Diales Plc

3 December 2024

DIALES Plc

("Diales", "Company" or "Group")

Preliminary Results for the year ended 30 September 2024

Diales Plc (AIM: DIAL), the global specialist dispute avoidance and dispute resolution consultancy is pleased to announce its Preliminary Results for the financial year ended 30 September 2024.

Financial Summary

·      Revenue from continuing operations increased by 0.9% to £43.0m (2023: £42.6m)

·      Gross profit increased by 1.9% to £11.0m (2023: £10.8m) and gross profit margin by 0.9% to 26.6% (2023: 25.4%)

·      Underlying* operating profit from continuing operations before tax increased by 20.0% to £1.2m (2023: £1.0m), a margin of 2.8% (2023: 2.3%)

·      Basic earnings per share from continuing operations of 0.8p (2023: 0.2p)

·      Profit before tax increased 125.0% to £0.9m (2023: £0.4m)

·      Net cash of £4.3m (2023: £5.8m), a year-on-year decrease, this is after funding dividends of £0.8m (2023: £0.8m), share buy-back of £0.2m, tax payments and the planned cessation of a JV agreement in Canada and the Middle East.

·      Cash returned to shareholders during the year of £1.0m via dividends and share buyback, dividend maintained at 1.5 pence per share (2023: 1.5 pence per share)

Operational Highlights

·      Overall utilisation rates stable at 72.6% (2023: 72.5%)

·      Europe & Americas (EuAm) reported underlying* profit before tax for the period of £5.2m (2023: £5.3m), utilisation 72.3% (2023: 72.2% excluding discontinued)

·      Middle East (ME) reported underlying* profit before tax for the period of £0.3m (2023: loss £0.1m), utilisation 75.8% (2023: 73.8%)

·      Asia Pacific (APAC) reported an underlying* loss before tax for the period of £0.1m (2023: loss £0.2m), utilisation 70.5% (2023: 68.0%)

Capital Allocation

·      Our approach to Capital Allocation remains focused on organic growth, strategic acquisitions and the return of surplus cash to our shareholders

·      In June 2024, the Company initiated a £0.25 million share buy-back programme to return surplus cash to our shareholders. This programme continues with the Company having repurchased 810,000 shares at a cost of £0.2m to date. The Group is actively considering a number of acquisition opportunities and the Board will review the potential to allocate further cash to the buyback once the current buyback programme is concluded

Outlook

·      Entered FY25 with a strong pipeline of leads, giving confidence for FY25

·      Management focussed on driving improvements in utilisation levels and margin enhancement

·      Real time management information tool to be rolled out to provide live data on utilisation and support resource planning

·      Group's transformation strategy providing a route map to future growth - brand consolidation to Diales, completed in July 2024, hub and spoke model now fully implemented across the regions

Mark Wheeler, Chief Executive Officer of Diales, said:

'During FY24 the Group realised an increase in both revenue and profitability. This is a result of the strategic actions taken last year and the successful turnaround, strengthened by the delivery of the first year of the four-year integrated transformation strategy. In particular, the brand consolidation to Diales, completed in July 2024, has been well received by clients and staff alike, around the world. I am pleased to report the Board has agreed to return to market guidance signalling our confidence in the future prospects of the Group."

* Underlying figures are stated before non-recurring costs, share-based payment costs and finance costs

Results presentation

Diales Plc will host a presentation for investors on Wednesday 4 December 2024 at 11:00am. Questions can be submitted before and during the online event.

To register for the webinar, please visit this link:

https://www.equitydevelopment.co.uk/news-and-events/diales-investor-presentation-4december2024

A recording of the presentation will be available shortly afterwards here:

https://www.equitydevelopment.co.uk/research/tag/diales

ENDS 

Enquiries:

Chairman's Statement

OVERVIEW

Looking back on my first full year as your Chairman, I am pleased to report that Diales Plc has enjoyed a year of consolidation, improved underlying profitability and efficiency gains, building on a well-executed turnaround in FY23. In FY24, we have laid strong and dependable foundations for future growth and taken important steps to place our business on a sustainable footing to deliver growth over coming years. FY24 has seen an improvement in underlying profit and the achievement of the targets we set ourselves in the first year of the four-year integrated transformation strategy which the Company unveiled a year ago. I believe that our shareholders can derive reassurance from Diales' strengthened financial and operational performance over the period.

