Half Yearly Report

RNS Number : 2100G

Driver Group plc

27 June 2012

 

27 June 2012  

DRIVER GROUP PLC

("Driver" or "the Group")

Half Yearly Report

For the six months ended 31 March 2012

Key Points

	6 months ended  31 March 2012 £000	6 months ended 31 March 2011 £000	Change 31 March 2012 to 31 March 2011	6 months ended 30 September 2011 £000	Change 31 March 2012 to 30 September 2011	Year ended 30 September 2011 £000
Revenue	10,640	7,893	2,747	9,472	1,168	17,365
Gross Profit %	30.1%	25.9%	4.2%	27.6%	2.5%	26.8%
Underlying* profit / (loss) before tax	799	(48)	847	596	203	548
Exceptional items and share-based payment charge	(68)	(92)	24	(107)	39	(199)
Profit / (loss) before tax	731	(140)	871	489	242	349
Profit / (loss) after tax	619	(116)	735	384	235	268
Basic earnings / (loss) per share	2.3p	(0.6)p	2.9p	1.5p	0.8p	0.9p
Underlying* earnings / (loss) per share	2.6p	(0.2)p	2.8p	1.9p	0.7p	1.7p
Proposed dividend per share	0.3p	Nil	0.3p	0.5p	(0.2p)	0.5p
Net cash / (borrowings) at period end**	924	(603)	1,527	572	352	572
Access to available funds***	3,190	1,986	1,204	3,078	112	3,078
Total Equity	7,255	6,238	1,017	6,700	555	6,700

*Underlying figures are stated before the share-based payment charge and exceptional items (note 6).

**Net cash / (borrowings) consist of cash equivalents, bank loans and finance leases.

***Available funds include net undrawn bank facilities plus other cash balances.

W Alan McClue, Chairman of Driver Group, said:

"The period continued the positive trends seen in the second half of our last financial year and was another period in which we achieved all of our objectives.  The business entered the second half of 2012 in good shape resulting in the Group issuing a further positive trading update. In addition, we were delighted to announce the completion of the acquisition of Trett Consulting ("Trett") in May 2012 and I continue to be very confident and excited by the opportunities that exist for the Group."

Enquiries:

Driver Group plc
David Webster, Chief Executive	Tel: [phone]
Damien McDonald, Group Finance Director
Alan McClue, Non-executive Chairman	Tel: [phone]
Charles Stanley Securities Nominated Adviser & Broker
Marc Milmo / Carl Holmes	Tel: [phone]

INTRODUCTION

I am pleased to report on the Group's performance for the first half of financial year 2011/2012. The period continued the positive trends seen in the second half of our last financial year and was another period in which we achieved all of our objectives including growth in revenues, profits and cash position. The strength of our trading and our continued optimism for the business allows us to return to the payment of an interim dividend.

In my statement in the Annual Report & Accounts for 2010/2011, I said that we would develop our operations in Africa, Qatar and the Power & Process market in the UK whilst maintaining a stable environment in the remaining businesses. Building on performance in that year, I am pleased to report that we have delivered on each of these objectives. Indeed the Middle East outperformed our expectations and contributed to us issuing two positive trading updates in the period.

FINANCIAL RESULTS

Revenue for the six months ended 31 March 2012 increased by 35% to £10.6m compared with £7.9m for the same period in 2011 and was up 12% compared with the second half revenue for 2011 of £9.5m.

The principal increase in revenue was in the Middle East where revenue grew by 48% to £2.9m (2011: £2.0m; second half 2011: £2.5m). Revenue from Europe increased 22% to £6.8m (2011: £5.6m) and is 5% higher than the second half revenue of 2011 (£6.5m). Africa revenue increased to £0.92m compared to £0.35m in the first half of 2011 and £0.47m in the second half of 2011.

