Tribal Share Discussion Threads

[interceptor2] 11/5/2011 16:37

There is another piggy quote "Bulls make money, bears make money, but pigs just get slaughtered!"

I'm sure this won't be case here :~)

[simon gordon] 11/5/2011 16:03

ic2,

Totally classic quote.

I'm just about pigged out too :-)

[interceptor2] 11/5/2011 15:34

Topped up again today, in the past I have been a bit timid when I have had a very strong conviction on a stock. Hopefully I'm putting this right now.

ic2........

As Stanley Druckenmiller said, something he learnt from George Soros "when you have tremendous conviction on a trade, you have to go for the jugular. It takes courage to be a pig."

[simon gordon] 09/5/2011 13:12

Danger,

You are right I've taken the EPS figure not the PBT. Sorry!

12/11
PBT - 7.7m

12/12
PBT - 8.9m

8.3m x 10 = £83m minus £8m debt = £75m divided by 93.6m shares = 80p.

My apologies for post 787.

[interceptor2] 09/5/2011 12:11

Agree that 60p to 65p would be a realistic area where I would expect they are haggling over. But being an optimist, I would hope for 70p to 75p.

ic2.......

[simon gordon] 09/5/2011 10:44

There is still a big risk that TRB see a marked slowdown in orders from UK public sector education.

A stab at a take out price:

12/11
PBT - 6.1m

12/12
PBT - 7.1m

Let's split the difference = £6.6m

47p market cap = £44m

Net Debt = c.£8m

= £52m

10 x £6.6m = £66m = 61.2p per share.

60p to 65p is possibly what they could be haggling over, if Civica is not the only bidder maybe 70p. Seems a stretch to go higher with all the public sector spending uncertainty.

[dangersimpson2] 09/5/2011 09:58

I'm not sure a 40% premium on today's price would be particularly welcome...if as we suspect 10p 2012 EPS is possible now the education business is free from funding the Government & Health Divisions, that would only be 6.5x earnings.

[interceptor2] 09/5/2011 09:40

Notice at the open, the offer was increased giving to spread of 46.5 - 49. MMs trying to put off buyers? They could have a good home for all those sells on Friday imo.

ic2.......

[interceptor2] 09/5/2011 09:29

Checked the company website and no mention now of Peter Martin CEO, so looks like he has stepped down at the end of April as agreed. Looks like he has completed his job in helping to dispose of all unprofitable divisions, Kindred Agency (PR) Oct 10, Tribal Resourcing Feb 11, and both Government and Health divisions in Apr 11.

Having been in takeover talks since 17th December 2010, I don't think we will have to wait much longer now for an announcement. BOD are in a stronger position now to negotiate a higher price but will they?

I'm convinced a bid will come, but I would be happy to see TRB remain independent. Because as a fully focused Educational company, the potential looks far greater than maybe a takeover at a 40% premium.

ic2....

[cockneyrebel] 04/5/2011 10:22

Someones taking all the sells with the bid holding up like this imo.

CR

[napoleon 14th] 03/5/2011 20:23

Nabbed a few - used to have some eons ago...
Had to sell summat, so the opening buy has been minimal, for now.

[cfro] 28/4/2011 18:25

Nice small tick-up at the end of play. Agreed, this is going to get very interesting going forward from here. IMO there is going to be bid rumours coming out from the woodwork from all kinds of directions.

[cockneyrebel] 28/4/2011 17:51

Has all the ingredients here imo - board changes, corporate action in the selling off of a division and the new CEO has been buying shares and a chart on the turn.

I suspect the directors may have liked to buy more shares but they have been in an offer period since Dec and the bid approach and remain in offer period so they cannot buy shares.

Should be interesting going forward imo.

CR

[davebowler] 15/4/2011 13:54

Stock to Watch: Tribal Group
Fri, 15/04/2011 - 00:00 | Edmond Jackson

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Event-driven investors may find it interesting to keep an eye on Tribal (TRB), a small cap support services company which has just restructured to leave a worthwhile ongoing business that also remains a bid play. This group has had a chequered history with the UK public sector as its mainstay, however, the future is all that counts and everything has its price.

Tribal's long-term chart shows a de-rating from over 150p in 2007/08, amid deteriorating trading statements, as low as 24p late last year when a shocker of an update revealed "significantly more challenging trading conditions" than anticipated in its UK advisory activities hence a profit outlook substantially below expectations. Government cuts were biting.

While the education side was continuing well, for example software and schools' inspection/improvement, weaker government and health business were prompting downsizing to reduce costs. Some £27.5 million net debt was however in context of £48 million total banking facilities.

Bid speculation has rumbled since last August when there were "expressions of interest which may or may not lead to an offer for Tribal" and on 7 April press reports cited an offer for Tribal's education side by software and IT services group Civica. This is in addition to approaches for the healthcare-related business which on 11 April was confirmed by way of a sale to Capita Group (CPI), also including Tribal's government business, for £15.7 million.

Management's rationale was the government and health businesses needing significant investment over time to generate worthwhile profitability and it does indeed look sensible for this smaller plc to focus investment on its most worthwhile activity. According to the 2010 prelims released on 30 March, this division accounted for virtually all of group operating profit, contributing £14.1 million on £106.6 million revenue.

It is involved, for example, with technology/administrative systems, inspections, teacher training, careers advisory and apprenticeships - and given the political priority education enjoys, ought to be relatively resilient. Management is hedging its UK exposure with initiatives abroad such as winning first software clients at universities in New Zealand and China, also schools improvement in Tennessee and EU-funded special education needs provision in Turkey. It does not as yet appear significant enough to justify detailing by way of foreign turnover, at least within the 2010 prelims.

