TIDMDRV
RNS Number : 1389X
Driver Group plc
17 February 2017
DRIVER GROUP PLC
("Driver" or "the Group")
Preliminary Results (unaudited)
For the Year to 30 September 2016
Driver provides specialist commercial & dispute
resolution
Services to the construction and engineering industries
Financial Highlights
-- Revenue and profits in line with guidance given in pre-close trading update of 14 September
-- Revenue up 21% to GBP58.3m (2015: GBP48.0m)
o Second half revenue up 13% to GBP30.4m (2015: GBP26.8m)
-- Underlying* operating loss of GBP0.2m (2015: Profit GBP1.2m)
o Second half underlying* operating profit of GBP1.2m (2015:
GBP1.6m)
o Second half result absorbs GBP0.5m bad debt provision for
"AMEA"
-- Underlying* loss before taxation of GBP0.4m (2015: Profit
GBP1.1m) and reported loss before taxation of GBP5.3m (2015:
GBP1.9m)
-- Net borrowings GBP9.9m at end September (2015: GBP2.5m)
Operational Highlights
-- Group Board changes
o Gordon Wilkinson appointed Chief Executive Officer in March
2016
o Hugh Cawley appointed Chief Financial Officer in September
2016
o Bob Laslett resigned as Non-Executive Director in June
2016
-- Strategy refreshed and clearly articulated, focusing on the
Group's traditional and proven areas of expertise, claims and
dispute resolution and expert witness support services
-- Overhead and administrative savings of GBP1.3m (annualised) implemented in the second half
-- Asia Pacific, Middle East & Africa ('AMEA')
o Regional oil & gas disputes team established in
Singapore
o H2 revenue up 26% on prior year period led by organic growth
in UAE, Oman and Singapore
-- Europe & Americas ('EuAm')
o H2 revenue up 6% on prior year period led by organic growth
across the regions disputes services and growth from the Paris
office opened in April 2015
Start to new financial year
-- First 4 months of new financial year comfortably ahead (by
GBP1.1m at an underlying* profit before tax level) of prior year
and ahead of internal forecasts
-- Equity fundraising announced today intended to reduce the
Group's outstanding borrowings and provide the financial
flexibility necessary to support the next phase of the
turnaround.
* Underlying figures are stated before the share-based payment
costs, exceptional items and amortisation of intangible assets
**Net (borrowings) / cash consists of cash and cash equivalents,
bank loans and finance leases
Gordon Wilkinson, Chief Executive of Driver Group said:
"The proposed fundraise announced today is intended to provide
the necessary level of refinancing to normalise the capital
structure of the business. On completion this additional financing
will provide a solid platform on which to effect the remainder of
the board's recovery plan and to capitalise on the current
opportunities available to the business"
Enquiries:
Driver Group plc
Gordon Wilkinson, Group +44 (0) 7964 518095
Chief Executive Email: gordon.wilkinson@driver-group.com
+44 (0) 7971 469975
Hugh Cawley, CFO Email: hugh.cawley@driver-group.com
N+1 Singer (Nominated
Adviser & Broker)
Sandy Fraser
James White
Alex Laughton-Scott +44 (0)20 7496 3000
CHAIRMAN'S STATEMENT
Introduction
The past year has been one of enormous change across the whole
of the Driver Group. The first half saw a significant increase in
revenue but this was not accompanied by commensurate profits as the
costs of the increased headcount within the "AMEA" region in
particular outweighed new client assignments, and we experienced
some delay in securing new opportunities. The loss declared at the
half year was clearly unacceptable. Significant change was needed
to improve the prospects of the Group and action needed to be taken
decisively and effectively. While much remains to be done the
changes implemented saw a new management team under Gordon
Wilkinson take charge and introduce a radical overhaul of every
part of our business resulting in a second half which demonstrated
a marked improvement. The underlying* loss before tax of GBP1.5m in
the first half was reduced to an underlying* loss before tax of
GBP0.4m for the full year to 30 September 2016 and a clear strategy
for the businesses has been articulated and is being executed. The
business in the UK and Europe showed excellent progress,
particularly in the disputes and claims business, enhancing its
reputation as a leading supplier of expert witnesses and in
particular strengthening the Diales brand. Our ambition now is to
turn underlying profits into actual and sustainable profits and
your Board is confident that this can be achieved over time.
Financial results
Revenue for the year was GBP58.3m (2015: GBP48.0m) and
underlying* operating loss before tax was GBP0.2m (2015: profit
GBP1.2m). The underlying* loss per share was 1.0p (2015: earnings
of 3.2p). The reported loss before taxation was GBP5.3m (2015:
GBP1.9m), after exceptional items relating to severance payments of
GBP1.4m (2015: GBP0.5m), impairment of goodwill GBP1.4m (2015:
GBPnil), acquisition and integration costs of GBP0.6m (2015:
GBP1.6m), restructuring costs of GBP0.2m (2015: GBPnil), a share
based payment charge of GBP1.1m (2015: GBP0.5m) and amortisation of
intangible assets of GBP0.2m (2015: GBP0.2m).