Headwinds in the global economy and continuing inflationary pressures have been among the more systemic issues facing our management teams around the world which, by their very nature can in part be mitigated by careful planning and active management, but not altogether eliminated. The commercial uncertainties resulting from elections in multiple jurisdictions, including those in the UK and the US, have been pragmatically managed. The ambitions of the new governments in the UK and US to invest significantly in infrastructure may represent opportunities for the Group in future years. Similarly, if there is to be a resolution to the conflict in Ukraine, I am confident that Diales will be well positioned to capitalise on the opportunities that extensive reconstruction of that country's infrastructure would undoubtedly bring.

After a year of successful consolidation and commercial achievement, the Company is able once more to look forwards and to consider the acquisition of relevant in-fill skills and expertise to deliver future growth, in a systematic and disciplined way. We will only progress opportunities where we are content that these meet all the criteria we have set. Most of all, we will aim in everything we do to build on the improved profitability of this year, in order to ensure successful and sustainable trading in FY25 and beyond, in the best interests of our shareholders.

TRADING PERFORMANCE

In its FY23 results, the Board reported a return to profitable trading, and I am pleased to report that the Company's underlying performance has improved further in FY24. The Company's underlying operating profit improved significantly, increasing from £1.0m in FY23 to £1.2m in FY24.

These results reflect the delivery of the promised benefits arising from the cost reduction programme which completed at the end of Q1 FY24, and the progress made during the first year of the four-year integrated transformation strategy announced in December 2023.

These are respectable results and reflect continuous improvements in the Company's performance based on its bigger pipeline, stable utilisation across most regions and the priority we attach to extracting efficiency gains from the global business. Accordingly, I am pleased to propose a final dividend for the year of 0.75 pence per ordinary share which, if approved at the next Annual General Meeting, will equate to 1.5 pence per share paid as dividends for the full year.

The Company is well positioned for the year ahead. Our cash position at the end of FY24 remains strong at £4.3m, after dividends and returning cash to shareholders via a buyback, while our strategy of planned cost and risk reductions has enabled us to deliver an improved underlying profit in FY24, compared to the previous year. As I said last year, a key metric for the business is cash generation and while our business is now trading profitably on a continuous basis, we remain focused on achieving optimal operational performance, which I am confident the next three years of fulfilment of our integrated transformation strategy will deliver.

We said last year that we considered an efficient way of returning value to shareholders could be through a share buy-back initiative. In June 2024, we announced a £0.25 million share buy-back programme which has already enjoyed considerable support and, at the time of writing, the business has acquired 810,000 shares. This programme remains ongoing. The Board will keep its capital allocation under review and remains focused on organic growth and strategic acquisitions along with the return of surplus cash to our shareholders.

STRATEGY

Explained in more detail in the CEO's statement, FY24 has seen us commence the execution of our integrated transformation strategy for the benefit of our clients and shareholders. With our principal focus of organic growth and acquisitions, we remain committed to returning surplus cash to our shareholders wherever possible and the generation of long-term accretive value. FY24 began with our objective of simplifying the businesses' branded offering beneath the Diales name to help clients and prospects better understand and engage with our business worldwide; implementing a hub and spoke model for the efficient delivery of outstanding service to our clients worldwide; resetting our relationships with and between global offices and management teams; and, by no means least, expanding the breadth, depth and quality of the Company's service offerings. I am pleased to be able to report that the business has received very positive feedback on our re-branding to our premium Diales brand from clients and staff around the world.

We continue with our mission of strengthening our global operating platform to improve client servicing in order to fulfil our mission of maximising shareholder value. This year's results provide the clearest possible testimony that our strategy is working, laying strong and sustainable foundations for further growth in FY25 and future years.

GOVERNANCE

Diales follow the Quoted Companies Alliance "Corporate Governance Guidelines for Smaller Quoted Companies" (the QCA Code) and its ten principles. We have reported against the 2018 version of the QCA Code and have undertaken a 2023 Code gap analysis with One Advisory (our Corporate Governance advisers) that identified several areas where we have either started to work on or intend to during FY25 including - corporate culture, ESG KPIs, Audit Committee reporting and Board succession planning. We intend to report against the 2023 version of the QCA Code in our next annual report.

