on-premise or hosted in
the Tribal Cloud. We are also concurrently
developing Tribal Edge, a next-generation
modular ecosystem of education
modules, with worldwide potential.
With an increasingly
positive outlook
• We are evolving a next-generation
platform with worldwide potential
• Never has the need for cloud-based
solutions for the Education market
been more pressing
• The investments we have made
position us at the forefront of the
evolution in our industry, providing
for an exciting future for Tribal
4
Tribal Group plc Annual Report and Accounts 2020
Chairman's statement
Turning point for
Tribal in its move to
Software as a Service
I look back on 2020 as a turning point for Tribal in its transition to an
'as-a-service' provider of cloud focused software and solutions to the
global education market. We have a clear proposition to help guide our
customers on their journey to a fully managed software service in the
public cloud, and the investments made over the last few years are
starting to deliver new product and sales momentum to existing and
new customers.
Our student management systems, including
SITS:Vision for Higher Education, continue
to attract new customers and expand our
customer base in new and existing territories.
Our customers are increasingly taking products
as a managed service in the public cloud and
planning migration to our cloud-native Tribal
Edge modules as they are released.
Existing customers are increasingly moving
to our fully managed Tribal Cloud solution as
a pathway to Tribal Edge, with notable sales
to King’s College London in the UK and the
University of Sydney in Australia.
We increased our South East Asia footprint
during the year, adding Nanyang Technological
University, a Top 50 world university, as our
first customer in Singapore. Their student
information system will include SITS:Vision,
Tribal Cloud and Dynamics CRM software with
a migration route to Tribal Edge Admissions and
other Tribal Edge modules.
During the year we completed and sold the first
internally developed Tribal Edge module Tribal
Edge Submissions, which was delivered to all
12 of our university customers in Australia on a
SaaS basis. We also completed the first version
of Tribal Edge Admissions which will be made
available to a number of smaller universities
as early adopters in the first half of 2021.
Financial performance
I am pleased to report on considerable progress
against our key Annual Recurring Revenue
('ARR') metric and a good profit performance
for the year despite the impact of Covid-19
particularly on Education Services revenue
for the year.
ARR committed as at 31 December 2020
increased 12% to £47.5m (2019: £42.3m)
thanks to a strong sales performance in the
second half of the year, increasing revenue
for future years but having minimal benefit
to 2020 results.
Tribal delivered increased Adjusted EBIT of
£11.8m (2019: £11.7m) and reduced Adjusted
EBITDA of £14.9m (2019: £15.4m) on a reduced
Overview
Strategic Report
Governance
Financial Statements
5
Culture and values
Our culture places customers at the heart
of what we do. We are united in a creative
and collaborative environment through
our well established values, which we
continually reinforce and celebrate.
Our values:
Trustworthy:
We value honest discussion, we
anticipate, listen and respond to
requirements and we rely on each other.
Pioneering:
We welcome change, we strive to
innovate and we aim to meet the
needs of the ever-evolving education
marketplace.
Accountable:
We take ownership, we keep our promises
and are focused on delivering successful
outcomes.
Dedicated:
We are committed to our customers; work
to secure long-term partnerships and we
collaborate to deliver optimum solutions.
mental health charity, empowering students
and members of the university community to
look after their own mental health, support
others and create change. Tribal has committed
to creating a formal ESG Committee in 2021,
which will be chaired by Nigel Halkes.
Strategy and outlook
We are making good progress towards our
goal of being a pure-play education technology
SaaS company, with a significant global reach.
The focus for the year ahead is to continue
to grow ARR, migrate customers to Tribal
Cloud and deliver our first customers on
Tribal Edge Admissions.
The market appetite for our solutions and
standardisation with a public cloud focus
is positive, and the full proposition of Tribal
products from our core student management
systems, to Tribal Cloud and Tribal Edge is
resonating well with our customers. It will
take time for full adoption of these solutions
by our customers given the annual cycle
around the academic year, however we
continue to believe the long-term opportunity
remains significant.
We are continuing to build strong momentum
with customers and look positively to the
year ahead.
Richard Last
Chairman
revenue of £73.0m (2019: £78.2m), however
adjusted EBITDA Margin increased to 20.4%
(2019: 19.6%).
The Statutory Profit after tax for the year
increased to £6.4m from a loss of £(3.0)m
in 2019. Tribal has shown strong growth in
a challenging year, with a profit increase of
3% from £6.2m in 2019 after excluding the
one-off cost of £9.2m incurred in 2019 in
settlement of the platform dispute.
Tribal remains committed to a progressive
dividend policy and the Board is pleased to
propose a final dividend in respect of the year
ended 31 December 2020 of 1.2p which is
expected to be paid at the end of July 2021.
Tribal paid a one-off interim dividend of 1.1p per
share in recognition of the proposed dividend
for the year ended 31 December 2019 being
cancelled due to Covid-19. The combined
dividend for the year was 2.3p per share (2019:
nil), however, it is Tribal’s expectation that only
a final dividend will be paid going forward.
Strong cash balances have been maintained
and the Group ended the year with a net
cash, after paying £8.1m in settlement of the
platform dispute, of £9.5m (2019: £16.5m),
with no debt drawn, and all furlough and
temporary tax deferral benefits repaid in
the year.
Covid-19
Tribal was not immune to the impact of
Covid-19 with the global pandemic affecting
the time and resource capacity of universities,
elongating sales cycles and reducing in-year
new sales revenue. We reacted quickly to the
pandemic by closing our offices in March 2020
to protect the health and safety of our teams,
which remain our utmost priority. We equipped
all employees to work from home and deliver
remotely to our customers; this proved to be
very successful with our customers, and we
aim to maintain a high level of remote delivery
into the future.
Our teams showed great understanding
and commitment during a challenging year,
agreeing to move to a four day working week
which lasted for three months. I would like to
thank them for their hard work and continued
support. We opened a consultation on new
ways of working and a significant number of
employees have moved to new remote working
contracts. We have started to adapt our offices
to this new way of working, with increased
collaboration and meeting space, and modern
technology such as Microsoft Surface Hubs.
As with many sectors, the pandemic has
accelerated the education sector’s move
towards the SaaS method of IT consumption,
as academic institutions wish to benefit from
the 24/7 remote service access and expert
support it provides. We anticipate this will be a
continued driver for interest in our Tribal Cloud
and Tribal Edge solutions moving forward.
Board
We were pleased to announce on 9 March
2021 the appointment to the Board of Diane
McIntyre as Chief Financial Officer, with effect
from 1 June 2021. Through her time at Sky,
Vodafone and Cable and Wireless Diane has
gained in-depth commercial experience of fast-
paced global organisations and I am confident
she will be a valuable addition to our team. The
Board would like to thank Paul Simpson, Acting
CFO, for his leadership of the finance team over
the last two years and his contribution to the
success of Tribal. We wish Paul all the best for
the future.
Environment, social and
governance (ESG)
Tribal has always been committed to activities
that benefit the environment and society,
under-pinned by good governance. Our mission
is to 'Empower the world of education'; with
education being a key action in the United
Nation’s Sustainable Development Goals.
During the year we have defined ESG activities
that we will report on in the future. There will
be two activities for each pillar (environment,
social and governance). I am very pleased to
announce that we will be supporting Student
Minds as our student wellbeing partner for
2021. Student Minds is the UK’s student
6
Tribal Group plc Annual Report and Accounts 2020
Chief Executive’s review
A year of considerable
evolution and progress
At the end of last year I set out our strategy for the year
with three key goals:
1. to continue to drive new sales through our portfolio of products
in existing and new geographies;
2. to deliver on the Tribal Edge strategy which provides a compelling
vision to new and existing customers to embrace our next-
generation, best-of-breed Student Information System (SIS)
solutions; and
3. to support our new and existing customers in taking advantage
of cloud technologies by broadening the portfolio of value-add
of cloud technologies by broadening the portfolio of value-add
solutions and services offered.
solutions and services offered.
I am delighted to report on a year of
considerable evolution and operational
progress at Tribal. Against the backdrop of
Covid-19, we have delivered against all of
our strategic goals, while protecting our
employees and customers. The swift actions
taken to mitigate the impact of Covid-19 on
the business resulted in a continued strong
financial performance, and we have emerged
a stronger business, with an increased
customer base and geographic footprint
and a growing market opportunity.
Our purpose is to enable student success
through our expertise, services and cloud
solutions. Our vision is to empower the
world of education. To achieve this, we will
strive to research, develop and deliver the
products, services and cloud solutions
needed by education institutes across
the world to support their primary goals
of educating students, providing optimum
learning experiences and ultimately delivering
successful outcomes. Through these
activities, we will meet our business goal, to
be a pure-play Ed. Tech. SaaS company, with
global reach.
7
I am pleased that all of these goals were
achieved in the year with continued sales of
all our products to new customers, including
our largest ever SITS sale expanding our
presence in South East Asia; we completed
and sold our first Tribal Edge module, Tribal
Submission, and finished the first version of
Tribal Edge Admissions, a key SIS module for
universities; and, we have expanded our cloud
proposition with Tribal Cloud with notable
sales in the second half of the year.
Our strategy has been refined and expanded
upon during the year to build on this progress
and to form our new ‘Sustain and Grow’
strategy for the next three years. The focus
is to SUSTAIN our existing products and
revenues, and GROW new products and
revenues by delivering Tribal Edge in the
public cloud and moving our product offering
to 'as-a-service'.
SUSTAIN: existing products
and revenues
• Student management systems
To continue to invest in and sell our
core student management systems to
new customers and deliver additional
functionality to existing customers in
Higher and Further education.
• Support and maintenance
To provide excellence of customer support
services for these products to protect
our ARR from Support and Maintenance.
• Long-term contracts
To support our long-term contract
customers who use bespoke versions of
our core student management systems
through quality of service delivery.
• Education services
To maintain high-quality contract delivery
to our Education Services customers
and develop and enhance our proposition
in new and existing geographies.
GROW: Tribal Edge and moving
to 'as-a-service'
• Tribal Edge
To develop new products on the Tribal Edge
platform in the public cloud, to new and
existing geographies with a new paradigm
of 'as-a-service' solutions; delivering Tribal
Edge Admissions as the first significant
module to migrate existing SITS customers
to the Tribal Edge platform.
• Tribal Cloud
To provide public cloud delivery, optimised
for existing Tribal products and managed
'as-a-service' allowing customers to make
the most of the benefits of the cloud with
existing products in advance of migrating
to Tribal Edge.
• Tribal Transform
To deliver Tribal Transform: Edge Readiness
products and services providing leading
practice to navigate customers along the
journey to the Tribal Cloud and Tribal Edge.
We have already started to see success with
this new 'Sustain and Grow' strategy during
the year.
Key Performance Indicators ('KPIs')
To support the Sustain and Grow strategy we monitor a number of KPIs to ensure we deliver on our goals.
1.
Institutions taking next generation 'as-a-service'
offerings in the public cloud:
We now have 13 Higher Education customers taking these
services including the addition of Sydney University and
Kings College London as fully managed SITS customers
in the public cloud.
2.
Sales of Tribal Edge modules:
We have completed 13 sales of the Tribal Edge Submissions
module to all 12 of our Higher Education customers in
Australia and TAFE New South Wales in Vocational Learning.
3.
Growth in ARR from existing and new products
and customers:
4.
Improvement in profit margin from enhanced sales
and continued cost efficiency:
ARR increased to £47.5m committed at the period end with
£2.1m (2019: £1.5m) relating to Tribal Edge (including Dynamics
CRM solutions) and £8.1m (2019: 6.5m) to Tribal Cloud
(including cloud hosting).
Adjusted EBITDA profit margin increased to 20.4% despite
a 6% fall in revenue due to Covid-19 impact on sales.
Strategic ReportGovernanceFinancial StatementsOverview 8
Chief Executive’s review continued
2020 in summary
Student Information Systems
Student Information Systems, our segment
targeting the further and higher education
sectors through our software offerings,
delivered a resilient performance in the period
with increased profits against a slightly
reduced revenue, largely due to the impact
of Covid-19 on sales to new and existing
customers in the middle of the year. The
Group had a positive end to the year, closing a
number of significant sales to new and existing
customers, and expanding into new territories
in South East Asia.
Across the year Tribal won four new SITS:Vision
Student Information Systems customers.
The year began positively with the addition
of Kaplan Business School Australia and
Chartered Accountants Australia and New
Zealand. These deals were closed prior to the
onset of the global pandemic, Covid-19.
As described in the Chairman's Statement,
Covid-19 had a significant impact on the
education market during the year, slowing
down sales to existing customers as spending
paused and elongating the sales process
with new customers. The implementation
of contracts was initially disrupted, however
the Group swiftly moved to successful
remote delivery.
The disruption of Covid-19 began to ease in
the final quarter of the year as UK students
returned to education and took up their places.
Tribal ended the year with the addition of two
new SITS:Vision customers: Arden University in
the UK, and Nanyang Technological University
in Singapore.
Our success with Nanyang Technological
University validates Tribal's strategy to provide
complete, integrated Student Information
Systems managed in the public cloud, covering
the complete student journey, from pre-
admission through to graduation. The £16.9m,
eight-year contract encompasses SITS in the
Tribal Cloud and Tribal Edge products, together
with Tribal Student Marketing & Recruitment
and Tribal Student Support & Welfare.
The implementation of SITS:Vision to recent
new customers continued during the year.
In the UK we commenced work with the
University of Northampton, and continued
to work at Glasgow Caledonian University,
University of Bristol, Canterbury Christ Church
University, University of Sheffield and the
University of Portsmouth. In Australia we
commenced work with both Kaplan Business
School Australia and Chartered Accountants
Australia and New Zealand, and continued to
work with University of Malay in Malaysia.
Our Callista student information system
software, which is used by 11 of our Australian
University customers, representing almost
25% of Australian universities, continued to
perform well completing the third year of a
four-year contract extension. Discussions
have commenced for the next extension to
the contract and this will include Tribal Edge
as part of the solution.
The Group’s cloud offering was enhanced in
the year through the launch of Tribal Cloud,
enabling all existing products to be hosted
and managed by Tribal in the public cloud,
resulting in cost efficiencies for our customers
whilst significantly increasing Tribal’s share
of wallet. There were two significant Tribal
Cloud sales in the second half of the year to
existing customers: the University of Sydney
in Australia and King’s College London in the
UK, and a growing pipeline across our existing
customer base.
We continued to deliver on our Tribal Edge
strategy, which provides a compelling vision to
new and existing customers to embrace our
next-generation, best-of-breed, cloud native
Student Information System (SIS) solutions.
As a cloud native SIS, Tribal Edge provides
a competitive differentiator in targeting
and acquiring new customers. In addition, it
protects Tribal's customer base into the future
by providing the most efficient, lowest cost
route to achieve a comprehensive, integrated,
open-standards SIS which maximises the
student experience and reduces the technical
complexity and IT cost for our customers.
Tribal Edge Submissions, the first Tribal Edge
product, was launched on schedule during
the year, and successfully sold to all 12 of
our current Australian University customers,
as well as to TAFE New South Wales. Our
continued investment in Tribal Edge has seen
the first version of Tribal Edge Admissions
completed in December; it will be released
to early adopters in the first half of 2021.
Tribal Dynamics, which provides Customer
Relationship Management ('CRM') solutions
including Student Recruitment and
Student Welfare using Microsoft Dynamics
functionality, forms part of the Tribal Edge
offering. We have made good progress in
enhancing this solution since we acquired the
business in 2018 and had a number of sales in
the year to new and existing customers across
Higher and Further Education: University of
Aberdeen, University of Sterling, University
of Worcester, Aberystwyth University, HCUC,
Royal Veterinary College (University of London)
and Nescot College. We have a good pipeline
of interest for further sales.
Our ebs software, which predominantly
focuses on the Further Education and
Vocational Learning markets but increasingly
is being considered by smaller universities,
continued to perform strongly. We won a
number of significant new customers in the
UK including Cambridge Education Group, City
of Wolverhampton College, the University of
Gibraltar and Highlands College in Jersey. The
latter being a full ebs implementation in the
Tribal Cloud. We also concluded the largest
ever ebs implementation at College Northern
Ireland. In Australia we added Literacy Aotearoa
and in New Zealand Carey Baptist College. The
majority of new sales are now delivered on a
subscription basis.
In Australia ebs is also used by the New
South Wales Technical and Further Education
colleges ('TAFEs') at over 130 campuses. This
contract has seen a significant amount of
work in the year completing upgrades to the
software as part of their OneTAFE programme
which has brought together the 11 TAFEs onto
one common platform. However, as previously
announced, the TAFE NSW contract will come
to an end in the near future.
A version of ebs has been successfully used by
the Department of Education ('DoE') schools
in New South Wales, Australia. This contract
supports around 2,000 schools and continues
to run at a mature state.
In addition to the DoE schools, we support
a further 1,800 schools in Australia with
our SchoolEdge solution giving a combined
total of nearly 4,000 schools using Tribal
student management software, representing
approximately one third of Australian schools.
Two of the school’s dioceses (New South
Wales and Victoria), which represent about
800 schools, continue to look to migrate their
customers away to a new product provider,
however this is progressing slowly and some of
the schools have opted to sign extensions with
Tribal. For those schools that do move Tribal is
offering a migration and archiving solution for
existing records.
Tribal Group plc Annual Report and Accounts 2020 Overview
Strategic Report
Governance
Financial Statements
9
The financial impact of Covid-19 and the
changing expectations of students means
that never has the need for cloud-based
solutions for the education market been
more pressing. The investments the Group
continue to position Tribal at the forefront of
this evolution in the industry, expanding our
addressable market opportunity through a
wider offering to upsell to existing customers
and enhanced ability to enter new geographies.
We have a growing pipeline of opportunities
across both existing and new customers,
and are confident in our ability to execute
against our strategic roadmap, growing ARR
and profit margins.
The safety and well being of the Group’s
employees and customers remain a priority, as
we continue to monitor the impact of Covid-19
both on Tribal and education as a whole. I would
like to take this opportunity to thank our teams
for their continued hard work and dedication.
The Group has had a positive start to trading in
2021 compared to 2020 and now anticipates
performance for the year to be slightly ahead
of the Board’s expectations. We are confident
in continued positive momentum as we deliver
on our growth strategy.
Mark Pickett
Chief Executive Officer
Our Maytas software, which supports
work-based learning and apprenticeship
management providers in the UK and is
increasingly of interest to Higher Education
institutions providing degree apprenticeships,
had a good sales year. In the year we added
Siemens Energy and Skills4Pharmacy in the
private sector, and De Montfort University
Leicester and Anglia Ruskin University in
Higher Education. We also completed our
largest ever Maytas implementation project
with Sopra Steria/Construction Industry
Training Board (CITB).
Education Services
In Education Services our team proved their
adaptability in the face of Covid-19, with
the key assurance, training and inspections
contracts in the UK, US and New Zealand
continuing largely remotely.
The major contracts with the Department
of Education in the UK, National Centre
for Excellence in the Teaching of Maths
('NCETM') in the UK and the New York State
Education Department inspections contract
in the US largely performed as planned and
adapted quickly to the impacts of Covid-19
with the majority of work able to be delivered
remotely. The inspections contract with
ADEK in the Middle East was paused due to
Covid-19 school closures but is expected
to resume upon relaxation of Covid-19
restrictions. The benchmarking and student
surveys work continued; however, the larger
Student Barometer survey for the southern
Hemisphere had to be delayed to 2021.
The contract with the New Zealand Tertiary
Education Commission ('TEC') was extended
for a further year, and we continued to provide
consultancy to a number of states in the US.
The evolution of the
education market and
Tribal’s market strength
There are four key factors driving the evolution
of the Higher Education market globally. As
well as dealing with the impact of a global
pandemic, it is evident that education is
becoming increasingly competitive, following
a legacy of inefficiency, poor adaptability
and cost. Rising student expectations in an
increasingly modern world, have meant that
there has been an increase in expectation
of success across a student’s life cycle and
support to student’s wellbeing and mental
health. Pressurised service delivery has led
to a redirection of focus to providing value
sooner, together with more student centric
services, remote delivery, and access to
blended learning. A drive towards SaaS has
also propelled a change in the education
market, with service access and support from
experts requested 24/7 and a need for new
point solutions to be deployed rapidly with
immediate value and impact.
Through the investment in the expansion of
our offering, Tribal is well placed to meet these
evolving market needs.
Tribal’s software is market leading both in
functionality and market share. Our SITS
student management software is the market
leader in its class, offering the most fully
functioning, robust and resilient student
management systems. The product has
been developed over the last 20 years, it
contains over 20 million lines of code, and we
continue to invest significantly in the software,
maintaining and building out new functionality.
We have leading market shares in the
geographies in which we operate. In the UK over
60% of all Higher Education institutions use
our student management systems, in Australia
we support one third of the universities, and in
New Zealand three of the eight universities. In
South East Asia we support the largest public
and the largest private universities in Malaysia,
and in 2020 we have expanded into Singapore
with Nanyang Technological University.
We will continue to focus on growth in these
geographies and Tribal Edge will allow us to
expand further into new geographies with
its multi-lingual capability, and its modular
approach allowing expansion into the North
America markets in Canada, where we already
support three universities, and the US.
Our people differentiate Tribal in the market
and are key to our success. Their depth of
domain knowledge in our products built over
three decades is unrivalled and we have an
innate understanding of the education market,
developed through working in partnership with
our customers and operating in senior roles for
leading education institutions.
2021 outlook
Tribal enters the current financial year with
increased levels of revenue visibility due to
the strong sales performance in the latter
part of 2020, a strengthened position in the
significant South East Asia market and a
considerably expanded addressable market
through the launch of Tribal Cloud and
imminent launch of Tribal Edge Admissions.
10
Tribal Group plc Annual Report and Accounts 2020
Our business model
Market-
leading
student
information
solutions
We provide market-leading, cloud-based,
student information software and services
to customers in target markets across the
world, using our resources and expertise
to create value that is shared with our
stakeholders. We empower education
institutes to educate students, providing
optimum learning experiences and ultimately
optimum learning experiences and ultimately
delivering successful outcomes.
delivering successful outcomes.
Our resources
Leading market share for
Student Information Systems
Trusted brand respected in
education worldwide
Education services capability
complementing student
information software
Market insight from long-standing
customer relationships
Experienced leadership bringing
clear business focus
Highly skilled people with
deep domain expertise
Culture that places customers
at the heart of what we do
Underpinning how we operate
Underpinning how we operate
Our values See page 32
How we maximise value creation
How we maximise value creation
Our strategy for profitable growth is outlined on page 14
Overview
Strategic Report
Governance
Financial Statements
11
Our software
Our cloud-based and on-premise student information solutions
add value to education and business organisations throughout
the student life cycle. Our modules span:
Generating returns and added value for all of our
stakeholders:
Marketing &
Recruitment
Student
Support &
Wellbeing
Admissions
Enrolment
Business
Engagement
Learning &
Studying
Graduation
& Alumni
Engagement
Assessments &
Examinations
Customers pay for Software as a Service (SaaS); cloud services;
or for licence, implementation, Support and Maintenance.
Our Education Services
Our education services are offered internationally and cover
institutions from Early Years through to Higher Education, all
focused on improving learning and student outcomes.
Self-
assessment
& Review
Quality Mark
Early Years
& School
Inspections
Student
Experience
Barometer
School
Improvement
Destination
of Leavers
Surveys
Professional
Learning
Operational
Benchmarking
Customers
Solutions to enable managers to enhance
the quality of education and improve
operational performance, to attract,
engage and retain students throughout
their learning journeys in a cost-effective
and flexible manner.
Students
Supporting a student's life-long learning
journey, through enhanced wellbeing, enriched
experience beyond the academic curriculum,
and seamless interaction with different
learning channels (physical and virtual).
Shareholders
Shareholder value and returns from
profitable, cash-generative growth with
a high proportion of recurring revenue
and progressive dividends.
Employees
Interesting and rewarding careers, with
the opportunity to work with the leading
educational institutes across the globe.
Government agencies/
education funders
Independent quality assurance services
supporting the development of top-class
education provision.
Our values See page 32
Risk management See page 30
Corporate responsibility See page 32
Our strategy for profitable growth is outlined on page 14
12
Tribal Group plc Annual Report and Accounts 2020
Our markets
Markets we serve
We are a worldwide provider and have delivered our student
information solutions in over 500 institutions. We are the
market-leading provider to Higher & Further Education in
the UK, Australia, New Zealand, Singapore and Malaysia.
• Over 65% market share of universities in the UK.
• Over 30% market share of Higher Education in Australia
and New Zealand.
• Over 35% market share of Further Education in the UK.
Our Education Services are provided worldwide, with quality
assurance services in the UK, US, Middle-East, Australia
and New Zealand. Education institutions across North
America, Europe, Asia, and Australasia use our international
benchmarking services.
Tribal offices and Tribal’s
Student Information
System customers
Revenue by business area
SIS Revenue by type
Student Information Systems
£56.9m
Education Services
£16.1m
Licence & Development Fees
£6.1m
Support & Maintenance Fees
£33.0m
Implementation Services
£11.1m
Cloud Services
£6.2m
Other Services
£0.5m
Tribal office
Tribal SIS customer
Overview
Strategic Report
Governance
Financial Statements
13
Market-leading provider of
student information solutions to
both Higher & Further Education
in UK, Australia, New Zealand,
Singapore and Malaysia
Over 500 institutions
empowered by Tribal's
student information solutions
Global provider of Quality
Assurance and Benchmarking
services for Education
Tribal office
Tribal SIS customer
>65%
market
share UK
Universities
>30%
>35%
market
share
Australia
& NZ
market
share UK
Further
Education
14
Tribal Group plc Annual Report and Accounts 2020
Tribal's growth strategy
Our objective is to provide education technology
solutions to customers globally, as-a-service.
Transitioning to the delivery of a broader set of solutions, via the ‘as a service’
model will increase our addressable market across a greater number of
geographies, drive revenue and margin expansion, while enabling universities
to deliver an enhanced, personalised service to their students.
We have four pillars to our growth strategy:
Our strategic priorities
Innovating with our
existing products
Tribal Cloud: delivering our existing
products 'as-a-service'
•
•
We will continue to invest in our market-leading existing
offerings, ensuring they stay up to date and are relevant
for our existing user base
We will continue to sell our existing products to new
customers, offered 'as-a-service' as standard, but
available on-premise if demanded
•
•
•
Deliver existing product suites as-a-service, and manage on
behalf of our clients including all of their integrations with
other IT products
This will enable us to sell more to our existing customers, and
help ensure our customers are prepared for the long-term
move to Tribal Edge, our native cloud ecosystem of education
technology modules
For some Tribal Cloud customers, we will also deliver Tribal
Transform, a packaged offering to ensure their data and
processes are ‘cloud ready’, enabling the future use of Tribal
Edge (professional services & process mapping, change
management, templated standardised solutions)
Key measures
• Growth in ARR
• New customer wins
Progress in 2020
•
Committed Annual Recurring Revenue increased by 12.2%
to £47.5m (2019: £42.3m), and represented 74% of reported
in-year SIS revenue from continuing operations
•
New business wins for all existing products: SITS:Vision
(Higher Education), ebs (Further Education), and Maytas
(Apprenticeships). Wins included Nanyang Technological
University (NTU), Singapore, a world top 20 university with over
32,000 students; KAPLAN (Australia); University of Gibraltar;
Highlands College (Jersey); and Literacy Aotearoa (New Zealand)
Key measures
• ARR from Cloud services
• Number of Tribal Cloud customers
• Number of Tribal Transform customers
Progress in 2020
• £8.1m for cloud services (2019: £6.5m)
•
Significant cloud transformation deals agreed with the
University of Sydney, Australia, and King’s College, London
Overview
Strategic Report
Governance
Financial Statements
15
Key benefits of our strategy:
increased revenue per customer
increased number of customers
• An expanded, modular product offering will enable us to
increase the size of our addressable market, through:
•
•
• easier entry into a greater number of geographies
• ability to target the customer base of competing solutions
ability to target the customer base of competing solutions
• enable a partners programme
•
It will increase our margins as we benefit from the scalability of the cloud
It will increase our margins as we benefit from the scalability of the cloud
• Students will benefit from the increased digital and personalised engagement with universities
Students will benefit from the increased digital and personalised engagement with universities
• Universities will be able to focus on education provision and not IT, delivering an enhanced, personalised service to their students
Universities will be able to focus on education provision and not IT, delivering an enhanced, personalised service to their students
Tribal Edge - a modular, next generation,
cloud-native, Student Information product set
Mergers and Acquisitions
• Expand SaaS offerings
• Gain market share
• Support geographic expansion
Our organic growth will be complemented through tactical
acquisitions, either of additional modular technology, to add to our
Tribal Edge ecosystem, or to add further customers. This enables:
•
Expansion of our SaaS offerings, particularly with cross-sell
to the large Tribal base
• Gain market share to build mass in our target geographies
•
•
•
•
•
•
•
•
Tribal Edge: Create an expanded higher education ecosystem
of next generation modules to meet all areas of student
engagement with universities
We have developed the Tribal Edge platform, on which module
applications can be built or acquired modules can be integrated
through simple API integrations. This is now complete
We are now developing modular applications that cover all the
areas of engagement between universities and students. These
will be ‘best of breed’ products, able to be bought either with
the Tribal Edge platform and other modules, or independently.
Universities no longer want to have to buy all their requirements
from just one vendor, in one monolithic system. They want
choice of modules and vendors. The modules can therefore
be sold both to existing Tribal customers and customers of
competing SIS vendors
These will be delivered entirely ‘as a service’, with no IT support
required from the universities, freeing them to focus on the
delivery of education services to their students
The modules will have the ability to be easily translated into
multiple languages, more quickly customisable to individual
geographic needs and able to be delivered remotely – therefore
providing an easier means to enter additional geographies
The modules will be more appropriate for a partner model,
as they will be smaller, more digestible offerings
The modules will provide the opportunity for increased upsell
to existing customers
The modules will enable more rapid adoption and faster
implementation times
Key measures
• Number of modules sold
Key measures
• Sales and ARR growth of acquired businesses
Progress in 2020
•
13 customers in Australia signed contracts for the new
Submissions module. Early adopters have also been lined up
for the Tribal Admissions module, launched in December 2020
•
•
Nanyang Technological University, Singapore; KAPLAN
(Australia); University of Gibraltar; Highlands College (Jersey);
and Literacy Aotearoa (New Zealand)
New regional services hub created in Malaysia to support the
growing SE Asia business
Progress in 2020
•
The Crimson acquisition of 2019 continued to make good
progress. The Dynamics 365 CRM based solutions are
integrated with existing products and are now available
as part of the Tribal Edge ecosystem
•
We won several new accounts and cross-sold into existing
customers. Wins included University of Worcester, University
of Aberdeen, University of Aberystwyth, and the University
of Stirling
16
Tribal Group plc Annual Report and Accounts 2020
Tribal Edge
Tribal Edge
Tribal Edge – next-
generation student
information
Student and staff experience
Marketing &
Recruitment
t
n
e
m
t
i
u
r
c
e
R
Event
Management
Agent
Management
Admissions
Support &
Wellbeing
Degree
Apprenticeships
e
c
n
e
g
i
l
l
e
t
n
i
a
t
a
d
d
n
a
s
c
i
t
y
a
n
A
l
t
r
o
p
p
u
S
e m e n t
g
a
Enrolm
& Re
gis
e
n
t
,
F
t
r
Academic model
a
e
t
i
e
o
s
n
,
ant m a n
lic
p
p
A
Student data
P
r
o
g
r
e
s
sion
d
E x a m A
n
o
ti
ministra
w ards
& A
Attendance
Management
Student Fees &
Financial Management
Scheduling, Timetabling &
Resource Planning
Curriculum
Management
Exam
Management
Digital
Credentials
Careers &
Business Engagement
Alumni
Engagement
i
A
d
m
n
i
s
t
r
a
t
i
o
n
O
u
t
c
o
m
e
s
O
p
e
n
A
P
I
f
r
a
m
e
w
o
r
k
Learner Management &
Individual Learner Record
International Exchange &
Placements
Tribal Edge platform
Overview
Strategic Report
Governance
Financial Statements
17
Tribal Edge is revolutionising the Student
Information Systems (SIS) market by
offering modular, next-generation, cloud-
native solutions. Each module provides
value and can be delivered to customers
rapidly to meet today's needs. Tribal Edge
moves away from bespoke development
and unique processes to providing
standard technologies that encapsulate
leading practice. Tribal Edge delivers
simpler, more efficient, and more effective
business solutions.
Third party integrations
Finance
HR
Resource Management
Liberty Management
Accommodation
Asset Management
Learning Management
The Tribal Edge platform ensures connectivity
and deep integration, creating a broader Tribal Edge
ecosystem. With an advanced Academic Model
at the centre, and the student data essential for
managing student success, Tribal Edge will provide
solutions across Recruitment and Admissions;
Student Support; Student Administration, and
Outcomes. All modules are interconnected,
consistent, and designed to support the business
process. Key elements of Tribal Edge include:
• a standard interface delivering exceptional user
experience to students and staff across desktop
and mobile devices;
• the aggregation of rich data across the system
to enable reporting, advanced analytics and data
intelligence; and
• an open API framework that ensures unrivalled
connectivity to third party applications.
Progress
In 2020, we launched Tribal Submissions and Tribal
Admissions, two core student management modules.
Tribal Submissions has been taken up across our
Australian customer base and by several non-Tribal
SIS institutions. Tribal Admissions was made available
to the first Early Adopter in December and will continue
to be developed and rolled out to other Early Adopters
across 2021, including APAC customers.
18
Tribal Group plc Annual Report and Accounts 2020
Financial review
Results
£m
Revenue
Student Information Systems
Education Services
Gross Profit
Gross Profit Margin
Adjusted Operating Profit 1
(Before Central Overheads)
Student Information Systems
Education Services
Central Overheads3
Net foreign exchange losses
Adjusted Operating Profit (EBITDA)1
Adjusted Operating Margin (EBITDA)1
Statutory Profit/(Loss) before Tax
Statutory Profit/(Loss) after Tax
Annual Recurring Revenue
2019
Reported
Constant
currency
20192
Change
constant
currency
Change
constant
currency %
78.2
58.6
19.6
39.2
77.6
58.0
19.6
39.6
50.1%
51.0%
2020
73.0
56.9
16.1
38.6
53.0%
24.4
21.0
3.4
(8.8)
(0.7)
14.9
23.8
19.7
4.2
(8.3)
(0.2)
15.4
20.4%
19.6%
8.5
6.4
47.5
(2.9)
(3.0)
42.3
23.3
19.1
4.2
(8.4)
14.9
19.2%
(3.4)
(3.5)
41.9
(4.6)
(1.1)
(3.5)
(1.0)
–
1.2
1.9
(0.8)
(0.4)
–
–
11.9
9.9
5.6
(5.9)%
(1.9)%
(17.9)%
(2.5)%
200bp
5.0%
10.0%
(18.0)%
(3.5)%
0.1%
120bp
350.0%
283.1%
13.4%
1.
2.
Adjusted Operating Profit and Adjusted Operating Margin are in respect of continuing operations and exclude charges reported in 'Other items' of £3.0m
(2019: £14.4m), refer to Note 6 in the Financial Statements, and before Interest, Tax, Depreciation and Amortisation.
2019 results adjusted are updated for constant currency – the Group has applied 2020 foreign exchange rates to 2019 results to present a constant currency basis,
when applied to 2019 results there is a reduction in Revenue of £0.6m, a reduction to Adjusted Operating Profit (before Central Overheads) of £0.5m and Adjusted
Operating Profit of £0.5m.
3.
Central Overheads are made up of costs that are not directly attributable to either Student Information Systems or Education Services.
Overview
Strategic Report
Governance
Financial Statements
19
The Revenue and Adjusted Operating Profit
by segment in the table shows the reported
results for FY2020 and FY2019, and the
FY2019 results restated to 'constant
currency' using 2020 rates to exclude foreign
currency impact. The change percentages
shown are on the 2019 constant currency
numbers. All comparatives reported below
are on a constant currency basis.
