# **SEPARATOR SHEET**
TRIBAL
# Empowering the world of education
Annual Report & Accounts 2023
# Our Purpose
# To enable student eeess through vare and services
# Our Vision
To empower the world of education.
Westilve to research, develop and deliver the products, services and solutions needed by education institutions across the world to support their primary goals of educating students, providing optimum learning experiences and ultimately delivering successful outcomes.
# (M) (M)
Tobeapure-playEducation Technology SaaScompany, expanding to global reach as the market leader.
#### **Overview**
- **Highlights Ataglance**
#### States to Report
- **Business Model**
- Chair's statement
- **Our opportunity**
- Tribal's product strategy
- m CEO's review
- 113 Case study
- 20 Financial review
- Stakeholder engagement
- Environmental Social and Governance Report
- Climate-related Financial Disclosures Report
- Principal risks and uncertainties
#### Covernance
- **Board of Directors**
- **Executive Committee**
- 83 Corporate Governance Statement
- 422 **Audit Committee Report**
- Nomination Committee Report 44
- 43 Remuneration Committee Report
- 50 Directors Report
- Independent Auditor's Report
#### Financial Statements
- Consolidated Income Statement
- Consolidated Statement of
- Comprehensive Income Consolidated Balance Sheet
- Consolidated Statement of Changes to Coulty
- Consolidated Cash Flow Statement
- 68 Notes to the Financial Statements
- 110 Company only Balance Sheet
- 1111 Company only Statement of Changes in Equity
- 112 Notes to the Company Balance Sheet
#### Company Information
118 Company Information
# **Highlights**
#### **Financial Performance**
Revenue
£85.7m
| 2023 | £85.7m |
|------|--------|
| 2022 | 283.6m |
Gross Profit Margin1
49.1%
| 2023 | 49.1% |
|------------|-------|
| 2022 77.5% | |
Adjusted Earnings per Share2
4.1p
| 2023 | 4.1p |
|----------|------|
| 2022 nil | |
Adjusted EBITDA1,2,3
£14.4m
| 2023 |
£14.4m |
|---------------------|------------|
| 2022s 97. 0m |
|
Adjusted EBITDA Margin1,2
16.8%
| 2023 | 16.8% |
|-----------|-------|
| 2022 8.4% | |
Statutory Earnings Per Share
2.5p
| | 2023 | 2.5p |
|-------|------|------|
| ).2)p | 2022 | |
**Statutory Operating Margin**
8.5%
| 2023 | | 8.5% |
|------|----|------|
| 2022 | 1% | |
Statutory Profit/(Loss) After Tax
£5.3m
| | 2023 | £5.3m | |
|---------|------|-------|--|
| £(0.5)m | 2022 | | |
Net (debt)/cash
£(7.2)m
| £(7.2)m | 2023 | | |
|-----------|------|---|--|
| +(/.2/11) | 2020 | * | |
| £(3.4)m | 2022 | | |
#### **Operational Performance**
£54.5m
Annual Recurring Revenue4
2022: £50.3m
£168.8m
Committed Income (Order Book)5
2022: £172.9m
£103.2k
Revenue per Operational FTE6
2022: £100.1k
110.5%
Operating Cash Conversion7
2022: 89.0%
£(1.4)m
Free Cash Flow
2022: £(5.3)m
- 1. 2022 Gross profit margin, Adjusted EBITDA and Adjusted EBITDA margin are all restated due to a change in accounting policy in 2023 to 'exceptionals'. As a result, certain items of income or expense previously included as 'exceptionals' have been classified as underlying.
- 2. Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Earnings per share are in respect of continuing operations and exclude charges reported in 'Exceptional items' of £3.3m (2022: £2.1m), refer to Note 6 in the Financial Statements.
- 3. Adjusted EBITDA is calculated by taking the Adjusted EBITDA after the allocation of Central Overheads and excludes Interest, Tax, Depreciation and Amortisation.
- 4. Annual Recurring Revenue (ARR) is a forward-looking metric. It includes exit rate annualised recurring revenue, plus future contracted recurring revenue yet to be delivered, and known losses within the next 12 months where customers have given notice.
- 5. Committed Income (Order Book) refers to the Total Contract Value of booked sales orders which have not yet been delivered (including two years Support and Maintenance, where it is contracted on an annual recurring basis).
- 6. Revenue per Operational FTE is the average FTE for the year excluding average FTE associated with capitalised Product Development. In 2023 107.3 FTE were capitalised (2022: 152.3).
- 7 Operating cash conversion is calculated as net cash from operating activities before tax, excluding cash outflow of £0.8m (2022: £nil) from an aborted takeover and £0.9m (2022: £0.6m) of restructuring costs as a proportion of adjusted EBITOA), excluding the onerous contract provision release of £4.3m (2022: £4.5m)).
# **Át a glance**
# Empowering the world of education
Who we are
**Provider of software** and services to education institutions, globally.
\*00mcoal
Tobeapure-play Edirech SaaS business, with global reach.
What we do
Student Information Solutions to both Higher & Further Education institutes globally.
Global provider of Quality Assurance and Benchmarking services for Education.
Who we help
Over 500 institutions empowered by Tribal's Student Information Solutions.
Customers across the Globe (UK, Canada, Malaysia, New Zealand, Australia).
Education Services 2023 Revenue
£17.2m
SIS2023 Revenue
£68.6m
2023 ARR
Market Share, Australia & NZ
Market Share, UK FE Colleagues
# **Our products**
Student Management Systems: SITS Callista ebs Maytas
- Delivering products 'as-a-Service' in the public cloud.
- Market-leading Student Management System products are at the core, with the Edge platform allowing for interoperability with new Capability and Experience offerings.
- Provides modern suite of SaaS products to expand existing share of customer wallet and addressable market.
- Most offerings now available to sell past peak development spend.
# **Dustness** model
# Market leading student :
# Our resources
Leadingmarketshare for Student Information Systems.
Irusted brandrespected in education worldwide.
. Education services capability complementing student information software.
Marketinsight from long-standing customer relationships
(Experiencedleadershipbringing) (Clear business focus.
Skilled people with deep do main expendes.
Culture that places customers at the lieute that places customers
#### Oureoftware
Our doud-based and on-premise student information solutions add value to education and business organisations throughout the student life cycle.
Ourmodulesspans
Qustomers payfor Software as a Sawlee (SaaS); clouds a wice sport or licence, implementation, Support and Maintenance.
Underplindinghow we operate
Ourvalues Seepage 28 We provide market-leading, cloud-based, student information software and services to customers in target markets across the world, using our resources and expertise to create value that is shared with our stakeholders. We empower education institutes to educate students, providing optimum learning experiences and ultimately delivering successful outcomes.
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Our education services are offered interrectionally and cover institutions from Early Veens through to Higher Education, all focused continuousling learning and student cuteomes.
#### ලකාන් කාලන් කාලන් සිටුන් ශාල්යා සිටුන් සිටුන් සිටුන් සිටුන් සිටුන් සිටුන් සිටුන් සිටුන් සිටුන් සිටුන් සිටුන් සිටුන් සිටුන් සිටුන් සිටුන්
#### **Customers**
Solutions to califerrange is to enhance the quality of education and improve operational partormance, to efficiel, engage and retain students throughout their learning formers in a cost-effective and flexible manner.
#### Sudans
Supporting estudent's liter long learning formay, through enhanced well being, end the death and contentum, and seamless interestion with different learning channels (physical and virtual).
#### **Shareholdars**
Shareholdervelue and returns from profitable, easing energive growth with editing revenue and progressive dividends.
#### **Employees**
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#### Governmentegeneles// education/iunders
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Riskmanagement Seepage 32 Corporatoresponsibility Seepenge 24
#### How we maximise value creation
Our strategy for profitable growth is outlined on page 8.
# Chair's statement
# Substantive progress agress strategic priorities
The Board is pleased with the progress achieved across the Group's strategic priorities, including the transition to Cloud-based offerings. Our core SITS offering is number one in the UK market and our Cloud offerings are gaining traction. We have an enviable list of customers, market-leading technology and growing opportunities.
As Shareholders will be aware on 50 ctober 2023 the Board recommended an offerfor the Company at a price of 74 penceper share. The offerdid not exhibit the necessary support from our largest shareholder and as a consequence the offerdid not progress. Our largest Shareholder has indicated their continuing support for the Company and its management and is optimistic for its future.
Revenue Growth
49%
Recurring Revenue
254m
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#
# We are confident Tribal has the resources and strong recurring revenues sufficient to execute on our growth strategy."
For the year ended 31 December 2023 Tribal reported adjusted EBITDA, net debt and Group revenue ahead of market expectations. The Group achieved revenue growth of 3% to £85.7m, Adjusted EBITDA growth of 86% to £13.8m (excluding the £0.6m net benefit from the release of provisions and payment of costs in respect of Nanyang Technological University (NTU)) and closed the year with a net debt position of £7.2m. Importantly, Tribal exited the year with over £54.5m of Annual Recurring Revenue. This was achieved against the backdrop of the lapsed offer for the Company, as announced in October 2023, and the termination of the contract with NTU (both of which absorbed substantial management time and effort) demonstrating the strength of the business, with its established customer based and respected product set. Tribal is, as previously announced, entering a mediation process with NTU which is expected to conclude in the first half of 2024, the potential outcome remains uncertain. We will continue to provide updates as appropriate.
Education Services (ES) continued to contribute positively to the Group's financials, delivering another year of good progress under its new managing director. The Board conducted a strategic review of the division during the Year and concluded that the best way to deliver value to shareholders and drive further growth in revenue and profitability, was to establish ES as a standalone entity within the Group, with its own company structure. Education Services made good progress in FY23, resetting its operating model, and strengthening its business development and marketing functions.
#### **Dividend**
Given Tribal's solid financial performance in FY23, the Board intends to pay a dividend to shareholders. However, given the uncertainty around the likely outcome of the dispute with NTU, the Board is deferring its decision on the quantum of the dividend payment this year until the Board has an appropriate level of certainty. Such dividend is likely to be declared as an interim dividend.
#### People
Supporting our employees as we transition to a SaaS business is a top priority, and much work has been done throughout the year to ensure appropriate training and development opportunities exist across the Group. The Board would like to thank the team for their unwavering commitment to the success of Tribal and its customers.
#### Outlook
The Board is confident Tribal has the resources and high levels of recurring revenues sufficient to continue to execute on its growth strategy and looks forward to continuing to drive the Group forward, for the benefit of all stakeholders.
Tribal started 2024 with £54.5m of ARR, providing the business a substantial platform from which to grow its core software product and service offerings in Higher and Further Education. Following our strategic review of our Education Services business we are increasingly positive that it will deliver growth in 2024 and beyond. We are also committed to driving improved operational efficiencies across the Group whilst continuing to improve customer satisfaction. The Board has no doubt that businesses generally face many economic headwinds, we are however positive that Tribal can continue the progress achieved to date.
1.1
Richard Last
# **Our opportunity**
#### What is driving our business
#### University challenge
- Legacy internal SMS unfit for purpose
- Legacy complexity/ lack of agility/security
- Improve student experience
- Improve internal efficiency
#### University solution
- Public tender for cloudbased commercial SMS
- Leverage public cloud and managed services
- Digital transformation to deliver a compelling student experience
#### Tribal opportunity
- © Sell existing products delivered from public cloud.
- Tribal Cloud providing SIS as a service through the public cloud
- Tribal Edge: Cloud-native solutions adding value across a wider solution set
#### **Tribal's growth strategy**
Tribal's growth strategy will increase margins as we grow scale by focusing on the three areas below:
- Expand customer share of wallet by upselling products to our existing customer base.
- Expand addressable market by capitalising on our wider Edge product range.
- Expand geographical reach by localising our existing products and utilising the capabilities of our Edge software.
# Expanded customer share of wallet
#### **Organic Growth**
- Strong sales performance across our offerings
- Continued high levels of customer retention
- Strong pipeline of Tribal Cloud Migrations
# Expanded addressable market
#### **New Product Sales**
- Cross-sell of products into existing customers, e.g. Semestry/Eveoh
- Successful launch of new products, e.g. Tribal Data Engine, bringing analytics capabilities to existing customers
# Ċ
#### Expanded geographical reach
#### New Geographies:
- Semestry/successfully-sole across our global footprint
- Increasing confidence that Edge development will allow us to expandinto
#### **Our metrics**
Revenue
£85.7m
**Gross Profit Margin**
49.1%
Adjusted Earnings per Share
**4.1**p
| 023 | £85.7m. | 2023 | 49.19 |
|-----|-------------------------|---------------------------|----------|
| 022 | / maic83 vil vil vil vi | 9 2022 101 (0.551) | 97757744 |
| 2023 | | 4.1p. |
|----------|---|-------|
| 2022 vil | * | |
# Tribal's product strategy
Tribal's growth strategy will increase margins as we grow scale by focusing on the three areas below:
- Expand customer share of wallet by upselling products to our existing customer base.
- Expand addressable market by capitalising on our wider Edge product range.
- Expand geographical reach by localising our existing products and utilising the capabilities of our Edge software.
#### Innovating with our existing products
- We will continue to invest in our market-leading existing offerings, ensuring they stay up to date and are relevant for our existing user base.
- We will continue to sell our existing products to new customers, offered 'as-a-service' as standard, but available on-premise if demanded.
# Tribal Cloud: delivering our existing products 'as-a-service'
- Deliver existing product suites as-a-service, and manage on behalf of our clients including all of their integrations with other IT products.
- This will enable us to sell more to our existing customers, and help ensure our customers are prepared for the longterm move to Edge, our native cloud ecosystem of education technology modules.
# Edge - a modular, next-generation, cloud-native, Student Information product set
Create an expanded higher education ecosystem of nextgeneration modules to meet key areas of student experience and engagement with universities.
- We have developed modular applications that are 'best of breed' products, able to be bought either with the Edge platform and other modules, or independently.
- These are delivered entirely 'as-a-service', with no IT support required from the universities, freeing them to focus on the delivery of education services to their students.
- The modules have the ability to be easily translated into multiple languages, more quickly customisable to individual geographic needs and able to be delivered remotely therefore providing an easier means to enter additional geographies.
- The modules will provide the opportunity for increased upsell to existing customers.
# CEO's review
# Focused on delivering outstanding service
While there have been many corporate developments at Tribal over the course of the last year, our focus has remained resolute on delivering outstanding service to our customers around the world and providing our teams with a rewarding place to work. As a result, we have continued to execute against our growth strategy, winning new customers, transitioning existing customers to the Cloud, and successfully piloting our newly developed native cloud product, Tribal Admissions.
Naturally some new business discussions were paused whilst we were in an offer period, as customers assessed the impact of a potential change of ownership of Tribal. Nonetheless, the Company's strong underlying basis of recurring revenue and continued focus on cost control have ensured we have delivered a year of growth.
We have entered 2024 very much on the front foot, with a clear strategic focus, to evolve Tribal at pace to become an EdTech business, delivering products to the further and higher education sectors. This transition will accelerate in 2024, as we change our operational structure to better fit that of a focused, SaaS business. We have implemented a cost reduction programme to ensure our profit margins remain stable as we execute against this strategy.
#### Strategy
Our strategic focus over the recent years has been the transition of the Group to a pureplay EdTech, SaaS business. This continues and over the next year we will continue to focus on this, building on the solid SaaS foundations we have already established.
With a clear direction of travel, focused on the delivery of our market-leading products as a cloud-based solution, further driving the adoption of our newly launched Tribal Admissions product and educating our customers on the opportunity and need to transition to the cloud, we are confident in our ability to continue to deliver growth.
# We will continue to build on the solid SaaS foundation we have already established."
#### **Product development**
In FY22, the Board made the decision to focus development spend in 2023 and 2024 on our existing Edge products, to ensure we are focused on maximising the opportunity for each, targeting an overall reduction in Edge development from 2023 as the peak of development investment on the Admissions product has passed. Our Edge products are part of the broader Student Information System ecosystem as we modernise our Student Management Systems products to provide a roadmap to SaaS for all our customers.
We see significant opportunities for our core cloud-native Edge and SITS: Vision products in the next few years across our key geographies, as there is an increasing appetite from the higher education sector to transition their existing Student Information Systems to the cloud and we anticipate this to be the main driver for uptake of our current range offerings.
#### **NTU** update
As previously announced on 20 and 24 March 2023 the contract with Nanyang Technological University (NTU) has been terminated and in April 2023, Tribal received from NTU an interim demand for the payment of damages which it rejected. In November 2023, NTU claimed the HSBC Bank Guarantee to the value of approximately £0.6m, which Tribal disputes. In February 2024, Tribal received an updated interim demand for the payment of damages. Tribal is now entering a mediation process with NTU which is expected to conclude in the first half of 2024, the potential outcome of which remains uncertain. Tribal vigorously disputes NTU claims and no provision has been currently made for any outcome from the mediation or potential future litigation. An update will be provided as and when appropriate.
#### **Student Information Systems (SIS)**
Student Information Systems, our core segment which targets the further and higher education sectors through our range of software solutions, delivered a steady performance in the year, growing customer numbers and revenue.
During the year, we secured a new SITS: Vision customer, adding a total of $\pounds 0.5m$ to ARR. This is a multi-year contract with the London School of Science and Technology to provide an improved student experience and deliver operational efficiencies for the university. This new business win comprises SITS Cloud, Engage and Tribal Dynamics Marketing & Recruitment.
In the first half of the year, we also sold further native cloud-based Edge modules, such as Dynamics, Engage and Tribal Data Engine (TDE), to existing customers. Notably, Tribal Dynamics saw a number of several projects go live in the period. Early in H2, we also went live with our first Admissions product, a next generation, native SaaS solution, built using Edge technology. Edith Cowen university, an Australian university with around 30,000 students, is running a pilot, starting with the admission of Post Graduate Domestic students and, over the coming year, rolling the product out to all student admissions. This is a key milestone for Tribal, successfully implementing a complex solution which is a critical system for a university and we are working towards making Tribal Admissions generally available in 2025.
With our Course & Exam Scheduling product, Semestry, we are beginning to see the UK universities starting to come to market to select their next-generation scheduling product. Although there is a good pipeline of opportunities, it is likely to be into mid 2024 before we see those tenders coming to market. In the meantime, we have taken the opportunity to integrate Semestry fully into the Tribal organisation.
We signed three further cloud contracts for existing customers, the University of Wolverhampton, University of the Arts and Royal Veterinary College, as part of their programme of improvement with Tribal to migrate to the Tribal Cloud. We secured smaller contracts across our ebs and Maytas portfolios where we continue to see substantial opportunities for these offerings across both existing and new customers.
# 66
# Tribal has made good progress, concluding the first phase of its new strategy this year."
Revenue
£85.7m
**Gross Profit Margin**
49.1%
We are pleased with these positive signs of potential across the Group and although it will take time for full adoption of our solutions by our customers due to the annual cycle of the academic year, we remain confident in the significant long-term opportunities.
#### **Education Services (ES)**
Tribal Education Services (ES) delivers Quality Assurance and benchmarking services to ministries of education and other education agencies around the world, across a broad range of services including overall school quality, leadership and teaching quality, as well as many specialist areas such as new teacher competence, Early Years, literacy and numeracy.
Last year, we implemented a strategy for the business, targeting sustainable growth. The aim of the new strategy was to create a clear identity for the ES business and better articulate the value it creates for our customers.
The business has made good progress, concluding the first phase of its new strategy this year, resetting the operating model and bedding in new structures and processes.
A principal focus has been investing to strengthen both its business development and marketing functions, starting with the appointment of a new Director of Business Development in January 2023, and aligning leadership expertise with key markets, including appointments of new Directors for the UK and Middle East business units. These changes have already created growth in our pipeline depth and quality, which in turn underscore our confidence in the division and the services it provides. This year, the Board also conducted a strategic review of the ES division and concluded that the best way to drive further growth in revenue and profitability, and deliver value to shareholders, was to establish ES as a standalone entity.
# CEO's review continued
In the year, ES signed a new 24-month £1.5m contract with the Department for Education in England - Multiply - supporting the roll out of promising interventions supporting Adult Numeracy with colleges and other providers across the country. We have focused much of our business development attention on the Middle East, resulting in a much improved pipeline of projects due over the coming months. The first of these to come on stream is with the Emirates Schools Establishment in the UAE, a new customer. We are delighted to begin a 12-month 10m AED (United Arab Emirates Dirham) project supporting teachers in public schools to attain their professional license. working in partnership with Queen Rania Teachers Academy in Jordan. These two major projects were complemented by strong performance in our Surveys and Benchmarking business, now trading above pre-COVID levels.
#### Operations and people
We continue to carefully invest in our operations and people, whilst effectively managing our cost base as we evolve our operational model to ensure service levels are maintained for long-term profitable growth and to remain robust.
We have seen considerable progress since the Global Business Services (GBS) organisation was established in January 2023. with the objective of driving internal efficiencies by simplifying, standardising and centralising back office processes into a single, global Centre of Excellence, In January 2023 we welcomed a new leader for GBS, based in the Philippines, who has a solid track record of leading finance and accounting services to large global corporations and who will lead the next phase of the program to realise the benefits as we transform our execution of business processes. By year end, a number of business-critical processes had migrated to GBS delivering immediate benefits and a solid foundation for continued improvements, in line with our Centre of Excellence model. This progress has already enabled us to create savings and unlock investment in new capabilities, which will be critical to our SaaS transformation. We will continue to build on this progress across all business support functions, so they take full advantage of the potential offered by Global Business Services.
Our evolving operational model, which is built upon our increasing focus on customer success and alignment to Tribal's 'as-aservice' transition, continues to prove effective. The new target operating model is also now being supported by the implementation of new SaaS financial systems and processes, intended to give our customers a more personalised experience and to maximise the value of each of the Group's products.
In June 2023, Tribal Achievers was launched, a global peer to peer recognition programme to maintain a vibrant culture and ensure reward and recognition is part and parcel of life at Tribal. It has been very encouraging to see both the creativity and frequency with which colleagues are ready to celebrate one another's achievements.
Our Customer Success model has successfully established itself in Further Education, providing some impressive outcomes and establishing a clear new revenue stream and source of value creation. We are taking those learnings into the Higher Educations market, bringing in highly valued sector professionals to build our advisory services and customer success offerings.
We remain committed to our ESG strategy and long-term goals. This year Tribal is supporting employees volunteering with ChapterOne, an education-based charity providing reading and literacy support to primary school aged children living in deprived areas of the UK. There are currently 14 active Tribal volunteers on the programme, collectively providing over 6 hours of support each week. We are proud that our volunteers are making a meaningful difference; ChapterOne's latest Impact results show children who participate in the programme increase their reading level by 44%, on average.
#### Focus for 2024
The resolution of the NTU contract dispute will continue to be a key area of focus during 2024 and we will update the market as appropriate.
We are focused on the delivery of our clear strategic priorities for the year, which will in turn drive growth in high margin recurring SaaS revenue and protect our operating profit margins, and look to the future with confidence.
Mark Pickett
**Chief Executive Officer**
# Case study
#### dimestorande
- Successfulinitial go-live of finnovative of fering, opening up a sizeable market opportunity
- Increased potential to attract new oustomers and expand with existing base
- Leading to growth in ARR
#### Aventuder of the Journey
While leading in the student records space, Tribal recognised the opportunity in the area of admissions, an essential function of the student lifecycle, as an area poised for substantial transformation.
The vision for Tribal Admissions was to create a native Software as a Service (SasS) platform steeped in the extensive experience gained of over 20 years of implementations, whilst making the most of the continuously expanding technology available to develop an innovative, dynamic, and future proof solution which would deliver tangible impact to the Higher Education sector.
Virginated mament in the year - Edith Covern University (EGU) go live
ECU has been avalued Tribal customersince 2004, utilising Tribalis student management system, Callista, and Tribal Submissions. ECU became the flust global customer to adopt the Tribal Admissions solution, successfully going live on 15 August 2023.
The road to being an early adopter
Spiralling admissions numbers and an ongoing need to do more with less saw ECU reachout. They were looking for a solution at the foreign to freshoology that is available to enhance efficiency, scalability, and ultimately dive their competitive edge, but with such a crucial part of the life cycle to tackle, they want adtorely on a trusted partner.
The collaborative paymenthing
With the implementation of Tribal Admissions, ECU embarked on a transformation journey, shifting its focus:
"The focus of our team has shifted to up front configuration and reference data; that is the primary discussion now. They ere not concerned with individual application processing, instead, they reengaged in discussions about core specifications, reference data of ferlibraries. Despite not being a highly technical team, they are admissions processing professionals who understand their work."
Successful outcomes
Since launch, ECU already have clear data showeasing accelerated processing of applications, and positive indicators are emerging on the impact on student experience.
"Upon processing an applicant who came through the portal, the offerwas then immediately centout. The applicant, surprised by the speed of the process, contacted our communication centre, suspecting a mistake or spam. They couldn't believe that they submitted the application yesterday, and the offerwas already sent the next day."
"Assoonasapplications started flowing through, excitement grew, prompting us to push forward and implement changes. The benefits became evident, motivating the team and fostering a positive outlook."
Confining the journey of no 2020 and beyond
The fourney for ECU is far from complete, and the team at ECU is more excited than ever to continue moving forward, with international admissions and agents next in the long-term plan.
# **Financial review**
#### Results
| £m | 2023 | 2022 Reported 1 | Constant currency
2022 3 | Change constant
currency | Change constant
currency % |
|------------------------------------------------------------|--------|----------------------------|----------------------------------------|-----------------------------|-------------------------------|
| Revenue | 85.7 | 83.6 | 83.1 | 2.7 | 3.2% |
| Student Information Systems | 68.6 | 68.2 | 67.9 | 0.7 | 1.1% |
| Education Services | 17.2 | 15.4 | 15.2 | 1.9 | 12.7% |
| Gross Profit | 42.1 | 31.3 | 31.4 | 10.7 | 34.1% |
| Gross Profit Margin | 49.1% | 37.5% | 37.8% | 11.3% | 11.3pp |
| Adjusted EBITDA
(Before Central Overheads) 2 | 28.1 | _ 17.9 | 18.1 | 10.1 | 55.6% |
| Student Information Systems | 25.7 | 14.35 | 14.6 | 11.1 | 75.9% |
| Education Services - | 2.4 | 3.65 | 3.5 | (1.0) | (29.8%) |
| Central Overheads⁴ | (13.6) | (10.8) | (10.8) | (2.9) | 26.5% |
| Net foreign exchange (losses)/gain | (0.2) | (0.1) | (0.1) | (0.1) | 62.7% |
| Adjusted EBITDA 2 | 14.4 | 7.0 | 7.2 | 7.1 | 99.0% |
| Adjusted EBITDA Margin 2 | 16.8% | 8.4% | 8.7% | 8.1% | (8.1)pp |
| Statutory Profit before Tax | 6.6 | 0.4 | 1.0 | 5.6 | 562.9% |
| Statutory Profit/(Loss) after Tax | 5.3 | (0.5) | 0.2 | 5.1 | 2,703.7% |
| Annual Recurring Revenue | 54.5 | 51.2 | 50.2 | 4.3 | 8.7% |
- 1. 2022 Gross profit margin, Adjusted EBITDA and Adjusted EBITDA margin are all restated due to a change in accounting policy in 2023 to 'exceptionals'. As a result, certain items of income or expense previously included as 'exceptionals' have been classified as underlying; Items reclassified are employee related share option charges, including employer-related taxes (2023: £446,000: 2022: £450,000).
- 2. Adjusted EBITDA and Adjusted EBITDA margin are in respect of continuing operations and are calculated by taking the Adjusted EBITDA after the allocation of Central Overheads and exclude Interest, Tax, Depreciation and Amortisation and exceptional items of £2.9m (2022: £2.1m), refer to Note 6 in the Financial Statements.
- 3. 2022 results adjusted are updated for constant currency the Group has applied 2023 foreign exchange rates to 2022 results to present a constant currency basis. On a constant currency basis there is a decrease in Revenue of £0.5m and an increase to Adjusted EBITDA (before Central Overheads) of £0.2m.
- 4. Central Overheads are made up of costs that are not directly attributable to either Student Information Systems or Education Services
- 5. 2022 Adjusted EBITDA has been restated by £0.3m in Student Information Systems and (£0.3m) in Education Services due to a misclassification.
The financial review presents the reported results for 2023 and 2022, and the 2022 results restated to 'constant currency' using 2023 rates to exclude foreign currency impact. The change percentages and comparatives are shown on the 2022 constant currency numbers. In addition to EBITDA and Adjusted EBITDA, the presentation disclosed as 'constant currency' is an alternative performance measure and not a statutory reporting measure prepared in line with International Financial Reporting Standards (IFRS). The Group has chosen to present its results on a constant currency basis to reflect the year-onyear performance and account for the impact of foreign exchange movements in the year.
#### Revenue
Revenue increased 3.2% to £85.7m (2022: £83.1m constant currency, £83.6m reported). Notwithstanding the drop in professional services partly due to the NTU contract ending, the Group's Student Information Systems segment performed well, with significant growth of 23% in Cloud revenue driven by new customer wins and Tribal Cloud migrations.
Education Services revenue increased by 12.7% to £17.2m (2022: £15.2m constant currency; £15.4m reported) as the main UK contracts continued to track well throughout the year in addition to growth in Surveys and Benchmarking due to the seasonality of the Southern Hemisphere International Student Barometer's in which most institutions participate every other year.
32.7% (2022: 38.0%) of Tribal's revenue in the year was generated outside the UK and is therefore subject to foreign exchange movement.
Gross Profit increased 33.6% to £42.1m (2022: £31.4m constant currency, £31.3m reported) and the margin percentage has increased to 49.1% (2022: 37.8% constant currency, 37.5% reported). The margin percentage increase is largely due to the release of the NTU onerous contract provision following termination of the contract.
#### **Adjusted EBITDA**
Adjusted EBITDA increased £7.1m to £14.4m (2022: £7.2m constant currency; £7.0m reported). Adjusted EBITDA margin increased to 16.8% (2022: 8.7% constant currency; 8.4% reported). The net impact of the release of the £4.5m NTU onerous contract provision created in 2022, with associated contract costs in 2023 gave a £0.6m one-off upside in the year, excluding this the adjusted EBITDA would be £13.8m and adjusted EBITDA margin 16.1%.
Central Overheads, representing costs in HR, IT, Finance, Marketing and Management that aren't directly attributable to lines of business increased by £2.9m to £13.6m (2022: £10.8m constant currency and reported). This includes £1.1m of one-off costs in relation to NTU as well as increased global insurance costs and legal and professional fees in line with market trends and investment in global business services as we focus on standardisation of processes across the Group to drive efficiency.
#### Statutory (Loss)/Profit after Tax
The Statutory (Loss)/Profit after tax for the year increased by £5.1m against constant currency to a profit of £5.3m (2022: £0.2m constant currency; (£0.5m) reported). The increase is largely due to the negative impact of the NTU contract within 2022, offset by £1.2m higher exceptionals due to £1.4m of costs associated with the lapsed offer for the company by Ellucian. The tax charge was £1.3m (2022: £0.9m reported and £0.8m constant currency).
#### Segmental performance
The Group provides software and non-software related services to the international educational market. These services are managed across two divisions, SIS and ES.
#### Student Information Systems (SIS)
| £m | 2023 | 2022 Reported | Constant currency 2022 | Change constant
currency | Change constant
currency % |
|------------------------------------|-------|-------------------|------------------------|-----------------------------|-------------------------------|
| Foundation Support and Maintenance | 24.9 | 25.4 | 25.1 | (0.2) | (0.7%) |
| Foundation Software | 8.5 | 7.2 | 7.3 | 1.3 | 17.5% |
| Cloud Services | 10.4 | 8.5 | 8.5 | 2.0 | 23.2% |
| Edge | 5.2 | 4.8 | 4.8 | 0.4 | 9.0% |
| Professional Services | 9.8 | 11.2 | 11.7 | (1.9) | (16.1%) |
| Core Revenue | 58.8 | 57.1 | 57.2 | 1.6 | 2.8% |
| Other Software & Services | 9.7 | 11.0 | 10.6 | (0.9) | (8.4%) |
| Total Revenue | 68.6 | 68.2 | 67.9 | 0.7 | 1.1% |
| Adjusted Operating Profit | 25.7 | 14.3 1 | 14.6¹ | 11.1 | 75.9% |
| Adjusted Operating Margin | 37.5% | 20.9% | 21.6% | 16.0% | (16.0)pp |
1. 2022 Adjusted Operating Profit has been restated by £0.3m in Student Information Systems and (£0.3m) in Education Services.
Student Information Systems focuses on software-related solutions to the Higher Education, Further Education, Colleges and Employers (referred to in Australia as VET), and Schools sectors across the main geographic markets being the UK, Australia, New Zealand, Malaysia, Netherlands and Canada.
SIS revenue increased 1.1% to £68.6m (2022: £67.9m constant currency; £68.2m reported). Revenue generated from our core product offerings increased 2.8% to £58.8m (2022: £57.2m constant currency and £57.1m reported). Growth in our Foundation, Edge and Cloud revenue streams has offset the professional services revenue lost from NTU following contract termination in March 2023.
Foundation Support & Maintenance fees in the period on our Foundation products (including SITS, Callista, ebs, Maytas, K2 and SID) decreased 0.7% in the period. As previously announced, Victoria University (Callista) exited in Q4 2022 resulting in £0.7m decline in revenues. Several ebs and Maytas customers moved onto Software-as-a-Service
(SaaS) contracts in the year, resulting in £0.3m of associated revenues transferring from Foundation Support and Maintenance to Foundation. This has been offset by £0.8m increased revenues from inflationary and student number increases across SITS and Callista.
Foundation Software includes the sale of new software licenses on our Foundation products. Revenue in the period increased 17.5% to £8.5m (2022: £7.3m constant currency, £7.2m reported) driven by growth across SITS, ebs and Maytas, including a new SITS customer: London School of Science and Technology.
Cloud Services cover the provision of Tribal Cloud, a fully managed public cloud service and other hosting services supporting Tribal products, either in a private cloud, or increasingly in a public cloud. Cloud revenues have continued to increase and are up 23.2% to £10.4m (2022: £8.5m constant currency and reported). As previously discussed, revenue growth in this area is driven by significant sales to existing customers, transitioning their existing on-premise
SITS:Vision software, into the Tribal Cloud. During 2023, four additional customers signed up to migrate their on-premise solutions into the cloud including University of the Arts London, University of Wolverhampton, University of Exeter and Royal Veterinary College.
Edge revenues saw an increase of 9.0% to £5.2m (2022: £4.8m constant currency and reported), due to sales across our range of products such as Semestry, Support and Wellbeing and Engage.
Professional Services includes the implementation of all our Foundation and Edge software products at customer sites, typically working alongside customer teams. Implementation projects vary in length and complexity, ranging from a small number of days to more than two years for complex projects. Revenues are either a day rate fee or performed under a fixed fee for defined implementation scope. Professional services have continued to be delivered remotely where appropriate, and the team has been bolstered by the Global Delivery Centre (GDC) in Kuala Lumpur, Malaysia.
# Financial review continued
Professional Services revenue decreased by 16.1% to £9.8m (2022: £11.2m constant currency, £11.7m reported), partly driven by the termination of the NTU contract.
Other Software & Services revenue decreased 8.4% to £9.7m (2022: £10.6m constant currency, £11.0m reported) due to continued Australian SchoolEdge churn and declining revenues on the Department of Education Contract with schools in New South Wales as previously announced. The Department of Education is working with schools to allow them to select their own providers and move away from one overarching contract with Tribal. Ahead of this expected exit, revenues will decline as usage of the Tribal systems decreases. The previously announced exit of the Technical and Further Education colleges New South Wales, 'TAFE NSW' contract has been extended from H2 2023 to H2 2024, at which point no further revenue will be generated. The TAFE and DoE contracts contributed £4.9m to Other Software and Services revenues in 2023.
Adjusted Operating Profit increased by 75.9% to £25.7m (2022: £14.6m constant currency; £14.3m reported) and Adjusted Operating Margin increased to 37.5% (2022: 21.6% constant currency and 20.9% reported). Operating profit benefited by £1.8m from the net impact of the reversal of the onerous contract provision recognised against the NTU contract in 2022 and the loss made on the contract in the early part of 2023. Revenue growth across Foundation Software and Cloud as discussed above, together with cost optimisation has further contributed to the margin improvement.
