Tribal Group plc (LON:TRB) shares surged in mid-morning trading Thursday after issuing a bullish update forecasting full-year earnings (EBITA) “materially ahead” of expectations.
The education software group added that revenues for the full year would be lower than 2017, as expected while operating margins would be higher year-on-year as a result of improved operating efficiency and cost control.
The full year results would also include the impact to EBITA of the IFRS15 revenue recognition standard, which would otherwise have resulted in “significantly higher profits” for the year. Tribal said it had seen “good sales momentum” in the year to 31 December, winning four new name universities in the UK and several larger further education colleges.
Australia and New Zealand
The company’s Australian and New Zealand higher education arms also performed well supporting existing customers, however, the Australian schools sector had been “challenging” and a restructuring plan had been put in place to improve operating performance costing around £1mln, although revenue growth in the sector was not expected.
Tribal also said it was currently in a dispute with a platform software supplier over historic royalty payments, which could potentially lead to a material claim that would be defended “vigorously”.
The firm said its operating efficiency drive was continuing to improve margins and reduce costs across all of its business lines, in line with expectations, while its net cash balance at the end of the year had risen to £20mln from £14.1mln in 2017.
Tribal will release its full-year results on 19 March.
Shares were up 6.6% at 81.8p.