Driver Grp Regulatory News (DRV)

DRV

9 December 2014

DRIVER GROUP PLC

("Driver" or "the Group")

Preliminary Results

For the Year to 30 September 2014

Driver, the global consultancy to the construction and engineering industries is pleased to announce its preliminary results for the year ended 30 September 2014.

Highlights

· Another record year for the Group

· Revenue up 7% with growth in the following regions:

- Asia Pacific up 102%

- Europe up 6%

- Middle East up 7%

· Underlying* profit before tax £3.45m (2013: £3.37m); Profit before tax from continuing operations £3.06m (2013: £2.89m)

· Reported earnings per share up 4% at 8.6 pence (2013: 8.3 pence)

· Increased final dividend of 1.05p (2013: 1.0p) giving an increase of 10% to the full year dividend of 1.65p (2013: 1.5p)

· Strengthened service offerings in core business and invested in the business in areas of the Company where significant growth can be achieved

· Established Joint Venture agreements with MHPM Project Managers in Canada and the Middle East

· Post year end, strategic acquisition of initiate Consulting to provide programming and project management offering in the infrastructure sector

· Post year end appointed Steve Norris as Non-executive Director

Alan McClue, Non-Executive Chairman of Driver, commenting on the results said:

"I am pleased to report on a further year of growth for the Group; a year in which revenue and profits continued to increase in line with our planned objectives. We have in the year continued to strengthen our service offerings and invested in the business as we recruited and positioned senior people in parts of our business where we believe we can deliver significant growth."

* Underlying figures are from continuing operations and are stated before the share-based payment costs and amortisation of intangible assets

Enquiries:

CHAIRMAN'S STATEMENT

Introduction

I am pleased to report on a further year of growth for the Group; a year in which revenue and profits continued to increase in line with our planned objectives. We have in the year continued to strengthen our service offerings and invested in the business as we recruited and positioned senior people in parts of our business where we believe we can deliver significant growth. We expect to report on this growth in the second half of 2014 / 2015.

As stated in our Pre Close Trading Update, we ended the year with a very strong performance in Africa, Asia Pacific and Europe. The Middle East, whilst relatively quiet in July and August traded up at normal levels in September. As previously announced we took the decision to close the Houston office and so ended the year with a solid performance from all regions of our continuing operations. This strength in trading and the continued optimism across the business allows us to again recommend an increase in the final dividend.

Headcount and utilisation levels have increased in Africa, Asia Pacific, Europe and the Middle East. We continue to attract and retain high quality staff who provide our market leading service and our employee and sub-consultant headcount as a whole has risen by 9% to 368 (2013: 338). The quality of our service offering is dependent upon the commitment and loyalty of our staff and on behalf of the Board and our shareholders I would like to thank all of our staff for their loyalty and commitment to the Company.

Financial Results

Revenue in our continuing operations for the 12 months to 30 September 2014 increased by 7% to £39.1m (2013: £36.6m) with growth coming from Asia Pacific, Europe and the Middle East. As previously announced, revenue in Africa was adversely affected by the suspension by the South African government of the three PPP hospitals at the start of the financial year.

Underlying* Profit before taxation increased by 2% to £3.5m (2013: £3.4m). After share-based payment costs and amortisation of £392,000 (2013: £482,000) reported profit before taxation increased 6% to £3.1m (2013: £2.9m).

The Group had net borrowings of £0.2m at 30 September 2014 (2013: net cash of £1.1m). However, the second half of the year saw cash generation of over £1.0m. The outflow in the first half was in large part due to the increase in working capital as we grew our overseas businesses, particularly in the Middle East; increased investment and capital expenditure into the business as we positioned the Group for further growth; and the consideration for the acquisition of the businesses in Hong Kong and South Africa.

As a result of issuing new shares, to satisfy share options, during the year underlying* earnings per share was 11.2 pence (2013: 11.4 pence). Reported earnings per share was up 4% at 8.6 pence (2013: 8.3 pence).

