Tribal Grp. Regulatory News (TRB)

NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES OF AMERICA, AUSTRALIA, CANADA, JAPAN, NEW ZEALAND AND THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH IT WOULD BE UNLAWFUL TO DO SO ("EXCLUDED TERRITORIES"). PLEASE SEE THE IMPORTANT NOTICE AT THE END OF THIS ANNOUNCEMENT

THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND DOES NOT CONSTITUTE A PROSPECTUS OR PROSPECTUS EQUIVALENT DOCUMENT. NOTHING HEREIN SHALL CONSTITUTE AN OFFERING OF NEW SHARES. NOTHING IN THIS ANNOUNCEMENT SHOULD BE INTERPRETED AS A TERM OR CONDITION OF THE RIGHTS ISSUE. ANY DECISION TO PURCHASE, SUBSCRIBE FOR, OTHERWISE ACQUIRE, SELL OR OTHERWISE DISPOSE OF ANY NIL PAID RIGHTS, FULLY PAID RIGHTS OR NEW SHARES MUST BE MADE ONLY ON THE BASIS OF THE INFORMATION CONTAINED IN AND INCORPORATED BY REFERENCE INTO THE PROSPECTUS ONCE PUBLISHED. COPIES OF THE PROSPECTUS WILL, FOLLOWING PUBLICATION, BE AVAILABLE FROM THE REGISTERED OFFICE OF TRIBAL GROUP PLC AND ON ITS WEBSITE AT WWW.TRIBALGROUP.COM.

Tribal Group plc

("Tribal" or the "Group")

Proposed 1 for 1 Rights Issue at 22 pence per share to raise approximately £21 million

Proposed Subscriptions

Proposed Share Matching Plan

Proposed Delisting and AIM Admission

Further to the announcements on 14 December 2015, 1 March 2016 and 9 March 2016, the Board of Tribal announces a fully underwritten Rights Issue to raise gross proceeds of approximately £21 million to reduce the Group's net debt. Tribal's full year results for the year ended 31 December 2015 have also been released today in a separate announcement.

Highlights

• 1 for 1 Rights Issue of 94,849,241 Rights Issue Shares at 22 pence per share to raise £20.87 million (gross)

· This follows the announcement on 1 March 2016 of the disposal of the Synergy business for £20.25 million. Together the proceeds of the Rights Issue and the disposal of the Synergy business will be approximately £41.12 million, which after costs will be used to reduce the Group's net debt

· The Rights Issue, which is subject to Shareholder approval, is fully underwritten by Investec Bank plc, which is also acting as Sponsor

· The Rights Issue and Disposal are critical steps in reducing Tribal's indebtedness to ensure the Group satisfies the next banking covenant net debt / EBITDA test on 30 June 2016

· Proposed Subscriptions by Richard Last, Ian Bowles and Roger McDowell (the Company's new Chairman, Chief Executive and Senior Independent Director, respectively) and a proposed Share Matching Plan to be entered into between the Company and Mr Last and Mr McDowell

· The Rights Issue Price represents a 32.7 per cent. discount to the theoretical ex-rights price of an Existing Share, when calculated by reference to the closing middle-market price of 43.375 pence per Existing Share on 15 March 2016 (being the last business day prior to the date of this announcement) and not taking account of Subscription Shares or Share Matching Plan Shares

· Tribal has received irrevocable undertakings from Shareholders holding in total 41.4 per cent. of Tribal's issued share capital, to vote in favour of all Resolutions at the General Meeting and to subscribe for, in total, 23,547,481 New Ordinary Shares under the Rights Issue

· The Company also announces the timetable for the proposed Delisting and Admission of its shares to AIM. The last day of dealings in Shares on the Main Market is expected to be on 29 April 2016 and AIM Admission is expected to take place on 3 May 2016. The Board believes that AIM has the benefit of lower costs and simpler administration and regulatory requirements more appropriate to a company of Tribal's size, which will help the implementation of Tribal's plans for the next stage of growth

· Full year results released today are in line with revised expectations in accordance with the 14 December 2015 and the 9 March 2016 statements. The Board expects an improvement in the Group's underlying profitability during the 2016 financial year compared to 2015, and expects the Group's overall results for the 2016 financial year to be weighted strongly towards the second half of the year

Ian Bowles, Chief Executive of Tribal, said:

"Tribal's recent progress has been restricted by its high levels of debt. As I commented at the time of the Synergy disposal earlier this month, the proceeds of the Disposal and Rights Issue will restore the Group's balance sheet and enable the management team to take the business forward in its domestic and international markets.

"The Board believes that the Group is well positioned to participate in continuing international demand for student management systems and upgrades, and the Group has secured a number of software and service customer wins in the early part of the current year."

Documentation

· The Prospectus containing full details of the Rights Issue and the notice of general meeting to consider the Resolutions to approve the Synergy Disposal, Rights Issue, Subscriptions, Share Matching Plan and Delisting and AIM Admission is expected to be posted to Shareholders (other than Shareholders listed in or with a registered address in an Excluded Territory) and made available on www.tribalgroup.com shortly

· The Prospectus will be submitted to the National Storage Mechanism and will be available for inspection at www.morningstar.co.uk/uk/nsm shortly

Indicative abridged timetable

2016

ENDS

Enquiries:

Tribal Group plc Tel: 0117 311 5293

Ian Bowles, Chief ExecutiveSteve Breach, Group Finance Director

Investec Bank plc Tel 0207 597 4000

Rowena Murray

Sara Hale

Weber Shandwick Financial Tel: 020 7067 0700 

Nick Oborne

Tom Jenkins

IMPORTANT NOTICE

This announcement has been issued by and is the sole responsibility of Tribal. The information contained in this announcement is for background purposes only and does not purport to be full or complete. No reliance may or should be placed by any person for any purpose whatsoever on the information contained in this announcement or on its accuracy or completeness. The information in this announcement is subject to change.

This announcement is not a prospectus but an advertisement and investors should not acquire any Nil Paid Rights, Fully Paid Rights or New Shares referred to in this announcement except on the basis of the information contained in the Prospectus to be published by Tribal in connection with the Rights Issue. The information contained in this announcement is for background purposes only and does not purport to be full or complete. The information in this announcement is subject to change.

A copy of the Prospectus will, following publication, be available from the registered office of Tribal and on Tribal's website at www.tribalgroup.com. The Prospectus is not, subject to certain exceptions, available (through the website or otherwise) to Shareholders in the United States or any other Excluded Territory. Neither the content of Tribal's website nor any website accessible by hyperlinks on Tribal's website is incorporated in, or forms part of, this announcement. The Prospectus will provide further details of the New Shares, the Nil Paid Rights and the Fully Paid Rights being offered pursuant to the Rights Issue.

This announcement does not contain or constitute an offer to sell or the solicitation of an offer to purchase securities to any person with a registered address in, or who is resident in the United States or in any other Excluded Territory or in any jurisdiction in which such an offer or solicitation is unlawful. None of the securities referred to herein have been or will be registered under the relevant laws of any state, province or territory of the United States or any Excluded Territory. Subject to certain limited exceptions, none of these materials will be released, published, distributed or forwarded in or into the United States or any Excluded Territory.

