TIDMDRV
RNS Number : 1819Z
Driver Group plc
09 December 2014
DRV
9 December 2014
DRIVER GROUP PLC
("Driver" or "the Group")
Preliminary Results
For the Year to 30 September 2014
Driver, the global consultancy to the construction and
engineering industries is pleased to announce its preliminary
results for the year ended 30 September 2014.
Highlights
-- Another record year for the Group
-- Revenue up 7% with growth in the following regions:
- Asia Pacific up 102%
- Europe up 6%
- Middle East up 7%
-- Underlying* profit before tax GBP3.45m (2013: GBP3.37m);
Profit before tax from continuing operations GBP3.06m (2013:
GBP2.89m)
-- Reported earnings per share up 4% at 8.6 pence (2013: 8.3 pence)
-- Increased final dividend of 1.05p (2013: 1.0p) giving an
increase of 10% to the full year dividend of 1.65p (2013: 1.5p)
-- Strengthened service offerings in core business and invested
in the business in areas of the Company where significant growth
can be achieved
-- Established Joint Venture agreements with MHPM Project
Managers in Canada and the Middle East
-- Post year end, strategic acquisition of initiate Consulting
to provide programming and project management offering in the
infrastructure sector
-- Post year end appointed Steve Norris as Non-executive Director
Alan McClue, Non-Executive Chairman of Driver, commenting on the
results said:
"I am pleased to report on a further year of growth for the
Group; a year in which revenue and profits continued to increase in
line with our planned objectives. We have in the year continued to
strengthen our service offerings and invested in the business as we
recruited and positioned senior people in parts of our business
where we believe we can deliver significant growth."
* Underlying figures are from continuing operations and are
stated before the share-based payment costs and amortisation of
intangible assets
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
CHAIRMAN'S STATEMENT
Introduction
I am pleased to report on a further year of growth for the
Group; a year in which revenue and profits continued to increase in
line with our planned objectives. We have in the year continued to
strengthen our service offerings and invested in the business as we
recruited and positioned senior people in parts of our business
where we believe we can deliver significant growth. We expect to
report on this growth in the second half of 2014 / 2015.
As stated in our Pre Close Trading Update, we ended the year
with a very strong performance in Africa, Asia Pacific and Europe.
The Middle East, whilst relatively quiet in July and August traded
up at normal levels in September. As previously announced we took
the decision to close the Houston office and so ended the year with
a solid performance from all regions of our continuing operations.
This strength in trading and the continued optimism across the
business allows us to again recommend an increase in the final
dividend.
Headcount and utilisation levels have increased in Africa, Asia
Pacific, Europe and the Middle East. We continue to attract and
retain high quality staff who provide our market leading service
and our employee and sub-consultant headcount as a whole has risen
by 9% to 368 (2013: 338). The quality of our service offering is
dependent upon the commitment and loyalty of our staff and on
behalf of the Board and our shareholders I would like to thank all
of our staff for their loyalty and commitment to the Company.
Financial Results
Revenue in our continuing operations for the 12 months to 30
September 2014 increased by 7% to GBP39.1m (2013: GBP36.6m) with
growth coming from Asia Pacific, Europe and the Middle East. As
previously announced, revenue in Africa was adversely affected by
the suspension by the South African government of the three PPP
hospitals at the start of the financial year.
Underlying* Profit before taxation increased by 2% to GBP3.5m
(2013: GBP3.4m). After share-based payment costs and amortisation
of GBP392,000 (2013: GBP482,000) reported profit before taxation
increased 6% to GBP3.1m (2013: GBP2.9m).
The Group had net borrowings of GBP0.2m at 30 September 2014
(2013: net cash of GBP1.1m). However, the second half of the year
saw cash generation of over GBP1.0m. The outflow in the first half
was in large part due to the increase in working capital as we grew
our overseas businesses, particularly in the Middle East; increased
investment and capital expenditure into the business as we
positioned the Group for further growth; and the consideration for
the acquisition of the businesses in Hong Kong and South
Africa.
As a result of issuing new shares, to satisfy share options,
during the year underlying* earnings per share was 11.2 pence
(2013: 11.4 pence). Reported earnings per share was up 4% at 8.6
pence (2013: 8.3 pence).
Dividend
In view of the sustained profit growth of the Group, the Board
proposes a final dividend for 2014 of 1.05p (2013: 1.0p) giving a
full year dividend of 1.65p (2013: 1.5p). The final dividend will
be paid on 7 April 2015 to shareholders on the register at the
close of business on 27 March 2015.
Trading Overview
The Groups performance continues to progress well. Revenue is 7%
higher, headcount is up 9%, utilisation levels are better by 3% at
78.8% (2013: 76.7%), underlying* profit before tax has increased by
2% and reported profit before tax has increased by 6%. The
strategic investments in Asia Pacific have developed well through
the year, particularly in Australia, and revenue in the established
regions of Europe and the Middle East also continue to increase.
With the closure of our Houston based operation, losses of GBP0.31m
were incurred in this region in the year, which will not continue
into the current year.
Trading in Europe accounted for 53% of Group revenue (2013: 54%)
and was up 6% on 2013 revenue largely as a result of a strong
performance from the Project Services business and its Process
division. Profits were at the top end of management expectations
and utilisation levels continued to improve; up 0.5 points at
77.2%. During the year, we were particularly pleased to announce
our appointment by SABIC UK Petrochemicals Limited to provide
Project Control Services on a significant investment to convert
their Teesside Plant to take shale gas from USA (SABIC is
headquartered in Riyadh, Saudi Arabia, and is one of the world's
top 6 petrochemical companies and the largest non-oil company in
the Middle East). This appointment is particularly pleasing given
the stature of the competition we had to compete against to secure
it and the track record we will now develop on projects of this
size.