The overseas initiative helps explain why the education side's operating margin of 13.2% was slightly down on 15.0% in 2009. "The pipeline now contains a larger proportion of higher value contracts than a year ago and includes an increasing overseas component."

The 11 April update clarified that at end-February, education had committed income of £187 million with two-thirds of 2011 planned revenue secured and a sales pipeline of £161 million. Net cash proceeds of £12.5 million from the sale of health and government will cut debt and enable further investment and development of education. The overall impact of the disposals is expected to be broadly earnings neutral in 2011.

One broker, Shore Capital, estimates 2011 pre-tax profit of £7.7 million for earnings per share of 6.1p and no dividend, rising to £8.9 million profit in 2012 for EPS of 7.1p and a 1.5p dividend. I would be surprised to see the directors interrupt their dividend policy as this could prompt some (institutional) investors to sell automatically, although the strength of earnings and how they are rated is really the crux for medium-term valuation. If the refocused Tribal can prove sound financial performance then the shares' price-earnings multiple ought to improve from single figures.

The analyst involved at Shore Capital speculates that a deal to buy the rest of the group has now become more likely, with a possible sale value of £75-90 million. This compares with a current market value of £44 million, Tribal shares having risen from just below 40p to about 47p on the disposal news. While I would be cautious of bid speculation, it is a useful addition to what looks a reasonably sound investment case.

As tends to be the case with service-oriented businesses, Tribal's end-2010 balance sheet had a lot of goodwill and intangibles; although the £102.9 million involved was down on £166.8 million at end-2009 after a £51.6 million goodwill impairment charge was taken with respect to the health and government businesses. This is in context of £69.8 million net assets (or 74.5p a share), down from £136.5 million at end-2009. While such asset backing reduces with the disposals, management says "the carrying value of goodwill for our education business has significant headroom."

Current liabilities of £58.9 million slightly exceeded end-2010 current liabilities although there was £14.7 million cash. Debt was principally longer-term with £33.2 million bank loans making for £1.4 million finance costs relative to £7.4 million operating profit before exceptional charges. Such liabilities will reduce following disposals.

A smaller sale came on 9 February: the disposal of Tribal Resourcing, a recruitment company serving the UK public sector which contributed £37,000 operating profit with gross assets of £10.8 million, so there will also be a balance sheet effect. The initial consideration was a nominal £1, but management has struck an earn-out deal for 20% of the revenue for three years with a maximum deferred consideration of £6 million; proceeds to be applied to continue to reduce debt.

So the divestments look overall encouraging for both fundamentals and perception of Tribal. It will be necessary to keep an eye on how educational spending holds up, but the risk/reward profile looks to have improved now making Tribal more worthy of attention.

For more information, visit tribalgroup.com.

[interceptor2] 13/4/2011 18:55

Well in my haste to buy my first stake after the RNS release on Monday, I brought them for my trading a/c. Then realised a few seconds after I hit the buy button what I had done. But no mistake today, and I haven't finished buying yet.

Stupid boy....
ic2..........

[cockneyrebel] 13/4/2011 18:44

I ISA'd more today too :-)

CR

[interceptor2] 13/4/2011 16:24

I also brought some more today for the ISA.

I can't ignore opportunities like this.

ic2........

[cockneyrebel] 13/4/2011 11:59

Added more on todays dip.

CR

[tole] 12/4/2011 21:51

Tribal Group added 14.1 per cent to 48½p on talk the company, which is the largest provider of inspections services to Ofsted, could soon receive a bid approach. On Monday, Tribal, which is currently in an offer period, announced the sale of its government and health business for as much as £15.9m.

That leaves the company as a pure play on the education sector in the UK and internationally, with a profitable technology driven business, say analysts, and a potentially tasty morsel for a bigger player.

[interceptor2] 12/4/2011 20:18

And this is what Shore Capital had to say yesterday. A sale value between £75.0m and £90.0m against a market cap today of £45.0m!

ic2.....

Shares in Tribal Group Plc (TRBG.L) rise nearly 11 percent
after the British outsourcing and consultancy firm says it will
sell its loss-making government and healthcare units to Capita
(CPI.L) for $26 million, four months after the company was
approached about an offer for the entire business.

"We would say post this transaction a deal to buy the rest of the group is more likely than less likely," says analyst Robin Speakman of Shore Capital. Speakman adds he expects the sale value of the remaining group to be between 75 million and 90 million pounds, as he sees bright prospects for Tribal's education business.

[simon gordon] 12/4/2011 20:11

Shore Capital's assumptions post the divestment:

2011
T/O - 110m
PBT - 7.7m
EPS - 6.1p
DPS - zilch
Net Debt - 10.1m

2012
T/O - 115m
PBT - 8.9m
EPS - 7.1p
DPS - 1.5p
Net Debt - 8.8m

[cfro] 12/4/2011 18:54

Boy what a gain! Thanks again for the rec. interceptor2 glad i got in early today! I had some other bits and bobs up today in the 'folio but this alone actually put my 'folio in the blue. Very pleased. With a clear breakout now this could really soar over the next few days imo.

[interceptor2] 12/4/2011 17:15

Well done cfro on buying in early today. The 10.2p EPS figure is just an example to what they could of earned last year, if everything was normal. It's hard to work out what the earnings could be for this year until we see a trading update or two.

But agree 7.0p would be a good starting point.

ic2......

[cockneyrebel] 12/4/2011 11:47

Breaking out on 2 levels here: