Preliminary Results and Dividend Declaration

RNS Number : 2996Z

Driver Group plc

24 January 2022

 

24 January 2022

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 2021.

The final dividend for the full year of 0.75 pence per share will be paid on 6 April 2022 to shareholders who are on the register of members at the close of business on 25 February 2022 subject to approval at the AGM.

Financial and Operational Highlights

· Revenue decreased by 8% to £48.8m (2020: £53.1m)

· Underlying^* profit before tax decreased by 20% to £2.0m (2020: £2.5m)

· Profit for the year decreased to £1.1m (2020: £1.3m)

· Net cash^** decreased to £6.5m (2020: £8.2m)

· Utilisation^*** increased to 72.4% (2020: 72.0%)

· Earnings per share decreased to 2.1p (2020: 2.6p)

Mark Wheeler, Chief Executive Officer of Driver Group plc, commented:

"I am pleased to report another positive result for the Group during unprecedented times and would like to pay tribute to our amazing staff, who have continued to respond with extraordinary dedication and professionalism to the challenges caused by the pandemic. The business remains focussed on higher margin work and opportunities and we have seen further growth in our number of Diales experts and Diales revenue."

* 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)

Singer Capital Markets (Nomad & Broker)   020 7496 3000

Sandy Fraser

Will Goode 

Acuitas Communications                                  020 3687 0868

Simon Nayyar                                                    [e-mail]

Edward Lee                                                        [e-mail] m

CHAIRMAN'S STATEMENT

IMPACT OF COVID-19

As I reported at the time of the interim results, this year has continued to be affected by the COVID-19 pandemic but, taken as a whole, the overall picture is positive and improving.

It is encouraging that as the world's economies began to open up over the last quarter of our financial year we have seen a significant uptick in activity levels, which I am pleased to report has continued post year end. This reflects the growing confidence of clients to take decisions which had been delayed during the uncertainties of the pandemic and positions Driver Group well for the opportunities that lie ahead.

In the regions where travel and social restrictions have been relaxed, we have moved to either full-time office-based working or a hybrid solution. This enables us to ensure that we have a safe working environment for our staff and strengthens our ability to service the requirements of our clients coherently and effectively, as they and we would wish. It is envisaged that this transition away from a largely working from home model will hopefully continue as the effects of COVID begin to recede across the markets in which we operate; the pace of this change will, of course, be dictated by the local considerations involved - most particularly the need to provide secure working arrangements for our people.

THE BUSINESS TRADING PERFORMANCE

During the year your Board has continuously monitored the uncertainty across global economies and markets caused by the pandemic, and the associated lower levels of commercial activity, in order to manage the impact on Driver Group whilst ensuring clients remained properly serviced and supported.

A resilient operating performance during 2021 saw profits only slightly down on last year's results, despite continued COVID impacts across our global business and the loss earlier in the year of two senior staff and associated team members to a competitor in the APAC region. In addition our cash position has been maintained at a healthy level.

In a year of unique and unprecedented challenge this is a strong performance and one that shows Driver Group has responded to the effects of the pandemic in a highly resourceful and resilient manner.

STRATEGY

I am pleased to report that whilst COVID-19 has created economic uncertainty across the world which has affected Driver in a number of important respects we have nonetheless made significant progress in implementing our strategy.

In particular, the opening of new offices in New York and Madrid has proven to be as successful as we could have anticipated, helping to generate new business opportunities

in and across our markets, and to onboard and service more clients in a more appropriate and culturally relevant manner. The strategic alliance with EVRA Consulting in South Africa

has also seen some encouraging leads for the requirement of our expert services.

DIVIDEND

I am pleased to confirm that given the strength of our operating performance and of the Group balance sheet the Directors recommend a final dividend of 0.75p (2020: 0.75p

per share) in addition to the interim dividend declared during the year.

BOARD

During the financial year the Board has remained unchanged.

I am pleased to report that Mark Wheeler has continued to demonstrate exceptional leadership since taking over as Chief Executive, reflecting his longstanding and deep knowledge of the business and its clients. 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 move forward with our strategy at pace and is well placed to meet the challenges in front of us.

