Driver Group plc Results for the year to 3 0 Septem ber 2 0 1 9 - - PowerPoint PPT Presentation

Driver Group plc Results for the year to 3 0 Septem ber 2 0 1 9

Driver Group plc

Driver Group plc

Business Profile

Driver Trett & Project Services

• Driver Trett provides specialist dispute avoidance and dispute resolution services to our clients from

the outset of a project to its completion, and beyond.

• We offer strategic commercial improvement and contract management services; live planning and

programming; assistance and forensic delay analysis; dispute avoidance and dispute resolution support and expertise; and training and seminars tailored to our clients’ needs.

• Driver Project Services provides site-based commercial management, project management and

planning and programming services to our clients in the UK and Middle East. Our staff work seamlessly with our clients’ teams, offering additional project support at the point of need or for the duration of the project.

Driver is a global dispute resolution provider to a blue chip client base 2

Driver Group plc

Business Profile

3 Diales

• Expert Witness and expert advisory services provider.
• Our world-class quantum, delay, and technical experts assist in litigation, arbitration, and

adjudication, as well as in negotiation, mediation, and other dispute resolution forums.

• Diales also provides highly experienced adjudicators, arbitrators, and mediators, as well as
• ffering third party neutral evaluation and determination.
• The number of experts has increased from 13 when the brand was launched in 2012 to 43 in

2019 with all experts having a minimum of 15 years’ industry experience and 50% of their workload is expert work.

• Diales accounts for 22% of Group Revenue for the period at £12.6m.

Prem ium branded service (shares Driver Trett resource)

Driver Group plc

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Global Footprint

EuAm 5 1 % ME 3 4 % APAC 1 5 %

2 0 1 9 REVEN UE REGI ON AL BREAKD OW N

EuAm ME APAC

£ 5 8 .5 m

Driver Group plc

Sectors & Services

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£ 5 8 .5 m

Diales 2 3 % Project Services 9 % Driver Trett 6 8 %

2 0 1 8 REVEN UE

£ 6 2 .6 m

Diales 2 2 % Project Services 1 0 % Driver Trett 6 8 %

2 0 1 9 REVEN UE

Driver Group plc

Revenue by Sector

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Building, 3 2 .0 % Energy, 2 0 .2 % I nfrastructure, 2 6 .4 % Marine, 2 .5 % Mining, 3 .4 % Oil & Gas, 1 2 .5 % Process, 2 .8 % Other, 0 .2 %

Sector Split 2 0 1 8

£ 6 2 .6 m

Building, 3 5 .4 % Energy, 1 7 .4 % I nfrastructure, 2 7 .5 % Marine, 2 .3 % Mining, 3 .1 % Oil & Gas, 1 0 .1 % Process, 3 .6 % Other, 0 .6 %

Sector Split 2 0 1 9

£ 5 8 .5 m

Driver Group plc

Segm ental revenue split by period

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EuAm , £ 2 9 .8 m , 5 1 % ME, £ 1 9 .6 m 3 4 % APAC, £ 9 .1 m , 1 5 %

2 0 1 9 REVEN UE

EuAm ME APAC

£ 5 8 .5 m

EuAm , £ 2 8 .7 m , 4 6 % ME, £ 2 2 .9 m , 3 7 % APAC, £ 1 1 .0 m , 1 7 %

2 0 1 8 REVEN UE

£ 6 2 .6 m

Driver Group plc

Highlights – strong second half profits

• Strong second half performance resulting in underlying* profit for the year of £3.0m

(2018: £3.8m)

• Another good year in EuAm with both profits and revenues increased (segmental

profits up 32% and revenues up 3.5% )

• Slow down in both APAC and ME commissions and pipeline resulted in disappointing

performance in these regions:

• APAC revenue down 17%
• ME revenue down 14%
• Prompt actions taken to rationalise & reduce cost base in APAC and ME regions to

reflect lower activity levels 8

Driver Group plc

Highlights – strong second half profits ( cont.)

