An education support services company contracted to provide inspectors for Ofsted school visits has posted losses of more than £6 million after the watchdog decided to bring inspections back in-house.
The Tribal Group posted a pre-tax loss of £6.3 million for 2014, compared with a £13.5 million profit in 2013.
The loss follows last year’s Ofsted announcement that it would not renew contracts with Tribal and two other companies – Serco and CfBT – to provide additional inspectors.
The move came after Ofsted said that it wanted tighter control over the quality of inspections amid concerns that they had been too erratic.
But the schools watchdog has dished out a contract worth at least £18 million for Tribal to continue inspecting early years’ providers.
An Ofsted spokesperson said: “Having considered quality and value for money, Ofsted agreed to extend its contract with early years’ inspection providers, which provide more than 90 per cent of our early years’ inspections, in May 2014.
“We are confident that our providers will, working within the same inspection framework, continue to provide a high quality service and help to raise standards for young children in nurseries and other early years’ settings.”
The contract could run until March 2017.
A Tribal spokesperson said: “Tribal has a diverse and growing business, working across all levels of education, from early years to higher education.
“Ofsted’s decision to bring schools inspections in-house had always been anticipated in our long-term planning.
“Our strategy has always been to grow other aspects of the business – although we remain committed to partnering with Ofsted to deliver early years’ inspections.”
According to the company’s accounts, its end of year results “fell short” of expectations.
Revenue fell from £125.5 to £123.7 million and its net debt rose from £4.6 to £11.7 million.
However the pre-tax loss has been attributed to impairment charges of £12.6 million, which it links to Ofsted’s decision to not renew the schools inspection contract.
Schools Week understands the £12.6 million figure was part of the acquisition cost when Tribal bought businesses that had inspection contracts with Ofsted.
However, with the contracts set to end and future income reduced, the £12.6 million has been written off, accounting for the pre-tax loss.
The write-off has no impact on Tribal’s cash position. Chief executive Keith Evans said: “Tribal has come a long way in the past three years. While we were unable to meet our financial targets for 2014, we have great people and great software. We are focused on grasping tightly the growth opportunities we now see before us.”