Dividend

In view of the sustained profit growth of the Group, the Board proposes a final dividend for 2014 of 1.05p (2013: 1.0p) giving a full year dividend of 1.65p (2013: 1.5p). The final dividend will be paid on 7 April 2015 to shareholders on the register at the close of business on 27 March 2015.

Trading Overview

The Groups performance continues to progress well. Revenue is 7% higher, headcount is up 9%, utilisation levels are better by 3% at 78.8% (2013: 76.7%), underlying* profit before tax has increased by 2% and reported profit before tax has increased by 6%. The strategic investments in Asia Pacific have developed well through the year, particularly in Australia, and revenue in the established regions of Europe and the Middle East also continue to increase. With the closure of our Houston based operation, losses of £0.31m were incurred in this region in the year, which will not continue into the current year.

Trading in Europe accounted for 53% of Group revenue (2013: 54%) and was up 6% on 2013 revenue largely as a result of a strong performance from the Project Services business and its Process division. Profits were at the top end of management expectations and utilisation levels continued to improve; up 0.5 points at 77.2%. During the year, we were particularly pleased to announce our appointment by SABIC UK Petrochemicals Limited to provide Project Control Services on a significant investment to convert their Teesside Plant to take shale gas from USA (SABIC is headquartered in Riyadh, Saudi Arabia, and is one of the world's top 6 petrochemical companies and the largest non-oil company in the Middle East). This appointment is particularly pleasing given the stature of the competition we had to compete against to secure it and the track record we will now develop on projects of this size.

Middle East revenues accounted for 32% of Group revenue (2013: 32%) and were up 7% on 2013. Utilisation levels increased by 0.7 points to a very respectable 85.1%. Growth came largely as a result of the Qatar office and its disputes services but these were at lower fee rates and profit levels than the region experienced in the prior year. This, together with a quieter July and August following the early settlement of work, accounts for a slight drop in profits. We are starting to experience wage inflation pressure across the region and whilst these are coming through in advance of increases in fee rates it is expected that fee rates will increase commensurate with remuneration in the future.

We are delighted by the progress made in Asia Pacific where revenues increased by 102%. The small underlying* loss in the year as a whole was an improvement in management expectations and the region ended the year trading profitably in the second half as the benefits of our investments started to come through. The region now accounts for 9% of Group revenues (5% in 2013). Overall utilisation levels were up 15.9 points at 59.5% with Australia performing best at 80.2%. We are continuing to invest in our Asia Pacific business especially in Hong Kong where we have increased headcount to establish ourselves in the region.

Africa performed in line with management expectations and strengthened through the second half of the year, a period in which we saw double digit profit margins following the slow start in the first half when the South African Government suspended work on the 3 PPP hospitals. As a result, the region accounts for 6% of Group revenues (10% in 2013). The strong performance in the second half was in the main as a result of expanding the dispute and project controls service offerings and the business now has far more breadth to its client base.

As previously announced, we reviewed the performance of the US business based in Houston and discontinued this operation during the year. Although we have ceased trading in the US market, we continue to be able to provide the required support for global clients who are based in the US for projects outside of the US from our other locations. Our Oil & Gas revenues together with associated Petrochemical and Marine revenues now account for 19% of our business and we continue to see this sector as one that will provide the Group with significant growth opportunities.

We have also now appointed a Vice President for Canada and this current financial year will see the start of our joint venture agreement with MHPM Project Leaders in Canada to provide dispute & advisory services across their network of offices in Canada.

Outlook

As referred to in last year's statement, targeted acquisitions will accelerate growth. The Board is therefore delighted with the acquisition of initiate Consulting ("Initiate") announced today and we believe that the programming and project management offering that this business provides, primarily to the rail, aviation and highways sectors will be a significant factor in our strategy for growth. The experience and track record that this business brings to the Group will allow for both the development of Initiate within the UK and across our global footprint whilst also providing the opportunity to leverage our existing project controls and dispute & advisory services.