The Group reported an underlying pre-tax profit before the charge for share options of £799,000.  This compared with an underlying pre-tax loss of £48,000 for the first half of 2011 and an underlying pre-tax profit of £596,000 in the second half of last year. After a charge for share options of £68,000 (2011: £44,000) the pre-tax profit for the six months ended 31 March 2012 was £731,000 compared with a pre-tax loss of £140,000 after the share option charge and exceptional items of £48,000 for the same period in 2011.

The Group's effective tax rate has reduced to 15% (2011: full year 23%) reflecting improved profits from overseas operations which benefit from lower tax rates.  The underlying earnings per share, before the share option charge was 2.6p (2011: loss per share before share options and exceptional items 0.2p).  After the share option charge the earnings per share was 2.3p (2011: loss per share 0.6p after share options and exceptional items).

As a result of the continued revenue growth, trade and other receivables increased by £0.74m over the first half (2011: £0.54m) and trade and other payables increased by £0.48m (2011: £0.37m). Net cash inflow from operations of £0.52m compares with an outflow of £0.11m in the corresponding period last year reflecting a return to profitability.

The Group had net cash at 31 March 2012 of £0.9m compared to net borrowings at 31 March 2011 of £0.6m and net cash at 30 September 2011 of £0.6m.

DIVIDEND

In view of the first half trading results, the Board are recommending an interim dividend for 2012 of 0.3 pence per share (2011: nil) which will be paid on 3 August 2012 to shareholders on the register at the close of business on 6 July 2012.

TRADING PERFORMANCE

The Group's performance continues to progress against all key parameters when compared to the second half of 2011. Revenue is 12% higher, underlying pre tax profit is 34% higher and our net cash position has improved by 62% in the first six months of our financial year.

This has been achieved in a trading environment that continues to be challenging with significant macro-economic uncertainty across the world and continued volatility in construction markets. This is down to the strength of our personnel and our continued focus on cost control and the development of targeted service streams and additional sectors.

Our European business is performing as expected. Revenues have increased by 5% on the second half of 2011. As we have expanded our reach and offering we have increased our cost base in this region which has enabled us to position the business for the continued growth being experienced in the Power & Process sector. This alignment of our business for the anticipated increase in revenues from Power & Process has resulted in margins in the period from our European business being reduced by 4%.

The Middle East region has outperformed our expectations as set out in previous trading updates. The restructuring and refocusing that was implemented during the middle of the last financial year has been a success. Revenues are up 17% on the second half of 2011 and profits are up 160% on the same period. This has been achieved by focusing the UAE business on the dispute market, the continued development of the Oman business across all service offerings and the commencement of more meaningful activity in the Qatar office. Our focus on expert witness work across the region has also contributed to the success.

Africa has developed well and is also ahead of expectations, as previously reported. Revenue is up 94% on the second half of last year and the £96k loss in the second half of 2011 has been converted to a £93k profit in the first half of 2012. This has been brought about by work in the PPP market, our planning services and some significant expert witness appointments.

OUTLOOK

The business entered the second half of 2012 in good shape resulting in the Group issuing a further positive trading update. In addition, we were delighted to announce the completion of the acquisition of Trett Consulting ("Trett") in May 2012.

This acquisition of Trett now ensures that we have a global footprint with offices in UK, Mainland Europe, Middle East, Africa, Asia Pacific and North America. Through our global network of offices we are now able to offer the three key service streams of the Group in Project Services, Dispute & Contract Advice and Expert Witness & Litigation Support. The potential to leverage these services and our client base across the network of offices provides the potential for significant growth over the medium to longer term.

The integration of Trett is progressing as planned and we anticipate having fully integrated the Trett business by the end of the financial year. This will allow us to build on the progress we have already made with the Trett business and therefore enter the following financial year set to develop on the opportunities available to our enlarged business. An important objective will be the development of our oil, gas and petrochemical expertise across the network of oil and gas hubs in Houston, UAE and Kuala Lumpur/Singapore.

