TIDMDRV
RNS Number : 6243I
Driver Group plc
15 December 2020
15 December 2020
DRIVER GROUP PLC
("Driver" or "the Group")
Preliminary Results and Dividend Declaration
Driver Group PLC (AIM: DRV), the global professional services
consultancy to construction and engineering industries, is pleased
to announce the dividend for the full year and its results for the
financial year ended 30 September 2020.
The final dividend for the full year of 0.75 pence per share
will be paid on 23 March 2021 to shareholders who are on the
register of members at the close of business on 19 February 2021,
with an ex-dividend date of 18 February 2021 subject to approval at
the AGM.
Financial & Operational Highlights
-- Revenue decreased by 9% to GBP 53.1m (2019: GBP 58.5m)
-- Underlying(*) profit before tax decreased by 17% to GBP 2.5m (2019: GBP 3.0m)
-- Profit for the year decreased to GBP 1.3m (2019: GBP 2.7m)
-- Net cash(**) increased to GBP 8.2m (2019: GBP 5.4m)
-- Utilisation(***) decreased to 72.0% (2019: 76.8%)
-- Earnings per share decreased to 2.6p (2019: 5.2p)
Mark Wheeler, Chief Executive Officer of Driver Group plc,
commented: " In spite of a challenging year, the business has
produced a good result, which is testimony to the work of all the
team. Activity levels in the early weeks of the new financial year
are encouraging and with a strong net cash position and the
availability of increased debt facilities, we believe that the
Group is well positioned for the coming year. "
* Underlying figures are stated before the share-based payment
costs and one off severance costs
** Net cash consists of cash and cash equivalents and bank
loans
*** Utilisation % is calculated by dividing the total hours
billed by the total working hours available for chargeable
staff
Enquiries:
Driver Group plc 020 7377 0005
Mark Wheeler (CEO)
David Kilgour (CFO
N+1 Singer (Nomad & Broker) 020 7496 3000
Sandy Fraser
Jen Boorer
Acuitas Communications 020 3687 0868
Simon Nayyar simon.nayyar@acuitsascomms.com
Fraser Schurer-Lewis fraser.schurer-lewis@acuitascomms.com
CHAIRMAN'S STATEMENT
IMPACT OF COVID-19
As I reported at the time of the interim results we have been
managing the effects and impact of the COVID-19 pandemic across our
global business since January 2020. We took action at an early
stage to protect both the business and our staff by implementing a
clear business continuity strategy which has enabled our clients
across key global regions and offices to be serviced effectively,
sustainably and without business interruption. As the pandemic
spread across the world with varying levels of impact we responded
to the requirements of the local governments and regulatory
authorities in the relevant jurisdictions and in some circumstances
in advance. We moved to a flexible home working model in every
region and office worldwide to protect the health and safety of our
staff. As local restrictions have been relaxed in some regions we
have moved to a hybrid working solution facilitating both a safe
work environment for our staff and ensuring our ability to fully
service the requirements of our clients.
As a consequence of our prompt response and continuing approach
to managing the impact of COVID-19 we have remained profitable and
cash generative throughout the financial year. In my report on the
interim results in June, I advised that although the impact of
COVID-19 on the Company had been limited to date the Board had
decided on a course of action which in the interests of prudence,
resilience, and long term strategic competitive positioning was
designed to maximise liquidity, preserve cash and enhance
operational flexibility. I am pleased to report that these prompt
actions and strong executive management, supported by more frequent
board meetings, have delivered a decent result for the year given
all the unprecedented and unavoidable circumstances and have
minimised the impact of the pandemic.
Following the appointment of Mark Wheeler as Group Chief
Executive Officer on 1st June 2020 a strategic review of the
business was commenced. The review is now complete and the Board's
agreed objective is to develop Driver Group into a higher margin
business on a steady growth curve by focussing on growth in expert
and arbitration services and reducing the share of Group revenue
derived from lower margin project services. Mark expands further on
the new strategy in his report.
THE BUSINESS TRADING PERFORMANCE
It is pleasing to note that whilst COVID-19 has created economic
uncertainty across the world which has resulted in lower economic
activity we have continued to be profitable and cash generative
throughout the financial year and ended the financial year with
GBP8.2m of net cash. The market uncertainty has led to delayed or
postponed client decisions which has resulted in lower market
activity and consequently Group revenue reduced by 9%. However, as
a result of strong management by the executive team we have
produced a profitable result allied just as importantly to strong
cash generation.
DIVID
One of the decisions made by the Board at the time of the
interim results in the early stages of the pandemic was to cancel
the interim dividend for the year in order to conserve cash. Given
the uncertainty about the effects of the pandemic and the various
responses to it by governments around the world including lockdowns
of varying severity I am confident this was the right decision.
But, given the strength of our operating performance and the
strength of the Group balance sheet the Directors now believe that
it is appropriate to recommend a final dividend of 0.75p (2019:
0.75p per share).
BOARD
During the financial year the Board appointed Elizabeth Filkin
CBE on 1st October 2019 and John Mullen on 1st June 2020 as
Non-executive Directors. Both bring substantial valuable experience
to our deliberations. Elizabeth is an acknowledged expert on
governance with great experience in both the public and private
sectors and John is not only one of the world's most highly
regarded quantum experts but knows the business intimately. We are
delighted that they have both joined us. On 31st May Gordon
Wilkinson left the business with our good wishes, having during his
tenure led the business through some extremely challenging times. I
am delighted to report that Mark Wheeler has shown excellent
leadership since he took over as Chief Executive. His unrivalled
understanding not only of our business but of this industry
worldwide allied to his personal relationship with so many of our
staff has meant that the Group is continuing to meet the challenges
of the pandemic while also working on a better, more productive
future for the business.
FORWARD GUIDANCE
In view of the continuing global uncertainty as a result of the
ongoing pandemic we are not in a position to reinstate forward
guidance at this point. We will review the position at the time of
our half year results.
