Driver Group plc Results for the six months to March 2019 Driver - PowerPoint PPT Presentation

Driver Group plc Driver Group plc Results for the six months to March 2019

Driver Group plc 2 Business Profile Driver is a global dispute resolution provider to a blue chip client base 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 Group plc 3 Business Profile Premium branded service (shares Driver Trett resource) 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 offering third • party neutral evaluation and determination. The number of experts has increased from 13 when the brand was launched in 2012 to 48 in 2019 with • all experts having a minimum of 15 years’ industry experience and 50% of their workload is expert work. Diales accounts for 21% of Group Revenue for the period at £6.3m. •

Driver Group plc 4 Sectors & Services 2019 REVENUE Diales 21% £29.7m Project Services 11% Driver Trett 68% 2018 REVENUE Diales 25% £31.7m Project Services 9% Driver Trett 66%

Driver Group plc 5 Global Footprint 2019 REVENUE REGIONAL BREAKDOWN APAC 15% EuAm £29.7m 50% ME 35%

Driver Group plc 6 Half year update The completion of several large commissions combined with delays in new • commissions commencing, particularly in ME and APAC regions, has adversely impacted overall earnings The slowdown in ME and APAC markets has resulted in a disappointing performance • - revenues down 14% in ME and 17% in APAC Appropriate measures have been instituted to manage down the cost base in an • orderly way Despite the slowdown in client conversion, the number of business enquiries • received is up significantly on the same period last year Revenues are 4% up in EuAm and there has been a strong overall performance • Cash conversion is at 140% and remains consistently strong • Share buyback programme launched in March 2019 • Progressive restoration of dividend payments – Interim dividend of 0.5p per share • matches full year payment in FY18

Driver Group plc 7 Financial update Revenue down by 6% to £29.7m (H1 2018: £31.7m) • Gross profit margin of 23.0% (H1 2018: 28%) at £6.7m (H1 2018: £8.9m) • Underlying* Profit of £0.8m (H1 2018: £2.1m) resulting in an underlying* Profit margin of 2.6% • (H1 2018: 6.6%) Underlying* EBITDA of £1.0m (H1 2018: £2.5m) • Net cash at 31 March 2019 of £5.0m (September 2018: £6.9m) • Underlying* Profit Underlying* EBITDA Net cash/(borrowings) £5.01m £2.49m £2.11m £0.84m £1.48m £1.04m £1.03m £0.76m (£3.50m) 2017 2018 2019 *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

Driver Group plc 8 Delivering a more resilient business Measures have already been taken to: Lower overall business break-even revenue point by £0.2m per month providing • enhanced resilience against fluctuations in revenue Restructure the ME business and reduce its cost base • Reduce direct & indirect costs in the APAC business • Reduce discretionary spend on marketing & training • Ongoing initiatives are in place to deliver: Selective recruitment in growing markets • Improved commission management process • Objective: Full benefits of the above actions expected to accrue during H2 2019 with a full • year’s impact in FY 2020

Driver Group plc 9 Segmental revenue split by period 2019 REVENUE 2018 REVENUE EuAm ME APAC EuAm ME APAC APAC, £5.4m, APAC, £4.5m, 17% 15% EuAm, £14.3m, EuAm, £14.9m, 45% 50% £29.7m £31.7m ME, £10.3m, ME, £12.0m, 35% 38%

Driver Group plc 10 Revenue by Sector Sector Split 2019 Sector Split 2018 Process, Other, 0.2% Process, Oil & Gas, Other, 0.8% 2.3% 10.0% 3.3% Oil & Gas, 11.6% Building, Building, Mining, 38.3% Mining, 31.3% 1.8% 5.0% Marine, Marine, 2.7% 2.9% £29.7m £31.7m Energy, Infrastructure, Infrastructure, Energy, 19.2% 25.6% 27.5% 17.5%

