Inflexion point

Driver Group is reaching an inflexion point as it looks to focus operations on the more profitable and less risky geographical regions. Following the H1 period end, management transferred 25 staff in the UAE and Malaysia and several contracts to an unnamed Counterparty in exchange for an advance payment of trade receivables (£2m) and help to collect further monies owed to the Group. As measured by adj. PBT, the interim results were in the middle of the guidance range. We think the resulting reduction in the cost base to the lowest annualised run rate since FY15 is likely to have a significantly positive impact on profitability.

Interestingly, after stripping out the net cash / share (7p) the shares are trading on just 2.9x peak earnings (FY14). Our fair value estimate is unchanged at 49p / share and based on a heavily discounted peer group valuation model.