LONDON (Alliance News) - Construction consultancy Driver Group PLC on Tuesday said its swung to a loss in the first half of its financial year due to restructuring costs and contract delays which hit its Africa, Asia and Middle East business, as the group said it expects to see an improvement in the second half.
Driver said its pretax loss in the first half to the end of March was GBP2.1 million, compared to a GBP1.3 million profit a year earlier. Administrative expenses surged up to GBP6.1 million from GBP3.5 million, as the company increased its headcount by 30% over the year, and it was hit by one-off costs related to the closure of its office in Houston and the restructuring of its Africa, Asia and Middle East regional operations.
Revenue growth from the Americas, Europe and the UK was in line with Driver's expectations in the half, but the Africa, Asia and Middle East business posted a loss in the half due to lower revenue and higher costs. The restructuring of the business is expected to benefit the company in the second half, it said.
Back in February, Driver shares had plunged after it said contract delays and cancellations in its Africa, Asia and Middle East business meant it will miss its expectations for the year. Some projects, particularly in Oman, but also to a lesser extent in Hong Kong and Singapore, were delayed or suspended and, in a small number of instances, cancelled, the company said.
The company said the acquisition of Initiate Consulting Ltd, a construction management consultancy, has been completed and integrated into the business, adding it is performing in line with its expectations so far.
Driver said it would maintain its interim dividend at 0.6 pence per share.
"The first half of financial year 2014/2015 has been a period of investment and change for the group, as we recognised the need to transition from the delivery of one growth strategy to the implementation of our new plan to take the business forward," said Steve Norris, Driver's chairman.
Shares in Driver were down 4.4% to 55.00 pence on Tuesday.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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Driver Grp (DRV)