Tribal Group plc 2007 Preliminary results

1
Tribal Group plcPreliminary results for the
yearended 31 December 2008 Peter Martin
Chief ExecutiveSimon LawtonGroup Finance
Director17 March 2009
2
Agenda

• Summary
• Financial performance
• Business review
• Outlook
• Q A

3
Financial Highlights
Year ended 31 December 2008 2007 Increase
Revenue 234.0m 209.2m 12
Profit before tax 18.6m 15.4m 21
Earnings per share 14.7p 12.2p 20
Dividend per share 4.35p 3.93p 11
Operating cash flow 21.4m 22.4m
Operating cash conversion 136 137
Before amortisation of intangibles, goodwill
impairment and financial instrument costs Pro
rata annualised basis
4
Business Achievements

• Improved operational performance
• Strengthened senior management team
• Internal reorganisation implemented
• Acquisitions successfully integrated
• International development progressed
• Increased committed income and sales pipeline

5
Outlook

• Committed income at 1 January
• Sales pipeline at 1 January

2009 2008
139m124m
2009 2008
297m168m
6

• Financial performance
• Simon Lawton
• Group Finance Director

7
Financial Performance
Revenue (m)
Profit before tax (m)
Earnings per share (pence)
18.6
234
15.4
209
194
14.7
13.0
12.2
10.4
8
Income Statement
Twelve months ended 31 December 2008 m 2007 m Growth
Continuing Operations
Turnover 294.2 256.5 15
Revenue 234.0 209.2 12
Operating profit 19.8 17.3 14
Operating margin 8.5 8.3
Interest (1.2) (1.9)
Profit before tax 18.6 15.4 21
Tax (5.0) (4.4)
Profit after tax 13.6 11.0 24

Adjusted fully diluted EPS (p) 14.7p 12.2p 20
No of WA diluted shares (000) 86,459 84,795

• Revenue increase of 12
• Operating profit up 14 to 19.8m
• Improved operating margin to 8.5
• Significant fall in interest and bank fees
• Effective tax rate of 26.8
• Earnings per share up 20 to 14.7p
• Final dividend 2.65p total dividend of 4.35p

Before amortisation of intangibles, goodwill
impairment and financial instrument costs
9
Committed Income
At 1 January 2009
21m
53m
5m
33m
4m
1m
18m
4m
4m
10
Sales Pipeline
At 1 January 2009
164m
104m
86m
22m
12m
47m
16m
6m
52m
Jan 08
11
Balance Sheet
December 2008 m December 2007 m

Intangible assets 217.5 191.2
Other non-current assets 11.2 9.1
Net debt (19.7) (6.8)
Net working capital (13.6) (12.3)
Net assets 195.4 181.2
Share capital 83.1 79.0
Profit and loss reserves 45.9 36.6
Minority interest 1.8 1.1
Other reserves 64.6 64.5
Total equity and reserves 195.4 181.2

• Intangible assets increased by 26.3m due to
  acquisitions
• No goodwill impairment
• Net debt increased by 12.9m following
  acquisitions
• Strong working capital management
• Gearing of 10.1 (December 2007 3.8)

12
Group Cash Flow
Twelve months ended 31 December 2008 m 2007 m
Operating cash flow
- continuing operations 26.9 23.6
- (decrease) / increase in restricted cash (1.3) 1.6
- discontinued operations - 2.6
25.6 27.8
Interest (0.9) (2.1)
Tax (3.3) (0.7)
Net cash flow before investing financing 21.4 25.0
Capital expenditure (5.1) (6.5)
Free cash flow 16.3 18.5
Acquisitions (19.0) -
Minorities and deferred consideration (5.6) (2.2)
Dividends paid (4.4) (3.4)
Disposal of Mercury Health - 36.3
Increase / (repayment) of loans 10.6 (53.2)
Net change in cash (2.1) (4.0)

• Operating profit to cash flow conversion of 136
  (2007 137)
• Free cash flow of 16.3m (2007 18.5m)
• Capital expenditure of 5.1m (2007 6.5m)
  includes product development costs of 1.9m
  (2007 2.3m)
• Five acquisitions completed for 19.0m

13
Group Net Debt
December 2008 m December 2007 m
Group net debt 21.7 10.0
Less restricted cash (2.0) (3.2)
Group debt 19.7 6.8

Bank revolver facilities (to 2012) 40.0 40.0
Working capital facility 6.0 3.0
Bank headroom 26.3 36.2

• 40m bank facility until June 2012 with HBoS and
  HSBC

Actual Covenant
Interest cover x16.7 gtx3.0
Debt to EBITA x0.9 ltx3.5

• Interest rate swap in place over 25m of debt
  through to 2010 providing interest rate certainty
  at 4.99
• Current margin 75 bps

