News Column

Tribal Group Swings To Loss As It's Hit By Ofsted Contract Withdrawal

August 13, 2014

Hana Stewart-Smith

LONDON (Alliance News) - Tribal Group PLC saw its shares fall Wednesday, after it swung to a loss in the first half of the year as it booked impairments primarily for the imminent loss of its work with the UK education regulator Ofsted.

Ofsted will end its contracts for schools quality assurance activities with Tribal, Serco Group PLC and educational charity CfBT Education Trust from September 2015, taking the work in house.

Tribal posted a pretax loss of GBP8.4 million for the six months to June 30, compared with a profit of GBP4.3 million a year earlier, as it booked a GBP9.2 million impairment charge for the impending loss of its Ofsted contract and a further GBP1.8 million writedown on some of its software products, which it said had been superceded by technology it acquired.

The writedowns offset a slight revenue increase in the first half to GBP63.4 million, from GBP62.1 million a year earlier.

"Looking forward into 2015 and beyond, our work with Ofsted will reduce and we will accelerate the repositioning of our Solutions business towards technology-based revenue streams. Whilst this may reduce short-term headline revenue growth rates in our Solutions business, we anticipate stronger medium-term revenue growth and margin improvement," the company said in its outlook statement.

It raised its interim dividend to 0.6 pence, from 0.5p.

Tribal also said its outlook for the whole of the current financial year remains unchanged. It hasn't said what those expectations are, but said Wednesday that its pipeline of opportunities is "healthy" and recent bolt-on acquisitions are integrating well.

Still, shares in Tribal were trading down 4.8% at 154.94 pence Wednesday morning.

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Source: Alliance News

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