This announcement does not contain or constitute an offer for sale or the solicitation of an offer to purchase securities in the United States. The securities referred to herein have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act") or with any securities regulatory authority of any state or other jurisdiction of the United States, and may not be offered or sold in the United States absent registration under the Securities Act or an available exemption from, or transaction not subject to, the registration requirements of the Securities Act. There will be no public offer of the securities in the United States. None of the New Shares, the Nil Paid Rights, the Fully Paid Rights, the PAL or the Form of Proxy, this announcement or any other document connected with the Rights Issue has been or will be approved or disapproved by the United States Securities and Exchange Commission or by the securities commissions of any state or other jurisdiction of the United States or any other regulatory authority, and none of the foregoing authorities or any securities commission has passed upon or endorsed the merits of the offering of the New Shares, the Nil Paid Rights, the Fully Paid Rights, the PAL, the Form of Proxy or the accuracy or adequacy of this announcement or any other document connected with the Rights Issue. Any representation to the contrary is a criminal offence in the United States.

This announcement is for information purposes only and is not intended to and does not constitute or form part of any offer or invitation to purchase or subscribe for, or any solicitation to purchase or subscribe for, Nil Paid Rights, Fully Paid Rights or New Shares or to take up any entitlements to Nil Paid Rights in any jurisdiction. No offer or invitation to purchase or subscribe for, or any solicitation to purchase or subscribe for, Nil Paid Rights, Fully Paid Rights or New Shares or to take up any entitlements to Nil Paid Rights will be made in any jurisdiction in which such an offer or solicitation is unlawful. The information contained in this announcement is not for release, publication or distribution to persons in the United States or any other Excluded Territory, and should not be distributed, forwarded to or transmitted in or into any jurisdiction, where to do so might constitute a violation of local securities laws or regulations.

The distribution of this announcement into jurisdictions other than the United Kingdom may be restricted by law, and, therefore, persons into whose possession this announcement comes should inform themselves about and observe any such restrictions. Any failure to comply with any such restrictions may constitute a violation of the securities laws of such jurisdiction. In particular, subject to certain exceptions, this announcement, the Prospectus (once published) and the Provisional Allotment Letters (once printed) should not be distributed, forwarded to or transmitted in or into the United States or any other Excluded Territory.

Recipients of this announcement and/ or the Prospectus should conduct their own investigation, evaluation and analysis of the business, data and property described in this announcement and/or if and when published the Prospectus. This announcement does not constitute a recommendation concerning any investor's options with respect to the Rights Issue. The price and value of securities can go down as well as up. Past performance is not a guide to future performance. The contents of this announcement are not to be construed as legal, business, financial or tax advice. Each Shareholder or prospective investor should consult his, her or its own legal adviser, business adviser, financial adviser or tax adviser for legal, financial, business or tax advice.

Notice to all investors

Investec Bank plc ("Investec"), which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting for Tribal and is acting for no one else in connection with the Disposal, Rights Issue, Subscriptions, Share Matching Plan and Delisting and AIM Admission, and will not regard any other person as a client in relation to the Disposal, Rights Issue, Subscriptions, Share Matching Plan and Delisting and AIM Admission and will not be responsible to anyone other than Tribal for providing the protections afforded to its clients, nor for providing advice in connection with the Disposal, Rights Issue, Subscriptions, Share Matching Plan and Delisting and AIM Admission or any other matter, transaction or arrangement referred to herein.

Apart from the responsibilities and liabilities, if any, which may be imposed on Investec in its capacity as Sponsor by the FSMA, Investec does not accept any responsibility or liability whatsoever and make no representation or warranty, express or implied, for the contents of this announcement, including its accuracy, fairness, sufficiency, completeness or verification or for any other statement made or purported to be made by it, or on its behalf, in connection with Tribal or the Nil Paid Rights, Fully Paid Rights, Provisional Allotment Letters, New Shares or the Rights Issue and nothing in this announcement is, or shall be relied upon as, a promise or representation in this respect, whether as to the past or future. Investec accordingly disclaims to the fullest extent permitted by law all and any responsibility and liability whether arising in tort, contract or otherwise (save as referred to above) which it might otherwise have in respect of this announcement or any such statement. Investec, and/or its affiliates provides various investment banking, commercial banking and financial advisory services from time to time to Tribal.

No person has been authorised to give any information or to make any representations other than those contained in this announcement and the Prospectus and, if given or made, such information or representations must not be relied on as having been authorised by Tribal or Investec. Subject to the Listing Rules, the Prospectus Rules and the Disclosure and Transparency Rules of the Financial Conduct Authority, the issue of this announcement shall not, in any circumstances, create any implication that there has been no change in the affairs of Tribal since the date of this announcement or that the information in it is correct as at any subsequent date.

Investec and its respective affiliates, acting as investors for their own accounts, may, in accordance with applicable legal and regulatory provisions, engage in transactions in relation to the Nil Paid Rights, the Fully Paid Rights, the New Shares and/or related instruments for their own account for the purpose of hedging their underwriting exposure or otherwise. Accordingly, references in the Prospectus to the Nil Paid Rights, Fully Paid Rights or New Shares being issued, offered, subscribed, acquired, placed or otherwise dealt in should be read as including any issue or offer to, or subscription, acquisition, placing or dealing by, Investec and any of its affiliates acting as investors for their own accounts. Except as required by applicable law or regulation, Investec does not propose to make any public disclosure in relation to such transactions.

Cautionary statement regarding forward-looking statements

This announcement may contain certain forward-looking statements, beliefs or opinions, with respect to the financial condition, results of operations and business of Tribal and the Group.

These statements, which contain the words "anticipate", "believe", "intend", "estimate", "expect", "may", "will", "seek", "continue", "aim", "target", "projected", "plan", "goal," "achieve" and words of similar meaning, reflect the Company's beliefs and expectations and are based on numerous assumptions regarding the Company's present and future business strategies and the environment the Company and the Group will operate in and are subject to risks and uncertainties that may cause actual results to differ materially. No representation is made that any of these statements or forecasts will come to pass or that any forecast results will be achieved. Forward-looking statements involve inherent known and unknown risks, uncertainties and contingencies because they relate to events and depend on circumstances that may or may not occur in the future and may cause the actual results, performance or achievements of the Company or the Group to be materially different from those expressed or implied by such forward looking statements. Many of these risks and uncertainties relate to factors that are beyond the Company's or the Group's ability to control or estimate precisely, such as increased competition, the loss of or damage to one or more key customer relationships, changes to customer ordering patterns, delays in obtaining customer approvals for engineering or price level changes, the failure of one or more key suppliers, the outcome of business or industry restructuring, the outcome of any litigation, changes in economic conditions, currency fluctuations, changes in interest and tax rates, changes in raw material or energy market prices, changes in laws, regulations or regulatory policies, developments in legal or public policy doctrines, technological developments, the failure to retain key management, or the key timing and success of future acquisition opportunities or major investment projects. Past performance of the Company cannot be relied on as a guide to future performance. As a result, you are cautioned not to place undue reliance on such forward-looking statements. The list above is not exhaustive and there are other factors that may cause the Company's or the Group's actual results to differ materially from the forward-looking statements contained in this announcement. Forward-looking statements speak only as of their date and the Company, its parent and subsidiary undertakings, the subsidiary undertakings of such parent undertakings, Investec and any of such persons' respective directors, officers, employees, agents, affiliates or advisers expressly disclaim any obligation to supplement, amend, update or revise any of the forward-looking statements made herein, except where it would be required to do so under applicable law.

