Interim Management Statement
02 May 2013
Interim Management Statement (May 2013)
Our markets in the first part of 2013 were broadly as expected, although in the Australia Asia Pacific region the slowdown in investment in resources projects, which seemed to have stabilised in the early weeks of the year, has reappeared. Our Energy business is, however, on track to deliver another year of growth. The Board still anticipates the Group will produce results at the half year broadly similar to 2012 and achieve growth in the second half. RPS remains financially strong.
Planned expenditure in the oil and gas exploration and production sector for 2013 is encouraging, in respect of both conventional and unconventional resources. Our international presence and reputation has enabled us to benefit from this investment in many parts of the world in the early part of the year. Spend in the Australia Asia Pacific region has recently slowed as some clients deal with increasing cost pressures. However, our two largest regional businesses, the US and EAME, continued to perform well and activity levels in respect of transaction support, valuations and oceanographic services have been encouraging.
The integration of the PEICE acquisition in Calgary, completed in January, is progressing well and we expect our training activities to make a good contribution in the remainder of the year. This should help offset a slow down in Canada as our clients' potash projects move into a phase of the development cycle in which we have less involvement.
The acquisition of Knowledge Reservoir ("KR") in Houston for a maximum consideration of US$20 million (£12.8 million) was announced on 19 April. KR will further strengthen our business in the US. After reorganisation of its non-US entities and integration of its US business it is expected to make a limited contribution this year and a full contribution in 2014.
BUILT AND NATURAL ENVIRONMENT ("BNE")
Our BNE business in Europe ("BNEE") performed well, even though economic uncertainty continued to hold back project investment in the first months of the year. Some of our commercial development clients seemed significantly more confident. Our strong position in the energy infrastructure market enabled us to win work at rates which reflect our market leading position. The investment we made in relocating and expanding our laboratories in the Netherlands in 2012 is proving worthwhile. We still expect BNEE to deliver a 2013 result broadly the same as in 2012, although the result in the first half of last year, underpinned by an excellent performance from our water business in the UK, is unlikely to be matched.
In BNE Australia Asia Pacific ("BNEA") we also remain well positioned in the energy infrastructure market. This enabled the scale of this business to double in recent years, despite the global financial crisis. As previously reported, in the second half of last year a significant number of natural resources projects were delayed, whilst our clients reviewed costs and efficiencies. Further delays in significant projects have been announced in recent weeks and so we are taking additional steps to reduce capacity and costs. The BNEA results in the first half of the year will, therefore, be below the same period last year. In these rapidly changing circumstances, the prospects for the second half remain uncertain, but have been improved by our recent cost reductions. Once the recovery in resource project investment gets underway it will offer an opportunity for us to create a further period of significant growth.
CASH FLOW, FUNDING AND DIVIDEND
Our cash conversion in the first part of 2013 was once again very good. Net bank debt at the end of March was £9.1 million, compared with £15.2 million at the same time last year and £13.5 million at the end of 2012. Our interest costs, as expected, have been modest. The Group has adequate facilities to continue its acquisition strategy and is currently examining a range of attractive opportunities. Over 19 consecutive years, from 1993 to 2012, we increased our dividend in the order of 15% each year. It is the Board's intention to maintain this rate of growth.
2 May 2013
RPS is an international consultancy providing advice upon the development of natural resources, land and property, the management of the natural and built environments and the health and safety of people. We have offices in the UK, Ireland, the Netherlands, the United States, Canada, Brazil, the Middle East and Australia/Asia Pacific and undertake projects in many other parts of the world. The Group is a constituent of both the FTSE 250 and FTSE 4 Good Indices.
|RPS Group plc||Tel: 01235 863206|
|Dr Alan Hearne, Chief Executive|
|Gary Young, Finance Director|
|College Hill||Tel: 020 7457 2020|