Interim Results

Driver Group plc 22 June 2006 Driver Group plc DRV.L DRIVER GROUP PLC ('Driver Group' or 'the Group') Interim Results for the six months ended 31 March 2006 Highlights â€¢ Turnover increased to Â£4.3m (2005: Â£4.1m) â€¢ Pre-tax profit rose to Â£0.85m (2005: Â£0.02m) â€¢ Earnings per share increased to 2.6p (2005: 0.3p) â€¢ Net cash at period end of Â£2.0m (2005: Â£0.7m) â€¢ Proposed interim dividend of 0.95p per share â€¢ Substantial investment in Group's infrastructure over first half and third quarter of financial year - consultancy resource significantly strengthened - first offices in Abu Dhabi and Dubai opened - expansion into Scotland and South-West of England â€¢ Benefits of investment to be felt in next financial year â€¢ Prospects very positive Michael Davis, Chairman of Driver, commented, 'At the time of Driver Group's admission in October 2005, we stated that we had ambitious growth plans for the Company. Since joining AIM, we have invested significantly in the business. Our investment has been focused on building our consultancy capability through the recruitment of senior level consultants with a proven track record in the industry. The potential to develop our business both in the UK and the Middle East remains significant. With the additions we have made to the senior management team, the breadth of experience across the Group and the continuing high reputation for quality work for established clients, we continue to view prospects very positively.' Enquiries: Driver Group plc Steve Driver, CEO 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 At the time of Driver Group's admission in October 2005, we stated that we had ambitious growth plans for the Company. Since joining AIM, we have invested significantly in the business. Our investment has been focused on building our consultancy capability through the recruitment of senior level consultants with a proven track record in the industry. In May and June, we were delighted to announce the appointment of key individuals who will lead our expansion in Scotland and in the South-West of England as well as two highly experienced directors who have taken up the positions of Northern Regional Director and Heavy Engineering Director. In June, we were also pleased to announce the acquisition of premises in Edinburgh and the opening of a new office in Bristol. These appointments have greatly strengthened our position in the UK and we expect to see the benefits reflected in the Group's results in the next financial year and beyond. Financial Overview Turnover for the six month period increased by 5.5% to Â£4.3 million from Â£4.1m last year and gross profit increased by 15% to Â£2.0 million, reflecting our objective of focusing on higher margin work. As planned, overheads rose over the period, with almost all the increase relating to investment in consultancy resource. I am pleased to report that operating profit was in line with the Board's expectations at Â£0.84 million (2005: Â£0.05m after surplus profit bonuses and non-recurring expenses) and pre-tax profit was Â£0.85 million (2005: Â£0.02 million). Earnings per share rose to 2.6p from 0.3p last year. The Group's cash position remains strong, with net cash at 31 March 2006 of Â£2.0m (2005: Â£0.7m). Dividend The Board is pleased to propose an interim dividend of 0.95p per share, which will be paid on 21 July 2006 to shareholders on the register on 30 June 2006 other than the Driver Group Employee Benefit Trust. Trading Performance We continue to make good progress in both the UK and overseas. The increase in the Group's profile as a result of our admission to AIM has brought considerable benefits in terms of recruitment and new business opportunities. Over the period, we were pleased to take instruction from yet another major contractor and this means that our client base now includes seven of the 10 largest contractors in the UK. As I outlined in my introduction, we have recruited several senior people in the industry and are well advanced in our plans to build our presence in Scotland and the South-West of England, where we currently have only a limited representation. We are also seeking to strengthen our operations in the South-East, particularly London. I am pleased with the progress we have made overseas. In Europe, we have re-focused our efforts to concentrate