As part of this acquisition, I welcome Steve Norris to the Group Board as a Non-Executive Director and the Board looks forward to working with Steve as we integrate Initiate into the Group and look to expand our infrastructure capabilities where Steve's considerable experience will be invaluable.

We are also delighted by the extension of our relationship with MHPM Project Leaders with a further joint venture to provide Project Management services across the UAE and Qatar and believe that their world class expertise in this service together with our platform across the Middle East will allow us to secure appointments that would otherwise be beyond our capabilities.

The acquisition of Initiate, the joint ventures with MHPM Project Leaders and recruitment of senior staff into parts of the business where growth opportunities have been identified will ensure that the Group is firmly established to take the business on to the next level. In order to achieve this, we will invest in further resource in the short term in order to ensure the maximum benefit from the momentum created by these events.

The Board is confident that there is the opportunity to press ahead and achieve material business development and growth over the next four years. The executive board, responsible for the operational aspects of the Group and reporting to the Group Board, has been streamlined in order to facilitate a more efficient means of leveraging our staff, services and clients across our global platform and we have made a senior appointment on to this Board to focus on Africa, Asia Pacific and Middle East where we see opportunity for significant growth over the medium term. I am very confident that through the recent acquisition and JV agreement the Group can develop a very strong programming and project management offering to complement its class leading project controls and dispute & advisory services which will result in significant growth in the medium term.

Our plans for the year anticipate investment in the recruitment of fee earning staff, particularly in Africa, Asia Pacific and the Middle East, throughout the year and this will mean that, as last year, our profits and cash inflow will be weighted towards the second half. The current year has started well and is in line with our expectations providing me with a high level of confidence in the outlook for the remainder of this financial year and beyond.

W. Alan McClue

Non-Executive Chairman

CHIEF EXECUTIVE'S REPORT

Introduction

I am delighted to report on another record year for Driver Group with revenue, profits and earnings all up on last year and at historic highest levels. The past year was always envisaged as one to consolidate our position in our target markets given three prior years of significant growth, and I am very pleased that we were able to achieve this, whilst at the same time continuing to deliver an increase in revenue and profits. We also had success in creating opportunities that further strengthen our service offerings. Towards the end of the year being reported on we recruited and have placed in position senior people who will deliver significant growth to the Group; the benefits of which will start to come through in the medium term.

During the year we agreed a Joint Venture with MHPM Project Leaders in Canada to provide dispute & advisory services across their network of Canadian offices starting in Toronto. There was no trading in the year but our Vice President of Canada was appointed in October 2014 and the current financial year will see a full year's contribution to trading.

Towards the end of the year our search for complementary acquisitions was successful and we have today announced the acquisition of initiate Consulting ("Initiate"); a London based programme and project management business serving the rail, aviation and highways sectors. The expertise and gravitas of the people involved in this business will serve the Group well as we look to grow Initiate internationally and leverage our project controls and dispute & advisory business.

Africa, Asia Pacific and Europe performed towards the top end of management expectations and whilst the Middle East had a drop off in revenue in July and August, the final month of the year was back at normal trading levels. The Houston office in America disappointed and we took the decision and decisive action to discontinue the Houston business with effect from 30 September 2014. After careful consideration, we believe that we can continue to deliver our global Oil & Gas offering and to serve our American clients on their projects around the world from our network of offices with strategic visits to the USA when necessary.

We have seen headcount and utilisation levels steadily increase in Africa, Asia Pacific and Europe whilst maintaining levels in the Middle East. We continue to attract and retain high quality staff who provide our market leading service and our employee and sub-consultant headcount as a whole has risen by 9% to 368 (2013: 338). Utilisation levels also increased by 2.1 points to 78.8% (2013: 76.7%).

