Driver Grp Regulatory News (DRV)

27 June 2012

DRIVER GROUP PLC

("Driver" or "the Group")

Half Yearly Report

For the six months ended 31 March 2012

Key Points

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

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

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

W Alan McClue, Chairman of Driver Group, said:

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

Enquiries:

INTRODUCTION

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

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

FINANCIAL RESULTS

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

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

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

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

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

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

DIVIDEND

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

TRADING PERFORMANCE

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

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

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

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

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

OUTLOOK

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

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

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

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

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

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

W. Alan McClue

Non-Executive Chairman

26 June 2012

For the six months ended 31 March 2012:

For the year ended 30 September 2011:

\* Total equity attributable to the equity shareholders of the parent

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

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

1 BASIS OF PREPARATION

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

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

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

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

2 TAXATION

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

3 DIVIDEND

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

4 SUMMARY SEGMENTAL ANALYSIS

Reportable segments

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

Segment information about these reportable segments is presented below.

Six months ended 31 March 2012

Six months ended 31 March 2011

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

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

(1)

4 SUMMARY SEGMENTAL ANALYSIS - continued

Year ended 30 September 2011

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

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

5 EARNINGS PER SHARE

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

6 EXCEPTIONAL ITEMS

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