2019 Half Year Results 20 th August 2019 2019 Half Year Good SIS - - PowerPoint PPT Presentation

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2019 Half Year Results 20 th August 2019 2019 Half Year Good SIS - - PowerPoint PPT Presentation

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Empowering the world of education 2019 Half Year Results 20 th August 2019 2019 Half Year Good SIS performance in EMEA; Australia challenging; Education Services positive but Middle East inspections curtailed in H1 Annual recurring revenues

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SLIDE 1

Empowering the world

  • f education

2019 Half Year Results

20th August 2019

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SLIDE 2

2019 Half Year

Good SIS performance in EMEA; Australia challenging; Education Services positive but Middle East inspections curtailed in H1

August 2019 Tribal Results Half Year 2019 2

Annual recurring revenues almost £20m for half-year, up 7%. Operating margin up to 15.5% Acquisition of Crimson Consultants (Tribal Dynamics) expanded SIS

  • ffering; good progress on delivering first Edge modules

Full year earnings expected to be in line with the Board’s expectations

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SLIDE 3

2019 Half Year Highlights

Student Information Services HE: Global ARR sales ahead, EMEA license and implementation ahead despite no new SITS wins, however APAC significantly behind. FE: Significant growth on prior year, won largest colleges group in London. WBL: Large Maytas sale to CITB for apprentice management. VL: Decrease on prior year as anticipated, however some good progress including helping to deliver OneTAFE for TAFE NSW Education Services Good performance in UK offset by curtailment of Middle East work; won new NCETM £9m contract over 3 years, new inspections work in Sharjah. Cost savings in i-graduate surveys delivering improved profitability.

August 2019 Tribal Results Half Year 2019 3

HE: Higher Education; FE: Further Education; WBL: Work-based Learning; VL: Vocational Learning

0% 5% 10% 15% 1 2 3 4 5 6 7 2016 H1 2017 H1 2018 H1 2019 H1

£m

Tribal profit growth

Adjusted operating profit Adjusted operating margin

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SLIDE 4

August 2019 Tribal Results Half Year 2019

Financial KPIs

Revenue

£40.4m

2018 £42.0m down 3.8%

Annual recurring revenue*

£19.9m

2018 £18.9m

Adjusted operating margin

15.5%

2018 15.0%

Revenue / Average FTE

£96k

2018 £92k**

Adjusted operating profit

£6.3m

2018 £6.3m

Adjusted earnings per share

2.5p

2018 2.2p

Net cash before acquisition

£12.0m

2018 £9.2m

* 6 months to 30 June

Committed income

£123.5m

2018 £121.6m** up 5.5% up 0.5 pp In line up 30% up 1.6% up 4.3%

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up 14%

£6.0m after acquisition

Adjusted EDITDA

£8.3m

2018 £7.9m

** as at 31 December 2018

up 4.9%

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SLIDE 5

2019 Challenges

August 2019 Tribal Results Half Year 2019 5

Universities are delaying going to market for new SIS system, particularly Australia, due to market uncertainties Challenges across all business in Australia are being addressed and improvement plans in place, but will continue in 2020 Data breach in Australian subsidiary, Tribal Campus, identified, addressed, and drawing to a conclusion Dispute with software platform provider on royalty payment ongoing

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SLIDE 6

Acquisition of Crimson Consultants (Tribal Dynamics)

  • Pure play Microsoft Dynamics vendor, developing IP-

based solutions for the UK Higher and Further Education market

  • Initial consideration of £6m with a further £4m

contingent consideration based on annual recurring revenue targets

  • Over 60 CRM implementations, including 30+

universities; £3m annual revenue of which c40% annual recurring

  • Focusing on market trend to use CRM to
  • increase Student Recruitment and
  • drive competitive advantage through improved

Student Experience

  • Broadens Tribal’s portfolio of products to take to

market:

