Driver Grp Regulatory News (DRV)

23 Jan 2007 07:01

Driver Group plc23 January 2007 23 January 2007DRV.L DRIVER GROUP PLC ("Driver Group" or "the Group") Preliminary Results For the Year ended 30 September 2006 Driver Group provides specialist commercial and dispute resolution services to the construction industry and was admitted to AIM in October 2005. KEY POINTSTrading/ Operational: • Major period of recruitment completed - six senior directors added as well as staff at all levels • Drive to expand in Scotland, South-West and London - new office opened in Bristol - freehold office acquired in Edinburgh - strengthening of London office in progress • Another Top 10 UK contractor added to client list - client base now includes 7 of the 10 largest UK contractors (by turnover) • Overseas expansion in key markets progressing well - Managing Director appointed to head international business - United Arab Emirates operation moved into profit Financial: • Turnover on continuing operations increased by 14% to £9.20m (2005: £8.06m) • Adjusted operating profits of £1.60m (2005: £1.65m) • Final dividend of 1.90p recommended - making total dividend for year of 2.85p per share • Prospects remain very encouraging Steve Driver, Chief Executive Officer, commented, "We are pleased with these results, which are in line with our expectations.Over the course of the financial year, the Group has invested heavily in therecruitment of new key personnel, creating a stronger and broader structure forfuture growth. Given the Group's increased management strength and the development of theCompany structure, together with forecast increases in construction activityboth in the UK and overseas, the Directors look forward to 2007 withconfidence." 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 DRIVER GROUP PLC CHAIRMAN'S STATEMENT Introduction I am delighted to announce very encouraging results and significant progress inour first year of trading since joining AIM in October 2005. During the financial year to 30 September 2006, we opened two new regionaloffices, in Edinburgh and Bristol, and made a number of key senior appointmentswhich significantly strengthen our consultancy capability. The investments wehave made both in staff and in our infrastructure, while impacting upon ourprofits this year, move the business forward, and create a strong platform forgrowth in 2007 and beyond. Financial Results The Group performed well and results are in line with expectations. Turnoverfrom continuing operations rose by 14% from £8.06m last year to £9.20m and grossprofit increased by 20% from £3.56m to £4.27m. The operating profit was £1.48magainst £0.03m last year. This is despite the operating profit for the yearunder review being adversely impacted by one-off costs relating to therecruitment of senior executives (totalling £0.13m). In the previous year, theoperating profit was affected by the payment of surplus profit* as bonuses andother exceptional items (totalling £1.62m). Taking into account these factors,adjusted operating profit was £1.60m against £1.65m last year. The same factorsare reflected in the profit before tax figure of £1.50m in 2006 and thebreakeven figure for 2005. Earnings per share were 4.6p (2005: 0.7p). Net assets have more than doubled to£5.88m from £2.39m. Gearing reduced from 33.5% at 30 September 2005 to 10.6% atthe end of the financial year under review. *As a private company, the Group's historical practice was to distribute surplusprofit as bonuses. This ceased on admission to AIM. Dividend In view of the Group's strong balance sheet, the Board is recommending thepayment of a final dividend of 1.90p per share to be paid on 2 March 2007 toshareholders on the register at the close of business on 9 February 2007. Thismakes a total for the year of 2.85p per share. Trading Overview Admission to AIM in October 2005 and the associated publicity has increased theGroup's profile and brought significant benefits. In particular, it has helpedto differentiate clearly the Group from its competitors and demonstrated theambition of the management team. A key aim for the Group, stated at the time of Admission to AIM, is to enlargethe business both domestically and in certain overseas markets and to growmarket share. We have strengthened our senior management team during the year with therecruitment of six senior Directors and several other specialist members ofstaff, including a well respected Academic Support and Knowledge Manager. Theseappointments were made to support our move into new territories or to strengthenour position in areas which offer good growth potential. In the UK, we appointedDirectors to head operations in Scotland, the South-West Region and London.These were all newly created positions. In order to support our expansion plansoverseas, we restructured our international business and appointed a ManagingDirector responsible for international development. In early June, we acquired freehold premises in central Edinburgh and opened anew office in Bristol. Both offices were operating profitably by the year end. In growing market share, we continue to focus on working for larger constructionand engineering contractors. Over the year, we secured instructions from anadditional leading UK contractor. This means that the client base now includes 7of