RNS Number:6013S
Driver Group plc
13 October 2005
DRIVER GROUP PLC
("Driver", "the Company" or "the Group")
Admission to
the Alternative Investment Market
* Share dealings in Driver Group, which provides specialist commercial and
dispute resolution services to the construction industry, begin today on
AIM.
* Driver has raised a total of #2 million (gross) via a Placing of
2,739,727 new Ordinary Shares at 73p per share. A further 2,739,727 Ordinary
Shares were placed on behalf of existing investors at 73p per share. WH
Ireland is acting as the Group's Nominated Adviser and Broker.
* The new funds raised will be used to meet the expenses of the Placing,
provide additional working capital and to finance the further expansion of
the Group, including by way of acquisition.
* Driver's market capitalisation at the Placing Price is approx. #16.9m.
* Based in Rossendale, Lancashire, Driver provides dispute resolution
services as well as non-contentious services to the construction industry.
The UK construction industry is one of the largest sectors in the economy,
accounting for 6% of GDP.
* The Group targets larger construction firms; its client base includes
six out of the 10 largest contractors in the UK based on turnover.
* Driver operates from a total of 6 UK offices, based in Rossendale,
Glasgow, London, Liverpool, Northampton and Teesside and has a workforce of
over 70 people.
* Driver recently opened an office in the UAE as a base from which it
could establish a presence in the region. Although a contract has not been
finalised, the Group is currently providing and invoicing for project
management and other services in connection with a multi-billion $ project
in Abu Dhabi.
* The Company enjoys a high level of repeat business from clients.
Approximately 80 per cent. of the Group's turnover in the nine months ended
30 June 2005 related to instructions from previous clients and/or ongoing
projects.
* The Group has increased turnover and underlying operating profits over
the last five years and, in the year ended 30 September 2004, the Group
recorded turnover of #7.6 million and underlying profit before tax of #1.25
million.
* Following Admission, the Directors intend to adopt a progressive
dividend policy.
Steve Driver, Managing Director, commented,
"I am delighted to announce Driver Group's admission to AIM.
We believe that Driver Group offers a high calibre service and that there is
tremendous growth potential for our services in the UK and abroad, especially
within the UAE. Our status as a publicly-quoted company will help us to take
advantage of this potential as well as enhancing our profile within our
marketplace.
We look forward to the future with confidence."
Enquiries:
Driver Group plc Steve Driver, Managing Director T: 01706 244 172
WH Ireland David Youngman T: 0161 819 8743
Biddicks Katie Tzouliadis T: 020 7448 1000
DRIVER GROUP PLC
KEY STATISTICS
Placing Price 73p
Number of new Ordinary Shares to be placed on behalf of the Company 2,739,727
Number of existing Ordinary Shares to be sold on behalf of the Selling Shareholders 2,739,727
Number of Ordinary Shares in issue immediately following the Placing 23,205,477
New Ordinary Shares as a percentage of the enlarged issued share capital 11.8%
Percentage of enlarged issued share capital available in the Placing 23.6%
Market Capitalisation on Admission at the Placing Price #16.9 million
Estimated gross proceeds of the Placing receivable by the Company #2.0 million
Estimated net proceeds of the Placing receivable by the Company #1.6 million
INTRODUCTION
Established in 1978 as a trading division of a quantity surveying partnership,
the Driver Group provides specialist commercial and dispute resolution services
to the construction industry. The construction industry is one of the largest
sectors in the UK economy, representing about 6 per cent. of gross domestic
product. With an industry of this size, there are often disputes where the
outcome is material to the parties concerned.
The Group's client base includes six out of the 10 largest contractors in the UK
by turnover according to statistics published by the Building Magazine in 2004.
The Group enjoys a high level of repeat business from clients. Approximately 80
per cent. of the Group's turnover in the nine months ended 30 June 2005 related
to instructions from previous clients and/or ongoing projects. The Group has
increased turnover and underlying operating profits over the last five years
and, in the year ended 30 September 2004, the Group recorded turnover of #7.6
million and underlying profit before tax of #1.25 million.
The Directors believe that one of the strengths of the Driver Group is the
quality and loyalty of its staff. During the nine months to 30 June 2005, the
average monthly number of employees was 53 and the average monthly number of
consultants, who are appointed to work on specific projects, was 27. These
employees and consultants have a range of experience and professional
qualifications related to the construction industry and associated legal
matters.