Net borrowings at the year-end were slightly higher than
expected, at GBP9.9m (2015: GBP2.5m), reflecting the losses, the
costs of severance payments, and of the acquisition of Initiate
Consulting Limited ('Initiate') and the increase in working capital
requirements associated with the growth of the business. The
deleveraging of the balance sheet is, of course, the principal
reason for the additional equity injection. The Company has today
announced the placing conditionally to raise GBP8.0 million before
expenses (the "Placing") with up to a further GBP0.5 million to be
raised by way of an Open Offer to existing shareholders at not less
than 35 pence per share (the "Issue Price"), alongside new term
debt facilities of an initial GBP8.0 million, comprising a GBP5.0
million term debt facility and a revolving credit facility of a
further GBP3.0 million, which will become effective and drawable
upon completion of the Placing.
Dividend
Given the trading results the Board do not recommend the payment
of a dividend for 2016 (2015: final 1.05p; full year 1.65p).
Strategy
The strategy of your Board is to concentrate on those areas
where we excel, in claims and dispute resolution, with the
objective of consolidating the Group's position as one of the
pre-eminent firms in its areas of expertise. Whilst this may not
deliver dramatic revenue growth in the near term it ought to result
in a healthy and stable business, generating attractive returns for
shareholders.
Board
As announced with the Interims, Dave Webster retired as CEO and
assumed a non-executive role. Dave was replaced by Gordon
Wilkinson, previously Chief Operating Officer of Initiate in March
of this year. Bob Laslett resigned as a non-executive director at
the beginning of June, and Damien McDonald stepped down to pursue
other opportunities with effect from 30 September to be replaced by
Hugh Cawley as Chief Financial Officer. As Dave Webster now steps
down altogether, we welcome the appointment of John Horgan as a
non-executive director who I am sure will be a significant asset to
the Board in the future. I believe we now have a balanced and
experienced Board well able to deliver the Group's recovery and
growth strategy.
I should like to place on record our thanks to the retiring
members of the Board for their service and dedication and to wish
them well in their future endeavours.
Outlook
The first four months of this current financial year have shown
a marked improvement compared with the equivalent period in the
previous year, with underlying* profit before tax improving by
GBP1.1m and ahead of internal forecasts. While it is always
difficult to predict volumes in a professional services business
such as ours your Board is confident that the company will continue
to take out unnecessary costs, improve margins and refine our areas
of operation both geographically and intellectually. Gordon
Wilkinson as CEO and Mark Wheeler as Global COO have led this
recovery and I am enormously grateful to them both and through them
to all our staff for the enormous effort they have put in to
reforming our business in challenging times. With this strategy of
increasing our concentration on the higher margin claims and
disputes markets now so clearly articulated and once the financial
structure of the business is again back on a solid base following
the equity raise now in process, I believe that shareholders, staff
and other stakeholders can look forward to the future with renewed
confidence.
Steven Norris
Non-Executive Chairman
* Underlying figures are stated before the share-based payment
costs, exceptional items and amortisation of intangible assets
**Net (borrowings) / cash consists of cash and cash equivalents,
bank loans and finance leases
CHIEF EXECUTIVE'S REPORT
Introduction
Having taken on the role of Group Chief Executive in March 2016,
I was in no doubt of the significant challenges that lay ahead and
the major rebuilding exercise required to return the business to a
sustainable and profitable business model. Despite impressive
revenue growth in recent years, we had failed to effectively manage
our cost base and cash collections, ultimately leading to an
underlying* loss before tax of GBP1.5m in the first half of the
financial year.
There were a number of immediate challenges to address:
The first priority was clearly to adjust the cost base, which
presented opportunities for reduction as it had been put in place
to support a planned steep increase in both revenue and profit.
Actions taken resulted in an annualised overhead cost saving of
GBP1.3m.
In parallel the Group strategy for growth and diversification
was closely scrutinised, and a decision made to move away from
providing a high volume of low margin work in a wide number of
construction related activities. Instead, the focus was returned to
the Group's core business offering of construction claims, dispute
resolution, and the provision of expert witness services. These
core services have consistently been the Group's most profitable
services, with gross margins of between 25% and 40%, varying from
region to region. We also focussed on the development and
strengthening of the Diales brand, which has proved hugely
successful with our clients.
Our cash collection had become less effective, especially in
some of our more challenging markets. Immediate steps were taken to
improve our cash position and put in place new processes to improve
our on-going cash collection.
The final step in the repositioning process was to appoint a
predominately new leadership team and structure which was both
streamlined, and could provide consistent global leadership and
direction. This led to the recruitment of Hugh Cawley as Chief
Financial Officer, replacing Damien McDonald, who has now left the
business. The appointment of Mark Wheeler as Global Chief Operating
Officer in September 2016, completed the leadership team and gave
us the ability to drive a strategy of global integration focussed
on delivering excellence in all that we do and achieving
sustainable and profitable success.
The financial year 2015-16 was undoubtedly a challenging one,
with H1 being particularly disappointing. However H2 saw the Group
return to profit at an underlying* level with trading stabilised,
and an underlying* loss before tax for the year of GBP0.4m (2015:
GBP1.1m profit), a creditable recovery on the H1 underlying* loss
before tax of GBP1.5m.
On behalf of the Board I would like to take this opportunity to
thank the staff for their efforts and loyalty throughout a very
challenging 2016.
Financial performance
Revenue grew by 21% to GBP58.3m (2015: GBP48.0m). Gross Margin
increased by GBP1.1m to GBP11.7m (2015: GBP10.6m).