• Resultant Group breakeven revenues lowered by 10%
• Good second half momentum of 2019 carried forward into the beginning of the new

financial year

• Opened small office in Riyadh to continue development of KSA market
• Share buy-back programme of £1.0m completed
• Dividends paid in April 2019 and October 2019
• Strong cash position at year end
• Level of business enquiries have increased year on year

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Driver Group plc

Regional Highlights

• Fee earner headcount reduced by 29 to 349 since September 2018 with reductions

coming from the Middle East (ME) and Asia Pacific (APAC) regions. Global utilisation rates down 3.2% points to 76.8% compared to September 2018

• Europe & Americas (EuAm) reported underlying* profit for the period of £3.9m, up

from £3.0m with utilisation rates at 72.4% (73% )

• Middle East (ME) reported underlying* profit for the period of £1.4m, down from

£2.1m with utilisation rates at 81.2% (84% )

• Asia Pacific (APAC) reported an underlying* loss for the period of £0.4m, down from

£1.0m profit with utilisation rates at 75.8% (83% ) 1 0

* Underlying profit stated before the share based payment costs

Driver Group plc

Business review - Europe & Am ericas

1 1 Operational

• Good performance across the whole
• f the UK market for both claims and

project services with strong profitability and revenue

• Revenue from Diales technical brand

in UK increased by 29% to £4.23m compared to 2018

• Mainland Europe delivered a strong

performance with profit increasing to £801k (2018: £492k). Germany revenues up 35%

• Good growth in profits for Canada
• Further recruitment of Diales experts

in line with Group strategy

Financial

• Revenue up 3.5% vs 2018 to £29.8m
• Segmental profit £3.9m vs 2018 £3.0m
• Headcount 197 vs 2018 192
• Utilisation 72.4% vs 2018 73%

£ 2 9 .8 m £ 3 .9 m 1 9 7 7 2 .4 % £28.75m £2.97m 192 73%

Revenue Profit Headcount Utilisation

2019 2018

Driver Group plc

1 2 Operational

• UAE revenue and result down due to

difficult market conditions with headcount reduced to reflect lower revenues

• Leadership

changes in the Kuwait business have impacted revenues and profitability

• Decisive action taken in H1 to lower

cost base and ensure sustainable performance across the region

• Oman

& Qatar delivered strong

• performances. In Oman greater focus
• n private sector, reducing trading risk

and improving cash generation

Financial

• Revenue down 14.3% vs 2018 to £19.6m
• Segmental profit £1.4m vs 2018 £2.1m
• Headcount 128 vs 2018 151
• Utilisation 81.2% vs 2018 84%

Business review - Middle East

£ 1 9 .6 5 m £ 1 .4 m 1 2 8 8 1 .2 % £22.91 £2.1m 151 84.0%

Revenue Profit Headcount Utilisation

2019 2018

Driver Group plc

1 3 Operational

• Singapore

and Malaysia revenues impacted due to the completion of major commissions and delays in the start of new commissions

• APAC Regional MD removed incurring
• ne-off £0.2m costs in year
• Headcount

re-aligned to match reduced revenues

• Improved

performance since the start

• f

March continuing into the start of 2019/ 20

Financial

• Revenue down 17.2% vs 2018 to £9.1m
• Segmental loss £0.4 m vs 2018 £1m profit
• Headcount 81 vs 2018 91
• Utilisation 75.8% vs 2018 83%

Business review - Asia Pacific

£ 9 .0 7 m ( £ 0 .4 m ) 8 1 7 5 .8 % £10.96m £0.95m 91 83% Revenue Profit Headcount Utilisation

2019 2018

Driver Group plc

Financial review

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Driver Group plc

Financial highlights

• Revenue down by 6.6% to £58.5m ( 2018: £62.6m)
• Gross profit margin of 24% (2018: 26% ) at £13.9m

(2018: £16.3m)

• Underlying* profit of £3.0m (2018: £3.8m) resulting in

an underlying* profit margin of 5.1% (2018: 6.1% )

• Profit before tax for the year up 18.5% to £3.2m (2018:

£2.7m)

• Basic earnings per share up 30% at 5.2p per share

(2018: 4.0p per share)

• Net cash at 30 September 2019 of £5.4m (September

2018: £6.9m)

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*Underlying profit stated before the share based payment costs and exceptional items ** Each of the above graphs are scaled individually and are not directly comparable