#### **Education Services (ES)**
| £m | 2023 | 2022
Reported | Constant
currency
2022 | Change
constant
currency | Change
constant
currency
% |
|---------------------------------------------|-------|------------------|------------------------------|--------------------------------|-------------------------------------|
| Revenue | 17.2 | 15.4 | 15.2 | 1.9 | 12.7% |
| School
Inspections &
Related Services | 14.2 | 12.7 | 12.6 | 1.6 | 12.9% |
| i-graduate –
Surveys & Data
Analytics | 2.9 | 2.7 | 2.6 | 0.3 | 11.6% |
| Adjusted Operating Profit | 2.4 | 3.6 1 | 3.5 1 | (1.0) | (29.8%) |
| Adjusted
Operating
Margin | 14.1% | 23.6% | 22.7% | (8.6%) | (8.6)pp |
1. 2022 Adjusted Operating Profit has been restated by £0.3m in Student Information Systems and (£0.3m) in Education Services.
Education Services (ES) provides non-software related solutions globally across the same market sectors. The core offerings are inspection and review services which support the assessment of educational delivery, performance benchmarking, student surveys, and data analytics.
Education Services revenue increased by 12.7% to £17.2m (2022: £15.2m constant currency; £15.4m reported).
The revenue from School Inspections & Related Services increased by 12.9% to £14.2m (2022: £12.6m constant currency; £12.7m reported). This revenue growth was driven by contracts in the UK with the Department for Education in England. The National Centre for Excellence in the Teaching of Mathematics 'NCETM' contract scope was increased resulting in additional revenues for Tribal and the contract for the National Tutoring Programme 'NTP' won in 2022 benefited from a full year's delivery. Tribal was also successful in securing a new contract with the Department for Education for the Multiply contract with a total contract value of £1.2m over two years. The Middle East revenues declined against 2022 with no new contracts won in year.
The revenue for Surveys & Data Analytics increased by 11.6% to £2.9m (2022: £2.6m constant currency; £2.7m reported). The revenues from Surveys are improved, as expected, due to the seasonality of the Southern Hemisphere International Student Barometer in which most institutions participate every other year.
The Adjusted Operating Profit in Education Services decreased by 29.8% to £2.4m (2022: £3.5m constant currency; £3.6m reported), the Adjusted Operating Margin also decreased 8.6pp to 14.1% (2022: 22.7% constant currency; 23.6% reported), this decrease is largely due to the mix of contracts running, with lower revenues in the Middle East which typically attract higher margins than in the UK, together with investment in the delivery, sales and management teams to drive and sustain growth in 2024 and beyond. There were £0.6m of one-off negative operating margin impacts, the majority of which relate to reorganisation of the operating model.
#### **Product development**
| £m | 2023 | 2022
Reported | Change |
|-------------------------|------|------------------|--------|
| Product Development | 12.4 | 14.4 | 14% |
| Of which capitalised | 8.5 | 10.3 | 17% |
| Tribal Edge | 8.5 | 10.3 | 17% |
| Of which expensed | 4.0 | 4.1 | 5% |
| Foundational Products | 2.7 | 2.31 | (19%) |
| Edge | 0.7 | 1.3 | 49% |
| Other Software Products | 0.6 | 0.61 | (0%) |
| Amortisation | 1.6 | 1.4 | (13%) |
2022 restated as the Student Information Desk product (£0.3m) has been restated from Other Software Products to Foundation Products.
The Group spent £12.4m on Product Development, of which £8.5m was capitalised in relation to Edge, including Dynamics and Semestry (2022: £14.4m spent, £10.3m capitalised, £4.1m expensed).
As a cloud-native SIS, Edge provides a competitive differentiator in targeting and acquiring new customers. In addition, it protects Tribal's customer base by providing an efficient route to achieve a comprehensive, integrated, open-standards SIS which maximises the student experience and reduces the technical complexity and IT cost for our customers.
As previously announced, the Edge development team reached its peak of development activities to deliver Tribal Admissions during 2022. The team was reduced part way through 2023
to align to our development strategy, which resulted in a 17% saving in capitalised product development and will reduce further in 2024 with further reductions undertaken in early 2024.
Expensed product development decreased 5% to £4.0m (2022: £4.1m) of which £2.7m (2022: £2.3m) related to our Foundation products, £0.7m (2022: £1.3m) related to Edge and £0.6m (2021: £0.6m) related to other products.
#### **Key performance indicators (KPIs)**
| £m | 2023 | 2022 Reported | 2022 Constant
currency | Change constant
currency | Change constant
currency % |
|---------------------------------------------|---------|---------------|---------------------------|-----------------------------|-------------------------------|
| Revenue | 85.7 | 83.6 | 83.1 | 2.7 | 3.2% |
| - Student Information Systems | 68.6 | 68.2 | 67.9 | 0.7 | 1.1% |
| - Education Services | 17.2 | 15.4 | 15.2 | 1.9 | 12.7% |
| Adjusted EBITDA 1 | 14.4 | 7.0 | 7.2 | 7.1 | 99% |
| Adjusted EBITDA Margin¹ | 16.8% | 8.4% | 8.7% | 8.1% | 8.1pp |
| Annual Recurring Revenue (ARR) 2 | 54.5 | 51.2 | 50.2 | 4.3 | 8.7% |
| Gross Revenue Retention (GRR) 3 | 91% | 91% | 91% | 0% | 0.0pp |
| Net Revenue Retention (NRR)⁴ | 102% | 103% | 103% | (1%) | (1.0)pp |
| Committed Income (Order Book) | 168.8 | 172.9 | 170.4 | (1.6) | (0.9%) |
| Operating Cash Conversion 6 | 110.5% | 89.0% | 89.6% | 20.9% | 23.3рр |
| Free Cash (Out)/In Flow | (1.4) | (5.3) | (5.3) | 3.9 | 73.2% |
| Staff Retention | 86.2% | 83.6% | 83.6% | 2.6% | 2.6рр |
| Revenue per Operational FTE 5 | £103.2k | £102.0k | £101.4k | £1.8k | 1.8% |
- 1. Adjusted EBITDA and Adjusted EBITDA Margin are in respect of continuing operations and exclude charges reported in 'Exceptional items' of £2.9m (2022: £2.1m), refer to Note 6 in the Financial Statements. EBITDA is calculated by taking the Adjusted EBITDA after the allocation of Central Overheads and excludes Interest, Tax, Depreciation and Amortisation.
- 2. Annual Recurring Revenue is a forward-looking metric. Includos oxit rato annualisod rocurring rovonuo, plus futuro contractod recurring revenuo yet bo delivored, and known losses within the next 12 months where customers have given notice.
- 3. GRR is calculated as a percentage of recurring revenue retained from existing customers at 1 January including contract expiry, cancellations or downgrades in the year. NRR is calculated as a percentage of recurring revenue retained from existing customers at 1 January including upsells as well as contract expiry, cancellations or downgrades in the year. NRR for 2022 has been restated, resulting in a decrease of 1pp from the reported value.
- 1. Committed Income (Order Book) refere to the Total Contract Value of booked sales orders which have not yet been delivered (including two years Support and Maintenance, where it is contracted on an annual recurring basis).
- 5. Rovenue per Operational FTE is the average FTE for the year excluding average FTE essociated with capitalised Product Development. In 2023 107.3 FTE were capitalised (2022: 152.3).
- 6 Operating each conversion is calculated as not each from operating activities before tax, excluding cash outflow of £0.0m (2022.£nil) from an aborted takeover and £0.9 (2022.£0.6m) of restructuring costs as a proportion of Adjusted EBITDA excluding the onerous contract provision release of £4.3m (2022: provision created £4.5m).
The above Alternative Performance Measures (APM) are not Statutory Accounting Measures and are not intended as a substitute for statutory measures. A reconciliation of Statutory Operating Profit and Adjusted EBITDA has been provided in the financial statements.
# Financial review continued
#### **Annual recurring revenue (ARR)**
| £m | 2023 | 2022
Reported | 2022
Constant
currency | Change
constant
currency | Change
% |
|------------------------------------------|------|------------------|------------------------------|--------------------------------|-------------|
| Foundational
Support &
Maintenance | 25.0 | 24.8 | 24.3 | 0.6 | 2.6% |
| Foundational
Subscription | 7.7 | 5.4 | 5.4 | 2.3 | 42.3% |
| Cloud | 12.6 | 10.2 | 10.1 | 2.5 | 24.5% |
| Edge | 5.9 | 5.4 | 5.4 | 0.4 | 8.1% |
| Core product ARR | 51.1 | 45.8 | 45.3 | 5.8 | 12.9% |
| Other Software
& Services | 3.4 | 5.4 | 4.9 | (1.5) | (30.6)% |
| Total ARR | 54.5 | 51.2 | 50.2 | 4.3 | 8.7% |
ARR is a key forward-looking financial metric of the Group and is an area of strategic focus. Our aim is to grow ARR in our core products through the delivery of Software-as-a-Service contracts, providing increased quality of earnings.
ARR relating to our core product offering increased by 12.9% to £51.1m (2022: £45.3m constant currency, £45.8m reported) driven by new customer wins and upsell to existing customers across our core product offerings.
ARR relating to other software and services has decreased 30.6% to £3.4m (2022: £4.9m constant currency, £5.4m reported), of which £1.5m relates to the removal of ARR for the Department of Education as we expect the customer to exit within the next 12 months.
NRR 102% (2022 restated: 103%) has decreased by 1pp. Uppell to existing customers has been largely consistent year on year, highlighting the growth opportunities within our existing customer base, in particular migrations of on-premise customers into the cloud.
GRR 91% (2022: 91%) includes expected churn across our School Edge customers of 0.7ppt, 2.5ppt for the material decline in DoE contract revenues, and 2.4ppt for the termination of NTU.
#### **Committed Income (Order Book)**
The Committed Income (Order Book) relates to the total value of orders across SIS and ES, which have been signed on or before, but not delivered by 31 December 2023. This represents the best estimate of business expected to be delivered and recognised in future periods and includes two years of Support & Maintenance revenue. At 31 December 2023 this decreased to £168.8m (2022: £170.5m constant currency, £172.9m reported). Growth in Foundation and Edge ARR revenues have driven committed income upwards, offset by the reduction due to a further 12 months delivered on key contracts including Callista, DoE and Education Services contracts.
#### Operating cash conversion
Operating cash conversion is calculated as net cash from operating activities before tax (excluding the cash outflow of £0.8m (2022: £nil) from costs associated with the lapsed offer from Ellucian and £0.9m (2022: £0.6m) of restructuring costs) as a proportion of Adjusted EBITDA excluding the onerous contract provision of £4.5m in 2022 and its £4.3m subsequent release due to the end of the NTU contract in 2023. In 2023, operating cash conversion was 110.5% (2022: 89.0% reported). The increase in operating cash conversion is a result of improved working capital.
#### Free cash flow
Free cash flow is included as a key indicator of the cash that is generated (or absorbed) by the Group and is available for acquisition-related investment, interest and finance charges, and distribution to shareholders. It is calculated as net cash generated, before dividends, interest and finance charges, deferred consideration, and investments in subsidiaries. Free cash flow in 2023 improved to an outflow of £(1.4)m (2022: outflow of £5.3m reported) as investment in product development decreased £1.9m to £8.5m (2022: £10.4m), net cash used in operating activities before tax increased £0.7m to £9.4m (2022: £8.7m), despite £1.8m of cash outflow from takeover and restructuring costs in year (2022: £0.6m), and there were lower tax payments of £1.5m to £1.1m (2022: £2.6m).
# Full time equivalent (FTE) and staff retention
| | 2023 | 2022 | Change |
|----------------------------|------|------|--------|
| UK | 601 | 622 | (21) |
| Asia Pacific | 293 | 317 | (24) |
| Rest of world 1 | 14 | 13 | 1 |
| Full Time Equivalent (FTE) | 908 | 952 | (44) |
1. Including USA, Canada and Middle East.
Our overall workforce has decreased by 4.6% to a total FTE of 908 from 952 at 31 December 2022.
On an operational FTE basis (excluding Capitalised Product Development), the revenue per average operational FTE increased to £103.2k (2022: £102.0k).
The reduction in headcount reflects our drive for operational efficiencies and reduction in Edge product development, whilst growing our global delivery capability in Malaysia and the Philippines. Staff retention has increased to 86.2% (2022: 83.6%).
#### **Exceptionals**
The Group has adopted a policy of disclosing separately on the face of its Group income statement the effect of any components of financial performance considered by the Directors to be not directly related to the trading business or significant one-off events, for which separate disclosure would assist in a better understanding of the financial performance achieved.
A full explanation of 'Exceptional items' is included in Note 6 of the Financial Statements, however the main items are as follows:
- Restructuring and associated costs:
Relate to planned reductions within our Edge development teams during the first half of 2024, and the restructuring of the Group's operations to implement a new target operating model in 2023. These costs relate to one-off initiatives that support the Group's transition to a pureplay Edtech, SaaS business (2023: £1.0m; 2022: £0.6m).
- Education Services restructure costs:
Board's strategic review of Education Services and establishing ES as a standalone entity, with costs of £1.4m in 2023.
- Lapsed offer by Ellucian: Costs of £1.4m were spent on due diligence and external advisors in 2023.
- Acquisition-related costs:
Amounts relating to the consultancy and legal costs of potential acquisitions (2023: credit of £0.1m; 2022 charge of £0.2m). The credit in 2023 has arisen from the recalculation of accounting for changes in the fair value of the contingent deferred consideration as part of the earn-out agreement with Eveoh BV, and the corresponding gain has been recognised in the income statement.
#### Net cash and cash flow
| £m | 2023 | 2022 | Change |
|-----------------------------------------------------------|--------|--------|--------|
| Net cash flow from operating | | | |
| activities before tax | 9.4 | 8.7 | 0.7 |
| Tax paid | (1.1) | (2.6) | 1.5 |
| Purchases of PPE | (0.4) | (0.7) | 0.3 |
| Net lease payments | (0.9) | (0.9) | 0.0 |
| Capitalised product development | (8.5) | (10.4) | 1.9 |
| Proceeds from shares | 0.0 | 0.6 | (0.6) |
| Free cash flow | (1.4) | (5.3) | 3.9 |
| Net cash outflow from acquisition activities | (0.1) | (1.0) | 0.9 |
| Net cash inflow/(outflow) from other financing activities | 5.6 | 3.2 | 2.4 |
| Net decrease in cash & cash equivalents | 4.1 | (3.1) | 7.2 |
| Cash & cash equivalents at beginning of the year | 2.9 | 5.9 | (3.0) |
| Less: Effect of foreign exchange rate changes | (0.2) | 0.0 | (0.2) |
| Cash & cash equivalents at end of period | 6.8 | 2.9 | 3.9 |
| Borrowings | (14.0) | (6.3) | (7.8) |
| Net (debt)/cash & cash
equivalents end of period | (7.2) | (3.4) | (3.8) |
Net debt and cash equivalents at 31 December 2023 were (£7.2)m (2022: (£3.4m)).
Operating cash inflow before tax for the period was £9.4m (2022: £8.7m), £0.7m higher than last year despite £0.8m cash outflow from costs relating to the lapsed offer from Ellucian and £0.9m outflow from restructuring.
Spend on product development decreased to £8.5m (2022: £10.4m) in line with the Group's product investment programme. The Group made a payment of £0.1m for deferred consideration (2022: £1.0m), which was a final earn-out payment for Eveoh. There have been no acquisitions in 2023.
Cash inflow from other financing activities (per table above) increased to £5.6m (2022: £3.2m). The Group paid a final dividend of 0.65p per share in the year with £1.4m returned to shareholders. Bank loan arrangement fees and all interest in the period totalled £0.9m (2022: £0.3m). During the year the Group drew down an additional net loan of £7.8m (2022 £6.3m) from the £20m facility to assist with working capital requirements.
# Financial review continued
#### **Funding arrangements**
On 29 December 2023 the Group entered into a three-year £20m multicurrency revolving facility with a further £5m accordion with HSBC with the option to extend by a further two years. The facility was put in place to cover general corporate and working capital requirements of the Group; as at 31 December 2023 £14.0m (2022: 6.3m) of the loan was utilised. The Group has a £2m committed overdraft facility in the UK and an AUD \$2m committed overdraft facility in Australia; both facilities are committed for a 12-month period ending August 2024 and October 2024 respectively. At 31 December 2023 none of the overdraft facilities were drawn.
#### Shareholders returns and dividends
Given Tribal's solid financial performance in FY23, the Board intends to pay a dividend to shareholders. However, given the uncertainty around the likely outcome of the dispute with NTU, the Board is deferring its decision on the quantum of the dividend payment this year until the Board has an appropriate level of certainty. Such dividend is likely to be declared as an interim dividend.
#### Going concern
As at 31 December 2023, the Group had cash and cash equivalents of £6.8m (2022: £2.9m) and borrowings of £14.0m (2022: £6.3m). The Group has funding arrangements in place as described earlier, also please see Note 19 to the financial statements.
The Group benefits from strong annual recurring revenues and cash generation, it also has a significant pipolino of committed income as it enters 2024. The Group's net current liability position has reduced to £19.1m from £25.0m in 2022; the decrease mainly driven by the release of the onerous contract provision (£4.5m) following termination of the NTU contract. The remaining net current liabilities primarily consist of net contract liabilities £21.8m (2022: £19.3m) relating to deferred customer revenue recognised in accordance with IFRS 15.
Management have considered a range of outcomes in relation to the NTU contract dispute and its potential impact on the Group's cash flows. If mediation is not successful, it may result in possible litigation. Should the dispute result in litigation, timelines for resolution will be uncertain but are considered highly unlikely to be resolved within the next 12 months. Management is undertaking a range of actions, including assessing all discretionary spend, in order to improve cash flows as a matter of prudence.
In assessing the Group's going concern position the Directors have considered all relevant facts, latest forecasts, an assessment of the risks faced by the Group, and considered potential changes in trading performance. In addition, management have stress tested the latest forecasts to the point where either the Group cannot meet its liabilities or is In breach of banking covenants and have concluded that this position is highly unlikely. Accordingly, the Directors have a reasonable expectation that the Group and the Company have adequate resources to continue in operational existence for at least 12 months from the date of approval of the financial statements and the foreseeable future. Thus, they continue to adopt the going concern basis in preparing the financial statements.
The corporation tax on profit before tax was £1.3m (2022: £0.9m). This increase is driven by the increased profits of the Group.
#### Share options and share capital
On 16 October 2023, 418,314 nil-cost share options were granted to Mark Pickett (240.308) and Diane McIntyre (178.006) as part of their ongoing remuneration.
On 16 October 2023, 185,194 nil-cost share options were granted to eligible employees on the Executive Board under the terms of its 2018 Long-Term Incentive plan.
#### Earnings per share (EPS)
Adjusted basic earnings per share from continuing operations before exceptional items and intangible asset impairment charges and amortisation, which reflects the Group's underlying trading performance, increased to 4.1p (2022: nil) due to the improved adjusted profit before tax in the year.
Statutory basic earnings per share increased to 2.5p (2022: statutory loss 0.2p) as a result of the statutory profit in the year £5.3m (2022: statutory loss £0.5m).
#### Pension obligations
At 31 December 2023, the Group operated two defined benefit pension schemoc for the benefit of cortain deferred employees of its subsidiaries in the UK. These schemes are administered by coparate funds that are legally separated from the Company. The trustees of the pension funds are required by law to act in the interest of the funds and of all relevant stakeholders in the schemes. The trustees of the pension funds are responsible for the investment policy with regard to the assets of the funds.
Across the pension schemes, the surplus calculated under IAS 19 at the end of the year was £0.1m (2022: surplus of £0.1m), with gross assets of £8.5m and gross liabilities of £5.7m (2022: £8.1m and £5.4m respectively). Total actuarial losses recognised in the consolidated statement of comprehensive income are (£0.1m) (2022: gains £0.3m). The Company does not have an unqualified right to apply any surplus on one of the schemes and consequently a surplus of £2.6m has not been recognised.
The Strategic Report on pages 1 to 33 was approved on behalf of the Board on 20 March 2024
Diane McIntyre
**Chief Financial Officer**
# Stakeholder engagement
Section 172 of the Companies Act 2006 requires each Director of the Company to act in a way they consider, in good faith, would most likely promote the success of the Company for the benefit of its members as a whole.
# Long-term business SUCCESS
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The Board recognises that the long-term success of the business is dependent on the way we interact with erange of keyetikeholders as demonstrated by our compliance with the QCA code, which under principles O and 9 requires companies to take account of widerstakeholder and so distresponsibilities, including the implications for long-term success and to maintain governance structures and processes that support good decision-making.
IndiswaySection1972 requires c Oirector to have regard, emorger other matters, to the
- Ukelyconsequences of any decisions in the long term.
- Interests of the Company's employees.
- Need to foster the Company's business relationships with suppliers, customers and other key erakeholders.
- Impact of the Company's operations on the community and the environment.
- Desirability of the Company maintaining acquiration for high standards of business conduct.
- Need to act fairly between members of the Company.
Indechaging its Section 17/2 duties the Boardhas considered the factors extend the views of key stake hullens.
Engaging, consulting and action on the needs of different stakeholders is entitled for the development and delivery of a culture and strategy that achieves long-term success.
Tibelundertakesmeaningfulengagementwithitsstakeholder groupstobuildtrusted, strongrelationshipsandsupportsthe ethosof Section 1972 in order to support groud decision-making.
Annually, the Board undertakes an in-depth review of the Company's performance against discrete gyand dive-year objectives. In 2023 this involved a detailed review of the Group's dive-year dinancial model. Once reviewed by the Board, the five-year model and strategy was used to shape the financial budget, including investment decisions for the next timentally ear and future strategic direction of the Company. In making decisions concerning the business planend future strategy, the Board has regard to avariety of matters including the interests of various etal cholders, the consequences of its decisions in the long-term and its long-term regulation.
In Boardecknowledges that some decisions will not necessarily result in a positive outcome for all our stakeholders, however, it always estive of continuous braintenests of the Group and to be distracted belanced in the approach to stakeholder management. The needs of different stakeholders are always considered as walked the consequences of any decision in the long term and the importance of our reputation for high standards of business conduct. By considering the Group's purpose, vision, values and commitment to responsible business to get her with its strategie priorities and having a process in place for principal decisions making, the Boardeins to ensure that its decisions are in the best interests of the business.
The Company's key stakeholders are set out in the table below. The views of and the impact of the Company's activities on those stakeholders are an important consideration for the Directors when making relevant decisions.
Strategic Report
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|-----------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
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| | endgrowth of the Group and have historically provided as our each equity to help funde one of the acquisition amade. In addition, shareholders provide important deedback to the Executive Directors on market conditions, expectations, and economic performance. | enswerquestionsreisedbyshareholders. Tibalencouragesregulardisloguewithboth\nexisting and potential shareholders throughout they can to understand the broadstand\nexpectations, and to ensure that the Group's strategy, business and eland progress are dearly understood. |
| i
G | | Investorinformationincluding the Annual Report, investorpresentations, including the capital markets day presentation and announcements are available on the Company's website. |
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| 2.5
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4 | | Employeeperformence reviews are conducted annually. In addition, managers are encouraged to hold regular, informations to consessions with each of their direct reports. |
| • | | Employeeseeneskquesitonsregardingell espectsof the business during our regular Group-wide all-handsmeetings with the Group's Executive Management team. |
| Customers & Suppliers | Delivering our strategiopriorities and ensuring we continue to operate successfully requires strong mutually beneficial relationships with customers, suppliers, and government departments. | The Crouphasaegular communication via email, and the Crouphasaegular communication via email, and the Crouphasaegular blogs for all stakeholders to view. |
| | Tribaleimstobuildstrongendtrustedbusiness relationshipswithbothcustomersendeupplises, ellofwhomersendeitlitodeliveringmenyofour stretegloobjectives. Weelintomeximisecost efficiencies and enhance positive outcomes | Wehaveoteam focused on Oustomer Success, facilitating on going meetings with existing oustomers to better service our customers and add value across our customers base. |
| | for all | Lestyearweiteld two customer conferences in the UK, almed a tup deting both our product fusers' and institution fleaders. Our tomers from across the globe joined us for easer teasof interactive cessions, panels and teynotes designed to inspire, and ultimately empower individuals and teams to get the very best from our suite of products and services. |
# **Environmental, Social and Governance Report**
Tribal has always been committed to activities that benefit the environment and society, underpinned by good governance. We believe the credibility and sustainability of any business goes beyond pure financial gain; a principle demonstrated by our mission to empower the world of education.
#### Our core tenets
We believe our solutions have the potential to make a positive impact within the education sector in two key areas: increasing student well-being, diversity and success, while supporting the drive by the sector to lower carbon emissions.
The issues of emotional wellbeing and diversity of their student populations are high on the agenda of many of the world's educational institutions and we are committed to harnessing the power of cloud computing to help our customers in addressing these challenges and realising their goals. You can read more on this topic within the social section of this report.
Educational institutions are also increasingly conscious of the role they can play in the global drive towards the reduction of carbon emissions. We believe the move from the use of servers running localised versions of our software on-site at our customers (our traditional SIS offerings), to our next-generation offerings, hosted within larger datacentres (Tribal Cloud and Edge), will not only free our clients from the burden of running their own IT systems, but also reduce the overall power consumption required to deliver this technology. You can read more about this within the Environmental section of this report.
#### Our priority areas
Alongside these two core tenets and as part of our journey to continually improve our approach and performance, the ESG Committee, chaired by Non-Executive Director, Nigel Halkes, ensures effective oversight and investment in these increasingly important areas. The Committee meets twice a year and members include Diane McIntyre (Governance), Chloe Payne (Social) and Matt Davis (Environmental).
The Committee focuses on priority areas for the Group and each area has key initiatives and objectives for the coming year and appropriate ownership from across our Executive Management Team. We have demonstrated where these priority areas align with the UN's Sustainable Development Goals (SDGs), as shown below.
In 2022, an ESG working group was formed to implement our initiatives across the Group, including Finance, Human Resources and Governance.
Ultimate responsibility for Tribal's ESG performance sits with the Board. However, we recognise that these initiatives are important to and rely on the commitment of all staff, and we continue to make efforts to encourage involvement across the business.
Tribal is currently focused on improving its impact in the following areas.
# Environmental
Asperiously demonstrated by our commitment to the Integry Savings Opportunity Schome (ISOS), Tribulian been to cused on reducing its environmental impact for somether of years. Changes to working practices following the COVID-19 pandemicallowed us to make major improvements in terms of carbon to opping, and we are delighted to easy that these behaviour changes have continued into this year.
#### KEYINITIATIVE
Reduced travel with carbon offset bongoing following the introduction in 2022 of a travel mindfulness framework and travel guidelines, we have continued to focus on reducing travel to the minimum levels necessary for business operations. Whilst the pandemic contributed greatly to travel reductions, we have maintained air travel levels within our targets, and achieved are duction in air travel from EMEA operations by 69% over the 6-year period to 2023. We will continue to promote a transfer it model for service delivery and challenge any travel which is out of scope of our travel mindfulness eithes.
Our Evelides alary sacifices cheme for staff, which was setupat the end of 2021, has saved \$5:65 to mes of 6022. The uptake in this scheme has continued to be impacted by the global supply shortage of EV components causing excessive lead times. Although many of our employees are remote workers, when travel cannot be avoided, we continue to look for new ways to off set our emissions with reductions elsewhere. We will continue to off arthis scheme to our staff and work towards our target of having at least 10% of employees using the scheme.
#### KEYINITIATIVE
Cloud consumption \*\*\*\* Our Cloud Optimisation director has spentitive year defining.... our cloud computing strategy and overseeing our cloud consumption Focus has been on developing policies and procedures to preventivaste in our cloud consumption, such as redundant resources, the over-provision of servers and excessive data retention policies. The Cloud commercial team are creating baseline plans to trackstandard business as usual sizings for our SUS customers, meaning engineers can. refer to accurate customer date on cloud provisioning needs. Tribal's cloud hosting providers, Amazon Web Services (AWS) and Microsoft, are also committed to building a sustainable business for customers and the planet. Ongoing discussions are being had with our providers about an abling visibility of Oarbon Footprint data in order to actively reduce 602 emissions AWS is on path to achieve 100% renewable energy by 2025 and as the world's largest corporate buyer of renewable energy. Amazon uses new renewable energy on the electric grid in Europe to help power its business operations. Microsofthas been earbon neutral across the world since 2012 and commits to being carbon negative by 2030. Its goal is to promote sustainable development and low-carbon business practices globally through its cloud-enable (technologies. Using cloud providers who are also committed to reducing carbon emissions, Tribal expects to see a positive impact onlise loudeation for print and thereby that of fiscustomers going forward.
# ESC Report continued
# ର୍ଭ୍ରମନ୍ତା
Tribaliscommitted to contributing to a fairer and more socially inclusive world. As well as having a positive impact on our employees and customers, we are aware of the positive contribution we can make to wider society.
#### KEY INITIATIVE:
Diversity within Tribal ongoing
It is important to ensure that we have an inclusive organisation where diverse talent is developed, engaged and retained.Buildinguponourworkin previous years we have continued to partner with external diversity and inclusion experts, Business in the Community, who are supporting the design of our ongoing management development program, built upon insight from our employee survey information.
In 2023, we continued to focus on developing our approach to talent acquisition to ensure we are hiring talent into the business at representative rates. Throughout the year, we made net positive progress in the recruitment rate of ethnic minority and female employees and continue to develop our strategy to attract and retain the right talent.
We continue to track and examine key informative metrics to support our long term EDI goals. In particular tracking of In On Up employment outcome metrics to ensure that we have strong and informative visibility of measures that matter in the employee life cycle, enabling us to ensure that our interventions are effective across the full employment fourney.
#### KEYINITIATIVE
Supporting student welfare: ongoing Through Edge
The challenges that students face today in colleges and universities are well documented, with increasing numbers of students reporting concerns about their mental health and struggling to balance financial, work and personal commitments. Education providers are facing everincreasing demands to help and support students to ensure they thrive and succeed. Tribal has been a leader for many years in providing solutions for support services and is proud to continue this history of innovation with tribal Student Support and Wellbeing.
With a wide range of communication options, Iribal Student Support and Wellbeing is able to reach students at any point in their personal journey with the services they need Staff also have a comprehensive view of a student's wellbeing from within a single record, helping institutions provide more effective and efficient delivery of services. Tribal's solution helps bring a student's data together and gives universities all the tools needed to truly understand and support Chardholyddial.
# Covernance
Titbaliscommitted to maintaining high standards of corporate governance and has adopted the Quoted Companies Allance Corporate Governance Code.
The Board will continue to developite governance arrangements particularly in respect of environmental and so dalissues, including any changes required as a result of the requirements of the Taskforce on Climate-related Financial Disclosures.
#### (XEVINDIOAUVE)
#### Global ISO cardiffections ongoing
inhel Croup holds certification for both the ISO 27001 standard for Information Security and the ISO 27001 standard for Our lity Management. In 2023, the Croup extended the croup of this critification to the Clubul Delivery Centre (GDS) to Malaysta. Schapelobally eligned and ISO certifications are created part of currick mitigation strategy and provides assurance for our customers. In 2024 we will maintain our current ISO certifications and will continue to elignour business continuity estivities with the ISO 22801 standard for Business Continuity.
#### (XEY/INITIDATIVE)
#### Enhanding sustainability in supply challo
Supply distinguing amont touches all separate of ESO. In 2028 Tribal continued to implement the Supplier Management framework to continue to ensure consistent supplier management throughout the organisation, including effective governance and best practice within the supply chains. The clim of the framework is to support working in partnership with its suppliers, are uning quality and good management of supply chains the clim of the framework is to suppliers, are uning quality and good management of supply chains at
During 2023, we provided training to key procurement personnal within the organisation to further enhance sustainability within the supply drain. We engaged with 80 of our key suppliers to promote and enhance sustainability throughout our supply chains, and to help understand and to support them to overcome the barriers to sustainable performance and reporting which they are experiencing, buring 2024 we will be its ultipour refined Supplier Code of Conduct to all suppliers and continue to engage with suppliers to enhance and improve our Scope Supporting espabilities.
#### (XEY)NUUATUVE
#### Standardsetton and simplifications
Following investment in the new three eards absorption system which went live in Jerusay 2028, a Global Business Services (GES) organization was established with the objective of diving internal efficiencies by simplifying, standardising and centralising back of fice processes into esingle, global Centre of Excellence. By year end, several business critical processes have migrated to GES delivering immediate benefits and esolid foundation for continued improvements. We will continue to build on this progresses crossed business support functions, so they take full advantage of the potential of fered by Global Business Services.
# **ESG Report** continued
#### Living up to our values
#### Our culture and values
The success of Tribal is dependent on our culture - the way we think, behave and act towards each other and our key stakeholders. We bring together highly talented people in a creative and collaborative environment, and are united through our well-established values, which we continually reinforce and celebrate.
#### Our values are:
Trustworthy: We value honest discussion, we anticipate, listen and respond to requirements and we rely on each other.
Pioneering: We welcome change, we strive to innovate and we aim to meet the needs of the ever-evolving education marketplace.
Accountable: We take ownership, we keep our promises and are focused on delivering successful outcomes.
Dedicated: We are committed to our customers, work to secure long-term partnerships and we collaborate to deliver optimum solutions.
#### 2023 Highlights:
With our values in mind, we made good progress against our ESG objectives in the year, including achieving the following:
#### Environmental
- In 2022 Tribal committed to planting 25 trees for every new starter globally via accredited schemes; to date 7,436 trees have been funded
- Octopus Electric Vehicle car scheme continued in the UK with saving 35.65 tonnes of CO2e since the end of 2021.
- Provided Procurement and Sustainability training to key procurers within the organisation to help drive positive behaviours through our category management framework.
- Engaged directly with 30 key suppliers to enhance and improve our Scope 3 reporting capabilities and support them to overcome key challengos in rolation to Sustainability and data collection.
#### Social
- Launch of our flagship reward and recognition programme. Tribal Achievers. This is a Company-wide, employee experience platform that enables all managers and colleagues to show appreciation, recognise, reward and celebrate colleagues within their own team and across the whole organisation. Each recognition aligns with one of our Company values. 100% of our managers have activated their Tribal Achievers account, which shows they find it a useful way to recognise and reward their team members and colleagues and almost 99% of employees have activated their account.
- Continue to offer volunteering leave to all employees, enabling our colleagues to have a real community impact. For example, in Dec 2023 colleagues from our Geelong team took the opportunity to come together as a team to support a local community project.
- Launched partnership with ChapterOne, a charity that supports children to reach their potential as happy and confident readers. This program focuses on supporting struggling young readers in areas of deprivation across the UK. including the government's designated Education Investment Areas. Tribal colleagues volunteer 30 minutes per week to provide much needed reading support to primary school children. To date. Tribal volunteers have provided over 150 one-to-one reading sessions, totalling over 4,000 minutes of support with the program continuing into 2024.
#### Governance
- Secured ISO certification for Global Delivery Centre in Kuala Lumpur.
- Secured Cyber Essentials+ certification business wide.
- Compliance training completion rate of over 95% globally.
- Continued to upskill Cloud Teams in core cloud technologies through the Cloud Development Pathway and other training, including the AWS Practitioner course.
**Financial Statements**
# Streamlined energy and carbon reporting (SECR)
The credibility and longevity of any business goes beyond pure financial gain; a principle long-embodied and supported by Tribal's strong values-based culture and approach to environmental, social and governance issues.
Tribal is subject to the Streamlined Energy and Carbon Reporting (SECR) Framework Regulations. Our energy consumption figures (see Table 1) and our greenhouse gas emissions relating to gas, electricity and transport (see Table 2) as well as an intensity ratio, and information relating to our energy efficiency action are presented as follows.
In 2023, our Scope 1 and Scope 2 emissions were $83.2\,\mathrm{tCO_2e}$ (2022: $91.9\,\mathrm{tCO_2e}$ ). The greatest contributors to Scope 1 and Scope 2 operational emissions are the electricity and gas used in powering our buildings. Our purchased electricity has decreased as we have reduced property space, offset by an increase in our gas usage as our offices are increasingly being utilised as staff move back to working in offices. Scope 3 emissions are attributed to fuel used in employees' cars on business use.
In 2023 Scope 3 emissions were $70.35tCO_2e$ (2022: 50.10 $tCO_2e$ ), the increase in the year was expected as travel continues to remobilise post COVID restrictions. Whilst we continue to operate a remote delivery policy for customer implementations, our sales teams and senior management have been able to travel to customers for in-person meetings. We continue to be cognisant of all travel and operate a mindful travel policy to ensure travel is kept to a minimum where possible.
Our intensity ratio (Scope 1, 2 and 3 emissions relative to revenue) is $1.79~{\rm tCO_2e/fm}$ (2022: $1.70~{\rm tCO_2e/fm}$ ) with Scope 3 emissions driving the increase. Tribal Group plc is an unquoted large company for the purpose of SECR, we are therefore only required to report on UK energy usage.
Tribal have followed the 2019 UK Government environmental reporting guidance. The figures relate to the required elements of each Scope 3 category rather than the optional elements. Tribal have used 2023 UK Government's Conversion Factors for Company Reporting.