PEOPLE

During the last 12 months, I have had the privilege to meet many of the brilliant and committed people across our global network who make Diales such a richly rewarding place in which to work and to build careers, and who exemplify the values of integrity, professionalism, and pursuit of excellence. We are proud that people around the world see these values as being synonymous with our business. I would like to take this opportunity to thank all our staff around the world for the tremendous contribution that they have made during the period which has, in turn, delivered such positive results at the end of FY24.

I should like to thank the Board for their continued support. Our CEO, Mark Wheeler, leads our business with exceptional insight and professional understanding and our CFO, Charlotte Parsons, who plays a central role in improving our financial monitoring and forecasting, and I am grateful to each of them for their leadership.

After 2 years of consolidation and change, the business is now well positioned to make the most of the opportunities that lie ahead in FY25. Our integrated transformation strategy promises to unlock significant future efficiency gains and I am confident that these will lead to further enhancements in our return of value to our shareholders. I am pleased to report the board has agreed to return to market guidance signalling our confidence in the future prospects of the Group.

Chief Executive Officer's Review

INTRODUCTION

I am pleased to report that, in FY24, Diales has continued to make good progress that builds on the Company's prior performance in FY23. The Company delivered revenue from continuing operations of £43.0m (2023: £42.6m) and realised an underlying operating profit of £1.2m in FY24, compared to £1.0m in FY23.

FY24 marked a year of consolidation and improved trading following the turnaround that was successfully executed by our team in FY23 which has delivered enhanced underlying operating profit. This is testimony to the successful execution of Diales' integrated transformation strategy which is now starting to deliver for the Company and its shareholders. Our earlier cost reduction programme was successfully completed by the end of December 2023 and the benefits of that programme flowed through into Q2 FY24, and as we anticipated FY24 has seen us go further. We have made reductions in our operational overheads - savings which have had direct and beneficial effects on the Company's profitability. The fact that significant progress has been made and profitability has been strengthened has been a particular achievement during a period of elevated geopolitical risk, regional conflict and economic headwinds. Additionally, this has been achieved in spite of operational challenges that the Company has faced, including issues such as staffing in the USA and the business failure of two significant clients.

FY24 has witnessed the transitioning of our corporate branding to our premium Diales brand, making our branding and service lines to clients, introducers and the market as a whole, simpler, easier to understand and to engage with. I am pleased to be able to report that the brand consolidation to Diales, completed in July 2024, has been well received by clients and staff alike, around the world.

In June 2024, the Company announced its intention to undertake a new share buy-back programme to give tangible form to the commitment we made last year to return surplus cash to our shareholders in a cost-efficient way that delivers long-term benefits to the Group. To date, the business has acquired 810,000 shares at a cost of £0.2m, funded from its existing surplus cash, in order to return value to our shareholders. The £0.25 million programme has already achieved a significant measure of success; the programme remains ongoing and will be subject to board review when the first tranche is concluded.

As a business working on some of the world's largest and most important projects, we have made over the past 3 years a significant investment in cyber security including cyber essentials accreditation to ensure the business and its clients are properly protected from the continuously evolving threats posed by a challenging virtual world. We have strengthened our IT systems considerably during the year and will continue to invest in this area in future years.

I want to thank our staff whose work has played a critically important role in taking forward our business and turning in a performance that, besides being highly conscientious and professional, has also proven that the integrated transformation strategy which Diales initiated a year ago is beginning to deliver significant, tangible and continuing improvements in our commercial performance. It has not only delivered improved profitability but, also, valuable incremental operational efficiency gains across the Company's global platform. Last and by no means least, it has earned the enthusiastic support of our team.

We pride ourselves on having an upfront and inclusive global culture that is respectful, engaged and focused on client fulfilment and, during FY24, we have gone further to strengthen and celebrate those key Diales values in order to support our overall mission of maximising shareholder value. 

