Empowering the world of education 2017 Results Ian Bowles, CEO Mark Pickett, CFO 22 nd March 2018 22 March 2018 Tribal Results Full Year 2017 1
Agenda § Business Highlights § 2017 Financial Report § CEO Summary § Q&A 22 March 2018 Tribal Results Full Year 2017 2
2017 Business Highlights Ian Bowles CEO 22 March 2018 Tribal Results Full Year 2017 3
Three Year Turnaround Plan Three Year Plan ( updated H1 2017) 2016 2017 2018 Move to recurring Create a solid Improve revenue foundation, and profitability, sound deliver new Continued margin operational product improvement model strategy with new licensable Continued module international Delivered Delivered expansion 22 March 2018 Tribal Results Full Year 2017 4
2017 Highlights § First statutory profit since 2013 § Positive progress across all lines of business § Key contracts secured in SMS & QAS § All Key Metrics showing positive direction of travel 22 March 2018 Tribal Results Full Year 2017 5
TEAM Achievements over 22 months March 2016- December 2017 22 March 2018 Tribal Results Full Year 2017 6
Team achievements in 22 months The Hard Yards § Reduced headcount from circa 1,400 to 850 − Tupe of staff to Ofsted − Disposal and closure of lines of business − Headcount reduction § Reduced cost base by £12m − Closed Leeds & Birmingham offices − Reduced excessive expenditure 22 March 2018 Tribal Results Full Year 2017 7
Team achievements in 22 months The Positive § § New operating model Invested in infrastructure − New Executive Board − Office 365, Rackspace − Student Information Systems, § Launched Cloud Services QAS, i-graduate § Restored competitiveness & win rate − New values programme § Designed and launched a § Re-launched the Tribal brand – competency framework Empowering the World of Education § Secured a global partnership with − Launched new website Microsoft § Committed investment for our future − Tribal Edge 22 March 2018 Tribal Results Full Year 2017 8
Team achievements in 22 month Restored Customer Restored Team Restored Financial Confidence Confidence Stability • Work in Progress! • Achieved financial • Tribal Edge plans for two messaging well • Win rate is up consecutive years received • Paid bonuses • Significant • Software revenues • Improved improvement in growing benefits package profitability on • Current customers lower revenues • Some of the remaining with us • Clear strategy for team who left came and buying more back the future • New customers joining the Tribe 22 March 2018 Tribal Results Full Year 2017 9
Headcount Report to end December 2017 Revenue per FTE ended the year at £103.6k per FTE. Overall payroll cost reduced to £36.17M. Average cost per FTE has remained at similar levels since September, now at £44.1k from £43.5k in March (when TUPE transfers occurred), an increase of 1.6% 22 March 2018 Tribal Results Full Year 2017 10
Financial Key Points Adjusted operating profit Statutory profit Core revenue Annually recurring revenue Adjusted operating margin Statutory profit per share Net cash from operating activities Net cash Committed income 22 March 2018 Tribal Results Full Year 2017 11
Tribal Edge 22 March 2018 Tribal Results Full Year 2017 12
Student Engage Student View Student Support 22 March 2018 Tribal Results Full Year 2017 13
Tribal Competency Framework 22 March 2018 Tribal Results Full Year 2017 14
Tribal Competency Framework: An overview Exec Leaders 9 Job families Specialist: Management: Widely recognised as a Significant responsibility for subject matter expert people management 4 Job levels Core Tribal Roles: The majority of Tribal roles will fall into this category at a variety of level of Common 40 responsibility or impact of the work carried out. competencies Career Pathways will help navigate progress through. 22 March 2018 Tribal Results Full Year 2017 15
Financial Report Mark Pickett CFO 22 March 2018 Tribal Results Full Year 2017 16
CFO Summary 12 months ended 31 December 2017 Revenue Adjusted Operating Profit* Net Cash (before share based payments) £14.1m £84.9m £8.5m 2017 £8.5m 2017 £14.1m 2017 £84.9m 2016 £8.8m 2016 £90.3m 2016 £4.7m up 59% up 82% down 5.9% § Core revenue has grown 6.5%, excluding expired Ofsted Early Years contract and Synergy disposal in 2016 § Profit growth driven by cost reductions in 2016 and 2017, and strong performance in QAS and APAC SMS § Strong Cash generation positively impacted timing of QAS collections from Middle East contracts • Adjusted operating profit is in respect of continuing operations and is stated excluding “Other Items” charges of £4.8m (2016: £4.6m). Other Items include Share-based Payments, Deferred Contingent Consideration, Amortisation of IFRS3 Intangibles, and Restructuring and associated costs 22 March 2018 Tribal Results Full Year 2017 17
