Half Yearly Report

RNS Number : 2405T
Driver Group plc
03 June 2009
 



DRV

3 June 2009


DRIVER GROUP PLC

('Driver' or 'the Group')


Interim Results

for the six months ended 31 March 2009


Driver provides specialist commercial & dispute resolution services

to the construction and engineering industries.


Highlights



  • Record half year revenue and profit 

  • Revenues increased by 49% to £11.25m (2008: £7.53m), reflecting

    - benefit of contribution from CMC, acquired in February 2008

    - strong growth in international business, especially in Middle East

  • Underlying* pre-tax profit increased by 41% to £1.30m (2008: £0.92m)

    Statutory pre-tax profit increased by 33% to £1.22m (2008: £0.92m)

  • Underlying* earnings per share increased by 52% to 4.1p (2008: 2.7p) 

    Statutory earnings per share increased by 40% to 3.8p (2008: 2.7p)

  • Interim dividend increased by 5% to 1.0p per share (2008: 0.95p)

  • Positive cash generated from operations 

  • Continued investment in the Middle East

  • Outlook for continuing growth remains positive



* underlying figures are stated before the charge for share options of £81,000 (2008: nil)



Michael Davis, Chairman of Driver, commenting on the results, said,



'I am pleased to report on a successful first half for Driver Group. Despite the difficult economic backdrop, the business continues to grow, benefiting from its broad geographic spread of activities and ability to service many different sub-sectors of the construction and engineering industries. This is a direct result of the growth strategy we have applied over the last few years. The half year results also benefited from a full six months' contribution from CMC, which was acquired in February 2008.


As we look ahead, our focus remains on developing our expert witness and litigation support services, particularly in London, the United Arab Emirates and Oman, where there continue to be substantial opportunities. Our growth plans are underpinned by our ability to operate throughout all sub-sectors within the construction and engineering industries, from civil engineering, power, oil & gas and process. We therefore remain confident that the Group is well placed to achieve further growth.'





Enquiries:


Driver Group plc

Steve Driver, Chief Executive

Dave Webster, Chief Operating Officer

T: 020 7448 1000 (today)

T: 01706 223999


Colin White, Finance Director





Zeus Capital Limited

Alex Clarkson

T: 0161 831 1512

  (Nomad)

Nick Cowles






W H Ireland Limited

Gary Marshall

T: 0113 394 6600

  (Broker)






Biddicks

Katie Tzouliadis

T: 020 7448 1000







CHAIRMAN'S STATEMENT


Introduction


I am pleased to report on a successful first half for Driver Group. Despite the difficult economic backdrop, the business continues to grow, benefiting from its broad geographic spread of activities and ability to service many different sub-sectors of the construction and engineering industries. This is a direct result of the growth strategy we have applied over the last few years. The half year results also benefited from a full six months' contribution from CMC, which was acquired in February 2008.


Of particular note in the period has been our substantial growth in the Middle East, which was supported by the opening of our office in Oman, in the summer last year. As expected, the reduction in the commercial construction market has impacted certain parts of the business, however, our London office, where we undertake the majority of our litigious support services and expert appointments has experienced further growth in demand. 


Financial Review


Revenue for the six months to 31 March 2009 grew strongly, increasing by 49% to £11.25m over the corresponding period last year (2008: £7.53m), with the year-on-year increase boosted by the contribution from CMC. Underlying pre-tax profits, before the charge for share options, rose by 41% to £1.30m (2008: £0.92m). 


After a charge for share options of £81,000 (2008: nil), pre-tax profits showed an increase of 33% at £1.22m (2008: £0.92m). The share option charge reflects the cost of new share options which have been issued over the last eighteen months. The profit was after having taken a charge of £0.2m in connection with bad and doubtful debts. The relative position of Sterling against the Group's major trading currencies (Euros, United Arab Emirate Dirhams and Omani Riyals) is now more of a factor on results given the increasing proportion of overseas revenues.


