Driver Grp Regulatory News (DRV)

11 November 2022

DRIVER GROUP PLC

("Driver" or the "Group") 

Trading update and Notice of Results

Driver Group PLC (AIM: DRV), the leading global professional services consultancy to the construction and engineering industries, providing multi-disciplinary consultancy services including expert witness, claims and dispute resolution services, announces the following trading update.

The Board can confirm that it expects to report an underlying* loss before tax of £0.3m for the financial year to 30 September 2022, before one-off Middle East reorganisation costs of £0.6m due to the Middle East and APAC issues announced on 23 May 2022 (the "Middle East Update"). Management have implemented plans to scale costs back further, to account for the lower revenue expected as a result of the Middle East and APAC reorganisation.

The Group had a healthy net cash position on 30 September 2022 of £4.8m, which reflected significantly improved collections in the year, particularly from the long-term debts in the Middle East, which are now markedly reduced.

Driver also reported in its Middle East Update, that trading in the Middle East and APAC regions had been loss making to the half year and that the management team responsible for those regions had transferred to a counterparty, along with 25 staff. The counterparty and Driver entered into an agreement which involved pre-payment by the counterparty of approximately £2.0m against book debts for regional collection. As a result of these departures and the reduction of the Group's Middle East and APAC footprint, which included the closure of an office and the completion of commissions that required re-work and additional restructuring, the Middle East region made an operating loss of £2.3m (including one-off costs of £0.5m as a consequence of this reorganisation) in the year and the APAC region incurred an operating loss of £0.4m (including £0.1m one-off costs). 

The Group's UK, European and North American offices have had another strong and profitable year within management expectations, delivering an operating profit of £4.2m; group central costs were £2.4m. The UK team has successfully grown with a series of expert hires, and the expansion of the team in mainland Europe has contributed to the delivery of regional profits.

The Group has started to benefit from its investment in a new enterprise software system which, following a commissioning process interrupted by the pandemic, was implemented at the half year. It is now performing satisfactorily and is on course to support the realisation of further efficiency gains. The Group will also recognise an onerous lease provision of approximately £1.0m at its former Haslingden HQ in Lancashire in the financial results for the year ended 30 September 2022.

Driver has further strengthened its management team this year through the appointment of Charlotte Parsons, with experience in this sector, as CFO and Tom Comerford, a long-standing employee of the Group, as COO. Both are now working with the CEO to efficiently manage the business, providing enhanced management and control over the global operations. As previously announced on 12 September 2022, Driver has changed auditor to Kreston Reeves LLP, which will conduct the audit of the Group's financial statements for the financial period to 30 September. Driver expects to report full year results for the twelve months ended 30 September 2022 in the first half of February 2023.

Driver's management expect to see the business return to profit in Q1 of the new financial year, and to realise further performance enhancements in Q2, based on the prudent steps it has taken to identify and implement additional improvements. The Group has replaced and strengthened its Middle East and APAC management teams and further optimised the Group's global footprint to enhance its returns and minimise risk. As a consequence of this realignment of priorities and servicing, larger project work that would formerly have been undertaken solely in the Middle East region will in the future be distributed among and delivered by the Group's business units worldwide, supporting that region and its clients in a more efficient and cost-effective way.

The share buyback programme announced on 14 June 2022 was successfully completed on 6 September 2022.

Mark Wheeler, CEO of Driver Group, said:

"This has been a particularly challenging year for the business. We have faced head on the legacy challenges in the Middle East and APAC that have damaged the Group's overall performance in recent years, masking the excellent contribution made by our business units in the UK, Europe and Americas. We have dramatically reduced our exposure to risk in the Middle East & APAC, which will now make a positive contribution to the Group."

*underlying loss before tax is stated before share-based payment costs

THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED TO CONSTITUTE INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) NO. 596/2014. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

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