Only energy consumed in the UK has been reported and the Group have taken the exemption to exclude emissions and energy consumed outside of the UK and offshore area until we can be confident in reporting methodology.
**Table 1: Energy consumption**
| Area | Category | Sub-category | 2023
Consumption | 2022
Consumption | Change | Units |
|----------------|-----------------------|--------------------------------------------|---------------------|---------------------|----------|-------|
| Electricity | Electricity | Purchased electricity | 352,293 | 435,134 | (82,841) | kWh |
| Gas | Stationary combustion | Natural gas | 60,215 | 42,268 | 17,947 | kWh |
| Transport fuel | Combustion of f | fuel used in personal cars on business use | 263,569 | 183,484 | 80,085 | kWh |
#### Table 2: Scope 1, 2 and 3 intensity ratios
| Year ended 31 December 2023 | Scope 1 | Scope 2 | Scope 3 | Total |
|-----------------------------------------------------------------|---------|---------|---------|--------|
| Tonnes of CO 2 e | 10.99 | 72.21 | 70.35 | 153.55 |
| Percentage | 7% | 47% | 46% | 100% |
| Emissions intensity relative to revenue (tCO 2 e/£m) | 0.13 | 0.84 | 0.82 | 1.79 |
| Year ended 31 December 2022 | Scope 1 | Scope 2 | Scope 3 | Total |
| Tonnes of CO 2 e | 7.72 | 84.15 | 50.10 | 141.96 |
| Percentage | 5% | 59% | 35% | 100% |
| Emissions intensity relative to revenue (tCO 2 e/£m) | 0.09 | 1.01 | 0.60 | 1.70 |
Nigel Halkes
Chairman, ESG Committee
#### **CAUTIONARY STATEMENT**
This information has been prepared solely to provide information to shareholders to assess how the Directors have performed their duty to promote the success of the Group. The Strategic Report contains certain forward-looking statements. These statements are made by the Directors in good faith based on the information available to them up to the time of their approval of this report and such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, which underlie any such forward-looking statement.
# **Climate-related Financial Disclosures Report**
Tribal recognises the significant impact that climate-related risks and opportunities (CRROs) may have on our business and its impact on wider society. We proactively consider ways in which we can address these issues. This report sets out our detailed climate-related financial disclosures in accordance with the Companies Act 2006, where we are in this journey, as well as our plans for reaching our Net Zero commitment.
#### Governance
We include climate-related risks in our risk register, which is considered by the Board on a regular basis. The Board is fully aware of their responsibilities as they relate to the climate and its impact on the business. This is demonstrated through establishing the ESG Committee, as explained on page 24.
The day-to-day consideration of climate-related matters is currently situated with an ESG working group, under the oversight and responsibility of the ESG Committee. The ESG working group meets monthly with any decisions ratified by the ESG Committee. The ESG working group consists of senior management, ensuring representation from across the business.
Any strategies to manage and respond to identified CRROs can only be successful when everyone in the Group contributes. We continually raise awareness of our responsibilities and how everyone can assist. This awareness is raised through training initiatives. Executive ylogs, Tribal talks, poster campaigns, and an intranet ESG page.
#### Strategy
The Group's processes for identifying and assessing CRROs are described in the Risk Management section below. At present, none of the CRROs are assessed as being material to the Group, irrespective of timeframe. Accordingly, there are no material impacts on the Group's financial statements for the current financial year. Nevertheless, we remain aware of the continuously evolving landscape, the potential impact it may have on our business and stakeholders, and the importance that even small changes can have.
Even though there are currently no material impacts from CRROs, we have developed a longer-term strategy to ensure we do our part in achieving a lower carbon economy for a sustainable future.
We previously communicated our Carbon Reduction Plan which sets out our commitment to achieve Net Zero GHG (greenhouse gas) emissions by 2050. The Carbon Reduction Plan, with the latest updates to our performance, can be found on our website and is summarised in the Metrics and Targets section. The key GHG metrics and targets are based on current emissions reporting, encompassing our operations in the UK, in accordance with statutory requirements. We are hard at work to access data collection to expand our emissions reporting to operations outside the UK, as well as greater disclosure of Scope 3 emissions.
In addition to the above, we continue to invest in various initiatives to assist us in achieving our commitment. This includes initiatives to reduce our air travel by 25% per head over five years and an o-vehicle solary sporifice scheme with the aim of at least 10% of our employees participating at the end of 2023. Other ongoing initiatives include a 'romote-first' business, reducing general travel requirements, refitting offices with LED lighting, reducing reliance on paper, and ensuring upcycling or recycling of electronic equipment.
With our continued transition to a SaaS business, we are migrating services to the cloud. We recognise that our use of cloud-based resources has a climate impact and is impacted by climate-related matters. Our focus is currently on the climate impact of using these cloud-based resources. During 2023. we have been analysing and communicating with a major cloud vendor to identify data and potential metrics that we can use to assess, monitor, and manage our climate impact. This process is ongoing with an expectation to finalise it during 2024, as well as a similar process for our other major cloud vendor. In the interim, we continue to optimise our usage of the cloud through modernisation. We have also been using the monetary value of our usage (using constant rates) as a proxy for measuring a reduction in climate impact at a location basis. This is deemed relevant given that the usage is normally charged on a per-hour basis. However, it is imperfect and not comparable across locations.
To further cement our commitment to sustainability and reducing our climate impact, we joined the UN Global Compact in 2023. The UN Global Compact is the world's largest corporate sustainability initiative. This allows us to form part of a wider community of corporations where we can share and learn best practices to reduce our climate impact.
As described above we are continually in communication with key suppliers to understand their sustainability goals and plans, ensuring that they are in alignment with our endeavours. We introduced our Supplier Management Framework in 2022 which forms the basis of our dealings with suppliers. The Supplier Management Framework includes considerations relating to sustainability and climate-related matters.
Although we have not yet formally assessed our resilience against different climate scenarios, we have robust business continuity management processes to ensure that we can continue to operate after experiencing shorter-term shocks. We will continue to rely on these processes until we can perform a formal resilience assessment.
#### Risk management
Tribal's risk management process for climate-related risks (CRRs) is incorporated into our overall risk management process. This process requires senior leaders to identify all relevant risks. including CRRs, and populate the risk register for their respective risks. In addition, we have one senior leader who focuses specifically on CRRs. The risk register includes relevant details of each risk and its potential impact on the entity. All risks are ranked based on the risk's likelihood of occurring and its magnitude of impact. The risk register elaborates on any action plans or controls to reduce, mitigate, manage, and monitor each risk. A risk remains on the risk register for so long as it remains a risk and cannot be fully reduced.
Strategic Report
This approach ensures the most complete identification of CRRs by those closest to them. The enhanced focus on CRRs through appointing a responsible senior leader ensures that we keep ahead of this changing field. In addition, we ensure that we maintain the same level of scrutiny in relation to CRRs as we do to all other risks.
We are continually exploring various ways to ensure that we capture and address all risks. One of the ways we've achieved this is to simplify the method of collating and monitoring risks. This process is achieved via an app with various reporting functionalities, which streamlines the entire process.
We do not currently classify risks according to timeframes, i.e., whether the risk is associated with the short-, medium-, or long term. Instead, the timeframe of the risk forms part of its overall assessment.
The risk register is regularly discussed in detail at various levels in the Group. The Board also has access to the risk register and various risks, based on ranking or importance, are specifically discussed on a regular basis.
#### **Metrics and targets**
We have set out our Scope 1 and Scope 2 GHG emissions on page 20. In addition, we set out limited Scope 3 GHG emissions. As statutorily required, these disclosures currently only include our UK operations, although we are in the process of collating data for our operations outside the UK and aim to report on them in future. Furthermore, we recognise that further Scope 3 emissions disclosure will be useful. As part of our broader initiatives, we are also assessing the requirements to collect, process, and disclose more Scope 3 information. As part of this process, we will also consider augmenting our targets as explained in this section.
We currently have limited formal metrics or targets as we build a robust and measurable strategy. As discussed in the Strategy section above, we committed to Net Zero GHG emissions by 2050. This commitment includes a Carbon Reduction Plan, which includes various targets to be met by 2050 with five-year targets to be met by 2024. The detailed plan can be found in our Carbon Reduction Plan as published on our website. We set out the five-year targets, associated metrics, and our current progress in the table below.
In addition to the above, we continued our commitment to plant 25 trees for every new starter globally via accredited schemes. During 2023, this initiative resulted in 2,736 trees being planted, which equates to offsetting about 68.4 tCO2e.
We are also considering the data availability from our cloud providers to determine appropriate metrics and targets relating to our use of cloud services and the resulting carbon footprint (as discussed in more detail in the Strategy section). Using the interim measure of costs measured using constant rates, we can report a reduction of approximately £953k during 2023. This reduction is due to our ongoing cloud optimisation processes.
Other initiatives, such as reducing the use of paper and the upcycling and recycling of electronic equipment, are ongoing as described in the Strategy section. Despite these initiatives not having any associated formal targets or metrics, they are important as part of our larger responsibilities.
Our five-year targets, associated metrics, and the current progress to achieving those targets are as follows:
| Target | Metric | Progress |
|----------------------------------------------------------------------------------|------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Reduce air travel CO2 emissions by 25% per head. | CO2 emissions from air travel per head. | This target has already been met with air travel reducing by 39% per head between 2019 and 2023. We will focus on maintaining to meet this target and may refine it in future. |
| Support 10% of employees within the first two years to obtain electric vehicles. | Percentage of employees
supported to obtain an
electric vehicle. | At the end of 2023, 5% of employees participated in the scheme. Although our interim target was not met, this was primarily due to supply and availability issues. We will continue to monitor this target and will endeavour to reach it as soon as possible. |
| Ensure that every UK office has electric vehicle charging points installed. | Percentage of UK offices with electric vehicle charging points. | We have liaised with all our UK landlords and installations are in the pipeline at 100% of UK offices within the next three years (currently 0% have charging points). We will continue to monitor the target to ensure the installations occur. |
| Reduce our Scope 1, 2, and 3 carbon emissions in the UK by 5% per head. | Scope 1, 2, and 3 UK carbon emissions per head. | Our Scope 1, 2, and 3 UK carbon emissions per head has reduced by approximately 84% on our 2019 baseline. We recognise that a significant portion of this reduction results from pandemic-related changes and we have noted an upwards trajectory in our emissions in recent years. Consequently, we are closely monitoring our activities to limit a reversal of the gains made to date. |
requirements and
developments.
keep pace with market
# Principal risks and uncertainties
The Group is exposed to a number of risks and uncertainties, which could have a material impact on the future performance of the Group. The table below summarises the key risks that the Directors consider the business faces and how the Group seeks to mitigate them.
#### Mitteation **Risk Title** RiskOeserlotton Strategic The Group continues to transforminto a The Group has an experienced senior management (team) gure-play Ed Tech See Stusiness, with a and performance against strategy to closely monitored, transformation newentityestablished for the Education withoversishibythe Board. Failure to successfully Sawices business - Empowering Education. Structured working committees and oversight boards are implement and Such transformation may present various manage growth actism eterrat lamend word erana aceus colores alord programmes and ensure delivery against our objectives challengeseuchas strategies. and themseld metries. Ensuring the effective transition of Ampowering Education to a position Transformation will focus on building SaaSbusiness of greater autonomy within the Group processes, driving simplification, standardisation, and endmanaging (is expansion into eddaneotydisaliesetheedalioonalde new geographies. delivery of our growith targets. Regular and effective Ensuring our business operations are communication with both employees and customers is one wo freque of yleviteelile elege of elds of the key components of the transformation programme, SeeSproducts and strettery. andkeytoftssuccess. Ensuring past acquisitions deliveron Wewill also continue to focus on effectively integrating their growth potential. past acquisitions into the business to support continued growth. Fallus can lead to impairment of assets, llarayo fasquibus epamablarofisingan financial performance of the Group. The Crouds activities include major Strong controls are maintained to ensure successful Project and service delivery enfiwareinstallation profess, which are profect deliveryand profect progress reviews take bredit melateresy ow for ency listing place monthly at Executive Management level with Delivery of major involvectmiliteant process change to our Boardoverstyltt, inconversiting any learning strom projects and ongoing dustomers' corebusiness operations. previous projects. coftware and service The complexity of our customers' systems delivery may not Avenewed/focus/has/been-greated-around/Customer endthebability to change can impact our Success as a strategic driver and value creator meet customer's ability to deliver to contract and requires dor the business. expectations edeptprofectmenagement. or contractual The Cropengaes with premium cloud computing requirements. Our Tribal Cloud customars Appartitular, rely suppliers (e.g. Microsoft Azure and Amazon AWS), the onour ability to maintain our savies levels architecture and contracts of which the filter big is level and ensure appropriate continuity of service. responseSLAs and a quick recovery to the event of a Afailure to deliver can lead to increased eingleregion deflure. implementation costs disputed invoices. The Group maintains a formal Delegation of Authority buseumablandiamen.anemyseyilared matrix to ensure appropriate visibility and approval of all animpacton other oncoing projects. customer contracts to ensure liabilities are reasonable and one rous contract clauses are avoided. The product development roadmap is focused on ensuring Innovation and Our customers deceding restring ressure to the Group cap meet customer needs. technology provide the best student experience and evicences, and required lexible cloud regime. The Croup continues to invest the implatform engineering The Group's software SasSeoftwaresolutions to help achiteve this. and product-development capability to careful delivery in development Challengesentse/from the ability to delive desperience of the second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second second seco programme needs to deliver to austomers bre segurd emborement and a constituent of the seguring with the seguring with the seguring and the seguring with the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the seguring and the segurin Overthenext three to five years our customers' focus will
beardene Honting their Student Management Systems
to the doud and continuing to evolve our See Sproducts.
Management have adjusted the product roadmap to fit
with customer trends whilst maintaining a competitive
advantage on our product of leatings.
sufficient quelity to ensure a successful
seles contractual penalities, higher churn,
reputational damage, and obsolete products.
implementation to our customers.
Afailure to deliver will result in lower
#### **Risk Title** Mitigation Risk Description Information As with other software and cloud-based The Group operates a Secure Data Centre and maintains ISO 27001 and Cyber Essentials Plus certification across management and businesses, there is an increasing risk of our systems being compromised by deliberate the global business. Continued investment in security data security attacks or unintentional acts, which could software and training for all staff enforces good practice Security breaches, lead to a loss of IP, unauthorised data access on data security. cyber-attacks or or data loss. This risk is further exacerbated outages could In addition, the Group has its own Data Protection Officer by the rapid development in Al capabilities. harm the Group by who ensures compliance with all relevant data security legislation and regulations, including the GDPR, and disrupting our internal A successful cyber-attack against our and customers' information assets could significantly a Global Information Security Group, which convenes impact our ability to function, retain and monthly and incorporates an Al working group. operations. attract business, and could lead to potential The Group annually renews its cyber insurance, reviewing financial penalties from regulators. the coverage needed to protect the business against the backdrop of a challenging global insurance market. With a wider geographic presence, there is increased risk from multiple regulatory data protection and information security requirements which need to be closely monitored. A failure to follow requirements could lead to financial penalties, reputational damage and a consequential impact on our overall performance. People Business growth requires key skill sets which The Group has incentive schemes designed to attract, motivate, and retain key employees, whilst encouraging are in demand in product areas such as Tribal Failure to attract and appropriate behaviours. We aim to provide competitive Cloud and Dynamics. With increased inflation retain skilled sales, remuneration and reward packages, and training and rotation in the market it becomes software development for all staff. increasingly important to attract and retain and other key people in our key roles. The Group's commitment to improving diversity within operational employees our workforce will assist overall performance and help Increased staff turnover and vacancies could harm the may hinder our ability to manage operations to widen our pool of potential candidates. Group's performance. effectively and could impact sales, product development and software implementations, resulting in reputational damage. The Group monitors proposed or adopted legal and Legal and regulatory The Group operates across several jurisdictions that have varying legal, regulatory changes, assessing the impact changes have requirements on business operations and implementing appropriate tax and compliance requirements. Any Failure to adhere to non-compliance with customer contract. safeguards to ensure compliance. External advisors are legal and regulatory legislative or regulatory requirements could used when required. requirements in have an adverse effect on the Group's current and new We operate a no-tolerance culture supported by our values. reputation and/or financial results. jurisdictions and and ethical standards. All relevant training is provided to staff and policies are updated regularly to reflect markets required changes.
The Strategic Report was approved by the Board of Directors:
Diane McIntyre
Chief Financial Officer
20 March 2024
# **Board of Directors**
"The Board, has a good blend of backgrounds pertinent to the challenges and opportunities Tribal faces."
#### **Key to Committee Membership**
Nomination Committee R Remuneration Committee A Audit Committee E ESG Committee
#### RichardLess Chairman
#### Appointed
Richardiolised the Board in November 2015.
#### Experience
Richard is currently Chaliman and Non-Executive Director of AIM listed Gresham Technologies ple. Richard is a Fellow of the Institute of Chartered Accountants in England and Wales (FCA) and has over 30 years experience of Public Companies. pertion and Communications businesses.
# Mark Plake & Chief Executive Officer
#### **Appointed**
Mark joined Tribal and the Board in July 2016.
#### Experience
Pizylously hawas Chief Financial Officer and Finance Director, UX of Computer Sciences Corp (CSC), a US-besed global leader in technologyenabled business solutions and services. Mark also spent 18 years in a vaitely of senior finance roles with Oracle amoss an umber of geographies. primarily in its software businesses.
# Diane Melutyre Chief Financial Officer
# E
#### **Appointed**
Dune plant the Board on 1 June 2021.
#### Experience
Diametrias over 25 years experience in finance roles, including her most recent role as Director of Finance at SkyUK Limited, and previous senter financial and executive positions at Vodations Group pla and Cable and Wireless pla. As an experienced finance leader, Diametrias a wealth of knowledge abooss commercial negotiation, strategy development and operational expension.
# Roger McDowell Senior Independent Director
#### Appointed
Roger prined the Scardin November 2015.
#### Experience
Roger is currently serving as Non-Executive Chairman of Avingtions plc. Hargreavies Services plc. Brand Architectus plc. Non-Executive Director of Proteome Setences plc and British Smaller Companies VCT 2 plc.
# Nigel Helkes Non-Executive Director
#### **Appointed**
Nigel joined the Board in January 2020.
#### Experience
Nigel is a fellow of the institute of Chartened Accountants in England and Wales (RCA). He qualified with FV and here a successful earest with EY, rething as Managing Partner UK and beland in 2013. Nigel is a Non-Executive Director of Hargreeves Sarvines pit. He is also a Non-Executive Director at Natical pit, a leading provider of intriligent automytion and Charles and Sarvines are nationally and develop this Non-Executive leadership skills.
# **Executive Committee**
# Diano Mointyro Chief Financial Officer
Dianajoined Modern 1 June 2021.
Stee bloodeplay on page 35.
# Adam Fox Chief Technology Officer
Adam was appointed to the Exec Board on 1 January 2024.
Coming from a background creating immersive and engaging technology products, scaling businesses via digital and about transformation. Adam has two decades of experience in strategic, technology company in 2011, strating it through to acquisition in 2017. He has been with litted since January 2023, exploring the width and depth of litted is business and products, in order to develop a future facing strategy for the next five years before formally taking the CTO position in January 2024.
# Ghloe Payme People & Transformation Director
Ohioe joined Tabal's HR team in 2007.
Other has been part of many notable expects in Titled's evolution, including the early days of our interrectionalisation. Children was appointed to lead the function globally in April 2017. Prior to Titled worked in the Health sector, supporting a large social care organisation through a period of sustained growth, and at Cambridge Assessment where she managed their reconfinent function interrectionally.
# Matt Davis Managing Director – Education Services
Mart joined Tribel in March 2022.
Having worked as a teacher, teacher trainer and leader for a clearde, Matt moved into advantancement in the continuous profit, Education Development Trust. He spent five years there designing large, complex advantaments moral managements for governments around the world then became the UK Regional Director, leading on the Trust's work for the UK Department; for Education,
# Tawfig Sleett Clobal Customer Services Director
Tawito totaled Tabelin January 20122.
: Hawilightings a wealth of experience having held senter bederelde positions at global SeaS providers in Adicoh, Artificial Intelligence, and Learning & Talent Management. With over 20 years of experience working in software companies, Tawingled global Services, Customer Success and Support teams, implementing and transforming talent and processes with a focus on improving Customer Success, retention and value added services.
#### Paul Davies Global Professional Services Director
Paul joined in April 2022.
Paul brings a wealth of International experience through senter positions with Oracle as a member of the professional services EMEA management team. Paul was responsible for innovation, and transformation of SaaSproject delivery focusing on global delivery tools, mathods and business development across the range of Oracle's products. He began his constituincy career with Pricewate thouse Coopers as an analyst and project manager.
# **Corporate Governance Statement**
# Tribal is committed to high standards of corporate governance and maintaining sound business ethics.
The Directors acknowledge the importance of good corporate governance and has formally adopted the 10 principles of the Quoted Companies Alliance Code (QCA). This Annual Report, together with the information on our website (www.tribalgroup.com/investors/governance), sets out how we comply with the principles of the QCA Code and provides insights into how our governance framework underpins our day-to-day activities and decisions.
| QCA Code Principle | Explanation | Additional information |
|---------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------|
| Establish a strategy and business
model which promotes long-term
value for shareholders | Tribelis eworld-class company, providing the expertise, software and success of our customers' students. | Pages 4 to 5 and 3 to 9 |
| Seek to understand and meet shareholder needs and expectations | This GEO and GFO communicate regularly with shareholders, investors fraid analysts, including at our heli-yearly results read shows. The full Beard is available at the Annual General Meeting (AGM) to communicate with shareholders. | Pages 22 to 26 https://www.tubalgroup. com/investors/governence |
| Take into account wider stakeholder
and social responsibilities and their
implications for long-term success | heddition to our shareholders, our customers, contractors, suppliers and amployees ere our most important stakeholders. We engage with the secommunities vieregular communications in our day-to-day and vier formal declarations and vier formal declarations. | Pagas 22 to 28
Pagas 24 to 29 |
| Embed effective risk management, considering both opportunities and threats, throughout the organisation | Ultimater caponalbility for dak managament reate with the Goardbut
day-to-day managament of dak is delivered through the way we do
business and our culture. | Pagas 32 to 36 |
| Maintain the Board as a
well-functioning, balanced team
led by the Chair | The Beardhes four established Committees for Audit, Remuneration, Nonfination and ISG. The composition and experience of the Beardits regize wednesday, primarily by the Nomination Committee. | Pages 34 to 35 https://www.tribelgroup. com/investors/directors |
| Ensure that between them the Directors have the nooeeeary up-to-date experience, skills and capabilities | The Coard is satisfied than its concern composition includes an appropriate balance of skills, experience and capabilities, including experience of the education, software technology and interactional markets. | Peges 34 to 37 |
| Evaluate Board performance baced on clear and relevant objectives, seeking continuous improvement | The Condregularly constitute the Area transport research the level of contributions, any learning and development needs and the level of somethy of the Senior Management Team. | https://www.inbelgroup.
com/investore/
governence/inenagement-
tremework |
| Promote a corporate culture that is based on ethical values and behaviours | Our Environmental, Sostal and Covernance Report section sets out our corporate values, behaviours and culture, which are reinforced via collaborative working, training and partonnance on an against a | Pegas 24 to 29 |
| Maintain govornance atructures and processes that are fit for purpose and aupport good decision-making by the Board | The Board is responsible for the Group's overall strategic direction and management, and for the establishment and maintenence of a strain work of delegated authorities and controls to ensure the afficient and affective management of the Group's operations. The Board wellatine alist of matters reserved for the Board. | https://www.tribalgroup.
com/investors/
governance/management-
framework |
| Communicate how the Company is governed and is performing by maintaining a dialogue with | The investors scattor of our website includes our results, presentations and communications to shareholders. We release the results of general meetings through a regulatory news service and also | hittps://www.tribalgroup.
com/hivestors |
The plc Board applies the principles of good governmes and supports a culture of open debate and constructive challenge to enable. Tribal to meet its objectives. In fulfilling their responsibilities, the Directors govern the Group in the best interest of the Company and It shareholders whilst having due regard to the interests of other stakeholders including customers, employees, supplies and regulators
on the Regulatory News section of our website.
shareholders and other relevant
stakeholders
#### **Governance structure**
#### The plc Board
The plc Board is responsible for the Company's systems of Corporate Governance.
The Non-Executive Directors are Richard Last, Roger McDowell and Nigel Halkes, all are considered to be independent of management and free from any business or other relationships, including consideration of shareholdings that could materially interfere with the exercise of their independent judgement. The Non-Executive Directors meet at least once a year without the Executive Directors present.
All Directors are required to submit to re-election each year at the Annual General Meeting (AGM) of the Company. All the Directors have access to the advice and services of the Legal Counsel. Each Director is entitled, if necessary, to seek independent professional advice at the Company's expense.
The Board meets at least eight times each year with additional meetings when circumstances and urgent business dictate. At these meetings the Board reviews a schedule of reserved matters including trading performance, financial strength, strategy (including investment and acquisition opportunities), risk management, controls, compliance, reports to shareholders and succession management.
The Board evaluates its performance and that of its committees through a process of regular dialogue and periodic formal Board evaluations.
The Board may, on occasion, delegate authority to a sub-committee consisting of at least one plc Director and senior manager as appropriate to facilitate final sign-off for an agreed course of action within strict parameters.
#### **Board Committees**
The plc Board has established four Committees to assist with its effective operation: the Audit Committee, the Remuneration Committee, the Nomination Committee and the Environmental, Social and Governance Committee. Each Committee has responsibilities to the Board which are outlined in formal Terms of Reference that have been approved by the Board. The Terms of Reference, which are available on the Group's website www.tribalgroup.com, are subject to annual review to ensure the Committees continue to follow best practice. The Chairman of each Committee reports to the plc Board after each Committee meeting and minutes are tabled at the next plc Board meeting. The responsibilities and operation of the Committees are summarised below:
#### **Audit Committee**
The Committee, chaited by Nigel Halkes, meets at least twice eyes, him onto retain tegrity of the Half Year and Annual Report and Accounts and formal announcements relating to the Group's disental performance. It reviews significant financial reporting issues, accounting policies and disclosures, key judgements, reviews the effectiveness of internal controls, as well as overseeing the engagement and score of the annual audit.
The Audit Committee Report on pages 42 to 48 contains during the Indianation on the Committee Jamie and entitles.
# Environmental, Social and Governance (ESG) Committee
The Committee, Chaffed by Migel Halkes, meate at least strottines eyear. It makes recommendations to the Board conflictor arching ESO vision and provides within Tribal to advance our approach, engage our colleagues throughout the business, and further raineend develop the details of our ESO strategy.
The ESB Committee Report on pages 24 to 29 contains further information on the Committee's releand activities.
#### **Remuneration Committee**
The Committee, chaired by Regar McDowell, meets at least twice eyear. Uneviews and makes recommendations as to the Objectors' remuneration, including benefits, terms of appointment and share-schemes.
The Remuneration Committee Report on pages 45 to 49 contains further information on the Committee Societies and activities.
#### **Nomination Committee**
The Committee, chaired by Richard Lest, meste at least once eyear. It leads the process for Board structure, size and composition of the Board and its Committees, and makes recommendations to the Board with regard to envelonges required to ensure an appropriate balance of skills, expertise, knowledge, diversity and independence. The Nomination Committee Report on page 44 contains further information and the Committee brole and activities.
# Corporate Governance Statement continued
Membership of Board Committees and attendance at Board and Committee meetings during the 12-month period under review are as follows:
| Committee | Plc Board | Audit Committee | Remuneration
Committee | Nominations
Committee | ESG Committee |
|------------------------------|-----------|-----------------|---------------------------|--------------------------|---------------|
| Number of meetings in period | 11 | 5 | 3 | 2 | 2 |
| Richard Last | . 11 | 3 | 3 | 2 | 1 |
| Roger McDowell | 10 | 5 | 3 | 2 | 2 |
| Nigel Halkes | 11 | 5 | 3 | 2 | 2 |
| Mark Pickett | 11 | 3 | 3 | 1 | 2 |
| Diane McIntyre | 11 | 5 | 3 | 2 | 2 |
#### **Executive Board**
The Executive Board is chaired by Mark Pickett. The members of the Executive Board are drawn from the heads of the business units and other operational areas. The Executive Board typically meets monthly, but the members interact frequently in the normal course of their roles. The Executive Board oversees the Group's operational and financial performance and is responsible for day-to-day management decisions in line with the Group's strategy. It also considers succession planning and talent management. Further matters are outlined in the Delegated Authorities. In addition to the 11 plc Board meetings, the Exec had numerous ad-hoc meetings on the lapsed offer by Ellucian, restructuring plans and other ad-hoc matters.
#### **Global Governance Committee**
Whilst not a formal Board Committee, the Global Governance Committee is chaired by the Chief Financial Officer and reports to the Chief Executive Officer. The Committee typically meets monthly and includes representatives from Finance, Information Services, Human Resources, Legal, Compliance, Property and Procurement. There are separate sub-committees for Health & Safety and Information Security which monitor relevant legislative and regulatory requirements.
#### Internal controls and risk management
The Board is responsible for establishing and monitoring internal control and risk management systems throughout the Group and assessing their effectiveness. The Board recognises that rigorous systems of internal control are critical to the Group's achievement of its business objectives and that those systems are designed to manage rather than eliminate risk of failure to achieve business objectives. The internal control and risk management systems can only provide reasonable, not absolute, assurance against material misstatement or loss.
Tribal maintains a risk framework that contains the key risks faced by the Group. The framework includes the impact and likelihood of key risks and the controls and procedures implemented to mitigate them. Risk management is embedded within Tribal by:
- Setting strategic direction, including targets.
- Maintaining a clear authorisation framework.
- Reviewing and approving annual plans and budgets.
- Maintaining documented policies and procedures.
- Regularly reviewing and monitoring the Group's performance in relation to risk through monthly Board reports.
The Directors are also responsible for the Group's system of internal control and for reviewing its effectiveness. The Audit Committee reviews the Group's internal financial controls and risk management systems and the Board reviews the effectiveness of all the Group's internal controls including operational and compliance controls and risk management systems in effect during the period.
To further manage risks faced by the Group, the Company attempts to ensure that employees fully understand the Group's business strategy and objectives. The Group's communication and consultation programme includes regular internal briefings by Directors to all employees throughout the year. Regular meetings are held with staff and managers, both to discuss specific issues and provide an exchange of information. Email communication and the Group's intranet site also provide information to employees.
The Group operates a comprehensive budgeting system whereby managers submit detailed budgets and forecasts, which are reviewed and approved by Executive Directors prior to submission to the Board for approval. Each month, actual results are reported against budget and forecast which are distributed to managers and are provided to the Board in advance of meetings.
The following graph compares the Group's share price with comparable AIM indices over the past six years.
#### Communication with shareholders
The Group reports formally to shareholders when its annual and half-yearly financial statements are published. At the same time, Executive Directors present the results to institutional investors, analysts and the media. Notification of the date of the AGM is sent to shareholders at least 21 days in advance of the meeting. Details of the AGM are set out in the Notice of Meeting. The Directors are available at the AGM to answer questions, both during the course of the meeting, and informally afterwards. Contact with major shareholders is principally maintained by the Chief Executive Officer and the Chief Financial Officer, who ensure that their views are communicated to the Board as a whole. The Chairman is also available to discuss governance and other matters directly with major shareholders. At every Board meeting, the Board is provided with the latest brokers' reports and a summary of the contents of any meetings with shareholders. The Board considers that the provision of these documents is a practical and efficient way for both the Chairman and Senior Independent Director to be informed of major shareholders' opinions on governance and strategy and to understand any shareholder issues and concerns.
Approved by the Board of Directors on 20 March 2024.
**Richard Last**
Chairman
# **Audit Committee Report**
#### **Activities of the Committee during** the year
The Committee's activities have focused on the accuracy of financial reporting and the related statutory audit; and the assessment of internal controls. During the year, the Committee was involved in the reviewing and approving of the Annual Report and Accounts for 2022 and the half year report and accounts for 2023, overseeing the Group's adoption of new and revised accounting standards, continued compliance with the General Data Protection Regulations (GDPR) and Corporate Criminal Offence Rules. In addition, the Committee reviewed the position of the Group's independent external auditors and proposed BDO LLP for reappointment at the AGM on 20 May 2023.
#### Financial reporting and statutory audit
The Committee has reviewed with both management and the external auditors the annual financial statements, focusing on:
- The overall truth and fairness of the results and financial position, including the clarity of disclosures shown in the statements and their compliance with statutory and best practice requirements.
- The appropriateness of the accounting policies and practices used in arriving at those results.
- The resolution of management's significant accounting judgements or of matters raised by the external auditors during the course of their annual statutory audit.
- The quality of the Annual Report taken as a whole, including disclosures on Governance, Strategy, Risks and Remuneration, and whether it gives a fair and balanced picture of the Group.
#### **External audit**
The Committee discussed, challenged and agreed with the auditors their detailed audit plans prepared in advance of the full year audit, which set out their assessment of key audit risks and materiality. The Committee has primary responsibility for overseeing the relationship with the External Auditors, BDO LLP. This includes monitoring and reviewing their objectivity and independence on an ongoing basis, recommending their appointment, reappointment and removal, and approving the scope of the statutory audit and fees. There are no contractual restrictions on the appointment of External Auditors.
BDO was appointed as the Group's Auditor in October 2018, following a competitive tender process. BDO has confirmed to the Committee their continuing independence and compliance with the Group's policy on Auditor independence. The external Auditor is required to rotate the lead audit partner responsible for the audit engagement every five years, unless there are unusual extenuating circumstances. James Eastell was newly appointed as the lead audit partner in 2023.
#### Accounting policies, practices and judgements
The selection of appropriate accounting policies and practices is the responsibility of management, and the Committee discussed these with both management and the external auditors. Significant areas considered by the Committee in relation to the 2022 financial statements are set out below.
#### Going concern
The Group and Company are required to assess their ability to trade as a going concern for at least 12 months from the signing of the annual financial statements. The Committee reviewed management's assessment and concluded that it remained appropriate to continue to adopt the going concern basis in preparing the financial statements.
#### Revenue recognition
The Group's operations include complex software delivery programmes and service activities that can require judgements to be made in relation to the timing of revenue recognition and contract profitability. The Committee reviewed the revenue recognition judgements taken, specifically the key judgements applied to variable consideration.
#### **Contingent Liabilities**
The audit committee has reviewed the contingent liabilities as the Group delivers complex multi-year projects which from time to time give rise to significant operational and commercial risks. The Committee concluded that the timing and outcome of the NTU dispute process is presently uncertain and whilst there may be significant adverse financial impact, it is not practicable to assess such potential impact, if any.
**Financial Statements**
#### Goodwill
The Group is required to test annually whether goodwill has suffered any impairment and consider whether the fixed assets used in the business are carried at an appropriate amount. The Committee reviewed management's impairment assessment and concluded that there was no impairment of goodwill or any of the tangible or intangible assets used in the business.
#### Capitalised product development costs
The Group's product development costs are capitalised where the expenditure meets the criteria of IAS38, and the recoverability assessed annually against expected future cash flows. The Committee reviewed management's capitalisation process and recoverability assessment and concluded the capitalisation was appropriate.
#### Assessment of internal financial control
Management is responsible for putting in place internal financial controls over financial reporting and to protect the business from identified material risks. There is no formal Internal Audit function however the Committee believes that management is able to derive accurance as to the adequacy and effectiveness of internal controls and risk management procedures without one. As described on pages 22 to 23 of the Annual Report, the Group has established a framework of risk management and internal control processes, policies and procedures to mitigate risks and the Committee continues to monitor these closely and is happy that they are appropriate for the business. The Committee reconsiders whether such a function is required annually.
#### **New accounting standards**
The Committee has continued to be kept appraised of new and revised accounting standards including the impact on the Group.
Approved by the Audit Committee on 20 March 2024.
Nigel Halkes
Chairman, Audit Committee
# **Nomination Committee Report**
The Nomination Committee leads the process for Board structure. size and composition of the Board and its Committees, and makes recommendations to the Board with regard to any changes required to ensure an appropriate balance of skills, expertise, knowledge, diversity and independence.
The Nomination Committee is chaired by Richard Last and includes Roger McDowell, Nigel Halkes and Mark Pickett, who provides Executive management insight. All but Mark Pickett are fully independent. Although only members of the Committee have the right to attend meetings, other individuals, such as other Board members and external advisors, may be invited to attend for all or part of any meeting. The Committee meets at least once a year.