The reduction in the Group's effective tax rate to 25% (2008: 30%) reflects the benefit of a lower local tax rate in Oman. Underlying earnings per share, before the charge for share options, rose by 52% to 4.1p (2008: 2.7p) and, after the charge, the increase in reported earnings was 40% at 3.8p (2008: 2.7p). 


Debtors increased by £1.00m (2008: £0.82m) over the period. This reflected the increase in revenues and, in particular, the growth in revenues internationally, especially from the Middle East where credit terms are significantly longer than in the UK. Cash generated from operations in the period was just £125,000 lower than the prior period, at £225,000 (2008: £350,000). Net borrowings at the 31 March 2009 were £0.93m (31 March 2008: £1.04m). 


Dividend


The Board is pleased to declare an interim dividend of 1.0p per share (2008: 0.95p), representing a 5% increase over last year and reflecting the Group's good performance. The dividend will be paid on 7 August 2009 to shareholders on the register at the close of business on 19 June 2009.  


Trading performance


Driver's continued growth in revenue and profit in these more testing economic times reflects the benefits of the Group's strategy of developing its presence outside the UK, into the Middle East and internationally, and broadening the range of its consultancy services.   

 

Growth in the period has been driven by our expansion in the Middle East, which continues to be very strong. In the UK, as anticipated, results were impacted by the reduction in commercial building activity and the time required developing the business in other sectors, including energy and power. However, the London office generated a 66% increase in revenue and 65% improvement in profit, compared with the prior period. This is a result of a high proportion of the London office's income arising from dispute and litigation services as well as a reflection of the large number of infrastructure projects in the region. We are pleased with the progress of our international business outside the Middle East, in Europe, the Far East, and the Americas. This business is serviced from the UK and our growth in profits has been mainly the result of the expansion of our expert witness services. Results overall from Driver Consult UK, compared with the comparative period, showed some decline in revenue and profits to £6.0m and £1.2m respectively, against £6.4m and £1.4m in the prior year period.


Our overseas performance has been excellent. Results from the Middle East during the period reflect our hard work over recent years to develop our presence in the region. Revenue increased to £3.1m (2008: £0.9m) and profits increased to £0.7m (2008: £0.1m). The profit margin showed a substantial improvement, rising from 15% to 24%. This largely reflected our planned shift away from project services into dispute and litigious services and our ability to scale up efficiently from the existing cost base. We continue to invest in the Middle East, particularly in Oman, which represents a relatively new market for us. Over the period, we recruited additional fee-earners and, at the end of the half year, the average number of fee- earners in the Middle East stood at 37 (from 33 at 30 September 2008). A far greater proportion of them are involved in consultancy and dispute resolution work than was the case in 2008. 


We reported last year that staff utilisation had increased and was back at its optimum level following the previous recruitment drive. I am pleased to report that these levels were maintained over the first half.


Whilst the UK and Dubai commercial building sectors have declined, and our services to live projects in these sectors have reduced accordingly, the large infrastructure and energy projects for the UKAbu Dhabi and Oman, which are either in the planning phase or in progress, continue to offer opportunities for our project consultancy services. It is also pleasing to report that the anticipated cross-referrals between Driver Consult and CMC, which started last year, continue to build and we are seeing referrals spread from the UK market into the Middle East


We continue to anticipate strong demand for both our specialist commercial services and our dispute resolution services over the next few years, particularly in London, the Middle East and the wider international market, and have a structure in place to accommodate this growth.


Outlook


As we look ahead, our focus remains on developing our expert witness and litigation support services, particularly in London, the United Arab Emirates and Oman, where there continue to be substantial opportunities. We also see opportunities to leverage our existing relationships to develop our presence in other geographic regions. We are initiating actions to position ourselves for the likely increase in work in the power and energy markets although we do not anticipate that this will benefit results in the current financial year. 


