TIDMDRV
RNS Number : 3028T
Driver Group plc
12 December 2012
12 December 2012
DRIVER GROUP PLC
("Driver" or "the Group")
Preliminary Results
For the Year to 30 September 2012
Driver provides specialist commercial & dispute
resolution
Services to the construction and engineering industries
2012 2011 Change
GBP000 GBP000
-------- -------- --------
Revenue 26,258 17,365 8,893
Gross profit % 26.8% 26.8% 0.0pp
Underlying* profit before tax 1,751 548 1,203
Exceptional items and share-based payment
charge (553) (199) (354)
Profit before tax 1,198 349 849
Profit after tax 961 268 693
Basic earnings per share 3.3p 0.9p 2.4p
Underlying* earnings per share 5.5p 1.7p 3.8p
Dividend per share*** 1.0p 0.5p 0.5p
Net (borrowings) / cash at year end** (964) 572 (1,536)
Total equity 7,497 6,700 797
Key points
-- Revenue up 51%
-- Underlying Pre Tax Profit up 220%*
-- Cash generated from operations GBP1.4m
-- Successful acquisition and integration of Trett Holdings Ltd (Trett)
-- Trett returned to profit
-- Established global operations
-- Middle East revenues up 58%
-- Qatar revenues up 175%
-- Africa Revenues up 143%
-- UK Power & Process Revenues up 147%
-- Q1 performance of 2012 / 2013 very strong
Alan McClue, Non-Executive Chairman of Driver, commenting on the
results said:
"I am pleased to report on the Group's performance for the
financial year 2011 / 2012; a year in which we both materially
outperformed market expectations and made a significant acquisition
which has given the Group a presence in 5 global regions. We
achieved all of our key objectives including further growth in
revenues, profits and cash position (after accounting for the funds
utilised in the acquisition of Trett).
We are delighted by the way our current financial year has
started, particularly in Africa and the Middle East which continue
to outperform as the momentum in our last financial year in these
regions has continued into the current year. The Board therefore
has a high level of confidence in the outlook for the remainder of
the current financial year."
Enquiries:
Driver Group plc
David Webster, Chief Executive Tel: +44 (0) 1706 223999
Damien McDonald, Group Finance Director
Alan McClue, Non-Executive Chairman Tel: +44 (0) 7791 546798
Charles Stanley Securities
Nominated Adviser & Broker
Marc Milmo / Carl Holmes Tel: +44 (0) 207 149
6000
* Underlying figures are stated before the share-based payment
charge and exceptional items (note 5)
**Net cash / (borrowings) consists of cash and cash equivalents,
bank loans and finance leases.
***0.3p paid as an interim dividend, remaining 0.7p proposed for
payment after year end.
CHAIRMAN'S STATEMENT
Introduction
I am pleased to report on the Group's performance for the
financial year 2011 / 2012; a year in which we both materially
outperformed market expectations and made a significant acquisition
which has given the Group a presence in 5 global regions.
Throughout the year we continued the positive trends seen in the
second half of 2010 / 2011 and the first half of 2011 / 2012.
We achieved all of our key objectives including further growth
in revenues, profits and cash position (after accounting for the
funds utilised in the acquisition of Trett). This strength in
trading, cash generation and continued optimism across the business
allows us to recommend an enhanced final dividend.
12 months ago we stated that the Group would continue to strive
for growth in terms of revenue and sustainable profit and that it
would maintain a healthy cash position. We identified areas where
the Group's operations could be developed (being primarily Africa,
Qatar and UK Power & Process sector) and said we were
structured to maintain a stable environment in all other areas of
the Group. I am pleased to report that not only was the Group
successful in developing and growing these targeted areas but it
was also able to significantly outperform in the Middle East.
Following the Trett acquisition and the underlying growth in our
business, our employee and sub-consultant numbers have risen to 271
(2011: 175). At all levels in the Group, our employees have adapted
to the challenges our business has encountered through this
continued period of growth and have adopted a flexibility
appropriate to Driver's developing global business. This commitment
to the Group's future performance has resulted in the Group being
in a position where it is creating exciting opportunities for our
staff across the globe and in an increased number of service
sectors.
I am particularly pleased, as the Group Chief Executive states
in his statement, to report that the integration of the Trett
business acquired in May 2012 has been successfully achieved and
the staff that joined Driver are making a full contribution to the
Group.
Financial Results
Revenue for the 12 months to 30 September 2012 increased by 51%
to GBP26.3m (2011: GBP17.4m) largely as a result of our improving
position in Africa, the Middle East, the UK Power & Process
sector and with the final 5 months benefitting from the acquisition
of Trett.
Underlying* profit before taxation increased by 220% to GBP1.75m
(2011: GBP0.55m). After a charge for share options of GBP135,000
(2011: GBP74,000) and exceptional items (being the costs related to
the acquisition and integration of Trett and severance payments) of
GBP418,000 (2011: GBP125,000) reported profit before taxation
increased 243% to GBP1.2m (2011: GBP0.35m).
The Group's net borrowing position at the end of the year stood
at GBP0.96m after the acquisition of Trett (2011: net cash
GBP0.57m). Cash generated from operations was GBP1.4m.
Underlying* earnings per share was 5.5 pence (2011: 1.7 pence).
Reported earnings per share was 3.3 pence (2011: 0.9 pence).
(* Underlying figures are stated before the share-based payment
charge and exceptional items (note 5))
Dividend
In view of the sustained profits and the underlying cash inflow
in the year, the Board proposes a final dividend for 2012 of 0.7p
per share (2011: 0.5p) giving a full year dividend of 1.0p per
share (2011: 0.5p). The final dividend will be paid on 9 April 2013
to shareholders on the register at the close of business on 2 April
2013.
