Wednesday, 28 January 2009

Tribal trading statement

Tribal Group (one of the listed service suppliers to the Public Sector that I rate highly since its refocusing in 2007) has released a positive statement on trading for the year to 31 December 2008 – “it is confident the Group will perform in line with its expectations for 2008”.

As I noted in my blog on
Tribal’s acquisition of Newchurch Ltd, I would expect an annualised profit of around £12M (eps around 14p) – and with the new acquisition, annualised revenue in excess of £200M going forward.

However, I note some caution, both in the wording of the trading statement – e.g. “our business model continued to prove resilient” - and the statement that Tribal entered “the new financial year with approximately 38% of 2009 planned revenue already committed”, disappointingly less than the 40% reported going into 2008 and, given Tribal’s supposed focus on longer-term projects, a figure that I would regard as quite low. I feel that Tribal’s confidence on its ability to achieve significant organic growth in 2009 is somewhat muted.

Realistically, I suspect that this is no more than would expect in the current financial environment, and I would fully expect Tribal to use its “resilient” business model to help it avoid cost wherever possible and achieve some profit growth in 2009. Tribal has made great steps forward since the disposal of it Mercury Health venture, and I remain a strong supporter of its abilities in the UK Public Sector.

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