on higher margin business. In the Middle East, our business is in line with expectations, currently employing six fee earners, and, following the initial investment, since April the business has been operating profitability. Outlook The potential to develop our business both in the UK and the Middle East remains significant. With the additions we have made to the senior management team, the breadth of experience across the Group and our continuing high reputation for quality work for established clients, we continue to view prospects very positively. Michael Davis Chairman DRIVER GROUP PLC Consolidated Profit and Loss Account For the half year ended 31 March 2006 Unaudited Unaudited Audited half year half year year ended ended 31 ended 31 30 March 2006 March 2005 September 2005 Â£ Â£ Â£ (Restated- note 1) ------------------------------------ Turnover 4,286,597 4,062,562 8,059,128 Cost of sales 2,268,368 2,314,075 4,495,767 ------------------------------------ Gross profit 2,018,229 1,748,487 3,563,361 Administrative expenses 1,176,418 1,702,716 3,533,388 ------------------------------------ Operating profit 841,811 45,771 29,973 (Loss)/profit on sale of tangible fixed assets (310) - 3,805 Profit on sale of fixed asset investments - 4,615 4,615 ------------------------------------ 841,501 50,386 38,393 Interest receivable and similar income 34,543 6,547 22,812 Interest payable and similar charges (22,935) (34,854) (61,131) ------------------------------------ Profit on ordinary activities before taxation 853,109 22,079 74 Tax on profit on ordinary activities (255,933) 24,557 103,047 ------------------------------------ Profit on ordinary activities after taxation 597,176 46,636 103,121 Minority interests - equity 5,986 2,757 9,958 ------------------------------------ Profit for the financial period 603,162 49,393 113,079 Dividends - (195,022) (195,022) ------------------------------------ Retained profit/(loss) for the period 603,162 (145,629) (81,943) ------------------------------------ Basic earnings per share 2.6p 0.3p 0.7p ------------------------------------ Diluted earnings per share (pence) 2.6p 0.3p 0.6p DRIVER GROUP PLC Consolidated Balance Sheet At 31 March 2006 Unaudited Unaudited Audited 31 March 31 March 30 September 2006 2005 2005 Â£ Â£ Â£ ---------------------------------------- Fixed assets Tangible assets 1,744,459 1,741,222 1,734,235 Investments 127,206 294,085 - ---------------------------------------- 1,871,665 2,035,307 1,734,235 ---------------------------------------- Current assets Debtors 2,176,847 1,740,808 1,996,863 Cash at bank and in hand 2,063,317 653,552 427,995 ---------------------------------------- 4,240,164 2,394,360 2,424,858 Creditors Amounts falling due within one year (1,095,935) (1,414,347) (1,190,790) ---------------------------------------- Net current assets 3,144,229 980,013 1,234,068 ---------------------------------------- Total assets less current liabilities 5,015,894 3,015,320 2,968,303 Creditors Amounts falling due after more than one year (474,063) (674,160) (574,293) Provisions for liabilities and charges (4,844) (8,480) (4,844) --------------------------------------- Net assets 4,536,987 2,332,680 2,389,166 --------------------------------------- Capital and reserves Called up share capital 92,822 81,863 81,863 Share premium 1,539,686 - - Revaluation reserve 722,954 722,954 722,954 Capital redemption reserve 18,137 18,137 18,137 Profit and loss account 2,179,283 1,506,435 1,576,121 -------------------------------------- Equity shareholders' funds 4,552,882 2,335,389 2,399,075 Minority interests (15,895) (2,709) (9,909) -------------------------------------- 4,536,987 2,332,680 2,389,166 -------------------------------------- DRIVER GROUP PLC Consolidated Cash Flow Statement For the half year ended 31 March 2006 Unaudited Unaudited Audited year half year half year ended ended 31 March ended 31 March 30 September 2006 2005 2005 Â£ Â£ Â£ -------------------------------------------- Net cash inflow from operating activities 353,932 386,455 138,604 Returns on investment and servicing of finance 11,608 (28,307) (38,319) Taxation - (32,625) (139,973) Capital expenditure and financial investment (180,212) 83,625 346,466 Acquisitions and disposals - (112,820) (112,820) -------------------------------------------- Net cash inflow before financing 