Trading Overview
The Group's performance continues to progress against all key
parameters. Revenue is 51% higher, underlying pre-tax profit is
220% higher and the underlying cash position has increased by
GBP0.6m when account is taken of the Trett acquisition net cost of
GBP2.2m.
This has been achieved whilst integrating Trett into the
business and returning the Trett business to profit from a
sustained period of losses at the time of acquisition.
The Group is now positioned as a global provider with 56% of
revenue earned on projects outside of the UK.
Trading in Europe, which accounted for 61% of Group revenue, was
up 34% on 2011 revenues as a result of the 5 month benefit of the
Trett business together with continued growth in the Power &
Process sector, where we recruited additional management in 2011 in
our efforts to increase our presence in this sector. In addition,
we have started to see areas of growth in our UK Civil &
Infrastructure sector as well as Off-Shore Wind projects.
Notwithstanding the increase in revenues, profit in Europe was down
due to losses in the Trett business in the early months following
acquisition. As we exited the year, utilisation levels of the Trett
staff had improved materially ensuring their final months of the
year were profitable in their European operations.
In the Middle East, trading accounted for 27% of Group revenue
and was up 58% on 2011 revenues. The region out-performed
expectations as set out in the previous trading updates, prior to
the Trett acquisition which added a 5 month benefit, with growth in
each of our 4 offices, primarily through the disputes and advisory
service and expert witness work. Whilst we anticipated the
construction market in the UAE to stay at much reduced levels, we
have benefitted from an increasing level of disputes and
arbitrations in the region taking revenue up 17% and returning the
region to profit. Oman continues to perform well with Government
projects providing much of the revenue from a healthy pipeline of
projects with revenue up 27% and profit up 8 percentage points.
Qatar continues to be relatively slow in development due to delays
in release of projects but nonetheless increased revenues by 175%
in the year and returned to profit. This increase in overall
performance has seen the region transform from a loss position in
2011 to healthy profits in 2012.
Africa's revenue represents 8% of Group revenue and is up 143%
on 2011 and significantly out-performed our internal expectations.
We now have work across all service streams - in the PPP sector,
expert witness appointments, claims and advisory services,
strategic project management and project services. The region has
transformed from a small loss in 2011 to good levels of profit in
2012.
The acquisition of Trett has allowed the Group to penetrate
markets in two additional regions, the Americas (through the
Houston office) and Asia Pacific (through offices in Kuala Lumpur
and Singapore). These regions were not performing well at the time
of the acquisition and had been losing money for a sustained period
of time but management action, and integration in to the wider
Driver Group during the 5 months since acquisition, has turned
America to a break even position. The markets in oil & gas,
shipping and marine services provided opportunities for this
recovery.
Outlook
Last year I said we would develop our operations in Africa, the
UK Power & Process sector and Qatar whilst maintaining a stable
environment in the remaining parts of our business and evidence the
sustainability of the Group profits. This has been achieved whilst
also out performing in the Middle East, a region where we have
grown the business quicker than anticipated following the
re-structuring, due to increased volume of work in the dispute
market.
In addition, we have completed a significant acquisition that
now ensures we have a global footprint. We have successfully
integrated the businesses and have returned the Trett business to
profitability.
Our Medium Term Plan is to establish all our key service
provisions (Project Services, Dispute & Advisory, Strategic
Project Management and Expert Witness & Litigation Support)
across all of the regions - Africa, Americas, Asia Pacific,
Mainland Europe, Middle East and UK. In large part this can be
achieved organically but we are receptive to the possibilities that
targeted acquisitions may be beneficial in some regions and service
sectors. We will be looking to open offices in key areas of Canada,
Mainland Europe and Asia Pacific. An important element of this plan
is to leverage our service offerings across all markets. This
provides the possibility for material growth particularly given
that Trett has not previously provided project services or
strategic project management services to their clients.
We see the coming year as one in which we will continue to grow
and develop our service offerings across all of our regions. Of
course different regions will develop at different paces and in
varying markets. The oil and gas market is an area where we see
opportunity to impact in 3 regions; and an important objective is
to increase our activity across the network of hubs in Houston, UAE
and Kuala Lumpur / Singapore. In June, we launched our Diales brand
through which we promote our high end expert witness offering to
clients involved in international arbitrations and this will
continue to be an area of focused development.
We are delighted by the way our current financial year has
started, particularly in Africa and the Middle East which continue
to outperform as the momentum in our last financial year in these
regions has continued into the current year. Across the Group, our
secured revenues and revenues expected to be secured and delivered
in the remainder of the year are very encouraging. We have
visibility of our first quarter performance and secured work beyond
this period, which indicates that we have had a particularly strong
start to the current year. This gives the Board a high level of
confidence in the outlook for the remainder of the financial
year.
W. Alan McClue
Non-Executive Chairman
CHIEF EXECUTIVE'S REPORT
Introduction
In my 2011 report I stated that the environment within which we
would operate in 2012 would be much the same as in 2011 and that
growth would come from Africa, Qatar and the UK Power & Process
sector within Driver Project Services. I anticipated stability
rather than growth in the rest of the UK market and was cautious
about the Middle East notwithstanding our strong start to the year
in that region. I am very pleased with our performance against
these expectations as highlighted in our trading updates and profit
upgrades during the course of the year. Africa increased its
revenues by 143% and returned to profit, Qatar by 175% and returned
to profit and the Power & Process sector of Driver Project
Services increased revenue and profits by 147%. The Middle East
maintained its strong start to the year increasing revenues by 58%,
additionally the region benefitted from 5 months contribution from
the acquisition of Trett and returned to a healthy level of profit
from a break even position in the previous year.
