Last checked at 20 Jan 2009 07:00
DRV
20 January 2009
DRIVER GROUP PLC
("Driver" or "the Group")
Preliminary Results
for the Year to 30 September 2008
Driver provides specialist commercial & dispute resolution services
to the construction and engineering industries.
Highlights
Record revenue and profit performance
Revenues increased by 43% to £18.15m (2007: £12.68m)
- CMC acquisition contributed seven months revenues of £2.4m
Underlying* pre-tax profit increased by 31% to £2.08m (2007: £1.59m)
Statutory pre-tax profit increased by 90% to £1.98m (2007: £1.04m)
Underlying* earnings per share increased by 40% to 6.3p (2007: 4.5p)
Statutory earnings per share increased by 107% to 5.8p (2007: 2.8p)
Final dividend of 2.0p per share proposed (2007: 1.9p), taking total to 2.95p (2007: 2.85p)
Strong cash flow performance. Net debt reduced to £0.2m from £1.0m at 31 March 2008.
Increased utilisation rate
Acquisition of Commercial Management Consultants Limited completed in February 2008
- extended Driver's range of services and added 50 fee-earners
Continuing strong demand in both UK (especially London and the South) and Middle East
Recruitment of additional fee-earners takes total to 163 at year end (30 Sept 2007: 96 fee-earners)
Outlook for continuing growth remains positive
* underlying figures are stated before the share-based payment charge and, for 2007, before the pension settlement charge.
Michael Davis, Chairman of Driver, commenting on the results, said,
"The business continues to make very good progress and the results for the year to 30 September 2008 stand at record levels.
These excellent results reflect the benefit of the major recruitment programme we undertook in 2007 to increase our fee-earning capability, as well as continuing strong demand for our specialist services, particularly in the southern offices of the UK, especially London, and in the Middle East, where we have now opened our third office.
Driver's specialist service offering and its reach across the many different sub-sectors of the construction and engineering industries means that it is robustly placed to continue to grow revenue and profitability."
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 delighted to report that the business continues to make very good progress and that results for the year to 30 September 2008 stand at record levels. Revenue has grown by 43% to £18.1m and underlying* pre-tax profit grew by 31% to £2.08m. Reported pre-tax profit grew by 90% to £1.98m (2007: £1.04m).
These excellent results reflect the benefit of the major recruitment programme we undertook in 2007 to increase our fee-earning capability, as well as continuing strong demand for our specialist services, particularly in the southern offices of the UK, especially London, and in the Middle East, where we have now opened our third office.
A key highlight during the year was the acquisition, on 29 February 2008, of Commercial Management Consultants Limited ("CMC"), which has expanded the range of the services we offer. The acquisition was Driver's first and the benefits we anticipated at the time of CMC's acquisition are materialising.
Financial Results
The financial accounts for the year have been prepared under International Financial Reporting Standards ("IFRS") for the first time and therefore the Group's results for the prior year have been restated.
Revenue over the twelve months to 30 September 2008 rose by 43% to £18.1m (2007: £12.7m), with CMC making a seven month contribution of £2.4m. Underlying* profit before taxation rose by 31% to £2.08m from £1.59m last year, with CMC contributing £354,000 to this increase. After deducting the IFRS2 charge for share-based payments which totalled £97,000 (2007: £73,000), reported profit before tax almost doubled year on year to £1.98m (2007: £1.04m, after deducting the £0.5m pension settlement charge).
Underlying* earnings per share increased by 40% to 6.3p (2007: 4.5p). After deducting the share based payments charge (and prior year pension settlement charge), reported earnings per share increased by 107% to 5.8p (2007: 2.8p).
The Group remains strongly cash generative and the balance sheet at the year end was very healthy, with net debt of £0.2m (30 September 2007: cash of £0.2m). This is after having paid the £1.475m cash element of the total consideration for CMC. Net assets increased by 50% to £7.1m (30 September 2007: £4.7m).
Dividend
The Board is pleased to recommend the payment of a final dividend of 2.0 pence per share (2007: 1.90 pence), an increase of 5%. This makes a total dividend for the year of 2.95 pence (2007: 2.85 pence) per share. The final dividend will be paid on 19 March 2009 to shareholders on the register at the close of business on 20 February 2009.
