Annual Report
& Accounts 2021
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Empowering
education
the world of
Financial and Operational Highlights
Overview
02
04 Chairman's Statement
06 Edge Product Offerings Case Study
Strategic Report
08 Our Markets
10 Our Business Model
12 Chief Executive’s Review
Tribal's Growth Strategy
16
18
Financial Review
26 Principal Risks and Uncertainties
28 Stakeholder Engagement
30 Q&A with Management
32 Acquiring Semestry Case Study
34 Environmental, Social and Governance Report
40 Tribal: Cloud Case Study
Governance
42 Board of Directors
44 Executive Committee
46 Corporate Governance Statement
50 Audit Committee Report
51 Remuneration Committee Report
56 Nomination Committee Report
57 Directors’ Report
60
Independent Auditor’s Report
Financial Statements
68 Consolidated Income Statement
Consolidated Statement of
69
Comprehensive Income
70 Consolidated Balance Sheet
72
73 Consolidated Cash Flow Statement
74 Notes to the Financial Statements
120 Company only Balance Sheet
121
122 Notes to the Company Balance Sheet
Company only Statement of Changes in Equity
Consolidated Statement of Changes in Equity
Company Information
127 Company Information
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Tribal Group plc
01
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
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02
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Financial and Operational Highlights
Financial Performance
20.5%
5.7p
Adjusted Operating Margin (EBITDA)1
Adjusted Earnings per Share1
2020: 20.8%
2020: 4.1p
51.5%
Gross Profit Margin
2020: 53.1%
11.0%
3.4p
Statutory Operating Margin
Statutory Earnings Per Share
2020: 12.5%
2020: 3.1p
Note: comparatives are in constant currency
1. Adjusted Operating Profit, Adjusted Operating Margin and Adjusted Earnings per Share is in respect of continuing operations which excludes ‘Other Items’ charges of £5.4m 2020:
charge of £3.0m).
Revenue
£81.1m
Adjusted Operating Profit (EBITDA)
Statutory Profit After Tax
£16.6m
£7.0m
2021
2020
£81.1m
£73.0m
2021
2020
£16.6m
£14.9m
2021
2020
£7.0m
£6.4m
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Strategic Report
Governance
Financial Statements
Tribal Group plc
03
Operational Performance
£50.3m
Annual Recurring Revenue3
2020: £47.0m
104%
Operating Cash Conversion2
2020: 97%
£172.5m
Committed Income (Order
Book)4
2020: £142.6m
£5.4m
Free Cash Flow
2020: £5.4m
£100.1k
Revenue per Operational FTE5
2020: £99.8k
£5.9m
Net Cash
2020: £9.5m
2. Operating Cash Conversion is calculated as net cash from operating activities before tax from continuing operations,excluding the cash outflow of £1.7m on the Veritas
programme, as a proportion of adjusted operating profit (EBITDA).
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 (Order Book) refers to the Total Contract Value of booked sales orders which have not yet been delivered (including two years Support & Maintenance,
where it is contracted on an annual recurring basis).
5. Revenue/Average Operational FTE is the average FTE for the year excluding average FTE associated with capitalised Product Development. In 2021 126.1 FTE were
capitalised (2020: 96.6)
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Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Chairman’s Statement
Evolution
and
progress
I am pleased to report another
year of significant progress
at Tribal. We are successfully
delivering on our transition to
an “as-a-service” provider of
cloud focussed software and
solutions to the global education
market, growing our engagements
with existing customers while
generating significant new wins,
both in the UK and internationally.
These successes are flowing through into
growth in our Annual Recurring Revenue
(ARR) and provide the Board with confidence
to continue investment in our technology,
people and operations to ensure we are well-
positioned to capitalise on the continuing
evolution of the global education market.
During the year, we launched our new five-
year objectives for the business, targeting
a doubling of ARR, both organically and
through select strategic acquisitions,
an improving EBITDA margin, delivery of
all major Edge modules, entry into new
geographies through the Edge offering,
and significant expansion of the customer
base. We have seen good progress in the
year against these objectives and with
an increasing frequency of new business
wins.
During the year Tribal acquired two
businesses; Semestry Ltd and Eveoh’s “My
Timetable” for a combined consideration of
£6.8m. These businesses complement our
existing portfolio and form part of our Edge
offering to the Higher Education market.
We continue to invest in the development
of Edge and have made positive progress
on the Admissions module for which we
have four universities taking the product
as early adopters.
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Tribal Group plc
05
Team. While we are still at the early stages
of the implementation of many of these
programmes, we are committed to their
sustained delivery and will continue to build
on our activities in 2022. You can read a
full report on these priority areas within the
ESG section of the Annual Report.
Notwithstanding this, with a growing
number of new customer wins, contract
extensions, cross sell opportunities and
a clear strategy and record sales pipeline,
the Board believes that the opportunities
for Tribal are significant and we view the
future positively.
Richard Last
Chairman
People
The progress we have made is a tribute
to our employees’ talent, expertise and
belief in our proposition, and this year, this
has never been more true. Their energy
and commitment to providing world-class
education software and services throughout
the pandemic has not wavered and I would
like to thank all our staff across the globe
for their hard work. As we move into what we
hope to be a post-pandemic environment our
priority remains on ensuring the wellbeing of
each employee and we will continue to invest
in our people, providing them with the tools,
training and support to allow them to realise
their potential.
Janet Tomlinson, Head of Tribal Education
Services retired on 9 December 2021, we
would like to thank her for her many years of
excellent service, and we wish her well for
the future.
Ukraine
The Directors have considered the impact
of the ongoing situation in Ukraine and have
concluded there is currently minimal risk
to business continuity as we do not have a
presence in the region. The group continues
to support all colleagues who are directly
impacted by the conflict and will monitor the
situation closely.
Outlook
The market appetite for our leading
solutions continues to be positive, and the
growing portfolio of Tribal products from
our core student management systems,
to Tribal:Cloud and Edge is resonating
well with both our existing and new
customers. We are focused on delivering
our newly launched 5 year plan, however,
as previously reported, over the next two
years we are likely to experience lower
levels of growth as historic contracts
draw to a close but we continue to see
opportunities to drive ARR growth.
Financial Performance
Tribal has seen another year of considerable
progress against our key performance
indicators.
Closing ARR committed as at 31 December
2021 increased by 7% to a record high
of £50.3m (2020: £47.0m constant
currency, £47.5m reported), revenue for
the year increased by 10.6% to £81.1m
(2020: £73.4m constant currency, £73.0m
reported) and Adjusted EBITDA increased by
9.2% of £16.6m (2020: £15.2m constant
currency, £14.9m reported). Our Cloud
and Edge products delivered substantial
organic revenue growth of 31% and 50%
respectively. Committed sales order book
as at 31 December 2021 amounted to
£172.5m (2020: £142.6m constant
currency, £144.4m reported). Diluted
earnings per share for the year grew to 3.2
pence per share compared to 3.1 pence per
share in 2020.
Tribal’s Statutory Profit before tax
remained stable at £8.6m (2020: £8.5m
reported).
The Group’s cash balance remained strong
with net cash of £5.9m at year end (2020:
£9.5m) after net capitalised development
costs of £10.2m, the net payment of
£6.4m on acquisitions and deferred
consideration payments and £2.5m of
dividends paid, with no debt drawn at the
end of the year.
Dividend
Tribal remains committed to a continuing
dividend policy and the Board is pleased to
propose a final dividend in respect of the
year ended 31 December 2021 of 1.3p
which is expected to be paid at the end of
July 2022.
Environment, Social and
Governance (ESG)
Tribal is committed to activities that
benefit the environment and society,
underpinned by good governance. As part
of our journey to continually improve our
approach and performance in these areas,
we formed an ESG Committee in 2020,
chaired by Non-Executive Director, Nigel
Halkes. The ESG Committee identified six
priority focus areas for the Group for 2021,
each with key initiatives and objectives
for the year and appropriate ownership
from across our Executive Management
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Financial Statements
Case Study
Edge Product Offerings
Robust
and adaptable
products
and services
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products
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Financial Statements
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Te Whare Wānanga o Awanuiārangi selects Tribal
to improve student experience from enquiry and
enrolment to graduation and alumni
Te Whare Wānanga o Awanuiārangi is a publicly
owned tertiary education institution based
in Whakatane, New Zealand which provides
education in a Māori cultural context to 6,000
students. The organisation’s vision is to
pursue knowledge to the greatest depths and
its broadest horizons, and to empower the
descendants of Awanuiārangi and all Māori
to claim and develop their cultural heritage.
The Challenge:
•
Improve and personalise the student
experience from enquiry, application and
enrolment through to graduation and alumni
•
Improve service delivery by managing
quality, reducing risk and cutting
turnaround times
• Create efficiencies for the organisation
by improving reporting and lines of
communication and reducing time
and cost caused by workarounds
Wiremu Doherty, CEO, Awanuiārangi, said:
“Our current SMIS plateaued in its ability to
service the needs of our staff and students.
We looked for a replacement system that
would improve the student experience from
their first enquiry to graduation, increase our
accessibility to information and enable us to
better manage our programs.”
The Solution:
•
Integrated solution, combining our Edge
products with EBS .
•
The core Student Management System
(SMS) will be based on Tribal’s ebs, hosted
in the Tribal Cloud integrated with Tribal’s
Student Marketing and Recruitment, Event
Management and Alumni Management
Solutions.
•
The solution provides a full 360-degree
view of the student from initial enquiry to
alumni management.
Awanuiārangi will also adopt Tribal’s Student
Engage mobile app as a private social network
to connect the entire Wānanga community.
It will engage students, staff, departments
and businesses and provide students with
a secure collaborative space to learn and
support each other.
The Benefits:
The Tribal suite of products will empower both
Te Whare Wānanga o Awanuiārangi’s staff
and students to receive a personalised view
of relevant information. Tauira (students) can
track their study, including their enrolments,
finance, results, timetables and attendance,
while staff will be able to view relevant
information such as links to their timetables,
students and the courses they teach – all in
one place. The new reporting solution offers
a valuable data mining tool which will provide
contextualised information visually.
Steve Exley, Tribal’s General Manager –
New Zealand, said:
“We’re delighted that Te Whare Wānanga o
Awanuiārangi has chosen to adopt a full suite of
Tribal solutions to manage the student journey.
It is a significant win for Tribal, being the first
customer in New Zealand to adopt our Student
Marketing and Recruitment, Event Management
and Alumni Management Solutions as well as
the Student Engage App. We are pleased to be
on the journey with Awanuiārangi and are looking
forward to continuing the relationship and
kicking off the implementation.”
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Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Our Markets
Geographic growth potential (Higher Education student numbers)
Europe
SE Asia
North America
EU-27: 17.5m
Rest of SE Asia: 7.4m
Current markets
UK
2.4m
Philippines: 3.6m
Malaysia: 0.86m
Australia
1.5m
Tribal Share
(Students):
50%
Tribal Share
(Students):
23%
USA: 19.8m
Canada: 2.2m
New Zealand
0.4m
Tribal Share
(Students):
36%
shorter implementation cycles which
can be delivered remotely unlocking a
breadth of opportunity across the world
to both new and existing customers.
Revenue by business area
Student Information Systems
£67.3m
Education Services
£13.8m
Opportunities
The three key goals within our Strategy,
supported by Tribal’s five-year
objectives enable us to maximise our
opportunity for growth.
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 globally.
With significant numbers of untapped
institutions globally, our next-generation
cloud based product offering enables
Annual Report & Accounts 2021
Annual Report & Accounts 2021
Strategic Report
Strategic Report
Governance
Governance
Financial Statements
Financial Statements
Tribal Group plc
Tribal Group plc
09
9
What is driving our business
University challenge
University solution
Tribal opportunity
Legacy internal SMS unfit
for purpose
Public tender for cloud-based
commercial SMS
Sell existing products delivered
from Public Cloud
Legacy complexity / lack of agility
/ security concerns
Leverage Public Cloud and
managed services
Improve Student Experience
Improve internal efficiency
Digital transformation to deliver a
compelling student experience
For more information
See pages 16 -17
Tribal:Cloud: providing SIS
as-a-service through the
public cloud
For more information
See pages 16-17
Tribal Edge: Cloud-native
solutions adding value across
a wider solution set
For more information
See pages 16-17
Tribal office
Tribal SIS customer
Tribal Group plc
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Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
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 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
Our values See page 37
How we maximise value creation
Our strategy for profitable growth is outlined on page 16
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Our resources
Our software
Generating returns and added
value for all of our stakeholders:
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
Our cloud-based and on-premise student information
solutions add value to education and business organisations
throughout the student life cycle. Our modules span:
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 37
Risk management See page 26
Corporate responsibility See page 34
Our strategy for profitable growth is outlined on page 16
Tribal Group plc
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Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Chief Executive’s Review
Evolution
and
progress
2021 was a year of positive
strategic and financial progress,
in which we delivered against
key milestones in our transition
to a SaaS business, while
maintaining our market leading
position in our core geographic
markets and supporting our
growing customer base.
With an increasing rate of new wins and
customer extensions, we are starting to see
the benefits of the investments we have
made in the evolution and expansion of our
offering, positioning Tribal at the forefront
of the evolving education industry and
providing for an exciting future.
Our areas of focus in 2021 were to grow ARR,
secure more Tribal:Cloud contracts, migrate
more customers to our cloud services,
and launch Edge Admissions – all of which
have been achieved. We also continued to
benefit from strong customer retention and
cash generation, providing us with a robust
financial platform from which to invest in
capturing our expanding opportunity.
Throughout the year we invested in our
people and operations to deliver on Tribal’s
growing customer footprint across the globe;
we have evolved our operational model to
ensure service levels are maintained and
scalability for long term growth.
This positive progress and the move of the
education sector towards the SaaS delivery
model, means we have entered the new
year with a record sales pipeline, reflecting
the continuing investment by the education
sector and our expanded offering.
Market Drivers
The higher education market continues to
evolve as anticipated and the drivers of
this evolution, heightened by the pandemic,
remain the same, providing a positive
backdrop for our evolving product offering.
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Financial Statements
Tribal Group plc
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Our Strategy
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 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
solutions and services offered.
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 Edge in the public cloud and moving our product offering to 'as-a-service'.
Tribal 2025: Five-year Objectives
1. Increase ARR
Double the Annual Recurring Revenue (being 15% Compound Annual Growth Rate
“CAGR”)
• ARR at end 2020: £47.5m
•
Includes bolt-on acquisitions
• Ramps up over 5 years
2. Improve EBITDA
EBITDA margin at low-30s%
• EBITDA at end 2020: 20%
• Multi-tenanted, SaaS solution
• Edge fully rolled out will drive margins in mid-30s
3. Complete Edge
Deliver all major modules of Edge
• Broadly complete ecosystem, incl bolt-on acquisitions
• Conclude accelerated Product Development spend
4. Grow globally
Double # of Higher Education markets
• 10% of revenue from new addressable global markets
• Markets (2020): UK, Aus, NZ, Canada, Malaysia, Singapore
5. Build customer position
Double # of Higher Education customers & share-of-wallet
• All customers on Tribal:Cloud and/or adopting Edge
•
Increase “share-of-wallet” Double Rev / Customer
For more information
See pages 16-17
The education sector is now becoming
increasingly competitive, efficient and
adaptable, with organisations needing to
compete for students. The expectations of
students are rising, particularly in the areas
of wellbeing and mental health. Institutions
increasingly need to consider elements
such as blended learning and the remote
delivery of services. This emergence of
online and collaborative learning has led
to the significant expansion of the higher
education market in recent years, which has
ultimately provided greater opportunities
and offerings to students worldwide. As
such, it is now necessary for a business to
introduce its innovative solutions to market
at speed in order to capture the expanding
market opportunity.
The Tribal:Cloud and Edge family of modules
specifically address each of these issues,
enabling education institutions to focus
less on maintaining legacy IT hardware and
software, and more time focusing on the
recruitment, engagement and success of
their students.
2021 has demonstrated there is a clear
market appetite for our solutions and the full
proposition of Tribal products is resonating
well with our customers. Through the
investment in the expansion of our offering,
Tribal is well placed to meet these evolving
market needs and grow market share
globally.
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 focus on the delivery of exceptional
education to their students.
As a demonstration of our ambition, in 2021,
we launched our new five-year objectives
shown to the right.
To achieve these ambitious targets, our
strategy has four growth pillars: Innovating with
our existing products; delivering our existing
products “as-a-service” in the Tribal Cloud;
developing a next-generation, modular cloud-
native product set, Edge; and complementing
organic growth with selective M&A.
Tribal Group plc
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Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Chief Executive’s Review continued
We have made positive progress in each of
these areas, including the winning of further
SITS:Vision customers, our existing market
leading software, the successful transition
of an additional two flagship customers
into the Tribal:Cloud, the marketing launch
of Admissions, including the winning of four
Admissions customers, and the successful
acquisition of two additional cloud modules
to add to our Edge product family.
The growth in ARR was 7% in the year. We
are pleased with these positive signs of
potential and although it will take time for full
adoption of our solutions by our customers
due to the annual cycle of the academic
year, we remain confident in the significant
long-term opportunities.
Geographic Expansion
We have leading market shares in the
geographies in which we operate. In the
UK over 65% of all Higher Education
institutions use our student management
systems, in Australia we support one-third
of universities, and in New Zealand three
of the eight universities. In Southeast
Asia, we support the largest public and the
largest private universities in Malaysia, and
this year we have expanded further with
new customer wins including Middlesex
University in Dubai and Universiteit Leiden in
The Netherlands.
We will continue to focus on growth in these
geographies and we anticipate Edge will allow
us to expand further into new geographies
once the modules are released, due to its
more easily digestible modular approach.
Semestry and Eveoh Acquisitions
We were pleased to complete two small
acquisitions in the year.
In April 2021 we acquired Semestry, a
supplier of cloud based scheduling software
to the higher education market, expanding
the Group’s Edge family of products and
taking the business into new geographies.
Semestry services over 20 customers
across five countries in Europe. Since
acquisition, Semestry has secured 8 new
customers, growing Semestry ARR by 37%,
representing an acceleration of its historic
growth rate.
The module was further enhanced in
November with the acquisition of Eveoh’s
“My Timetable”. The platform allows
institutions to publish personalised student
and staff timetables, via the web or their
mobile device and is currently in use at more
than forty institutions in Europe and the UK.
The products can be sold across Tribal’s
extensive customer base, as universities seek
to increase engagement with their students
and offer more personalised experiences.
We continue to explore investment
opportunities to scale the business and
enter into new geographies and expand our
Edge family.
2021 Operational Review
People
Tribal relies 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. Their depth of domain knowledge in
the sector 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. We continue to
invest in our people, providing them with
the tools and training to support and allow
them to realise their potential, with clear
alignment to our Group objectives.
The key initiatives enabling our people to
develop their true potential includes, our
bespoke competency framework, which
underpins a range of Career Pathways.
Through our framework, we aim to help each
employee understand how they can develop
in their current role as well as plan for their
future growth and development.
We also run remote business development
programmes focusing on the 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.
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.
Communication with our people and
maintaining wellbeing is crucial, especially
as we continue to feel the impact of the
pandemic. We have focused on supporting
all aspects of our people’s health and
wellbeing providing ongoing and additional
support through our Employee Assistance
Programme.
We have now reopened our offices and
following consultation with our employees,
the teams are embracing the new form of
hybrid working.
Student Information Systems (SIS)
Student Information Systems, our core
segment which targets the further and
higher education sectors through our range
of software offerings, delivered a positive
performance in the year, growing customer
numbers, revenue, and profits, and has
entered the new financial year with a record
pipeline of opportunities. We continue to win
new customers for our existing on premise
offering, transition existing customers
into our cloud offerings, and sign the first
contracts for our Edge offerings.
Key new customers include University of
West London and Southampton Solent
University in the UK, and internationally:
Te Whare Wānanga o Awanuiārangi in New
Zealand, Middlesex University in Dubai and
Universiteit Leiden in The Netherlands.
We were delighted to close a number of
significant sales to existing customers,
transitioning their existing on-premise
Tribal SITS software, SITS:Vision, into the
Tribal:Cloud, a managed cloud environment.
These include five-year contracts with the
University College London for £3m and
The University of Warwick for £3.5m. We
continue to have positive conversations
across our extensive customer base as they
explore the benefits a move to the cloud can
bring their organisation and are confident of
continued uptake.
Our largest SITS deal to date, worth
approximately £17m over eight years, with
Nanyang Technology University launched
in early 2021 and project implementation
will continue to progress throughout
2022. The partnership encompassing
SITS:Vision, Tribal:Cloud and Edge products,
demonstrates the relevance of Tribal’s broad
suite of offerings.
We also completed the first sales of
our newly developed Cloud-based Edge
Admissions module, to Aberystwyth
University and the University for the
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Tribal Group plc
15
Creative Arts. The solution can be integrated
with the SITS Student Management System,
or any other SMS, providing the Group with a
significant addressable market. Sales of the
Dynamics based Edge Student Recruitment
and Student Welfare modules have
developed and have a growing pipeline.
In December, we concluded contract renewal
discussions with our Australian university
customers on the Callista Software
platform. Of the eleven universities, nine
have elected to renew. The five-year
agreements provide an evolutionary path
towards the Edge, Cloud delivered SaaS
ecosystem and provide a strong foundation
of long-term visible revenue, with £5.8m
ARR, in the Australian market.
As the Group transitions to a SaaS delivery
model, we have introduced some additional
metrics to measure progress towards key
objectives.
£m
2021
Annual
Recurring
Revenue (ARR)4 50.3
Monthly
Recurring
Revenue (MRR)1 4.3k
2020
Constant
currency
Change
%
47.0
7%
3.7k
16%
Gross Revenue
Retention
(GRR)2
Net Revenue
Retention
(NRR)3
93% 92%
1%
106% 103%
3%
1. Calculated as the monthly recurring revenue as at
31 December
2.
Calculated as a percentage of recurring revenue
retained from existing customers at 1 January
including contract expiry, cancellations or
downgrades in the year
3. Calculated as a percentage of recurring revenue
retained from existing customers at 1 January
including upsells as well as contract expiry,
cancellations or downgrades in the year
4. ARR is a forward looking metric representing
committed revenues as at 31 December 2021
and includes Support & Maintenance fees paid on
all software, License sold on a subscription basis,
Cloud services and Edge sales.
MRR has increased 16% to £4.3k (2020:
£3.7k). 20pp of the increase is driven by the
acquisitions of Semestry and Eveoh’s “My
Timetable”, the remaining increase is organic
growth from significant new wins including
Nanyang Technological University, Te Whare
Wanaga o Awanuiarangi, Solent University
and University of West London.
GRR has increased 1pp to 93% (2020:
92%). In 2021 and 2020, a third of the
movement relates to churn on SchoolEdge
customers. We have also seen a decline in
some of our other services as customers
move away from our bespoke products.
NRR increased by 3pp to 106% (2020:
103%). This growth is predominantly due
to cloud migrations sold to Kings College
London, University of Warwick, University
College London and Universiti Teknologi
Petronas and Dynamics sales made to 8
existing customers. Annual inflationary
increases applied to customer renewals also
contribute to NRR growth.
Education Services (ES)
Education Services trading performance
remained stable throughout the year, despite
the impact of the ongoing pandemic. The
team continued remote delivery of the key
assurances, training, and inspections in the
UK, US and New Zealand. The business has
a good pipeline of opportunities for the new
financial year which will enable Education
Services to deliver new revenue in 2022.