In May 2012, we announced the acquisition of Trett. Prior to the
acquisition, Trett had experienced a prolonged period of losses but
we did anticipate that we would turn this around before the end of
the year. I am delighted to report the integration has gone well,
with the Trett business making profits in each month of the final
quarter. The Trett name is long established and well regarded
within the market place in which we operate and in certain parts of
the world we will continue to use the name of Trett through
"DriverTrett".
The Group performed very well against all key metrics. The
Driver business, excluding the benefit of Trett, increased revenue
by 26% and gross margin improved by 1 percentage point to 28%. As a
whole the Group increased revenue by 51% to GBP26.3m (2011:
GBP17.4m) and gross margin was maintained at 27% (2011: 27%) - due
to a reduced gross margin of 23% in the Trett business. Underlying*
profit before taxation increased by 220% to GBP1.75m (2011:
GBP0.55m). The Group's net borrowing position at the end of the
year stood at GBP0.96m (2011: net cash GBP0.57m) after the net
GBP2.2m acquisition of Trett with other net cash inflow of
GBP0.6m.
The acquisition of Trett added headcount of 75 employees, of
which 65 are fee earners taking our staff levels (including sub
consultants) to 271 and it gives us established offices in 3
additional regions of the world - Americas (Houston), Asia Pacific
(Kuala Lumpur and Singapore) and Mainland Europe (Netherlands),
providing a true global footprint for all of our service offerings.
I am very pleased to report that the integration of the Trett
offices have been successfully completed and we ended the year with
all staff operating within the Driver management systems and
policies. We now have a business managed through the five regions
in which we trade: Africa, Americas, Asia Pacific, Europe and the
Middle East and as a global business 56% of revenue is generated on
overseas projects.
(*Underlying figures are stated before the share based payment
charge and exceptional items (note 5))
Africa
Africa has this past year developed into a material region for
the Group with 8% of Group revenue coming through this office.
Trading increased by 143% to GBP1.99m (2011: GBP0.8m) with healthy
gross margins returning the region to good profits. In my last
statement, I said I expected some of the good quality outstanding
proposals to be secured in 2012 and they were - for example the
strategic project management appointment announced in July 2012.
Our key markets continue to be PPP, disputes and project management
/ supervision and the pipeline of opportunities for 2013 is again
solid.
Americas
We now have an office in Houston as a result of the Trett
acquisition. This office primarily serves the oil & gas market
as the vast majority of these projects are initiated and managed
from here. The focus has been on providing dispute and expert
witness services and, in the 5 months since the acquisition, we
have eliminated the losses and closed the year with a break even
position. We have plans in place to develop the broader service
offering of the Driver Group in this region, particularly Project
Services which are in demand and were not previously offered by
Trett.
Asia Pacific
Trett have two offices in this region - Kuala Lumpur and
Singapore and, as was the Trett model, they focused on the dispute
and expert witness market. The business lost money over a sustained
period prior to acquisition and although this has recovered to some
extent in the five months since acquisition, it was still loss
making at the close of the year. We have provided added focus and
impetus in the region and will also be developing the wider Group
services within Driver - primarily Project Services to the oil
& gas and petrochemical markets in the region.
Europe
This region is the largest region in the Group with 61% of Group
revenue. Revenue has increased by GBP4m or 34% to GBP16.1m (2011:
GBP12m) in the year as a result of the anticipated growth in our UK
Power & Process sector (up GBP1.9m) and the benefit of 5 months
of Trett trading. Underlying profits were down 5 percentage points
at 12% of revenue (2011: 17%) reflecting the lower level of
utilisation and gross margin of the Trett business particularly in
the early months following the acquisition. Due to this,
utilisation levels for Driver Trett Europe averaged across both
businesses were down 7 percentage points on 2011 at 69% - an area
where I believe increased profits can be generated in 2013.
We continue to benefit from our client base in the civil
engineering & infrastructure sectors as well as off shore wind,
and the Driver UK business outside of Power & Process and Trett
maintained 2011 revenues. In Mainland Europe our revenues and
client base have increased materially through the addition of the
Trett office in the Netherlands which brings with it clients in the
marine and shipbuilding sectors as well as a broader oil & gas
and energy client base. I remain of the view that we are increasing
market share in the UK and Mainland Europe due to our growing
reputation, the quality of our staff and the marketing focus of the
senior management.
Middle East
This region continued the turnaround experienced in the second
half of 2010 / 2011 following the restructuring and now accounts
for 27% of Group revenue. Revenue increased by GBP2.6m or 58% in
the year to GBP7.1m (2011: GBP4.5m) some of which is the benefit of
the Trett business in the final 5 months of the year. The region
made a substantial profit in 2012 overturning the previous year's
losses of GBP0.09m with every office in the region growing and
returning profits.
Oman is the largest office in the region and the administrative
centre for all of our Middle East business. It continued to grow as
highlighted by the announcements made during the course of the year
confirming appointments to provide consulting and project
management services for the Public Authority for Electricity and
Water, consultancy services on Muscat and Salalah Airports and
project management of a major road scheme. The office also works
for several other Government Ministries. Oman increased revenues by
27% to GBP2.8m (2011: GBP2.2m) and returned a very healthy profit
up 7 percentage points on 2011. I have previously stated that
Government work on live projects provides a stable foundation for
the higher margin disputes business and in 2012 we benefitted from
this. There was an upturn in dispute work with higher gross margins
leading to the increased profits even though the nature of this
work did cause utilisation levels to drop - down 9 percentage
points at 79% (2011: 88%). Oman did not benefit directly from the
acquisition of Trett as they did not have an office in this
region.