We have within the last few days recently launched a fresh branding for the Group's expert witness service under the brand name of - 'Diales'. The aim of this is to promote a higher level of focus on the expert witnesses we have within the Group and enhance our ability to secure appointments on a larger number of high value international arbitrations.

In respect of the current financial year our secured revenues and revenue expected to be secured and delivered in the remainder of the year, give the Board a high level of confidence in the outlook for this financial year.

The combination of Trett and Driver, two of the strongest brands in the dispute and advisory market, provides the Group with excellent opportunities for strong growth on a global basis. We are already starting to see the benefits of this acquisition, as evidenced by the previously announced contract with one of the world's largest independent oil and gas exploration and production companies. Notwithstanding the economic backdrop and the continued challenges we face as we operate in this environment, I continue to be very confident and excited by the opportunities that exist for the Group and look forward to working with our staff, both Driver and Trett, to continue growing the revenue and profitability of the business.

W. Alan McClue

Non-Executive Chairman

26 June 2012

	6 months ended 31 March 2012 £000	6 months ended 31 March 2011 £000	Year ended 30 September 2011 £000
REVENUE	10,640	7,893	17,365
Cost of sales	(7,439)	(5,849)	(12,704)
GROSS PROFIT	3,201	2,044	4,661
Administrative expenses	(2,548)	(2,234)	(4,424)
Other operating income	75	57	123
Operating profit / (loss) before share-based payment charge and exceptional items	796	(41)	559
Exceptional items (note 6)	-	(48)	(125)
Share-based payment charge	(68)	(44)	(74)
OPERATING PROFIT / (LOSS)	728	(133)	360
Finance income	4	-	2
Finance costs	(1)	(7)	(13)
PROFIT / (LOSS) BEFORE TAXATION	731	(140)	349
Tax (expense) / credit (note 2)	(112)	24	(81)
PROFIT / (LOSS) FOR THE PERIOD	619	(116)	268
Profit attributable to non-controlling interests	56	25	40
Profit / (loss) attributable to equity shareholders of the parent	563	(141)	228
	619	(116)	268
Basic earnings / (loss) per share (pence)            (note 5)	2.3p	(0.6)p	0.9p
Diluted earnings / (loss) per share (pence)         (note 5)	2.3p	(0.6)p	0.9p

	6 months ended 31 March 2012 £000	6 months ended 31 March 2011 £000	Year ended 30 September 2011 £000
PROFIT / LOSS FOR THE PERIOD	619	(116)	268
Other comprehensive income:
Exchange differences on translating foreign operations	(17)	5	23
Deferred tax credit on property revaluation	11	-	30
Other comprehensive income for the year net of tax	(6)	5	53
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD	613	(111)	321
Total comprehensive income attributable to:
Owners of the parent	557	(136)	281
Non-controlling interest	56	25	40
	613	(111)	321

	31 March 2012 £000	31 March 2011 £000	30 September 2011 £000
NON-CURRENT ASSETS
Goodwill	2,356	2,356	2,356
Property, plant and equipment	2,093	2,210	2,134
Deferred tax asset	77	-	67
	4,526	4,566	4,557
CURRENT ASSETS
Trade and other receivables	5,579	4,553	4,839
Cash and cash equivalents	940	653	596
Current tax receivable	-	210	-
	6,519	5,416	5,435
TOTAL ASSETS	11,045	9,982	9,992
CURRENT LIABILITIES
Borrowings	(16)	(1,240)	(12)
Trade and other payables	(3,393)	(2,231)	(2,915)
Current tax payable	(171)	-	(131)
	(3,580)	(3,471)	(3,058)
NON-CURRENT LIABILITIES
Borrowings	-	(16)	(12)
Deferred tax liabilities	(210)	(257)	(222)
	(210)	(273)	(234)
TOTAL LIABILITIES	(3,790)	(3,744)	(3,292)
NET ASSETS	7,255	6,238	6,700
SHAREHOLDERS' EQUITY
Share capital	106	106	106
Share premium	2,649	2,649	2,649
Merger reserve	1,493	1,493	1,493
Translation reserve	(33)	(34)	(16)
Capital redemption reserve	18	18	18
Retained earnings	3,892	3,183	3,493
Own shares	(963)	(1,202)	(1,083)
TOTAL SHAREHOLDERS' EQUITY	7,162	6,213	6,660
NON-CONTROLLING INTEREST	93	25	40
TOTAL EQUITY	7,255	6,238	6,700