In the UK, the main contracts continued
to operate at consistent levels. Work on
the National Professional Qualifications
(NPQ) moderations, Advanced Mathematics
Support Programme (AMSP) and National
Centre for the Excellence of Teaching
Mathematics (NCETM), professional
development and training all continued to
be successfully delivered remotely with
the gradual return of some face-to-face
events in the second half of the year. These
contracts are subject to retender in 2022.
School closures in the US continued
to hamper business development
opportunities. The New York State Education
Department (NYSED) contract had a solid
performance as we worked closely with
NYSED to ensure continued delivery despite
the restrictions from the pandemic.
In the Middle East, the ADEK contract
resumed at a reduced level in the final
quarter of 2021 compared to three
months full delivery in early 2020. No
further revenues are expected from the
ADEK contract as this has now come to
an end. The decrease in ADEK revenues
were offset with smaller contract wins in
Bahrain, however due to the flexible cost
model and variable cost base our margin was
somewhat protected.
2022 Areas of Focus
We anticipate 2022 will be a pivotal year
for Tribal, as we see momentum building in
our pipeline and across our industry as it
moves towards SaaS and cloud offerings.
We will focus on transitioning more of our
existing customers to the Tribal:Cloud,
the sale of further Edge modules and the
delivery of our first early adopter Admissions
customers. We will also continue to develop
new customer relationships globally and
look for complementary partnerships and
acquisitions, to accelerate our expansion.
We are transitioning to a new target
operating model which will underpin the
structures and capabilities required
of a SaaS business. This includes the
introduction of two new executive roles
focusing on Customer Success and Service
Delivery. The new target operating model will
be supported by the implementation of new
SaaS financial systems and processes.
2022 Outlook
We have a strong sales pipeline as we
enter the current financial year, giving us
the confidence to continue to invest in our
product expansion strategy to achieve our
long-term financial goals. The Group has
traded in line with Board expectations since
the start of the new financial year and is
seeing continued positive sales momentum.
We expect continuing revenue growth
in our strategic products with improving
margins over time as we gain scale, but
this will be offset in the next couple of
years by declining revenues from our higher
margin, historic Australian government
contracts and non-core schools systems
contracts. While cognisant of inflationary
cost pressures, the Board remains confident
in delivering results for 2022 in line with
current expectations.
We believe the education market globally
is becoming more attuned to the benefits
of SaaS and cloud offerings and presents a
supportive market backdrop, as we release
new offerings to the market and increase
our sales and marketing activities.
The Group remains focused on its key
strategic priorities during 2022 and we
remain confident in our ambition and ability
to deliver on our growth strategy.
Mark Pickett
Chief Executive Officer
Tribal Group plc
16
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Tribal’s Growth Strategy
Our objective is to
provide
education
technology
to customers globally,
as-a-service.
Key benefits of our strategy:
An expanded, modular product offering will enable us to increase the size of our addressable market, through:
•
•
increased revenue per customer
increased number of customers
• easier entry into a greater number of geographies
•
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
• 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
Innovating with our existing products
• We will continue to invest in our market-leading existing offerings, ensuring
Key measures
• Growth in ARR
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
• New customer wins
Progress in 2021
• Committed Annual Recurring
Revenue increased by 7% to
£50.3m (2020: £47.0m).
•
New business wins for all existing
products plus increased traction
of the successful migration of key
customers to Tribal:Cloud.
• New customers include University
of West London and Southampton
Solent University in the UK, Te Whare
Wānanga o Awanuiārangi in New
Zealand, Middlesex University in
Dubai and Universiteit Leiden in the
Netherland.
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Tribal Group plc
17
Tribal Cloud: delivering our existing products 'as-a-service'
• Deliver existing product suites as-a-service, and manage on behalf of our
Key measures
• ARR from Cloud services
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 Edge, our native
cloud ecosystem of education technology modules
• Number of Tribal Cloud customers
Progress in 2021
• Notable 5-year contract wins with
University College London and The
University of Warwick.
Edge – a modular, next generation, cloud-native, Student
Information product set
• Create an expanded higher education ecosystem of next generation modules
to meet all areas of student engagement with universities
• We have developed the 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 Edge platform and other modules,
or independently
• Universities no longer want to buy all their requirements from a single
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
Mergers and Acquisitions
• Support geographic expansion, our organic growth will be complemented
through tactical acquisitions, of additional modular technology, to add to our
Edge ecosystem, or to enable cross-sell to the large Tribal customer base
• Gain market share to build mass in our target geographies
Key measures
• Number of modules sold
Progress in 2021
• 11 new Dynamics deals in the
UK and 3 in APAC highlights the
relevance of Edge products globally
• Positive progress on new modules
with the marketing launch of
Admissions, and the delivery of our
first four early adopter customers
•
Expansion of our Global Delivery
Centre in Malaysia to support the
growing SE Asia business and Global
Delivery Model
Key measures
• Sales and ARR growth of acquired
businesses
Progress in 2021
•
The acquisition of Semestry Ltd and
Eveoh’s “My Timetable” in the year
added cloud based scheduling to our
Edge product offering which enabled
expansion of the business into new
geographies.
• We won several new accounts and
cross sold into existing customers
Tribal Group plc
18
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Financial Review
Results
£m
Revenue
Student Information Systems
Education Services
Gross Profit
Gross Profit Margin
Adjusted Operating Profit (EBITDA) 1, 2
(Before Central Overheads)
Student Information Systems
Education Services
Central Overheads 4
Net foreign exchange gain/(losses)
Adjusted Operating Profit (EBITDA) 1, 2
Adjusted Operating Margin (EBITDA) 1, 2
Statutory Profit before Tax
Statutory Profit after Tax
Annual Recurring Revenue
Constant
Currency
20203
Change
constant
currency
Change
constant
currency %
2021
81.1
67.3
13.8
41.8
2020
Reported
73.0
59.4
13.5
38.6
73.4
60.0
13.4
38.9
51.5%
53.0%
53.1%
25.8
23.6
2.2
(9.2)
0.1
16.6
20.5%
8.6
7.0
50.3
24.5
22.3
2.1
(8.8)
(0.8)
14.9
20.4%
8.5
6.4
47.5
24.8
22.9
1.9
(8.8)
(0.8)
15.2
20.8%
8.5
6.4
47.0
7.7
7.3
0.4
2.9
1.0
0.7
0.3
(0.4)
0.9
1.4
0.1
0.6
3.3
10.6%
12.1%
3.5%
7.4%
(1.5)pp
4.0%
3.1%
15.8%
(4.0)%
112.5%
9.2%
(0.3)pp
0.7%
8.6%
7.0%
1. Adjusted Operating Profit and Adjusted Operating Margin are in respect of continuing operations and excludes charges reported in “Other items” of £5.4m (2020: £3.0m),
refer to note 6 in the Financial Statements.
2. EBITDA is calculated by taking the Adjusted Operating Profit after the allocation of Central Overheads and excludes Interest, Tax, Depreciation and Amortisation.
3. 2020 results adjusted are updated for constant currency - the Group has applied 2021 foreign exchange rates to 2020 results to present a constant currency basis, when applied
to 2020 results there is an increase in Revenue of £0.4m, an increase to Adjusted Operating Profit (before Central Overheads) of £0.3m and Adjusted Operating Profit of £0.3m.
4. Central Overheads are made up of costs that are not directly attributable to either Student Information Systems or Education Services.
The financial review presents the reported
results for 2021 and 2020, and the 2020
results restated to “constant currency”
using 2021 rates to exclude foreign
currency impact. The change percentages
and comparatives are shown on the 2020
constant currency numbers. The 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”.
The Group has chosen to present its results
on a constant currency basis to reflect the
year-on-year performance and account for
the impact of foreign exchange movements
in the year.
Revenue
Revenue in the year increased 10.6% to
£81.1m (2020: £73.4m constant currency,
adjusted for the impact of foreign exchange
of £0.4m; £73.0m as reported). On a like for
like basis, excluding Semestry revenue of
£1.2m (2020: £nil), the increase in total
revenue was 8.9%.
The Group’s Student Information Systems
segment performed well, increasing by
12.1% to £67.3m (2020: £60.0m constant
currency; £59.4m reported). 10.1pp of the
increase was driven by a strong performance
due to new customer wins across a range
of offerings, the remaining 2.0pp was
attributable to Semestry revenue.
Education Services revenue increased by
3.5% to £13.8m (2020: £13.4m constant
currency; £13.5m reported) as a result of
projects gaining momentum as the impact of
the pandemic eased.
Approximately 40% of Tribal’s revenue in
the year was generated outside the UK
and is therefore subject to foreign exchange
movement.
Gross Profit has increased 7.4% to £41.8m
(2020: £39.1m constant currency, £38.6m
reported) whilst the margin percentage
has decreased to 51.5% (2020: 53.3%
constant currency, 53.3% reported). The main
percentage decrease is due to an increase in
sales of our Edge products which have a lower
initial margin whilst we build scale and invest
in sales teams and due to low margins from
the Nanyang Technological University (NTU)
contract implementation phase.
Adjusted Operating Profit
(EBITDA)
The Adjusted Operating Profit (EBITDA)
increased £1.4m to £16.6m (2020:
£15.2m constant currency; £14.9m
reported). The Adjusted Operating Margin
(EBITDA) decreased to 20.5% (2020:
20.8% constant currency; 20.4% reported).
Central Overheads, representing costs in
HR, IT, Finance, Marketing and Management
that aren’t directly attributable to lines of
business increased by £0.4m to £9.2m
(2020: £8.8m constant currency; £8.8m
reported). The increase was primarily due to
additional property costs as offices gradually
re-opened in 2021 following the easing of
pandemic restrictions and increased global
insurance costs in line with market trends.
Margins will continue to be under pressure
next year due to the impact of inflation on
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Tribal Group plc
19
£1.7m, as noted on page 24, the underlying
profit increase was 35.9%. The tax charge
reduced to £1.6m (2020: £2.1m reported)
due to the release of uncertain tax
provisions previously required, the effective
tax rate before these releases was 19%
(2020: 25%).
Segmental performance
The Group provides software and
non-software related services to the
international educational market. These
services are managed across two divisions,
Software Information Systems (SIS) and
Education Services.
As the Group’s explicit strategy is to
transition to a pure cloud-based SaaS
business, we have enhanced our segmental
revenue disclosure to highlight our Edge
and Cloud services. In addition, we now
differentiate “Other software and services”
which will continue to be supported but
where further investment will be limited
and mainly consists of historic Australian
Government contracts with bespoke
software and services.
The table on page 21 shows the changes in
more detail.
2021
26.0
5.4
6.8
3.4
12.7
54.2
13.1
67.3
23.6
2020
Reported
25.2
4.4
5.2
1.7
9.2
45.7
13.7
59.4
22.3
Constant
Currency
2020
25.5
4.5
5.2
1.7
9.3
46.0
14.0
60.0
22.9
Change
constant
currency
Change
constant
currency %
0.5
0.9
1.6
1.7
3.4
8.2
(0.9)
7.3
0.7
1.9%
21.3%
31.5%
101.9%
36.8%
17.8%
(6.3)%
12.2%
3.1%
(3.1)pp
salaries and global insurance is expected to
continue to rise in 2022.
We continue to focus on reducing overhead
costs and have continued to grow our Manila
office in the Philippines to support central
back office functions, product development,
ebs and SchoolEdge product support
and other business services. The Group
continues to identify cost saving measures
and effectively manage its cost base.
Statutory Profit after Tax
The Statutory Profit after tax for the year
increased by 8.6% to £7.0m (2020: £6.4m
reported). Excluding the costs of the Veritas
Programme, a one-off project, in year of
Student Information Systems (SIS)
£m
Foundation Support & Maintenance
Foundation Software
Cloud Services
Edge
Professional Services
Core Revenue
Other Software & Services
Total Revenue
Adjusted Operating Profit
Adjusted Operating Margin
35.0%
37.6%
38.1%
Student Information Systems focusses 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, Singapore,
Malaysia, Netherlands and Canada.
SIS revenue increased by 12.2% to £67.3m (2020: £60.0m
constant currency; £59.4m reported). We note that 2021 and
2020 reported numbers now include revenue and costs of Asset
Management, Software Solutions and Information Managed
Services, which were previously in Education Services, as it more
closely aligns to the Software segment, of which revenue was
2021:£2.7m, (2020:£2.6m constant currency and reported) and
associated operating margin was 2021: £1.6m, (2020: £1.3m
constant currency and reported). Revenue generated from our core
product offerings increased 17.8% to £54.2m (2020: £46.0m
constant currency, £45.7m reported) however revenue from our
other software and services declined 6.3% to £13.1m (2020:
£14.0m constant currency, £13.7m reported) as discussed below.
The Group secured multiple new customer wins throughout the year
across Tribal’s range of software, reflecting the evolving product
suite, technology leadership and increasing activity levels within the
education sector globally.
Foundation Support & Maintenance fees in the period on our
Foundation products (SITS, Callista, ebs, Maytas, K2 and SID)
increased 1.9% in the period reflecting strong retention rates in our
customer base and new customers in the year.
Foundation Software includes the sale of new perpetual and
subscription software licenses on our Foundation products.
Revenue in the period increased 21.3% to £5.4m (2020: £4.5m
constant currency, £4.4m reported). Under IFRS15 license
revenue is recognised as the software is implemented on a
percentage complete basis, resulting in the revenue from larger
implementations taking more than two years to recognise. Key new
customers include University of West London and Southampton
Solent University in the UK, and internationally: Te Whare Wānanga
o Awanuiārangi in New Zealand, Middlesex University in Dubai and
Universiteit Leiden in the Netherlands.
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 more increasingly in a public cloud.
Tribal Group plc
20
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Financial Review continued
Cloud revenues have continued to increase and are up 31.5% to £6.8m
(2020: £5.2m constant currency and reported). The main cloud hosting
services revenue increased as the Group closed a number of significant
sales to existing customers, transitioning their existing on-premise
Tribal SITS software, SITS:Vision, into the Tribal:Cloud, a managed
environment. Notably five-year contracts with University College
London and The University of Warwick which demonstrates interest in
moving to the public cloud from customers across all markets remains
high. We continue to have positive conversations across our extensive
customer base as they explore the benefits a move to the cloud can
bring to their organisation and are confident of continued uptake.
Edge revenues saw a significant increase of 102% to £3.4m
(2020: £1.7m constant currency, £1.7m reported). The main
contribution to the increase in revenue was generated from the
successful acquisition of Semestry and Eveoh’s “My Timetable”,
contributing 50pp of the increase in total Edge revenue. In addition,
Dynamics had a strong year closing eleven new deals in the UK and
three in APAC, including Te Whare Wānanga o Awanuiārangi in New
Zealand, Brunel University, and the University of St Andrews in the
UK, highlighting the relevance of Edge products globally. The Group
also completed the first sales of its newly developed Cloud-based
Edge Admissions module, including Aberystwyth University and the
University for the Creative Arts. Admissions is the first significant
module on the Edge platform. The solution can be integrated with the
SITS Student Management System, or any other SMS, providing the
Group with a significant addressable market.
Professional Services includes the implementation of all our software
products at customer sites, typically working alongside customer
teams. Implementation projects vary in length and complexity, ranging
from a small number of days to more than two years for complex
projects. Revenues are typically based on a day rate fee, although some
contracts are performed under a fixed fee for defined implementation
scope. Professional services have continued to be delivered remotely
and the team has been bolstered by the Global Delivery Centre (GDC) in
Kuala Lumpur, Malaysia.
Revenue increased by 36.8% to £12.7m (2020: £9.3m constant
currency, £9.2m reported) primarily as result the NTU contract in
Singapore which was won in late December 2020.
Other Software & Services declined 6.3% to £13.1m (2020:
£14.0m constant currency, £13.7m reported). These revenues
include historic Australian government contracts, SchoolEdge, Data
Managed Services, Software Solutions and Information Managed
Services. In the year increased revenues from Software Solutions
offset a decline in SchoolEdge revenues. While these products
continue to operate profitably, they are non-core with limited
investment plans and revenues will reduce over time.
Adjusted Operating Profit increased by 3.1% to £23.6m (2020:
£22.9m constant currency; £22.3m reported) and Adjusted
Operating Margin decreased to 35.0% (2020: 38.1% constant
currency; 37.6% reported. SIS margin reduced due to a product mix
impact, with increased Edge sales which have a lower initial margin
whilst we build scale and invest in sales teams and low margins
from the NTU contract implementation phase due to its size and
complexity.
Annual Recurring Revenue (ARR)
£m
Foundation
– Support &
Maintenance
Foundation –
Subscription
Cloud Services
Edge
2020
Reported
2021
Constant
Currency
2020
Change Change %
24.7
25.9
25.7
(1.0)
(3.9)%
3.8
8.2
4.5
2.5
6.6
1.9
2.5
6.6
1.8
1.3
1.6
53.8%
24.1%
2.6 138.9%
Core Product ARR 41.2
36.9
36.7
4.5
12.4%
Other Software &
Services
Total ARR
9.1
50.3
10.6
47.5
10.3
47.0
(1.2) (12.0)%
3.3
7.0%
ARR is a key forward looking financial metric of the Group and is an
area of strategic focus. Our aim is to grow ARR in our core products
through the delivery of Software as a Service contracts, providing
increased quality of earnings.
ARR increased by 7% to £50.3m (2020: £47.0m constant currency,
£47.5m reported). 4% of the growth is organic and the remaining
3% of the growth is due to the successful acquisition of Semestry
and Eveoh’s “My Timetable”.
The 4% organic revenue growth is driven by 9pp of new software
sales and the successful migration of key customers to the Tribal:
Cloud,offset by a 5pp decrease which is largely attributable to the
loss of two Callista customers and reduction in historic Government
contracts.
In December 2021, we concluded contract renewal discussions
with our eleven Australian university customers on the Callista
Software platform, of which nine have elected to renew. The five-
year agreements provide a pathway to integrate the established
Callista software with Edge. While this represents a £1.0m drop in
ARR, these multi-year renewals provide a strong base of long-term
committed revenue.
Education Services (ES)
2020
Reported
2021
Constant
Currency
2020
Change
constant
currency
Change
constant
currency
%
11.1
11.4
11.2
(0.1)
(1.1)%
£m
School
Inspections &
Related Services
I-graduate –
Surveys & Data
Analytics
Total Revenue
13.8
13.5
13.4
2.7
2.1
2.1
0.5
0.4
27.4%
3.5%
Adjusted
Operating Profit
2.2
2.1
1.9
0.3
15.8%
Adjusted
Operating Margin 16.3% 15.7% 14.5% 1.7% 170bps
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Tribal Group plc
21
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.
Education Services revenue increased by 3.5% to £13.8m (2020:
£13.4m constant currency; £13.5m reported).
The revenue from School Inspections & Related Services
decreased by 1.1% to £11.1m (2020: £11.2m constant currency;
£11.4m reported).
In the UK, the main contracts continued to operate at consistent
levels largely delivered remotely. Revenue from the National
Professional Qualifications (NPQ) contract was somewhat reduced
in 2021 because of the phasing of the contract being weighted
more toward 2020, this was offset by the increase in National
Centre for the Excellence of Teaching Mathematics (NCETM)
revenue because of the recovery from Covid-19 allowing face-to-
face events to resume in 2021.
The New York State Education Department (NYSED) contract had a
solid performance as we worked closely with the NYSED to ensure
activity continued over the summer in 2021 ensuring some of the
contract value lost due to Covid-19 in 2020 was recovered in year.
The Performance Review Program for Initial License (PRPIL) picked
up in the year with a significant increase in licenses sold in 2021
compared to 2020 as a result of schools re-opening in the US.
In the Middle East, the ADEK contract resumed at a reduced level
in the final quarter of 2021 compared to three months full delivery
in early 2020. No further revenues are expected from the ADEK
contract. The decrease in ADEK revenues were offset by smaller
one-off contract wins in Bahrain however due to the flexible cost
model and variable cost base our margin was somewhat protected.
The revenue for Surveys & Data Analytics increased by 27.4%
to £2.7m (2020: £2.1m constant currency; £2.1m reported). The
volume of benchmarking projects recovered slightly from the impact
of Covid-19 as the International Student Barometer for the Southern
Hemisphere, delayed from 2020 was delivered in 2021, albeit with
lower participant numbers than normal, as a direct impact of reduced
numbers of international students in the Southern Hemisphere.
The Adjusted Operating Profit in Education Services increased by
15.8% to £2.2m (2020: £1.9m constant currency; £2.1m reported),
the Adjusted Operating Margin also increased 1.7pp to 16.3%
(2020: 14.5% constant currency; 15.7% reported), this increase
is largely due to the variable cost model it operates and the mix of
higher margin contracts offsetting the impact of the lower margin
ADEK contract which was completed at the end of 2021.
Mapping of Revenue Streams
The table below highlights how previously reported revenue streams
have been updated to show more detail and moved to provide
clarity. Foundation products include SITS, Callista, ebs, Maytas
and SID. Edge products include Admissions, Submissions, Engage,
Dynamics and Semestry. Bespoke Software relates to historic
Australian government contracts.
Segment
Previous Reported revenue streams
Sub Sections
Changes
Student
Information
Systems (SIS)
License & Development fees
Foundation Software
Shown as new separate line
Edge
Shown as new separate line
Bespoke software and SchoolEdge
Moved to Other Software & Services
Support & Maintenance
Foundation Support and Maintenance
Shown as new separate line
Bespoke software and AchoolEdge
Support and Maintenance
Moved to Other Software & Services
Implementation Services, remamed Professional Services
Cloud Services
Cloud Services
Shown as new separate line
Bespoke Software and Data Managed
Services
Moved to Other Software & Services
Other services, renamed Other Software and Services
Includes new products as noted
above/below
Education
Services
School inspections & related services
Surveys & Data Analytics, renamed I-graduate - Surveys & Data Analytics
Information Management Services
Asset Management
Software Solutions
Moved to Other Software & Services
Split across ‘Foundarion Software’.
‘Foundation Support & Maintenance’,
‘Implementation Services’ and
‘Cloud Services’
Moved to Other Software & Services
Tribal Group plc
22
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Financial Review continued
Product Development
£m
Product Development
Of which capitalised
Edge
Other Products
Of which expensed
Foundation Products
Edge
Other Products
Amortisation
2021
2020 Reported
15.9
10.2
10.1
0.1
5.8
2.9
2.2
0.7
0.9
11.6
6.8
6.8
—
4.8
2.8
1.3
0.6
1.2
Change
27%
33%
33%
100%
17%
3%
40%
–
(25%)
The Group spent £15.9m on Product Development, of which £10.1m
was capitalised in relation to Edge, including Dynamics and Semestry.
(2020: £11.6m spent, £6.8m capitalised, £4.8m expensed) and £0.1m
(2020: £nil) was capitalised in relation to E-Evidence, a new application
for Education Services to streamline inspections. The net P&L charge
after removing capitalised spend was £5.8m (2020: £4.8m). We
continue to invest in our Foundation products, adding new modules and
additional functionality as well as statutory updates, the costs of which
are expensed.
We continued to deliver on our Edge strategy, which provides a
compelling vision to new and existing customers to embrace our
next-generation, best-of-breed, cloud native SIS solutions. As a
cloud native SIS, Edge provides a competitive differentiator in
targeting and acquiring new customers. In addition, it protects
Tribal’s customer base 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.
Our continued investment in Edge saw the marketing launch of
Admissions in July 2021 and the first sales began to come through.