Middle East revenues accounted for 32% of Group revenue (2013:
32%) and were up 7% on 2013. Utilisation levels increased by 0.7
points to a very respectable 85.1%. Growth came largely as a result
of the Qatar office and its disputes services but these were at
lower fee rates and profit levels than the region experienced in
the prior year. This, together with a quieter July and August
following the early settlement of work, accounts for a slight drop
in profits. We are starting to experience wage inflation pressure
across the region and whilst these are coming through in advance of
increases in fee rates it is expected that fee rates will increase
commensurate with remuneration in the future.
We are delighted by the progress made in Asia Pacific where
revenues increased by 102%. The small underlying* loss in the year
as a whole was an improvement in management expectations and the
region ended the year trading profitably in the second half as the
benefits of our investments started to come through. The region now
accounts for 9% of Group revenues (5% in 2013). Overall utilisation
levels were up 15.9 points at 59.5% with Australia performing best
at 80.2%. We are continuing to invest in our Asia Pacific business
especially in Hong Kong where we have increased headcount to
establish ourselves in the region.
Africa performed in line with management expectations and
strengthened through the second half of the year, a period in which
we saw double digit profit margins following the slow start in the
first half when the South African Government suspended work on the
3 PPP hospitals. As a result, the region accounts for 6% of Group
revenues (10% in 2013). The strong performance in the second half
was in the main as a result of expanding the dispute and project
controls service offerings and the business now has far more
breadth to its client base.
As previously announced, we reviewed the performance of the US
business based in Houston and discontinued this operation during
the year. Although we have ceased trading in the US market, we
continue to be able to provide the required support for global
clients who are based in the US for projects outside of the US from
our other locations. Our Oil & Gas revenues together with
associated Petrochemical and Marine revenues now account for 19% of
our business and we continue to see this sector as one that will
provide the Group with significant growth opportunities.
We have also now appointed a Vice President for Canada and this
current financial year will see the start of our joint venture
agreement with MHPM Project Leaders in Canada to provide dispute
& advisory services across their network of offices in
Canada.
Outlook
As referred to in last year's statement, targeted acquisitions
will accelerate growth. The Board is therefore delighted with the
acquisition of initiate Consulting ("Initiate") announced today and
we believe that the programming and project management offering
that this business provides, primarily to the rail, aviation and
highways sectors will be a significant factor in our strategy for
growth. The experience and track record that this business brings
to the Group will allow for both the development of Initiate within
the UK and across our global footprint whilst also providing the
opportunity to leverage our existing project controls and dispute
& advisory services.
As part of this acquisition, I welcome Steve Norris to the Group
Board as a Non-Executive Director and the Board looks forward to
working with Steve as we integrate Initiate into the Group and look
to expand our infrastructure capabilities where Steve's
considerable experience will be invaluable.
We are also delighted by the extension of our relationship with
MHPM Project Leaders with a further joint venture to provide
Project Management services across the UAE and Qatar and believe
that their world class expertise in this service together with our
platform across the Middle East will allow us to secure
appointments that would otherwise be beyond our capabilities.
The acquisition of Initiate, the joint ventures with MHPM
Project Leaders and recruitment of senior staff into parts of the
business where growth opportunities have been identified will
ensure that the Group is firmly established to take the business on
to the next level. In order to achieve this, we will invest in
further resource in the short term in order to ensure the maximum
benefit from the momentum created by these events.
The Board is confident that there is the opportunity to press
ahead and achieve material business development and growth over the
next four years. The executive board, responsible for the
operational aspects of the Group and reporting to the Group Board,
has been streamlined in order to facilitate a more efficient means
of leveraging our staff, services and clients across our global
platform and we have made a senior appointment on to this Board to
focus on Africa, Asia Pacific and Middle East where we see
opportunity for significant growth over the medium term. I am very
confident that through the recent acquisition and JV agreement the
Group can develop a very strong programming and project management
offering to complement its class leading project controls and
dispute & advisory services which will result in significant
growth in the medium term.
Our plans for the year anticipate investment in the recruitment
of fee earning staff, particularly in Africa, Asia Pacific and the
Middle East, throughout the year and this will mean that, as last
year, our profits and cash inflow will be weighted towards the
second half. The current year has started well and is in line with
our expectations providing me with a high level of confidence in
the outlook for the remainder of this financial year and
beyond.
W. Alan McClue
Non-Executive Chairman
CHIEF EXECUTIVE'S REPORT
Introduction
I am delighted to report on another record year for Driver Group
with revenue, profits and earnings all up on last year and at
historic highest levels. The past year was always envisaged as one
to consolidate our position in our target markets given three prior
years of significant growth, and I am very pleased that we were
able to achieve this, whilst at the same time continuing to deliver
an increase in revenue and profits. We also had success in creating
opportunities that further strengthen our service offerings.
Towards the end of the year being reported on we recruited and have
placed in position senior people who will deliver significant
growth to the Group; the benefits of which will start to come
through in the medium term.