Our growth plans are underpinned by our ability to operate throughout all sub-sectors within the construction and engineering industries, from civil engineering, power, oil & gas and process. With the addition of CMC, we can now offer services throughout the full cycle of a construction or engineering project, from feasibility to closure. While the current economic environment presents more challenges to the Group, we remain confident that the business is well placed to continue to grow.  


Michael Davis

Chairman

 

CONSOLIDATED INCOME STATEMENT (UNAUDITED)

For the six months ended 31 March 2009



6 months ended

31 March 2009

£'000


6 months 

ended 

31 March 2008

£'000

Year 

ended 

30 Sept

 2008 

£'000

REVENUE

11,253

7,533

18,149

Cost of Sales

(7,292)

(4,544)

(11,660)





GROSS PROFIT

3,961

2,989

6,489

Administrative expenses

(2,807)

(2,120)

(4,581)

Other operating income

77

64

120





OPERATING PROFIT




Before share-based payment

1,312

933

2,125


Share-based payment

(81)

-

(97)



1,231

933

2,028

Finance income

9

4

14

Finance costs

(19)

(19)

(62)





PROFIT BEFORE TAXATION

1,221

918

1,980

Taxation

(300)

(275)

(571)





PROFIT FOR THE PERIOD

921

643

1,409









(Loss) / Profit attributable to minority interests

(11)

4

11

Profit attributable to equity shareholders

932

639

1,398






921

643

1,409





Basic earnings per share (pence) (note 5)

3.8p

2.7p

5.8p





Diluted earnings per share (pence) (note 5)

3.8p

2.7p

5.8p










The profit for the period arises from the Group's continuing operations.




 

CONSOLIDATED BALANCE SHEET (UNAUDITED)

31 March 2009



31 March

2009

£'000

31 March

2008

£'000

30 Sept

2008

£'000

NON-CURRENT ASSETS




Goodwill

2,356

2,356

2,356

Property, plant and equipment

3,194

3,083

3,059

Deferred tax asset

61

26

37






5,611

5,465

5,452





CURRENT ASSETS




Trade and other receivables

5,886

4,768

4,823

Cash and cash equivalents

422

720

1,054






6,308

5,488

5,877





TOTAL ASSETS

11,919

10,953

11,329





CURRENT LIABILITIES




Borrowings

(292)

(244)

(219)

Trade and other payables

(2,192)

(1,955)

(2,380)

Current tax payable

(447)

(495)

(361)






(2,931)

(2,694)

(2,960)





NON-CURRENT LIABILITIES




Borrowings

(1,057)

(1,513)

(1,000)

Deferred tax liabilities

(297)

(335)

(309)






(1,354)

(1,848)

(1,309)









TOTAL LIABILITIES

(4,285)

(4,542)

(4,269)









NET ASSETS

7,634

6,411

7,060









SHAREHOLDERS' EQUITY




Share capital

106

106

106

Share premium

2,649

2,649

2,649

Merger reserve

1,493

1,493

1,493

Currency translation reserve

66

6

-

Capital redemption reserve

18

18

18

Other reserves

268

90

187

Retained earnings

4,276

3,287

3,838

Own shares

(1,242)

(1,242)

(1,242)





TOTAL SHAREHOLDERS' EQUITY

7,634

6,407

7,049





MINORITY INTEREST IN EQUITY

-

4

11





TOTAL EQUITY

7,634

6,411

7,060





 

CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)

For the six months ended 31 March 2009



6 months ended

31 March

2009

£'000

6 months ended

31 March

2008

£'000

Year

Ended

30 Sept

2008

£'000





CASH FLOWS FROM OPERATING ACTIVIES








Profit before taxation

1,221

918

1,980





Adjustments for:




Depreciation

98

82

170

Exchange adjustments

-

-

(65)

Finance income

(9)

(4)

(14)

Finance costs

19

19

62

Share-based payment 

81

-

97





OPERATING CASH FLOW BEFORE CHANGES IN WORKING CAPITAL AND PROVISIONS

1,410

1,015

2,230





Increase in trade and other receivables

(997)