Revenue in our continuing operations for the 12 months to 30 September 2014 increased by 7% to £39.1m (2013: £36.6m), underlying* Profit before taxation increased by 2% to £3.5m (2013: £3.4m) and Profit before taxation increased by 6% to £3.1m (2013: £2.9m). The Group had net debt of £0.2m at 30 September (2013: net cash of £1.1m). In the second half of the year we had cash inflow of around £1.0m. The outflow in the first half was as a result of increases in working capital primarily in the Middle East and payments for the acquisitions in Hong Kong and South Africa.

Africa

Africa performed in line with expectations with revenue at £2.3m (2013:£3.6m) and profits of £0.1m (2013: £0.4m). This reduction was as a result of the South African Government suspending work on the 3 PPP hospitals at the start of the year and it was not possible to replace this revenue until the second half of the year. In the second half revenues increased by 39% delivering what the Board considers to be acceptable profits of 11.5%. The growth in the second half was as a result of expanding the dispute and project controls service offerings so as not to be overly reliant on the PPP activity and the business now has far more breadth to its client base. The new Managing Director has successfully transitioned into the business and has increased the headcount to 23 (2013: 16) with utilisation levels now very good at 79.8%.

Asia Pacific

Asia Pacific performed slightly ahead of expectations increasing revenues by 102% to £3.4m (2013: £1.7m) and reducing the prior year's loss in 2013 of £0.7m to a small underlying* loss of £0.1m in 2014; the region ended the year trading profitably in the second half. Utilisation levels were up 15.9 points at 59.5% with Australia the best performing office delivering good profits and with utilisation at 80.2%. During the year we also opened a further office in Perth, Australia on the back of client demand in the region. The Hong Kong office started trading on 1 October 2013 and has developed well in the expert witness and training markets, ending the year with 8 staff generally through forward recruiting and hence a low utilisation level for the office.

Europe

Trading in Europe consolidated with revenue up 6% at £20.8m (2013: £19.6m) largely as a result of the Project Services business and its Process division. Profits were at the top end of management expectations with average fee rates up 7% and utilisation levels continued to improve; up 0.5 points at 77.2% (2013: 76.7%). During the year we were particularly pleased to announce our appointment by SABIC UK Petrochemicals Limited to provide Project Control Services on a significant investment to convert their Teesside Plant to take shale gas from USA (SABIC are headquartered in Riyadh, Saudi Arabia, is one of the world's top 6 petrochemical companies and the largest non-oil company in the Middle East). This appointment is particularly pleasing given the stature of the competition we had to compete against to secure it and the track record we will now develop on projects of this size.

Middle East

Middle East trading also consolidated with revenues up 7% at £12.6m (2013: £11.8m). Utilisation levels increased by 0.7 points to a very respectable 85.1%. Growth came largely as a result of the Qatar office and its disputes services but these were at lower fee rates (8% down in the year across the region) than the region experienced in the prior year. This, together with a quieter couple of months over the summer following the early settlement of work, accounts for a drop in profits to what is still a respectable 23% (2013: 27%). We are starting to experience pressure to increase remuneration levels across the region as a result of competition to recruit good quality staff and whilst these are coming through in advance of increases in fee rates it is expected that fee rates will increase commensurate with remuneration.

Outlook

Between 2010 and 2013 we doubled the size of the business during a very challenging economic climate whilst continuing to deliver increasing levels of profit. In 2014 we consolidated this position. Last year we also worked hard to create the conditions and structure needed to embark on a new period of growth and the benefits are starting to accrue. The acquisition of Initiate will allow the Group to develop programming and project management services in the infrastructure sector across the UK, where the infrastructure spend is significant, to other geographical regions in which the Group operates, such as Africa and the Middle East, where the aviation, rail and highways sectors provide substantial opportunities. We can further leverage our existing project controls and dispute & advisory business into this sector on the back of Initiates' offering and client base. I am very excited about the appointment of Steve Norris to the Group Board as a Non-Executive Director as part of the Initiate deal, as he brings a wealth of experience in this sector as do a number of senior people in the Initiate business. We also have the opportunity to grow Project Management through the Middle East in our new joint venture with MHPM as their class leading expertise across our regional network provides the opportunities to work on projects that otherwise would be beyond our capability.