During the year we agreed a Joint Venture with MHPM Project
Leaders in Canada to provide dispute & advisory services across
their network of Canadian offices starting in Toronto. There was no
trading in the year but our Vice President of Canada was appointed
in October 2014 and the current financial year will see a full
year's contribution to trading.
Towards the end of the year our search for complementary
acquisitions was successful and we have today announced the
acquisition of initiate Consulting ("Initiate"); a London based
programme and project management business serving the rail,
aviation and highways sectors. The expertise and gravitas of the
people involved in this business will serve the Group well as we
look to grow Initiate internationally and leverage our project
controls and dispute & advisory business.
Africa, Asia Pacific and Europe performed towards the top end of
management expectations and whilst the Middle East had a drop off
in revenue in July and August, the final month of the year was back
at normal trading levels. The Houston office in America
disappointed and we took the decision and decisive action to
discontinue the Houston business with effect from 30 September
2014. After careful consideration, we believe that we can continue
to deliver our global Oil & Gas offering and to serve our
American clients on their projects around the world from our
network of offices with strategic visits to the USA when
necessary.
We have seen headcount and utilisation levels steadily increase
in Africa, Asia Pacific and Europe whilst maintaining levels in the
Middle East. We continue to attract and retain high quality staff
who provide our market leading service and our employee and
sub-consultant headcount as a whole has risen by 9% to 368 (2013:
338). Utilisation levels also increased by 2.1 points to 78.8%
(2013: 76.7%).
Revenue in our continuing operations for the 12 months to 30
September 2014 increased by 7% to GBP39.1m (2013: GBP36.6m),
underlying* Profit before taxation increased by 2% to GBP3.5m
(2013: GBP3.4m) and Profit before taxation increased by 6% to
GBP3.1m (2013: GBP2.9m). The Group had net debt of GBP0.2m at 30
September (2013: net cash of GBP1.1m). In the second half of the
year we had cash inflow of around GBP1.0m. The outflow in the first
half was as a result of increases in working capital primarily in
the Middle East and payments for the acquisitions in Hong Kong and
South Africa.
Africa
Africa performed in line with expectations with revenue at
GBP2.3m (2013:GBP3.6m) and profits of GBP0.1m (2013: GBP0.4m). This
reduction was as a result of the South African Government
suspending work on the 3 PPP hospitals at the start of the year and
it was not possible to replace this revenue until the second half
of the year. In the second half revenues increased by 39%
delivering what the Board considers to be acceptable profits of
11.5%. The growth in the second half was as a result of expanding
the dispute and project controls service offerings so as not to be
overly reliant on the PPP activity and the business now has far
more breadth to its client base. The new Managing Director has
successfully transitioned into the business and has increased the
headcount to 23 (2013: 16) with utilisation levels now very good at
79.8%.
Asia Pacific
Asia Pacific performed slightly ahead of expectations increasing
revenues by 102% to GBP3.4m (2013: GBP1.7m) and reducing the prior
year's loss in 2013 of GBP0.7m to a small underlying* loss of
GBP0.1m in 2014; the region ended the year trading profitably in
the second half. Utilisation levels were up 15.9 points at 59.5%
with Australia the best performing office delivering good profits
and with utilisation at 80.2%. During the year we also opened a
further office in Perth, Australia on the back of client demand in
the region. The Hong Kong office started trading on 1 October 2013
and has developed well in the expert witness and training markets,
ending the year with 8 staff generally through forward recruiting
and hence a low utilisation level for the office.
Europe
Trading in Europe consolidated with revenue up 6% at GBP20.8m
(2013: GBP19.6m) largely as a result of the Project Services
business and its Process division. Profits were at the top end of
management expectations with average fee rates up 7% and
utilisation levels continued to improve; up 0.5 points at 77.2%
(2013: 76.7%). During the year we were particularly pleased to
announce our appointment by SABIC UK Petrochemicals Limited to
provide Project Control Services on a significant investment to
convert their Teesside Plant to take shale gas from USA (SABIC are
headquartered in Riyadh, Saudi Arabia, is one of the world's top 6
petrochemical companies and the largest non-oil company in the
Middle East). This appointment is particularly pleasing given the
stature of the competition we had to compete against to secure it
and the track record we will now develop on projects of this
size.
Middle East
Middle East trading also consolidated with revenues up 7% at
GBP12.6m (2013: GBP11.8m). Utilisation levels increased by 0.7
points to a very respectable 85.1%. Growth came largely as a result
of the Qatar office and its disputes services but these were at
lower fee rates (8% down in the year across the region) than the
region experienced in the prior year. This, together with a quieter
couple of months over the summer following the early settlement of
work, accounts for a drop in profits to what is still a respectable
23% (2013: 27%). We are starting to experience pressure to increase
remuneration levels across the region as a result of competition to
recruit good quality staff and whilst these are coming through in
advance of increases in fee rates it is expected that fee rates
will increase commensurate with remuneration.
Outlook
Between 2010 and 2013 we doubled the size of the business during
a very challenging economic climate whilst continuing to deliver
increasing levels of profit. In 2014 we consolidated this position.