the 10 largest contractors (by turnover) in the UK. Our relationships acrossour client base remain strong and we advised on a wide variety on instructionsacross many sectors, including transportation, energy, process, infrastructure,building, water, chemical and IT, both in the UK and overseas. Our business in the United Arab Emirates ("UAE"), which was established in 2005,continued to grow and we secured appointments from a number of new clientsoperating either in property development, construction or consultancy. I ampleased to report that our UAE operation moved into profits over the year and weare delighted with the rapid scaling of the business that we have achieved. Prospects The Group now has in place a management and structure which can address,efficiently and effectively, the needs of existing and potential clients both inthe UK and internationally. With the anticipated increases in constructionactivity in the UK and the UAE, and the skills, capacity and potential forgrowth within the Group, the Directors look forward to 2007 with confidence. Michael DavisChairman CHIEF EXECUTIVE'S REPORT Once again, I am delighted to deliver my report on a successful financial year. Over the course of the financial year, the Group has invested heavily in therecruitment of new key personnel, creating a stronger and broader structure forfuture growth. Capitalising on the increased profile gained by the admission toAIM in October 2005, the Group's principal trading company, Driver ConsultLimited, has recruited at all levels, including six high profile Directors, twoSenior Associate Directors as well as several specialists and other new staff.This took our total staff count to 82 staff at 30 September 2006 from 57 staffat the end of the last financial year. This investment has substantiallystrengthened the Group's senior management team and is intended to accelerateour ambitious expansion plans for the business both in the UK and overseas. In tandem with these appointments, we acquired freehold offices in the heart ofEdinburgh and opened an office in Bristol as part of our strategy to expandsignificantly in both geographical areas. The development of the Group's structure focuses on three business streams - UKConsultancy Services, International Consultancy Services and InternationalProject Services. My review of the Group's performance has therefore been setout on this basis. UK Consultancy Services UK Consultancy Services, headed by David Webster, are provided through a networkof regional offices located in Scotland, the North and South of England. Theservices offered include dispute avoidance, commercial, planning andprogramming, risk analysis and dispute resolution services. A particular highlight in the financial year was winning a number ofappointments from a new major new client, a leading UK contractor. The additionof this major UK contractor to our client list means that the Group's now worksfor 7 of the top 10 UK contractors. At the time of the Group's IPO in the autumnof 2005, our client list comprised 6 of the top UK contractors. All divisions within UK Consultancy Services operated profitably during thefinancial year, with significant growth in the Northern Region in particular.Here, turnover increased from £4.63m to £4.94m, a rise of 6%, and profitimproved from £1.08m to £1.22m, an increase of 13%. Growth in our Liverpooloffice was particularly impressive with turnover increasing by 148%. As part of our plans to develop the business, UK Consultancy Services wasstrengthened by the appointment of 4 new Directors - Andrew Glover as NorthernRegional Director, Sandy Dickson as Scottish Regional Director, Mark Wheeler asBristol Office Director and Greg Russell as London Office Director. Andrew Glover was appointed as Northern Regional Director in April 2006, takingon responsibility for the Region from David Webster, following David'sappointment to the Group Board and as Managing Director (UK). Sandy Dickson was appointed as Scottish Regional Director in May 2006 to set upour Scottish office. This is now established in new premises and a team of 7staff has been built up in the 5 months since opening. The Scottish office endedthe financial year operating profitably. Mark Wheeler was appointed as Bristol Office Director in June 2006 and by theend of the financial year, the new Bristol office was also operating profitably. Greg Russell was appointed as London Office Director in September 2006 to takeover and develop the London office in accordance with our stated objectives atthe start of the year. We also appointed a well respected Academic Support and Knowledge Manager, AnnGlacki in July 2006. Ann provides research and data material both internally andto key clients as an additional service. We believe this service gives us acompetitive edge and it is already being used extensively by a significantnumber of contractors, lawyers and construction professionals throughout the UK. International Consultancy Services International Consultancy Services provides services to clients throughoutEurope, Eastern Europe, the Americas and the Middle East. The services providedare substantially the same as those we provide in the UK with concentration onhigh profile Expert Witness and Arbitrator appointments. Cameron Hill was appointed as Managing Director of this