AMEA
A significant proportion of the revenue generated in AMEA came
from the Middle East market. This market continues to be highly
competitive, and the payment terms available have created a
significant challenge for the business in collecting its debts. Our
overall bad debt provision in 2016 was increased significantly to
GBP1.4m (2015: GBP0.5m) owing to a number of Middle East contracts
being written down. Moving forward we will take a more stringent
approach to our bad debt provisions.
The implementation of our previous strategic plan had led to a
significant increase in headcount across the AMEA region. Steps
have been taken to ensure our headcount is more closely aligned
with our ability to secure and deliver profitable work.
Despite the downturn in the Oil & Gas sector in the year,
the region saw an increase in the number of appointments on
commissions, particularly in Asia Pacific. We are optimistic that
this trend will continue.
The market in Hong Kong has been challenging, and whilst there
was no growth for the Group, trading was steady and we remain
confident that we can be a major player in the marketplace.
The Australian market was very difficult in FY 2015-16 and as
such we significantly reduced our costs to stabilise trading.
Europe and Americas
The UK continued to operate in a strong and consistent manner.
Following the outcome of the Brexit vote in June, the UK
construction market dipped briefly but has now recovered and is
showing signs of growth in 2017 and beyond. The UK Government
announced an additional GBP23bn of capital spend on innovation and
infrastructure over the next five years; the third runway at
Heathrow was approved; and construction of HS2 will start next
year.
The UK has developed into a centre of excellence for testimony
and dispute resolution expertise. 2016 saw the number of our Diales
experts increase, from only 13 four years ago, to close to 40, half
of whom are based in the UK. We are winning more expert work around
the globe, typically with healthy gross margins of up to 40%.
The Netherlands and Germany have been effectively run as one
business following leadership changes in 2014-15. The offices
service Northern Europe predominantly in offshore and heavy
engineering. Both have had a good year, with the Netherlands
achieving record breaking revenue and profit levels for the year as
a whole.
Although still in its infancy, our France business is performing
well. In its first 18 months the office has expanded to a team of
10, and there are significant opportunities to grow the business
further. We have a dominant position and unique offering in the
French market that should facilitate continued growth and
opportunities to develop markets in Central and South America, as
well as parts of French speaking Africa and Canada.
After a strong first year in 2015 for our Canadian business,
2016 has been somewhat more difficult owing to a number of
commissions taking longer than expected to start.
At the end of year we changed the leadership team which had a
positive effect and is starting to produce results.
Initiate
Initiate was acquired in December 2014, and performed broadly in
line with expectations throughout 2016 financial year. During this
financial year Initiate has continued to provide project delivery
and project management services to the infrastructure sector.
Strong relationships with the existing client base have served as a
solid base for the business, particularly in Network Rail,
Transport for London and Heathrow.
During the year a review of the management team's progress in
extending these services to the Middle East region took place. A
decision was made to discontinue this intended expansion due to a
high level of local competition in a well-established marketplace
that did not provide opportunity for increased margin. The Initiate
brand is now firmly focused on the UK infrastructure market, where
its core strengths lie. The business's consulting revenues have
reduced in Q4 from GBP1.5m in 2015 to GBP1.3m in 2016. The board
has subsequently determined from a review of the market for such
businesses that an impairment was required against the carrying
amount of goodwill (note 5) for both this business and Driver
Project Services of some GBP1.4m.
The outlook for Initiate, however, remains reasonable with
recent post-Brexit decisions for Hinkley, HS2, and in particular
Heathrow, where Initiate is well placed to capitalise on the
planned expansion.
Outlook
The outlook for the Group's core global business in the
construction claims, dispute resolution, and expert witness markets
remains strong. The Driver Trett brand is ranked among the top
three global leaders in this niche section. Our highly-regarded
pool of experts/specialists have an excellent reputation in the
industry and strong links to the world's leading law firms.
Whilst the Group had a very disappointing period in H1 of 2016,
we have taken decisive action in the restructuring of the
leadership team with an emphasis firmly on profit and cash
generation. Significant cost savings have already been implemented
in H2, and we are seeing the benefits of a reduced cost base in
re-building our margin.
Although the business has been through a difficult time in 2016
much of the substantial investment made in attracting new talent
and achieving a truly global reach leaves the Group well placed to
deliver a significantly improved performance in the next financial
year and beyond.
With the Group now operating as one global business, rather than
by region, under one Chief Operating Officer, we can ensure that
our clients get the right people/team with the right expertise, and
in the right location.