OUTLOOK

The effects of the pandemic seem at last to be receding in many jurisdictions including the UK, which is hugely welcomed. But as recent infection rates across the world attest, we must remain alert to the fact that in some markets it is possible that the outlook is not yet certain in all regions but it is anticipated that market stability will improve during 2022.

So while it remains likely in the near term that we will continue to see some disruption in some areas of our business I have every confidence in our management team to navigate the right path for the Group. The strength of our balance sheet and our continued profitability provide clear evidence of a well-functioning team and a well-run business. With activity levels showing signs of improving, we are well placed to take advantage of the opportunities that will come as the markets in which we operate fully re-open. Our medium term aspiration is unchanged from that first communicated to shareholders twelve months ago, namely to deliver the core financial target established within the Board's five year strategic plan of moving towards a double digit operating profit margin over the life of the plan.

I would like to pay particular tribute to our CEO Mark Wheeler and CFO David Kilgour for the exemplary way in which they have managed the business through the last year. I would also like to thank my Board colleagues Peter Collini, Elizabeth Filkin and John Mullen for their unstinting support and insights. But most of all I want to thank all our staff for their continued diligence and loyalty. They are the heart and soul of our business and in this year as in all years they have done us proud. Last but by no means least I take this opportunity to express my gratitude to all our shareholders for the confidence they have consistently demonstrated and I am confident that the Group is well placed to repay that confidence in the year ahead.

Steven Norris

Non-Executive Chairman

CHIEF EXECUTIVE OFFICER'S REVIEW

INTRODUCTION

A year ago, in my first CEO's review, I reported on the challenges Driver faced as a result of the COVID-19 pandemic; highlighted a nevertheless resilient, and profitable, operating performance; anticipated the potential for further success on the return to more normal trading conditions; and laid out the rationale and ambitions for a new strategic plan. It is gratifying to me, and I hope to our shareholders, that I am to return to those themes today and report to you strong progress.

As the pandemic progressively affected global markets through 2020, we saw a backlog of work for the Group building up in our client base but not working its way through to the order pipeline. Whilst frustrating at the time, this situation did mean that we saw meaningful improvements in market conditions through 2021, as clients gained confidence to resume their commercial operations with greater eagerness and growing momentum.

As for the Group's future strategic positioning, we continue to place particular emphasis on: attracting and retaining staff to build a unified, and highly commercially competitive culture; focussing on higher margin work; broadening our regional presence; strengthening internal systems; and, ultimately, ensuring sustainable growth in profitability.

Finally, I would like to pay tribute to our amazing staff, who have continued to respond with extraordinary dedication and professionalism to the challenges caused by the pandemic during the year. The challenges were particularly acute in a business that operates globally and for which travel has always been a key and essential part of our day

to day operations.

Our staff have often been unable to return from long term commissions for periods of time without quarantine and, so, have had to rapidly adopt new electronic ways of working across time zones. I know that this flexibility is deeply appreciated by the management team, the Board, and our shareholders.

STRATEGY

The strategy I set out in our last annual report remains in place and I can confirm that good progress has continued to be made against the five year strategy and our key areas are staff, margin and growth.

Promoting a shared business culture that prioritises profitability and effectiveness across all staff and management has been the focus of a great deal of effort and attention.

We have put in place retention measures for key staff in each of the areas of the business where this is deemed to be business-critical. In addition, we have sharpened our recruitment strategy with a focus on international integration. This will allow key members of staff to relocate globally within the business in a more flexible and efficient way, where they wish to, rather than needing to seek engagement with competitors.

Our success in recruiting, particularly in Asia Pacific and the Middle East, where business has been particularly challenging provides eloquent testimony to the reputation that our business now has among the people that work in our specialist sector. We have a deserved reputation for looking after our people; for providing excellent training and staff development opportunities; and, through our network of Diales experts, of offering the opportunity to work on some of the most interesting projects anywhere in the world.

The business remains focussed on higher margin work and opportunities, and we have seen further growth in our number of Diales experts and in our expert revenue, particularly in Q4, when it was possible to access more opportunities across the Middle East and Asia Pacific.

