TIDMRPS
RNS Number : 2273M
RPS Group PLC
20 January 2021
For immediate release 20 January 2021
RPS Group plc
('RPS' or the 'Group')
Q4-2020 Trading Update
'Balance sheet significantly strengthened.
Group trading continues to improve steadily in challenging
markets'
RPS, a leading multi-sector global professional services firm,
provides the following trading update for the three months ended 31
December 2020 ('Q4-2020'), based on a preliminary unaudited summary
of Q4-2020 (1) .
Q4-2020 Trading Update
Fee Revenue in Q4-2020 was GBP115.8 million (Q4-2019: GBP130.3
million; GBP131.7 million at constant currency), a decline of 12.1%
(at constant currency) on Q4-2019. This was a sequential
improvement at constant currency with Q3-2020 (GBP109.0 million)
15.6% below the prior year, Q2-2020 (GBP107.0 million) 18.1% below
the prior year and Q1-2020 (GBP125.4 million), which had only some
early impact of COVID-19, 4.1% below the prior year.
Fee Revenue improved in the quarter as individuals continued to
return from furlough and from reduced working hours. With lockdowns
continuing across Europe, we continue to match capacity to market
activity while ensuring the safety and welfare of our people.
Strong exposure to government and quasi-government organisations
continues to provide some resilience to the impact of COVID-19.
This can be seen in Australia Asia Pacific, which has generated
growth in 2020, in Services UK & Netherlands, where Fee Revenue
grew in Q4-2020 as the AMP cycle continued to ramp up, and in
Norway, which has a significant exposure to government, delivering
growth in Q4-2020.
Our Energy segment delivered an improving trajectory in Q4-2020.
Consulting UK & Ireland Fee Revenue was broadly unchanged on
Q3-2020 despite tougher lockdown restrictions and an increase in
people taking annual leave, with the variance to Q4-2019 reduced
slightly from Q3-2020.
North America continued to benefit from an improvement in the
Environmental Risk business, with strong private equity activity.
However, delays in the activation of various Infrastructure
projects and higher than usual Thanksgiving and Christmas leave,
meant the percentage reduction in Fee Revenue in comparison to
Q4-2019 remained in line with Q3-2020.
As a result of the improving fee performance and proactive
actions taken in 2020 to manage costs across the Group, draft
Adjusted Profit Before Tax is currently expected to be in line with
the average of analysts' forecasts(2) .
Market highlights by Segment
Key segment highlights during Q4-2020 are as follows:
-- Energy - continued good progress diversifying into
renewables, in particular offshore wind including supporting Ørsted
in consenting the world's largest offshore windfarm - Hornsea III
(UK). Work also continued on reshaping the Energy portfolio with
the divestment of its small Specialist Geology business to
Petrostrat on 31 December 2020
-- Consulting UK & Ireland - working with the UK &
Ireland arm of a major blue chip client in the Waste, Energy and
Water segment on their Net Zero Carbon strategy and action plan
-- Services UK & Netherlands - AMP7 cycle continues to ramp
up with new and extended contracts awarded including the
implementation of Waternet, our leakage detection targeting system,
for South East Water
-- Norway - secured contracts in renewables and green
technology, including supporting Norcem Heidelberg in the building
of a carbon capture facility and an agreement to license project
management solutions to a Norwegian lithium battery producer
-- North America - strong public sector activity drove awards in
both Ocean Science and Texas Infrastructure
-- Australia Asia Pacific (AAP) - secured major transport work
in New South Wales, Queensland, and Victoria and the first large
transport project in New Zealand. Obtained a substantial contract
extension with existing client Star of the South for environmental
services to support Australia's first offshore wind project
Improved debt and liquidity - significantly strengthened balance
sheet
Cashflow continues to be well managed with net bank borrowings
at 31 December 2020 of GBP11.4 million (31 December 2019: GBP94.1
million; 30 June 2020: GBP57.8 million, September 2020: GBP32.8
million), a reduction of GBP46.4 million since June 2020, supported
in part by the net cash of GBP19.4 million received from the
September 2020 placing.
The reduction in net bank borrowings in Q4-2020 of GBP21.4
million was due to continued strong cash management with reducing
working capital, ongoing deferral of tax payments under government
COVID schemes and a strong focus on driving cash performance. Lock
up day performance was excellent with lock up days at 31 December
2020 exceptionally low at 48 days (31 December 2019: 69 days), due
in part to government clients continuing to pay well within
terms.
Financial leverage of Net Debt/EBITDA is expected to be in the
range of 0.7x to 0.9x at 31 December 2020, compared to the Group's
target range of 1.0x to 2.0x Net Debt/EBITDA.