Trading Overview
During the previous financial year, we undertook a major recruitment programme to increase the number of our fee-earning consultants. As a result, we commenced the financial year under review with some 96 fee-earners (including sub-consultants), adding further fee-earners during the year. Having scaled the business significantly, I am pleased to report that we achieved our growth targets for both our core UK business and our overseas operations.
The broad range of sectors we operate in within the construction industry continued to provide us with growth opportunities and, while the residential and commercial property sectors of the UK construction industry experienced a severe downturn over the year, we saw continuing good demand for our services in the public, civil engineering, energy and transport sectors, underpinned by large scale infrastructure projects across these sectors. Our growth in the UK has been particularly strong across our offices in the south and revenues here grew by 93% over the year, led by the London office, where sales rose by 75%.
The acquisition of CMC in February 2008, which has four UK offices, has proved to be as successful as we initially hoped. CMC's addition has broadened the scope of our services, enabling us to become involved with construction projects much earlier in the life cycle. The combination of CMC with Driver Consult is working very successfully. We have been able to sell Driver's existing services to CMC's customer base and have introduced CMC to Driver Consult's clients. CMC's integration is now substantially complete and I am pleased to report that the average charge-out rate of CMC's 50 fee-earners is now higher than before its combination with Driver.
Overall revenues from our UK offices, including CMC's seven month contribution of £2.4m, totalled £15.4m, up from £11.3m last year, an increase of 36%.
Our growth internationally remains strong. The main area of our international business is in the Middle East, where we have two offices in the United Arab Emirates and where we have been involved with some of the most high profile projects in the region. In the second half of the year, we opened our third office in the region, in Oman. This office is already trading profitably having successfully secured work on Omani government projects as well as in the private sector. Revenues over the year from the Middle East grew by 107% to £3.1m from £1.5m last year, and we continue to see very strong demand for our commercial services. While construction activity in Dubai has slowed, we are seeing an increase in demand for our dispute/litigation services. Demand overall for our commercial services within the region is still strong, and with our three offices in Abu Dhabi, Dubai and Oman, we can service all key areas of the Middle East and anticipate continued strong growth in this region.
Looking forward, market conditions in both the UK and Middle East remain healthy for our dispute work and we continue to see good growth opportunities. Our close relationships with the UK's largest contractors stand us in good stead and we anticipate that, as certain sectors of the construction market experience worsening economic pressures, this will lead to a rise in litigation and therefore increased demand for our litigation support services. These services are generally at higher rates and the appointments also tend to run for longer periods than our general dispute related business.
Key to our ability to take advantage of the opportunities we see ahead of us is our high calibre staff. We have made a significant investment over the last two years in new fee-earning consultants as well as in support staff in both the UK and the Middle East. At 30 September 2008, the total number of Driver's fee-earners (including sub-contract consultants) stood at 163, compared with 96 fee-earners at the same point last year. This 70% rise includes the additional 50 fee-earners who came with CMC. Of our 163 fee-earners, 33 are based in the Middle East, up from 18 at the end of September last year, with the balance of 130 based in the UK.
* Underlying figures are stated before the IFRS2 share-based payment charge and, for 2007, before the pension settlement charge.
Board Changes
Following the acquisition of CMC, on 29 February 2008, we were pleased to welcome CMC's Managing Director, Bob Parfitt, to the Board as an Executive Director. Bob is a Quantity Surveyor with over 30 years' experience in the construction and engineering industry, in both the UK and the Middle East. His skills and market knowledge strengthen the team.
After the year end, reflecting the ongoing expansion of the business, we were delighted to promote Executive Director, Dave Webster, to the newly created role of Chief Operating Officer. Prior to his promotion, Dave was previously Managing Director of Driver Consult.
Staff
On behalf of the Board, I would like to thank all of our staff for their commitment and hard work over the last twelve months. This year's results reflect their skill and efforts.
Outlook
Driver is well positioned for ongoing growth, with increased fee-earning capacity, a broader service offering and a third office in the Middle East.
Our plans for the year remain focused on those areas offering greatest growth potential. We expect to remain very active in London and in the south of the UK, where there is large committed public sector spend and major infrastructure projects are underway, and we also expect to see further significant growth potential in the Middle East. In addition, we anticipate considerable growth in our work for financial institutions involved with distressed or insolvent businesses.
While the external environment has become more challenging, the new financial year has started well. In the light of the current global financial and economic environment, we remain confident that Driver's specialist service offering and its reach across the many different sub-sectors of the UK and Middle Eastern construction and engineering industries means that it is robustly placed to continue to grow revenue and profitability.