Capitalised Product Development spend increased to £10.1m
(2020: £6.8m) as the Edge development team increased in size
in the year. A review of the Group’s capitalisation to date has been
undertaken resulting in £0.9m of pre-2021 capitalised costs being
expensed as we have clarity on our future Edge offering, increasing
the net P&L charge to £5.8m (2020: £4.8m). We continue to invest
in our Foundation products, adding new modules and additional
functionality as well as statutory updates, the costs of which
are expensed.
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Tribal Group plc
23
Key Performance Indicators (KPIs)
£m
Revenue
– Student Information Systems
– Education Services
Adjusted Operating Profit (EBITDA)1
Adjusted Operating Margin1
Annual Recurring Revenue (ARR)
Committed Income (Order Book)
Operating Cash Conversion2
Free Cash Flow3
Staff Retention
Revenue/Average Operational FTE2
2021
81.1
67.3
13.8
16.6
20.5%
50.3
172.5
104%
5.4
86.9%
£100.1k
2020
Reported
73.0
56.9
16.1
14.9
20.4%
47.5
144.4
97%
5.4
92.3%
£99.2k
2020
Constant
Currency
73.4
60.0
13.4
15.2
20.8%
47.0
142.6
97%
5.4
–
Change
constant
currency
Change
constant
currency %
7.8
7.3
0.5
1.4
–
3.2
29.8
–
–
–
10.6%
12.1%
3.5%
9.2%
(0.3)pp
7%
20.9%
7pp
0.2%
–
0.3%
£99.8k
£0.3k
1. Adjusted Operating Profit and Adjusted Operating Margin are in respect of continuing operations and excludes charges reported in “Other items” of £5.4m (2020: £3.0m),
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 Revenue/Average Operational FTE is the average FTE for the year excluding average FTE associated with capitalised Product Development. In 2021 126.1 FTE were
capitalised (2020:96.6)
3 Comparative restated – refer to Free Cash Flow section below
Committed Income (Order Book)
The Committed Income (Order Book) relates to the total value of
orders across SIS and ES, which have been signed on or before,
but not delivered by 31 December 2021. This represents the best
estimate of business expected to be delivered and recognised
in future periods and includes 2 years of Support & Maintenance
revenue. At 31 December 2021 this increased to £172.5m (2020:
£144.4m reported). 76% of the increase relates to the 5-year
contract extension with nine universities within the Callista group in
Australia. The remainder of the increase is attributable to Semestry.
Operating cash conversion
Operating cash conversion is calculated as net cash from operating
activities before tax as a proportion of adjusted operating profit
(EBITDA) excluding the cash outflow of £1.7m on the Veritas
programme. In 2021, operating cash conversion was 104% (2020:
97% reported). In prior years’ operating cash conversion was
calculated using EBITA rather than EBITDA, this has been changed to
align more closely with the most relevant profit measure. The 2020
comparison has been restated and excludes the one-off settlement
of the platform dispute payment of £8.1m as disclosed in 2020.
Free cash flow
Free cash flow is included as a key indicator of the cash that is
generated by the Group and is available for acquisition related
investment, interest and finance charges and, or distribution
to shareholders. It is calculated as net cash generated before
dividends, interest and finance charges, deferred consideration, and
investments in subsidiaries. Free cash flow in 2021 and 2020 was
consistent at £5.4m, investment in product development increased
£3.1m however, was offset with £3.0m proceeds on shares sold to
satisfy exercises of share-based payment schemes. In prior years’
free cash flow was calculated based on net cash from operating
activities less capital expenditure and less capitalised development
costs (excluding acquired intellectual property), the prior year
comparative has been restated to reflect the change in definition.
In 2020, free cash flow excluded the one-off settlement of the
platform dispute of £8.1m.
Net of cash acquired, the Group paid £4.1m as initial consideration of
Semestry Limited, which included £0.8m of deferred consideration
paid in October 2021. The final deferred consideration relating to the
Dynamics acquisition of £1.3m was paid in March 2021.
Full Time Equivalent (FTE) and staff retention
UK
Asia Pacific
Rest of world1
Full Time Equivalent (FTE)
1 Including USA, Canada and Middle East.
2021
651
317
14
982
2020
Change
587
282
10
879
64
35
4
103
Our overall workforce has increased by 11.7% to a total FTE of 982
from 879 at 31 December 2020. This is after adding an additional
35 heads following the acquisition of Semestry Limited and Eveoh’s
“My Timetable” an increase of 15 FTE in our Global Delivery Centre
in Malaysia and 30 additional FTE in our Edge team as we accelerate
delivery in line with the product development roadmap.
On an operational FTE basis (excluding Capitalised Product
Development), the revenue per average operational FTE increased
to 100.1k (2020: £99.8k constant currency, £99.2k reported).
We note, though, that despite the extent of change within the Group,
our staff retention has only decreased to 87.0% (2020: 92.3%).
Tribal Group plc
24
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Financial Review continued
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 be not directly
related to the trading business or regarded as exceptional, and 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 2021, share based payment charges (including employer
related taxes) totalled £1.6m (2020: £1.8m), and are excluded
from the Adjusted operating profit. On 28 June 2021, 479,591
nil-cost share options were granted to Mark Pickett (275,510)
and Diane McIntyre (204,081) under the terms of the 2010
Long-Term Incentive Plan.
• Amortisation of IFRS 3 intangibles:
•
The amortisation charge in relation to IFRS 3 intangible assets
of £0.9m (2020: £1.0m) 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.
Internal Systems Transformation Programme “Veritas”:
During 2020 and 2021 the Group has been running the
Veritas Programme. This includes an upgrade to its accounting
system (Microsoft Dynamics D365) and is part of a wider
implementation of a new target operating model and processes
to provide greater operating efficiencies and reporting
functionalities. Following clarified guidance issued in relation
to IAS 38 £1.7m of costs that would have previously been
capitalised do not meet the criteria to be capitalised as a
software intangible and have been expensed to the income
statement, of which £0.2m was incurred in 2020.
Net cash and cashflow
£m
2021
2020
Change
Net cash flow from operating
activities
Net cash outflow from investing
activities
Net cash outflow from financing
activities
13.9
5.5
8.4
(16.9)
(9.2)
(7.7)
(0.4)
(3.3)
2.9
Net (decrease)/increase in cash &
cash equivalents
(3.4)
(7.0)
(3.5)
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
9.5
16.5
(6.9)
6.1
9.5
(3.4)
(0.2)
–
(0.2)
5.9
9.5
(3.6)
Cash and cash equivalents at 31 December 2021 were £5.9m
(2020: £9.5m).
Operating cash inflow for the period was £13.9m (2020: £5.5m).
Excluding the one-off settlement of £8.2m in 2020 the cash inflow
would have been £13.7m compared to £5.5m. The working capital
movement in year increased to £1.4m, (2020: £0.4m excluding the
one-off settlement of £8.2m) due to strong collection of debtors at
year end.
Cash outflow from investing activities was £16.9m (2020: £9.2m).
The increased headcount has seen an increase in capital expenditure
spend on equipment costs (2021: £0.6m; 2020: £0.4m). Spend on
product development increased to £10.2m (2020: £7.1m) in line
with the Group’s product investment programme. The Group made
a payment of £2.1m for deferred consideration (2020: £1.7m), of
which £1.3m was the final earn-out from the Dynamics acquisition,
the remaining £0.8m was an initial earn out payment for Semestry.
The Group made an upfront net payment of £4.2m in respect of the
acquisition of Semestry Limited in April 2021.
Cash outflow from financing activities decreased to £0.4m (2020:
3.3m). The Group paid a final dividend of 1.2p per share in the year
with £2.5m returned to shareholders. Bank loan arrangement fees
and interest in the period totalled £0.2m (2020: £0.2m). This is offset
with the proceeds from the issue of shares totalling £3.2m (2020:
£0.2m) to satisfy exercises of share-based payment schemes.
Funding arrangements
On 21 January 2020 the Group entered into a 3 year £10m
multicurrency revolving facility with HSBC with the option to extend
by a further 2 years. The first option to extend was approved by HSBC
on 15 March 2021, the second extension was approved by HSBC on
5 January 2022, effective 21 January 2022. The facility was put in
place to cover general corporate and working capital requirements of
the Group, as at 31 December 2021 none of the loan was utilised. 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 August 2022 and October 2022
respectively. At 31 December 2021 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:GBP and USD:GBP. These contracts expired in the year
and generated a net change in fair value of £0.2m (2020: £0.1m). The
Group will continue to manage foreign exchange exposure during 2022.
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 2021 of 1.3p, pending approval at the AGM on
4 May 2022. The anticipated payment date is 28 July 2022, with
an associated record date of 24 June 2022 and ex-dividend date
of 23 June 2022. In July 2021 Tribal paid a final dividend of 1.2p
per share in recognition of the year ended 31 December 2020. The
Board intends to continue a progressive dividend policy, with a single
dividend payment each year following annual results.
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Tribal Group plc
25
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 28 June 2021, 479,591 share options were granted to Mark
Pickett (275,510) and Diane McIntyre (204,081) as part of their
ongoing remuneration.
The shares issued during the year in order to satisfy exercises of
share-based payment schemes totalled 4,676,064. The exercise
cost of 5p, 79.6p and 80p per share for the LTIP’s resulted in cash
receipts of £3.2m, refer to Note 22.
Earnings per share (EPS)
Adjusted basic earnings per share from continuing operations before
other costs and intangible asset impairment charges and amortisation,
which reflects the Group’s underlying trading performance, increased by
39% to 5.7p (2020: 4.1p) due to the increase in adjusted profit before
tax and the reduced tax charge in the year. of the overseas current tax
charges.
Statutory basic earnings per share increased by 10% to 3.4p (2020:
3.1p) as a result of the statutory profit increase in the year to £7.0m
(2020: statutory profit £6.4m).
Pension obligations
At 31 December 2021, the Group operated two defined benefit
pension schemes for the benefit of certain deferred employees
of its subsidiaries in the UK which are closed to new members.
These schemes are administered by separate funds that are legally
separated from the Parent Company and relate to a historic contract
within Education Services. 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 pension schemes, the combined deficit calculated under
IAS19 at the end of the year reduced 78% to £0.2m (2020: deficit
of £0.9m), with gross assets of £8.8m and gross liabilities of £9.0m
(2020: £8.3m and £9.3m respectively). Total actuarial gains/(losses)
recognised in the consolidated statement of comprehensive
income are £0.7m (2020: (£0.4)m).
Diane McIntyre
Chief Financial Officer
Going concern
Tribal had cash and cash equivalents of £5.9m at the end of 2021 plus
access to an undrawn UK and Australian overdraft of £2.0m and $AUD
2.0m respectively. 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 by entering a £10m facility
to cover corporate merger and acquisition activity and, if required,
temporary working capital requirements of the Group.
Tribal’s main business is software related through the provision
of Student Information Systems (SIS) to education institutions
globally. Revenue is generated from the sale of software licenses and
related implementation work, and the ongoing provision of support
& maintenance and cloud/hosting services. The Group benefits from
strong annual recurring revenues and cash generation, it also has a
significant pipeline of committed income as it enters 2022 which
provides a good level of protection and certainty to the business. While
the Group’s net current liability position has increased to £20.9m from
£16.2m in 2020, it is still being driven by the recognition of IFRS 16
lease liabilities as current liabilities of £0.9m, the deferred consideration
recognised relating to the Semestry and Eveoh acquisitions of £1.3m
and net current contract liabilities of £17.4m relating to deferred
customer revenue recognised in accordance with IFRS 15.
The Group had a positive end to the year, closing several significant
sales to new and existing customers, and expanding its global footprint.
The financial impact of the pandemic 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.
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, considering 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 at least 12 months from the date of approval of the
financial statements and 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 £2.2m (2020:
£3.1m) and the adjusted effective tax rate was 16% (2020: 27%).
The decrease was due to the release of uncertain tax provisions
previously required, the effective tax rate before these releases
was 19% (2020: 25%).
Tribal Group plc
26
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
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.
Risk Title
Risk Description
Mitigation
Strategic
Transformation
Failure to successfully
implement and manage
growth strategies.
Project and Service
Delivery
Delivery of major
projects and ongoing
software and service
delivery may not meet
customer’s expectations
or contractual
requirements.
The Group continues to pursue expansion both
organically and through acquisition, as we transition
to becoming a pure play Ed Tech SAAS business.
The Group has an experienced management team
and performance against strategy is closely
monitored, with oversight by the Board.
Such transformation may present various
challenges such as:
•
Increased demands on management attention
due to acquisitions and wider product portfolio
• Ensuring acquisitions deliver on their growth
potential
• Entering new geographic markets and evaluating
market, legal and regulatory risks
• Ensuring the business operations can scale
effectively and support our SAAS products
Failure can lead to impairment of assets acquired,
reputational damage and impact overall financial
performance of the group.
Structured working committees and oversight
boards are in place to focus on integrating new
businesses into the group, manage our internal
transformation programme (Veritas) and ensure
delivery against our objectives and financial
metrics.
Veritas will focus on building SAAS business
processes, driving simplification, standardisation,
and optimisation right across the value chain to
enable delivery of our growth targets.
Appropriate due diligence is carried out by the
Company prior to the identification and completion
of an acquisition and incentive/retention schemes
are put in place for certain key personal.
The Group’s activities includes major software
installation projects which are typically one to two
years in length and involve significant process
change to our customers core business operations.
The complexity of our customers’ systems and
ability to change can impact our ability to deliver to
contract and require adept project management.
Our Tribal:Cloud customers in particular rely on our
ability to maintain our service levels and ensure
appropriate continuity of service despite potential
wider global disruption from pandemics for
example, or supply chain issues.
A failure to deliver can lead to increased
implementation costs, disputed invoices, penalty
payments, reputational damage and an impact on
other ongoing projects.
Strong controls are maintained to ensure
successful project delivery and reviews project
progress monthly at Executive Management level
with Board oversight.
The Group engages with premium cloud computing
suppliers (e.g. Microsoft Azure and Amazon AWS)
the architecture and contracts of which facilitates
high level response SLAs and a quick recovery in
the event of a single region failure.
The Group maintains a formal Delegation of
Authority matrix to ensure appropriate visibility
and approval of all customer contracts to ensure
liabilities are reasonable and onerous contract
clauses are avoided.
The Group has responded quickly to external
shocks such as the Global Pandemic and the
executive team have established processes to
enable quick and effective decision making.
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Tribal Group plc
27
Risk Title
Risk Description
Mitigation
The Edge product development roadmap is
focused on ensuring the Group can fulfil our
customer demands.
The Group continues to investment in its internal
engineering and product-development capability
to enable delivery in line with the product roadmap.
The Group operates a Secure Data Centre and
continues to implement ISO 27001 certification
across the business. Continued investment in
security software and training for all staff enforces
good practice on data security. In addition, the
Group has its own Data Protection Officer who
ensures compliance with GDPR.
Innovation and
Technology
The Group’s software
development
programme needs to
deliver to customer’s
requirements and
keep pace with market
developments.
Information
Management and
Data Security
Security breaches,
cyber-attacks or
outages could harm the
Group by disrupting our
internal and customers
operations.
Our customers face increasing pressure to provide
the best student experience and outcomes
and require flexible cloud native, SAAS software
solutions.
Challenges arise from the ability to deliver
new software products to time, budget and
to a sufficient quality to ensure a successful
implementation to our customers.
A failure to deliver will result in lower sales, higher
churn reputational damage and obsolete products.
As with other software and cloud-based business
there is an increasing risk of our systems being
compromised by deliberate attacks or unintentional
acts, which could lead to a loss of IP, unauthorised
data access or data loss. A successful cyber-attack
against our information assets could significantly
impact our ability to function and retain and attract
business, as well as potential financial penalties
from regulators.
With a wider geographic presence, there is increased
risk from multiple regulatory data protection and
information security requirements which need to be
closely monitored. A failure to follow requirements
could lead to financial penalties, reputational
damage and their consequent impact on our overall
performance.
People
Failure to attract and
retain skilled sales,
software development
and other key
operational employees
could harm the Group’s
performance.
Business growth requires key skill sets which are in
demand, in product areas such as Tribal:Cloud and
Dynamics. With increased inflation and rotation in
the market it becomes increasingly important to
attract and retain people in our key roles.
The Group has incentive schemes designed to
attract, motivate, and retain key employees, whilst
encouraging appropriate behaviours. We aim to
provide competitive remuneration packages and
training for all staff.
Increased staff turnover and vacancies may hinder
our ability to manage operations effectively and
impact sales, product development or software
implementations.
The Group’s commitment to improving the
diversity within our workforce will assist overall
performance and help to widen our pool of
potential candidates.
Legal & Regulatory
Requirements
The Group operates across several jurisdictions
that have varying legal, tax and compliance
requirements. Any non-compliance with customer
contract requirements and legislation or regulatory
requirements could have an adverse effect on the
Group’s reputation or financial results.
The Group monitors proposed or adopted legal
and regulatory changes, assessing the impact
changes have on the business operations and
implementing appropriate safeguards to ensure
compliance. External advisors are used when
required.
We operate a no-tolerance culture supported
by our values and ethical standards. All relevant
training is provided to staff and policies are
updated regularly to reflect required changes.
Tribal Group plc
28
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Stakeholder Engagement
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.
Long-term
business
success
The Board recognises that the long-term
success of the business is dependant on
the way we interact with a range of key
stakeholders as demonstrated by our
compliance with the QCA code, which under
principles 3 and 9 require companies to take
account of wider stakeholder and social
responsibilities, including the implications
for long-term success and to maintain
governance structures and processes that
support good decision making.
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.
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Tribal Group plc
29
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 trusted, strong
relationships and supports the ethos of Section 172 in order to support good decision making.
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.
Stakeholder
Group
Investors
Why we engage
How we engage
Trust from our shareholders is key to
delivering our strategy and long-term
success. We endeavour to provide fair,
balanced, and meaningful information to
shareholders and potential investors to
ensure they understand our performance
and strategy.
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 Chief Executive Officer and Chief Financial Officer meet with
representatives of most major institutional shareholders at least
twice a year. Feedback from these meetings is shared with the Board
to ensure the Directors understand shareholder expectations and
motivations. The Directors are also available at the AGM to answer
questions raised by shareholders.
Tribal encourages regular dialogue with both existing and potential
shareholders throughout the year to understand their needs and
expectations, and to ensure that the Group’s strategy, business model
and progress are clearly understood.
Investor information including the annual report, investor presentations,
including the annual capital markets day presentation and
announcements are available on the Company’s website.
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.
Tribal engages with its employees through anonymous opinion surveys
to gather feedback on all aspects of employment within the Group
throughout the year. This feedback is then considered by the senior
management team and reported to the Board on a regular basis.
Employee performance reviews are conducted annually. In addition,
managers are encouraged to hold regular, informal one-to-one sessions
with each of their direct reports.
Employees can ask questions regarding all aspects of the business
during our regular Group-wide all-hands meetings with the Group’s
Executive Management team.
Customers &
Suppliers
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 and trusted
business relationships with both
customers and suppliers, all of whom
are crucial to delivering many of our
strategic objectives. We aim to 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 for all
stakeholders to view.
We have a team focused on Customer Success, facilitating ongoing
meetings with existing customers to better service our customers and
add value across our customer base.
We hold an annual conference, Empower, for all customers globally
where sessions are run to update customers on our suite of products
and services. During Covid-19 this conference was run remotely but
will be looking to re-instate face to face conferences when restrictions
allow.
Tribal Group plc
30
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Q&A with Management
Well positioned
in a growing
market
Chloe Payne
Director of HR
Diane McIntyre
Chief Financial Officer
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Tribal Group plc
31
Q
A
Q
A
Chloe, having been with
Tribal for 10 years, what
are the most profound
changes you have seen
in the business over
that time?
Chloe:
The business I joined then, is
not the Tribal of today. I joined
an Education business with a
very broad portfolio, now Tribal
is first and foremost a software
business, entirely focussed
around our goal of becoming an
EdTech SaaS business.
Diane, you are now
nearly a year into your
time with Tribal, what do
you think the Company’s
key strengths are to
enable delivery of its
strategy?
Diane:
Our deep understanding of
the education sector and the
passion of our people. Every
day I see our teams absolutely
committed to ensuring our
clients get the best out of
the products. And then in the
background, the management
team are focused on our
transition to a SaaS model,
and the changes we need to
make so we can efficiently
deliver an excellent service
to our customers. I see these
elements as sitting at the heart
of our success.
Q
A
What role do you think the pandemic has had on how
the business has evolved in the last 18 months?
Chloe:
It’s been difficult seeing some of our colleagues struggle with such difficult
circumstances brought about by the pandemic. We worked hard to provide
individualised support and ensure we had mechanisms in place, but there has
been a lot outside of our control and that can be hard. On the plus side, we
have seized the opportunity to really cement what was already a very flexible
culture and to be bold about enabling our people to make permanent choices
about where and when they work. Our flexibility has become a core part of our
employee value proposition.
A
Diane:
To add to that, from an operations perspective, as a global business we have
always worked remotely to some extent, but the experience has shown both
us and our customers that we can increase the amount we deliver remotely,
to both increase efficiency and reduce our carbon footprint. We’ve also seen
a big increase in our customers’ focus on student wellbeing over this difficult
period and this is an important part of our product roadmap.
Q
A
A
Q
A
How do you think the business has responded to having more of
a focus on ESG or has that always been a part of the Company?
Chloe:
Tribal has always been a responsible business, our roots in Education means
that many colleagues are driven by a passion for making a difference and
that’s what took them to Tribal. For me, having a focus and a formal ESG
Committee is about ensuring we are pushing ourselves to be as good as we
can be. That is about looking outwards to ensure we can learn from others and
continually striving to improve and measure those improvements.
Diane:
It has been clear to me that the fundamental ideas have always been core
to Tribal’s values. For example, before I joined, I remember listening to Janet
Tomlinson, the former MD of our Education Services business at the time,
talking about the work we completed with schools that needed some extra
guidance and support to improve their teaching in English and Maths, and it
made me realise just how important our projects can be. I have seen that spirit
replicated across the organisation.
What are the most exciting challenges or opportunities
that lie ahead for Tribal?
Chloe:
2022 is a pivotal year for us, real momentum has been built and customers
are beginning to buy next generation solutions – our challenge is ensuring
that we continue to build our capacity and capability to deliver and exceed
our customers’ expectations whilst maintaining focus on our continued
investments in new products. It’s really exciting, as we can really see a
validation of our strategy driving that momentum.
A
Diane:
As Chloe says, our operational teams are focused on ensuring our customers
have a great experience as they move to Tribal:Cloud, whilst other teams
are focused on our longer term opportunities from our Edge product set and
increasing our global presence. Seeing early shoots of success from our early
adopters for example is incredibly motivating, while we keep our target of
doubling ARR firmly in our mind.
Tribal Group plc
32
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Case Study
Acquiring Semestry
Empowering
students through
smart
technology
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Tribal Group plc
33
students through
smart
Aarhus University & Semestry: Improving student
and teacher experiences with their schedules.
Aarhus University (AU) is a dynamic, modern,
highly-international university that excels at
creating value through knowledge, new insights,
and collaboration. And through their partnership
with Semestry, AU is on its way to achieving
their strategic goal of offering “research-based
education of the highest international quality.”
“AU knew that it must consolidate its
timetabling solutions into a unified solution in
order to provide greater support for scheduling
processes and workflows. Our goal? Greater
flexibility, increased personalisation and user
centredness, and greater space optimization.”
Said Arnold Boon, University Director at
Aarhus University.
