Construction disputes and property services provider Driver Group (LON:DRV) reported lower interims, but the second half should be better as cost savings come through. Share buybacks should help to put a floor on the share price.
In the six months to March 2024, revenues dipped from £22.7m to £22.5m and gross margins were maintained. Utilisation rates are improving. In the first half it was 79.6%, up from 79.2%. This is based on a newer methodology.
Underlying pre-tax profit fell from £730,000 to £562,000. Middle East and Asia Pacific both returned to profit on higher revenue, but Europe and Americas remains the main profit contributor even though its contribution fell from £2.9m to £2.3m, which covers central costs. Staffing issues in North America and phasing of projects hampered profitability. This should not be a problem from now on.
The interim dividend is maintained at 0.75p/share. Net cash was £3.57m at the end of March 2024 and that had risen to £4.2m at the end of May. Cash is being collected from old business in the Middle East.
There will initially be £250,000 spent on buybacks. There has been £750,000 set aside to add additional skill bases to the group through the acquisition of niche businesses or teams. There are opportunities being assessed.
Singer believes that full year pre-tax profit should at least be maintained. Equity Development forecasts an improvement in full year pre-tax profit from £1.1m to £1.2m.
The brand will become Diales on 1 July and investment in software should improve efficiency. The share price recovered 1p to 25p, which represents 16 times prospective earnings. A maintained dividend means a yield of 6%. There is further recovery potential.