(821)

(875)

(Decrease) / Increase in trade and other payables

(188)

156

602





CASH GENERATED FROM OPERATIONS

225

350

1,957

Tax paid

(250)

(96)

(563)





NET CASH (OUTFLOW) / INFLOW

FROM OPERATING ACTIVITIES


(25)


254


1,394





CASH FLOWS FROM INVESTING ACTIVITIES




Interest received

9

4

14

Acquisition of subsidiary net of cash acquired

-

(1,003)

(1,003)

Acquisition of property, plant and equipment

(233)

(46)

(111)





NET CASH OUTFLOW FROM INVESTING ACTIVITIES

(224)

(1,045)

(1,100)





CASH FLOWS FROM FINANCING ACTIVITIES




Interest paid

(19)

(19)

(62)

Borrowings

130

1,129

590

Payment of equity dividends

(494)

(454)

(688)





NET CASH (OUTFLOW) / INFLOW 

FROM FINANCING ACTIVITIES


(383)


656


(160)





Net (decrease) / increase in cash and cash equivalents

(632)

(135)

134

Effect of foreign exchange on cash and cash equivalents

-

-

65

Cash and cash equivalents at start of period

1,054

855

855





CASH AND CASH EQUIVALENTS AT END OF PERIOD

422

720

1,054





 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

For the six months ended 31 March 2009

 

 

 



Share

Capital

£'000


Share

Premium

£'000


Merger

Reserve

£'000

Other
 reserves
(1)

£'000


Retained
 earnings

£'000


Own
 shares

£'000



Total

£'000


Minority interest

£'000


Total

Equity

£'000

Opening balance

At 1 October 2008



106


2,649


1,493


205


3,838


(1,242)


7,049


11


7,060


Exchange adjustments



-


-


-


66


-

   

-


66


-

   

 66


NET INCOME RECOGNISED

DIRECTLY IN EQUITY



-


-


-


66


-


  -


66


-


66

Profit for the period


-

-

-

-

932

  -

932

(11)

921


TOTAL RECOGNISED 

INCOME AND EXPENSE



-


-


-


66


932


-


998


(11)


987

Dividends


-

-

-

-

(494)

-

(494)

-

(494)

Share-based payment


-

-

-

81

-

-

81

-

81


CLOSING BALANCE 

AT 31 MARCH 2009



106


2,649


1,493


352


4,276


(1,242)


7,634


-


7,634








For the six months ended 31 March 2008









Share

Capital

£'000


Share

Premium

£'000


Merger

Reserve

£'000

Other
 reserves
(1)

£'000


Retained
 earnings

£'000


Own
 shares

£'000



Total

£'000


Minority interest

£'000


Total

Equity

£'000

Opening balance

At 1 October 2007



99


2,649


-


112


3,086


(1,242)


4,704


16


4,720


Exchange adjustments



-


-


-


5


-


-


5


-


5


NET INCOME RECOGNISED

DIRECTLY IN EQUITY



-


-


-


5


-


-


5


-


5

Profit for the period


-

-

-

-

639

-

639

4

643


TOTAL RECOGNISED 

INCOME AND EXPENSE



-


-


-


5


639


-


644


4


648

Issue of new shares


7

-

1,493

-

-

-

1,500

-

1,500

Dividends


-

-

-

-

(438)

-

(438)

(16)

(454)

Share-based payment


-

-

-

(3)

-

-

(3)

-

(3)


CLOSING BALANCE 

AT 31 MARCH 2008



106


2,649


1,493


114


3,287


(1,242)


6,407


4


6,411

For the year ended 30 September 2008




Share

Capital

£'000


Share

Premium

£'000


Merger

Reserve

£'000

Other
 reserve
s

(1)