“With Semestry, AU gains smart scheduling
technology that empowers institutional
responses to complex constraints so we
can deliver the right schedules for everyone”
continued Arnold.
Aarhus University is realizing the benefits of a
single timetabling solution, including:
•
•
Personalised timetables that offer a
greater degree of self-management for
students and teachers
Increased transparency into scheduling and
room usage across the institution
• More efficient planning and process
optimization for timetablers
The result is better, more accessible and
personalised timetables for students as well
as improved timetabler views into schedules
and room availability across faculties and
departments. And the next step for Aarhus
University? The implementation of ExamTime to
handle the planning of the university’s exams.
Tribal Group plc
34
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Environmental, Social and Governance Report
Tribal has always been committed to activities that
benefit the environment and society, under-pinned
by good governance. We believe the credibility and
sustainability of any business goes beyond pure
financial gain; a principle demonstrated by our
mission to empower the world of education.
Our core tenets
We believe our solutions have the potential to make a positive
impact within the education sector in two key areas: increasing
student well-being, diversity and success, while supporting the drive
by the sector to lower carbon emissions.
The issues of emotional wellbeing and diversity of their student
populations are high on the agenda of many of the world’s
educational institutions and we are committed to harnessing the
power of cloud computing to help our customers in addressing
these challenges and realising their goals. You can read more on this
topic within the Social section of this report.
Educational institutions are also increasingly conscious of the role
they can play in the global drive towards the reduction of carbon
emission. We believe the move from the use of servers running
localised versions of our software on site at our customers (our
traditional SIS offerings), to our next generation offerings, hosted
within larger datacentres (Tribal:Cloud and Edge), will not only free
our clients from the burden of running their own IT systems, but
also reduce the overall power consumption required to deliver this
technology. You can read more about this within the Environmental
section of this report.
Our six priority areas
Alongside these two core tenets and as part of our journey to
continually improve our approach and performance, Tribal created a
formal ESG Committee in 2021, chaired by Non-Executive Director,
Nigel Halkes, to ensure effective oversight and investment in these
increasingly important areas. The Committee meets on a quarterly
basis and members also include CFO Diane McIntyre and HR Director
Chloe Payne.
In early 2021 the Committee 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, but as our ESG commitments cement, we will continue
to raise awareness amongst all staff members to encourage
involvement in our ESG initiatives.
In 2022, an ESG working group will be formed to implement our
initiatives across the Group, including Finance, Human Resources
and Governance.
In order to understand best practice, we are learning from other
companies and have engaged a third-party business in the
community to help monitor and understand our position with ESG.
Tribal is currently focused on improving its impact in the
following areas.
Environmental
Social
Governance
Reduced carbon emissions
Diversity & Wellbeing
Compliance & Data
Reduced travel with carbon offset
Diversity within Tribal
Internal systems improvements
Ongoing
Ongoing
Ongoing
Commitment to minimal paper
Supporting student welfare
Global ISO certification
Now met
Ongoing
Ongoing
Cloud consumption
Charity: Job Coaching Scheme
New
New
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
Annual Report & Accounts 2021
Strategic Report
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Financial Statements
Tribal Group plc
35
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 are determined to change behaviour on
an ongoing basis so that such improvements can continue in the
long term.
Key initiative: reduced travel with carbon offset: ongoing
The ongoing impact of the pandemic requiring remote working and
virtual meetings, meant our travel continued to reduce in 2021.
As part of our target to reduce air travel by 25% per head over the
next five years, we issued travel guidelines and a travel mindfulness
framework to all employees in July 2021. To oversee this, we hired
a Global Travel Manager in October who has helped to refresh our
global travel policy to ensure the continuing adoption of a “remote
first” model for service delivery. On top of this, in November 2021,
we introduced an E-vehicle salary sacrifice scheme for staff with
the aim of having at least 10% of employees using the scheme
by the end of 2023. Although many of our employees have already
changed their contracts to stay as remote workers permanently,
when travel cannot be avoided, we continue to look for new ways to
offset our emissions with reductions elsewhere.
Key initiative: commitment to minimal paper: now met
We are focused on finding ways to reduce our overall resource
consumption. By the end of 2021, we met our commitment to going
paperless, a key initiative we had launched in 2020, by ceasing or
reducing contracts with all printer-photocopiers globally to minimum
operational levels. We have also continued to invest in equipment
that will significantly reduce our need for printing when delivering
our services.
New Key initiative: cloud consumption
Now that we have met our paperless initiative, we are switching
one of our focus areas to cloud computing consumption. This year
we have hired a Cloud Optimisation director to oversee our cloud
computing consumption in 2022. This is to ensure we are not
wasting energy by having too many servers running that we do
not need.
Tribal’s cloud hosting providers, Amazon Web Services (AWS) and
Microsoft, are also committed to building a sustainable business
for customers and the planet. AWS is on path to achieve 100%
renewable energy by 2025 and as the world’s largest corporate
buyer of renewable energy, Amazon uses new renewable energy on
the electric grid in Europe to help power its business operations.
Microsoft has been carbon neutral across the world since 2012 and
commits to being carbon negative by 2030. Its goal is to promote
sustainable development and low-carbon business practices
globally through its cloud-enabled technologies. Using cloud
providers who are also committed to reducing carbon emissions,
Tribal expects to see a positive impact on its global server usage
and thereby that of its customers going forward.
Tribal Group plc
36
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Environmental, Social and Governance Report continued
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 within Tribal: ongoing
Development, retention and recruitment strategies at all levels of
the business have a strong emphasis on diversity. In 2021, Tribal
turned its internal focus to developing policies and strategies in
the area of talent acquisition to ensure the business is attracting
a more diverse applicant pool. The team also focused on ensuring
systems exist to measure progress, helping increase accountability
and delivering improvement. We now have the tools to examine how
our focus on driving diversity and improving the gender balance is
tracking on a month by month basis.
Whilst the recruitment process is key, it is also important to pay
attention to turnover and the retaining of talent to ensure the
efforts in driving diversity in hiring are not then undone. Our data
confirms we do not experience this problem at Tribal and so we can
be confident that our continuing progress in hiring diverse talent will
translate in to progress in actual representation.
Throughout the year, we also made significant progress in the hiring
rate of BAME employees and continue to develop our strategy to
attract and retain the right talent.
In 2021, 23% of our hiring has been of BAME employees, compared
to our current baseline representation of 8%. This has resulted
in BAME employee numbers in the business increasing to 11% in
2021 from 8%.
In 2021 we became a signatory of the Tech Talent Charter, a
commitment by over 650 UK organisations to a set of undertakings
that aim to deliver greater inclusion and diversity in the UK tech
workforce.
Gender pay equality
Since 2018, Tribal has published its Gender Pay Gap statutory report
for UK employees. In our forthcoming Gender Pay Gap report to be
published in April 2022, we will explain the steps we are taking to
balance gender pay as we continue to strive for equality across all
groups. Our new recruitment processes are having a positive effect
on the organisation’s overall make up and diversity of its employees.
Key initiative: Supporting Student welfare: ongoing
Through Edge
In response to the change in focus towards mental health,
accelerated by the global pandemic, and the increasing pressure
for student faculties to take an organisation wide approach to the
mental health of their students, Tribal has recognised the need to
develop its support services solution offered to universities. SID
has been hugely successful and the best-in-class Higher Education
ticketing and enquiry management solution for many years, but in
order to allow universities to proactively support more students,
Tribal has developed the Student Support & Wellbeing solution
which enables all forms of student support to be securely managed
in the cloud. Universities with high drop-out rates are under pressure
to improve retention rates and Tribal’s solutions has analytics
which provide intelligent intervention to enable staff to predict and
intervene when a student is at risk.
The Student Support & Wellbeing solution covers the full welfare
agenda, allowing all forms of student support to be managed from
within a central record. Through the power of technology, students
have been able to get the answers they need, communicate with
their lecturers and peers, and manage appointments from a single
app. This has enabled universities to improve response times and
reduce the queues, ensuring student wellbeing is at the forefront of
their approach. The solution helps to bring a student’s data together
and gives universities all the tools needed to truly understand that
individual. In turn this has helped to prevent future issues, spot
problems before they happen and improve retention rates.
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Tribal Group plc
37
Through charitable support
We supported ‘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. We made a donation to
the charity to support its mission to empower students to look after
their mental health, support others and create change and align to
our desire to make a positive societal impact.
To ensure our contribution extended beyond a passive donation, we
also worked in partnership with Student Minds to seek opportunities
to further contribute to this worthwhile cause, providing marketing
support and using our presence in Higher Education to help the
charity extend its reach in to new and varied institutions and
stakeholders. We have actively advocated the Student Minds
Mental Health Charter in blogs and webinars and invested in
customer coffee mornings to facilitate dialogue about the mental
health challenge facing the sector.
In 2022, we will also be working with Māori Education Trust (MET)
which will provide Tribal with an opportunity to demonstrate our
support for an underrepresented section of the population in higher
education within New Zealand. It will also offer future opportunities
as MET seek to grow their offering of scholarships and bring on
board more partners. The scholarship under Tribal Education Ltd will
provide Tribal with clear visibility in supporting Māori equity and will
align to Te Pūkenga and the wider sector’s priorities.
Tribal also continues to allow employees to take an additional day’s
leave to volunteer and support charitable causes and for 2022 we
have signed up to national Job Coaching programme run by Business
in the Community to make it more accessible for our people to make
use of the time we give them and to connect with opportunities to
make a positive impact.
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.
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.
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.
We continue to run the Tribal Impact awards to recognise those
across the Group who have gone above and beyond in living out
Tribal’s values. The peer-nominated awards were initially introduced
to celebrate highly talented people and they are now truly embedded
within Tribal’s culture, across all geographies.
Tribal Group plc
38
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Environmental, Social and Governance Report continued
Governance
Tribal is committed to maintaining high standards of corporate
governance and has adopted the Quoted Companies Alliance
Corporate Governance Code. The Board will continue to develop its
governance arrangements particularly in respect of environmental
and social issues, including any changes required as a result of
the requirements of the Taskforce on Climate-related Financial
Disclosures.
Key initiative: compliance: ongoing
Across the UK, Tribal has maintained the ISO27001 Standard
for Information Security and the ISO9001 Standard for Quality
Management for the last several years. In 2021, the Group launched
a risk framework system and built on its am to achieve a globalised
certification with ISO Compliance broadening to Australia and the
Philippines. Being globally aligned and certified is important for
mitigating our risks and assuring our customers. In 2022, we will look
to expand our ISO scope for subsidiaries and refresh our Business
Continuity plans.
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.
Key initiative: data: ongoing
In 2022 the new finance and subscriptions system will go live
across the Group, enabling staff to be repurposed to higher value
activity, a stronger governance process and improved reporting
capability for our SaaS product sets.
Streamlined energy and carbon reporting (SECR)
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 subject to the Streamlined Energy and Carbon Reporting
(SECR) Framework Regulations. Our energy consumption figures
(see Table 1) and our greenhouse gas emissions relating to gas,
electricty and transport (see Table 2) as well as an intensity ratio,
and informaiton relating to our energy efficiency action 2021 are
presented as follows.
In 2021, our Scope 1 and Scope 2 emissions were 102.17
tCO2e and Scope 3 emissions were 14.73 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. Our intensity ratio (Scope 1, 2 & 3 emissions relative
to revenue) is 1.45 tCO2e/£m. 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 2021 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.
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Tribal Group plc
39
Table 1: 2021 energy consumption
Area
Electricity
Gas
Category
Electricity
Sub-category
Purchased electricity
Stationary combustion
Natural gas
Transport fuel
Combustion of fuel used in personal cars on business use
2021
consumption
2020
consumption
Change
Units
469,517
133,536
54,981
464,912
4,605
63,944 69,592
56,807 (1,826)
kWh
kWh
kWh
Table 2: Scope 1, 2 and 3 intensity ratio
Year ended 31 December 2021
Tonnes of CO2e
Percentage
Emissions intensity relative to revenue (tCO2e/£m)
Year ended 31 December 2020
Tonnes of CO2e
Percentage
Emissions intensity relative to revenue (tCO2e/£m)
Scope 1
2.48
2%
0.03
Scope 1
11.76
6%
0.16
Scope 2
99.69
85%
1.24
Scope 2
108.39
62%
1.48
Scope 3
14.73
13%
0.18
Scope 3
55.67
32%
0.76
Total
116.90
100%
1.45
Total
175.83
100%
2.41
Energy efficiency action
During 2021, due to the pandemic, Tribal offices were closed for a large proportion of the year and travel was significantly reduced.
Throughout this time, we ensured that energy usage was reduced to minimum levels by switching off all electrical equipment not in use
and reducing heating/cooling levels to a minimum. We renewed our energy contracts to energy from renewable sources and reduced
multi-function printers in our UK offices to the minimum required for operational efficiency. In September we commenced a sustainability
audit in conjunction with Business in the Community (BITC) to help inform and support our Carbon Net Zero journey. We employed a Global
Travel Manager in October to promote travel mindfulness as travel remobilises and have invested further in technology to support remote
meetings. In November, we introduced a salary sacrifice scheme for electric vehicles to employees.
Nigel Halkes
Chairman, ESG Committee
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.
Tribal Group plc
40
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Case Study
Tribal Cloud
King’s College’s
journey
Cloud
to deliver success
to the
King’s College’s
journey
to the
to deliver success
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Tribal Group plc
41
King’s College London moves their Tribal Student Information
System (SITS) to be run by Tribal as a service from the cloud.
Introduction:
Tribal and King’s College London have delivered
a hugely significant SITS Cloud migration
project which ends over two decades of KCL
running SITS on premise.
The purpose-built architecture provides a more
connected, agile, resilient and secure platform,
providing quicker access to advances in
technology, the ability to scale and flex for the
planned and unplanned, and assured security
design with proactive monitoring and scanning.
The challenge:
Through its commitment to exceptional
education, impactful research and genuine
service to society, KCL is creating positive
change in the communities it serves. Its
strategic vision sets ambitious targets for
educating the next generation of change-
makers, and its business systems need to
support that vision.
Discovery workshops and stakeholder
meetings helped identify the challenges
KCL faced in providing the most appropriate
systems to deliver the best possible
experience for its students.
People
Maintaining an on-premise SITS
implementation requires time from highly
skilled staff detracting from focussing on
improving administrative processes and
student experience.
System availability
Transfering responsibility for the system
availability, performance, maintenance and
upgrades means KCL staff can focus on
deriving increased value from the application.
New features can be more quickly and easily
accessible so that the service develops in line
with KCL’s needs.
Change
The on-premise infrastructure cannot scale
and flex sufficiently with large-scale, fast
changes in demand and the SITS Client was
not as responsive for a home-based workforce
as it was on campus.
The solution:
With previous success in migrating and
managing student information systems in the
cloud, Tribal was uniquely positioned to help
KCL address these challenges.
By moving SITS to the cloud and managing it as
a service, Tribal were able to take care of the
day to day monitoring, upgrading and patching
of the systems, freeing KCL staff to focus on
improving use of the application.
The benefits:
A combined delivery team enabled easier
and faster end-users access and improved
SITS performance. Faster processes have
helped with increased student numbers.
UCAS data can be uploaded within minutes
rather than hours, meaning more time can be
spent analysing the data and making informed
decisions in the admissions process.
Phase two will see the optimisation of all
remaining system interfaces and further
transformation and functional improvements.
KCL Director of Education and Student
Solutions, John Harris said:
“A massive thank you to everybody involved in
making the SITS migration happen – it’s a huge
improvement in terms of speed, and it’s going
to make life much easier. As we head into
September, their lives will be hugely benefited
by not having to wait for the system to respond.”
KCL Chief Information Officer, Nick Leake added:
“It has improved performance, it has provided
us with resilience, it has improved some of
our interfaces, and it has demonstrated that
a committed group of people working well
together can deliver a major project on one of
our most critical systems in a record time. This
project has also provided a major step forward
for us to make further improvements to our
student related processes.”
“We loaded the UCAS data into SITS within
23 minutes – something that previously took
hours to complete.”
“Given the complexity of the migration and the
number of different parties involved, this is a
phenomenal achievement and a testament to
excellent collaboration and project work across
faculties, SED, IT, Tribal and Tribal’s suppliers.”
With SITS running in the cloud KCL will be able
to take advantage of the latest technology
in the new modules rolled out on the Edge
platform as all their system interfaces will be
optimised to connect to Edge.
Tribal Group plc
42
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Board of Directors
“
The Board, has a good blend
of backgrounds pertinent
to the challenges and
opportunities Tribal faces.
”
Richard Last
Chairman
Appointed
Richard joined the Board in November 2015.
N
R
E
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.
Mark Pickett
Chief Executive Officer
Appointed
Mark joined Tribal and the Board in July 2016
N
E
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.
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Tribal Group plc
43
Key to Committee Membership
N Nomination Committee
R Remuneration Committee
A Audit Committee
E ESG Committee
Diane McIntyre
Chief Financial Officer
Appointed
Diane joined Tribal on 1 June 2021
E
Experience
Diane has over 25 years' experience in finance roles, including her most recent role as
Director of Finance at Sky UK Limited, and previous senior financial and executive positions
at Vodafone Group plc and Cable and Wireless plc. As an experienced finance leader, Diane
has a wealth of knowledge across commercial negotiation, strategy development and
operational expansion.
Roger McDowell
Senior Independent Director
Appointed
Roger joined the Board in November 2015.
N R A
Experience
Roger is currently serving as Non-Executive Chairman of Avingtrans plc, Hargreaves
Services plc, Brand Architeckts plc (formerly Swallowfield), Non-Executive Director of
Proteone Sciences plc and British Smaller Companies VCT 2 plc.
Nigel Halkes
Non-Executive Director
Appointed
Nigel joined the Board in January 2020.
N R A E
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 is a Non-Executive Director of Hargreaves Services plc 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.
Tribal Group plc
44
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Executive Committee
Mark Pickett
Chief Executive Officer
Appointed
Mark joined Tribal and the Board in July 2016
Experience
See biography on page 42
Diane McIntyre
Chief Financial Officer
Appointed
Diane joined Tribal on 1 June 2021
Experience
See biography on page 43
Mike Cope
Chief Technology Officer
Appointed
Mike joined Tribal in September 2019
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.businesses.
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Tribal Group plc
45
Chloe Payne
Director of HR
Appointed
Chloe joined Tribal’s HR team in 2007.
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.
Janet Tomlinson
Managing Director – Education Services
Appointed
Janet joined Tribal at the end of 2009 and retired at the end
of 2021.
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 on school inspection policy.
businesses.
Mark Wilson
Chief Operating Officer
Appointed
Mark joined Tribal in December 2016
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.
Peter Croft
Managing Director – APAC Region
Appointed
Peter joined Tribal in September 2017.
Experience
Peter leads the Asia Pacific business with a focus
on delivering growth and benefitsdriven 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.
Tribal Group plc
46
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Corporate Governance Statement
Tribal is committed to high standards of corporate
governance and maintaining sound business ethics.
The Directors acknowledge the importance of good corporate governance and has formally adopted the 10 principles of the Quoted
Companies Alliance Code (QCA). This Annual Report, together with the information on our website (www.tribalgroup.com/investors/
governance), sets out how we comply with the principles of the QCA Code and provides insights into how our governance framework
underpins our day-today activities and decisions.
QCA Code Principle
Explanation
Establish a strategy and business
model which promotes long-term
value for shareholders
Tribal is a world-class 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.
Seek to understand and
meet shareholder needs and
expectations
The CEO and CFO communicate regularly with shareholders,
investors and analysts, including at our half-yearly results
roadshows. The full Board is available at the Annual General
Meeting (‘AGM’) to communicate with shareholders.
Additional Information
Pages 8 – 11
Pages 28 – 29
https://www.tribalgroup.
com/investors/
governance
Take into account wider
stakeholder and social
responsibilities and their
implications for long-term success
In addition to our shareholders, our customers, contractors,
suppliers and employees are our most important stakeholders. We
engage with these communities via regular communications in our
day-to-day activities, and via formal feedback requests.
Pages 28 – 29
Pages 34 – 39
Embed effective risk management,
considering both opportunities
and threats, throughout the
organisation
Maintain the Board as a
well-functioning, balanced
team led by the Chair
Ultimate responsibility for risk management rests with the Board
but day-to-day management of risk is delivered through the way
we do business and our culture
Pages 26 – 27
The Board has four established Committees for Audit,
Remuneration, Nomination and ESG. The composition and
experience of the Board is reviewed regularly, primarily by the
Nominations Committee.
Pages 42 – 43
https://www.tribalgroup.
com/investors/directors
Ensure that between them the
Directors have the necessary
up-to-date experience, skills and
capabilities
The Board is satisfied that its current composition includes
an appropriate balance of skills, experience and capabilities,
including experience of the education, software technology and
international markets.
Page 47
Evaluate Board performance
based on clear and relevant
objectives, seeking continuous
improvement
The Board regularly considers the effectiveness and relevance
of its contributions, any learning and development needs and the
level of scrutiny of the Senior Management Team.
https://www.
tribalgroup.com/
investors/governance/
management-framework
Promote a corporate culture that
is based on ethical values and
behaviours
Our Environmental, Social and Governance Report section sets out
our corporate values, behaviours and culture, which are reinforced
via collaborative working, training and performance management.
Pages 34 – 39
Maintain governance structures
and processes that are fit for
purpose and support good
decision-making by the Board
The Board is responsible for the Group’s overall strategic direction
and management, and for the establishment and maintenance of
a framework of delegated authorities and controls to ensure the
efficient and effective management of the Group’s operations.
The Board maintains a list of matters reserved for the Board.
https://www.
tribalgroup.com/
investors/governance/
management-framework
Communicate how the Company
is governed and is performing
by maintaining a dialogue with
shareholders and other relevant
stakeholders
The Investors section of our website includes our results,
presentations and communications to shareholders. We release
the results of general meetings through a regulatory news service
and also on the Regulatory News section of our website.
https://www.tribalgroup.
com/investors
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Tribal Group plc
47
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.
Governance Structure
The plc Board
The plc Board is responsible for the Company’s systems of Corporate Governance.
The Non-Executive Directors are Richard Last, Roger McDowell and Nigel Halkes, all are 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.
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.
The Board may, on occasion, delegate authority to a sub-committee consisting of at least one plc director and senior manager as
appropriate to facilitate final sign-off for an agreed course of action within strict parameters.
Board Committees
The plc Board has established four Committees to assist with its effective operation: the Audit Committee, the Remuneration Committee,
the Nomination Committee and the Environmental, Social and Governance 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. The responsibilities and operation of the Committees are summarised below:
Audit
Committee
Environmental, Social and Governance
(“ESG”) Committee
The Committee, chaired by Nigel Halkes, meets at least three
times a year. It monitors the integrity of the Half Year and Annual
Report and Accounts and formal announcements relating to the
Group’s financial performance. It reviews significant financial
reporting issues, accounting policies and disclosures, key
judgements, reviews the effectiveness of internal controls, as well
as overseeing the engagement and scope of the annual audit.
The Audit Committee report on page 50 contains further
information on the Committee’s role and activities.
The Committee, Chaired by Nigel Halkes, meets four times a year.
Established in 2020, it makes recommendations to the Board on
the overarching ESG vision and priorities within Tribal to advance
our approach, engage our colleagues throughout the business,
and further refine and develop the details of our ESG strategy.
The ESG Committee Report on pages 34 to 39 contains further
information on the Committee’s role and activities.