	6 months ended 31 March 2012 £'000	6 months ended 31 March 2011 £'000	Year ended 30 September 2011 £'000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit / (loss) before taxation	731	(140)	349
Adjustments for:
Depreciation	102	127	236
Exchange adjustments	(12)	9	(10)
Loss on disposal of equipment	-	-	2
Finance income	(4)	-	(2)
Finance costs	1	7	13
Equity settled share-based payment charge	68	44	74
OPERATING CASH FLOW BEFORE CHANGES IN WORKING CAPITAL AND PROVISIONS	886	47	662
Increase in trade and other receivables	(740)	(534)	(825)
Increase in trade and other payables	478	365	1,049
CASH GENERATED / (ABSORBED) BY OPERATIONS	624	(122)	886
Tax (paid) / received	(100)	12	197
NET CASH INFLOW / (OUTFLOW) FROM OPERATING ACTIVITIES	524	(110)	1,083
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received	4	-	2
Acquisition of property, plant and equipment	(61)	(14)	(49)
NET CASH OUTFLOW FROM INVESTING ACTIVITIES	(57)	(14)	(47)
CASH FLOWS FROM FINANCING ACTIVITIES
Interest paid	(1)	(7)	(13)
Decrease in borrowings	(8)	(7)	(1,239)
Payment of equity dividends	(126)	(4)	(4)
NET CASH OUTFLOW FROM FINANCING ACTIVITIES	(135)	(18)	(1,256)
Net increase / (decrease) in cash and cash equivalents	332	(142)	(220)
Effect of foreign exchange on cash and cash equivalents	12	(9)	12
Cash and cash equivalents at start of period	596	804	804
CASH AND CASH EQUIVALENTS AT END OF PERIOD	940	653	596

For the six months ended 31 March 2012:

	Share capital £000	Share premium £000	Merger reserve £000	Other reserves(1) £000	Retained earnings £000	Own shares £000	Total* £000	Non-controlling interest £000	Total Equity £000
Opening balance At 1 October 2011	106	2,649	1,493	2	3,493	(1,083)	6,660	40	6,700
Dividends	-	-	-	-	(123)	-	(123)	(3)	(126)
Share-based payment	-	-	-	-	68	-	68	-	68
Reserve transfer(2)	-	-	-	-	(120)	120	-	-	-
Total profit for the period	-	-	-	-	563	-	563	56	619
Other comprehensive income for the period	-	-	-	(17)	11	-	(6)	-	(6)
CLOSING BALANCE AT 31 MARCH 2012	106	2,649	1,493	(15)	3,892	(963)	7,162	93	7,255
For the six months ended 31 March 2011:
	Share capital £000	Share premium £000	Merger reserve £000	Other reserves(1) £000	Retained earnings £000	Own shares £000	Total* £000	Non-controlling interest £000	Total Equity £000
Opening balance At 1 October 2010	106	2,649	1,493	(21)	3,320	(1,242)	6,305	4	6,309
Dividends	-	-	-	-	-	-	-	(4)	(4)
Share-based payment	-	-	-	-	44	-	44	-	44
Reserve transfer(2)	-	-	-	-	(40)	40	-	-	-
(Loss) / profit for the period	-	-	-	-	(141)	-	(141)	25	(116)
Other comprehensive income for the period	-	-	-	5	-	-	5	-	5
CLOSING BALANCE AT 31 MARCH 2011	106	2,649	1,493	(16)	3,183	(1,202)	6,213	25	6,238

For the year ended 30 September 2011:

	Share capital £000	Share premium £000	Merger reserve £000	Other reserves(1) £000	Retained earnings £000	Own shares £000	Total* £000	Non-controlling interest £000	Total Equity £000
Opening balance At 1 October 2010	106	2,649	1,493	(21)	3,320	(1,242)	6,305	4	6,309
Dividends	-	-	-	-	-	-	-	(4)	(4)
Share-based payment	-	-	-	-	74	-	74	-	74
Reserve transfer	-	-	-	-	(159)	159	-	-	-
Profit for the year	-	-	-	-	228	-	228	40	268
Other comprehensive income for the year	-	-	-	23	30	-	53	-	53
CLOSING BALANCE AT 30 SEPTEMBER 2011	106	2,649	1,493	2	3,493	(1,083)	6,660	40	6,700

*Total equity attributable to the equity shareholders of the parent

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

⁽²⁾     The shortfall between the exercise price of share options granted and the outstanding loan due from the EBT is transferred from own shares to retained earnings over the vesting period.

1    BASIS OF PREPARATION

These condensed consolidated financial statements have been prepared in accordance with IFRSs as adopted by the European Union. They do not include all disclosures that would otherwise be required in a complete set of financial statements and should be read in conjunction with the 2011 Annual Report. The accounting policies used are consistent with those in the most recent annual financial statements. The financial information for the half years ended 31 March 2012 and 31 March 2011 does not constitute statutory accounts within the meaning of Section 434(3) of the Companies Act 2006 and is unaudited.

The annual financial statements of Driver Group plc are prepared in accordance with

IFRSs as adopted by the European Union. The comparative financial information for the year ended 30 September 2011 included within this report does not constitute the full statutory accounts for that period. The statutory Annual Report and Financial Statements for 2011 have been filed with the Registrar of Companies. The Independent Auditor's Report on that Annual Report and Financial Statements for 2011 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

After making enquiries, the directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the half-yearly condensed consolidated financial statements.

2    TAXATION

      The tax expense on the profit for the half-year ended 31 March 2012 is based on the estimated tax rates in the jurisdictions in which the Group operates, for the year ending 30 September 2012.

3    DIVIDEND

      The directors propose an interim dividend for the half-year ended 31 March 2012 of 0.3p per share (2011: nil).

4    SUMMARY SEGMENTAL ANALYSIS

      Reportable segments    

      For management purposes, the Group is organised into three operating divisions: Europe, Middle East and Africa.  These divisions are the basis on which the Group is structured and managed, based on its geographic structure.  In each of the divisions the key service provisions are: quantity surveying, planning / programming, quantum and planning experts, dispute avoidance / resolution, litigation support, contract administration, commercial advice / management and strategic project management.

      Segment information about these reportable segments is presented below.

Six months ended 31 March 2012

	Europe £000	Middle East £000	Africa £000	Eliminations £000	Unallocated £000	Consolidated £000
Total external revenue	6,782	2,939	919	-	-	10,640
Total inter-segment revenue(2)	10	-	-	(10)	-	-
Total revenue	6,792	2,939	919	(10)	-	10,640
Segmental profit	886	595	93	-	-	1,574
Unallocated corporate expenses(1)	-	-	-	-	(778)	(778)
Share-based payment charge	-	-	-	-	(68)	(68)
Exceptional items (note 6)	-	-	-	-	-	-
Operating profit	886	595	93	-	(846)	728
Finance Income	-	-	-	-	4	4
Finance costs	-	-	-	-	(1)	(1)
Profit before tax	886	595	93	-	(843)	731
Tax expense	-	-	-	-	(112)	(112)
Profit for the period	886	595	93	-	(955)	619

