Driver Grp Regulatory News (DRV)

13 Oct 2005 07:00

Driver Group plc 13 October 2005 DRIVER GROUP PLC ('Driver', 'the Company' or 'the Group') Admission to the Alternative Investment Market • Share dealings in Driver Group, which provides specialist commercial and dispute resolution services to the construction industry, begin today on AIM. • Driver has raised a total of £2 million (gross) via a Placing of 2,739,727 new Ordinary Shares at 73p per share. A further 2,739,727 Ordinary Shares were placed on behalf of existing investors at 73p per share. WH Ireland is acting as the Group's Nominated Adviser and Broker. • The new funds raised will be used to meet the expenses of the Placing, provide additional working capital and to finance the further expansion of the Group, including by way of acquisition. • Driver's market capitalisation at the Placing Price is approx. £16.9m. • Based in Rossendale, Lancashire, Driver provides dispute resolution services as well as non-contentious services to the construction industry. The UK construction industry is one of the largest sectors in the economy, accounting for 6% of GDP. • The Group targets larger construction firms; its client base includes six out of the 10 largest contractors in the UK based on turnover. • Driver operates from a total of 6 UK offices, based in Rossendale, Glasgow, London, Liverpool, Northampton and Teesside and has a workforce of over 70 people. • Driver recently opened an office in the UAE as a base from which it could establish a presence in the region. Although a contract has not been finalised, the Group is currently providing and invoicing for project management and other services in connection with a multi-billion $ project in Abu Dhabi. • The Company enjoys a high level of repeat business from clients. Approximately 80 per cent. of the Group's turnover in the nine months ended 30 June 2005 related to instructions from previous clients and/or ongoing projects. • The Group has increased turnover and underlying operating profits over the last five years and, in the year ended 30 September 2004, the Group recorded turnover of £7.6 million and underlying profit before tax of £1.25 million. • Following Admission, the Directors intend to adopt a progressive dividend policy. Steve Driver, Managing Director, commented, 'I am delighted to announce Driver Group's admission to AIM. We believe that Driver Group offers a high calibre service and that there is tremendous growth potential for our services in the UK and abroad, especially within the UAE. Our status as a publicly-quoted company will help us to take advantage of this potential as well as enhancing our profile within our marketplace. We look forward to the future with confidence.' Enquiries: Driver Group plc Steve Driver, Managing Director T: 01706 244 172 WH Ireland David Youngman T: 0161 819 8743 Biddicks Katie Tzouliadis T: 020 7448 1000 DRIVER GROUP PLC KEY STATISTICS Placing Price 73p Number of new Ordinary Shares to be placed on behalf of the Company 2,739,727 Number of existing Ordinary Shares to be sold on behalf of the Selling Shareholders 2,739,727 Number of Ordinary Shares in issue immediately following the Placing 23,205,477 New Ordinary Shares as a percentage of the enlarged issued share capital 11.8% Percentage of enlarged issued share capital available in the Placing 23.6% Market Capitalisation on Admission at the Placing Price £16.9 million Estimated gross proceeds of the Placing receivable by the Company £2.0 million Estimated net proceeds of the Placing receivable by the Company £1.6 million INTRODUCTION Established in 1978 as a trading division of a quantity surveying partnership, the Driver Group provides specialist commercial and dispute resolution services to the construction industry. The construction industry is one of the largest sectors 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. The Group's client base includes six out of the 10 largest contractors in the UK by turnover according to statistics published by the Building Magazine in 2004. The Group enjoys a high level of repeat business from clients. Approximately 80 per cent. of the Group's turnover in the nine months ended 30 June 2005 related to instructions from previous clients and/or ongoing projects. The Group has increased turnover and underlying operating profits over the last five years and, in the year ended 30 September 2004, the Group recorded turnover of £7.6 million and underlying profit before tax of £1.25 million. The Directors believe that one of the strengths of the Driver Group is the quality and loyalty of its staff. During the nine months to 30 June 2005, the average monthly number of employees was 53 and the average monthly number of consultants, who are appointed to work on specific projects, was 27. These employees and consultants have a range of experience and professional qualifications related to the construction industry and associated legal matters. The Group's head office is in Rossendale, Lancashire and it also operates from offices in Glasgow, Liverpool, London, Northampton and Teesside. In 2005, the Group opened an