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Education software provider targets ambitious margin gains

Tribal (TRB:AIM)  56.75p

Gain to date: 20.1%

Previous Shares view: 47.25p, 19 May 2016

Tribal (TRB:AIM) chief executive Ian Bowles says the business is capable of delivering operating margins in excess of 20% after a turnaround is complete.

Tribal struggled with lumpy revenue flow and problem contracts during 2015 – culminating in a profit warning and dilutive equity raise.

TRIBAL GROUP - Comparison Line Chart (Rebased to first)77

In a bullish assessment of the education support services business’ prospects after taking the reins early this year, Bowles said key performance indicators during his tenure would focus around staff and customer retention as well as margins.

‘I am encouraging shareholders to think 20% margins at a group level which will be a good achievement from where we started,’ said Bowles.

But I would not see it ending there because good software companies can earn more than that.’

Tribal delivered adjusted operating profit of £2.9m on revenue of £107m in 2015 for a 2.7% margin. (WC)

Bowles’ targets are a long way off but promise great returns if they can be delivered.

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