The Dubai office continues to focus on the dispute market and
the expert witness market following the restructure and refocusing
of the business in 2011. Revenue, before a small benefit from the
acquisition of Trett, was maintained at GBP1.2m (2011: GBP1.2m).
However, the small loss in 2011 was overturned and a healthy profit
margin was delivered as a result of continually managing the cost
base of the business to reflect anticipated revenues and better
utilisation of staff across the region. Utilisation levels did
increase by 7 percentage points but were still low at 63% -
providing an area for increased profits in 2013.
The Abu Dhabi office benefitted the most in the region from the
acquisition of Trett with revenues increasing 173% and provided the
healthiest gross margin and profit levels in the region -
overturning the small loss in 2011. As with Dubai, the focus
remains on the dispute and expert witness market. High utilisation
levels were a contributory factor to these gross margin and profit
levels.
In Qatar, the frustration experienced in 2011 due to delays in
the release of the major infrastructure projects by government was
reduced as the office increased revenues by 175% and again the
marginal loss was overturned and replaced with a healthy profit.
This was a reflection of continuing the work with our key clients
from 2011 and converting the good opportunities that I said we had
in my last statement. With utilisation levels at 100% recruitment
plans are in place for the coming year.
Outlook
The acquisition of Trett provided a key moment for consideration
of our next medium term plan. We now have a global business with
opportunities to leverage all Group service offerings across all
these regions. This opportunity is enhanced by the fact that Trett
did not provide Project Services or Strategic Project Management
Services to their clients and so the Group can now offer these
services to new clients in new parts of the world; particularly the
oil & gas hubs of Houston, Kuala Lumpur and Singapore together
with our existing offices in the Middle East. Our Medium Term Plan
is to achieve this and we will consider opening further offices in
Asia Pacific, Canada and Mainland Europe as part of this plan. Our
preferred means of growth is organic but we acknowledge that in
certain regions and service sectors it may be appropriate to
consider strategic acquisitions and we will certainly be receptive
to this prospect.
On a more basic note, it is evident that utilisation levels and
gross margins in the old Trett businesses can be bettered and are
starting to improve as the staff relationships with each other and
the Driver management systems develop; this provides the
opportunity through sensible management to increase
profitability.
The Africa region again has a strong pipeline of proposals and
opportunities in the PPP sector and for project management /
planning services and is a target area for continued growth.
I have made a new appointment in Americas - Martin Woodall as
Managing Director of the Region. Martin was the Managing Director
of Driver Project Services in the UK and was brought in
specifically to establish the Power & Process division. This
has been successful and the succession plan in that business has
allowed Martin to relocate to Houston in the New Year to establish
both Driver Project Services and DriverTrett in the Region -
initially in the oil & gas sector where Trett have clients and
Martin is well connected. I anticipate growth to come from this
region as a result of this appointment and the additional offerings
Driver Group now brings to the market.
Asia Pacific is now headed by the ex Trett Managing Director -
Alastair Farr as Managing Director for the region. With his
knowledge of the staff and the region together with reducing his
responsibilities to now focus only on this region we should start
to see some positive results and a return to profitability. Plans
are in place to open an office in Queensland, Australia on the back
of the large LNG project we announced our appointment to in May
2012.
The construction market in the UK and Europe continues to be
challenging and is unlikely to grow in 2013, however, there are
some industry commentators who suggest 2013 may be the bottom of
the cycle. Our own experience is that outside of our Power &
Process initiatives the rest of the UK construction market was flat
in 2012 but it was the first year since recession that our revenues
did not decline. There are Government initiatives such as the
National Infrastructure Plan and the new PFI framework which ought
to see 2014 benefit in terms of construction and engineering spend.
There is also a large market in Off Shore Wind where we are picking
up live project appointments. In Europe we therefore look to 2013
with caution but given our performance in 2012 and the pressure on
Government to spend on infrastructure and PFI schemes we have a
degree of optimism thereafter.
In the Middle East we will continue to seek to develop our full
service offering where appropriate. The live construction market in
Qatar is now starting to kick in and should provide opportunities
for our Project Services offering but we continue to believe that
in the UAE our focus should remain in the dispute and expert
witness market.
At the end of the first quarter for 2013 we have an encouraging
level of budgeted revenue allocated on secured assignments and a
strong pipeline of outstanding proposals. I have visibility of Q1
performance and am very pleased with the levels of revenue and
profit this indicates. Areas with particularly strong secured
assignments and pipelines are Africa and the Middle East as their
workload continues the momentum from the second half of 2012.
Key to our performance is the quality, reputation and dedication
of our staff. I have seen that the Trett staff, like Driver staff,
are of a high quality and held in high regard across the
construction and engineering industry. I am delighted with the
attitude of all our staff in the way they have embraced the
acquisition of Trett and whole-heatedly worked to integrate in to
one group of people and business. It is because of the quality and
attitude of our people, working as one across our group of
businesses, that I am excited
about the coming year and look forward to delivering continued
profitable growth for our shareholders.
Dave Webster
Chief Executive Officer
FINANCIAL DIRECTOR'S REVIEW
Results
Revenue increased by 51% to GBP26.3m (2011: GBP17.4m). This
included GBP4.3m of external sales arising from Trett which was
acquired on 11 May 2012. The Chief Executive's report describes the
business segmental performance in more detail.
The underlying* operating profit for the year ended 30 September
2012 was GBP1.79m (2011: GBP0.56m). Reported operating profit was
GBP1.24m (2011: GBP0.36m).