Last year we also worked hard to create the conditions and
structure needed to embark on a new period of growth and the
benefits are starting to accrue. The acquisition of Initiate will
allow the Group to develop programming and project management
services in the infrastructure sector across the UK, where the
infrastructure spend is significant, to other geographical regions
in which the Group operates, such as Africa and the Middle East,
where the aviation, rail and highways sectors provide substantial
opportunities. We can further leverage our existing project
controls and dispute & advisory business into this sector on
the back of Initiates' offering and client base. I am very excited
about the appointment of Steve Norris to the Group Board as a
Non-Executive Director as part of the Initiate deal, as he brings a
wealth of experience in this sector as do a number of senior people
in the Initiate business. We also have the opportunity to grow
Project Management through the Middle East in our new joint venture
with MHPM as their class leading expertise across our regional
network provides the opportunities to work on projects that
otherwise would be beyond our capability.
At the start of financial year 2014 / 2015, a new executive
board reporting to the Group Board through myself has been created
aimed at structuring the senior management of the business in order
to better facilitate growth through the leveraging of our new
acquisition, JV relationships, staff, clients and Group services.
This Executive Board, chaired by me as CEO, also consists of the
Group Finance Director, three Chief Operating Officers (COO) and
the Group Business Development Director. A new senior appointment
has been made for the COO role across Africa, Asia Pacific and
Middle East as these regions represent a significant part of our
growth plans.
I am delighted with these developments and believe that the
Group is firmly established with the senior management and
skill-set to take the business into the next period of growth. We
need to ensure that we gain the maximum benefit from the momentum
created by the acquisition of Initiate, our JV agreements and these
new senior appointments within the Group. I see the opportunity to
press ahead for material business development over the coming four
years from this foundation and I am confident that the Group can
develop a very strong programming and project management offering
to complement its class leading project controls and dispute &
advisory services which will lead to significant growth in the
medium term. I also see a material element of this growth coming
from Asia Pacific where we have worked hard over the last year to
create a team of 24 people but where there is also a major
opportunity to increase our headcount and presence significantly in
this large part of the world. On a smaller scale, our operations in
Canada have had a good start and I am confident that with MHPM we
will see this region develop to a reasonable sized practice.
As we end the first quarter of the new financial year, I am very
happy with the progress we are making and with our plans for the
next stage of our growth. We anticipate the first half of the year
to be one in which we invest in new staff and structure and, as a
result, our profits and cash inflow will be back-end weighted. As
we progress through the year, opportunities will present themselves
that may require further investment but will be necessary in order
to deliver our aspirations to again double the size of this
business and I will be looking to make that type of investment in
the interest of long term growth in our profit levels.
Dave Webster
Chief Executive Officer
* Underlying figures are from continuing operations and are
stated before the share-based payment costs and amortisation of
intangible assets
STRATEGIC REPORT - DESCRIPTION OF THE BUSINESS
Driver Group has been providing consultancy services to the
engineering and construction industries since 1978. The company has
grown to over 300 members of staff, with offices across Africa,
Asia Pacific, Europe, and the Middle East. The range of services
offered across the Group provides support to the engineering and
construction industries it serves, from 'cradle to grave'.
DIALES
DIALES is the Group's expert witness support service provider.
We supply world-class quantum, delay, and technical experts for
litigation; alongside provision of internationally experienced
adjudicators, arbitrators, and mediators.
Driver Project Management
Driver Project Management provides the strategic and leadership
disciplines necessary to develop and deliver a project. We support
clients in the strategic leadership and decision making necessary
to define, evaluate, develop, finance, procure, and implement their
investment projects.
Driver Project Services
Driver Project Services provides customer focused project
controls solutions throughout a project lifecycle. We deliver
commercial management, quantity surveying, and planning services,
offering clients long term support and commitment for the duration
of their projects.
Driver Trett
Driver Trett provides multi-disciplinary consultancy services to
support effective delivery of our clients' projects. Our
specialities include commercial and contract management, planning,
programming and scheduling, and dispute resolution support
services.
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 UK and global economy on the business.
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 is
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. At the year end, the Group's borrowing facilities
consisted of an overdraft facility of GBP2.75m renewable annually
and a term loan of GBP1.25m repayable on 31 October 2016. With an
overdraft utilisation of GBP0.34m and cash balances of GBP1.43m the
Group had access to GBP3.84m of available funds at 30 September
2014. 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; Malaysian Ringgit ("MYR"),
Singapore Dollar ("SGD"), Hong Kong Dollar ("HKD") and Australian
Dollar ("AUD") 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 are returned to the UK and 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
income statement 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, Hong Kong Dollar,
Australian 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.
STRATEGIC REPORT - FINANCE DIRECTOR'S REVIEW
Overview for the Year
The key performance indicators for the Group are revenue,
operating profit, profit before tax and utilisation. We also
monitor underlying* operating profit and underlying* profit before
tax as we believe these measures better reflect the underlying
results of the Group. We are pleased to report that 2014 has again
been a record year in both revenue and operating profit and overall
utilisation has improved 2.1 points to 78.8% (2013: 76.7%).
Revenue increased by 7% to GBP39.1m (2013: GBP36.6m) and
underlying* operating profit for the year ended 30 September 2014
was GBP3.52m (2013: GBP3.43m). Reported operating profit was
GBP3.13m (2013: GBP2.95m).
After a net interest charge of GBP0.07m (2013: GBP0.06m) the
underlying* profit before tax was GBP3.45m (2013: GBP3.37m) and
reported profit before tax was GBP3.06m (2013: GBP2.89m).
The Group's results include a share based payment cost in the
year of GBP0.29m (2013: GBP0.48m) in relation to the Group's share
option scheme and an amortisation cost for intangible assets of
GBP0.1m (2013: GBPnil) arising from acquisition of contracts in
Hong Kong during the year.
During the year the Board took the decision to close the Houston
office, which lost money throughout the year and consequently the
Americas segment has been presented as a discontinued operation in
the accounts with a loss on discontinued operation, net of tax of
GBP0.31m (2013: GBP0.3m).
The European business segment revenue grew by GBP1.2m to
GBP20.8m although operating profit reduced slightly by GBP0.06m to
GBP2.45m. The Middle East segment revenue increased by GBP0.9m to
GBP12.6m although operating profit reduced by GBP0.3m to GBP2.9m as
the growth came principally from Qatar where profits were at lower
rates. The Africa segment revenue reduced by GBP1.3m to GBP2.3m as
a result of the suspension of three major hospital projects and
operating profit reduced by GBP0.3m to GBP0.1m. Asia Pacific
segment revenue grew by GBP1.7m to GBP3.4m and the underlying*
operating loss reduced by GBP0.6m to GBP0.1m after an amortisation
charge of GBP0.1m (2013: nil) Asia Pacific Operating loss was
GBP0.2m. Reflecting strong controls on costs, underlying*
unallocated corporate costs reduced by GBP0.1m to GBP1.8m. After a
share option cost of GBP0.29m (2013:GBP0.48m) the reported
unallocated costs were GBP2.1m (2013: GBP2.4m).
Taxation
The Group had a tax charge of GBP0.44m (2013: GBP0.39m). The
effective tax rate was 14% (2013: 13%). 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 11.2 pence (2013: 11.4
pence). The basic earnings per share was 8.6 pence (2013: 8.3
pence) and diluted earnings per share was 7.8 pence (2013: 7.3
pence).
Cash Flow
Cash generated from operations was GBP0.06m (2013: inflow of
GBP2.2m). This reflected an outflow from increased debtors of
GBP2.1m (2013: GBP1.9m) and an outflow in relation to reduced
creditors of GBP1.1m (2013: inflow of GBP1.0m). Net tax paid in the
year was GBP0.2m (2013: nil).
Other major cash items are: proceeds from the sale of new and
own shares of GBP0.2m (2013: GBP0.5m), capital spend of GBP0.4m
(2013: GBP0.3m), acquisition of intangible assets GBP0.2m (2013:
nil), acquisition of non-controlling interest GBP0.2m (2013: nil)
and net repayment of borrowings of GBP0.3m (2013: GBP0.7m).
Dividends paid were GBP0.4m (2013: GBP0.3m).
The Company had net borrowings at the end of the year of
GBP0.17m compared to net cash of GBP1.07m at 30 September 2013.
DIVIDENDS
The Directors have proposed a final dividend in respect of the
current financial year of 1.05p per share (2013: 1.0p) payable to
all shareholders other than the Driver Group Employee Benefit
Trust. This has not been accounted for as it was not approved
before the year end. The total cost of this proposed dividend will
be GBP285,000 (2013: GBP253,000). The final dividend will be paid
on 7 April 2015 to shareholders on the register at the close of
business on 27 March 2015.
There were dividends of GBP424,000 (2013: GBP295,000) paid by
the Company during the year, including an interim dividend of 0.6p
(GBP159,000).
On behalf of the Board
Damien McDonald
Finance Director
* Underlying figures are from continuing operations and are
stated before the share-based payment costs and amortisation of
intangible assets
CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER
2014
Notes 2014 2013
GBP000 GBP000
Restated*
---------- ------------
REVENUE 39,078 36,640
Cost of Sales (29,336) (27,131)
---------- ------------
GROSS PROFIT 9,742 9,509
Administrative expenses (6,773) (6,730)
Other operating income 160 170
---------- ------------
Operating profit before share-based
payment costs and amortisation of
intangible assets 3,521 3,431
Share-based payment charges and associated
costs (293) (482)
Amortisation of intangible assets (99) -
---------------------------------------------- ------- ---------- ------------
OPERATING PROFIT 3,129 2,949
Finance income 8 14
Finance costs (78) (72)
---------- ------------
PROFIT BEFORE TAXATION 3,059 2,891
Tax expense (443) (387)
---------- ------------
PROFIT FROM CONTINUING OPERATIONS 2,616 2,504
Loss on discontinued operation, net
of tax 4 (314) (299)
PROFIT FOR THE YEAR 2,302 2,205
---------- ------------
Profit attributable to non-controlling
interests from continuing operations 9 104
Profit attributable to non-controlling
interests from discontinued operations - -
Profit attributable to equity shareholders
of the parent from continuing operations 2,607 2,400
Profit attributable to equity shareholders
of the parent from discontinued operations (314) (299)
2,302 2,205
----------
Basic earnings per share attributable
to equity shareholders of the parent
(pence) 2 8.6p 8.3p
----------
Diluted earnings per share attributable
to equity shareholders of the parent
(pence) 2 7.8p 7.3p
----------
Basic earnings per share attributable
to equity shareholders of the parent
(pence) from continuing operations 2 9.7p 9.5p
----------
Diluted earnings per share attributable
to equity shareholders of the parent
(pence) from continuing operations 2 8.9p 8.4p
----------
*Restated to reflect discontinued operations
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 SEPTEMBER 2014
2014 2013
GBP000 GBP000
--------- ---------
PROFIT FOR THE YEAR 2,302 2,205
--------- ---------
Other comprehensive income:
Items that could subsequently be reclassified to the Income Statement:
Exchange differences on translating foreign operations (116) (112)
========= =========
OTHER COMPREHENSIVE INCOME FOR THE YEAR NET OF TAX (116) (112)
--------- ---------
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 2,186 2,093
--------- ---------
Total comprehensive income attributable to:
Owners of the parent 2,177 1,989
Non-controlling interest 9 104
========= =========
2,186 2,093
--------- ---------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 30 SEPTEMBER 2014
2014 2013