14

• Business review
• Peter Martin
• Chief Executive

15
Market Analysis
2008 Revenue 234m
Education 38
Central Government 20
Health 16
Housing and Regeneration 9
Local Government 9





UK Public Sector
92
International
4
4
Private Sector
16
Business Stream Analysis
2008 Operating Profit 27.4m
2008 Revenue 234m
Before central group costs
17
Education
Year ended 31 December 2008 2007
Revenue (000) 96,408 91,581
Operating profit (000) 14,303 14,928
Operating profit margin () 14.8 16.3
Financial performance
Revenue increased by 5 to 96.4m Operating profit fell by 4 to 14.3m Good performance in software, training and delivery contracts and inspections Margin impacted by - contract / business mix - investment in products and services - increase in bid costs / development capability 2009 margin anticipated to be at similar level


Business review
New chief executive appointed November 2008 Reorganisation being implemented six market facing business units Restructuring / investment costs in H1 2009 Committed income of 79m at January 2009 Ofsted contract award (75m over 6 years) UK sales pipeline remains healthy Good range of international opportunities
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Consulting
Year ended 31 December 2008 2007
Revenue (000) 85,191 68,666
Operating profit (000) 8,250 4,911
Operating margin () 9.7 7.2
Business review
Significant increase in committed income to 38m at January 2009 Continued importance of frameworks Anticipate tightening in the spending environment but Public sector reform agenda will continue - performance improvement - commissioning - value for money - resource allocation Strong pipeline in UK and internationally


Financial performance
Revenue increased by 24 to 85.2m Operating profit increased by 68 to 8.3m Contribution of 2.4m from acquisitions Operating margins increased to 9.7 Excellent performance in Central Government Good results from Health - establishment of commissioning business - strategic acquisitions Housing, Regeneration Local Government - integration (local government) - acquisitions (regeneration, local government) - softer trading conditions in regeneration Strong performance from Tribal HELM
19
Support Services
Year ended 31 December 2008 2007
Revenue (000) 54,277 51,997
Operating profit (000) 4,861 4,041
Operating margin () 9.0 7.8
Business review
Architecture - record order book in health - no significant dependence on PFI - uncertainty in FE / reducing cost base Communications - acquisition provides distinctive, integrated offering - digital capability established - activity levels high Resourcing - challenging conditions likely to continue - new business wins remain high Committed income of 22m

Financial performance
Revenue increased by 4 to 54.3m Operating profit increased by 20 to 4.9m Margin improved significantly Architecture made good progress - health contracts / new frameworks
Excellent performance from Communications - acquisition / rebranding Resourcing exceeded expectations despite difficult markets
20
Outlook Peter Martin
Chief Executive
21

Macro Outlook

• Tribal operates in the public services industry
  (PSI)
• The Julius report (July 2008) confirmed the
  importance of the UK PSI
• Worth 79bn in 07/08 6 of GDP
• Employs 1.2m people
• Fastest growing sectors health, education and
  environment
• Competitive tendering reduces costs
• Significant export potential
• OGC estimates UK public sector consultancy spend
  at 2.8bn
• World Bank alone spends 1.5bn a year on public
  sector reform in the developing world

The Public Services Industry review by Dr
DeAnne Julius CBE published by the Department for
Business, Enterprise and Regulatory Reform 
22

Macro Outlook

• 09/10. Headline spending plans to be maintained
• Tightening being seen on the ground, but
• Pressure to reform, improve performance and
  achieve better value for money
• 10/11. Post-election retrenchment
• Public sector finances will have deteriorated,
  however maintaining the governments spending
  plans for the NHS, schools, defence and
  international development David Cameron, 5
  January 2009
• Tribals business driven by change, not by
  overall spending patterns
• Current pipeline
• Top 30 opportunities (by value)
• 73 health or education
• 22 international
• 4 capital-related
• 1 PFI-related

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2009 Priorities

• Retain focus on existing sectors
• Increase market share
• Develop international activities
• Exploit competitive advantages
• Domain expertise
• Breadth of capability
• Technology
• Increase committed income
• Larger, longer-term contracts
• Pipeline conversion
• Control overheads / reduce costs / planned
  investment

24
Current Trading

• Delivered plus committed revenue 49 of 2009 plan
  at end of February
• H1 restructuring costs 1.0m / investments of
  0.7m
• Restructuring
• Cost reductions will generate annualised cost
  savings of at least 4m
• Investments
• New health and education initiatives
• International development
• Business development / bid costs
• Strong pipeline / Ofsted contract secured
• Further progress anticipated in 2009

25

• Q A

26
Client Feedback
27
Tribal Group plcPreliminary results for the
year ended 31 December 2008 ENDThis
presentation is intended only as a summary of key
points from Tribal Group plcs announcement of
its results for the year ended 31 December 2008
(the Full Year Results 2008). Accordingly,
reference should be made to the Full Year Results
2008 and not to this presentation.