After a net interest charge of GBP0.04m (2011: GBP0.01m) the
underlying* profit before tax was GBP1.75m (2011: GBP0.55m) and
reported profit before tax was GBP1.2m (2011: GBP0.35m).
The Group's results include exceptional items (note 5) relating
to severance costs of GBP0.06m (2011: GBP0.13m) and costs relating
to the acquisition and integration of Trett of GBP0.36m. In
addition the Group recorded a share based payment charge of
GBP0.13m (2011: GBP0.07m) in relation to the Group's share option
scheme.
The European business segment revenue grew by GBP4.0m to
GBP16.1m although operating profit reduced by GBP0.5m to GBP1.6m
including the cost of a GBP0.31m exceptional charge. The Middle
East segment revenue increased by GBP2.6m to GBP7.1m and reported a
profit of GBP1.5m compared with a loss of GBP0.09m in 2011. The
Africa segment revenue grew by GBP1.2m to GBP2.0m and reported a
profit of GBP0.3m compared with a loss of GBP0.1m in 2011. New
segments have been created arising from the acquisition of Trett
with America reporting revenue of GBP0.5m and being roughly break
even and Asia Pacific reporting revenue of GBP0.55m and reporting a
loss of GBP0.15m. Reflecting the growth in the business underlying*
unallocated corporate costs increased by GBP0.3m to GBP1.7m. After
a share option charge of GBP0.13m (2011:GBP0.07m) and exceptional
costs of GBP0.1m (2011: GBP0.05m) the reported unallocated costs
were GBP2.0m (2011: GBP1.52m).
Taxation
The Group had a tax charge of GBP0.24m (2011: tax charge of
GBP0.08m). The effective tax rate was 20% (2011: 23%). The tax
charge includes the effect of a lower tax rate for Oman, the UAE
and Qatar.
Earnings Per Share
Underlying* earnings per share was 5.5 pence (2011: 1.7 pence).
The basic earnings per share was 3.3 pence (2011: 0.9 pence) and
diluted earnings per share was 3.1 pence (2011: 0.9 pence).
Cash Flow
Trett was acquired in the year for gross consideration of GBP3m
with cash of GBP0.8m being left within Trett on acquisition and
therefore a net consideration of GBP2.2m. Net cash inflow from
operating activities was GBP1.1m (2011: GBP1.08m). This included a
favourable impact of an increase in creditors of GBP1.5m (2011:
GBP1.05m) offset by a net outflow from an increase in debtors of
GBP1.7m (2011: GBP0.83m).
Other major cash items are tax paid of GBP0.3m (2011: tax
received GBP0.2m), capital spend of GBP0.18m (2011: GBP0.05m) and
increased borrowings of GBP2.3m (2011: repayment of borrowings
GBP1.24m). Dividends paid were GBP0.25m (2011: nil).
The Company had net borrowings at the end of the year of
GBP0.96m compared to net cash of GBP0.57m at 30 September 2011.
Trett Acquisition
The Trett acquisition was funded via bank finance as described
further below. The gross cost of the acquisition was GBP3.0m.
Advisors costs in relation to the acquisition were
GBP0.1m and we have recorded an exceptional onerous lease
provision of GBP0.2m in relation to the closure of the London Trett
office where staff are now working together within the Driver
office.
Goodwill acquired with the business totalled GBP1.1m. Goodwill
represents the value of the synergies arising from the economies of
scale achievable in the enlarged group. These synergistic benefits
were the primary reason for entering into the business
combination.
Principal Risks And Uncertainties
There are a variety of specific business risks which can affect
international consultancy businesses like Driver. The principal
risks are outlined below, the principal uncertainties being the
impact of the downturn in the UK and global economy on the business
is considered in the Chairman's and the Chief Executive's
reports.
Credit Risk
The Group's credit risk is primarily attributable to its trade
receivables. The risk increases as our business expands into new
territories where payment of outstanding receivables can be slower.
Credit risk is managed by running credit checks on customers and by
monitoring payments against contractual terms. There is a clear
internal process for elevating potential problems in recovering
debts such that prompt action is taken to recover debts at the
earliest possible point and legal action taken where necessary.
Liquidity
The Group monitors cash flow as part of its day to day control
procedures. The Board reviews cash flow projections and ensures
that appropriate facilities are available to be drawn upon as
necessary. During the year the Group secured a term loan of GBP1.5m
repayable quarterly over two years in addition to an existing term
loan of GBP1.0m repayable in February 2015. These loans together
funded the acquisition of Trett. At the year end, the Group's
undrawn borrowing facilities consisted of an overdraft facility of
GBP0.75m renewable annually. With cash of GBP1.36m the Group had
access to GBP2.11m of available funds at 30 September 2012. The
Group's facilities with the bank are secured by means of debentures
over the Group's assets and a legal charge over the land and
building at Haslingden.
Reputation Risk
The quality and experience of our people is fundamental to our
success, and we are committed to the development and training of
our staff. All assignments are managed by a director who remains
directly responsible until its conclusion and will regularly
re-evaluate the client's requirements and issues.