  • increase share of wallet in existing customers
  • penetrate competitor sites
  • expand into other geographies
  • Tribal Edge Student Information System
  • accelerates speed to market
  • reduces the product investment cost required to

develop this functionality

  • Earnings enhancing is accretive to eps
  • however, will invest in Crimson through first full

year to drive increased revenue in new markets

August 2019 Tribal Results Half Year 2019

What Why

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SLIDE 7

Financial Report

August 2019 Tribal Results Half Year 2019 7

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SLIDE 8

Summary

6 months ended 30 June 2019

August 2019 Tribal Results Half Year 2019

Revenue Adjusted Operating Profit* Net Cash

£40.4m

down 3.8%

£40.4m 2019 £42.0m 2018

£6.3m

in line

£6.3m 2019 £6.3m 2018

£6.0m

down 35%

£6.0m 2019 £9.2m 2018

* Adjusted operating profit is in respect of continuing operations and is stated excluding “Other Items” charges of £1.8m (2018: £2.0m). Other Items include Share-based Payments, Amortisation of IFRS3 Intangibles, and Restructuring and associated costs

§ Core revenue, on a constant currency basis, is down 3%, SIS unchanged, Education Services down 9% § Adjusted Operating Profit is in line with 2018 at £6.3m, on a constant currency basis this is £0.1m up on 2018 § Net cash increased 30% excluding the acquisition of Crimson Consultants for £6m, includes £2.8m of investment in Edge development

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SLIDE 9

August 2019 Tribal Results Half Year 2019

Segment Results

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Revenue (£m) 6 months to 30 June 2019 H1 2018 H1 2018 H1

(Constant Currency)

Growth %

(Constant Currency)

Student Information Systems 28.7 29.1 28.8

  • Education Services

11.7 12.8 12.9 (9%) Total 40.4 42.0 41.7 (3%) Annual Recurring Revenue

(6 months to 30 June)

19.9 18.9 18.5 7% Adjusted Operating Profit 6 months to 30 June 2019 H1 2018 H1 2018 H1

(Constant Currency)

Growth %

(Constant Currency)

Student Information Systems 9.2 9.2 9.0 2% Education Services 2.6 3.2 3.2 (16%) Segment Profit 11.8 12.4 12.2 (3%) Central Overheads (5.6) (6.1) (6.0) 7% Total 6.3 6.3 6.2 1% Operating Margin 15.5% 15.0% 14.8% 0.7pp Revenue by Geography Revenue £m 2019 H1 2018 H1 2018 H1

(Constant Currency)

Growth % UK 24.2 20.5 20.5 18% Rest of World 16.2 21.5 21.3 (25%) Total 40.4 42.0 41.7 (4%)

5 10 15 20 25 30 35 40 45

2018 H1 2019 H1

Segment Revenue

(Constant Currency)

SIS ES 2 4 6 8 10 12 14 2018 H1 2019 H1

Segment Profit

(Constant Currency)

SIS ES

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SLIDE 10

August 2019 Tribal Results Half Year 2019

Segment Results - SIS

10 Student Information Systems (£m)

2019 H1 2018 H1 2018 H1

(Constant Currency)

Growth %

(Constant Currency)

License & Development Fees 3.4 4.8 4.8 (30%) Support & Maintenance Fees 16.2 15.6 15.4 5% Implementation Services 6.4 6.5 6.4 (1%) Cloud Services 2.5 2.0 2.0 21% Other 0.3 0.1 0.1 112% Revenue 28.7 29.1 28.8 (1%) Segment Profit 9.2 9.2 9.0 2% Segment Margin % 32% 32% 31% 2%

EMEA (£m)

2019 H1 2018 H1 2018 H1

(Constant Currency)

Growth %

(Constant Currency)

License & Development Fees 3.2 3.0 3.0 8% Support & Maintenance Fees 7.9 6.9 6.9 13% Implementation Services 4.6 3.4 3.4 35% Cloud Services 2.1 1.7 1.7 22% Other 0.2 0.1 0.1 115% Revenue 18.1 15.2 15.2 19% Segment Profit 6.0 3.9 3.9 53% Segment Margin % 33% 26% 26% 29%

