Welcome news of progress

The pre-close trading update from Driver Group was encouraging, with static revenues (signifying rising productivity), improving profitability and margins, and the move into the black for the first time in two years within the Middle East region. Cash levels continued to improve, highlighting the collection of doubtful debts and higher profitability. We expect the solid foundations put in place by the management team over the last 12-18 months will provide a strong base from which to grow meaningfully over the medium term.

Although our estimates remain suspended pending further visibility, we note the NAV (FY22 end: £16.4m or 30.3p / share) and net cash account for 35.1% of the market cap. DRV’s wider consultancy peer group, trades on an average prospective P/B ratio of 4.4x, suggesting that a re-rating of DRV shares looks overdue now that an inflection point has been passed. Our fair value/share remains 49p.