Our new ERP IT system should come online in the second quarter of the current financial year and will bring great benefits to management in terms of ease and accessibility of data, and also the timescale in which key business KPIs are available to be assessed, measured and managed. We have seen over the last 18 months the importance of investing well in technology and I am confident that this will allow our management teams across the world to be better equipped and even more focussed on meeting the margin improvement targets that the Board has set.

REGIONAL BREAKDOWN

EUROPE AND AMERICAS

The business in central Europe has had a particularly pleasing year with strong utilisation levels throughout the year and a number of additional hires joining to bolster both the regional and global capability of these business units. We were delighted to see our new operation in Madrid, Spain, increase its headcount and therefore provide us with additional opportunities to take on work from Spanish speaking Latin America in conjunction with our operation in the United States which demonstrates early delivery on our decision to open this office. We have an excellent business in Paris and the Netherlands which, together with the growing operation in Germany, offers a solid platform for further growth in the current financial year.

Our business in the UK continued to perform admirably throughout the challenges of the pandemic and all of our mainland UK offices are now back in operation with staff attending on at least a part-time basis. This has allowed us to increase business development activity and we are already seeing new inbound enquiries for assignments to commence in the current quarter. Our project services business in the Northeast of England has had an exceptional year, significantly exceeding revenue targets. This appears to be a positive indication that the economic outlook for manufacturing in the Northeast of England is strong and growing.

The office in New York which we opened during the pandemic has gone from strength to strength during the year hiring some additional staff and attracting enquiries for work from both South America and Canada, as well as the domestic US market. Our staff are highly motivated to continue our growth in the United States over the coming year and we are delighted to see some of the new work won being transferred to our UK and European offices in order to meet the level of demand we are experiencing. The Board will be taking steps to ensure this growing business is properly and sustainably supported over the next 12 months in order to maximise its potential.

ASIA PACIFIC

During the year we were able to establish an operating base in Seoul, South Korea, which has allowed us to service existing commissions in Seoul and also provided the opportunity to connect with Korean clients working in our Middle East and African regions. A number of opportunities have been generated already from this base, which will continue to run during the current quarter. We have also managed to grow the team in APAC with some excellent new expert witness hires, giving a particular boost to our busy Australian business that has traded successfully throughout the last 18 months and is now well positioned to seek expert commissions with the increase in testifying staff.

MIDDLE EAST

The Middle East business experienced a particularly challenging year as issues with liquidity in clients caused the backlog of projects to build significantly without generating the required level of activity to drive our utilisation up to pre-pandemic levels. Throughout the third quarter of 2020/21 this position began to change, and in Q4 we started to see the pipeline of opportunities finally maturing into live work. I am pleased to note that this trend continued during Q1 of the current financial year. We have taken the opportunity

to refocus our business in the UAE by reducing the size of our Abu Dhabi office and hiring additional expertise in the oil & gas sector, for which we have identified particular current and upcoming demand. We have consolidated the management of our Kuwait and Qatar operations and also optimised the team in Oman to focus on more profitable dispute workstreams.

CURRENT TRADING AND OUTLOOK

I am optimistic about the future of Driver Group and our ability to deliver on our strategic aims, helping to drive sustainable value creation for our shareholders.

This confidence is inspired by the consistent evidence I have seen of our staff rising to the challenges of the pandemic; a particularly strong trading performance in the final quarter of the 2021 financial year which delivered underlying profit at a run rate in excess of £3.5m on an annualised basis, a reminder of the profit potential of the Group  at elevated utilisation rates; and the good pipeline of live opportunities that currently sit within our tender and prospect lists.

Frustratingly, that pipeline of opportunity is yet to be reflected in a sustained improvement in the Group's financial performance. The consolidated budget for the 2022 financial year is heavily second-half weighted as usual but also reflects the Board's expectation of some level of Covid-related disruption during the first half and the typical lag between new strategic hiring decisions and revenue generation. However, management information for the first quarter shows an estimated result which is slightly behind both the budgeted result and the outcome for the same period last year. The Board remains optimistic that the underlying result for the year as a whole will show significant year-on-year improvement, but this will require monthly revenues during the remainder of the financial year consistently higher than the c£4.0m monthly run rate recorded across the first quarter.