office in the UAE to provide commercial and project planning services in conjunction with international organisations. Although a contract has not been finalised, the Company is currently providing and invoicing for project management and other services in connection with a multi-billion $ project in Abu Dhabi. The Company proposes to seek admission of its entire issued and to be issued ordinary share capital to trading on AIM and to raise approximately £2 million, before expenses, by way of a placing of 2,739,727 New Ordinary Shares. The net proceeds of the placing of the New Ordinary Shares will be used to meet the expenses of the Placing and Admission, to provide additional working capital and /or to finance the further expansion of the Group including by way of acquisitions. In addition, the Selling Shareholders are placing the Sale Shares with institutional investors at the Placing Price in order to raise £2 million, before expenses, for the Selling Shareholders. The Company has historically paid surplus profits as bonuses. Following Admission, the Directors intend to cease payment of surplus profit bonuses and adopt a progressive dividend policy whilst maintaining an appropriate level of dividend cover. HISTORY Established in 1978 as a trading division of a quantity surveying partnership, the business was carried out as a separate partnership from 1988 to 1998, when it was incorporated into BWS International. In 2001, there was a group reorganisation in which the shares of BWS International were transferred by their holders to Driver Group in exchange for shares in Driver Group. At the same time, the commercial and dispute resolution division of BWI International was transferred to Driver Consult. In October 2004, BWS International was demerged from the Driver Group. THE BUSINESS Driver Group is the holding company of a trading group comprising Driver Consult, Driver Consult nv and Adjudication Toolkit. Driver Consult is the principal trading subsidiary in the Group and provides the construction industry with a commercial and dispute resolution service. Driver Consult nv is a Belgian registered company used to engage staff who are based in Europe. The Company also has a 51 per cent. interest in Adjudication Toolkit, a recently incorporated company which provides an on-line adjudication service for small claims. Services Driver Consult Driver Consult specialises in the provision of commercial and dispute resolution services to the construction industry. 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 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 claimants; • advising on whether there is a claim for respondents; • the preparation and defence of claims; • negotiating and settlement of claims; • advising on strategy for adjudications and on alternative methods of dispute resolution, such as mediation, conciliation and expert determination; • providing staff to act as expert witnesses; • providing support to those involved in disputes being considered for resolution within arbitration or court proceedings; • sitting as adjudicators, mediators and arbitrators. At present, almost all of Driver Consult's turnover is derived from the provision of services in relation to contentious matters. However, Driver Consult also offers a number of noncontentious services which include the following: • the commercial management of construction and engineering projects; • the planning and programming of construction and engineering projects; • the provision of pre-contract services designed to highlight risks and reduce disputes, such as the preparation of tender enquiry and contract documents, advising on the pricing of tender documents, carrying out feasibility studies and advising on the appointment of contractors; • cost management; and • risk analysis and management. Projects on which Driver Consult has provided its services include: • design, build, finance and operate schemes to build or upgrade roads; • the construction of schools and hospitals; • PFI schemes; • high-rise, multi-use, city centre property developments; and • the construction of nuclear, petrochemical, gas turbine power and water and sewage treatment plants. Time spent on projects can vary from one day to several years. Driver Consult nv Driver Consult nv is a Belgian registered company and was set up to give the Driver Group a presence in Europe. The vast majority of work in Europe, however, is now dealt with by Driver Consult from its Northampton office. Driver Consult nv is therefore used as vehicle to engage staff who are based in Europe of which there are currently two. Adjudication Toolkit Driver Group has a 51 per cent. interest in Adjudication Toolkit. Adjudication Toolkit provides an on-line programme, which was launched in September 2005, to enable small contractors and subcontractors to run adjudications. Scope of Operations The Group provides its services through a network of offices in the UK including the head office in Rossendale and from other offices in Glasgow, Liverpool, London, Northampton and Teesside. The Group also conducts business in Europe, managed from