Interim Results

Driver Group plc 18 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. Of particular note is the progress made on increasing the number of fee-earners across 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. One of 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. 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. Of particular note is the progress made on increasing the number of fee-earners across 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, an increase of 40% over the corresponding period to March 2006 (£4.29m) and, perhaps more significantly, an increase of 22% over the immediately preceding six months to September 2006 (£4.92m). Pre-tax profit was in line with expectations at £0.75m (2006: £0.85m) after recognising the increase in costs resulting from a substantial rise in headcount. Of the increase in administrative expenses, £0.4m related to the initial non-fee earning time of the new recruits, a variable overhead which will diminish as the new staff become fully utilised. The increase in administrative costs also includes a first time FRS20 (Share-based payment) charge of £36k. Despite the increase in headcount and related costs the operating profit increased by 20% when compared to the immediately preceding six months to September 2006. Basic earnings per share for the half year were 2.3p (2006: 2.6p). Net assets at the end of the period increased to £6.0m (2006 £ 4.5m). The Group's net cash position continues to be strong although cash in the period has reduced principally by working capital requirements due to the increase in sales. Dividend The Board is pleased to declare an interim dividend of 0.95p per share which will be paid on 18 July 2007 to shareholders on the register on 29 June 2007 other than the Driver Group Employee Benefit Trust. Trading performance In the UK the growth in sales has demonstrated both the continuing demand for the Group's services and the professional way in which our people meet the needs of 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 locations as well as in the more established offices across the UK. However, profitability of the London office has been disappointing, despite developing new sources of work. Appropriate action has been taken to ensure that the full potential of this office is realised. In the International Division good progress has been made with Heavy Engineering and Europe doing particularly well. Our business in the UAE, where the total number of employees in the region grew from 4 to 17, increased revenues strongly in the period with work progressing on 7 projects. Encouragingly, we are also seeing good opportunities emerging in Oman and the USA. Recruitment is key to increasing future fee earning capacity. In the 12 month period to March 2007, the number of fee earners across the group has risen by 63% from 57 to 93. In what is a tight labour market, attracting and retaining quality people (along with the associated costs) remains one of the key challenges to ensure continued growth. During the period a small recruitment business was established with recruitment consultants experienced in the construction sector, to service both the needs of the Group as well as providing services to key clients. I am pleased to report that the investment programme in Group infrastructure, encompassing IT, marketing and management systems, to provide effective support for fee earners is both proceeding on time and on budget. Outlook Whilst our sales performance is beginning to positively reflect the investments we have made, the full benefit to sales and profits will take slightly longer than originally envisaged. However, the potential and ambition of the senior management team is considerable and we continue to be very positive about the prospects for the future. Michael Davis Chairman 15 June 2007 Consolidated Profit and Loss Account For 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 9,203,260 Cost of sales 3,269,246 2,268,368 4,928,385 -------- -------- ---------- GROSS PROFIT 2,720,358 2,018,229 4,274,875 Administrative expenses 1,972,278 1,176,418 2,810,535 -------- -------- ---------- OPERATING PROFIT 748,080 841,811 1,464,340 Loss on sale of tangible fixed assets 1,575 310 10 -------- -------- ---------- 746,505 841,501 1,464,330 Interest receivable and similar income 22,613 34,543 70,221 Interest payable and similar charges (17,890) (22,935) (44,381) -------- -------- ---------- PROFIT ON ORDINARY ACTIVITES BEFORE TAXATION 751,228 853,109 1,490,170 Tax on profit on ordinary activities 225,368 255,933 451,291 -------- -------- ---------- PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 525,860 597,176 1,038,879 Minority 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 Losses For the half year ended 31 March 2007 Total recognised gains and losses relating to the period 523,723 603,162 1,046,210 Prior year adjustment (net of tax) (7,660) - - ------- ------- ------- Total recognised gains and losses since last annual report 516,063 603,162 1,046,210 ------- ------- ------- *The restatement of the prior year results relates to the new accounting treatment for share-based compensation as required by Financial Reporting Standard 20 (note 1). Consolidated Balance Sheet 31 March 2007 Unaudited Unaudited Audited 31 March 31 March 30 September 2007 2006 2006 £ £ £ (Restated - note 1) FIXED ASSETS Tangible assets 2,721,117 1,744,459 2,620,193 Investments 1,242,206 127,206 1,242,206 --------- --------- ---------- 3,963,323 1,871,665 3,862,399 --------- --------- ---------- CURRENT ASSETS Debtors 3,358,753 2,176,847 2,750,283 Cash at bank and in hand 929,419 2,063,317 1,316,504 --------- --------- ---------- 4,288,172 