Michael Davis
Chairman
CHIEF EXECUTIVE'S REPORT
Introduction
I am delighted to deliver my report on another successful financial year.
The twelve months have been very productive. Following our recruitment drive last year to increase the number of our fee-earning consultants, we were able to take on more consultancy work than ever before. The Group made its first acquisition in February 2008, of Commercial Management Consultants Limited ("CMC"), opened its third office in the Middle East, in Oman, and continued to invest heavily in the recruitment of fee-earning personnel. Our excellent results show the benefits of our activity but the full benefits, including the substantial increase in fee-earners to 163 fee-earning staff at 30 September 2008 from 96 at the same point last year, should come through in the current financial year and beyond.
Driver Consult Ltd
Driver Consult is the principal trading subsidiary of the Group and provides the construction and engineering industries with both dispute resolution services and commercial services.
The construction industry is one of the largest in the UK economy, representing about 6 per cent. of gross domestic product. With an industry of this size, there are often disputes where the outcome is material to the parties concerned. Driver Consult is able to deliver its services at any stage of a dispute and its services include: advising on whether there is a claim (for both claimants and respondents); preparing and defending claims; providing expert witnesses and sitting as adjudicators, mediators and arbitrators.
Driver Consult's commercial services include: the commercial management, planning and programming of construction and engineering projects; the provision of pre-contract services designed to highlight risks and reduce disputes and cost management and risk analysis.
UK Operations
Driver Consult in the UK predominantly provides dispute avoidance and resolution services and operates through a network of seven regional offices across England and Scotland. These offices are grouped into four regional areas, North, Midlands & South West, London & South East and International (excluding Middle East).
All four regions operated profitably in the year. Revenue increased by 14% to £12.9m from £11.3m last year and operating profit increased by 17% to £2.98m from £2.54m. Staff utilisation levels increased by around 7 percentage points. As anticipated, while we experienced a downturn in work from the residential and commercial property sectors, we were more than able to offset the impact of this by increasing our work in the civil engineering, energy, transport and public sectors, which remain very strong as a result of the government's commitment to proceed with large scale infrastructure projects.
As stated in last year's report, we anticipated significant growth opportunities in London and positioned ourselves for this by moving into larger premises. I am pleased to report that revenue from our London office increased by 75% on last year, with profit margins some 18 percentage points higher. Given the increased demand for expert dispute services and the government's committed spend on large scale infrastructure projects in London and the South East, we continue to anticipate growth in this region.
During the year, we also established a Corporate Services team to provide services to financial institutions. The team provides specialist construction-related advice on fund monitoring, due diligence, companies in administration, and liquidations and is now successfully working on appointments for a number of major banks and accountancy firms. We anticipate that this service will inevitably grow in the current economic climate.
Middle East Operations
During the year, we opened a new office in Oman to support the ongoing demand we see in the region and I am pleased to report that the office is already trading profitably. As a result, our coverage of the Middle East region is now provided through three offices, in Abu Dhabi, Dubai and Oman. The services we provide in the Middle East are wider than those provided in the UK. In addition to our contentious/dispute consultancy services, we provide commercial, planning, project controls and employers' representative services.
Revenue in the region rose to £3.1m from £1.5m last year, an increase of 107%, with operating profit margins for the region rising by 15 percentage points over last year. While our commercial services work in Dubai has been affected by the current economic climate, this has been offset by an increase in demand for contentious/dispute work as cash flow and funding come under pressure there.
We expect to grow our business strongly and have invested in staff, increasing our personnel in the region by 83% from 18 at 30 September 2007 to 33 at 30 September 2008.
Commercial Management Consultants
On 29 February 2008, we acquired CMC which provides site-based quantity surveying and planning services. Established in 1979 and with four offices in the UK, it has a well-established presence in the rail, utilities, highways, building, water, airports and marine sectors and its client base comprises a number of major UK contractors as well as other blue chip organisations, including Public Private Partnership contractors. This, our first acquisition was strategically important to the Group since it meant that we could offer in the UK the full extent of the services we already offer in the Middle East.
CMC's integration within our wider business has gone very well and both companies are able to offer a broader range of services as a result. The cross-selling we envisaged between CMC's client base and Driver Consult's has been successful and we have already been able to increase the charge-out rate of CMC's consultants. As we integrated CMC, we have also been able to achieve cost savings, merging CMC's Manchester and Glasgow offices into the Group's existing offices. Over the coming year, we anticipate that we will merge CMC's Dartford office with the Group's London office.
