01 April 2021

Tribal Group plc

("Tribal" or "the Group")

Acquisition of Semestry Limited

Expansion of product through the addition of cloud Scheduling and Timetabling software to Tribal Edge

Tribal (AIM: TRB), a leading provider of software and services to the international education market, is pleased to announce that it has agreed to acquire the entire issued share capital of Semestry Limited, a supplier of cloud based scheduling and timetabling software to the higher education market ("the Acquisition"), for an initial cash consideration of £4.5 million with a further £1.5 million contingent cash consideration based on achieving incremental increases in Annual Recurring Revenue (ARR) over a two year period from Completion. The Acquisition will be financed out of the Group's existing cash resources of £10.2m.

Acquisition Summary

Mark Pickett, CEO of Tribal Group commented: "We are delighted to welcome the Semestry team to Tribal Group as we deliver on our strategy to provide complete, integrated Student Information Systems delivered as SaaS solutions in the public cloud. Semestry has developed and delivered market-leading SaaS solutions which, with their strong client relationships, will open up an exciting opportunity for Tribal and expand our Tribal Edge ecosystem of best-in-breed student management applications.

"The Group remains selective in its approach to acquisition opportunities which will focus on   cloud-based solutions, as well as building a partner ecosystem of best-of-breed solutions which maximises the value-add for our current customers.  We look forward to delivering on the opportunity ahead."

About Tribal Group plc

Tribal Group plc is a pioneering world-leader of education software and services. Its portfolio includes Student Information Systems; a broad range of education services covering quality assurance, peer review, benchmarking and improvement; and student surveys that provide the leading global benchmarks for student experience. Working with Higher Education, Further and Tertiary Education, schools, Government and State bodies, training providers and employers, in over 55 countries; Tribal Group's mission is to empower the world of education with products and services that underpin student success.

Additional Information on the Acquisition

Under AIM Rules the Acquisition is not considered to be a substantial transaction; however, Tribal is providing the following additional information.

Acquisition rationale

The Acquisition is in line with Tribal's strategy of underpinning student success through the provision of world class education software and services, and supports its key goals of providing complete, integrated Student Information Systems delivered in the public cloud. Presently, SITS has limited Scheduling and Timetabling capability, and Tribal customers tend to utilise a 3^rd party product which integrates into SITS. The Acquisition will enable Tribal to provide a more comprehensive offering to its existing and new customers, supporting the Tribal Edge strategy. TermTime and ExamTime will help extend Tribal's reach into other markets, such as South East Asia and North America.  

Acquisition consideration

Consideration is paid as a multiple of Annual Recurring Revenue, subject to a maximum of £6.0m for all the issued shares of Semestry Limited.  The initial cash consideration of £4.5m represents a multiple of 5.0x the contracted ARR at the date of acquisition.  Further contingent cash consideration up to a maximum of £1.5m will be due based on achieving additional incremental ARR in the two years post Completion, payable after the first 6 months based on four times (or in relation to certain contracts, five times) ARR, the following six months on three times ARR and the final 12 months on two times ARR. 

Acquisition financials

For the unaudited 12 month period to 31 December 2020 Semestry had Revenue of £0.9m, Operating Profit (EBITDA) of £0.45m and Net Assets of £0.9m.  The Acquisition will be earnings accretive on a pro-forma basis and Tribal will invest in Semestry to provide increased sales and delivery capacity to drive additional revenue.

Acquisition structure

Semestry Limited was founded by Steve Harrison and Barry Keepence.  Steve will continue to be involved with the business and will move to a Tribal service contract from the date of acquisition.  The Board of Tribal Group were sad to be informed that Barry Keepence died in late December 2020.  The grant of the certificate of confirmation relating to the Estate of Barry Keepence by a Scottish court is outstanding and accordingly the sale of the shares held by the Estate of Barry Keepence representing 28.75% per cent of the issued share capital of Semestry Limited will not occur until the grant of the certificate of confirmation.  Initially therefore Tribal will acquire 71.25% of the issued shares in Semestry Limited with the remaining 28.75% to be acquired and paid for once the certificate of confirmation has been granted.  It has also been agreed that the payment for the shares of Steve Harrison will not be made until the shares held by the Estate of Barry Keepence are acquired.