#### **Duties**
The Committee's principal duties are to:
- Monitor the structure, size and composition (including the skills, knowledge, experience and diversity) of the Board and make recommendations to the Board with regard to any changes.
- Give full consideration to succession planning for Directors and other senior Executives in the course of its work, taking into account the challenges and opportunities facing the Company, and the skills and expertise needed on the Board in the future.
- Keep under review the leadership needs of the organisation, both Executive and Non-Executive, with a view to ensuring the continued ability of the organisation to compete effectively in the marketplace.
- Koop up to date and fully informed about strategic issues and commercial changes affecting the Company and the market in which it operates.
The Committee's full Terms of Reference are available on our website. They were last reviewed on 27 June 2022.
#### Appointments in the year
During the year, the main focus of the Committee has been on succession planning for the Executive Committee and senior management. We have appointed Adam Fox to the role of Chief Technology Officer on the Executive Committee following the retirement of Mike Cope,
#### **Diversity**
One area of focus is to continue to improve our Board diversity. We recognise the value of increased diversity at Board level in achieving our strategic objectives and in driving innovation and growth. Whilst Board appointments will continue to be based on merit and relevant skill, the Directors appreciate that contrasting backgrounds, experience and opinion can promote more balanced and nuanced debate and lead to improved decisions. With regard to gender diversity, the Directors are mindful that as at the date of this Report the Board currently comprises 20% female representation and strives to achieve a balanced Board.
#### Succession planning
Ensuring that there are robust succession plans in place at Board and senior management level is fundamental to the long-term prospects of the business.
The Board recognises that effective succession planning also requires a thorough induction programme upon joining the Executive Board. Work has been conducted to improve this process for all incoming Executive Board members, whilst recognising too that each induction programme will also need to be tailored to the specific needs of the individual.
Richard Last
**Chair of the Nomination Committee**
# **Remuneration Committee Report**
# The Remuneration Report details the Group's remuneration policy and the arrangements currently in place for remuneration of both Executive and Non-Executive Directors.
#### Remuneration policy
The full Directors' remuneration policy is shown below for ease of reference, updated with minor changes. A shareholder vote on the remuneration policy is not required.
The Remuneration Committee (the Committee) operates the annual bonus plan and long-term incentive plans according to their respective rules, the Listing Rules and HMRC rules where relevant. The table below details each element of pay and demonstrates how the remuneration policy is linked to overall Group strategy.
| Element of pay | Purpose and link to strategy | Operation including maximum | Performance criteria |
|-------------------------|-----------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------|
| Salary | To attract and retain high-quality individuals with the appropriate skills, experience and knowledge, | Salaries are reviewed annually or when an individual changes position or responsibility. Salaries for the current year are set out on page 47. | Assessment of personal and corporate performance. |
| | while also recognising their ongoing performance. | All appointments that attract either a base salary of £150,000 or a total remuneration package of £250,000, whichever being the least, must be approved by the Remuneration Committee. | |
| Benefits | To provide a range of cost-
effective benefits which are
typical market practice. | The main benefits provided include private medical insurance, a death in service benefit of four times salary and private fuel. | None. |
| Pension | To provide cost-effective long-
term retirement benefits which are
aligned with market practice. | Contributions of 10% of salary are paid to Executive Directors. An equivalent cash supplement may be paid to an individual if the annual or lifetime allowance has been met or exceeded. | None. |
| Annual bonus | To incentivise and reward for the achievement of in-year objectives, which are linked to the Group's Adjusted EBITDA. | An annual cash bonus is payable up to a maximum of 125% of salary for the Chief Executive Officer, and 50% of salary for the Chief Financial Officer, subject to the achievement of performance targets. In all cases, bonus payments are subject to the overriding discretion of the Remuneration Committee. | The Remuneration Committee reviews the performance measures, sets and approves the level of final award. |
| Long-term
Incentives | To incentivise and reward for the achievement of long-term performance, which is | An annual grant of nil-cost options, which vest after
three years subject to continued service and the
achievement of performance conditions. | The Remuneration Committee reviews the performance measures and targets annually. |
| | aligned to the generation of shareholder value. | The plan limit for an award in any year is 200% of base salary. The normal policy will be to grant 100% of base salary to the Chief Executive Officer and Chief Financial Officer. | The Remuneration Committee has determined that a target linked directly to the Group's adjusted EBITDA is an appropriate measure |
| | | Dividends which accrue on vested awards may be paid as cash, or treated as reinvested and paid in shares. | for awards granted in 2023 together with a free cash flow measure and other specific operational performance measures. |
| All employee plans | To encourage broad-based employee shareholding in the Group. | The past Share Incentive Plans and Save As You Earn Schemes provided all eligible employees with the opportunity to acquire shares at a discounted share price. | None. |
# Remuneration Committee Report continued
#### **Director changes**
There have been no Director changes in the year.
#### The use of performance measures
Annual bonus targets will include financial measures which reflect the performance of the business and are directly linked to an adjusted EBITDA margin measure, a free cash flow measure and specific operational performance measures appropriate to the relevant year.
Long-term incentive performance measures are chosen to be aligned to long-term shareholder value creation by using an adjusted EBITDA margin measure, a free cash flow measure and specific operational performance measures appropriate to the relevant year.
#### **Directors' service contracts**
Details of service agreements and notice periods are as follows:
| Name | Director status | Effective date of contract | Expiry | Notice period for both parties |
|---------------------------|-------------------------------|----------------------------|----------|--------------------------------|
| Mark Pickett | Chief Executive Officer | 30 June 2016 | Ongoing | 6 months |
| Richard Last 1 | Non-Executive Chairman | 17 November 2015 | 2024 AGM | - |
| Roger McDowell | Senior Non-Executive Director | 17 November 2015 | 2024 AGM | 3 months |
| Nigel Halkes | Non-Executive Director | 20 January 2020 | 2024 AGM | 3 months |
| Diane McIntyre | Chief Financial Officer | 01 June 2021 | Ongoing | 6 months |
1. Richard Last has no notice period.
Copies of each Director's service agreement will be available for inspection at the AGM.
Under the terms of their appointment, the Non-Executive Directors have agreed to commit no less than 25 days per annum to their roles. If they are required to commit in excess of 25 days per annum, they may be entitled to an additional fee at a suitable pro rata rate per day.
#### Policy on payments for loss of office
The Committee aims to deal fairly with cases of termination, while attempting to limit compensation. Executives' service contracts provide the Committee with the discretion to make a payment in lieu of notice limited to base salary. The Committee also retains the discretion to pay an annual bonus on a departure in certain circumstances. The rules of the long-term incentive plan set out the treatment if a participant leaves employment prior to awards vesting. If the participant is considered a good leaver (through death, retirement, injury or disability, redundancy, employment being transferred outside the Group, or any other reason the Committee decides) then awards would normally vest on the normal vesting date. In the event of a change of control, an award may vest early subject to the extent the performance conditions have been achieved and scaled back pro rata for service, although the Committee has the discretion to disapply time pro-rating.
Each Non-Executive Directors' notice period is defined in the table above and no compensation or other benefits are payable.
#### Risk
The Committee is cognisant of the need for the remuneration policy to operate within an effective risk management system. The Committee reviews the various elements of remuneration on an annual basis, to ensure that they do not encourage any undue risk-taking by Executive Directors or senior management. When setting performance targets for variable components of remuneration, the Committee remains mindful of environmental, social and governance (ESG) issues.
#### Shareholders' views
The Committee considers shareholder feedback received at the AGM and during meetings with investors throughout the year, and uses these views to help formulate the overall remuneration policy.
#### **Non-Executive Director fees**
The fees for the year ending 31 December 2023, which took effect from 1 January 2023 are as follows. These exclude any expenses which the Non-Executive Directors may incur in relation to their duties.
| | From 1 January 2023 1 | From 1 January 2022 | Increase/(decrease) |
|-------------------------------|----------------------------------|---------------------|---------------------|
| Non-Executive Chairman | £111,600 | £111,600 | - |
| Senior Non-Executive Director | £57,000 | £57,000 | - |
| Non-Executive Director | £56,250 | £56,250 | - |
1. Subject to review in April 2024 in line with the Group's annual pay review process.
#### Information subject to audit
Remuneration payable for the financial year ending 31 December 2023:
| Director | Salary³ | Benefits 1 | Bonus 4 | SBP 2 | Pension 3 | Total 2023 | Total 2022 |
|----------------|---------|-----------------------|--------------------|------------------|----------------------|------------|------------|
| Mark Pickett | 278,100 | 1,564 | 252,720 | 140,474 | 24,922 | 697,780 | 1,073,953 |
| Diane McIntyre | 206,000 | 2,053 | 85,280 | 85,801 | 10,300 | 389,434 | 293,692 |
| Richard Last | 111,600 | - | - | - | - | 111,600 | 111,600 |
| Roger McDowell | 57,000 | | - | - | - | 57,000 | 57,000 |
| Nigel Halkes | 56,250 | - | - | _ | - | 56,250 | 56,250 |
- 1. Benefits include private medical insurance and private fuel.
- 2. The cost reported in remuneration is equivalent to the share-based payment accounting charge incurred in the year, including dividends accruing on LTIPs and matching shares (see Note 6). SBP for Mark Pickett includes gains made on exercise of share options of £nil (2022: £537,414) and a notional bonus repaid to the Company in relation to the exercise of share options equivalent to the nominal value of number of shares issued totalling £nil (2022: £16,480).
- 3. The fixed element of Directors remuneration includes salary and employers pension contributions; all other elements are variable.
- 4. Part of the 2023 bonus payment will be deferred and paid subsequent to a satisfactory outcome of the NTU claim (£91,260 for Mark Pickett and £27,040 for Diane McIntyre).
#### Long-Term Incentives Plan (LTIP) awards
On 16 October 2023 the Remuneration Committee approved LTIP awards to Mark Pickett and Diane McIntyre of which 28% (Mark Pickett) and 18% (Diane McIntyre) are expected not to vest.
| | Туре | Number of shares | Face value 1 | Performance condition | Performance period | % Vesting at threshold |
|----------------|-----------------|------------------|-----------------------------|----------------------------------------------------------------------------------------------------|----------------------------------------------|------------------------|
| Mark Pickett | Nil-Cost Option | 240,308 | £170,618
(61% of salary) | Adjusted EBITDA,
free cash flow
and other specific
operational
performance
measures | Measured over 1 years to
31 December 2023 | 50% of LTIP |
| Diane McIntyre | Nil-Cost Option | 178,006 | £126,384
(61% of salary) | Adjusted EBITDA,
free cash flow
and other specific
operational
performance
measures | Measured over 1 years to
December 2023 | 50% of LTIP |
1. Face value calculated based on share price on 16 October 2023 (71p).
# Remuneration Committee Report continued
#### **Share award interests**
The interests in share options were as follows:
| | At 1 January
2023 | Granted | Expected to lapse | Exercised | At 31
December
2023 | Exercise
price | Price on date of grant | Date from
which
exercisable | Expiry date |
|---------------------------|----------------------|---------|-------------------|-----------|---------------------------|-------------------|------------------------|-----------------------------------|-------------|
| Mark Pickett | | | | | | | | | |
| LTIP - 7 July 2020 | 321,429 | - | - | - | 321,429 | Nil | 56.0p | July 2023 | July 2030 |
| LTIP - 28 June 2021 | 183,673 | - | (25,714) | - | 157,959 | Nil | 98.0p | June 2024 | June 2031 |
| LTIP - 11 April 2022 | 211,765 | - | (29,647) | - | 182,118 | Nil | 92.0p | April 2025 | April 2032 |
| LTIP - 16 October
2023 | - | 240,308 | (67,286) | - | 173,022 | Nil | 71.0p | Oct 2026 | Oct 2033 |
| Diane McIntyre | | | | | | | | | |
| LTIP - 28 June 2021 | 136,054 | - | (12,245) | _ | 123,809 | Nil | 98.0p | June 2024 | June 2031 |
| LTIP - 11 April 2022 | 156,863 | - | (14,118) | - | ,142,745 | Nil | 92.0p | April 2025 | April 2032 |
| LTIP - 16 October
2023 | | 178,006 | (32,041) | - | 145,965 | Nil | 71.0p | Oct 2026 | Oct 2033 |
The closing share price at 31 December 2023 was 55.4p and during the year ranged from 35p to 71.7p. There have been no variations to the terms and conditions or performance criteria for share awards during the financial year. There are 321,429 vested but unexercised options relating to the Directors as at 31 December 2023.
Of the applicable LTIPS 72% of Mark Pickett's shares and 82% of Diane McIntyre's shares vested in relation to the 2023 performance. In addition a number of LTIP shares relating to the performance of 2023 will have their vesting decision deferred, dependent on a satisfactory outcome of the NTU claim (113,887 for Mark Pickett and 84,361 for Diane McIntyre).
# Annual percentage change in Directors' remuneration compared to FTE employees
| | Year-on-year percentage change in remuneration | | | | | | |
|------------------------------------------------------|------------------------------------------------|-------|------|-------|------|--|--|
| | 2023 | 2022 | 2021 | 2020¹ | 2019 | | |
| Group FTE employees | 938 | 972 | 936 | 832 | 850 | | |
| Average Remuneration/FTE £'000 | 56 | 54 | 54 | 52 | 53 | | |
| Average FTE Employees percentage change 3 | 5% | (1)% | 3% | (2)% | 2% | | |
| Directors' percentage change | | | | | | | |
| Mark Pickett | 55% | (51)% | 4% | 1% | 30% | | |
| Richard Last | - | 1% | 5% | (35)% | 19% | | |
| Roger McDowell | _ | 3% | 5% | (5)% | 0% | | |
| Nigel Halkes | - | 2% | 11% | 100% | - | | |
| Diane McIntyre 2 | 33% | 17% | - | _ | _ | | |
1. Includes three months at 80% pay as a mitigating action to COVID.
2. Diane McIntyre's figures in 2021 relate to the period from 1 June 2021 to 31 December 2021.
3. Average percentage change is a result of investment in our GDC and Manila shared service centre in 2022 and 2023.
#### INFORMATION NOT AUDITED
#### **Directors' shareholdings**
The table below sets out the Directors' current shareholdings as at 31 December 2023. The shareholding guideline for the Chief Executive Officer is to hold two times base salary in stock (excluding invested LTIPs) within no more than five years of appointment.
| Director | Beneficially
owned | % of salary/
share value held | LTIP
options |
|----------------|-----------------------|----------------------------------|-----------------|
| Mark Pickett | 1,263,727 | 212% | 834,527 |
| Diane McIntyre | - | - | 412,529 |
| Richard Last | 3,095,726 | 1304% | - |
| Roger McDowell | 3,975,726 | 3278% | - |
| Nigel Halkes | 14,285 | 26% | - |
Note: % of salary/share value held is calculated by reference to the value of the individual's shareholding in Tribal valued at the share price on the close of business on 31 December 2023.
#### All-employee plans
The Committee believes wider employee share ownership can act as an additional retention and motivation vehicle and has operated Save As You Earn (SAYE) Schemes and Share Incentive Plans (SIP) in the past. The Committee regularly considers the appropriate overall incentive schemes for all employees.
#### Position against dilution limit
The share incentive plans operate in line with the ABI principle, which requires that all commitments must not exceed 10% of the issued share capital in any rolling ten-year period. Given the Company's issued share capital, the number of employees and the level of participation in the LTIP, the Committee believes that operating a single 10% in ten-year limit for all share plans remains appropriate. The Group's position against the dilution limit at 31 December 2023 was 7.3%.
#### **Executive Directors' external appointments**
Executive Directors are permitted to accept an external non-executive position with the Board's approval. Any fees received in respect of these appointments may be retained by the Executive. No such fees were received by the Executive Directors during the year.
Approved by the Remuneration Committee on 20 March 2024.
Roger McDowell
Chairman, Remuneration Committee
# **Directors' Report**
The Directors
present their
report and audited
consolidated financial
statements for
the year ended
\$11 December 2023.
#### **Principal activities**
Tribal Group plc is incorporated as a public limited company, and is registered in England and Wales with registered number 4128850. Its registered office is at Kings Orchard, One Queen Street, Bristol BS2 0HQ.
The Company acts as a holding company with a number of trading subsidiaries that provide education-related systems, solutions and consultancy services. There was no significant change in this activity during the year. The subsidiary undertakings of the Company are listed in Note 33.
#### Results and dividends
The profit for the year, after taxation, amounted to £5.3m (2022: loss of £0.5m). The Board is proposing to defer payment of the dividend until later on in 2024, post further clarification on the NTU position and pending approval at the AGM on 20 May 2024. In July 2023 Tribal paid a final dividend of 0.65p per share in recognition of the year ended 31 December 2022. The Board intends to continue a progressive dividend policy, with a single dividend payment each year following annual results.
#### **Dividend policy**
Meeting shareholder dividend expectations is a high priority as it supports our overall strategy. Our longer-term plan indicates that our progressive dividend policy can be met whilst making the investments we need to meet our strategic objectives.
Tribal remains committed to a progressive dividend policy, however having reviewed the Group's cash flow forecasts, specifically with regard to the significant uncertainties around the resolution of the NTU contract, the Board have concluded that it would be prudent to maintain a flat final dividend 0.65p. It is the Board's intention to return to its former policy of dividend progression when circumstances allow.
#### **Business model and strategy**
The business model and strategy section, pages 4 and 5 and pages 8 and 9; set out the Company's strategy, business model and key performance indicators.
#### Long-term financing
On 29 December 2023 the Group entered into a three-year £20m multicurrency revolving facility with HSBC with the option to extend by a further two years. The facility was put in place to cover general corporate and working capital requirements of the Group, as at 31 December 2023 £14.0m (2022: £6.3m) of the loan was utilised. The Group has a £2m committed overdraft facility in the UK and an AUD \$2m committed overdraft facility in Australia, both facilities are committed for a 12-month period ending August 2024 and October 2024 respectively. At 31 December 2023 none of the overdraft facilities were drawn. The Group is subject to two covenant tests from the revolving facility: Senior Interest cover (12 month adjusted EBITDA/ Interest charge) and Leverage cover (Net debt/12 month adjusted EBITDA).
Following a review of the Group's cash flow forecasts and covenant compliance projections, the Directors consider the Group is well placed to meet its funding requirements for the foreseeable future. Information about the use of financial instruments by the Group is given in Note 31 of the financial statements.
#### **Board effectiveness**
In respect of our operations as a Board, we continue to reflect upon our collective skills and experience and our ability to effectively lead Tribal.
#### **Environment**
The credibility and longevity of any business goes beyond pure financial gain; a principle long-embodied and supported by Tribal's strong values-based culture and approach to environmental, social and governance issues.
The ESG Report is on pages 24 to 29 and highlights our initiatives in relation to Environmental, Social and Governance matters concerning the Group.
#### Principal risks and uncertainties
The Group's principal risks and uncertainties are explained in the Strategic Report on page 32 and 33. Risks of a financial nature are addressed in Note 31 of the financial statements.
#### Section 172
The Board's responsibilities to promote the success of the Group under Section 172 of the Companies Act 2006, as modified by the Companies (Miscellaneous Reporting) Regulations 2018 are outlined in the Section 172 Statement on pages 22 and 23.
#### **Directors' indemnities**
The Company has made qualifying third-party indemnity provisions for the benefit of its Directors, which remain in force at the date of this report and throughout the year. Directors' and officers' liability insurance is provided for all Directors of the Company.
#### **Going concern**
Please refer to the going concern statement in the Strategic Report on page 20 for details on the assessment carried out by Directors with regard to going concern.
#### **Directors retiring**
The names of the Directors who served during the year and up to the date of signing the financial statements are set out on page 34 and 35. All Directors are required to submit to re-election each year and will be proposed for re-election at the forthcoming AGM.
The appointment and replacement of Directors is governed by the Company's Articles of Association, the Companies Act 2006 and related legislations. The Articles themselves may be amended by special resolution of the shareholders.
Directors' interests in the Company and share capital information, including share options, are detailed in the Remuneration Report on pages 45 to 49.
#### Share capital
Details of the authorised and issued share capital are shown in Note 23 to the financial statements. The Company has one class of Ordinary Shares, which carry no right to fixed income. Each share carries the right to one vote at general meetings of the Company. During the year, the Company issued nil shares (2022: 1,847,373 Ordinary Shares of 5p).
#### **Branches**
The Group has overseas branches in New Zealand, Abu Dhabi and Singapore.
#### **Employees**
Tribal is a business which is highly dependent on its people. We seek to attract, develop and retain high-calibre staff and, as a consequence, our customers can be assured that the service they receive is among the best available. The Group's commitment to its people is discussed in the Environmental, Social and Governance Report on pages 24 to 29.
The Board takes its responsibilities to employee engagement and interests very seriously and ensures any decisions made take into consideration the impact on the Group's employees. Employees' have the opportunity to ask questions regarding all aspects of the business during our regular Group-wide update meetings with the Group's Executive Management team. The Group recognises the value of its employees and where possible seeks to promote internally within the business and aims to empower, where appropriate, employees to aid with decision-making within the Group.
Employee interests are considered in full when the Board is making key decisions regarding changes to the business, such as restructuring, acquisitions and streamlining of operating segments. Decisions impacting employees' interest are communicated in a timely manner.
The Group is an equal opportunities employer and bases all decisions on individual ability, regardless of race, religion, gender, sexual orientation, age or disability. Applications for employment by disabled persons will always be fully considered, having regard to their particular aptitudes and abilities. Should any employee become disabled, every practical effort is made to provide continued employment. Depending on their skills and abilities, they enjoy the same career prospects and scope for realising their potential as other employees. Appropriate training is arranged for disabled employees, including retraining for alternative work for those who become disabled, to promote their career development within the organisation.
#### Research and development
The Group continues to invest in research and development of software products, as set out in Notes 5 and 14 of the financial statements. The investment is predominantly in the Group's next-generation cloud-based Student Information System, Edge. Total research and development expenditure decreased to £12.4m (2022: £14.4m) of which £8.5m (2022: £10.3m) was capitalised.
#### **Future developments**
An indication of likely future developments in the business of the Group is included in the Strategic Report.
#### **Annual General Meeting**
The Company's AGM will be held on 20 May 2024. The notice convening the AGM and an explanation of the business to be put to the meeting are contained in a separate circular to shareholders.
# **Directors' Report** continued
#### Independent auditor
BDO LLP have expressed their willingness to continue in office as auditor and a resolution to reappoint them will be put to the AGM.
#### **Directors' responsibility statement**
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are required to prepare the Group financial statements in accordance with UK adopted international accounting standards and have elected to prepare the Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group for that period.
In preparing these financial statements, the Directors are required to:
- Select suitable accounting policies and then apply them consistently.
- Make judgements and accounting estimates that are reasonable and prudent.
- For the Group financial statements state whether they have been prepared in accordance with UK adopted international accounting standards subject to any material departures disclosed and explained in the financial statements.
- For the Company financial statements, state whether applicable UK Accounting Standards have been followed subject to any material departures disclosed and explained in the Company financial statements.
- Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
#### Website publication
The Directors are responsible for ensuring the Annual Report and the financial statements are made available on a website. Financial statements are published on the Company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.
#### Corporate governance
The Company's statement on corporate governance compliance can be found in the Corporate Governance Report on pages 42 to 45 of the Annual Report and Accounts. The Corporate Governance Report forms part of this Directors' Report and is incorporated by reference.
#### Statement of disclosure of information to auditor
In accordance with Section 418, Directors' Reports shall include a statement, in the case of each Director in office at the date the Directors' Report is approved, that:
- So far as each Director is aware, there is no relevant audit information of which the Company's auditor is unaware.
- They have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the Company's auditor is aware of that information.
Approved by the Board of Directors and signed on its behalf by:
Mark Pickett
**Chief Executive Officer**
Registered number 4128850
20 March 2024
# **Independent Auditor's Report**
#### Independent auditor's report to the members of Tribal Group plc
#### **Opinion on the financial statements**
In our opinion:
- The financial statements give a true and fair view of the state of the Group's and of the Company's affairs as at 31 December 2023 and of the Group's profit for the year then ended.
- The Group financial statements have been properly prepared in accordance with UK adopted international accounting standards.
- The Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice.
- The financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Tribal Group plc (the Company) and its subsidiaries (the Group) for the year ended 31 December 2023 which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the Consolidated Statement of Changes in Equity, the Consolidated Cash Flow Statement, the Company only Balance Sheet, the Company only Statement of Changes in Equity and notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and UK adopted international accounting standards. The financial reporting framework that has been applied in the preparation of the Company financial statements is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice).
#### **Basis for opinion**
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
#### Independence
We remain independent of the Group and the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
#### Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors' assessment of the Group and the Company's ability to continue to adopt the going concern basis of accounting included:
- Obtaining the going concern assessment, approved by the Directors, including detailed cash flow and covenant compliance forecasts up to 31 March 2025 and where applicable agreed this to third party documentation including signed banking facilities.
- Inspecting the Group's signed three-year £20m multicurrency revolving facility with HSBC and other bank overdraft arrangements to confirm that the Group has sufficient liquidity to meet its liabilities as they fall due over the going concern period. We also agreed the nature of the financial covenants included therein and checked that management's covenant forecasts over the going concern period were appropriately derived.
- Assessing the reasonableness of the Directors' assumptions included in the going concern forecast, including revenue growth and margins, with reference to the historical accuracy of the Directors' forecasts by comparing the current forecasts with actual trading results post year end.
- Assessing the appropriateness of sensitivity analyses prepared by the Directors over the Group's cash flow forecasts. We also considered our own sensitivities including the effects of adverse movements in EBITDA and various possible outcomes in relation to the NTU contract dispute to determine the potential impact on covenant compliance and the sufficiency of available cash resources over the going concern period.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group and the Company's ability to continue as a going concern for a period of at least 12 months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
# **Independent Auditor's Report** continued
#### **Overview**
| Coverage 1 | 86% of Group profit before tax | | | | | | | |
|-----------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------|----------|--|--|--|--|--|
| | 81% of Group revenue | | | | | | | |
| | 87% of Group total assets | | | | | | | |
| Key audit matters | | 2023 | 2022 | | | | | |
| | Revenue recognition – Implementation Services revenue streams | √ | ✓ | | | | | |
| | Accounting treatment - NTU contract | 1 | √ | | | | | |
| | Going concern* | × | ✓ | | | | | |
| | Defined benefit pension scheme surplus** | × | ✓ | | | | | |
| | * Going concern is no longer considered to be a key audit matter. The Group signed a three-year £20m multicurrency revolving facility with HSBC on 29 December 2023 which can be extended by a further two years. The Group's liquidity and covenant headroom are sufficient to allow the Group and Company to meet their obligations as they fall due for a period of at least 12 months from the date of the financial statements. | | | | | | | |
| | ** Defined benefit pensions scheme surplus is no longer considered to be a key audit matter. The active treatment for the surplus position was clarified in the prior year and there have been no changes position of the scheme. Adjusted profit is before exceptional items in Note 6 of the financial state. | in the lega | l | | | | | |
| Materiality | Group financial statements as a whole | | | | | | | |
| | £497,500 (2022: £360,000) based on 5% of Adjusted profit before tax (2022: 5% the three-year and Adjusted profit before tax). Adjusted profit is before exceptional items in Note 6 of the financial state. | | | | | | | |
#### An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group's system of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement.
In determining the scope of our audit, we considered the size and nature of each component within the Group to determine the level of work to be performed at each in order to ensure sufficient assurance was obtained to allow us to express an opinion on the financial statements as a whole. The components identified as significant were Tribal Group plc (company only), Tribal Education Limited, Tribal Group Pty Limited and Callista Software Services PTY Limited which were subject to a full scope audit by the Group engagement team. Significant components comprise 76% of revenue and 24% of Group total assets. Procedures over specific balances on the year-end results of the remaining non-significant components were performed by the Group engagement team which then increased the coverage to the percentages detailed in the above table.
We also obtained an understanding of the internal control environment related to the financial reporting process and assessed the appropriateness, completeness and accuracy of the Group journals and other adjustments performed on consolidation.
#### Climate change
Our work on the assessment of potential impacts of climate-related risks on the Group's operations and financial statements included:
- Enquiries and challenge of management to understand the actions they have taken to identify climate-related risks and their potential impacts on the financial statements and adequately disclose climate-related risks within the Annual Report.
- Our own qualitative risk assessment taking into consideration the sector in which the Group operates and how climate change affects this particular sector.
- Review of the minutes of Board and Audit Committee meetings and other papers related to climate change and performed a risk assessment as to how the impact of the Group's commitments as set out in the Environmental, Social and Governance Report may affect the financial statements and our audit.
We challenged the extent to which climate-related considerations, including the expected cash flows from the initiatives and commitments have been reflected, where appropriate, in the Directors' going concern assessment and in management's judgements and estimates in relation to impairment of assets and the recognition of deferred tax assets.
We also assessed the consistency of management's disclosures included as Other Information with the financial statements and with our knowledge obtained from the audit.
Based on our risk assessment procedures, we did not identify there to be any Key Audit Matters materially impacted by climate-related risks.
#### **Key audit matters**
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified, including those which
had the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
#### Kev audit matter
#### Revenue recognition – Implementation Services
(Refer to Notes 1, 2 and 3 of the financial statements) Implementation revenue comprises revenue received from customers for the configuration, set up and installation of the Group's software products.
For fixed price implementation projects, judgement is required in determining the stage of completion which is driven by the estimated total implementation time required and the total time incurred to date.
In light of the judgements required to be made by the Directors in this area, we have determined that revenue recognition in relation to these ongoing, fixed price revenue projects is a key audit matter.
How the scope of our audit addressed the key audit matter
As part of our audit procedures, we:
- Assessed the appropriateness of the Group's revenue recognition policies against the requirements of the applicable accounting standards.
- Performed an assessment of a sample of contractual terms and conditions
of the services being provided to check that the revenue recognition policy\nis appropriate in the circumstances.
- Made enquiries of project managers and Directors to understand the nature of the projects, how projects were progressing against key milestones and any impact on expected delivery times from changes in project scope.
- Assessed the appropriateness of the stage of completion and the resulting revenue recognised for a sample of contracts by:
- Agreeing the number of days worked to date in the determination of the percentage complete on projects and compared this against the timecard system.
- Reviewing management's time forecasts for ongoing projects and performing a review of historical forecasting on a sample of projects to confirm the accuracy of the project managers' forecasts.
- Verifying progress against key milestones on a sample of projects by viewing correspondence between the customer and the Group.
- Verifying timecard approvals by ensuring that for a sample of timecards, the timecards had been approved by an appropriate individual.
- Testing the monthly project review control performed by the commercial management and finance teams.
#### **Key observations:**
Based on the procedures performed, we consider the revenue recognised on the ongoing, fixed price Implementation Services projects to be appropriate.
# **Independent Auditor's Report** continued
Key audit matter
#### Accounting treatment – Nanyang Technological University (NTU) contract
(Refer to Note 30 of the financial statements)
The Group's contract with NTU, a former customer, has been terminated and in April 2023 the Group received an interim demand for the payment of damages which it rejected. Legal advice has been obtained on the matter and settlement discussions are underway. Since the year-end, the parties have agreed to a mediation meeting with a view to achieving a resolution to the matter.
In connection with the uncertainties associated with the NTU dispute, the Directors must assess whether it is appropriate for any provision to be recorded at the balance sheet date, whether there is any impact arising on the Group's going concern assessment and whether there are any other accounting consequences.
Given the significance of the quantum of alleged loss and the nature of the judgements required to be taken by the Directors, we consider the NTU dispute to be a key audit matter.
How the scope of our audit addressed the key audit matter
As part of our audit procedures, we:
- Reviewed the terminated customer contract, Board minutes and correspondence between the Group and NTU to gain an understanding of the nature of the dispute and the contractual positions and views of the parties.
- Held discussions with the Directors to understand their views on the matter and the potential financial implications of the dispute.
- Held discussions with the Group's external legal counsel and obtained a letter signed by them to confirm relevant facts and circumstances.
- Considered the appropriateness of the Directors' consideration of the possible impact on the going concern position of the Group.
- Assessed the facts and circumstances as to whether it is appropriate for the Directors to disclose the matter as a contingent liability or to record a provision and ensured that the disclosures included in the financial statements are in line with the requirements of the accounting standards.
#### **Key observations:**
Based on the procedures performed, we are satisfied with the accounting treatments and disclosures included in the Group financial statements in connection with the NTU dispute.
#### Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows:
Strategic Report
| | C | Broup financial statements | Company financial statements | | |
|-----------------------------------------------|-----------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|
| | 2023
£ | 2022
£ | 2023
£ | 2022
£ | |
| Materiality | 497,500 | 360,000 | 927,000 | 1,677,000 | |
| Basis for determining materiality | | of the Adjusted* profit before tax
or average Adjusted* profit before tax) | 2% (2022: 3.5%) of Company's total assets (2022: net assets). | | |
| Rationale for the benchmark applied | • | efore tax is a key measure for
sed on market practice and
tions. | entity is purely f | e holding company of the Group. The
for holding investments, financing and
expenditure. Profit is not an appropriate | |
| | | ation in profits from year to year it was
opriate to use a three-year average. | (therefore rever | ard as there are no trading activities
nue cannot be used). Total assets was
appropriate benchmark. | |
| Performance materiality | 358,200 | 258,000 | 664,000 | 1,208,000 | |
| Basis for determining performance materiality | a number of facto
within the financi | erformance materiality, we considered
ors including the areas of estimation
ial statements and history of errors.
formance materiality was set at 72%
Group materiality. | a number of fact
within the finance
On this basis pe | performance materiality, we considered tors including the areas of estimation cial statements and history of errors. or formance materiality was set at 72% Company materiality. | |
\* Profit before tax adjusted for exceptional costs in Note 6 of the financial statements.
#### Component materiality
For the purposes of our Group audit opinion, we set materiality for each significant component of the Group, based on a percentage of between 30% and 90% (2022: 50% and 78%) of Group materiality dependent on the size and our assessment of the risk of material misstatement of that component. Component materiality ranged from £146,000 to £441,000 (2022: £180,000 to £280,000). In the audit of each component, we further applied performance materiality levels of 72% (2022: 72%) of the component materiality to our testing to ensure that the risk of errors exceeding component materiality was appropriately mitigated.
#### Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £24,500 (2022: $\pm$ 7,200). We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.
#### Other information
The Directors are responsible for the other information. The other information comprises the information included in the Annual Report & Accounts other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
#### Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described on the next page.
# **Independent Auditor's Report** continued
| Strategic Report and Directors' Report | In our opinion, based on the work undertaken in the course of the audit: | | | | | | |
|---------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|--|--|
| | - The information given in the Strategic Report and the Directors' Report for the financial
year for which the financial statements are prepared is consistent with the financial
statements.
| | | | | | |
| | - The Strategic Report and the Directors' Report have been prepared in accordance with
applicable legal requirements.
| | | | | | |
| | In the light of the knowledge and understanding of the Group and Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report. | | | | | | |
| Matters on which we are required to report by exception | We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: | | | | | | |
| | - Adequate accounting records have not been kept by the Company, or returns adequate
for our audit have not been received from branches not visited by us.
| | | | | | |
| | - The Company financial statements are not in agreement with the accounting records
and returns.
| | | | | | |
| | - Certain disclosures of Directors' remuneration specified by law are not made.
| | | | | | |
| | • We have not received all the information and explanations we require for our audit. | | | | | | |
#### **Responsibilities of Directors**
As explained more fully in the Directors' responsibility statement, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group's and the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.
#### Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
#### Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
#### Based on:
- Our understanding of the Group and the industry in which it operates.
- Discussions with management, those charged with governance and the Audit Committee.
- Obtaining an understanding of the Group's policies and procedures regarding compliance with laws and regulations.
- We considered the significant laws and regulations to be the applicable accounting framework, UK and overseas tax legislation and the AIM Listing Rules.
Our procedures in respect of the above included:
- Review of minutes of meeting of those charged with governance for any instances of non-compliance with laws and regulations.
- Review of correspondence with regulatory and tax authorities for any instances of non-compliance with laws and regulations.
- Review of financial statement disclosures and agreeing to supporting documentation.
- Involvement of tax specialists in the audit.
- Review of legal expenditure accounts to understand the nature of expenditure incurred.
- Discussions with external legal counsel.
#### Fraud
We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk assessment procedures included:
- Enquiry with management, those charged with governance and the Audit Committee regarding any known or suspected\ninstances of fraud.
- Obtaining an understanding of the Group's policies and procedures relating to:
- Detecting and responding to the risks of fraud.
- Internal controls established to mitigate risks related to fraud.
- Review of minutes of meeting of those charged with governance for any known or suspected instances of fraud.
- Discussion amongst the engagement team as to how and where fraud might occur in the financial statements.
- Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material
misstatement due to fraud.
