Financial Highlights
Significant improvement on all fronts
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Revenue increased 4% to £62.6m (2017: £60.2m) with continued focus on core claims and disputes
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Gross profit increased to £16.3m (2017: £14.8m) resulting in a gross margin % increased to 26.0% (2017: 24.6%)
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Underlying*profit before taxation increase of 54% to £3.8m (2017: £2.5m)
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Profit for the year £2.2m (2017: £0.3m)
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Net Cash** £6.9m (2017: borrowings £0.2m)
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Earnings per share increased to 4.0p (2017: 0.7p)
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Utilisation increased to 80.0% (2017: 76.2%) contributing to the increased gross margin %
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Positive start to the new financial year in line with management expectations
Operational Highlights
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Completed strategic actions the Board committed to implementing in February 2017 at the time of the equity raise and refinancing
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Strong and sustained focus on the Group's existing expertise of Claims and Dispute Resolution and Expert Witness Support Services
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Positive performance by both the Diales and Driver Trett brands, notably in the UK, Singapore, Qatar and Kuwait
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Awarded Large Company Turnaround of the Year at the national 2018 Institute for Turnaround Awards
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Plans in place to broaden the offering into new sectors and have a wider geographical spread
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Gordon Wilkinson, Chief Executive Officer of Driver Group plc, commented: “The transformative turnaround in Driver Group's fortunes reflects a job carefully judged and executed by its management team and staff. The result of this has been to return significant value to our shareholders and to deliver expert, sustainable and truly world-class professional service to our clients.“
* Underlying figures are stated before the share-based payment costs, exceptional items and amortisation of intangible assets
** Net cash / (borrowings) consists of cash and cash equivalents, bank loans and finance leases
*** Utilisation % is calculated by dividing the total hours billed by the total working hours available for chargeable staff
Chairman's Statement
INTRODUCTION
I am pleased to report that our performance this year has built on the good progress achieved last year and the Group has produced an excellent result ahead of original market expectations. We have seen during the period that demand for our services continues to be strong across the globe and we have broadened our offering into new sectors. Last year was a period of significant change during which we carried out an equity raise, disposed of underperforming businesses and streamlined our operations. Following this transformation, the shape of the Group is now largely as our strategy requires and we have been able to progress and significantly improve performance across the business with all regions contributing to the overall excellent result.
FINANCIAL RESULTS
The Group's revenue for the year was £62.6m (2017: £60.2m) and the underlying* profit before tax was £3.8m (2017: £2.5m), which we believe more accurately reflects the underlying, operating performance of the Group. The underlying* continuing earnings per share was 6.1p (2017: 5.8p). The reported profit was £2.2m (2017: £0.3m) which includes a share-based payment charge of £1.1m (2017: £0.2m). In the prior year, there were also exceptional costs associated with the restructuring of the business of £1.1m, which I am pleased to report were £nil in the current year.
During the year all regions performed well. Revenue in Europe and Americas 'EuAm' grew by 10% to £28.8m, with a 27% improvement in segmental profitability to £3.0m (2017: £2.3m). Growth in the Asia Pacific region 'APAC', was particularly pleasing at 32% to £11.0m and the region's segmental profitability improved significantly recording a profit of £1.0m against a profit of £0.5m in the prior year. The Middle East 'ME' region saw especially strong performances from Kuwait and Qatar and although there was a reduction in regional revenues to £22.9m (2017: £25.2m) partly as a result of a large commission completing early and not being replaced in the year, segmental profitability improved by 11% to £2.1m (2017 £1.9m) through careful cost management.
Net cash** at the close of the year was an improvement on expectations, standing at £6.9m (2017: net borrowings £0.2m), reflecting significant progress made during the year in cash collections and the continued focus on working capital management generally.
DIVIDEND
I am pleased to report the Directors propose a return to dividends with the payment of a dividend for 2018 of 0.5p per share (2017: £nil) reflecting our confidence in the transformation of the Group. Looking forward, the Board intends to pursue a progressive dividend policy which will seek to maximise shareholder value, while retaining balance sheet flexibility to fund ongoing operating requirements.
STRATEGY
The Group's strategy remains to focus on those areas of expertise where we have a particularly strong position, in claims and dispute resolution and in expert witness work, and to consolidate the Group's position as one of the pre-eminent firms in its areas of expertise. Concentration on this clearly articulated aim has so far demonstrably delivered improved revenue growth and increased profitability leading to the generation of more attractive returns for shareholders. In support of this strategy we also keep under review broadening our sector, geographic and service offerings. We see no reason at this stage to amend our objective or strategy, although of course they remain under continual review.
BOARD
Following the appointment of David Kilgour as Group Chief Financial Officer on 12th December 2017, the composition of the Board has remained unchanged for the remainder of the year. During the year, the Board elected to adopt the QCA Corporate Governance Code which was published on 25 April 2018 as its corporate governance code. The Board believes that this provides an appropriate and suitable framework for a group of our size and complexity.
OUTLOOK
The start of the current financial year has shown a continuation of the positive trading and improvements that we enjoyed during last year. I have always stressed that in a professional services business like ours, it is notoriously difficult to predict activity levels, but your Board will continue to monitor costs and margins to ensure that the Company deals appropriately with the fluctuations in activity that are an inevitable feature of our business. Nonetheless, your Board is confident that we can continue to build on the exceptional progress we have made so far. There is no question that in every significant respect the Company is in a far better position than it has been for several years.
I would particularly like to take this opportunity to thank all of the staff of Driver Group in every part of our business for the loyalty, hard work and support that they have shown during this and previous years. Under the leadership of the Executive Board they have all contributed to delivering an excellent result for the Group and my Board colleagues join me in thanking them most sincerely. As a mark of how far the company has come in recent times on the 22nd of November Gordon Wilkinson and David Kilgour on behalf of the whole Board collected the Large Company Turnaround of the Year award from the Institute for Turnarounds. It is a remarkable achievement to which everyone in the business contributed.
Finally, I should also like to thank again both our longstanding and new shareholders for their continued support throughout the year. Your Board will continue to do all it can to reward the confidence you have shown in us.
Steven Norris
Non-Executive Chairman
11 December 2018