In the seven months to 30 September 2008, CMC generated revenue of £2.4m and operating profits of £0.35m, which with a profit margin of 14%, already exceeds the level of margin achieved before its acquisition and demonstrates the benefits of being part of the wider Driver Group.
Outlook
The business continues to grow and develop, with new offices, a strengthened management structure and enhanced resources. We begin the current financial year with 163 fee-earners and this should enable us to exploit the good growth opportunities we see, particularly in London and the Middle East. We therefore view the current financial year with confidence and believe we are well positioned to continue to deliver a strong performance over the coming year.
Steve Driver
Chief Executive Officer DRIVER GROUP PLC
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2008
| 2008 | 2007 | |||||||
| £000 | £000 | |||||||
| REVENUE | 3 | 18,149 | 12,684 | |||||
| Cost of sales | (11,660) | (8,218) | ||||||
| GROSS PROFIT | 6,489 | 4,466 | ||||||
| Administrative expenses | (4,581) | (3,533) | ||||||
| Other operating income | 120 | 109 | ||||||
| OPERATING PROFIT | ||||||||
| - Before pension settlement and share-based payment | 2,125 | 1,600 | ||||||
| - Pension settlement cost | - | (485) | ||||||
| - Share-based payment | (97) | (73) | ||||||
| 2,028 | 1,042 | |||||||
| Finance income | 14 | 32 | ||||||
| Finance costs | (62) | (39) | ||||||
| PROFIT BEFORE TAXATION | 3 | 1,980 | 1,035 | |||||
| Taxation | (571) | (365) | ||||||
| PROFIT FOR THE YEAR | 1,409 | 670 | ||||||
| Profit attributable to minority interests | 11 | 16 | ||||||
| Profit attributable to equity shareholders | 1,398 | 654 | ||||||
| 1,409 | 670 | |||||||
| Basic earnings per share (pence) | 2 | 5.8p | 2.8p | |||||
| Diluted earnings per share (pence) | 2 | 5.8p | 2.8p | |||||
| The profit for the year arises from the Group's continuing operations. | ||||||||
DRIVER GROUP PLC
CONSOLIDATED BALANCE SHEET
30 SEPTEMBER 2008
| 2008 | 2007 | ||||
| Notes | £000 | £000 | £000 | £000 | |
| NON-CURRENT ASSETS | |||||
| Goodwill | 4 | 2,356 | - | ||
| Property, plant and equipment | 3,059 | 3,104 | |||
| Deferred tax asset | 37 | 29 | |||
| 5,452 | 3,133 | ||||
| CURRENT ASSETS | |||||
| Trade and other receivables | 4,823 | 3,227 | |||
| Cash and cash equivalents | 1,054 | 855 | |||
| 5,877 | 4,082 | ||||
| TOTAL ASSETS | 11,329 | 7,215 | |||
| CURRENT LIABILITIES | |||||
| Borrowings | (219) | (450) | |||
| Trade and other payables | (2,380) | (1,353) | |||
| Current tax payable | (361) | (172) | |||
| (2,960) | (1,975) | ||||
| NON-CURRENT LIABILITIES | |||||
| Borrowings | (1,000) | (179) | |||
| Deferred tax liabilities | (309) | (341) | |||
| (1,309) | (520) | ||||
| TOTAL LIABILITIES | (4,269) | ( 2,495) | |||
| NET ASSETS | 7,060 | 4,720 | |||
| SHAREHOLDERS' EQUITY | |||||
| Share capital | 106 | 99 | |||
| Share premium | 2,649 | 2,649 | |||
| Merger reserve | 1,493 | - | |||
| Translation reserve | - | 1 | |||
| Capital redemption reserve | 18 | 18 | |||
| Other reserves | 187 | 93 | |||
| Retained earnings | 3,838 | 3,086 | |||
| Own shares | (1,242) | (1,242) | |||
| TOTAL SHAREHOLDERS' EQUITY | 7,049 | 4,704 | |||
| MINORITY INTEREST IN EQUITY | 11 | 16 | |||
| TOTAL EQUITY | 7,060 | 4,720 | |||
DRIVER GROUP PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2008
| Year ended 30 September 2008 £000 | Year ended 30 September 2007 £000 | |
| CASH FLOWS FROM OPERATING ACTIVITIES | ||
| Profit before taxation: | ||
| Before pension settlement and share-based payments | 2,077 | 1,593 |
| Pension settlement cost | - | (485) |
| Share-based payments | (97) | (73) |
| 1,980 | 1,035 | |
| Adjustments for: | ||
| Depreciation | 170 | 83 |
| Loss on sale of property, plant and equipment | - | 24 |
| Exchange adjustments | (65) | - |
| Finance income | (14) | (32) |