- Considering remuneration incentive schemes and performance targets and the related financial statement areas impacted by these.
Based on our risk assessment, we considered the areas most susceptible to fraud to be revenue recognition and management override of controls.
Our procedures in respect of the above included:
- Testing a sample of journal entries throughout the year, which met a defined risk criteria, by agreeing to supporting documentation and testing a random sample of journals within the residual population.
- Assessing significant estimates made by management for bias including the assessment of the stage of completion on the Group's ongoing, fixed price implementation projects, amortisation periods on the Group's intangible assets and the estimates of future revenues and costs included in the Group's impairment models.
- Assessing the appropriateness of the judgements taken by the Directors in relation to the NTU contract dispute.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members who were all deemed to have appropriate competence and capabilities and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
#### Use of our report
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.
James Eastell
James Eastell (Senior Statutory Auditor) For and on behalf of BDO LLP, Statutory Auditor
Bristol, UK
20 March 2024
BDO LLP is a limited liability partnership registered in England and Wales (with registered number 0C305127).
# FINANCIAL STATEMENTS
#### Financial Statements
- 62 Consolidated Income Statement
- 62 Consolidated Income Statement
63 Consolidated Statement of
Comprehensive Income
64 Consolidated Balance Sheet
65 Consolidated Statement of Changes in Equity
67 Concolidated Oash Flow Statement
68 Notes to the Financial Statements
110 Company only Balance Sheet
111 Company only Statement of Changes in Equity
112 Notes to the Company Balance Sheet
CompanyInformation
118 CompanyInformation
# **Consolidated Income Statement**
For the year ended 31 December 2023
| | Note | Year ended
31 December 2023
Total
£ 2000 | Restated*
Year ended
31 December 2022
Total
£'000 |
|--------------------------------------------------------|------|---------------------------------------------------|---------------------------------------------------------------|
| Revenue | 3 🖗 | 85,750 | 83,585 |
| Cost of sales | | (43,628) | (52,250) |
| Gross profit | | 42;122 | 31,335 |
| Total administrative expenses | | (34,861) | (30,556) |
| Operating profit | 4,5 | 7.261 | 779 |
| Analysed as: | | | |
| Operating profit (before exceptional items) | 4 🗓 | 10,581 | 2,901 |
| Exceptional items | .6 | (3,320) | (2,122) |
| Operating profit (EBIT) | | 7,261 | 779 |
| Finance income | 8 \$ | 308 | 25 |
| Finance costs | 9 | (939) | (417) |
| Profit before tax | | 6,630 | 387 |
| Tax charge | 10 | (1,336) | (897) |
| Profit/(loss) attributable to the owners of the parent | 90 | 5,294 | (510) |
| Earnings per share | | | |
| Basic | 12 | 2.5p | · (0.2)p |
| Diluted | 12 | 2.4p° | (0.2)p |
All activities are from continuing operations.
\*Restated see Note 5.
# **Consolidated Statement of Comprehensive Income**
For the year ended 31 December 2023
| • | Note | Year ended
31 December 2023
£ 000 | Year ended
31 December 2022
£'000 |
|--------------------------------------------------------------------------------------|------|-----------------------------------------|-----------------------------------------|
| Profit/(loss) for the year | | 5,294 | (510) |
| Other comprehensive (expense)/income: | | | |
| Items that will not be reclassified subsequently to profit or loss: | | | |
| Remeasurement of defined benefit pension schemes | 27 | (129) | 262 |
| Deferred tax on measurement of defined benefit pension schemes | 21 | | (66) |
| Items that may be reclassified subsequently to profit or loss: | | | |
| Exchange differences on translation of foreign operations | | (458) | 595 |
| Other comprehensive (expense)/income for the year net of tax | | (G87) | 791 |
| Total comprehensive income for the year attributable to equity holders of the parent | · | 4.707 | 281 |
# **Consolidated Balance Sheet**
As at 31 December 2023
| | Note | 2023
£:000 | 2022
£'000 |
|----------------------------------|------|---------------------------------------------------|---------------|
| Non-current assets | | | |
| Goodwill | 13 | 28,524 | 29,176 |
| Other intangible assets | 14 | 49.894 | 43,667 |
| Property, plant and equipment | 15 | 836 | 1,044 |
| Right-of-use assets | 26 | 2.117 | 1,435 |
| Net investment in lease | 26 | 21. | 70 |
| Deferred tax assets | 21 | 4.960 | 5,064 |
| Retirement benefit scheme assets | 27 | A - 15 ( 81) | . 72 |
| | | 86:433 | 80,528 |
| Current assets | | | |
| Trade and other receivables | 16 | 13,690 | 12,505 |
| Net investment in lease | 26 | * 49 | 47 |
| Contract assets | 3 | 5,918 | 6,676 |
| Current tax assets | | 752 | 421 |
| Cash and cash equivalents | 17 | 6,797 | 2,891 |
| | | 27.206 | 22,540 |
| Total assets | | 113.639 | 103,068 |
| | | | |
| Current liabilities | | | |
| Trade and other payables | 18 | (5,902) | (5,788) |
| Accruals | | (9.194) | (8,622) |
| Contract liabilities | 3 | (27,732) | (26,004) |
| Current tax liabilities | | (1,541). | (1,145) |
| Lease liabilities | 26 | (713) | (728) |
| Borrowings | 19 | | (35) |
| Provisions | 20 | (1,205) | (5,194) |
| | | (46,287) | (47,516) |
| Net current liabilities | | - (19,081) | (24,976) |
| Non-current liabilities | | | |
| Other payables | 18 | (212) | (209) |
| Deferred tax liabilities | 21 | (2.740) | (2,930) |
| Contract liabilities | 3 | 5 - 26
- 27 - 28 - 28 - 28 - 28 - 28 - 28 - 28 | (141) |
| Lease liabilities | 26 | (1.320) | (721) |
| Borrowings | 19 | (14,000); | (6,250) |
| Provisions | 20 | (605) | (483) |
| | | (18,877) | (10,734) |
| Total liabilities | | (65,164) | (58,250) |
| Net assets | | 48,475 | 44,818 |
# **Consolidated Balance Sheet** continued
As at 31 December 2023
| | Note | 2023¢
£'000° | 2022
£'000 |
|-----------------------------------------------------------|------|-----------------|---------------|
| Equity | | | |
| Share capital | 23 | 10,611 | 10,611 |
| Share premium | 24 | - 83 | . 83 |
| Other reserves | 25 | 28,893 | 28,598 |
| Accumulated profits | | · 9,888 · · | 5,526 |
| Total equity attributable to equity holders of the parent | | 48,475 | 44,818 |
Notes 1 to 33 form part of these financial statements. The Company's registered number is 04128850.
The financial statements on pages 62 to 109 were approved by the Board of Directors and authorised for issue on 20 March 2024 and were signed on its behalf by:
**Richard Last**
Director
**Mark Pickett**
Director
# **Consolidated Statement of Changes in Equity**
For the year ended 31 December 2023
| | Note | Share
capital
£'000 | Share
premium
£'000 | Other
reserves
£'000 | Accumulated
(losses)/profits
£'000 | Total
equity
£'000 |
|---------------------------------------------------------|--------|---------------------------|---------------------------|----------------------------|------------------------------------------|--------------------------|
| Balance at 31 December 2022 | | 10,519 | 18,961 | 27,978 | (11,118) | 46,340 |
| Loss for the year | , | - | _ | _ | (510) | (510) |
| Other comprehensive income for the year | | | - | - | 791 | 791 |
| Total comprehensive income for the year | | | | - | 281 | 281 |
| Issue of equity share capital | 23, 24 | 92 | 481 | | - | 573 |
| Share premium capital reduction | 24 | - | (19,359) | | 19,359 | - |
| Equity dividend paid | 11 | - | - | - | (2,736) | (2,736) |
| Credit to equity for share-based payments | 22 | - | - | 589 | - | 589 |
| Foreign exchange difference on share-based payments | 22 | - | - | 31 | - | 31 |
| Tax charge on credit to equity for share-based payments | 10 | - | - | - | (260) | (260) |
| Contributions by and distributions to owners | | 92 | (18,878) | 620 | 16,363 | (1,803) |
| Balance at 31 December 2022 and 1 January 2023 | | 10,611 | 83 | 28,598 | 5,526 | 44,818 |
| Profit for the year | | - | _ | _ | 5,294 | -5,294 |
| Other comprehensive expense for the year | | - | - | - | (587) | (587) |
| Total comprehensive income for the year | | | _ | - | 4,707 | 4,707 |
| Equity dividend paid | 11 | _ | - | _ | (1,377) | (1,377) |
| Credit to equity for share-based payments | 22 | - | - | 295 | - | 295 |
| Tax credit on credit to equity for share-based payments | 10 | - | - | - | 32 | 32 |
| Contributions by and distributions to owners | | - | - | 295 | (1,345) | (1,050) |
| At 31 December 2023 | | 10,611 | 83 | £28,893 | # '8,888' | 48,475 |
# **Consolidated Cash Flow Statement**
For the year ended 31 December 2023
| | Note | Year ended
31 December 2023
£'000 | Year ended
31 December 2022
£'000 |
|------------------------------------------------------|------|-----------------------------------------|-----------------------------------------|
| Net cash from operating activities | 28 | 8,308 | 6,106 |
| Investing activities | | | |
| Purchases of property, plant and equipment | 15 | (390) | (716) |
| Expenditure on intangible assets | 14 | 2 (8,479) | (10,369) |
| Payment of deferred consideration for acquisitions | 20 | (71) | (994) |
| Proceeds from sub-leases | 26 | 50 | 29 |
| Net gain on forward contracts | | * 175 | 23 |
| Net cash outflow from investing activities | | (8.715) | (12,027) |
| Financing activities | | | |
| Interest paid | | (717) | (229) |
| Loan arrangement fees | | * 5 E (112) | (9) |
| Loan drawdown | | 8.750 | 8,500 |
| Loan repayment | | (1,000) | (2,250) |
| Proceeds on issue of shares | | | 573 |
| Principal paid on lease liabilities | 26 | (911) | (943) |
| Interest paid on lease liabilities | 26 | (77) | (60) |
| Equity dividend paid | 11 | (1,377) | (2,736) |
| Net cash from financing activities | | 4,556 | 2,846 |
| Net increase/(decrease) in cash and cash equivalents | | 4149 | (3,075) |
| Cash and cash equivalents at beginning of year | | 2,856 | 5,924 |
| Effect of foreign exchange rate changes | | (208) | 7 |
| Cash and cash equivalents at end of year | 17 | 6.797 | 2,856 |
#### **Notes to the Financial Statements**
#### 1. Accounting policies
#### **General information**
Tribal Group plc (the Company) is a company incorporated, registered and domiciled in England and Wales in the United Kingdom under the Companies Act. The Company is a public limited company which is listed on the Alternative Investment Market (AIM). The address of the registered office is given on page 118. The principal activities of the Company and its subsidiaries (the Group) and the nature of the Group's operations are set out in Note 4 and in the Strategic Report on pages 1 to 33. The financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the Group operates. Foreign operations are included in accordance with the policies set out below. The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
#### Basis of preparation
The financial statements on pages 62 to 117 have been prepared in accordance with UK adopted International Accounting Standards. The financial information has been prepared on the historical cost basis, except for contingent consideration, share-based payments and forward exchange contracts which are recognised at fair value.
The preparation of financial statements in accordance with UK adopted International Accounting Standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 2.
#### Adoption of new and revised standards
In the current financial year, there have been no new standards or amendments which became effective for the current reporting period that have had a material effect on the Group.
At the date of the authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective (and in some cases had not been adopted by the UK):
Mandatorily effective for periods beginning on or after 1 January 2024:
Amendments to IAS 1 Classification of liabilities as current or non-current
Amendments to IAS 1 Non-current liabilities with covenants
Amendments to IFRS 16 Liability in a sale and leaseback Amendments to IAS 17 and IFRS 7 Supplier finance arrangements
Amendments to IAS 12 Deferred tax arising from single transaction
Mandatorily effective for periods beginning on or after 1 January 2025:
Amendments to IAS 21 Lack of exchangeability
None of the above standards are expected to have a material impact on the Group or are expected to be early adopted.
#### **Basis of consolidation**
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 December each year. Control is achieved where the Company:
- Has the power over the investee.
- Is exposed, or has the rights, to variable returns from its involvement with the investee.
- Has the ability to use its power to affect its returns.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. All intra-Group transactions, balances, income and expenses are eliminated on consolidation.
#### Adoption of the going concern basis
As at 31 December 2023, the Group had cash and cash equivalents of £6.8m (2022: £2.9m) and borrowings of £14.0m (2022: £6.3m). The Group has a £2m committed overdraft facility in the UK and a AUD\$2m committed overdraft facility in Australia. Both facilities are committed on a 12-month rolling period ending August 2024 and October 2024 respectively. At the year-end neither facility had been drawn down.
Tribal Group plc has entered into a £20m loan facility to cover temporary working capital requirements of the Group and corporate merger and acquisition activity, if required, which expires in December 2027. See Note 19.
The Group benefits from strong annual recurring revenues and cash generation, it also has a significant pipeline of committed income as it enters 2024. The Group's net current liability position has reduced to £19.1m from £25.0m in 2022; the decrease mainly driven by the release of the onerous contract provision (£4.5m) following termination of the NTU contract. The remaining net current liabilities is primarily made up of net contract liabilities of £21.8m (2022: £19.3m) relating to deferred customer revenue recognised in accordance with IFRS 15, which are non-cash liabilities.
Management have considered a range of outcomes in relation to the NTU contract dispute and its potential impact on the Group's cash flows. If mediation is not successful, it may result in possible litigation. Should the dispute result in litigation, timelines for resolution will be uncertain but are considered highly unlikely to be resolved within the next 12 months.
In assessing the Group's going concern position the Directors have considered all relevant facts, latest forecasts, an assessment of the risks faced by the Group, and considered potential changes in trading performance. In addition, management have stress tested the latest forecasts to the point where either the Group cannot meet its liabilities or is in breach of banking covenants and have concluded that this position is highly unlikely. Accordingly, the Directors have a reasonable expectation that the Group and the Company have adequate resources to continue in operational existence for at least 12 months from the date of approval of the financial statements and the foreseeable future. Thus, they continue to adopt the going concern basis in preparing the financial statements.
#### Revenue recognition
Revenue is measured at the fair value of the consideration receivable from the provision of goods and services to third party customers in the normal course of business. Revenue is stated excluding sales tax and trade discounts. The particular recognition policies applied in respect of the various potential elements of short-term or repeat service contracts are as set out below.
For multi-element contracts that include more than one separable revenue stream, the stand alone selling prices of the component parts are established, and revenue recognised for each separable element in line with the relevant policy below. Where legally separate contracts are entered into at or near the same time, with the same entity and were negotiated as a package, they are treated as a single arrangement for accounting purposes. Performance obligations are met in the same way they are for each relevant stream as noted below.
The Group has long-term contracts for the provision of more complex, project-based services including arrangements that involve significant production, modification, or customisation of software. Where the outcome of such long-term project-based contracts can be measured reliably, revenue and costs are recognised by reference to the stage of completion of the project at the balance sheet date. This is measured by the proportion of development time incurred for work performed to date compared to the estimated total development time required. Variations in contract work are included to the extent that the amount can be measured reliably, and the revenue is considered highly probable not to reverse.
Where the outcome of a long-term project-based contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs that it is probable will be recovered. When it is probable that the total contract costs will exceed total contract revenue, the expected loss is recognised as an expense within administrative expenses immediately.
The transaction price of contracted goods and services is shown separately in the contract with customers. The contracted prices of each component of a product sale are expected to provide a robust and appropriate starting point in seeking to allocate the total transaction price to the identified performance obligations. The time value of money is not expected to be significant as contracts where cash is disconnected from revenue by greater than one year are likely to be rare.
#### **Notes to the Financial Statements** continued
#### 1. Accounting policies continued
#### Revenue recognition continued
Interest is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.
Balances arise on contract assets and liabilities when cumulative payments received from customers at the balance sheet date do not necessarily equal the amount of revenue recognised on contracts. Customers are on standard payment terms which may result in settlement of invoices prior to recognition of associated revenue.
#### **Student Information Systems:**
#### Licence & Development Fees - applies to Foundation Software and Edge
- Revenue on perpetual software licenses is recognised on the commencement of software implementation and related consultancy.
- Revenue on the implementation of fixed price software licenses is recognised over the duration of the project implementation period on a percentage complete basis being the number of days complete compared to the number of days expected for the project based on timesheet records. Revenue is recognised over time as the conditions as set out in IFRS 15.35(a) are met.
- Revenue from term software licenses is recognised on a pro-rata basis over the period of the license. This has the effect of spreading the recognition of License & Development Fees revenue over an extended period, rather than immediate, upfront recognition, to reflect the performance obligation of the license transferring over time in line with IFRS 15.B56.
- Customer paid enhancements (Development Fees) are recognised in line with Implementation Services as noted below.
- Support & Maintenance applies to Foundation Software and Edge.
- Revenue from contracts for software maintenance and support is recognised on a pro rata basis over the contract period. reflecting the Group's obligation to support the relevant software products and update their content over the contract period.
#### Implementation Services - applies to Professional Services
- Revenue from software implementation, consultancy and other services that involve the purchase of a number of days is recognised as the service is provided.
- If implementation services are inherently linked to the delivery of fixed price software, revenue is recognised on a percentage complete basis being the number of days complete compared to the number of days expected for the project based on timesheet records.
#### Cloud Services - applies to Cloud Services
Revenue from contracts for cloud services is recognised on a pro rata basis over the contract period, reflecting the Group's obligation to host the relevant software products over the contract period.
#### Other Services - applies to Other Software Services (including Bespoke Software, Software Solutions, Data Managed Services and SchoolEdge)
Revenue from other services that are provided for a specific term are recognised on a pro rata basis over the contract period. This includes services such as hosting and managed IT services; and where services include any element of Licence and Development Fees, Support and Maintenance, Implementation Services or Cloud Services revenue recognition will be in line with the policy outline in the relevant section above.
#### **Education Services:**
Revenue from the sale of services is recognised upon transfer of control to the customer and assessment of performance obligations. This is generally when services are performed for customers. The method by which the Group measures the service being performed varies depending on the nature of the contract, but will typically be driven by either time incurred or deliverables delivered as appropriate to the particular arrangement with the customer. Performance obligations are considered to be met upon the transfer of deliverables as defined in the contract.
#### Deferred contingent consideration
The Group has deferred contingent consideration obligations arising from acquisitions.
The accounting for changes in the present value of deferred contingent and non-contingent consideration, that do not qualify as measurement period adjustments, and for which consideration is classified as a liability, are remeasured at subsequent reporting dates at present value with the corresponding gain or loss being recognised in profit or loss.
Any equity-based consideration is recognised in equity at the date it is agreed and would not be remeasured at subsequent reporting dates, with subsequent settlement accounted for within equity.
#### Goodwill
Goodwill arising in a business combination is recognised as an asset at the date that control is acquired (the acquisition date). Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer's previously held equity interest (if any) in the entity over the net of the acquisition date amounts of the identifiable assets acquired and liabilities assumed.
If, after reassessment, the Group's interest in the fair value of the acquiree's identifiable net assets exceeds the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer's previously held equity interest in the acquiree (if any), the excess is recognised immediately in the income statement as a bargain purchase gain.
Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is allocated to each of the Group's cash-generating units (CGUs) expected to benefit from the combination. CGUs (or groups of CGUs) to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the CGU (or groups of CGUs) is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the CGUs (or group of CGUs) and then to the other assets of the CGU (or groups of CGUs) pro rata on the basis of the carrying amount of each asset. An impairment loss recognised for goodwill is not reversed in a subsequent period.
On disposal of a subsidiary or a division, the attributable amount of goodwill is included in the determination of the profit and loss on disposal. Goodwill arising on acquisition before the date of transition to IFRS has been retained at the previous UK GAAP amounts, subject to being tested for impairment at that date.
#### Merger reserve
The merger reserve comprises the non-statutory premium arising on shares issued as consideration for acquisitions of subsidiaries where merger relief under the relevant section of the Companies Act applies. To the extent that the creation of goodwill originally gave rise to a merger reserve, upon impairment an appropriate amount is transferred from the merger reserve to the profit and loss reserve.
#### Impairment of tangible and intangible assets excluding goodwill
At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets and right-of-use assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment (if any). Tangible and Intangible assets are amortised over their estimated useful lives (see Notes 14 and 15).
The recoverable amount is the higher of fair value less costs to sell and the value in use. The estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income immediately.
Unlike intangible assets and goodwill, right-of-use assets are not subject to a significant risk of material impairment, due to the nature and short-term duration of the leases held by the Group. Expected changes to the rental duration of office properties and the corresponding discount rate used to value lease liabilities are not considered probable within the course of normal business, so are excluded from the requirements set out in IAS 1.125.
#### **Business systems**
The Group's business systems (internal operational systems; i.e. finance, HR) are treated as an intangible asset where the probable future economic benefits arising from the investment can be assessed with reasonable certainty at the time the costs are incurred. Costs included are those directly attributable to the design, construction and testing of new systems (including major enhancements) from the point of inception to the point of satisfactory completion as defined by IAS 38, with the exception of cloud computing costs which are expensed as incurred. Maintenance and minor modifications are expensed against the income statement as incurred. These assets are amortised by equal instalments over 10 years.
#### Notes to the Financial Statements continued
#### 1. Accounting policies continued
#### Internally generated intangible assets - research and development costs
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
An internally generated intangible asset arising from the Group's product development is recognised only if all of the following conditions have been demonstrated:
- The technical feasibility of completing the intangible asset so that it will be available for use or sale.
- The intention to complete the intangible asset and use or sell it.
- The ability to use or sell the intangible asset.
- How the intangible asset will generate probable future economic benefits.
- The availability of adequate technical, financial and other resources to complete the development and to use or sell the asset.
- The ability to measure reliably the expenditure attributable to the intangible asset during its development.
Where no internally generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in which it is incurred.
#### Intangible assets
Intangible assets are stated at cost, net of amortisation and any recognised impairment loss. These assets are amortised on a straight-line basis over their useful economic lives as follows:
- Development costs 3 to 15 years.
- Business systems 10 years.
- Software licences 3 to 5 years.
#### **Acquired intangibles**
Acquired intangibles are stated at cost, net of amortisation and any recognised impairment loss. These assets are amortised on a straight-line basis over their useful economic lives as follows:
- Acquired intellectual property 15 years.
- Acquired software 15 years.
- Acquired customer contracts & relationships 3 to 12 years.
#### Property, plant and equipment
Property, plant and equipment is stated at cost, net of depreciation and any recognised impairment loss. Depreciation is charged so as to write off the cost of each asset, other than assets in the course of construction, by equal instalments over their estimated useful economic lives as follows:
- Leasehold buildings life of the lease.
- Fixtures, fittings and other equipment 3 to 7 years.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is measured by reference to the measurement of the lease liability on that date, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the Group's incremental borrowing rate. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating the lease, if the lease term reflects the Group exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses in the period in which the event or condition that triggers the payment occurs,
#### Short-term leases and leases of low-value assets
The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of buildings that have a lease term of 12 months or less and leases of low-value items including office equipment. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the term of the lease.
#### Sub-leases
When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification as a sub-lease with reference to the right-of-use-asset arising from the head lease, not with reference to the underlying asset.
#### Other items
IAS 1, 'Presentation of Financial Statements', provides no definitive guidance as to the format of the income statement, but states key lines which should be disclosed. It also encourages the disclosure of additional line items and the reordering of items presented on the face of the income statement when appropriate for a proper understanding of the entity's financial performance. The Group has adopted a policy of disclosing separately on the face of its Group income statement the effect of any components of financial performance considered by the Directors to be not directly related to the trading business or regarded as exceptional, or for which separate disclosure would assist in a better understanding of the financial performance achieved.
Both materiality and the nature and function of the components of income and expense are considered in deciding upon such presentation. Such items may include, inter alia, impairment and amortisation charges relating to goodwill and other intangible assets, the financial effect of major restructuring and integration activity, gains or losses associated with acquisitions (including the costs of such acquisitions, movements in deferred contingent consideration and the associated unwind of any discount thereon), profits or losses arising on business disposals, share-based payments and other items where separate disclosure is considered appropriate by the Directors, including the taxation impact of the aforementioned items.
#### Retirement benefit costs
The Group operates two defined contribution pension schemes that are established in accordance with employment terms set by the employing companies. The assets of these schemes are held separately from those of the Group in independently administered funds. The amount charged against profits represents the contributions payable to the scheme in respect of the accounting period.
Payments made to state-managed retirement benefit schemes are dealt with as payments to defined contribution schemes, where the Group's obligations under the schemes are equivalent to those arising in a defined contribution retirement benefit scheme.
For defined benefit retirement schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at the end of each reporting period. Remeasurement comprising actuarial gains and losses, the effect of the asset ceiling (if applicable) and the return on scheme assets (excluding interest) are recognised immediately in the balance sheet with a charge or credit to the statement of comprehensive income in the period in which they occur. Remeasurement recorded in the statement of comprehensive income is not recycled. Past service cost is recognised in profit or loss in the period of scheme amendment. Net interest is calculated by applying a discount rate to the net defined benefit liability or asset. Defined benefit costs are split into three categories:
- Current service cost, past service cost and gains and losses on curtailments and settlements.
- Net interest expense or income.
- Remeasurement.
The Group presents the first component of defined benefit costs within cost of sales and administrative expenses in the consolidated income statement. Curtailment gains and losses are accounted for as past-service cost. Net interest expense or income is recognised within finance costs. The retirement benefit obligation recognised in the consolidated balance sheet represents the deficit or surplus in the Group's defined benefit pension schemes. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the schemes or reductions in future contributions to the schemes.
#### **Provisions**
Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group will be required to settle the obligation. Provisions are measured at the Directors' best estimate of the expenditure required to settle the obligation at the balance sheet date, and are discounted to present value where the effect is material.
A property-related provision is recognised and measured as a provision when the Group has a present obligation arising under a property-related contract. This includes dilapidation costs arising from exiting a leasehold property where the costs are not all expected to be incurred during the next year. For a business that is closed or to be discontinued the provision reflects the costs associated with exiting the property leased by the discontinued or closed business.
Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist where the Group has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it.
A legal claims provision is recognised and measured as a provision when the Group has a present obligation arising under a legal claim. This includes anticipated costs to resolve any contractual disputes and any anticipated costs in respect of disputes arising on previously disposed of businesses.
A restructuring provision is recognised when the Group has developed a detailed formal plan for the restructuring and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it. The measurement of a restructuring provision includes only the direct expenditures arising from the restructuring, which are those amounts that are both necessarily entailed by the restructuring and not associated with the ongoing activities of the entity.
#### **Notes to the Financial Statements** continued
#### 1. Accounting policies continued
#### Foreign currencies
Transactions in currencies other than the local functional currency are recorded at the rates of exchange on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date, with differences recognised in profit or loss in the period in which they arise.
On consolidation, the assets and liabilities of the Group's overseas operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period. These are considered to be approximate rates for the transaction dates. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Exchange differences arising, if any, are recognised directly within equity within other comprehensive income. Such translation differences are recognised as income or expense in the period in which the operation is disposed of.
#### Share-based payments
The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value at the date of grant. This is expensed on a straight-line basis over the vesting periods of the instruments. At each balance sheet date, the Group revises its estimate of the number of equity instruments expected to vest as a result of the effect of the particular vesting conditions. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to other reserves in equity.
Fair value is measured by use of an adjusted Black-Scholes model for the 2017 - 2023 LTIPs (including the CSOP) and the 2019 SAYE, and a Monte-Carlo model for the LTIPs awarded in 2016, as these will vest dependent on market conditions.
#### Tax
Current tax is provided at amounts expected to be paid or recovered using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Current tax provisions are recognised in accordance with IFRIC 23 and represent genuine uncertain tax treatments. The Group continually monitors the status of any tax provisions and will reassess annually based on any changes in facts or circumstances leading to a 'more likely than not' outcome.
Research and development tax credits are recognised in other revenue in the consolidated income statement.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying values of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying value of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax in the income statement is charged or credited, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt within equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.
#### Financial instruments
Financial assets and financial liabilities are recognised in the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.
#### Financial assets
Financial assets are classified into the following specified categories: financial assets 'at fair value through profit or loss' (FVTPL) and 'amortised cost'. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. The Group does not currently hold any assets at fair value through profit or loss.
#### **Amortised cost**
These assets arise principally from the provision of goods and services to customers (e.g. trade receivables) and cash and cash equivalents. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.
#### Impairment of financial assets
Impairment provisions for current and non-current trade receivables are recognised based on the simplified approach within IFRS 9 using a provision matrix in the determination of credit losses. During this process the probability of the non-payment of the trade receivable is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the expected credit loss for the trade receivables. Provisions are recorded net in a separate provision account with the loss being recognised in the consolidated income statement. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.
Impairment provisions for receivables from related parties and loans to related parties are recognised based on a forward-looking expected credit loss model. The methodology used to determine the amount of provision is based on whether there has been a significant increase in credit risk since the initial recognition of the asset.
The Group's financial assets measured at amortised cost comprise trade and other receivables and cash and cash equivalents.
Cash comprises cash in hand and deposits repayable on demand. These instruments are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.
#### Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into.
#### **Equity instruments**
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.
#### Financial liabilities
Financial liabilities are classified as either financial liabilities 'at FVTPL' or 'amortised cost'. The only financial liabilities held 'at FVTPL' by the Group is deferred contingent consideration.
#### **Dividends**
Dividends are recognised when they become legally payable. In the case of final dividends, this is when approved by the shareholders at the AGM.
#### Contingent liabilities
Contingent liabilities are disclosed when there are uncertainties related to the amount or timing of any outflows.
#### **Notes to the Financial Statements** continued
#### 2. Critical accounting judgements and sources of estimation uncertainty
In the process of applying the Group's accounting policies, which are described in Note 1, the Board has made the following judgements that have the most significant effect on the amounts recognised in the financial statements.
#### Carrying value of goodwill
The carrying value of goodwill at the year-end is £28.5m (2022: £29.2m). An annual impairment review is required under IAS 36 'Impairment of assets' involving judgement of the future cash flows and discount rates for cash-generating units. The Group prepares such cash flow forecasts derived from the most recent budgets approved by the Board of Directors. Further details of the other assumptions used are given in Note 13.
#### Carrying value of development costs
The carrying value of development costs is £43.7m (2022: £36.7m). Judgement is required to assess whether costs meet the criteria for capitalisation set out in IAS 38, the useful life of those assets, and subsequently the consideration of the potential need for impairment of these assets, in particular in relation to their expected ability to generate future revenue. Amortisation is charged once a product is ready for its intended use. Amortisation is charged on a straight-line basis over the useful economic life of the product to which the expenditure relates which range from 3 to 15 years, with a weighted average product life of 15 years. In considering the appropriateness of the useful economic life of products management take into account typical product life cycles, technical, technological, commercial or other types of obsolescence and the stability of the industry in which the asset operates/changes in the market demand for the product. Further details of the other assumptions used are given in Note 14.
#### Revenue recognition
The Group's revenue recognition policies are disclosed in Note 1. In some cases, particularly in relation to software implementation programmes on which we are engaged in a number of international settings, judgement is required to determine the most appropriate measure of the stand alone selling prices and separately the timing of the revenue and profit recognition related to the service and products that have been delivered to customers at the balance sheet date. Judgement is also required in the recognition of any variable consideration and in the associated risk of recoverability of any associated receivables and contract assets where invoicing and/or payment is subject to certain future milestones. Programme delivery requirements, software specification and customer expectations may evolve during the course of these major projects. This may result in developments to ongoing commercial arrangements that could materially impact the basis of financial judgements made at the period end. Therefore, the potential impact of these evolving obligations and the overall customer project status must be considered carefully and where appropriate reflected in accounting judgements.
#### Uncertainty over income tax treatments
From time to time the Group encounters situations where there is uncertainty over income tax treatments that may affect both current and deferred taxes. Where the Group determines it is probable that a tax treatment will be accepted, then it measures its income taxes on that basis. In relation to the current period, the Group has excluded an amount of £0.8m of current tax from the tax charge included in the consolidated income statement on the basis that it believes that it is probable that the relevant tax authority will accept an amended and refiled tax return.
#### **Provisions and contingent liabilities**
Provisions are liabilities of uncertain timing or amount and therefore judgement is applied in making a reliable estimate of the quantum and timing. Further information about the assumptions and risk factors is given in note 20 'Provisions'. In addition, the determination of whether any claims against the Group give rise to a possible, probable or remote outflow of economic benefit are key judgements that the Directors have made in preparing the financial information. Further information on contingent liabilities are included in note 30 'Contingent liabilities'.
#### 3. Revenue from contracts with customers
The Group has split revenue into various categories which is intended to enable users to understand the relationship between revenue streams and segment information.
| Č | | | | North America
and Rest of | |
|----------------------------------------------------|-------------|----------------------|---------------------|------------------------------|----------------|
| 31 December 2023 | UK
8:000 | Australia
€ £'000 | Other APAC
£:000 | the world
£:000 | Total
£'000 |
| Foundation - Support & Maintenance | 15,903 | 6,269 | 1,727 | 996 | 24,895 |
| Foundation - Software | 7.865 | 185 | 417 | 75 | 8,642 |
| Cloud Services | 8,384 | 1,432 | 453 | 150 | 10,419 |
| Edge | 3,913 | 414 | . 63 | 801 | 5,191 |
| Professional Services | 7,969 | + 498 | 1,164 | 151 | 9,782 |
| Core Student Information Systems (SIS) | 44,034 | 8,798 | 3,824 | 2,173 | 58,829 |
| Other software & services | 3,316 | 6.424 | 200 a _ | 9 | 9,749 |
| Total Student Information Systems (SIS) | 47,350 | 15,222 | 3,824 | 2,182 | 68,578 |
| Schools inspections & other related services (QAS) | 9,121 | -1 | 1 | 5,104 | 14,226 |
| i-graduate survey & data analytics | 1,214 | 370 | 1,076 | 286- | 2,946 |
| Total Education Services (ES) | 10,335 | 370 | ≥ ≥ 1,077 | 5;390 | 1, 17,172 |
| Total | 57,685 | 15,592 | # 14.901 m | 7,57.2 | 85,750 |
| 31 December 2022 | UK
£'000 | Australia
£'000 | Other APAC
£'000 | North America
and Rest of
the world
£'000 | Total
£'000 |
|----------------------------------------------------|-------------|--------------------|---------------------|----------------------------------------------------|----------------|
| Foundation - Support & Maintenance | 15,668 | 7,112 | 1,617 | 1,023 | 25,420 |
| Foundation - Software | 6,575 | 106 | 515 | 21 | 7,217 |
| Cloud Services | 6,577 | 1,351 | 425 | 144 | 8,497 |
| Edge | 3,870 | 400 | 142 | 346 | 4,758 |
| Professional Services | 7,618 | 1,191 | 2,181 | 231 | 11,221 |
| Core Student Information Systems (SIS) | 40,308 | 10,160 | 4,880 | 1,765 | 57,113 |
| Other software & services | 3,240 | 7,808 | _ | - | 11,048 |
| Total Student Information Systems (SIS) | 43,548 | 17,968 | 4,880 | 1,765 | 68,161 |
| Schools inspections & other related services (QAS) | 7,176 | _ | - | 5,570 | 12,746 |
| i-graduate survey & data analytics | 1,126 | 126 | 1,080 | 346 | 2,678 |
| Total Education Services (ES) | 8,302 | 126 | 1,080 | 5,916 | 15,424 |
| Total | 51,850 | 18,094 | 5,960 | 7,681 | 83,585 |
#### **Net contract liabilities**
| | Contract asset/
(liability)
2023
£'000 | Contract asset/
(liability)
2022
£'000 |
|-------------------------------------------------------|-------------------------------------------------|-------------------------------------------------|
| Opening contract balance | (19,469); | (17,647) |
| Of which released to income statement | 19,328 | 17,405 |
| New billings and cash in excess of revenue recognised | (21.673) | (19,227) |
| Closing contract balance | # (21.814) | (19,469) |
Balances arise on contract assets and liabilities when cumulative payments received from customers at the balance sheet date do not necessarily equal the amount of revenue recognised on contracts. Customers are on standard payment terms, which may result in settlement of invoices prior to the recognition of associated revenue.
# Notes to the Financial Statements continued
#### 3. Revenue from contracts with customers continued
Contract assets inherently have some contractual risks associated with them related to the specific and ongoing risks in each individual contract with a customer. The impairment of contract assets/(liabilities) reflects provisions recognised against contract assets in relation to these risks. See Note 31.