Six months ended 31 March 2011

		Continuing Operations
	Europe £000		Middle East £000	Africa £000	Eliminations £000	Unallocated £000	Consolidated £000
Total external revenue	5,561		1,987	345	-	-	7,893
Total inter-segment revenue(2)	77		3	-	(80)	-	-
Total revenue	5,638		1,990	345	(80)	-	7,893
Segmental profit / (loss)	940		(315)	(2)	-	-	623
Unallocated corporate expenses(1)	-		-	-	-	(664)	(664)
Share-based payment charge	-		-	-	-	(44)	(44)
Exceptional items (note 6)	-		-	-	-	(48)	(48)
Operating profit / (loss)	940		(315)	(2)	-	(756)	(133)
Finance costs	-		-	-	-	(7)	(7)
Profit / (loss) before tax	940		(315)	(2)	-	(763)	(140)
Tax expense	-		-	-	-	24	24
Profit / (loss) for the period	940		(315)	(2)	-	(739)	(116)

 

⁽¹⁾         Unallocated costs represent Directors' remuneration, administrative staff, corporate head office costs and expenses associated with AIM.

⁽²⁾         Inter-segment revenue is charged at prevailing market rates.

⁽¹⁾          

4   SUMMARY SEGMENTAL ANALYSIS - continued

Year ended 30 September 2011

		Continuing Operations
	Europe £000		Middle East £000	Africa £000	Eliminations £000	Unallocated £000	Consolidated £000
Total external revenue	12,044		4,503	818	-	-	17,365
Total inter-segment revenue(2)	11		-	-	(11)	-	-
Total revenue	12,055		4,503	818	(11)	-	17,365
Segmental profit / (loss)	2,067		(15)	(98)	-	-	1,954
Unallocated corporate expenses(1)	-		-	-	-	(1,395)	(1,395)
Share-based payment charge	-		-	-	-	(74)	(74)
Exceptional items (note 6)	-		(71)	-	-	(54)	(125)
Operating profit / (loss)	2,067		(86)	(98)	-	(1,523)	360
Finance income	-		-	-	-	2	2
Finance expense	-		-	-	-	(13)	(13)
Profit / (loss) before tax	2,067		(86)	(98)	-	(1,534)	349
Tax expense	-		-	-	-	(81)	(81)
Profit / (loss) for the year	2,067		(86)	(98)	-	(1,615)	268

⁽¹⁾         Unallocated costs represent Directors' remuneration, administrative staff, corporate head office costs and expenses associated with AIM.

⁽²⁾         Inter-segment revenue is charged at prevailing market rates.

5   EARNINGS PER SHARE  

	6 months Ended 31 March 2012 £000	6 months Ended 31 March 2011 £000	Year Ended 30 September 2011 £000
Profit / (loss) for the financial period attributable to equity shareholders	563	(141)	228
Share-based payments charge	68	44	74
Exceptional items (note 6)	-	48	125
Adjusted profit / (loss) for the financial period before share-based payments and exceptional items	631	(49)	427
Weighted average number of shares:
-     Ordinary shares in issue	26,379,416	26,379,416	26,379,416
-     Shares held by EBT	(1,700,645)	(1,700,645)	(1,700,645)
Basic weighted average number of shares	24,678,771	24,678,771	24,678,771
Effects of employee share options	316,339	-	-
Diluted weighted average number of shares	24,995,110	24,678,771	24,678,771
Basic profit / (loss) per share	2.3p	(0.6)p	0.9p
Diluted profit / (loss) per share	2.3p	(0.6)p	0.9p
Adjusted basic profit / (loss) per share before share-based payments and exceptional items	2.6p	(0.2)p	1.7p

Potential ordinary shares relating to 1,925,000 share options (31 March 2011: 3,727,500; 30 September 2011: 4,402,500) have not been included in the calculation of diluted earnings per share as their value has no dilutive effect. 

6   EXCEPTIONAL ITEMS

	6 months Ended 31 March 2012 £000	6 months Ended 31 March 2011 £000	Year Ended 30 September 2011 £000
Severance costs(1)	-	48	125

⁽¹⁾         Severance costs include redundancy, ex-gratia, other discretionary payments and associated legal costs.

 

END

 

 

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