Interim Management Statement
30 April 2009
We are leaders in a diverse range of international markets. As a result, we have long term relationships with a significant number of substantial organisations, the majority of which continued to invest in the first part of the year. This supported the Group's level of activity during the continuing economic downturn.
Results for the first quarter of 2009 indicate the Group is currently on track to meet market expectations for the full year. Our balance sheet remains strong. Net bank debt reduced from £28.6 million at the end of 2008 to £27.0 million at the end of March 2009, after funding deferred payments on prior year acquisitions of £6.6 million. We have extended our facilities with Lloyds Banking Group from £100 million to £125 million, available until 2013.
Energy: market strength demonstrated
Our Energy clients continued to invest in major oil and gas exploration and production programmes. We are working on many internationally important projects and are only modestly exposed to the reduced investment in higher production cost areas. As is often the case after an oil price fall, the pace of asset and corporate transactions increased, further improving our income in this part of the market. National Oil Companies were increasingly active and have become an important part of our portfolio of clients. The cost inflation seen in the sector in recent years has subsided, making it easier to manage our own costs and accommodate clients' increased focus on achieving value for money.
Planning and Development: mixed performance.
Planning and Development in Australia continued to prosper, supporting, in particular, major gas exploration and infrastructure projects. The Governments of Ireland and Northern Ireland continued to invest in infrastructure and social developments from which we benefited. The Irish Government has sought to protect this investment in its recent budget, although pricing pressure is developing as individual departments manage tight finances and the deliverability of the budget needs to be demonstrated. There have been some limited signs of confidence returning to our UK commercial development clients, but more positive economic conditions are probably needed before activity levels materially increase, particularly in the London market. Private sector infrastructure providers in the UK remained busy, enabling us to focus more on this sector.
Environmental Management: broadly based success.
Environmental Management again performed well. The advice we provide to the UK water industry remained in demand as a result of our strong market position. Our Dutch business performed well in an economy which seemed more resilient than many. Demand for health, safety and environmental management support from the oil and gas sector also boosted our performance. Activity levels in the nuclear safety sector remained buoyant and our laboratories made a useful contribution.
Effective Cost Management.
Group interest costs reduced significantly compared with 2008, a trend that seems likely to prevail for the rest of 2009. Increased focus on efficiency in all businesses enabled us to reduce employment and operating costs further. This process will continue until economic prospects become clearer. We always manage working capital tightly, although in current circumstances, securing payment is taking somewhat longer, particularly in Ireland. We experienced no material bad debts, but the risk of clients defaulting will remain higher than usual until economic growth resumes. The weakness of sterling relative to other currencies in which we trade provided us with a currency benefit on consolidation of the Group's results.
Acquisitions and Strategy.
The acquisitions made in 2008 have been successfully integrated. Interesting acquisition opportunities continue to present themselves. In current circumstances our due diligence is more demanding and takes longer than usual, but our strategy of continuing to build a multi-disciplinary RPS on an international basis remains appropriate and achievable. Once the current financial and economic problems ease, the world will need to focus on the related issues of energy security, supply and climate change with renewed vigour. This will help RPS deliver the next phase of its growth.
Brook Land, Chairman, commented:
"RPS has a flexible and resilient business model which has enabled us to deliver good results in a range of circumstances for many years. The Board believes the Group is well equipped to meet the varying economic challenges in each of the markets and countries in which we operate and is currently on track to meet market expectations in the full year. Beyond that we are well positioned to assist in finding the solutions to the related problems of energy security, supply and climate change and remain confident about the strategy of the Group."
30 April 2009
|RPS Group plc|
|Dr Alan Hearne, Company Secretary
Gary Young, Group Finance Director
|Tel: 01235 863 206|
|Justine Warren / Matthew Smallwood||Tel: 020 7457 2020|
RPS is an international consultancy providing advice upon: the development of land, property and infrastructure; the exploration and development of oil and gas and other natural resources; the management of the environment and the health and safety of people. We trade in the UK, Ireland, the Netherlands, the United States, Canada, South East Asia and Australia and undertake projects in many other parts of the world. The Group is a constituent of both the FTSE 250 and FTSE4Good Indices.
Forward looking statements
This announcement contains certain forward looking statements with respect to the businesses of RPS. These statements involve risk and uncertainty because they relate to events and depend upon circumstances that may occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward looking statements. The current uncertainty in global economic outlook inevitably increases the risks to which the Group is exposed. Nothing in this announcement should be construed as a profit forecast.