Annual recurring revenue
Annual Recurring Revenue (ARR) is a key
financial metric of the Group and an area of
strategic focus. Our aim is to grow Annual
Recurring Revenue through the delivery of
an increasing proportion of Software as a
Service contracts, providing increased quality
of earnings. ARR represents committed
revenue as at 31 December 2020 and
comprises Support and Maintenance Fees
and Cloud Services together with Subscription
License fees where the license revenue is
received over the life of the contract. This
has increased by 13.4% to £47.5m (2019:
£41.9m constant currency: £42.3m reported),
representing 74.2% of Software & Related
revenue and 59.5% of total Group revenue
(2019: 71.8% and 53.8%, respectively).
Growth has been generated in both Support
and Maintenance revenues and Cloud
revenues, where we continue to see
increased demand from customers.
Revenue
As anticipated, revenue in the year reduced
5.9% to £73.0m (2019: £77.6m constant
currency, adjusted for the negative impact
of foreign exchange of £0.7m; £78.2m
as reported), predominantly as a result of
the impact of Covid-19 on the Education
Services segment. The Group’s core Student
Information Systems segment revenue held
up well, decreasing by only 1.9% to £56.9m
(2019: £58.0 constant currency; £58.6m
reported). Education Services revenue
decreased by 17.9% to £16.1m (2019:
£19.6m constant currency; £19.6m reported)
as a result of certain on-site projects being
suspended during the Covid-19 period.
The Group has chosen to present its results
in the CEO Review on a constant currency
basis to give a true reflection of year-on-year
performance and to account for the adverse
impact of foreign exchange movements in
the year. Approximately 42% of Tribal’s
income in the year was generated outside
the UK and is therefore subject to foreign
exchange movement. During 2020, the
continued strengthening of sterling,
particularly against the Australian dollar, has
impacted revenue. Consistent with reporting
last year, the results for 2019 have been
adjusted to reflect the foreign exchange rates
prevailing during 2020 to provide a 'constant
currency' comparative.
Note this presentation disclosed as
'constant currency' is an alternative
performance measure and not a statutory
reporting measure prepared in line with
International Financial Reporting Standards
(IFRS) and disclosed as 'reported' in the
Chief Executive's review.
Adjusted operating profit (EBITDA)
The Adjusted Operating Profit (EBITDA) was
£14.9m (2019: £14.9m constant currency;
£15.4m reported). The Adjusted Operating
Margin (EBITDA) increased to 20.4% (2019:
19.2% constant currency; 19.6% reported).
Central Overheads, representing costs in HR,
IT, Finance, Marketing and Management that
aren’t directly attributable to lines of business
increased by £0.6m to £8.8m (2019: £8.4m
constant currency; £8.3m reported), primarily
due to accounting for holiday pay as we
allowed all employees the option to carry
forward up to 5 days annual leave due to
Covid-19. We continue to focus on reducing
these costs and have grown our Manila office
in the Philippines to help support certain
finance and HR processes, alongside their
existing work supporting ebs and SchoolEdge
and business services. This has enabled us to
improve margin without impacting the Group’s
ability to deliver on customer contracts and
generate growth. The Group continues to
identify cost saving measures and effectively
manages its cost base.
Statutory profit/(loss) after tax
The Statutory Profit after Tax for the year
increased to £6.4m (2019: Loss £3.0m
reported). Excluding the increased cost of
£9.1m incurred in 2019 as a result of the
platform dispute, Tribal shows strong growth,
with a normalised Statutory Profit after
Tax increase of 3% from £6.1m in 2019.
Segmental performance
The Group provides software and non-
software related services to educational
customers, both public and private. These
services are managed across two lines of
business (segments), Software Information
Systems (SIS) and Education Services (ES).
The majority of software sales are across
our core Student Information Systems
business together with a small amount
of software sales in Education Services,
reported under Other.
Student information systems (SIS)
focuses on software related solutions to
the Higher Education, Further Education,
Colleges and Employers (referred to in
Australia as VET), and Schools sectors
across the main geographic markets being
the UK, Australia, New Zealand, Malaysia and
Canada. Products and offerings are split
between License & Development Services,
Support and Maintenance, Implementation,
and Cloud Operations.
Education Services (ES)
provides non-software related solutions
globally across the same market sectors.
The core offerings are inspection and review
services which support the assessment
of educational delivery, performance
benchmarking, student surveys and
data analytics.
20
Financial review continued
Student Information Systems (SIS)
£m
Total Revenue
License & Development Fees
Support & Maintenance Fees
Implementation Services
Cloud Services
Other Services
Adjusted Operating Profit (EBITDA)
2020
56.9
6.1
33.0
11.1
6.2
0.5
21.0
2019
Reported
Constant
currency
2019
Change
constant
currency
Change
constant
currency %
58.6
6.4
32.6
12.8
6.0
0.8
19.7
58.0
6.4
32.1
12.6
6.0
0.8
19.1
(1.1)
(0.3)
0.8
(1.5)
0.2
(0.3)
1.9
–
(1.9)%
(4.0)%
2.6%
(12.0)%
2.7%
(40.0)%
10.0%
40bp
Adjusted Operating Margin (EBITDA)
36.9%
33.6%
32.9%
Student Information Systems revenue decreased by 1.9% to £56.9m (2019: £58.0m constant currency; £58.6m reported).
The market for the replacement of student
information systems in the UK, Australia
and wider APAC region has proved to be
resilient with Tribal adding new customers
in the UK and Australia, as well expanding
its presence in South East Asia with a new
customer in Singapore.
License & development fees relate to the
sale of new software licenses as well as
customer paid enhancements (development
fees) to previous sales. Tribal’s core Student
Information Systems products include:
• SITS (Student Information Technology
System) used by around 60% of
universities in the UK, including 50% of
the Russell Group universities, as well as
universities in Australia, New Zealand,
Malaysia, Singapore, Canada, Southern
Ireland, Hungary and Malta;
• Tribal Dynamics, a suite of customer
relationship management (CRM)
based solutions;
• Callista, a bespoke student
management system implemented
in 11 Australian universities;
• ebs (education business system)
used by colleges and training institutes
in the UK (including Northern Ireland);
• Maytas, for training providers and
apprenticeship providers;
• Student Engage, a social collaboration
mobile technology application sold across
all markets; and
• School Edge and ebs Schools used by
around 4,000 schools in Australia.
In addition, non-SIS software sales include K2
(asset management software) and Software
Solutions (bespoke software development).
These are businesses that operate profitably
and continue to be supported, although there
is limited investment in future development
of the solutions and little proactive sales and
marketing activity.
License & Development fees revenue fell
slightly compared to the previous year to
£6.1m (2019: £6.4m constant currency;
£6.4m reported). Under IFRS 15 license
revenue is recognised as the software is
implemented on a percentage complete
basis, resulting in the revenue from larger
implementations taking up to four years to
recognise. The strong sales performance
in the final quarter of the year will benefit
revenue in future years, however only a small
amount was recognised in 2020. There
have been new sales in Further Education
(FE), although the revenue on these sales
has continued to be impacted by the move
to subscription selling where the license is
bundled with the Support and Maintenance
fee which is paid for and recognised over the
life of the contract, rather than upfront.
Implementation services deliver the
technical implementation of our software
products at customer sites, typically working
alongside customer teams. Implementation
projects vary in length, and range from a
small number of days, to more than two years
for more complex projects. Revenues are
typically based on day rate fees, although we
sometimes operate under fixed fee contracts
for defined implementation scopes. Revenue
reduced to £11.1m (2019: £12.6m constant
currency; £12.8m reported) reflecting
disruption caused by Covid-19 as customers
moved to remote working, as well as delays
to the sales cycle. This was particularly
noticeable in the UK as revenue decreased
by 32% to £5.8m. In APAC revenue increased
by 30% to £4.9m benefitting from the two
large SITS sales at the start of the year pre-
Covid-19 to Kaplan Business School Australia
and Chartered Accountants Australia and
New Zealand.
Tribal Group plc Annual Report and Accounts 2020 21
Support & maintenance fees in the period
increased by 2.6% to £33.0m (2019: £32.1m
adjusted; £32.6m reported). This reflects the
strong retention rates in our customer base
and new customers added in the year.
Cloud services cover the provision of Tribal
Cloud fully managed public cloud services,
and hosting services supporting Tribal
products either on-premise, in a private cloud,
or in a public cloud, as well as IT managed
services. Demand continued to increase for
cloud services across all markets with the
majority of customers now managed in the
public cloud. Revenue increased by 2.7%
to £6.2m (2019: £6.0m constant currency;
£6.0m reported).
Other software & related services include
revenue from the conferences that Tribal
provides to customers in the Higher Education
and Further Education sectors, and research
and development tax credits (RDEC) received
in the UK in relation to product development
work undertaken.
The Annual Recurring Revenue reported
in 2020 in SIS, which relates to Support
and Maintenance, Cloud services and
Subscription license/support sales, increased
by 5% to £42.2m (2019: £40.2m constant
currency; £40.7m reported) and represents
74% of SIS revenue (2019: 69%). Support and
Maintenance renewals have minimal attrition
and the demand for cloud services continues
to grow.
The Adjusted Operating Profit in Student
Information Systems increased by 10.0% to
£21.0m (2019: £19.1m constant currency;
£19.7m reported) and Adjusted Operating
Margin increased to 36.9% (2019: 32.9%
constant currency; 33.6% reported). The
improvement in both profit and margin is
driven by increased revenue in Support and
Maintenance and Cloud services, together
with improvements in efficiency in
implementation services from delivering
remotely to customers.
Education Services (ES)
£m
Total Revenue
School Inspections & Related Services
Surveys & Data Analytics
Information Management Services
Asset Management and Software Solutions
Adjusted Operating Profit (EBITDA)
2019
Reported
Constant
currency
2019
Change
constant
currency
Change
constant
currency %
19.6
13.9
3.3
0.3
2.1
4.2
19.6
13.9
3.2
0.3
2.1
4.2
(3.5)
(2.5)
(1.0)
–
0.2
(0.8)
(17.9)%
(18.5)%
(33.6)%
(2.4)%
8.6%
(18.0)%
2020
16.1
11.4
2.2
0.3
2.3
3.4
Adjusted Operating Margin (EBITDA)
21.3%
21.2%
21.4%
–
10bps
Education Services revenue decreased by 17.9% to £16.1m (2019: £19.6m constant currency; £19.6m reported).
The revenue from School Inspections & Related Services decreased by 18.5% to £11.4m (2019: £13.9m constant currency; £13.9m reported).
Strategic ReportGovernanceFinancial StatementsOverview 22
Financial review continued
The Group spent £11.6m on Product
Development, of which £6.6m was capitalised
in relation to Tribal Edge and £0.2m was
capitalised in relation to Tribal Dynamics.
(2019: £10.7m spent, £6.1m capitalised). The
net P&L charge after removing capitalised
spend was £4.8m (2019: £4.6m), and £3.6m
excluding amortisation (2019: £3.2m). We
continue to invest in our core products,
including SITS, ebs, SchoolEdge, Dynamics and
Maytas, adding new modules and additional
functionality as well as statutory updates.
The Group continued to invest in the Tribal
Edge platform, the next-generation, cloud-
based platform for student information
systems in the Higher Education and Further
Education & Colleges sectors. Capitalised
Product Development spend increased to
£6.6m (2019: £5.9m) as the Tribal Edge
development team increased in size and
completed its first modules in the year,
Tribal Submissions and the first version
of Tribal Admissions.
The Group also undertakes client funded
product development work in relation to
the Callista student management system
on behalf of a group of 11 universities
in Australia.
The revenue from Asset Management (K2)
and Software Solutions, increased by 8.6%
to £2.3m (2019: £2.1m constant currency;
£2.1m reported). Asset Management
benefitted from increased royalties from
its contract supporting the governments,
archive programme. These two businesses
continue to operate profitably however, they
are non-core with limited investment benefits
and will reduce over time.
The Adjusted Operating Profit in Education
Services decreased by 18.0% to £3.4m
(2019: £4.2m constant currency; £4.2m
reported), however the Adjusted Operating
Margin remained consistent at 21.3% (2019:
21.4% constant currency; 21.2% reported).
Product development
£m
Product
development
Of which
capitalised
Tribal Edge
Tribal Dynamics
Of which
expensed
SITS
ebs
Maytas
SchoolEdge
Tribal Dynamics
Other
Of which
amortised
2019
Reported
2020
Change
11.6
10.7
8%
6.8
6.6
0.2
4.8
1.0
1.8
0.1
0.3
0.6
1.0
6.1
5.9
0.2
4.6
1.5
1.4
0.2
0.4
0.2
0.9
10%
11%
(14)%
4%
(55)%
19%
(44)%
(24)%
59%
20%
1.2
1.4
(21)%
School inspections & related services are
delivered globally with sales in the UK, North
America, the Middle East, Australia and New
Zealand. Inspection services are provided to
government and non-government bodies in
the UK, US and Middle East. These tend to be
multi-year contracts with fixed and variable
pricing elements. Related complementary
services include training for prospective
quality assurance inspectors, training
and software tools for school leaders to
prepare for inspections, online professional
development tools for teachers to enhance
their professional development, and other
similar offerings.
The key contracts in the UK with the
Department of Education in the UK, the
National Centre for the Excellence of Teaching
Mathematics and the Advance Maths Support
Programme, and with the New York State
Education Department (NYSED) in the US
largely continued as planned quickly moving to
a remote delivery model. Covid-19 did disrupt
the inspections element of the contract
with NYSED and the large school inspections
contract in the Middle East with ADEK due
to school closures, as well as impacting new
business revenue.
The revenue for Surveys & Data Analytics
fell by 33.6% to £2.2m (2019: £3.2m
constant currency; £3.3m reported).
Surveys & data analytics, which includes
benchmarking, provides a range of services
for managers of universities, colleges and
schools to assess and enhance the quality
of education they provide and improve their
operational performance. These services are
provided globally, the largest product being
the International Student Barometer which is
performed annually for each of the Northern
and Southern hemispheres.
Covid-19 impacted the volume of
benchmarking projects in the year, and the
International Student Barometer for the
Southern hemisphere was delayed into 2021.
Tribal Group plc Annual Report and Accounts 2020 23
Geographic revenue
£m
Total Revenue
UK
Asia Pacific
Rest of world1
1.
Including USA, Canada and Middle East.
2019
Reported
2019
constant
currency
Change
constant
currency
Change
constant
currency %
78.2
47.4
23.5
7.3
77.6
47.4
22.9
7.3
(4.6)
(4.9)
1.3
(1.0)
(6.0)%
(12)%
5%
(15)%
2020
73.0
42.5
24.2
6.3
Tribal’s key geographic markets are the UK (58% of total revenue), Asia Pacific including Australia, New Zealand and Malaysia (33%); and, North
America and the rest of the world including Middle East (9%).
UK revenues reduced 11.7% due to new implementations coming to an end in the year, a limited pipeline for new implementations as well as
reduced sales in the schools market. This was partially offset by strong delivery of UK-based Education Services contracts.
Asia Pacific revenues increased by 5.4%, primarily due to new implementations beginning in the year as a result of new wins in the period.
Revenue for the Rest of the world reduced by 15.0%, due to the temporary pause of larger QAS contracts in the Middle East and the rephasing of
ongoing work into 2021 as a result of Covid-19.
Key Performance Indicators (KPIs)
£m
Total Revenue
– Student Information Systems
– Education Services
Adjusted Operating Profit (EBITDA)1
Adjusted Operating Margin1
Annual Recurring Revenue (ARR)
Committed Income (Backlog)
Operating Cash Conversion2
Free Cash Flow2
Staff Retention
Revenue/Average FTE
2019
Reported
2019
constant
currency
Change
constant
currency
Change
constant
currency %
78.2
58.6
19.6
15.4
19.6%
42.2
133.6
105%
5.3
87.9%
£92.0k
77.6
58.0
19.6
14.9
19.2%
41.9
–
105%
5.3
–
–
(4.6)
(1.1)
(3.5)
–
–
5.6
–
–
(0.1)
–
–
(5.9)%
(1.9)%
(17.9)%
0.1%
120bp
13.4%
–
170bp
(1.4)%
–
–
2020
73.0
56.9
16.1
14.9
20.4%
47.5
144.4
122%
5.2
92.3%
£87.7k
1. Adjusted Operating Profit and Adjusted Operating Margin are in respect of continuing operations and exclude charges reported in 'Other items' of £3.0m
(2019: £14.4m), refer to Note 6 in the Financial Statements. EBITDA is calculated by taking the Adjusted Operating Profit after the allocation of Central Overheads
and excludes Interest, Tax, Depreciation and Amortisation.
2. Excluding the platform dispute settlement of £8.1m.
Strategic ReportGovernanceFinancial StatementsOverview 24
Financial review continued
Committed income (backlog)
The Committed Income (backlog) relates to the total value of orders which have been signed
on or before, but not delivered by 31 December 2020. This represents the best estimate of
business expected to be delivered and recognised in future periods and includes 2 years of
Support and Maintenance revenue. At 31 December 2020 this increased to £144.4m (2019:
£133.6m reported). The majority of the increase relates to the significant contract wins in SIS.
Annual Recurring Revenue (ARR)
Support & Maintenance
Subscription License
Tribal Cloud
Tribal Edge
(including Dynamics CRM)
ARR
2020
34.8
2.5
8.1
2.1
47.5
2019
Reported
Change
Change %
33.7
0.6
6.5
1.5
42.3
1.1
1.9
1.6
0.6
5.2
3.3%
307.1%
23.4%
41.7%
12.2%
Items excluded from adjusted
profit figures
The Group has adopted a policy of disclosing
separately on the face of its Group income
statement the effect of any components
of financial performance considered by the
Directors to not be directly related to the
trading business or regarded as exceptional,
or for which separate disclosure would assist
in a better understanding of the financial
performance achieved. A full explanation
of 'Other Items' is included in Note 6 of the
Financial Statements, however the main
items are as follows:
• Employee-related share option charges
In 2020, share-based payment charges
(including employer related taxes) totalled
£1.8m (2019: £1.7m), and are excluded
from the Adjusted operating profit.
The Annual Recurring Revenue (ARR)
represents committed revenue as at
31 December 2020 and includes Support
and Maintenance fees paid on all software,
License sold on a subscription (non perpetual)
basis, Cloud hosting services, and Tribal Edge
sales. The 2019 ARR is restated to include
License sold on a subscription basis. Overall
the Annual Recurring Revenue total increased
by 12.2% to £47.5m (2019: £42.3m reported).
Operating cash conversion
Operating cash conversion is calculated as
net cash from operating activities after tax
as a proportion of adjusted operating profit
excluding the settlement of the platform
dispute. In 2020, operating cash conversion
was 122% (2019: 105% reported).
Free cash flow
Free cash flow is included as a key indicator
of the cash that is generated by the Group
and available for further investment or
distribution. It is calculated as net cash from
operating activities less capital expenditure
and less capitalised development costs
(excluding acquired intellectual property).
In 2020, free cash flow excluding the
one-off settlement of the platform dispute
was £5.2m (2019: £5.3m reported).
Headcount and staff retention
Headcount
UK
Asia Pacific
Rest of world1
2020
2019
Change
893
602
277
14
879
618
245
16
14
(16)
32
(2)
On 7 July 2020, 482,143 nil-cost share
options were granted to Mark Pickett under
the terms of the 2010 LTIP. On 7 July 2020,
1,876,000 share options were granted to
senior management under the Company
share option plan.
Full Time Equivalent
(FTE)
832
850
(18)
1.
Including USA, Canada and Middle East.
Our overall workforce has increased by 1.6%
to a total headcount of 893 from 879 at
31 December 2019.
The total Full Time Equivalent (FTE)
headcount has decreased by 18 FTEs to 832
(2019: 850 FTEs).
The Revenue per Average FTE metric is
slightly lower than the prior year at £87.7k
for 2020 (2019: £92.0k). On an operational
headcount basis (excluding Product
Development), the revenue per FTE for 2020
is £153.4k (2019: £104.6k).
We note, though, that despite the extent
of change within the Group, our staff
retention has marginally increased to 92.3%
(2019: 87.9%).
• Amortisation of IFRS 3 intangibles
The amortisation charge in relation to
IFRS 3 intangible assets of £1.0m (2019:
£1.3m) arose from separately identifiable
assets recognised as part of previous
acquisitions. The assets principally relate to
software and customer relationships and
are amortised over their expected life which
was determined in the year the acquisition
took place.
• Restructuring and associated costs
These costs relate to the restructuring of
the Group’s operations and the charge for
the year is £0.5m (2019: £0.8m) due to
planned restructures at the start of the
year. There are no restructuring provisions
recognised as at 31 December 2020.
Tribal Group plc Annual Report and Accounts 2020 25
Net cash and cash flow
£m
Net cash flow from operating activities
Net cash outflow from investing activities
Net cash outflow from financing activities
Net (decrease)/increase in cash & cash equivalents
Cash & cash equivalents at beginning of the year
Cash & cash equivalents at end of period
Less: Effect of foreign exchange rate changes
Net cash & cash equivalents at end of period
2020
5.5
(9.2)
(3.3)
(7.0)
16.5
9.5
–
9.5
2019
12.4
(13.2)
(2.9)
(3.7)
20.0
16.3
0.2
16.5
Change
(6.9)
4.0
(0.4)
(3.3)
(3.5)
(6.8)
(0.2)
(7.0)
Cash and cash equivalents at 31 December
2020 were £9.5m (2019: £16.5m).
Operating cash inflow for the period was
£5.5m (2019: £12.4m). The working capital
movement excluding the one-off settlement
increased to £0.4m (2019: £0.3m), as a
result of strong cash management including
a significant reduction in trade debtors and
trade payables.
Cash outflow from investing activities was
£9.2m (2019: £13.2m). The Group has seen
a decrease in capital expenditure spend
on equipment costs (2020: £0.4m; 2019:
£0.6m). Spend on product development
increased to £7.1m (2019: £6.3m) in line with
the Group’s Edge strategy. The Group made a
payment of £1.7m for deferred consideration
(2019: £0.5m), this was in respect of the
first Earn Out from the acquisition of Crimson
Consultants in May 2019.
Cash outflow from financing activities
increased to £3.3m (2019: £2.9m). The
Group made an interim dividend payment of
1.1p per share in the year with £2.3m (2019:
£2.1m) returned to shareholders. Bank loan
arrangement fees and interest in the period
totalled £0.3m (2019: nil) as a result of the
£10m facility agreed in January 2020. This
is offset with the issue of shares (£0.2m)
(2019: (£0.2m)) to satisfy exercises of
share-based payment schemes.
Finance costs and funding
arrangements
Net finance costs increased to £0.2m in
the year (2019: £0.1m). On 21 January
2020 the Group entered into a three-year
£10m multicurrency revolving facility with
HSBC with the option to extend by a further
two years. The first option to exercise was
approved by HSBC on 16 March 2021. The
facility was put in place to cover general
corporate and working capital requirements
of the Group and was fully drawn down in
March 2020 but was repaid in full before
31 December 2020. The Group had a £2m
committed overdraft facility in the UK and
a AUD$2m committed overdraft facility
in Australia, both facilities are committed
for a 12-month period ending September
2021 and October 2021, respectively. At
31 December 2020 both overdrafts were
available but undrawn. To offset the impact
of movements in foreign exchange the Group
entered into three forward contracts to hedge
the movement between AUD and GBP. These
contracts expired in the year and generated a
net change in fair value of £0.1m. The Group
will continue to manage foreign exchange
exposure during 2021.
Shareholders returns and dividends
Tribal remains committed to a progressive
dividend policy and the Board is pleased to
propose a final dividend in respect of the year
ended 31 December 2020 of 1.2p, pending
approval at the AGM on 27 April 2021. The
anticipated payment date is 29 July 2021,
with an associated record date of 9 July
2021 and ex-dividend date of 8 July 2021.
Tribal paid a one-off interim dividend of 1.1p
per share in recognition of the proposed
dividend for the year ended 31 December
2019 being cancelled due to Covid-19. The
combined dividend for the year was 2.3p
per share. (2019: nil), however, it is Tribal’s
expectation that only a final dividend will be
paid going forward.
Going concern
Tribal had cash and cash equivalents of
£9.5m at the end of 2020 plus access to
an undrawn UK and Australian overdraft of
£2.0m and $AUD 2.0m, respectively. This
is after £0.1m of furlough benefits and all
temporary tax deferrals were repaid in full
before the 31 December 2020. As noted
above, the Group entered into a £10m facility
to cover general corporate and working capital
requirements of the Group. Tribal Group plc
has undertaken to make adequate financial
resources available to the Group to meet its
current and future obligations as and when
they fall due.
We responded to the challenges presented by
the Covid-19 pandemic and we transitioned
quickly and efficiently to remote working.
The changes customers have seen from our
delivery of work across the business have
been well received and demonstrate our
ability to adapt and change as a business but
still serve customers. It also demonstrates
the benefits of remote working to the
business both in terms of reduction of travel
costs and increase in productivity which we
expect to continue to benefit the business
into the future post-Covid-19. Any medium
to longer-term effects or changes resulting
from Covid-19 on education institutions will
become clearer over time and we continue
to closely monitor the ongoing impact of
Covid-19 on a regular basis.
Strategic ReportGovernanceFinancial StatementsOverview 26
Financial review continued
Tribal’s main business is software related
through the provision of Student Information
Systems (SIS) to education institutions
in the UK, Australia, and a number of other
overseas locations. Revenue is generated
from the sale of software licenses and
related implementation work, and the ongoing
provision of Support and Maintenance and
cloud/hosting services.
To date the Support and Maintenance
and cloud/hosting services have been
unaffected. Customers have continued to
pay for the services, all of which can and
are being delivered remotely. This revenue,
which is annual recurring (repeat) income and
represents half of our total annual revenue,
two thirds of our software revenue, provides
a level of protection and certainty to the
business. We expect this position to continue.
The Group had a positive end to the year,
closing a number of significant sales to
new and existing customers, and expanding
into new territories in South East Asia. The
financial impact of Covid-19 and the changing
expectations of students, means that never
has the need for cloud-based solutions for
the Education market been more pressing.
The investments the Group continue to
make position Tribal at the forefront of this
evolution in the industry.
Our success with Nanyang Technological
University validates Tribal's strategy to
provide complete, integrated Student
Information Systems managed in the public
cloud, covering the complete student
journey, from pre-admission through to
graduation. The £16.9m, eight-year contract
encompasses SITS in the Tribal Cloud and
Tribal Edge products, together with Tribal
Student Marketing & Recruitment and Tribal
Student Support & Welfare and provides a
significantly stronger position as we head
into 2021 and beyond.
Tribal’s other business area, Education
Services (ES), provides training, inspections,
surveys and benchmarking to education
institutions globally. The larger UK and US
contracts in ES mostly continued unaffected
by Covid-19 as we were able to adapt our
delivery to a remote model very quickly. The
temporary closure of schools, particularly
in the Middle East, has caused delays to
the delivery of inspections work until the
schools reopen. We have seen some delays
on surveys and benchmarking with projects
delayed to later in the year or next year. Whilst
we have seen revenue decrease in 2020 our
profit margins have a degree of protection as
we operate a variable cost model. We expect
paused contracts in the UAE to resume in
2021 and we have recently extended both
the AMSP and NPQ contracts until Q3 2022
and Q4 2022, respectively, thus increasing
revenues going forward.
As part of this assessment, management
has included various sensitivities to better
understand the impact to the business, this
includes, but is not limited to, a decrease in
revenue, a decrease in cash receipts and the
impact of meeting our covenant requirements
should we draw down on the available facility.
Management would also introduce cost
saving measures to mitigate the impact on
profit and cash if necessary. We do though
remain positive about the medium and
longer-term prospects for the Group. Based
on this assessment they have a reasonable
expectation that adequate financial
resources will continue to be available for at
least 12 months from the date of approval of
the financial statements.
In assessing the Company’s going concern
position and the Group’s ability to provide the
necessary financial support, the Directors
have considered all relevant facts and the
latest forecasts and assessment of the
risks faced by the Group, taking into account
reasonably possible changes in trading
performance. In addition, management
have sufficiently stress tested the latest
forecasts to the point where either the Group
cannot meet its liabilities or is in breach of
banking covenants and have concluded that
this position is so remote it does not have a
significant impact on the Group's ability to
continue as a going concern. Accordingly,
after making enquiries and receiving
confirmation of Group support as set out
above, the Directors have a reasonable
expectation that the Company has adequate
resources to continue in operational
existence for the foreseeable future. Thus,
they continue to adopt the going concern
basis in preparing the financial statements.
Taxation
The corporation tax on continuing operations
was £3.1m (2019: £2.5m) and the adjusted
effective tax rate was 27% (2019: 22%). This
includes the impact of higher rates of taxation
arising in overseas jurisdictions.
As the Group continues to operate in
international jurisdictions with a higher rate
of corporation tax, it is anticipated that the
tax charges on profits in the near- to medium-
term future is likely to be higher than the
standard rate of UK corporation tax.
Share options and share capital
On 7 July 2020, 4,278,143 share options were
granted to senior management, excluding
Mark Pickett. On 7 July 2020, 482,143 nil-cost
share options were granted to Mark Pickett as
part of his ongoing remuneration.
The shares issued during the year in order to
satisfy exercises of share-based payment
schemes were as follows: 3,405,998 issued
on 16 January 2020, 1,223,241 issued on
6 February 2020 and 150,000 issued on
12 June 2020. In addition 1,339,286 shares
were issued on 13 June 2020 to the vendors
of Sky Software Pty as part of the deferred
consideration payable.
As at 31 December 2020, there were
205,698,309 shares issued (2019:
199,579,784).
Tribal Group plc Annual Report and Accounts 2020 27
Related parties
Transactions with related parties during the
period are set out in Note 31.
Earnings per share (EPS)
Adjusted diluted earnings per share from
continuing operations before other costs
and intangible asset impairment charges
and amortisation, which reflects the Group’s
underlying trading performance, decreased by
10% to 4.0p (2019: 4.4p) due to the increase
of the overseas current tax charges.
Statutory earnings per share (diluted)
increased by 307% to 3.1p (2019: (1.5)p)
as a result of the statutory profit made in the
year of £6.4m (2019: statutory loss £(3.0)m).
Pension obligations
At 31 December 2020, the Group operated
two defined benefit pension schemes for
the benefit of certain deferred employees
of its subsidiaries in the UK. These schemes
are administered by separate funds that are
legally separated from the Parent Company.
The trustees of the pension funds are required
by law to act in the interest of the funds and of
all relevant stakeholders in the schemes. The
trustees of the pension funds are responsible
for the investment policy with regard to the
assets of the funds.
Across the pensions schemes, the combined
deficit calculated under IAS19 at the end
of the year totalled £0.9m (2019: deficit of
£0.5m), with gross assets of £8.3m and gross
liabilities of £9.2m (2019: £7.7m and £8.3m
respectively). Total actuarial (losses)/gains
recognised in the consolidated statement
of comprehensive income are (£0.4)m
(2019: £0.5m).
Risks
Financial risks
The main financial risks the Group faces relate
to the continued sales of our software, where a
trading downturn puts a strain on the operating
cash flow, credit risk arising from contractual
delays or scope changes, fluctuations in
interest rates, and foreign exchange risk.
Operating cash flow risk
The Group benefits from significant annually
recurring revenue which is received throughout
the year. A 12-month rolling cash flow forecast
is updated on a monthly basis to help identify
any risk in future operating cash flows.
Credit risk
The credit risk arising from contractual delays
or scope changes is reviewed monthly by the
PLC Board. The Group seeks to reduce the risk
credit losses arising from non-payment by our
customers. This risk is closely monitored by the
Credit & Collections team, which forms part of
Group Finance. Tribal incurred no material credit
losses during 2020.
Interest rate risk
At the end of 2020, Tribal had no bank loan
indebtedness. However, the Group is exposed
to interest rate risk because entities in the
Group hold cash and cash equivalents at
floating interest rates. Hedging activities
are evaluated regularly to align with interest
rate views and defined risk appetite, and
forward rate agreements and interest swaps
may be used, where appropriate, to achieve
the desired mix of fixed and floating rate
debt. There are no open derivative financial
instruments at the year end.
Foreign exchange risk
Tribal’s reporting currency is sterling. A
number of its subsidiaries have different
functional currencies, so movement in the
value of sterling versus the currency used by
the Group’s international operations will affect
its reported results, and the value of assets
and liabilities on the consolidated balance
sheet. Tribal’s principal currency exchange
exposure is to the Australian dollar although
as at 31 December 2020, the Group was also
exposed to movements in the rates between
sterling and the US dollar, United Arab
Emirates Dirhams and New Zealand dollar.
See Note 30 for further details.
The Group reduces its exposure to currency
fluctuation on translation by typically managing
currencies at Group level using bank accounts
denominated in the principal foreign currencies
for payments and receipts. The Group seeks to
optimise the matching of currency surpluses
generated to the foreign currency needs of the
wider Group, and where there is a sufficient
visibility of currency needs, forward contracts
are used to hedge exposure to foreign
currency fluctuations. The Group does not use
financial instruments of a speculative nature
and the Group’s treasury function does not
act as a profit centre. The volatility of sterling
as a result of Brexit discussions heightens the
foreign exchange risk.
The Group Finance team oversees the
management of foreign exchange risk, and
policies and procedures approved by the Board.
Cyber risk
The Group relies on technology in our day-to-
day business. These systems are potentially
vulnerable to service interruptions and data
breaches from attacks by malicious third
parties, or from intentional or inadvertent
actions by our employees. Failure to protect
against the threat of cyber-attack could
adversely impact the systems performing
critical functions which could lead to a
significant breach of security or contracts,
jeopardising sensitive commercial or personal
data and financial transactions of the Group.
The Group has invested in the protection of its
data and IT systems from the threat of cyber-
attack. Cyber security training is mandatory
for all employees and a formal policy exists
to minimise this risk. Furthermore, the Group
ensures compliance with ISO and GDPR
standards and there is a formal data breach
process in place adopted by the Board.
Paul Simpson
Acting Chief Financial Officer
Strategic ReportGovernanceFinancial StatementsOverview 28
Tribal Group plc Annual Report and Accounts 2020
University of Sydney case study
University of
Sydney’s journey
to the cloud
The University of Sydney embarked
upon a technological transformation
programme to take their IT infrastructure
into the cloud. They selected Tribal Cloud
services to migrate their SITS:Vision
Student Information System (SIS) to the
cloud and to then take on the full daily
management of the SIS as-a-service to
the University.
over 180
institutions worldwide using Tribal's cloud services
Overview
Strategic Report
Governance
Financial Statements
29
“ Moving our largest and most crucial
on-premises system to Tribal cloud
managed service aligns perfectly
with the University’s cloud-first
system strategy. Together with
the operational efficiencies and
locked-in cost savings, the benefits
of the University not having to plan
and execute annual major upgrades
made this a compelling and straight
forward decision.
The other benefit of this move
for the University will be the
seamless transition from the
current SITS system to the Tribal
SaaS system as the relevant
modules become available.
We look forward to the completion
of the migration to the Tribal
Cloud and the realisation of the
benefits this new service provides
to the University.”
Caroline Hungerford,
ICT Director, University
of Sydney, Australia
to deliver
success
30
Tribal Group plc Annual Report and Accounts 2020
Principal risks and uncertainties
The Group is exposed to a number of risks and uncertainties which could have a material impact
on the future performance of the Group. The table below summarises the key risks that the
Directors consider the business faces and how the Group seeks to mitigate them.
In addition to these, other risks of a financial nature are addressed in the CEO's review.
Risk area
Cause and effect
Mitigation
Reputation
Cause:
Failure to deliver contractual commitments.
Failure to meet investor expectations.
Contract tendering
Effect:
Adverse publicity relating to contract and solution delivery
with associated reputational damage and financial risk.
Cause:
Poor commercial negotiation and documentation on
major contracts with customers and suppliers. Failure to
adapt to local legal framework on international projects.
Penetration in new markets increases risk of omissions
and mistakes.
Effect:
Contract delivery failure, risk of legal claims or onerous
financial contract terms.
The Group maintains strong controls to ensure
successful project delivery.
