Interim Management Statement (30 October 2014)
On track for good growth in 2014 on a constant currency basis.
Full year dividend again to be increased 15%.
Continuing investment has strengthened our international platform providing significant growth opportunities.
On a constant currency basis we expect to deliver good profit growth for the full year. Currency volatility, as well as the uncertainty affecting the oil and gas sector, make it difficult to anticipate the full year outturn with precision. However, year to date trading suggests we are on track to achieve market expectations.
We have committed about £31 million to acquisitions since 30 June 2014. We anticipate this and the investments committed to in the first half (about £32 million) should help deliver a good performance in 2015. Our balance sheet remains strong, enabling us to continue to invest in our long term strategy.
We continued to benefit from our excellent reputation and prominent position in the oil and gas sector in many parts of the world and also experienced good demand for our transaction support and asset valuation advice. During the second quarter some of our clients began to manage expenditure more tightly; against the background of a rapidly falling oil price, this trend continued into the third quarter. As previously reported, our trading was also affected by the political disruption in the Middle East, which caused clients to delay investment, particularly in Kurdistan/Iraq.
Until markets stabilise our flexible business model and strong market presence should ensure a robust performance. With global demand for energy resources set to grow substantially in coming years, we remain well positioned in an attractive, long term market.
Built and natural environment
Europe: Those activities which assist clients develop new capital projects, particularly our planning and development business, continued to benefit both 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.
The acquisition of CgMs (announced on 11 August) has extended the range of our UK planning activities and will assist the strategic development of this fast growing business. It is being integrated rapidly, is likely to make a good contribution this year and should add materially to our result next year.
North America: We remain well positioned in attractive sectors of the expanding North American market. The acquisition of GaiaTech (announced on 20 May 2014) was an important step in the development of this business, giving us access to new markets and geography. It has integrated well and is beginning to make an important contribution. Those parts of the business closest to oil and gas E&P activities experienced the expenditure tightening from clients seen in the Energy business. In the most buoyant part of our market, the permitting and licensing of industrial facilities, staff retention became difficult in the first half. However, this team is now being successfully rebuilt.
Australia, Asia Pacific
Throughout this year our mining and energy clients in AAP have remained focused on operational efficiency rather than capital expenditure on new project development. As a result a number of projects have been delayed or cancelled, with this trend continuing into the second half. We have, therefore, continued to reduce our cost base.
Our position in the more active development sector of the economy has been reinforced with the acquisition of Point, a leading project management consultancy (announced on 18 September). Although only part of the Group for a short period it will make a helpful contribution this year. In 2015 its contribution will be material to the segment as a whole.
Debt, Funding and Dividend
The Group balance sheet remains strong. We have issued notes with an aggregate value of £51 million under our seven year facility with Pricoa, giving us total facilities of £176 million. Net bank debt at the 30 September 2014 was £83.5 million (30 June 2014: £63.8 million). The Group has ample facilities to continue to implement its acquisition strategy. The Board intends to increase the dividend 15% again for the full year.
Brook Land (Group Chairman) commented:
"Throughout 2014 we have been impacted by factors outside our control, particularly the strength of sterling, significantly reduced investment in the resources markets and unrest in the Middle East. Nonetheless, we are likely to deliver good growth on a constant currency basis, once again illustrating the robustness of our strategy and the quality of our staff and management."
"The acquisition of a number of high quality businesses this year positions us well to achieve in 2015 the potential our strategy is capable of delivering."
30 October 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, Norway, the United States, Canada 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|
|Instinctif Partners||Tel: 020 7457 2020|
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 a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements. Statements in respect of the Group's performance in 2014 in the year to date are based upon unaudited management accounts for the period January to September 2014. Nothing in this announcement should be construed as a profit forecast.