APAC (£m)

2019 H1 2018 H1 2018 H1

(Constant Currency)

Growth %

(Constant Currency)

License & Development Fees 0.1 1.8 1.8 (92%) Support & Maintenance Fees 8.3 8.7 8.5 (2%) Implementation Services 1.8 3.1 3.0 (41%) Cloud Services 0.4 0.3 0.3 10% Other 0.0 0.0 0.0 (49%) Revenue 10.6 14.0 13.7 (22%) Segment Profit 3.2 5.3 5.2 (38%) Segment Margin % 30% 38% 38% (20%)

2 4 6 8 10 12 14 16 18

Licence & Dev. Maintenance Implementation Cloud Other

Revenue (Constant Currency)

2018 H1 2019 H1

HE 56% FE 25% WBL 6% Schools 12% Crimson 1%

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SLIDE 11

Committed Revenue

Total Committed Revenue* £123.5m (FY18 £121.6m)

  • Increase of £1.9m on 2018

Key Student Information System contracts closed

  • Sopra Steria (Shared Services Connected

Limited)

  • TAFE NSW
  • Catholic Education Commission Victoria

Key Education Services contracts closed

  • Skills Funding Agency
  • Sharjah Education Council
  • Louisiana Department of Education
  • Tertiary Education Commission

August 2019 Tribal Results Half Year 2019

* Committed Revenue (Backlog) refers to the Total Contract Value of booked sales orders which

have not yet been delivered (including 2 years Support & Maintenance, where it is contracted on an annual recurring basis) Committed Revenue £122.5m, split by business

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£123.5m Committed as at 30 June 2019 split by year of expected recognition

SIS EMEA 46% SIS APAC 39% QAS 10% Other 4%

32.2 47.7 34.7 8.9

2019 2019 H2 2020 2020 2021 2021 2022+ 2022+ 20 40 60 80 100 120 140

SIS EMEA 44% SIS APAC 37% Crimson 2% QAS 13% OTHER 4%

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SLIDE 12

August 2019 Tribal Results Half Year 2019

down 86pp

Operating cashflow (before tax)

£(2.8)m

2018 £1.7m

down £4.5m down £4.1m

Cashflow

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2019 2018

Operating Cashflows 7.4 8.0 Working Capital movements (10.2) (6.2) Tax received/(paid) 0.1 (1.2) Net Operating Cash (2.7) 0.6 Acquisition of Crimson (5.9)

  • Investing activities (inc. Edge)

(3.3) (2.4) Deferred consideration

  • (0.8)

Financing (inc. dividend) (2.1) (1.9) Foreign exchange impact

  • (0.2)

Cash decrease (14.0) (4.7) Net Cash 6.0 9.2

Net cash before acquisition

£12.0m (£6.0m after acquisition)

2018 £9.2m

up 30%

Working capital profile is negative in H1; key drivers include the timing of the Support & Maintenance and Cloud Services renewals with annual payments weighted to H2. In addition there were delays in receiving cash on a Middle East contract (received in July) in H1 and exit payments made in relation to the restructuring in Australia.

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SLIDE 13

Tribal: strategy update

August 2019 Tribal Results Half Year 2019 13

We provide the expertise, software and services required by education and business organisations worldwide to underpin student success.

EMPOWERING THE WORLD OF EDUCATION § Evolution of Tribal strategy § Pricing the transition to Edge

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SLIDE 14

Higher Education: a market ripe for change

August 2019 Tribal Results Half Year 2019 14

  • Inefficient
  • Inflexible
  • Closed
  • Costly on-premise

Lack of industry standards è systems patched together over time

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SLIDE 15

Higher Education: a market ripe for change

August 2019 Tribal Results Half Year 2019 15

  • Inefficient
  • Inflexible
  • Closed
  • Costly on-premise

need a pathway

  • Efficient
  • Flexible
  • Open (for innovation)
  • In the cloud
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SLIDE 16