The Board engages with investors on a
regular basis.
The Group maintains a formal Delegation of
Authority matrix to ensure appropriate visibility
and approval of all potential contracts.
Project delivery
Cause:
Failure to meet project milestones and other contractual
requirements, customer subject to own internal pressures.
The Group reviews project progress on a
monthly basis at Executive Management level
with Board oversight.
Innovation and
technology
Information
security
Effect:
Non-payment or application of contractual penalty clauses
by customers.
Cause:
Increasing emergence and demand for cloud-architected
solutions for some legacy technology platforms and
core products.
Effect:
Technically obsolete platform and products.
Cause:
Data loss or system security breach. Increasing
regulatory data protection and information security
requirements including health-related controls over
student management data.
Effect:
Losses of reputation with customers and in market.
Risk of regulatory penalty.
People
Cause:
Key employees leave the Group.
Effect:
Detrimental effect on customer relationships and
development pipeline.
The Group is investing in a new Student
Information Systems product strategy with
a Cloud Operations (hosting) focus. This is
continuing to move functionality from existing
platforms to newer cloud-based applications.
The Group operates a Secure Data Centre and
continues to roll out ISO 27001 certification
across the business and invest in security
software and training for all staff. In addition,
the Group has its own Data Protection Officer
who ensures compliance with GDPR.
The Group has incentive schemes designed to
attract, motivate and retain key employees,
whilst encouraging appropriate behaviours.
We aim to provide competitive remuneration
packages for all staff. No sole staff member
is considered to be a single point of failure.
Overview
Strategic Report
Governance
Financial Statements
31
Section 172 statement
Section 172 of the Companies Act 2006 requires each Director of the Company to act in a way they
consider, in good faith, would most likely promote the success of the Company for the benefit of its
members as a whole.
In this way Section 172 requires a Director to have regard, amongst
other matters, to the:
• Likely consequences of any decisions in the long term
•
Interests of the Company’s employees
• Need to foster the Company’s business relationships with
suppliers, customers and other key stakeholders
•
Impact of the Company’s operations on the community and the
environment
• Desirability of the Company maintaining a reputation for high
standards of business conduct, and
• Need to act fairly between members of the Company
In discharging its Section 172 duties the Board has considered the
factors set out above and the views of key stakeholders.
Engaging, consulting and action on the needs of different
stakeholders is critical for the development and delivery of a culture
and strategy that achieves long-term success. Tribal undertakes
meaningful engagement with its stakeholder groups to build trust
and supports the ethos of Section 172.
The Board acknowledges that some decisions will not necessarily
result in a positive outcome for all our stakeholders, however, it
always strives to act in the best interest of the Group and to be
fair and balanced in its approach to stakeholder management. The
needs of different stakeholders are always considered as well as the
consequences of any decision in the long term and the importance of
our reputation for high standards of business conduct. By considering
the Group’s purpose, vision, values and commitment to responsible
business together with its strategic priorities and having a process in
place for principal decision-making, the Board aims to ensure that its
decisions are in the best interests of the business.
The Company’s key stakeholders are set out in the table below. The views
of and the impact of the Company’s activities on those stakeholders
are an important consideration for the Directors when making relevant
decisions, particularly in relation to dividend payments, responses
to the Covid-19 pandemic and potential business restructures.
With significant uncertainty created by the Covid-19 pandemic the Board
oversaw the Group’s response with the aim of ensuring Tribal emerges
from the crisis well positioned for long-term success, whilst supporting our
employees and their safety and continuing to deliver for our customers.
Stakeholder Group Why they are important
Type of engagement
Response to Covid-19
Employees
Our employees are vital to
help us deliver on our strategic
objectives. We seek to attract,
develop and retain high-calibre
staff, and as a consequence, our
customers can be assured that
the service they receive is among
the best available.
Employees have the
opportunity to ask questions
regarding all aspects of
the business during our
regular Group-wide all-hands
meetings with the Group’s
Executive Management team.
The Board was satisfied that sufficient measures
were in place to protect the health, safety and
wellbeing of our people and continue to monitor
the situation.
A decision was taken to implement significant cash
and cost-saving measures, including three months
at 80% pay materially impacting all staff. All staff
moved to remote working and Tribal ensured all
staff had a safe and effective workspace from
which to work from. Furthermore, increased mental
health and wellbeing support has been provided to
all staff globally.
Investors/
shareholders
Customers /
suppliers/
other
Shareholders play an important
role in the success and growth of
the Group and have historically
provided a source of equity
to help fund some of the
acquisitions made. In addition,
shareholders provide important
feedback to the Executive
Directors on market conditions,
expectations, and economic
performance.
The Group reports formally
to its shareholders twice
annually, at half year and
year end.
At the same time the
Executive Directors present
the results in the form of
Investor Presentations. The
Directors are also available at
the AGM to answer questions.
It was concluded that the Group was in a strong
financial position as a result of the cash and cost-
saving measures put in place. Given the uncertainty
it was prudent to reduce discretionary cash outflows
where possible, to ensure that the Group emerges well
positioned to deliver long-term sustainable growth
for shareholders. The Board took action to pause the
payment of the 2019 final dividend until there was
more clarity around the true liquidity requirements of
the Group. As trading and cash flows remained positive
an interim 2020 dividend was paid in December 2020.
Delivering our strategic priorities
and ensure we continue to operate
successfully requires strong
mutually beneficial relationships
with customers, suppliers and
government departments. Tribal
aims to build strong business
relationships so it can maximise
cost efficiencies and enhance
positive outcomes for all.
The Group has regular
communication via email,
newsletters and the Group’s
website that includes news
and regular blogs. We hold an
annual conference, Empower,
for all customers globally
where sessions are run to
update customers on our suite
of products and services.
The Board were satisfied with the continuity plans
in place to ensure the continued delivery of work
by moving to a remote delivery model. Particular
attention was given to how Tribal responded to
changing customer priorities and challenges they
may face in the longer term.
32
Environmental, social and governance report
Tribal’s commitment to improving its performance in relation to environmental, social and governance
(ESG) issues is long-standing and well established. We believe the credibility and longevity of any
business goes beyond pure financial gain; a principle demonstrated by our mission to empower the
world of education and supported by our strong values-based culture.
Though we focus on a wide range of matters which affect our stakeholders, in early 2021 we formalised six priority areas for the Group going
forward. Each area has key initiatives and objectives for the coming year and appropriate ownership from across our Executive Management
Team. We have also demonstrated where these priority areas align with the UN’s Sustainable Development Goals (SDGs), as shown below.
Ultimate responsibility for Tribal’s ESG performance lies with the Board, who receive regular updates on the key initiatives from relevant owners.
However, as part of our journey to continually improve our approach and performance in these areas and more, Tribal has committed to creating
a formal ESG Committee in 2021, which will be chaired by Nigel Halkes.
Key ESG initiatives
Tribal is currently focused on improving its impact in the following areas.
Environmental
Social
Governance
Travel
Paperless
Diversity
Charity
Compliance
Data
Reduced
travel with
carbon offset
Minimal
paper
commitment
Within Tribal
Helping our
customers
Student
welfare
Global ISO
certification
Internal
systems
improvements
e
v
i
t
a
i
t
i
n
I
t
n
e
m
t
i
m
m
o
C
s
G
D
S
N
U
Our culture and values
The success of Tribal is dependent on our culture – the way we think, behave and act towards each other and our key stakeholders. We bring
together highly talented people in a creative and collaborative environment, and are united through our well-established values, which we
continually reinforce and celebrate. In 2020, we rewarded 311 people globally who had gone above and beyond in living our values.
Our values are:
Trustworthy: We value honest discussion, we anticipate, listen and respond to requirements and we rely on each other.
Pioneering: We welcome change, we strive to innovate and we aim to meet the needs of the ever-evolving education marketplace.
Accountable: We take ownership, we keep our promises and are focused on delivering successful outcomes.
Dedicated: We are committed to our customers; work to secure long-term partnerships and we collaborate to deliver optimum solutions.
Tribal Group plc Annual Report and Accounts 2020
33
Environmental
As previously demonstrated by our commitment to the Energy Savings
Opportunity Scheme (ESOS), Tribal has been focused on reducing its
environmental impact for a number of years. Though the pandemic
has allowed us to improve our performance in many of these areas
this year, we’re determined to change behaviours so that such
improvements can continue in the long term.
Key initiative: travel
Remote working and the lack of in-person meetings necessitated by
the pandemic has meant our travel has been greatly reduced in 2020.
However, Tribal has been seeking to reduce the travel of our people
for several years, and we believe that the pandemic will have done
a great deal to change attitudes towards unnecessary travel going
forward. We have committed to a minimal travel budget and set a
target of providing remote delivery first, with onsite work deemed
a premium activity. As such, some of our employees have already
changed their contracts to stay as remote workers permanently.
Where travel cannot be avoided, we will aim to offset our emissions
with reductions elsewhere.
Key initiative: paperless
We are focused on finding ways to reduce our overall resource
consumption. Though Tribal still has many customers that require
printed documents, we are working with them to change this
behaviour and are committed to minimising our paper usage (and the
resultant energy use from printing) wherever possible. We have ended
our UK contracts with our printer-photocopiers and will look to do the
same globally in 2021. We have also invested in equipment that will
significantly reduce our need for printing when delivering our services.
Table 1: 2020 energy consumption
Area
Category
Electricity
Electricity
Gas
Stationary combustion
Transport fuel
Combustion of fuel used in personal cars on business use
Table 2: Scope 1, 2 and 3 intensity ratio
Year ended 31 December
Tonnes of CO2e
Percentage
Emissions intensity relative to revenue (tCO2e/£m)
Streamlined energy and carbon reporting (SECR)
The new SECR regulations came into effect on 1 April 2019. Under
these UK regulations, we are obliged to report UK energy use and
associated greenhouse gas emissions. The SECR report covers Scope
1 direct emissions, which includes company-owned vehicles, Scope 2
indirect emissions from electricity purchased and Scope 3 emissions
from private vehicles for business use. The SECR report matches the
financial year for the year ended 31 December 2020.
In 2020, the Group’s Scope 1 and Scope 2 emissions were 120.15
tCO2e and Scope 3 emissions were 55.68 tCO2e. The greatest
contributors to Scope 1 and Scope 2 operational emissions are the
electricity and gas used in powering our buildings. Scope 3 emissions
are attributed to fuel used in employees' cars on business use. The
Group’s intensity ratio (Scope 1, 2 and 3 emissions relative to revenue)
is 2.41 tCO2e/£m. As this is the first year of reporting, Tribal is not
required to disclose information for the previous year. Tribal Group
plc is an unquoted large company for the purpose of SECR, we are
therefore only required to report on UK energy use.
Tribal have followed the 2019 UK Government environmental reporting
guidance. The figures relate to the required elements of each scope 3
category rather than the optional elements. Tribal have used 2020 UK
Government’s Conversion Factors for Company Reporting.
Only energy consumed in the UK has been reported and the Group
have taken the exemption to exclude emissions and energy consumed
outside of the UK and offshore area.
Sub-category
2020 consumption
Units
Purchased electricity
464,912
Natural gas
Small sized car (Diesel)
Medium sized car (Diesel)
Large sized car (Diesel)
Small sized car (Petrol)
Medium sized car (Petrol)
Large sized car (Petrol)
Average sized car (Hybrid)
Average sized car (Other)
Scope 1
11.76
6%
0.16
Scope 2
108.39
62%
1.48
63,944
5,691
15,678
5,511
9,918
14,748
4,323
24
914
Scope 3
55.67
32%
0.76
kWh
kWh
kWh
kWh
kWh
kWh
kWh
kWh
kWh
kWh
Total
175.83
100%
2.41
Strategic ReportGovernanceFinancial StatementsOverview 34
Environmental, social and governance report continued
Energy efficiency action
Tribal is part of the Government initiative, Energy Savings Opportunity
Scheme (ESOS) and completed its Phase 2 assessment in November
2019. This reviewed Tribal’s energy consumption across its UK offices
and Tribal is implementing a number of energy saving opportunities as
identified throughout its Global offices. Measures implemented during
the period include the following:
Key initiative: student welfare and volunteering
We will be supporting ‘Student Minds’ throughout 2021. Student
Minds is the UK’s student mental health charity, empowering students
and members of the university community to look after their own
mental health, support others and create change. Tribal also continues
to allow employees to take an additional day’s leave to volunteer and
support charitable causes.
• Optimising and aligning operation of aircon units with the
operational hours of the business.
•
Increase server room temperature.
• Switch off and introduce thermostat for the appliance and equipment.
•
Installing PIRs and dimming for lighting.
• Optimising aligning the hours of condensing boilers with the
operational hours of the business.
• Ensuring there is no active heating and cooling running at
the same time.
• Switch off and introduce thermostat for the appliance and
equipment.
• Repair existing assets such as fans, PIRs, window sealant.
• LED rolling replacement/installation phase 2 (of 4).
In addition, Tribal undertook a Travel Energy Use assessment to identify
ways by which to reduce its carbon footprint, this includes initiatives such
as promotion and monitoring of video and teleconference meetings and
the use of public transport and car sharing options wherever possible.
Tribal has actively moved customers to the Public Cloud and we are
promoting Tribal Cloud, our managed Cloud service for customers.
We work with globally recognised third parties who provide Cloud
infrastructure and we expect working with these established
businesses to have a positive effect on the impact of our global
server usage.
Social
Tribal is committed to contributing to a fairer and more socially
inclusive world. As well as having a positive impact on our employees
and customers, we are aware of the positive contribution we can make
to wider society.
Key initiative: diversity
Development, retention and recruitment strategies at all levels of
the business have a strong emphasis on diversity. We’re also working
to improve diversity across our sectors. In 2020, our services in
recruitment and teacher training certification in the US helped to
progress diversity and inclusion in the industry in the wake of the
Black Lives Matter movement.
Our people
Tribal’s capabilities are founded on the talent and expertise of its
people. Our success as a growing international business is a tribute
to our people’s energy, commitment and know-how. We invest in our
people, providing them with the tools and training to support and
enable them to realise their potential.
A key tool for Tribal’s people is our bespoke competency framework,
which underpins a range of Career Pathways. Our aim is to help our
people to understand how they can develop in their current role as
well as plan for their future growth and development. It is important
to us that our people can envisage a long and successful career, our
investment is designed to help and empower people to take ownership
of their careers and to navigate a dynamic organisation.
We continue to build on our learning and development programmes
and have only seen demand and investment increase in response.
In 2020, we ran numerous remote courses in the UK and Australia,
including business development programmes and two key strategic
initiatives which have centred on the refresh and expansion of our
Manager Academy. The Academy broadens the skills and commercial
awareness of our leaders and future leaders and supports our Digital
Learning strategy. All of our people globally have access to a market
leading online learning platform (e.g. Pluralsight, LinkedIn learning). In
2020, our people spent thousands of hours engaging in self-directed
learning, allowing everyone the opportunity to develop new skills for
their role, and also develop new capabilities for future opportunities.
As well as focusing on the performance, development and success
of our existing people, a key part of our people strategy involves
investing in early talent programmes across the business; bringing
in new recruits who learn and work in some of our key job families
including Product Development and Customer Support. This included
between 25 and 30 active or former apprentices who have secured
formal qualifications whilst at the same time establishing a solid
foundation of practical work experience from which to build their
career with us and contribute to our ongoing success.
Tribal Group plc Annual Report and Accounts 2020 Overview
Strategic Report
Governance
Financial Statements
35
Employee engagement and wellbeing
Communication with our people and maintaining wellbeing is crucial.
We use a combination of Group-wide updates, including webinars,
as well as running specific local communication sessions. We
supplement these events by communicating on a number of channels
(email, internal bulletin boards), our corporate social media and in our
now established bimonthly staff news update – Tribal Talk. We also
provide all our UK employees with access to Thrive, an app featuring
in-depth tools and support for improving wellbeing.
During 2020, we assigned Engagement Champions who are
dedicated, creative and enthusiastic about creating an environment
that enriches our employees experience of being at Tribal globally.
Some of the initiatives in 2020 were the continuation of Wellbeing
days, 'Try Something New' month and the launch of Tribal’s 900 Acts
of Kindness initiative.
Gender pay equality
Tribal published its first Gender Pay Gap statutory report for our UK
employees in March 2018, due to the Coronavirus outbreak, the
Government Equalities Office (GEO) and the Equality and Human Rights
Commission (EHRC) suspended enforcement of the gender pay gap
reporting for the 2019/2020 year. Despite this, Tribal has continued to
prepare and publish the 2020 report. Only 26% of organisations have
published gender pay gap information for 2019 making meaningful
comparisons difficult, however, like the vast majority of UK companies, it
highlighted that we do have a gender pay gap, primarily because there are
more women than men in our lower paid roles, and fewer in higher paid ones.
Tribal continues to strive for equality across all groups. In our
forthcoming Gender Pay Gap report to be published in April 2021,
we will describe the range of actions and initiatives we are taking
to proactively work towards closing the gender pay gap.
Improving education
Our professional development and training work with the National
Centre for the Excellence of Teaching Mathematics (NCETM) is
contributing to improving education for children across the UK.
This includes our involvement in Numberblocks, a series of short
programmes on the BBC aimed at helping preschool age children
develop early understanding of numbers. NCETM Director for Primary
Maths, Debbie Morgan, this year received a CBE for services to
education in the Queen's Birthday Honours.
Governance
Tribal believes in the importance of good Governance and maintaining
the highest standards across its operations. The Group’s approach to
managing its ESG impacts is evolving as we formalise our policies and
systems, and the creation of an ESG Committee will ensure effective
oversight and investment in these increasingly important areas.
Key initiative: compliance
Across the UK, Tribal has maintained the ISO27001 Standard
for Information Security and the ISO9001 Standard for Quality
Management for the last several years. The Group is now focused
on achieving a globalised certification, with assessments of our
offices in Australia and the Philippines due in Q1 2021. Being globally
aligned and certified is important for mitigating our risks and assuring
our customers.
Key initiative: data
As the Tribal Group has grown via acquisitions, historically it has not
had fully integrated internal systems for areas such as finance and HR.
As part of ongoing internal systems improvements, we are currently
focused on achieving consistency of data across the Group by bringing
in new universal systems and approaches.
Bribery, corruption and whistleblowing
Tribal provides training to all staff on Anti-bribery and Corruption. We
have engaged a third party to act as an independent whistleblowing
contact for all our staff should they deem it necessary.
Tax strategy
Taxes are managed on a prudent and moral basis; our strategy is to pay
taxes in line with all global rules and regulations. In 2020, we repaid all
Furlough support (£80k) and all Covid-19 tax deferrals within the year.
The Strategic report, comprising the ‘Our business model’,
‘Our strategy’, ‘Principal risks and uncertainties’, ‘Business
review’, ‘Financial Review’ and ‘Corporate and social responsibility’
sections, was approved by the Board of Directors on 17 March
2021 and signed on its behalf by:
Richard Last
Chairman
Mark Pickett
Mark Pickett
Chief Executive Officer
CAUTIONARY STATEMENT
This information has been prepared solely to provide information
to shareholders to assess how the Directors have performed their
duty to promote the success of the Group. The Strategic report
contains certain forward-looking statements. These statements
are made by the Directors in good faith based on the information
available to them up to the time of their approval of this report
and such statements should be treated with caution due to the
inherent uncertainties, including both economic and business risk
factors, which underlie any such forward-looking statement.
36
Tribal Group plc Annual Report and Accounts 2020
Board of Directors
The Board, has a good blend
of backgrounds pertinent
to the challenges and
opportunities Tribal faces
Richard Last
Chairman
Mark Pickett
Chief Executive Officer
Appointed
Richard joined the Board in November 2015.
Appointed
Mark joined Tribal and the Board in July 2016.
Experience
Richard is currently Chairman and Non-Executive Director of
AIM listed Gamma Communications plc. In addition, a Non-
Executive Director of AIM listed Corero Network Security plc
and Non-Executive Chairman of fully listed HYVE Group plc.
Richard is a Fellow of the Institute of Chartered Accountants
in England and Wales (FCA) and has over 30 years experience
of Public Companies, particularly IT Software and Services and
Communications businesses.
Experience
Previously he was Chief Financial Officer and Finance Director,
UK of Computer Sciences Corp (CSC), a US-based global
leader in technology-enabled business solutions and services.
Mark also spent 18 years in a variety of senior finance roles
with Oracle across a number of geographies, primarily in its
software businesses.
Overview
Strategic Report
Governance
Financial Statements
37
Key to Committee membership:
Nomination Committee
Audit Committee
Remuneration Committee
Roger McDowell
Senior Independent Director
Nigel Halkes
Non-Executive Director
Appointed
Roger joined the Board in November 2015.
Appointed
Nigel joined the Board in January 2020.
Experience
Roger is currently serving as Non-Executive Chairman of
Avingtrans plc, Hargreaves Services plc, Flowtech Fluidpower
plc and Brand Architeckts plc (formerly Swallowfield) ,
Non-Executive Director of Augean plc, Proteone Sciences plc,
ThinkSmart plc and British Smaller Companies VCT 2 plc.
Experience
Nigel is a Fellow of the Institute of Chartered Accountants
in England and Wales (FCA), he qualified with EY and had a
successful career with EY, retiring as Managing Partner UK and
Ireland in 2013. Nigel has pursued a portfolio career since 2013
and was a Non-Executive Director at FreeAgent Holdings plc, a
provider of Software as a Service based accounting solutions,
from its successful 2016 IPO to its acquisition by RBS in 2018.
Nigel continues to take time to develop his Non-Executive
leadership skills.
38
Tribal Group plc Annual Report and Accounts 2020
Executive Committee
Mark Pickett
Chief Executive
Officer
Paul Simpson
Acting Chief Financial
Officer
Mike Cope
Chief Technology
Officer
Mark Wilson
Chief Operating
Officer
Appointed
Mark joined Tribal and the
Board in July 2016.
Appointed
Paul joined Tribal in
December 2016.
Appointed
Mike joined Tribal in
September 2019.
Appointed
Mark joined Tribal in
December 2016.
Experience
See biography on page 36.
Experience
Paul was appointed as Acting
Chief Financial Officer in March
2019. He has worked for a
variety of listed companies
in the UK and Australia.
Paul supported Jelf Group
plc though a number of
acquisitions prior to its own
acquisition and subsequent
integration into Marsh &
McLennan companies. Paul
is a Fellow of the Institute of
Chartered Accountants in
England and Wales (FCA).
Experience
Mike was formerly Chief
Information Officer at
University College London
(UCL), Mike is an experienced
Board level leader, with
success in leading businesses
during periods of growth.
Mike’s previous roles saw
the delivery of significant
strategic change programmes
within the IT sector as well
as creating an improved
customer product rating while
reducing IT operation costs.
Experience
Mark initially joined as the
Managing Director for the
EMEA region. Mark is an
experienced business leader
having spent over 20 years
in national and international
roles in software and services
businesses. In that time he
has enjoyed great success
driving transformation
and helping his clients
maximise the value to their
organisations of deploying
technology enabled solutions.
Overview
Strategic Report
Governance
Financial Statements
39
Chloe Payne
Director of HR
Janet Tomlinson
Managing Director –
Education Services
Mike Beech
Product Management
and Marketing Director
Peter Croft
Managing Director –
APAC Region
Appointed
Chloe joined Tribal’s HR
team in 2007.
Appointed
Janet joined Tribal at the
end of 2009.
Appointed
Mike joined Tribal in
March 2016.
Appointed
Peter joined Tribal in
September 2017.
Experience
Chloe has been part of
many notable aspects in
Tribal’s evolution, including
the early days of our
internationalisation. Chloe was
appointed to lead the function
globally in April 2017. Prior
to Tribal, Chloe worked in the
Health sector, supporting a
large social care organisation
through a period of sustained
growth, and at Cambridge
Assessment where she
managed their recruitment
function internationally.
Experience
Janet was Director of
Education and Children’s
Services in Oxfordshire.
Janet has chaired a range
of regional partnership
Boards, including Children’s
Trusts, Safeguarding Boards,
Education Action Zones and
Creative Partnerships. She has
also advised the Government
on the educational impact
of migration and on school
inspection policy.
Experience
Mike heads up Tribal’s global
marketing team. Responsible
for the strategic development
of Tribal’s marketing initiatives
and driving awareness of the
Group’s portfolio of capabilities,
Mike has the expertise, drive
and enthusiasm needed to ‘tell
the Tribal story’ worldwide.
Experience
Peter leads the Asia Pacific
business with a focus on
delivering growth and benefits-
driven customer experiences.
Peter has over 20 years’
experience in successful
leadership of IT enterprises in
the APAC region, and has held
Directorships in Australian,
UK, US and Malaysian
technology companies.
40
Tribal Group plc Annual Report and Accounts 2020
South Devon College case study
Empowered
student
communications
At the time of turning to Tribal for a solution,
South Devon College were using multiple
communication platforms, causing lots of
issues. They wanted a digital solution to
improve direct communication between
staff and students, and students and their
peers, and also to improve college-wide
messages and announcements. They turned
to Tribal’s mobile solution, Tribal Engage.
over 2 million
messages sent using the Tribal Engage app
Overview
Strategic Report
Governance
Financial Statements
41
“Tribal technology has modernised and grown
with our college to enable us to put the resource
into supporting students, rather than just
administering their information. The college
is undergoing a digital programme of change
and Tribal products help to deliver this. It has
been really great to see the team delivering on
the vision they had for Tribal Engage, it helped
me realise that Tribal technology fitted our
aspirations and desires for the services we
provide students.”
Dan Hallam, Assistant Principal at South
Devon College, UK
for a secure
community
Tribal Engage is revolutionising
communication and empowering
students to take control of their
learning. Through a secure, private
social network app, students and
staff can communicate freely
with each other, and college
announcements can be shared
to students easily.
42
Corporate governance
Tribal is committed to high standards of corporate governance and maintaining
sound business ethics.
The Directors acknowledge the
importance of good corporate governance
and formally adopted the principles of the
Quoted Companies Alliance Code (QCA) on
25 September 2018, this was reviewed on
11 November 2019 and reapproved by the
Board on 17 March 2021. Compliance with
the code is shown on pages 46 to 53.
The PLC Board applies the principles of good
governance and supports a culture of open
debate and constructive challenge to enable
Tribal to meet its objectives. In fulfilling their
responsibilities, the Directors govern the
Group in the best interest of the Company
and its shareholders whilst having due regard
to the interests of other stakeholders
including customers, employees, suppliers
and regulators.
The PLC Board
The PLC Board (the Board) is responsible
for the Company’s systems of corporate
governance.
The Non-Executive Directors Richard
Last, Roger McDowell and Nigel Halkes,
are all considered to be independent of
management and free from any business
or other relationships that could materially
interfere with the exercise of their
independent judgement. The Non-Executive
Directors meet at least once a year without
the Executive Directors present.
Nigel Halkes was appointed as Non-Executive
Director with effect from 20 January 2020
and became the Chairman of the Audit
Committee following the AGM in April 2020.
All Directors are required to submit to re-
election each year at the Annual General
Meeting (AGM) of the Company.
All the Directors have access to the advice
and services of the Legal Counsel. Each
Director is entitled, if necessary, to seek
independent professional advice at the
Company’s expense.
The Board meets at least eight times
each year with additional meetings when
circumstances and urgent business dictate.
At these meetings the Board reviews a
schedule of reserved matters including
trading performance, financial strength,
strategy (including investment and acquisition
opportunities), risk management, controls,
compliance, reports to shareholders and
succession management.
The Board plans to evaluate its performance
and that of its Committees through a
process of regular dialogue and periodic
formal Board evaluations.
Subsidiary Boards
The Group’s subsidiary companies operate
a Board of Directors that comprises at least
one PLC Director and senior management
of the subsidiary as appropriate.
Board Committees
The PLC Board has established three
Committees to assist with its effective
operation: the Audit Committee, the
Remuneration Committee and the
Nomination Committee. Each Committee
has responsibility to the Board which are
outlined in formal Terms of Reference that
have been approved by the Board. The
Terms of Reference, which are available
on the Group’s website www.tribalgroup.
com, are subject to annual review to ensure
the Committees continue to follow best
practice. The Chairman of each Committee
reports to the PLC Board after each
Committee meeting and minutes are
tabled at the next PLC Board meeting.
Delegated authorities
All other matters not specifically reserved
to the Board are delegated to management
in accordance with a schedule of Delegated
Authorities. These delegated authorities
cover expenditure, agreements, financial
matters, remuneration and agreements
with third parties. Management is required
to report to the Board concerning authority
exercised and matters which come, or may
come, within the scope of the Board.
Tribal Group plc Annual Report and Accounts 2020 43
Membership of Board Committees and attendance at Board and Committee meetings during the 12-month period under review are as follows:
Committee
Number of meetings in period
Meetings attended by members:
Richard Last
Roger McDowell
Nigel Halkes
Mark Pickett
* By invitation.
PLC Board
Audit Committee
Remuneration
Committee
Nomination
11
11
11
11
11
4
4*
4
4
4*
2
2
2
2
2
1
1
1
1
1
Audit Committee
The Audit Committee is chaired by Nigel
Halkes and includes Roger McDowell.
The Chairman, Chief Executive Officer,
representatives from finance and our
external auditors participate in the meeting
by invitation, as and when appropriate and
necessary, as non-voting observers. The
Committee meets at least twice a year.
The Committee oversees the Group’s financial
reporting and internal controls, including
their effectiveness and risk management
processes, and the external audit process
and has the following responsibilities:
• considering reports from the auditors
on the annual and half-yearly financial
statements;
• monitoring the integrity of the Group’s
financial statements and formal
announcements relating to the Group’s
financial performance;
• making recommendations to the Board
on the appointment and remuneration of
the external auditors;
•
reviewing the independence and
objectivity of the external auditors and the
effectiveness of the audit process; and
• considering reports on the effectiveness
of the Group’s risk-management procedures
and internal controls.
The Committee advises the PLC Board
on the appointment, independence and
objectivity of the external auditors and on
the remuneration for both audit and non-audit
work. The Committee also discusses the
nature, scope and results of the audit with
the external auditors. The Audit Committee
Chairman separately meets with the external
auditors during the course of the year.
The auditors’ report to the Audit Committee
on matters including independence and non-
audit fees on an annual basis. The specific
audit partner changes every five years. The
amount charged by the external auditors for
the provision of services during the 12-month
period under review is set out in Note 5 of the
financial statements on page 90.
Strategic ReportGovernanceFinancial StatementsOverview 44
Corporate governance continued
Remuneration Committee
The Remuneration Committee is chaired by
Roger McDowell and includes Richard Last and
Nigel Halkes. The Committee meets at least
twice a year.
The Committee sets the remuneration of
the Directors, including basic salary, bonuses
and other incentive payments and awards.
It also ratifies policy proposals in respect
of remuneration of senior executives in
the Group.
The Remuneration report which details the
Directors’ remuneration, pension entitlements
and service contracts, including information
on Directors’ interests, is set out on pages
57 to 61.
Nomination Committee
The Nomination Committee is chaired by
Richard Last and includes Roger McDowell,
Nigel Halkes and Mark Pickett, who provides
Executive management insight. The
Committee meets at least once a year.
The Committee deals with appointments to
the PLC Board, monitors potential conflicts
of interest and reviews the independence
of the Non-Executive Directors.
The PLC Board also operates the following
management Boards and committees:
Executive Board
The Executive Board is chaired by Mark
Pickett. The members of the Executive
Board are drawn from the heads of the
business units and other operational
areas. The Executive Board typically meets
monthly but the members interact frequently
in the normal course of their roles. The
Executive Board oversees the Group’s
operational and financial performance and
is responsible for day-to-day management
decisions in line with the Group’s strategy.
It also considers succession planning and
talent management. Further matters are
outlined in the Delegated Authorities.
Global Governance Committee
The Integrated Governance Committee is
chaired by the Chief Financial Officer and
reports to the Chief Executive Officer. The
Committee meets monthly and includes
representatives from Finance, Information
Services, Human Resources, Legal,
Compliance, Property and Procurement.
There are separate sub-committees for
Health & Safety and Information Security
which monitor relevant legislative and
regulatory requirements.
Internal controls and risk
management
The Board is responsible for establishing
and monitoring internal control and risk
management systems throughout the
Group and assessing their effectiveness.
The Board recognises that rigorous systems
of internal control are critical to the Group’s
achievement of its business objectives and
that those systems are designed to manage
rather than eliminate risk of failure to achieve
business objectives. The internal control and
risk management systems can only provide
reasonable, not absolute, assurance against
material misstatement or loss.
Tribal maintains a risk framework that
contains the key risks faced by the Group.
The framework includes the impact and
likelihood of key risks and the controls and
procedures implemented to mitigate them.
Risk management is embedded within
Tribal by:
• setting strategic direction,
including targets;
• maintaining a clear authorisation
framework;
•
reviewing and approving annual
plans and budgets;
• maintaining documented policies
and procedures; and
•
regularly reviewing and monitoring
the Group’s performance in relation
to risk through monthly Board reports.
The Directors are also responsible for the
Group’s system of internal control and for
reviewing its effectiveness.
The Audit Committee reviews the
Group’s internal financial controls and risk
management systems and the Board reviews
the effectiveness of all the Group’s internal
controls including operational and compliance
controls and risk management systems in
effect during the period.
Tribal Group plc Annual Report and Accounts 2020 Overview
Strategic Report
Governance
Financial Statements
45
To further manage risks faced by the Group,
the Company attempts to ensure that
employees fully understand the Group’s
business strategy and objectives. The
Group’s communication and consultation
programme includes regular internal briefings
by Directors to all employees throughout the
year. Regular meetings are held with staff and
managers, both to discuss specific issues
and provide an exchange of information. Email
communication and the Group’s intranet site
also to provide information to employees.
The Group operates a comprehensive
budgeting system whereby managers submit
detailed budgets and forecasts, which are
reviewed and approved by Executive Directors
prior to submission to the Board for approval.
Each month, actual results are reported
against budget and forecast which are
distributed to managers and are provided to
the Board in advance of meetings.
days in advance of the meeting. Details of
the AGM are set out in the Notice of Meeting.
The Directors are available at the AGM to
answer questions, both during the course
of the meeting, and informally afterwards.
Contact with major shareholders is principally
maintained by the Chief Executive Officer and
the Chief Financial Officer, who ensure that
their views are communicated to the Board
as a whole. The Chairman is also available
to discuss governance and other matters
directly with major shareholders. At every
Board meeting, the Board is provided with the
latest brokers’ reports and a summary of the
contents of any meetings with shareholders.
The Board considers that the provision of
these documents is a practical and efficient
way for both the Chairman and Senior
Independent Director to be informed of major
shareholders’ opinions on governance and
strategy and to understand any shareholder
issues and concerns.
Communication with shareholders
The Group reports formally to shareholders
when its annual and half-yearly financial
statements are published. At the same time,
Executive Directors present the results to
institutional investors, analysts and the
media. Notification of the date of the AGM
is sent to shareholders at least 21 working
Approved by the Board of Directors on
17 March 2021.
Richard Last
Chairman
46
Quoted Companies Alliance Code (QCA)
Tribal adheres to the Quoted Companies Alliance Corporate Governance Code (QCA Code),
revised and published in April 2018. Compliance with the code and the activities we undertake
to successfully manage the Tribal business are detailed below.
Tribal follows the QCA Code’s 10 principles of corporate governance, these are detailed in the table below together with Tribal’s
practices against the principles.
Deliver Growth
1
2
3
4
Establish a strategy and business model which promote long-term value for shareholders
Seek to understand and meet shareholder needs and expectations
Take into account wider stakeholder and social responsibilities and their implications
for long-term success
Embed effective risk management, considering both opportunities and threats, throughout
the organisation
Maintain a Dynamic Management Framework
Delivering growth is key to Tribal's
success. Our strategy, business model,
stakeholder engagement activities and
risk management all help achieve this.
5
6
7
8
9
Maintain the Board as a well-functioning, balanced team led by the Chairman
Ensure that between them the Directors have the necessary up-to-date experience, skills and
capabilities
Tribal maintains its own Dynamic
Management Framework and has
experienced Board members.
Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement
Promote a corporate culture that is based on ethical values and behaviours
Maintain governance structures and processes that are fit for purpose and support good
decision-making by the Board
Building Trust
10
Communicate how the Company is governed and is performing by maintaining a dialogue with
shareholders and other relevant stakeholders
Building trust with all stakeholders is
key to the successful functioning of
our business.
Tribal Group plc Annual Report and Accounts 2020 47
Deliver growth
Tribal’s goal is to be the international, market-
leading education software and services
provider, valued by customers, employees and
shareholders alike.
Overview
Tribal is a world-class, education focused
company, providing the expertise, software
and services needed by education and
business organisations worldwide. Everything
we do underpins the experience and success
of our customers’ students.
We operate internationally and serve hundreds
of Higher Education, Further Education
and Vocational institutions; thousands of
schools; and many Government and State
bodies, Training Providers and Employers; in
over 55 countries. Tribal employs over 800
professionals with deep educational domain
expertise, across our offices in the UK,
Australia, New Zealand, Canada, US, Middle
East, Philippines and Malaysia.
Vision & mission
Our vision is simply: to empower the world
of education.
Our mission is: to provide the expertise,
software and services required by
education and business organisations
worldwide to underpin student success.
We strive to research, develop and deliver
products, services and solutions needed
by education institutes across the world
that support the primary goals of educating
students, providing optimum learning
experiences and ultimately, delivering
successful outcomes. Our solutions enable
institutes to maintain their focus on the
quality of learning and development offered
to their students.
Our key strengths
• Extensive and long-standing customer
relationships – we enjoy deep and long-
term relationships with our customers
across all education sectors.
• Broad, complementary portfolio –
we offer a range of world-class software
and education services: market-leading
Student Information Systems that
underpin the student journey from
recruitment to successful outcomes;
a broad range of education services,
covering quality assurance, peer review,
improvement and inspections; and a
student survey and analysis business,
which provides the leading global
benchmarks for student experience.
• Educational expertise and focus –
our deep educational domain expertise
has been developed through a long and
successful history of working with, and
focusing on, the education market. Our
team includes many former education
practitioners.
•
International delivery and insight –
our business operates globally, and
actively collects and shares leading-
practice and market insight with our
worldwide customer base.
Our direction
We are developing a new Student Information
System, Tribal Edge. This combines our rich
experience and expertise, with feedback from
our customers as to what they require now
and in the future. Tribal Edge will initially
enhance and, in time, replace our existing
student systems. Tribal Edge will provide
richer functionality and a platform for our
customers in Higher and Further Education
to underpin their management and oversight
of the student journey, from recruitment
through to successful completion or
graduation, and beyond.
Tribal Edge has been designed for the Cloud,
and with our collaboration agreement with
Microsoft will be available on the Microsoft
Azure cloud platform.
Business model
Our business model is shown on pages
10 and 11.
Strategic priorities
Our strategy is to focus globally on education
sectors – Higher Education, Further Education
and Vocational institutions, Schools,
Government and State bodies, Training
Providers, and Employers – to underpin student
success through the provision of expertise,
software and services. Our four strategic
priorities are outlined on pages 14 and 15.
Shareholder engagement
Tribal proactively engages with its
shareholders and potential shareholders
alike. This is through a series of mechanisms:
• Formal announcements – as a London
Stock Exchange (LSE) AIM listed company,
we make all statutory announcements
through the LSE’s regulatory news service
(RNS). A full RNS feed is maintained on
our investor area (see below). Tribal
reports formally to shareholders by the
publication of its annual and half-yearly
financial statements.
• Analyst and investor presentations –
the Executive Directors present the half-
yearly and annual results to institutional
investors, analysts and the media. The
presentations are available on the investor
section of the website. Institution investor
and analyst presentations after half-yearly
and annual results have been well received.
Strategic ReportGovernanceFinancial StatementsOverview 48
Tribal Group plc Annual Report and Accounts 2020
Quoted Companies Alliance Code (QCA) continued
Deliver growth continued
Shareholder engagement continued
• AGM – Notification of the date of the AGM
is sent to shareholders at least 21 working
days in advance of the meeting. Details
are set out in the Notice of Meeting. The
Directors (and the auditor) are available at
the AGM to answer questions, both during
the course of the meeting, and informally
afterwards. All details, including previous
AGM communications, can be found on the
Investor Announcements and the Investor
Documents pages.
• News releases – in addition to statutory
announcements, we use RNS Reach
to present regular business news and
updates to shareholders. We also have
a full news service available on the
Tribal website.
•
•
Interactive sessions – Tribal’s Executive
Directors arrange regular (six monthly)
face to face sessions with any interested
shareholders or potential shareholders,
and are also available for updates at
any point in the year. See contact
details below.
Investor focused micro-site – we
maintain a full section on the main Tribal
website for investors. This includes the
Financial Calendar and real-time RNS
announcements; the latest investor
documents, presentations and reports;
share information and share dealing
interactive feeds; this corporate
governance statement; a full list of
investor related contacts.
• LSE Profile – we also maintain a profile
on the London Stock Exchange Issuer
services website.
•
Investor Email – we also manage an
investor email account for any direct
queries – investors@tribalgroup.com.
Contact with major shareholders is principally
maintained by the Executive Directors, who
ensure that their views are communicated
to the Board as a whole. The Chairman is also
available to discuss governance and other
matters directly with major shareholders. At
every Board meeting, the Board is provided
with the latest brokers’ reports and a
summary of the contents of any meetings
with shareholders. The Board considers
that the provision of these documents is
a practical and efficient way for both the
Chairman and Senior Independent Director to
be informed of major shareholders’ opinions on
governance and strategy and to understand
any shareholder issues and concerns.
If you would like to know more about Tribal
as a shareholder, or potential shareholder,
please contact us through our investors
email address and we will put you in touch
with one of our Executive Directors.
Wider stakeholder and
social responsibilities
As well as our shareholders, we regularly
engage with the wider stakeholder group
including employees, customers and
regulators. Our engagement activities and
ability to build trust, are described here.
In addition, we take our Corporate Social
Responsibilities (CSR) seriously and
encourage a proactive and positive
attitude towards CSR across the Company.
Tribal empowers educators and we are proud
to support an industry that changes people’s
lives and contributes so much to society. We
believe in fairness, integrity, and ‘doing the
right thing’. This means we treat our people
well, and that we expect to give something
back to the communities where we work,
through our charitable activities.
Previously, we had set-up and managed our
own charitable body – the Tribal Foundation.
This has contributed to and supported
numerous projects within the UK and
globally, with the stated aim of widening the
opportunity of education to those who are
in anyway disadvantaged. The Foundation
has contributed over £600,000 to a variety
of programmes.
From 2018 onwards, we have decided to
adopt a different approach to encourage
wider employee participation. We will continue
to run Give As You Earn (GAYE) schemes,
including the option of Company matched
contributions, to allow employees
to contribute to their chosen charities, but
we now also allow every member of staff to
take a day's paid leave to support a charity
of their choice. This has been actively
promoted and team-wide participation has
been encouraged. All such endeavours are
then presented in the Company newsletter,
Tribal Talk.
In addition, new charity teams are
being established across the Company,
representing the major regions we have staff
based in, with the goal of annually selecting
a charity to support financially, and with the
employee charity days.
Risk management
Our Risk Management Framework applies
consistently across all Tribal offices and
regions, and is managed at Operational
and Corporate levels. Risk management
activity is overseen by the Chief Executive
Officer, with the support of the Executive
Management Team and the Global Risk
Manager.
Our framework enables us to remain vigilant
to all known and emerging risks and
opportunities. Effective risk management
supports informed decision-making; enables
us to minimise impact from unforeseen internal
or external events; and allows us to fully exploit
emerging opportunities.
Overview
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Governance
Financial Statements
49
Our objectives for risk management are to:
• support and develop our reputation as a well
•
identify, measure, control and report
on business risk that may undermine
the achievement of objectives, both
strategically and operationally, through
appropriate analysis and assessment
criteria;
• effectively allocate effort and resources for
the management of key and emerging risks;
• build an accurate picture at the highest
level of the key risks facing our business,
and use this information to drive business
improvements in a considered and
coordinated way;
governed and trusted organisation;
• minimise costs and drive efficiencies in the
way that pervasive risk is controlled across
the business; and
•
identify weaknesses in, and opportunities
to improve our business processes.
Risk registers
At the Operational level, risks are recorded
and managed within teams or projects
as required and in line with the Risk
Management Framework.
At the Corporate level, a risk register is held
for every line of business, including central
support functions. These registers record
risks pertinent to the line of business. Above
these, there is a single central risk register for
Group Significant risks, which records the top
risks to the business.
Risk registers are reviewed on a quarterly
basis which supports the escalation of any
risks with a high residual impact, or potentially
pervasive risks, to a higher level risk register
as appropriate. This process is overseen by
the Global Risk Manager.
Risk management framework
Corporate
Operational
Group
Significant
Risks
Lines of Business
Information Security
Quality Management
Project Portfolio
Operational Teams
50
Tribal Group plc Annual Report and Accounts 2020
Quoted Companies Alliance Code (QCA) continued
Deliver growth continued
Risk registers continued
The Board determines the amount and type
of risk that Tribal is willing to take on in pursuit
of its strategic objectives. The Board’s
appetite for risk is influenced by various
key factors including (but not limited to) the
overall economic, regulatory and operational
landscape in which we operate.
The Executive Management Team and Global
Risk Manager monitor and advise the Board of
these key influences which enables the Board
to adjust the amount of risk that Tribal takes
on. Risk tolerance may, by business choice,
differ in different parts of the Company.
The Framework defines how risks should be
handled depending on their severity level.
Review and assurance
Risk registers are updated as and when
required. A full review is undertaken quarterly.
The highest rated risks are presented to
the Board every quarter by the CEO. Every
six months the Board is presented with the
detailed risk registers for each line of business.
Dynamic management framework
Tribal Board
Feedback
Management
Oversight
Audit
Committee
Remuneration
Committee
Nominations
Committee
Executive
Management
Team
Global
Governance
team &
supporting
Committees
Subsidiary
Boards
Policies
Processes
Procedures
Objectives and KPIs
Our Software
Values
Overview
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Governance
Financial Statements
51
Board composition, experience,
and independence
The PLC Board (the Board) is responsible for the
Company’s corporate governance systems and
processes that support good decision-making.
Board meetings are occasionally scheduled to
take place at different Tribal office locations,
to support active engagement with the
business and ensure visibility to the Board of
matters pertinent to each location.
External advice
All the Directors have access to the advice and
services of the Legal Counsel. Each Director
is entitled, if necessary, to seek independent
professional advice at the Company’s expense.
The Non-Executive Directors, Richard Last
(Chairman) , Roger McDowell and Nigel
Halkes are all considered independent of
management and free from any business
or other relationships that could materially
interfere with the exercise of their
independent judgement. All three Director's
own shares in Tribal, however this is not
considered to alter their independent status.
A summary of Board and Committee meetings
and attendance can be found in the Annual
Report on page 43.
The Board, nor any committee, has had
cause to obtain external advice on any
external matter.
Board experience, skills and capabilities
External Board advisers
The Board members and their expertise, the
roles of the Chairman and Chief Executive
Officer, and the roles of the Committees are
listed here.
Director’s commitment to Tribal
Board charter
Our Non-Executive Directors have committed
in their letters of appointment to attend all
reasonable Board and Committee meetings in
addition to being reasonably available at other
times for Tribal business.
Our Executive Directors have entered into
employment contracts which require them to
attend all Board and Committee (of which they
are a member) meetings.
The Board Charter has been approved by the
Board and details:
• the overarching roles and responsibilities
of the Board;
• all of the matters which are the ultimate
responsibility of the Board;
• the Board’s powers to establish
Committees;
The Board has a number of advisers used on
a regular basis. Their details can be found on
page 130.
Board evaluation
The Tribal Board is reviewed annually, with
the evaluation process tying in to our annual
planning cycle. The evaluation is initiated by
the Chairman, who with the consensus of the
Tribal Board, agrees the need and scope of the
evaluation, as well as whether it is conducted
in-house or with the help of an independent
external expert.
The Board evaluation covers:
The Non-Executive Directors meet at least
once a year without the Executive Directors
present. All Directors submit to re-election
each year at the Annual General Meeting
(AGM) of the Company.
The Board meets at least eight times
each year with additional meetings when
circumstances and urgent business dictate.
At each meeting the Board reviews a schedule
of reserved matters including trading
performance, financial strength, strategy
(including investment and acquisition
opportunities), risk management, controls,
compliance, reports to shareholders and
succession management.
• Board membership, including guidance on
• Board Structure: its composition,
Director independence;
• the role of the Chairman;
• the role of the Chief Executive;
• the role of the Company Secretary;
• managing exceptional circumstances; and
• obligation to annually review Board
performance and the Board Charter.
All other matters not specifically reserved to
the Board are delegated to management in
accordance with a schedule of delegation of
execution, financial and negotiation authority
policy. These delegated authorities cover
expenditure, agreements, financial matters,
remuneration, and agreements with third
parties. Management is required to report to
the Board concerning authority exercised and
defer to the Board any matters which come,
or may come, within the scope of the Board.
constitution and diversity and that of
its Committees, competencies of the
members, Board and Committee charters,
frequency of meetings, procedures.
• Dynamics and Functioning of the Board:
annual Board calendar, information
availability, interactions and communication
with CEO and senior executives, Board
agenda, cohesiveness and the quality of
participation in Board meetings.
• Business Strategy Governance: Board’s
role in Company strategy.
• Financial Reporting Process, Internal
Audit and Internal Controls: The integrity
and the robustness of the financial and
other controls regarding abusive related
party transactions, vigil mechanism and
risk management.
• Monitoring Role: Monitoring of policies,
strategy implementation and systems.
• Supporting and advisory roles.
• The role of the Chairman.
52
Tribal Group plc Annual Report and Accounts 2020
Quoted Companies Alliance Code (QCA) continued
Deliver growth continued
Board evaluation continued
Outcomes of the Board evaluation are
documented and an action plan put in place as
needed. The actions may be owned solely by
members of the Board or may be distributed
to Tribal's Executive Management team as
appropriate. Progress of the action plan is then
tracked within the regular Board meetings.
Corporate culture and ethics
The executive management team sets
strategic, quality management and information
security objectives on an annual basis
(overseen by the Board). These objectives
are integrated into day to day business
activity through:
• translation into team and individual
objectives;
• policies, procedures and detailed
business processes;
We maintain an internal management
framework which is in compliance with
the ISO9001 Standard for Quality
Management and ISO27001 Standard
for Information Security.
Our Compliance Training Programme
is compulsory for all new employees.
Refresher training is also compulsory
on a rolling basis over a two-year period.
Training is updated and delivered following
introduction of new or changes to applicable
legislation or regulations.
Topics covered by Tribal’s Compliance Training
Programme include:
• Anti-Bribery and Corruption;
• Equality and Diversity;
• Data Protection and the GDPR;
• Cyber Security;
• Risk Management;
• structured compliance training programme;
• Anti-Money Laundering;
• operational management structures for
• Health and Safety; and
monitoring and reporting on performance
of the governance framework; and
• Whistleblowing.
•
integration into individual job descriptions,
career competencies, and performance
reviews.
The Compliance Training Programme
is actively supported by our executive
management team, who personally
undertake all modules, emphasising the
importance of the training and Tribal’s
commitment to compliance.
All job descriptions define how employees
are expected to uphold Tribal’s Values and
are mapped to our career competencies.
Tribal has defined 40 competencies which,
when combined, describe the behaviours
which drive both our individual and collective
success. Individual performance against
both the relevant competencies and the
corporate Values, and goal-setting in line
with corporate objectives, is central to an
employee’s annual review cycle.
Our incentive structures are designed
to encourage ethical conduct in line with
our Values, and specifically reward cross-
functional collaboration. We operate a spot
reward scheme, ‘Living the Values’; which
explicitly recognises demonstration of
the Values. Annual pay reviews are based
on individual performance, achievement
and behaviours.
Building trust with all our stakeholders is key
to our success.
Strategic leadership
pyramid
Vision
and Mission
Values and
strategic priorities
Objectives – strategic, quality,
and information security
Training, policies and business
processes, KPIs, budgets
Performance monitoring and feedback
53
• Additional customer engagements –
Tribal employees and senior managers
regularly meet customers for two-way
discussions on an as-needs basis.
Our stakeholders have a track record of
providing genuine feedback on their use of
our solutions via the above communication
methods; most commonly from the User
Groups and CAB. It is common for this
feedback to be incorporated in our product
roadmaps.
With our shareholders
Our activities to regularly engage shareholders
is presented here. This ensures an ongoing
dialogue between shareholders and Tribal.
Website
Tribal's compliance with the QCA code and
the activities undertaken are published on our
website at:
www.tribalgroup.com/investors/governance
Building trust
With our people
Tribal’s Values, the talent and expertise of our
people, and gender pay equality are detailed on
page 32.
Communication
Tribal has a number of offices in the UK and
around the world. The locations are shown on
page 12 and detailed on page 121.
Communication among our people is crucial
and is a fundamental platform of our success.
We use a combination of Group-wide updates,
including webinars, as well as running specific
local communication sessions. We supplement
these by communicating via a number of
channels (email, internal bulletin boards), our
corporate social media and in our now
established bi-monthly staff news update –
Tribal Talk. We also make extensive use of our
Office 365 infrastructure with corporate
news hubs for all main areas and Group-wide
use of Microsoft Teams for both calling
and messaging.
We continue to listen to our people and have
moved to completing regular Company-wide
engagement survey. The results of this gives
us a baseline for planning further work in
2021 and beyond and has ensured we have an
engaged and motivated team.
Our communication strategies, both internal
and external, feed the key relationships upon
which we rely to achieve our goals.
With our customers
We have a wide range of mechanisms to
regularly engage our customers, both to inform
and also to obtain their feedback and input.
This includes:
Account management
• Regular communications – including email
updates, newsletters, and a website that
includes news and weekly blogs;
• Customer conference – we hold an annual
conference, Empower, for all customers
globally where over 50 sessions are
run to update customers on all areas of
product and services. We showcase our
domain knowledge and expertise including
our insights in the future direction of
the market. It also provides opportunity
for customers to comment, question
and provide feedback directly to Tribal
employees. Due to Covid-19 this was held
remotely in the year however the Group
intends to hold annual conferences going
forward if appropriate.
With our suppliers
We rely on our suppliers to ensure we continue
to operate successfully. Tribal aims to build
strong business relationships with suppliers
so it can maximise cost efficiencies and
enhance positive outcomes, this includes its
contractors and associates.
• User groups – most product areas have
their own user groups (our customers),
either managed by the users themselves
or supported by Tribal, where users can
discuss products and any concerns or
issues;
• Customer Advisory Board (CAB) – we
have a formal, strategic advisory Board
for the Tribal Edge solution which engages
customers globally and across education
sectors, for review of the Tribal Edge plans
and roadmap;
Strategic ReportGovernanceFinancial StatementsOverview 54
Tribal Group plc Annual Report and Accounts 2020
Robert Gordon University Aberdeen case study
Continuous
improvement
delivers results
Robert Gordon University, Aberdeen, have
been a Tribal customer since 1998. The
university had struggled to take advantage
of much of the new functionality was now
offering, or to improve embedded working
practices in line with good practice. This left
them in a position where they had too many
workarounds and were overly reliant on
numerous external databases, rather than
holding key information in Tribal systems.
They also found themselves severely
lacking in the internal resources required
to support their solution. They turned to
Tribal's professional services to help and
embarked upon an improvement project.
Overview
Strategic Report
Governance
Financial Statements
55
“There have been numerous teams that have
worked hard to deliver improvements at RGU.
We are proud to say the project has been very
successful. We are excited about our new
systems and the positive impact we are now
realising across the institution.”
Gillian Reid, Project Lead at Robert
Gordon University, Scotland, UK
‘single version
of the truth’
Robert Gordon University
Aberdeen started their
‘Continuous Improvement Project’
in early 2017 with the aim to
provide a ‘single version of the
truth’. Working with Tribal, they
were able to remove duplicate
systems across the university,
increase personalisation in
communications, improve
access to support systems
and capture high-quality data.
56
Tribal Group plc Annual Report and Accounts 2020
Audit Committee report
The Audit Committee report details the key activities undertaken during the year.
Activities of the Committee
during the year
The Committee’s activities have focused on
the accuracy of financial reporting and the
related statutory audit; and the assessment
of internal controls. During the year the
Committee was involved in the reviewing and
approving of the Annual Report and Accounts
for 2019 and the half year report and accounts
for 2020, overseeing the Group's adoption
of new and revised accounting standards,
continued compliance with the General Data
Protection Regulations (GDPR) and Corporate
Criminal Offence Rules. In addition, the
Committee reviewed the position of
the Group’s independent external auditors
and reappointed BDO LLP at the AGM on
27 April 2020.
Financial reporting and
statutory audit
The Committee has reviewed with both
management and the external auditors the
half year and annual financial statements,
focusing on:
• the overall truth and fairness of the results
and financial position, including the clarity
of disclosures shown in the statements and
their compliance with statutory and best
practice requirements;
• the appropriateness of the accounting
policies and practices used in arriving at
those results;
• the resolution of management’s significant
accounting judgements or of matters
raised by the external auditors during the
course of their half year review and annual
statutory audit;
• the quality of the Annual Report taken as a
whole, including disclosures on Governance,
Strategy, Risks and Remuneration, and
whether it gives a fair and balanced picture
of the Group.
External audit
The Committee discussed, challenged and
agreed with the auditors their detailed audit
plans prepared in advance of the full year
audit, which set out their assessment of key
audit risks and materiality. The approach to
their work on the half year results was also
discussed and agreed.
Accounting policies, practices
and judgements
The selection of appropriate accounting
policies and practices is the responsibility of
management, and the Committee discussed
these with both management and the external
auditors. Significant areas considered by the
Committee in relation to the 2020 financial
statements are set out below.
Going concern
The Group is required to assess its ability
to trade as a going concern for at least 12
months from the signing of the annual financial
statements. The Committee reviewed
management’s assessment and concluded
that it remained appropriate to continue to
adopt the going concern basis in preparing
the financial statements.
Revenue recognition
The Group’s operations include complex
software delivery programmes and service
activities that can require judgements to be
made in relation to the timing of revenue
recognition. The Committee reviewed the
revenue recognition judgements taken and
it was concluded that the judgements
were appropriate.
Goodwill
The Group is required to test annually whether
goodwill has suffered any impairment and
consider whether the fixed assets used in the
business are carried at an appropriate amount.
The Committee reviewed management’s
impairment assessment and concluded that
there was no impairment of goodwill or any
of the fixed assets used in the business.
Capitalised product
development costs
The Group’s product development costs are
capitalised where the expenditure meets
the criteria of IAS38, and the recoverability
assessed annually against expected future
cash flows. The Committee reviewed
management’s capitalisation process and
recoverability assessment and concluded
the capitalisation was appropriate.
Assessment of internal
financial control
Management is responsible for putting in
place internal financial controls over financial
reporting and to protect the business from
identified material risks. The Committee
continues to monitor these closely and
they are happy they are appropriate for
the business. There is no formal Internal
Audit department however the Committee
reconsiders whether such a department is
required annually.
New accounting standards
The Committee has continued to be kept
appraised of new and revised accounting
standards including the impact on the Group.
Approved by the Audit Committee on
17 March 2021.
Nigel Halkes
Chairman, Audit Committee
57
Remuneration report
The Remuneration report details the Group’s remuneration policy and the arrangements
currently in place for remuneration of both Executive and Non-Executive Directors.
Remuneration policy
The full Directors’ remuneration policy is shown below for ease of reference, updated with minor changes. A shareholder vote on the remuneration
policy is not required except as set out below.
The table below details each element of pay and demonstrates how the remuneration policy is linked to overall Group strategy.
Element of pay
Purpose and link to strategy
Operation including maximum
Performance criteria
Salary
Benefits
Pension
To attract and retain high-
quality individuals with the
appropriate skills, experience
and knowledge, while also
recognising their ongoing
performance.
Salaries are reviewed annually or when an individual
changes position or responsibility. Salaries for the
current year are set out on page 59.
Assessment of personal and
corporate performance.
All appointments that attract either a base salary of
£150,000 or a total remuneration package of £250,000,
whichever being the least, must be approved by the
Remuneration Committee.
To provide a range of cost-
effective benefits which
are typical market practice.
The main benefits provided include private medical
insurance, a death in service benefit of four times salary
and private fuel.
To provide cost-effective
long-term retirement
benefits which are aligned
with market practice.
Contributions of 10% of salary are paid to Executive
Directors. An equivalent cash supplement may be paid to
an individual if the annual or lifetime allowance has been
met or exceeded.
None.
None.
Annual bonus
Long-term
Incentives
To incentivise and reward for
the achievement of in-year
objectives, which are linked
to the Group’s Adjusted
Operating Profit.
To incentivise and reward
for the achievement of long-
term performance, which is
aligned to the generation of
shareholder value.
An annual cash bonus is payable up to a maximum of
125% of salary for the Chief Executive Officer, subject
to the achievement of performance targets. In all cases,
bonus payments are subject to the overriding discretion
of the Remuneration Committee.
An annual grant of nil-cost options, which vest after three
years subject to continued service and the achievement
of performance conditions.
The plan limit for an award in any year is 200% of base
salary. The normal policy will be to grant 100% of base
salary to the Chief Executive Officer.
Dividends which accrue on vested awards may be paid
as cash, or treated as reinvested and paid in shares.
The Remuneration Committee reviews
the performance measures.
The Remuneration Committee reviews
the performance measures and
targets annually. The Remuneration
Committee has determined that a
target linked directly to the Group's
adjusted operating profit margin is
an appropriate measure for awards
granted in 2020.
All employee
plans
To encourage broad-based
employee shareholding in
the Group.
The Save As You Earn Scheme provides all eligible
employees with the opportunity to acquire shares
at a discounted share price.
None.
The Remuneration Committee (the Committee) operates the annual bonus plan and long-term incentive plans according to their respective rules,
the Listing Rules and HMRC rules where relevant.
Strategic ReportGovernanceFinancial StatementsOverview 58
Remuneration report continued
Director changes
Nigel Halkes was appointed Director of Tribal Group plc on 20 January 2020. There have been no other Director changes in the year.
The use of performance measures
Annual bonus targets will include financial measures which reflect the performance of the business and are directly linked to the Group’s
Adjusted Operating Profit.
Long-term incentive performance measures are chosen to be aligned to long-term shareholder value creation by using a share price
growth measure.
Directors’ service contracts
Details of service agreements and notice periods are as follows:
Name
Mark Pickett
Richard Last1
Director status
Effective date of contract
Expiry
Chief Executive Officer
30 June 2016
Non-Executive Chairman
17 November 2015
Roger McDowell
Senior Non-Executive Director
17 November 2015
Nigel Halkes
Non-Executive Director
20 January 2020
1. Richard Last has no notice period.
Copies of each Director’s service agreement will be available for inspection at the AGM.
Ongoing
2021 AGM
2021 AGM
2021 AGM
Notice period for
both parties
6 months
–
3 months
3 months
Under the terms of their appointment, the Non-Executive Directors have agreed to commit not less than 25 days per annum to their roles. If they
are required to commit in excess of 25 days per annum, they may be entitled to an additional fee at a suitable pro rata rate per day.
Policy on payments for loss of office
The Committee aims to deal fairly with cases of termination, while attempting to limit compensation. Executives’ service contracts provide the
Committee with the discretion to make a payment in lieu of notice limited to base salary. The Committee also retains the discretion to pay an annual
bonus on a departure in certain circumstances. The rules of the long-term incentive plan set out the treatment if a participant leaves employment
prior to awards vesting. If the participant is considered a good leaver (through death, retirement, injury or disability, redundancy, employment being
transferred outside the Group, or any other reason the Committee decides) then awards would normally vest on the normal vesting date. In the
event of a change of control, an award may vest early subject to the extent the performance conditions have been achieved and scaled back pro
rata for service, although the Committee has the discretion to disapply time pro-rating.
Non-Executive Directors notice period is defined in the table above and no compensation or other benefits are payable other than the potential
share-based incentives in respect of Richard Last and Roger McDowell.
Tribal Group plc Annual Report and Accounts 2020 59
Risk
The Committee is cognisant of the need for the remuneration policy to operate within an effective risk management system. The Committee
reviews the various elements of remuneration on an annual basis, to ensure that they do not encourage any undue risk-taking by Executive
Directors or senior management. When setting performance targets for variable components of remuneration, the Committee remains mindful
of environmental, social and governance (ESG) issues. The Committee does not believe that the current remuneration structure will encourage
dysfunctional behaviours or would reward despite a negative ESG event.
Shareholders’ views
The Committee considers shareholder feedback received at the AGM and during meetings with investors throughout the year, and uses these
views to help formulate the overall remuneration policy.
External Board appointments
It is recognised that external Non-Executive Directorships may be beneficial for both the Company and Executive. At the discretion of the Board,
Executive Directors are permitted to retain fees received in respect of any such Non-Executive Directorship.
Non-Executive Director fees
The fees for the year ending 31 December 2020, which took effect from 1 January 2020 are as follows. These exclude any expenses which the
Non-Executive Directors may incur in relation to their duties.
Non-Executive Chairman
Basic Fee
From
1 January
2021
From
1 January
2020
£110,000
£110,000
£55,100
£55,100
Increase /
(decrease)
Nil
Nil
INFORMATION SUBJECT TO AUDIT
Remuneration payable for the financial year ending 31 December 2020
Director
Mark Pickett
Richard Last
Roger McDowell
Nigel Halkes
Salary4,5
Benefits1
Bonus2
SBP3
Pension4
Total 2020
Total 2019
256,500
104,500
52,345
49,659
1,465
435,489
270,852
13,469
–
–
–
–
–
–
–
–
–
–
–
–
977,775
104,500
52,345
49,659
874,014
269,559
164,659
–
1. Benefits include private medical insurance and private fuel.
2.
3.
The bonus includes a notional bonus repaid to the Company in relation to the exercise of share options equivalent to the nominal value of number of shares issued
totalling £0.1m (see Note 7).
The cost reported in remuneration is equivalent to the share-based payment accounting charge incurred in the year including dividends accruing on LTIPs and
matching shares (see Note 7).
4. The fixed element of Directors remuneration includes salary and pension, all other elements are variable.
5.
Salary reflects three months at 80% pay as a mitigating action to Covid-19.
Strategic ReportGovernanceFinancial StatementsOverview 60
Tribal Group plc Annual Report and Accounts 2020
Remuneration report continued
Long Term Incentives Plan (LTIP) awards
On 7 July 2020 the Remuneration Committee approved LTIP awards to Mark Pickett.
Mark Pickett
Nil-Cost Option
482,143
Type
Number
of shares
Face value1
£270,000
(100% of
salary)
Performance
condition
Performance
period
% Vesting at
threshold
Adjusted
operating
profit
Measured over
3 years to
31 December
2022
80%
1. Face value calculated based on share price on 7 July 2020 (56p).
Share award interests
The interests in share options were as follows:
At 1
January
2020
611,620
611,621
247,678
251,256
760,563
Mark Pickett
LTIP – 30 June 2016
LTIP – 30 June 2016
LTIP – 30 June 2017
LTIP – 22 May 2018
LTIP – 7 June 2019
LTIP – 7 July 2020
Granted
Lapsed
Exercised
At 31
December
2020
Exercise
price
Price on
date of
grant
Date from
which
exercisable
Expiry
date
–
–
–
–
–
–
–
–
–
–
–
611,620
611,621
–
–
–
–
–
–
247,678
251,256
760,563
482,143
Nil
Nil
Nil
Nil
Nil
Nil
32.7p
June 2017
June 2026
32.7p
June 2019
June 2026
83.8p
June 2020
June 2027
79.6p
May 2021
May 2028
71.0p
June 2022
June 2029
56.0p
July 2023
July 2030
–
482,143
The closing share price at 31 December 2020 was 86.8p and during the year ranged from 43.5p to 86.8p. There have been no variations to the
terms and conditions or performance criteria for share awards during the financial year.
Annual percentage change in Directors' remuneration compared to FTE employees
Group FTE employees
Averager Remuneration/FTE £'000
Average FTE Employees percentage change
Directors percentage change2
Mark Pickett
Richard Last
Roger McDowell
Nigel Halkes
Year -on-year percentage change in remuneration
20201
832
52
(2%)
1%
(35%)
(5%)
100%
2019
850
53
2%
30%
19%
0%
–
2018
873
52
(13%)
10%
23%
0%
–
2017
820
60
14%
42%
100%
100%
–
2016
1041
53
11%
100%
–
–
–
1.
Includes 3 months at 80% pay as a mitigating action to Covid-19.
2.
Includes remuneration for the matching shares with the nominal value paid to participants as a bonus. Basic fees are consistent year on year.
Overview
Strategic Report
Governance
Financial Statements
61
INFORMATION NOT AUDITED
Directors’ shareholdings
The table below sets out the Directors’ current shareholdings as at 31 December 2020. The shareholding guideline for the Chief Executive Officer
is to hold two times base salary in stock (excluding invested LIPT's) within no more than five years of appointment.
Director
Mark Pickett
Richard Last
Roger McDowell
Nigel Halkes
Beneficially
owned
% of salary/
share value held
693,241
3,995,726
3,975,726
14,285
223%
3151%
6259%
23%
LTIP
options
1,697,629
–
–
–
Share matching
plan option
–
–
–
–
Note:% of salary/fees held is calculated by reference to the value of the individual’s shareholding in Tribal valued at the share price on the close of business on
31 December 2020.
All-employee plans
The Committee believes wider employee share ownership can act as an additional retention and motivation vehicle, and operates a Save As You
Earn (SAYE) Scheme. Eligible employees, including the Executive Director, are invited to subscribe for options in the SAYE. The Committee regularly
monitors the participation level in the all-employee arrangements.
Position against dilution limit
The share incentive plans operate in line with the ABI principle, which requires that all commitments must not exceed 10% of the issued share
capital in any rolling 10 year period. Given the Company’s issued share capital, the number of employees and the level of participation in the LTIP, the
Committee believe that operating a single 10% in 10 year limit for all share plans remains appropriate. The Group’s position against the dilution limit
at 31 December 2020 was 7.1%.
Executive Directors external appointments
Executive Directors are permitted to accept an external Non-Executive position with the Board’s approval. Any fees received in respect of these
appointments may be retained by the Executive. No such fees were received by the Executive Directors during the year.
Approved by the Remuneration Committee on 17 March 2021.
Roger McDowell
Chairman, Remuneration Committee
62
Tribal Group plc Annual Report and Accounts 2020
Directors’ report
The Directors present their report and audited consolidated financial statements
for the year ended 31 December 2020.
Principal activities
Tribal Group plc is incorporated as a public limited company, and is
registered in England and Wales with registered number 4128850. Its
registered office is at Kings Orchard, One Queen Street, Bristol BS2 0HQ.
The Company acts as a holding company with a number of trading
subsidiaries that provide education related systems, solutions and
consultancy services. There was no significant change in this activity
during the year. The subsidiary undertakings of the Company are listed
in Note 32.
Results and dividends
The profit for the year, after taxation, amounted to £6,358,000 (2019:
Loss of £2,963,000). The Directors paid a one-off interim dividend of
1.1p per share on 8 December 2020. As explained in the Chairman’s
statement, the Directors propose a final dividend of 1.2p per share for
the year ended 31 December 2020, subject to approval at the AGM on
27 April 2021. Together with the interim dividend of 1.1p, this makes a
combined dividend for the year of 2.3p per share (2019: 1.2p per share).
Dividend policy
Meeting shareholder dividend expectations is a high priority as it
supports our overall strategy. Our longer-term plan indicates that our
progressive dividend policy can be met whilst making the investments
we need to bring our Tribal Edge product to market. This underpins our
commitment to a dividend that remunerates shareholders over the
long term whilst ensuring we have adequate financing to meet other
stakeholder commitments. It is Tribal’s expectation that only a final
dividend will be paid going forward.