Our critical advantages in addressing this challenge are an exceptional team of people across the world who are committed to the business and a backlog of work from construction and engineering projects that have been through all manner of challenges during the last 18 months.

Additionally, whilst a reduction in global travel will create, and has created, savings both economically and in terms of our environmental impact, the opportunity to travel for key new commissions and marketing opportunities cannot be underestimated. Seeing current and potential clients face-to-face will be of great significance as we work to drive the business to return to higher levels of profit over the next 2 years.

As always, we are very keen to thank all our shareholders for their continued support as the staff, Board, and management work to deliver on the strategy and outcomes that we all expect to see.

Mark Wheeler

Chief Executive Officer

CHIEF FINANCIAL OFFICER'S REVIEW

Income Statement	2021 £m	2020 £m
Revenue	48.77	53.07
Cost of sales	(36.35)	(39.16)
Impairment movement	(0.19)	(0.78)
Gross Profit	12.23	13.13
Recurring operating expenses	(10.11)	(10.52)
Net finance costs	(0.11)	(0.11)
Underlying*profit before tax	2.01	2.50
One off severance costs	-	(0.76)
Share-based payments credit	(0.15)	-
Profit before Tax	1.86	1.74
Tax expense	(0.75)	(0.40)
Profit for the year	1.11	1.34

In 2021 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. Additionally the business in the ME and APAC regions was restructured to reduce the cost base and refocus the fee earning capability on to higher margin and growing market sectors. Overall, this resulted in lower revenues and underlying* profit before tax than 2020. The key financial metrics are as follows:

Key Metrics	2021	2020
Revenue	£48.77m	£53.07m
Gross Margin %	25.1%	24.7%
Profit for the year	£1.11m	£1.34m
Utilisation Rates**	72.4%	72.0%
Basic earnings per share	2.1p	2.6p

Total revenue decreased by 8.1% to £48.77m (2020: £53.07m) and gross profit decreased by 6.9% to £12.23m (2020: £13.13m). The reduction in gross profit was as a result of the

lower revenues in the APAC and ME regions, the impact of which has been offset by further rationalisation of the cost base. The profit for the year has decreased by 17.2% to £1.11m

(2020: £1.34m). The net cash** at the year end was £6.5m (2020: £8.2m), after funding a dividend payment of £0.39m (2020: £0.65m).

The EuAm region increased revenue by 8.7% to £33.73m (2020: £31.03m) and generated an increase in segmental profit of 24% to £4.95m (2020: £3.99m). This strong performance was driven by good revenues in the UK of £25.25m (2020: £23.23m) with a small drop in revenues in mainland Europe of 1% to £6.53m (2020: £6.61m). The full year revenues of the USA business helped increase the North American revenues by 64.7% to £1.96m (2020: £1.19m). The ME region saw revenues drop during the year by 24% to £10.92m (2020: £14.37m) due to a reduction in market activity in the region and the impact of COVID-19. Revenues in Qatar showed an increase of 34.1% to £2.44m (2020:

£1.82m) otherwise revenues were down across the region. Segmental result for the region was a loss of £0.74m (2020: segmental profit £0.11m).

The APAC region saw revenues drop by 46.3% to £4.12m (2020: £7.67m). The reduction was partly as a consequence of COVID-19 but mainly as a result of the loss from Singapore

of two senior staff and their associated team to a competitor in the region. Since this happened in November 2020 we have recruited to replace some of the staff and our capability in the region. The revenues in Australia increased by 25.2% from £1.16m to £1.45m, which helped to offset the reduction in the remainder of the region. The segmental result for the year was a loss of £0.41m (2020: segmental profit £0.51m) which reflects the impact of the loss of key senior staff. The opening of a South Korean base during the year reflects our confidence that the APAC region will provide further growth over the next few years.