OUTLOOK
Although the 2020 financial year has been challenging as a
result of the pandemic, I believe the financial results demonstrate
that the executive team have managed the business well in
maintaining profits and strong cash generation throughout the year.
The Group continues to maintain strict discipline over the
management of its net working capital position and I am pleased to
report that the Group's net cash balance at the year end was
GBP8.2m. In more normal times, Driver is conditioned to operating
with relatively low forward revenue visibility and that has been
made even more difficult because the pandemic has resulted in so
much global uncertainty. However, activity levels in the early
weeks of the new financial year are encouraging and with a strong
net cash position and the availability of increased debt
facilities, the Directors believe that the Group is well placed to
trade through this current uncertain market environment, and to
take advantage of the opportunities afforded as a consequence of
the disruption of COVID-19 in the Group's target markets.
I would like to pay particular tribute to our CEO Mark Wheeler
and CFO David Kilgour for the way they have managed the business
through the last year. I thank my Board colleagues, Peter Collini,
Elizabeth Filkin and John Mullen for their unstinting support and
most of all, I thank every one of our staff wherever they are in
the world for their continued diligence and loyalty. I am of course
also grateful for the confidence our shareholders have consistently
demonstrated and I assure them that the Group will continue to do
its utmost to repay that confidence.
Steven Norris
Non-Executive Chairman
15 December 2020
*Underlying figures are stated before the share-based payment
costs and one off severance costs
**Net cash consists of cash and cash equivalents, bank
loans.
***Utilisation % is calculated by dividing the total hours
billed by the total working hours available for chargeable
staff
CHIEF EXECUTIVE OFFICER'S REVIEW
INTRODUCTION
I am pleased to present my first CEO report in what has been a
very challenging but successful year. The COVID-19 pandemic has
caused significant market disruption globally which has seen a
reduction in activity as the economic uncertainty has resulted in
delays in claims and disputes proceeding. In response, we have
actively managed the business and our cost base to ensure we have
maintained profitability throughout the year.
It is especially pleasing that during the pandemic we have
achieved a strong cash performance increasing the net cash balance
from GBP3.3m at 31 March 2020 to GBP8.2m at 30 September 2020.
The Group's global operating footprint has proven to be a source
of significant operational strength and diversified risk with a
strong result in the Europe & Americas (EuAm) region offsetting
weaker performance in the Middle East (ME) and Asia Pacific (APAC)
regions following a greater early impact in these markets from the
pandemic. The market disruption has resulted in challenging trading
conditions during the year. However, we believe that based on our
track record of prudent business planning and management, our
exceptional team of world-class professional services experts and
our specialist understanding of sectors, markets and disciplines we
will be able to continue to perform well. Driver is well positioned
to benefit from the expected increase in dispute resolution
activity in the future as globally we move beyond the pandemic to a
market which will have seen significant numbers of contracts having
faced some form of disruption as a consequence of COVID-19, and
hence, requiring our services.
Our utilisation rates, which are, as ever, a key performance
indicator for a global professional services business such as
Driver, reduced to 72%, which considering the level of market
disruption demonstrates our ability to minimise the impact of the
pandemic over the past year.
Following my appointment as Group Chief Executive Officer on 1
June 2020 I have led a strategic review of the business which has
established a five year strategic plan. The key themes of the plan
are to focus growth on expert and dispute resolution services as we
seek both to grow revenue and improve our margin towards a double
digit operating profit margin over the life of the plan. To achieve
this target we will seek to grow both the geographic and sectoral
spread of our offering by recruiting and retaining our most
valuable asset, technically expert and suitably qualified
people.
STRATEGY
The Board believes that the execution of this strategy will
enhance shareholder value through:
-- Focus on growth on higher margin Diales revenue
-- Sustainable financial performance
-- Maintaining financial strength
-- Measured organic growth through enhanced and expanded geographic presence
sTAFF:
-- Retention and development of existing key staff
-- Focussed recruitment strategy
-- Culture
-- Move to risk and reward sharing
mARGIN:
-- Focus on higher margin work
-- Improve cost effectiveness of geographic presence
-- Risk based approach
-- Extract value from downtime
gROWTH:
-- Invest in technology and processes to enhance working
practices and improve services to clients
-- Edge growth around expertise
-- True global coverage
Over the last six months our confidence in our performance has
allowed us to take advantage of market opportunities when they have
arisen. We have strengthened our expert offering in the Middle
East, opened an office in New York (to both service our North
American clients and improve access to the important South American
markets), set up a strategic partnership in South Africa and
recently opened an office in Madrid. These low risk actions have
significantly improved our geographic and sectoral offering in both
Africa and the Americas which we expect to be an important source
of future measured growth towards our planned objectives. Moving
forward we will continue to review further potential opportunities
to broaden the geographic and sectoral coverage of our business and
with our strong balance sheet, Driver is in a good position to take
advantage of opportunities to achieve these aims in a controlled
and progressive manner.
I would like to take this opportunity on behalf of your Board to
thank all the team at Driver Group for their hard work and
commitment to the business during what has been a challenging
period, and to our loyal clients around the world. We are
appreciative of the support of all of them while we continue to
position the business for further growth and an even better
advisory offering as we begin the next decade.
Financial Performance HIGHLIGHTS
As noted, the economic uncertainty created by the pandemic has
resulted in a lower revenue during the year of GBP53.1m (2019:
GBP58.5m). The underlying* profit before tax was GBP2.5m (2019:
GBP3.0m) which is a margin of 4.7% (2019: 5.1%). The underlying
profit before tax is stated before the one-off severance cost of
GBP0.8m in 2020 following the exit of our previous Chief Executive
Officer and a credit for share-based payments in 2019 of GBP0.2m.
The reported profit for the year after tax is GBP1.3m (2019:
GBP2.7m).