The amount of incremental costs to obtain a contract which extends over a period of more than 12 months has been recognised as an asset in prepayments totalling £0.3m (2022: £0.5m) and will be released in line with the total contract revenue. No amount has been impaired at 31 December 2023 or 2022.
#### Remaining performance obligations
The amount of revenue that will be recognised in future periods on revenue contracts entered into prior to 31 December when the remaining performance obligations will be satisfied is analysed as follows:
#### At 31 December 2023
| | 2024
£'000 | 2026
£'000 | 2026
£'000 | Thereafter
£'000 | Total
£'000 |
|----------------------------------------------------|---------------|---------------|---------------|---------------------|----------------|
| Foundation - Support & Maintenance | 25,476 | 24,784 | 16,230 | 63 | 66,553 |
| Foundation - Software | 7,489 | 7,332 | 3,935 | 20 | 18,776 |
| Cloud Services | 11,523 | 11,219 | 7,204 | 1,272 | 31,218 |
| Edge | 4,845 | 4,649 | 2,337 | 421 | 12,252 |
| Professional Services | 7,763 | 1,642 | 52 | - | 9,457 |
| Core SIS | 57,095 | 49,625 | 29,758 | 1,776 | 138,253 |
| Other software & services | 6,120 | 2,346 | 1,066 | 56 | 9,588 |
| Total SIS | 63,215 | 51,971 | 30,824 | 1,832 | 147,841 |
| Schools inspections & other related services (QAS) | 11,396 | 6,190 | 275 | 22 | 17,883 |
| i-graduate survey & data analytics | 1,764 | 903 | 453 | - | 3,120 |
| Total ES | 13,160 | 7,094 | 728 | 22 | 21,003 |
| TOTAL | 76,375 | 59,064 | 31,552 | 1,853 | 168,844 |
#### At 31 December 2022
| | 2023
£'000 | 2024
£'000 | 2025
£'000 | Thereafter
£'000 | Total
£'000 |
|----------------------------------------------------|---------------|---------------|---------------|---------------------|----------------|
| Foundation - Support & Maintenance | 24,635 | 24,472 | 15,783 | 6,389 | 71,279 |
| Foundation - Software | 5,876 | 5,275 | 3,187 | 134 | 14,472 |
| Cloud | 8,947 | 8,320 | 5,618 | 2,334 | 25,219 |
| Edge | 4,648 | 4,560 | 2,996 | 1,263 | 13,467 |
| Professional Services | 7,093 | 1,303 | 74 | 12 | 8,482 |
| Core SIS | 51,199 | 43,930 | 27,658 | 10,132 | 132,919 |
| Other software & services | 7,577 | 3,541 | 1,982 | 9 | 13,109 |
| Total SIS | 58,776 | 47,471 | 29,640 | 10,141 | 146,028 |
| Schools inspections & other related services (QAS) | 12,013 | 8,120 | 2,101 | 141 | 22,375 |
| i-graduate survey & data analytics | 2,121 | 1,033 | 878 | 439 | 4,471 |
| Total ES | 14,134 | 9,153 | 2,979 | 580 | 26,846 |
| TOTAL | 72,910 | 56,624 | 32,619 | 10,721 | 172,874 |
#### An analysis of the Group's revenue is as follows:
| | 2023
£'000 | 2022
£'000 |
|-----------------------|-------------------|---------------|
| Continuing operations | | |
| Sales of services | ¥ 85.7 5 0 | 83,585 |
| Total revenue | 85,750 | 83,585 |
E-COMMUNICATION ACCORDING
Further details of the nature of the services provided are disclosed in Note 4. Sales of goods are not material and are therefore not shown separately. Included in sales of services is £1.3m (2022: £1.7m) related to software license revenues recognised as a result of a periodic review of our license entitlement resulting from changes in our customers' enrolled student numbers.
There is no revenue in respect of discontinued operations.
#### 4. Business segments
Information reported to the Group's Chief Executive for the purposes of resource allocation and assessment of segment performance is focused on the nature of each type of activity. The Group's reportable segments and principal activities under IFRS 8 are detailed below:
- Student Information Systems (SIS) represents the delivery of software and subsequent maintenance and support services
and the activities through which we deploy and configure our software for our customers, including software solutions,
asset management and information managed services.
- Education Services (ES) represents inspection and review services which support the assessment of educational delivery, and a portfolio of performance improvement tools and services, including analytics.
In accordance with IFRS 8 'Operating Segments', information on segment assets is not shown, as this is not provided to the chief operating decision-maker, being the Chief Executive. Inter-segment sales are charged at prevailing market prices.
| · | Reven | ue | Adjusted segment o | |
|--------------------------------------------------------------------------|------------------------------------------------------|-----------------------------------------|-----------------------------------------|-----------------------------------------|
| | Year ended
31 December 2023
£'000 | Year ended
31 December 2022
£'000 | Year ended
31 December 2023
£:000 | Year ended
31 December 2022
£'000 |
| SIS | 68,578 | 68,161 | 23,412 | 12,099 |
| ES | 17,172 | 15,424 | 2,254 | 3,496 |
| Total | 85,750 | 83,585 | 25,666% | 15,595 |
| Unallocated corporate expenses | | | (14,360). | (11,596) |
| Amortisation of acquired software and customer contracts & relationships | tan kajag sama baggar di k
kajag sama baggar di k | | (725) | (1,098) |
| Adjusted operating profit | | | 10,581 | 2,901 |
| Exceptional items (see Note 6) | | | (3,320) | (2,122) |
| Operating profit | | | 7261 | 779 |
| Finance income | 110 | | .308 | 25 |
| Finance costs | | | (939) | (417) |
| Profit before tax | | | .6630 | 387 |
| Tax charge | 198 | | (1,336), | (897) |
| Profit/(loss) after tax | | | 5,294 | (510) |
\* See Note 5
Associated depreciation and amortisation is allocated to segment profits and is included in adjusted segment operating profit as above. The amount included in SIS is £2.3m (2022: £2.6m) and within Education Services £0.2m (2022: £0.1m). The accounting policies of the reportable segments are the same as the Group's accounting policies described in Note 1. Segment profit represents the profit earned by each segment, without allocation of central administration costs, including Directors' salaries, finance costs and income tax expense. This is the measure reported to the Group's Chief Executive for the purpose of resource allocation and assessment of segment performance.
Within Education Services revenues of approximately 2% (2022: 5%) have arisen from the segment's largest customer; within SIS revenues of approximately 4% (2022: 4%) have arisen from the segment's largest customer. These percentages are calculated against total revenue.
# Notes to the Financial Statements continued
#### 4. Business segments continued
#### **Geographical information**
Revenue from external customers, based on location of the customer, is shown below:
| | 2023
£1000 | 2022
£'000 |
|--------------------|---------------|---------------|
| UK | 57,685 | 51,850 |
| Australia | 15,592 | · 18,094 |
| Other Asia Pacific | 4.901 | 5,960 |
| North America | 3,650 | 3,616 |
| Rest of the world | 3.922 | 4,065 |
| | 85,750 | 83,585 |
#### Non-current assets (excluding deferred tax)
| rion current assets (excluding deterred tax) | 2023
£2000 | 2022
£'000 |
|----------------------------------------------|--------------------|---------------|
| UK | 67,523 | 60,746 |
| Australia | 13,342* | 14,350 |
| Other Asia Pacific | ( ) | 305 |
| North America | \$27. 3 | 52 |
| Rest of the world | * 50.° | 11 |
| | 81,473 | 75,464 |
#### 5. Operating profit for the year
| | Note | 2023
£'000 | 2022
£'000 |
|----------------------------------------------------------------------|------|---------------|---------------|
| Operating profit for the year is stated after charging: | | | |
| Staff costs (excluding amounts capitalised) | 7 | 47,151 | 44,719 |
| Depreciation and other amounts written off in PPE | 15 | 566 | 623 |
| Depreciation of right-of-use assets | 26 | 1,004 | 1,036 |
| Amortisation of software and customer contracts & relationships | 14 | 725 | 1,098 |
| Amortisation of business systems | 14 | 7 | 20 |
| Amortisation of development costs and acquired Intellectual Property | 14 | 1,485 | 1,301 |
| Write off of development costs | 14 | 2.0 | 113 |
| Fair value loss on financial asset | | 577 | - |
| Internal systems transformation programme 'VERITAS' | 14 | 1 | 1,321 |
| Net impairment loss/(gain) on trade receivables | 16 | 471 | 7 |
| Research and development expenditure | | 5,558 | 5,562 |
| Net foreign exchange losses | | 130 | 114 |
#### The analysis of auditors' remuneration is as follows:
| | 2023
£:000 | 2022
£'000 |
|----------------------------------------------------------------------------------------------------|---------------|---------------|
| Fees payable to the Company's current auditors for the audit of the Company's Annual Report | 359 | 246 |
| Fees payable to the Company's current auditors and its associates for other services to the Group: | | |
| - the audit of the Company's subsidiaries pursuant to legislation | 120 | 210 |
| Total audit fees | 479 | 456 |
| Total non-audit fees | | - |
| Total auditor's remuneration | 479 | 456 |
Non-audit fees were £nil in 2023 and 2022.
A number of non-IFRS adjusted profit measures are used in this Annual Report and financial statements. Exceptional items are excluded from our headline performance measures by virtue of their size and nature, in order to reflect management's view of the underlying performance of the Group (see Note 6).
Summarised below is a reconciliation between statutory results to adjusted results. The Group believes that alternative performance measures such as adjusted EBITDA are commonly reported by companies in the markets in which it competes and are widely used by investors in comparing performance on a consistent basis without regard to factors such as depreciation and amortisation, which can vary significantly depending upon accounting methods (particularly when acquisitions have occurred), or based on factors which do not reflect the underlying performance of the business. The adjusted profit after tax earnings measure is also used for the purpose of calculating adjusted earnings per share.
#### Alternative performance measures (APM)
| | 2023
£'000 | Restated*
2022
£'000 |
|----------------------------------------------------------------------|---------------|----------------------------|
| Statutory operating profit | 7,261 | 779 |
| Amortisation of development costs and acquired intellectual property | §1,485° | 1,301 |
| Amortisation of other intangibles | 7-1 | 20 |
| Depreciation on Property, Plant & Equipment | , | 623 |
| Depreciation of right-of use assets | 1:004 | 1,036 |
| Amortisation of software and customer contracts & relationships | , +) 725 ° | 1,098 |
| Exceptional items (Note 6) | 3,320 | 2,122 |
| Adjusted EBITDA | 14:368 | 6,979 |
| | 2023
£'000 | 2022
£'000 |
|--------------------------------|----------------------------|---------------|
| Adjusted EBITDA | 14:368 | 6,979 |
| Exceptional items (Note 6) | (3,320). | (2,122) |
| EBITDA after exceptional items | // e .sk 11:048 | 4,857 |
| Depreciation & amortisation | (3,787) | (4,078) |
| Operating profit (EBIT) | 7.261 | 779 |
| Net financing costs | (631) | (392) |
| Profit before tax | 6.630 | 387 |
\* In previous periods adjusted measures of profits and adjustments have been presented in a separate column in the consolidated income statements. In the current year the format of the income statement has been changed to a 'box out' format to show the impact of exceptional items. Separately in 2023 we made a change to our accounting policy in respect of previously reported 'other items'. As a result, certain items of income, or expense previously included as 'other items' have been classified as underlying activities. Previously reported 'other items' are new referred to as 'exceptional items'. Items reclassified are employee-related share option charges, including employer-related taxes (2023: £446,000; 2022: £450,000), amortisation of acquired customer contracts and relationships (2023: £458,000; 2022: £470,000). Prior periods have been restated. The impact on previously reported operating profit before other items (adjusted operating profit) has been to reduce adjusted operating profit for the year ended 31 December 2022 by £1,548,000.
#### **Notes to the Financial Statements** continued
#### 5. Operating profit for the year continued
| | Restateda
31 December 2022 | As report | ted 31 December 2022 | |
|---------------------------------------------|-------------------------------|-------------------|----------------------|--------------------|
| | £.000 | Adjusted
£'000 | Other items
£'000 | Statutory
£'000 |
| Continuing operations | | | | |
| Revenue | 83,585 | 83,585 | - | 83,585 |
| Cost of sales | (52,250) | (52,250) | - | (52,250) |
| Gross profit | 21,335 | 31,335 | | 31,335 |
| Total administrative expenses | (30,556) | (26,886) | (3,670) | (30,556) |
| Operating profit/(loss) | 7.79 | 4,449 | (3,670) | 779 |
| Analysed as: | | | | |
| Operating profit (before exceptional items) | 2,901 | - . | - | |
| Exceptional items | (2.122) | - | _ | - |
| Operating profit (EBIT) | 779 g | - | - | - |
| Finance income | 25 | 25 | - | 25 |
| Finance costs | (417) | (323) | (94) | (417) |
| Profit/(loss) before tax | 3872 | 4,151 | (3,764) | 387 |
#### 6. Exceptional items
| Total exceptional items | (3.320) | (2,122) |
|-----------------------------------------------------|----------------------|----------------------------|
| Group restructuring and associated costs | (1,000) | (615) |
| Education Services (ES) restructure | (1,003) 2 | - |
| Takeover costs | 4.420) | - |
| Internal systems transformation programme 'VERITAS' | | (1,321) |
| Acquisition related costs | 103 | (186) |
| | 2023
£'000 | Restated*
2022
£'000 |
The exceptional items are not part of the Group's underlying trading activities and include the following:
Acquisition-related costs: Amounts relating to the consultancy and legal costs of potential acquisitions (2023; credit of £103,000; 2022: charge of £186,000). The credit in 2023 has arisen from the remeasurement of accounting for changes in the fair value of the contingent deferred consideration as part of the earn-out agreement with Eveoh BV, and the corresponding gain has been recognised in the income statement.
Internal systems transformation programme 'Veritas': The upgrade of the accounting system went live in January 2023. In 2022 £1,321,000 of costs were included as exceptional items as the upgrade was material and nonrecurring in nature. In 2023 all further costs associated with this project have been expensed as part of the Group's underlying activities.
Restructuring and associated costs relate to the restructuring of the Group's operations, including properties and the Education Services Restructure. (2023: £2,003,000; 31 December 2022: £615,000). These costs relate to one-off initiatives that support the Group's transition to a Pureplay EdTech, SaaS business.
Takeover costs: Amounts relating to the lapsed offer for Tribal Group plc by Ellucian. Costs of £1,420,000 were spent on due diligence and external advisors.
#### 7. Staff numbers and costs
The average monthly number of persons employed under contracts of service by the Group (including Executive Directors) during the year was as follows:
| | 2028
number | 2022
number |
|------------------------------------------------|----------------|----------------|
| Selling, operations, marketing and development |
833 | 880 |
| Finance and administration . | 105 | 92 |
| • | 938 | 972 |
The aggregate payroll costs of these persons were as follows:
| | €2023
€:000 | 2022
£'000 |
|-----------------------|----------------|---------------|
| Wages and salaries | 46,691 | 45,892 |
| Social security costs | 4.013 | 3,957 |
| Other pension costs | 2.199 | 2,005 |
| Restructuring costs | 1.260 | 752 |
| Share option charge* | 354 | 574 |
| | 54.517 | 53,180 |
\* Includes £23,000 (2022: £(15,000)) amounts paid and accrued on dividends on share options that have met performance conditions.
The total payroll costs above include £7,366,000 (2022: £8,461,000) capitalised as development costs. £27,325,000 of payroll costs are included in cost of sales and £19,826,000 of payroll costs are included in administrative expenses.
#### 8. Finance income
| | 2023
£'000 | 2022
£'000 |
|---------------------------------------------------------------------|---------------|---------------|
| Fair value movement on forward exchange contract | 175 | 23 |
| Net interest receivable on retirement benefit obligations (Note 27) | 129 | - |
| Interest receivable on leased assets | 3. | 2 |
| Other interest received | | _ |
| Total finance income | 308 | 25 |
# 9. Finance costs
| | 2023
2'000 | 2022
£'000 |
|--------------------------------------------------------|---------------|---------------|
| Interest on bank overdrafts and loans | 717 | 229 |
| Loan arrangement fees | 112 | 9 |
| Net interest payable on retirement benefit obligations | | 4 |
| Interest expense on lease liabilities | 78 | 81 |
| Unwinding of discounts | 32 | 94 |
| Total finance costs · | 939 | 417 |
# Notes to the Financial Statements continued
#### 10. Tax
| | 2023
£'000 | 2022
£'000 |
|---------------------------------------|---------------|---------------|
| Current tax | | |
| UK corporation tax | (117) | (1,381) |
| Overseastax | 1.999° | 1,967 |
| Adjustments in respect of prior years | (493) | 483 |
| | 1/389 | 1,069 |
| Deferred tax | | |
| Current year | 502 | (212) |
| Adjustments in respect of prior years | (555) | 40 |
| | (63); | (172) |
| Tax charge on profits | 4.75.4936 | 897 |
See Note 21 for further analysis of movements in the deferred tax position. The continuing tax charge can be reconciled to the profit from continuing operations per the income statement as follows:
| | 2023
£'000 | 2022
£'000 |
|-----------------------------------------------------|---------------|---------------|
| Profit before tax on continuing operations | £ 6,630 f | 387 |
| Tax charge at standard UK rate of 23.5% (2022: 19%) | * 1558 | 74 |
| Effects of: | | |
| Overseas tax rates | 342 a | 619 |
| Expenses not deductible for tax purposes | 495 | 14 |
| Adjustments in respect of prior years | (1.048) | 523 |
| Additional deduction for R&D expenditure | | (23) |
| Share scheme costs | | 19 |
| Fixed assets ineligible depreciation | g | (14) |
| Losses not recognised | , see 192 | 989 |
| Movement in IFRIC 23 tax provision | (117) | (1,405) |
| Effect of changes in tax rates | 14. | 101 |
| Tax expense for the year | 1:936 | 897 |
In addition to the amount charged to the income statement a current tax credit of £1il (2022: credit of £24,000) and a deferred tax credit of £32,000 (2022: charge of £284,000) has been recognised directly in equity during the year in relation to Share Schemes.
A deferred tax charge of £nil (2022: £726,000) has been recognised in the Consolidated Statement of Comprehensive Income in relation to defined benefit pension schemes.
The Group continues to hold appropriate uncertain tax provisions.
The income tax expense for the year is based on the UK statutory rate of corporation tax for the period of 23.5% (2022: 19%).
Tax for other jurisdictions is calculated at the prevailing rates in the respective jurisdictions.
#### 11. Dividends
| | 2023
£:000 | 2022
£'000 |
|-----------------------------------------------------------------------------------------------------------------------------------------------|---------------|---------------|
| Amounts recognised as distributions to equity holders in the period: | | |
| Final dividend for the year ended 31 December 2022 of 0.65 pence
(Final dividend for the year ended 31 December 2021: 1.3 pence) per share | 1,377 | 2,736 |
| Proposed dividend: | | |
| Dividend for the year ended 31 December 2023 to be confirmed (TBC) | L TBC | 1,379 |
The Board regularly reviews the available distributable reserves (Notes 24 and 25) of Tribal Group plc to ensure they are protected for future dividend payments.
#### 12. Earnings per share
Basic earnings per share and diluted earnings per share are calculated by reference to a weighted average number of Ordinary Shares calculated as follows:
| | 2023 -
'000 | 2022 |
|-------------------------------------------------------------------------------|------------------------------|---------|
| Weighted average number of shares outstanding: | | |
| Basic weighted average number of shares in issue | ×214:180 | 211,627 |
| Dilutive weighted average number of employee share options | 1.626 | 3,236 |
| Total weighted average number of shares outstanding for dilution calculations | ** ** 215 , 806 ° | 214,863 |
Diluted earnings per share reflects the dilutive effect of LTIP and CSOP share options for which vesting criteria have been met. In regards the diluted loss per share in 2022, all potentially dilutive Ordinary Shares, including options are anti-dilutive as they would decrease the loss per share.
The maximum number of potentially dilutive shares, based on options that have been granted but have not yet met vesting criteria, is 3,300,128 (2022: 3,328,168). This includes 17,937 options in the 2019 SAYE Scheme (2022: 92,157).
The adjusted basic and diluted earnings per share figures shown are included as the Directors believe that they provide a better understanding of the underlying trading performance of the Group. A reconciliation of how these figures are calculated is set out below:
| | 2023
E 000 | Restated*
2022
£'000 |
|-----------------------------------------------------------------|---------------|----------------------------|
| Net profit/(loss) | 5:294 | (510) |
| Earnings/(loss) per share | | |
| Basic | 2 5p | (0.2)p |
| Diluted | . ≥ 2.4p. | (0.2)p |
| | | |
| Net profit (before exceptional items) * | | 59 |
| Adjusted earnings per share | | |
| Basic | 41p | - |
| Diluted | 4.10 | - |
| * Net profit (before exceptional items) is calculated as below: | 2023
£000 | 2022
£'000 |
| Operating profit (before exceptional items) | 10/581 | 2,901 |
| Finance income | 308 | 25 |
| Finance costs | (939) | (417) |
| Operating profit (before exceptional items) before tax | 9960 | 2,509 |
| Tax charge (before exceptional items) | (1,139) | (2,450) |
| Net profit (before exceptional items) | 8,811 | 59 |
#### Notes to the Financial Statements continued
#### 13. Goodwill
| | 2023
€°000 | 2022
£'000 |
|-------------------------------|---------------|---------------|
| Cost | | |
| At beginning of year | 110,407 | 109,813 |
| Exchange differences | \$6.4 × (652) | 594 |
| At end of year | 109,755 | 110,407 |
| Accumulated impairment losses | | |
| At beginning of year | 81,231 | 81,231 |
| At end of year | 81:231 | 81,231 |
| Net book value | | = |
| At end of year | ` | 29,176 |
| At beginning of year | 29176% | 28,582 |
Goodwill acquired in a business is allocated, at acquisition, to the cash-generating units (CGUs) that are expected to benefit from the business combination. The carrying amount of goodwill has been allocated as follows:
| | 2023
£000 | 2022
£'000 |
|-----------------------------------|--------------|---------------|
| Student Information Systems (SIS) | 24.990 | 25,642 |
| Education Services (ES) | 3:534 | 3,534 |
| | 28.524 | 29,176 |
Goodwill is reviewed at least annually for impairment by comparing the recoverable amount of each cash generating unit (CGU) with the goodwill, intangible assets and property, plant and equipment allocated to that CGU.
The recoverable amount of a CGU is determined based on value in use calculations. These calculations use risk adjusted cash flow projections based on the financial budget approved by management for the period to 31 December 2023. The budget was prepared based on past experience, strategic plans and management's expectation for the markets in which they operate including adjustments for known contract ends, contract related inflationary increases and planned cost savings. From the budget a forecast was extrapolated by product over a five-year period to give greater clarity on future cash flows. Cash flows beyond the budget and extrapolation period were calculated into perpetuity using a 2% growth assumption. This growth rate is in line with the expected long-term growth rate of the market in which the business operates.
The cash flows projections are discounted at a pre-tax discount rate of 16.0% (2022: 14.5%). The single discount rate, which is consistently applied for both CGUs, is determined with reference to internal measures and available industry information and reflects specific risks relevant to the Group.
Impairment testing inherently involves a number of judgemental areas, including the preparation of cash flow forecasts for periods that are beyond the normal requirements of management reporting; the assessment of the discount rate appropriate to the Group and the estimation of the future revenue and expenditure of each CGU. Accordingly, management undertook stress testing to understand the key sensitivities and concluded as follows:
A rise in discount rate of 280bps and 250bps would trigger an impairment in SIS and ES respectively. A decline in growth rate of EBITDA (330bps) in SIS and (290bps) in ES would result in an impairment.
Management does not believe a reasonably possible change in the key assumptions may cause impairment.
#### 14. Other intangible assets
| | Acquired
software
£'000 | Acquired
customer
contracts &
relationships
£'000 | Acquired
Intellectual
property
£'000 | Development
costs
£'000 | Business
systems
£'000 | Software
licenses
£'000 | Total
£'000 |
|-------------------------------------------|-------------------------------|---------------------------------------------------------------|-----------------------------------------------|-------------------------------|------------------------------|-------------------------------|----------------|
| Cost | | | | | | | |
| At 1 January 2022 | 12,233 | 9,753 | 1,873 | 54,013 | 818 | 1,488 | 80,178 |
| Adjustments | - | - | - | 23 | (30) | - | (7) |
| Additions | - | _ | - | 10,294 | 75 | - | 10,369 |
| Disposals | _ | _ | - | (9,171) | (793) | (1,445) | (11,409) |
| Exchange differences | 349 | 149 | - | 155 | 5 | 1 | 659 |
| At 31 December 2022
and 1 January 2023 | 12,582 | 9,902 | 1,873 | 55,314 | 75 | 44 | 79,790 |
| Additions | - | - | - | 8,479 | - | - | 8,479 |
| Exchange differences | (383) | (163) | - | (170) | - | - | (716) |
| At 31 December 2023 | 12,199 | 9,739 | 1,873 | 63,623 | 75 | 44 | * 87,553 |
| Amortisation | | | | | | | |
| At 1 January 2022 | 8,305 | 6,606 | 809 | 26.399 | 624 | 1.488 | 44,231 |
| Charge for the year | 628 | 470 | 141 | 1,160 | 20 | · - | 2,419 |
| Disposals | _ | _ | = | (9,058) | (644) | (1,445) | (11,147) |
| Exchange differences | 350 | 113 | - | 156 | - | 1 | 620 |
| At 31 December 2022
and 1 January 2023 | 9,283 | 7,189 | 950 | 18,657 | - | 44 | 36,123 |
| Charge for the year | 267 | 458 | 97 | 1,388 | 7 | - | 2,217 |
| Exchange differences | (383) | (129) | - | (169) | - | _ | (681) |
| At 31 December 2023 | 9:167 | + °7,518⇒ | 1,047 | 19,876 | 7. | 44 / | > 37,659 |
| Carrying amount | | | | | | | |
| At 31 December 2023 | 3,032 | 2,221 | 826 | 43,747 | 68 | 1 | 49,894 |
| At 31 December 2022 | 3,299 | 2,713 | 923 | 36,657 | 75 | | 43,667 |
Software, customer contracts and relationships and intellectual property that have arisen from acquisitions are amortised over their estimated useful lives, which are 3 to 8 years and 3 to 15 years respectively. The amortisation period for development costs incurred on the Group's product development is 3 to 15 years, based on the expected life cycle of the product. Amortisation and impairment of development costs, amortisation for software, customer contracts and relationships, intellectual property, business systems and software licenses are all included within administrative expenses.
Management have reassessed the useful economic life (UEL) of the previously acquired software relating to the Tribal Dynamics and Semestry intangible assets. As a result the UEL of these assets has been aligned with that of the Tribal Edge product, reflecting the fact that these products are integral to Edge. This has been treated as a change in accounting estimate from 1 January 2023. Prior periods have not been adjusted. The net impact of this change in accounting estimate resulted in a reduced charge to the Income Statement of £361,000 in the period (Charge to 31 December 2023: £267,000; under previous estimate £628,000).
The Group is required to test annually if there are any indicators of impairment and perform an impairment test on all assets which are under development, irrespective of whether there is an indicator of impairment. The recoverable amount is determined based on value in use calculations of identified CGUs. The use of this method requires the estimation of future cash flows and the determination of a discount rate in order to calculate the present value of the cash flows.
The impairment testing allocates all assets relating to specific CGUs, including goodwill, other intangibles, property, plant and equipment and net current assets and liabilities.
# Notes to the Financial Statements continued
#### 15. Property, plant and equipment
| · | Leasehold
improvements
£'000 | Fixtures, fittings and other equipment £'000 | Total
£'000 |
|-----------------------------------------|------------------------------------|----------------------------------------------|----------------|
| Cost | | | |
| At 31 December 2021 and 1 January 2022 | 3,109 | 6,697 | 9,806 |
| Additions | 316 | 400 | 716 |
| Disposals | (1,120) | (6,211) | (7,331) |
| Exchange differences | 39 | 110 | 149 |
| At 31 December 2022 and 1 January 2023 | 2,344 | 996 | 3,340 |
| Additions | 52 | 338 | 390 |
| Disposals | (220) | (192) | (412) |
| Exchange differences | (26) | (40) | (66) |
| At 31 December 2023 | 2,150 | 1,102 | 5⊯3,252€ |
| Accumulated depreciation and impairment | | | |
| At 31 December 2021 and 1 January 2022 | 2,919 | 5,925 | 8,844 |
| Charge for the year | 123 | 500 | 623 |
| Disposals | (1,104) | (6,203) | (7,307) |
| Exchange differences | 35 | 101 | 136 |
| At 31 December 2022 and 1 January 2023 | 1,973 | 323 | 2,296 |
| Charge for the year | 119 | 447 | 566 |
| Disposals | (212) | (181) | (393) |
| Exchange differences | (19) | (34) | (53) |
| At 31 December 2023 | 1,861 | \$ 4.55 555 × | 2,416 |
| Net book value | | | |
| At 31 December 2023 | 1289 | 547 | 836 |
| At 31 December 2022 | 371 | 673 | 1,044 |
There are £2.9m (2022: £2.3m) cost of assets that are fully depreciated within property, plant and equipment.
A review of all assets was undertaken in the year and £0.1m (2022 £7.3m) of fully depreciated assets have been written off as no longer in use.
#### 16. Trade and other receivables
| | 2023
1 2000 | 2022
£'000 |
|---------------------------------------------|----------------|---------------|
| Amounts receivable for the sale of services | 8.834 | 7,387 |
| Less: Loss allowance | (665) | (194) |
| • | 8:169 | 7,193 |
| Other receivables | 689 | 828 |
| Prepayments | 4,832 | 4,484 |
| | 13,690 | 12,505 |
The Group's principal financial assets are cash and cash equivalents and trade and other receivables which represent the Group's maximum exposure to credit risk in relation to financial assets. The Group's credit risk is primarily related to its trade receivables. The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies.
All receivables are due within one year in both current and prior years.
The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.
#### Trade receivables
Trade receivables are measured at amortised cost. The average credit terms on sales is 30 days (20221: 30 days). The Group sells the majority of its services to the public sector or related bodies and institutions, and as such there is a low incidence of default experience.
Of the total trade receivables balance at the end of the year there were three customers (2022: two) who held balances outstanding of more than 5% (2026: £1.7m; 2022: £1.6m). The average age of receivables is 29 days (2022: 40 days).
The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss allowance for trade receivables and accrued income. To measure expected credit losses on a collective basis, trade receivables and accrued income are grouped based on similar credit risk and ageing.
At 31 December 2023 the lifetime expected loss allowance for trade receivables is as follows:
| | Expected Gross carrying amount Loss provision (loss rate £ 000 £ 000 |
|-------------|----------------------------------------------------------------------|
| Current | 176. * 7,004 39 |
| 30-60 days | |
| 60-90 days | 18% * 277 * 50 |
| 90-180 days | 434% 399 137 |
| 180+ days | 96%; 1 439° 1 ≥ 377°. |
| Total | 8:834 |
At 31 December 2022 the lifetime expected loss allowance for trade receivables is as follows:
| | Expected loss rate | Gross carrying amount
£'000 | Loss provision
£'000 |
|-------------|--------------------|--------------------------------|-------------------------|
| Current | 1% | 6,502 | 66 |
| 30-60 days | 8% | 255 | 19 |
| 60-90 days | 39% | 104 | 40 |
| 90-180 days | 10% | 252 | 25 |
| 180+ days | 16% | 274 | 44 |
| Total | | 7,387 | 194 |
Movement in the impairment allowance for trade receivables is as follows:
| | 2023
£\000 | 2022
£'000 |
|----------------------------------------|---------------|---------------|
| Balance at the beginning of the year | 194 | 187 |
| IFRS 9 expected credit loss adjustment | 491 | 75 |
| Amounts written off during the year | (12) | (12) |
| Movements on unused amounts | (8) | (56) |
| Balance at the end of the year | . 665 | 194 |
#### **Contract assets**
Contract assets are measured at amortised cost. Contract assets inherently have some contractual risks associated with them related to the specific and ongoing risks in each individual contract with a customer. These are subject to the expected credit loss impairment under IFRS 9.
Revenue provisions recognised in the income statement in respect of contract assets amount to £0.5m (2022: £0,5m).
#### Notes to the Financial Statements continued
#### 17. Cash and cash equivalents
Cash and cash equivalents of £6.8m (2022; £2.9m) comprise cash held by the Group and short-term bank deposits with an original maturity of three months or less. The carrying amount of these assets approximates their fair value.
The credit quality of cash at bank can be assessed by reference to external credit ratings. The Group has not changed its risk appetite during the year. The following table has been sourced from Moodys credit ratings.
| | 2023
2000 2 | 2022
£'000 |
|------|----------------------|---------------|
| Aa3 | 167, | 595 |
| A1 | 4:655 | 1,427 |
| A2 | 4,655
1,891
34 | 740 |
| A3 | 34 | 42 |
| Baa2 | 60% | 52 |
| | 6.797 | 2,856 |
Cash and cash equivalents include the following for the purposes of the statement of cash flows:
| | 2023
€ 000 | 2022
£'000 |
|---------------------------|---------------|---------------|
| Cash and cash equivalents | 6:797 6 | 2,856 |
#### 18. Trade and other payables
| | 2023
£'000 | 2022
£'000 |
|------------------------------------|------------------------------------------|---------------|
| Current | | |
| Trade payables | * 1:289 | 1,010 |
| Other taxation and social security | 3,664 | 2,498 |
| Other payables | \$ \$\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\ | 2,280 |
| | 5/902 | 5,788 |
| Non-current | aut. | |
| Other payables | 212 | 209 |
| | , 212 | 209 |
| Total | 6.115 | 5,997 |
The average credit period taken for trade purchases is 30 days (2022: 10 days). For most suppliers, no interest is charged on the trade payables for the first 30 days from the date of invoice. Thereafter, in some cases, interest may be charged on the outstanding balances due to certain suppliers at various interest rates. The Group has financial risk management policies in place to ensure that all payables are paid within a reasonable time frame. The Directors consider that the carrying amount of trade and other payables approximates their fair value.
Other payables are split as follows:
| | 2023
£:000 | 2022
£'000 |
|-----------------------------|---------------|---------------|
| Goods received not invoiced | 68 | 712 |
| Other creditors | 888 | 1,568 |
| | .956 | 2,280 |
#### 19. Borrowings
The Group had a £2m committed overdraft facility in the UK and a AUD\$2m committed overdraft facility in Australia, both facilities are committed for a 12-month rolling period ending August 2024 and October 2024 respectively. At 31 December 2023 none of the overdraft facilities were drawn. As at 31 December 2023, the Group had cash and cash equivalents of £6.8m (2022: £2.9m).
Governance
On 29 December 2023 the Group entered into a three-year £20m multicurrency revolving facility with HSBC, plus a £5m accordion. with the option to extend by a further two years. The facility was put in place to cover general corporate and working capital requirements of the Group, as at 31 December 2023 £14,0m (2022: £6,3m) of the loan was utilised.
The facility interest charge is set at Sonia +1.85% and the loan is subject to two covenants: Senior interest cover (ratio of EBITDA to Senior interest charge) and Total debt cover (ratio of total debt to EBITDA). The Directors have reviewed the forecast covenants and do not expect any breach for the foreseeable future.
#### 20. Provisions
| | | | Deferred 1 | | | |
|-----------------------------------------|--------------------|------------------------|--------------------------------------|--------------------------------|----------------|----------------|
| | Restructuring Prop | perty related
£'000 | contingent
consideration
£:000 | Onerous
contracts
# £000 | Other
£'000 | Total
£'000 |
| At 1 January 2023 | | 833 | 184. | 4.497 | f 163 k | 5,677 |
| Net additions/(reductions) to provision | 779 | 55 | (114) | (3.927) | -26 | (3,181) |
| Unwinding of discount | | . 31 | - 1 | | | .32 |
| Utilisation of provision | 100 | (66) | (71) | Sales to the sales | | (126) |
| Exchange rate movement | | (14) | | (570) | (8) | (592) |
| At 31 December 2023 | 7.79 | 850 | $\mathcal{F}_{n,j} = \mathbb{I}_{n}$ | and the | vs 181 | 1,810 |
| The provisions are split as follows: | | | | | | |
|--------------------------------------|--------------------------------|----------------------|-----------------------------------------|---------------------------------|----------------|----------------|
| | Restructuring Proposition (CO) | ertyrelated
£:000 | Deferred contingent consideration £:000 | Onerous
contracts
£ £'000 | Other
£:000 | Total
£'000 |
| 2023 | 1.0 | | | | | |
| Within one year | 779 | 245 | 12 C 15 T 15 G | 1.00 | 181 | 1,205 |
| After more than one year | | 605 | | 4 | | * 605 |
| Total | 779 | 850 | | - | 181.7 | -1,810 |
| 2022 | | | • | | | |
| Within one year | - | 350 | 184 | 4,497 | 163 | 5,194 |
| After more than one year | | 483 | - | - | - | 483 |
| Total | - | 833 | 184 | 4,497 | 163 | 5,677 |
Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group will be required to settle the obligation. Provisions are measured at the Directors' best estimate of the expenditure required to settle the obligation at the balance sheet date, and are discounted to present value where the effect is material.