185,328 296,328 193,958 Financing 1,456,585 (87,460) (177,814) -------------------------------------------- Increase in cash in the period 1,641,913 208,868 16,144 -------------------------------------------- RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT Increase in cash in the period 1,641,913 208,868 16,144 Cash outflow from decrease in debt 94,060 87,460 177,814 ------------------------------------------- Movement in net debt in the period 1,735,973 296,328 193,958 Opening net debt (374,458) (568,416) (568,416) ------------------------------------------- Closing net funds/(debt) 1,361,515 (272,088) (374,458) ------------------------------------------- DRIVER GROUP PLC NOTES 1 BASIS OF PREPARATION The interim report which is the responsibility of the directors and has not been audited, was approved by the directors on 21 June 2006. The figures for the half year ended 31 March 2006 have been prepared using the same accounting policies as for the year ended 30 September 2005. These unaudited interim financial statements do not constitute statutory accounts. They have, however, been reviewed by the auditors. Comparative figures for the year ended 30 September 2005 have been extracted from the financial statements which have been filed with the Registrar of Companies. These were audited and reported upon without qualification by Harold Sharp and did not contain any statement under section 237 of the Companies Act 1985. The comparative figures have been adjusted to reflect a reclassification from administrative expenses to cost of sales of Â£542,274, inclusive of exceptional items of Â£77,816, to include in the calculation of gross profit the cost of the proportion of senior management time directly attributable to turnover. 2 SEGMENTAL ANALYSIS Unaudited Unaudited Audited half year half year ended year ended 31 March ended 2005 31 March 30 September 2006 2005 Â£ Â£ Â£ -------------------------------------- Turnover by geographical area of operation by origin United Kingdom 3,785,390 3,859,746 7,584,644 Overseas 501,207 202,816 474,484 -------------------------------------- 4,286,597 4,062,562 8,059,128 -------------------------------------- Operating profit by geographical area of operation by origin United Kingdom 793,422 18,174 28,319 Overseas 48,389 27,597 1,654 -------------------------------------- 841,811 45,771 29,973 -------------------------------------- Net assets United Kingdom 4,446,375 2,264,527 2,346,943 Overseas 90,612 68,153 42,223 -------------------------------------- 4,536,987 2,332,680 2,389,166 -------------------------------------- Turnover by geographical area of operation by destination United Kingdom 2,886,007 2,893,318 5,864,970 Overseas 1,400,590 1,169,244 2,194,158 -------------------------------------- 4,286,597 4,062,562 8,059,128 -------------------------------------- 3 EXCEPTIONAL ITEMS Unaudited Unaudited Audited half year half year year ended ended ended 30 September 31 March 31 March 2005 2006 2005 Â£ Â£ Â£ (Restated - note 1) ---------------------------------------- Surplus profit bonuses in administrative expenses - 700,000 1,444,885 Other non-recurring expenses - Cost of sales - 87,630 146,000 - Administrative expenses - 19,000 29,000 ---------------------------------------- - 806,630 1,619,885 ---------------------------------------- The company has historically paid surplus profits as bonuses as opposed to distributing them by way of dividend. Following admission to AIM on 13 October 2005, the directors have ceased the payment of surplus profit bonuses and intend to adopt a progressive dividend policy whilst maintaining an appropriate level of dividend cover. Other non-recurring expenses for the year ended 30 September 2005 include one off costs associated with establishing Adjudication Toolkit of Â£25,000 and one-off costs associated with establishing a presence in the UAE of Â£150,000. 4 TAXATION The charge for taxation on the profit for the half year ended 31 March 2006 is based on an effective rate of 30% which has been calculated by reference to the projected charge for the full year. 5 DIVIDEND It is proposed that an interim dividend for the half year ended 31 March 2006 of 0.95p per share costing Â£218,806 be paid on 21 July 2006 to all the shareholders on the register on 30 June 2006 other than the Driver Group Employee Benefit Trust. 