Driver Group PLC (DRV)

[WickedLester]

Here's another micro cap from me which I think offers good value in a recovery coupled with an attractive and hopefully sustainable yield and with the possibility of corporate action delivering shareholder value at some point in the future.

They describe themselves as:

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, announces the following trading update.

The market cap at the current price is around £13.7m and the company was trading at a small discount to NTAV and NCA last time it reported, but I would expect losses this year to have lessened this discount somewhat. When they last updated the market they reported that net cash was around £4.8m which should be enough to support the 1.5p dividend thus giving a yield of around 6%.

https://www.investegate.co.uk/driver-gr ... 00040486G/

The thing that really appeals to me about these is the divisional breakdown which I think highlights the inherent value in these shares.

The Middle East and Asia Pacific regions have been troublesome for some time but have been substantially restructured and the group expects to return to profit in the first quarter of this year.

The jewel in the crown, though, is the Europe and Americas segment. This regularly seems to turn in an operating profit of £4m-£5m although this year's profit is down on last year's and the second half was not as good as the first. I don't know if that is an anomaly or the start of a trend. I have bet that it is the first although I don't know what their immediate prospects hold in the face of a recession.

Finally I think there is the very real prospect of corporate action in the future due to investors AB Traction who have built up a 20% stake in the company. They did this at both Cyril Sweett and Watermans before both were sold for substantial premiums. They don't seem in any great rush to act but may be waiting until the company's performance and market conditions are more favourable.

In summary then I think an investment here gets you a 6% yield which should be sustainable assuming the restructuring has the desired results, a rock solid balance sheet with net cash and the prospect of a capital gain in the event of a sale of the company.

Any thoughts?

[BigTim]

Curious as a little punt is often fun and they don't get much littler than this.

I see the middle East restructuring meant then transferring all bar 9 employees to a counter party. This meant the division was loss making in the current year and going forward... will those 9 people generate anything? I suppose everything hinges on a recovery in Europe and Americas. If there is another weak qtr/H then it's a leg down in share price, if that encourages the stake builder into an offer.. I'm not convinced as they'd surely want a growing business?

[WickedLester]

There's been some changes in shareholdings here if anyone is interested in this little company.

Ruffer have sold their entire holding to AB traction who now have over 27.5% of the shares. I don't expect them to bid themselves but I wouldn't be surprised if they tried to force the board to put up the for sale sign.

If it does get sold I would hope to get at least 60p a share.

[Whatsitworth]

If they just sold/dumped the Middle East rest of world part they would be better off. Only had a quick scan of the accounts, the cash and earnings are positive in the west.