Middle East Update

RNS Number : 3485M

Driver Group plc

23 May 2022

 

23 May 2022

DRIVER GROUP PLC

("Driver Group" or "the Company")  

Middle East Update

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, today provides an update on its operational review in the Middle East region, and in particular the UAE.

Driver Group has agreed that 25 employees, primarily based in the region but including employees based in Malaysia who work on Middle East assignments, will leave the Company on 1 June 2022 and immediately join another entity in the region (the "Counterparty"). The Company and the Counterparty have agreed that on leaving these employees will retain certain live project assignments, but the Counterparty will be subject to certain restrictive covenants in relation to continuing clients and employees of Driver Group. No exceptional employment termination costs will be payable by the Company in relation to the transfer. 

In addition, the Counterparty will assist in collection of approximately £3.5 million of Driver Group's current regional debtor book. The Counterparty has agreed to pay circa £2 million in cash upfront to the Company as an advance payment in respect of the debtor book and, following the transfer, will also assist the Company in collection of the remaining debtors, which primarily attach to non-transferring employees.  

Following the transfer, Driver Group will retain a UAE headcount of 9 fee earners. The Company's operations in Qatar and Oman are unaffected. The annualised reduction in the Company's regional cost base is expected to exceed £3 million per annum as against the £1 million in annual cost savings identified within the Company's trading update statement of 29 March 2022.

Driver Group expects to report interim profit before tax for the six months ended 31 March in line with recent guidance of between £300,000 and £500,000. The full operational impacts of today's changes to the Group's operational footprint will take time to work through and the Directors are not yet in a position to offer guidance on the likely outcome for the year as a whole. However, the transfer also reduces Driver Group's working capital exposure on a forward-looking basis and it is already clear that the estimated net cash balances of £5.3 million following receipt of the advance payment from the Counterparty will comfortably exceed the Company's near term operational requirements. As a result, the Board is actively reviewing the alternatives for returning surplus cash to shareholders.

Mark Wheeler, Chief Executive of Driver Group PLC, said:

"We have worked very hard to identify and implement the optimal solution for the Company's operations in the Middle East. The agreement we have reached will allow us to focus on the client base and market segments that are the best fit for Driver Group's wider business, and should facilitate higher utilisation, significantly improved profitability, and enhanced sustainability for the global business."

"The Company also now has improved certainty on the recovery of our outstanding trade receivables in the Middle East region, and additionally has substantially de-risked its operating footprint in the region."

ENDS

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.

Enquiries:
Driver Group plc	020 7377 0005
Mark Wheeler (CEO)
Singer Capital Markets (Nomad & Broker)	020 7496 3000
Sandy Fraser, Will Goode
Acuitas Communications	020 3848 2810 / 07736 220 565
Simon Nayyar	[e-mail]
Edward Lee	[e-mail]

 

END

 

 

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