Second Glance: £35m cash raise “normalises” position
Tribal’s trading statement earlier this week contained three key points: 1) sales momentum in a number of key contracts remains slow; 2) certain cash receipts anticipated for H2 2015 are now expected in H1 2016; 3) the company is proposing a £35m rights issue and move to AIM. We downgrade revenues by 2% for both FY15E and FY16E, with EBITDA reduced by 18% FY15E and 16% in FY16E. Whilst significant, the proposed £35m raise will give Tribal a balance sheet in line with comparable software businesses. It will insulate the Group from the effects of lumpy licence revenues.