REGIONAL BREAKDOWN
EUROPE AND AMERICAS
Across the EuAm region, there has again been a strong trading
performance, resulting in an overall increase in revenue of 4% to
GBP31.0m. The UK's revenue was GBP23.2m, (delivering a profit of
GBP3.1m) with a good performance across the whole of the UK market
for both claims and project services. Our European businesses
continued to perform well with a small drop in revenue to GBP6.6m
but an increase in profit of 37.5% to GBP0.9m, reflecting the
strength of our proposition. Our Technical Services team in London
has continued to grow, increasing revenues from GBP4.2m in 2019 to
GBP4.6m in 2020. The team offers forensic architecture and
engineering globally from the UK, a service which is showing demand
worldwide.
The newly opened office in New York, supported by two leading
resident experts, contributed GBP0.1m of revenue in the first month
of operation and alongside our Canadian business the pipeline of
opportunities is growing well.
ASIA PACIFIC
Whilst APAC started the year strongly, challenges in the second
half meant it was unable to meet its performance targets. The
results reflect a slowdown caused by the pandemic and downward
pressure on fees; but they are, nonetheless, disappointing for the
Group. Revenue was down across the region with the largest
reduction being in Singapore and Malaysia which were a combined 20%
below the 2019 position. This was mainly as a consequence of the
closure of a low margin project services business. Profitability
was improved in the region following the actions taken to reduce
the cost base and the closure of the project services business.
Additionally, following the recent departure of two senior members
of staff we have further streamlined the business and as a result
we move forward with a more cost efficient business in 2020/21 as
the region manages the impact of the pandemic, and we are well
placed to exploit future opportunities.
Middle East
ME has seen a significant contraction in market activity across
the whole region over the last couple of years. Additionally, this
year the region suffered market disruption from the COVID-19
pandemic and the various local and national governmental
restrictions imposed. As a result regional revenue reduced by 27%
from the 2019 level to GBP14.4m. Apart from a small increase in
revenue in Kuwait the decrease in revenue was felt across the
region. The drop in regional profit from GBP1.4m in 2019 to GBP0.1m
this year has been mitigated by actively managing our cost base and
ensuring we are in the appropriate position to take advantage of
the expected increase in opportunities after the pandemic. The
region is now under new leadership and this, combined with the
recent increase in the Diales presence in the region, leaves us
well positioned.
outlook
In spite of a challenging year, the business has produced a good
result, which is testimony to the work of all the team. Whilst the
pandemic continues to disrupt activity with various lockdowns
affecting our business globally the pipeline of opportunities has
been maintained into the new financial year.
We believe that we are, therefore, well positioned for the
coming year, and that we can build sustainable value for all our
stakeholders over the life of the strategic plan.
Mark Wheeler
Chief Executive Officer
15 December 2020
*Underlying figures are stated before the share-based payment
costs and one off severance costs
**Net cash consists of cash and cash equivalents, bank
loans.
***Utilisation % is calculated by dividing the total hours
billed by the total working hours available for chargeable
staff
CHIEF FINANCIAL OFFICER'S REVIEW
Income Statement 2020 GBPm 2019 GBPm
-------------------------------- ---------- ----------
Revenue 53.07 58.49
Cost of sales (39.16) (44.95)
Impairment movement (0.78) 0.40
-------------------------------- ---------- ----------
Gross Profit 13.13 13.94
Recurring operating expenses (10.52) (10.85)
Net finance costs (0.11) (0.09)
-------------------------------- ---------- ----------
Underlying(*) profit before tax 2.50 3.00
One off severance costs (0.76) -
Share-based payments credit - 0.25
-------------------------------- ---------- ----------
Profit before Tax 1.74 3.25
Tax expense (0.40) (0.50)
-------------------------------- ---------- ----------
Profit for the year 1.34 2.75
-------------------------------- ---------- ----------
In 2020 Driver Group managed the impact of the COVID-19 pandemic
and although the EuAm region performed well there was a slowdown in
activity levels in the ME and APAC regions. Overall, this resulted
in lower revenues and underlying(*) profit before tax than 2019. We
also absorbed the impact of the severance cost for our outgoing
Chief Executive Officer of GBP0.8m. The key financial metrics are
as follows:
Key Metrics 2020 2019
------------------------- ---------- ----------
Revenue GBP53.07m GBP58.49m
Gross Margin % 24.7% 23.8%
Profit for the year GBP1.34m GBP2.75m
Utilisation Rates 72.0% 76.8%
Basic earnings per share 2.6p 5.2p
------------------------- ---------- ----------
Total revenue decreased by 9% to GBP53.07m (2019: GBP58.49m) and
gross profit decreased by 6% to GBP13.13m (2019: GBP13.94m). The
reduction in gross margin was as a result of the lower revenues in
the APAC and ME regions, the impact of which has been offset by a
rationalisation of the cost base. Before the impact of impairment
provisions the operating gross profit has actually increased during
the year to GBP13.91m (2019: GBP13.54m). The profit for the year
has decreased by 51% to GBP1.34m (2019: GBP2.75m) as it is stated
after the inclusion of the one off severance cost for the outgoing
CEO of GBP0.77m in the year. The net cash** at the year end was
GBP8.2m (2019: GBP5.4m), after funding a dividend payment of
GBP0.65m.
The EuAm region increased revenue by 4.2% to GBP31.03m (2019:
GBP29.77m) and generated an increase in segmental profit of 2% to
GBP3.99m (2019: GBP3.91m). This strong performance was driven by
good revenues in the UK of GBP23.23m (2019: GBP21.41m) with a small
drop in revenues in mainland Europe of 4.6% to GBP6.61m (2019:
GBP6.93m) and a drop in revenues in Canada of 26% to GBP1.06m
(2019: GBP1.44m) following a change in leadership.
The ME region saw revenues drop during the year by 26.8% to
GBP14.37m (2019: GBP19.65m) due to a reduction in market activity
in the region and the impact of COVID-19. Revenues in Kuwait showed
a small increase at GBP0.97m (2019: GBP0.76m) otherwise revenues
were down across the region. Segmental profit for the region
decreased to GBP0.11m (2019: GBP1.45m).