The utilisation^*** rate of chargeable staff across the business as a whole for the year stood at 72.4%, a small increase from 72.0% in the prior year reflecting the continued impact of the pandemic on market activity. The variation in utilisation during the year ranged from a low of 67.8% in April to a high of 79.2% in July. The overall level of utilisation during the pandemic has remained fairly consistent and has held up well during the period when considering the level of market disruption.

After a net interest charge of £0.11m (2020: £0.11m) the underlying* profit before tax was £2.01m (2020: £2.50m) and the reported profit before tax was £1.86m (2020: £1.74m). The current year profit before tax includes a charge for share-based payments of £0.15m while last year's result included a one off severance cost for the outgoing Chief Executive Officer of £0.77m. Details of outstanding options can be found in the Report of the Directors and Directors' Remuneration Report.

NET WORKING CAPITAL 

Net cash** remained healthy, closing the year at £6.5m (2020: £8.2m) with net working capital increasing as there was an increase in outstanding debtors and a decrease in creditors.

TAXATION

The Group incurred a tax charge of £0.75m (2020: £0.40m). 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 40.3% (2020: 23%). The increase in the effective rate is due to losses or lower profits made in jurisdictions with either nil or lower tax rates which results in no relief for tax losses.

EARNINGS PER SHARE

The basic earnings per share was 2.1 pence (2020: 2.6 pence). Underlying* continuing basic earnings per share was 2.4 pence (2020: 4.0 pence).

CASH FLOW

There was a net cash inflow from operating activities before changes in working capital of £3.36m (2020: £3.28m), including the current year benefit of £0.97m (2020: £1.05m) from the amortisation of right of use assets under IFRS16. The movement also reflects the reported profit for the year of £1.11m (2020: £1.34m) after depreciation of £0.26m (2020:

£0.32m). There was an increase of £0.88m in trade and other receivables (2020: decrease of £2.06m) reflecting the more difficult market conditions during the year, and a decrease

in trade and other payables of £1.47m (2020: increase £0.24m) resulting in a net cash inflow from operating activities of £0.25m (2020: £5.06m). Net tax paid in the year was

£0.76m (2020: £0.52m).

There was a net cash outflow from investing activities of £0.52m (2020: £0.34m) which is a result of increased capital expenditure, including IT spend.

Net cash flow from financing activities was an outflow of £4.43m (2020: £0.98m) with the current year reflecting the dividends paid of £0.39m (2020: £0.65m), repayment of borrowings of £3.25m (2020: £2.13m), which includes the repayment, on 1st October 2020, of the revolving credit facility of £3.0m drawn during the first six months of the pandemic and lease repayments under IFRS 16 of £0.93m (2020: £1.07m).

cash flow	£m
Net cash** at 30 September 2020	8.22
Operating cash flow before changes in working capital	3.36
Increase in Trade and other receivables	(0.88)
Decrease in Trade and other payables	(1.46)
Tax paid	(0.76)
Net interest paid	(0.11)
Capital spend	(0.52)
Dividends paid	(0.39)
Repayment of leases	(0.93)
Effects of Foreign Exchange	(0.04)
Net cash** at 30 September 2021	6.47

LIQUIDITY AND GOING CONCERN

The Group is in a strong financial position. At the year end the Group had net cash balances of £6.5m (2020: £8.2m) together with committed borrowing facilities of £5.0m (2020: £7.0m) all of which were undrawn at 30 September 2021. The net cash and available facilities provide significant liquidity and taking into account going concern reviews the Board decided that the CLBILs facility which was arranged early in the pandemic was no longer required. It is considered that the net cash position and the available facilities are more than adequate for the Group's operating requirements looking forward.

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.

DIVIDENDS

The Directors propose a final dividend for 2021 of 0.75p per share (2020: 0.75p per share) in addition to the interim dividend paid in October 2021 of 0.75p per share (2020: £nil) This will be paid on 6 April 2022 to shareholders who are on the register of members at the close of business on 25 February 2022 subject to approval at the Group's Annual General Meeting.

