DRV.L Regulatory News (DRV)

25 Sep 2009 07:00



DRV

Driver Group plc

("Driver" or "the Group")

Pre-Close Update

Driver, the provider of specialist commercial and dispute resolution services to the construction industry, issues the following trading update prior to the close of its financial year on 30 September 2009.

The trading environment in the second half of the year has been very challenging, reflecting wider economic conditions. Trading in the UK, Driver's core market, continued to be mixed. London and the Southern regions performed in line with management expectations, supported by growth in expert services work. However, trading in the Northern region has not shown the expected upturn after the Summer break and revenues and profitability are therefore behind management projections. The Group continued to invest in its operations in the Middle East, especially in Oman in line with Driver's long term growth strategy. However, certain new contracts in Oman have been further delayed and are now expected to commence during the first half of the new financial year. Nonetheless, opportunities in Oman remain very good.

In the light of trading conditions, the Board has acted to reduce the cost base of the business. These actions will be fully accounted for in the financial year under review and are expected to generate annualised cost saving of approximately £0.7m. Including the cost of these actions, management expects profit before tax and before the cost of share options for the full year to be in the range of c£1.1m-£1.3m. The Group's net debt position is expected to close the year significantly better than market expectations at around £0.5m, benefiting in part from the lower than projected volume growth in the Middle East.

Despite these near term challenges, the Board believes that the combination of Driver's breadth of consultancy services and its robust balance sheet and cash flows means that the Group is well-positioned for on-going growth as market conditions stabilise.

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