Last checked at 16 Jan 2009 07:00
Tribal Group plc
Acquisition of Newchurch
Tribal Group plc ("Tribal" or the "Group"), the provider of consultancy, support and delivery services to the public sector in the UK and internationally, is pleased to announce the acquisition of Newchurch Limited ("Newchurch") for a total consideration of up to £10.5m.
Newchurch, based in London, is one of the leading health consulting businesses in the UK, providing strategic advice to healthcare organisations at a senior level in both the public and private sectors. Newchurch has established a track record of working with the Department of Health, Strategic Health Authorities and Primary Care Trusts, as well as a number of private providers of healthcare services.
The acquisition of Newchurch is a further important step in building Tribal's healthcare business, an area expected to benefit from increases in government spending of approximately 5% per annum in the period to 2011.
Newchurch's expertise in commercial and change management will integrate well with Tribal's existing services covering commissioning, finance, informatics, human resources and communications. As a result of the acquisition, Tribal will now be able to offer comprehensive end to end support to healthcare organisations, from strategy and organisational development to front-line change management. Tribal will also be able to support Newchurch's future growth by providing access to key government frameworks. The acquisition of Newchurch should therefore enhance the growth potential of the Group's healthcare interests in the UK.
Newchurch has demonstrated strong growth in recent years. Based on the unaudited management accounts for the year ended 31 December 2008, Newchurch achieved normalised operating profit of £1.11m on turnover of £3.40m and had gross assets at that date of £1.90m.
The prospects for Newchurch in 2009 are very encouraging. At the beginning of January, the business had confirmed projects for 2009 representing approximately 30% of planned revenue for the year and a strong pipeline of additional identified sales opportunities. The acquisition is expected to be earnings enhancing in the current financial year to 31 December 2009 and thereafter.
Newchurch's management team will remain in place and Kingsley Manning, its Managing Director, will join the senior executive of Tribal's health business.
Tribal has offered to acquire 100% of the issued share capital of Newchurch for a total consideration of up to £10.5m (the "Offer"). Tribal currently has irrevocable undertakings to accept the Offer from holders of 97% of the issued share capital of Newchurch.
The total consideration of up to £10.5m comprises the following:
The consideration will be paid as follows: 1. On completion, up to £5.0m (to include an initial payment of £0.5m in respect of the Tax Losses) comprising:
a. £2.25m in cash; b. up to £0.725m in cash for surplus cash; and c. the issue of 2,418,073 new ordinary shares of 5p each in Tribal ("New Tribal Shares").
2. A payment of up to £3.0m, expected to be made on or before 31 March 2009 and dependent upon confirmation from its audited accounts of Newchurch's profit for the year ended 31 December 2008, comprising: a. up to £2.5m in cash; and b. £0.5m through the issue of further New Tribal Shares. 3. Deferred consideration of up to £2.5m (to be satisfied by a mix of cash and Tribal loan notes) will be paid after HMRC confirmation of the tax treatment of the Tax Losses. (The deferred consideration payable to the vendors will represent two thirds of the future tax benefit realised.)
Completion is expected to be on 27 January 2009. Following the acquisition of Newchurch, Tribal estimates that its net debt at 31 March 2009 will be approximately £22m, against bank facilities, committed to June 2012, of £40m.
Application will be made for the admission of the New Tribal Shares to trading on the Main Market of The London Stock Exchange ("Main Market"). Tribal will make a further announcement, once an application is made, concerning the date on which the New Tribal Shares will commence trading on the Main Market. The New Tribal Shares will rank pari passu in all respects with the existing ordinary shares of 5p each in Tribal.
Commenting on the acquisition of Newchurch, Peter Martin, Chief Executive of Tribal, said:
"Newchurch is a high quality business run by an excellent management team and we are delighted that they have decided to join Tribal. Newchurch's services and client base complement our healthcare business and we will now be able to offer our health sector clients integrated solutions to complex organisational challenges."
Kingsley Manning, Managing Director of Newchurch said:
"This is an exciting development for Newchurch. We share the same values of helping to improve the quality and value for money of essential public services. As part of Tribal, we will have greater access to major contract opportunities and be able to offer our clients a broader range of expertise and services."
Tribal will be releasing its Trading Update in respect of the year ended 31 December 2008 on 28 January 2009 and will be presenting its health business at an investor event to be held on the same date.
Ends
For further information, please contact:
Tribal Group plc Telephone: 020 7323 7100
Peter Martin, Chief Executive
Simon Lawton, Group Finance Director
Maitland Telephone: 020 7379 5151
Colin Browne
Anthony Silverman
Editors' note:
Tribal provides a range of consultancy, support and delivery services focused on improving the delivery of public services in the UK and internationally. Our core markets are in education, health, housing and regeneration, central government and local government. Tribal employs approximately 2,300 staff and its shares are quoted on the London Stock Exchange (TRB).
In the last set of audited statutory accounts for the year ended December 2007, Newchurch delivered turnover of £2.1m, EBITDA of £0.4m and had gross assets of £0.9m.
Links: Tribal Group plc website: www.tribalgroup.co.uk
This announcement has been prepared for and is addressed only to our shareholders as a whole and should not be relied on by any other party or for any other purpose. Tribal, its directors, employees, agents or advisers do not accept or assume responsibility to any other person to whom this announcement is shown or into whose hands it may come and any such responsibility or liability is expressly disclaimed.
This announcement may contain forward-looking statements. Any forward-looking statement has been made by the directors in good faith based on the information available to them up to the time of approval of this announcement and should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying such forward-looking information. To the extent that this announcement contains any statement dealing with any time after the date of its preparation, such statement is merely predictive and speculative as it relates to events and circumstances which are yet to occur and therefore the facts stated and views expressed may change. Tribal undertakes no obligation to update these forward-looking statements.