Remuneration
Committee
Nomination
Committee
The Committee, chaired by Richard Last, meets at least once a
year. It reviews and makes recommendations as to the Directors’
remuneration, including benefits, terms of appointment and
share schemes.
The Remuneration Committee report on pages 51 to 55 contains
further information on the Committee’s role and activities.
The Committee, chaired by Richard Last, meets at least once
a year. It leads the process for Board structure, size and
composition of the Board and its Committees, and makes
recommendations to the Board with regard to any changes
required to ensure an appropriate balance of skills, expertise,
knowledge, diversity and independence. The Nomination
Committee report on page 56 contains further information on
the Committee’s role and activities.
Tribal Group plc
48
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Corporate Governance Statement continued
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
Diane McIntyre (Joined 01 June 2021)
Paul Simpson (Resigned 30 June 2021)
* By Invitation
plc Board
Audit
Committee
Remuneration
Committee
Nominations
Committee
ESG
Committee
11
11
11
11
11
5
6
3
2*
3
3
3*
2*
1*
2
2
2
2
2*
–*
2*
4
4
4
4
4
–*
–*
3
3
–
3
2
2
–
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
Whilst not a formal Board Committee, the Global 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.
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.
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Tribal Group plc
49
Indexed Share Price Performance
The The following graph compares the Group's share price with comparable AIM indices over the past six years.
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Tribal Group
FTSE AIM All Share
FTSE AIM All Share – Tech
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 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.
Approved by the Board of Directors on 16 March 2022.
Richard Last
Chairman
Tribal Group plc
50
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
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 2020 and the half year report and accounts
for 2021, 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 2021.
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. The Committee has primary responsibility
for overseeing the relationship with the External Auditors, BDO
LLP. This includes monitoring and reviewing their objectivity
and independence on an ongoing basis, recommending their
appointment, reappointment and removal, and approving the scope
of the statutory audit and fees.
BDO was appointed as the Group’s Auditor in October 2018,
following a competitive tender process. BDO has confirmed to the
Committee their continuing independence and compliance with
the Group’s policy on Auditor independence. The external Auditor
is required to rotate the lead audit partner responsible for the audit
engagement every five years, unless there are unusual extenuating
circumstances. Sarah Applegate was appointed as the lead audit
partner in 2018 and this represented her fourth year as lead
audit partner.
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 2021 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,
specifcally the key judgements applied to variable consideration,
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. There is no formal Internal Audit function
however the Committee believes that management is able to derive
assurance as to the adequacy and effectiveness of internal controls
and risk management procedures without one. As described on
pages 26 and 27 of the annual report, the Group has established
a framework of risk management and internal control processes,
policies and procedures to mitigate risks and the Committee
continues to monitor these closely and they are happy they are
appropriate for the business. The Committee reconsiders whether
such a function 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 16 March 2022.
Nigel Halkes
Chairman, Audit Committee
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Tribal Group plc
51
Remuneration Committee 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.
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. 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 53.
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.
None.
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.
Annual bonus
To incentivise and reward for
the achievement of in-year
objectives, which are linked to the
Group’s Adjusted Operating Profit.
Long-term
Incentives
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,
and 100% of salary for the Chief Financial Offier,
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 and Chief Financial 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
(EBITDA) is an appropriate
measure for awards granted
in 2021.
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.
Tribal Group plc
52
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Remuneration Committee Report continued
Director changes
Diane McIntyre was appointed Chief Financial Officer of Tribal Group plc on 1 June 2021. 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 an adjusted
operating profit margin measure.
Directors’ service contracts
Details of service agreements and notice periods are as follows:
Name
Director status
Effective date of contract
Expiry
Notice period for both parties
Mark Pickett
Richard Last1
Chief Executive Officer
30 June 2016
Ongoing
6 months
Non-Executive Chairman
17 November 2015
2022 AGM
–
Roger McDowell
Senior Non-Executive Director
17 November 2015
2022 AGM
Nigel Halkes
Non-Executive Director
20 January 2020
2022 AGM
Diane McIntyre
Chief Financial Officer
01 June 2021
Ongoing
3 months
3 months
6 months
1. Richard Last has no notice period.
Copies of each Director’s service agreement will be available for inspection at the AGM.
Under the terms of their appointment, the Non-Executive Directors have agreed to commit no 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.
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.
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.
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Tribal Group plc
53
Non-Executive Director fees
The fees for the year ending 31 December 2021, which took effect from 1 January 2021 are as follows. These exclude any expenses which
the Non-Executive Directors may incur in relation to their duties.
Non-Executive Chairman
Senior Non-Executive Director
Non-Executive Director
From 1 January 2022
From 1 January 2021
£111,600
£110,000
£57,000
£56,250
£55,100
£55,100
Increase
£1,600
£1,900
£1,150
INFORMATION SUBJECT TO AUDIT
Remuneration payable for the financial year ending 31 December 2021:
Director
Mark Pickett
Diane McIntyre5
Richard Last
Roger McDowell
Nigel Halkes
Salary4
Benefits1
Bonus2
SBP3
Pension4
Total 2021
Total 2020
270,000
116,667
110,000
55,100
55,000
387
217
–
–
–
415,283
281,175
26,260
993,105
977,775
100,000
28,231
5,833
250,948
–
–
–
–
–
–
–
–
–
–
110,000
104,500
55,100
55,000
52,345
49,659
1. Benefits include private medical insurance and private fuel.
2. 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).
3. 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. Diane McIntyre’s figures relate to the period from 1 June 2021 to 31 December 2021.
Long Term Incentives Plan (LTIP) awards
On 28 June 2021 the Remuneration Committee approved LTIP awards to Mark Pickett and Diane McIntyre.
Type
Number of shares
Face value1
Performance condition
Performance period
Mark Pickett
Nil-Cost Option 275,510
Diane McIntyre Nil-Cost Option 204,081
£270,000 (100%
of salary)
Adjusted operating
profit
Measured over 3 years
to 31 December 2023
£200,000 (100%
of salary)
Adjusted operating
profit
Measured over 3 years
to December 2023
% Vesting at
threshold
80% of LTIP
80% of LTIP
1. Face value calculated based on share price on 28 June 2021 (98p).
Tribal Group plc
54
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Remuneration Committee Report continued
Share award interests
The interests in share options were as follows:
At 1 January
2021
Granted
Lapsed
Exercised
Mark Pickett
LTIP – 30 June 2017
247,678
LTIP – 22 May 2018
251,256
LTIP – 7 June 2019
716,552
LTIP – 7 July 2020
482,143
–
–
–
–
LTIP – 28 June 2021
Diane McIntyre
LTIP – 28 June 2021
–
–
275,510
204,081
–
–
–
–
–
–
247,678
251,256
–
–
–
–
At 31
December
2021
–
–
716,552
482,143
275,510
204,081
Exercise
price
Price on date
of grant
Date from
which
exercisable
Expiry date
Nil
Nil
Nil
Nil
Nil
Nil
83.8p June 2020 June 2027
79.6p May 2021 May 2028
71.0p June 2022 June 2029
56.0p
July 2023
July 2030
98.0p June 2024 June 2031
98.0p June 2024 June 2031
The closing share price at 31 December 2021 was 101.25p and during the year ranged from 88.75p to 110.00p. 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
Average Remuneration/FTE £'000
Average FTE Employees percentage change
Directors percentage change2
Mark Pickett
Richard Last
Roger McDowell
Nigel Halkes
Diane McIntyre
Year-on-year percentage change in remuneration
2021
936
54
3%
4%
5%
5%
11%
–
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%
–
–
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.
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Tribal Group plc
55
INFORMATION NOT AUDITED
Directors’ shareholdings
The table below sets out the Directors’ current shareholdings as at 31 December 2021. The shareholding guideline for the Chief Executive
Officer is to hold two times base salary in stock (excluding invested LTIP’s) within no more than five years of appointment.
Director
Mark Pickett
Diane McIntyre
Richard Last
Roger McDowell
Nigel Halkes
Beneficially
owned
% of salary/
share value held
LTIP
options
Share matching
plan option
876,175
329%
1,474,205
–
–
204,081
2,995,726
2,975,726
14,285
2757%
5468%
26%
–
–
–
–
–
–
–
–
Note: % of salary/share value 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 2021.
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 2021 was 8.2%.
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 16 March 2022.
Roger McDowell
Chairman, Remuneration Committee
Tribal Group plc
56
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Nomination Committee Report
The Committee, chaired by Richard Last, meets at least once a year. It leads the
process for Board structure, size and composition of the Board and its Committees,
and makes recommendations to the Board with regard to any changes required
to ensure an appropriate balance of skills, expertise, knowledge, diversity and
independence.
Diversity
One area of focus is to continue to improve our Board diversity.
We recognise the value of increased diversity at Board level in
achieving our strategic objectives and in driving innovation and
growth. Whilst Board appointments will continue to be based on
merit and relevant skill, the Directors appreciate that contrasting
backgrounds, experience and opinion can promote more balanced
and nuanced debate and lead to improved decisions. With regard to
gender diversity, the Directors are mindful that as at the date of this
Report the Board currently comprises 20% female representation
and continues to focus on maintaining a balanced Board.
Succession Planning
Ensuring that there are robust succession plans in place at Board
and senior management level is fundamental to the long-term
prospects of the business. The Committee conducted a review
of its succession plans during the year, particularly in relation to
Education Services following the retirement of Janet Tomlinson,
former Managing Director of Education Services.
The Board recognises that effective succession planning also
requires a thorough induction programme upon joining the Executive
Board. Work has been conducted to improve this process for all
incoming Executive Board members, whilst recognising too that
each induction programme will also need to be tailored to the
specific needs of the individual.
Richard Last
Chair of the Nomination Committee
The Nomination Committee is chaired by Richard Last and includes
Roger McDowell, Nigel Halkes and Mark Pickett, who provides
Executive management insight. All but Mark Pickett are fully
independent. Although only members of the Committee have the
right to attend meetings, other individuals, such as other Board
members and external advisors, may be invited to attend for all or
part of any meeting. The Committee meets at least once a year.
Duties
The Committee’s principal duties are to:
•
•
•
•
monitor the structure, size and composition (including the skills,
knowledge, experience and diversity) of the Board and make
recommendations to the Board with regard to any changes;
give full consideration to succession planning for Directors and
other senior Executives in the course of its work, taking into
account the challenges and opportunities facing the Company,
and the skills and expertise needed on the Board in the future;
keep under review the leadership needs of the organisation,
both Executive and Non-Executive, with a view to ensuring the
continued ability of the organisation to compete effectively in
the marketplace; and
keep up to date and fully informed about strategic issues and
commercial changes affecting the Company and the market in
which it operates.
The Committee’s full Terms of Reference are available on our
website. They were last reviewed on 14 June 2021.
Appointments in the year
During the year, the main focus of the committee has been on
succession planning for the Executive Committee and senior
management, including the appointment of a permanent Chief
Financial Officer.
We are pleased to strengthen the Board and Executive Committee
with the appointment of Diane McIntyre as Chief Financial Officer,
with effect from 1 June 2021. Diane was appointed following an
external search using an independent recruitment agency.
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Tribal Group plc
57
Directors’ Report
The Directors present their report and audited consolidated financial statements
for the year ended 31 December 2021.
Acquisition
Tribal Group plc acquired Semestry Limited on 1 April 2021 and
the assets and business of Eveoh BV on 1 October 2021. Both
acquisitions were financed through existing cash resources. The
initial cash consideration was £4.5m and £0.1m respectively and
both acquisitions had further contingent consideration amounts
paid in the year of £1.5m and £0.7m respectively based on the
annual recurring revenue growth of the acquired businesses.
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.
The ESG Report is on pages 34 to 39 and highlights our initiatives
in relation to Environmental, Social and Governance matters
concerning the Group.
Principal risks and uncertainties
The Group’s principal risks and uncertainties are explained in the
Strategic report on page 26 and 27. Risks of a financial nature are
addressed in 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 pages 28 and 29.
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.
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 33.
Results and dividends
The profit for the year, after taxation, amounted to £6,993,000
(2020: profit of £6,358,000). Tribal remains committed to a
continuing dividend policy and as explained in the Chairman’s
statement, the Directors propose a final dividend of 1.3p per share
for the year ended 31 December 2021, subject to approval at the
AGM on 4 May 2022 (2020 combined dividend: 2.3p 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 16 and 17; 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 option to exercise was approved
on 16 March 2021, the second extension was approved by HSBC
on 25 January 2022, effective 21 January 2022. 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 2021. 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 August 2022 and the
Australian overdraft committed for a 12-month period ending
October 2022. At the end of 2021, 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.
Tribal Group plc
58
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Directors’ Report continued
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 42 and
43. 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
pages 51 to 55.
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 4,676,064 shares (2020:
6,118,525 Ordinary Shares of 5p).
Branches
The Group has overseas branches in New Zealand, 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 pages 34 to 39.
The Board takes its responsibilities to employee engagement and
interests very seriously and ensures any decisions made take into
consideration the impact on the Group’s 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.
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, Edge. Total
research and development expenditure increased to £15.9m (2020:
£11.6m) of which £10.1m (2020: £6.8m) was capitalised.
Post balance sheet events
There have been no significant events to report since the date of
the balance sheet except for those shown in note 34.
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 4 May 2022. 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.
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Tribal Group plc
59
Corporate governance
The Company’s statement on corporate governance compliance can
be found in the Corporate Governance Report on pages 46 to 49 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 each Director is aware, there is no relevant audit
information of which the Company’s auditors are unaware; and
•
they have 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
16 March 2022
Directors’ responsibility statement
The directors are responsible for preparing the annual report and
the financial statements in accordance with applicable law and
regulations.
Company law requires the directors to prepare financial statements
for each financial year. Under that law the directors are required
to prepare the group financial statements in accordance with UK
adopted international accounting standards and the company
financial statements in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting
Standards 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 for that period.
In preparing these financial statements, the directors are required to:
•
•
•
•
select suitable accounting policies and then apply them
consistently;
make judgements and accounting estimates that are reasonable
and prudent;
state whether they have been prepared in accordance with
UK adopted international accounting standards subject to any
material departures disclosed and explained in the financial
statements;
prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the group and the
company will continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the company’s
transactions and disclose with reasonable accuracy at any time
the financial position of the company and enable them to ensure
that the financial statements comply with the requirements of the
Companies Act 2006. They are also responsible for safeguarding the
assets of the company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
Website publication
The directors are responsible for ensuring the annual report and
the financial statements are made available on a website. Financial
statements are published on the company’s website in accordance
with legislation in the United Kingdom governing the preparation
and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity of the
company’s website is the responsibility of the directors. The directors’
responsibility also extends to the ongoing integrity of the financial
statements contained therein.
Tribal Group plc
60
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Independent Auditor’s Report
to the members of Tribal Group plc
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 2021 and of the Group’s profit for the year
then ended;
the Group financial statements have been properly prepared
in accordance with UK adopted international accounting
standards;
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 2021 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 UK adopted international accounting standards. 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 2023
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 £1.6m (note 18) for
Semestry Limited and Eveoh BV while at the same time maintaining
adequate working capital to continue daily operations as normal.
We assessed the impact on banking covenants to determine if they
would be breached if the drawn 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 impact on covenant
compliance and 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, and funding and
covenant compliance 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.
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 the Parent Company’s ability to continue as a going concern
for a period of at least twelve 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.
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Tribal Group plc
61
Overview
Coverage
100% (2020: 100%) of Group profit before tax
100% (2020: 100%) of Group revenue
99% (2020: 99%) of Group total assets
Key audit matters
2021
2020
Revenue measurement – Implementation services
revenue stream
Cloud computing costs within intangibles
Revenue recognition – iGraduate and data analytics
revenue stream
Revenue recognition – iGraduate and data analytics revenue stream is no longer considered to be a key
audit matter because the appropriate point of revenue recognition was determined in 2020 with no
ongoing key audit matters in the current year.
Materiality
Group financial statements as a whole
£550,000 (2020: £560,000) based on 5% of Adjusted profit before tax (2020: 6% of Adjusted profit
before tax)
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 Group plc (company only), Tribal Education Ltd
and Tribal Group Pty Limited, which were subject to a full scope audit
by the Group engagement team. Significant components comprise
90% of revenue and 97% of Group total assets. Procedures
over specific balances on the year-end results of the remaining
components were performed by the Group engagement team which
then increased the coverage to the percentages detailed in the
above table.
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. These
matters were 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 these matters.
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Financial Statements
Independent Auditor’s Report continued
to the members of Tribal Group plc
Key audit matter
Revenue measurement –
Implementation services
revenue stream
(Refer to notes 1 and 3 to
the financial statements)
Implementation revenue
comprises revenue received
for implementing Tribal’s off
the shelf products as is or
configuring it into a bespoke
product based on the
customer’s requirements.
Judgement is required in
determining the variable
consideration to be included in
the transaction price.
In light of the judgements
and assessments required
to be made by management
in this area particularly in
relation to constraining the
variable consideration and the
complexities of the applicable
accounting standard, we have
determined that revenue
measurement in relation to the
implementation revenue stream
is a key audit matter.
How the scope of our audit addressed the key audit matter
As part of our audit procedures, we:
• Assessed the appropriateness of the Group’s revenue recognition
policies against the requirements of the applicable accounting standards.
• Performed an assessment of a sample of the contracts including the
terms and conditions of the implementation services being provided to
check that revenue was appropriately recognised in accordance with the
requirements of applicable accounting standards.
• Assessed the judgements made by management in determining the
appropriate allocation of fixed and variable consideration and constraining
the variable consideration against the requirements of the applicable
accounting standards.
• Obtained management’s method of calculating variable consideration
and assessed this against the requirements of the applicable accounting
standards.
• Enquired with project managers and directors for the sample of contracts
to establish how contracts were progressing against key milestones,
the impact of expected delivery times on variable consideration and
comparing this to management’s calculations.
• Reviewed the contract margin calculations prepared to identify onerous
contracts to determine whether the required provision has been made for
a sample of contracts.
• Assessed the stage of completion and resulting revenue recognised for a
sample of contracts by:
– agreeing the number of days worked to the timecard system and
compared this against the total expected number of days for the
project.
– reviewing management’s forecasted costs for the projects against
actual costs incurred to date and performed a review of historical
forecasting on a sample of contracts to confirm the historical accuracy
of the project managers and management’s forecasts.
Key observations:
Based on the procedures performed, we consider the revenue recognition
for the Implementation services revenue stream to be appropriate.
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63
Key audit matter
Cloud computing costs
within intangibles
Refer to notes 1,
5 and 14 to the financial
statements)
Judgement is required
in determining whether
implementation costs in a
Software as a Service contract
and costs incurred during the
development phase of the
project should be expensed
or capitalised as an intangible
asset per the IFRIC Update
March 2021 on Configuration
or Customisation Costs in a
Cloud Computing Arrangement.
In light of the judgements and
assessments required to be
made by management in this
area, including the capitalised
costs in previous financial
years, we have determined
that the capitalisation of
cloud computing costs is a key
audit matter.
How the scope of our audit addressed the key audit matter
As part of our audit procedures, we:
• Obtained management’s assessment on the impact of the IFRIC update
and assessed the judgements made by management against the
guidance provided in the IFRIC update in determining the appropriate
accounting treatment for the Tribal Edge development costs and D365
implementation costs incurred in the current year.
• Tested a sample of the implementation costs to invoices and assessed
whether these costs have been expensed as appropriate in accordance
with the applicable accounting standard.
• Tested a sample of capitalised development costs in the year to invoices
and timecards and assessing whether these costs have met the criteria
to be capitalised in accordance with the applicable accounting standards.
• Assessed the judgements made by management in identifying potential
capitalised implementation costs in the opening balances of intangible
assets against the guidance provided in the IFRIC update to check that all
costs previously capitalised still meet the criteria of the IFRIC Update.
• Reviewed the consistency of the disclosures with the judgements made
by management.
Key observations:
Based on the procedures performed, we consider the accounting treatment
of cloud computing costs within intangibles to be appropriate.
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:
Group financial statements
Parent company financial statements
2021
£
550,000
2020
£
560,000
2021
£
350,000
2020
£
350,000
5% (2020: 6%) of Adjusted* profit before tax
Materiality
Basis for determining
materiality
Rationale for the benchmark
applied
Adjusted profit before tax is a key measure for
stakeholders based on market practice and investor
expectations.
3.75% of net assets, capped at 63.6% (2020:
62.5%) of Group materiality
As a non-trading holding entity, net assets is a key
measure for stakeholders based on market practice
and investor expectations. Materiality was capped at
63.6% (2020: 62.5%) of Group materiality given the
assessment of the component’s aggregation risk.
Performance materiality
396,000
392,000
252,000
245,000
Basis for determining
performance materiality
In determining performance materiality we considered
a number of factors including the areas of estimation
within the financial statements and history of errors.
On this basis performance materiality was set at
72% (2020: 70%) of Group materiality.
In determining performance materiality we considered
a number of factors including the areas of estimation
within the financial statements and history of errors.
On this basis performance materiality was set at
72% (2020: 70%) of Parent Company materiality.
* Profit before tax adjusted for acquisition related costs, internal systems transformation programme and other financing costs in note 6 of the financial statements.
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Financial Statements
Independent Auditor’s Report continued
to the members of Tribal Group plc
Component materiality
We set materiality for each component of the Group based on a percentage of between 63.6% 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 £350,000 to
£385,000. In the audit of each component, we further applied performance materiality levels of 72% 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 £11,000 (2020: £11,200).
We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.
Other information
The directors are responsible for the other information. The other information comprises the information included in the Annual report
and Accounts other than the financial statements and our 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
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 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.
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.
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.
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65
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 framework applicable to the Group and the industry in which it operates and
determined that the most significant laws and regulations are the Companies Act 2006, applicable accounting framework, 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 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 reviewed the Group’s tax computations and returns and financial statements against the requirements of the
relevant tax legislation and applicable accounting framework respectively.
We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud might occur. In
addressing the risk of fraud included in management override of controls, we have performed journals testing based on a set of fraud risk
criteria and tested to supporting documentation whilst also verifying the business rationale and assessed whether the judgements made
in significant accounting estimates were indicative of potential bias.
We also incorporated unpredictability procedures as part of our response to the risk of management override of controls. With regards to
the fraud risk in revenue recognition, our procedures included those set out in the key audit matters section above.
We 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/auditors
responsibilities. 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 Applegate (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
Bristol, UK
16 March 2022
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
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67
Financial
Statements
Financial Statements
68 Consolidated Income Statement
Consolidated Statement of
69
Comprehensive Income
70 Consolidated Balance Sheet
72
73 Consolidated Cash Flow Statement
74 Notes to the Financial Statements
120 Company only Balance Sheet
121 Company only Statement of Changes
Consolidated Statement of Changes in Equity
in Equity
122 Notes to the Company Balance Sheet
Company Information
127 Company Information
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Financial Statements
Consolidated Income Statement
For the year ended 31 December 2021
Note
Adjusted
£’000
Other items
(see Note 6)
£’000
Year ended
31 December
2021
Total
£’000
Adjusted
£’000
Other items
(see Note 6)
£’000
Year ended
31 December
2020
Total
£’000
Continuing operations
Revenue
Cost of sales
Gross profit
Total administrative expenses
Operating profit/(loss)
Investment income
Finance costs
3
81,148
(39,335)
41,813
(27,846)
13,967
255
(230)
4,6
8
6,9
–
–
–
(5,079)
(5,079)
–
(299)
81,148
72,954
(39,335)
(34,322)
41,813
38,632
(32,925)
(26,831)
8,888
11,801
255
(529)
53
(345)
Profit/(loss) before tax
13,992
(5,378)
8,614
11,509
Tax (charge)/credit
6,10
(2,240)
619
(1,621)
(3,156)
–
–
–
(2,693)
(2,693)
–
(307)
(3,000)
1,005
72,954
(34,322)
38,632
(29,524)
9,108
53
(652)
8,509
(2,151)
Profit/(loss) attributable to
the owners of the parent
Earnings per share
Basic
Diluted
All activities are from continuing operations.