Business model and strategy
The business model and strategy section, pages 10 and 11 and pages
14 and 15, set out the Company’s strategy, business model and key
performance indicators.
Long-term financing
On 21 January 2020 the Group entered into a three-year £10m
multicurrency revolving facility with HSBC with the option to extend
up to a further two years. The first of these options has been utilised
effective 16 March 2021. The facility was put in place to cover general
corporate and working capital requirements of the Group, this was drawn
down in the year but was repaid in full before 31 December 2020. In
addition to this, the Group has a £2.0m committed overdraft facility in
the UK and a $2.0m committed overdraft facility in Australia. The UK
overdraft is committed for a 12-month period ending September 2021
and the Australian overdraft committed for a 12-month period ending
October 2021. At the end of 2020 none of the overdraft facility was
drawn down. Following a review of the Group’s forecasts and projections,
the Directors consider the Group is well placed to meet its funding
requirements for the foreseeable future. Information about the use
of financial instruments by the Group is given in Note 30 of the
financial statements.
Board effectiveness
In respect of our operations as a Board, we continue to reflect upon our
collective skills and experience and our ability to effectively lead Tribal.
Environment
The credibility and longevity of any business goes beyond pure
financial gain; a principle long-embodied and supported by Tribal’s
strong values-based culture and approach to environmental, social
and governance issues.
Tribal is part of the Government initiative, Energy Savings Opportunity
Scheme (ESOS), and completed its Phase 2 assessment in November
2019. This reviewed Tribal’s energy consumption across its UK offices
and Tribal is implementing a number of energy saving opportunities as
identified throughout its Global offices. In addition, Tribal undertook
a Travel Energy Use assessment to identify ways by which to reduce
its carbon footprint, this includes initiatives such as promotion and
monitoring of video and teleconference meetings and the use of
public transport and car sharing options wherever possible.
Principal risks and uncertainties
The Group’s principal risks and uncertainties are explained in the
Strategic report on page 30. Risks of a financial nature are addressed
in the Financial review on page 27, and Note 30 of the financial
statements.
Section 172
The Board's responsibilities to promote the success of the Group under
Section 172 of the Companies Act 2006, as modified by the Companies
(Miscellaneous Reporting) Regulations 2018 are outlined in the Section
172 Statement on page 31.
Directors’ indemnities
The Company has made qualifying third party indemnity provisions for
the benefit of its Directors, which remain in force at the date of this
report and throughout the year. Directors’ and officers’ liability insurance
is provided for all Directors of the Company.
63
The Group is an equal opportunities employer and bases all decisions on
individual ability, regardless of race, religion, gender, sexual orientation,
age or disability. Applications for employment by disabled persons will
always be fully considered, having regard to their particular aptitudes
and abilities. Should any employee become disabled, every practical
effort is made to provide continued employment. Depending on their
skills and abilities, they enjoy the same career prospects and scope
for realising their potential as other employees. Appropriate training
is arranged for disabled employees, including retraining for alternative
work for those who become disabled, to promote their career
development within the organisation.
Research and development
The Group continues to invest in research and development of software
products, as set out in Notes 5 and 14 of the financial statements. The
investment is predominantly in the Group’s next-generation cloud-based
Student Information System, Tribal Edge. More information on Tribal
Edge is on pages 16 and 17 of the Strategic report. Total research and
development expenditure increased to £11.6m (2019: £10.7m) of
which £6.8m (2019: £6.2m) was capitalised.
Post balance sheet events
There have been no significant events to report since the date of the
balance sheet.
Future development
An indication of likely future developments in the business of the Group
is included in the Strategic report.
Annual General Meeting
The Company’s AGM will be held on 27 April 2021. The notice convening
the AGM and an explanation of the business to be put to the meeting are
contained in a separate circular to shareholders.
Independent auditors
BDO LLP have expressed their willingness to continue in office as
auditors and a resolution to reappoint them will be put to the AGM.
Directors retiring
The names of the Directors who served during the year and up to the
date of signing the financial statements are set out on page 39. All
Directors are required to submit to re-election each year and will be
proposed for re-election at the forthcoming AGM.
The appointment and replacement of Directors is governed by the
Company’s Articles of Association, the UK Corporate Governance
Code, the Companies Act 2006 and related legislations. The Articles
themselves may be amended by special resolution of the shareholders.
Directors’ interests in the Company and share capital information,
including share options, are detailed in the Remuneration report on
page 60 and 61.
Share capital
Details of the authorised and issued share capital are shown in Note
23 to the financial statements. The Company has one class of Ordinary
Shares, which carry no right to fixed income. Each share carries the right
to one vote at general meetings of the Company. During the year, the
Company issued 6,118,525 shares (2019: 3,528,603 Ordinary Shares
of 5p).
Branches
The Group has overseas branches in Australia, New Zealand, South
Africa, Abu Dhabi, Hungary and Singapore.
Employees
Tribal is a business which is highly dependent on its people. We seek
to attract, develop and retain high-calibre staff and, as a consequence,
our customers can be assured that the service they receive is among
the best available. The Group’s commitment to its people is discussed
in the Environmental, social and governance report on page 32.
The Board takes its responsibilities to employee engagement and
interests very seriously and ensures any decisions made take into
consideration the impact on the Groups employees. Employees have
the opportunity to ask questions regarding all aspects of the business
during our regular Group-wide update meetings with the Group’s
Executive Management team. The Group recognises the value of its
employees and where possible seeks to promote internally within
the business and aims to empower, where appropriate, employees
to aid with decision-making within the Group. Employee interests are
considered in full when the Board are making key decisions regarding
changes to the business, such as restructuring, acquisitions and
streamlining of operating segments. Decisions impacting employees
interest are communicated in a timely manner.
Strategic ReportGovernanceFinancial StatementsOverview 64
Tribal Group plc Annual Report and Accounts 2020
Directors’ report continued
Directors’ responsibility statement
The Directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and regulation.
Each of the Directors, whose names and functions are listed in the
Directors’ responsibility statement confirm that, to the best of
their knowledge:
Company law requires the Directors to prepare financial statements
for each financial year. Under that law the Directors have prepared
the Group financial statements in accordance with international
accounting standards in conformity with the requirements of the
Companies Act 2006 in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting Standards,
comprising FRS 101 ‘Reduced Disclosure Framework’, and applicable
law). Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair view
of the state of affairs of the Group and Company and of the profit or
loss of the Group and Company for that period. In preparing the financial
statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• state whether applicable IFRSs as adopted by the European
Union have been followed for the Group financial statements
and United Kingdom Accounting Standards, comprising FRS 101,
have been followed for the Company financial statements,
subject to any material departures disclosed and explained
in the financial statements;
• make judgements and accounting estimates that are reasonable
and prudent;
• prepare the financial statements on the going concern basis unless
it is inappropriate to presume that the Group and Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group and
Company’s transactions and disclose with reasonable accuracy at any
time the financial position of the Group and Company and enable them
to ensure that the financial statements comply with the Companies
Act 2006 and, as regards the Group financial statements, Article 4
of the IAS Regulation.
The Directors are also responsible for safeguarding the assets of the
Group and Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors of the ultimate Parent Company are responsible for the
maintenance and integrity of the of the ultimate Parent Company’s
website. Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from legislation
in other jurisdictions.
The Directors consider that the Annual Report and Accounts, taken as a
whole, is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Group and Company’s
performance, business model and strategy.
• the Company financial statements, which have been prepared in
accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards, comprising FRS
101 ‘Reduced Disclosure Framework’, and applicable law), give a true
and fair view of the assets, liabilities, financial position and profit of
the Company;
• the Group financial statements, which have been prepared in
accordance with IFRSs as adopted by the European Union, give a true
and fair view of the assets, liabilities, financial position and profit of
the Group;
• the Directors’ report includes a fair review of the development and
performance of the business and the position of the Group and
Company, together with a description of the principal risks and
uncertainties that it faces.
Corporate governance
The Company’s statement on corporate governance compliance can
be found in the Corporate Governance Report on pages 42 to 45 of the
Annual Report and Accounts. The Corporate Governance Report forms
part of this Directors’ report and is incorporated by reference.
Statement of disclosure of information to auditors
In accordance with Section 418, Directors’ reports shall include a
statement, in the case of each Director in office at the date the
Directors’ report is approved, that:
• so far as the Director is aware, there is no relevant audit information
of which the Company’s auditors are unaware; and
• he has taken all the steps that he ought to have taken as a Director in
order to make himself aware of any relevant audit information and to
establish that the Company’s auditors are aware of that information.
Approved by the Board of Directors and signed on its behalf by;
Mark Pickett
Chief Executive Officer
Registered number 4128850
17 March 2021
Independent auditor's report
to the Members of Tribal Group plc
65
Opinion on the financial statements
In our opinion:
• the financial statements give a true and fair view of the state of
the Group’s and of the Parent Company’s affairs as at 31 December
2020 and of the Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in
accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006;
• the Parent Company financial statements have been properly
prepared in accordance with United Kingdom Generally Accepted
Accounting Practice; and
• the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
We have audited the financial statements of Tribal Group plc (the
Parent Company) and its subsidiaries (the Group) for the year ended
31 December 2020, which comprise the consolidated income
statement, the consolidated statement of comprehensive income,
the consolidated balance sheet, the consolidated statement of
changes in equity, the consolidated cash flow statement, the
Company only balance sheet, the Company only statement of
changes in equity and notes to the financial statements, including
a summary of significant accounting policies.
The financial reporting framework that has been applied in the
preparation of the Group financial statements is applicable law
and international accounting standards in conformity with the
requirements of the Companies Act 2006. The financial reporting
framework that has been applied in the preparation of the Parent
Company financial statements is applicable law and United Kingdom
Accounting Standards, including Financial Reporting Standard 101
Reduced Disclosure Framework (United Kingdom Generally Accepted
Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards
on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section
of our report. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
Independence
We remain independent of the Group and the Parent Company in
accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the FRC’s Ethical
Standard as applied to listed entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation of
the Directors’ assessment of the Group and the Parent Company’s ability
to continue to adopt the going concern basis of accounting included:
We obtained the going concern assessment, approved by the Directors,
including detailed cash flow forecasts up to March 2022 and where
applicable agreed this to third party documentation including signed
banking facilities and agreements for deferred consideration.
We inspected the Group’s signed revolving facility agreements with
HSBC (Note 1) to check that the Group has sufficient funds to settle the
deferred consideration due of £1.4m (Note 18) for Tribal Dynamics while
at the same time maintaining sufficient working capital to continue daily
operations as normal. We assessed the impact on banking covenants to
determine if they would be breached if the draw down of all facilities were
to occur.
We assessed the appropriateness of sensitivity analyses prepared by
management over the Group’s cash flow forecasts including the effects
of adverse movements in revenue, the gross margin and an increase in
expenditure to determine the sufficiency of available cash resources
required to settle short-term liabilities as they fall due over the next
12 months.
We assessed management’s assumptions in the going concern forecast
including revenue growth, profit margin, Coronavirus risk assessment and
funding headroom availability with reference to the historical accuracy of
management’s forecasts, comparing the current forecasts against post-
year end actual results and committed revenue contracts.
We assessed the effect of contract liabilities on the net current
liability position by considering the costs to deliver the products and
services, as well as deferred costs in order to realise revenue held as
a contract liability.
We reviewed the adequacy of disclosures in Note 1 to the financial
statements regarding going concern.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the Group and Parent
Company’s ability to continue as a going concern for a period of at least
12 months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect
to going concern are described in the relevant sections of this report.
Strategic ReportGovernanceFinancial StatementsOverview 66
Independent auditor's report continued
Overview
Coverage
100% (2019: 100%) of Group profit before tax
Key audit
matters ('KAM')
100% (2019: 100%) of Group revenue
99% (2019: 99%) of Group total assets
2020
2019
Revenue recognition
Going Concern
IFRS 16 implementation
Based on our risk assessment and consideration that certain factors affecting going concern in 2019 are no longer present, going
concern is no longer considered to be a key audit matter in the current year.
IFRS 16 implementation is no longer considered to be a key audit matter because the implementation of IFRS 16 was a one-off event
with no ongoing key audit matters in the current year.
Materiality
Group financial statements as a whole
£560,000 (2019: £580,000) based on 6% of profit before tax (2019: 5% adjusted operating profit)
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the
Group and its environment, including the Group’s system of internal
control, and assessing the risks of material misstatement in the
financial statements. We also addressed the risk of management
override of internal controls, including assessing whether there was
evidence of bias by the Directors that may have represented a risk of
material misstatement.
In determining the scope of our audit we considered the size and nature
of each component within the Group to determine the level of work to be
performed at each in order to ensure sufficient assurance was obtained
to allow us to express an opinion on the financial statements as a
whole. The components identified as significant were Tribal Education
Ltd and Tribal Group PTY, which were subject to a full scope audit by
BDO LLP. Significant components comprises 100% revenue, 100%
of adjusted operating profit and 99% of Group total assets. There are
16 other components around the world that were not considered to be
significant components of the Group on the basis that their results do
not make up a significant proportion of the Group as a whole. These 16
other components are branches or subsidiaries of the two significant
components identified and their results are included within the financial
results of the two significant components. For these components,
analytical review procedures were performed on their year-end results
by the Group audit team.
We also obtained an understanding of the internal control environment
related to the financial reporting process and assessed the
appropriateness, completeness and accuracy of the Group journals
and other adjustments performed on consolidation.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to fraud)
that we identified, including those which had the greatest effect on:
the overall audit strategy, the allocation of resources in the audit,
and directing the efforts of the engagement team. This matter was
addressed in the context of our audit of the financial statements as
a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on this matter.
Tribal Group plc Annual Report and Accounts 2020
67
Key audit matter
Revenue
recognition
i-graduate and
data analytics
revenue stream
(Refer to Note 1
and 3 to the
financial
statements)
Judgement is required in
determining the appropriate point
of revenue recognition in line with
the requirements of applicable
accounting standards and whether
revenue should be measured at a
point in time or over time.
In light of the judgements and
assessments required to be
made by management in this
area, particularly as a result of the
material difference between point
in time and over time recognition,
and the complexities of the
applicable accounting standard,
we have determined that revenue
recognition is a key audit matter.
How the scope of our audit addressed the key audit matter
Our audit procedures included assessing the judgements made by management in
determining the appropriate revenue recognition for performance obligations satisfied
over time.
We performed a detailed assessment of a sample of the contracts including the terms
and conditions of the services being provided to check that revenue was appropriately
recognised in accordance with the requirements of applicable accounting standards.
We obtained the physical report deliverables for a sample of customers to assess the
performance obligations and how these have been delivered to the customer. We reviewed
the inputs and outputs against the survey and benchmarking performance obligations in the
relevant contracts to assess whether revenue was recognised in line with contractual terms,
the Group’s recognition policy and the provisions of applicable accounting standards.
We assessed the appropriateness of the Group’s revenue recognition policies against the
requirements of the applicable accounting standards.
Key observations:
Based on the procedures performed, we consider the revenue recognition of the i-graduate
and data analytics revenue stream to be in accordance with the Group’s accounting policy.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider
materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users
that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level,
performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be
evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence,
when evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows:
2020
£
Materiality
560,000
2019
£
580,000
2020
£
350,000
2019
£
387,000
Basis for determining
materiality
Rationale for the
benchmark applied
Performance
materiality
Basis for determining
performance
materiality
6% Profit before tax
5% Adjusted operating profit
As a listed business
shareholders are interested
in a statutory measure
of profit before tax as an
indicator of the Group’s ability
to pay dividends and overall
performance of the business.
The Group use adjusted
operating profit as their main
measure of performance
internally and to the market.
Adjusted operating profit is
calculated excluding the other
items as disclosed in Note 7
to the financial statements.
Capped at 62.5% of
Group materiality
Capped at 70% of
Group materiality
Capped 62.5% (2019: 70%) of Group materiality given the
assessment of the components aggregation risk.
392,000
406,000
245,000
270,900
In setting the level of performance materiality we considered
a number of factors including the areas of estimation with
the financial statements and the type of audit testing to be
completed. On this basis performance materiality was set at
70% of Group materiality.
In setting the level of performance materiality we
considered a number of factors including the areas of
estimation with the financial statements and the type of
audit testing to be completed. On this basis performance
materiality was set at 70% of Parent Company materiality.
Strategic ReportGovernanceFinancial StatementsOverview 68
Independent auditor's report continued
Component materiality
We set materiality for each component of the Group based on a
percentage of between 57% and 70% of Group materiality dependent
on the size and our assessment of the risk of material misstatement
of that component. Component materiality ranged from £320,000
to £400,000. In the audit of each component, we further applied
performance materiality levels of 70% of the component materiality
to our testing to ensure that the risk of errors exceeding component
materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all
individual audit differences in excess of £11,200 (2019: £11,600).
We also agreed to report differences below this threshold that, in our
view, warranted reporting on qualitative grounds.
auditor’s report thereon. Our opinion on the financial statements does
not cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of assurance
or conclusion thereon. Our responsibility is to read the other information
and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in
the course of the audit, or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise
to a material misstatement in the financial statements themselves.
If, based on the work we have performed, we conclude that there is
a material misstatement of this other information, we are required to
report that fact.
We have nothing to report in this regard.
Other information
The Directors are responsible for the other information. The other
information comprises the information included in the Annual Report
and Accounts 2020 other than the financial statements and our
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed
during the course of the audit, we are required by the Companies
Act 2006 and ISAs (UK) to report on certain opinions and matters as
described below.
Strategic report and Directors’ report
Matters on which we are required to report by exception
•
•
In our opinion, based on the work undertaken in the course of the audit:
the information given in the Strategic report and the Directors’ report
for the financial year for which the financial statements are prepared
is consistent with the financial statements; and
the Strategic report and the Directors’ report have been prepared in
accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and Parent
Company and its environment obtained in the course of the audit, we
have not identified material misstatements in the Strategic report or the
Directors’ report.
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the Parent
Company, or returns adequate for our audit have not been received from
branches not visited by us; or
•
the Parent Company financial statements are not in agreement with the
accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not
made; or
• we have not received all the information and explanations we require for
our audit.
Tribal Group plc Annual Report and Accounts 2020 Overview
Strategic Report
Governance
Financial Statements
69
Responsibilities of Directors
As explained more fully in the Directors’ responsibility statement, the
Directors are responsible for the preparation of the financial statements
and for being satisfied that they give a true and fair view, and for such
internal control as the Directors determine is necessary to enable
the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
We assessed the susceptibility of the Group’s financial statements to
material misstatement, including how fraud might occur. In addressing
the risk of fraud including management override of controls, we have
performed journals testing based on a set of fraud risk criteria and
tested to supporting documentation also verifying the business
rationale. We also incorporated unpredictability procedures as part
of our response to the risk of management override of controls.
In preparing the financial statements, the Directors are responsible for
assessing the Group’s and the Parent Company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or the Parent Company
or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these
financial statements.
Extent to which the audit was capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws
and regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our procedures are
capable of detecting irregularities, including fraud is detailed below:
We obtained an understanding of the legal and regulatory frameworks
that are applicable to the Group and determined that the most
significant are the Companies Act 2006, accounting standards
AIM Rules and the Corporation Tax Act 2010. We identified these
areas of laws and regulations as those that could reasonably be
expected to have a material effect on the financial statements from
sector experience and through discussion with the Directors and
other management.
We assessed compliance with the these laws and regulations through
enquiry with management and the Audit Committee, review of reporting
to Directors with respect to compliance with laws and regulations,
review of Board meeting minutes and review of legal correspondence
and confirmations.
We also communicated relevant identified laws and regulations and
potential fraud risks to all engagement team members and remained
alert to any indications of fraud or non-compliance with laws and
regulations throughout the audit.
Our audit procedures were designed to respond to risks of material
misstatement in the financial statements, recognising that the risk
of not detecting a material misstatement due to fraud is higher than
the risk of not detecting one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery, misrepresentations or
through collusion. There are inherent limitations in the audit procedures
performed and the further removed non-compliance with laws and
regulations is from the events and transactions reflected in the financial
statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial
Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent Company’s members, as a
body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state
to the Parent Company’s members those matters we are required
to state to them in an auditor’s report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Parent Company and the
Parent Company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
Sarah Joannidi (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
Bristol, UK
17 March 2021
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
70
Tribal Group plc Annual Report and Accounts 2020
Overview
Strategic Report
Governance
Financial Statements
71
Financial
Statements
72 Consolidated income statement
73
Consolidated statement of comprehensive income
74
76
Consolidated balance sheet
Consolidated statement of changes in equity
77 Consolidated cash flow statement
78 Notes to the financial statements
123 Company only balance sheet
124
Company only statement of changes in equity
125 Notes to the Company balance sheet
Company information
130 Company information
72
Consolidated income statement
For the year ended 31 December 2020
Note
Adjusted
£’000
Other items
(see Note 6)
£’000
Year ended
31 December
2020
Total
£’000
Adjusted
£’000
Other items
(see Note 6)
£’000
Year ended
31 December
2019
Total
£’000
3
72,954
(34,322)
38,632
(26,831)
11,801
53
(345)
11,509
4,5
8
6,9
6,10
(3,156)
–
–
–
(2,693)
(2,693)
–
(307)
(3,000)
1,005
72,954
78,210
(34,322)
(39,028)
38,632
39,182
–
–
–
78,210
(39,028)
39,182
(29,524)
(27,530)
(14,098)
(41,628)
9,108
11,652
(14,098)
(2,446)
53
(652)
59
(162)
–
(344)
59
(506)
8,509
11,549
(14,442)
(2,893)
(2,151)
(2,518)
2,448
(70)
8,353
(1,995)
6,358
9,031
(11,994)
(2,963)
12
12
4.1p
4.0p
(1.0)p
(0.9)p
3.1p
3.1p
4.6p
4.4p
(6.1)p
(5.9)p
(1.5)p
(1.5)p
Continuing operations
Revenue
Cost of sales
Gross profit
Total administrative expenses
Operating profit/(loss)
Investment income
Finance costs
Profit/(loss) before tax
Tax (charge)/credit
Profit/(loss) attributable to
the owners of the parent
Earnings per share
Basic
Diluted
All activities are from continuing operations.
Tribal Group plc Annual Report and Accounts 2020
73
Consolidated statement of comprehensive income
For the year ended 31 December 2020
Profit/(loss) for the year
Other comprehensive income/(expense):
Items that will not be reclassified subsequently to profit or loss:
Remeasurement of defined benefit pension schemes
Deferred tax on measurement of defined benefit pension schemes
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations
Other comprehensive income/(expense) for the year net of tax
Year ended
31 December 2020
£’000
Year ended
31 December 2019
£’000
Note
6,358
(2,963)
26
21
(438)
89
1,120
771
490
(83)
(627)
(220)
Total comprehensive income/(expense) for the year attributable
to equity holders of the parent
7,129
(3,183)
Strategic ReportGovernanceFinancial StatementsOverview 74
Consolidated balance sheet
As at 31 December 2020
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Right-of-use assets
Net investment in lease
Deferred tax assets
Contract assets
Current assets
Trade and other receivables
Net investment in lease
Contract assets
Current tax assets
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Accruals
Contract liabilities
Current tax liabilities
Lease liabilities
Provisions
Net current liabilities
Non-current liabilities
Other payables
Deferred tax liabilities
Contract liabilities
Retirement benefit obligations
Lease liabilities
Provisions
Total liabilities
Net assets
Note
2020
£’000
2019
£’000
13
14
15
25
25
21
16
25
17
18
25
20
18
21
26
25
20
26,661
24,376
1,069
3,342
174
4,829
22
25,879
19,469
1,438
4,110
220
4,462
129
60,473
55,707
11,036
46
3,951
–
9,520
24,553
85,026
(6,052)
(7,480)
(23,078)
(2,861)
(1,020)
(265)
(40,756)
(16,203)
(40)
(1,250)
(330)
(958)
(2,551)
(923)
(6,052)
(46,808)
38,218
10,791
46
3,864
2
16,463
31,166
86,873
(7,027)
(14,437)
(22,940)
(1,864)
(933)
(450)
(47,651)
(16,485)
(1,970)
(1,093)
(78)
(540)
(3,286)
(936)
(7,903)
(55,554)
31,319
Tribal Group plc Annual Report and Accounts 2020 Overview
Strategic Report
Governance
Financial Statements
75
Consolidated balance sheet continued
As at 31 December 2020
Equity
Share capital
Share premium
Other reserves
Accumulated losses
Total equity attributable to equity holders of the parent
Note
23
24
2020
£’000
10,285
15,951
26,926
(14,944)
38,218
2019
£’000
9,979
15,539
26,029
(20,228)
31,319
Notes 1 to 33 form part of these financial statements. The Company’s registered number is 04128850.
The financial statements on pages 72 to 129 were approved by the Board of Directors and authorised for issue on 17 March 2021
and were signed on its behalf by:
Richard Last
Director
Mark Pickett
Director
76
Consolidated statement of changes in equity
For the year ended 31 December 2020
Balance as at 31 December 2018
Loss for the year
Other comprehensive expense for the year
Total comprehensive expense for the year
Issue of equity share capital
Equity dividend paid
Credit to equity for share-based payments
Foreign exchange difference on share-based payments
Tax credit on credit to equity for share-based payments
Contributions by and distributions to owners
Balance at 31 December 2019
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Issue of equity share capital
Equity dividend paid
Credit to equity for share-based payments
Share options exercised
Foreign exchange difference on share-based payments
Tax credit on credit to equity for share-based payments
Share
capital
£’000
Share
premium
£’000
Other
reserves
£’000
Accumulated
losses
£’000
Total
equity
£’000
Note
9,803
15,539
25,020
(14,982)
35,380
9,979
15,539
26,029
(20,228)
31,319
1,009
(2,063)
–
–
–
176
–
–
–
–
176
–
–
–
–
–
–
–
–
–
–
–
–
239
–
–
67
–
–
–
–
–
–
–
–
412
–
–
–
–
–
–
–
1,042
(33)
–
(2,963)
(2,963)
(220)
(220)
(3,183)
(3,183)
–
(2,147)
–
–
84
176
(2,147)
1,042
(33)
84
(878)
–
–
–
–
–
1,339
(479)
37
–
897
6,358
771
7,129
–
6,358
771
7,129
239
(2,254)
(2,254)
–
–
–
409
(1,845)
1,339
–
37
409
(230)
23
11
22
22
21
23
11
22
23
22
21
Contributions by and distributions to owners
306
412
At 31 December 2020
10,285
15,951
26,926
(14,944)
38,218
Tribal Group plc Annual Report and Accounts 2020
Consolidated cash flow statement
For the year ended 31 December 2020
Net cash from operating activities
Investing activities
Interest received
Purchases of property, plant and equipment
Expenditure on intangible assets
Payment of deferred consideration for acquisitions
Net gain on forward contracts
Acquisition of investments in subsidiaries – cash consideration
Acquisition of investments in subsidiaries – cash acquired
Net cash outflow from investing activities
Financing activities
Interest paid
Loan arrangement fees
Proceeds on issue of shares
Payment of lease liabilities
Proceeds from sub-leases
Equity dividend paid
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of foreign exchange rate changes
Cash and cash equivalents at end of year
77
Year ended
31 December 2020
£’000
Year ended
31 December 2019
£’000
5,461
12,359
6
(356)
(7,129)
(1,732)
41
–
–
(9,170)
(259)
(65)
239
(980)
52
(2,254)
(3,267)
(6,976)
16,463
33
9,520
51
(577)
(6,300)
(485)
–
(5,904)
34
(13,181)
(119)
–
176
(865)
52
(2,147)
(2,903)
(3,725)
19,974
214
16,463
Note
27
15
14
23
25
25
11
17
Strategic ReportGovernanceFinancial StatementsOverview 78
Notes to the financial statements
1. Accounting policies
General information
Tribal Group plc (the Company) is a company incorporated, registered and domiciled in England and Wales in the United Kingdom under the
Companies Act. The Company is a public limited company which is listed on the Alternative Investment Market (AIM). The address of the registered
office is given on page 130. The principal activities of the Company and its subsidiaries (the Group) and the nature of the Group’s operations are set
out in Note 4 and in the Strategic report on pages 10 to 35. The financial statements are presented in pounds sterling because that is the currency
of the primary economic environment in which the Group operates. Foreign operations are included in accordance with the policies set out below.
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been
consistently applied to all the years presented, unless otherwise stated.
Basis of preparation
The financial statements on pages 72 to 129 have been prepared in accordance with International Accounting Standards in conformity
with the requirements of the Companies Act 2006. The financial information has been prepared on the historical cost basis, except for
contingent consideration and share-based payments which are recognised at fair value.
The preparation of financial statements in conforming with IFRS requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 2.
Adoption of new and revised standards
In the current financial year, there have been no new standards or amendments which became effective for the current reporting period that
have had a material effect on the Group.
At the date of the authorisation of these financial statements, the following Standards and Interpretations which have not been applied in
these financial statements were in issue but not yet effective (and in some cases had not been adopted by the EU):
IFRS 17
IFRS 16 (amendments)
IAS 37 (amendments)
Insurance contracts
Property, Plant and Equipment
Provisions, Contingent Liabilities and Contingent assets
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 16
Interest rate benchmark reform
Amendments to IAS 1
Amendments to IFRS 16
Amendments to IAS 8
Classification of liabilities as current or non-current
Covid-19 related rent concessions
Accounting policies - changes in estimates and errors
None of the above standards will have a material impact on the Group.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 31 December each year. Control is achieved where the Company:
• has the power over the investee;
•
is exposed, or has the rights, to variable returns from its involvement with the investee; and
• has the ability to use its power to affect its returns.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective
date of acquisition or up to the effective date of disposal, as appropriate. All intra Group transactions, balances, income and expenses are
eliminated on consolidation.
Tribal Group plc Annual Report and Accounts 2020 79
Adoption of the going concern basis
Tribal had cash and cash equivalents of £9.5m at the end of 2020 plus access to an undrawn UK and Australian overdraft of £2.0m and $AUD
2.0m respectively. This is after £0.1m of furlough benefits and all temporary tax deferrals were repaid in full before 31 December 2020. On
21 January 2020 the Group entered into a three-year £10m multicurrency revolving facility with HSBC with the option to extend by a further
two years. The first option to exercise was approved by HSBC on 16 March 2021. The facility was put in place to cover general corporate and
working capital requirements of the Group and was fully drawn down in March 2020 but was repaid in full before 31 December 2020. Tribal Group
plc has undertaken to make adequate financial resources available to the Group to meet its current and future obligations as and when they fall
due. We responded to the challenges presented by the Covid-19 pandemic and we transitioned quickly and efficiently to remote working. The
changes customers have seen from our delivery of work across the business have been well received and demonstrate our ability to adapt and
change as a business but still serve customers. It also demonstrates the benefits of remote working to the business both in terms of reduction
of travel costs and increase in productivity which we expect to continue to benefit the business into the future post-Covid-19. Any medium
to longer-term effects or changes resulting from Covid-19 on education institutions will become clearer over time and we continue to closely
monitor the ongoing impact of Covid-19 on a regular basis.
The Company has guaranteed the year-end liabilities of its UK subsidiaries (see Note 32).
The Group’s software products benefit from a significant installed customer base, whilst its other activities are typically delivered under
the framework of long-term contracts. Collectively, the Group has a range of customers across different geographic areas, good levels of
committed income and a pipeline of new opportunities. While the Group’s net current liability position has decreased slightly to £16.2m from
£16.5m in 2019, it is still being driven by the recognition of IFRS 16 lease liabilities as current liabilities of £1m, the deferred consideration
recognised relating to the Tribal Dynamics Ltd acquisition of £1.4m and net current contract liabilities of £19.1m relating to deferred customer
revenue recognised in accordance with IFRS 15.
The Group benefits from strong annual recurring revenues and cash generation, it also has a significant pipeline of committed income. The impact
on 2021 will become clearer as the year progresses and as the medium to longer-term impact of Covid-19 on education institutions is understood.
The Directors, having considered the cash-flow forecast, and while noting the Group has net current liabilities, have performed a risk
assessment of likely downside scenarios and associated mitigating actions. Based on this assessment they have a reasonable expectation
that adequate financial resources will continue to be available for at least 12 months from the date of approval of the financial statements.
Thus, they continue to adopt the going concern basis in preparing the financial statements.
In assessing the Company’s going concern position and the Group’s ability to provide the necessary financial support, the Directors have
considered all relevant facts and latest forecasts and assessment of the risks faced by the Group, taking into account reasonably possible
changes in trading performance. In addition, management have sufficiently stress tested the latest forecasts to the point where either the
Group cannot meet its liabilities or is in breach of banking covenants and have concluded that this position is so remote it does not have a
significant impact on the Groups ability to continue as a going concern. Accordingly, after making enquiries and receiving confirmation of Group
support as set out above, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational
existence for the foreseeable future. Thus, they continue to adopt the going concern basis in preparing the financial statements.
Revenue recognition
Revenue is measured at the fair value of the consideration receivable from the provision of goods and services to third party customers
in the normal course of business. Revenue is stated excluding sales tax and trade discounts. The particular recognition policies applied in
respect of the various potential elements of short-term or repeat service contracts are as set out below. Analysis has been provided by
revenue stream:
Student Information Systems:
•
revenue on perpetual software licenses is recognised on the commencement of software implementation and related consultancy.
Revenue will be recognised over the duration of the project implementation period on a percentage complete basis being the number of days
complete compared to the number of days expected for the project based on timesheet records. Performance obligations are considered to
be met when the installation of software is complete. Revenue is recognised over time as the conditions as set out in IFRS 15.35 are met;
• where there is a short implementation, as with most Further Education and Work-based Learning sales, there will be little, if any,
impact. For the larger deals, which may typically have implementation periods of two years or more, this has the effect of spreading the
recognition of License revenue over an extended period, rather than immediate, upfront recognition;
•
•
revenue from term software licenses is spread over the period of the license;
revenue from contracts for software maintenance and support is recognised on a pro rata basis over the contract period, reflecting the
Group’s obligation to support the relevant software products and update their content over the contract period;
• other services that are purchased for a specific term are recognised on a pro rata basis over the contract period. This includes services
such as hosting and managed IT services; and
•
revenue from software implementation, consultancy and other services that involve the purchase of a number of days is recognised as
the service is provided.
Strategic ReportGovernanceFinancial StatementsOverview 80
1. Accounting policies continued
Revenue recognition continued
Education Services:
Revenue from the sale of services is recognised upon transfer of control to the customer and assessment of performance obligations.
This is generally when services are performed for customers. The method by which the Group measures the service being performed varies
depending on the nature of the contract, but will typically be driven by either time incurred or deliverables delivered as appropriate to the
particular arrangement with the customer. Performance obligations are considered complete upon the transfer of deliverables as defined in
the contract.
Interest is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.
For multi-element contracts that include more than one separable revenue stream, the fair values of the component parts are established
and revenue recognised for each separable element in line with the relevant policy above. Where legally separate contracts are entered into
at or near the same time, with the same entity and were negotiated as a package, they are treated as a single arrangement for accounting
purposes. Performance obligations are met in the same way they are for each relevant stream as noted above.
In addition to this, the Group has long-term contracts for the provision of more complex, project-based services including arrangements
that involve significant production, modification, or customisation of software. Where the outcome of such long-term project-based
contracts can be measured reliably, revenue and costs are recognised by reference to the stage of completion of the project at the balance
sheet date. This is measured by the proportion that development time incurred for work performed to date bears to the estimated total
development time required. Variations in contract work and claims are included to the extent that the amount can be measured reliably and
its receipt is considered probable.
Where the outcome of a long-term project-based contract cannot be estimated reliably, contract revenue is recognised to the extent of
contract costs that it is probable will be recovered. When it is probable that the total contract costs will exceed total contract revenue, the
expected loss is recognised as an expense within administrative expenses immediately.
The transaction price of contracted goods and services is shown separately in the contract with customers. The contracted prices of each
component of a product sale are expected to provide a robust and appropriate starting point in seeking to allocate the total transaction
price to the identified performance obligations. The time value of money is not expected to be significant as contracts where cash is
disconnected from revenue by greater than one year are likely to be rare. There are limited variables outside the contracted price which
impact the transaction price allocated to performance obligations.
