Driver Grp Regulatory News (DRV)

18 Jun 2007 07:01

Driver Group plc18 June 2007 DRV.L DRIVER GROUP PLC ("Driver Group" or "the Group") Interim Results for the six months ended 31 March 2007 Driver Group provides specialist commercial and dispute resolution services to the construction industry. Highlights • Turnover of £5.99m (2006 : £4.29m) • Gross profit margin 45% (2006 : 47%) • Pre-tax profit £0.75m (2006: £0.85m) but an increase of approximately 18% on the previous six months to September 2006 • Basic earnings per share of 2.3p (2006 : 2.6p) • Proposed interim dividend of 0.95p per share • Continuing investment in the people and infrastructure of the Group to provide further capacity for profitable expansion • Growth outlook remains positive Michael Davis, Chairman of Driver Group, commenting on results, said, "I am pleased to report on a successful six month period for Driver Group. Ofparticular note is the progress made on increasing the number of fee-earnersacross the Group, the development of the two new offices (Bristol andEdinburgh), and, the continued growth seen both in the UK market as well asoverseas. One of the key points of focus in the period has been on theintegration of new consultants to capitalise on the platform for growth beingcreated. We continue to be very positive about the prospects for the future." Enquiries: Driver Group plc Steve Driver, CEO T: 020 7448 1000 (today) T: 01706 244 172 WH Ireland David Youngman T: 0161 832 2174 Biddicks Katie Tzouliadis T: 020 7448 1000 Chairman's Statement Introduction I am pleased to report on a successful six month period for Driver Group. Ofparticular note is the progress made on increasing the number of fee-earnersacross the Group, the development of the two new offices (Bristol and Edinburgh), and, the continued growth seen both in the UK market as well as overseas. Oneof the key points of focus in the period has been on the integration of new consultants to capitalise on the platform for growth being created. Financial Review Turnover grew strongly in the first half of the financial year to £5.99m, anincrease of 40% over the corresponding period to March 2006 (£4.29m) and,perhaps more significantly, an increase of 22% over the immediately precedingsix months to September 2006 (£4.92m). Pre-tax profit was in line withexpectations at £0.75m (2006: £0.85m) after recognising the increase in costsresulting from a substantial rise in headcount. Of the increase inadministrative expenses, £0.4m related to the initial non-fee earning time ofthe new recruits, a variable overhead which will diminish as the new staffbecome fully utilised. The increase in administrative costs also includes afirst time FRS20 (Share-based payment) charge of £36k. Despite the increase inheadcount and related costs the operating profit increased by 20% when comparedto the immediately preceding six months to September 2006. Basic earnings pershare for the half year were 2.3p (2006: 2.6p). Net assets at the end of theperiod increased to £6.0m (2006 £ 4.5m). The Group's net cash position continuesto be strong although cash in the period has reduced principally by workingcapital requirements due to the increase in sales. Dividend The Board is pleased to declare an interim dividend of 0.95p per share whichwill be paid on 18 July 2007 to shareholders on the register on 29 June 2007other than the Driver Group Employee Benefit Trust. Trading performance In the UK the growth in sales has demonstrated both the continuing demand forthe Group's services and the professional way in which our people meet the needsof our clients. In addition our relationships are being reinforced by'framework' agreements with major customers. There has been profitable growth in both the new Bristol and Edinburgh locationsas well as in the more established offices across the UK. However, profitabilityof the London office has been disappointing, despite developing new sources ofwork. Appropriate action has been taken to ensure that the full potential ofthis office is realised. In the International Division good progress has been made with Heavy Engineeringand Europe doing particularly well. Our business in the UAE, where the totalnumber of employees in the region grew from 4 to 17, increased revenues stronglyin the period with work progressing on 7 projects. Encouragingly, we are alsoseeing good opportunities emerging in Oman and the USA. Recruitment is key to increasing future fee earning capacity. In the 12 monthperiod to March 2007, the number of fee earners across the group has risen by63% from 