Core Revenue growth: 2015 to 2017 120 100 30.2 § Core revenue grown 7.1% 6.5% growth 13.3 3.0 0.5% growth 80 from £76.5m in 2015 to 14.8 81.9m in 2017 9.1 10.9 § Core revenue excludes 60 discontinued businesses, shown in grey, including 40 the Ofsted contracts, 67.4 67.1 66.0 Synergy, SLS and Careers Advice 20 § Core revenue is split between QAS revenues 0 and SMS/Other revenue 2015 2016 2017 SMS/Other QAS Discontinued 22 March 2018 Tribal Results Full Year 2017 18
Financial Key Points Core revenue Adjusted operating profit Statutory profit £81.9m £8.5m £2.6m improved 2016 £76.9m 2016 £4.7m 2016 Loss of £1.2m up 6.5% up 82% £3.8m Annually recurring revenue Adjusted operating margin Statutory profit per share £37.5m 10.1% 1.3p improved 2016 5.2 % 2016 £35.5m 2016 Loss of 0.7p up 5.5% up 4.9 pp 2.0p Net cash from operating activities Net cash Committed Income £11.1m £14.1m £120.4m 2016 £8.3m 2016 £8.8m 2016 £113.8m up 34% up 59% up 5.8% 22 March 2018 Tribal Results Full Year 2017 19
Adjusted EBITDA Bridge from 2016 to 2017 Cost Reduction Annualised 2016 2017 2018 FY 2016 Savings 9.0 5.8 3.2 12 FY 2017 Savings 3.0 2.0 1.0 12.1 1.9 Total Savings 12.0 5.8 5.2 1.0 11 (0.7) KPIs 1.6 10 Full Year to 31 December 2016 2017 Change 9 Headcount: 1,041 820 222 2.0 Full Time Equivalent (FTE) 8 £m (1.0) 7.9 Revenue /FTE 7 3.2 £86.7k £103.6k 20% (as at 31 Dec) (£'000s) (3.2) 6 5 4 0.4 3 A S ) ) s s s e ) A t t t g g D L s t D e e e a n n e S T n n n T u i i n I / I ( ( v v ( B d B y i d t a a s r E g a E e c e s s u r r a h 6 b g 7 e t 6 7 t s p 1 n - 1 1 1 w O f m i 0 y 0 O Y Y e S 2 i 2 F F n X F S A Q 22 March 2018 Tribal Results Full Year 2017 20
Revenue by Product/Service and by Segment REVENUE BY PRODUCTS & SERVICES Revenue by segment Y-o-Y growth: 5.8% QAS 21% Other 5% i-grad SMS 3% Y-o-Y growth: 8.9% 71% Net adverse impact on revenue of £10.3m due to discontinued businesses; excluding these factors, revenue rose 6.5%. Overall, Software & related services increased 5.8%, and non- software related services by 8/9% (excluding discontinued businesses) NB: i-graduate and other combine to a single segment 22 March 2018 Tribal Results Full Year 2017 21
Segmentation: All Businesses Adjusted operating Revenue £m profit £m 2017 2016 2017 2016 Student Management Systems 60.0 59.0* 17.6 12.0* i-graduate 3.0 3.1 0.4 1.1 Other 4.1 5.6 0.7 (0.1) Quality Assurance Solutions 17.8 22.5 4.4 6.5 Total Lines of Business 84.9 90.2 23.1 19.6 - - Central / Group costs (14.5) (14.9) Total Group 84.9 90.2 8.5 4.7 Significantly increased profitability in SMS, due to cost savings achieved. Reduction in i-grad due to lower profitability of Student Barometer survey. “Other” includes businesses which have been moved to a maintenance-only and benefited from cost savings. QAS includes Ofsted contracts, successfully concluded in March 2017 – excluding this, underlying QAS revenue growth was 35%. * Synergy, disposed of in March 2016, is included in Student Management Systems (2016: revenue £1.7m / profit £1.0m) 22 March 2018 Tribal Results Full Year 2017 22
Student Management Systems Other 2% Revenue £m Cloud 2017 2016 Licence & 6% Development License and development fees 8.7 11.1 15% Implementation 14.2 12.1 Implementation 24% Maintenance fees 32.1 31.1 Maintenance Cloud 3.6 3.3 53% Other 1.4 1.4 Total 60.0 59.0 Adjusted Operating Profit (£m) 17.6 12.0 Adjusted Operating Profit Margin 29% 20% Lower License and development fees are offset by higher services as developed software was implemented. It is also impacted by contracts requiring software revenue recognition Capitalised Product Development to be spread over the contract. This will be required in 2018 by Expenditure (£m) 2.1 1.1 implementation of IFRS15. Amortisation of Development costs (1.4) (1.4) Total 2017 investment in Product Development was £10.2m (2016: £10.3m); £2.1m was capitalised (Edge products only) 22 March 2018 Tribal Results Full Year 2017 23
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