You are advised to read this announcement and the Prospectus (once published) in their entirety for a further discussion of the factors that could affect Tribal's future performance. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements in this announcement may not occur.

No statement in this announcement is intended as a profit forecast or a profit estimate and no statement in this announcement should be interpreted to mean that earnings per share of Tribal for the current or future financial years would necessarily match or exceed the historical published earnings per share of Tribal.

Tribal Group plc

("Tribal", the "Company" or the "Group")

Proposed 1 for 1 Rights Issue at 22 pence per share to raise approximately £21 million

Proposed Subscriptions

Proposed Share Matching Plan

Proposed Delisting and AIM Admission

1. Introduction

The Board gave the market an update on the Company's current trading and financial position on 14 December 2015. At that time, the Company also announced the Board's intention to carry out a Rights Issue and, separately, to delist the Company's Shares from the Official List and seek admission of the Shares to trading on AIM.

Tribal further announced on 1 March 2016 that it had agreed to dispose of its Synergy business to Servelec Corelogic Limited, part of the Servelec group, for total consideration of £20.25 million in cash payable on completion. Subject to Shareholder approval, completion of the Disposal is expected to take place shortly after the conclusion of the General Meeting on 1 April 2016.

Tribal gave the market a further update on 9 March 2016 on trading and contract progress. The Board announced then that revenues and profit of approximately £2 million were being deferred and writedowns of £8.0 million of product development investment had been made. In addition, the Group announced it would be recognising goodwill impairment charges of £38.8 million. The Group has announced today adjusted EBITDA of £8.2 million for the 2015 financial year.

In brief, Tribal is proposing to raise gross proceeds of £20.87 million (approximately £19.2 million net of expenses) by way of the Rights Issue on the basis of 1 Rights Issue Share for every 1 Existing Share at a price of 22 pence per Rights Issue Share. The Rights Issue Shares are expected to be admitted to listing on the Official List and to trading on the Main Market on 19 April 2016.

In addition, Tribal's proposals include a proposed CEO Subscription by Ian Bowles (the Company's new Chief Executive) to raise £250,000, a proposed NED Subscription by Richard Last and Roger McDowell (the Company's new Chairman and Senior Independent Director, respectively) to raise a total of £1,000,000 and a proposed Share Matching Plan to be entered into between the Company and Richard Last and Roger McDowell. Subject to the passing of the CEO Subscription Resolution, the NED Subscription Resolution and the Share Matching Plan Resolution, the Subscription Shares are expected to be admitted to listing on the Official List and admitted to trading on the Main Market on 19 April 2016.

The last day of dealings in Shares on the Main Market is expected to be 29 April 2016 and AIM Admission is expected to take place on 3 May 2016. Delisting and AIM Admission are conditional on the passing of the Rights Issue Resolutions as well as on the AIM Resolution.

2 Background and reasons for the Rights Issue

2.1 Tribal's business

The Tribal Group provides software and services that support principally the management of universities, colleges and schools. Tribal mainly operates in the UK, Asia Pacific (Australia, New Zealand and South East Asia) and other countries in the English-speaking world. It works with managers, administrators and senior academic staff to enhance the quality of education and experience their institutions offer to students.

For the year ended 31 December 2015, the Group's software-related activities accounted for

58% of the Group's revenues and the Group's service activities accounted for 42%.

Tribal is a leading provider of student management systems to universities, colleges and schools in its key markets of the UK, Australia and New Zealand. Tribal serves an excellent installed customer base including some of the world's leading universities, colleges and schools, from which recurring annual support revenues in excess of £30m were generated during the year ended 31 December 2015.

Tribal's software business at present typically delivers through a traditional software revenue model. Customers are provided with a perpetual licence to the software, and implementation services are then provided to enable customers to configure the software to suit their requirements. Following installation, support and maintenance services are provided to assist customers in their ongoing use of the software, and to keep software installed on customer sites up to date.

The Group's services focus on enabling managers of universities, colleges and schools to improve the academic and operational performance of their institutions. These services include benchmarking and analytics services, advisory services and specialist support services to enhance the delivery of education and training. The Group's quality assurance solutions are used primarily by government agencies to review, measure and monitor the quality of education provision and associated activities by universities, colleges and schools, and where appropriate to inform and support improvement programmes in these settings.

Tribal intends to continue to invest in the development of its software portfolio with the aim of extending and innovating its existing product portfolio, including by enhancing its capabilities to deploy systems in the Cloud and to offer SaaS models.

Tribal also intends to streamline and simplify its operational structure, to enable the Group to rebuild sales momentum and improve efficiency. The Board recognises the need to reinvigorate the sales team and this will be a priority of the newly appointed Chief Executive who has, among other things, a sales and marketing background.

2.2 Reasons for the Rights Issue

Need to reduce indebtedness

2015 was a challenging year for Tribal, as set out in previous announcements made on 19 October 2015 and 14 December 2015. As a result, in early December 2015 the Board took the decision that it would be prudent to approach its lending banks to request a waiver of the covenants in the facility for the period ended 31 December 2015. The lending banks agreed to this request, which was announced by the Company on 21 December 2015.

Given the increased volatility of Tribal's profitability and cashflow resulting from its increased exposure to larger contracts, together with tightened market conditions and the constraints of the financial covenant tests in the Group's Facility Agreement, the Board considers that it is appropriate to reduce the Group's net debt.

On 14 December 2015, the Company announced that it planned to undertake a rights issue of up to £35m and had entered into a standby underwriting agreement pursuant to which Investec Bank plc had agreed to underwrite £30 million of that planned rights issue.

If the lending banks under the Group's Facility Agreement had not waived the covenants in the facility for the period ended 31 December 2015, the Group would have breached the net debt to EBITDA covenant in the Facility Agreement. The net debt to EBITDA covenant is next tested for the year ending 30 June 2016 and every six months thereafter. There can be no guarantee that, without a significant reduction in the Group's level of net debt, the net debt to EBITDA covenant will not be breached at 30 June 2016, and there is no guarantee that the lending banks under the Facility Agreement would agree to a waiver or amendment of the covenants in future.

Notwithstanding the planned rights issue, the Board has continued to investigate alternative options for raising additional capital and/or improving the Group's financial position. As part of the investigation of alternative options, the Company considered the disposal of the Synergy business which had last year been identified by the Board as non-core to the Group, and subsequently entered into negotiations with Servelec.

Tribal has agreed to sell the business and assets comprising Synergy to Servelec for consideration of £20.25 million in cash payable on completion, expected to be shortly following approval of the Disposal Resolution at the General Meeting.

Size of Rights Issue

The Board considers that the net proceeds of the Disposal are a positive step in reducing the Group's net debt. However, it believes that it would be prudent and appropriate, given the volatility in sales and the need to restructure the business and reduce its underlying cost base, to reduce net debt still further.

