Tribal Group, the now streamlined education, learning and training supplier, would appear to have bounced back from its ‘lacklustre’ performance in mid-2011 (see here), with a ‘strong' performance in the final quarter. Adjusted profit before tax for the year ended 31 December, is now expected to be ‘significantly ahead’ of previous expectations. No mention of the recent cost cutting programme that has trimmed £5m from Tribal’s cost base, or the recent loss-making disposals to Capita however (see Capita buys Tribal’s health and government business), which we suspect will also have contributed to a better profit outcome. Committed income for the year was £178m, down 4.3% on FY10. Nonetheless, investors were pleased with the positive noises, pushing Tribal's share price up 16%.
Tribal said both its technology and services businesses traded well in the final quarter. But it is clearly outside the UK where this is the case. In the quarter, Tribal continued the roll out of its student management systems with seven polytechnic colleges in New Zealand. And it also became preferred bidder to supply its student management systems for the Student Administration and Learning Management (SALM) programme in New South Wales, Australia. If signed off, this multi-year deal would be worth some Aus $40m to Tribal from 2012. The UK meanwhile continues to suffer from ‘longer purchasing cycles’.
Tribal has got off to a good start under the management of new CEO Keith Evans (see Tribal promotes COO to top job). He now plans to increase investment in sales and business development to target new growth opportunities. However while the UK remains weak, Evans would be wise to focus this effort on Tribal's more buoyant international markets in Australia and New Zealand.