David Kilgour

Chief Financial Officer

* 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

Consolidated Income Statement

For the year ended 30 September 2021

	2021 £000	2020 £000
REVENUE	48,772	53,074
Cost of sales	(36,350)	(39,162)
Impairment movement	(187)	(778)
GROSS PROFIT	12,235	13,134
Administrative expenses	(10,459)	(11,413)
Other operating income	194	130
Underlying* operating profit	2,119	2,618
One off severance costs	-	(767)
Share-based payment charges and associated costs	(149)	-
OPERATING PROFIT	1,970	1,851
Finance income	-	14
Finance costs	(110)	(128)
PROFIT BEFORE TAXATION	1,860	1,737
Tax expense	(746)	(399)
PROFIT FOR THE YEAR	1,114	1,338
(Loss)/profit attributable to non-controlling interest	-	(1)
Profit attributable to equity shareholders of the Parent	1,114	1,339
	1,114	1,338
Basic earnings per share attributable to equity shareholders of the Parent (pence)	2.1p	2.6p
Diluted earnings per share attributable to equity shareholders of the Parent (pence)	2.1p	2.5p

* 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 2021

	2021 £ 000	2020 £000
PROFIT FOR THE YEAR	1,114	1,338
Other comprehensive income:
Items that could subsequently be reclassified to the Income Statement:
Exchange differences on translating foreign operations	38	(24)
OTHER COMPREHENSIVE PROFIT/(LOSS) FOR THE YEAR NET OF TAX	38	(24)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR	1,152	1,314
Total comprehensive income attributable to:
Owners of the Parent	1,152	1,315
Non-controlling interest	-	(1)
	1,152	1,314

Consolidated Statement of Financial Position

For the year ended 30 September 2021

	2021		2020
	£000	£000	£000	£000
NON-CURRENT ASSETS
Goodwill	2,969		2,969
Property, plant and equipment	405		501
Intangible asset	516		182
Right of use asset	1,854		1,831
Deferred tax asset	272		308
		6,016		5,791
CURRENT ASSETS
Trade and other receivables	18,865		17,819
Derivative financial asset	57		171
Cash and cash equivalents	6,474		11,215
		25,396		29,205
TOTAL ASSETS		31,412		34,996
CURRENT LIABILITIES
Borrowings	-		(3,000)
Lease creditor	(778)		(679)
Trade and other payables	(8,009)		(9,446)
Derivative financial liability	(169)		(178)
Current tax payable	(165)		(264)
		(9,121)		(13,567)
NON-CURRENT LIABILITIES
Lease creditor	(1,023)		(1,040)
		(1,023)		(1,040)
TOTAL LIABILITIES		(10,144)		(14,607)
NET ASSETS		21,268		20,389
SHAREHOLDERS' EQUITY
Share capital		216		216
Share premium		11,496		11,496
Merger reserve		1,055		1,055
Currency reserve		(411)		(449)
Capital redemption reserve		18		18
Treasury shares		(1,025)		(1,025)
Retained earnings		9,916		9,075
Own shares		(3)		(3)
TOTAL SHAREHOLDERS' EQUITY		21,262		20,383
NON-CONTROLLING INTEREST		6		6
TOTAL EQUITY		21,268		20,389

Consolidated Cash Flow Statement

For the year ended 30 September 2021

	2021 £000	2020 £000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit for the year	1,114	1,338
Adjustments for:
Depreciation	261	321
Exchange adjustments	38	55
Amortisation of right of use asset	969	1,051
Finance income	-	(14)
Finance expense	110	128
Tax expense	746	399
Equity settled share-based payment charge	118	-
OPERATING CASH FLOW BEFORE CHANGES IN WORKING CAPITAL AND PROVISIONS	3,356	3,278
(Increase)/decrease in trade and other receivables	(881)	2,056
(Decrease)/increase in trade and other payables	(1,465)	240
CASH GENERATED IN OPERATIONS	1,010	5,574
Tax paid	(763)	(519)
NET CASH INFLOW FROM OPERATING ACTIVITIES	247	5,055
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received	-	14
Acquisition of property, plant and equipment	(187)	(167)
Acquisition of intangible assets	(334)	(182)
NET CASH OUTFLOW FROM INVESTING ACTIVITIES	(521)	(335)
CASH FLOWS FROM FINANCING ACTIVITIES
Interest paid	(110)	(107)
Repayment of borrowings	(3,250)	(2,125)
Proceeds of borrowings	250	3,000
Repayment of lease liabilities	(928)	(1,066)
Purchase of Treasury shares	-	(25)
Dividends paid to equity shareholders of the Parent	(391)	(653)
NET CASH OUTFLOW FROM FINANCING ACTIVITIES	(4,429)	(976)
Net (decrease)/increase in cash and cash equivalents	(4,703)	3,744
Effect of foreign exchange on cash and cash equivalents	(38)	(55)
Cash and cash equivalents at start of period	11,215	7,526
CASH AND CASH EQUIVALENTS AT END OF PERIOD	6,474	11,215