The APAC region saw revenues drop by 15.5% to GBP7.67m (2019:
GBP9.07m). The reduction was mainly as a consequence of the
decision to close a low margin project services business in the
region resulting in a reduction in revenue of GBP1.58m. The
segmental result for the year was a profit of GBP0.51m (2019:
segmental loss GBP0.36m) which shows the benefit of the
restructuring last year and the business closure this year. The
APAC region continues to be a target for further growth
opportunity.
The utilisation(***) rate of chargeable staff across the
business as a whole for the year stood at 72.0%, a decrease from
76.8% in the prior year reflecting the impact of a weaker market in
the ME and APAC regions and the impact of the pandemic on market
activity. The variation in utilisation during the year ranged from
a low of 65% in the holiday month of August to a high of 77% in
October, June and July. The overall decrease in utilisation is
clearly impacted by the COVID-19 pandemic and has held up well
during the year when considering the level of market
disruption.
After a net interest charge of GBP0.11m (2019: GBP0.09m) the
underlying(*) profit before tax was GBP2.50m (2019: GBP3.00m) and
the reported profit before tax was GBP1.74m (2019: GBP3.25m). The
current year profit before tax includes one off severance costs for
the outgoing Chief Executive Officer of GBP0.77m while the previous
year includes a credit of GBP0.24m for share-based payments due to
the criteria for vesting of options not being met for that year.
Details of outstanding options can be found in the Report of the
Directors and Directors' Remuneration Report.
NET WORKING CAPITAL
Net cash(**) showed a strong improvement during the year to
GBP8.2m (2019: GBP5.4m) with net working capital decreasing as
there was a significant reduction in outstanding debtors and a
small increase in creditors.
TAXATION
The Group showed a tax charge of GBP0.40m (2019: GBP0.50m). The
tax charge includes the effects of expenses not deductible for tax
purposes and is calculated at the prevailing rates for the
jurisdictions in which the Group operates and, consequently, the
effective tax rate for the year was 23% (2019: 15%). The increase
in the effective rate is due to lower profits from jurisdictions
with lower tax rates.
EARNINGS PER SHARE
The basic earnings per share was 2.6 pence (2019: 5.2 pence).
Underlying(*) continuing basic earnings per share was 4.0 pence
(2019: 4.7 pence).
CASH FLOW
There was a net cash inflow from operating activities before
changes in working capital of GBP3.28m (2019: GBP3.44m), however
the current year does benefit by GBP1.05m from the amortisation of
right of use assets following the transition to IFRS 16 during the
year. The movement also reflects the reported profit for the year
of GBP1.34m (2019: GBP2.75m) after depreciation of GBP0.32m (2019:
GBP0.42m) and the one off severance charge of GBP0.77m (2019:
GBPnil). The prior year saw a benefit of GBP0.24m for the
share-based payment credit which was GBPnil in the current year.
There was a decrease of GBP2.06m in trade and other receivables
(2019: increase of GBP0.66m) reflecting improved cash collections
during the year, and a small increase in trade and other payables
of GBP0.24m (2019: decrease of GBP2.05m) resulting in a net cash
inflow from operating activities of GBP5.06m (2019: GBP0.1m). Net
tax paid in the year was GBP0.52m (2019: GBP0.62m).
There was a net cash outflow from investing activities of
GBP0.34m (2019: GBP0.29m) principally capital expenditure,
including IT spend, of GBP0.35m offset by interest received.
Net cash flow from financing activities was an outflow of
GBP0.98m (2019: GBP2.36m) with the current year reflecting the
dividends paid of GBP0.65m (2019: GBP0.27m) and repayment of
borrowings of GBP3.19m (2019: GBP0.98m) which includes scheduled
term loan repayments of GBP2.12m and lease repayments under IFRS 16
of GBP1.07m. Offsetting this is a drawdown of the GBP3m revolving
credit facility on 1st April 2020 to allow for unforeseen
circumstances as a consequence of the potential impact of the
pandemic but, this facility was not required and hence was repaid
on 1st October 2020.
cash flow GBPm
------------------------------------------------------ -------
Net cash(**) at 30 September 2019 5.40
Operating cash flow before changes in working capital 3.28
Decrease in Trade and other receivables 2.06
Increase in Trade and other payables 0.24
Tax paid (0.52)
Net interest paid (0.09)
Capital spend (0.35)
Repurchase of shares (0.02)
Dividends paid (0.65)
Repayment of leases (1.07)
Effects of Foreign Exchange (0.06)
Net cash(**) at 30 September 2020 8.22
------------------------------------------------------ -------
LIQUIDITY AND GOING CONCERN
The Group is in a strong financial position. At the year end the
Group had net cash balances of GBP8.2m (2019: GBP5.4m) together
with committed borrowing facilities of GBP7.0m (2019: GBP3.0m) of
which GBP4.0m were undrawn at 30 September 2020. At the start of
the COVID-19 pandemic GBP3.0m of the revolving credit facility was
drawn to meet any unforeseen contingencies. This was repaid on 1st
October 2020. The net cash and available facilities provide
significant liquidity entering into the new financial year.
In the interest of prudence, resilience and long term strategic
competitive positioning the Board, at the beginning of the
pandemic, took the following measures in order to enhance
operational flexibility and maximise liquidity:
-- The interim dividend was cancelled
-- Non-essential capital expenditure and discretionary operational expenditure were postponed
-- The Board members' salaries were deferred by 20%
-- Targeted reductions in pay for under utilised staff
-- The GBP3m revolving working capital facility was drawn for
any unforeseen circumstances as a consequence of the pandemic
-- Additional financing facilities along with a relaxation of covenants were agreed with HSBC
In carrying out their duties in respect of going concern the
Directors have completed a review of the Group's financial
forecasts for a period of more than twelve months from the date of
approving these financial statements. This review has included
sensitivity analysis and stress tests which took account of
reasonable and foreseeable scenarios including the impact of the
COVID-19 pandemic and related risks. Under all scenarios modelled
the Directors believe that any funding needs required will be
sufficiently covered by the existing cash reserves and the Group's
undrawn borrowing facilities. As such the Directors have a
reasonable expectation that the Group has sufficient resources and
hence these financial statements include information prepared on a
going concern basis.