Gordon Wilkinson
Chief Executive Officer
* Underlying figures are stated before the share-based payment
costs, exceptional items and amortisation of intangible assets
STRATEGIC REPORT - FINANCE DIRECTOR'S REVIEW
Overview of the year
The financial key performance indicators for the Group are
revenue, operating profit and profit before tax, all of which
ultimately reflect the effects of the key influence of chargeable
staff utilisation. We also monitor underlying* operating profit and
underlying* profit before tax as we believe that these measures
better reflect the underlying, replicable results of the Group. The
poor results for the first half year, in which the Group lost
GBP1.5 million at underlying* profit before tax level contrasted
markedly with the second half in which the Group returned to
profit, though not sufficient wholly to counteract the losses of
the first half. In terms of revenue, this was another year of
substantial growth, up 21% to GBP58.3m from GBP48.0m, whereas
underlying* profit before tax fell from a profit of GBP1.1m in the
prior year to a loss of GBP0.4m. There were also substantial
exceptional costs recognised in the year of GBP3.6m (2015:
GBP2.2m), reflecting principally severance costs incurred of
GBP1.4m (2015: GBP0.5m) in an effort to control overheads
particularly, in dismantling the central team which had been
assembled in the UAE. With the appointment of the Global COO, such
a team was no longer necessary. Other significant exceptional costs
were the recognition of impairment in the value of the UK project
management businesses of GBP1.4m (2015: GBPnil); and the
amortisation of deferred consideration of GBP0.6m (2015: GBP1.6m)
relating to the acquisition of Initiate at the end of 2014. Other
costs excluded from underlying* profit before tax comprised
share-based payments of GBP1.1m (2015: GBP0.5m). The increased cost
in the year has been largely due to the acceleration of the share
options charge relating to employee
options that were replaced by long term incentive plans designed
to help align staff motivation with the interests of shareholders
and the amortisation of acquired intangibles of GBP0.2m (2015:
GBP0.2m) associated with the Initiate acquisition. Utilisation
across the whole business during the year averaged out at 71%
(2015: 76%), including the first half of the year when it dropped
to 69% (2015: 74%). The financial results for 2016 clearly
reflected this excess of unproductive headcount.
After a net interest charge of GBP0.2m (2015: GBP0.1m) the
underlying* loss before tax was GBP0.4m (2015: profit of GBP1.1m)
and the reported loss before tax was GBP5.3m (2015: loss
GBP1.9m).
The Europe & Americas business segment revenue grew again
this year, by GBP0.7m to GBP22.9m although underlying* operating
profit reduced by GBP0.2m to GBP1.9m; exceptional costs of GBP0.5m
(2015: GBP0.1m), reduced profit for the year to GBP1.4m (2015:
GBP2.0m).
The Asia Pacific / Middle East / Africa segment revenue
increased by GBP9.1m to GBP29.4m, whilst underlying* operating
profit turned negative from a profit of GBP0.8m to a loss of
GBP1.1m. This deterioration can be attributed to the decision to
recruit extensively with the aim of growing revenue, in advance of
winning the business for which the staff would be required. After
exceptional items and amortisation of intangible assets of GBP0.5m
(2015: GBP0.5m) the operating loss increased to GBP1.6m (2015:
profit GBP0.2m).
Initiate, acquired in December 2014, reported revenue of GBP5.9m
(2015:GBP5.4m) and an underlying* operating loss of GBP0.1m (2015:
profit of GBP0.4m). After exceptional items of GBP1.6m and
amortisation of intangibles of GBP0.2m, the operating loss was
GBP1.8m (2015: GBP1.4m).
Corporate costs have been allocated more fully to the business
segments in 2016 in order to better reflect the benefits accruing
to the segments from the support activities reflected in the
corporate costs. Unallocated costs remaining at the underlying
level amounted to GBP1.0m in 2016 (2015: GBP2.1m). After a share
option cost of GBP1.1m (2015: GBP0.5m) and exceptional costs of
GBP0.9m (2015: GBPnil) the reported unallocated costs were GBP3.3m
(2015: GBP2.7m). These segmental results for the year are disclosed
in note 3.
Taxation
The Group showed a tax credit of GBP0.1m (2015: charge GBP0.1m).
The tax charge includes the effects of expenses not deductible for
tax purposes and losses made in countries where the effective tax
rate is nil, consequently, the effective tax rate for the year was
negative 2% (2015: 5%).
Earnings per share
Underlying* earnings per share were minus 1.0 pence (2015: 3.2
pence). The basic loss per share was 16.8 pence (2015: loss per
share 6.5 pence).
Cash flow
There was a cash outflow from operations before changes in
Working Capital of GBP1.6m (2015: GBP0.7m). This reflected the
reported loss for the year of GBP5.3m (2015: profit of GBP1.8m)
before depreciation and amortisation of GBP0.7m (2015: GBP0.6m) and
the share based payment charge of GBP1.1m (2015: GBP0.5m). The
outflow from increased receivables of GBP4.2m (2015: GBP3.0m)
resulting from the growth in revenue in the second half of the year
was offset slightly by an inflow from increased payables of GBP0.4m
(2015: GBP2.9m). Net tax paid in the year was GBP0.1m (2015:
GBP0.5m).
There was a net cash outflow from investing activities of
GBP0.7m (2015: GBP0.8m) principally consisting of net capital spend
of GBP0.7m (2015: GBP0.5m). There were no costs of acquisition in
2016 (2015: GBP0.3m).
Net cashflow from financing activities was an inflow of GBP3.1m
(2015: GBP1.7m). This included net proceeds from borrowings of
GBP4.2m (2015: GBP1.9m), offset by the repurchase of share options
of GBP0.4m (2015: GBPnil), a dividend paid of GBP0.3m (2015:
GBP0.5m), interest paid of GBP0.2m (2015: GBP0.1m) and repayment of
borrowings of GBP0.1m (2015: GBPnil). The prior year, 2015, also
benefited from the proceeds from sale of shares of GBP0.4m.
The Company had net borrowings at the end of the year of GBP9.9m
compared to GBP2.5m at 30 September 2015.
DIVIDS
The Directors do not propose the payment of a dividend for the
year (2015: a final dividend of 1.05 pence per share at a cost of
GBP320,000).