The Group's head office is in Rossendale, Lancashire and it also operates from
offices in Glasgow, Liverpool, London, Northampton and Teesside.
In 2005, the Group opened an office in the UAE to provide commercial and project
planning services in conjunction with international organisations. Although a
contract has not been finalised, the Company is currently providing and
invoicing for project management and other services in connection with a
multi-billion $ project in Abu Dhabi.
The Company proposes to seek admission of its entire issued and to be issued
ordinary share capital to trading on AIM and to raise approximately #2 million,
before expenses, by way of a placing of 2,739,727 New Ordinary Shares. The net
proceeds of the placing of the New Ordinary Shares will be used to meet the
expenses of the Placing and Admission, to provide additional working capital and
/or to finance the further expansion of the Group including by way of
acquisitions.
In addition, the Selling Shareholders are placing the Sale Shares with
institutional investors at the Placing Price in order to raise #2 million,
before expenses, for the Selling Shareholders.
The Company has historically paid surplus profits as bonuses. Following
Admission, the Directors intend to cease payment of surplus profit bonuses and
adopt a progressive dividend policy whilst maintaining an appropriate level of
dividend cover.
HISTORY
Established in 1978 as a trading division of a quantity surveying partnership,
the business was carried out as a separate partnership from 1988 to 1998, when
it was incorporated into BWS International. In 2001, there was a group
reorganisation in which the shares of BWS International were transferred by
their holders to Driver Group in exchange for shares in Driver Group. At the
same time, the commercial and dispute resolution division of BWI International
was transferred to Driver Consult. In October 2004, BWS International was
demerged from the Driver Group.
THE BUSINESS
Driver Group is the holding company of a trading group comprising Driver
Consult, Driver Consult nv and Adjudication Toolkit. Driver Consult is the
principal trading subsidiary in the Group and provides the construction industry
with a commercial and dispute resolution service. Driver Consult nv is a Belgian
registered company used to engage staff who are based in Europe. The Company
also has a 51 per cent. interest in Adjudication Toolkit, a recently
incorporated company which provides an on-line adjudication service for small
claims.
Services
Driver Consult
Driver Consult specialises in the provision of commercial and dispute resolution
services to the construction industry.
The construction industry is one of the largest in the UK economy, representing
about 6 per cent. of gross domestic product. With an industry of this size,
there are often disputes where the outcome is material to parties concerned.
Driver Consult is able to deliver its services at any stage of a dispute and its
services include:
* advising on whether there is a claim for claimants;
* advising on whether there is a claim for respondents;
* the preparation and defence of claims;
* negotiating and settlement of claims;
* advising on strategy for adjudications and on alternative methods of
dispute resolution, such as mediation, conciliation and expert
determination;
* providing staff to act as expert witnesses;
* providing support to those involved in disputes being considered for
resolution within arbitration or court proceedings;
* sitting as adjudicators, mediators and arbitrators.
At present, almost all of Driver Consult's turnover is derived from the
provision of services in relation to contentious matters. However, Driver
Consult also offers a number of noncontentious services which include the
following:
* the commercial management of construction and engineering projects;
* the planning and programming of construction and engineering projects;
* the provision of pre-contract services designed to highlight risks and
reduce disputes, such as the preparation of tender enquiry and contract
documents, advising on the pricing of tender documents, carrying out
feasibility studies and advising on the appointment of contractors;
* cost management; and
* risk analysis and management.
Projects on which Driver Consult has provided its services include:
* design, build, finance and operate schemes to build or upgrade roads;
* the construction of schools and hospitals;
* PFI schemes;
* high-rise, multi-use, city centre property developments; and
* the construction of nuclear, petrochemical, gas turbine power and water
and sewage treatment plants.
Time spent on projects can vary from one day to several years.
Driver Consult nv
Driver Consult nv is a Belgian registered company and was set up to give the
Driver Group a presence in Europe. The vast majority of work in Europe, however,
is now dealt with by Driver Consult from its Northampton office. Driver Consult
nv is therefore used as vehicle to engage staff who are based in Europe of which
there are currently two.
Adjudication Toolkit
Driver Group has a 51 per cent. interest in Adjudication Toolkit. Adjudication
Toolkit provides an on-line programme, which was launched in September 2005, to
enable small contractors and subcontractors to run adjudications.