Treasury Policies and Foreign Exchange Management
Treasury operations are managed centrally and operate so as to
reduce financial risk, ensure sufficient liquidity is available for
the Group's operations and to invest surplus cash. Corporate
Treasury does not operate as a profit centre and does not take
speculative positions. The Company regularly invoices in Euros for
work performed in Europe as well as receiving foreign currency
income in UAE Dirhams ("AED"), Omani Rials ("OMR") and Qatari
Riyals ("QAR") from its Middle East businesses, South African Rand
("ZAR") from its African business and Malaysian Ringgit ("MYR") and
Singapore Dollar ("SGD") from its Asia Pacific operations and US
Dollar ("USD") generated in America. The Group is therefore exposed
to movements in these currencies relative to Sterling. AED, OMR and
QAR are currently linked to the US Dollar. Foreign currency
balances in excess of forecast amounts required to fund projected
outgoings have been converted to Sterling balances during the year
at spot rate. Euro exposure is managed through the use of a foreign
currency overdraft facility, which is used to match up to 90% of
the value of the Euro debtor balance against Euro borrowings. The
net value of AED, OMR and QAR exposure is managed using foreign
currency hedge contracts to provide a targeted level of cover of
between 50% and 75% of the net exposure. Other currencies are
hedged where outstanding amounts become material. This policy is
regularly reviewed by the Board.
As a consequence of the earnings generated in the Middle East,
America, Asia Pacific and South Africa as well as Euro earnings
generated in the UK, the Group's net income and its equity is
exposed to movements in the value of Sterling relative to the US
Dollar, Malaysian Ringgit, Singapore Dollar, Euro, and South
African Rand. As non-Sterling earnings increase, the exposure of
the Group's Income Statement and Equity to movements in Sterling
will increase as well.
Contingencies and Legal Proceedings Risk Management
The Group monitors all material contingent liabilities, through
a process of consultation and evaluation which includes senior
management, internal and external advisors. This process results in
an evaluation of potential exposure and provisions are made or
adjusted accordingly by reference to accounting principles. No
contingent liabilities have been recognised at the year end.
Health and Safety
Driver is committed to ensuring the health and safety of its
employees in the workplace and where possible implementing health
and safety policy improvements. Driver continues to invest in the
training and development of safe working practices. The Group
measures its health and safety policies through three metrics: lost
time due to accidents, lost time days, and reportable accidents. No
time was lost as a result of a reported incident during the
year.
Damien McDonald
Finance Director
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2012
Notes 2012 2011
GBP000 GBP000
--------- ---------
REVENUE 26,258 17,365
Cost of Sales (19,209) (12,704)
--------- ---------
GROSS PROFIT 7,049 4,661
Administrative expenses (5,966) (4,424)
Other operating income 152 123
--------- ---------
Operating profit before share-based payment
charge and exceptional items 1,788 559
Exceptional items 5 (418) (125)
Share-based payment charge (135) (74)
--------- ---------
OPERATING PROFIT 1,235 360
Finance income 9 2
Finance costs (46) (13)
--------- ---------
PROFIT BEFORE TAXATION 1,198 349
Tax expense (237) (81)
PROFIT FOR THE YEAR 961 268
--------- ---------
Profit attributable to non-controlling
interests 152 40
Profit attributable to equity shareholders
of the parent 809 228
961 268
Basic earnings per share attributable
to equity shareholders of the parent
(pence) 2 3.3p 0.9p
Diluted earnings per share attributable
to equity shareholders of the parent
(pence) 2 3.1p 0.9p
The result for the current and the prior year arises from the
Group's continuing operations.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 SEPTEMBER 2012
2012 2011
GBP000 GBP000
-------- --------
PROFIT FOR THE YEAR 961 268
-------- --------
Other comprehensive income:
Exchange differences on translating foreign operations (69) 23
Deferred tax credit 23 30
-------- --------
OTHER COMPREHENSIVE INCOME FOR THE YEAR NET OF TAX (46) 53
-------- --------
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 915 321
-------- --------
Total comprehensive income attributable to:
Owners of the parent 763 281
Non-controlling interest 152 40
======== ========
915 321
-------- --------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 30 SEPTEMBER 2012
Company Number 3475146
2012 2011
GBP000 GBP000 GBP000 GBP000
------------------------------- -------- -------- -------- --------
NON-CURRENT ASSETS
Goodwill 3,407 2,356
Property, plant and equipment 2,147 2,134
Deferred tax asset 12 67
-------- --------
5,566 4,557
CURRENT ASSETS
Trade and other receivables 8,835 4,839
Cash and cash equivalents 1,357 596
Current tax receivable 217 -
------------------------------- -------- --------
10,409 5,435
-------- --------
TOTAL ASSETS 15,975 9,992
CURRENT LIABLITIES
Borrowings (758) (12)
Trade and other payables (5,741) (2,915)
Current tax payable (97) (131)
------------------------------- -------- --------
(6,596) (3,058)
-------- --------
NON-CURRENT LIABILITIES
Borrowings (1,563) (12)
Deferred tax liabilities (319) (222)
------------------------------- -------- --------
(1,882) (234)
-------- --------
TOTAL LIABILITIES (8,478) (3,292)
NET ASSETS 7,497 6,700
-------- --------
SHAREHOLDERS' EQUITY
