Tribal crashes to all-time low after second profit warning

Shares in Tribal Group were speared after the education software and services group issued a four-pronged warning: of lower profits, debts that might breach covenants, a £35m rights issue and proposal to move down from London's full list to AIM.

Despite some optimism about potential contracts since its prior profit warning in October, Tribal has continued to endure slow sales momentum and cautioned that adjusted operating profit for the calendar year was likely to be "significantly" lower than the recently lowered expectations, with net debt also likely to breach debt covenants as a result.

Still interviewing potential permanent replacements for chief executive Keith Evans, who departed in May, the company has proposed to improve its debt position by raising up to £35m from a rights issue, of which £30m will be underwritten by Investec, and is in discussions with banks about rearranging debt covenants.

This will 're-set' the company's balance sheet and Tribal also said it expected the wider market for education management systems and services to be "stable" in 2016, though the timing of order completions remains difficult to predict.

Broker WH Ireland's new forecast for the current year is for £3.5m profit before tax and 2.9p of earnings per share, down from its £5.5m PBT and 4.5p EPS prior prediction.

After initially falling off a cliff to an all-time low of 20p, Tribal shares rebounded slightly to 27.57p by 1033 GMT on Monday, still a 49% fall on the day.