Scope of Operations
The Group provides its services through a network of offices in the UK including
the head office in Rossendale and from other offices in Glasgow, Liverpool,
London, Northampton and Teesside. The Group also conducts business in Europe,
managed from the Northampton office, and has recently opened an office in the
UAE to provide commercial and project planning services to employers,
contractors and consultants in conjunction with international organisations.
During the nine months ended 30 June 2005, services performed outside the UK
comprised 27 per cent. of the Group's turnover.
Clients
In the UK, the Group's strategy has been to focus its efforts on obtaining work
from the larger construction companies in terms of turnover. The Group has
carried out work for six out of the top 10 construction companies in the UK by
turnover according to statistics published by the Building Magazine in 2004 and
its strategy is to continue to focus on securing work from the top 100 of such
firms. The Directors believe that the increased profile of a listing on AIM will
help with this strategy.
Sales and Marketing
Driver Consult enjoys a high level of repeat business from clients. During the
nine months ended 30 June 2005, approximately 80 per cent. of turnover was
derived from repeat business and/or continuing projects.
In the UAE, Driver Consult has targeted specific projects and is establishing
relationships with international organisations in order to establish itself in
the non-contentious, rather than the contentious, market. Although a contract
has not been finalised, the Company is currently providing and invoicing for
project managing and quantity surveying services in connection with a
multi-billion $ project in Abu Dhabi.
STRATEGY
The Directors believe that there are good opportunities to expand both the
Group's UK and overseas operations. In the UK the Directors intend to:
* maintain and develop the Group's relationships with the larger
construction companies;
* strengthen the Group's presence in the UK, particularly in London, the
south-east and the south-west;
* increase the Group's market share in non-contentious work and in PFI
projects; and
* take advantage of dispute work which may arise out of major construction
projects.
Overseas, the Directors intend to:
* strengthen the Group's presence in the UAE by establishing commercial
and project planning services on major projects in conjunction with
international organisations; and
* continue to improve the profitability of the Group's activities in
Europe.
GROUP FINANCIAL SUMMARY
The Group's reported profitability in recent years has been depressed by the
payment of surplus profits by way of bonuses. However, the Group's underlying
profitability, based on restated operating profit adjusted for these bonuses and
other non recurring items, is as follows:
9 months Year ended 30 September
ended
30 June
2005 2004 2003 2002
(Restated) (Restated) (Restated) (Restated)
Notes #000 #000 #000 #000
Turnover 6,120 7,601 6,246 5,374
======== ======== ======== ========
Operating profit 35 571 355 306
Surplus profit
bonuses 1,170 665 438 496
accrued -------- -------- -------- --------
1,205 1,236 793 802
Other non-recurring
items 1 175 54 4 15
-------- -------- -------- --------
Underlying operating
profit 1,380 1,290 797 817
Other items 2 13 9 9 2
Interest payable (48) (50) (42) -
-------- -------- -------- --------
Underlying profit
before tax 1,345 1,249 764 819
-------- -------- -------- --------
Notes
1. Other non-recurring items include (a) one-off costs associated with
establishing Adjudication Toolkit of #25,000 (2005) (b) one-off costs associated
with establishing a presence in the UAE of #150,000 (2005) and #25,000 (2004)
and (c) legal and professional fees of #29,000 incurred in 2004 in connection
with the disposal of BWS International.
2. Other items include interest receivable and profits/losses on the sale of
investments and tangible fixed assets.
CURRENT TRADING AND PROSPECTS
Both turnover and profit before tax in the nine months ended 30 June 2005 were
ahead of expectations. Since 30 June 2005, trading has been below expectations
which the Directors attribute to seasonal factors, such as holidays. However,
the Directors believe that the outcome for the current financial year will be in
line with budget.
With several major contracts and/or disputes continuing after the period ended
30 June 2005, and a number of new appointments secured thereafter, the Directors
view prospects for the financial year to 30 September 2006 with confidence.
DIVIDEND POLICY
In the financial years ended 30 September 2004, 2003 and 2002, the Company did
not declare any dividends. The Company has historically paid surplus profits as
bonuses. Following Admission, the Directors intend to cease payment of surplus
profit bonuses and adopt a progressive dividend policy whilst maintaining an
appropriate level of dividend cover. No dividend will be paid in respect of the
year ended 30 September 2005.