The Group continues to have significant liquidity and
substantial headroom in respect of the committed bank facilities of
GBP160.0 million at 31 December 2020 in addition to cash at bank of
GBP42.5 million at that date. At the end of December 2020, the
revolving credit facility was undrawn due to the proactive
management actions the Group has taken.
Dividends
Due to the ongoing national lockdown in the UK and wider
uncertainty over the timing of recovery in our markets, the Board
has taken a prudent approach and decided not to pay a dividend for
FY-2020. The Board anticipates resuming the dividend payment for
FY-2021 providing markets continue to recover, at which point the
Board will assess the appropriate level of dividend.
Outlook
Q4-2020 saw pleasing signs of continued recovery across RPS.
Despite this encouraging trajectory, we remain cautious due to the
uncertain macro-economic climate and the potential for further
COVID-19 related restrictions. Consequently, we continue to manage
the business tightly with a focus on costs and cash flow management
but, without forward visibility of the markets, we are not in a
position to provide guidance.
Our strong cash management has delivered reduced debt and
leverage. However, debt levels are expected to increase in FY-2021
as growth in Fee Revenue drives an increase in working capital and
the tax deferrals continue to be settled. At the end of December
2020, deferrals for payroll taxes and VAT totaled circa GBP10.0
million (September 2020: GBP7.0 million).
The Group has a strong balance sheet and the proceeds from the
placing in September 2020 coupled with the significant headroom on
our bank facilities are enabling us to protect capability, return
to pre-COVID-19 salaries and hours, and return the majority of
those on furlough back to work. With financial flexibility to make
medium-term decisions on headcount and longer-term investments, RPS
is well positioned to benefit as market conditions improve.
John Douglas, Chief Executive of RPS, commented:
"Our strategic exposure to government sector work is continuing
to benefit the Group. Our improved fourth quarter trading
performance was in line with our expectations, with some areas of
the business pleasingly showing year-on-year growth.
"We continued to make strong progress in significantly reducing
net debt and de-risking the balance sheet, providing a strong
platform for the year ahead. Management's continued focus in
improving lock up days, combined with the proactive actions and
cash management measures taken in response to the pandemic, have
contributed to the Group's improved financial profile.
"Our Q4-2020 performance, along with efforts in the preceding
periods, have put RPS in a strong position for when market
conditions improve in 2021. We look forward to updating the market
further when we report our full year results in early March."
(1) The Group provides this information based on a preliminary
summary of Q4-2020. These figures are yet to undergo full audit
review and are therefore subject to change until the 2020 financial
statements are finally approved and released in early March
2021.
(2) The Board considers the consensus Adjusted Profit before Tax
(PBT) to be the average of existing analysts' forecasts published
in the notes of those analysts who regularly follow the Group. For
FY-2020 the Adjusted PBT range is GBP10.0 million to GBP17.0
million, with an average of GBP13.3 million.
This announcement contains certain forward-looking statements
with respect to the financial condition, results of operations and
businesses of RPS Group plc. These statements involve risk and
uncertainty because they relate to events and depend upon
circumstances that will occur in the future. There are many factors
that could cause actual results or developments to differ
materially from those expressed or implied by these forward-looking
statements. Nothing in this announcement should be construed as a
profit forecast.
The above announcement contains inside information for the
purpose of Article 7 of the Market Abuse Regulation.
- Ends -
For further information:
RPS
John Douglas, Chief Executive Tel: +44 (0) 1235 863 206
Judith Cottrell, Finance Director www.rpsgroup.com
Media enquiries:
Buchanan
Henry Harrison-Topham / Chris Lane / Tel: +44 (0) 20 7466 5000
Tilly Abraham
RPS@buchanan.uk.com www.buchanan.uk.com
Notes to Editors
Founded in 1970, RPS is a leading global professional services
firm of 5,000 consultants and service providers. Having operated in
125 countries across six continents RPS defines, designs and
manages projects that create shared value for a complex, urbanising
and resource scarce world.
RPS delivers a broad range of services in six sectors: property,
energy, transport, water, defence and government services and
resources. Services provided across RPS' six sectors cover twelve
service clusters: project and programme management, design and
development, water services, environment, advisory and management
consulting, exploration and development, planning and approvals,
health, safety and risk, oceans and coastal, laboratories, training
and communications, creative & digital services.
RPS stands out for its clients by using its deep expertise to
solve problems that matter, making them easy to understand. Making
complex easy.
RPS' London Stock Exchange ticker is RPS.L. For further
information, please visit www.rpsgroup.com.
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