the Northampton office, and has recently opened an office in the UAE to provide commercial and project planning services to employers, contractors and consultants in conjunction with international organisations. During the nine months ended 30 June 2005, services performed outside the UK comprised 27 per cent. of the Group's turnover. Clients In the UK, the Group's strategy has been to focus its efforts on obtaining work from the larger construction companies in terms of turnover. The Group has carried out work for six out of the top 10 construction companies in the UK by turnover according to statistics published by the Building Magazine in 2004 and its strategy is to continue to focus on securing work from the top 100 of such firms. The Directors believe that the increased profile of a listing on AIM will help with this strategy. Sales and Marketing Driver Consult enjoys a high level of repeat business from clients. During the nine months ended 30 June 2005, approximately 80 per cent. of turnover was derived from repeat business and/or continuing projects. In the UAE, Driver Consult has targeted specific projects and is establishing relationships with international organisations in order to establish itself in the non-contentious, rather than the contentious, market. Although a contract has not been finalised, the Company is currently providing and invoicing for project managing and quantity surveying services in connection with a multi-billion $ project in Abu Dhabi. STRATEGY The Directors believe that there are good opportunities to expand both the Group's UK and overseas operations. In the UK the Directors intend to: • maintain and develop the Group's relationships with the larger construction companies; • strengthen the Group's presence in the UK, particularly in London, the south-east and the south-west; • increase the Group's market share in non-contentious work and in PFI projects; and • take advantage of dispute work which may arise out of major construction projects. Overseas, the Directors intend to: • strengthen the Group's presence in the UAE by establishing commercial and project planning services on major projects in conjunction with international organisations; and • continue to improve the profitability of the Group's activities in Europe. GROUP FINANCIAL SUMMARY The Group's reported profitability in recent years has been depressed by the payment of surplus profits by way of bonuses. However, the Group's underlying profitability, based on restated operating profit adjusted for these bonuses and other non recurring items, is as follows: 9 months Year ended 30 September ended 30 June 2005 2004 2003 2002 (Restated) (Restated) (Restated) (Restated) Notes £000 £000 £000 £000 Turnover 6,120 7,601 6,246 5,374 ======== ======== ======== ======== Operating profit 35 571 355 306 Surplus profit bonuses 1,170 665 438 496 accrued -------- -------- -------- -------- 1,205 1,236 793 802 Other non-recurring items 1 175 54 4 15 -------- -------- -------- -------- Underlying operating profit 1,380 1,290 797 817 Other items 2 13 9 9 2 Interest payable (48) (50) (42) - -------- -------- -------- -------- Underlying profit before tax 1,345 1,249 764 819 -------- -------- -------- -------- Notes 1. Other non-recurring items include (a) one-off costs associated with establishing Adjudication Toolkit of £25,000 (2005) (b) one-off costs associated with establishing a presence in the UAE of £150,000 (2005) and £25,000 (2004) and (c) legal and professional fees of £29,000 incurred in 2004 in connection with the disposal of BWS International. 2. Other items include interest receivable and profits/losses on the sale of investments and tangible fixed assets. CURRENT TRADING AND PROSPECTS Both turnover and profit before tax in the nine months ended 30 June 2005 were ahead of expectations. Since 30 June 2005, trading has been below expectations which the Directors attribute to seasonal factors, such as holidays. However, the Directors believe that the outcome for the current financial year will be in line with budget. With several major contracts and/or disputes continuing after the period ended 30 June 2005, and a number of new appointments secured thereafter, the Directors view prospects for the financial year to 30 September 2006 with confidence. DIVIDEND POLICY In the financial years ended 30 September 2004, 2003 and 2002, the Company did not declare any dividends. The Company has historically paid surplus profits as bonuses. Following Admission, the Directors intend to cease payment of surplus profit bonuses and adopt a progressive dividend policy whilst maintaining an appropriate level of dividend cover. No dividend will be paid in respect of the year ended 30 September 2005. In line with previous practice, the Company has committed to pay a final surplus profit bonus out of the residual profits for the financial year ending 30 September 2005. REASONS FOR ADMISSION AND USE OF PROCEEDS The Directors believe that Admission will benefit the Group by enhancing its market profile. The Directors believe that this increased profile and status should assist the Group with