Driver Grp Regulatory News (DRV)

11 Dec 2007 07:01

Driver Group plc11 December 2007 DRV.L DRIVER GROUP PLC ("Driver Group" or "the Group") Preliminary Results for the Year to 30 September 2007 Driver Group provides specialist commercial and dispute resolution services to the construction industry. Highlights • Year of significant progress - major recruitment drive to scale business for growth - fee earners increased by 35% to 96 (2006: 71) • Turnover increased by 39% to £12.68m (2006 : £9.12m) • Operating profit rose by 14% to £1.68m (2006: £1.47m) before exceptional costs and share based payments • Full and final settlement of pension scheme liability for £485,000 • Basic earnings per share of 4.9p (2006: 4.6p), before exceptional costs and share based payments • Proposed final dividend of 1.9p per share (2006: 1.9p), making total for the year of 2.85p (2006: 2.85p) • All UK offices performed well - with London office outperforming at year end • Strong growth in Middle East, with revenues almost doubling • Prospects remain very encouraging Michael Davis, Chairman of Driver Group, commenting on the results, said, "Over the last fifteen months or so, the business has undergone a significanttransformation. We have opened and integrated new offices in the UK, which haveexpanded our presence regionally and established Driver in the Middle East wherethe construction sector is expanding rapidly. Following our recruitment initiative, the business is now substantially strongerand our increased consulting resource puts the Group in a better position tocapitalise on the good growth opportunities in the UK and internationally. Wetherefore view prospects for the business positively." Enquiries: Driver Group plc Steve Driver, Chief Executive T: 020 7448 1000 (today) Colin White, Finance Director T: 0870 873 7878 Zeus Capital Alex Clarkson T: 0161 831 1512Limited Nick Cowles Biddicks Katie Tzouliadis T: 020 7448 1000 CHAIRMAN'S STATEMENT Introduction This is our second year as an AIM quoted company and I am delighted to announcethat the business continues to make very good progress. Results for the year to30 September 2007 show record levels of turnover and profits. Key to the ongoing development of the business is the necessity to ensure thatwe attract and retain high calibre staff at all levels, and a major focus overthe year has been to increase the number of our fee-earning consultants. Therecruitment programme has gone well and at the financial year end, the number offee earners within the Company had risen by 35% to 96 from 71 at the same timelast year. As the substantial growth in Driver's turnover shows, we are now seeing thebenefits of this increase in resource coming through, in the performance of bothour UK and international businesses. I am pleased to report too that our newerareas of operations in London, Bristol and Edinburgh all showed good growth, andrevenues from the United Arab Emirates almost doubled over the year to £1.45m. Our relationships within the industry, both with existing and potential clients,are vital for future growth and I am pleased to report that we have successfullynegotiated four new framework agreements with clients. These further strengthenour relationship with these customers and reflect Driver's increasing reputationand profile in the market. Over the last fifteen months or so, the business has undergone a significanttransformation. We have opened and integrated new offices in the UK, which haveexpanded our presence regionally and established Driver in the Middle East wherethe construction sector is expanding rapidly. Following our recruitmentinitiative, the business is now substantially stronger and our increasedconsulting resource puts the Group in a better position to capitalise on thegood growth opportunities in the UK and internationally. We therefore viewprospects for the business positively. Financial Results Turnover rose by 39% to £12.68m from £9.12m last year and underlying operatingprofits rose by 14% to £1.68m from £1.47m last year. This is before the chargeof £485,000 for settling the pension liability, which is treated as exceptionaland the FRS20 charge for share options, which totalled £73,000 (2006: £11,000).After deducting the exceptional charge and FRS20 charge for share options,reported profit before tax was £1.11m (2006: £1.49m) Earnings per share, before exceptional items and share option charges, was 4.9p(2006: 4.6p). After deducting the share option charge and exceptional item,earnings per share was 3.2p (2006: 4.6p). At the year end, the Group's net cash stood at £0.23m (30 September 2006:£0.69m) and net assets, after deducting the employee benefit trust shares in theGroup (which had a book value of £1.24m at 30 September 