57 to 93. In what is a tight labour market, attracting and retainingquality people (along with the associated costs) remains one of the keychallenges to ensure continued growth. During the period a small recruitmentbusiness was established with recruitment consultants experienced in theconstruction sector, to service both the needs of the Group as well as providingservices to key clients. I am pleased to report that the investment programme in Group infrastructure,encompassing IT, marketing and management systems, to provide effective supportfor fee earners is both proceeding on time and on budget. Outlook Whilst our sales performance is beginning to positively reflect the investmentswe have made, the full benefit to sales and profits will take slightly longerthan originally envisaged. However, the potential and ambition of the seniormanagement team is considerable and we continue to be very positive about theprospects for the future. Michael DavisChairman 15 June 2007 Consolidated Profit and Loss AccountFor the half year ended 31 March 2007 Unaudited Unaudited Audited half year half year year ended ended ended 31 March 31 March 30 September 2007 2006 2006 £ £ £ (Restated* - note 1) -------- -------- ----------TURNOVER 5,989,604 4,286,597 9,203,260Cost of sales 3,269,246 2,268,368 4,928,385 -------- -------- ----------GROSS PROFIT 2,720,358 2,018,229 4,274,875Administrative expenses 1,972,278 1,176,418 2,810,535 -------- -------- ---------- OPERATING PROFIT 748,080 841,811 1,464,340Loss on sale of tangible fixed assets 1,575 310 10 -------- -------- ---------- 746,505 841,501 1,464,330Interest receivable and similar income 22,613 34,543 70,221Interest payable and similar charges (17,890) (22,935) (44,381) -------- -------- ----------PROFIT ON ORDINARY ACTIVITES BEFORETAXATION 751,228 853,109 1,490,170Tax on profit on ordinary activities 225,368 255,933 451,291 -------- -------- ----------PROFIT ON ORDINARY ACTIVITIES AFTERTAXATION 525,860 597,176 1,038,879Minority interests - equity (2,137) 5,986 7,331 -------- -------- ----------PROFIT FOR THE FINANCIAL PERIOD 523,723 603,162 1,046,210 -------- -------- ----------Basic earnings per share (pence) 2.3p 2.6p 4.6p -------- -------- ----------Diluted earnings per share (pence) 2.2p 2.6p 4.5p -------- -------- ---------- Consolidated Statement of Total Recognised Gains and LossesFor the half year ended 31 March 2007 Total recognised gains and losses relating tothe period 523,723 603,162 1,046,210Prior year adjustment (net of tax) (7,660) - - ------- ------- ------- Total recognised gains and losses since lastannual report 516,063 603,162 1,046,210 ------- ------- ------- \* The restatement of the prior year results relates to the new accountingtreatment for share-based compensation as required by Financial ReportingStandard 20 (note 1). Consolidated Balance Sheet31 March 2007 Unaudited Unaudited Audited 31 March 31 March 30 September 2007 2006 2006 £ £ £ (Restated - note 1) FIXED ASSETSTangible assets 2,721,117 1,744,459 2,620,193Investments 1,242,206 127,206 1,242,206 --------- --------- ---------- 3,963,323 1,871,665 3,862,399 --------- --------- ---------- CURRENT ASSETSDebtors 3,358,753 2,176,847 2,750,283Cash at bank and in hand 929,419 2,063,317 1,316,504 --------- --------- ---------- 4,288,172 4,240,164 4,066,787CREDITORSAmounts falling due within one year (1,968,055) (1,095,935) (1,665,714) --------- --------- ----------NET CURRENT ASSETS 2,320,117 3,144,229 2,401,073 --------- --------- ----------TOTAL ASSETS LESS CURRENTLIABILITIES 6,283,440 5,015,894 6,263,472 CREDITORSAmounts falling due after more thanone year (266,396) (474,063) (371,117) PROVISIONS FOR LIABILITIES ANDCHARGES (6,457) (4,844) (6,457) --------- --------- ----------NET ASSETS 6,010,587 4,536,987 5,885,898 --------- --------- ---------- CAPITAL AND RESERVESCalled up share capital 98,932 92,822 98,932Share premium 2,648,647 1,539,686 2,648,647Revaluation reserve 722,954 722,954 722,954Capital redemption reserve 18,137 18,137 18,137Other reserve 47,384 - 10,943Profit and loss account 2,489,636 2,179,283 2,403,525 --------- --------- ----------EQUITY SHAREHOLDERS' FUNDS 6,025,690 4,552,882 5,903,138 MINORITY INTERESTS (15,103) (15,895) (17,240) --------- --------- ---------- 6,010,587 4,536,987 5,885,898 --------- --------- ---------- Consolidated Cash Flow StatementFor the half year ended 31 March 2007 Unaudited Unaudited Audited half year half year year ended ended ended 31 March 31 March 30 September 2007 2006 2006 £ £ £ (Restated - note 1) NET CASH INFLOW FROM OPERATING