On behalf of the Board
Hugh Cawley
Chief Financial Officer
* Underlying figures are stated before the share-based payment
costs, exceptional items and amortisation of intangible assets
CONSOLIDATED INCOME STATEMENT FOR THE YEARED
30 SEPTEMBER 2016
Notes Unaudited
2016 2015
GBP000 GBP000
----------------------------------------- ------- ----------- -----------
REVENUE 2 58,261 47,950
Cost of Sales (46,579) (37,380)
----------------------------------------- ------- ----------- -----------
GROSS PROFIT 11,682 10,570
Administrative expenses (17,010) (12,508)
Other operating income 197 170
----------------------------------------- ------- ----------- -----------
Underlying* operating (loss)/profit (208) 1,155
Exceptional items 5 (3,559) (2,173)
Share-based payment charges
and associated costs 19 (1,141) (510)
Amortisation of intangible
assets 13 (223) (240)
----------------------------------------- ------- ----------- -----------
OPERATING LOSS 2, 4 (5,131) (1,768)
Finance income 14 9
Finance costs 6 (231) (104)
----------------------------------------- ------- ----------- -----------
LOSS BEFORE TAXATION 2 (5,348) (1,863)
Tax expense 7 115 (96)
----------------------------------------- ------- ----------- -----------
LOSS FOR THE YEAR (5,233) (1,959)
----------------------------------------- ------- ----------- -----------
Loss attributable to non-controlling
interests from continuing (3) -
operations
Loss attributable to equity
shareholders of the parent
from continuing operations (5,230) (1,959)
(5,233) (1,959)
-----------
Basic loss per share attributable
to equity shareholders of
the parent (pence) 10 (16.8)p (6.5)p
-----------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEARED 30
SEPTEMBER 2016
Notes Unaudited
2016 2015
GBP000 GBP000
------------------------------------------------------------------------- -------- ----------- ---------
LOSS FOR THE YEAR (5,233) (1,959)
----------------------------------------------------------------------------------- ----------- ---------
Other comprehensive income:
Items that could subsequently be reclassified to the Income Statement:
Exchange differences on translating foreign operations (49) (79)
=================================================================================== =========== =========
OTHER COMPREHENSIVE INCOME FOR THE YEAR NET OF TAX (49) (79)
----------------------------------------------------------------------------------- ----------- ---------
TOTAL COMPREHENSIVE INCOME FOR THE YEAR (5,282) (2,038)
----------------------------------------------------------------------------------- ----------- ---------
Total comprehensive income attributable to:
Owners of the parent (5,279) (2,038)
Non-controlling interest (3) -
========================================================================= ======== =========== =========
(5,282) (2,038)
---------------------------------------------------------------------------------- ----------- ---------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION FOR THE YEARED 30
SEPTEMBER 2016
Unaudited Restated*
2016 2015
GBP000 GBP000 GBP000 GBP000
-------------------------------- --------- ---------- --------- ----------
NON-CURRENT ASSETS
Goodwill 3,456 4,838
Property, plant and equipment 2,927 2,676
Intangible assets 621 842
Deferred tax asset 21 35
--------- ---------
7,025 8,391
CURRENT ASSETS
Trade and other receivables 20,346 16,537
Derivative financial
asset 454 17
Cash and cash equivalents 555 1,111
--------- ---------
21,355 17,665
---------- ----------
TOTAL ASSETS 28,380 26,056
CURRENT LIABLITIES
Borrowings (3,352) (479)
Trade and other payables (8,593) (9,384)
Derivative financial
liability (1,395) (153)
Current tax payable (49) (209)
--------- ---------
(13,389) (10,225)
---------- ----------
NON-CURRENT LIABILITIES
Borrowings (7,110) (3,100)
Deferred tax liabilities (301) (352)
Trade and other payables - (317)
--------- ---------
(7,411) (3,769)
---------- ----------
TOTAL LIABILITIES (20,800) (13,994)
---------- ----------
NET ASSETS 7,580 12,062
---------- ----------
SHAREHOLDERS' EQUITY
Share capital 127 125
Share premium 3,453 3,095
Merger reserve 1,702 3,102
Currency reserve (441) (392)
Capital redemption reserve 18 18
Retained earnings 2,829 6,219
Own shares (107) (107)
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 7,581 12,060
NON-CONTROLLING INTEREST (1) 2
---------- ----------
TOTAL EQUITY 7,580 12,062
---------- --------- ----------
**Restated to reflect the reallocation of GBP1,609,000 from the
share premium account to the merger reserve in relation to shares
issued as part of the consideration for the purchase of initiate
Consulting Ltd in December 2014. The amount is equal to the
difference between the fair value on issue and the nominal
value.