| Finance costs | 62 | 39 |
| Equity settled share-based payment expenses | 97 | 73 |
| OPERATING CASH FLOW BEFORE CHANGES IN WORKING CAPITAL AND PROVISIONS | 2,230 | 1,222 |
| Increase in trade and other receivables | (875) | (518) |
| Increase in trade and other payables | 602 | 332 |
| CASH GENERATED FROM OPERATIONS | 1,957 | 1,036 |
| Tax paid | (563) | (594) |
| NET CASH INFLOW FROM OPERATING ACTIVITIES | 1,394 | 442 |
| CASH FLOWS FROM INVESTING ACTIVITIES | ||
| Interest received | 14 | 32 |
| Acquisition of subsidiary net of cash acquired (note 4) | (1,003) | - |
| Acquisition of property, plant and equipment | (111) | (245) |
| NET CASH OUTFLOW FROM INVESTING ACTIVITIES | (1,100) | (213) |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||
| Interest paid | (62) | (39) |
| Borrowings | 590 | 4 |
| Payment of equity dividends | (688) | (656) |
| NET CASH OUTFLOW FROM FINANCING ACTIVITIES | (160) | (691) |
| Net increase / (decrease) in cash and cash equivalents | 134 | (462) |
| Effect of foreign exchange on cash and cash equivalents | 65 | - |
| Cash and cash equivalents at start of period | 855 | 1,317 |
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | 1,054 | 855 |
DRIVER GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2008
| Share capital | Share premium | Merger reserve | Other reserves* | Retained earnings | Own shares | Total | Minority interest | Total Equity | |
| £000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | |
| Opening balance at 1 October 2006 | 99 | 2,649 | - | 29 | 3,088 | (1,242) | 4,623 | - | 4,623 |
| Exchange adjustments | - | - | - | 1 | - | - | 1 | - | 1 |
| NET INCOME RECOGNISED DIRECTLY IN EQUITY | - | - | - | 1 | - | - | 1 | - | 1 |
| Profit for the period | - | - | - | - | 654 | - | 654 | 16 | 670 |
| TOTAL RECOGNISED INCOME AND EXPENSE | - | - | - | 1 | 654 | - | 655 | 16 | 671 |
| Dividends | - | - | - | - | (656) | - | (656) | - | (656) |
| Share-based payment | - | - | - | 82 | - | - | 82 | - | 82 |
| BALANCE AT 30 SEPTEMBER 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 |
| BALANCE AT 30 SEPTEMBER 2008 | 106 | 2,649 | 1,493 | 205 | 3,838 | (1,242) | 7,049 | 11 | 7,060 |
* Other reserves combines the translation reserve, capital redemption reserve and 'other reserves'.
NOTES
1. The financial information set out in these Preliminary Results does not constitute the Company's statutory accounts for the year ended 30 September 2008 or the year ended 30 September 2007 but is derived from those accounts.
Statutory accounts for the year ended 30 September 2007 have been delivered to the Registrar of Companies, and those for the year ended 30 September 2008 will be delivered following the Company's Annual General Meeting. BDO Stoy Hayward LLP have reported on the 2008 accounts and Harold Sharp (the Group's previous auditors) have reported on the 2007 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 237(2) or (3) of the Companies Act 1985.
The statutory accounts for the year ended 2008 are the Company's first accounts under IFRS. Details of the reconciliation between the previously reported UK GAAP figures and the IFRS restatement are contained in the Company's Interim Statement issued on 10 June 2008. There have been no changes in IFRS accounting policies since the restatement.
2. Earnings per share
Basic earnings per share before the charge for share-based payments is 6.3p (2007: 4.5p before pension settlement charge).
The calculation of earnings per share before share-based payments (and pension settlement costs in 2007) is based on earnings of £1,520,000 (2007: £1,045,000). Earnings after deducting these charges are £1,398,000 (2007: £654,000). The basic and diluted weighted average number of shares in issue for the period were 23,992,712 and 23,995,988 respectively (2007: 23,032,229 and 23,626,631 respectively).