DIVIDS
The Directors propose a dividend for 2020 of 0.75p per share
(2019: 0.75p per share). This will be paid on 23rd March 2021 to
shareholders who are on the register of members at the close of
business on 19th February 2021.
David Kilgour
Chief Financial Officer
15 December 2020
*Underlying figures are stated before the share-based payment
costs and one off severance costs
**Net cash consists of cash and cash equivalents, bank
loans.
***Utilisation % is calculated by dividing the total hours
billed by the total working hours available for chargeable
staff
Consolidated Income Statement
For the year ended 30 September 2020
2020 2019
GBP000 GBP000
-------------------------------------------------- -------- --------
REVENUE 53,074 58,486
Cost of sales (39,162) (44,950)
Impairment movement (778) 401
-------------------------------------------------- -------- --------
GROSS PROFIT 13,134 13,937
Administrative expenses (11,413) (10,760)
Other operating income 130 155
-------------------------------------------------- -------- --------
Underlying(*) operating profit 2,618 3,089
-------------------------------------------------- -------- --------
One off severance costs (767) -
-------------------------------------------------- -------- --------
Share-based payment charges and associated costs - 243
-------------------------------------------------- -------- --------
OPERATING PROFIT 1,851 3,332
Finance income 14 44
Finance costs (128) (131)
-------------------------------------------------- -------- --------
PROFIT BEFORE TAXATION 1,737 3,245
Tax expense (399) (497)
-------------------------------------------------- -------- --------
PROFIT FOR THE YEAR 1,338 2,748
-------------------------------------------------- -------- --------
(Loss)/profit attributable to non-controlling
interest (1) 1
Profit attributable to equity shareholders of
the Parent 1,339 2,747
-------------------------------------------------- -------- --------
1,338 2,748
-------------------------------------------------- -------- --------
Basic earnings per share attributable to equity
shareholders of the Parent (pence) 2.6p 5.2p
Diluted earnings per share attributable to equity
shareholders of the Parent (pence) 2.5p 4.8p
-------------------------------------------------- -------- --------
(*) Underlying figures are stated before the share-based payment
costs and one off severance costs
Consolidated Statement of Comprehensive Income
For the year ended 30 September 2020
2020 2019
GBP000 GBP000
------------------------------------------------------- ------- -------
PROFIT FOR THE YEAR 1,338 2,748
------------------------------------------------------- ------- -------
Other comprehensive income:
Items that could subsequently be reclassified to
the Income Statement:
Exchange differences on translating foreign operations (24) (25)
------------------------------------------------------- ------- -------
OTHER COMPREHENSIVE LOSS FOR THE YEAR NET OF TAX (24) (25)
------------------------------------------------------- ------- -------
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 1,314 2,723
------------------------------------------------------- ------- -------
Total comprehensive income attributable to:
Owners of the Parent 1,315 2,722
Non-controlling interest (1) 1
------------------------------------------------------- ------- -------
1,314 2,723
------------------------------------------------------- ------- -------
Consolidated Statement of Financial Position
For the year ended 30 September 2020
2020 2019
-------------------------------
GBP000 GBP000 GBP000 GBP000
------------------------------- ------- -------- ------- --------
NON-CURRENT ASSETS
Goodwill 2,969 2,969
Property, plant and equipment 501 685
Intangible asset 182 -
Right of use asset 1,831 -
Deferred tax asset 308 268
------------------------------- ------- -------- ------- --------
5,791 3,922
CURRENT ASSETS
Trade and other receivables 17,819 20,189
Derivative financial asset 171 2
Cash and cash equivalents 11,215 7,526
------------------------------- ------- -------- ------- --------
29,205 27,717
------------------------------- ------- -------- ------- --------
TOTAL ASSETS 34,996 31,639
------------------------------- ------- -------- ------- --------
CURRENT LIABILITIES
Borrowings (3,000) (2,125)
Lease creditor (679) -
Trade and other payables (9,446) (9,197)
Derivative financial liability (178) (398)
Current tax payable (264) (428)
------------------------------- ------- -------- ------- --------
(13,567) (12,148)
------------------------------- ------- -------- ------- --------
NON-CURRENT LIABILITIES
Lease creditor (1,040) -
------------------------------- ------- -------- ------- --------
(1,040) -
------------------------------- ------- -------- ------- --------
TOTAL LIABILITIES (14,607) (12,148)
------------------------------- ------- -------- ------- --------
NET ASSETS 20,389 19,491
------------------------------- ------- -------- ------- --------
SHAREHOLDERS' EQUITY
Share capital 216 216
Share premium 11,496 11,496
Merger reserve 1,055 1,055
Currency reserve (449) (425)
Capital redemption reserve 18 18
Treasury shares (1,025) (1,000)
Retained earnings 9,075 8,127
Own shares (3) (3)
------------------------------- ------- -------- ------- --------
TOTAL SHAREHOLDERS' EQUITY 20,383 19,484
NON-CONTROLLING INTEREST 6 7
------------------------------- ------- -------- ------- --------
TOTAL EQUITY 20,389 19,491
------------------------------- ------- -------- ------- --------
Consolidated Cash Flow Statement
For the year ended 30 September 2020
2020 2019
GBP000 GBP000
-------------------------------------------------------- ------- -------
CASH FLOWS FROM OPERATING ACTIVITIES
Profit for the year 1,338 2,748
-------------------------------------------------------- ------- -------
Adjustments for:
Depreciation 321 418
Exchange adjustments 55 (69)
Amortisation of right of use asset 1,051 -
Finance income (14) (44)
Finance expense 128 131
Tax expense 399 497
Equity settled share-based payment charge/(credit) - (243)
-------------------------------------------------------- ------- -------
OPERATING CASH FLOW BEFORE CHANGES IN WORKING CAPITAL
AND PROVISIONS 3,278 3,438
Decrease/(increase) in trade and other receivables 2,056 (658)
Increase/(decrease) in trade and other payables 240 (2,053)