Property-related provision relates to the estimated future dilapidation costs arising from exiting leasehold properties, under IAS 37. This provision is discounted by property and is between 2.65% and 6.25%.
Other provision relates to the recoverability of input VAT in the Philippines. This provision is not discounted.
Onerous contracts provision relates to a specific contract and represents the unavoidable costs of meeting the obligations under the contract that exceed the economic benefit expected to be received under it. This was released in the year following the termination of the associated customer contract.
Restructuring provision represents amounts provided in respect of the Group's restructuring and reorganisation and principally reflects redundancy costs.
Deferred consideration reflects amounts in respect of the acquisitions of subsidiary undertakings payable over a period of up to two years. Certain amounts are contingent upon the performance of the acquired entities with amounts reflecting management's best estimate of the future profitability of those entities and the resultant payment due under the terms of the Sale and Purchase Agreement. The deferred consideration is discounted at 18%. Deferred contingent consideration reflects the remaining amount in respect of the acquisition of the assets of Eveoh BV. The amounts have been calculated upon the performance of the entity in the year to 31 December 2023 and the resultant payments are due under the Sale and Purchase Agreement. At 31 December 2022 there was a maximum of £184,000 of deferred contingent consideration due to the owners of Eveoh BV. During 2023 £71,000 was paid, with the remaining £115,000 released to the income statement The obligations have now been concluded.
#### **Notes to the Financial Statements** continued
#### 21. Deferred tax
The amounts provided for deferred tax and the amounts for which credit has been taken are set out below:
| | 2023
£:000 | 2022
£'000 |
|----------------------------------------------|---------------|---------------|
| Deferred tax assets | | |
| Short-term timing differences | 1836 | 1,621 |
| Share-based payments | | 301 |
| Taxlosses | 2.768 | 3,142 |
| | 4,960 | 5,064 |
| Deferred tax liabilities | | |
| Retirement benefit schemes | (21) | (19) |
| Depreciation in excess of capital allowances | (1:383) | (1,385) |
| Intangible assets | (1336) | (1,526) |
| | (2.740). | (2,930) |
| • | 2,220% | 2,134 |
The Directors are of the opinion, based on currently available forecasts, that these timing differences will reverse in the near future and when they do there will be sufficient taxable profits to recognise the impact of this in the income statement. Accordingly, the Directors believe that it is more likely than not that the deferred tax assets will be recoverable.
The Group has recognised a deferred tax asset of £2,768,000 (2022: £3,142,000) on tax losses carried forward in the UK of £11.068.000 (2022; £12.568.000). The Group has losses of £1.173.000 (2022; £1.092.000) in the UK and losses of £251.000 (2022: £nil) in Singapore on which no deferred tax has been recognised. The losses have no expiry date. The Group and Company have no further unrecognised deferred tax assets or liabilities.
The movement in deferred tax during the year and prior year was as follows:
| | Temporary
differences on
non-current
assets
£'000 | Retirement
defined benefit
schemes
£'000 | Other
temporary
differences
£'000 | Total
£'000 |
|---------------------------------------------------------------------|---------------------------------------------------------------|---------------------------------------------------|--------------------------------------------|----------------|
| At 1 January 2022 | (1,143) | 53 | 3,370 | 2,280 |
| Foreign exchange differences | 240 | | (208) | 32 |
| (Charge)/credit to income statement | (482) | (6) | 660 | 172 |
| Items taken directly to equity | - | - | (284) | (284) |
| Credit recognised in consolidated statement of comprehensive income | - | (66) | - | (66) |
| At 31 December 2022 | (1,385) | (19) | 3,538 | 2,134 |
| Adjustments to opening balance | (12) | - | 568 | 556 |
| Credit/(charge) to income statement | 14 | (2) | (514) | (502) |
| Items taken directly to equity | - | - | 32 | 32 |
| At 31 December 2023 | (1,383) | (21) | 3,624 | 2,220 |
Included in other temporary differences are deferred tax assets of £2,768,000 (2022: £3,142,000) relating to tax losses carried forward and other timing differences of £2,192,000 (2022: £1,922,000). The balance also includes a deferred tax liability. in relation to intangible assets, of £1,336,000 (2022: £1,526,000).
The (charge)/credit taken to the income statement for items in 'other temporary differences' is split as follows: Tax losses £(927,000) (2022: £243,000); Intangible assets £189,000 (2022: £283,000); Share schemes £24,000 (2022: £(103,000)); and other timing differences £200,000 (2022; £237,000).
The deferred tax assets are expected to be settled as follows: £350,000 less than 12 months from 31 December 2023 and £4,613,000 greater than 12 months from 31 December 2023. The deferred tax liabilities are all expected to reverse greater than 12 months from 31 December 2023.
#### 22. Share-based payments
The Group recognised the following charges/(credit) related to equity-settled share-based payment transactions:
| | 2023
£:000 | 2022
£'000 |
|------------------------------------------------|---------------|---------------|
| 2019 SAYE | | 23 |
| LTIPs awarded in 2023 | 21 | - |
| LTIPs awarded in 2022 | 141 | 158 |
| LTIPs awarded in 2021 | 80 | 66 |
| LTIPs awarded in 2020 (2 year vesting) | 52° | 185 |
| LTIPs awarded in 2020 | | 47 |
| LTIPs (incorporating the CSOP) awarded in 2019 | | 141 |
| Total | 294 | 620 |
Awards made to eligible employees under the LTIP schemes are nil cost options with an award period of three years, unless stated.
#### **2019 SAYE**
The 2019 SAYE Scheme is open to all UK employees, giving them the opportunity to participate in the future growth of the Company via share option arrangements.
Eligible employees were invited to subscribe for options over Ordinary Shares of 5p of the Company with an exercise price of 58.2 pence, a 10% discount to the closing average market price of the Ordinary Shares from 3 September 2019 to 5 September 2019. The options have a contract start date of 1 November 2019 and are exercisable between 1 November 2022 and 30 April 2023, During 2023 4,639 options were exercised by employees. As at 31 December 17,937 shares options remain in the Scheme with final exercise date of 31 January 2024.
#### LTIPs awarded in 2023
New awards in 2023 to Mark Pickett (240,308) and Diane McIntyre (178,006) will vest equally over the next three years. These awards were granted subject to performance conditions based on the Group's Adjusted EBITDA for the year ended 31 December 2023 together with other specific conditions. During 2023 99,327 options lapsed as part of the 2023 performance condition was not met. 108,762 of the remaining options will be dependent pending a satisfactory outcome of the NTU claim.
Eligible employees on the Executive Board received 185,194 awards under the LTIP Scheme. These will vest equally over the next three years. These awards were granted subject to performance conditions based on the Group's Adjusted EBITDA for the year ended 31 December 2023 together with other specific conditions. During 2023 17,944 options lapsed as part of the 2023 performance condition was not met.
#### LTIPs awarded in 2022
New awards in 2022 to Mark Pickett (317,647) and Diane McIntyre (235,294) will vest equally over the next three years. These awards were granted subject to performance conditions based on the Group's Adjusted EBITDA for the years ended 31 December 2022, 2023 and 2024, During 2023 43,765 options lapsed as part of the 2023 performance condition was not met. 47,922 of the remaining options will be dependent pending a satisfactory outcome of the NTU claim.
Eligible employees on the Executive Board received 294,117 awards under the LTIP Scheme. These will vest equally over the next three years. These awards were granted subject to performance conditions based on the Group's Adjusted EBITDA for the years ended 31 December 2022, 2023 and 2024, During 2023 9,216 options lapsed as part of the 2023 performance condition was not met.
#### LTIPs awarded in 2021
New awards in 2021 to Mark Pickett (275,510) and Diane McIntyre (204,081) will vest equally over the next three years. These awards were granted subject to performance conditions based on the Group's Adjusted EBITDA for the years ended 31 December 2021, 2022 and 2023, During 2023 37.959 options lapsed as part of the 2023 performance condition was not met. 41,564 of the remaining options will be dependent pending a satisfactory outcome of the NTU claim.
#### **Notes to the Financial Statements** continued
#### 22. Share-based payments continued
#### LTIPs awarded in 2020
New awards in 2020 to Mark Pickett (482,143) will vest equally over the next three years. These awards were granted subject to performance conditions based on the Group's Adjusted EBITDA for the years ended 31 December 2020, 2021 and 2022. The options met the three-year vesting condition on 7 July 2023. No options were exercised in the year.
Eligible employees on the Executive Board also received 1,876,000 awards under the LTIP Scheme. These will vest equally over the next three years. These awards were granted subject to performance conditions based on the Group's Adjusted EBITDA for the years ended 31 December 2020, 2021 and 2022. The options met the three-year vesting condition on 7 July 2023. No options were exercised in the year.
In addition 1,920,000 options were granted to eligible employees under the LTIP Scheme. These awards were granted subject to time limit conditions. 50% of the options can be exercised from 1 July 2021 and 50% from 1 July 2022. During the year 98,276 options were exercised.
#### LTIPs awarded in 2019 (including the CSOP)
Eligible employees received awards under the CSOP scheme on 7 June 2019 and on 16 September 2019. Those granted in June 2019 can only be exercised after a three-year period if the share price is above 71p, and those granted in September 2019 can only be exercised after a three-year period if the share price is above 61.5p. The options met the three year vesting condition on 7 June 2022 and 16 September 2022 respectively. No options were exercised in the year.
#### LTIPs awarded in 2018 (including the CSOP)
Eligible employees received awards under the CSOP scheme on 26 March 2018. These can only be exercised after a three-year period if the share price is above 79.6p. The options met the three-year vesting condition on 26 March 2021. No options were exercised in the year.
#### LTIPs awarded in 2017 (including the CSOP)
Awards in 2017 under the new CSOP scheme (as part of the 2010 LTIP Plan) can only be exercised after a three-year period and if the share price is above 80p. The options met the three-year vesting condition on 2 July 2020. No options were exercised in the year.
#### LTIPs awarded in 2016
Awards in 2016, to eligible employees, vest according to a target share price. The amount of awards that will vest will range between 0% and 100% of those granted based on a target share price between 60p and 80p which could be met at any point over a three-year period. These awards have now vested. No options were exercised in the year.
Options outstanding during the year are as follows:
| | LTIP - nil cos | t (2 years) | LTIP - nil cost (3 years) | | LTIP (inc CSOP) | | SAYE | |
|-----------------------------------------------------|-------------------|-------------------------------------------|---------------------------|-------------------------------------------|-------------------|------------------------------------------|-------------------|------------------------------------------|
| | Number of options | Weighted
average
exercise
price* | Number of options '000 | Weighted
average
exercise
price* | Number of options | Weighted
average
exercise
price | Number of options | Weighted
average
exercise
price |
| Outstanding at 1 January 2023 | 1,038 | £0.05 | 2,174 | £0.05 | 1,861 | £0.72 | 604 | £0.58 |
| Exercised during the year | (98) | £0.05 | - | - | - | - | (5) | £0.58 |
| Granted during the year | - | - | 604 | £0.05 | - | _ | - | - |
| Lapsed during the year | - | - | (208) | £0.05 | (911) | £0.74 | (581) | £0.58 |
| Outstanding at 31 December 2023 | ×940 | £0.05 | 2,570 | £0.05 | 950% | £0.70 | *× : 18 ∗ | £0.58 |
| Exercisable at 31 December 2023 | 940 | £0.05 | 1,290 | £0.05 | 950; | £0:70 | . 18) | £0.58 |
| Weighted average remaining contractual life (years) | 6.5 | _ | 7.4 | _ | 4.7 | - | _ | _ |
| Weighted average share price at date of exercise | _ | £0.38 | _ | _ | - | _ | - | £0.64 |
\* Under Companies Act 2006 rules a nominal value must be paid to issue new shares, however under the rules of the LTIP and Matching Share Schemes the Company will
pay the nominal value to the participants as a bonus.
Share options outstanding at the year-end have the following exercise prices: LTIP: £0.05, CSOP £0.80, £0.71 and £0.615 and SAYE £0.582.
The Group has used a Monte-Carlo valuation model for the LTIPs awarded in 2016 and an adjusted Black-Scholes valuation model for the 2017 to 2023 LTIP awards (including the new CSOP plan) and 2019 SAYE in order to incorporate discount factors into the fair value to reflect the performance conditions of the LTIP grants. The following table sets out the information about how the fair value of the grants are calculated:
| Date of grant | 2 June 2016 | 2 July 2017 | 26 March 2018 | 7 June 2019 | 16 Sept 2019 | 1 Oct 2019 |
|---------------------------|--------------|---------------------|---------------------|---------------------|---------------------|---------------|
| Type of grant | LTIPs | LTIPs
(inc CSOP) | LTIPs
(Inc CSOP) | LTIPs
(inc CSOP) | LTIPs
(Inc CSOP) | SAYE |
| Share price | £0.505 | £0.78 | £0.796 | £0.71 | £0.615 | £0.647 |
| Exercise price | £0.05 | £0.80` | £0.796 | £0.71 | £0.615 | £0.582 |
| Expected dividend yield | 0% | 0% | 1% | 1.57% | 1.79% | 1.79% |
| Risk-free interest rate | 0.14% | 0.14% | 0.14% | 1.04% | 1.04% | 1.04% |
| Expected volatility | 68% | 61% | 61% | 26% | 26% | 24% |
| Term (years) | 3.0 | 5.0 | 5.0 | 5.0 | 5.0 | 3.0 |
| Option fair value | £0.316 | £0.407 | £0.374 | £0.32 | £0.28 | £0.108 |
| Expiry date | 27 June 2026 | 2 July 2027 | 26 March 2028 | 06 June 2029 | 15 Sept 2029 | 30 April 2023 |
| No of options issued | 3,591,020 | 3,535,000 | 3,975,000 | 2,600,000 | 300,000 | 1,116,879 |
| No of options outstanding | 75,000 | 100,000 | 150,000 | 400,000 | 300,000 | 17,937 |
| Date of grant | 7 July 2020 | 7 July 2020* | 28 June 2021 | 11 April 2022 | 26 May 2022 | 16 Oct 2023 |
|---------------------------|--------------|--------------|--------------|-------------------|-------------|-------------|
| Type of grant | LTIPs | LTIPs | LTIPs | LTIPs | LTIPs | LTIPs |
| Share price | £0.56 | £0.59 | £0.98 | £0.92 | £0.91 | £0.71 |
| Exercise price | £0.05 | £0.05 | £0.05 | £0.05 | £0.05 | £0.05 |
| Expected dividend yield | 2.12% | 2.12% | 2.28% | 2.68% | 2.68% | 0.90% |
| Risk-free interest rate | 0.40% | 0.40% | 0.85% | 2.02% | 2.02% | 4.17% |
| Expected volatility | 26% | 24% | 26% | 30% | 30% | 28% |
| Term (years) | 5.0 | 2.0 | 5.0 | 5.0 | 5.0 | 5.0 |
| Option fair value | £0.46 | £0.51 | £8.0£ | 08.0 2 | £0.81 | £0.64 |
| Expiry date | 06 July 2030 | 30 June 2030 | 28 June 2031 | 11 April 2032 | 26 May 2032 | 16 Oct 2033 |
| No of options issued | 2,358,143 | 1,920,000 | 479,591 | 552,941 | 294,117 | 603,508 |
| No of options outstanding | 1,214,762 | 939,724 | 281,768 | 324,863 | 186,863 | 486,237 |
\* These awards have no market-based performance conditions.
The expected term (the period from grant date to the estimated exercise date) used in the models has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.
Expected volatility was determined by calculating the historical volatility of the Group's share price over the term commensurate with the expected term immediately prior to the date of grant.
#### **Notes to the Financial Statements** continued
#### 23. Share capital
| | 2023 2023
number £:000 | 2022
number | 2022
£'000 |
|------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------|---------------|
| Allotted, called up and fully paid | | | |
| At beginning of the year | 4212,221,746 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10.611 10. | 210,374,373 | 10,519 |
| Issued during the year | | 1,847,373 | 92 |
| At end of the year | × 212,221,746 × 10,611) | 212,221,746 | 10,611 |
The Company has one class of Ordinary Shares of 5p each which carry no right to fixed income.
#### 24. Share premium
| | Share premium
reserve
£'000 |
|------------------------------------------|-----------------------------------|
| At 31 December 2021 and 1 January 2022 | 18,961 |
| Issue of shares | 481 |
| Capital reduction | (19,359) |
| At 31 December 2022 and 31 December 2023 | 83 |
On 27 September 2022 the High Court of Justice, in the Business and Property courts of England and Wales, approved the cancellation of the share premium account. On 4 October 2022 the statement of capital was delivered to the Registrar of Companies.
#### 25. Other reserves
| | Capital
reserve
£'000 | Merger
reserve
£'000 | Own share
reserve
£'000 | Share-based
payment
reserve
£'000 | Total
£'000 |
|---------------------------------------------------|-----------------------------|----------------------------|-------------------------------|--------------------------------------------|----------------|
| At 31 December 2021 and 1 January 2022 | 9,545 | 11,304 | (326) | 7,455 | 27,978 |
| Transfer between reserves | - | - | 128 | (128) | - |
| Movement in relation to share-based payment (net) | - | - | - | 620 | 620 |
| At 31 December 2022 and 1 January 2023 | 9,545 | 11,304 | (198) | 7,947 | 28,598 |
| Movement in relation to share-based payment (net) | - | - | - | 331 | 331 |
| At 31 December 2023 | 9,545 | 11,304 | J (198) | 8,278 | 28,929 |
The capital reserve of £9.5m (2022: £9.5m) resulted from a share exchange when Tribal Group plc was listed in February 2001.
The merger reserve of £11.3m (2022: £11.3m) relates to the premium arising on shares issued subject to the provisions of section 612 of the Companies Act 2006 (previously section 131 of the Companies Act 1985), net of cumulative goodwill impairment of £58.7m (2022: £58.7m) in respect of related acquisitions deemed to be impaired.
The own share reserve of $\mathfrak{L}(0.2)$ m (2022: $\mathfrak{L}(0.2)$ m) represents the cost of 320,086 shares (2022: 423,000) in Tribal Group plc held by the Employee Share Ownership Trust (EBT) to satisfy certain options under the Group's share option schemes. During 2023 no shares were purchased by the EBT, and 102,914 shares were sold to satisfy options granted in 2020 under the LTIP Scheme and the SAYE Scheme (see Note 22).
The share-based payment reserve represents the reserve arising from the application of IFRS 2.
**Financial Statements**
# 26. Leases
#### As a lessee
The Group's leases represent land and buildings. Information about leases for which the Group is a lessee is presented below:
#### Right-of-use assets
| Lease liabilities | 2023 | 2022 |
|----------------------------------|--------------|---------------|
| Balance at 31 December | 2.117. | 1,435 |
| Exchange differences | , (32) | 25 |
| Disposals during the year | (138) | (903) |
| Depreciation charge for year | (19004) | (1,036) |
| Additions to right-of-use assets | 1986) | 1,040 |
| Balance at 1 January | 1,435 | 2,309 |
| | 2023
£000 | 2022
£'000 |
| Maturity analysis | 2023)
£'000 | 2022
£'000 |
|-----------------------------------------------------------------------------|----------------|---------------|
| Less than one year | 74.4% | 761 |
| One to five years | 1/397 | 744 |
| Total undiscounted lease liabilities at 31 December | 21141 | 1,505 |
| Current
Non-current | 743 | 728
721 |
| Lease liabilities included in the consolidated balance sheet at 31 December | 2.033 3 | 1,449 |
| | 2023
£'000 | 2022
£'000 |
|---------------------------|---------------------------------------|---------------|
| Balance at 1 January | 1:449 | 2,327 |
| Additions | 1/668 | 823 |
| Lease payments | (988) | (1,003) |
| Interest expense | 77 ' | 60 |
| Disposals during the year | $(142)^{2}$ | (782) |
| Exchange differences | ************************************* | 24 |
| Balance at 31 December | 2.033 | 1,449 |
| | 2028
£'000 | 2022
£'000 |
|------------------------------------------------------------|------------------------------|---------------|
| Amounts recognised in the consolidated income statement | | |
| Interest on lease liabilities | | 60 |
| Interest received on leased assets | (3) | (2) |
| Depreciation on right-of-use assets | >1,004 | 1,036 |
| Expenses relating to short-term leases | 17, | 49 |
| Expenses relating to leases of low-value assets | 4 % E | . 16 |
| | 1,111 | 1,159 |
| Amounts recognised in the consolidated cash flow statement | | |
| Interest paid on lease liabilities | . A. S. S. S. S. S. S. (7:7) | (60) |
| Principal lease payments | * (9 11 ) | (943) |
| Total cash outflow for leases | (988) | (1,003) |
#### Notes to the Financial Statements continued
#### 26. Leases continued
The Group has lease contracts for office properties in various countries that the Group operates in. Leases of office properties generally have lease terms between two and ten years. The Group's obligations under its leases are secured by the lessor's title to the leasehold properties. The Group has several lease contracts that include extension and termination options. These options are negotiated by management to provide flexibility in managing the leased-asset portfolio and align with the Group's business needs. Management exercises judgement in determining whether these extension and termination options are reasonably certain to be exercised. As at 31 December 2023, management does not intend to exercise termination options (i.e. break clauses) in the existing leases. Total lease payments of £66,000 (2022: £42,000) were potentially avoidable had the Group exercised break clauses at the earliest opportunity.
The Group also has certain leases of office properties with lease terms of 12 months or less and leases of vehicles and office equipment with low value. The Group applies the 'short-term lease' and 'lease of low-value assets' recognition exemptions for these leases.
Lease payments for some property leases are subject to annual fixed increase. The total lease payments subject to annual fixed increase are £155,000 (2022: £207,000) compared to total lease payments of £988,000 (2022: £1,003,000).
#### As a lessor
Lease income from lease contracts in which the Group acts as a lessor is as below:
| | 2023 | 2022 |
|---------------------------------------------------|-------|-------|
| | 000°£ | €,000 |
| Finance income on the net investment in the lease | 50 | 29 |
During 2023 the Group sub-leased an office building and classified the sub-lease as a finance lease.
| Maturity analysis | 2023
£:000 | 2022
£'000 |
|-------------------------------------------------------------|------------------------------------------|---------------|
| Less than one year | 50 | 50 |
| One to five years | 2100 | 71 |
| Total undiscounted lease payments receivable at 31 December | 19 171 171 171 171 171 171 171 171 171 1 | 121 |
| Current | *49 | 47 |
| Non-current | 21.5 | 70 |
| Net investment in the lease at 31 December | 70 | 117 |
#### 27. Retirement benefit schemes
The Group operates a number of defined contribution and defined benefit pension schemes within individual subsidiaries and contributes to certain employees' personal pension plans. The pension charge for the year ended 31 December 2023 was £2.2m (2022: £2.0m), of which £2.2m (2022: £2.0m) related to defined contribution schemes and £nil (2022: £nil) to defined benefit schemes. Contributions amounting to £0.4m (2022: £0.3m) were payable to the funds at the year-end and are included in current liabilities.
#### **Defined benefit schemes**
At 31 December 2023, the Group operated two defined benefit pension schemes for the benefit of certain deferred employees of its subsidiaries in the UK. These schemes are administered by separate funds that are legally separated from the Company. The trustees of the pension funds are required by law to act in the interest of the funds and of all relevant stakeholders in the schemes. The trustees of the pension funds are responsible for the investment policy with regard to the assets of the funds.
#### Scheme 1 - the Prudential Platinum Pension Fund
Tribal Education Limited, a Group subsidiary, participates in the Prudential Platinum Pension Fund (PPP), which is a defined benefit arrangement. This is a multi employer plan whereby the Company has no liability for other employers' obligations. If there is any deficit on the wind up of the plan Tribal will augment the benefits payable on behalf of its members under an approved Group income protection scheme. If there is any surplus on the wind up of the plan after all other payments have been made, this will be returned to the Company. The last full actuarial valuation of this scheme was carried out by a qualified independent actuary as at 31 December 2021.
The Tribal Education section of the Prudential Platinum Pension Fund had three deferred members and two pensioners at the year-end. The weighted average duration of the Defined Benefit Obligation is 26 years (2022: 27 years), Employer contributions amounting to £34,000 were paid in the year ended 31 December 2023 (2022: £53,000). The accounting figures have been calculated using the valuation as at 31 December 2021, updated on an approximate basis to 31 December 2023 by a qualified independent actuary.
#### Scheme 2 - the Mercer DB Master Trust (formerly known as the Federated Pension Plan)
Tribal Education Limited, a Group subsidiary, participates in the Mercer DB Master Trust (MMT), which is a defined benefit arrangement. The Ofsted employees were transferred back to Ofsted in March 2017 and the plan closed to future accrual. The last full actuarial valuation of this scheme was carried out by a qualified independent actuary as at 5 April 2021.
The Tribal Education section of the Mercer DB Master Trust had 73 deferred members and 88 pensioners/dependents at the year end. The weighted average duration of the Defined Benefit Obligation is 17 years (2022: 16 years). The Company does not have an unqualified right to apply any surplus in the scheme either on a ongoing basis or upon winding-up of the plan. Consequently a surplus of £2,644,000 has not been recognised in these accounts. Employer contributions amounting to £76,000 were paid in the year ended 31 December 2023 (2022: £69,000). The accounting figures have been calculated using the valuation as at 5 April 2021, updated on an approximate basis to 31 December 2023 by a qualified independent actuary.
The schemes are exposed to a number of risks, including:
- Investment risk: movement of discount rate used against the return from plans.
- Interest rate risk: decreases/increases in the discount rate used will increase/decrease the defined benefit obligation.
- Longevity risk: changes in the estimation of the mortality rates of current and former employees.
The assets of the funds have been taken at market value and the actuarial assumptions used to calculate scheme liabilities under IAS 19 'Employee Benefits' for both schemes are:
| | 2029
7. persannum | 2022
% per annum |
|------------------------------|----------------------|---------------------|
| Inflation | 2:10-3.10 | 2.30-3.30 |
| Salary increases | $\pm 0$ | - |
| Rate of discount | 4.6 | 4.75 |
| Pension in payment increases | ‡2i10=3:10 | 2.30-3.30 |
The salary increase assumption is nil as both the MMT and PPP only have deferred and pensioner members.
The mortality assumptions adopted at 31 December 2023 imply the following life expectations:
| | Males Females |
|-----------------|---------------|
| Aged 60 in 2023 | 86:4 88:5 |
| Aged 60 in 2043 | 87.9 |
The mortality assumptions adopted at 31 December 2022 imply the following life expectations:
| | Males | Females |
|-----------------|-------|---------|
| Aged 60 in 2022 | 87.3 | 89.2 |
| Aged 60 in 2042 | 88.8 | 90.8 |
All assets are held in pooled investment vehicles. The analysis of these assets at the balance sheet date was as follows:
| | 2023
£1000 | 2022
£'000 |
|-----------------------------------|---------------------------------------|---------------|
| Equities | 1,219 | 2,013 |
| Corporate bonds | 5,098 | 1,670 |
| Gilts . | 126 | 122 |
| Alternative assets | 812 | 2,278 |
| Property . | 1.187 | 2,014 |
| Cash | · · · · · · · · · · · · · · · · · · · | 34 |
| Total fair value of scheme assets | #8.465. | 8,131 |
All equities and corporate bonds are quoted on active markets.
#### **Notes to the Financial Statements** continued
#### 27. Retirement benefit schemes continued
The sensitivities regarding the principal assumptions used to measure the schemes' liabilities are set out below:
| Assumption | sumption Change in assumption | |
|-------------------|-------------------------------|----------------|
| Discount rate | Increase by 0.5% | Decrease by 8% |
| Rate of inflation | Increase by 0.5% | Increase by 8% |
| Rate of mortality | Increase by one year | Decrease by 3% |
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the pension liability recognised within the statement of financial position.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period.
The amount included in the balance sheet arising from the Group's obligation in respect of its defined benefit schemes is as follows:
| | 2023
£000 | 2022
£'000 |
|----------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------|
| Present value of defined benefit obligations | (5.7.40) 4 | (5,418) |
| Fair value of scheme assets | (1.55 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. 4.65 Sept. | 8,131 |
| Surplus in schemes | 2,725 | 2,713 |
| Surplus in scheme not recognised | (2,644)) | (2,641) |
| Asset recognised in the balance sheet | . 81 | 72 |
Reconciliation of opening and closing balances of the fair value of scheme assets:
| | 2023 i
£'000 4 | 2022
£'000 |
|-----------------------------------------------------------------------------------------------------------|-------------------|---------------|
| Fair value of scheme assets at beginning of year | 8,131 | 8,790 |
| Expected return on assets | 383 | 166 |
| Actuarial gains/(losses) due to investment returns different from the return implied by the discount rate | 85% | (736) |
| Contributions by employer | 110 | 122 |
| Benefits paid | (143) | (118) |
| Administration expenses | (101) | (93) |
| Fair value of scheme assets at end of year | 9,465 | 8,131 |
Reconciliation of opening and closing balances of the present value of the defined benefit obligations:
| | 2023
£000 | 2022
£'000 |
|-------------------------------------------------|-----------------------------------------|---------------|
| Defined benefit obligation at beginning of year | 5;418 | 9,005 |
| Interest cost | 254 | 170 |
| Actuarial loss - experience | i 1 i 2 i 1 i 1 i 1 i 1 i 1 i 1 i 1 i 1 | 258 |
| Actuarial loss - demographic assumptions | 84°, 84° | 14 |
| Actuarial loss/(gain) - financial assumptions | ₩ | (3,911) |
| Benefits paid | (143) | (118) |
| Defined benefit obligation at end of year | 5.74 0 | 5,418 |
The Group's contribution rate for 2023 and 2022 for the Prudential Platinum Fund and for the Mercer DB Master Trust was 0%.
The Group expects to make contributions of £110,000 to the defined benefit schemes during the next financial year.
Analysis of amounts recognised in the consolidated income statement for the defined benefit schemes is as follows:
| | 2023
£'000 | 2022
£'000 |
|--------------------------------------------|---------------|---------------|
| Administration expenses | 101 | 93 |
| Recognised in arriving at operating profit | 101 | 93 |
| Other finance (income)/expense | | |
| Interest on pension scheme liabilities | 254 | 170 |
| Expected return on pension scheme assets | (383) | (166) |
| Net finance (income)/expense | (129) | 4 |
| Total (credit)/charge to income statement | (28) | 97 |
Analysis of actuarial gains and losses in the consolidated statement of comprehensive income:
| | 2023
£'000 | 2022
£'000 |
|-------------------------------------------------------------------------------------------------|---------------|---------------|
| Actual return less expected return on pension scheme assets | , a 85 , | (736) |
| Experience losses arising on the scheme liabilities | (86) | (258) |
| Changes in assumptions underlying the present value of scheme liabilities | (125) | 3,897 |
| Surplus in scheme not recognised | (3) | (2,641) |
| Total actuarial (losses)/gains recognised in the consolidated statement of comprehensive income | (129) | 262 |
Cumulative actuarial losses in the year to 31 December 2023 recognised in the consolidated statement of comprehensive income since 1 April 2004 are £32,000 (in the year to 31 December 2022: cumulative gains of £97,000). The history of experience adjustments is as follows:
| | 2023
£;000 | 2022
£'000 | 2021
£'000 | 2020
£'000 | 2019
£'000 |
|-----------------------------------------------------------|---------------|---------------|---------------|---------------|---------------|
| Present value of defined benefit obligations | (5.740) | (5,418) | (9,005) | (9,225) | (8,285) |
| Fair value of scheme assets | / 8,465· | 8,131 | 8,790 | 8,267 | 7,745 |
| Surplus/(deficit) in the scheme | 2,725 | 2,713 | (215) | (958) | (540) |
| Experience adjustments arising on scheme asset | S: | | ٠ | | |
| Amount | 85 | (736) | 503 | 493 | 812 |
| Percentage of the scheme assets | .176.7 | (9%) | 6% | 6% | 10% |
| Experience adjustments arising on scheme liabilities: | | | | | |
| Amount | (84) | (258) | (10) | 6 | 780 |
| Percentage of the present value of the scheme liabilities | (176) | 5% | - | - | 9% |
No assets are invested in the Group's own financial instruments, properties or other assets used by the Group.
Movement in borrowings (Note 19)
Closing net debt
Non-cash effect of foreign exchange rate changes
#### 28. Notes to the cash flow statement
| 28. Notes to the cash flow statement | | |
|---------------------------------------------------------------------------|-----------------------------------------|---------------|
| | ±8. 2023 °
∳ £1000 | 2022
£'000 |
| Operating profit from continuing operations | 7,261 | 779 |
| Depreciation of property, plant and equipment | 566 | 623 |
| Depreciation of right-of-use assets | 1.004 | 1,036 |
| Amortisation and impairment of other intangible assets | · J. 2.217 | 2,419 |
| Share-based payments | . 4 4 4 331 | 589 |
| Movement in contingent deferred consideration | (115) | - |
| Research and development tax credit | (141) | (177) |
| Net pension credit | (9) | (29) |
| Other non-cash items | (470) | 23 |
| Operating cash flows before movements in working capital | 10:644 | . 5,263 |
| Increase in receivables | (423) | (808) |
| (Decrease)/increase in payables | (853) | 4,252 |
| Net cash from operating activities before tax | 9.368 | 8,707 |
| Net tax paid | (1,060) | (2,601) |
| Net cash from operating activities | 8,308 | 6,106 |
| Net cash from operating activities before tax can be analysed as follows: | 2023
2000 | 2022
£'000 |
| Continuing operations | 9/368 | 8,707 |
| 29. Analysis of net (debt)/cash | | |
| | n 2023
E'000 | 2022
£'000 |
| Cash and cash equivalents | 6,797 | 2,891 |
| Overdrafts | tan tan tan tan tan tan tan tan tan tan | (35) |
| Borrowings | (14,000) | (6,250) |
| Net debt | (7,203) | (3,394) |
| Reconciliation of changes in net (debt)/cash | 2023
£000 | 2022
£'000 |
| Opening net (debt)/cash | (3/394) | 5,924 |
| Net increase/(decrease) in cash and cash equivalents | 4,149 | (3,075) |
(6,250)
(3,394)
#### 30. Contingent liabilities
The Company and its subsidiaries have provided performance guarantees issued by its banks on its behalf, in the ordinary course of business, totalling £0.1m (2022: £0.8m). These are not expected to result in any material financial loss and the likelihood of using these guarantees is assessed as remote.
As disclosed in Note 34, Tribal Holdings Limited, Tribal Dynamics Limited and Semestry Limited have taken advantage of the exemption available under Section 394A/479A of the Companies Act 2006 in respect of the requirements for audit. As a condition of the exemption, the Company has guaranteed the year-end liabilities of these subsidiaries until they are settled in full. The liabilities of the subsidiaries at the year-end were £72,799,710 (2022: £64,309,000). These are inclusive of intercompany liabilities of £69,555,514 (2022: £60,963,020).
The Group delivers complex multi-year projects which from time to time give rise to significant operational and commercial risks. Such risks may, in certain circumstances, lead to potential negotiations or disputes with customers which may give rise to consequential financial or commercial obligations or liabilities arising. The Group's contract with Nanyang Technological University (NTU) has been terminated with both parties reserving rights. NTU have demanded SGD17,511,651 and USD377,724 on account of alleged damages, losses, costs and/or expenses which the Group vigorously disputes. No legal proceedings have been instituted (nor are they permitted to be brought) until the parties have participated in mediation in an attempt to achieve a resolution. The timing and outcome of that process is presently uncertain. It is possible that there may be a significant adverse financial impact on the Group but at this juncture it is not practicable for the Board to fully assess such potential impact, if any.
#### 31. Financial instruments
#### Capital risk management
The Group manages its capital to ensure the entities in the Group will be able to continue as going concern, while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of cash and cash equivalents (see Note 17) and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings as disclosed in consolidated statement of changes in equity and Notes 23 to 25.
#### **Gearing ratio**
The gearing ratio at the year-end is as follows:
| | 2028
£'000 | 2022
£'000 |
|----------------------------|---------------|---------------|
| Net debt | (7.203) | (3,394) |
| Equity | 48.475 | 44,818 |
| Net debt to equity ratio . | (14:9%) | (7.6%) |
#### Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 1 to the financial statements.