Consolidated Statement of Changes in Equity

For the year ended 30 September 2021

	Share capital £000	Share premium £000	Treasury shares £000	Merger reserve £000	Other reserves(2) £000	Retained earnings £000	Own shares(3) £000	Total(1) £000	Non- controlling interest £000	Total Equity £000
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
OPENING BALANCE AT 1 OCTOBER 2020	216	11,496	(1,025)	1,055	(431)	9,075	(3)	20,383	6	20,389
Profit for the year	-	-	-	-	-	1,114	-	1,114	-	1,114
Other comprehensive income for the year	-	-	-	-	38	-	-	38	-	38
Total comprehensive income for the year	-	-	-	-	38	1,114	-	1,152	-	1,152
Dividends	-	-	-	-	-	(391)	-	(391)	-	(391)
Share-based payment(4)	-	-	-	-	-	118	-	118	-	118
Purchase of Treasury shares	-	-	-	-	-	-	-	-	-	-
Issue of new shares	-	-	-	-	-	-	-	-	-	-
CLOSING BALANCE AT 30 SEPTEMBER 2021	216	11,496	(1,025)	1,055	(393)	9,916	(3)	21,262	6	21,268

(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.

(4)  The amount stated reflects only the share-based payment charge and does not include the associated costs that are included within the amount stated on the consolidated Income Statement.

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 2021 or 2020. Statutory accounts for 2020 have been delivered to the Registrar of Companies, and those for 2021 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 focused 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. As measures imposed by governments around the world have slowly begun to relax throughout 2021 the Group has slowly re-opened offices to staff and 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 any potential further impact the COVID-19 pandemic may bring. 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 stressed forecasts show that the Group could incur a reduction in revenues of up to approximately 13% compared to base forecasts combined with a minimal change to the cost base and a reduction of cash collections by up to 14%

compared to base forecasts 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 2021 the Group had cash reserves of £6.5m with an undrawn amount of £5.0m from a revolving credit facility of £5.0m.

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.

Year ended 30 September 2021	Europe & Americas £000	Middle East £000	Asia Pacific £000	Eliminations £000	Unallocated £000	Consolidated £000
Total external revenue	33,734	10,919	4,119	-	-	48,772
Total inter-segment revenue	468	798	220	(1,486)	-	-
Total revenue	34,202	11,717	4,339	(1,486)	-	48,772
Segmental profit/(loss)	4,947	(737)	(408)	-	-	3,802
Unallocated corporate expenses(1)	-	-	-	-	(1,683)	(1,683)
Share-based payments charge and associated costs	-	-	-	-	(149)	(149)
One off severance costs	-	-	-	-	-	-
Operating profit/(loss)	4,947	(737)	(408)	-	(1,832)	1,970
Finance income	-	-	-	-	-	-
Finance expense	-	-	-	-	(110)	(110)
Profit/(loss) before taxation	4,947	(737)	(408)	-	(1,942)	1,860
Taxation	-	-	-	-	(746)	(746)
Profit/(loss) for the period	4,947	(737)	(408)	-	(2,688)	1,114
OTHER INFORMATION
Non current assets	3,224	249	74	-	2,449	6,016
Reportable segment assets	14,865	10,051	2,401	-	4,095	31,412
Capital additions(2)	88	71	12	-	350	521
Depreciation and amortisation	602	240	157	-	231	1,230

(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 2021.