-------------------------------------------------------- ------- -------
CASH GENERATED IN OPERATIONS 5,574 727
Tax paid (519) (623)
-------------------------------------------------------- ------- -------
NET CASH INFLOW FROM OPERATING ACTIVITIES 5,055 104
-------------------------------------------------------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received 14 44
Acquisition of property, plant and equipment (167) (338)
Acquisition of intangible assets (182) -
-------------------------------------------------------- ------- -------
NET CASH OUTFLOW FROM INVESTING ACTIVITIES (335) (294)
-------------------------------------------------------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Interest paid (107) (131)
Repayment of borrowings (3,191) (981)
Proceeds of borrowings 3,000 -
Proceeds from issue of new shares - 22
Purchase of Treasury shares (25) (1,000)
Dividends paid to equity shareholders of the Parent (653) (270)
-------------------------------------------------------- ------- -------
NET CASH OUTFLOW FROM FINANCING ACTIVITIES (976) (2,360)
-------------------------------------------------------- ------- -------
Net increase/(decrease) in cash and cash equivalents 3,744 (2,550)
Effect of foreign exchange on cash and cash equivalents (55) 69
Cash and cash equivalents at start of period 7,526 10,007
-------------------------------------------------------- ------- -------
CASH AND CASH EQUIVALENTS AT OF PERIOD 11,215 7,526
-------------------------------------------------------- ------- -------
Consolidated Statement of Changes in Equity
For the year ended 30 September 2020
Non-
Share Share Treasury Merger Other Retained Own controlling Total
capital premium shares reserve reserves(2) earnings shares(3) Total(1) interest Equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
CLOSING
BALANCE AT
1 OCTOBER
2018 215 11,475 - 1,055 (382) 6,154 (3) 18,514 6 18,520
-------------- ------- ------- -------- -------- ----------- -------- --------- -------- ----------- -------
Profit for the
year - - - - - 2,747 - 2,747 1 2,748
Other
comprehensive
income for
the year - - - - (25) - - (25) - (25)
-------------- ------- ------- -------- -------- ----------- -------- --------- -------- ----------- -------
Total
comprehensive
income for
the year - - - - (25) 2,747 - 2,722 1 2,723
Dividends - - - - - (531) - (531) - (531)
Share-based
payment - - - - - (243) - (243) - (243)
Purchase of
Treasury
shares - - (1,000) - - - - (1,000) - (1,000)
Issue of new
shares 1 21 - - - - - 22 - 22
-------------- ------- ------- -------- -------- ----------- -------- --------- -------- ----------- -------
CLOSING
BALANCE AT
30 SEPTEMBER
2019 216 11,496 (1,000) 1,055 (407) 8,127 (3) 19,484 7 19,491
-------------- ------- ------- -------- -------- ----------- -------- --------- -------- ----------- -------
OPENING
BALANCE AT
1 OCTOBER
2019 216 11,496 (1,000) 1,055 (407) 8,127 (3) 19,484 7 19,491
-------------- ------- ------- -------- -------- ----------- -------- --------- -------- ----------- -------
Profit for the
year - - - - - 1,339 - 1,339 (1) 1,338
Other
comprehensive
income for
the year - - - - (24) - - (24) - (24)
-------------- ------- ------- -------- -------- ----------- -------- --------- -------- ----------- -------
Total
comprehensive
income for
the year - - - - (24) 1,339 - 1,315 (1) 1,314
Dividends - - - - - (391) - (391) - (391)
Share-based - - - - - - - - - -
payment
Purchase of
Treasury
shares - - (25) - - - - (25) - (25)
Issue of new - - - - - - - - - -
shares
-------------- ------- ------- -------- -------- ----------- -------- --------- -------- ----------- -------
CLOSING
BALANCE AT
30 SEPTEMBER
2020 216 11,496 (1,025) 1,055 (431) 9,075 (3) 20,383 6 20,389
-------------- ------- ------- -------- -------- ----------- -------- --------- -------- ----------- -------
(1) Total equity attributable to the equity holders of the
Parent.
(2) 'Other reserves' combines the currency reserve and capital
redemption reserve. The movement in the current and prior year
relates to the translation of foreign currency equity balances and
foreign currency non-monetary items.
(3) The shortfall in the market value of the shares held by the
EBT and the outstanding loan is transferred from own shares to
retained earnings.
NOTES
1 BASIS OF PREPARATION
The financial information has been prepared under the historical
cost convention, as modified by the revaluation of certain assets,
and in accordance with Applicable Accounting Standards.
The financial information set out above does not constitute the
Group's statutory accounts for the years ended 30 September 2020 or
2019. Statutory accounts for 2019 have been delivered to the
Registrar of Companies, and those for 2020 will be delivered in due
course. The auditor has reported on those accounts; their reports
were (i) unqualified, (ii) did not include a reference to any
matters to which the auditor drew attention by way of emphasis
without qualifying their report (iii) did not contain a statement
under section 498 (2) or (3) of the Companies Act 2006.
The Financial Statements have been prepared on a going concern
basis. In reaching their assessment, the Directors have considered
a period extending at least twelve months from the date of approval
of this financial report.
The Directors continue to monitor developments across the
markets the Group operate in and the potential impact of COVID-19
in the short and medium term and is in particular focussed on the
key risks of: delays by clients in contracting for claims advice;
projects being suspended or planned projects not proceeding which
could potentially result in a reduction in staff utilisation
levels; and the impact of the current situation on the financial
stability of clients causing delays to payments.
As Driver's business is geographically well spread across the
world the Directors have been managing the impact of COVID-19 since
January 2020 when the Singapore and Hong Kong offices started
working remotely. As COVID-19 has spread, remote working has been
successfully adopted at varying times in the Middle East offices
and across Europe including the UK with minimal disruption of
service to our clients. The Directors have been closely monitoring
the impact on the business ensuring the welfare of the staff and
the clients.