£'000


Retained
 earnings

£'000


Own
 shares

£'000



Total

£'000


Minority interest

£'000


Total

Equity

£'000

Opening balance

At 1 October 2007



99


2,649


-


112


3,086


(1,242)


4,704


16


4,720


Deferred tax credit on property revaluation



-


-


-


-


26


-


26


-


26


NET INCOME RECOGNISED

DIRECTLY IN EQUITY



-


-


-


-


26


-


26


-


26


Profit for the period



-


-


-


-


1,398


-


1,398


11


1,409


TOTAL RECOGNISED 

INCOME AND EXPENSE



-


-


-


-


1,424


-


1,424


11


1,435

Issue of new shares


7

-

1,493

-

-

-

1,500

-

1,500

Dividends


-

-

-

-

(672)

-

(672)

(16)

(688)

Share-based payment


-

-

-

93

-

-

93

-

93


CLOSING BALANCE 

AT 30 SEPT 2008



106


2,649


1,493


205


3,838


(1,242)


7,049


11


7,060


(1) 'Other reserves' combine the translation reserve, capital redemption reserve and other reserves. 

 

NOTES TO THE INTERIM FINANCIAL STATEMENTS



1  BASIS OF PREPARATION


The financial information presented in this documentation has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards ('IFRS') and International Financial Reporting Interpretations Committee ('IFRIC') interpretations that are expected to be applicable for the year ending 30 September 2009. These are subject to ongoing review and endorsement by the European Commission, and possible amendment by the International Accounting Standards Board ('IASB'), and are therefore subject to possible change. 


The financial information in this statement relating to the six months ended 31 March 2009 and the six months ended 31 March 2008 has not been audited, but has been reviewed, pursuant to guidance issued by the Auditing Practices Board. The comparative figures for the year ended 30 September 2008 do not amount to full statutory accounts within the meaning of section 435 of the Companies Act 2006. Those accounts have been reported on by the Group's auditors and delivered to the Registrar of Companies. The audit report was unqualified, did not include references to matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.



2    TAXATION

 

      The tax charge on the profit for the half-year ended 31 March 2009 is based on an estimated tax rate for

      the year ending 30 September 2009.


3   DIVIDEND


It is proposed that an interim dividend for the half-year ended 31 March 2009 of 1.00p per share amounting to £246,788 be paid on 7 August 2009 to all the shareholders on the register as at 19 June 2009 other than the Driver Group Employee Benefit Trust.  



4.  SUMMARY SEGMENTAL ANALYSIS 

Reportable segments

For management purposes, the Group is organised into three operating divisions - Driver Consult UK, Driver Consult Middle East and Commercial Management Consultants (CMC). These divisions are the basis on which the Group is structured and managed, based on its geographic structure and principal services offered.

    

    


Summary segment information about these reportable segments is presented below.

Six months ended 31 March 2009


Continuing Operations

 

Driver Consult UK

£'000

Driver Consult Middle

 East

£'000



CMC

£'000



Eliminations

£'000



Unallocated

£'000



Consolidated

£'000

Total external revenue

5,903

3,044

2,306

-

-

11,253

Inter-segment revenue

124

56

-

(180)

-

-


________

________

_______

________

________

________

Total revenue

6,027

3,100

2,306

(180)

-

11,253


                 

                 

               

                 

                 

                 

Segmental profit


1,160

741

209

-

-

2,110

Unallocated corporate expenses








(798)


  (798)

Share-based payment






(81)

  (81)


________

________

_______

_________

_________

_________  

Operating profit

1,160

741

209

-

(879)

  1,231

Investment income





  9  

  9

Finance costs





(19)

  (19)


________

________

_______

_________

_________

_________

Profit before tax

   1,160  

   741      

   209   

  -  

   (889)   

    1,221


                    

                 

               

                  

                    

                 


Six months ended 31 March 2008


Continuing Operations


Driver Consult UK

£'000

Driver Consult Middle

 East

£'000



CMC

£'000



Eliminations

£'000



Unallocated

£'000



Consolidated

£'000

Total external revenue

6,319

902

312

-

-

7,533

Inter-segment revenue

32

-

-

(32)