GBP000 GBP000 GBP000 GBP000
-------------------------------- --------- --------- --------- ---------
NON-CURRENT ASSETS
Goodwill 3,407 3,407
Property, plant and equipment 2,527 2,273
Intangible assets 96 -
Deferred tax asset 22 12
--------- ---------
6,052 5,692
CURRENT ASSETS
Trade and other receivables 12,768 10,696
Cash and cash equivalents 1,430 2,667
Current tax receivable 77 75
--------- ---------
14,275 13,438
--------- ---------
TOTAL ASSETS 20,327 19,130
CURRENT LIABLITIES
Borrowings (338) (574)
Trade and other payables (6,003) (6,885)
Current tax payable (444) (292)
--------- ---------
(6,785) (7,751)
--------- ---------
NON-CURRENT LIABILITIES
Borrowings (1,259) (1,020)
Deferred tax liabilities (194) (308)
--------- ---------
(1,453) (1,328)
--------- ---------
TOTAL LIABILITIES (8,238) (9,079)
--------- ---------
NET ASSETS 12,089 10,051
--------- ---------
SHAREHOLDERS' EQUITY
Share capital 111 106
Share premium 2,702 2,649
Merger reserve 1,493 1,493
Translation reserve (313) (197)
Capital redemption reserve 18 18
Retained earnings 8,173 5,988
Own shares (107) (242)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 12,077 9,815
NON-CONTROLLING INTEREST 12 236
--------- ---------
TOTAL EQUITY 12,089 10,051
--------- ---------
CONSOLIDATED CASHFLOW STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER
2014
2014 2013
GBP000 GBP000
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Profit for the year 2,302 2,205
--------- ---------
Adjustments for:
Depreciation 215 181
Amortisation 99 -
Exchange adjustments (34) 28
Finance income (11) (14)
Finance expense 78 72
Tax expense 330 387
Equity settled share-based payment charge 293 253
--------- ---------
OPERATING CASH FLOW BEFORE CHANGES IN WORKING
CAPITAL AND PROVISIONS 3,272 3,112
--------- ---------
Increase in trade and other receivables (2,069) (1,861)
(Decrease) / Increase in trade and other
payables (1,141) 979
--------- ---------
CASH GENERATED FROM OPERATIONS 62 2,230
Tax paid (243) (8)
--------- ---------
NET CASH (OUTFLOW)/INFLOW FROM OPERATING
ACTIVITIES (181) 2,222
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received 11 14
Acquisition of property, plant and equipment (432) (307)
Acquisition of intangible assets (155) -
Acquisition of non-controlling interest (206) -
Proceeds from the disposal of property, 2 -
plant & equipment
NET CASH OUTFLOW FROM INVESTING ACTIVITIES (780) (293)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Interest paid (78) (72)
Repayment of borrowings (563) (727)
Proceeds of borrowings 238 -
Proceeds from sale of own shares 135 507
Proceeds from sale of shares 58 -
Dividends paid to equity shareholders of
the parent (420) (295)
Payment of dividends to non controlling
interests (8) (4)
--------- ---------
NET CASH (OUTFLOW) / INFLOW FROM FINANCING
ACTIVITIES (638) (591)
--------- ---------
Net (decrease) / increase in cash and cash
equivalents (1,599) 1,338
Effect of foreign exchange on cash and cash
equivalents 34 (28)
Cash and cash equivalents at start of period 2,667 1,357
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD 1,102 2,667
--------- ---------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2014
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
2012 106 2,649 1,493 (67) 4,024 (844) 7,361 136 7,497
---------------- ---------- ---------- ---------- -------------- ----------- --------- --------- ----------------- ---------
Profit for
the year - - - - 2,101 - 2,101 104 2,205
Other
comprehensive
income for
the year - - - (112) - - (112) - (112)
---------------- ---------- ---------- ---------- -------------- ----------- --------- --------- ----------------- ---------
Total
comprehensive
income for
the year - - - (112) 2,101 - 1,989 104 2,093
Dividends - - - - (295) - (295) (4) (299)
Share-based
payment - - - - 253 - 253 - 253
Transfer
of
reserves(2) - - - - (95) 95 - - -
Proceeds
from sale
of own shares - - - - - 507 507 - 507
Proceeds
from sale - - - - - - - - -
of shares
---------------- ---------- ---------- ---------- -------------- ----------- --------- --------- ----------------- ---------
CLOSING
BALANCE
AT 30
SEPTEMBER
2013 106 2,649 1,493 (179) 5,988 (242) 9,815 236 10,051
---------------- ---------- ---------- ---------- -------------- ----------- --------- --------- ----------------- ---------
Profit for
the year - - - - 2,293 - 2,293 9 2,302
Other
comprehensive
income for
the year - - - (116) - - (116) - (116)
---------------- ---------- ---------- ---------- -------------- ----------- --------- --------- ----------------- ---------
Total
comprehensive
income for
the year - - - (116) 2,293 - 2,177 9 2,186
Dividends - - - - (420) - (420) (8) (428)
Share-based
payment - - - - 293 - 293 - 293
Acquisition
of non
controlling
interests - - - - 19 - 19 (225) (206)
Proceeds
from sale
of own shares - - - - - 135 135 - 135
Proceeds
from sale
of shares 5 53 - - - - 58 - 58
---------------- ---------- ---------- ---------- -------------- ----------- --------- --------- ----------------- ---------
CLOSING
BALANCE
AT 30
SEPTEMBER
2014 111 2,702 1,493 (295) 8,173 (107) 12,077 12 12,089
---------------- ---------- ---------- ---------- -------------- ----------- --------- --------- ----------------- ---------
* 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. These Preliminary Results have been prepared in accordance
with the recognition and measurement principles of International
Financial Reporting Standards ("IFRS") and the IFRS Interpretation
Committee (IFRIC) interpretations as endorsed by the European
Union. The financial information set out in these Preliminary
Results does not constitute the Company's statutory accounts for
the year ended 30 September 2014 or the year ended 30 September
2013 but is derived from those accounts.