11,752
(4,759)
6,993
8,353
(1,995)
6,358
12
12
5.7p
5.5p
(2.3)p
(2.3)p
3.4p
3.2p
4.1p
4.0p
(1.0)p
(0.9)p
3.1p
3.1p
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Financial Statements
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69
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2021
Profit for the year
Other comprehensive (expense)/income:
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 (expense)/income for the year net of tax
Total comprehensive income for the year attributable
to equity holders of the parent
Year ended
31 December 2021
£’000
Year ended
31 December 2020
£’000
Note
6,993
6,358
26
21
728
(131)
(917)
(320)
(438)
89
1,120
771
6,673
7,129
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Financial Statements
Consolidated Balance Sheet
As at 31 December 2021
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
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
* see note 20 and note 21
Note
2021
£’000
Restated*
2020
£’000
13
14
15
25
25
21
16
25
17
18
25
20
18
21
26
25
20
28,582
35,947
962
2,309
–
5,233
1,610
74,643
10,602
–
6,178
5,924
22,704
97,347
(6,081)
(9,253)
(23,571)
(2,456)
(878)
(1,349)
(43,588)
(20,884)
(131)
(2,953)
(1,864)
(215)
(1,449)
(807)
(7,419)
(51,007)
46,340
26,661
24,376
1,069
3,342
174
4,243
22
59,887
11,036
46
3,951
9,520
24,553
84,440
(4,660)
(7,480)
(23,078)
(2,861)
(1,020)
(1,657)
(40,756)
(16,203)
(40)
(1,250)
(330)
(958)
(2,551)
(923)
(6,052)
(46,808)
37,632
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Financial Statements
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71
Consolidated Balance Sheet continued
As at 31 December 2021
Equity
Share capital
Share premium
Other reserves
Accumulated losses
Total equity attributable to equity holders of the parent
* see note 21
Note
23
24
2021
£’000
10,519
18,961
27,978
(11,118)
46,340
Restated*
2020
£’000
10,285
15,951
26,926
(15,530)
37,632
Notes 1 to 34 form part of these financial statements. The Company’s registered number is 04128850.
The financial statements on pages 68 to 126 were approved by the Board of Directors and authorised for issue on 16 March 2022
and were signed on its behalf by:
Richard Last
Director
Mark Pickett
Director
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Consolidated Statement of Changes in Equity
For the year ended 31 December 2021
Share
capital
£’000
Share
premium
£’000
Other
reserves
£’000
Accumulated
losses
£’000
Total
equity
£’000
Note
Balance as at 31 December 2019
9,979
15,539
26,029
(20,228)
31,319
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
–
–
–
239
–
–
67
–
–
–
–
–
–
–
–
412
–
–
23
11
22
23
22
10
Contributions by and distributions to owners
306
412
–
–
–
–
–
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)
Balance at 31 December 2020 as previously reported
10,285
15,951
26,926
(14,944)
38,218
Impact of prior year adjustment*
10,21
–
–
–
(586)
(586)
Balance at 31 December 2020 restated
10,285
15,951
26,926
(15,530)
37,632
Profit for the year
Other comprehensive expense for the year
Total comprehensive income 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
–
–
–
–
–
–
234
3,010
–
–
–
–
–
–
–
–
–
–
–
–
–
1,078
(26)
–
6,993
(320)
6,673
–
6,993
(320)
6,673
3,244
(2,505)
(2,505)
–
–
244
1,078
(26)
244
23
11
22
22
10
Contributions by and distributions to owners
234
3,010
1,052
(2,261)
2,035
At 31 December 2021
10,519
18,961
27,978
(11,118)
46,340
* see note 21
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Financial Statements
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73
Consolidated Cash Flow Statement
For the year ended 31 December 2021
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
Acquisition of investments in subsidiaries – cash consideration
Acquisition of investments in subsidiaries – cash acquired
Net gain on forward contracts
Net cash outflow from investing activities
Financing activities
Interest paid
Loan arrangement fees
Loan drawdown
Loan repayment
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
*The prior year column has been restated to show the total drawdown and repayment of the loan, see note 19.
Year ended
31 December 2021
£’000
Restated*
Year ended
31 December 2020
£’000
13,889
5,461
Note
27
15
14
32
32
23
25
25
11
17
–
(563)
(10,224)
(2,180)
(4,512)
317
249
6
(356)
(7,129)
(1,732)
–
–
41
(16,913)
(9,170)
(165)
(45)
15,000
(15,000)
3,244
(987)
52
(2,505)
(406)
(3,430)
9,520
(166)
5,924
(259)
(65)
10,000
(10,000)
239
(980)
52
(2,254)
(3,267)
(6,976)
16,463
33
9,520
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Financial Statements
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 127. 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 8 to 41. 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 68 to 126 have been prepared in accordance with UK adopted 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 UK adopted International Accounting Standards 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 UK):
IFRS 17
Insurance contracts
Amendments to IAS 1 and Practice Statement 2 Disclosure of accounting policies
Amendments to IAS 1
Amendments to IAS 12
Amendments to IAS 8
Classification of liabilities as current or non-current
Deferred tax arising from single transaction
Accounting policies – changes in estimates and errors
None of the above standards are expected to 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.
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Adoption of the going concern basis
Tribal had cash and cash equivalents of £5.9m at the end of 2021 plus access to an undrawn UK and Australian overdraft of £2.0m and
$AUD 2.0m respectively. 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 by entering a £10m facility to cover corporate merger and acquisition activity and, if
required, temporary working capital requirements of the Group.
Tribal’s main business is software related through the provision of Student Information Systems (SIS) to education institutions globally.
Revenue is generated from the sale of software licenses and related implementation work, and the ongoing provision of support &
maintenance and cloud/hosting services. The Group benefits from strong annual recurring revenues and cash generation, it also has a
significant pipeline of committed income as it enters 2022 which provides a good level of protection and certainty to the business. While
the Group’s net current liability position has increased to £20.9m from £16.2m in 2020, it is still being driven by the recognition of IFRS 16
lease liabilities as current liabilities of £0.9m, the deferred consideration recognised relating to the Semestry and Eveoh acquisitions of
£1.3m and net current contract liabilities of £17.4m relating to deferred customer revenue recognised in accordance with IFRS 15.
The Group had a positive end to the year, closing several significant sales to new and existing customers, and expanding its global footprint.
The financial impact of the pandemic 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.
The Company has guaranteed the year-end liabilities of its subsidiaries.
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, considering 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 at least 12 months from the date of approval of the financial statements and 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.
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 below.
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.
Variable consideration linked to contract performance and related sales revenue is calculated and recognised based on the probability
weighted value of a range of possible outcomes. It is addressed at the beginning of a contract and reviewed annually for qualitative
factors. Variable consideration is accounted for as an adjustment to contract revenue and accrued income.
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.
Interest is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.
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 recognition of associated revenue.
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Notes to the Financial Statements continued
1. Accounting policies continued
Revenue recognition continued
Student Information Systems:
Licence & Development Fees – applies to Foundation Software and Edge
•
•
•
revenue on perpetual software licenses is recognised on the commencement of software implementation and related consultancy.
revenue on fixed price software licenses is 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. Revenue is recognised over time as the conditions as set out in IFRS 15.35(a) are met.
revenue from term software licenses is recognised on a pro-rata basis over the period of the license. This has the effect of spreading
the recognition of License & Development Fees revenue over an extended period, rather than immediate, upfront recognition, to
reflect the performance obligation of the license transferring over time in line with IFRS 15.B56.
• customer paid enhancements (Development Fees) are recognised in line with Implementation Services as noted below.
Support & Maintenance – applies to Foundation Software and Edge
•
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.
Implementation Services – applies to Professional Services
•
•
revenue from software implementation, consultancy and other services that involve the purchase of a number of days is recognised
as the service is provided.
if implementation services are inherently linked to the delivery of fixed price software, revenue is recognised 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.
Cloud Services – applies to Cloud Services
•
revenue from contracts for cloud services is recognised on a pro rata basis over the contract period, reflecting the Group’s
obligation to host the relevant software products over the contract period.
Other Services –applies to Other Software Services (including Bespoke Software, Software Solutions, Data Managed Services
and SchoolEdge)
•
revenue from other services that are provided 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 where services include any element of Licence and Development
Fees, Support and Maintenance, Implementation Services or Cloud Services revenue recognition will be in line with the policy outline
in the relevant section above.
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 to be met upon the transfer of deliverables as
defined in the contract.
Deferred contingent consideration
The Group has deferred contingent consideration obligations arising from acquisitions.
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.
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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 (internal operational systems; ie finance, HR) 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 as defined by IAS 38, with the exception of cloud computing costs
which are expensed as incurred. 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.
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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 3 to 15 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 as follows:
• Aquired Intellectual property – 15 years;
• Acquired Software – 3 to 8 years; and
• Acquired Customer contracts & relationships – 3 to 12 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 assets 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.
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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.
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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, 2020 and 2021 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.
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.
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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 £28.6m (2020: £26.7m). 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.
Other intangible assets (Development costs)
The carrying value of development costs is £27.6m (2020: £18.4m). 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.
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Notes to the Financial Statements continued
2. Critical accounting judgements and sources of estimation uncertainty continued
Other intangible assets (Business systems)
The carrying value of business systems is £0.2m (2020: £0.4m). Judgement is required to assess whether costs meet the criteria
for capitalisation set out in IAS 38 (with the exception of cloud computing costs which are expensed as incurred), 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 recognition of any variable consideration and 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 the 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.
Acquisition accounting
The Group acquired Semestry Limited on 1 April 2021 with an element of the consideration being deferred and contingent on the
future annual recurring revenue (ARR) growth of the acquired business. Judgement is required to estimate the recurring revenue which
determines the level of provision for deferred contingent consideration that is required. As part of the accounting for the acquisition
of Semestry Limited judgement has been used to identify the fair value of intangible assets totalling £2.9m, relating to software, and
customer contracts and relationships (see note 32).
The Group incorporated a Dutch legal entity on 14 September 2021 (Semestry Netherlands BV) for the purpose of acquiring the assets
and business of Eveoh BV on 1 October 2021. An element of the consideration has been deferred and is contingent on the future annual
recurring revenue (ARR) growth of the acquired business. Judgement is required to estimate the recurring revenue which determines
the level of provision for deferred contingent consideration that is required. As part of the accounting for the acquisition of the assets
of Eveoh BV judgement has been used to identify the fair value of intangible assets totalling £0.7m, relating to software, and customer
contracts and relationships (see note 32).
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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. For 2021 reporting Asset Management, Software Solutions and Information Managed Services revenue is now
included in SIS as it more closely aligns with the Software side of the business. This totals £2.7m and was previously included within
Education Services. 2020 has been updated for comparison with £2.6m revenue being reassigned.
31 December 2021
Foundation – Support & Maintenance
Foundation – Software
Cloud Services
Edge
Professional Services
Core SIS
Other software & services
Total SIS
Schools inspections & other related services (QAS)
i-graduate survey & data analytics
Total ES
Total
31 December 2020
Australia
£000
Other APAC
£000
North America
and Rest of
the world
£000
UK
£000
15,945
4,927
5,097
2,903
8,004
36,876
4,266
41,142
6,888
945
7,833
7,375
81
1,326
363
2,153
11,298
8,816
20,114
–
371
371
1,709
324
237
125
2,338
4,733
–
4,733
–
1,091
1,091
5,824
925
71
145
3
173
1,317
–
1,317
4,181
366
4,547
5,864
48,975
20,485
UK
£000
Australia
£000
Other APAC
£000
North America
and Rest of
the world
£000
Foundation – Support & Maintenance
15,529
7,316
Foundation – Software
Cloud Services
Edge
Professional Services
Core SIS
Other software & services
Total SIS
Schools inspections & other related services (QAS)
i-graduate survey & data analytics
Total ES
Total
4,119
4,211
1,522
5,778
31,159
3,754
34,913
6,976
574
7,550
79
772
104
2,322
10,593
10,008
20,601
–
249
249
42,465
20,850
1,455
146
42
–
635
2,278
23
2,301
–
1,066
1,066
3,366
916
103
134
–
465
1,618
13
1,631
4,377
266
4,643
6,273
Total
£000
25,954
5,403
6,805
3,394
12,668
54,224
13,082
67,306
11,069
2,773
13,842
81,148
Total
£000
25,216
4,447
5,159
1,626
9,200
45,648
13,798
59,446
11,353
2,155
13,508
72,954
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Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Notes to the Financial Statements continued
3. Revenue for contracts with customers continued
Net contract liabilities
Opening contract balance
Of which released to income statement
New billings and cash in excess of revenue recognised
Closing contract balance
Contract asset/
(liability)
2021
£000
Contract asset/
(liability)
2020
£000
(19,435)
19,128
(17,340)
(17,647)
(19,025)
18,750
(19,160)
(19,435)
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.
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 £0.5m (2020: £0.3m) and will be released in line with the total contract revenue. No amount has been
impaired at 31 December 2021 or 2020.
Remaining performance obligations
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 2021
Foundation – Support & Maintenance
24,814
24,063
16,191
12,609
2022
£000
2023
£000
2024
£000
Thereafter
£000
Foundation – Licence
Cloud Services
Edge
Professional Services
Core SIS
Other software & services
Total SIS
Schools inspections & other related services (QAS)
i-graduate survey & data analytics
Total ES
TOTAL
4,563
7,557
4,132
12,694
53,760
9,873
63,633
6,756
1,501
8,257
3,438
6,982
4,012
1,062
39,557
4,000
43,557
2,136
1,157
3,293
71,890
46,850
2,764
4,816
2,890
107
26,768
2,542
29,310
660
978
1,638
30,948
Total
£000
77,677
12,833
23,638
12,758
13,990
2,068
4,283
1,724
127
20,811
140,896
677
17,092
21,488
157,988
–
1,279
1,279
9,552
4,915
14,467
22,767
172,455
Notes to the financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section Annual Report & Accounts 2021
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Financial Statements
Tribal Group plc
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At 31 December 2020
2021
£000
2022
£000
2023
£000
Thereafter
£000
Foundation – Support & Maintenance
25,374
18,197
10,310
3,498
6,093
2,087
11,272
48,324
9,154
57,478
12,374
1,534
13,908
71,386
2,692
5,644
2,118
7,061
35,712
5,488
41,200
4,098
414
4,511
2,065
3,562
1,695
146
17,778
1,477
19,255
2,113
128
2,241
45,712
21,496
Foundation – Licence
Cloud
Edge
Professional Services
Core SIS
Other software & services
Total SIS
Schools inspections & other related services (QAS)
i-graduate survey & data analytics
Total ES
TOTAL
An analysis of the Group’s revenue is as follows:
Continuing operations
Sales of services
Total revenue
Total
£000
54,619
8,725
18,271
6,185
18,479
738
470
2,972
285
–
4,465
106,279
13
4,478
1,308
23
1,331
5,809
16,132
122,411
19,893
2,099
21,991
144,403
2021
£’000
2020
£’000
81,148
81,148
72,954
72,954
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 £0.8m (2020: £0.5m) 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. For 2021 reporting Asset Management, Software Solutions and Information Managed
Services revenue is now included in SIS as it more closely aligns with the Software side of the business. This totals £2.7m and was
previously included within ES. 2020 has been updated for comparison with £2.6m revenue being reassigned. 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, including software solutions, asset management
and information managed services; 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.
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.
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Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Notes to the Financial Statements continued
4. Business segments continued
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
Investment income
Finance costs
Profit before tax
Tax charge
Profit after tax
Revenue
Adjusted segment operating profit
Year ended
31 December 2021
£’000
Year ended
31 December 2020
£’000
Year ended
31 December 2021
£’000
Year ended
31 December 2020
£’000
67,306
13,842
81,148
59,446
13,508
72,954
22,404
2,229
24,633
(10,666)
13,967
(947)
(4,132)
8,888
255
(529)
8,614
(1,621)
6,993
20,851
2,047
22,898
(11,097)
11,801
(1,021)
(1,672)
9,108
53
(652)
8,509
(2,151)
6,358
Associated depreciation and amortisation is allocated to segment profits and is included in adjusted segment operating profit as above.
The amount included in SIS is £1.1m (2020: £1.4m) and within Education Services £nil (2020: £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 4% (2020: 6%) have arisen from the segment’s largest customer; within SIS
revenues of approximately 4% (2020: 6%) 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
Non-current assets (excluding deferred tax)
UK
Australia
Other Asia Pacific
North America
Rest of the world
2021
£’000
48,975
20,485
5,824
3,149
2,715
81,148
2021
£’000
54,314
13,391
1,637
68
–
2020
£’000
42,465
20,850
3,366
2,572
3,701
72,954
2020
£’000
39,632
15,214
695
88
15
69,410
55,644
Notes to the financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section Annual Report & Accounts 2021
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Financial Statements
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5. Operating profit for the year
Operating profit for the year is stated after charging/(crediting):
Staff costs (excluding amounts capitalised)
Depreciation and other amounts written off in PPE
Depreciation of right-of-use assets
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 development costs
Internal systems transformation programme “VERITAS”
Net impairment gain on trade receivables
Research and development expenditure
Net foreign exchange (gains)/losses
The analysis of auditors’ remuneration is as follows:
Note
7
15
25
14
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
2021
£’000
43,969
650
985
947
1
24
1,008
905
1,715
(44)
6,763
(110)
2021
£’000
186
156
342
8
5
13
355
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
Non-audit fees in 2021 and 2020 (2021: £8,000; 2020: £8,000) arose as a result of the half year review, and in 2021 as a result of
business contingency planning advice (£5,000).
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.
Alternative Performance Measures (APM).
A number of non-IFRS adjusted profit measures are used in this annual report and financial statements. Adjusting items are excluded
from our headline performance measures by virtue of their size and nature, in order to reflect management’s view of the performance
of the Group. Summarised below is a reconciliation between statutory results to adjusted results. The Group believes that alternative
performance measures such as adjusted EBITDA are commonly reported by companies in the markets in which it competes and
are widely used by investors in comparing performance on a consistent basis without regard to factors such as depreciation and
amortisation, which can vary significantly depending upon accounting methods (particularly when acquisitions have occurred), or based
on factors which do not reflect the underlying performance of the business. The adjusted profit after tax earnings measure is also used
for the purpose of calculating adjusted earnings per share.
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Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Notes to the Financial Statements continued
5. Operating profit for the year continued
Alternative Performance Measures (APM) continued
Statutory Operating profit
Amortisation of Development cost and acquired Intellectual Property
Amortisation of other intangibles
Depreciation on Property, Plant & Equipment
Depreciation of right-of use assets
Amortisation of software and customer contracts & relationships
Other exceptional costs
Employee related share option charges
Adjusted Operating Profit (EBITDA)
6. Other items
Acquisition related costs
Employee related share option charges (including employer related taxes)
– Internal systems transformation programme “VERITAS”
– 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
2021
£’000
8,888
1,008
25
650
985
947
2,504
1,628
2020
£’000
9,108
1,245
23
735
1,059
1,021
(143)
1,815
16,635
14,863
2021
£’000
(765)
(1,628)
(1,715)
–
–
(24)
(1,739)
(947)
(5,079)
(299)
(5,378)
619
(4,759)
Change
£’000
(220)
(237)
2
(85)
(74)
(74)
2,647
(187)
1,772
2020
£’000
814
(1,815)
–
(123)
(36)
(512)
(671)
(1,021)
(2,693)
(307)
(3,000)
1,005
(1,995)
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 of the acquisition of Semestry Limited, and the acquisition of
Eveoh BV’s assets into Semestry Netherlands BV in the period total £832,000 (2020: £nil). Under IFRS 3 these amounts were expensed as
they are not eligible for capitalisation. These are considered to be one-off costs in the year. In 2021 accounting for changes in the fair value
of the contingent deferred consideration have been remeasured at relevant reporting dates as part of the earn-out agreement with Tribal
Dynamics Limited, and the corresponding gain has been recognised in the income statement (2021: £(67,000): 2020: £(814,000))
Employee related share option charges. The numbers above include:
• share-based payments (see Note 22) plus foreign exchange (2021: £27,000: 2020: £(37,000));
• the movement in associated employers taxes accrual (2021: £494,000: 2020: £153,000);
• the amounts accrued and paid on dividends on share options that have met performance conditions (2021: £(10,000): 2020: £195,000).
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
Notes to the financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section Annual Report & Accounts 2021
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Financial Statements
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• a nominal value paid to employees as a bonus (2021: £65,000: 2020: £128,000). 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.
Other items are detailed below:
• during 2020 and 2021 the Group has been running the Veritas Programme. This includes an upgrade to its accounting system
(Microsoft Dynamics D365) and is part of a wider implementation of a new target operating model and processes to provide greater
operating efficiencies and reporting functionalities. Following clarified guidance issued in relation to IAS 38, £181,000 of costs
capitalised in 2020 have been expensed to the income statement alongside £1,534,000 of costs in 2021. The upgrade is material
and non-recurring in nature;
•
•
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 additional funding and administration charges (2021: £nil: 2020: £123,000);
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 in 2020. The amounts expensed are the excess not covered by the Group’s Insurance policy. All costs were
fully settled in 2020; and
•
restructuring and associated costs relate to the restructuring of the Group’s operations (2021: £24,000: 2020: £512,000).
Amortisation of software and customer contracts and relationships: Amortisation arising on the fair value of intangible assets acquired
is separately disclosed. (2021: £947,000: 2020: £1,021,000).
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 (2021: £299,000: 2020: £307,000).
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*
2021
number
848
88
936
2021
£’000
44,224
4,179
2,022
185
1,068
51,678
2020
number
798
95
893
2020
£’000
38,452
3,288
1,717
556
1,534
45,547
*
Includes £(10,000) (2020: £195,000) amounts paid and accrued on dividends on share options that have met performance conditions.
The total payroll costs above include £7,709,000 (2020: £5,777,000) capitalised as development costs.
Net interest expense relating to pension schemes of £14,000 (2020: £10,000) and administrative expenses of £23,000
(2020: £23,000) are reported elsewhere and are therefore excluded from the figures above.
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Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Notes 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
2021
£’000
–
249
6
255
2020
£’000
6
41
6
53
2021
£’000
2020
£’000
70
45
14
101
230
299
299
529
2021
£’000
(319)
2,017
(103)
1,595
(2)
28
26
1,621
147
65
10
123
345
307
307
652
2020
£’000
67
1,800
33
1,900
188
63
251
2,151
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:
Notes to the financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section Annual Report & Accounts 2021
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Profit before tax on continuing operations
Tax charge at standard UK rate of 19% (2020: 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
Movement in tax provision
Effect of changes in tax rates
Tax expense for the year
2021
£’000
8,614
1,637
688
190
(74)
(13)
(174)
(47)
84
(371)
(299)
1,621
2020
£’000
8,509
1,617
654
134
96
(11)
30
(47)
5
–
(327)
2,151
In addition to the amount charged to the income statement a current tax credit of £53,000 (2020: £66,000) and a deferred tax charge
of £395,000 (2020: credit of £343,000) together with the prior year deferred tax credit of £586,000 (relating to a reduction in the
2020 deferred tax asset due to the reduced expected future deductions available in relation to Share Schemes, see note 21) has been
recognised directly in equity during the year in relation to Share Schemes.