£2.486m £3.839m £3.00m

Underlying* Profit 2017 2018 2019

£1.233m £2.739m £3.245m Profit before tax

2017 2018 2019

0.7p 4.0p 5.2p Basic EPS

2017 2018 2019

Driver Group plc

Financials - I ncom e Statem ent 1 6

3 0 Sep 1 9 3 0 Sep 1 8 £ '0 0 0 £ '0 0 0 REVENUE 58,486 62,615 COST OF SALES (net of impairment movement) (44,549) (46,338) GROSS PROFI T 13,937 16,277 GROSS PROFI T % 23.8% 26.0% Underlying* profit before tax 3,002 3,839 5.1% 6.1% Share based paym ent credit/ ( charge) and associated costs 243 (1,100) Profit before tax 3,245 2,739 Tax charge (497) (567) Reported profit after tax 2,748 2,172 Basic earnings per share 5.2p 4.0p * before share based payment costs

Driver Group plc

Profit bridge

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* before share-based payment costs

Underlying* profit 2018 ‐ £3.8m Revenue down ‐ £4.1m Costs of sales saving ‐ £1.4m Impairment movement ‐ £0.4m Admin cost saving ‐ £1.4m Other ‐ £0.1m Underlying* profit 2019 ‐ £3.0m

Underlying* profit

Driver Group plc

Cashflow bridge

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Net cash at Sep 18 ‐ £6.9m Cashflow from operations ‐ £3.4m Capex ‐ £0.3m Tax paid ‐ £0.6m Purchase of treasury shares ‐ £1m Dividend ‐ £0.3m Net interest paid ‐ £0.1m Working capital movement ‐ £2.6m Net cash at Sep 19 ‐ £5.4m

Cashflow

Driver Group plc

I m pact of I FRS 9 , I FRS 1 5 & I FRS 1 6

1 9

I FRS 9

The Group transitioned to IFRS 9 on 1 October 2018. The Group has adopted a simplified model of recognising lifetime expected credit losses to trade receivables which on transition resulting in a one off increase of £0.95m to the provision which was adjusted under transition relief via the opening retained earnings.

I FRS 1 5

The Group transitioned to IFRS 15 on 1 October 2018. This change in standard has not affected the revenue recognition by the Group.

I FRS 1 6

The Group will transition on 1 October 2019. Following adoption, the anticipated increase to EBITDA is c£1.0m. Overall PBT impact is anticipated to be minimal.

Driver Group plc

Strategic overview

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Driver Group plc

Delivering a m ore resilient business

Actions taken during the year:

• Lowered overall business break-even revenue point by approximately 10% providing

enhanced resilience against fluctuations in revenue

• Restructured the ME business reducing its cost base and appointed a new head of

Diales in the region

• Share buy-back of £1.0m successfully completed
• Reduced direct & indirect costs in the APAC business

Ongoing initiatives are in place to deliver:

• Selective recruitment in growing markets
• Improved commission management process
• Investment in improved management systems

Aim:

• Ensure the Group is more resilient against fluctuations in revenues and ready for the

next stage of profitable growth and development in FY 2020 and beyond 2 1

Driver Group plc

Business m anagem ent & grow th initiatives

• Potential acquisitions criteria:
• Strategic infill
• Increase sector spread
• Increase geographic coverage
• Although not required for the foreseeable future, replacement revolving credit facility

(£3.0m for 3 years) will be in place with HSBC in February 2020

• Investment in management systems
• KSA office opened
• Development of software solutions to enhance data management and analysis as part
• f the service to clients

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Driver Group plc

Sum m ary

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• Significant improvement in second half of year resulting in underlying* profit for

the year of £3.0m meeting market expectations

• Continued strong performance across the EuAm region
• Actions taken in ME and APAC regions to offset underperformance and lower

breakeven revenues of the business thereby making the business less susceptible to market fluctuations and well positioned for future growth

• Healthy cash position at year end after funding share buy-back programme £1.0m

and dividends paid & proposed of £0.5m

• Growth of Diales brand still a key strategy with recent appointment of a new Head
• f Diales in the Middle East and new experts in the UK
• 35% of clients have awarded multiple commissions in 2019 (810 commissions for

445 clients)

• Top 100 clients = 64% revenue covering 250 commissions
• Business is now well positioned for future success following decisive actions already

taken

Appendices

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Driver Group plc

Managem ent Team

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David Kilgour, CFO

• David is a Chartered Accountant

with over 25 years' experience in the engineering, infrastructure and utilities sectors.

• He was formerly Managing

Director for Amec plc of a renewables developer and consultancy business and previously Finance Director for United Utilities plc of international and non-regulated operations.

• David has extensive financial and
• perational experience of

managing international businesses.