Year ended 30 September 2020	Europe & Americas £000	Middle East £000	Asia Pacific £000	Eliminations £000	Unallocated £000	Consolidated £000
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. 

GEOGRAPHICAL INFORMATION

External revenue by location of customers	2021 £000	2020 £000
United Kingdom	18,892	17,622
United Arab Emirates	3,474	5,757
Netherlands	3,186	2,230
Saudi Arabia	3,137	2,589
Oman	3,065	5,043
Qatar	2,581	1,877
Germany	1,856	2,193
Australia	1,462	1,393
Singapore	1,266	2,413
Ireland	1,151	1,599
Canada	1,146	1,027
France	1,030	1,953
Spain	955	955
United States	932	943
Kuwait	845	286
Italy	502	506
Malaysia	473	949
South Korea	437	210
Russia	391	353
Denmark	366	390
Indonesia	255	1,006
Belgium	224	365
South Africa	209	15
Poland	119	327
Myanmar (Burma)	116	-
Algeria	106	-
Austria	104	96
Hong Kong	74	193
Other countries	418	784
	48,772	53,074

Geographical information of Non current assets

	2021 £000	2020 £000
UK	5,347	4,929
Oman	123	123
UAE	125	275
Singapore	25	46
Qatar	41	53
Malaysia	58	75
Kuwait	8	12
Hong Kong	9	68
Netherlands	211	144
France	21	33
Australia	10	19
Canada	5	8
USA	8	8
Spain	25	-
	6,016	5,791

3  TAXATION

Analysis of the tax charge

The tax charge on the profit for the year is as follows:

	2021 £000	2020 £000
Current tax:
UK corporation tax on profit for the year	540	88
Non-UK corporation tax	173	388
Adjustments to the prior period estimates	(3)	(37)
	710	439
Deferred tax:
Origination and reversal of temporary differences	36	(40)
Tax charge for the year	746	399

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:

	2021 £000	2020 £000
Profit before tax	1,860	1,737
Expected tax charge based on the standard average rate of corporation tax in the UK of 19% (2020: 19%)	353	330
Effects of:
Expenses not deductible	20	8
Deferred tax - other differences	36	(40)
Foreign tax rate differences	375	124
Adjustment to prior period estimates	(3)	(37)
Utilisation of losses	(24)	(47)
Unprovided losses	(11)	61
Tax charge for the year	746	399

Factors that may affect future tax charges

Following Royal Assent of the Finance Bill 2021 an increase to the main rate of UK corporation tax has been announced, increasing this to 25% from 1 April 2023.

4  EARNINGS PER SHARE

	2021 £000	2020 £000
Profit for the financial year attributable to equity shareholders	1,114	1,339
Compensation for loss of office	-	767
Share-based payment charges and associated costs	149	-
Underlying profit for the year before share-based payments and compensation for loss of office	1,263	2,106
Weighted average number of shares:
Ordinary shares in issue	53,962,868	53,962,868
Shares held by EBT	(3,677)	(3,677)
Treasury shares	(1,787,811)	(1,786,937)
Basic weighted average number of shares	52,171,380	52,172,254
Effect of Employee share options	2,125,958	2,558,796
Diluted weighted average number of shares	54,297,338	54,731,050
Basic earnings per share	2.1p	2.6p
Diluted earnings per share	2.1p	2.5p
Underlying basic earnings per share before share-based payments and compensation for loss of office	2.4p	4.0p

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 £2,561,000 (2020: £2,559,000) 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.

6  POST BALANCE SHEET EVENTS

Further to our announcement of 09 December 2021 (RNS number 0504V) Driver Group have become aware that its principal customer in the Sultanate of Oman, is being investigated by the public prosecutor and these investigations include a party connected to the Driver Group's Oman based subsidiary. Driver Group has been making its own enquiries to understand the nature of the investigation, details of which are not in the public domain. Our enquiries indicate that the investigation does not concern the Driver Group's Oman based subsidiary's operations and the subsidiary itself is not believed to be part of the investigation.

 

END

 

 

FR BJMITMTTTBJT