division in September2006 to drive growth of the division going forward. In addition to theappointment of Cameron Hill, the division recruited Tim McGoldrick as HeavyEngineering Director to focus the Group's efforts on work in the Power andProcess industries. The division has operated very profitably in the year with significantimprovements in margins in comparison with previous years. A particular successin the year was our appointment as Independent Quantum and Planning Expert inrelation to a multi million dollar dispute in Trinidad. International Project Services International Project Services is based in the UAE, with potential opportunitiesto develop business elsewhere in the world. The services provided by thisdivision differ from the other divisions in that it provides commercial,planning and project controls services to property development companies lookingto construct multi-million dollar and sometimes multi-billion dollar, mixed-usedevelopments incorporating houses, apartments, offices, schools, hospitals,roads, etc. Our role often begins with the inception of a property developmentand lasts until its completion as we monitor budget, cost and time in all phasesof development. This has been a profitable financial year for International Project Serviceswith an increase in the number of employees over the year in the UAE to 10staff, working on a variety of projects. Outlook Given the Group's increased management strength and the development of theCompany structure, together with forecast increases in construction activityboth in the UK and overseas, the Directors look forward to 2007 with confidence. Stephen DriverChief Executive Officer DRIVER GROUP PLCCONSOLIDATED PROFIT AND LOSS ACCOUNTFor the year ended 30 September 2006 2006 2005 (Restated - Note 1) £ £ ---------------------- Turnover 9,203,260 8,059,128 Cost of sales (including exceptional items) 4,928,385 4,495,767 ---------------------- Gross profit 4,274,875 3,563,361 Administrative expenses (including exceptional items) 2,799,592 3,533,388 ---------------------- Operating profit before exceptional items 1,475,283 1,649,858 Exceptional items - 1,619,885 ---------------------- Operating profit 1,475,283 29,973 (Loss)/profit on sale of tangible fixed assets (10) 3,805 Profit on sale of fixed asset investments - 4,615 ---------------------- 1,475,273 38,393 Interest receivable and similar income 70,221 22,812 Interest payable and similar charges (44,381) (61,131) ---------------------- Profit on ordinary activities before taxation 1,501,113 74 Tax on profit on ordinary activities (454,574) 103,047 ---------------------- Profit on ordinary activities after taxation 1,046,539 103,121 Minority interests - equity 7,331 9,958 ---------------------- Profit for the financial year 1,053,870 113,079 ---------------------- Basic earnings per share before exceptional items (pence) 4.6 7.4 ---------------------- Basic earnings per share after exceptional items (pence) 4.6 0.7 ---------------------- Diluted earnings per share (pence) 4.6 0.6 ====================== DRIVER GROUP PLCCONSOLIDATED BALANCE SHEET30 September 2006 2006 2005 £ £ £ £ ------------------------------------------- Fixed assets Tangible assets 2,620,193 1,734,235Investments 1,242,206 - ---------- --------- 3,862,399 1,734,235 Current assets Debtors 2,750,283 1,996,863 Cash at bank and in hand 1,316,504 427,995 ---------- ---------- 4,066,787 2,424,858 Creditors Amounts falling due within one year 1,668,997 1,190,790 ---------- ----------Net current assets 2,397,790 1,234,068 ---------- ---------Total assets less current liabilities 6,260,189 2,968,303 Creditors Amounts falling due after more than one year (371,117) (574,293)Provisions for liabilities and charges (6,457) (4,844) ---------- ---------Net assets 5,882,615 2,389,166 ---------- --------- Capital and reserves Called up share capital 98,932 81,863Share premium 2,648,647 -Revaluation reserve 722,954 722,954Capital redemption reserve 18,137 18,137Profit and loss account 2,411,185 1,576,121Equity shareholders' funds 5,899,855 2,399,075 ---------- ----------Minority interests (17,240) (9,909) ---------- ---------- 5,882,615 2,389,166 ========== ========== DRIVER GROUP PLCCONSOLIDATED CASH FLOW STATEMENTFor the year ended 30 September 2006 2006 2005 £ £ £ £ -------------------------------------- Net cash inflow from operating activities 761,353 138,604Returns on investments and servicing of finance Interest received 70,221 22,812 Interest paid (44,381) (61,131) -------- --------Net cash inflow/(outflow) for returns on investment and servicingof finance 25,840 (38,319)Taxation 52,920 (139,973)Capital expenditure and financial investment Purchase of tangible fixed assets (981,110) (62,296)Purchase of fixed assetinvestments (1,242,206) -Sale of tangible fixed assets 1,929 9,701Sale of fixed asset investments - 399,061 --------- --------Net cash (outflow)/ inflow for capital expenditure and financial investment (2,221,387) 346,466 Acquisitions and disposals Demerger of subsidiary undertaking - (112,820) --------- ---------Net cash outflow for acquisitions and disposals - (112,820) Equity dividends paid (218,806) - --------- -------- Net cash (outflow)/ inflow before financing (1,600,080) 193,958Financing Loan repayments (190,834) (177,814) Issue of ordinary share capital 3,115,000 - Issue costs (449,284) - ---------- --------Net cash inflow/ (outflow) from financing 2,474,882 (177,814) --------- --------Increase in cash 874,802 16,144 ========= ======== DRIVER GROUP PLC 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 2006 under UK GAAPfor the year ended 30 September 2006 which will be delivered to the Registrar ofCompanies following the Company's Annual General Meeting. The comparative figures have been adjusted to reflect a reclassification fromadministrative expenses to cost of sales of £542,274, inclusive of exceptionalitems of £77,816, to include in the calculation of gross profit the costs of theproportion of senior management time directly attributable to turnover. 