Interim Management Statement (May 2014)
The Group continued to grow well in the early part of 2014, supported by the acquisitions made in 2013. As anticipated, this growth was significantly affected on consolidation by the increased strength of sterling. Nonetheless, we remain focussed on delivering a satisfactory result for the year. RPS is financially strong, with resources to continue its acquisition strategy.
We continued to benefit from good levels of demand from oil and gas companies in many parts of the world, as well as from the financial services sector. Although some clients have continued to manage expenditure more tightly, our diverse range of skills and international capability enabled us to position ourselves on major projects globally. The Canadian potash market, which turned down in the middle of 2013, remains subdued. The acquisitions made in 2013 (PEICE, Knowledge Reservoir, Ichron and OEC) are integrating well and should contribute to the delivery of another year of good growth for this business. With the need for energy supply set to grow significantly in the long term, we anticipate demand for our services from the oil and gas sector will continue to expand.
BUILT AND NATURAL ENVIRONMENT ("BNE")
Our BNE business in Europe has performed well in the first part of the year. Those activities which assist clients develop new capital projects, particularly our planning and development business, continued to benefit from improving market conditions and client confidence. Those exposed to operational environments, such as providing environment management advice, continue to need to offer an efficient, cost effective service to assist clients manage tight budgets. Our expanded laboratory in the Netherlands continued to trade well. The acquisition of Clear Environmental Consultants ("Clear": announced on 10 April) has extended the range of our UK water activities and will assist the strategic development of this business. Overall, our European business retains the potential to achieve growth this year. Further acquisition opportunities, which would enable us to take advantage of improving markets, are also being evaluated.
In BNE North America we remain well positioned in the expanding energy infrastructure market. The strengthening of the US economy, the investment in shale oil and gas and the exposure of the Canadian economy to natural resources provides us with a significant market opportunity. However, in this buoyant market, staff retention and recruitment has become exceptionally difficult, limiting our immediate potential. The acquisition of HMA Land Services in September 2013, now reported in this segment, gives us access to the substantial pipeline development market. We have a good opportunity to develop this business and further acquisitions are under active consideration in both the US and Canada.
AUSTRALIA, ASIA PACIFIC ("AAP")
Our mining and energy clients in AAP remain focused more on operational efficiency and capital management than new project development. As a result projects have continued to be delayed, although in smaller numbers than last year. This trend has, to a degree, been compensated for by increased optimism and investment in private and public sector development projects, particularly in and around Sydney and Melbourne. As expected, trading in the first quarter was at a lower level than last year and we continued to reduce our cost base in order to sustain efficiency. The rebalancing of the economy continues positively but, as indicated previously, is going to take some time. In the meantime prospects in this business inevitably remain difficult to predict.
CASH FLOW, FUNDING AND DIVIDEND
Our cash conversion in the first part of 2014 was ahead of budget. Net bank debt at the end of March was ￡35.3 million, compared with ￡32.4 million at the end of 2013. In the first quarter we paid ￡6.5 million in consideration for acquisitions. In addition, the initial payment in respect of Clear was ￡6.8 million. Our interest costs, as expected, have been modest. The Group has sufficient resources to maintain the usual rate of growth in the dividend, as well as continuing the Group's acquisition strategy.
1 May 2014
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|
This announcement contains certain forward-looking statements with respect to the financial condition and results of businesses within RPS Group plc. 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. Nothing in this announcement should be construed as a profit forecast.