Gordon W ilkinson, CEO

• Gordon is responsible for all

aspects of the Group business and strategy.

• Gordon’s initial consultancy

experience was gained with KPMG from 1989 to 2000 where he progressed to become a full equity partner, responsible for a number

• f business units in their

Consulting Division.

• More recently he was a Director at

AECOM where he was Head of the Global Consulting and Cost Management Businesses.

• Prior to AECOM he was a Director

at Arup and a member of Arup’s UKMEA Board with responsibility for the UKMEA Consulting division.

Mark W heeler, COO

• Mark is an engineer and surveyor

with over 25 years’ experience within the construction industry, including major civil engineering, building and power projects.

• He is an expert in the provision of

quantum and technical reports for construction dispute resolution through litigation, adjudication, arbitration or mediation.

• Mark also has experience in

working with a wide range of contracts, including JCT, FIDIC and the NEC3 form. He regularly advises on the practical application and use of NEC3.

Driver Group plc

Managem ent Structure

Gordon W ilkinson† CEO Mark W heeler* † Chief Operating Officer David Kilgour† Chief Financial Officer Tom Com erford* Managing Director, UK Helen Bentley MD, SW and Midlands Keith Strutt MD, SE and London Mike Noteyoung MD, DPS & North East Ali Fard Director, Canada Mark Castell MD, Regional Hugo-Frans Bol* Director, Germany and the Netherlands Frédéric Berjot Director, Europe John Lancaster* Global Head of Delay Analysis Jam es Keenan & Kirsty Bruton Group Finance Managers Denis d’Souza Finance Director, ME Dennis Anderton Group IT Manager Norm a Zebrow ski Human Resources Manager Steve Norris - Chairman† Peter Collini - NED† Elizabeth Filkin CBE - NED† Key †Main Board Director * Global Management Board

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Matt W ills* Managing Director, Asia Pacific Phil Duggan Head of Diales, Middle East Peter Banathy* Deputy Chief Operating Officer

Driver Group plc

Significant Shareholders

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* % according to share register analysis report at 3 1 / 0 9 / 1 9

Sanford DeLand Asset Mgt ( Manchester) , 1 5 .5 1 % Gresham House ( London) , 1 5 .0 6 % Adrian J W illiam s ( Regional - England) , 7 .4 0 % Ruffer ( London) , 6 .6 8 % Allianz Global I nvestors ( London) , 6 .5 1 % River & Mercantile Asset Mgt ( London) , 5 .8 5 % Soros Fund Mgt ( New York) , 4 .4 6 % John P Mullen ( Northam pton) , 3 .9 8 % The Ram sey Partnership Fund Ltd ( Douglas) , 3 .9 1 % Close Asset Mgt ( London) , 3 .2 1 % Unicorn Asset Mgt ( London) , 3 .1 2 %

Driver Group plc

Disclaim er

Nothing in this presentation (the “Presentation)”)

• r in any accompanying management discussion of the

Presentation constitutes, nor is it intended to constitute: (i) any recommendation or advice to invest in or

• therwise deal in any shares or other securities in Driver

Group plc (the “Company”); or (ii) any offer for the sale, purchase

• r subscription of any shares or other securities in the

Company. The information contained in the Presentation has not been independently verified and no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or

• pinions contained herein. None of the Company, its

directors or shareholders nor any

• f their respective affiliates, advisers or representatives

shall have any liability whatsoever for any loss arising from any use of the Presentation or its contents or otherwise arising in connection with the Presentation. The Presentation and accompanying management discussion of the Presentation may contain certain forward-looking statements with respect to the financial condition, results

• f operations and business of the Company. These

forward-looking statements represent the Company’s current expectations or beliefs concerning future events and involve known and unknown risks and uncertainty that could cause actual results, performance or events to differ materially from those implied or expressed in such forward-looking statements. Other than in accordance with the Company’s obligations under applicable law and regulation, the Company undertakes no obligation to update or revise publicly any forward-looking statement in the Presentation, to reflect any change in the Company’s expectations with regard thereto or any change in any events, conditions or circumstances on which such forward-looking statements are based. The information in this Presentation is confidential and may constitute inside information and you should be aware of the relevant obligations and restrictions under the Market Abuse Regulation (EU 596/ 2014) relating to insider dealing and market abuse. This Presentation may not be copied, reproduced or distributed, in whole or in part, to others at any time without the prior written consent of the Company.

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