Given the net proceeds of the Disposal and the financial profile of the Continuing Group, the Board has determined that the appropriate size of the Rights Issue is approximately £21 million. This is significantly less than the £35 million maximum rights issue amount announced in December 2015 and reduces the risk of dilution to Shareholders who do not take up their rights under the Rights Issue.

The net proceeds of the Disposal and the Rights Issue would be sufficient, in the view of the Board, to remove any material risk of a breach of covenants in the Facility Agreement.

Conditionality of the Disposal and the Rights Issue

The Board is of the view that it is in the best interests of the Company for the Disposal to take place regardless of whether the Rights Issue or AIM Admission takes place. Accordingly, the Disposal is not conditional on the approval of the Rights Issue Resolutions or the AIM Resolution.

However, if the Disposal does not take place then, even if the Company received the net proceeds of the Rights Issue, the Board is of the view that the Company would have insufficient working capital. Accordingly, the Board does not consider it appropriate to proceed with the Rights Issue if the Disposal does not take place, and in such circumstances the Board would reconsider its proposals to improve the Group's balance sheet position. Accordingly, the Rights Issue is conditional on approval of the Disposal Resolution and completion of the Disposal.

The Company cannot move to AIM unless it has sufficient working capital. Accordingly, the Delisting and AIM Admission are conditional upon approval of the Disposal Resolution and the Rights Issue Resolutions being passed, and upon completion of the Disposal and the Rights Issue.

None of Delisting, AIM Admission, the Subscriptions or the Share Matching Plan are conditions to either the Disposal or the Rights Issue. Neither the Subscriptions nor the Share Matching Plan are a condition to the Delisting or AIM Admission.

Further steps in the event that the Disposal and/or Rights Issue does not take place

As referred to above, the Board considers that the Group needs the net proceeds of both the Disposal and the Rights Issue in order that it has sufficient working capital. In the event that the Disposal and/or the Rights Issue does not take place, the Board considers that there is a material risk that the Group will breach the net debt to EBITDA covenant in the Group's Facility Agreement at 30 June 2016.

In the event that the covenants were breached the banks would be entitled to demand repayment in full of the Facility Agreement. Given the work the Board has undertaken to investigate the different options for reducing the Group's net debt and/or amending the Group's Facility Agreement, the Board is of the view that these steps will either not be possible or, if possible, would be on terms which do not represent fair value for the Company and its Shareholders. In particular:

· The Company would need to commence attempts to negotiate amendments to the Facility Agreement. There is no guarantee that any such negotiation would be possible before the next net debt to EBITDA covenant test date of 30 June 2016. If it is possible, it is likely that the commercial terms of such debt would be changed in a manner which would be unattractive for the Company.

· Similarly, the Board is of the view that borrowing money from other sources (to replace the Facility Agreement) would be difficult given the Company's financial position and trading history. Accordingly, there is no guarantee that any new sources of debt finance would be available to the Company or, if available, would be on terms which are as favourable as the existing Facility Agreement.

· The Company would need to investigate further the possibility of disposing of other assets. The sale of assets at a time which is not of the Group's choosing might result in a failure to realise the full value of the assets, or might not be possible at all.

· The Board may need to consider the possibility of another type of equity issuance. Such equity issuance would be likely to be subject to Shareholder approval but, if approved, might result in a lower issue price than the Rights Issue and/or might be carried out on a non- pre-emptive basis, meaning that Shareholders who do not take up the rights or are not given the opportunity to participate suffer significant dilution to their stakes as a result.

· Finally, the Board might need to consider the possibility of marketing the entire Group for sale to a third party. The Board believes that undertaking a formal sale process would be likely to be perceived as a distressed sale and valuations would be depressed accordingly.

In the event that none of the above options is possible, the Group might be forced to cease trading, in which case Shareholders could lose their entire equity investment. Such cessation of trading could occur as early as the Group's results for the period ending 30 June 2016 are known, which might result in a breach of the net debt to EBITDA covenant set out in the Group's Facility Agreement which is tested based on the results for the period ending on that date.

In the meantime, the Board would be required to operate the business of the Group in such a manner as to reduce the risk of a breach of covenants in the future. The need to manage the Group's finances in compliance with the Group's Facility Agreement, given the volatility of results, would constrain the Group's ability to proceed confidently with its planned developments and efficiency improvements (as referred to above).

Certain of Tribal's customers have expressed concerns about the strength of the Group's financial position and the Board's view is that these concerns have impacted on the Group's sales and contributed to the loss of sales momentum.

Finally, perceptions about Tribal's financial position may contribute to an inability to retain and/or hire appropriately skilled and experienced management required to drive the business forwards.

3 Financial effects of the Rights Issue and use of proceeds

The Rights Issue is expected to raise £20.87 million in gross proceeds and approximately £19.2 million (net of expenses) for the Company.

The net proceeds will be applied to reduce the Group's net debt. The Company will continue to have the benefit of the full amount of the Revolving Credit Facility, in order to meet the future working capital needs of the business.

The Company's share capital is expected to increase by £4,742,462.05 and the share premium account will increase by £16,124,370.97.

4 Reasons for, and details of, the Subscriptions

4.1 Reasons for the CEO Subscription

Ian Bowles (the Company's new Chief Executive) was appointed to the Board on 17 February 2016.

On his appointment to the Board, Mr Bowles indicated his intention to invest in Shares of the Company to ensure that his interests were aligned with those of the Company and its Shareholders as a whole and to demonstrate his confidence in the future prospects of the Group.

Given the timing of his appointment and the presence of unpublished price sensitive information prior to the announcement of the Group's financial results released on the date of this Prospectus, Mr Bowles has not been permitted to buy Shares.

The Board considers that the Subscription is the most efficient way for Mr Bowles to acquire Shares in the Company and has permitted the Board to reduce the amount that the Company would otherwise seek to raise pursuant to the Rights Issue. Neither Mr Bowles nor any person deemed to be associated with him for the purposes of the Listing Rules has participated in the Board's consideration of the CEO Subscription. In addition, neither Mr Last nor Mr McDowell has participated in the Board's consideration of the CEO Subscription as the NED Subscription is to be made at the same price.

4.2 Details of the Subscription

The Company and Mr Bowles have entered into a CEO Subscription Agreement pursuant to which Mr Bowles will subscribe for a total of 1,136,363 Subscription Shares at the Subscription Price of 22 pence per Share. This would result in net proceeds of £250,000 for the Company (there being no expenses associated with the CEO Subscription).

Immediately following the CEO Subscription, assuming that Rights Issue completes and the Share Matching Plan is implemented, Mr Bowles will have an interest of 0.6 per cent. in the Enlarged Issued Share Capital of the Company. For the avoidance of doubt, the CEO Subscription will only take place if the Disposal and Rights Issue complete. Accordingly, there are no circumstances in which the CEO Subscription Shares will represent more than

0.6 per cent. of the issued share capital of the Company on issue.

It is anticipated that Mr Bowles will be granted additional options pursuant to the Company's LTIP, in line with the Company's adopted remuneration policy. Any options over Shares granted to Mr Bowles under the LTIP will be in addition to the CEO Subscription Shares. Given that such options will be granted under the existing LTIP which has previously been approved by Shareholders, such option grants are not conditional on the passing of the CEO Subscription Resolution and are not conditional on the CEO Subscription taking place.