CONSOLIDATED CASHFLOW STATEMENT FOR THE YEARED 30 SEPTEMBER
2016
Unaudited
2016 2015
GBP000 GBP000
----------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the year (5,233) (1,959)
----------- ----------
Adjustments for:
Depreciation 503 357
Amortisation 223 240
Impairment of goodwill 1,400 -
Exchange adjustments 249 (5)
Finance income (14) (9)
Finance expense 231 104
Tax (credit)/expense (115) 96
Equity settled share-based payment
charge 1,141 510
----------- ----------
OPERATING CASH FLOW BEFORE CHANGES
IN WORKING CAPITAL AND PROVISIONS (1,615) (666)
----------- ----------
Increase in trade and other receivables (4,184) (2,968)
Increase in trade and other payables 434 2,865
----------- ----------
CASH USED IN OPERATIONS (5,365) (769)
Tax paid (98) (491)
NET CASH OUTFLOW FROM OPERATING
ACTIVITIES (5,463) (1,260)
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received 14 9
Acquisition of property, plant
and equipment (728) (532)
Acquisition of intangible assets - (41)
Acquisition of subsidiary net
of cash acquired - (344)
Proceeds from the disposal of
property, plant & equipment - 80
NET CASH OUTFLOW FROM INVESTING
ACTIVITIES (714) (828)
----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Interest paid (231) (104)
Repayment of borrowings (91) (33)
Proceeds of borrowings 4,162 1,926
Repurchase of share options (462) -
Proceeds from sale of shares - 401
Dividends paid to equity shareholders
of the parent (320) (505)
Payment of dividends to non controlling
interests - (10)
----------- ----------
NET CASH INFLOW FROM FINANCING
ACTIVITIES 3,058 1,675
----------- ----------
Net decrease in cash and cash
equivalents (3,119) (413)
Effect of foreign exchange on
cash and cash equivalents (249) 5
Cash and cash equivalents at
start of period 694 1,102
----------- ----------
CASH AND CASH EQUIVALENTS AT OF PERIOD (2,674) 694
----------- ----------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEARED 30
SEPTEMBER 2016
2016: Unaudited *Restated
Non-controlling
Share Share Merger Other Retained Own interest Total
capital premium reserve reserves(2) earnings shares Total(1) GBP000 Equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
OPENING
BALANCE
AT 1 OCTOBER
2014 111 2,702 1,493 (295) 8,173 (107) 12,077 12 12,089
---------------- ---------- ---------- ----------- -------------- ----------- --------- ----------- ----------------- -----------
Loss for
the year - - - - (1,959) - (1,959) - (1,959)
Other
comprehensive
income
for the
year - - - (79) - - (79) - (79)
---------------- ---------- ---------- ----------- -------------- ----------- --------- ----------- ----------------- -----------
Total
comprehensive
income
for the
year - - - (79) (1,959) - (2,038) - (2,038)
Dividends - - - - (505) - (505) (10) (515)
Share-based
payment - - - - 510 - 510 - 510
Issue
of share
capital 8 393 - - - - 401 - 401
Shares
issued
as part
of the
consideration
in a business
combination 6 - 1,609 - - - 1,615 - 1,615
---------------- ---------- ---------- ----------- -------------- ----------- --------- ----------- ----------------- -----------
CLOSING
BALANCE
AT 30
SEPTEMBER
2015 125 3,095 3,102 (374) 6,219 (107) 12,060 2 12,062
---------------- ---------- ---------- ----------- -------------- ----------- --------- ----------- ----------------- -----------
Loss for
the year - - - - (5,230) - (5,230) (3) (5,233)
Other
comprehensive
income
for the
year - - - (49) - - (49) - (49)
---------------- ---------- ---------- ----------- -------------- ----------- --------- ----------- ----------------- -----------
Total
comprehensive
income
for the
year - - - (49) (5,230) - (5,279) (3) (5,282)
Dividends - - - - (320) - (320) - (320)
Share-based
payment - - - - 1,141 - 1,141 - 1,141
Transfer
on impairment
of goodwill - - (1,400) - 1,400 - - - -
Issue
of share
capital 2 358 - - - - 360 - 360
Repurchase
of share
options - - - - (381) - (381) - (381)
---------------- ---------- ---------- ----------- -------------- ----------- --------- ----------- ----------------- -----------
CLOSING
BALANCE
AT 30
SEPTEMBER
2016 127 3,453 1,702 (423) 2,829 (107) 7,581 (1) 7,580
---------------- ---------- ---------- ----------- -------------- ----------- --------- ----------- ----------------- -----------
(1) Total equity attributable to the equity holders of the parent
(2) 'Other reserves' combines the translation reserve and
capital redemption reserve. The movement in the current and prior
year relates to the translation of foreign currency equity balances
and foreign currency non-monetary items.
*Restated to reflect the reallocation of GBP1,609,000 from the
share premium account to the merger reserve in relation to shares
issued as part of the consideration for the purchase of initiate
Consulting Ltd in December 2014. The amount is equal to the
difference between the fair value on issue and the nominal
value.
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 2016 or the year ended 30 September
2015 but is derived from those accounts. These preliminary results
have been prepared in accordance with the accounting policies set
out in the Annual Report and Financial Statements of Driver Group
plc for the year ended 30 September 2015 which will be consistent
with those in the Annual Report and Financial Statements of Driver
Group plc for the year ended 30 September 2016 when finalised.
The Directors have prepared cashflow forecasts for a period of
48 months from the date of releasing these financial statements
which show that the Group will have sufficient funds to continue
and therefore that the going concern basis of preparation is
appropriate. However, a key assumption within these forecasts is
the receipt of GBP8m from an equity placing and new banking
facilities of GBP8m. The Company has today announced the Placing
conditionally to raise GBP8.0 million before expenses with up to a
further GBP0.5 million to be raised by way of an Open Offer to
existing shareholders at the Issue Price, alongside new term debt
facilities of an initial GBP8.0 million, comprising a GBP5.0
million term debt facility and a revolving credit facility of a
further GBP3.0 million, which will become effective and drawable
upon completion of the Placing.
