Driver Group’s profits slump despite Middle East success

DRIVER Group, a north west firm which advises companies on disputes over contracts, has seen its profits cut in half over the past year despite its turnover increasing on the back of Middle Eastern growth.

The Rossendale-based company’s preliminary results for the year to September 30 show that it had an underlying profit before tax of £1.1m which was down from £2.08m last time. But its turnover increased to £20.5m from £18.2m in 2008.

The company, which restructured over the past financial year, now intends to invest £1m to ensure that it is in the best possible position to capitalise on the global economic upturn.

Driver Group’s operations in the north of England have been particularly badly affected by the recession’s impact on large construction projects although it did see some growth in services to financial institutions involved with ‘distressed or insolvent’ businesses.

But its results show that its offices in London and the Southern regions performed ‘in line with management expectations’.

By contrast, revenue from the group’s Middle East office grew by 85% from £3.1m to £5.8m – on the back of an increased need for its expert services – and the company expects this to accelerate.

The company has announced that it intends to make a final dividend payment of 1p per share which makes a total dividend for the year of 2p – which is down from 2.95p in 2008.

Steve Driver, executive chairman of Driver Group, said:”Against a very challenging trading backdrop, especially in the second half of the year, I am pleased to report that Driver Group generated a pre-tax profit of £1.1m on sales of £20.5m.

“While conditions in our core UK market were generally very difficult, we saw continuing strong growth in our overseas business, especially the Middle East where sales rose by 85%.

“While conditions are tougher, we believe that there are interesting growth opportunities available to us over the next three years. The organisational restructuring which we have put in place is the first step in developing these opportunities.

“Building on our growing presence in the Middle East, we see scope to deliver our expert services, consultancy and project services offering in new territories in the Middle East as well as in other geographic markets, including Africa, the Far East and Asia.

“The client relationships we have with international contracting and engineering companies will assist this process. Over the course of the current financial year, we expect to invest around £1m in our expansion strategy, including the recruitment of key personnel for new market sectors.

“The board therefore views the current financial year as a year of strategic investment, with the attendant beneficial effect on revenues and profitability coming through in the next financial year and beyond. With these strategic initiatives in place we believe that the group is positioned to deliver a strong performance in the coming years.”