its strategy of targeting the larger construction companies for commercial opportunities and encourage the recruitment of high-quality, experienced staff. Admission will also enable potential acquisition opportunities to be explored. The net proceeds of the placing of New Ordinary Shares will be used to meet the expenses of the Placing and Admission, to provide additional working capital and /or to finance the further expansion of the Group including by way of acquisitions. THE BOARD OF DIRECTORS Michael Davis (aged 59) Non-executive Chairman Michael is a chartered accountant and spent 32 years in the profession principally with Arthur Young/Ernst & Young. During his 15 years as a partner he specialised in corporate finance, including PFI, and was managing partner of the firm's Liverpool office. On leaving the firm he has spent the last 8 years as a non-executive chairman/director of companies in sectors including financial/ professional services, media and manufacturing. He is also deputy chairman of the North West's film and TV agency and was a regular judge on Granada's long running televised business competition ''Flying Start''. Stephen Driver (aged 41) Managing Director Stephen has over 23 years' experience in the construction industry working both for contractors and in private practice. After training as a quantity surveyor, initially with a national civil engineering contractor, Stephen subsequently worked for a number of national building contractors. He subsequently moved into private practice at BWS International and became Managing Director of BWS International in 1998 and of the Group in 2001. Since becoming Managing Director, Stephen has overseen a number of major developments including the incorporation of the partnership through to the formation of Driver Group, the demerger of BWS International, the reorganisation of the business to focus on regional and local office performance, the opening of an office in Dubai and the formation of Adjudication Toolkit. Stephen has broad experience in the construction and engineering industries. His specialist fields include claims support services, adjudication, mediation and expert witness services. Stephen has a Masters degree in construction law and arbitration from Kings College, London. He is a Fellow of the Royal Institution of Chartered Surveyors, the Chartered Institute of Arbitrators and the Institution of Civil Engineering Surveyors and a Member of the Cost Engineers and Academy of Experts. David Webster (aged 38) Director David has over 22 years experience in the construction industry, initially training as a quantity surveyor with a pipeline, tunnelling and civil engineering contractor. He worked with various contractors before moving into private practice with BWS International in 2000. David was appointed to the board of Driver Consult in 2002 with initial responsibility for the Manchester office before being appointed to the northern region in 2003. Subsequently, in 2004 he was appointed to the Board and has been actively involved in reorganising the business to focus on regional and local office performance. As well as the broader responsibilities that come with his position, David provides a hands-on service either leading teams of consultants or working on single specialist appointments. David specialises in dispute resolution, contractual and commercial advice on all aspects of civil engineering projects, highways, water and sewage treatment plants, tunnel and pipeline projects, industrial process plants, building and development. David has a masters degree in construction law and arbitration. He is a Fellow of the Royal Institution of Chartered Surveyors and the Institution of Civil Engineering Surveyors and a member of the Academy of Experts and Expert Witness Institute. Peter Cove (aged 54) Finance Director Peter has 35 years' experience in accountancy, working initially in private practice and then in industry. His industrial experience includes working for John Smiths Limited during a period of growth, reorganisation and take-overs. He has also been involved as financial controller with small and medium-sized companies in different sectors of business. Peter joined the Group in 1999 as Financial Controller and was promoted to Finance Director in 2001, in which position he was heavily involved in the Group re-organisation. He is responsible for the financial and accountancy functions of all Group businesses. David Clements (aged 61) Non-executive Director David qualified as a civil engineer with a post-graduate degree in applied economics and has 38 years' experience in the construction industry, both in the UK and overseas, progressing to managing director level. He has recently retired from the Atkins Group management board and has more than 10 years experience of the Private Finance Initiative and Public-Private Partnerships. David is a non-executive director of Partnerships UK plc and Lambert Smith Hampton Group Limited, the commercial property subsidiary of the Atkins Group. ENDS This information is provided by RNS The company news service from the London Stock Exchange