Tribal Grp. Regulatory News (TRB)

Tribal Group plc

Acquisition of Crimson Consultants

Strategically important transaction; strengthens Tribal's technology portfolio

Tribal Group plc, ("Tribal", the "Company" or the "Group") a leading provider of software and services to the international education management market, has acquired Crimson Consultants Holdings Limited ("Crimson"), the UK's market-leading provider of customer relationship management ('CRM') based solutions to the education market, for a total initial consideration of £6m ("the Acquisition") with a further £4m contingent consideration based on meeting an annual recurring revenue target. The Acquisition will be financed through existing cash resources.

Transaction summary

Tribal is pleased to announce this strategically important acquisition. A summary of the highlights includes:

- Crimson's technology provides valuable, additional functionality to Tribal Edge, Tribal's cloud-based, next generation Student Information System (SIS). It will accelerate its speed to market and reduces Tribal's requirement to develop this functionality.

- Crimson brings with it a broad existing customer base and strong relationships with universities and Further Education colleges, presenting compelling new cross-selling opportunities

- The Acquisition will be earnings accretive in the medium term as Tribal is reinvesting in Crimson to drive increased revenue in markets in the near term.

- For the year ended 31 December 2018, Crimson had revenues of £3.0m, operating profits (adjusted EBITDA) of £0.6m and net assets of approximately £0.3m 

- The contingent consideration is based on the Directors of Crimson meeting challenging Annual Recurring Revenue ("ARR") growth targets

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 our key goals of:

- delivering a cloud-based Student Information System (Tribal Edge);

- increasing Annual Recurring Revenue,

- growing market share; and,

- driving improved margin.

Crimson's market-leading CRM solutions support the marketing to and recruitment of students, as well as the management of alumni and fundraising.

The combination of both Tribal's and Crimson's technology creates a broader and richer product portfolio, and a more valuable and compelling customer proposition. Once integrated together, educational institutions will be able to manage the end-to-end student lifecycle from initial interest to beyond graduation through Tribal.

Crimson has an established, growing and complementary customer base. With Crimson's range of products integrated with our current systems we will be able to immediately take this new functionality to our other customers in both Higher and Further Education, helping us to grow our share of wallet in these accounts, as well as penetrating into competitor accounts.

We believe this is an international growth opportunity that - with our combined resources - we are very well placed to capitalise upon. This successful execution of our sales strategy will lead to increased revenue without the need to increase costs, improving our overall margin.

Like Tribal Edge, Crimson's solutions are cloud-based, with a strong ARR. One of Tribal's goals is to improve its revenue mix with a higher percentage of ARR and this acquisition gives us the opportunity to drive sales and growth in this area.

Consideration

The initial consideration for the acquisition is £6m, with further contingent consideration of £4m payable in two equal instalments at the end of years 1 and 2 respectively. The contingent consideration is based on meeting challenging Annual Recurring Revenue (ARR) growth targets.

Background to Crimson Consultants

Having worked in education for over 10 years, Crimson have successfully developed a full range of solutions that utilise the CRM capabilities of Microsoft Dynamics 365 to create a cloud-based, education-ready "student relationship management" solution. Crimson provides these to many of the leading universities and colleges in the UK, enabling them to achieve their goals of increasing student recruitment and driving improved student experience. Customers include the University of Cardiff, the University of Aberdeen, Durham University and Leicester College.

Crimson is a privately held company based in Swansea, incorporated in 2005. They are led by an experienced management team: Gary Williams, Operations Director; John Drew, Commercial Director; and Lee Parton, Technical Director; each with over 20 years' experience in the sector. The three directors have joined Tribal and will move to Tribal service contracts from the date of acquisition.

Mark Pickett, Tribal's Chief Executive Officer, commented: "The acquisition of Crimson provides our current customers with complementary functionality and delivers to our vision of empowering the end to end student lifecycle. We warmly welcome all customers who are new to Tribal and look forward to fully supporting them with their organisation's needs into the future, and also welcome the whole Crimson team to Tribal."

John Drew, Commercial Director of Crimson Consultants, commented: "We are delighted to have completed the move to Tribal and see this as the next step in the development of our business. We already offer solutions that integrate with Tribal's current systems, including SITS:Vision and ebs. Now with Tribal's broader capability and wider market reach, we will be able to accelerate and expand what we can offer to the market and will be able to continue with our rapid growth. It is great to have found a company with similar values and approach, and like us, a focus on the education market."

- Ends -

For further information please contact:

Tribal Group plc Tel: 0117 313 6371

Richard Last, Executive Chairman

Mark Pickett, Chief Executive Officer

Paul Simpson, Acting Chief Financial Officer

Investec Bank plc Tel: 020 7597 5970

Sara Hale

Andrew Pinder

William Godfrey

Neil Coleman

N+1 Singer Capital Markets Limited Tel: 0207 496 3000

Shaun Dobson

Tulchan Communications LLP Tel: 0207 353 4200

James Macey White

David Ison

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.

About Crimson Consultants Holdings Limited

Crimson Consultants Holdings Limited is a consultancy and development company which specialises in assisting education organisations implement a customer engagement strategy on Microsoft Dynamics 365 to achieve their goals of improving student recruitment and better supporting students once attending the institution.