2007) from shareholders'equity stood at £5.42m (30 September 2006: £4.64m). Dividend The Board is pleased to recommend the payment of a final dividend for the yearended 30 September 2007 of 1.90 pence per share (2006: 1.90 pence). This makes atotal dividend for the year of 2.85 pence (2006: 2.85 pence) per share. Thefinal dividend will be paid on 19 March 2008 to shareholders on the register atthe close of business on 22 February 2008. Trading Overview Market conditions in both the UK and internationally remained very healthy overthe year and looking forward, we continue to see excellent growth opportunities.A major objective, which was achieved during the period, was to scale thebusiness for growth by attracting new fee earners. As a consequence total staffnumbers (including sub-contract staff) increased by 30% to 120 at 30 September2007 compared to 92 staff at 30 September 2006. In my interim statement, I noted the growth in business at our new Bristol andEdinburgh locations as well as at our more established UK offices but alsoreported that the profitability at the London office has been disappointing.Some six months on, I am pleased to report that we are continuing to make verygood progress in developing our presence in Bristol and Edinburgh and that wehave recorded a significant improvement in the performance of our London office.Over the second half, our London team secured several new clients, improvedcharge-out rates and enhanced staff utilisation rates, as well as adding newfee-earning consultants. As a result, in the last month of the financial year,the London office became our most profitable centre in the UK. Internationally, we continue to make significant progress. In particular, ourbusiness in the United Arab Emirates ("UAE") has seen extremely strong growth,with sales increasing by 91% to £1.45m from £0.76m last year. We are continuingto secure new appointments in this region, where the construction sectorcontinues to expand strongly. We are building on this success by setting up newoperating entities for both our dispute resolution and project servicesbusinesses in this region. Board Changes On 1 October 2007, we were pleased to welcome Colin White to the Board as GroupFinance Director. He took over the position from Peter Cove, who stepped downfrom the Board on 30 September. Colin is a chartered accountant with over 20years' experience in financial roles. He was previously Group Finance Directorof Scapa Group plc, the AIM quoted global supplier of technical tapes and cablecompounds. I would like to thank Peter for his significant contribution to the business,particularly during the time of the flotation, and I am pleased that he remainswith the Group as finance director of the Group's principal trading subsidiary,Driver Consult Ltd. On 1 October 2006, Keith Kirkwood joined the Board as a non-executive director. Keith is a chartered quantity surveyor with over 30 years' experience in both the general construction industry and in the specialist area of dispute resolution. Until recently he was Group Chief Executive of Schofield Lothian Group, the construction, engineering and infrastructure management consultancy which he founded in 1986. Under his leadership, the business was successfully developed into an international operation. Staff On behalf of the Board, I would like to thank all of our staff for theircommitment and hard work over the last twelve months. This year's resultsreflect their skill and efforts. Outlook It has been a year of investment for the Group as we focused on scaling thebusiness for growth. We are now seeing the benefits of our recruitment drive toincrease our fee-earning capability coming through in our top-line growth andsaw record sales in the final quarter of 2006/07. We have clear growth objectives for the current financial year and as well asdeveloping the Group organically, we are actively considering acquisitions whichcomplement our existing business. With construction activity in our key domestic and overseas markets remainingvery strong, we continue to regard prospects for the Group very positively. Michael Davis, Chairman CHIEF EXECUTIVE'S REPORT Once again, I am delighted to deliver my report on a successful financial year. During the year, the Group has continued to invest heavily in the recruitment offee-earning personnel. This took our staff count (including sub-contractorstaff) to 120 at 30 September 2007 from 92 at the end of the last financialyear. By the end of the financial year, all staff were fully integrated anddelivering high levels of utilisation. The Group's principal trading company, Driver Consult Ltd, comprises threebusiness streams and my review of the Group's performance has therefore been setout on that basis. UK