4,240,164 4,066,787 CREDITORS Amounts 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 CURRENT LIABILITIES 6,283,440 5,015,894 6,263,472 CREDITORS Amounts falling due after more than one year (266,396) (474,063) (371,117) PROVISIONS FOR LIABILITIES AND CHARGES (6,457) (4,844) (6,457) --------- --------- ---------- NET ASSETS 6,010,587 4,536,987 5,885,898 --------- --------- ---------- CAPITAL AND RESERVES Called up share capital 98,932 92,822 98,932 Share premium 2,648,647 1,539,686 2,648,647 Revaluation reserve 722,954 722,954 722,954 Capital redemption reserve 18,137 18,137 18,137 Other reserve 47,384 - 10,943 Profit 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 Statement For 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 AND SERVICING 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 FLOW TO MOVEMENT IN NET FUNDS (Decrease)/increase in cash in the period (340,194) 1,641,913 874,802 Cash 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 its subsidiary companies made up to 31 March 2007. The information set out does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The financial information for the full preceding year is based on the financial statements for the financial year ended 30 September 2006. These accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies. The interim financial information has been prepared on the basis of accounting policies set out in the statutory accounts for the year ended 30 September 2006, with the exception of accounting for share based payments. This follows the adoption of Financial Reporting Standard 20 (FRS 20 - Share-based Payment) for the year ending 30 September 2007. In accordance with the standard, the cost of share options awarded to employees measured by reference to their fair value at the date of grant is recognised over the vesting period of the options based on the number of options which in the opinion of the Directors will ultimately vest. The cost of the share options is charged to the profit and loss account and transferred to other reserves (see note 8). No adjustment is required to comparative figures for the half year ended 31 March 2006. Comparative figures for the year ended 30 September 2006 have been restated to apply the provisions of FRS20, increasing staff costs and other operating 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 of operation by origin United Kingdom 5,251,021 3,785,390 8,055,951 Overseas 738,583 501,207 1,147,309 --------- --------- --------- 5,989,604 4,286,597 9,203,260 --------- --------- --------- Operating profit by geographical area of operation by origin United Kingdom 682,047 793,422 1,421,059 Overseas 66,033 48,389 43,281 --------- --------- --------- 748,080 841,811 1,464,340 --------- --------- --------- Net assets United Kingdom 5,455,020 4,446,375 5,800,394 Overseas 555,567 90,612 85,504 --------- --------- --------- 6,010,587 4,536,987 5,885,898 --------- --------- --------- Turnover by geographical area of operation by destination United Kingdom 4,512,278 2,886,007 6,400,887 Overseas 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 is based on an effective rate of 30% which has been calculated by reference to the projected charge for the full year. 4 DIVIDEND It is proposed that an interim dividend for the half year ended 31 March 2007 of 0.95p per share costing £218,806 be paid on 18 July 2007 to all the shareholders on the register on 29 June 2007 other than the Driver Group Employee Benefit Trust. 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 23,709,624 Non-vested shares held by EBT (1,700,645) (115,499) (777,126) --------- --------- --------- Basic weighted average number of 23,032,229 23,089,978 22,932,498 shares Issuable on conversion of options 335,505 - 106,345 Issuable on conversion of warrants 259,640 - 52,057 --------- --------- --------- Diluted weighted average number of shares 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 PROFIT TO 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 1,464,340 Share-based compensation 36,441 - 10,943 Depreciation charges 64,244 42,472 93,213 Increase in debtors (649,666) (274,100) (806,340) Increase/(decrease) in creditors 117,696 (256,251) (803) --------- --------- --------- NET CASH INFLOW FROM 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) 929,419 Bank 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 - 2,411,185 FRS20 adjustment - - - 10,943 (7,660) -------- -------- -------- -------- --------- As restated 2,648,647 722,954 18,137 10,943 2,403,525 Profit for the period - - - - 523,723 Dividends 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 copy will 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 for the half year ended 31 March 2007 which comprises the consolidated profit and loss 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 and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. This report, including the conclusion, has been prepared for and only for the company for the purpose of their interim report and for no other purpose. We do not, therefore in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with the Alternative Investment Market Rules which require that the accounting policies and presentation applied to the interim figures must be consistent with those that will be adopted in the company's annual accounts. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom, as if that Bulletin applied. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the half year ended 31 March 2007. Harold Sharp Chartered Accountants Sale 15 June 2007 This information is provided by RNS The company news service from the London Stock Exchange

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