Project and construction dispute services provider Driver Group returned to profit in the year to September 2011 and it has started paying dividends again.
Driver has taken an annualised £3.5m out of its cost base and this helped it move into profit. The move into the power and process sector has helped revenues at a time when much of the rest of the business is at best flat. The number of fee earners is rising with a greater percentage of them sub-consultants. This helps to improve utilisation and gross margins.
Revenues improved from £16.4m to £17.4m, while an underlying loss of £430,000 was turned into a profit of £548,000. Costs were slightly lower even though there were bonuses of more than £400,000 included compared with no bonuses last year. The European business made all the profit with the African business still at an early stage of development.
The Middle East was loss-making for the year as a whole but it was profitable in the second half. Revenues have slumped in the UAE but they did improve in Oman.
Strong cash generation and a tax rebate have wiped out net debt and left Driver with net cash of £572,000 at the end of September 2011. A final dividend of 0.5p a share was declared.
The recovery should continue into this year. Revenues are expected to improve to £19.5m and profit is forecast to double to £1.1m. The shares are trading on ten times prospective 2011-12 earnings.
Finance director Damien McDonald bought 10,000 shares at 33p each. This is his first purchase of Driver shares.
At 32p a share, up 1.25p, Driver is valued at £8.44m.
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