Balances arise on contract assets and liabilities arise when cumulative payments received from customers at the balance sheet date
do not necessarily equal the amount of revenue recognised on contracts. Customers are on standard payment terms which may result in
settlement of invoices prior to recognition of associated revenue.
Deferred non-contingent consideration
The Group has a deferred non-contingent consideration obligation arising from the acquisition of Tribal Dynamics Holdings Limited.
The accounting for changes in the fair value of deferred contingent and non-contingent consideration, that do not qualify as measurement
period adjustments, and for which consideration is classified as an asset or liability, are remeasured at subsequent reporting dates at fair
value with the corresponding gain or loss being recognised in profit or loss.
Any equity-based consideration is recognised in equity at the date it is agreed and would not be remeasured at subsequent reporting dates,
with subsequent settlement accounted for within equity.
Tribal Group plc Annual Report and Accounts 2020Notes to the financial statements continued 81
Goodwill
Goodwill arising in a business combination is recognised as an asset at the date that control is acquired (the acquisition date). Goodwill is
measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair
value of the acquirer’s previously held equity interest (if any) in the entity over the net of the acquisition date amounts of the identifiable
assets acquired and liabilities assumed.
If, after reassessment, the Group’s interest in the fair value of the acquiree’s identifiable net assets exceeds the sum of the consideration
transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer’s previously held equity interest in the
acquiree (if any), the excess is recognised immediately in the income statement as a bargain purchase gain.
Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is allocated to each of the
Group’s cash-generating units (CGUs) expected to benefit from the combination. CGUs (or groups of CGUs) to which goodwill has been allocated are
tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the CGU
(or groups of CGUs) is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated
to the CGUs (or group of CGUs) and then to the other assets of the CGU (or groups of CGUs) pro rata on the basis of the carrying amount of each
asset. An impairment loss recognised for goodwill is not reversed in a subsequent period.
On disposal of a subsidiary or a division, the attributable amount of goodwill is included in the determination of the profit and loss on
disposal. Goodwill arising on acquisition before the date of transition to IFRS has been retained at the previous UK GAAP amounts, subject
to being tested for impairment at that date.
Merger reserve
The merger reserve comprises the non-statutory premium arising on shares issued as consideration for acquisitions of subsidiaries
where merger relief under the relevant section of the Companies Act applies. To the extent that the creation of goodwill originally gave
rise to a merger reserve, upon impairment an appropriate amount is transferred from the merger reserve to the profit and loss reserve.
Impairment of tangible and intangible assets excluding goodwill
At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets and right-of-use assets to
determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of the impairment (if any). Tangible and Intangible assets are amortised
over their estimated useful lives (see Notes 14 and 15). Right-of-use assets are depreciated using the straight-line method from the lease
commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.
The recoverable amount is the higher of fair value less costs to sell and the value in use. The estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific
to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset is estimated to be
less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised as an
expense immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount,
but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been
recognised for the asset in prior years. A reversal of an impairment loss is recognised as income immediately.
Unlike intangible assets and goodwill, right of use assets are not subject to a significant risk of material impairment, due to the nature and short-
term duration of the leases held by the Group. Expected changes to the rental duration of office properties and the corresponding discount rate
used to value lease liabilities are not considered probable within the course of normal business, so are excluded from the requirements set out in
IAS 1.125.
Business systems
The Group’s business systems are treated as an intangible asset where the probable future economic benefits arising from the investment
can be assessed with reasonable certainty at the time the costs are incurred. Costs included are those directly attributable to the
design, construction and testing of new systems (including major enhancements) from the point of inception to the point of satisfactory
completion. Maintenance and minor modifications are expensed against the income statement as incurred. These assets are amortised by
equal instalments over an average of 3 to 10 years.
Strategic ReportGovernanceFinancial StatementsOverview 82
1. Accounting policies continued
Internally generated intangible assets – research and development costs
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
An internally generated intangible asset arising from the Group’s product development is recognised only if all of the following conditions
have been demonstrated:
• the technical feasibility of completing the intangible asset so that it will be available for use or sale;
• the intention to complete the intangible asset and use or sell it;
• the ability to use or sell the intangible asset;
• how the intangible asset will generate probable future economic benefits;
• the availability of adequate technical, financial and other resources to complete the development and to use or sell the asset; and
• the ability to measure reliably the expenditure attributable to the intangible asset during its development.
Internally generated intangible assets are amortised on a straight-line basis over their useful economic lives of 2 to 7 years. Where no
internally generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in which it
is incurred.
Acquired Intangibles
Acquired intangibles are stated at cost, net of amortisation and any recognised impairment loss. These assets are amortised on a straight-
line basis over their useful economic lives of 15 years.
Property, plant and equipment
Property, plant and equipment is stated at cost, net of depreciation and any recognised impairment loss. Depreciation is charged so as
to write off the cost of each asset, other than properties in the course of construction, by equal instalments over their estimated useful
economic lives as follows:
• Leasehold buildings – life of the lease; and
• Fixtures, fittings and other equipment – 3 to 7 years.
Leases
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is measured by
reference to the measurement of the lease liability on that date, less any lease incentives received. The right-of-use asset is subsequently
depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life
of the right-of-use asset or the end of the lease term.
The lease liability is initially measured at the present values of the lease payments that are not paid at the commencement date, discounted
using the Group’s incremental borrowing rate. The lease payments also include the exercise price of a purchase option reasonably certain to
be exercised by the Group and payments of penalties for terminating the lease, if the lease term reflects the Group exercising the option to
terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses in the period in which the event or
condition that triggers the payment occurs.
Short-term leases and leases of low-value assets
The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of buildings that have a lease term of
12 months or less and leases of low-value items including office equipment. The Group recognises the lease payments associated with
these leases as an expense on a straight-line basis over the term of the lease.
Sub-leases
When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease
classification as a sub-lease with reference to the right-of-use-asset arising from the head lease, not with reference to the underlying asset.
Tribal Group plc Annual Report and Accounts 2020Notes to the financial statements continued 83
Other items
IAS 1, ‘Presentation of Financial Statements’, provides no definitive guidance as to the format of the income statement, but states key lines
which should be disclosed. It also encourages the disclosure of additional line items and the reordering of items presented on the face of the
income statement when appropriate for a proper understanding of the entity’s financial performance.
The Group has adopted a policy of disclosing separately on the face of its Group income statement the effect of any components
of financial performance considered by the Directors to be not directly related to the trading business or regarded as exceptional,
or for which separate disclosure would assist in a better understanding of the financial performance achieved.
Both materiality and the nature and function of the components of income and expense are considered in deciding upon such presentation.
Such items may include, inter alia, impairment and amortisation charges relating to goodwill and other intangible assets, the financial effect
of major restructuring and integration activity, gains or losses associated with acquisitions (including the costs of such acquisitions,
movements in deferred contingent consideration and the associated unwind of any discount thereon), profits or losses arising on business
disposals, share-based payments and other items where separate disclosure is considered appropriate by the Directors, including the
taxation impact of the aforementioned items.
Retirement benefit costs
The Group operates two defined contribution pension schemes that are established in accordance with employment terms set by the employing
companies. The assets of these schemes are held separately from those of the Group in independently administered funds. The amount charged
against profits represents the contributions payable to the scheme in respect of the accounting period. Payments made to state-managed
retirement benefit schemes are dealt with as payments to defined contribution schemes, where the Group’s obligations under the schemes are
equivalent to those arising in a defined contribution retirement benefit scheme. For defined benefit retirement schemes, the cost of providing
benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at the end of each reporting period.
Remeasurement comprising actuarial gains and losses, the effect of the asset ceiling (if applicable) and the return on scheme assets (excluding
interest) are recognised immediately in the balance sheet with a charge or credit to the statement of comprehensive income in the period in which
they occur. Remeasurement recorded in the statement of comprehensive income is not recycled. Past service cost is recognised in profit or loss
in the period of scheme amendment. Net interest is calculated by applying a discount rate to the net defined benefit liability or asset. Defined
benefit costs are split into three categories:
• current service cost, past service cost and gains and losses on curtailments and settlements;
• net interest expense or income; and
•
remeasurement.
The Group presents the first component of defined benefit costs within cost of sales and administrative expenses in the consolidated income
statement. Curtailment gains and losses are accounted for as past-service cost. Net interest expense or income is recognised within finance
costs. The retirement benefit obligation recognised in the consolidated balance sheet represents the deficit or surplus in the Group’s defined
benefit pension schemes. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the
form of refunds from the schemes or reductions in future contributions to the schemes.
Provisions
Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group will be
required to settle the obligation. Provisions are measured at the Directors’ best estimate of the expenditure required to settle the obligation
at the balance sheet date, and are discounted to present value where the effect is material.
A property related provision is recognised and measured as a provision when the Group has a present obligation arising under a property
related contract. This includes dilapidation costs arising from exiting a leasehold property where the costs are not all expected to be incurred
during the next year. For a business that is closed or to be discontinued the provision reflects the costs associated with exiting the property
leased by the discontinued or closed business.
A legal claims provision is recognised and measured as a provision when the Group has a present obligation arising under a legal claim.
This includes anticipated costs to resolve any contractual disputes and any anticipated costs in respect of disputes arising on previously
disposed of businesses.
A restructuring provision is recognised when the Group has developed a detailed formal plan for the restructuring and has raised a valid
expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to
those affected by it. The measurement of a restructuring provision includes only the direct expenditures arising from the restructuring,
which are those amounts that are both necessarily entailed by the restructuring and not associated with the ongoing activities of the entity.
Strategic ReportGovernanceFinancial StatementsOverview 84
1. Accounting policies continued
Foreign currencies
Transactions in currencies other than the local functional currency are recorded at the rates of exchange on the dates of the transactions.
At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates
prevailing on the balance sheet date, with differences recognised in profit or loss in the period in which they arise.
On consolidation, the assets and liabilities of the Group’s overseas operations are translated at exchange rates prevailing on the balance
sheet date. Income and expense items are translated at the average exchange rates for the period. These are considered to be approximate
rates for the transaction dates. Exchange differences arising, if any, are recognised directly within equity within other comprehensive
income. Such translation differences are recognised as income or expense in the period in which the operation is disposed of. Goodwill and
fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at
the closing rate.
Share-based payments
The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at
fair value at the date of grant. This is expensed on a straight-line basis over the vesting periods of the instruments. At each balance sheet
date, the Group revises its estimate of the number of equity instruments expected to vest as a result of the effect of the particular vesting
conditions. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense
reflects the revised estimate, with a corresponding adjustment to other reserves in equity.
Fair value is measured by use of an adjusted Black-Scholes model for the 2017, 2018, 2019 and 2020 LTIPs (including the CSOP) and the
2019 SAYE, and a Monte-Carlo model for the LTIPs awarded in 2016, as these will vest dependent on market conditions.
Tax
Current tax is provided at amounts expected to be paid or recovered using the tax rates and laws that have been enacted or substantively
enacted by the balance sheet date.
Current tax provisions are recognised in accordance with IFRIC 23 and represent genuine uncertain tax treatments. The Group continually
monitors the status of any tax provisions and will reassess annually based on any changes in facts or circumstances leading to a ‘more likely
than not’ outcome.
Research and development tax credits are recognised in other revenue in the consolidated income statement.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying values of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance
sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be
utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from initial recognition (other than
in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying value of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that
sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that
are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax in the income statement is charged or
credited, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt within equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets
and liabilities on a net basis.
Financial instruments
Financial assets and financial liabilities are recognised in the Group’s balance sheet when the Group becomes a party to the contractual
provisions of the instrument.
Tribal Group plc Annual Report and Accounts 2020Notes to the financial statements continued 85
Financial assets
Financial assets are classified into the following specified categories: financial assets ‘at fair value through profit or loss’ (FVTPL) and
‘amortised cost’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial
recognition. The Group does not currently hold any assets at fair value through profit or loss.
Amortised cost
These assets arise principally from the provision of goods and services to customers (e.g. trade receivables) and cash and cash equivalents.
They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition, and are subsequently
carried at amortised cost using the effective interest rate method, less provision for impairment.
Impairment of financial assets
Impairment provisions for current and non-current trade receivables are recognised based on the simplified approach within IFRS 9 using
a provision matrix in the determination of credit losses. During this process the probability of the non-payment of the trade receivable is
assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the expected credit loss
for the trade receivables. Provisions are recorded net in a separate provision account with the loss being recognised in the consolidated
income statement. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off
against the associated provision.
Impairment provisions for receivables from related parties and loans to related parties are recognised based on a forward looking expected
credit loss model. The methodology used to determine the amount of provision is based on whether there has been a significant increase in
credit risk since the initial recognition of the asset.
The Group’s financial assets measured at amortised cost comprise trade and other receivables and cash and cash equivalents.
Cash comprises cash in hand and deposits repayable on demand, less overdrafts payable on demand which have a right of offset against cash
balances. These instruments are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.
Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.
Financial liabilities
Financial liabilities are classified as either financial liabilities ‘at FVTPL’ or ‘amortised cost’. The only financial liabilities held ‘at FVTPL’ by the
Group is deferred contingent consideration.
Dividends
Dividends are recognised when they become legally payable. In the case of final dividends, this is when approved by the shareholders at
the AGM.
Contingent liabilities
Contingent liabilities are disclosed when cash flows are not probable.
2. Critical accounting judgements and sources of estimation uncertainty
In the process of applying the Group’s accounting policies, which are described in Note 1, the Board has made the following judgements that
have the most significant effect on the amounts recognised in the financial statements.
Goodwill
The carrying value of goodwill at the year-end is £26.7m (2019: £25.9m). An annual impairment review is required under IAS 36 ‘Impairment
of assets’ involving judgement of the future cash flows and discount rates for cash-generating units. The Group prepares such cash flow
forecasts derived from the most recent budgets approved by the Board of Directors. Further details of the other assumptions used are given
in Note 13.
Strategic ReportGovernanceFinancial StatementsOverview 86
2. Critical accounting judgements and sources of estimation uncertainty continued
Other intangible assets
The carrying value of other intangible assets is £24.4m (2019: £19.5m). Judgement is required to assess whether costs meet the criteria
for capitalisation set out in IAS 38, the useful life of those assets, and subsequently the consideration of the potential need for impairment
of these assets, in particular in relation to their expected ability to generate future revenue. Further details of the other assumptions used
are given in Note 14.
Revenue recognition
The Group’s revenue recognition policies are disclosed in Note 1. In some cases, particularly in relation to software delivery programmes on
which we are engaged in a number of international settings, judgement is required to determine the most appropriate measure of the fair
value and the timing of the revenue and profit recognition related to the service and products that have been delivered to customers at
the balance sheet date. In particular before any license revenue can be recognised, the license must have been delivered and installed at
the customers premises and be available to use by the customer in the environment on which installation will take place. Judgement is also
required in the associated risk of recoverability of any associated receivables and contract assets where invoicing and/or payment is subject
to certain future milestones. Programme delivery requirements, software specification and customer expectations may evolve during the
course of these major projects. This may result in developments to ongoing commercial arrangements that could materially impact the basis
of financial judgements made at period end. Therefore, the potential impact of these evolving obligations and the overall customer project
status must be considered carefully and where appropriate reflected in accounting judgements.
3. Revenue for contracts with customers
The Group has split revenue into various categories which is intended to enable users to understand the relationship with revenue
segment information.
31 December 2020
License and development fees
Implementation services
Support & Maintenance
Cloud services
Other services
Schools inspections & other related services (QAS)
i-graduate survey & data analytics
31 December 2019
License and development fees
Implementation services
Support & Maintenance
Cloud services
Other services
Schools inspections & other related services (QAS)
i-graduate survey & data analytics
Australia
£000
Other APAC
£000
UK
£000
5,633
5,800
263
4,226
15,472
15,280
5,210
462
9,330
558
800
26
–
254
42,465
20,849
UK
£000
5,992
8,591
152
2,610
14,869
15,656
5,154
804
11,689
327
47,426
752
20
–
333
19,523
North
America and
Rest of the
world
£000
103
465
916
133
4
4,377
275
6,273
North
America and
Rest of the
world
£000
80
417
843
111
–
5,095
694
7,240
Total
£000
6,111
11,119
32,985
6,185
493
13,905
2,156
72,954
Total
£000
6,373
12,753
32,622
6,043
824
17,838
1,757
78,210
112
628
1,317
42
1
198
1,069
3,367
149
1,135
1,254
26
–
1,054
403
4,021
Australia
£000
Other APAC
£000
Tribal Group plc Annual Report and Accounts 2020Notes to the financial statements continued 87
Contract asset/
(liability)
2020
£000
Contract asset/
(liability)
2019
£000
(19,025)
18,750
(19,161)
(19,436)
(17,752)
17,112
(18,385)
(19,025)
Net contract liabilities
Opening contract balance post IFRS 15
Of which released to income statement
New billings and cash in excess of revenue recognised
Closing contract balance
Balances arise on contract assets and liabilities when cumulative payments received from customers at the balance sheet date do
not necessarily equal the amount of revenue recognised on contracts. Customers are on standard payment terms, which may result in
settlement of invoices prior to the recognition of associated revenue.
License revenue is recognised over the duration of the project implementation period on a percentage completion basis based on timesheet
data of actual days delivered versus number of expected days for the project.
Contract assets inherently have some contractual risks associated with them related to the specific and ongoing risks in each individual
contract with a customer. The impairment of contract assets/(liabilities) reflects provisions recognised against contract assets in relation
to these risks. See Note 30.
The amount of incremental costs to obtain a contract which extends over a period of more than 12 months has been recognised as an
asset in prepayments totalling £0.3m (2019: £0.2m) and will be released in line with the total contract revenue. No amount has been
impaired at 31 December 2020 or 2019.
Remaining performance obligations
License revenue is recognised over the duration of the project implementation period on a percentage completion basis. For large deals,
which may typically have an implementation period of two years or more, the recognition of License revenue is spread over an extended
period, rather than immediate upfront recognition.
The amount of revenue that will be recognised in future periods on these contracts when those remaining performance obligations will be
satisfied is analysed as follows:
At 31 December 2020
License and development fees
Implementation services
Support & Maintenance
Cloud services
Other services
Schools inspections & other related services (QAS)
i-graduate survey & data analytics
2021
£000
6,416
9,451
2022
£000
5,084
5,488
2023
£000
3,881
146
34,204
23,823
10,994
7,252
155
12,374
1,534
71,386
6,552
254
4,098
413
4,003
231
2,113
128
Thereafter
£000
765
–
741
2,972
–
1,308
23
Total
£000
16,146
15,085
69,762
20,779
640
19,893
2,098
45,712
21,496
5,809
144,403
Strategic ReportGovernanceFinancial StatementsOverview 88
3. Revenue for contracts with customers continued
At 31 December 2019
License and development fees
Implementation services
Support & Maintenance
Cloud services
Other services
Schools inspections & other related services (QAS)
i-graduate survey & data analytics
An analysis of the Group’s revenue is as follows:
Continuing operations
Sales of services
Total revenue
2020
£000
4,364
7,680
2021
£000
2,826
703
32,894
29,362
5,629
300
13,875
696
4,888
174
7,633
278
2022
£000
1,439
208
11,012
2,048
23
3,862
281
Thereafter
£000
36
–
293
146
–
2,850
70
Total
£000
8,665
8,591
73,561
12,711
497
28,220
1,325
65,438
45,864
18,873
3,395
133,570
2020
£’000
2019
£’000
72,954
72,954
78,210
78,210
Sales of services are defined as education related systems or solutions and consultancy services. Further details of the nature of the
services provided are disclosed in Note 4. Sales of goods are not material and are therefore not shown separately. Included in sales of
services is £0.5m (2019: £0.6m) related to software license revenues recognised as a result of a periodic review of our license entitlement
resulting from changes in our customers’ enrolled student numbers.
There is no revenue in respect of discontinued operations.
4. Business segments
Information reported to the Group’s Chief Executive for the purposes of resource allocation and assessment of segment performance is
focused on the nature of each type of activity. The Group’s reportable segments and principal activities under
IFRS 8 are detailed below:
• Student Information Systems (SIS) represents the delivery of software and subsequent maintenance and support services and the
activities through which we deploy and configure our software for our customers; and
•
Education Services (ES) represents inspection and review services which support the assessment of educational delivery, and a
portfolio of performance improvement tools and services, including analytics, software solutions, facilities and asset management.
In accordance with IFRS 8 ‘Operating Segments’, information on segment assets is not shown, as this is not provided to the chief operating
decision-maker, being the Chief Executive. Inter-segment sales are charged at prevailing market prices.
Tribal Group plc Annual Report and Accounts 2020Notes to the financial statements continued 89
Student Information Systems
Education Services
Total
Unallocated corporate expenses
Adjusted operating profit
Amortisation of software and customer contracts &
relationships (see Note 6)
Other items (see Note 6)
Operating profit/(loss)
Investment income
Finance costs
Profit/(loss) before tax
Tax charge
Profit/(loss) after tax
Revenue
Adjusted segment operating profit
Year ended
31 December 2020
£’000
Year ended
31 December 2019
£’000
Year ended
31 December 2020
£’000
Year ended
31 December 2019
£’000
56,895
16,059
72,954
58,615
19,595
78,210
19,572
3,326
22,898
(11,097)
11,801
(1,021)
(1,672)
9,108
53
(652)
8,509
2,151
6,358
17,937
4,014
21,951
(10,299)
11,652
(1,331)
(12,767)
(2,446)
59
(506)
(2,893)
(70)
(2,963)
Depreciation and amortisation is allocated to segment profits and is included in adjusted segment operating profit as above. The amount
included in SIS is £1.4m (2019: £1.8m) and within Education Services £0.1m (2019: £0.1m).
The accounting policies of the reportable segments are the same as the Group’s accounting policies described in Note 1. Segment profit
represents the profit earned by each segment, without allocation of central administration costs, including Directors’ salaries, finance costs
and income tax expense. This is the measure reported to the Group’s Chief Executive for the purpose of resource allocation and assessment
of segment performance.
Within Education Services revenues of approximately 6% (2019: 4%) have arisen from the segment’s largest customer; within SIS revenues
of approximately 6% (2019: 7%) have arisen from the segment’s largest customer.
Geographical information
Revenue from external customers, based on location of the customer, is shown below:
UK
Australia
Other Asia Pacific
North America
Rest of the world
2020
£’000
42,465
20,724
3,492
2,572
3,701
72,954
2019
£’000
47,426
19,523
4,021
3,127
4,113
78,210
Strategic ReportGovernanceFinancial StatementsOverview 90
4. Business segments continued
Non-current assets (excluding deferred tax)
UK
Australia
Other Asia Pacific
North America
Rest of the world
5. Operating profit/(loss) for the year
Operating profit/(loss) for the year is stated after charging/(crediting):
Staff costs (excluding amounts capitalised)
Depreciation and other amounts written off property, plant and equipment
Depreciation of right-of-use assets
Platform dispute
Amortisation of software and customer contracts & relationships
Amortisation of software licenses
Amortisation of business systems
Amortisation of development costs and acquired Intellectual Property
Write-off of business systems
Net impairment (gain)/loss on trade receivables
Research and development expenditure
Net foreign exchange losses
The analysis of auditors’ remuneration is as follows:
Note
7
15
25
6
14
14
14
14
14
16
Fees payable to the Company’s current auditors for the audit of the Company’s Annual Report
Fees payable to the Company’s current auditors and its associates for other services to the Group:
– the audit of the Company’s subsidiaries pursuant to legislation
Total audit fees
– audit related assurance services
– non-audit related assurance services
Total non-audit fees
Total auditor’s remuneration
2020
£’000
39,632
15,214
695
88
15
2019
£’000
34,657
15,607
892
64
25
55,644
51,245
2020
£’000
39,770
734
1,059
–
1,021
3
20
1,245
–
(210)
6,094
769
2020
£’000
150
126
276
8
–
8
284
2019
£’000
41,965
879
1,043
9,133
1,331
60
223
1,510
646
304
6,161
181
2019
£’000
176
119
295
10
17
27
322
Non-audit fees in 2020 (£8,000) arose as a result of the half year review.
Non-audit fees in 2019 (£10,000) arose as a result of the half year review and as a result of corporate activity (£17,000).
Fees payable to BDO LLP and its associates for non-audit services to the Company are not required to be disclosed because the
consolidated financial statements are required to disclose such fees on a consolidated basis.
Tribal Group plc Annual Report and Accounts 2020Notes to the financial statements continued 6. Other items
Acquisition related costs
Platform dispute
Employee related share option charges (including employer related taxes)
– Write-off of business systems
– Legacy defined benefit schemes
– Other legal costs
– Restructuring and associated costs
Other items
Amortisation of software and customer contracts & relationships
Total administrative expenses
Other financing costs
Total other items before tax
Tax on other items
Total other items after tax
91
2020
£’000
814
–
(1,815)
–
(123)
(36)
(512)
(671)
(1,021)
(2,693)
(307)
(3,000)
1,005
(1,995)
2019
£’000
(237)
(9,133)
(1,717)
(646)
(90)
(150)
(794)
(1,680)
(1,331)
(14,098)
(344)
(14,442)
2,448
(11,994)
The Group has adopted a policy of disclosing separately on the face of its Group income statement the effect of any components of
financial performance considered by the Directors to be not directly related to the trading business or regarded as exceptional, or for which
separate disclosure would assist in a better understanding of the financial performance achieved. Both materiality and the nature and
function of the components of income and expense are considered in deciding upon such presentation. As such, ‘other items’ are not part of
the Group’s underlying trading activities and include the following:
Acquisition related costs: Amounts relating to the legal and due diligence costs acquisition of Tribal Dynamics Holdings Limited in the period
total £nil (2019: £237,000). Under IFRS 3 these amounts were expensed as they are not eligible for capitalisation. These are considered to
be one-off costs in the previous year. In 2020 accounting for changes in the fair value of the deferred consideration have been remeasured
at relevant reporting dates as part of the earn-out agreement, and the corresponding gain has been recognised in the income statement
(2020: (£814,000): 2019: £nil).
Platform dispute: Amounts relating to the Platform dispute and the agreement to settle the dispute for past royalties and associated legal
costs in the period total £nil (2019: £9,133,000). An accrual of £8,200,000 was made in 2019 to settle all historic liabilities and outstanding
legal costs. The dispute has now been settled and all amounts paid and accruals released.
Employee related share option charges. The numbers above include:
• share-based payments (see Note 22) plus foreign exchange £(37,000): (2019: £33,000);
• the movement in associated employers taxes accrual (2020: £153,000: 2019: £(52,000));
• the amounts accrued and paid on dividends on share options that have met performance conditions (2020: £195,000: 2019: £155,000).
When the Company declares a cash dividend, some option holders are entitled to a ‘dividend equivalent’. This is a payment in cash and/
or additional shares with a value determined by reference to the dividends that would have been paid on the vested shares in respect of
dividend record dates occurring during the period between the grant of the Award and the date on which it becomes exercisable; and
• a nominal value paid to employees as a bonus (2020: £128,000: 2019: £572,000). Under Companies Act 2006 rules a nominal value
must be paid to issue new shares, however under the rules of the LTIP and Matching Shares Schemes the Company will pay the nominal
value to the participants as a bonus.
Strategic ReportGovernanceFinancial StatementsOverview 92
6. Other items continued
Other items are detailed below:
• during the previous year the Group upgraded its accounting system to Microsoft Dynamics D365 to allow the Group’s finance team to
access new functionalities and thus providing operating efficiencies. After the successful upgrade the remaining life of AX 2012 was
reviewed and management concluded that this asset should be fully impaired in line with IAS 36 paragraph 12(e) due to the obsolescence
of the asset (2020: £nil: 2019: £646,000) (see Note 14);
•
•
legacy defined benefit schemes relate to the Prudential Platinum and Federated Pension Funds to which no current Tribal employee is a
member. Costs arising relate to administration charges (2020: £123,000: 2019: £90,000);
legal costs associated with the data breach in Tribal Campus, an Australian subsidiary of the Group, announced on
12 August 2019, amounted to £36,000 (2019: £150,000). The amounts expensed are the excess not covered by the Group’s Insurance
policy. All costs have now been fully settled in 2020; and
•
restructuring and associated costs relate to the restructuring of the Group’s operations (2020: £572,000: 2019: £794,000).
Amortisation of software and customer contracts and relationships: Amortisation arising on the fair value of intangible assets acquired is
separately disclosed. (2020: £1,021,000: 2019: £1,331,000).
Other financing charges: Consistent with the treatment of movements in deferred consideration, the unwind of the discount on deferred
consideration is separately presented as other financing costs in the income statement (2020: £307,000: 2019: £344,000).
Taxation: The tax credit arising on the above items is presented on a consistent basis with the underlying cost or credit to which it relates
and therefore is also presented separately on the face of the income statement.
7. Staff numbers and costs
The average monthly number of persons employed under contracts of service by the Group (including Executive Directors) during the year
was as follows:
Selling, operations and marketing
Finance and administration
The aggregate payroll costs of these persons were as follows:
Wages and salaries
Social security costs
Other pension costs
Restructuring costs
Share option charge*
2020
number
798
95
893
2020
£’000
38,452
3,288
1,717
556
1,534
45,547
2019
number
782
97
879
2019
£’000
40,012
3,363
1,889
817
1,197
47,278
*
Includes £195,000 (2019: £155,000) amounts paid and accrued on dividends on share options that have met performance conditions.
The total payroll costs above include £5,777,000 (2019: £5,313,000) capitalised as development costs.
Net interest expense relating to pension schemes of £10,000 (2019: £27,000) and administrative expenses of £23,000 (2019: £44,000)
are reported elsewhere and are therefore excluded from the figures above.
Tribal Group plc Annual Report and Accounts 2020Notes to the financial statements continued 8. Investment income
Other interest receivable
Fair value movement on forward exchange contract
Interest receivable on leased assets
Total investment income
9. Finance costs
Interest on bank overdrafts and loans
Loan arrangement fees
Net interest payable on retirement benefit obligations
Interest expense on lease liabilities
Adjusted finance costs
Unwinding of discounts
Other finance costs
Total finance costs
10. Tax
Current tax
UK corporation tax
Overseas tax
Adjustments in respect of prior years
Deferred tax
Current year
Adjustments in respect of prior years
Tax charge on profits
93
2019
£’000
51
–
8
59
2020
£’000
6
41
6
53
2020
£’000
2019
£’000
147
65
10
123
345
307
307
652
2020
£’000
67
1,800
33
1,900
188
63
251
2,151
4
–
27
131
162
344
344
506
2019
£’000
–
1,299
(406)
893
(1,143)
320
(823)
70
Strategic ReportGovernanceFinancial StatementsOverview 94
Tribal Group plc Annual Report and Accounts 2020
Notes to the financial statements continued
10. Tax continued
See Note 21 for further analysis of movements in the deferred tax position. The continuing tax charge can be reconciled to the profit from
continuing operations per the income statement as follows:
Profit/(loss) before tax on continuing operations
Tax charge/(credit) at standard UK rate of 19% (2019: 19%)
Effects of:
Overseas tax rates
Expenses not deductible for tax purposes
Adjustments in respect of prior years
Additional deduction for R&D expenditure
Share scheme costs
Fixed assets ineligible depreciation
Utilisation of unrecognised tax losses
Effect of changes in tax rates
Tax expense for the year
2020
£’000
8,509
1,617
654
134
96
(11)
30
(47)
5
(327)
2,151
2019
£’000
(2,893)
(550)
349
268
(86)
8
18
(18)
(7)
88
70
In addition to the amount charged to the income statement a current tax credit of £66,000 (2019: £nil) and a deferred tax credit of
£343,000 (2019: £84,000) has been recognised directly in equity during the year in relation to Share Schemes. A deferred tax credit of
£89,000 (2019: charge of £83,000) has been recognised in the Consolidated Statement of Comprehensive Income in relation to defined
benefit pension schemes.
The Group continues to hold an appropriate corporation tax provision in relation to the Group relief claimed from Care UK for the year
ended 31 March 2007, together with other appropriate Group provisions. There has been no progress in the Care UK case in the year to
31 December 2020. Under IFRIC 23 management have reviewed this uncertain tax provision and in line with the new standard do not
consider it appropriate to make any adjustments due to the lack of progression in the year.
The income tax expense for the year is based on the UK statutory rate of corporation tax for the period of 19% (2019: 19%). Tax for other
jurisdictions is calculated at the prevailing rates prevailing in the respective jurisdictions.
Deferred tax on temporary differences and tax losses at the balance sheet date is calculated at the substantively enacted rates at which
the temporary differences and tax losses are expected to reverse. The main rate of UK corporation tax reduced from 20% to 19% from
1 April 2017. A further reduction in the UK corporation tax rate of 17%, effective from 1 April 2020, was substantively enacted in a prior
period so its effect was reflected in the Group’s balance sheet as at 31 December 2019. A change in the corporation tax rate, so that it
remains at 19% rather than reducing it to 17% from 1 April 2020, was announced in the 2020 budget and substantively enacted prior to
31 December 2020. Therefore it is recognised in the current period.
95
11. Dividends
Amounts recognised as distributions to equity holders in the period:
Interim dividend for the year ended for the year ended 31 December 2020 of 1.1 pence
(final dividend for the year ended 31 December 2019: 1.1 pence) per share
Proposed final dividend:
Proposed final dividend for the year ended 31 December 2020 of 1.2 pence
(year ended 31 December 2019: 1.2 pence) per share
2020
£’000
2019
£’000
2,254
2,147
2,470
2,451
The Board regularly reviews the available distributable reserves of Tribal Group plc to ensure they are protected for future dividend payments.
No dividend was paid in 2020 relating to FY19. The Board took the decision to pay an interim dividend of 1.1p per share on 8 December
2020, relating to FY20. The Board has proposed a final dividend in respect of the year ended 31 December 2020 of 1.2p. Together with
the one-off interim dividend of 1.1p per share paid on 8 December 2020, this makes a combined dividend for the year of 2.3p per share
(2019: 1.2p per share).
12. Earnings per share
Earnings per share and diluted earnings per share are calculated by reference to a weighted average number of Ordinary Shares calculated
as follows:
Weighted average number of shares outstanding:
Basic weighted average number of shares in issue
Weighted average number of employee share options
Weighted average number of shares outstanding for dilution calculations
2020
thousands
2019
thousands
203,986
4,230
208,216
196,626
7,241
203,867
Diluted earnings per share only reflects the dilutive effect of share options for which vesting criteria have been met.
The maximum number of potentially dilutive shares, based on options that have been granted but have not yet met vesting criteria, is
12,796,406 (2019: 5,281,859). This includes 1,028,396 options in the 2019 SAYE Scheme (2019: 1,116,879).
Strategic ReportGovernanceFinancial StatementsOverview 96
12. Earnings per share continued
The adjusted basic and diluted earnings per share figures shown on the consolidated income statement on page 72 are included as the
Directors believe that they provide a better understanding of the underlying trading performance of the Group. A reconciliation of how these
figures are calculated is set out below:
Net profit/(loss)
Earnings per share
Basic
Diluted
Adjusted net profit
Adjusted earnings per share
Basic
Diluted
2020
£’000
6,358
3.1p
3.1p
2019
£’000
(2,963)
(1.5)p
(1.5)p
8,353
9,031
4.1p
4.6p
4.0p
4.4p
Profit/(loss) for the year attributable to equity shareholders
Add back:
Amortisation of IFRS intangibles (net of tax)
Share-based payments
Unwinding of discounts
Platform dispute
Movement in deferred consideration
Other items (net of tax)
Total adjusting items (net of tax)
Adjusted earnings
Profit/(loss) for the year
Earnings per share
2020
£’000
6,358
800
1,376
307
–
(814)
326
1,995
8,353
2019
£’000
(2,963)
1,003
1,009
344
9,133
–
505
11,994
9,031
2020
£’000
3.1p
2019
£’000
(1.5)p
–
–
–
–
–
–
–
–
–
–
–
–
1.0p
4.1p
6.1p
4.6p
Tribal Group plc Annual Report and Accounts 2020Notes to the financial statements continued 13. Goodwill
Cost
At beginning of year
Additions
Exchange differences
At end of year
Accumulated impairment losses
At beginning of year
At end of year
Net book value
At end of year
At beginning of year
97
2019
£’000
101,748
5,870
(508)
107,110
81,231
81,231
25,879
20,517
2020
£’000
107,110
–
782
107,892
81,231
81,231
26,661
25,879
Goodwill acquired in a business is allocated, at acquisition, to the cash-generating units (CGUs) that are expected to benefit from the
business combination. The carrying amount of goodwill has been allocated as follows:
Student Information Systems (SIS)
Education Services (ES)
2020
£’000
23,127
3,534
26,661
2019
£’000
22,345
3,534
25,879
Goodwill is reviewed at least annually for impairment by comparing the recoverable amount of each cash generating unit (CGU) with the
goodwill, intangible assets and property, plant and equipment allocated to that CGU.