Share capital 106 106
Share premium 2,649 2,649
Merger reserve 1,493 1,493
Translation reserve (85) (16)
Capital redemption reserve 18 18
Retained earnings 4,024 3,493
Own shares (844) (1,083)
TOTAL SHAREHOLDERS' EQUITY 7,361 6,660
NON-CONTROLLING INTEREST 136 40
-------- --------
TOTAL EQUITY 7,497 6,700
-------- --------
CONSOLIDATED CASHFLOW STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2012
2012 2011
GBP000 GBP000
-------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before taxation
-------- ----------
* Before share-based payment charge and exceptional
items 1,751 548
* Exceptional items (418) (125)
* Share-based payment charge (135) (74)
-------- ----------
1,198 349
Adjustments for:
Depreciation 208 236
Exchange adjustments (2) (10)
Loss on disposal of equipment 2 2
Finance income (9) (2)
Finance expense 46 13
Equity settled share-based payment charge 135 74
-------- ----------
OPERATING CASH FLOW BEFORE CHANGES IN
WORKING CAPITAL AND PROVISIONS 1,578 662
-------- ----------
Increase in trade and other receivables (1,688) (825)
Increase in trade and other payables 1,496 1,049
-------- ----------
CASH GENERATED FROM OPERATIONS 1,386 886
Tax (paid) / received (285) 197
-------- ----------
NET CASH INFLOW FROM OPERATING ACTIVITIES 1,101 1,083
-------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received 9 2
Acquisition of property, plant and equipment (184) (49)
Acquisition of subsidiary, net of cash (2,165) -
acquired
NET CASH OUTFLOW FROM INVESTING ACTIVITIES (2,340) (47)
-------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Interest paid (46) (13)
Repayment of borrowings (203) (1,239)
Proceeds of borrowings 2,500 -
Dividends paid to equity shareholders (197) -
of the parent
Payment of dividends to non controlling
interests (56) (4)
-------- ----------
NET CASH INFLOW / (OUTFLOW) FROM FINANCING
ACTIVITIES 1,998 (1,256)
-------- ----------
Net increase / (decrease) in cash and
cash equivalents 759 (220)
Effect of foreign exchange on cash and
cash equivalents 2 12
Cash and cash equivalents at start of
period 596 804
-------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD 1,357 596
-------- ----------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2012
Non-controlling
Share Share Merger Other Retained Own interest Total
capital premium reserve reserves(1) earnings shares Total* GBP000 Equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
OPENING
BALANCE
AT 1 OCTOBER
2010 106 2,649 1,493 (21) 3,320 (1,242) 6,305 4 6,309
Dividends - - - - - - - (4) (4)
Share-based
payment - - - - 74 - 74 - 74
Transfer
of
reserves(2) - - - - (159) 159 - - -
Profit for
the year - - - - 228 - 228 40 268
Other
comprehensive
income for
the year - - - 23 30 - 53 - 53
CLOSING
BALANCE
AT 30
SEPTEMBER
2011 106 2,649 1,493 2 3,493 (1,083) 6,660 40 6,700
Dividends - - - - (197) - (197) (56) (253)
Share-based
payment - - - - 135 - 135 - 135
Transfer
of
reserves(2) - - - - (239) 239 - - -
Profit for
the year - - - - 809 - 809 152 961
Other
comprehensive
income for
the year - - - (69) 23 - (46) - (46)
--------- --------- --------- ------------- ---------- ---------- -------- ---------------- --------
CLOSING
BALANCE
AT 30
SEPTEMBER
2012 106 2,649 1,493 (67) 4,024 (844) 7,361 136 7,497
* Total equity attributable to the equity holders of the parent
(1) 'Other reserves' combines the translation reserve, capital
redemption reserve and other reserves.
(2) The shortfall in balance between the exercise price of share
options granted and the outstanding loan to the EBT is transferred
from own shares to retained earnings over the vesting period.
NOTES:
1. The financial information set out in these Preliminary
Results does not constitute the Company's statutory accounts for
the year ended 30 September 2012 or the year ended 30 September
2011 but is derived from those accounts.
Statutory accounts for the year ended 30 September 2011 have
been delivered to the Registrar of Companies, and those for the
year ended 30 September 2012 will be delivered to following the
Company's Annual General Meeting. BDO LLP have reported on the 2012
and 2011 accounts. Their reports were unqualified, did not include
references to any matters to which the auditors drew attention by
way of emphasis without qualifying their report, and did not
contain statements under section 498(2) or 498(3) of the Companies
Act 2006.
2. Earnings per share
Underlying earnings per share before exceptional items and the
charge for share-based payments is 5.5p (2011: 1.7p).
The calculation of adjusted earnings per share is based on a
profit of GBP1,362,000 (2011: GBP427,000). The profit attributable
to equity shareholders, after deducting exceptional items and the
share-based payment charge is GBP809,000 (2011: GBP228,000). The
basic weighted average number of shares in issue for the period was
24,678,771 (2011: 24,678,771). The diluted weighted average number
of shares in issue for the period was 25,683,628 (2011:
24,678,771).
3. Segmental analysis
For management purposes, the Group is organised into five
operating divisions: Europe, Middle East, Africa, Asia Pacific and
America. Asia Pacific and America were added following the
acquisition of Trett Holdings Limited (note 6). These divisions are
the basis on which the Group is structured and managed, based on
its geographic structure. In each of the divisions the key service
provisions are: quantity surveying, planning / programming, quantum
and planning experts, dispute avoidance / resolution, litigation
support, contract administration, commercial advice / management
and strategic project management.