-

-


______

________

_______

_________

_________

_________

Total revenue

6,351

902

312

(32)

-

7,533


            

            

           

               

               

                

Segmental profit


1,494

131

32

-

-

1,657

Unallocated corporate expenses



_______



_______



_______



_________


(724)

_________


                    (724)

            _________


Operating profit

1,494

131

32

-

(724)

933

Investment income





  4

4

Finance costs





(19)

                      (19)


   _______   

_______

_______

_________

_________

_________

Profit before tax

   1,494  

   131

   32

   -

  (739)

   918


            

            

           

               

               

                

For the year ended 30 September 2008


Continuing Operations


Driver Consult UK

£'000

Driver Consult Middle

 East

£'000

CMC

£'000

Eliminations

£'000

Unallocated

£'000

Consolidated

£'000

Total external revenue

12,628

3,096

2,425

-

-

18,149

Inter-segment revenue

305

12

99

(416)

-

-


_______

_________

_____

_________

_________

_________

Total revenue

12,933

             

3,108

                

2,524

        

(416)

                

-

                

18,149

                

Segmental profit

2,984

537

354

-

-

3,875

Unallocated corporate expenses







(1,750)


(1,750)

Share-based payment





(97)

(97)


________

_________

____

_________

_________

_________


Operating profit


2,984


537


354


-


(1,847)


2,028

Investment income





  14

14

Finance costs





(62)

(62)


           

_________

_____

_________

_________

_________

Profit before tax

   2,984   

   537

   354

   -

   (1,895)

   1,980



Inter-segment sales are charged at prevailing market rates.



5    EARNINGS PER SHARE (UNAUDITED)




6 months

Ended

31 March

2009

£'000

6 months

Ended

31 March

2008

£'000

Year

Ended

30 Sept

2008

£'000





Profit for the financial period

932

639

1,398

Share-based payments after tax

81

-

122





Profit for the financial period before share-based payments


1,013


639


1,520





Weighted average number of shares:




Ordinary shares in issue

26,379,416

25,011,796

25,693,357

Shares held by EBT

(1,700,645)

(1,700,645)

(1,700,645)





Basic weighted average number of shares

24,678,771

23,311,151

23,992,712

Issuable on conversion of options

-

124,720

-

Issuable on conversion of warrants

-

99,457

3,276









Diluted weighted average number of shares

24,678,771

23,535,328

23,995,988





Basic earnings per share before exceptional items

and share-based payments


4.1p


2.7p


6.3p





Basic earnings per share (pence)

3.8p

2.7p

5.8p





Diluted earnings per share (pence)

3.8p

2.7p

5.8p







Independent Review Report to Driver Group plc


Introduction


We have been engaged by the company to review the condensed set of financial statements in the interim report for the six months ended 31 March 2009 which comprises the Consolidated Income Statement, the Consolidated Statement of Changes in Equity, the Consolidated Balance Sheet, the Consolidated Cash Flow Statement, and the related explanatory notes. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.  


Directors' responsibilities


The interim report, including the financial information contained therein, is the responsibility of and has been approved by the directors. The directors are responsible for preparing the interim report in accordance with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market which require that the half-yearly report be presented and prepared in a form consistent with that which will be adopted in the company's annual accounts having regard to the accounting standards applicable to such annual accounts.  


Our responsibility


Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the interim report based on our review.  


Our report has been prepared in accordance with the terms of our engagement to assist the company in meeting the requirements of the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market, and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.  


Scope of review


We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity,' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.  


Conclusion


Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the interim report for the six months ended 31 March 2009 is not prepared, in all material respects, in accordance with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market.  


BDO Stoy Hayward LLP

Chartered Accountants and Registered Auditors

Manchester

2 June 2009


This information is provided by RNS
The company news service from the London Stock Exchange
 
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