Business process complexity Technical complexity

Tribal Edge – a transformational journey

August 2019 Tribal Results Half Year 2019 16

Process Transformation pathway System Transformation pathway

Tribal Edge user experience Tribal Edge SIS

  • Best practice processes

built into User Interface

  • Develop open standards
  • Cloud infrastructure
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SLIDE 17

Tribal Edge: a complete enterprise solution built on open standards

August 2019 Tribal Results Half Year 2019 17

Enquiries Admissions Enrolment Learning & Studying Assessments Awarding Employment & Alumni Business experience Student experience Microsoft technology stack Tribal Edge platform (open standards, cloud based) Ecosystem of standards-based integrated applications

Tribal applications Partners: 3rd party applications Customers

CRM Tribal Edge Student Information System ERP HR

…

Applicants

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SLIDE 18

Incremental Revenue opportunities

§ Moving current on premise applications to the Public Cloud § Incremental sales of modules of Tribal Dynamics § Edge platform adoption driving additional hosting revenues § Additional value-add modules built on the Edge platform (eg, TCSI submission system in Australia) § Ecosystem of partners develop their applications on Edge platform § Universities building their own integrated applications on the Edge platform; possibility of selling to other universities

August 2019 Tribal Results Half Year 2019 18

Focus on driving Annual Recurring Revenue:

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SLIDE 19

Pricing: the transition to Edge

August 2019 Tribal Results Half Year 2019 19

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Example 1 of 2: upfront pricing to Cloud / SaaS pricing

§ Historic pricing model (blue line) has upfront License fee + annual recurring Support & Maintenance payments at 20% § IFRS 15 (green line) spreads the license revenue over implementation period, typically 2-3 years § Cloud / SaaS pricing (red line) has a single annual payment covering license, S&M and Cloud hosting which continues year-on-year § Breakeven point on cumulative revenue is around 3 years

August 2019 Tribal Results Half Year 2019 20 Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7

Revenue model

Historic Pricing [pre-IFRS 15] Historic Pricing [post-IFRS 15] Cloud / SaaS Pricing Cum Historic Pricing [pre-IFRS 15] Cum Historic Pricing [post-IFRS 15] Cum Cloud / SaaS Pricing

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SLIDE 21

Example 2 of 2: upfront pricing to Cloud / SaaS pricing

August 2019 Tribal Results Half Year 2019 21 Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7

Profit model

Historic Pricing [pre-IFRS 15] Historic Pricing [post-IFRS 15] Cloud / SaaS Pricing Cum Historic Pricing [pre-IFRS 15] Cum Historic Pricing [post-IFRS 15] Cum Cloud / SaaS Pricing

§ Profit contribution margin for historic pricing models is around 80% (license and S&M) § Blended margin of Cloud / SaaS pricing lower due to cloud costs, but continues at same rate year-on-year § Breakeven point on cumulative profit is around 4 years § Tribal continues to absorb contribution gap, from move to SaaS pricing from upfront

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SLIDE 22

Tribal: model comparing revenue/profit with Edge

§ Chart depicts the model for existing Higher Education customers revenue / profit trajectory 1) without the introduction of Edge (light blue bars) and 2) the revenue / profit trajectory following the adoption of Edge (dark blue bars), highlighting the value-add that the Edge platform brings. § Significant increase in profit comes from greater share-of-wallet as customers move student information systems into the public cloud, managed through Tribal; increased volumes in public cloud will reduce per unit cost and drive up profit margins § Years 1 and 2 (2019 / 2020) show similar profit contribution due to higher costs as customers start adoption of Edge § In Year 3, momentum builds towards Edge, and year 4 represents a significant uptake in the adoption of the full Edge system

August 2019 Tribal Results Half Year 2019 22

Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7

Revenue (including Edge) Revenue (excluding Edge) Profit contribution (including Edge) Profit contribution (excluding Edge)