The CEO Subscription is conditional upon:

(a) the passing of the CEO Subscription Resolution; and

(b) completion of the Disposal and the Rights Issue.

The Subscription Price (i.e. the price Mr Bowles will pay for each Subscription Share) is 22 pence per Share. This is the same as the Rights Issue Price, and represents a discount of

49.3 per cent. to the Closing Price per Share on 15 March 2016.

Subject to the passing of the CEO Subscription Resolution and completion of the Disposal and the Rights Issue, the CEO Subscription Shares will be issued on the date of Admission. Accordingly, the CEO Subscription Shares will not confer any entitlement to participate in the Rights Issue.

For the avoidance of doubt, none of the Disposal, the Rights Issue or the Delisting and AIM Admission is conditional on the CEO Subscription.

4.3 Use of proceeds of the CEO Subscription

The total amount to be raised through the CEO Subscription is £250,000. There are no expenses associated with the CEO Subscription.

The proceeds of the CEO Subscription will be used to repay amounts due under the Group's Facility Agreement.

4.4 Related party transaction

As Mr Bowles is a Director of the Company, the CEO Subscription constitutes a related party transaction for the purposes of the Listing Rules. Given the value of the CEO Subscription, it constitutes a smaller related party transaction for the purposes of the Listing Rules. Mr Bowles does not hold any Shares as at the time of this announcement, but, for the avoidance of doubt, he will not vote on the CEO Subscription Resolution and he has undertaken to take all reasonable steps to ensure that his associates will not vote on the CEO Subscription Resolution.

5. Reasons for, and details of, the NED Subscription

5.1 Reasons for the NED Subscription

Richard Last and Roger McDowell were appointed as Chairman and Senior Independent Director of the Company, respectively, on 16 November 2015. On his appointment to the Board, Mr Last and Mr McDowell each indicated his intention to invest in Shares of the Company to ensure that his interests were aligned with those of the Company and its Shareholders as a whole and to demonstrate his confidence in the future prospects of the Group.

Given the timing of their appointment and the presence of unpublished price sensitive information prior to the announcement of the Group's financial results released on the date of this Prospectus, they have not been permitted to buy Shares.

The Board considers that the NED Subscription is the most efficient way for Mr Last and Mr McDowell to acquire Shares in the Company and has permitted the Board to reduce the amount that the Company would otherwise seek to raise pursuant to the Rights Issue.

Neither Mr Last nor Mr McDowell nor any person deemed to be associated with either of them for the purposes of the Listing Rules has participated in the Board's consideration of the NED Subscription. In addition, Mr Bowles has not participated in the Board's consideration of the NED Subscription as the CEO Subscription is to be made at the same price.

5.2 Details of the NED Subscription

The Company and Mr Last and Mr McDowell have agreed that the Directors will subscribe for a total of 4,545,454 NED Subscription Shares at the Subscription Price of 22 pence per Share. This results in net proceeds of £1,000,000 for the Company (there being no expenses associated with the NED Subscription).

Immediately following the NED Subscription, assuming that Rights Issue completes and the Share Matching Plan is implemented, Mr Last and Mr McDowell will have the following interests in the Enlarged Issued Share Capital of the Company:

For the avoidance of doubt, the NED Subscription is conditional on the completion of the Disposal and the Rights Issue completing. Accordingly, there are no circumstances in which the NED Subscription Shares will represent more than 2.3 per cent. of the issued share capital of the Company on issue.

Mr Last and Mr McDowell will be granted additional options over Shares pursuant to the Share Matching Plan described further below. The Share Matching Plan Shares will be in addition to the NED Subscription Shares.

The NED Subscription is conditional upon:

(a) the passing of the NED Subscription Resolution;

(b) completion of the Disposal and the Rights Issue; and

(c) the approval of the Share Matching Plan Resolution.

The Subscription Price (i.e. the price each of Mr Last and Mr McDowell will pay for each Subscription Share) is 22 pence per Share. This is the same as the Rights Issue Price, and represents a discount of 49.3 per cent. to the Closing Price per Share on 15 March 2016.

Subject to the passing of the NED Subscription Resolution, completion of the Disposal and the Rights Issue and the approval of the Share Matching Plan Resolution, the NED Subscription Shares will be issued on the date of Admission. Accordingly, the NED Subscription Shares will not confer any entitlement to participate in the Rights Issue.

For the avoidance of doubt, none of the Disposal, the Rights Issue or the Delisting and AIM Admission is conditional on the NED Subscription. However, the Share Matching Plan is conditional on the NED Subscription.

5.3 Use of proceeds of the NED Subscription

The total amount to be raised through the NED Subscription is £1,000,000. There are no expenses associated with the NED Subscription. The proceeds of the NED Subscription will be used to repay amounts due under the Group's Facility Agreement.

5.4 Related party transaction

As each of Mr Last and Mr McDowell is a Director of the Company, the NED Subscription constitutes a related party transaction for the purposes of the Listing Rules. Given the value of the NED Subscription, it constitutes as a smaller related party transaction for the purposes of the Listing Rules. Neither Mr Last nor Mr McDowell holds any Shares as at the time of this announcement, but, for the avoidance of doubt, they will not vote on the NED Subscription Resolution and they have undertaken to take all reasonable steps to ensure that their associates will not vote on the NED Subscription Resolution.

6. Proposed Share Matching Plan

6.1 Background

During the process of appointing Mr Last and Mr McDowell, the Board discussed the remuneration and incentivisation of those Directors with a number of the Company's largest Shareholders. These Shareholders (who between them hold over 40 per cent. of the Company's Share capital) instigated these discussions and put forward proposals to the Board, encouraging the Board to propose an incentivisation arrangement for Mr Last and Mr McDowell on the basis of the Share Matching Plan, as well as the terms of the Subscriptions. The Board continued discussions with Shareholders at the time of the appointment of Mr Bowles, and in the lead up to the announcement of the Rights Issue, at which Shareholders have continued to advocate the putting in place of the Subscriptions (and the terms of the Subscriptions) and the Share Matching Plan.

6.2 Details of proposed Share Matching Plan

The Share Matching Plan shall be administered by the Board. The terms of the Share Matching Plan that are proposed are that, on the basis that Mr Last and Mr McDowell subscribe for their NED Subscription Shares, they will be offered rights to acquire additional Share Matching Plan Shares on the terms of the Share Matching Plan.

Pursuant to the Share Matching Plan, Mr Last and Mr McDowell will each be granted options over additional Share Matching Plan Shares. The exercise price of the option will be equal to the nominal value of the Shares, and Mr Last and Mr McDowell will be provided with a bonus which is sufficient to meet the exercise price payable on the exercise of the option (such that the options are effectively nil cost).