6 EARNINGS PER SHARE Unaudited Unaudited Audited half year half year year ended ended ended 30 September 31 March 31 March 2005 2006 2005 Â£ Â£ Â£ --------------------------------------- Profit for the financial period 603,162 49,393 113,079 --------------------------------------- Weighted average number of shares: Ordinary shares in issue 23,205,477 20,465,750 20,465,750 Non-vested shares held by EBT (115,499) (5,983,000) (3,704,918) --------------------------------------- Basic weighted average number of shares 23,089,978 14,482,750 16,760,832 Issuable on conversion of options - 3,049,935 1,906,770 --------------------------------------- Diluted weighted average number of shares 23,089,978 17,532,685 18,667,602 --------------------------------------- Basic earnings per share 2.6p 0.3p 0.7p --------------------------------------- Diluted earnings per share 2.6p 0.3p 0.6p --------------------------------------- The 696,164 warrants to subscribe for ordinary shares at a price of 73 pence per share are not considered to be dilutive. 7 RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES Unaudited Unaudited Audited half year half year year ended ended ended 30 September 31 March 31 March 2005 2006 2005 Â£ Â£ Â£ --------------------------------------- Operating profit 841,811 45,771 29,973 Depreciation charges 42,472 39,380 81,416 Increase in debtors (274,100) (6,766) (187,967) (Decrease)/increase in creditors (256,251) 308,070 215,182 --------------------------------------- NET CASH INFLOW FROM OPERATING ACTIVITIES 353,932 386,455 138,604 --------------------------------------- 8 ANALYSIS OF CHANGES IN NET DEBT At 01/10/05 Cash flow At 31/03/06 Â£ Â£ Â£ ------------------------------------- Net cash: Cash at bank and in hand 427,995 1, 635,322 2,063,317 Bank overdraft (34,900) 6,591 (28,309) ------------------------------------- 393,095 1,641,913 2,035,008 ------------------------------------- Debt: Debts falling due within one year (193,260) (6,170) (199,430) Debts falling due after one year (574,293) 100,230 (474,063) ------------------------------------- (767,553) 94,060 (673,493) ------------------------------------- Total (374,458) 1,735,973 1,361,515 ------------------------------------- 9 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS Unaudited Unaudited Audited half year half year year ended ended ended 30 September 31 March 31 March 2005 2006 2005 Â£ Â£ Â£ --------------------------------------- Profit for the financial period 603,162 49,393 113,079 Dividends - (195,022) (195,022) --------------------------------------- 603,162 (145,629) (81,943) Shares issued net of expenses 1,550,645 - - --------------------------------------- NET ADDITION/(REDUCTION) TO SHAREHOLDERS' FUNDS 2,153,807 (145,629) (81,943) Opening shareholders' funds - equity 2,399,075 2,481,018 2,481,018 --------------------------------------- CLOSING SHAREHOLDERS' FUNDS - EQUITY 4,552,882 2,335,389 2,399,075 --------------------------------------- On 13 October 2005, 2,739,727 new ordinary shares of 0.04p were issued at 73 pence per share raising Â£1,550,645 after deduction of expenses of Â£449,355. On the same date the company issued 696,164 warrants to subscribe for ordinary shares at a price of 73 pence per share. The warrants have an expiry date of 12 October 2008. In April 2006 a further 1,527,397 new ordinary shares of 0.4p each were issued at 73p per share raising Â£1,120,000 net of expenses. At the same time the company's employee benefit trust agreed to acquire 1,527,397 ordinary shares of 73p per share from existing employee shareholders. The company agreed to advance the net proceeds of the issue of the new ordinary shares to the employee benefit trust to facilitate the purchase. The shares will be held by the trust with the intention of satisfying options to be granted to employees in the future. 10 COPIES OF INTERIM REPORT AND FINANCIAL STATEMENTS The Interim Report and Financial Statements will be sent to shareholders by 30 June 2006. Further copies will be available to the public, free of charge at the company's registered office, Driver House, 4 St Crispin Way, Haslingden, Rossendale, Lancashire, BB4 4PW, for a period of at least one month thereafter. This information is provided by RNS The company news service from the London Stock Exchange

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