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SLIDE 23

Tribal – Looking Forward

August 2019 Tribal Results Half Year 2019 23

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SLIDE 24

2019 – A Transition Year

Continue to develop our Edge strategy, and build out Edge modules, preparing company and customers for 2020 adoption

August 2019 Tribal Results Half Year 2019 24

Grown ebs to be the Further Education market-leading product in UK, and Maytas as a leading apprenticeship product Developed strategies for customers to migrate into public cloud, and developed SITS Accelerate to drive standardised process Restructured Australian operations to drive growth; refreshed and reinvigorated i-graduate offering within Education Services

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SLIDE 25

Outlook

Forecast remains unchanged for 2019; market uncertainties reducing the Higher Education opportunities as universities delay system changes

August 2019 Tribal Results Half Year 2019 25

Opportunities for additional offshoring drive cost efficiencies and continuing margin improvement Company well positioned for first Edge delivery, sales growth in Tribal Dynamics, and driving partner ecosystem and M&A opportunities

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SLIDE 26

Appendix

August 2019 Tribal Results Half Year 2019 26

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SLIDE 27

Consolidated Income Statement

August 2019 Tribal Results Half Year 2019

2019 2018 £m £m Revenue 40.4 42.0 Gross profit margin 50% 50% Adjusted operating profit 6.3 6.3 Adjusted operating profit margin 15.5% 15.0% Other Items (1.8) (2.0) Statutory operating profit 4.4 4.2 Finance (income)/costs (0.1) (0.1) Statutory profit before tax 4.3 4.1 Income tax charge (0.7) (1.3) Statutory profit after tax 3.6 2.9

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SLIDE 28

HY 2019 HY 2018 £m £m Acquisition related costs 0.1

  • Share based payment charges

0.5 1.0 Legal 0.3

  • Restructuring

0.3 0.1 IFRS3 amortisation 0.6 0.9 Other Items (excluded from Adjusted

Operating Profit)

1.8 2.0 Finance costs 0.1 0.1 Tax credit on other items (0.3) (0.4) Total Other Items (excluded from

Statutory Profit)

1.6 1.7

August 2019 Tribal Results Half Year 2019

Other Items

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§ To assist understanding of the underlying performance of the business, certain items are included in Other Items. § The main items are Share-based Payments, Deferred Contingent Consideration, Amortisation of IFRS3 Intangibles, and Restructuring and associated costs.

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SLIDE 29

August 2019 Tribal Results Half Year 2019 29

Product Development costs in 2019

§ Investment in the Tribal Edge platform increased to £2.8m capitalised in the period (2018: £1.5m). § We continue to support and invest in our core products including SITS; a total of £2.9m was expensed in the period (2018: £3.5m).

£m 2019 H1 2018 H1 Change Product Development 5.8 5.2 9%

  • f which capitalised

2.8 1.7 38% Tribal Edge 2.8 1.5 47% School Edge 0.0 0.3 (1419%)

  • f which expensed

2.9 3.5 (19%) SITS (inc. SID) 1.0 1.2 (26%) ebs 0.8 0.9 (17%) SchoolEdge 0.6 0.5 15% Maytas 0.2 0.2 (41%) Dynamics(Crimson) 0.1 0.0 100% Other (inc. Campus, K2, bespoke) 0.4 0.6 (60%) Including Amortisation of 0.7 0.6 10%

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Edge platform

Tribal Edge – Student Information System

August 2019 Tribal Results Half Year 2019

User Interfaces (student and staff) Learning Analytics

Core Student Management Value-add modules Interfaces (App / Portal) Platform

SIS = + + + Admissions Enrolment/ Registration Learning & Studying Assessments Awarding

Marketing & Recruitment Student CRM Student Support Alumni Management Event Management … … Apprenticeship Management

Finance Statutory Returns

Engage

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August 2019 Tribal Results Half Year 2019

Contact: Email § Mark.Pickett@tribalgroup.com § Paul.Simpson@tribalgroup.com

WWW.TRIBALGROUP.COM @TRIBALGROUP

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