I should like to thank Shaun Smith for his guidance, encouragement and support throughout FY24 in his first full year as our Chairman. I should also like to commend Charlotte Parsons, our Chief Financial Officer, whose seasoned scrutiny of our financial performance through our now fully integrated ERP IT, has improved our ability to appraise our operational performance to help drive improvements in future financial performance.

At the end of FY23 we referred to the significant investments made in infrastructure projects globally. We remain focused on the opportunities that the Kingdom of Saudi Arabia, South American and APAC clients can offer our business and shareholders in FY25 and beyond. We continue to identify and assess opportunities of strategic interest, but only where we are confident that there is an appropriate and synergistic fit in terms of value and management and will only proceed further in circumstances where we consider all our key criteria are met.

OVERALL TRADING ENVIRONMENT

FY24 has witnessed a period of geopolitical change as a consequence of over 70 elections worldwide, including in territories in which Diales operates or provides service to clients. Elections have included both the UK and US which have each witnessed substantial political change, as well as European Parliamentary elections that have taken place over our footprint of EU offices. Dynamic public policy and regulatory change inevitably has the potential to have a bearing on our overall operational performance and the future environment in which our business trades.

The recent change of government in the UK and its first Budget has also created challenges with increased National Insurance costs materially affecting our UK operations through increased payroll costs. The Company is now putting in place the necessary steps ahead of the implementation of the Budget measures from April 2025 in order to ensure the business can mitigate the additional costs as far as possible. Management do, however see significant opportunities from the UK government's commitment to spending on hospitals, schools and infrastructure, which are expected to benefit the core UK business over the medium to longer term.

Similarly, we anticipate that the change of administration in the US in January 2025 is set to unlock significant medium term opportunities for structural infrastructure upgrade, particularly in the energy sector.

An early stabilisation of the conflict in the Ukraine region in HY FY25 would bring with it significant requirements for reconstruction and a potential need for our services.

REGIONAL BREAKDOWN

EUROPE AND AMERICAS

As a consequence of in-market operational issues, the Company has decided to retrench from its New York office. Diales' Canada business and footprint remains unaffected by this short-term resource-based issue. For the time being, future opportunities in Latin America will be managed from the Company's office in Madrid.

The cost of doing business in New York is high and some staffing issues early in FY24 had a negative impact on the Group. Accordingly, staff are expected to exit with local management in an agreed and orderly way, in order to ensure efficient cash collection for the Group and effective and timely fulfilment of existing local client requirements. The Group considers that this early and decisive action reflects the business's ability and willingness to take proactive steps in the way envisioned in the integrated transformation strategy and guided by more accurate and timely financial data and reporting.

FY24 has witnessed a period of satisfactory trading and consolidation across European markets, with our businesses in Germany, France and the Netherlands returning a decent trading performance in spite of economic headwinds affecting the Eurozone. In addition, there has been some commendable growth achieved in Spain. We expect to see further sustained growth in FY25 with additional hires planned in Germany, the Netherlands, France and Spain in order to strengthen further our offering and our ability to service clients and pipeline.

Retrenching our presence in New York will bring more growth to Spain in view of the language opportunities that come from the Latin American market, to which we continue to attach importance. This will involve the addition of some Portuguese speaking staff to work on projects in Brazil.

Our Driver Project Services business in the UK has enjoyed another year of notable achievement, with further growth that has exceeded what was originally forecast.

Industrial clients in the North-East continue to require high quality project-related support and the business is, therefore, now uniquely differentiated from the wider Group by continuing to operate under the trading name of Driver Project Services, while the rest of the global platform now trades as Diales.

The UK business performed in line with expectations in the year; but it is a testimony to the business' continuing strength, vitality and resolution that it would have been significantly further ahead, had it not been for two disappointing client insolvencies which occurred in Q4 FY24.These were well-publicised large entities in the construction sector and, whilst advance warning was not available to us, quick thinking and decisive early action by management enabled the impact of the two business failures to be substantially mitigated.

There is now underlying strength to the business, providing secure foundations for future performance gains in FY25. It is with this in mind, therefore, that the business has hired two new testifying experts in the Project Management and Mechanical engineering departments in the expectation of economic growth and contingent demand for consulting services, and it continues to seek to acquire the best talent in the marketplace, confident of its ability to compete effectively, support further organic growth next year and deliver for our shareholders.