Driver Group plc 11 Regional Highlights Fee earner headcount reduced by 23 to 355 since September 2018 with reductions coming from • the Middle East (ME) and Asia Pacific (APAC) regions. Global utilisation rates down 5.5% points to 76.1% compared to March 2018 Europe & Americas (EuAm) reported underlying* Profit for the period of £2.0m, up 45% with • utilisation rates at 70.3% Middle East (ME) reported underlying* Profit for the period of £0.4m, down from £1.3m with • utilisation rates at 80.9% Asia Pacific (APAC) reported an underlying* loss for the period of £0.6m, down from £0.6m profit • with utilisation rates at 76.1% *Underlying profit stated before the share based payment costs

Driver Group plc 12 Business review - Europe & Americas Operational Financial Good performance across the whole Revenue up 4% vs H1 2018 to £14.85m • • of the UK market for both claims and Segmental profit £1.98m vs H1 2018 £1.37m • project services with strong profitability and revenue Headcount 195 vs H1 2018 194 • Utilisation 70.3% vs H1 2018 73.6% • Revenue from Diales technical brand • in UK increased by 51% to £2.11m compared to H1 2018 £14.85m Mainland Europe delivered a strong • 195 73.6% £14.26m 194 70.3% performance with profit increasing from £69k to £476k compared to H1 2018 Small increase in profits for Canada • Further recruitment of Diales experts • in line with Group strategy £1.98m £1.37m Revenue Profit Headcount Utilisation 2019 2018

Driver Group plc 13 Business review - Middle East Operational Financial Revenue down 14% vs H1 2018 to £10.32m • UAE revenue and profit down due to • difficult market conditions with Segmental profit £0.36m vs H1 2018 £1.29m • headcount reduced to reflect lower Headcount 139 vs H1 2018 155 • revenues Utilisation 80.9% vs H1 2018 83.5% • Changes in the Kuwait business have • impacted revenues with a number of larger commissions coming to an end £11.99m Qatar continues strong performance • 171 83.5% £10.32m from previous years 80.9% 139 Oman profit increased to £247k • £1.29m £0.36m Revenue Profit Headcount Utilisation 2019 2018

Driver Group plc 14 Business review - Asia Pacific Financial Operational Revenue down 17% vs H1 2018 to £4.54m Singapore and Malaysia revenues • • impacted due to the completion of Segmental loss £0.58m vs H1 2018 £0.64m • major commissions and delays in the profit start of new commissions Headcount 76 vs H1 2018 78 • APAC Regional MD removed incurring • Utilisation 76.1% vs H1 2018 91.6% • one off £0.2m costs in H1 Headcount re-aligned to match • £5.44m 78 91.6% reduced revenues 76 £4.54m Improved performance since the • 76.1% start of March £0.64m Revenue Profit Headcount Utilisation £(0.58)m 2019 2018

Driver Group plc 15 Financials - Income Statement Full Year Six months ended 31 March / year ended 30 September H1 2019 H1 2018 2018 £’000 £’000 £’000 Revenue 29,711 31,694 62,615 Cost of Sales (23,016) (22,807) (46,338) Gross profit 6,695 8,887 16,277 Gross profit % 22.5% 28.0% 26.0% Underlying* profit before tax 762 2,105 3,839 2.6% 6.6% 6.1% Share based payment credit /(charge) and associated costs 243 (379) (1,100) Profit before tax 1,005 1,726 2,739 Tax charge (170) (297) (597) Reported profit after tax 835 1,429 2,172 Basic earnings per share 1.5p 2.7p 4.0p * before share-based payment costs

Driver Group plc 16 Profit bridge * before share-based payment costs

Driver Group plc 17 Cashflow bridge *before share-based payment costs, depreciation and tax

Driver Group plc 18 Impact of IFRS 9, IFRS 15 & IFRS 16 IFRS 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 resulting in a one off increase of £0.95m to the provision which has been adjusted under transition relief via the opening retained earnings. IFRS 15 The Group transitioned to IFRS 15 on 1 October 2018. This change in standard has not affected the revenue recognition by the Group. IFRS 16 The Group will transition on 1 October 2019.