Driver Grp Regulatory News (DRV)

14 June 2022

DRIVER GROUP PLC

("Driver" or "the Group")

Interim Report

For the six months ended 31 March 2022

Key Points (for the six months ended 31 March 2022)

· Underlying* profit before tax at £0.4m (2021: £1.0m) resulting in an underlying* profit before tax margin of 2% (2021: 4%).

· Profit before tax at £0.1m (2021: £0.9m).

· Net cash** decrease year on year of £3.5m to £3.7m (2021: £7.2m).

· Revenue down by 2% to £24.4m (2021: £25.0m) which is attributable to Middle East and Asia Pacific regions.

· Gross profit at 24%, a £0.5m decrease to £5.9m (2021: £6.4m).

· Fee earner headcount decreased by 7 to 294 with an increase in EuAm offset by decreases in both APAC and Middle East.

· Overall utilisation rates*** of 69.6% (2021: 72.1%).

· Europe & Americas (EuAm) reported underlying* profit before tax for the period of £2.4m (2021: £2.5m) with utilisation rates*** at 72.7% (2021: 71.6%).

· Middle East (ME) reported underlying* loss before tax for the period of £0.3m (2021: loss £0.4m) with utilisation rates*** at 60.9% (2021: 75.0%).

· Asia Pacific (APAC) reported underlying* loss before tax for the period of £0.5m (2021: loss £0.3m) with utilisation rates*** at 71.3% (2021: 67.6%).

* Underlying figures are stated before the share-based payment costs (this is not a GAAP measure).

** 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

Steve Norris, Chairman of Driver Group, said:

"I am pleased to report that the Company's performance remains resilient with only a small decline in revenue and, in line with the Company's Trading Update of 19 March 2022, an underlying* profit before tax of £0.4m. In these circumstances, we believe that this has been a credible performance and has laid strong foundations to support future growth."

Results presentation

The leadership team will be hosting a live webcast for analysts and investors at 09.30 GMT on 14 June 2022. Analysts have already been invited to participate in a live Q&A during the presentation, but any eligible person not having received details should contact the Company's PR advisers, Acuitas Communications, at driver@acuitascomms.com or on +44 (0)20 3848 2810.

Enquiries:

Consolidated Statement of Comprehensive Income

Interim report for the six months ended 31 March 2022

Consolidated Statement of Financial Position

Interim report for the six months ended 31 March 2022

Consolidated Cashflow Statement

Interim report for the six months ended 31 March 2022

Consolidated Statement of Changes of Equity

Interim Report for the six months ended 31 March 2022

For the six months ended 31 March 2022 (Unaudited):

For the six months ended 31 March 2021 (Unaudited):

Consolidated Statement of Changes of Equity (continued)

Interim Report for the six months ended 31 March 2022

For the year ended 30 September 2021 (Audited):

(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.

1 BASIS OF PREPARATION

The consolidated interim financial information has been prepared using accounting policies which are consistent with those applied at the prior year end 30 September 2021 and that are expected to be adopted in the Group's full financial statements for the year ending 30 September 2022.

The financial information in this interim report is in compliance with the recognition and measurement principles of international accounting standards but does not include all disclosures that would be required under IFRSs and are not IAS 34 compliant. The accounting policies have been applied consistently throughout the Group for the purposes of preparation of this financial information. The financial information for the half years ended 31 March 2022 and 31 March 2021 does not constitute statutory accounts within the meaning of Section 434(3) of the Companies Act 2006 and is unaudited but has been reviewed by our auditors.

The comparative financial information for the year ended 30 September 2021 included within this report does not constitute the full statutory accounts for that period. The statutory Annual Report and Financial Statements for 2021 have been filed with the Registrar of Companies. The Independent Auditor's Report on that Annual Report and Financial Statements for 2021 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(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 COVID-19 pandemic had a huge impact on economies around the world. Following the successful roll out of vaccinations, the potential impact of lockdowns causing the closures of world economies appears to have reduced in risk. However, the Directors continue to monitor developments across the markets the Group operate in and the potential ongoing impact on the Group post pandemic in both the short and medium term. Particular focus is 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.

The Directors have prepared cash flow forecasts including a stressed scenario 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 cashflows and financing facilities available to the Group. In preparing these forecasts, the Directors have considered sensitivities such as a reduction in both revenues and debtor receipts. The forecasts show that the Group could incur a further reduction in revenues of in excess of 14% compared to baseline levels if combined with no remedial action to the cost base and a significant debtor stretch due to a reduction in cash collections in excess of £1.5m 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 31 March 2022 the Group had cash reserves of £3.7m with an undrawn revolving credit facility of £5.0m available until March 2023.

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 TAXATION

The tax charge for the half-year ended 31 March 2022 is based on the estimated tax rates in the jurisdictions in which the Group operates, for the year ending 30 September 2022

3 DIVIDEND

In view of the medium term prospects for the Group along with the strong balance sheet position, the Board recommends the payment of an interim dividend of 0.75p per share for 2022 (2021: 0.75p per share). During the period, the Group paid an interim dividend of 0.75p per share (2021: 0.75p per share).

4 POST BALANCE SHEET EVENTS

Post period end the Group agreed that 25 employees, primarily based in the Middle East region but including employees based in Malaysia who work on Middle East assignments, would leave the Company on 1 June 2022 and immediately join another entity in the region (the "Counterparty"). The Company and the Counterparty have agreed that on leaving these employees will retain certain live project assignments, but the Counterparty will be subject to certain restrictive covenants in relation to continuing clients and employees of Driver Group. No exceptional employment termination costs will be payable by the Company in relation to the transfer.

In addition, the Counterparty will assist in collection of approximately £3.5 million of Driver Group's current regional debtor book. The Counterparty has paid circa £2 million in cash upfront to the Company as an advance payment in respect of the debtor book and, following the transfer, will also assist the Company in collection of the remaining debtors, which primarily attach to non-transferring employees.

5 SUMMARY 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). 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.

(1) Unallocated costs represent Directors' remuneration, administration staff, corporate head office costs and expenses associated with AIM.

(1) Unallocated costs represent Directors' remuneration, administration staff, corporate head office costs and expenses associated with AIM.

(2) Capital additions comprise of additions to property, plant and equipment and intangible assets.

6 EARNINGS PER SHARE

*Underlying figures are stated before the share-based payment costs (this is not a GAAP measure) and compensation for loss of office.