The positive updates keep coming from Tribal Group, the systems and solutions provider to the education, learning and training markets (see Tribal still on track). This time its trading update ahead of its full year results (due in March) highlights a stronger than expected final quarter (to end December); PBT and EPS will therefore be better than previous expectations. Net debt has also reduced significantly over the twelve months period: from £9.9m to £4.6m. The share price in early trading is up over 7%. In May things had not been looking quite so positive when the company reported a drop in the order book (see Tribal orders drop), so it looks like Tribal cut its cost base in anticipation of a far worse year.
It appears that the ‘Systems’ business has made particularly good progress, with major education management system projects “on track” and a healthy level of opportunities cited in the UK and internationally. Notably, the higher education market is singled out as having a particularly high level of opportunities. We will be taking a closer look at the higher and further education markets later in the year; several of the big SIs, as well as some software providers, have singled out the sector as a target growth market.
The Solutions business, meanwhile, performed “as anticipated”. In the UK, quality assurance work remains on track and performance improvement activities had a strong end to the year. In May 2013, a drop in the order book was largely blamed on a quiet UK market for 'Solutions'.
Overall, the order book is described as “resilient”; though it is down from £168m (at the same time last year) to £129m, mainly due to the maturity of the company’s Ofsted inspection contracts. Tribal says that “technology is becoming increasingly pervasive throughout (its) work” – thus validating the Group's decision at the start of 2013 to refocus the Solutions business around offering services founded upon software-based tools (see Tribal Group: technology key to services growth).