ACTIVITIES 316,795 353,932 761,353 RETURNS ON INVESTMENTS ANDSERVICING OF FINANCE 4,723 11,608 25,840 TAXATION 41,195 - 52,920 CAPITAL EXPENDITURE AND FINANCIAL (166,743) (180,212) (2,221,387)INVESTMENT EQUITY DIVIDENDS PAID (437,612) - (218,806) ------- ------- --------NET CASH (OUTFLOW)/INFLOW BEFORE (241,642) 185,328 (1,600,080)FINANCING FINANCING (98,552) 1,456,585 2,474,882 ------- -------- --------(DECREASE)/INCREASE IN CASH IN THE PERIOD (340,194) 1,641,913 874,802 ------- -------- -------- RECONCILIATION OF NET CASH FLOWTO MOVEMENT IN NET FUNDS (Decrease)/increase in cash in the period (340,194) 1,641,913 874,802Cash outflow from decrease in debt 98,552 94,060 190,834 ------- ------- --------MOVEMENT IN NET FUNDS/(DEBT) IN THE PERIOD (241,642) 1,735,973 1,065,636 OPENING NET FUNDS/(DEBT) 691,178 (374,458) (374,458) ------- ------- --------CLOSING NET FUNDS 449,536 1,361,515 691,178 ------- ------- -------- Notes to the Financial Statements 1 BASIS OF PREPARATION The Group's Interim Results consolidate the results of the Company and itssubsidiary companies made up to 31 March 2007. The information set out does not constitute statutory accounts within themeaning of Section 240 of the Companies Act 1985. The financial information forthe full preceding year is based on the financial statements for the financialyear ended 30 September 2006. These accounts, upon which the auditors issued anunqualified opinion, have been delivered to the Registrar of Companies. The interim financial information has been prepared on the basis of accountingpolicies set out in the statutory accounts for the year ended 30 September 2006,with the exception of accounting for share based payments. This follows theadoption of Financial Reporting Standard 20 (FRS 20 - Share-based Payment) forthe year ending 30 September 2007. In accordance with the standard, the cost ofshare options awarded to employees measured by reference to their fair value atthe date of grant is recognised over the vesting period of the options based onthe number of options which in the opinion of the Directors will ultimatelyvest. The cost of the share options is charged to the profit and loss accountand transferred to other reserves (see note 8). No adjustment is required to comparative figures for the half year ended 31March 2006. Comparative figures for the year ended 30 September 2006 have beenrestated to apply the provisions of FRS20, increasing staff costs and otheroperating charges and consequently reducing profit for that year as follows: Audited year ended 30 September 2006 (Restated) £ Profit for the financial period prior to adjustment 1,053,870 FRS 20 share option charge (net of tax) (7,660) -----------Profit for the financial period restated 1,046,210 ----------- The Board of Directors approved the interim report on 15 June 2007. 2 SEGMENTAL ANALYSIS Unaudited Unaudited Audited half year half year year ended ended ended 31 March 31 March 30 September 2007 2006 2006 £ £ £ (Restated - note 1) Turnover by geographical area ofoperation by originUnited Kingdom 5,251,021 3,785,390 8,055,951Overseas 738,583 501,207 1,147,309 --------- --------- --------- 5,989,604 4,286,597 9,203,260 --------- --------- ---------Operating profit by geographical area ofoperation by originUnited Kingdom 682,047 793,422 1,421,059Overseas 66,033 48,389 43,281 --------- --------- --------- 748,080 841,811 1,464,340 --------- --------- ---------Net assetsUnited Kingdom 5,455,020 4,446,375 5,800,394Overseas 555,567 90,612 85,504 --------- --------- --------- 6,010,587 4,536,987 5,885,898 --------- --------- ---------Turnover by geographical area ofoperation by destinationUnited Kingdom 4,512,278 2,886,007 6,400,887Overseas 1,477,326 1,400,590 2,802,373 --------- --------- --------- 5,989,604 4,286,597 9,203,260 --------- --------- --------- 3 TAXATION The charge for taxation on the profit for the half year ended 31 March 2007 isbased on an effective rate of 30% which has been calculated by reference to theprojected charge for the full year. 4 DIVIDEND It is proposed that an interim dividend for the half year ended 31 March 2007 of0.95p per share costing £218,806 be paid on 18 July 2007 to all the shareholderson the register on 29 June 2007 other than the Driver Group Employee BenefitTrust. 