The Company's existing top-up facility of GBP2.0 million is due
to expire in April 2017 and whilst the Directors are confident that
the equity placing will be successful, should it fail to be
approved by Shareholders at the General Meeting of the Company to
be convened on 9 March 2017 (or not proceed for any other reason)
the Company would be obliged to enter into negotiations with its
bankers for the extension of its existing facilities or the
arrangement of new facilities either with its existing bank or with
a new lender(s). Whilst the Directors are confident that its
existing bankers would engage in constructive negotiations
following a request for a facility extension or renewal, there is
nonetheless no guarantee that the Company would be able to arrange
suitable alternative bank financing prior to expiry of the existing
facilities.
Should the above not take place, in view of the inherent
uncertainty around the alternative courses of action available to
the Directors, the going concern basis on which these financial
statements have been prepared may prove to be inappropriate. If the
auditors were to be asked to issue an audit report today it is
likely their report would be unqualified, but would draw attention
to the going concern uncertainties by way of emphasis without
qualifying their report. In circumstances where the going concern
basis is inappropriate, adjustments are likely to have to be made
to the net assets shown in these financial statements to reduce
assets to their more immediately recoverable amounts, to reclassify
fixed assets and creditors due after more than one year to current
assets and current liabilities and to provide for further
liabilities that may arise.
Group statutory accounts for the year ended 30 September 2015
have been delivered to the Registrar of Companies, and those for
the year ended 30 September 2016 will be delivered following the
Company's Annual General Meeting. The audit on the 2016 accounts is
not yet complete. BDO LLP have reported on the 2015 accounts. Their
report was 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
Unaudited
2016 2015
GBP000 GBP000
------------ ------------
Loss for the financial year attributable
to equity shareholders (5,230) (1,959)
Share-based payment charges and
associated costs 1,141 510
Exceptionals (note 4) 3,559 2,173
Amortisation of intangible assets 223 240
============ ============
Adjusted (loss)/profit for the year
before share-based payments, amortisation
of intangible assets and exceptional
items (307) 964
------------------------------------------------------- ------------ ------------
Weighted average number of shares:
* Ordinary shares in issue 31,251,190 30,401,519
* Shares held by EBT (596,677) (596,677)
* Vested options with nominal consideration 426,017 272,997
------------------------------------------------------- ------------ ------------
Basic weighted average number of
shares 31,080,530 30,077,839
Effect of Employee share options 1,590,610 2,149,588
Diluted weighted average number
of shares 32,671,140 32,227,427
------------------------------------------------------- ------------ ------------
Basic loss per share (16.8)p (6.5)p
Adjusted (loss)/earnings per share
before share-based payments, amortisation
of intangible assets and exceptional
items (1.0)p 3.2p
3. Segmental Analysis
REPORTABLE SEGMENTS
For management purposes, the Group is organised into three
operating divisions: EuAm (Europe & Americas), AMEA (APAC,
Middle East & Africa) and Initiate. These divisions are the
basis on which the Group is structured and managed, based on its
geographic structure. In EuAm and AMEA the key service provisions
are: quantity surveying, planning / programming, quantum and
planning experts, dispute avoidance / resolution, litigation
support, contract administration and commercial advice /
management. In Initiate the key service provisions are capital
investment consultancy providing development, project and
contracting management services to the infrastructure market in the
UK.
Segment information about these reportable segments is presented
below.
Year ended 30 September 2016
Unaudited
APAC,
Middle
Europe East
& & Africa Initiate Eliminations Unallocated(1) Consolidated
Americas GBP000 GBP000 GBP000 GBP000 GBP000
GBP000
----------- ----------- ----------- -------------- ----------------- --------------
Total external
revenue 22,945 29,440 5,876 - - 58,261
Total inter-segment
revenue 532 80 - (612) - -
========================= =========== =========== =========== ============== ================= ==============
Total revenue 23,477 29,520 5,876 (612) - 58,261
------------------------- ----------- ----------- ----------- -------------- ----------------- --------------
Segmental
profit/(loss) 1,916 (1,089) (52) - - 775
Unallocated
corporate
expenses(1) - - - - (983) (983)
Share-based
payment charge - - - - (1,141) (1,141)
Exceptional
items (note
4) (535) (504) (1,600) - (920) (3,559)
Amortisation
of intangible
assets - (27) (196) - - (223)
------------------------- ----------- ----------- ----------- -------------- ----------------- --------------
Operating
profit/(loss) 1,381 (1,620) (1,848) - (3,044) (5,131)
Finance income - - - - 14 14
Finance expense - - - - (231) (231)
------------------------- ----------- ----------- ----------- -------------- ----------------- --------------
Profit/(loss)
before taxation 1,381 (1,620) (1,848) - (3,261) (5,348)
Taxation - - - - 115 115
----------- ----------- ----------- --------------
Profit/(loss)
for the year 1,381 (1,620) (1,848) - (3,146) (5,233)
------------------------- ----------- ----------- ----------- -------------- ----------------- --------------
OTHER
INFORMATION
Non current
assets 5,642 742 490 - 151 7,025
Reportable
segment
assets 9,955 14,779 908 - 2,738 28,380
Capital additions(2) 70 547 4 - 107 728
Depreciation
and amortisation 118 291 197 - 120 726
------------------------- ----------- ----------- ----------- -------------- ----------------- --------------
(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
2016.