Consultancy Services Our UK Consultancy Services, based predominantly around the provision of disputeavoidance and resolution services, are provided through our network of sevenregional offices located in Northern and Southern England and in Scotland. Relationships with key clients have strengthened during the year, reflected inthe negotiation of four framework agreements and I am pleased to report thatothers are under negotiation. All seven offices operated profitably in the year with significant improvementsin turnover and profit over the final quarter. Over the year as a whole,turnover increased to £9.33m from £7.15m, an increase of 30%. The measures taken at the end of the first half to improve the productivity ofour London office have been very successful and resulted in a significant risein the office's contribution to the business in the final quarter. During theyear, we also relocated our London office to larger premises which provide uswith ample scope for future expansion. We expect the major construction projectsplanned in the South of England for the next five years to offer us excellentgrowth opportunities. International Consultancy Services International Consultancy Services provides services to construction clientsthroughout Europe, Eastern Europe, the Americas and the Middle East. Theservices provided are substantially the same as those we provide in the UK withconcentration on high profile expert witness and arbitrator appointments. Turnover in the year increased to £1.60m from £1.21m, an increase of 32%. Thedivision has operated very profitably in the year concentrating on quantum andplanning expert assignments. We are currently in the process of opening an office in Oman which is intendedto capitalise on our existing relationships in the region and opportunitiesarising from the country's extensive construction programme. International Project Services Our International Project Services business is based in the UAE and there arepotential opportunities to develop elsewhere in the world. The services providedby our International Project Services unit complement our other business areasin that it provides commercial, planning and project controls services toproperty development companies involved in the construction of multi-milliondollar and sometimes multi-billion dollar, mixed-use developments incorporatinghouses, apartments, offices, schools, hospitals and roads. Our role often beginswith the inception of a property development and lasts until its completion aswe monitor budget, cost and timetables in all phases of development. Our operations in the UAE have continued to expand during the financial yearwith an increase in turnover to £1.45m in 2007 from £0.76m in 2006. Staffnumbers in the region increased from 10 to 18. Most pleasing of all, we start the new financial year with eleven projectscompared with three projects in the previous year and we are also pursuingseveral additional opportunities. Outlook The Group has been considerably enlarged since we joined AIM. We havestrengthened the management team, opened new offices and aggressively increasedthe number of fee earners within the Group. Looking forward, Driver is now well positioned to capitalise on growthopportunities both in the UK and in the Middle East and we intend to continue toinvest in developing the business, particularly in the Middle East, where theconstruction market is extremely strong. We are also actively engaged in seekingacquisitions, which fit our criteria. With all our markets remaining buoyant, we expect to deliver a strongerperformance in the coming year and remain confident about future prospects. Steve Driver, Chief Executive Officer DRIVER GROUP PLC CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 30 SEPTEMBER 2007 2007 2007 2007 2006 Pre-exceptional Exceptional Total Restated /share-based /share-based (note 3) payment payment (notes 2 & 3) £'000 £'000 £'000 £'000TURNOVER (note 5) 12,684 - 12,684 9,124Cost of sales (8,218) - (8,218) (5,394) ________ _______ _______ _______ GROSS PROFIT 4,466 - 4,466 3,730Administrativeexpenses- other (2,896) (73) (2,969) (2,345)- exceptional (note 2) - (485) (485) - Other operatingincome 109 - 109 79 ________ _______ _______ _______OPERATINGPROFIT 1,679 (558) 1,121 1,464 Interestreceivable andsimilar income 32 - 32 70Interestpayable andsimilar charges (39) - (39) (44) ________ _______ _______ _______PROFIT ON ORDINARYACTIVITIESBEFORE TAXATION 1,672 (558) 1,114 1,490Tax on profiton ordinaryactivities (536) 167 (369) (451) ________ _______ _______ _______PROFIT ON ORDINARY ACTIVITIESAFTER TAXATION 1,136 (391) 745 1,039Minority interests -equity (16) - (16) 7 ________ _______ _______ _______ PROFIT FOR THEFINANCIAL YEAR 1,120 (391) 729 