ASIA PACIFIC

Our presence in APAC is now streamlined through a regional footprint of offices in Singapore, Seoul and in Australia (ie Perth, Sydney, Brisbane). The wider region is served from these spokes within the hub and spoke model that was a central feature of our integrated transformation strategy announced in FY23 and which is now delivering for the Group. Australia has had a reasonable year despite some regional headwinds and I am pleased to report that Singapore has now turned around and returned a very creditable year of profitable trading. Seoul has rapidly developed into a strategically important new business spoke for the region and, in addition, continues to be used to win work in the Middle East and APAC regions for our Korean clients. In order to service this pipeline of valuable leads and converting business, some of our staff are based in Seoul and utilise further support from other areas of our global business.

MIDDLE EAST

Diales' Middle East business is now structured around regional hubs in Dubai / Abu Dhabi, Qatar and the Kingdom of Saudi Arabia (KSA). The legacy operations in Oman and Kuwait are going through an orderly process of winding down, leading to eventual closure. I am pleased to report that the region as a whole has continued to trade profitably and work has been shared around the region's offices in an efficient and seamless way. KSA continues to act as a regional magnet for infrastructure spend with recent reports suggesting that contracts awarded in the construction, industrial and transport sectors now approaches USD 150 billion. Our Qatar office is winning international work all over the globe.

Through intelligent planning and a lean team which we currently have no plans to increase, we are well positioned to make the most of continuing growth in and from the region. Our careful monitoring of work and pipeline emanating from, in particular, KSA requires the precise matching of resources to local opportunities, which I am pleased to report that we are well positioned to develop strongly and sustainably in FY25.

Full integration through the offices, effectively acting as one Middle East business has now been achieved, and I am grateful to the excellent management team we have in place.

CURRENT TRADING

The Group has delivered a significant improvement in underlying* operating profit of £1.2m, compared to £1.0m in FY23. In the face of significant geopolitical, commercial, fiscal and operational risk, I believe we have delivered a highly respectable set of full year numbers.

Staff retention levels have continued to be strong. More efficient servicing of clients delivered through the integrated transformation strategy across our global platform has improved the competitiveness of our offering and the effectiveness of our client servicing and client retention in a way that positions us well for FY25.

Continued vigilance on cash collection, assisted by improved financial reporting, has ensured that our cash position has strengthened significantly to £4.3m compared to £3.6m at the FY24 Interim Results. Whilst this is a decrease year on year of £1.5m (2023: £5.8m), this is after funding dividend payments of £0.8m (2023: £0.8m), share buy-back of £0.2m, tax payments and the planned cessation of a JV agreement in Canada and the Middle East.

DIVIDEND

I am pleased to report a proposed final dividend to shareholders at 0.75 pence per share, which if approved at the forthcoming Annual General Meeting will make 1.5 pence per share paid as dividends for the year.

CAPITAL ALLOCATION

The business's framework objective continues to be to generate growing levels of cash each year, predicated on trading profitably, which we do year on year.

Our approach to Capital Allocation remains focused on organic growth, strategic acquisitions and the return of surplus cash to our shareholders.

In June 2024, the Company initiated a new £0.25 million share buy-back programme that delivered on its promise to repatriate surplus cash to our shareholders and this programme continues. The Group is actively considering a number of acquisition opportunities and the Board will review the potential to allocate further cash to the buyback once the first tranche is concluded.

OUTLOOK

We have entered FY25 with a strong pipeline of leads, a more stable trading environment and a clear direction of travel in terms of public policy in the UK and the USA. Both incoming governments have publicly stated their commitment to investment in infrastructure and, in the US, to energy. In these markets and other adjacent ones, there are opportunities for the advisory services provided by Diales. 

Following a successful turnaround, and strengthened by the delivery of the first year of the four-year integrated transformation strategy that was announced last year, Diales is now exceptionally well positioned to meet the challenges and exploit the opportunities of FY25.