Group statutory accounts for the year ended 30 September 2013
have been delivered to the Registrar of Companies, and those for
the year ended 30 September 2014 will be delivered following the
Company's Annual General Meeting. BDO LLP have reported on the 2014
and 2013 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 is from continuing operations,
before share-based payment costs and amortisation of intangible
assets is 11.2p (2013: 11.4p).
The calculation of underlying earnings per share is based on a
profit of GBP2,999,000 (2013:GBP2,882,000). The profit attributable
to equity shareholders, after share-based payment costs and
amortisation of intangible assets is GBP2,293,000 (2013:
GBP2,101,000). The basic weighted average number of shares in issue
for the period was 26,812,195 (2013: 25,254,416). The diluted
weighted average number of shares in issue for the period was
29,358,509 (2013: 28,704,083).
3. Segmental analysis
For management purposes, the Group is organised into five
operating divisions: Europe, Middle East, Africa, Asia Pacific and
America. These divisions are the basis on which the Group is
structured and managed, based on its geographic structure. During
the year to 30 September 2014 the Board closed the USA operation
and has consequently disclosed Americas as discontinued. 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. Segmental information in respect of these
services is not disclosed as the business is managed geographically
and the cost of obtaining this information is deemed excessive.
Segment information about these reportable segments is presented
below.
Year ended 30 September 2014
Continuing Operations Discontinued
Middle Asia
Europe East Africa Pacific Eliminations Unallocated(1) Consolidated Americas
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------- ---------- --------- --------- ------------------- ------------------- -------------- --------------
Total external
revenue 20,780 12,634 2,287 3,377 - - 39,078 513
Total
inter-segment
revenue 1,469 78 118 - (1,775) - (110) 110
Total revenue 22,249 12,712 2,405 3,377 (1,775) - 38,968 623
---------------- ---------- ---------- --------- --------- ------------------- ------------------- -------------- --------------
Segmental
profit/(loss) 2,446 2,889 109 (118) - - 5,326 (430)
Unallocated
corporate
expenses(1) - - - - - (1,805) (1,805) -
Share-based
payment
charge - - - - - (293) (293) -
Amortisation
of intangible
assets - - - (99) - - (99) -
Operating
profit/(loss) 2,446 2,889 109 (217) - (2,098) 3,129 (430)
Finance
income - - - - - 8 8 3
Finance
expense - - - - - (78) (78) -
---------------- ---------- ---------- --------- --------- ------------------- ------------------- -------------- --------------
Profit/(loss)
before
taxation 2,446 2,889 109 (217) - (2,168) 3,059 (427)
Taxation - - - - - (443) (443) 113
---------- ---------- --------- --------- -------------------
Profit/(loss)
for the
year 2,446 2,889 109 (217) - (2,611) 2,616 (314)
---------------- ---------- ---------- --------- --------- ------------------- ------------------- -------------- --------------
OTHER
INFORMATION
Non current
assets 4,214 127 44 158 - 1,500 6,043 9
Reportable
segment
assets 9,691 6,614 810 1,318 - 1,817 20,250 77
Capital
additions(2) 245 42 7 73 - 110 477 -
Depreciation
and
amortisation 71 45 11 119 - 65 311 3
---------------- ---------- ---------- --------- --------- ------------------- ------------------- -------------- --------------
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.
(2) Capital additions comprise additions to property, plant and
equipment including additions resulting from acquisitions through
business combinations.
No client had revenue of 10% or more of the Group's revenue
in the year to 30 September 2014.