#### **Categories of financial instruments**
The Directors consider that the book value of the financial assets and liabilities is equal to their fair value.
# Notes to the Financial Statements continued
#### 31. Financial instruments continued
| 31 December 2023 | Financial
assets
measured
at amortised cost
£'000 | Financial Liabilities measured at amortised cost £'000 | Financial
Liabilities
measured
at FVTPL
£'000 | at in the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of |
|------------------------------------------|---------------------------------------------------------------|--------------------------------------------------------|-----------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Financial assets | | The second region of the | especial control of the second | |
| Cash and cash equivalents | 11 6,797 | 2.0 | | 6,797 |
| Trade receivables and other receivables* | 8.858 | | | |
| | 15,655 | | eng na na paga ana | 15,655 |
| | Financial | Financial | Financial | |
|-------------------------------------|----------------------------|-----------------------------|-------------------------|-------------------|
| | assets
measured | Liabilities (),
measured | Liabilities
measured | |
| 31 December 2023 | at amortised cost
£'000 | cat amortised cost
£'000 | at FVTPL
£'000 | l Total
2000:£ |
| Financial liabilities | | | | |
| Trade payables and other payables** | | 2.238 | - | 2,238 |
| Bank loans | | 14,000 | | 14:000 |
| | | 16,238 | | 16,238 |
| 31 December 2022 | Financial
assets
measured
at amortised cost
£'000 | Financial
Liabilities
measured
at amortised cost
£'000 | Financial
Liabilities
measured
at FVTPL
£'000 | Total
£'000 |
|------------------------------------------|---------------------------------------------------------------|--------------------------------------------------------------------|-----------------------------------------------------------|----------------|
| Financial assets | | | | |
| Cash and cash equivalents | 2,891 | - | - | 2,891 |
| Trade receivables and other receivables* | 8,021 | - | - | 8,021 |
| | 10,912 | _ | - | 10,912 |
| Financial liabilities | | | | |
| Trade payables and other payables** | - | 3,290 | - | 3,290 |
| Overdrafts | - | 35 | - | 35 |
| Bank loans | - | 6,250 | - | 6,250 |
| Deferred contingent consideration | - | - | 184 | 184 |
| | - | 9,575 | 184 | 9,759 |
\* Excluding amounts that relate to non-financial instruments of tax, prepayments and contract assets.
The above tables have been stated at undiscounted values with the exception of the 2022 contingent deferred consideration amounts. The undiscounted value of the contingent deferred consideration for 2022 is £185,000 versus a discounted value of £184,000.
In addition the Group's financial liabilities held at fair value, are categorised by the following valuation methodology:
- Level 1: fair value derived from quoted prices in active markets for identical assets or liabilities.
- Level 2: fair value derived from observable inputs other than quoted prices included in Level 1.
- Level 3: fair value derived from inputs for the asset or liability that are not based on observable market data.
\*\* Excluding amounts that relate to non-financial instruments of tax.
| | Level1 | Level 2 | Level 3 | Total |
|-------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------|------------------|----------------|
| 31 December 2023 | 2:000 | \$1000 | €'000 ± | £1000 |
| Financial liabilities at fair value | 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 (4 m) 10 | | | = |
| Deferred contingent consideration | | 100 | 4,52 | 100 |
| | | | | # 7 |
| 31 December 2022 | Level 1
£'000 | Level 2
£'000 | Level 3
£'000 | Total
£'000 |
| Financial liabilities at fair value | · · · · · · · · · · · · · · · · · · · | | | |
| Deferred contingent consideration | - | - | 184 | 184 |
| | - | _ | 184 | 184 |
For the movement in deferred contingent consideration please refer to Note 20. There are no financial assets held at fair value (2022: £nil).
#### Financial risk management objectives
Treasury management is led by the Group finance team, which is responsible for managing the Group's exposure to financial risk. It operates within a defined set of policies and procedures reviewed and approved by the Board. This includes both foreign exchange risk and interest rate risk. The Group's exposure to interest rate fluctuations on its interest-bearing assets and liabilities is selectively managed, using interest rate swaps where appropriate. This is an ongoing risk and the Board will continue with this policy. The Group does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. No interest rate swaps were in place at 31 December 2023 (2022: none).
#### Market risk
As the Group's international activities grow, its exposure to overseas markets also increases in non-core territories outside of the UK and Australasia. There have been no other significant changes to the Group's exposure to market risk, or the manner in which it manages and measures the risk.
#### Foreign currency risk management
The Group undertakes an increasing number of transactions denominated in foreign currencies. Here, exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters and the Group enters into forward foreign exchange contracts where appropriate. No forward contracts were in place at 31 December 2023 (2022: none).
The carrying amounts of the Group's foreign currency denominated monetary assets and monetary liabilities at the reporting date are as follows:
| | Asset | Assets | | es |
|-----------------------------|---------------------------|---------------------------|---------------------------|---------------------------|
| | 31/December 2023
£:000 | 31 December 2022
£'000 | 31 December 2023
£:000 | 31 December 2022
£'000 |
| Euros | 770 | 806 | 59 | 1 |
| Australian dollar | 2.073 | 1,267 | | - |
| United States dollar | 644 | 1,413 | 31 | _ |
| Saudi Arabian riyal | | 138 | | - |
| New Zealand dollar | 819 | 413 | 100 | - |
| Canadian dollar | 69.5 | 32 | _ | _ |
| Philippine peso | r , | 58 | - | - |
| United Arab Emirates dirham | -191 | 50 | _ | - |
| Malaysian ringgit | 395 | 760 | | - |
| Bahraini dinar | 16 | 88 | | - |
| Singapore dollar | 111 · 12 | 36 | | 141 |
| | 5.290 | 5,061 | 901 | 142 |
#### **Notes to the Financial Statements** continued
#### 31. Financial instruments continued
#### Foreign currency sensitivity analysis
The Group is primarily exposed to the following currencies: US dollar, euro, Australian dollar, New Zealand dollar, Singapore dollar, Canadian dollar, United Arab Emirates dirham and Philippine peso.
If sterling were to strengthen or weaken by 10% against the relevant foreign currencies, the balances in the table above would give rise to an increase/reduction in profit of £538,000 (2022: £506,000). This sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period-end for a 10% change in foreign currency rates.
10% represents management's assessment of the reasonably possible change in foreign exchange rates.
#### Interest rate risk management
The Group is exposed to interest rate risk because entities hold cash deposits. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite, ensuring the most cost-effective hedging strategies are applied. There are no hedges in place as at 31 December 2023 (2022: nil).
The Group's exposure to interest rates on financial assets and financial liabilities are detailed in the liquidity risk management section of this note.
#### Credit risk management
The Group's principal financial assets are cash and cash equivalents and trade and other receivables. The Group's credit risk is relatively low because a high proportion of trade and other receivables have a sovereign or close to sovereign rating. Of the total trade receivables balance at the end of the year there were three customers (2022: two) who held balances outstanding of more than 5% (2023 £1.7m; 2022: £1.6m).
#### Trade receivables and contract assets
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables and contract assets.
To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit risk characteristics and the days past due. The contract assets relate to unbilled work in progress and have substantially the same risk characteristics as the trade receivables for the same type of contracts. The Group has therefore concluded that the expected loss rates for trade receivables are a reasonable approximation of the loss rates for the contract assets.
The expected loss rates are based on the payment profiles of sales over a period of 36 months before 31 December 2023 or 31 December 2022 respectively and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking information affecting the ability of the customers to settle the receivables. In the absence of any seasonality to the business, 2% increase in defaults was considered appropriate and supportable as the risk of credit losses is relatively low.
Before applying the expected loss rate percentage to each respective ageing category of trade receivables an assessment of specific customers has occurred and these amounts have been excluded from the general loss allowance. The expected credit loss for these customers is separately assessed (using the same logic as above) and relates to customers where the probability of default is higher.
On that basis, the loss allowance as at 31 December 2023 and 31 December 2022 was determined as follows for both trade receivables and contract assets:
| 31 December 2023 £'000 | Current 30=60 61-90 91-180 180+ Total |
|------------------------|---------------------------------------|
| Expected loss rate | 1%, 9%, 18%, 35%, 86%, |
| Trade receivables | 7,004. 715 277 399 439 8,834 |
| Contract assets | |
| General loss allowance | 39 62 50 137 377 665 |
| 31 December 2022 £'000 | Current | 30-60 | 61-90 | 91-180 | 180+ | Total |
|------------------------|---------|-------|-------|--------|------|-------|
| Expected loss rate | 1% | 8% | .39% | 10% | 16% | |
| Trade receivables | 6,502 | 255 | 104 | 252 | 274 | 7,387 |
| Contract assets | 6,676 | - | - | - | · _ | 6,676 |
| General loss allowance | 66 | 19 | 40 | 25 | 44 | 194 |
The expected credit losses on trade receivables and contract assets have been calculated using the simplified approach. A reconciliation of closing loss allowances for trade receivables and contract assets as at 31 December 2023 to the opening loss allowances is in Note 16.
Impairment losses on trade receivables and contract assets are presented as net impairment losses within operating profit. Subsequent recoveries of amounts previously written off are credited against the same line item.
#### Other financial assets at amortised cost
Other financial assets at amortised cost include loans to related parties and key management personnel and other receivables. The loss allowance for other financial assets at amortised cost as at 31 December 2023 was £nil (2022; £nil).
#### Contract risk management
Contract assets inherently have some contractual risks associated with them related to the specific and ongoing risks in each individual contract with a customer.
#### Liquidity risk management
The Group manages liquidity risk by maintaining adequate cash reserves and banking facilities, and by continuously monitoring forecast and actual cash flows and covenant headroom. The Group has access to committed financing facilities; being a short-term UK overdraft facility of £2.0m and a short-term AUS overdraft facility of \$2.0m. The total unused amount was £2.0m and \$2.0m at the balance sheet date and no interest is being incurred on this balance (2022: £nil). The Group expects to meet its obligations from operating cash flows. The Group also had cash balances at 31 December 2023 of £6.8m (2022: £2.9m) as detailed in Note 17. Interest is received on this at applicable bank rates.
On 29 December 2023 the Group entered into a three-year £20m multicurrency revolving facility with HSBC, plus a £5m accordion, with the option to extend by a further two years. The facility was put in place to cover general corporate and working capital requirements of the Group, as at 31 December 2023 £14.0m (2022: 6.3m) was utilised.
#### **Notes to the Financial Statements** continued
#### 32. Related party disclosures
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
On 16 October 2023, Tribal Group plc (the Company) granted nil-cost options over a total of 418,314 Ordinary Shares (representing approximately 0.1% of the Company's issued shares) to Mark Pickett (240,308) and Diane McIntyre (178,006) under the terms of its 2018 Long-Term Incentive Plan. This award has been granted subject to performance conditions based on the Group's Adjusted EBITDA for the year ending 31 December 2023 together with other specific conditions. The options may not be exercised before 16 October 2026. During 2023 99,327 options lapsed as part of the 2023 performance condition was not met. A number of LTIP shares relating to the performance of 2023 will have their vesting decision deferred, dependent on a satisfactory outcome of the NTU claim (113,887 for Mark Pickett and 84,361 for Diane McIntyre).
On 16 October 2023, Tribal Group plc (the Company) granted nil-cost options over a total of 185,194 Ordinary Shares (representing approximately 0.1% of the Company's issued shares) to eligible employees on the Executive Board under the terms of its 2018 Long-Term Incentive Plan. This award has been granted subject to performance conditions based on the Group's Adjusted EBITDA for the year ending 31 December 2023 together with other specific conditions. The options may not be exercised before 16 October 2026, During 2023 17,944 options lapsed as part of the 2023 performance condition was not met.
The remuneration of the key management personnel of the Group is set out below in aggregate for each of the categories specified in IAS 24 'Related Party Disclosures'. The members of the Group Board and the Group's Executive Board are considered to be the key management personnel of the Group.
#### Remuneration of key management personnel
| | 2023 †
£'000 | 2022
£'000 |
|-------------------------------------------|----------------------------|---------------|
| Salaries and short-term employee benefits | 2:765 | 2,601 |
| Termination benefits | . | 202 |
| Share-based payments | 327 | 302 |
| | 3.092 | 3,105 |
Included within Directors' salaries and short-term employee benefits are pension costs of £25,000 (2022: £24,000) in respect of accruals and payments made to one (2022: one) Director's individual defined contribution pension schemes. Included within share-based payments are amounts paid on dividends on share options that have met performance conditions. Disclosures on Directors' remuneration, share options, long-term incentive schemes, and pension contributions are contained in the Directors' remuneration section within the audited part of the Remuneration Report on pages 45 to 49 and form part of these audited financial statements. Arrangements with the Group's pension schemes are set out in Note 27.
#### 33. Subsidiaries
The Group consists of a Parent Company (limited by shares) Tribal Group plc, incorporated and domiciled in England and Wales and a number of subsidiaries held directly and indirectly by Tribal Group plc, which operate and are incorporated around the world. Tribal Education Limited operates branches in New Zealand, and Abu Dhabi. Tribal Group Pty Limited operates a branch out of Singapore.
Tribal Group plc has guaranteed the liabilities of Tribal Holdings Limited, Tribal Dynamics Limited and Semestry Limited in order that they qualify for the exemption from audit under Section 394A/479A of the Companies Act 2006 in respect of the year ended 31 December 2023. Information about the composition of the Group at the end of the reporting period is as follows:
| | | | Proportion | Proportion |
|--------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------|-------------------------------------------|--------------------------------------|
| | | | of Ordinary
Shares held
directly by | of Ordinary
Shares
held by the |
| Name of entity | Address of the registered office | Nature of business | Parent (%) | Group (%) |
| Tribal Education
Limited | Kings Orchard, 1 Queen Street, Bristol, BS2 OHQ, UK | Education-related systems and solutions | 100% | 100% |
| Tribal Holdings Limited | Kings Orchard, 1 Queen Street, Bristol, BS2 OHQ, UK | IP holding Company | 100% | 100% |
| International Graduate
Insight Group Limited | Kings Orchard, 1 Queen Street, Bristol, BS2 OHQ, UK | Educational consultancy services | - | 100% |
| Tribal Dynamics
Limited | Kings Orchard, 1 Queen Street, Bristol, BS2 OHQ, UK | Education-related systems and solutions | - | 100% |
| Tribal Dynamics
Holdings Limited | Kings Orchard, 1 Queen Street, Bristol, BS2 OHQ, UK | Dormant Company | 100% | 100% |
| Semestry Limited | Dundee One, River Court, 5 West Victoria Dock Road,
Dundee, D1 3JT, UK | Education-related systems and solutions | 100% | 100% |
| Semestry
Netherlands BV | Leiden Bio Science Park, Mendelweg 32, Ground to 2nd floor, Leiden, 2333 CS, Netherlands | Education-related systems and solutions | 100% | 100% |
| Human Edge Software
Corporation PTY
Limited | G8 & 9 Glasshouse, 11 Mackey Street, 287-307
Melbourne Road, North Geelong, Victoria, 3215, Australia | Education-related systems and solutions | - | 100% |
| Tribal Campus
PTY Limited | G8 & 9 Glasshouse, 11 Mackey Street, 287-307
Melbourne Road, North Geelong, Victoria, 3215, Australia | Education-related systems and solutions | - | 100% |
| Tribal Group
PTY Limited | G8 & 9 Glasshouse, 11 Mackey Street, 287-307
Melbourne Road, North Geelong, Victoria, 3215, Australia | Education-related systems and solutions | - | 100% |
| Callista Software
Services PTY Limited | G8 & 9 Glasshouse, 11 Mackey Street, 287-307
Melbourne Road, North Geelong, Victoria, 3215, Australia | Education-related systems and solutions | - | 100% |
| Tribal Middle East
WLL Limited | Municipality 3457, Building 1398, Road 4626, Area 346,
Sea Front, Manama, Kingdom of Bahrain | Education-related systems and solutions | - | 100% |
| Tribal Group
(Malaysia) SDN | 12th floor, Menara Symphony, No 5, Jalan Professor
Khoo Kay Kim, Seksyen 13, 46200 Petaling Jaya,
Selangor Darul Ehsan, Malaysia | Education-related systems and solutions | - | 100% |
| Tribal Systems
Canada Limited | 1750–1755 West Georgia Street, PO Box 11125,
Vancouver, BC, V6E 3PE, Canada | Education-related systems and solutions | - | 100% |
| Tribal Software
Philippines, INC | Units 1001,1005,1006, 10th floor Cyberpod One, Eton
Centris, Barangay Pinahan, Quezon City, Philippines 1100 | Education-related systems and solutions | - | 100% |
| Class Measures Inc | 100 Tower Park Drive, Suite A, Woburn, MA 01801, USA | Educational consultancy services | - | 100% |
| Class Measures
Limited | Kings Orchard, 1 Queen Street, Bristol, BS2 OHQ, UK | Dormant Company | - | 100% |
| Empowering Education International Limited | Kings Orchard, 1 Queen Street, Bristol, BS2 OHQ, UK | Educational consultancy services | - | 100% |
| Empowering
Education Australia
PTY Limited | 66 Stone Parade, Davidson, NSW 2085, Australia | Educational consultancy services | - | 100% |
| Empowering
Education New
Zealand Limited | Suite 13741, Level 1, 6 Johnsonville Road, Johnsonville, Wellington, 6037, NZ | Educational consultancy services | - | 100% |
| Empowering Education International Limited Educational | Office 1878, Firdous Tower, Al Salem Street, AbuDhabi | Educational consultancy services | - | 100% |
| Consultancy LLC OPC | 200.001 | | | |
| Tribal Group Asset
Co Pty Limited | G8 & 9 Glasshouse, 11 Mackey Street, 287-307
Melbourne Road, North Geelong, Victoria, 3215, Australia | Dormant Company | _ | 100% |
# **Company only Balance Sheet**
As at 31 December 2023
| | Note | . 2023
£¹000 | 2022
£'000 |
|-------------------------------------------------------|------|-----------------|---------------|
| Fixed assets | | | |
| Investments | 36 | 84,859 | 85,173 |
| Right-of-use assets | | | 174 |
| Total fixed assets | | 84,859 | 85,347 |
| Current assets | | | |
| Debtors | 37 | - 5,705 | 2,568 |
| Deferred tax assets | 38 | 1,174 | 1,142 |
| Cash at bank and in hand | | 278% | - |
| Total current assets | | 7,157 | 3,710 |
| Total assets | | 92.016 | 89,057 |
| Creditors: amounts falling due within one year | 39 | (29,968) | (30,771) |
| Net current liabilities | | , (22,811) | (27,061) |
| Total assets less current liabilities | | 62,048 | 58,286 |
| Creditors: amounts falling due after one year | 39 | (14,023) | (6,332) |
| Net assets | | 48,025 | 51,954 |
| Capital and reserves | | | |
| Called up share capital | 40 | 10.611 | 10,611 |
| Share premium | 41 | 83° - 83° | 83 |
| Mergerreserve | 41 | 11,304 | 11,304 |
| Own share reserve | 41 | (198) | (198) |
| Share-based payment reserve | 41 | 8,241 | 7,947 |
| Retained earnings: | | | |
| At 1 January | 41 | 22,207 | 2,365 |
| Transfer from share premium | 41 | | 19,359 |
| (Loss)/profit for the year attributable to the owners | 41 | (2,853) | 3,276 |
| Equity dividend paid | 41 | (1,377) | (2,736) |
| Other changes in retained earnings | 41 | 7 | (57) |
| At 31 December | 41 | 17984 | 22,207 |
| Equity shareholders' funds | | 48.025 | 51,954 |
Notes 34 to 44 form part of these financial statements.
The financial statements on pages 110 to 117 of Tribal Group plc (registered number 04128850) were approved by the Board of Directors and authorised for issue on 20 March 2024. They were signed on its behalf by:
**Richard Last**
Director
**Mark Pickett**
Director
# **Company only Statement of Changes in Equity**
| | Note | Called up
share capital
£'000 | Share
premium
£'000 | Merger
reserve
£'000 | Own share
reserve
£'000 | Share-based
payment
reserve
£'000 | Retained
earnings
£'000 | Total
equity
£'000 |
|---------------------------------------------------------|------|-------------------------------------|---------------------------|----------------------------|-------------------------------|--------------------------------------------|-------------------------------|--------------------------|
| At 1 January 2022 | | 10,519 | 18,961 | 11,304 | (326) | 7,455 | 2,365 | 50,278 |
| Profit and total comprehensive income for the year | | - | - | - | | - | 3,276 | 3,276 |
| Issue of share capital | 23 | 92 | 481 | - | - | - | - | 573 |
| Share options exercised | | - | _ | - | 128 | (128) | - | - |
| Share premium capital reduction | 24 | - | (19,359) | - | - | - | 19,359 | - |
| Equity dividend paid | 11 | - | - | - | - | - | (2,736) | (2,736) |
| Credit to equity for share-based payments | 22 | - | - | _ | - | 589 | - | 589 |
| Foreign exchange differences on
share-based payments | 22 | - | - | - | - | 31 | _ | 31 |
| Tax charge on credit to equity for share-based payments | | _ | _ | - | _ | _ | ·
(57) | (57) |
| Contributions by and distributions to owners | | 92 | (18,878) | _ | 128 | 492 | 16,566 | (1,600) |
| At 31 December 2022 and 1 January 2023 | | 10,611 | 83 | 11,304 | (198) | 7,947 | 22,207 | 51,954 |
| Loss and total comprehensive expense for the year | | - | _ | _ | · - | - | (2,853) | (2,853) |
| Equity dividend paid | | _ | - | - | _ | - | (1,377) | (1,377) |
| Credit to equity for share-based payments | | - | - | - | - ' | 331 | - | 331 |
| Foreign exchange differences on
share-based payments | | _ | _ | | _ | (37) | _ | (37) |
| Tax credit on credit to equity for share-based payments | | | _ | _ | | - | 7 | 7 |
| Contributions by and distributions to owners | | = ' | - | - | _ | 331 | (1,370) | (1,076) |
| At 31 December 2023 | (V.) | 10,611 | F/4-7(83) | 11,304 | · · · (108). | 17/28/241 ha | 17,984 | 48,025% |
# **Notes to the Company Balance Sheet**
#### 34. Significant accounting policies
Tribal Group plc is a public limited company incorporated and domiciled in England and Wales.
The separate financial statements of the Company are presented as required by the Companies Act 2006. The Company meets the definition of a qualifying entity under FRS 101 (Financial Reporting Standard 101) issued by the Financial Reporting Council. As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available under that standard in relation to share-based payment, financial instruments, capital management, presentation of comparative information in respect of certain assets, presentation of a cash flow statement and certain related party transactions.
Where required, equivalent disclosures are given in the consolidated financial statements.
The financial information has been prepared on the going concern and historical cost basis. The principal accounting policies adopted are the same as those set out in Note 1 to the consolidated financial statements except as noted below.
Investments in subsidiaries are stated at cost less, where appropriate, provisions for impairment.
#### 35. Loss/(profit) for the year
As permitted by section 408 of the Companies Act 2006, the Company has elected not to present its own profit and loss account for the year. The loss for the Company (before dividends paid) amounted to £2.9m (2022: profit of £3.3m). Dividends paid amounted to £1,377,000 (2022: £2,736,000). The independent auditors' remuneration for audit services to the Company was £359,000 (2022: £246,000).
#### 36. Investments
| | Shares in subsidiary
undertakings
£'000 | Long-term
Ioans
£'000 | Total
£'000 |
|-------------------------------------------------------|-----------------------------------------------|-----------------------------|----------------|
| Cost | | | |
| At 31 December 2021 and at 1 January 2022 | 30,514 | 54,248 | 84,762 |
| Capital contribution relating to share-based payments | 411 | - | 411 |
| At 31 December 2022 and at 1 January 2023 | 30,925 | 54,248 | 85,173 |
| Transfer of investment | (406) | - | (406) |
| Capital contribution relating to share-based payments | 92 | - | 92 |
| At 31 December 2023 | 30,611 | 54,248 | 84,859 |
Long-term loans are treated as investments as they are non repayable.
As Tribal Group plc grants share options to employees in subsidiary companies, a notional capital contribution is created in the books of the relevant subsidiary undertaking. This is treated as an investment by Tribal Group plc.
The Directors have considered the value of the above investments and are satisfied that the aggregate value of each investment is not less than its carrying value. The investments in subsidiaries are all stated at cost less provision.
Details of the Company's subsidiaries are given in Note 33 to the consolidated financial statements.
#### 37. Debtors
| | 5.705 | 2,568 |
|------------------------------------|---------------|---------------|
| Current tax | 50, | 54 |
| Other debtors | 703 | 347 |
| Amounts owed by Group undertakings | 4.952 | 2,167 |
| | 2023
£'000 | 2022
£'000 |
All amounts owed by Group undertakings are unsecured and have no fixed repayment date. No interest is charged and amounts are repayable on demand. All debtors fall due within one year.
The Company has applied the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for Group receivables. The Parent Company has guarantees in place for its UK subsidiaries, and management have assessed each entity's ability to repay amounts owed. As a result, no expected credit loss has been recognised.
#### 38. Deferred tax asset
| · | 2023 £ 2000 | 2022
£'000 |
|-------------------------------------|-------------------|---------------|
| Deferred taxation | | |
| At start of year | 1,142 | 1,279 |
| Charge/(credit) to income statement | ≥ 25 , | (59) |
| Items taken directly to equity | 7. | (78) |
| At end of year | 1.174 | 1,142 |
The deferred tax asset is analysed as follows:
| · | \$2029
\$1000 | 2022
£'000 |
|-----------------------------|-------------------|---------------|
| Share schemes | 1112 | 81 |
| Other temporary differences | . as - *** 1:062. | 1,061 |
| | 1174 | 1,142 |
Included in other temporary differences are deferred tax assets of £1,021,000 (2022: £1,020,000) relating to tax losses carried forward and other timing differences of £41,000 (2022: £41,000).
Deferred tax assets are all non-current assets.
#### 39. Creditors
#### Amounts falling due within one year
| | 2023
£000 | 2022
£'000 |
|-----------------------------------------------------------|----------------------|---------------|
| Amounts owed to Group undertakings | . The second 28:278. | 29,875 |
| Trade and other creditors | 216 | 82 |
| Accruals | 1.474 | 448 |
| Lease liabilities | | 93 |
| Bank overdraft | | 89 |
| Contingent deferred consideration provision (see Note 20) | | 184 |
| | 29.968 | 30,771 |
All amounts owed to Group undertakings are unsecured and have no fixed repayment date. No interest is charged and amounts are repayable on demand.
#### Amounts falling due after one year
| | 2023
£ 000 | 2022
£'000 |
|-------------------|---------------|---------------|
| Lease liabilities | | 82 |
| Borrowings | 14,000 | 6,250 |
| Other liabilities | 23. | - |
| | * * 14:023 · | 6,332 |
# Notes to the Company Balance Sheet continued
# 40. Called up share capital
| | 2023 2028
number £0000 | 2022
number | 2022
£'000 |
|------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------|---------------|
| Allotted, called up and fully paid | | | |
| At beginning of the year | 212,221,746 10,611 | 210,374,373 | 10,519 |
| Issued during the year | ting the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of | 1,847,373 | 92 |
| At end of the year | 212.221.746 10.611 | 212,221,746 | 10,611 |
The Company has one class of Ordinary Shares of 5p each which carry no right to fixed income.
`Details of options in respect of shares outstanding at 31 December 2023 are as follows:
| Employee share option schemes: | Number outstanding
'000 | Exercise price payable | Date from which exercisable |
|---------------------------------------------|----------------------------|---------------------------------------|-----------------------------|
| 2016LTIP | 75 | £0.05 | June 2019 |
| 2020 LTIP | 1,215 | £0.05 | July 2023 |
| 2020 LTIP | 940 | £0.05 | July 2021 |
| 2021 LTIP | 282 | £0.05 | June 2024 |
| 2022 LTIP | 512 | £0.05 | April 2025 |
| 2023 LTIP | 486 | £0.05 | October 2026 |
| | 3,510 | | |
| 2017 LTIP (inc CSOP) | 100 | 08.02 | July 2020 |
| 2018 LTIP (inc CSOP) | 150 | £0.796 | March 2021 |
| 2019 LTIP (inc CSOP) | 400 | £0.71 | June 2022 |
| 2019 LTIP (inc CSOP) | . 300 | £0.615 | September 2022 |
| | 950 | · · · · · · · · · · · · · · · · · · · | |
| 2019 SAYE | 18 | £0.582 | November 2022 |
| Total Tribal Group plc share option schemes | 4,478 | | |
Details of share-based payments are given in Note 22 to the consolidated financial statements.
#### 41. Share premium and other reserves
| · | Merger reserve
£'000 | Share premium reserve £'000 | Own share
reserve
£'000 | Share-based
payment
reserve
£'000 | Retained
earnings
£'000 |
|---------------------------------------------------------|-------------------------|-----------------------------|-------------------------------|--------------------------------------------|-------------------------------|
| At 31 December 2021 and 1 January 2022 | 11,304 | 18,961 | (326) | 7,455 | 2,365 |
| Profit for the year | - | - | - | - | 3,276 |
| Issue of share capital | - | 481 | - | - | - |
| Share premium capital reduction | - | (19,359) | - | - | 19,359 |
| Equity dividend paid | - | _ | - | _ | (2,736) |
| Share options exercised | - | - | 128 | (128) | - |
| Charge to equity for share-based payments | - | - | - | 589 | - |
| Foreign exchange differences on share-based payments | - | - | - | 31 | _ |
| Tax charge on credit to equity for share-based payments | - | - | - | - | (67) |
| At 31 December 2022 and 1 January 2023 | 11,304 | 83 | (198) | 7,947 | 22,207 |
| Loss for the year | - | _ | - | - | (2,853) |
| Equity dividend paid | _ | _ | - | - | (1,377) |
| Charge to equity for share-based payments | - | | - | 331 | - |
| Foreign exchange differences on share-based payments | - | - | - | (37) | - |
| Tax credit on credit to equity for share-based payments | - | - | _ | _ | 7 |
| At 31 December 2023 | 11,304 | 83 | (198) | 8,241 | 17,984 |
The merger reserve of £11.3m (2022: £11.3m) relates to the premium arising on shares issued subject to the provisions of section 612 of the Companies Act 2006.
On 27 September 2022 the High Court of Justice, in the Business and Property courts of England and Wales, approved the cancellation of the share premium account. On 4 October the statement of capital was delivered to the Registrar of Companies.
The own share reserve of $\pounds(0.2)$ m (2022: $\pounds(0.2)$ m) represents the cost of 320,086 shares (2022: 423,000) in Tribal Group plc held by the Employee Share Ownership Trust (EBT) to satisfy certain options under the Group's share option schemes. During 2023 no shares were purchased by the EBT, and 102,914 shares were sold to satisfy options granted in 2020 under the LTIP Scheme and the SAYE Scheme (see Note 22).
The retained earnings reserve is distributable.
# Notes to the Company Balance Sheet continued
#### 42. Contingent liabilities
A cross-guarantee exists between Group companies in respect of bank facilities which was £nil as at 31 December 2023 (2022: £nil).
In addition the Company and its subsidiaries have provided performance guarantees issued by its bank on its behalf in the ordinary course of business, totalling £0.1m (2022: £0.8m). They are not expected to result in any material financial loss These are not expected to result in any material financial loss and the likelihood of using these guarantees is assessed as remote.
As disclosed in Note 33, Tribal Holdings Limited, Tribal Dynamics Limited, and Semestry Limited have taken advantage of the exemption available under Section 394A/ 479A of the Companies Act 2006 in respect of the requirements for audit. As a condition of the exemption, the Company has guaranteed the year-end liabilities of these subsidiaries until they are settled in full. The liabilities of the subsidiaries at the year-end were £73,066,000 (2022: £64,309,000). These are inclusive of intercompany liabilities of £16,586,000 (2022: £16,675,000).
#### 43. Financial instruments
All Company risks are aligned to those of the Group. Details of the risks relating to the Group are given in Note 31 to the consolidated financial statements.
| 31 December 2023 | Financial
assets
measured
at amortised cost
£'000 | Financial
liabilities
measured
at amortised cost
£'000 | Financial
liabilities
measured
at FVTPL
£'000 | Total
£'000 |
|-----------------------|---------------------------------------------------------------|--------------------------------------------------------------------|-----------------------------------------------------------|----------------|
| Financial assets | | Comment of the second | | |
| Cash | 278 | | | 278 |
| Debtors* | * \$ 4958 \$ | | | "4,958 |
| | \$5,236 | | | 5,236 |
| Financial liabilities | | | to the second | |
| Bank loans | | 14,000 | 198 | 14,000 |
| Creditors** | | 1/28,517 | 286 1 1 - 1 Say | 28,517 |
| | | 42,517 | region (Library | 42,517 |
| | Financial
assets
measured | Financial
liabilities
measured | Financial
liabilities
measured | |
| 31 December 2022 | Financial
assets
measured
at amortised cost
£'000 | Financial
liabilities
measured
at amortised cost
£'000 | Financial
liabilities
measured
at FVTPL
£'000 | Total
£'000 |
|-----------------------------------|---------------------------------------------------------------|--------------------------------------------------------------------|-----------------------------------------------------------|----------------|
| Financial assets | | | | |
| Debtors* | 2,167 | - | - | 2,167 |
| | 2,167 | - | - | 2,167 |
| Financial liabilities | | | | |
| Overdrafts | - | 89 | - | 89 |
| Bankloans | - | 6,250 | - | 6,250 |
| Creditors** | - | 30,049 | - | 30,049 |
| Deferred contingent consideration | - | - | 184 | 184 |
| | _ | 36,388 | 184 | 36,572 |
Excluding amounts that relate to non-financial instruments of propayments and tax.
\*\* Excluding amounts that relate to non-financial instruments of accruals and tax.
#### 44. Staff numbers and costs
The average monthly number of persons employed (including all Directors) under contracts of service by the Company during the year was as follows:
| | \$2023
Number | 2022
Number |
|---------------------------------------------------------------|-------------------|----------------|
| | 5 | 5 |
| The aggregate payroll costs of these persons were as follows: | | |
| | . 2023
. £2000 | 2022
£'000 |
| Wages and salaries | 1,186 | 1,127 |
| Social security costs | 92 | 95 |
| Other pension costs | \$35 | 34 |
| Share option charge . | 226 | 209 |
| , | 1.539 | 1,465 |
Cost of Directors' emoluments were incurred by the Company and are included in the Remuneration Report on pages 45 to 49.
# **Company Information**
#### **Tribal Group plc**
Registered in England and Wales Company number: 04128850
#### Registered office
Kings Orchard 1 Queen Street Bristol BS2 0HQ
T: 0330 016 4000 E: info@tribalgroup.com www.tribalgroup.com
#### **Company Secretary**
Diane McIntyre
#### **Stockbrokers**
Investec Bank plc Singer Capital Markets Limited 2 Gresham Street 1 Bartholomew Lane
London London EC2V 7QP EC2N 2AX
#### Financial adviser
Investec Bank plc 30 Gresham Street London EC2V 7QP
#### **Principal bankers**
Lloyds Bank PO Box 112 HSBC Bank 3 Temple Quay
Canon's House Canon's Way Bristol BS1 6DZ
Bristol BS1 5LL
#### Independent auditor
BDO LLP Bridgewater House Counterslip Bristol BS1 6BX
#### **Solicitors**
Taylor Wessing LLP 5 New Street Square London EC4A 3TW
#### Registrars
Link Group 10th floor, Central Square 29 Wellington Street Leeds LS1 4DL
#### E-communications
As an alternative to receiving documents through the post, shareholders can receive important information online, including annual and half-year reports and notices of meetings. Registering for e-communications also enables shareholders to obtain secure online access to personal shareholding details, change address details and check dividend payments.
To register for e-communications, please visit https://www.signalshares.com
#### **Duplicate accounts**
If you receive two or more copies of the Annual Report and Accounts and/or multiple cheques for each dividend payment, it means that you have more than one shareholder account.
To receive just one Annual Report and Accounts and one cheque for each dividend payment, please contact the Company's registrars, Link Group, on 0371 664 0445, and ask for your accounts to be amalgamated.
(Calls are charged at the standard geographic rate and will vary by provider. If you are outside the United Kingdom, please call +44 371 664 0445. Calls outside the United Kingdom will be charged at the applicable international rate. We are open between 9.00 am - 5.30pm, Monday to Friday excluding public holidays in England and Wales.)
#### Financial calendar
Annual General Meeting 20 May 2024
.
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# doguan ladin
Registeredoffice KingsOrchard 1QueenStreet Bristol 852010
Te03300164000 Betinfo@iribalgroup.com www.tribalgroup.com Tribal Group plc Annual Report & Accounts 2023