2 Earnings per share The calculation of earnings per share before and after exceptional items isbased on earnings of £1,053,870 and the basic and diluted weighted averagenumber of shares in issue for the period of 22,932,498 and 23,090,900respectively (2005: £1,246,999 and £113,079, and 16,760,832 and 18,667,602). 3 Segmental analysis The table below sets out turnover for each geographic area of operation byorigin. 2006 2005 £ £United Kingdom 8,055,951 7,584,644Overseas 1,147,309 474,484 -------------------------- 9,203,260 8,059,128 -------------------------- Turnover by geographical destination is significantly different from turnover byorigin and is as follows: 2006 2005 £ £United Kingdom 6,400,887 5,864,970Overseas 2,802,373 2,194,158 -------------------------- 9,203,260 8,059,128 -------------------------- 4 Reconciliation of movement in shareholders' funds 2006 2005 £ £Profit for the financial year 1,053,870 113,079Dividends (218,806) (195,022)Proceeds from issue of shares 2,665,716 - ----------------------- Net addition/(reduction) to shareholders' funds 3,500,780 (81,943)Opening shareholders' funds - equity 2,399,075 2,481,018 -----------------------Closing shareholders' funds - equity 5,899,855 2,399,075 ----------------------- 5 Consolidated cash flow statement a) Reconciliation of operating profit to net cash inflow from operatingactivities 2006 2005 £ £Operating profit 1,475,283 29,973Depreciation charges 93,213 81,416Increase in debtors (806,340) (187,967)(Decrease)/increase in creditors (803) 215,182 ---------------------------Net cash inflow from operating activities 761,353 138,604 --------------------------- b) Reconciliation of net cash flow to movement in net debt 2006 2005 £ £Increase in cash in the year 874,802 16,144Cash outflow from decrease in debt 190,834 177,814 -----------------------------Movement in net debt in the year 1,065,636 193,958Net debt at 1 October (374,458) (568,416) -----------------------------Net funds/(debt) at 30 September 691,178 (374,458) ----------------------------- 6 Pensions Driver Group plc and Driver Consult Limited participated in the Baker Wilkins &Smith Retirement Benefits Scheme, a final salary scheme that commenced in 1973(the "Scheme"). The assets of the Scheme are administered by trustees in a fundindependent from those of the companies. In accordance with Financial ReportingStandard 17, contributions to the Scheme have been accounted for as if it were adefined contribution scheme as it has not been possible to identify thecompanies' share of the underlying assets and liabilities. Contributions to theScheme ceased on 31 May 2002. The Scheme is currently in the process of being wound up which means that theGroup may be required to pay a debt to the Scheme if the assets of the Schemeare less that its liabilities. The liabilities of the Scheme can be calculated on a minimum funding requirementbasis or a full buy out basis depending on the date when the winding-up of theScheme commenced. The Group has obtained legal advice that the liabilities arelikely to be calculated on a minimum funding requirement basis. As referred to in the Group's Admission Document, the Group receivedapproximations in August 2005 which suggested that, at that time, on a giltmatching minimum funding requirement basis there may be a debt due to the Schemeof approximately £500,000. The approximations also suggest that the Group'sshare of any such liability may be approximately 30 per cent of any Schemedeficit. A quotation obtained in August 2004, suggested a total fundingshortfall on a full buy out basis of £2.87 million which would approximate to anaggregate Group liability of approximately £860,000 assuming a 30 per cent Groupcontribution. These are approximations only and the actual amount of any Scheme deficit andthe Group's contribution can only be calculated when the Trustees of the Schemeformally confirm the date upon which they wish to establish the debt and themethod of valuation. The liabilities of the Scheme are also likely to haveincreased as a result of the time taken to wind up the Scheme. The Trustees of the Scheme wrote to the members of the Scheme on 9 November 2006confirming that they were looking at the basis upon which the liabilities of theScheme should be valued, had appointed independent lawyers to assist them withthis process and that they could not therefore give any definite estimate as towhen winding up of the Scheme would be completed. 7 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. This information is provided by RNS The company news service from the London Stock Exchange