At the start of financial year 2014 / 2015, a new executive board reporting to the Group Board through myself has been created aimed at structuring the senior management of the business in order to better facilitate growth through the leveraging of our new acquisition, JV relationships, staff, clients and Group services. This Executive Board, chaired by me as CEO, also consists of the Group Finance Director, three Chief Operating Officers (COO) and the Group Business Development Director. A new senior appointment has been made for the COO role across Africa, Asia Pacific and Middle East as these regions represent a significant part of our growth plans.

I am delighted with these developments and believe that the Group is firmly established with the senior management and skill-set to take the business into the next period of growth. We need to ensure that we gain the maximum benefit from the momentum created by the acquisition of Initiate, our JV agreements and these new senior appointments within the Group. I see the opportunity to press ahead for material business development over the coming four years from this foundation and I am confident that the Group can develop a very strong programming and project management offering to complement its class leading project controls and dispute & advisory services which will lead to significant growth in the medium term. I also see a material element of this growth coming from Asia Pacific where we have worked hard over the last year to create a team of 24 people but where there is also a major opportunity to increase our headcount and presence significantly in this large part of the world. On a smaller scale, our operations in Canada have had a good start and I am confident that with MHPM we will see this region develop to a reasonable sized practice.

As we end the first quarter of the new financial year, I am very happy with the progress we are making and with our plans for the next stage of our growth. We anticipate the first half of the year to be one in which we invest in new staff and structure and, as a result, our profits and cash inflow will be back-end weighted. As we progress through the year, opportunities will present themselves that may require further investment but will be necessary in order to deliver our aspirations to again double the size of this business and I will be looking to make that type of investment in the interest of long term growth in our profit levels.

Dave Webster

Chief Executive Officer

* Underlying figures are from continuing operations and are stated before the share-based payment costs and amortisation of intangible assets

STRATEGIC REPORT - DESCRIPTION OF THE BUSINESS

Driver Group has been providing consultancy services to the engineering and construction industries since 1978. The company has grown to over 300 members of staff, with offices across Africa, Asia Pacific, Europe, and the Middle East. The range of services offered across the Group provides support to the engineering and construction industries it serves, from 'cradle to grave'.

DIALES

DIALES is the Group's expert witness support service provider. We supply world-class quantum, delay, and technical experts for litigation; alongside provision of internationally experienced adjudicators, arbitrators, and mediators.

Driver Project Management

Driver Project Management provides the strategic and leadership disciplines necessary to develop and deliver a project. We support clients in the strategic leadership and decision making necessary to define, evaluate, develop, finance, procure, and implement their investment projects. 

Driver Project Services

Driver Project Services provides customer focused project controls solutions throughout a project lifecycle. We deliver commercial management, quantity surveying, and planning services, offering clients long term support and commitment for the duration of their projects.

Driver Trett

Driver Trett provides multi-disciplinary consultancy services to support effective delivery of our clients' projects. Our specialities include commercial and contract management, planning, programming and scheduling, and dispute resolution support services.

Principal Risks and Uncertainties

There are a variety of specific business risks which can affect international consultancy businesses like Driver. The principal risks are outlined below, the principal uncertainties being the impact of the UK and global economy on the business.

Credit Risk

The Group's credit risk is primarily attributable to its trade receivables. The risk increases as our business expands into new territories where payment of outstanding receivables can be slower. Credit risk is managed by running credit checks on customers and by monitoring payments against contractual terms.

There is a clear internal process for elevating potential problems in recovering debts such that prompt action is taken to recover debts at the earliest possible point and legal action is taken where necessary.