1,046 ________ _______ _______ _______Basic earnings per share (pence) (note 4) 3.2 4.6 ======= ======= Dilutedearningsper share(pence) (note 4) 3.1 4.5 ======= ======= The operating profit for the year arises from the Group's continuing operations. DRIVER GROUP PLC CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESFOR THE YEAR ENDED 30 SEPTEMBER 2007 2007 2007 Restated - note 3 £'000 £'000 Profit for the financial year 729 1,046 Fixed asset revaluation 615 - _______ _______ Total recognised gains and losses relating to the year 1,344 1,046 Prior year adjustment (net of tax) (note 3) (8) - _______ _______ Total recognised gains and losses since last annual report 1,336 1,046 ======= ======= DRIVER GROUP PLC CONSOLIDATED BALANCE SHEET30 SEPTEMBER 2007 2007 2006 Restated - notes 3&6 £'000 £'000 £'000 £'000 FIXED ASSETS Tangible assets 3,421 2,620 CURRENT ASSETS Debtors 3,227 2,750 Cash at bank and in hand 855 1,317 _______ _______ 4,082 4,067 CREDITORS Amounts falling due within one year 1,884 1,669 _______ _______ NET CURRENT ASSETS 2,198 2,398 _______ _______ TOTAL ASSETS LESS CURRENT LIABILITIES 5,619 5,018 CREDITORS Amounts falling due after more than one year (179) (371) PROVISIONS FOR LIABILITIES (19) (3) _______ _______ NET ASSETS 5,421 4,644 CAPITAL AND RESERVES Called up share capital 99 99 Share premium 2,649 2,649 Revaluation reserve 1,338 723 Capital redemption reserve 18 18 Other reserve 84 11 Profit and loss account 2,476 2,403 Own shares (note 6) (1,242) (1,242) _______ _______ EQUITY SHAREHOLDERS' FUNDS (note 7) 5,422 4,661 MINORITY INTERESTS (1) (17) _______ _______ 5,421 4,644 ======= ======= DRIVER GROUP PLC CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 30 SEPTEMBER 2007 2007 2006 £'000 £'000 Net cash inflow from operating activities before exceptional item (note 8) 1,520 761 Cash outflow relating to exceptional item (485) - _______ _______ Net cash inflow from operating activities after exceptional item 1,035 761 Returns on investments and servicing of finance (7) 26 Taxation (593) 53 Capital expenditure and financial investment (245) (2,221) Equity dividends paid (656) (219) _______ _______ Net cash outflow before financing (466) (1,600) Financing (179) 2,475 _______ _______ (Decrease)/increase in cash in the year (645) 875 ======= ======= RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS 2007 2006 £'000 £'000 £'000 £'000 (Decrease)/increase in cash in the year (645) 875 Cash outflow from decrease in debt 179 191 _______ _______ Change in net debt resulting from cash flows (466) 1,066 _______ _______ Movement in net funds in the year (466) 1,066 Net funds/(debt) at 1 October 692 (374) _______ _______ Net funds at 30 September 226 692 ======= ======= NOTES 1 The financial information set out above does not constitute statutory accountsas defined in s.240 of the Companies Act 1985. The auditors have issued anunqualified opinion on the statutory financial statements for 2007 under UK GAAPfor the year ended 30 September 2007 which will be delivered to the Registrar ofCompanies following the Company's Annual General Meeting. 2 Exceptional items As referred to in the Group's Admission Document and the Annual Report andAccounts for the year ended 30 September 2006, Driver Group plc and DriverConsult Limited participated in the Baker Wilkins & Smith Retirement BenefitsScheme ("the Scheme"), a final salary pension scheme which is in the process ofbeing wound up. As a member of the Scheme, the Group was required to pay a debt to the Schemeunder pension legislation which provides that if the Scheme's assets areexceeded by its liabilities, the shortfall should be treated as a debt due fromthe participating employers. On 19 July 2007, the Group entered into an agreement with the Trustees of theScheme under which they agreed to pay £450,230 in full and final settlement.This amount and related legal costs of £34,321 have been disclosed as anexceptional item. The amounts charged reduce tax payable by £145,365. In order to assist in understanding the Group's results for the year incomparison to the prior year, and in view of the unusual materiality of theexceptional item, the directors believe that it is appropriate to showseparately the operating profit of the Group before exceptional items on theface of the profit and loss account as additional information. 