Year ended 30 September 2013
Continuing Operations Discontinued
Middle Asia
Europe East Africa Pacific Eliminations Unallocated(1) Consolidated Americas
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------- ---------- --------- --------- ------------------- ----------------- -------------- -------------
Total external
revenue 19,625 11,755 3,591 1,669 - - 36,640 595
Total
inter-segment
revenue 390 158 - - (548) - - -
Total revenue 20,015 11,913 3,591 1,669 (548) - 36,640 595
---------------- ---------- ---------- --------- --------- ------------------- ----------------- -------------- -------------
Segmental
profit/(loss) 2,505 3,157 421 (742) - - 5,341 (299)
Unallocated
corporate
expenses(1) - - - - - (1,910) (1,910) -
Share-based
payment
charge - - - - - (482) (482) -
Amortisation
of intangible - - - - - - - -
assets
---------------- ---------- ---------- --------- --------- ------------------- ----------------- -------------- -------------
Operating
profit/(loss) 2,505 3,157 421 (742) - (2,392) 2,949 (299)
Finance
income - - - - - 14 14 -
Finance
expense - - - - - (72) (72) -
---------------- ---------- ---------- --------- --------- ------------------- ----------------- -------------- -------------
Profit/(loss)
before
taxation 2,505 3,157 421 (742) - (2,450) 2,891 (299)
Taxation - - - - - (387) (387) -
---------- ---------- --------- --------- -------------------
Profit/(loss)
for the
year 2,505 3,157 421 (742) - (2,837) 2,504 (299)
---------------- ---------- ---------- --------- --------- ------------------- ----------------- -------------- -------------
OTHER
INFORMATION
Non current
assets 3,837 130 38 9 - 1,660 5,674 18
Reportable
segment
assets 9,141 5,303 1,235 521 - 2,773 18,973 157
Capital
additions(2) 153 96 45 4 - - 298 9
Depreciation
and
amortisation 138 27 9 3 - - 177 4
---------------- ---------- ---------- --------- --------- ------------------- ----------------- -------------- -------------
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.
(2) Capital additions comprise additions to property, plant and equipment
including additions resulting from acquisitions through business combinations.
No client had revenue of 10% or more of the Group's revenue
in the year to 30 September 2013.
Geographical information:
External revenue
by location of customers
2014 2013
GBP000 GBP000
-------------- -------------
UK 15,047 14,100
Oman 4,821 4,325
UAE 4,413 4,969
Qatar 3,451 1,953
South Africa 2,854 3,856
Netherlands 1,613 1,654
Germany 1,339 803
Singapore 1,128 727
Australia 1,048 468
Hong Kong 673 -
United States 404 816
Belgium 382 310
Azerbaijan 355 192
Malaysia 350 451
Other countries 1,713 2,611
============== =============
39,591 37,235
-------------- -------------
Reconciliation to total Group revenue
----
2014 2013
GBP000 GBP000
--------- -----------
Total external revenue from continuing operations 39,078 36,640
Total external revenue from discontinued
operations 513 595
--------- -----------
Total external revenue for the Group 39,591 37,235
--------- -----------
4. Discontinued Operation
During the year, the Directors made the decision to discontinue
the trade of Trett Texas LLC. The net assets of the company
continued to be held at the year end, contributing GBP29,000 of the
Group net assets.
The post-tax loss on discontinued operations was determined as
follows:
Result of discontinued operation
2014 2013
GBP000 GBP000
--------- ---------
Revenue 513 595
Expenses other than finance costs (943) (894)
Finance costs 3 -
--------- ---------
Loss before tax (427) (299)
Tax 113 -
--------- ---------
Loss for the year (314) (299)
--------- ---------
Earnings per share from discontinued operation
2014 2013
GBP000 GBP000
--------- ---------
Basic loss per share (1.1)p (1.1)p
Diluted loss per share (1.1)p (1.0)p
--------- ---------
Result of discontinued operation
The statement of cash flows includes the following amounts
relating to discontinued operations:
2014 2013
GBP000 GBP000
--------- ---------
Operating activities (8) (39)
Investing activities - -
Financing activities (3) -
========= =========
Net cash from discontinued operation (11) (39)
--------- ---------
5. Copies of the Annual Report and Financial Statements
Copies of the Annual Report and Financial Statements will be
available on the Group's website (www.driver-group.com) and will be
sent to the shareholders in due course. Further copies will be
available to the public, free of charge, at the Group's office,
Driver House, 4 St Crispin Way, Haslingden, Lancashire, BB4
4PW.
The Annual General Meeting will be held at Pall Mall Court,
61-67 King Street, Manchester, M2 4PD on Wednesday 25 February 2015
commencing at 3:00pm.
6. Post Balance Sheet Events
On 08 December 2014 the Group acquired initiate Consulting
Limited ("Initiate"). Initiate are capital investment consultants
providing development, project and construction management services
to the infrastructure market in the UK. The consideration for the
acquisition is being satisfied by way of an initial cash payment of
GBP1.5m satisfied out of the Company's existing financial
resources, and by the issue of 1,594,274 new ordinary shares in the
Group (the "Consideration Shares") with a fair value of GBP1.6m.
There is a further GBP2.185m additional cash payment, which is
deferred over a 2 year period and is conditional on key individuals
remaining in employment. At the date of the acquisition, Initiate
had net assets of GBP1.2m including net cash of GBP1.2m. The
intangible assets arising on the acquisition have yet to be
calculated.
The acquisition enables the Group to immediately provide
development and project management services on significant
aviation, highway and rail projects across the UK and creates the
opportunity to leverage existing project and dispute & advisory
services in to this sector and to Initiate's client base. This is
an excellent strategic fit for the Group, in a sector experiencing
significant growth, for example through the Government's GBP375bn
National Infrastructure Plan. Over the medium term, Driver Group
will look to develop the Initiate offering to other regions where
infrastructure-spend is at significant levels.
For the year ended 30 April 2014, Initiate reported turnover of
GBP7.48m and operating profit of GBP0.73m. Given the complementary
nature of the two businesses, the acquisition provides the Group
with synergistic benefits. It fits perfectly with the Group's
stated strategy of developing complementary service offerings that
allow for leverage of the existing business and is expected to
provide strong growth opportunities for the Company.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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