Liquidity

The Group monitors cash flow as part of its day to day control procedures. The Board reviews cash flow projections and ensures that appropriate facilities are available to be drawn upon as necessary. At the year end, the Group's borrowing facilities consisted of an overdraft facility of £2.75m renewable annually and a term loan of £1.25m repayable on 31 October 2016. With an overdraft utilisation of £0.34m and cash balances of £1.43m the Group had access to £3.84m of available funds at 30 September 2014. The Group's facilities with the bank are secured by means of debentures over the Group's assets and a legal charge over the land and building at Haslingden.

Reputation Risk

The quality and experience of our people is fundamental to our success, and we are committed to the development and training of our staff. All assignments are managed by a director who remains directly responsible until its conclusion and will regularly re-evaluate the client's requirements and issues.

Treasury Policies and Foreign Exchange Management

Treasury operations are managed centrally and operate so as to reduce financial risk, ensure sufficient liquidity is available for the Group's operations and to invest surplus cash. Corporate Treasury does not operate as a profit centre and does not take speculative positions. The Company regularly invoices in Euros for work performed in Europe as well as receiving foreign currency income in UAE Dirhams ("AED"), Omani Rials ("OMR") and Qatari Riyals ("QAR") from its Middle East businesses; South African Rand ("ZAR") from its African business; Malaysian Ringgit ("MYR"), Singapore Dollar ("SGD"), Hong Kong Dollar ("HKD") and Australian Dollar ("AUD") from its Asia Pacific operations and US Dollar ("USD") generated in America. The Group is therefore exposed to movements in these currencies relative to Sterling. AED, OMR and QAR are currently linked to the US Dollar. Foreign currency balances in excess of forecast amounts required to fund projected outgoings are returned to the UK and have been converted to Sterling balances during the year at spot rate. Euro exposure is managed through the use of a foreign currency overdraft facility, which is used to match up to 90% of the value of the Euro debtor balance against Euro borrowings. The net value of AED, OMR and QAR exposure is managed using foreign currency hedge contracts to provide a targeted level of cover of between 50% and 75% of the net income statement exposure. Other currencies are hedged where outstanding amounts become material. This policy is regularly reviewed by the Board. 

As a consequence of the earnings generated in the Middle East, America, Asia Pacific and South Africa as well as Euro earnings generated in the UK, the Group's net income and its equity is exposed to movements in the value of Sterling relative to the US Dollar, Malaysian Ringgit, Singapore Dollar, Hong Kong Dollar, Australian Dollar, Euro, and South African Rand. As non-Sterling earnings increase, the exposure of the Group's Income Statement and Equity to movements in Sterling will increase as well.

Contingencies and Legal Proceedings Risk Management

The Group monitors all material contingent liabilities, through a process of consultation and evaluation which includes senior management, internal and external advisors. This process results in an evaluation of potential exposure and provisions are made or adjusted accordingly by reference to accounting principles. No contingent liabilities have been recognised at the year end.

Health and Safety

Driver is committed to ensuring the health and safety of its employees in the workplace and where possible implementing health and safety policy improvements. Driver continues to invest in the training and development of safe working practices. The Group measures its health and safety policies through three metrics: lost time due to accidents, lost time days, and reportable accidents. No time was lost as a result of a reported incident during the year.

STRATEGIC REPORT - FINANCE DIRECTOR'S REVIEW

Overview for the Year

The key performance indicators for the Group are revenue, operating profit, profit before tax and utilisation. We also monitor underlying* operating profit and underlying* profit before tax as we believe these measures better reflect the underlying results of the Group. We are pleased to report that 2014 has again been a record year in both revenue and operating profit and overall utilisation has improved 2.1 points to 78.8% (2013: 76.7%). 

Revenue increased by 7% to £39.1m (2013: £36.6m) and underlying* operating profit for the year ended 30 September 2014 was £3.52m (2013: £3.43m). Reported operating profit was £3.13m (2013: £2.95m).

After a net interest charge of £0.07m (2013: £0.06m) the underlying* profit before tax was £3.45m (2013: £3.37m) and reported profit before tax was £3.06m (2013: £2.89m). 