3 Prior year adjustments Share-based paymentsThe Group adopted Financial Reporting Standard 20 (FRS 20 - Share-based Payment)for the first time in the interim report for the half year ended 31 March 2007.In accordance with the standard, the cost of share options awarded to employeesmeasured by reference to their fair value at the date of grant is recognisedover the vesting period of the options based on the number of options which inthe opinion of the Directors will ultimately vest. The cost of the share optionsis charged to the Group profit and loss account and transferred to otherreserves. As the share options are granted by the parent company to subsidiaryemployees the cost is included in the cost of its investment in shares in Groupundertakings. Comparative figures for the year ended 30 September 2006 have been restated toapply the provisions of FRS 20, increasing staff costs and consequently reducingprofit for that year by £10,943 before tax and £7,660 net of tax. The currentyear charge amounts to £73,082 before tax and £51,157 net of tax. Investment in own sharesIn prior years, assets and liabilities of the Driver Group Employee BenefitTrust were recognised on the Company's balance sheet in accordance with UITFabstract 32. Any shares in the Company purchased by the Trust were included infixed asset investments. International Financial Reporting Standards require acompany's holding in its own shares to be accounted for as a deduction fromequity rather than recognised as an asset. This accounting treatment also nowapplies in the UK, for instance under FRS25, in relation to the acquisition ofown shares, referred to as treasury shares. The Company has therefore revisedits accounting policy and deducted the cost of the Trust's investment in its ownshares of £1,242,206 from equity. Reclassification of comparative income and costComparative figures have also been adjusted to reflect a reclassification fromadministrative expenses to cost of sales of £465,548 to include in thecalculation of gross profit the total cost of direct staff includingnon-chargeable time. Rent receivable of £79,550 has also been reclassified fromturnover to other operating income. 4 Earnings per share The calculation of earnings per share before exceptional items and share basedpayments is based on earnings of £1,120,000 (2006: £1,054,000). Earnings afterdeducting these charges are £729,000 (2006: £1,046,000). The basic and dilutedweighted average number of shares in issue for the period were 23,032,229 and23,626,631 respectively (2006:22,932,498 and 23,090,900 respectively). 5 Segmental analysis The table below sets out turnover for each geographic area of operation byorigin. 2007 2006 Restated note 3 £'000 £'000United Kingdom 11,079 7,977Overseas 1,605 1,147 ________ _______ 12,684 9,124 ======== ======= Turnover by geographical destination is significantly different from turnover byorigin and is as follows: 2007 2006 Restated note 3 £'000 £'000United Kingdom 9,714 6,322Overseas 2,970 2,802 ________ _______ 12,684 9,124 ======== ======= 6 Own shares £000At 1 October 2006 as previously reported -Prior year adjustment (note 3) 1,242 _________ At 1 October 2006 as restated and 30 September 2007 1,242 ========= In prior years, assets and liabilities of the Driver Group Employee BenefitTrust were recognised on the Company's balance sheet in accordance with UITFabstract 32. Any shares in the Company purchased by the Trust were included infixed asset investments. As explained in note 3 the Company has revised itsaccounting policy and deducted the cost of the Trust's investment in its ownshares from equity. 7 Reconciliation of movement in shareholders' funds 2007 2006 As restated (note 3) £000 £000Profit for the financial year 729 1,046Dividends (656) (219)Proceeds from issue of shares - 2,666Share-based payments 73 11Investment in own shares - (1,242)Revaluation in year 615 - _________ _________ Net addition to shareholders' funds 761 2,262Opening shareholders' funds - equity 4,661 2,399 _________ _________ Closing shareholders' funds - equity 5,422 4,661 ========= ========= 8 Consolidated cash flow statement 2007 2007 2007 2006 Pre-exceptional Exceptional Total Restated - note 3 £000 £000 £000 £000Operating profit 1,606 (485) 1,121 1,464Share-based payments 73 - 73 11Depreciation charges 36 - 36 93Loss on sale oftangible fixed assets 23 - 23 -Increase in debtors (518) - (518) (806)Increase/(decrease)in creditors 300 - 300 (1) ________ _________ ________ _________Net cash inflow fromoperating activities 1,520 (485) 1,035 761 ======== ========= ======== ========= 9 Copies of the annual report and financial statements The Annual Report and Financial Statements will be sent to shareholders in duecourse. Further copies will be available to the public, free of charge at thecompany's registered office, Driver House, 4 St Crispin Way, Rossendale,Lancashire, BB4 4PW. The Annual General Meeting will be held at IoD Hub, 1st Floor, Peter House,Oxford Street, Manchester, M1 5AN on Thursday 7th February 2008 commencing at3.00pm. This information is provided by RNS The company news service from the London Stock Exchange