A deferred tax charge of £131,000 (2020: credit of £89,000) 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 2021. Under IFRIC 23 management have reviewed this uncertain tax provision and 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% (2020: 19%). Tax for
other jurisdictions is calculated at the prevailing rates in the respective jurisdictions.
In the 3 March 2021 Budget, it was announced that the UK tax rate will increase to 25% from 1 April 2023. As the rate of 25% has been
substantively enacted at the balance sheet date, the deferred tax balances have been calculated at 25%. Where the underlying timing
differences are expected to unwind before 1 April 2023, the deferred tax on those balances have continued to be calculated at 19%.
11. Dividends
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 December 2020 of 1.2 pence
(Interim dividend for the year ended 31 December 2020: 1.1 pence) per share
Proposed final dividend:
Proposed final dividend for the year ended 31 December 2021 of 1.3 pence
(year ended 31 December 2020: 1.2 pence) per share
2021
£’000
2020
£’000
2,505
2,254
2,735
2,470
The Board regularly reviews the available distributable reserves of Tribal Group plc to ensure they are protected for future dividend
payments.
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Strategic Report
Governance
Financial Statements
Notes to the Financial Statements continued
12. Earnings per share
Basic 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
2021
thousands
2020
thousands
207,934
7,047
214,981
203,986
4,230
208,216
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
7,125,172 (2020: 12,796,406). This includes 876,512 options in the 2019 SAYE Scheme (2020: 1,028,396).
The adjusted basic and diluted earnings per share figures shown on the consolidated income statement on page 68 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
Earnings per share
Basic
Diluted
Adjusted net profit
Adjusted earnings per share
Basic
Diluted
Profit for the year attributable to equity shareholders
Add back:
Amortisation of IFRS intangibles
Share-based payments
Internal systems transformation programme “VERITAS”
Unwinding of discounts
Movement in deferred consideration
Other acquisition costs
Other items (net of tax)
Total adjusting items
Adjusted earnings
2021
£’000
6,993
3.4p
3.2p
2020
£’000
6,358
3.1p
3.1p
11,752
8,353
5.7p
5.5p
4.1p
4.0p
Profit for the year
Earnings per share
2021
£’000
6,993
1,083
1,400
1,460
299
(67)
832
(248)
4,759
11,752
2020
£’000
6,358
800
1,376
–
307
(814)
–
326
1,995
8,353
2021
£’000
3.4p
2020
£’000
3.1p
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2.3p
5.7p
1.0p
4.1p
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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
2021
£’000
107,892
2,543
(622)
109,813
81,231
81,231
28,582
26,661
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)
2021
£’000
25,048
3,534
28,582
2020
£’000
23,127
3,534
26,661
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 2022. 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 (2020: 2%) and 2% for ES (2020: 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 10.8% (2020: 11.0%). 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 31% and 301% would trigger an impairment in SIS and ES respectively. A decline in growth rate to (22%) in SIS
and (110%) 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 £103.9 million and £16.5 million in SIS and ES respectively.
As a result, management does not believe a reasonably possible change in the key assumptions may cause impairment.
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Financial Statements
Notes to the Financial Statements continued
14. Other intangible assets
Acquired
Customer
contracts &
relationships
£’000
Acquired
Software
£’000
Acquired
intellectual
property
£’000
Development
costs
£’000
Business
systems
£’000
Software
licenses
£’000
Total
£’000
Cost
At 1 January 2020
Additions
Exchange differences
At 31 December 2020
and 1 January 2021
Acquisitions (note 33)
Additions
Disposals
Exchange differences
At 31 December 2021
Amortisation
At 1 January 2020
Charge for the year
Exchange differences
At 31 December 2020
and 1 January 2021
Acquisitions (note 33)
Charge for the year
Disposals
Exchange differences
At 31 December 2021
Carrying amount
At 31 December 2021
At 31 December 2020
9,831
–
462
10,293
2,305
–
–
(365)
12,233
7,137
535
469
8,424
–
196
8,620
1,289
–
–
(156)
9,753
5,677
486
136
8,141
6,299
–
529
–
(365)
8,305
3,928
2,152
–
418
–
(111)
6,606
3,147
2,321
1,873
–
–
1,873
–
–
–
–
36,513
6,902
204
43,619
1,237
10,224
(905)
(162)
1,873
54,013
1,489
63,213
5,083
227
9
–
–
5,319
1,489
–
–
(4,496)
(5)
818
–
–
–
(1)
1,488
7,129
871
71,213
4,831
10,224
(5,401)
(689)
80,178
43,744
2,289
804
23,893
1,170
192
4,893
1,485
20
7
3
–
25,255
4,920
1,488
46,837
366
933
–
(155)
–
24
(4,315)
(5)
624
–
1
–
(1)
366
1,980
(4,315)
(637)
1,488
44,231
809
26,399
659
75
–
734
–
75
–
–
1,064
1,139
27,614
18,364
194
399
–
1
35,947
24,376
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 3 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 £0.2m (2020: £0.4m). Phase I of the D365
implementation was fully capitalised and is being amortised over a period of ten years. The Veritas programme commenced in October
2020 and is part of a wider implementation of a new target operating model and processes to provide greater operating efficiencies
and reporting functionalities across the Group. In line with IAS 38 £181,000 of costs capitalised in 2020 no longer meet the criteria
to be capitalised as a software intangible and have been expensed to the 2021 income statement. All costs in 2021 have also been
expensed in 2021.
In addition a review of all business systems was undertaken in the year and £4.3m of fully depreciated assets have been written off as
no longer in use.
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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.
A review of the Group’s capitalisation to date has been undertaken resulting in £0.9m of early capitalised costs being expensed, as
the Group now has clarity on the future Edge offering. The “Dynamics” product has now been incorporated into Edge (included within
development costs)and the amortisation time frame of this is expected to be fifteen years in line with the rest of Edge. Subsequently
management have changed the UEL of this asset from 5 to 15 years in accordance with IAS 8.36. This has been treated as a change in
accounting estimate from 1 January 2021 and therefore prior periods have not been adjusted as it is not considered practical to do so.
The net impact of this change in accounting estimate is a reduction in the amortisation charge of £88,000. The future impact of this
change is not considered material.
The impairment testing allocates all assets relating to specific CGUs, including goodwill, other intangibles, property, plant and
equipment and net current assets and liabilities. Semestry and Eveoh acquired assets have been allocated to the SIS CGU.
15. Property, plant and equipment
Cost
At 1 January 2020
Additions
Disposals
Exchange differences
At 31 December 2020 and 1 January 2021
Additions
Exchange differences
At 31 December 2021
Accumulated depreciation and impairment
At 1 January 2020
Charge for the year
Exchange differences
At 31 December 2020 and 1 January 2021
Charge for the year
Exchange differences
At 31 December 2021
Net book value
At 31 December 2021
At 31 December 2020
Leasehold
improvements
£’000
Fixtures, fittings and
other equipment
£’000
3,103
–
–
50
3,153
5
(49)
3,109
2,677
135
39
2,851
108
(40)
2,919
190
302
5,788
356
(13)
129
6,260
558
(121)
6,697
4,776
599
118
5,493
542
(110)
5,925
772
767
Total
£’000
8,891
356
(13)
179
9,413
563
(170)
9,806
7,453
734
157
8,344
650
(150)
8,844
962
1,069
There are £8.5m (2020: £7.7m) worth of assets that are fully depreciated within property, plant and equipment.
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Governance
Financial Statements
Notes to the Financial Statements continued
16. Trade and other receivables
Amounts receivable for the sale of services
Less: loss allowance
Other receivables
Prepayments
2021
£’000
5,629
(187)
5,442
693
4,467
2020
£’000
7,701
(231)
7,470
413
3,153
10,602
11,036
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 (2020: 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 three customers (2020: none) who held balances outstanding
of more than 5% (2021: £1.2m; 2020: £nil). The average age of receivables is 31 days (2020: 44 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.
At 31 December 2021 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%
8%
33%
16%
36%
5,024
241
123
134
107
5,629
68
19
41
21
38
187
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%
17%
25%
5,669
760
205
801
266
7,701
67
29
13
55
67
231
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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
2021
£’000
231
(34)
(81)
71
187
2020
£’000
441
(52)
(45)
(113)
231
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.
Revenue provisions recognised in the income statement in respect of contract assets amount to £0.7m (2020: £0.8m).
17. Cash and cash equivalents
Cash and cash equivalents of £5.9m (2020: £9.5m) 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.
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 one of the Group’s main banks has been downgraded in the period. The following table has been sourced from
Moodys credit ratings.
Aa3
A1
A2
A3
Baa2
Cash and cash equivalents include the following for the purposes of the statement of cash flows:
Cash and cash equivalents
2021
£’000
440
1,273
3,047
1,113
51
5,924
2021
£’000
5,924
2020
£’000
700
8,157
–
613
50
9,520
2020
£’000
9,520
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Financial Statements
Notes to the Financial Statements continued
18. Trade and other payables
Current
Trade payables
Other taxation and social security
Other payables
Non-current
Other payables
Total
2021
£’000
1,712
2,728
1,641
6,081
131
131
6,212
2020
£’000
892
2,522
1,246
4,660
40
40
4,700
The average credit period taken for trade purchases is 17 days (2020: 12 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
19. Borrowings
2021
£’000
826
815
1,641
2020
£’000
564
682
1,246
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 August 2022 and October 2022 respectively. As at 31 December 2021, the Group had cash
and cash equivalents of £5.9m (2020: £9.5m).
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 extend was approved by HSBC on 15 March 2021, the second extension was approved by HSBC
on 5 January 2022, effective 21 January 2022. The loan was fully drawn down in 2021 and repaid in full before 31 December 2021.
The facility was put in place to cover general corporate and working capital requirements of the Group.
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Property
related
£’000
1,030
32
(31)
15
(107)
(19)
920
Deferred
Contingent
Consideration
£’000
1,392
1,639
(67)
299
(2,180)
–
1,083
Other
£’000
158
–
3
–
–
(8)
153
Total
£’000
2,580
1,671
(95)
314
(2,287)
(27)
2,156
Property
related
£’000
Deferred
Contingent
Consideration
£’000
Other
£’000
Total
£’000
113
807
920
107
923
1,030
1,083
–
1,083
1,392
–
1,392
153
–
153
158
–
158
1,349
807
2,156
1,657
923
2,580
20. Provisions
At 1 January 2021
On acquisition of subsidiary
Net release of provision
Unwinding of discount
Utilisation of provision
Exchange rate movement
At 31 December 2021
The provisions are split as follows:
2021
Within one year
After more than one year
Total
2020
Within one year
After more than one year
Total
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 estimated future dilapidation costs arising from exiting leasehold properties, under IAS 37.
This provision is discounted at 2.65%
Other provision relates to the recoverability of input VAT in the Philippines. This provision is not discounted.
Deferred consideration reflects amounts in respect of the acquisitions of subsidiary undertakings payable over a period of up to
2 years. Certain amounts are contingent upon the performance of the acquired entities with amounts reflecting management’s
best estimate of the future profitability of those entities and the resultant payment due under the terms of the Sale and Purchase
Agreement. The deferred consideration is discounted at 18%.
Deferred contingent consideration in 2021 reflects amounts in respect of the acquisition of Semestry Limited and the assets of
Eveoh BV. The amounts have been calculated upon the performance of the entities in the year to 31 December 2021 and the resultant
payments are due under the Sale and Purchase Agreements. Deferred contingent consideration amounts to £564,000 for Semestry
Limited and £519,000 for the assets of Eveoh BV. At 31 December 2020 there was £1,392,000 of deferred contingent consideration
due to the owners of Tribal Dynamics Limited. During 2021 a final payment of £1,325,000 was made with the remaining balance
credited to the income statement (see note 6).
The remaining deferred consideration for Semestry and Eveoh is likely to be paid in 2022 and hence is all classified as current.
Deferred contingent consideration was misclassified as Other payables in Trade and other payables in 2020. £1,392,000 has been
reclassed as a provision in 2020 as this better reflects the nature of the balance.
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Financial Statements
Notes 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
Short-term timing differences
Share-based payments
Tax losses
Retirement benefit schemes
Deferred tax liabilities
Depreciation in excess of capital allowances
Intangible assets
2021
£’000
1,593
688
2,899
53
5,233
(1,143)
(1,810)
(2,953)
2,280
Restated
2020
£’000
1,022
668
2,371
182
4,243
(309)
(941)
(1,250)
2,993
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 £2,899,000 (2020: £2,371,000) on tax losses carried forward in the UK of
£13,072,000 (2020: £12,477,000). The Group has losses of £1,092,000 (2020: £195,000) in the UK on which no deferred tax has
been recognised. The Group and Company have no further unrecognised deferred tax assets or liabilities.
The movement in deferred tax during the year and prior year was as follows:
At 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 as previously reported
Prior year equity adjustment
At 31 December 2020 restated
Foreign exchange differences
Acquisitions
(Charge)/credit to income statement
Items taken directly to equity
Credit recognised in consolidated statement of comprehensive income
At 31 December 2021
Temporary
differences on
non-current
assets
£’000
Retirement
defined
benefit
schemes
£’000
434
55
(798)
–
–
(309)
–
(309)
5
–
(839)
–
–
(1,143)
91
–
2
–
89
182
–
182
–
–
2
–
(131)
53
Other
temporary
differences
£’000
2,844
(26)
545
343
–
3,706
(586)
3,120
(20)
(732)
811
191
–
Total
£’000
3,369
29
(251)
343
89
3,579
(586)
2,993
(15)
(732)
(26)
191
(131)
3,370
2,280
The prior period adjustment of £586,000 relates to a reduction in the 31 December 2020 deferred tax asset due to the reduced
expected future deductions available in relation to Share Schemes; in addition to an adjustment in respect to the reversal of intra-group
recharges capitalised. These arose due to an inaccuracy in the inputs in the prior year calculations. The balances impacted are deferred
tax asset and accumulated losses.
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Included in other temporary differences are deferred tax assets of £2,899,000 (2020: £2,371,000) relating to tax losses carried
forward and other timing differences of £2,281,000 (2020: £2,276,000). The balance also includes a deferred tax liability, in relation to
intangible assets of £1,810,000 (2020: £941,000).
The (charge)/credit taken to the income statement for items in ‘other temporary differences’ is split as follows: Tax losses £528,000
(2020: £46,000); Intangible assets £(137,000) (2020 £(152,000)); Share schemes £(171,000) (2020: £(157,000)); and other timing
differences £(246,000) (2020: £(282,000)).
The deferred tax assets are expected to be settled as follows: £513,000 less than 12 months from 31 December 2021 and
£4,720,000 greater than 12 months from 31 December 2021. The deferred tax liabilities are all expected to reverse greater than
12 months from 31 December 2021.
During the period, legislation was substantively enacted to increase the UK corporation tax rate to 25% with effect from 1 April 2023.
Where relevant, the deferred tax balances have been restated at the future effective rate of 25%. This has had an impact in the period
of a charge of £355,000 (2020: £nil). Of this £299,000 of the impact has been charged to the income statement and is included within
the total charge to the income statement of £26,000 (2020: £251,000) disclosed above.
22. Share-based payments
The Group recognised the following charges/(credit) related to equity-settled share-based payment transactions:
2019 SAYE
LTIPs awarded in 2021
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
Total
2021
£’000
40
66
485
270
175
47
(31)
2020
£’000
47
–
220
181
261
445
222
1,052
1,376
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 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. As at 31
December 2021 19,329 options had been exercised by employees deemed as good leavers.
LTIPs awarded in 2021
New awards in 2021 to Mark Pickett (275,510) and Diane McIntyre (204,081) 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 2021,
2022 and 2023.
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Financial Statements
Notes to the Financial Statements continued
22. Share-based payments continued
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 under the LTIP Scheme. These awards were granted subject to time
limit conditions. 50% of the options can be exercised from 1 July 2021 and 50% from 1 July 2022. During the year 509,000 options
were exercised.
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 those granted in September 2019 can only be
exercised after a three-year period if the share price is above 61.5p.
LTIPs awarded in 2018 (including the CSOP)
Awards in 2018 were made to Mark Pickett (251,256). These awards were granted subject to performance conditions based on
the Group’s Adjusted Operating Profit for the year ended 31 December 2018 and continued employment. These awards vested on
22 May 2021 and were exercised in June 2021.
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. The options met the three-year vesting condition on 26 March 2021. During 2021 1,996,415 options
were exercised.
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 and were exercised in April 2021.
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 2021 2,011,386 options were exercised.
Notes to the financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section Annual Report & Accounts 2021
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Tribal Group plc
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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 which could be met at any point over a three year
period. These awards have now vested. During 2021 150,000 options were exercised.
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 2021
1,920
£0.05
3,799
£0.05
7,875
£0.77
1,029
£0.58
Exercised during the year
(509)
£0.05
(649)
£0.05
(4,008)
£0.80
(19)
£0.58
Granted during the year
Lapsed during the year
–
–
479
£0.05
–
–
–
–
(100)
£0.05
(400)
£0.05
(1,228)
£0.75
(133)
£0.58
Outstanding at 31 December 2021
Exercisable at 31 December 2021
Weighted average remaining contractual
life (years)
Weighted average share price at date of
exercise
1,311
427
£0.05
£0.05
0.5
–
3,229
75
0.5
£0.05
£0.05
2,639
957
£0.73
£0.80
–
6.7
–
877
£0.58
–
0.5
–
–
–
£1.00
–
£1.00
–
£1.02
–
£0.97
*
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.
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Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Notes to the Financial Statements continued
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, 2020 and 2021 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 2017*
2 July 2017
26 March 2018
22 May 2018
7 June 2019
LTIPs LTIPs (inc CSOP) LTIPs (Inc CSOP)
LTIPs
£0.505
£0.05
0%
0.14%
68%
3.0
£0.316
£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
LTIPs
£0.78
£0.05
1%
0.14%
74%
5.0
LTIPs
£0.71
£0.05
1.57%
1.04%
26%
5.0
£0.61
27 June 2026
30 June 2027
2 July 2027 26 March 2028
22 May 2028
06 June 2029
£0.407
£0.374
£0.664
No of options issued
3,591,020
1,935,351
3,535,000
3,975,000
590,452
No of options outstanding
75,000
–
112,675
844,169
–
760,563
716,552
Date of grant
7 June 2019
16 Sept 2019
1 October 2019
7 July 2020
7 July 2020*
28 June 2021
Type of grant
Share price
Exercise price
Expected dividend yield
Risk-free interest rate
Expected volatility
Term (years)
Option fair value
Expiry date
LTIPs (inc CSOP)
£0.71
£0.71
1.57%
1.04%
26%
5.0
£0.32
LTIPs (Inc
CSOP)
£0.615
£0.615
1.79%
1.04%
26%
5.0
£0.28
SAYE
£0.647
£0.582
1.79%
1.04%
24%
3.0
£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
LTIPs
£0.98
£0.05
2.28%
0.85%
26%
5.0
£0.83
06 June 2029
15 Sept 2029
30 April 2023
06 July 2030
30 June 2030
28 June 2031
No of options issued
2,600,000
300,000
1,116,879
2,358,143
1,920,000
No of options outstanding
1,381,820
300,000
876,512
1,958,143
1,311,000
479,591
479,591
*
These awards have no market based performance conditions.
The expected term (the period from grant date to the estimated exercise date) 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.
Notes to the financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section Annual Report & Accounts 2021
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Financial Statements
Tribal Group plc
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23. Share capital
Allotted, called up and fully paid
At beginning of the year
Issued during the year
At end of the year
2021
number
2021
£’000
2020
number
205,698,309
10,285
199,579,784
4,676,064
234
6,118,525
2020
£’000
9,979
306
210,374,373
10,519
205,698,309
10,285
The Company has one class of Ordinary Shares of 5p each which carry no right to fixed income.
4,676,064 shares were issued during the year in order to satisfy exercises of share-based payment schemes. The exercise costs of 5p,
79.6p and 80p per share for the LTIPs resulted in cash receipts of £3.2m.
24. Other reserves
At 1 January 2020
Movement in relation to share-based payment (net)
At 31 December 2020 and 1 January 2021
Transfer between reserves
Movement in relation to share-based payment (net)
Capital
reserve
£’000
9,545
–
9,545
–
–
Merger
reserve
£’000
11,304
–
11,304
–
–
At 31 December 2021
9,545
11,304
Own share
reserve
£’000
Share-based
payment
reserve
£’000
(856)
–
(856)
530
–
(326)
6,036
897
6,933
(530)
1,052
7,455
Total
£’000
26,029
897
26,926
–
1,052
27,978
The capital reserve of £9.5m (2020: £9.5m) resulted from a share exchange when Tribal Group plc was listed in February 2001.
The merger reserve of £11.3m (2020: £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 (2020: £58.7m) in respect of related acquisitions deemed to be impaired.
The own share reserve of £(0.3)m (2020: £(0.9)m) represents the cost of 318,692 shares (2020: 827,692) in Tribal Group plc held by
the Employee Share Ownership Trust (EBT) to satisfy certain options under the Group’s share option schemes. During 2021 509,000
shares were sold from the EBT to satisfy options granted in 2020 under the LTIP Scheme (see note 22).
The share-based payment reserve represents the reserve arising from the application of IFRS 2.
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Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Notes to the Financial Statements continued
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
Balance at 1 January
Additions
Lease payments
Interest expense
Disposals during the year
Exchange differences
Balance 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
2021
£’000
3,342
445
(985)
(439)
(54)
2,309
2021
£’000
931
1,301
215
2,447
878
1,449
2,327
2021
£’000
3,571
262
(985)
(100)
(455)
34
2,327
2021
£’000
100
(6)
985
54
25
1,158
100
987
1,087
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
4,219
449
(980)
(112)
(69)
64
3,571
2020
£’000
123
(6)
1,059
43
34
1,253
112
980
1,092
Notes to the financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section Annual Report & Accounts 2021
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Financial Statements
Tribal Group plc
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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 2021, management does not intend to exercise termination options (i.e., break clauses) in the existing
leases. Total lease payments of £31,000 (2020: £32,000) were potentially avoidable had the Group exercised break clauses at the
earliest opportunity.
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 £405,000 (2020: £397,000) compared to total lease payments of £1,087,000 (2020: £1,092,000).
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
2021
£’000
52
2020
£’000
52
During 2021 the Group sub-leased an office building and classified the sub-lease as a finance lease. In December 2021 the tenant
exercised their right to break the sub-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
2021
£’000
–
–
–
–
–
–
2020
£’000
52
182
234
46
174
220
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 2021 was £2.0m
(2020: £1.7m), of which £2.0m (2020: £1.7m) related to defined contribution schemes and £nil (2020: £nil) to defined benefit schemes.
Contributions amounting to £0.4m (2020: £0.3m) were payable to the funds at the year end and are included in current liabilities.
Defined benefit schemes
At 31 December 2021, 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 31 years (2020: 32 years). Employer contributions amounting to £52,000 were paid in the
year ended 31 December 2021 (2020: £53,000). The accounting figures have been calculated using the valuation as at 31 December
2018, updated on an approximate basis to 31 December 2021 by a qualified independent actuary.
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Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Notes to the Financial Statements continued
26. Retirement benefit schemes continued
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. The last full actuarial
valuation of this scheme was carried out by a qualified independent actuary as at 5 April 2018.