In line with previous practice, the Company has committed to pay a final surplus
profit bonus out of the residual profits for the financial year ending 30
September 2005.
REASONS FOR ADMISSION AND USE OF PROCEEDS
The Directors believe that Admission will benefit the Group by enhancing its
market profile. The Directors believe that this increased profile and status
should assist the Group with its strategy of targeting the larger construction
companies for commercial opportunities and encourage the recruitment of
high-quality, experienced staff. Admission will also enable potential
acquisition opportunities to be explored.
The net proceeds of the placing of New Ordinary Shares will be used to meet the
expenses of the Placing and Admission, to provide additional working capital and
/or to finance the further expansion of the Group including by way of
acquisitions.
THE BOARD OF DIRECTORS
Michael Davis (aged 59) Non-executive Chairman
Michael is a chartered accountant and spent 32 years in the profession
principally with Arthur Young/Ernst & Young. During his 15 years as a partner he
specialised in corporate finance, including PFI, and was managing partner of the
firm's Liverpool office. On leaving the firm he has spent the last 8 years as a
non-executive chairman/director of companies in sectors including financial/
professional services, media and manufacturing. He is also deputy chairman of
the North West's film and TV agency and was a regular judge on Granada's long
running televised business competition ''Flying Start''.
Stephen Driver (aged 41) Managing Director
Stephen has over 23 years' experience in the construction industry working both
for contractors and in private practice. After training as a quantity surveyor,
initially with a national civil engineering contractor, Stephen subsequently
worked for a number of national building contractors. He subsequently moved into
private practice at BWS International and became Managing Director of BWS
International in 1998 and of the Group in 2001. Since becoming Managing
Director, Stephen has overseen a number of major developments including the
incorporation of the partnership through to the formation of Driver Group, the
demerger of BWS International, the reorganisation of the business to focus on
regional and local office performance, the opening of an office in Dubai and the
formation of Adjudication Toolkit.
Stephen has broad experience in the construction and engineering industries. His
specialist fields include claims support services, adjudication, mediation and
expert witness services.
Stephen has a Masters degree in construction law and arbitration from Kings
College, London. He is a Fellow of the Royal Institution of Chartered Surveyors,
the Chartered Institute of Arbitrators and the Institution of Civil Engineering
Surveyors and a Member of the Cost Engineers and Academy of Experts.
David Webster (aged 38) Director
David has over 22 years experience in the construction industry, initially
training as a quantity surveyor with a pipeline, tunnelling and civil
engineering contractor. He worked with various contractors before moving into
private practice with BWS International in 2000. David was appointed to the
board of Driver Consult in 2002 with initial responsibility for the Manchester
office before being appointed to the northern region in 2003. Subsequently, in
2004 he was appointed to the Board and has been actively involved in
reorganising the business to focus on regional and local office performance.
As well as the broader responsibilities that come with his position, David
provides a hands-on service either leading teams of consultants or working on
single specialist appointments. David specialises in dispute resolution,
contractual and commercial advice on all aspects of civil engineering projects,
highways, water and sewage treatment plants, tunnel and pipeline projects,
industrial process plants, building and development.
David has a masters degree in construction law and arbitration. He is a Fellow
of the Royal Institution of Chartered Surveyors and the Institution of Civil
Engineering Surveyors and a member of the Academy of Experts and Expert Witness
Institute.
Peter Cove (aged 54) Finance Director
Peter has 35 years' experience in accountancy, working initially in private
practice and then in
industry. His industrial experience includes working for John Smiths Limited
during a period of
growth, reorganisation and take-overs. He has also been involved as financial
controller with small and medium-sized companies in different sectors of
business.
Peter joined the Group in 1999 as Financial Controller and was promoted to
Finance Director in 2001, in which position he was heavily involved in the Group
re-organisation. He is responsible for the financial and accountancy functions
of all Group businesses.
David Clements (aged 61) Non-executive Director
David qualified as a civil engineer with a post-graduate degree in applied
economics and has 38 years' experience in the construction industry, both in the
UK and overseas, progressing to managing director level. He has recently retired
from the Atkins Group management board and has more than 10 years experience of
the Private Finance Initiative and Public-Private Partnerships. David is a
non-executive director of Partnerships UK plc and Lambert Smith Hampton Group
Limited, the commercial property subsidiary of the Atkins Group.
ENDS
This information is provided by RNS
The company news service from the London Stock Exchange
END
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