The Group's results include a share based payment cost in the year of £0.29m (2013: £0.48m) in relation to the Group's share option scheme and an amortisation cost for intangible assets of £0.1m (2013: £nil) arising from acquisition of contracts in Hong Kong during the year.

During the year the Board took the decision to close the Houston office, which lost money throughout the year and consequently the Americas segment has been presented as a discontinued operation in the accounts with a loss on discontinued operation, net of tax of £0.31m (2013: £0.3m).

The European business segment revenue grew by £1.2m to £20.8m although operating profit reduced slightly by £0.06m to £2.45m. The Middle East segment revenue increased by £0.9m to £12.6m although operating profit reduced by £0.3m to £2.9m as the growth came principally from Qatar where profits were at lower rates. The Africa segment revenue reduced by £1.3m to £2.3m as a result of the suspension of three major hospital projects and operating profit reduced by £0.3m to £0.1m. Asia Pacific segment revenue grew by £1.7m to £3.4m and the underlying* operating loss reduced by £0.6m to £0.1m after an amortisation charge of £0.1m (2013: nil) Asia Pacific Operating loss was £0.2m. Reflecting strong controls on costs, underlying* unallocated corporate costs reduced by £0.1m to £1.8m. After a share option cost of £0.29m (2013:£0.48m) the reported unallocated costs were £2.1m (2013: £2.4m).

Taxation

The Group had a tax charge of £0.44m (2013: £0.39m). The effective tax rate was 14% (2013: 13%). The tax charge includes the effect of a lower tax rate for Oman, the UAE and Qatar.

Earnings per Share

Underlying* earnings per share was 11.2 pence (2013: 11.4 pence). The basic earnings per share was 8.6 pence (2013: 8.3 pence) and diluted earnings per share was 7.8 pence (2013: 7.3 pence).

Cash Flow

Cash generated from operations was £0.06m (2013: inflow of £2.2m). This reflected an outflow from increased debtors of £2.1m (2013: £1.9m) and an outflow in relation to reduced creditors of £1.1m (2013: inflow of £1.0m). Net tax paid in the year was £0.2m (2013: nil).

Other major cash items are: proceeds from the sale of new and own shares of £0.2m (2013: £0.5m), capital spend of £0.4m (2013: £0.3m), acquisition of intangible assets £0.2m (2013: nil), acquisition of non-controlling interest £0.2m (2013: nil) and net repayment of borrowings of £0.3m (2013: £0.7m). Dividends paid were £0.4m (2013: £0.3m).

The Company had net borrowings at the end of the year of £0.17m compared to net cash of £1.07m at 30 September 2013.

DIVIDENDS

The Directors have proposed a final dividend in respect of the current financial year of 1.05p per share (2013: 1.0p) payable to all shareholders other than the Driver Group Employee Benefit Trust. This has not been accounted for as it was not approved before the year end. The total cost of this proposed dividend will be £285,000 (2013: £253,000). The final dividend will be paid on 7 April 2015 to shareholders on the register at the close of business on 27 March 2015.

There were dividends of £424,000 (2013: £295,000) paid by the Company during the year, including an interim dividend of 0.6p (£159,000).

On behalf of the Board

Damien McDonald

Finance Director

* Underlying figures are from continuing operations and are stated before the share-based payment costs and amortisation of intangible assets

CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2014

*Restated to reflect discontinued operations

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONSOLIDATED CASHFLOW STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2014

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

* Total equity attributable to the equity holders of the parent

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

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

NOTES

1. These Preliminary Results have been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards ("IFRS") and the IFRS Interpretation Committee (IFRIC) interpretations as endorsed by the European Union. The financial information set out in these Preliminary Results does not constitute the Company's statutory accounts for the year ended 30 September 2014 or the year ended 30 September 2013 but is derived from those accounts.