The executive team is focused on extracting continuous efficiency gains for the business and our shareholders; refining our strategy to keep the business highly competitive over coming years; and implementing an ongoing process of incremental improvements in utilisation levels and margin enhancement. We believe that running our global business with continuously improving levels of cost-effectiveness and accountability whilst simultaneously providing our clients with exceptional levels of client servicing is a winning formula for growing our business and pipeline. This will ensure that our integrated transformation strategy not only meets the objectives that we have set ourselves over the coming three years, but also provides a route map to even greater success and achievement.

We see prospects for the business and our clients in FY25 and the longer term as very promising for Diales. I am pleased to report the Board has agreed to return to market guidance, signalling our confidence in the future prospects of the Group.

Chief Financial Officer's Review

The key financial metrics are as follows:

* Underlying figures are stated before the share-based payment costs and non-recurring costs

**Net cash consists of cash and cash equivalents

***Utilisation % is calculated by dividing the total hours billed by the total working hours available for chargeable staff

Revenue from continuing operations increased by 0.9% to £43.0m (2023: £42.6m). Gross profit margin increased by 0.9% to 26.6% (2023: 25.4%), a £0.2m increase to £11.0m (2023: £10.8m). This resulted in an increase in underlying operating profit of 20.0% to £1.2m (2023: £1.0m). There was a decrease in net cash year on year to £4.3m (2023: £5.8m), after funding dividend payments of £0.8m (2023: £0.8m), share buy-back, tax payments and the planned cessation of a JV agreement in Canada and the Middle East.

The UK and Europe region revenue increased to £34.1m (2023: £32.7m) with a slightly reduced segmental underlying operating profit pre-central cost recharge of £5.2m (2023: £5.4m). This was driven by increased revenues in the UK of 8.3% to £26.0m (2023: £24.0m) and a decrease in revenues in mainland Europe of 8.0% to £8.1m (2023: 8.8m). 

Revenue in Canada decreased by 25.0% to £0.6m (2023: £0.8m). The segmental underlying operating loss pre-central cost recharge was £0.2m, due to some exceptional staffing issues (2023: £Nil).

The ME region saw revenue increase during the year by 14.3% to £4.8m (2023: £4.2m). The segmental underlying operating profit pre-central cost recharge for the region was a turnaround of £0.4m to a profit of £0.3m (2023: loss £0.1m).

The APAC region saw revenues increase by 20.7% to £3.5m (2023: £2.9m).  The segmental underlying operating loss pre-central cost recharge for the region was £0.1m, due to market challenges (2023: loss £0.2m).

The profit before tax increased 125.0% to £0.9m (2023: £0.4m) after non-recurring costs of £0.2m (2023: £0.2m), charge for share-based payments of £0.1m (2023: £0.4m) and net finance income of £Nil (2023: £0.1m). 

There was a loss from discontinued operations of £1.0m (2023: £0.4m) relating mainly to the USA (£0.5m), Oman (£0.2m), Kuwait (£0.3m)

The utilisation*** rate of chargeable staff across the continuing business as a whole for the year remained stable at 72.6% (2023: 72.5%). Across the regions this was 72.3% in EuAm (2023: 72.2%), 75.8% in the Middle East (2023: 73.8%) and 70.5% in APAC (2023: 68.0%).

NET WORKING CAPITAL

Net cash** decreased, closing the year at £4.3m (2023: £5.8m) with a decrease in net working capital following a decrease in outstanding debtors and a decrease in creditors.

TAXATION

The Group incurred a tax charge of £0.5m (2023: £0.3m). 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.

EARNINGS PER SHARE

The basic loss per share was 1.2p (2023: loss 0.6p).

Underlying* basic earnings per share was 1.4p (2023: 1.4p).

CASH FLOW

There was a net cash inflow from operating activities before changes in working capital of £1.0m (2023: £1.0m), including the current year benefit of £0.6m (2023: £0.6m) from the amortisation of right of use assets under IFRS16. The movement also reflects the reported loss for the year of £0.6m (2023: loss £0.3m) after depreciation of £0.2m (2023: £0.2m). There was a decrease of £0.2m in trade and other receivables (2023: decrease of £6.2m) reflecting the continuing strong debt collection, and a decrease in trade and other payables of £0.4m (2023: decrease £4.7m) resulting in a net cash inflow from operating activities of £0.4m (2023: £2.4m). Net tax paid in the year was £0.4m (2023: £0.2m).