Segment information about these reportable segments is presented
below:
Year ended 30 September 2012
Continuing Operations
Middle Asia
Europe East Africa Pacific Americas Eliminations Unallocated(1) Consolidated
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Total
external
revenue 16,085 7,134 1,990 551 498 - - 26,258
Total
inter-segment
revenue 17 - - - - (17) - -
Total revenue 16,102 7,134 1,990 551 498 (17) - 26,258
--------- -------- ---------- ---------- ---------- -------------- ---------------- --------------
Segmental
profit/(loss) 1,900 1,491 284 (149) (4) - - 3,522
Unallocated
corporate
expenses(1) - - - - - - (1,734) (1,734)
Share-based
payment
charge - - - - - - (135) (135)
Exceptional
items
(note 5) (311) - - - - - (107) (418)
--------- -------- ---------- ---------- ---------- -------------- ---------------- --------------
Operating
profit/(loss) 1,589 1,491 284 (149) (4) - (1,976) 1,235
Finance income - - - - - - 9 9
Finance
expense - - - - - - (46) (46)
--------- -------- ---------- ---------- ---------- -------------- ---------------- --------------
Profit/(loss)
before
taxation 1,589 1,491 284 (149) (4) - (2,013) 1,198
Taxation - - - - - - (237) (237)
--------- -------- ---------- ---------- ---------- --------------
Profit/(loss)
for the year 1,589 1,491 284 (149) (4) - (2,250) 961
--------- -------- ---------- ---------- ---------- -------------- ---------------- --------------
Year ended 30 September 2011
Continuing Operations
Middle Asia
Europe East Africa Pacific Americas Eliminations Unallocated(1) Consolidated
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------- -------- -------- ------------ ---------- -------------- ---------------- --------------
Total
external
revenue 12,044 4,503 818 - - - - 17,365
Total
inter-segment
revenue 11 - - - - (11) - -
Total revenue 12,055 4,503 818 - - (11) - 17,365
--------- -------- -------- ------------ ---------- -------------- ---------------- --------------
Segmental
profit/(loss) 2,067 (15) (98) - - - - 1,954
Unallocated
corporate
expenses(1) - - - - - - (1,395) (1,395)
Share-based
payment
charge - - - - - - (74) (74)
Exceptional
items
(note 5) - (71) - - - - (54) (125)
--------- -------- -------- ------------ ---------- -------------- ---------------- --------------
Operating
profit/(loss) 2,067 (86) (98) - - - (1,523) 360
Finance income - - - - - - 2 2
Finance
expense - - - - - - (13) (13)
--------- -------- -------- ------------ ---------- -------------- ---------------- --------------
Profit/(loss)
before
taxation 2,067 (86) (98) - - - (1,534) 349
Taxation - - - - - - (81) (81)
Profit/(loss)
for the year 2,067 (86) (98) - - - (1,615) 268
--------- -------- -------- ------------ ---------- -------------- ---------------- --------------
Inter-segment sales are charged
at prevailing market rates.
(1) Unallocated costs represent Directors' remuneration, administration
staff, corporate head office costs and expenses associated with AIM.
No client had revenue exceeding 10% of the Group's revenue in the
year to 30 September 2012 and the year to 30 September 2011.
4. Geographical information:
External revenue
by location of customers
2012 2011
GBP000 GBP000
------------- -------------
UK 11,540 8,330
UAE 2,950 1,794
Oman 2,761 2,325
South Africa 2,363 1,778
United States 1,367 1,036
Qatar 1,290 490
Trinidad and Tobago - 666
Other African countries 1,282 421
Germany 787 353
Netherlands 790 -
Singapore 270 -
Switzerland 229 -
Other Countries 629 172
------------- -------------
26,258 17,365
------------- -------------
5. Exceptional items
2012 2011
GBP000 GBP000
-------- --------
Severance costs (1) 60 125
Acquisition and integration costs (2) 358 -
-------- --------
418 125
-------- --------
(1) Severance costs include redundancy, ex-gratia, other
discretionary payments and associated legal costs.
(2) Acquisition and integration costs include legal and
professional fees and office restructuring costs.
6. Acquisition of Trett Consulting Limited
On 11 May 2012 the Company acquired 100% of the share capital in
Trett Holdings Limited. The company was acquired in order to bring
in an experienced and high quality team of individuals to
complement the Group's existing skill set and also to provide the
group with access to a wide range of end markets (including marine
and shipbuilding, petrochemical and nuclear engineering) and to
bring greater geographical penetration.
Goodwill represents the value of the synergies arising from the
economies of scale achievable in the enlarged group and the
presence of certain intangible assets, such as the assembled
workforce of the acquired entity, which do not qualify for separate
recognition. The synergistic benefits were the primary reason for
entering into the business combination. The total amount of
goodwill arising from the acquisition was GBP1,051,000. This is
non-deductable for tax purposes.
The fair value of cash consideration paid amounted to
GBP2,934,000 with cash paid at the point of acquisition of
GBP3,000,000.
Other costs relating to the acquisition of GBP109,000 of the
subsidiaries have not been included in the consideration and have
been recognised as an expense. This expense is included within
exceptional items (note 5).
Book and provisional fair value of assets and liabilities
acquired:
Book and
Provisional
Fair Value
GBP000
-------------
Cash and cash equivalents 835
Trade and other receivables 2,311
Plant and equipment 39
Trade and other payables (1,330)
Deferred tax liability (112)
Tax Asset 140
-------------
NET ASSETS ACQUIRED 1,883
-------------
The contribution to net profit of the Group was GBP185,000.
Group revenue includes GBP4,333,368 from the operations of
Trett.
Since the acquisition Trett has contributed GBP4,333,368 Group
revenues and GBP185,000 to Group profit. If the acquisition had
been made on 1 October 2011 then Group revenue would have been
GBP31,949,000. It is impracticable to calculate Group profit had
the acquisition taken place on 1 October 2011 due to the group
charges in the business pre acquisition.
7. Copies of the Annual Report and Financial Statements
The Annual Report and Financial Statements will be sent to
shareholders in due course. Further copies will be available to the
public, free of charge at the Company's office, 1 Norton Folgate,
London, E1 6DB and on the Company's website,
www.driver-group.com.
The Annual General Meeting will be held at Peter House, Oxford
Street, Manchester, M1 5AN on Thursday 28 February 2013 commencing
at 3:00pm.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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