Group statutory accounts for the year ended 30 September 2013 have been delivered to the Registrar of Companies, and those for the year ended 30 September 2014 will be delivered following the Company's Annual General Meeting. BDO LLP have reported on the 2014 and 2013 accounts. Their reports were unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and did not contain statements under section 498(2) or 498(3) of the Companies Act 2006.

2. Earnings per share

Underlying earnings per share is from continuing operations, before share-based payment costs and amortisation of intangible assets is 11.2p (2013: 11.4p).

The calculation of underlying earnings per share is based on a profit of £2,999,000 (2013:£2,882,000). The profit attributable to equity shareholders, after share-based payment costs and amortisation of intangible assets is £2,293,000 (2013: £2,101,000). The basic weighted average number of shares in issue for the period was 26,812,195 (2013: 25,254,416). The diluted weighted average number of shares in issue for the period was 29,358,509 (2013: 28,704,083).

3. Segmental analysis

For management purposes, the Group is organised into five operating divisions: Europe, Middle East, Africa, Asia Pacific and America. These divisions are the basis on which the Group is structured and managed, based on its geographic structure. During the year to 30 September 2014 the Board closed the USA operation and has consequently disclosed Americas as discontinued. In each of the divisions the key service provisions are: quantity surveying, planning / programming, quantum and planning experts, dispute avoidance / resolution, litigation support, contract administration, commercial advice / management and strategic project management. Segmental information in respect of these services is not disclosed as the business is managed geographically and the cost of obtaining this information is deemed excessive.

Segment information about these reportable segments is presented below.

Year ended 30 September 2014

Year ended 30 September 2013

Geographical information:

4. Discontinued Operation

During the year, the Directors made the decision to discontinue the trade of Trett Texas LLC. The net assets of the company continued to be held at the year end, contributing £29,000 of the Group net assets.

The post-tax loss on discontinued operations was determined as follows:

Result of discontinued operation

Earnings per share from discontinued operation

Result of discontinued operation

The statement of cash flows includes the following amounts relating to discontinued operations:

5. Copies of the Annual Report and Financial Statements

Copies of the Annual Report and Financial Statements will be available on the Group's website (www.driver-group.com) and will be sent to the shareholders in due course. Further copies will be available to the public, free of charge, at the Group's office, Driver House, 4 St Crispin Way, Haslingden, Lancashire, BB4 4PW.

The Annual General Meeting will be held at Pall Mall Court, 61-67 King Street, Manchester, M2 4PD on Wednesday 25 February 2015 commencing at 3:00pm.

6. Post Balance Sheet Events

On 08 December 2014 the Group acquired initiate Consulting Limited ("Initiate"). Initiate are capital investment consultants providing development, project and construction management services to the infrastructure market in the UK. The consideration for the acquisition is being satisfied by way of an initial cash payment of £1.5m satisfied out of the Company's existing financial resources, and by the issue of 1,594,274 new ordinary shares in the Group (the "Consideration Shares") with a fair value of £1.6m. There is a further £2.185m additional cash payment, which is deferred over a 2 year period and is conditional on key individuals remaining in employment. At the date of the acquisition, Initiate had net assets of £1.2m including net cash of £1.2m. The intangible assets arising on the acquisition have yet to be calculated.

The acquisition enables the Group to immediately provide development and project management services on significant aviation, highway and rail projects across the UK and creates the opportunity to leverage existing project and dispute & advisory services in to this sector and to Initiate's client base. This is an excellent strategic fit for the Group, in a sector experiencing significant growth, for example through the Government's £375bn National Infrastructure Plan. Over the medium term, Driver Group will look to develop the Initiate offering to other regions where infrastructure-spend is at significant levels.

For the year ended 30 April 2014, Initiate reported turnover of £7.48m and operating profit of £0.73m. Given the complementary nature of the two businesses, the acquisition provides the Group with synergistic benefits. It fits perfectly with the Group's stated strategy of developing complementary service offerings that allow for leverage of the existing business and is expected to provide strong growth opportunities for the Company.