The number of Share Matching Plan Shares in respect of which options are granted will be such that, when taking into account the NED Subscription Shares held by them, each of Mr Last and Mr McDowell will hold 2 per cent. of the Enlarged Share Capital of the Company (taking into account the issue of the Share Matching Plan Shares). For the avoidance of doubt, the Share Matching Plan will not take place unless the Rights Issue completes and, accordingly, the Share Matching Plan Shares (together with the NED Subscription Shares) cannot exceed 2 per cent. of the issued share capital of the Company at the time of issue for each of Mr Last and Mr McDowell (i.e. 4 per cent. total). The Group has agreed that not more than 5 per cent. of the issued share capital of the Company will be issued to Directors pursuant to incentive plans (excluding .

The Share Matching Plan is not subject to any performance conditions. The Matching Share Options will vest over three years such that Mr Last and Mr McDowell will have the following Matching Share Options under the Share Matching Plan:

The Matching Share Options will not vest unless the relevant Director remains a Director and has not given notice to terminate his directorship on the applicable vesting date.

The Matching Share Options may be exercised at any time during the period of two years from the applicable vesting date but the Matching Shares acquired may not be sold during that period. Accordingly, Matching Shares subject to the Matching Share Option vesting on

1 January 2017 may not be sold prior to 1 January 2019.

In the event that Mr Last's or Mr McDowell's position as Director is terminated (other than by reason of fraud, criminal misconduct or a prohibition on acting as a Director) then all unvested Matching Share Options vest on the date of termination and along with any vested Matching Share Options may be exercised within a period of six months from the date of cessation, whereupon to the extent unexercised they will lapse. In such circumstances there is no prohibition on the relevant Director from selling his Share Matching Plan Shares once acquired. Where the office is terminated as a result of fraud, criminal misconduct or a prohibition on the individual acting as a Director, the Matching Share Options shall lapse and may not be exercised.

In the event of a change of control of the Company, the Matching Share Options may be exercised in full during the period of six months following the change of control, or such period as the Remuneration Committee may determine, whereupon to the extent unexercised they will lapse.

The Matching Share Options will be satisfied by the issue of new Share Matching Plan Shares. Shares issued to satisfy rights under the Share Matching Plan will count towards the dilution limits for the purpose of the Share Schemes.

In the event of a capitalisation, rights issue or other change to the share capital of the Company, the Board may adjust the number of Share Matching Plan Shares under the Matching Share Option and the exercise price as it deems appropriate.

As a condition of participation in the Share Matching Plan, the participants will be required to enter into such arrangements as the Board require to enable the Company to discharge its obligations in relation to the income tax and employee's national insurance contribution liability arising an exercise or other dealing in the Matching Share Option or Share Matching Plan Shares.

The Share Matching Plan is conditional upon:

(a) the passing of the Share Matching Plan Resolution; and

(b) the passing of the NED Subscription Resolution.

However, none of the Disposal, the Rights Issue or Delisting or AIM Admission is conditional on approval of the Share Matching Plan.

The terms of the Share Matching Plan, including the proposed participants, the limitations on the number of Shares subject to the Share Matching Plan, Mr Last and Mr McDowell's maximum entitlement cannot be altered to their advantage without the further approval of Shareholders (other than to the extent such changes are minor and administrative in nature or reflect a change in the tax, legal or regulatory position).

Rights under the Share Matching Plan are not pensionable.

The Share Matching Plan is a related party transaction.

6.3 Consideration by the Board/related party transaction

As Mr Last and Mr McDowell are Directors of the Company, the Share Matching Plan constitutes a related party transaction for the purposes of the Listing Rules. Given the value of the Share Matching Plan, it constitutes a smaller related party transaction for the purposes of the Listing Rules.

Because of their conflict of interest, Mr Last and Mr McDowell have not participated in the Board's consideration of the Share Matching Plan. In addition, given that the obligation of Mr Last and Mr McDowell to participate in the NED Subscription is conditional on the adoption of the Share Matching Plan, Mr Bowles (who also benefits from the CEO Subscription) has not participated in the Board's consideration of the Share Matching Plan. None of Mr Last, Mr Bowles or Mr McDowell, nor any person deemed to be associated with them for the purposes of the Listing Rules, has participated in the Board's consideration of the Share Matching Plan. In addition, none of Mr Last, Mr Bowles nor Mr McDowell holds Shares as at the time of the this announcement, but, for the avoidance of doubt, none will vote on the Share Matching Plan Resolution and each of them has undertaken to take all reasonable steps to ensure that their respective associates will not vote on the Share Matching Plan Resolution.

The Board notes that the Subscriptions and Share Matching Plan represents a significant change to the corporate governance and incentivisation structure of the Group historically.

In particular, in accordance with the provisions of the UK Corporate Governance Code, the Group has not historically granted options or invited non-executive Directors to participate in the Group's incentive schemes.

Further, the Share Matching Plan is not permitted under the terms of the remuneration policy previously approved by Shareholders, which also prohibits the granting of options to non- executive Directors.

Finally, the Group has limited the number of Shares to be issued pursuant to incentive schemes to 10 per cent. of the Company's issued share capital, of which the Group has agreed not more than 5 per cent. of the Company's share capital will be issued to Directors. At the date of this announcement, a total of 2,049,765 Shares were subject to the Company's existing Share Schemes, representing 2.16 per cent. of the Company's current issued share capital. Given the number of Shares subject to the existing Share Schemes, when taking into account the Share Matching Plan Option Shares, a total of 5,455,763 Shares will be subject to Share Schemes, representing 2.74 per cent. of the Company's Enlarged Issued Share Capital (including, for this purpose only, the Share Matching Plan Shares).

Notwithstanding these changes to the previous corporate governance and incentivisation structure of the Group, after careful consideration the Board has concluded that the Share Matching Plan is in the best interests of the Company and its Shareholders as a whole. In coming to its decision the Board has taking into account the following factors (amongst others):

• the need for the Company to attract, retain and incentivise Directors with the necessary skills and experience to join the Board, particularly in the context of the work required to turn around the fortunes of the Company following the disappointing results of the 2015 financial year;

• the anticipation that the roles of the Chairman and Senior Independent Director are likely to be more hands-on (and take up more of their time) than might be the case in other listed companies, given the work required;

• the Board's determination that the senior management of the Company should be strongly focussed on delivering Shareholder value with interests aligned with those of Shareholders;

• the contribution already made by Mr Last, Mr Bowles and Mr McDowell since their appointment.

The Board has paid particular attention to the views of those Shareholders who originally proposed the broad outlines of the Subscription and Share Matching Plan and who, more recently, have confirmed their continued support and encouraged the adoption of the Share Matching Plan.

Accordingly, the Board is of the view that the Share Matching Plan is appropriate to ensure that Mr Last and Mr McDowell are incentivised.

7. Reasons for the Delisting and AIM Admission

The Board believes that given the size of the Company, AIM is a more appropriate market on which to develop. AIM has the benefit of lower transactions costs, lower annual costs, simpler administration and regulatory requirements more appropriate to a company of Tribal's size, which the Board believes will help the implementation of Tribal's plans for the next stage of growth.

The Delisting and Admission will offer greater flexibility to Tribal, particularly with regard to corporate transactions, including acquisitions and/or disposals which are subject to more onerous requirements under the Listing Rules relating to the requirement to obtain shareholder approval and the content of shareholder circulars. If AIM Admission occurs, the Company would have greater freedom to acquire or dispose of assets without the cost and administrative difficulties of preparing a circular complying with the Listing Rules and obtaining shareholder approval.