The Directors have prepared cash flow forecasts and a reverse
stress test covering a period of more than 12 months from the date
of releasing these financial statements. This assessment has
included consideration of the forecast performance of the business
for the foreseeable future, the cash and financing facilities
available to the Group and the mitigating actions undertaken to
reduce the impact of COVID-19. In preparing these forecasts, the
Directors have considered sensitivities incorporating the potential
impact of COVID-19 such as a reduction in both revenues and debtor
receipts. The forecasts show that the Group could incur a further
reduction in revenues of up to approximately 15% compared to
existing depressed COVID-19 levels if combined with a minimal
change to the cost base and a reduction of cash collections by up
to 33% compared to current levels and still have sufficient
headroom to operate. In all scenarios, the Group remained in a cash
positive position with headroom throughout and as such there were
no concerns with the banking covenants associated with the Group's
facilities.
At 30 September 2020 the Group had cash reserves of GBP11.2m
with an undrawn amount of GBP2.0m from a revolving credit facility
of GBP5.0m (GBP3.0m drawn down) and an undrawn GBP2.0m Coronavirus
Large Business Interruption Loan Scheme Facility. In addition to
the above, the Group has also agreed a relaxation of its banking
covenants until 30 September 2021.
Based on the cash flow forecasts prepared including appropriate
stress testing, the Directors are confident that any funding needs
required by the business will be sufficiently covered by the
existing cash reserves and the undrawn additional credit facility.
As such these Financial Statements have been prepared on a going
concern basis.
2 SEGMENTAL ANALYSIS
REPORTABLE SEGMENTS
For management purposes, the Group is organised into three
operating divisions: Europe & Americas (EuAm), Middle East (ME)
and Asia Pacific (APAC). This has remained unchanged from the
previous year. These divisions are the basis on which the Group is
structured and managed, based on its geographic structure. The
following key service provisions are provided across all three
operating divisions: quantity surveying, planning / programming,
quantum and planning experts, dispute avoidance / resolution,
litigation support, contract administration and commercial advice /
management. Segment information about these reportable segments is
presented below.
Europe & Middle
Year ended 30 September Americas East Asia Pacific Eliminations Unallocated Consolidated
2020 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------ --------- ------- ------------ ------------ ----------- ------------
Total external revenue 31,033 14,373 7,668 - - 53,074
Total inter-segment revenue 53 576 24 (653) - -
------------------------------ --------- ------- ------------ ------------ ----------- ------------
Total revenue 31,086 14,949 7,692 (653) - 53,074
------------------------------ --------- ------- ------------ ------------ ----------- ------------
Segmental profit 3,988 111 511 - - 4,610
Unallocated corporate
expenses(1) - - - - (1,992) (1,992)
One off severance costs - - - - (767) (767)
------------------------------ --------- ------- ------------ ------------ ----------- ------------
Operating profit 3,988 111 511 - (2,759) 1,851
Finance income - - - - 14 14
Finance expense - - - - (128) (128)
------------------------------ --------- ------- ------------ ------------ ----------- ------------
Profit before taxation 3,988 111 511 - (2,873) 1,737
Taxation - - - - (399) (399)
------------------------------ --------- ------- ------------ ------------ ----------- ------------
Profit for the period 3,988 111 511 - (3,272) (1,338)
------------------------------ --------- ------- ------------ ------------ ----------- ------------
OTHER INFORMATION
Non current assets 3,192 270 87 - 2,242 5,791
Reportable segment assets 16,061 8,796 2,117 - 8,022 34,996
Capital additions(2) 82 37 18 - 212 349
Depreciation and amortisation 543 327 247 - 255 1,372
------------------------------ --------- ------- ------------ ------------ ----------- ------------
(1) Unallocated costs represent Directors' remuneration,
administration staff, corporate head office costs and expenses
associated with AIM.
(2) Capital additions comprise additions to property, plant and
equipment and intangible assets. No client had revenue exceeding
10% of the Group's revenue in the year to 30 September 2020.
Europe & Middle
Year ended 30 September Americas East Asia Pacific Eliminations Unallocated Consolidated
2019 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------ --------- ------- ------------ ------------ ----------- ------------
Total external revenue 29,771 19,645 9,070 - - 58,486
Total inter-segment revenue 47 121 20 (188) - -
------------------------------ --------- ------- ------------ ------------ ----------- ------------
Total revenue 29,818 19,766 9,090 (188) - 58,486
------------------------------ --------- ------- ------------ ------------ ----------- ------------
Segmental profit/(loss) 3,908 1,446 (363) - - 4,991
Unallocated corporate
expenses(1) - - - - (1,902) (1,902)
Share-based payment charge - - - - 243 243
------------------------------ --------- ------- ------------ ------------ ----------- ------------
Operating profit/(loss) 3,908 1,446 (363) - (1,659) 3,332
Finance income - - - - 44 44
Finance expense - - - - (131) (131)
------------------------------ --------- ------- ------------ ------------ ----------- ------------
Profit/(loss) before taxation 3,908 1,446 (363) - (1,746) 3,245
Taxation - - - - (497) (497)
------------------------------ --------- ------- ------------ ------------ ----------- ------------
Profit/(loss) for the
period 3,908 1,446 (363) - (2,243) 2,748
------------------------------ --------- ------- ------------ ------------ ----------- ------------
OTHER INFORMATION
Non current assets 3,200 379 129 - 214 3,922
Reportable segment assets 11,707 9,609 3,832 - 6,491 31,639
Capital additions(2) 43 190 77 - 28 338
Depreciation and amortisation 99 145 100 - 74 418
------------------------------ --------- ------- ------------ ------------ ----------- ------------
(1) Unallocated costs represent Directors' remuneration,
administration staff, corporate head office costs and expenses
associated with AIM.