5 EARNINGS PER SHARE Unaudited Unaudited Audited half year half year year ended ended ended 31 March 31 March 30 September 2007 2006 2006 £ £ £ (Restated - note 1) Profit for the financial period 523,723 603,162 1,046,210 --------- --------- ---------Weighted average number of shares:Ordinary shares in issue 24,732,874 23,205,477 23,709,624Non-vested shares held by EBT (1,700,645) (115,499) (777,126) --------- --------- ---------Basic weighted average number of 23,032,229 23,089,978 22,932,498sharesIssuable on conversion of options 335,505 - 106,345Issuable on conversion of warrants 259,640 - 52,057 --------- --------- ---------Diluted weighted average number ofshares 23,627,374 23,089,978 23,090,900 Basic earnings per share (pence) 2.3p 2.6p 4.6p --------- --------- ---------Diluted earnings per share (pence) 2.2p 2.6p 4.5p --------- --------- --------- 6 RECONCILIATION OF OPERATING PROFITTO NET CASH INFLOW FROM OPERATING ACTIVITIES Unaudited Unaudited Audited half year half year year ended ended ended 31 March 31 March 30 September 2007 2006 2006 £ £ £ (Restated - note 1) Operating profit 748,080 841,811 1,464,340Share-based compensation 36,441 - 10,943Depreciation charges 64,244 42,472 93,213Increase in debtors (649,666) (274,100) (806,340)Increase/(decrease) in creditors 117,696 (256,251) (803) --------- --------- ---------NET CASH INFLOWFROM OPERATING ACTIVITIES 316,795 353,932 761,353 --------- --------- --------- 7 ANALYSIS OF CHANGES IN NET DEBT At At 01/10/06 Cash flow 31/03/07 £ £ £ Net cash:Cash at bank and in hand 1,316,504 (387,085) 929,419Bank overdraft (48,607) 46,891 (1,716) --------- -------- ------- 1,267,897 (340,194) 927,703 --------- -------- -------Debt:Debts falling due within one year (205,602) (6,169) (211,771)Debts falling due after one year (371,117) 104,721 (266,396) --------- -------- ------- (576,719) 98,552 (478,167) --------- -------- -------Total 691,178 (241,642) 449,536 --------- -------- ------- 8 RESERVES Capital Profit Share Revaluation redemption Other and loss premium reserve reserve reserve account £ £ £ £ £ At 1 October 2006 - as previously reported 2,648,647 722,954 18,137 - 2,411,185FRS20 adjustment - - - 10,943 (7,660) -------- -------- -------- -------- ---------As restated 2,648,647 722,954 18,137 10,943 2,403,525Profit for the period - - - - 523,723Dividends paid - - - - (437,612)Share-based compensation - - - 36,441 - -------- -------- -------- -------- ---------At 31 March 2007 2,648,647 722,954 18,137 47,384 2,489,636 -------- -------- -------- -------- --------- The interim report will be despatched to shareholders in due course and a copywill be available from the Company's website, www.driver-group.com. Independent Review Report to Driver Group plc Introduction We have been instructed by the company to review the financial information forthe half year ended 31 March 2007 which comprises the consolidated profit andloss account, consolidated statement of total recognised gains and losses,consolidated balance sheet, consolidated cash flow statement, and related notes.We have read the other information contained in the interim report andconsidered whether it contains any apparent misstatements or materialinconsistencies with the financial information. This report, including the conclusion, has been prepared for and only for thecompany for the purpose of their interim report and for no other purpose. We donot, therefore in producing this report, accept or assume responsibility for anyother purpose or to any other person to whom this report is shown or into whosehands it may come save where expressly agreed by our prior consent in writing. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report in accordance with theAlternative Investment Market Rules which require that the accounting policiesand presentation applied to the interim figures must be consistent with thosethat will be adopted in the company's annual accounts. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom, as if thatBulletin applied. A review consists principally of making enquiries of groupmanagement and applying analytical procedures to the financial information andunderlying financial data and based thereon, assessing whether the accountingpolicies and presentation have been consistently applied unless otherwisedisclosed. A review excludes audit procedures such as tests of controls andverification of assets, liabilities and transactions. It is substantially lessin scope than an audit performed in accordance with Auditing Standards andtherefore provides a lower level of assurance than an audit. Accordingly, we donot express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the half year ended31 March 2007. Harold SharpChartered AccountantsSale 15 June 2007 This information is provided by RNS The company news service from the London Stock Exchange