AIM Admission should therefore enable the Group to execute transactions more quickly and cost effectively when compared to the requirements of the Official List.

For example, under the AIM Rules, prior Shareholder approval is required only for transactions with a much larger size threshold than applied to companies whose shares are listed on the premium segment of the Official List. These larger transactions include reverse takeover, and disposals resulting in a fundamental change of business (exceeding 75% in various size tests). Under the Listing Rules a broader range of transactions require shareholder approval including most related party transactions and acquisitions and disposals above a 25% size threshold on various tests.

The AIM Rules also contain less stringent obligations on buy backs, and there is no general requirement for a prospectus to issue further shares to institutional investors (provided they are of the same class). There are also no restrictions on the level of any discount for future offers of securities.

Other than the Disposal or the Rights Issue, the Group has no immediate plans to undertake any such transaction.

Given the Group's size and strategic intent, the Board believes that the move is likely to be of significant benefit to the Company going forward and enable Tribal to deliver enhanced value to Shareholders.

None of the other proposals in the Prospectus are conditional on the Delisting and AIM Admission. Accordingly, even if the AIM Resolution is not passed the other proposals would proceed (subject to Shareholder approval).

However, the Delisting and AIM Admission is conditional on completion of the Disposal and the Rights Issue. In the event that that the Disposal and Rights Issue do not complete, or the Company does not satisfy requirement for AIM Admission, the Company's Shares will remain admitted to the Official List and traded on the main market of the London Stock Exchange. The Company will therefore be subject to the higher costs and greater regulatory burden associated with a listing on the Official List. While the Board believes that the Company would be able to continue to meet its obligations as a premium listed company on the Official List, the Board does not consider a Main Market listing to be the most appropriate option for the Company or to deliver the best value for Shareholders.

8. Current trading and prospects

The Company expects the wider market backdrop for education management systems and services to be stable in 2016.

While the timing of order completions and the achievement of major customer contract milestones remains difficult to predict, the Board believes that the Group is well positioned to participate in continuing international demand for student management systems and upgrades. The Group has secured a number of software and service contract wins in the early part of the current year, including a significant system upgrade programme with the University of Bristol. Discussions in relation to the TAFE Queensland contract are ongoing and it is uncertain as to whether any amounts will be received in respect of past or future work. No such revenues or cash receipts have been assumed to be received by the Group in its forecasts.

During the 2016 financial year the Board intends to focus on reducing the Group's cost base and improving operational efficiency. While delivering long term benefits for the Group, actions to change its cost base are likely to result in restructuring costs during the year. Given the factors described above and after allowing for the effects of the disposal of Synergy, the Board now expects an improvement in the Group's underlying profitability during the 2016 financial year compared to 2015, and expects the Group's overall results for the 2016 financial year to be weighted strongly towards the second half of the year.

9. Dividends and dividend policy

The New Shares, when issued and fully paid, will be identical to and rank in full for all dividends or other distributions declared, made or paid after Admission and in all respects will rank pari passu with the Existing Shares.

The Group has historically operated a progressive dividend policy. The Directors have decided that it is not appropriate, in the context of the Rights Issue, to declare a final dividend in respect of the 2015 financial year. However, the Company expects to resume its progressive dividend policy, starting from a lower base, in due course once the Group has returned to delivering strong financial performance and significant cash generation.

10. Overseas shareholders

New Shares will be provisionally allotted (nil paid) to all Qualifying Shareholders on the register at the Record Date (including Overseas Shareholders). However, subject to certain exceptions, Provisional Allotment Letters will not be sent to, and CREST stock accounts will not be credited in respect of, Qualifying Shareholders with a registered address in the United States or any of the other Excluded Territories.

Persons who have registered addresses in, or who are resident in, or who are citizens of, countries other than the UK should consult their professional advisers as to whether they require any governmental or other consents or need to observe any other formalities to enable them to take up their entitlements to the Rights Issue.

Notwithstanding any other provision of the Prospectus or the Provisional Allotment Letter, the Company reserves the right to permit any Shareholder on the register at the Record Date to take up his rights if the Company in its sole and absolute discretion is satisfied that the transaction in question will not violate applicable laws.

11. Principal terms of the Rights Issue

Pursuant to the Rights Issue, it is proposed that up to 94,849,241 Rights Issue Shares be issued by way of rights to Qualifying Shareholders (other than, subject to certain exceptions, to Shareholders with a registered address, or who are located, in the United States or one of the other Excluded Territories) at 22 pence per Rights Issue Share, payable in full on acceptance by no later than 11.00 a.m. on 18 April 2016. The Rights Issue is expected to raise gross proceeds of approximately £21 million. The Issue Price represents:

(a) a 59.5 per cent. discount to the Closing Price of 54.4 pence per Share on 11 December 2015 (being the last Business Day before the announcement of a rights issue on 14 December 2015);

(b) a 32.7 per cent. discount to the theoretical ex-rights price of an Share, when calculated by reference to the Closing Price of 43.375 pence per Share on 15 March 2016 (being the last Business Day before the announcement of the Rights Issue); and

(c) a 49.3 per cent. discount to the Closing Price of 43.375 pence per Share on 15 March 2016. The Rights Issue will be made on the basis of:

1 Rights Issue Share at 22 pence per Rights Issue Share for every

1 Existing Share

held by and registered in the name of each Qualifying Shareholder at the close of business on the Record Date, and in proportion to any other number of Existing Shares each Qualifying Shareholder then holds.

Entitlements to Rights Issue Shares will be rounded down to the nearest whole number and fractional entitlements will not be allotted to Shareholders but will be aggregated and sold in the market for the benefit of the Company. Holdings of Existing Shares in certificated and uncertificated form and holdings under different designations will be treated as separate holdings for the purpose of calculating entitlements under the Rights Issue.

Qualifying Shareholders who take up their pro rata entitlements to Rights Issue Shares in full will suffer no dilution of their shareholdings in the Company as a result of the Rights Issue. However, if a Qualifying Shareholder does not take up the offer of Rights Issue Shares in full, his/her proportionate shareholding will be diluted by up to approximately 50 per cent.. The Rights Issue Shares will rank for all dividends declared, made or paid after the date of allotment and issue of the Rights Issue Shares and otherwise pari passu with the Existing Shares.

The Rights Issue has been fully underwritten by Investec on, and subject to, the terms of the Underwriting Agreement.

The Rights Issue will result in up to 94,849,241 Rights Issue Shares being issued (representing 100 per cent. of the existing issued share capital and 50 per cent. of the enlarged issued share capital immediately following completion of the Rights Issue).

The Rights Issue is conditional, among other things, upon:

(a) the Underwriting Agreement having become unconditional in all respects save for the condition relating to Admission of the Rights Issue Shares and not having been terminated in accordance with its terms;

(b) Admission of the Rights Issue Shares becoming effective by not later than 8.00 a.m. on 24 April 2016 (or such later time and date as may be agreed pursuant to the Underwriting Agreement);

(c) the passing without amendment of the Rights Issue Resolutions; and

(d) the passing without amendment of the Disposal Resolution approving the Disposal and completion of the Disposal, which is expected to take place on 1 April 2016.