Year ended 30 September 2015
APAC,
Middle
Europe East
& & Africa initiate Eliminations Unallocated(1) Consolidated
Americas GBP000 GBP000 GBP000 GBP000 GBP000
GBP000
----------- ---------- ----------- -------------- ----------------- --------------
Total external
revenue 22,243 20,333 5,374 - - 47,950
Total inter-segment
revenue 508 200 - (708) - -
========================= =========== ========== =========== ============== ================= ==============
Total revenue 22,751 20,533 5,374 (708) - 47,950
------------------------- ----------- ---------- ----------- -------------- ----------------- --------------
Segmental
profit/(loss) 2,087 781 399 - - 3,267
Unallocated
corporate
expenses(1) - - - - (2,112) (2,112)
Share-based
payment charge - - - - (510) (510)
Exceptional
items (note
4) (81) (460) (1,617) - (15) (2,173)
Amortisation
of intangible
assets - (77) (163) - - (240)
------------------------- ----------- ---------- ----------- -------------- ----------------- --------------
Operating
profit/(loss) 2,006 244 (1,381) - (2,637) (1,768)
Finance income - - - - 9 9
Finance expense - - - - (104) (104)
------------------------- ----------- ---------- ----------- -------------- ----------------- --------------
Profit/(loss)
before taxation 2,006 244 (1,381) - (2,732) (1,863)
Taxation - - - - (96) (96)
----------- ---------- ----------- --------------
Profit/(loss)
for the year 2,006 244 (1,381) - (2,828) (1,959)
------------------------- ----------- ---------- ----------- -------------- ----------------- --------------
OTHER
INFORMATION
Non current
assets 7,556 471 2 - 362 8,391
Reportable
segment
assets 13,335 10,744 577 - 1,400 26,056
Capital additions(2) 111 333 - - 70 514
Depreciation
and amortisation 105 208 163 - 121 597
------------------------- ----------- ---------- ----------- -------------- ----------------- --------------
(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
2015.
Geographical information:
External revenue
by location
of customers
Unaudited
2016 2015
GBP000 GBP000
----------- ----------
UK 20,713 21,413
UAE 8,724 7,040
Oman 6,270 4,306
South Africa 3,347 4,894
Netherlands 2,699 1,381
South Korea 1,939 226
France 1,740 356
Singapore 1,689 405
Qatar 1,678 1,650
Saudi Arabia 1,481 -
Malaysia 1,330 654
Germany 1,272 1,174
Hong Kong 1,123 648
Kuwait 967 748
Australia 924 1,006
Belgium 624 236
Canada 540 511
United States 367 -
China 205 7
Azerbaijan 75 576
Other countries 554 719
58,261 47,950
----------- ----------
4. Exceptional Items
Unaudited
2016 2015
GBP000 GBP000
----------- ----------
Severance costs (1) 1,385 526
Acquisition and integration costs
(2) 620 1,647
Restructuring costs (3) 154 -
Impairment of Goodwill (note 5) 1,400 -
=========== ==========
3,559 2,173
----------- ----------
(1) Severance costs include redundancy, ex-gratia, other
discretionary payments and associated legal costs.
(2) Acquisition and integration costs include contingent
consideration being a cost of GBP0.6m (2015: GBP1.5m) in respect of
deferred consideration dependent on future employment, legal and
professional fees associated with the acquisition of Initiate and
office restructuring costs.
(3) Restructuring costs include bank charges and legal and
professional fees in relation to the requirement of an additional
banking facility.
5. Goodwill
The group is required to test, on an annual basis, whether
goodwill has suffered any impairment. The recoverable amount is
determined based on value in use calculations. The use of this
method required the estimation of future cash flows and the
determination of a discount rate in order to calculate the present
value of the cash flows.
As discussed in the Chief Executive Officer's review, a decision
was made to discontinue the intended expansion of the project
delivery and project management services, into the Middle East
region. Consequently and in addition to the reduced revenues of the
UK project management businesses (Initiate and Driver Project
Services) the recoverable amount of these cash generating units
('CGU's') was insufficient to cover the carrying value of the total
net assets, resulting in an impairment charge totalling GBP1.4m
being recognised in the statement of comprehensive income.
A 1% increase in the discount rate would reduce the recoverable
amount of the Initiate CGU by approximately GBP0.001 million and
the Driver Project Services CGU by GBP0.11 million
A 2% reduction in the annual revenue would reduce the
recoverable amount Initiate CGU by approximately GBP0.064 million
and the Driver Project Services CGU by GBP0.11 million
The carrying amount of goodwill is allocated to the cash
generating units (CGU's) as follows;
Driver Project Services Ltd GBP1,918,000
Initiate Consulting Ltd GBP487,000
Trett Ltd GBP1,050,000
The key assumptions used in the value in use calculations are as
follows;
Gross margin - 13.5% - 34%
Growth rate - 2%
Discount rate - 18% (pre-tax)
6. 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) when
completed 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR XQLLFDLFXBBL
(END) Dow Jones Newswires
February 17, 2017 02:00 ET (07:00 GMT)
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