Driver Group Plc - Interim Period End Trading Update
This content has been sourced from: https://www.investegate.co.uk/driver-group-plc/rns...
DRIVER GROUP plc
("Driver Group", "Driver" or "the Company")
Interim period end trading 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 announces the following operational update on its activities for the period to 31 March 2020.
Driver Group has continuously monitored the development of the COVID-19 pandemic since January 2020, in view of the Company's global footprint. The Company took early action to protect its business and employees by implementing a clear business continuity strategy which has enabled its clients across key global regions and offices to be serviced effectively and sustainably, without business interruption. In a number of key Asia-Pacific locations, Driver moved quickly to a flexible home working model to protect the health and safety of its staff, in accordance with the requirements of local government and regulatory authorities in the relevant jurisdictions. Home working has now been extended to every region and office worldwide.
In the first half of the current financial year, Driver Group's financial performance was not impacted in any meaningful way by COVID-19 related issues. Underlying profit before tax for the period is expected to be broadly in line with internal forecasts for the period and significantly ahead of the same period last year.
Although the pipeline of activity for delivery during April and May is encouraging, the Board's forward planning is driven by future revenue visibility and the expectation that COVID-19 will in the near future impact customer behaviours and therefore activity levels, perhaps materially so.
The Company has a strong net cash position, with net cash balances at 31 March of £3.3m and a robust balance sheet. Nonetheless, in the interests of prudence, resilience and long term strategic competitive positioning, Driver Group is now implementing the following measures in order to maximise liquidity, preserve cash, and enhance operational flexibility:
- The Board will not pay an interim dividend in respect of the current financial year and will revisit the Group's dividend policy only when there is sufficient clarity as to the actual impact of the COVID-19 pandemic on its trading and financial position;
- It has indefinitely postponed all non-essential capex and discretionary operational expenditure;
- It has drawn down in full its £3.0m revolving credit facility and will hold the resulting funds on its balance sheet, in order to meet any currently unforeseen contingencies; and
- All Board members' salaries will reduce by 20%, effective from 1 April 2020, for the foreseeable future.
In view of the unquantifiable impact of COVID-19 on the Group's performance, the Board is formally withdrawing forward guidance on future profits for the time being.
Gordon Wilkinson, Chief Executive Officer of Driver Group, said:
"The early action that the Company took is designed to secure the health, well-being and safety of all our employees around the world. This remains our overriding objective.
"Although client servicing has been largely unaffected, the impact of COVID-19 on Driver Group and its clients remains unquantifiable during what is an unprecedented global phenomenon. In spite of the good progress that we have made over the first half of the current financial year, we consider it sensible and appropriate to take a prudent and proportionate approach to the management of the business, in the best interests of its shareholders, clients and employees. We will not hesitate to take further steps if we deem these are necessary, in order to maintain Driver Group's resilience and strengthen its long-term competitive positioning."