(2) Capital additions comprise additions to property, plant and
equipment and intangible assets. No client had revenue exceeding
10% of the Group's revenue in the year to 30 September 2019.
Geographical information
2020 2019
External revenue by location of customers GBP000 GBP000
------------------------------------------ ------- -------
UK 17,622 16,709
UAE 5,757 9,124
Oman 5,043 6,004
Saudi Arabia 2,589 806
Singapore 2,413 3,608
Netherlands 2,230 2,294
Germany 2,193 2,461
France 1,953 2,149
Qatar 1,877 3,582
Ireland 1,599 533
Australia 1,393 1,559
Canada 1,027 1,298
Indonesia 1,006 -
Spain 955 1,246
Malaysia 949 1,812
United States 943 771
Italy 506 514
Denmark 390 161
Belgium 365 570
Russia 353 365
Poland 327 485
Kuwait 286 430
South Korea 210 42
Hong Kong 193 288
Croatia 192 70
Vietnam 127 84
India 30 518
Luxembourg 5 114
Kazakhstan - 122
Other countries 541 767
------------------------------------------ ------- -------
53,074 58,486
------------------------------------------ ------- -------
Geographical information of Non current assets
2020 2019
GBP000 GBP000
------------ ------- -------
UK 4,927 3,396
UAE 275 184
Netherlands 144 10
Oman 123 129
Malaysia 75 43
Hong Kong 68 21
Qatar 53 38
Singapore 46 54
France 33 3
Australia 19 11
Kuwait 12 28
Canada 8 5
USA 8 -
------------ ------- -------
5,791 3,922
------------ ------- -------
3 TAXATION
Analysis of the tax charge
The tax charge on the profit for the year is as follows:
2020 2019
GBP000 GBP000
------------------------------------------------- ------- -------
Current tax:
UK corporation tax on profit for the year 88 165
Non-UK corporation tax 388 568
Adjustments to the prior period estimates (37) (37)
------------------------------------------------- ------- -------
439 696
Deferred tax:
Origination and reversal of temporary difference (40) (199)
------------------------------------------------- ------- -------
Tax charge for the year 399 497
------------------------------------------------- ------- -------
Factors affecting the tax charge
The tax assessed for the year varies from the standard rate of
corporation tax in the UK. The difference is explained below:
2020 2019
GBP000 GBP000
---------------------------------------------------------- ------- -------
Profit before tax 1,737 3,245
---------------------------------------------------------- ------- -------
Expected tax charge based on the standard average rate of
corporation tax in the UK of 19% (2019: 19%) 330 617
Effects of:
Expenses not deductible 8 (24)
Deferred tax - other differences (40) (199)
Foreign tax rate differences 124 206
Adjustment to prior period estimates (37) (37)
Utilisation of losses (47) (168)
Share options exercised - (11)
Unprovided losses 61 113
---------------------------------------------------------- ------- -------
Tax charge for the year 399 497
---------------------------------------------------------- ------- -------
Factors that may affect future tax charges
As at the balance sheet date there are no known reasons that
will affect future tax charges.
4 EARNINGS PER SHARE
2020 2019
GBP000 GBP000
------------------------------------------------------- ----------- ----------
Profit for the financial year attributable to
equity shareholders 1,339 2,747
Compensation for loss of office 767 -
Share-based payment charges and associated costs - (243)
------------------------------------------------------- ----------- ----------
Underlying profit for the year before share-based
payments and compensation for loss of office 2,106 2,504
------------------------------------------------------- ----------- ----------
Weighted average number of shares:
Ordinary shares in issue 53,962,868 53,942,035
Shares held by EBT (3,677) (3,677)
Treasury shares (1,786,937) (619,223)
------------------------------------------------------- ----------- ----------
Basic weighted average number of shares 52,172,254 53,319,135
------------------------------------------------------- ----------- ----------
Effect of Employee share options 2,558,796 3,462,087
------------------------------------------------------- ----------- ----------
Diluted weighted average number of shares 54,731,050 56,781,222
------------------------------------------------------- ----------- ----------
Basic earnings per share 2.6p 5.2p
Diluted earnings per share 2.5p 4.8p
Underlying basic earnings per share before share-based
payments and compensation for loss of office 4.0p 4.7p
------------------------------------------------------- ----------- ----------
5 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Some asset and liability amounts reported in the Consolidated
Financial Statements contain a degree of management estimation and
assumptions. There is therefore a risk of significant changes to
the carrying amounts for these assets and liabilities within the
next financial year. The estimates and assumptions are made on the
basis of information and conditions that exist at the time of the
valuation.
The following are considered to be key accounting estimates:
Impairment reviews
Determining whether goodwill is impaired requires an estimation
of the value in use of the cash generating units to which goodwill
has been allocated. The value in use calculation requires an entity
to estimate the future cash flows expected to arise from the cash
generating unit and a suitable discount rate in order to calculate
present value. An impairment review test has been performed at the
reporting date and no impairment is required.
Receivables impairment provisions
The amounts presented in the Consolidated Statement of Financial
Position are net of allowances for doubtful receivables, estimated
by the Group's management based on the expected credit loss within
IFRS 9. This is calculated using a simplified model of recognising
lifetime expected losses based on the geographical location of the
Group's entities and considers historical default rates, projecting
these forward taking into account any specific debtors and
forecasts relating to local economies. At the Statement of
Financial Position date a GBP2,559,000 (2019: GBP2,384,000)
provision was required. If management's estimates changed in
relation to the recoverability of specific trade receivables the
provision could increase or decrease. Any future increase to the
provision would lead to a corresponding increase in reported losses
and a reduction in reported total assets.
Revenue recognition on fixed fee projects
Where the Group enters into a formal fixed fee arrangement
revenue is recognised by reference to the stage of completion of
the project. The stage of completion will be estimated by the
Group's management based on the Project Manager's assessment of the
contract terms, the time incurred and the performance obligations
achieved and remaining.
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END
FR BZLLFBLLFFBQ
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December 15, 2020 02:00 ET (07:00 GMT)
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