26 June 2019
Full year expectations impacted by Australian market conditions
RPS, a leading multi-sector global professional services firm, today announces a trading update.
Recent trading conditions in RPS' Australia Asia Pacific (AAP) segment are expected to have an adverse impact on the Group's full year results for the financial year ending 31 December 2019 ('FY-2019'). The Board is therefore advising that the FY-2019 results for RPS will be materially below management and market expectations*.
The Australian economy is experiencing its slowest growth since 2009. RPS' AAP business has a mix of public and private sector work with public sector work predominating.
- Public sector infrastructure spend has been affected by recent state elections in Victoria in late November 2018 and in NSW in March 2019. Both elections resulted in the return of the existing majority governments but there has been some hiatus in infrastructure spend that will impact RPS' full year results. The integration of Corview, which largely services public sector infrastructure markets, is progressing satisfactorily and the strategic logic of this acquisition remains robust
- The Federal election in May 2019 resulted in the return of a business-friendly centre right party. The result was a surprise to many commentators. The release of major defence projects has been much slower than normal, affecting our Project Management business that works extensively in this sector
- RPS' private sector work is focused on the property sector. The Australian property sector is subdued; as at April 2019 dwelling approvals were down more than 20% compared to the prior year. However, the Federal election result has produced more property sector friendly policies. A recent interest rate cut will also be helpful
Trading in the Group's other segments is as follows:
- In Energy, good trading conditions are expected to continue as the oil and gas market continues to improve. Energy is still a business in recovery and although the recent weakness in the oil price has had some impact, management believe that it will grow year on year
- Consulting UK & Ireland's market conditions continue to be affected by political uncertainty. This is impacting clients' investment decisions, which means that the performance for the year is now anticipated to be slightly below management expectations
- Services UK & Netherlands continues to perform as expected. As previously stated, this is the last year of the Ofwat AMP cycle and this is affecting the performance of Water. The Netherlands business is performing well. The Health Safety and Risk business is subdued
- In Norway, after a good first quarter the Group expects the segment will meet management expectations at the full year
- In North America, the recent departure of a small team has led the Group to lower expectations for FY-2019 in the segment. However, the improvements expected in Q2-2019 have started to materialise. The US economy remains strong and performance in H2-2019 is expected to be at a good level
Commenting on the Trading Update, John Douglas, Chief Executive, said:
"It's disappointing that softness in Australia is having a negative impact on Group performance in FY-2019, despite progress in other segments such as Energy and Norway. Notwithstanding this near-term impact, RPS is well placed to benefit when the Australian market recovers. We are making solid progress in achieving our stated strategic priorities. The implementation of these initiatives will support RPS' growth in the medium to long-term and I look forward to updating shareholders on progress at our interim results in August."
* The Board considers market expectations to be the consensus fee income and PBTA published in the notes of those analysts who regularly follow and interact with the Group. For FY-2019 consensus fee income is £594.0 million and PBTA is £49.9 million.
Notice of Interim Results
RPS will announce its Half Year Results for the six months ended 30 June 2019 on Thursday, 1 August 2019. A meeting for analysts will be held at 9.30am on the morning of the results announcement at the offices of Buchanan, 107 Cheapside, London, EC2V 6DN.
The above announcement contains inside information for the purpose of Article 7 of the Market Abuse Regulation.
For further information:
|RPS Group plc|
|John Douglas, Chief Executive
Gary Young, Group Finance Director
|Today||Tel: +44 (0) 20 7466 5000|
|From 27.6.19||Tel: +44 (0) 1235 863 206|
|Henry Harrison-Topham / Chris Lane / Maddie Seacombe||Tel: +44 (0) 20 7466 5000|
Notes to Editors
Founded in 1970, RPS is a leading global professional services firm of 5,600 consultants and service providers. Located in 125 countries across six continents, RPS defines, designs and manages projects that create shared value for a complex, urbanising and resource scarce world.
The Group delivers a broad range of services in six sectors: property, energy, transport, water, defence & government services and resources. Services provided across RPS' six sectors cover twelve service clusters: project & program management, design & development, water services, environment, advisory & management consulting, exploration & development, planning & approvals, health, safety & risk, oceans & coastal, laboratories, training and communication & creative 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.
The financial information given is derived from management accounts that are unaudited.
RPS's London Stock Exchange ticker is RPS.L. For further information, please visit www.rpsgroup.com.
26 June 2019