The Rights Issue is not conditional on the passing of the AIM Resolution or AIM Admission occurring.

In the event that the conditions to the Rights Issue are not satisfied, in full prior to 8.00 a.m. on 30 April 2016 and the Rights Issue does not proceed, then there will remain a material risk that the Group will breach the net debt to EBITDA covenant in its Facility Agreement at 30 June 2016.

12. Directors' intentions regarding the Rights Issue

The Directors are fully supportive of the Rights Issue.

Notwithstanding the announcement on 9 March 2016 of his intention to stand down as Group Finance Director and to leave the Group, Steve Breach, who is the only director who owns shares in the Company as at the time of this announcement, has confirmed that he intends to take up his rights in full.

13. Importance of your vote

Your attention is drawn to the fact the Disposal is conditional and dependent upon the Disposal Resolution being passed by Shareholders at the General Meeting and the Rights Issue is conditional and dependent upon the Rights Issue Resolutions and Disposal Resolution being passed by Shareholders at the General Meeting.

Shareholders are asked to vote in favour of the Rights Issue Resolutions (the Allotment Resolution and Disapplication Resolution) and the Disposal Resolution in order for both the Disposal and the Rights Issue to proceed.

The Directors believe that the resulting stronger capital base and significantly reduced net debt will remove any material risk for at least next 12 months that there will be a breach of the covenants in the Facility Agreement.

In addition, the strengthening of the Group's balance sheet will:

• enable Tribal confidently to continue to develop its products and services and enhance its capabilities to deploy its systems in the Cloud and to offer SaaS models, as well as moving forward decisively with plans to streamline and simplify its operational structure and re-build momentum;

• reassure Tribal's current and prospective customers; and

• assist the Group in retaining and/or hiring appropriately skilled and experienced management to drive the business forward.

The Board believes that if the Rights Issue Resolutions and the Disposal Resolution are not passed and the Disposal and the Rights Issue do not both proceed, the Group's ability to implement these changes would be constrained and the Group's capitalisation and balance sheet concerns would not be addressed.

In addition, unless both the Disposal and the Rights Issue proceed, the Board believes there is a material risk that the Company would breach the net debt to EBITDA covenant when it is next tested on 30 June 2016. In addition, the Company would be obliged under the terms of its existing waiver to enter into further discussions with its lending banks immediately. There is no guarantee that the lending banks under the Facility Agreement would agree to a waiver or amendment of the covenants in future and in the event that the covenants were breached the banks would be entitled to demand repayment in full of the Facility Agreement. In such circumstances, Tribal would not have sufficient cash resources available to repay the Facility Agreement, without:

• borrowing money from other sources (which might potentially not be available at that time, or might not be available on as favourable terms as the existing Facility Agreement);

• selling other assets of the Group. The sale of such assets at a time which is not of the Group's choosing might result in a failure to realise the full value of the assets, or might not be possible at all;

• undertaking another type of equity issuance. Such an equity issuance would be likely to be subject to Shareholder approval but, if approved, might result in a lower issue price than the Rights Issue and may be more dilutive to Shareholders; or

• the Group being acquired by another party, at a price which might not reflect the full value of the Group.

The Board has considered these options, but does not consider that they are likely to maximise value for Shareholders in the circumstances. In particular:

• the Directors have not so far been able to secure an improved covenant position in light of the fact that, in the absence of the waiver obtained, it would have breached its net debt to EBITDA covenant at 31 December 2015;

• the Board does not believe it is sufficiently certain that the Group would be able to procure a purchaser for any of the Group's other assets at their full value in time to meet the next covenant test at 30 June 2016;

• the Board does not believe that an equity issuance which is more dilutive to Shareholders unable to participate is in the best interests of Shareholders as a whole; and

• the Board believes that undertaking a formal sale process would be likely to be perceived as a distressed sale and valuations would be depressed accordingly. The Board does not believe the current share price of the Company reflects the full value of the Group.

In the event that none of the above options was possible, the Group might be forced to cease trading, in which case Shareholders could lose their entire equity investment. Such cessation of trading could occur as early as the Group's results for the period ending 30 June 2016 are known, which might result in a breach of the net debt to EBITDA covenant which is tested based on the results for the period ending on that date.

The Rights Issue cannot take place unless the Disposal completes. However, the Disposal could complete without the Rights Issue proceeding. In this case, the Company will have received the net proceeds of the Disposal. This will improve the Group's immediate cash position, however, the Board is of the view that while the net proceeds of the Disposal would result in a reduction in the likelihood of a breach of the net debt to EBITDA covenant at 30 June 2016, depending on the performance of the Group's business, there would still be a material risk of a breach of covenant at that time which would have the results set out above.

Accordingly, even with the net proceeds of the Disposal, the Board is of the view that further steps would be required to reduce the net debt of the Group, and that the above options and risks would continue to apply.

Finally, the Board strongly believes that AIM is the most appropriate market for the Company's Shares to be listed, and that the lower costs and more flexible regulatory environment are in the interests of both the Company and Shareholders. Pursuant to the AIM Rules, the Company will not be permitted to move to AIM unless it has sufficient working capital. Accordingly, the Delisting and AIM Admission is conditional on completion of the Disposal and Rights Issue, as well as the passing of the AIM Resolution.

Accordingly, the Board believes that the Disposal, the Rights Issue, the CEO Subscription, the NED Subscription, the Share Matching Plan, and Delisting and AIM Admission are in the best interests of the Company and Shareholders as a whole, and recommends that Shareholders vote in favour of all the Resolutions.

Several of the Directors have conflicts of interest in relation to particular matters (or are party to related party transactions) and so those Directors have not participated in the Board's consideration of the proposals in respect of which they are conflicted. Specifically:

(a) Richard Last and Roger McDowell are conflicted in respect of the Disposal as they are also directors of Servelec, the parent company of the purchaser; and

(b) Richard Last, Ian Bowles and Roger McDowell are conflicted in respect of the Subscriptions and the Share Matching Plan (which are also related party transactions).

None of Mr Last, Mr Bowles nor Mr McDowell, nor any person deemed to be associated with him for the purposes of the Listing Rules has participated in the Board's consideration of the Subscriptions or the Share Matching Plan.

In addition, Duncan Lewis has been unwell during the latter stages of the Board's deliberations on the matters covered by this announcement. Accordingly, he has not been able to attend Board meetings or participate in the Board's decisions in respect of these matters.

In setting the Rights Issue Price, the Directors have considered the price at which the Rights Issue Shares need to be offered to investors to ensure the success of the Rights Issue and to raise significant equity compared with the current market capitalisation of the Company. The Directors believe that the Rights Issue Price, and its discount to the recent trading price of the Existing Shares, is appropriate.

Appendix 1

Expected timetable of principal events

2016

Appendix 2

Definitions

The following definitions apply throughout this announcement unless the context otherwise requires:

All references to legislation in this announcement are to the legislation of England and Wales unless the contrary is indicated. Any reference to any provision of any legislation or regulation shall include any amendment, modification, re-enactment or extension thereof.

Words importing the singular shall include the plural and vice versa, and words importing the masculine gender shall include the feminine or neutral gender.