The recoverable amount of a CGU is determined based on value in use calculations. These calculations use risk adjusted cash flow
projections based on the financial budget approved by management for the period to 31 December 2021. The budget was prepared based
on past experience, strategic plans and management’s expectation for the markets in which they operate including adjustments for known
contract ends, contract related inflationary increases and planned cost savings. The budget was extrapolated over a five-year period in line
with previous calculations and to give greater clarity on future cash flows. The growth assumption is 2% per annum for SIS (2019: 2%) and
2% for ES (2019: 2%). Cash flows beyond the budget and extrapolation period were calculated into perpetuity using the same growth rates.
These growth rates are in line with the expected average UK economy long-term growth rate.
The cash flows projections are discounted at a pre-tax discount rate of 11.0% (2019: 9.3%). The single discount rate, which is consistently
applied for both CGUs, is determined with reference to internal measures and available industry information and reflects specific risks
relevant to the Group.
Impairment testing inherently involves a number of judgemental areas, including the preparation of cash flow forecasts for periods that
are beyond the normal requirements of management reporting; the assessment of the discount rate appropriate to the Group and the
estimation of the future revenue and expenditure of each CGU. Accordingly, management undertook stress testing to understand the key
sensitivities and concluded as follows:
A rise in discount rate to 36% and 189% would trigger an impairment in SIS and ES respectively. A decline in growth rate to (26%) in SIS
and (155%) in ES would result in an impairment. Management does not consider these changes possible but considers a slight increase in
discount rate to 12% and zero growth may be possible as a result of the current economic environment. As a result of the analysis, there is
headroom of £104.3 million and £21.7 million in SIS and ES respectively.
As a result, management does not believe a reasonably possible change in the key assumptions may cause impairment.
Strategic ReportGovernanceFinancial StatementsOverview 98
14. Other intangible assets
Cost
At 1 January 2019
Acquisitions
Additions
Disposals
Exchange differences
At 31 December 2019
and 1 January 2020
Additions
Exchange differences
At 31 December 2020
Amortisation
At 1 January 2019
Charge for the year
Disposals
Exchange differences
At 31 December 2019
and 1 January 2020
Charge for the year
Exchange differences
At 31 December 2020
Carrying amount
At 31 December 2020
At 31 December 2019
Customer
contracts &
relationships
£’000
Acquired
intellectual
property
£’000
Software
£’000
Development
costs
£’000
Business
systems
£’000
Software
licenses
£’000
Total
£’000
7,414
2,718
–
–
6,945
1,607
–
–
(301)
(128)
1,873
30,507
–
–
–
–
–
6,141
–
(135)
9,831
–
462
10,293
8,424
–
196
8,620
1,873
36,513
–
–
6,902
204
1,873
43,619
6,415
–
156
(1,480)
(8)
5,083
227
9
5,319
1,486
54,640
–
3
–
–
4,325
6,300
(1,480)
(572)
1,489
63,213
–
–
7,129
871
1,489
71,213
6,563
5,287
861
–
(287)
7,137
535
469
8,141
2,152
2,694
470
–
(80)
5,677
486
136
6,299
2,321
2,747
561
98
–
–
659
75
–
734
22,577
1,412
–
(96)
23,893
1,170
192
25,255
5,509
1,425
223
(834)
(5)
60
–
–
4,893
1,485
20
7
3
–
4,920
1,488
41,922
3,124
(834)
(468)
43,744
2,289
804
46,837
1,139
1,214
18,364
12,620
399
190
1
4
24,376
19,469
Software and customer contracts and relationships have arisen from acquisitions and are amortised over their estimated useful lives, which
are 3 to 8 years and 3 to 12 years respectively. The amortisation period for development costs incurred on the Group’s product development
is 5 to 15 years, based on the expected life cycle of the product. Amortisation and impairment of development costs, amortisation for
software, customer contracts and relationships, business systems and software licenses are all included within administrative expenses.
Included within Business systems are finance systems with a carrying value of £0.4m (2019: £0.2m). During 2019 management took the
decision to write off the AX finance system (£0.6m) following a successful implementation of the new D365 system which has now been
capitalised. This system is being amortised over a period of ten years and has eight years left. Phase II of the D365 implementation is now
under way. During 2020 £227,000 has been capitalised. This implementation is expected to be completed late 2021 and amortisation will
commence then.
The Group is required to test annually if there are any indicators of impairment. The recoverable amount is determined based on value in use
calculations of identified CGUs. The use of this method requires the estimation of future cash flows and the determination of a discount rate
in order to calculate the present value of the cash flows.
Tribal Group plc Annual Report and Accounts 2020Notes to the financial statements continued 99
The impairment testing allocates all assets relating to specific CGUs, including goodwill, other intangibles, property, plant and equipment and
net current assets and liabilities.
An intangible asset of £1,873,000 has been recorded under Acquired intellectual property. The Wambiz code has been incorporated within
the new app/Engage platform of Tribal Edge, the amortisation time frame of this is expected to be 15 years in line with the rest of Tribal Edge.
The UEL of this asset was changed from 5 to 15 years in the previous year in accordance with IAS 8.36.
15. Property, plant and equipment
Cost
At 1 January 2019
Additions
Disposals
Exchange differences
At 31 December 2019 and 1 January 2020
Additions
Disposals
Exchange differences
At 31 December 2020
Accumulated depreciation and impairment
At 1 January 2019
Charge for the year
Disposals
Exchange differences
At 31 December 2019 and 1 January 2020
Charge for the year
Disposals
Exchange differences
At 31 December 2020
Net book value
At 31 December 2020
At 31 December 2019
Leasehold
improvements
£’000
Fixtures, fittings and
other equipment
£’000
3,102
228
(196)
(31)
3,103
–
–
50
3,153
2,643
253
(196)
(23)
2,677
135
–
39
2,851
302
426
5,579
349
(59)
(81)
5,788
356
(13)
129
6,260
4,276
626
(59)
(67)
4,776
599
–
118
5,493
767
1,012
Total
£’000
8,681
577
(255)
(112)
8,891
356
(13)
179
9,413
6,919
879
(255)
(90)
7,453
734
–
157
8,344
1,069
1,438
There are £7.7m (2019: £7.6m) worth of assets that are fully depreciated within property, plant and equipment.
Strategic ReportGovernanceFinancial StatementsOverview 100
16. Trade and other receivables
Amounts receivable for the sale of services
Less: loss allowance
Other receivables
Prepayments
2020
£’000
7,701
(231)
7,470
413
3,153
2019
£’000
8,070
(441)
7,629
330
2,832
11,036
10,791
The Group’s principal financial assets are cash and cash equivalents and trade and other receivables which represent the Group’s maximum
exposure to credit risk in relation to financial assets. The Group’s credit risk is primarily related to its trade receivables. The credit risk on
liquid funds is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies.
All receivables are due within one year in both current and prior years.
The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.
Trade receivables
Trade receivables are measured at amortised cost. The average credit terms on sales is 30 days (2019: 30 days). The Group sells the
majority of its services to the public sector or related bodies and institutions, and as such there is a low incidence of default experience.
Of the total trade receivables balance at the end of the year there were no customers (2019: one) who held balances outstanding of more
than 5% (2019: £0.4m). The average age of receivables is 44 days (2019: 38 days).
The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss allowance for
trade receivables and accrued income. To measure expected credit losses on a collective basis, trade receivables and accrued income are
grouped based on similar credit risk and ageing. See Note 3.
At 31 December 2020 the lifetime expected loss allowance for trade receivables is as follows:
Current
30–60 days
60–90 days
90–180 days
180+ days
Total
Expected
loss rate
Gross carrying
amount
£’000
Loss provision
£’000
1%
4%
6%
7%
25%
5,669
760
205
801
266
7,701
67
29
13
55
67
231
Tribal Group plc Annual Report and Accounts 2020Notes to the financial statements continued 101
At 31 December 2019 the lifetime expected loss allowance for trade receivables is as follows:
Current
30–60 days
60–90 days
90–180 days
180+ days
Total
Movement in the impairment allowance for trade receivables is as follows:
Balance at the beginning of the year
IFRS 9 expected credit loss adjustment
Amounts written off during the year
Unused amounts reversed
Balance at the end of the year
Contract assets
Expected
loss rate
Gross carrying
amount
£’000
Loss provision
£’000
0%
4%
17%
14%
10%
6,035
1,253
332
190
260
8,070
2020
£’000
441
(52)
(45)
(113)
231
25
126
76
66
148
441
2019
£’000
137
326
(28)
6
441
Contract assets are measured at amortised cost. Contract assets inherently have some contractual risks associated with them related
to the specific and ongoing risks in each individual contract with a customer. These are subject to the expected credit loss impairment
under IFRS 9.
Impairments recognised in the income statement in respect of contract assets amount to £0.8m (2019: £nil).
Strategic ReportGovernanceFinancial StatementsOverview 102
17. Cash and cash equivalents
Cash and cash equivalents of £9.5m (2019: £16.5m) comprise cash held by the Group and short-term bank deposits with an original
maturity of three months or less. The carrying amount of these assets approximates their fair value. Of the above balance, £nil (2019: £nil)
represents funds restricted in use by the relevant commercial terms of certain trading contracts. These terms have been complied with.
The credit quality of cash at bank can be assessed by reference to external credit ratings. The Group has not changed its risk appetite during
the year, however two of the Group’s main banks have been downgraded in the period. The following table has been sourced from Moodys
credit ratings.
Aa1
Aa3
A1
A3
Baa2
Cash and cash equivalents include the following for the purposes of the statement of cash flows:
Cash and cash equivalents
2020
£’000
–
700
8,157
613
50
9,520
2020
£’000
9,520
9,520
2019
£’000
13
5,885
9,393
1,120
52
16,463
2019
£’000
16,463
16,463
Tribal Group plc Annual Report and Accounts 2020Notes to the financial statements continued 18. Trade and other payables
Current
Trade payables
Other taxation and social security
Other payables
Deferred contingent consideration
Deferred non-contingent consideration
Non-current
Deferred contingent consideration
Other payables
Total
103
2020
£’000
2019
£’000
892
2,522
1,246
–
1,392
6,052
–
40
40
6,092
800
3,156
1,378
1,693
–
7,027
1,939
31
1,970
8,997
The average credit period taken for trade purchases is 12 days (2019: 10 days). For most suppliers, no interest is charged on the trade
payables for the first 30 days from the date of invoice. Thereafter, in some cases, interest may be charged on the outstanding balances due
to certain suppliers at various interest rates. The Group has financial risk management policies in place to ensure that all payables are paid
within a reasonable time frame. The Directors consider that the carrying amount of trade and other payables approximates their fair value.
Other payables are split as follows:
Goods received not invoiced
Other creditors
2020
£’000
564
682
1,246
2019
£’000
538
840
1,378
Deferred non-contingent consideration reflects amounts in respect of the acquisition of Tribal Dynamics Limited, payable by 31 March 2021.
The amount has been calculated upon the performance of this entity in the year to 31 December 2020 and the resultant payment is due
under the Sale and Purchase Agreement.
19. Borrowings
As at 31 December 2020 the Group has the following committed borrowing facilities: a £2.0m committed overdraft facility in the UK and
a $AUD 2.0m committed overdraft facility in Australia. The UK overdraft is committed for a 12-month period ending September 2021, and
the Australian overdraft committed for a 12-month period ending October 2021. As at 31 December 2020, the Group had cash and cash
equivalents of £9.5m (2019: £16.5m).
At the year-end there was £2.0m available but undrawn in respect of the UK overdraft facility and $AUD 2.0m available but undrawn in
respect of the Australian overdraft facility.
On 21 January 2020 the Group entered into a three-year £10m multi-currency revolving facility with HSBC with the option to extend to a
further two years. The first option to exercise was approved by HSBC on 16 March 2021 with no significant changes to note. The loan was
fully drawn down in 2020 and repaid in full before 31 December 2020. The facility was put in place to cover general corporate and working
capital requirements of the Group.
Strategic ReportGovernanceFinancial StatementsOverview 104
20. Provisions
At 1 January 2020
Net release of provision
Utilisation of provision
Exchange rate movement
At 31 December 2020
The provisions are split as follows:
2020
Within one year
After more than one year
Total
2019
Within one year
After more than one year
Total
Property
related
£’000
1,077
(45)
(23)
21
Other
£’000
156
(2)
–
4
1,030
158
Legal
claims
£’000
153
(45)
(108)
–
–
Property
related
£’000
Other
£’000
Legal
claims
£’000
107
923
1,030
141
936
1,077
158
–
158
156
–
156
–
–
–
153
–
153
Total
£’000
1,386
(92)
(131)
25
1,188
Total
£’000
265
923
1,188
450
936
1,386
Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group will be
required to settle the obligation. Provisions are measured at the Directors’ best estimate of the expenditure required to settle the obligation
at the balance sheet date, and are discounted to present value where the effect is material.
Property related provision relates to the dilapidation costs arising from exiting leasehold properties, under IAS 37.
Legal claims provision relates to the data breach in Australia.
Other provision relates to the recoverability of input VAT in the Philippines.
Tribal Group plc Annual Report and Accounts 2020Notes to the financial statements continued 21. Deferred tax
The amounts provided for deferred tax and the amounts for which credit has been taken are set out below:
Deferred tax assets
Depreciation in excess of capital allowances
Other timing differences
Share-based payments
Tax losses
Retirement benefit schemes
Deferred tax liabilities
Depreciation in excess of capital allowances
Intangible assets
105
2019
£’000
434
766
754
2,417
91
4,462
–
(1,093)
(1,093)
3,369
2020
£’000
–
1,022
1,254
2,371
182
4,829
(309)
(941)
(1,250)
3,579
The Directors are of the opinion, based on currently available forecasts, that these timing differences will reverse in the near future and when
they do there will be sufficient taxable profits to recognise the impact of this in the income statement. Accordingly, the Directors believe
that it is more likely than not that the deferred tax assets will be recoverable.
The Group has recognised a deferred tax asset of £2,371,000 (2019: £2,417,000) on tax losses carried forward in the UK of £12,477,000
(2019: £14,512,000).
The Group and Company have no further unrecognised deferred tax assets or liabilities.
The movement in deferred tax assets and liabilities during the year and prior year was as follows:
At 1 January 2019
Adjustments to opening balances – IFRS 16
Acquisitions
Foreign exchange differences
(Charge)/credit to income statement
Items taken directly to equity
Charge recognised in consolidated statement
of comprehensive income
At 31 December 2019 and 1 January 2020
Foreign exchange differences
(Charge)/credit to income statement
Items taken directly to equity
Charge recognised in consolidated statement
of comprehensive income
At 31 December 2020
Temporary
differences on non-
current assets
£’000
Retirement
defined benefit
schemes
£’000
Other
temporary
differences
£’000
557
–
–
8
(131)
–
–
434
55
(798)
–
–
(309)
170
–
–
–
4
–
(83)
91
–
2
–
89
182
2,564
(9)
(735)
(10)
950
84
–
2,844
(26)
545
343
–
3,706
Total
£’000
3,291
(9)
(735)
(2)
823
84
(83)
3,369
29
(251)
343
89
3,579
Strategic ReportGovernanceFinancial StatementsOverview 106
21. Deferred tax continued
Included in other temporary differences are deferred tax assets of £2,371,000 (2019: £2,417,000) relating to tax losses carried forward
and other timing differences of £2,276,000 (2019: £1,520,000). The balance also includes a deferred tax liability, in relation to intangible
assets of £941,000 (2019: £1,093,000).
The (charge)/credit taken to the income statement for items in ‘other temporary differences’ is split as follows: Tax losses £46,000
(2019: £(1,102,000)); Intangible assets £(152,000) (2019 £(336,000)); Share schemes £(157,000) (2019: £271,000); and other timing
differences £(282,000) (2019: £217,000).
There are no unrecognised deferred tax liabilities.
The deferred tax assets are expected to be settled as follows: £716,000 less than 12 months from 31 December 2020 and £4,111,000
greater than 12 months from 31 December 2020.
The impact of changes in tax rates on deferred tax balances of £327,000 (2019: £227,000) has been charged to the income statement
and is included within the total charge to the income statement of £251,000 (2019: credit of £823,000) disclosed above.
22. Share-based payments
The Group recognised the following charges related to equity-settled share-based payment transactions:
2019 SAYE
LTIPs awarded in 2020 (2 year vesting)
LTIPs awarded in 2020
LTIPs (incorporating the CSOP) awarded in 2019
LTIPs (incorporating the CSOP) awarded in 2018
LTIPs (incorporating the CSOP) awarded in 2017
LTIPs awarded in 2016
Total
2020
£’000
47
220
181
261
445
222
–
2019
£’000
10
–
–
127
434
389
49
1,376
1,009
Awards made to eligible employees under the LTIP schemes are nil cost options with an award period of three years, unless stated.
2019 SAYE
The 2019 SAYE Scheme scheme is open to all UK employees, giving them the opportunity to participate in the future growth of the Company
via share option arrangements.
Eligible employees were invited to subscribe for options over Ordinary Shares of 5p of the Company with an exercise price of 58.2 pence, a
10% discount to the closing average market price of the Ordinary Shares from 3 September 2019 to 5 September 2019. The options have
a contract start date of 1 November 2019 and are exercisable between 1 November 2022 and 30 April 2023.
LTIPs awarded in 2020
New awards in 2020 to Mark Pickett (482,143) will vest equally over the next 3 years. These awards were granted subject to performance
conditions based on the Group’s Adjusted Operating Profit for the years ended 31 December 2020, 2021 and 2022.
Eligible employees on the Executive Board also received 1,876,000 awards under the LTIP Scheme. These will vest equally over the next
three years. These awards were granted subject to performance conditions based on the Group’s Adjusted Operating Profit for the years
ended 31 December 2020, 2021 and 2022.
In addition 1,920,000 options were granted to eligible employees. These awards were granted subject to time limit conditions. Only 50% of
the options can be exercised from 1 July 2021 and 50% from 1 July 2022.
Tribal Group plc Annual Report and Accounts 2020Notes to the financial statements continued 107
LTIPs awarded in 2019 (including the CSOP)
New awards in 2019 to Mark Pickett (760,563) will vest equally over the next three years. These awards were granted subject to
performance conditions based on the Group’s Adjusted Operating Profit for the years ended 31 December 2019, 2020 and 2021.
During 2020 44,011 shares lapsed as part of the 2019 performance condition was not met.
Eligible employees received awards under the CSOP scheme on 7 June 2019 and on 16 September 2019. Those granted in June 2019
can only be exercised after a three-year period if the share price is above 71p and for those granted in September 2019, the exercise price
is 61.5p.
LTIPs awarded in 2018 (including the CSOP)
Awards in 2018 were made to Mark Pickett (251,256) and will vest on 22 May 2021. These awards were granted subject to performance
conditions based on the Group’s Adjusted Operating Profit for the year ended 31 December 2018.
Eligible employees received awards under the CSOP scheme on 26 March 2018. These can only be exercised after a three-year period if the
share price is above 79.6p.
LTIPs awarded in 2017 (including the CSOP)
Awards in 2017 were made to Mark Pickett (247,678). These awards were granted subject to a time-limit condition and continued
employment. These awards vested on 29 June 2020. They have not been exercised.
Awards in 2017 under the new CSOP scheme (as part of the 2010 LTIP Plan) can only be exercised after a three-year period and if the share
price is above 80p. The options met the three-year vesting condition on 2 July 2020. During the year no options were exercised.
LTIPs awarded in 2016
Awards in 2016, to eligible employees, vest according to a target share price. The amount of awards that will vest will range between 0%
and 100% of those granted based on a target share price between 60p and 80p. These awards have now vested. During the year 1,373,241
options were exercised, including 1,223,241 by Mark Pickett. In addition 1,339,286 options issued to the vendors of Sky Software Pty, as
part of the deferred consideration payable, were exercised during the year.
Options outstanding during the year are as follows:
LTIP – nil cost (2 years) LTIP – nil cost (3 years)
LTIP (inc CSOP)
SAYE
Number
of options
thousands
Weighted
average
exercise
price*
Number
of options
thousands
Weighted
average
exercise
price*
Number
of options
thousands
Weighted
average
exercise
price
Number
of options
thousands
Weighted
average
exercise
price
Outstanding at 1 January 2020
Exercised during the year
Granted during the year
Lapsed during the year
4,372
£0.05
8,119
£0.77
1,117
£0.58
–
–
–
–
(2,712)
£0.05
1,920
£0.05
2,358
£0.05
–
–
–
–
–
–
–
–
–
–
(219)
£0.05
(244)
£0.80
(88)
£0.58
Outstanding at 31 December 2020
1,920
£0.05
Exercisable at 31 December 2020
Weighted average remaining contractual
life (years)
Weighted average share price at date of exercise
-
1.5
–
–
–
–
3,799
473
7.8
–
£0.05
£0.05
–
£0.64
7,875
2,660
£0.77
£0.80
7.7
–
–
–
1,029
£0.58
–
2.3
–
–
–
–
*
Under Companies Act 2006 rules a nominal value must be paid to issue new shares, however under the rules of the LTIP and Matching Share Schemes the Company will pay the
nominal value to the participants as a bonus.
Share options outstanding at the year-end have the following exercise prices: LTIP: £0.05, CSOP £0.80, £0.71 and £0.615 and SAYE £0.582.
Strategic ReportGovernanceFinancial StatementsOverview 108
22. Share-based payments continued
The Group has used a Monte-Carlo valuation model for the LTIPs awarded in 2016 and an adjusted Black-Scholes valuation model for the
2017, 2018 2019 and 2020 LTIP awards (including the new CSOP plan) and 2019 SAYE in order to incorporate discount factors into the fair
value to reflect the performance conditions of the LTIP grants. The following table sets out the information about how the fair value of the
grants are calculated:
Date of grant
Type of grant
Share price
Exercise price
Expected dividend yield
Risk-free interest rate
Expected volatility
Term (years)
Option fair value
Expiry date
28 June 2016
30 June 2016
30 June 2016*
30 June 2017*
2 July 2017
26 March 2018
LTIPs
£0.505
£0.05
0%
0.14%
68%
3.0
LTIPs
£0.505
£0.05
0%
0.14%
68%
3.0
LTIPs
£0.505
£0.05
0%
0.14%
68%
3.0
£0.316
£0.318
£0.508
LTIPs LTIPs (inc CSOP) LTIPs (Inc CSOP)
£0.838
£0.05
0%
0.14%
61%
3.0
£0.79
£0.78
£0.80
0%
0.14%
61%
5.0
£0.796
£0.796
1%
0.14%
61%
5.0
£0.407
£0.374
27 June 2026
29 June 2026
29 June 2026
30 June 2027
2 July 2027 26 March 2028
No of options issued
3,591,020
611,621
611,620
1,935,351
3,535,000
3,975,000
No of options outstanding
225,000
–
–
247,678
2,660,297
2,839,361
Date of grant
22 May 2018
7 June 2019
7 June 2019 16 Sept 2019
1 October
2019
7 July 2020
7 July 2020*
Type of grant
Share price
Exercise price
Expected dividend yield
Risk-free interest rate
Expected volatility
Term (years)
Option fair value
Expiry date
LTIPs
£0.78
£0.05
1%
0.14%
74%
5.0
£0.664
LTIPs
£0.71
£0.05
1.57%
1.04%
26%
5.0
£0.61
LTIPs (inc
CSOP)
LTIPs (Inc
CSOP)
£0.71
£0.71
1.57%
1.04%
26%
5.0
£0.32
£0.615
£0.615
1.79%
1.04%
26%
5.0
SAYE
£0.647
£0.582
1.79%
1.04%
24%
3.0
£0.28
£0.108
LTIPs
£0.56
£0.05
2.12%
0.40%
26%
5.0
£0.46
LTIPs
£0.59
£0.05
2.12%
0.40%
24%
2.0
£0.51
22 May 2028 06 June 2029 06 June 2029 15 Sept 2029 30 April 2023 06 July 2030 30 June 2030
No of options issued
590,452
760,563
2,600,000
300,000
1,116,879
2,358,143
1,920,000
No of options outstanding
251,256
716,552
2,075,342
300,000
1,028,396
2,358,143
1,920,000
*
These awards have no market based performance conditions.
The expected life used in the models has been adjusted, based on management’s best estimate, for the effects of non-transferability,
exercise restrictions and behavioural considerations.
Expected volatility was determined by calculating the historical volatility of the Group’s share price over the term commensurate with the
expected term immediately prior to the date of grant.
In 2019 there were 1,339,286 options over shares that had not been recognised in accordance with IFRS 2. These options were issued
to the vendors of Sky Software Pty in 2017 as part of the deferred consideration payable. These options were subject to a performance
condition measured over a maximum three year period ending 31 March 2020. The options vested in 2020, were exercised and shares were
issued on 1 June 2020 (see Note 23).
Tribal Group plc Annual Report and Accounts 2020Notes to the financial statements continued 23. Share capital
Allotted, called up and fully paid
At beginning of the year
Issued during the year
At end of the year
2020
number
2020
£’000
2019
number
199,579,784
9,979
196,051,181
6,118,525
306
3,528,603
205,698,309
10,285
199,579,784
109
2019
£’000
9,803
176
9,979
The Company has one class of Ordinary Shares of 5p each which carry no right to fixed income.
The shares issued during the year in order to satisfy exercises of share-based payment schemes were as follows: 3,405,998 issued on
16 January 2020, 1,223,241 issued on 6 February 2020 and 150,000 issued on 12 June 2020. In addition 1,339,286 shares were issued on
13 June 2020 to the vendors of Sky Software Pty as part of the deferred consideration payable. The exercise costs of 5p per share for the
LTIPs resulted in cash receipts of £0.3m.
24. Other reserves
At 1 January 2019
Movement in relation to share-based payment (net)
At 31 December 2019 and 1 January 2020
Movement in relation to share-based payment (net)
At 31 December 2020
Capital
reserve
£’000
9,545
–
9,545
–
9,545
Merger
reserve
£’000
11,304
–
11,304
–
11,304
Own share
reserve
£’000
Share-based
payment
reserve
£’000
(856)
–
(856)
–
(856)
5,027
1,009
6,036
897
6,933
Total
£’000
25,020
1,009
26,029
897
26,926
The capital reserve of £9.5m (2019: £9.5m) resulted from a share exchange when Tribal Group plc was listed in February 2001.
The merger reserve of £11.3m (2019: £11.3m) relates to the premium arising on shares issued subject to the provisions of section
612 of the Companies Act 2006 (previously section 131 of the Companies Act 1985), net of cumulative goodwill impairment of £58.7m
(2019: £58.7m) in respect of related acquisitions deemed to be impaired.
The own share reserve of £(0.9)m (2019: £(0.9)m) represents the cost of 827,692 shares (2019: 827,692) in Tribal Group plc held by the
Employee Share Ownership Trust to satisfy certain options under the Group’s share option schemes.
The share-based payment reserve represents the reserve arising from the application of IFRS 2.
Strategic ReportGovernanceFinancial StatementsOverview 110
25. Leases
As a lessee
The Group’s leases represent land and buildings. Information about leases for which the Group is a lessee is presented below:
Right-of-use assets
Balance at 1 January
Additions to right-of-use assets
Depreciation charge for year
Disposals during the year
Exchange differences
Balance at 31 December
Lease liabilities
Maturity analysis
Less than one year
One to five years
More than five years
Total undiscounted lease liabilities at 31 December
Current
Non-current
Lease liabilities included in the consolidated balance sheet at 31 December
Amounts recognised in the consolidated income statement
Interest on lease liabilities
Interest received on leased assets
Depreciation on right-of-use assets
Expenses relating to short term leases
Expenses relating to leases of low-value assets
Amounts recognised in the consolidated cash flow statement
Interest
Principal
Total cash outflow for leases
2020
£’000
4,110
298
(1,059)
(76)
69
3,342
2020
£’000
1,096
2,357
279
3,732
1,020
2,551
3,571
2020
£’000
123
(6)
1,059
43
34
1,253
112
980
1,092
2019
£’000
4,176
1,083
(1,043)
(54)
(52)
4,110
2019
£’000
1,034
2,959
524
4,517
933
3,286
4,219
2019
£’000
131
(8)
1,043
130
52
1,348
115
865
980
The Group has lease contracts for office properties in various countries that the Group operates in. Leases of office properties generally
have lease terms between two and ten years. The Group’s obligations under its leases are secured by the lessor’s title to the leasehold
properties. The Group has several lease contracts that include extension and termination options. These options are negotiated by
management to provide flexibility in managing the leased-asset portfolio and align with the Group’s business needs. Management exercises
judgement in determining whether these extension and termination options are reasonably certain to be exercised. As at 31 December
2020, management does not intend to exercise termination options (i.e., break clauses) in the existing leases. Total lease payments of
£32,000 (2019: £139,000) were potentially avoidable had the Group exercised break clauses at the earliest opportunity.
Tribal Group plc Annual Report and Accounts 2020Notes to the financial statements continued 111
The Group also has certain leases of office properties with lease terms of 12 months or less and leases of vehicles and office equipment
with low value. The Group applies the ‘short-term lease’ and ‘lease of low-value assets’ recognition exemptions for these leases.
Lease payments for some property leases are subject to annual fixed increase. The total lease payments subject to annual fixed increase
are £397,000 (2019: £325,000) compared to total lease payments of £1,092,000 (2019: £980,000).
As a lessor
Lease income from lease contracts in which the Group acts as a lessor is as below:
Finance income on the net investment in the lease
2020
£’000
52
2019
£’000
52
The Group has sub-leased an office building and has classified the sub-lease as a finance lease, as the sub-lease is for the majority of the
remaining term of the head lease.
Maturity analysis
Less than one year
One to five years
Total undiscounted lease payments receivable at 31 December
Current
Non-current
Net investment in the lease at 31 December
2020
£’000
52
182
234
46
174
220
2019
£’000
52
234
286
46
220
266
26. Retirement benefit schemes
The Group operates a number of defined contribution and defined benefit pension schemes within individual subsidiaries and contributes to
certain employees’ personal pension plans. The pension charge for the year ended 31 December 2020 was £1.7m (2019: £1.9m), of which
£1.7m (2019: £1.9m) related to defined contribution schemes and £nil (2019: £nil) to defined benefit schemes.
Contributions amounting to £0.3m (2019: £0.2m) were payable to the funds at the year end and are included in current liabilities.
Defined benefit schemes
At 31 December 2020, the Group operated two defined benefit pension schemes for the benefit of certain deferred employees of its
subsidiaries in the UK. These schemes are administered by separate funds that are legally separated from the Company. The trustees of
the pension funds are required by law to act in the interest of the funds and of all relevant stakeholders in the schemes. The trustees of
the pension funds are responsible for the investment policy with regard to the assets of the funds.
Scheme 1 – the Prudential Platinum Pension Fund
Tribal Education Limited, a Group subsidiary, participates in the Prudential Platinum Pension Fund (PPP), which is a defined benefit
arrangement. The last full actuarial valuation of this scheme was carried out by a qualified independent actuary as at 31 December 2018.
The Tribal Education section of the Prudential Platinum Pension Fund had five deferred members at the year-end. The weighted average
duration of the Defined Benefit Obligation is 32 years (2019: 33 years). Employer contributions amounting to £53,000 were paid in the year
ended 31 December 2020 (2019: £43,000). The accounting figures have been calculated using the valuation as at 31 December 2018,
updated on an approximate basis to 31 December 2020 by a qualified independent actuary.
Scheme 2 – the Federated Pension Plan
Tribal Education Limited, a Group subsidiary, participates in the Federated Pension Plan (FPP), which is a defined benefit arrangement.
The Ofsted employees were transferred back to Ofsted in March 2017 and the plan closed to future accrual. All of the active members
at 31 March 2017 were transferred to the deferred section of the plan. On 11 September 2018 there was a bulk transfer of 45 deferred
members into a government scheme and a settlement gain of £380,000 crystallised. The last full actuarial valuation of this scheme was
carried out by a qualified independent actuary as at 5 April 2018.
Strategic ReportGovernanceFinancial StatementsOverview 112
26. Retirement benefit schemes continued
The Tribal Education section of the Federated Pension Plan had 84 deferred members and 77 pensioners/dependents at the year-end. The
weighted average duration of the Defined Benefit Obligation is 23 years (2019: 23 years). Employer contributions amounting to £nil were
paid in the year ended 31 December 2020 (2019: £nil). The accounting figures have been calculated using the valuation as at 5 April 2018,
updated on an approximate basis to 31 December 2020 by a qualified independent actuary.
The schemes are exposed to a number of risks, including:
•
•
Investment risk: movement of discount rate used against the return from plans;
Interest rate risk: decreases/increases in the discount rate used will increase/decrease the defined benefit obligation; and
• Longevity risk: changes in the estimation of the mortality rates of current and former employees.
The assets of the funds have been taken at market value and the actuarial assumptions used to calculate scheme liabilities under IAS 19
‘Employee Benefits’ for both schemes are:
Inflation
Salary increases
Rate of discount
Pension in payment increases
The salary increase assumption is nil as both the FPP and PPP only have deferred members.
The mortality assumptions adopted at 31 December 2020 imply the following life expectations:
Aged 60 in 2020
Aged 60 in 2040
The mortality assumptions adopted at 31 December 2019 imply the following life expectations:
Aged 60 in 2019
Aged 60 in 2039
The analysis of the schemes’ assets at the balance sheet date was as follows:
Equities
Corporate Bonds
Gilts
Cash
Total fair value of scheme assets
All equities and corporate bonds are quoted on active markets.
2020
% per annum
2019
% per annum
2.10–3.30
2.50–3.30
–
1.4
–
1.9
2.10–3.30
2.50–3.30
Males
86.7
88.3
Males
86.7
88.2
2020
£’000
5,240
2,790
158
79
8,267
Females
88.8
90.4
Females
88.7
90.3
2019
£’000
4,930
2,605
135
75
7,745
Tribal Group plc Annual Report and Accounts 2020Notes to the financial statements continued 113
The sensitivities regarding the principal assumptions used to measure the schemes’ liabilities are set out below:
Assumption
Discount rate
Rate of inflation
Rate of mortality
Change in assumption
Impact on scheme liabilities
Increase by 0.5%
Increase by 0.5%
Increase by one year
Decrease by 13%
Increase by 12%
Increase by 2%
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this
is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit
obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the
projected unit credit method at the end of the reporting period) has been applied as when calculating the pension liability recognised
within the statement of financial position.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period.
The amount included in the balance sheet arising from the Group’s obligation in respect of its defined benefit schemes is as follows:
Present value of defined benefit obligations
Fair value of scheme assets
Deficit in schemes
Liability recognised in the balance sheet
Reconciliation of opening and closing balances of the fair value of scheme assets:
Fair value of scheme assets at beginning of year
Expected return on assets
Actuarial gains due to investment returns different from the return implied by the discount rate
Contributions by employer
Benefits paid
Administration expenses
Fair value of scheme assets at end of year
Reconciliation of opening and closing balances of the present value of the defined benefit obligations:
Defined benefit obligation at beginning of year
Interest cost
Actuarial gain – experience
Actuarial loss – demographic assumptions
Actuarial loss – financial assumptions
Benefits paid
Defined benefit obligation at end of year
2020
£’000
(9,225)
8,267
(958)
(958)
2020
£’000
7,745
146
493
53
(147)
(23)
8,267
2020
£’000
8,285
156
(6)
29
908
(147)
9,225
2019
£’000
(8,285)
7,745
(540)
(540)
2019
£’000
6,846
184
812
43
(96)
(44)
7,745
2019
£’000
7,848
211
(780)
17
1,085
(96)
8,285
The Group’s contribution rate for 2020 was 0% (2019: 0%) for the Prudential Platinum Fund and 0% (2019: 0%) for the Federated
Pension Plan.