There was a net cash outflow from investing activities of £0.1m (2023: £Nil) which relates to office relocations and IT spend.

Net cash flow from financing activities was an outflow of £1.5m (2023: £1.5m) with the current year reflecting the dividends paid of £0.8m (2023: £0.8m), purchase of treasury shares £0.1m (2023: Nil) and lease repayments under IFRS 16 of £0.6m (2023: £0.7m).

LIQUIDITY AND GOING CONCERN

The Group continues to be in a strong financial position. At the year-end the Group had net cash balances of £4.3m (2023: £5.8m) which is appropriate for the Group's operating requirements going forward. During the year management agreed a £1m overdraft facility with Barclays and will be transitioning the UK banking across over the coming months.

The Directors have completed a review of the Group's financial forecasts for a period of twelve months from the date of approving these financial statements. This review included sensitivity analysis and stress tests which took account of reasonable and foreseeable scenarios. Under all scenarios modelled, the Directors anticipate that any funding needs required would be sufficiently covered by the existing cash reserves. As such the Directors have a reasonable expectation that the Group has sufficient resources to meet its obligations when they fall due for at least twelve months from the date of signing this report and hence these financial statements include information prepared on a going concern basis.

DIVIDENDS

The Directors propose a final dividend for 2024 of 0.75p per share (2023: 0.75p per share) in addition to the interim dividend paid in October 2024 of 0.75p per share (2023: 0.75p). This will be paid on 10 April 2025 to shareholders who are on the register of members at the close of business on 28 February 2025, with an ex-dividend date of 27 February 2025, subject to approval at the Group's Annual General Meeting.

Consolidated Income Statement

For the year ended 30 September 2024

* Underlying figures are stated before the share-based payment costs and non-recurring operational costs.

Consolidated Statement of Comprehensive Income

For the year ended 30 September 2024

Consolidated Statement of Financial Position

As at 30 September 2024

Consolidated Cash Flow Statement

For the year ended 30 September 2024

Consolidated Statement of Changes in Equity

For the year ended 30 September 2024

(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. Explanatory details for these reserves are disclosed in note 22.

(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.

BASIS OF PREPARATION

The Financial Statements have been prepared under the historical cost convention, as modified by the revaluation of certain assets, and in accordance with Applicable Accounting Standards.

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 have prepared cash flow forecasts 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. At 30 September 2024 the Group had cash reserves of £5.3m. The strong cash position was after a year of turnaround within the Group. The group reported a loss of £0.6m, however, profit from continuing operations was £0.4m. 

The Directors have also prepared a stress case scenario that demonstrates the Group's ability to continue as a going concern even with a significant drop in revenues and limited mitigating cost reduction to re-align with the revenue drop.

Based on the cash flow forecasts prepared including appropriate stress testing, the Directors are confident that any funding needs for at least 12 months from the date of signing the report required by the business will be sufficiently covered by the existing cash reserves. As such these Financial Statements have been prepared on a going concern basis.

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.

(1) Unallocated costs represent Directors' remuneration (the audited Directors' remuneration report can be found on page 42 of these financial statements), 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 2024.

(1) Unallocated costs represent Directors' remuneration (the audited Directors' remuneration report can be found on page 42 of these financial statements), 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 2023.

GEOGRAPHICAL INFORMATION

GEOGRAPHICAL INFORMATION OF NON-CURRENT ASSETS

ANALYSIS OF THE TAX CHARGE

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

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:

FACTORS THAT MAY AFFECT FUTURE TAX CHARGES

The Corporation tax rate for the year ended 30 September 2024 was 25%. No factors noted that would impact future charges.

EARNINGS PER SHARE

NON-RECURRING ITEMS

TRADE AND OTHER RECEIVABLES

TRADE AND OTHER PAYABLES

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 intangible assets including goodwill are impaired requires an estimation of the value in use of the cash generating units to which the intangible asset or 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. Further details can be found in note 12.

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 £1,793,000 (2023: £2,960,000) 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.

POST BALANCE SHEET EVENTS

There have been no significant events requiring disclosure since 30 September 2024.

END