3. Segmental analysis
The table below sets out revenue and profit by business segment:
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 geographical structure and principal services provided.
| Year ended 30 September 2008 £000 | ||||||||||
|
| 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 | ||||
| Total inter-segment revenue | 305 | 12 | 99 | (416) | - | - | ||||
| Total revenue | 12,933 | 3,108 | 2,524 | (416) | - | 18,149 | ||||
| SEGMENTAL PROFIT Segment result | 2,984 | 537 | 354 | - | - | 3,875 | ||||
| Unallocated corporate expenses | - | - | - | - | (1,750) | (1,750) | ||||
| Share option charge | (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 | ||||
Year Ended 30 September 2007 £000
|
| Driver Consult UK £000 | Driver Consult Middle East £000 | CMC £000 | Eliminations £000 | Unallocated £000 | Consolidated £000 |
| Total external revenue | 11,231 | 1,453 | - | - | - | 12,684 |
| Total Inter-segment revenue | 88 | - | - | (88) | - | - |
| Total revenue | 11,319 | 1,453 | - | (88) | - | 12,684 |
| SEGMENTAL PROFIT Segment result | 2,542 | 36 | - | - | - | 2,578 |
| Unallocated corporate expenses | - | - | - | - | (978) | (978) |
| Share option charge | - | - | - | - | (73) | (73) |
| Pension settlement | - | - | - | - | (485) | (485) |
| Operating profit | 2,542 | 36 | - | - | (1,536) | 1,042 |
| Investment income | - | - | - | - | 32 | 32 |
| Finance costs | - | - | - | - | (39) | (39) |
| Profit before tax | 2,542 | 36 | - | - | (1,543) | 1,035 |
The table below sets out revenue by geographic origin based on location of the Group's operations:
| Year ended 30 September 2008 £000 | Year ended 30 September 2007 £000 | |
| UK | 15,053 | 11,231 |
| Middle East | 3,096 | 1,453 |
| 18,149 | 12,684 |
4. Acquisition of Commercial Management Consultants Limited
On 29 February 2008 the Group acquired the entire share capital of Commercial Management Consultants Limited ("CMC"). The consideration for the acquisition is set out below:
| £000 | |||
| New Shares | 1,500 | ||
| Cash | 1,475 | ||
| Acquisition costs | 120 | ||
| Consideration | 3,095 | ||
The net cash cost of acquiring the business was as follows:
| £000 | |||
| Cash consideration | 1,475 | ||
| Acquisition costs | 120 | ||
| Less cash acquired with business | (592) | ||
| Consideration | 1,003 | ||
The value of the assets and liabilities acquired at the date of acquisition and after fair value adjustments were as follows:
| Initial book value at date of acquisition | Fair value adjustment | Provisional fair value at date of acquisition | |
| £000 | £000 | £000 | |
| Property, plant and equipment | 33 | (19) | 14 |
| Trade and other receivables | 721 | - | 721 |
| Cash and cash equivalents | 592 | - | 592 |
| Total assets | 1,346 | (19) | 1,327 |
| Trade and other payables | (519) | (65) | (584) |
| Deferred taxation | (4) | - | (4) |
| Total liabilities | (523) | (65) | (588) |
| Net assets | 823 | (84) | 739 |
| Goodwill arising on acquisition | 2,356 | ||
| Total consideration | 3,095 | ||
The goodwill is attributable primarily to the intangible benefits arising from the expert fee-earners acquired with the business and their collective relationships with a blue chip customer base, which will be applied in generating cross company leads. Goodwill also arises from other earnings enhancing synergies which are expected to arise from the integration of the business with that of the Group.
IFRS3 does not permit people based intangibles nor intangibles arising from synergy benefits created by the acquirer to be separately accounted for. No intangibles other than goodwill have been separately identified.
5. Copies of the annual report and financial statements
The Annual Report and Financial Statements will be sent to shareholders in due course. Further copies will be available to the public, free of charge at the Company's registered office, Driver House, 4 St Crispin Way, Rossendale, Lancashire, BB4 4PW and on the Company's website, www.drivergroupplc.com.
The Annual General Meeting will be held at IoD Hub, 1st Floor, Peter House, Oxford Street, Manchester, M1 5AN on Tuesday 24th February 2009 commencing at 3.00pm.