The Group expects to make contributions of £21,000 to the defined benefit schemes during the next financial year.
Strategic ReportGovernanceFinancial StatementsOverview 114
26. Retirement benefit schemes continued
Analysis of amounts recognised in the consolidated income statement for the defined benefit schemes is as follows:
Administration expenses
Recognised in arriving at operating profit
Other finance costs/(income)
Interest on pension scheme liabilities
Expected return on pension scheme assets
Net finance expense
Total charge to income statement
Analysis of actuarial gains and losses in the consolidated statement of comprehensive income:
Actual return less expected return on pension scheme assets
Experience gains and losses arising on the scheme liabilities
Changes in assumptions underlying the present value of scheme liabilities
Total actuarial (losses)/gains recognised in the consolidated statement of comprehensive income
2020
£’000
23
23
156
(146)
10
33
2020
£’000
493
6
(937)
(438)
2019
£’000
44
44
211
(184)
27
71
2019
£’000
812
780
(1,102)
490
Cumulative actuarial losses recognised in the consolidated statement of comprehensive income since 1 April 2004 are £893,000
(2019: losses of £455,000). The history of experience adjustments is as follows:
Present value of defined benefit obligations
Fair value of scheme assets
Deficit in the scheme
Experience adjustments arising on scheme assets:
Amount
Percentage of the scheme assets
Experience adjustments arising on scheme liabilities:
Amount
Percentage of the present value of the scheme liabilities
2020
£’000
(9,225)
8,267
(958)
493
6%
6
–
2019
£’000
(8,285)
7,745
(540)
812
10%
780
9%
2018
£’000
(7,848)
6,846
(1,002)
(593)
(9%)
98
1%
2017
£’000
(12,731)
11,013
(1,718)
484
4%
118
1%
2016
£’000
(11,917)
10,192
(1,725)
863
8%
789
7%
No assets are invested in the Group’s own financial instruments, properties or other assets used by the Group.
Tribal Group plc Annual Report and Accounts 2020Notes to the financial statements continued 27. Notes to the cash flow statement
Operating profit/(loss) from continuing operations
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Amortisation and impairment of other intangible assets
Share-based payments
Movement in deferred consideration
Research and development tax credit
Net pension (credit)/charge
Other non-cash items
Operating cash flows before movements in working capital
(Increase)/decrease in receivables
(Decrease)/increase in payables
Net cash from operating activities before tax
Tax (paid)/received
Net cash from operating activities
Net cash from operating activities before tax can be analysed as follows:
Continuing operations
28. Analysis of net cash
Cash and cash equivalents (Note 17)
Net cash
Analysis of changes in net cash
Opening net cash
Net decrease in cash and cash equivalents
Effect of foreign exchange rate changes
Closing net cash
115
2019
£’000
(2,446)
879
1,043
3,770
1,042
–
(176)
3
(428)
3,687
2,248
6,245
12,180
179
12,359
2019
£’000
12,180
2019
£’000
16,463
16,463
2019
£’000
19,974
(3,725)
214
16,463
2020
£’000
9,108
734
1,059
2,289
1,339
(815)
(214)
(30)
552
14,022
(255)
(7,461)
6,306
(845)
5,461
2020
£’000
6,306
2020
£’000
9,520
9,520
2020
£’000
16,463
(6,976)
33
9,520
Strategic ReportGovernanceFinancial StatementsOverview 116
29. Contingent liabilities
From time to time the Group is subject to potential and actual litigation claims. On the basis of legal advice, claims are being robustly
contested as to both liability and quantum. A provision of £nil (2019: £0.1m) has been made for defending and settling these claims,
where appropriate (see Note 20).
The Company and its subsidiaries have provided performance guarantees issued by its banks on its behalf, in the ordinary course of
business, totalling £0.1m (2019: £1.6m). These are not expected to result in any material financial loss.
As disclosed in Note 32, Tribal Holdings Limited, Tribal Dynamics Limited , Tribal Dynamics Holdings Limited and International Graduate
Insight Group Limited have taken advantage of the exemption available under Section 394A/479A of the Companies Act 2006 in respect
of the requirements for audit. As a condition of the exemption, the Company has guaranteed the year-end liabilities of these subsidiaries
until they are settled in full. The liabilities of the subsidiaries at the year-end were £39,763,000 (2019: £35,683,000). These are inclusive
of intercompany liabilities.
30. Financial instruments
Capital risk management
The Group manages its capital to ensure the entities in the Group will be able to continue as going concern, while maximising the return
to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of cash and cash
equivalents (see Note 17) and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings
as disclosed in consolidated statement of changes in equity and Notes 23 and 24.
Gearing ratio
The gearing ratio at the year-end is as follows:
Net cash
Equity
Net cash to equity ratio
Significant accounting policies
2020
£’000
9,520
38,218
24.9%
2019
£’000
16,463
31,319
52.5%
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the
basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are
disclosed in Note 1 to the financial statements.
Tribal Group plc Annual Report and Accounts 2020Notes to the financial statements continued
Categories of financial instruments
The Directors consider that the book value of the financial assets and liabilities is equal to their fair value.
31 December 2020
Financial assets
Cash and cash equivalents
Trade receivables and other receivables*
Financial liabilities
Trade payables and other payables**
Accruals
Deferred non-contingent consideration
31 December 2019
Financial assets
Cash and cash equivalents
Trade receivables and other receivables*
Financial liabilities
Trade payables and other payables**
Accruals
Deferred contingent consideration
Financial
assets
measured at
amortised cost
£’000
Financial
Liabilities
measured at
amortised cost
£’000
Financial
Liabilities
measured
at FVTPL
£’000
9,520
7,883
17,403
–
–
–
–
–
–
–
2,138
7,480
1,392
11,010
–
–
–
–
–
–
–
Financial
assets
measured at
amortised cost
£’000
Financial
Liabilities
measured at
amortised cost
£’000
Financial
Liabilities
measured
at FVTPL
£’000
16,463
7,960
24,423
–
–
–
–
–
–
–
2,209
14,437
–
16,646
–
–
–
–
–
3,632
3,632
117
Total
£’000
9,520
7,883
17,403
2,138
7,480
1,392
11,010
Total
£’000
16,463
7,960
24,423
2,209
14,437
3,632
20,278
*
Excluding amounts that relate to non-financial instruments of tax, prepayments and contract assets.
**
Excluding amounts that relate to non-financial instruments of tax and contingent deferred consideration.
The above tables have been stated at undiscounted values with the exception of the 2019 contingent and non-contingent deferred
consideration amounts. The undiscounted value of the non-contingent deferred consideration is £1,392,000 (2019: £nil). The undiscounted
value of the contingent deferred consideration is £nil (2019: £4,000,000) versus a discounted value of £nil (2019: £3,632,000).
There are no financial assets held at fair value (2019: £nil).
Strategic ReportGovernanceFinancial StatementsOverview 118
30. Financial instruments continued
Financial risk management objectives
Treasury management is led by the Group finance team, which is responsible for managing the Group’s exposure to financial risk. It operates
within a defined set of policies and procedures reviewed and approved by the Board. This includes both foreign exchange risk and interest
rate risk. The Group’s exposure to interest rate fluctuations on its interest-bearing assets and liabilities is selectively managed, using
interest rate swaps where appropriate. This is an ongoing risk and the Board will continue with this policy. The Group does not enter into or
trade financial instruments, including derivative financial instruments, for speculative purposes. No interest rate swaps were in place at
31 December 2020 (2019: none).
Market risk
As the Group’s international activities grow, its exposure to overseas markets also increases in non-core territories outside of the UK and
Australasia. There have been no other significant changes to the Group’s exposure to market risk, or the manner in which it manages and
measures the risk.
Foreign currency risk management
The Group undertakes an increasing number of transactions denominated in foreign currencies. Here, exposures to exchange rate
fluctuations arise. Exchange rate exposures are managed within approved policy parameters and the Group enters into forward foreign
exchange contracts where appropriate. No forward contracts were in place at 31 December 2020 (2019: none).
The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the reporting date are
as follows:
Assets
Liabilities
31 December 2020
£’000
31 December 2019
£’000
31 December 2020
£’000
31 December 2019
£’000
Euros
Australian dollar
United States dollar
Saudi Arabian riyal
South African rand
New Zealand dollar
Canadian dollar
Philippine peso
United Arab Emirates dirham
Malaysian ringgit
Bahraini dinar
Other
153
4,666
582
88
84
1,008
722
256
265
479
350
19
105
6,789
874
78
107
1,620
399
133
1,082
1,558
38
32
6
–
149
–
–
2
2
1
–
–
8
–
8,672
12,815
168
23
18
27
–
–
12
–
1
–
–
19
–
100
Foreign currency sensitivity analysis
The Group is primarily exposed to the following currencies: US dollar, euro, Australian dollar, New Zealand dollar, Canadian dollar, United Arab
Emirates dirham, Philippine peso, Bahraini dinar and Malaysian ringgit.
If sterling were to strengthen or weaken by 10% against the relevant foreign currencies, the balances in the table above would give rise
to an increase/reduction in profit of £847,000 (2019: £1,285,000). This sensitivity analysis includes only outstanding foreign currency
denominated monetary items and adjusts their translation at the period-end for a 10% change in foreign currency rates.
10% represents management’s assessment of the reasonably possible change in foreign exchange rates.
Interest rate risk management
The Group is exposed to interest rate risk because entities hold cash deposits. Hedging activities are evaluated regularly to align with
interest rate views and defined risk appetite, ensuring the most cost-effective hedging strategies are applied. There are no hedges in place
as at 31 December 2020 (2019: nil).
The Group’s exposure to interest rates on financial assets and financial liabilities are detailed in the liquidity risk management section of
this note.
Tribal Group plc Annual Report and Accounts 2020Notes to the financial statements continued 119
Credit risk management
The Group’s principal financial assets are cash and cash equivalents and trade and other receivables. The Group’s credit risk is relatively low
because a high proportion of trade and other receivables have a sovereign or close to sovereign rating. Of the total trade receivables balance
at the end of the year there were no customers (2019: one) who held balances outstanding of more than 5% (2019: £0.4m).
Trade receivables and contract assets
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all
trade receivables and contract assets.
To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit risk characteristics
and the days past due. The contract assets relate to unbilled work in progress and have substantially the same risk characteristics as the
trade receivables for the same type of contracts. The Group has therefore concluded that the expected loss rates for trade receivables are
a reasonable approximation of the loss rates for the contract assets.
The expected loss rates are based on the payment profiles of sales over a period of 36 months before 31 December 2020 or 1 January 2020
respectively and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect
current and forward-looking information affecting the ability of the customers to settle the receivables. In the absence of any seasonality
to the business, 2% increase in defaults was considered appropriate and supportable as the risk of credit losses is relatively low.
Before applying the expected loss rate percentage to each respective ageing category of trade receivables an assessment of specific
customers has occurred and these amounts have been excluded from the general loss allowance. The expected credit loss for these
customers is separately assessed (using the same logic as above) and relates to customers where the probability of default is higher.
On that basis, the loss allowance as at 31 December 2020 and 1 January 2020 was determined as follows for both trade receivables and
contract assets:
31 December 2020 £’000
Current
30–60
61–90
91–180
Expected loss rate
Trade receivables
Contract assets
General loss allowance
1 January 2020 £’000
Expected loss rate
Trade receivables
Contract assets
General loss allowance
Case by case loss allowance
1%
5,669
3,973
67
Current
0%
6,035
3,993
25
–
4%
760
–
29
30–60
4%
1,253
–
126
–
6%
205
–
13
7%
801
–
55
61–90
91–180
17%
332
–
76
–
14%
190
–
66
–
180+
25%
266
–
67
180+
10%
260
–
47
101
Total
7,701
3,973
231
Total
8,070
3,993
340
101
The expected credit losses on trade receivables and contract assets have been calculated using the simplified approach. A reconciliation
of closing loss allowances for trade receivables and contract assets as at 31 December 2019 to the opening loss allowances is in Note 16.
Impairment losses on trade receivables and contract assets are presented as net impairment losses within operating profit. Subsequent
recoveries of amounts previously written off are credited against the same line item.
Other financial assets at amortised cost
Other financial assets at amortised cost include, loans to related parties and key management personnel and other receivables.
The loss allowance for other financial assets at amortised cost as at 31 December 2020 was £nil (2019: £nil).
Strategic ReportGovernanceFinancial StatementsOverview 120
30. Financial instruments continued
Contract risk management
Contract assets inherently have some contractual risks associated with them related to the specific and ongoing risks in each individual
contract with a customer.
Liquidity risk management
The Group manages liquidity risk by maintaining adequate cash reserves and banking facilities, and by continuously monitoring forecast and
actual cash flows. The Group has access to committed financing facilities; being a short-term UK overdraft facility of £2.0m and a short-term
AUS overdraft facility of $2.0m. The total unused amount was £2.0m and $2.0m at the balance sheet date and no interest is being incurred
on this balance (2019: £nil). The Group expects to meet its obligations from operating cash flows. The Group also had cash balances at
31 December 2020 of £9.5m (2019: £16.5m) as detailed in Note 17. Interest is received on this at applicable bank rates.
On 21 January 2020 the Group entered into a three-year £10m multi-currency revolving facility with HSBC with the option to extend to a
further two years. The first option to exercise was approved by HSBC on 16 March 2021 with no significant changes to note. The loan was
fully drawn down in 2020 and repaid in full before 31 December 2020. The facility was put in place to cover general corporate and working
capital requirements of the Group.
31. Related party disclosures
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not
disclosed in this note.
On 7 July 2020, Tribal Group plc (the Company) granted nil-cost options over a total of 482,143 Ordinary Shares (representing approximately
0.20% of the Company’s issued shares) to Mark Pickett under the terms of its 2010 Long-Term Incentive Plan. This award has been granted
subject to performance conditions based on the Group’s Adjusted Operating Profit for the years ending 31 December 2020, 2021 and
2022. The options may not be exercised before 6 July 2023.
On 7 July 2020, Tribal Group plc (the Company) granted nil-cost options over a total of 1,876,000 Ordinary Shares (representing approximately
0.90% of the Company’s issued shares) to members of the senior management team under the Company share option plan. This award has
been granted subject to performance conditions based on the Group’s Adjusted Operating Profit for the years ending 31 December 2020,
2021 and 2022. The options may not be exercised before 6 July 2023.
On 7 July 2020, Tribal Group plc (the Company) granted nil-cost share options over a total of 70,000 Ordinary Shares (representing
approximately 0.03% of the Company’s issued shares) to members of the senior management team under the Company share option plan.
50% of the options can be exercised from 1 July 2021 and 50% of the options can be exercised from 1 July 2022. There are no other
performance conditions.
The remuneration of the key management personnel of the Group is set out below in aggregate for each of the categories specified in IAS
24 ‘Related Party Disclosures’. The members of the Group Board and the Group’s Executive Board are considered to be the key management
personnel of the Group.
Remuneration of key management personnel
Salaries and short-term employee benefits
Termination benefits
Share-based payments
2020
£’000
2,874
70
901
3,845
2019
£’000
3,711
318
814
4,843
Included within Directors’ salaries and short-term employee benefits are pension costs of £25,000 (2019: £12,000) in respect of accruals
and payments made to one (2019: one) Director’s individual defined contribution pension schemes. Included within share-based payments
are amounts paid on dividends on share options that have met performance conditions. Disclosures on Directors’ remuneration, share
options, long-term incentive schemes, and pension contributions are contained in the Directors’ remuneration section within the audited
part of the Remuneration report on pages 57 to 61 and form part of these audited financial statements. Arrangements with the Group’s
pension schemes are set out in Note 26.
Tribal Group plc Annual Report and Accounts 2020Notes to the financial statements continued 121
32. Subsidiaries
The Group consists of a Parent Company (limited by shares) Tribal Group plc, incorporated and domiciled in England and Wales and a number
of subsidiaries held directly and indirectly by Tribal Group plc, which operate and are incorporated around the world. Tribal Education Limited
operates branches in New Zealand, South Africa*, Hungary, and Abu Dhabi. Tribal Group Pty Limited operates a branch out of Singapore.
Tribal Group plc has guaranteed the liabilities of Tribal Holdings Limited, Tribal Dynamics Limited, Tribal Dynamics Holdings Limited and
International Graduate Insight Group Limited in order that they qualify for the exemption from audit under Section 394A/479A
of the Companies Act 2006 in respect of the year ended 31 December 2020.
Information about the composition of the Group at the end of the reporting period is as follows:
Name of entity
Tribal Education
Limited
Address of the registered office
Nature of business
Kings Orchard, 1 Queen Street, Bristol, BS2 0HQ, UK
Education related systems
and solutions
Proportion
of Ordinary
Shares held
directly by
Parent (%)
Proportion
of Ordinary
Shares
held by the
Group (%)
100%
100%
Tribal Holdings Limited
Kings Orchard, 1 Queen Street, Bristol, BS2 0HQ, UK
IP holding Company
100%
Kings Orchard, 1 Queen Street, Bristol, BS2 0HQ, UK
Kings Orchard, 1 Queen Street, Bristol, BS2 0HQ, UK
Educational consultancy
services
Education related systems
and solutions
–
–
100%
100%
100%
Kings Orchard, 1 Queen Street, Bristol, BS2 0HQ, UK
Dormant Company
100%
100%
International Graduate
Insight Group Limited
Tribal Dynamics Limited
(formerly Crimson
Consultants Limited)
Tribal Dynamics
Holdings Limited (formerly
Crimson Consultants
Holdings Limited)
Human Edge Software
Corporation PTY Limited
West 7–8 Federal Mills Park, 3–35 Mackey Street, Geelong,
North Victoria, 3215, Australia
Education related systems
and solutions
Tribal Campus
PTY Limited
Tribal Group
PTY Limited
West 7–8 Federal Mills Park, 3–35 Mackey Street, Geelong,
North Victoria, 3215, Australia
Education related systems
and solutions
West 7–8 Federal Mills Park, 3–35 Mackey Street, Geelong,
North Victoria, 3215, Australia
Education related systems
and solutions
Callista Software Services
PTY Limited
West 7–8 Federal Mills Park, 3–35 Mackey Street, Geelong,
North Victoria, 3215, Australia
Education related systems
and solutions
–
–
–
–
100%
100%
100%
100%
Municipality 3457, Building 1398, Road 4626, Area 346,
Sea Front, Manama, Kingdom of Bahrain
Education related systems
and solutions
100%
100%
Tribal Middle East
WLL Limited
Tribal Group
(Malaysia) SDN
Tribal Systems
Canada Limited
Human Edge Software
Philippines INC
i-graduate USA LLC
12th floor, Menara Symphony, No 5, Jalan Professor
Khoo Kay Kim, Seksyen 13, 46200 Petaling Jaya,
Selangor Darul Ehsan, Malaysia
Tribal Group South
Africa (PTY) Limited**
2 Alexandra Avenue, Unit 8, Craighall. Gauteng,
2196, South Africa
1100 One Bentall Centre, 505 Burrard Street,
Box 11, Vancouver, BC V7X 1M5, Canada
Education related systems
and solutions
Education related systems
and solutions
Education related systems
and solutions
Units 1001,1005,1006, 10th floor Cyberpod One, Eton
Centris, Barangay Pinahan, Quezon City, Philippines 1100
Education related systems
and solutions
1007 N Orange Street, 9th Floor, Wilmington, Delaware,
19801, USA
Educational
consultancy services
Class Measures INC
100 Tower Park Drive, Suite A, Woburn MA 01801, USA
Education related systems
and solutions
Class Measures Limited
Kings Orchard, 1 Queen Street, Bristol, BS2 0HQ, UK
Dormant Company
Tribal Group Asset
Co Pty Limited
West 7–8 Federal Mills Park, 3–35 Mackey Street, Geelong,
North Victoria, 3215, Australia
Dormant Company
*
This branch is in the process of being struck off.
**
This company has been struck off since the year-end.
–
–
–
–
–
–
–
–
100%
100%
100%
100%
100%
100%
100%
100%
Strategic ReportGovernanceFinancial StatementsOverview 122
33. Post balance sheet events
On 21 January 2020 the Group entered into a three-year £10m multi-currency revolving facility with HSBC with the option to extend to a
further two years. The first option to exercise was approved by HSBC on 16 March 2021 with no significant changes to note. The loan was
fully drawn down in 2020 and repaid in full before 31 December 2020. The facility was put in place to cover general corporate and working
capital requirements of the Group.
Tribal Group plc Annual Report and Accounts 2020Notes to the financial statements continued Overview
Strategic Report
Governance
Financial Statements
123
Company only balance sheet
As at 31 December 2020
Investments
Current assets
Debtors
Deferred tax assets
Cash at bank and in hand
Total current assets
Total assets
Creditors: amounts falling due within one year
Net current liabilities
Total assets less current liabilities
Creditors: amounts falling due after one year
Net assets
Capital and reserves
Called up share capital
Share premium
Merger reserve
Own share reserve
Share-based payment reserve
Retained earnings:
At 1 January
Loss for the year attributable to the owners
Equity dividend paid
Other changes in retained earnings
At 31 December
Equity shareholders’ funds
Note
36
37
38
39
39
40
41
41
41
41
41
41
41
41
41
2020
£’000
77,774
6,732
878
23
7,633
85,407
(35,767)
(28,134)
49,640
–
49,640
10,285
15,951
11,304
(856)
6,933
9,145
(919)
(2,254)
51
6,023
2019
£’000
76,930
6,085
855
57
6,997
83,927
(30,841)
(23,844)
53,086
(1,939)
51,147
9,979
15,539
11,304
(856)
6,036
12,789
(1,458)
(2,147)
(39)
9,145
49,640
51,147
Notes 34 to 44 form part of these financial statements.
The financial statements on pages 123 to 129 of Tribal Group plc (registered number 04128850) were approved by the Board of Directors
and authorised for issue on 17 March 2021. They were signed on its behalf by:
Richard Last
Director
£
Mark Pickett
Director
124
Company only statement of changes in equity
As at 31 December 2020
Called
up share
capital
£’000
Note
Share
premium
£’000
Merger
reserve
£’000
Own share
reserve
£’000
Share-
based
payment
reserve
£’000
Retained
earnings
£’000
Total
equity
£’000
At 1 January 2019
9,803
15,539
11,304
(856)
5,027
12,789
53,606
Loss and total comprehensive expense
for the year
Issue of share capital
Equity dividend paid
Credit to equity for share-based payments
Foreign exchange differences on
share-based payments
Tax on credit to equity for
share-based payments
Contributions by and distributions to owners
At 31 December 2019 and 1 January 2020
Loss and total comprehensive expense
for the year
Issue of share capital
Share options exercised
Equity dividend paid
Credit to equity for share-based payments
Foreign exchange differences on
share-based payments
Tax on credit to equity for
share-based payments
23
11
22
22
38
23
11
22
22
38
–
176
–
–
–
–
176
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
9,979
15,539
11,304
(856)
–
239
67
–
–
–
–
–
–
412
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(1,458)
(1,458)
–
176
(2,147)
(2,147)
1,042
(33)
–
–
1,042
(33)
–
(39)
(39)
1,009
6,036
(2,186)
(1,001)
9,145
51,147
–
–
(479)
(919)
(9194)
–
–
239
–
–
(2,254)
(2,254)
1,339
37
–
–
–
51
1,339
37
51
897
(2,203)
(588)
Contributions by and distributions to owners
306
412
At 31 December 2020
10,285
15,951
11,304
(856)
6,933
6,023
49,640
Tribal Group plc Annual Report and Accounts 2020 125
Notes to the Company balance sheet
34. Significant accounting policies
Tribal Group plc is a public limited company incorporated and domiciled in England and Wales.
The separate financial statements of the Company are presented as required by the Companies Act 2006. The Company meets the
definition of a qualifying entity under FRS 100 (Financial Reporting Standard 100) issued by the Financial Reporting Council. As permitted by
FRS 101, the Company has taken advantage of the disclosure exemptions available under that standard in relation to share-based payment,
financial instruments, capital management, presentation of comparative information in respect of certain assets, presentation of a cash
flow statement and certain related party transactions.
Where required, equivalent disclosures are given in the consolidated financial statements.
The financial information has been prepared on the going concern and historical cost basis. The principal accounting policies adopted are the
same as those set out in Note 1 to the consolidated financial statements except as noted below.
Investments in subsidiaries are stated at cost less, where appropriate, provisions for impairment.
35. Loss for the year
As permitted by section 408 of the Companies Act 2006, the Company has elected not to present its own profit and loss account for
the year. The loss for the Company (before dividends paid) amounted to £0.9m (2019: £1.5m). Dividends paid amounted to £2,254,000
(2019: £2,147,000). The independent auditors’ remuneration for audit services to the Company was £150,000 (2019: £140,000).
36. Investments
Cost
At 1 January 2019
Capital contribution relating to share-based payments
Acquisition of subsidiary
At 31 December 2019 and at 1 January 2020
Capital contribution relating to share-based payments
Additional investment in subsidiary
At 31 December 2020
Shares in subsidiary
undertakings
£’000
Long-term
loans
£’000
12,510
732
9,440
22,682
626
218
23,526
54,248
–
–
54,248
–
–
54,248
Total
£’000
66,758
732
9,440
76,930
626
218
77,774
Long-term loans are treated as investments as they are non repayable.
As Tribal Group plc grants share options to employees in subsidiary companies, a notional capital contribution is created in the books of the
relevant subsidiary undertaking. This is treated as an investment by Tribal Group plc.
The Directors have considered the value of the above investments and are satisfied that the aggregate value of each investment is not less
than its carrying value. The investments in subsidiaries are all stated at cost less provision.
Details of the Company’s subsidiaries are given in Note 32 to the consolidated financial statements.
Strategic ReportGovernanceFinancial StatementsOverview 126
Notes to the Company balance sheet continued
37. Debtors
Amounts owed by Group undertakings
Other debtors
Current tax
2020
£’000
6,449
180
103
6,732
2019
£’000
5,924
161
–
6,085
All amounts owed by Group undertakings are unsecured and have no fixed repayment date. No interest is charged and amounts are repayable
on demand. All debtors fall due within one year.
The Company has applied the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision
for Group receivables. The Parent Company has guarantees in place for its UK subsidiaries, and management have assessed each entity’s
ability to repay amounts owed. As a result, no expected credit loss has been recognised.
38. Deferred tax asset
Deferred taxation
At start of year
Charge/(credit) to income statement
Items taken directly to equity
At end of year
The deferred tax asset is analysed as follows:
Share schemes
Other temporary differences
2020
£’000
855
38
(15)
878
2020
£’000
148
730
878
2019
£’000
927
(33)
(39)
855
2019
£’000
185
670
855
Included in other temporary differences are deferred tax assets of £714,000 (2019: £670,000) relating to tax losses carried forward and
other timing differences of £16,000 (2019: £nil).
Deferred tax assets are all non-current assets.
39. Creditors
Amounts falling due within one year
Amounts owed to Group undertakings
Trade and other creditors
Accruals
Non-contingent deferred consideration
2020
£’000
33,772
199
404
1,392
35,767
2019
£’000
28,160
674
314
1,693
30,841
All amounts owed to Group undertakings are unsecured and have no fixed repayment date. No interest is charged and amounts are repayable
on demand.
Amounts falling due after one year
Contingent deferred consideration
2020
£’000
–
2019
£’000
1,939
Tribal Group plc Annual Report and Accounts 2020 40. Called up share capital
Allotted, called up and fully paid
At beginning of the year
Issued during the year
At end of the year
2020
number
199,579,784
6,118,525
205,698,309
2020
£’000
9,979
306
2019
number
196,051,181
3,528,603
10,285
199,579,784
127
2019
£’000
9,803
176
9,979
The Company has one class of Ordinary Shares of 5p each which carry no right to fixed income.
The shares issued during the year in order to satisfy exercises of share-based payment schemes were as follows: 3,405,998 issued on
16 January 2020, 1,223,241 issued on 6 February 2020 and 150,000 issued on 12 June 2020. In addition 1,339,286 shares were issued
on 13 June 2020 to the vendors of Sky Software Pty as part of the deferred consideration payable. The exercise costs of 5p per share for
the LTIPs resulted in cash receipts of £0.3m.
Details of options in respect of shares outstanding at 31 December 2020 are as follows:
Employee share option schemes:
Number outstanding
‘000
Exercise price
payable
Date from which
exercisable
2016 LTIP
2017 LTIP
2018 LTIP
2019 LTIP
2020 LTIP
2020 LTIP
2017 LTIP (inc CSOP)
2018 LTIP (inc CSOP)
2019 LTIP (inc CSOP)
2019 LTIP (inc CSOP)
2019 SAYE
Total Tribal Group plc share option schemes
225
248
251
716
2,358
1,920
5,718
2,660
2,840
2,075
300
7,875
1,028
14,621
£0.05
£0.05
£0.05
£0.05
£0.05
£0.05
£0.80
£0.796
£0.71
June 2019
June 2020
July 2021
June 2022
July 2023
July 2021
July 2020
March 2021
June 2022
£0.615
September 2022
£0.582
November 2022
Details of share-based payments are given in Note 22 to the consolidated financial statements.
Strategic ReportGovernanceFinancial StatementsOverview 128
Notes to the Company balance sheet continued
41. Share premium and other reserves
At 1 January 2019
Loss for the year
Equity dividend paid
Charge to equity for share-based payments
Foreign exchange differences on share-based payments
Tax on charge to equity for share-based payments
Merger
reserve
£’000
11,304
Share
premium
reserve
£’000
15,539
Own share
reserve
£’000
(856)
Share-based
payment
reserve
£’000
Retained
earnings
£’000
5,027
12,789
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,042
(33)
–
At 31 December 2019 and 1 January 2020
11,304
15,539
(856)
6,036
Loss for the year
Equity dividend paid
Share options exercised
Charge to equity for share-based payments
Foreign exchange differences on share-based payments
Tax on charge to equity for share-based payments
–
–
–
–
–
–
–
–
412
–
–
–
–
–
–
–
–
–
–
–
(479)
1,339
37
–
At 31 December 2020
11,304
15,951
(856)
6,933
(1,458)
(2,147)
–
–
(39)
9,145
(919)
(2,254)
–
–
–
51
6,023
The merger reserve of £11.3m (2019: £11.3m) relates to the premium arising on shares issued subject to the provisions of section 612 of
the Companies Act 2006.
The own share reserve of £(0.9)m (2019: £(0.9)m) represents the cost of 827,692 (2019: 872,692) shares in Tribal Group plc held by the
Employee Share Ownership Trust to satisfy certain options under the Group’s share option schemes. See Note 22 of the consolidated
accounts for details of the Group’s share options schemes.
The retained earnings reserve is distributable.
42. Contingent liabilities
A cross-guarantee exists between Group companies in respect of bank facilities which was £nil as at 31 December 2020 (2019: £nil).
In addition the Company and its subsidiaries have provided performance guarantees issued by its bank on its behalf in the ordinary course of
business, totalling £0.1m (2019: £1.6m). They are not expected to result in any material financial loss.
As disclosed in Note 32, Tribal Holdings Limited, Tribal Dynamics Limited, Tribal Dynamics Holdings Limited and International Graduate Insight
Group Limited have taken advantage of the exemption available under Section 394A/ 479A of the Companies Act 2006 in respect of the
requirements for audit. As a condition of the exemption, the Company has guaranteed the year-end liabilities of these subsidiaries until
they are settled in full. The liabilities of the subsidiaries at the year-end were £39,763,000 (2019: £35,683,000). These are inclusive of
intercompany liabilities.
Tribal Group plc Annual Report and Accounts 2020
129
43. Financial Instruments
All Company risks are aligned to those of the Group. Details of the risks relating to the Group are given in Note 30 to the consolidated
financial statements.
31 December 2020
Financial assets
Cash
Debtors*
Financial liabilities
Creditors
Deferred non-contingent consideration
31 December 2019
Financial assets
Cash
Debtors*
Financial liabilities
Creditors
Deferred contingent consideration
Financial assets
measured at
amortised cost
£’000
Financial liabilities
measured at
amortised cost
£’000
Financial liabilities
measured at
FVTPL
£’000
23
6,469
6,492
–
–
–
–
–
–
34,375
1,392
35,767
–
–
–
–
–
–
Financial assets
measured at
amortised cost
£’000
Financial liabilities
measured at
amortised cost
£’000
Financial liabilities
measured at
FVTPL
£’000
57
5,940
5,997
–
–
–
–
–
–
29,148
–
29,148
–
–
–
–
3,632
3,632
Total
£’000
23
6,469
6,492
34,375
1,392
35,767
Total
£’000
57
5,940
5,997
29,148
3,632
32,780
*
Excluding amounts that relate to non-financial instruments of prepayments.
44. Staff numbers and costs
The average monthly number of persons employed (including all Directors) under contracts of service by the Company during the year was
as follows:
The aggregate payroll costs of these persons were as follows:
Wages and salaries
Social security costs
Other pension costs
Share option charge
2020
Number
3
2019
Number
3
2020
£’000
849
56
25
369
1,299
2019
£’000
887
75
12
310
1,284
Cost of Directors’ emoluments were incurred by the Company and are included in the Remuneration report on pages 57 to 61.
Strategic ReportGovernanceFinancial StatementsOverview 130
Company information
Tribal Group plc
Registered in England and Wales
Company number: 04128850
Registered office
Kings Orchard
1 Queen Street
Bristol
BS2 0HQ
T: 0845 123 6001
E: info@tribalgroup.com
www.tribalgroup.com
Company Secretary
Kenneth Lewis
Stockbrokers
Investec Bank plc
2 Gresham Street
London
EC2V 7QP
Financial adviser
Investec Bank plc
30 Gresham Street
London
EC2V 7QP
Principal bankers
Lloyds Bank
PO Box 112
Canon’s House
Canon’s Way
Bristol
BS1 5LL
Independent auditors
BDO LLP
Bridgewater House
Counterslip
Bristol
BS1 6BX
Solicitors
Taylor Wessing LLP
5 New Street Square
London
EC4A 3TW
N+1 Singer Capital Markets Limited
1 Bartholomew Lane
London
EC2N 2AX
HSBC Bank
3 Temple Quay
Bristol
BS1 6DZ
Tribal Group plc Annual Report and Accounts 2020 Overview
Strategic Report
Governance
Financial Statements
131
Registrars
Link Group
Unit 10
Central Square
29 Wellington Street
Leeds
LS1 4DL
E-communications
As an alternative to receiving documents through the post, shareholders can receive important information online, including annual
and half-year reports and notices of meetings. Registering for e-communications also enables shareholders to obtain secure online
access to personal shareholding details, change address details, request new share certificates and check dividend payments.
To register for e-communications, please visit
https://www.signalshares.com
Duplicate accounts
If you receive two or more copies of the Annual Report and Accounts and/or multiple cheques for each dividend payment,
it means that you have more than one shareholder account.
To receive just one Annual Report and Accounts and one cheque for each dividend payment, please contact the Company’s
registrars, Link Group, on 0371 664 0445, and ask for your accounts to be amalgamated.
(Calls are charged at the standard geographic rate and will vary by provider. If you are outside the United Kingdom, please call
+44 371 664 0445. Calls outside the United Kingdom will be charged at the applicable international rate. We are open between
8.00 am – 4.30pm, Monday to Friday excluding public holidays in England and Wales.)
Financial calendar
Annual General Meeting
27 April 2021
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Registered office
Kings Orchard
1 Queen Street
Bristol
BS2 0HQ
T: 0845 123 6001
E: info@tribalgroup.com
www.tribalgroup.com