The Tribal Education section of the Federated Pension Plan had 80 deferred members and 81 pensioners/dependents at the year-end.
The weighted average duration of the Defined Benefit Obligation is 23 years (2020: 23 years). Employer contributions amounting to £nil
were paid in the year ended 31 December 2021 (2020: £nil). The accounting figures have been calculated using the valuation as at
5 April 2018, updated on an approximate basis to 31 December 2021 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 2021 imply the following life expectations:
Aged 60 in 2021
Aged 60 in 2041
The mortality assumptions adopted at 31 December 2020 imply the following life expectations:
Aged 60 in 2020
Aged 60 in 2040
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
2021
% per annum
2020
% per annum
2.50–3.50
2.10–3.30
–
1.9
–
1.4
2.50–3.50
2.10–3.30
Males
86.8
88.4
Males
86.7
88.3
2021
£’000
5,569
2,959
178
84
8,790
Females
88.9
90.5
Females
88.8
90.4
2020
£’000
5,240
2,790
158
79
8,267
All equities and corporate bonds are quoted on active markets.
The sensitivities regarding the principal assumptions used to measure the schemes’ liabilities are set out below:
Notes to the financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section Annual Report & Accounts 2021
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Financial Statements
Tribal Group plc
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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 11%
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
2021
£’000
(9,005)
8,790
(215)
(215)
2021
£’000
8,267
115
503
52
(124)
(23)
8,790
2021
£’000
9,225
129
10
30
(265)
(124)
9,005
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
The Group’s contribution rate for 2021 and 2020 for the Prudential Platinum Fund and for the Federated Pension Plan was 0%
The Group expects to make contributions of £52,000 to the defined benefit schemes during the next financial year.
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Annual Report & Accounts 2021
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Governance
Financial Statements
Notes to the Financial Statements continued
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 gains/(losses) recognised in the consolidated statement of comprehensive income
2021
£’000
23
23
129
(115)
14
37
2021
£’000
503
(10)
235
728
2020
£’000
23
23
156
(146)
10
33
2020
£’000
493
6
(937)
(438)
Cumulative actuarial losses in the year to 31 December 2021 recognised in the consolidated statement of comprehensive income
since 1 April 2004 are £165,000 (In the year to 31 December 2020: cumulative losses of £893,000). 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
2021
£’000
(9,005)
8,790
(215)
503
6%
(10)
–
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%
No assets are invested in the Group’s own financial instruments, properties or other assets used by the Group.
Notes to the financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section Annual Report & Accounts 2021
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27. Notes to the cash flow statement
Operating profit 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 contingent deferred consideration
Research and development tax credit
Net pension credit
Other non-cash items
Operating cash flows before movements in working capital
Increase in receivables
Increase/(decrease) in payables
Net cash from operating activities before tax
Net tax paid
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
2021
£’000
8,888
650
985
1,980
1,078
(67)
(204)
(29)
874
14,155
(3,093)
4,472
15,534
(1,645)
13,889
2021
£’000
15,534
2021
£’000
5,924
5,924
2021
£’000
9,520
(3,430)
(166)
5,924
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
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Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Notes to the Financial Statements continued
29. Contingent liabilities
The Company and its subsidiaries have provided performance guarantees issued by its banks on its behalf, in the ordinary course of
business, totalling £1.2m (2020: £0.1m). These are not expected to result in any material financial loss and the likelihood of using these
guarantees is assessed as remote.
As disclosed in Note 33, Tribal Holdings Limited, Tribal Dynamics Limited , Tribal Dynamics Holdings Limited, Semestry 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 £60,736,000
(2020: £46,027,000). 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
2021
£’000
5,924
46,340
12.8%
2020
£’000
9,520
38,218
24.9%
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.
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 2021
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
5,924
6,135
12,059
–
–
–
–
–
–
–
1,576
9,253
–
10,829
–
–
–
–
–
1,083
1,083
Total
£’000
5,924
6,135
12,059
1,576
9,253
1,083
11,912
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113
31 December 2020
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
–
9,618
–
–
–
–
–
1,392
1,392
*
Excluding amounts that relate to non-financial instruments of tax, prepayments and contract assets.
**
Excluding amounts that relate to non-financial instruments of tax
The above tables have been stated at undiscounted values with the exception of the 2021 and 2020 contingent deferred
consideration amounts. The undiscounted value of the contingent deferred consideration is £1,267,000 (2020: £1,476,000)
versus a discounted value of £1,083,000 (2020: £1,392,000).
In addition the Group’s financial liabilities held at fair value, are categorised by the following valuation methodology:
•
•
•
Level 1 : fair value derived from quoted prices in active markets for identical assets or liabilities
Level 2 : fair value derived from observable inputs other than quoted prices included in Level 1
Level 3 : fair value derived from inputs for the asset or liability that are not based on observable market data
31 December 2021
Financial liabilities at fair value
Deferred contingent consideration
31 December 2020
Financial liabilities at fair value
Deferred contingent consideration
Level 1
£’000
–
–
Level 1
£’000
–
–
Level 2
£’000
–
–
Level 2
£’000
–
–
Level 3
£’000
1,083
1,083
Level 3
£’000
1,392
1,392
For the movement in deferred contingent consideration please refer to note 20.
There are no financial assets held at fair value (2020: £nil).
Total
£’000
9,520
7,883
17,403
2,138
7,480
1,392
11,010
Total
£’000
1,083
1,083
Total
£’000
1,392
1,392
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Financial Statements
Notes to the Financial Statements continued
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 2021 (2020: 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 2021 (2020: none).
The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the reporting date are
as follows:
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
Singapore dollar
Assets
Liabilities
31 December 2021
£’000
31 December 2020
£’000
31 December 2021
£’000
31 December 2020
£’000
333
2,051
1,212
89
–
671
78
185
931
424
207
926
153
4,666
582
88
84
1,008
722
256
265
479
350
19
7,107
8,672
1
13
262
–
–
–
–
–
–
–
–
55
331
6
–
149
–
–
2
2
1
–
–
8
–
168
Foreign currency sensitivity analysis
The Group is primarily exposed to the following currencies: US dollar, euro, Australian dollar, New Zealand dollar, Singapore 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 £738,000 (2020: £847,000). 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.
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Tribal Group plc
115
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 2021 (2020: 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.
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 three customers (2020: nil) who held balances outstanding of more than 5% (2021 £1.2m;
2020: £nil).
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 2021 or
31 December 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 2021 and 31 December 2020 was determined as follows for both trade
receivables and contract assets:
31 December 2021 £’000
Current
30–60
61–90
91–180
Expected loss rate
Trade receivables
Contract assets
General loss allowance
1%
5,024
7,373
68
8%
241
–
19
33%
123
–
41
16%
134
–
21
31 December 2020 £’000
Current
30–60
61–90
91–180
Expected loss rate
Trade receivables
Contract assets
General loss allowance
1%
5,669
3,973
67
4%
760
–
29
6%
205
–
13
7%
801
–
55
180+
36%
107
–
38
180+
25%
266
–
67
Total
5,629
7,373
187
Total
7,701
3,973
231
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 2021 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.
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Financial Statements
Notes to the Financial Statements continued
30. Financial instruments continued
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 2021 was £nil (2020: £nil).
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 (2020: £nil). The Group expects to meet its obligations from operating cash flows.
The Group also had cash balances at 31 December 2021 of £5.9m (2020: £9.5m) 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 extend was approved by HSBC on 15 March 2021, the second extension was approved by HSBC
on 5 January 2022, effective 21 January 2022. The loan was fully drawn down in 2021 and repaid in full before 31 December 2021.
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 28 June 2021, Tribal Group plc (the Company) granted nil-cost options over a total of 479,591 Ordinary Shares (representing
approximately 0.20% of the Company’s issued shares) to Mark Pickett (275,510) and Diane McIntyre (204,081) 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 2021, 2022 and 2023. The options may not be exercised before 28 June 2024.
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
2021
£’000
2,524
26
732
3,282
2020
£’000
2,874
70
901
3,845
Included within Directors’ salaries and short-term employee benefits are pension costs of £26,000 (2020: £25,000) in respect of
accruals and payments made to one (2020: 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 51 to 55 and form part of these audited financial statements.
Arrangements with the Group’s pension schemes are set out in Note 26.
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117
32. Acquisition of subsidiary
On 1 April 2021, Tribal Group plc acquired 71.25% of the issued share capital of Semestry Limited (Semestry), a company incorporated
in the UK that is a leading supplier of cloud based scheduling and timetabling software to the higher education market. On 4 May 2021,
the Group acquired the remaining 28.75 %.
The Acquisition expands Tribal’s product portfolio, adding Scheduling and Timetabling capability to the Group’s Tribal Edge ecosystem of
Higher Education solutions; this provides additional upsell opportunity to the Group’s existing and new customers as well as cross-sell
opportunities for Tribal’s existing applications into Semestry’s existing customer base.
This transaction has been accounted for by the acquisition method of accounting. This comprises an initial cash consideration of
£4.5m and a deferred contingent cash consideration of £1.5m (the discounted figure at acquisition being £1.1m) which is payable on
the annual recurring revenue (ARR) growth of the acquired business. As per the Sale and Purchase agreement, deferred contingent
consideration can be satisfied over a two year period from completion. The first payment of £854,000 was made in October 2021 after
review of the ARR growth in the period to September 2021.
The carrying amount of each class of Semestry Limited’s assets before combination is set out below
:
Intangible assets
Tangible assets
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Contract liabilities
Deferred tax liabilities
Net assets/(liabilities) acquired
Goodwill arising on acquisition
Consideration – Satisfied by
Initial cash consideration
Deferred contingent consideration
Book value
£’000
Fair value
adjustments
£’000
Acquisition
adjustments
£’000
Provisional
fair value
£’000
871
14
357
317
(173)
(466)
–
920
–
(14)
46
–
(52)
–
–
(20)
2,874
3,745
–
–
–
–
(546)
2,328
–
403
317
(225)
(466)
(546)
3,228
2,383
4,466
1,145
5,611
The initial consideration paid to Semestry was satisfied through existing cash balances. The acquisition led to a net cash out-flow taking
into account the cash acquired of £4,149,000.
Intangible assets arising on acquisition are in respect of customer relationships and contracts £1.0m and software £1.9m, together
with £0.9m of assets that relate to the net book value of the capitalised development costs of the Semestry product.
The goodwill arising on acquisition is attributable to synergies, the assembled workforce, and potential relationships.
Semestry Limited contributed revenue of £1.1m and operating profit of £0.7m to the Group for the period between the date of
acquisition and the balance sheet date. Acquisition related costs amounted to £0.7m and have been expensed through the income
statement.
Had the acquisition occurred on 1 January 2021, the Group’s revenue would have increased by £0.3m and its operating profit increased
by £0.1m.
Tribal Group incorporated a Dutch legal entity on 14 September 2021 (Semestry Netherlands BV) for the purpose of acquiring the
assets and business of Eveoh BV on 1 October 2021. Eveoh BV is a supplier of cloud timetabling software to the higher education
market. The software allows institutions to publish personalised student and staff timetables, via the web or their mobile device and is
currently in use at more than forty institutions in Europe and the UK.
The software will be integrated with the recently acquired Semestry timetabling and scheduling solutions and will be applicable across
Tribal’s extensive customer base, as universities seek to increase engagement with their students and offer more personalised
experiences.
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Financial Statements
Notes to the financial statements continued
Notes to the Financial Statements continued
32. Acquisition of subsidiary continued
The transaction has been accounted for by the acquisition method of accounting. This comprises an initial cash consideration of £0.1m
and a deferred contingent cash consideration of £0.7m (the discounted figure at acquisition being £0.5m) which is payable on the
annual recurring revenue (ARR) growth of the acquired business. Deferred contingent consideration is expected to be satisfied in 2021
and 2022.
The carrying amount of each class of Eveoh BV assets before combination is set out below:
Intangible assets
Tangible assets
Trade and other payables
Contract liabilities
Deferred tax liabilities
Net assets/(liabilities) acquired
Goodwill arising on acquisition
Consideration – Satisfied by
Initial cash consideration
Deferred contingent consideration
Book value
£’000
Fair value
adjustments
£’000
Acquisition
adjustments
£’000
Provisional
fair value
£’000
9
(126)
–
(117)
–
(9)
(17)
–
–
(26)
720
–
–
(197)
523
720
–
(17)
(126)
(197)
380
160
46
494
540
The initial consideration paid was satisfied through existing cash balances. The acquisition led to a net cash out-flow.
Intangible assets arising on acquisition are in respect of customer relationships and contracts £298,000 and software £422,000.
The goodwill arising on acquisition is attributable to synergies, the assembled workforce, and potential relationships.
Semestry Netherlands BV contributed revenue of £74,000 and operating loss of £25,000 to the Group for the period between the
date of acquisition and the balance sheet date. Acquisition related costs amounted to £145,000 and have been expensed through
the income statement.
33. 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, 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,
Semestry 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 2021.
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Tribal Group plc
119
Information about the composition of the Group at the end of the reporting period is as follows:
Name of entity
Address of the registered office
Tribal Education
Limited
Kings Orchard, 1 Queen Street, Bristol, BS2 0HQ, UK
Nature of business
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%
International Graduate
Insight Group Limited
Kings Orchard, 1 Queen Street, Bristol, BS2 0HQ, UK
Tribal Dynamics Limited Kings Orchard, 1 Queen Street, Bristol, BS2 0HQ, UK
Educational consultancy
services
Education related systems
and solutions
–
–
100%
100%
100%
Tribal Dynamics
Holdings Limited
Kings Orchard, 1 Queen Street, Bristol, BS2 0HQ, UK
Dormant Company
100%
100%
Semestry Limited
Netherdale Industrial Estate, Galashiels, TD1 3EY, UK
Education related systems
and solutions
Education related systems
and solutions
100%
100%
100%
100%
Lulofsstraat 55, Unit 39, The Hague, NL
Semestry Netherlands
BV
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%
Tribal Middle East
WLL Limited
Municipality 3457, Building 1398, Road 4626, Area 346, Sea
Front, Manama, Kingdom of Bahrain
Education related systems
and solutions
100%
100%
Tribal Group
(Malaysia) SDN
12th floor, Menara Symphony, No 5, Jalan Professor
Khoo Kay Kim, Seksyen 13, 46200 Petaling Jaya,
Selangor Darul Ehsan, Malaysia
Education related systems
and solutions
Tribal Systems
Canada Limited
1750–1755 West Georgia Street, PO Box 11125, Vancouver,
BC V6E 3PE, Canada
Education related systems
and solutions
Human Edge Software
Philippines INC
Units 1001,1005,1006, 10th floor Cyberpod One, Eton
Centris, Barangay Pinahan, Quezon City, Philippines 1100
Education related systems
and solutions
Class Measure Inc
100 Tower Park Drive, Suite A, Woburn MA 01801, USA
Educational
consultancy services
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
–
–
–
–
–
–
100%
100%
100%
100%
100%
100%
34. 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 extend was approved by HSBC on 15 March 2021, the second extension was approved by HSBC
on 5 January 2022, effective 21 January 2022. The loan was fully drawn down in 2021 and repaid in full before 31 December 2021.
The facility was put in place to cover general corporate and working capital requirements of the Group.
Tribal Group plc
120
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Company only Balance Sheet
As at 31 December 2021
Fixed
Investments
Right of use assets
Total fixed assets
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
37
38
39
40
40
41
42
42
42
42
42
42
42
42
42
2021
£’000
84,762
169
84,931
7,705
1,279
5
8,989
93,920
(43,534)
(34,545)
50,386
(108)
50,278
10,519
18,961
11,304
(326)
7,455
6,023
(1,230)
(2,505)
77
2,365
2020
£’000
77,774
–
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
50,278
49,640
Notes 35 to 45 form part of these financial statements.
The financial statements on pages 120 to 126 of Tribal Group plc (registered number 04128850) were approved by the Board of
Directors and authorised for issue on 16 March 2022. They were signed on its behalf by:
Richard Last
Director
Mark Pickett
Director
Annual Report & Accounts 2021
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Governance
Financial Statements
Tribal Group plc
121
Company only Statement of Changes in Equity
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 2020
9,979
15,539
11,304
(856)
6,036
9,145
51,147
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
–
239
67
–
–
–
–
–
–
412
–
–
–
–
Contributions by and distributions to owners
306
412
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(479)
(919)
–
–
(919)
239
–
–
(2,254)
(2,254)
1,339
37
–
–
–
51
1,339
37
51
897
(2,203)
(588)
At 1 January 2021
10,285
15,951
11,304
(856)
6,933
6,023
49,640
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
–
–
234
3,010
–
–
–
–
–
–
–
–
–
–
Contributions by and distributions to owners
234
3,010
–
–
–
–
–
–
–
–
At 31 December 2021
10,519
18,961
11,304
–
–
–
–
530
(530)
(1,230)
(1,230)
–
–
3,244
–
–
–
–
–
530
(326)
–
(2,505)
(2,505)
1,078
(26)
–
–
1,078
(26)
–
77
77
522
(2,428)
1,868
7,455
2,365
50,278
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Annual Report & Accounts 2021
Strategic Report
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Financial Statements
Notes to the Company Balance Sheet
35. 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.
36. 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 £1.2m (2020: £0.9m). Dividends paid amounted to £2,505,000
(2020: £2,254,000). The independent auditors’ remuneration for audit services to the Company was £161,000 (2020: £150,000).
37. Investments
Cost
At 1 January 2020
Capital contribution relating to share-based payments
Additional investment in subsidiary
At 31 December 2020 and at 1 January 2021
Capital contribution relating to share-based payments
Acquisition of subsidiary
Additional investment in subsidiary
At 31 December 2021
Shares in subsidiary
undertakings
£’000
Long-term
loans
£’000
22,682
626
218
23,526
741
6,151
96
30,514
54,248
–
–
54,248
–
–
–
54,248
Total
£’000
76,930
626
218
77,774
741
6,151
96
84,762
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 33 to the consolidated financial statements.
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Tribal Group plc
123
38. Debtors
Amounts owed by Group undertakings
Other debtors
Current tax
2021
£’000
7,472
233
–
7,705
2020
£’000
6,449
180
103
6,732
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.
39. Deferred tax asset
Deferred taxation
At start of year
Charge 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
2021
£’000
878
356
45
1,279
2021
£’000
194
1,085
1,279
2020
£’000
855
38
(15)
878
2020
£’000
148
730
878
Included in other temporary differences are deferred tax assets of £1,047,000 (2020: £714,000) relating to tax losses carried forward
and other timing differences of £38,000 (2020: £16,000).
Deferred tax assets are all non-current assets.
40. Creditors
Amounts falling due within one year
Amounts owed to Group undertakings
Trade and other creditors
Accruals
Lease liabilities
Contingent deferred consideration provision (see note 20)
2021
£’000
41,778
161
425
87
1,083
43,534
2020
£’000
33,772
199
404
–
1,392
35,767
All amounts owed to Group undertakings are unsecured and have no fixed repayment date. No interest is charged and amounts are
repayable on demand.
Tribal Group plc
124
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Notes to the Company Balance Sheet continued
40. Creditors continued
Amounts falling due after one year
Lease liabilities
Other liabilities
41. Called up share capital
Allotted, called up and fully paid
At beginning of the year
Issued during the year
At end of the year
2021
£’000
89
19
108
2021
number
2021
£’000
2020
number
205,698,309
4,676,064
210,374,373
10,285
234
199,579,784
6,118,525
10,519
205,698,309
2020
£’000
–
–
–
2020
£’000
9,979
306
10,285
The Company has one class of Ordinary Shares of 5p each which carry no right to fixed income.
4,676,064 shares were issued during the year in order to satisfy exercises of share-based payment schemes. The exercise costs of 5p,
79.6p and 80p per share for the LTIPs resulted in cash receipts of £3.2m.
Details of options in respect of shares outstanding at 31 December 2021 are as follows:
Employee share option schemes:
Number outstanding
‘000
Exercise price
payable
Date from which
exercisable
2016 LTIP
2019 LTIP
2020 LTIP
2020 LTIP
2021 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
75
716
1,958
1,311
479
4,539
1,127
844
1,382
300
3,653
877
9,069
£0.05
£0.05
£0.05
£0.05
£0.05
£0.80
£0.796
£0.71
June 2019
June 2022
July 2023
July 2021
June 2024
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.
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Governance
Financial Statements
Tribal Group plc
125
42. Share premium and other reserves
At 31 December 2019 and 1 January 2020
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
Merger
reserve
£’000
11,304
Share
premium
reserve
£’000
15,539
Own share
reserve
£’000
(856)
Share-based
payment
reserve
£’000
6,036
–
–
–
–
–
–
–
–
412
–
–
–
–
–
–
–
–
–
–
–
(479)
1,339
37
–
At 31 December 2020 and 1 January 2021
11,304
15,951
(856)
6,933
Loss for the year
Issue of share capital
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
–
–
–
–
–
–
–
–
3,010
–
–
–
–
–
–
–
–
530
–
–
–
–
–
–
(530)
1,078
(26)
–
At 31 December 2021
11,304
18,961
(326)
7,455
Retained
earnings
£’000
9,145
(919)
(2,254)
–
–
–
51
6,023
(1,230)
–
(2,505)
–
–
–
77
2,365
The merger reserve of £11.3m (2020: £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 £(0.3)m (2020: £(0.9)m) represents the cost of 318,692 shares (2020: 827,692) in Tribal Group plc held by
the Employee Share Ownership Trust (EBT) to satisfy certain options under the Group’s share option schemes. During 2021 509,000
shares were sold from the EBT to satisfy options granted in 2020 under the LTIP Scheme (see note 22).
The retained earnings reserve is distributable.
43. Contingent liabilities
A cross-guarantee exists between Group companies in respect of bank facilities which was £nil as at 31 December 2021 (2020: £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 £1.2m (2020: £0.1m). They are not expected to result in any material financial loss These are not expected
to result in any material financial loss and the likelihood of using these guarantees is assessed as remote.
As disclosed in Note 33, Tribal Holdings Limited, Tribal Dynamics Limited, Tribal Dynamics Holdings Limited, Semestry 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
£60,735,758 (2020: £46,026,750). These are inclusive of intercompany liabilities.
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Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Notes to the Company Balance Sheet continued
44. 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 2021
Financial assets
Cash
Debtors*
Financial liabilities
Creditors
Deferred contingent consideration
31 December 2020
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
5
7,502
7,507
–
–
–
–
–
–
42,451
–
42,451
–
–
–
–
1,083
1,083
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
–
34,375
–
–
–
–
1,392
1,392
Total
£’000
5
7,502
7,507
42,451
1,083
43,534
Total
£’000
23
6,469
6,492
34,375
1,392
35,767
*
Excluding amounts that relate to non-financial instruments of prepayments.
45. 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
2021
Number
3
2021
£’000
1,034
81
32
387
1,534
2020
Number
3
2020
£’000
849
56
25
369
1,299
Cost of Directors’ emoluments were incurred by the Company and are included in the Remuneration report on pages 51 to 55.
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Governance
Financial Statements
Tribal Group plc
127
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
Diane McIntyre
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
Contents Generation – PageContents Generation – Sub PageContents Generation – Section Tribal Group plc
128
Annual Report & Accounts 2021
Strategic Report
Governance
Financial Statements
Company Information continued
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 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
4 May 2022
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Tribal Group plc
Registered office
Kings Orchard
1 Queen Street
Bristol
BS2 0HQ
T: 0845 123 6001
E: info@tribalgroup.com
www.tribalgroup.com
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