Q3-2020 Trading Update

29 October 2020

‘Good momentum with a strong balance sheet and improving order book’

RPS, a leading multi-sector global professional services firm, provides the following trading update for the three months ended 30 September 2020 (‘Q3-2020’).

Q3-2020 Trading Update

Fee Revenue in Q3-2020 was £109.0 million (Q3-2019: £132.0 million; £129.2 million at constant currency). Q3-2020 Fee Revenue increased compared to Q2-2020 (£107.0 million) and was 15.6% (at constant currency) below the same quarter in 2019 compared to a reduction of 18.1% in Q2-2020, with an improving trajectory across the quarter.  This is in line with management’s COVID-19 impact modelling and our expectations at the time of the Group’s half year results announcement.

During Q3-2020, RPS continued to match capacity to market activity and Fee Revenue improved as individuals started to return from furlough and increase the number of hours worked.  RPS continues to benefit from its strong exposure to government and quasi-government organisations, which provides some resilience to the impact of COVID-19.  This can be seen in Australia Asia Pacific which has generated growth for the last three quarters compared to 2019.

Commentary on RPS’ business segments during Q3-2020 is as follows:

  • Energy– RPS continues to make good progress in diversifying this segment into renewables, in particular offshore wind.  As reported at H1-2020, our Energy operations and training businesses have been significantly impacted by COVID-19 and oil price fluctuations.  The segment will be slower to return to pre-COVID-19 activity levels but represents less than 16% of Q3-2020 Group Fee Revenue.  In the meantime, our flexible associate-based employee model has enabled us to reduce costs in line with Fee Revenue and the shift in Q2-2020 of our technical advisory business to this model resulted in profit margin improvement in Q3-2020
  • Consulting UK & Ireland – while private sector work and the property sector continue to be impacted by COVID-19, activity has started to increase, and the public sector-exposed businesses continue to perform well.  This has led to improving Fee Revenue and margins in Q3-2020 as our people return from furlough and increase the number of hours worked
  • Services UK & Netherlands – as predicted, Fee Revenue from our UK water business improved in Q3-2020 as the new AMP7 cycle ramps up and we were recently retained by Welsh Water as its leakage field service specialists for the next five years.  The backlog of work in Health and Laboratories we saw build up in H1-2020 is also starting to come through and Netherlands had a solid quarter.  Overall Fee Revenue improved compared to Q2-2020 as did margins
  • Norway – delivered another solid performance in Q3-2020 with Fee Revenue only 4% down on Q3-2019, at constant currency.  The segment remains well placed to benefit from a future recovery owing to its strong public sector exposure alongside its leading market position within Project and Program Management
  • North America – the government-exposed infrastructure and oceans and coastal businesses performed well in Q3-2020.  In the environmental risk business, activity in the private equity sector is starting to recover, and the business outperformed the prior year in September 2020.  Overall Fee Revenue and profit margins improved on Q2-2020
  • Australia Asia Pacific (AAP) – for the third quarter in a row the business grew compared to 2019, with 7% growth in Q3-2020 at constant currency.  The segment is seeing a positive trajectory across the year with margins improving and significant transport infrastructure client wins, including Inland Rail

Improved debt and liquidity

Debt continues to be well managed with net bank borrowings at 30 September 2020 of £32.8 million (30 September 2019:  £108.1million; 30 June 2020:  £57.8 million), a reduction of £25.0 million since June 2020.  This represents financial leverage of 1.1x Net Debt/EBITDA, comfortably within the Group’s target range of 1.0x to 2.0x Net Debt/EBITDA.  The reduction in net bank borrowings in Q3-2020 was due to delivering cash profitability in the quarter while maintaining working capital and the net placing proceeds of £19.4 million.  Lock up day performance has continued to be strong.

Following the successful placing in September 2020, the documentation amending the banking arrangements is now complete.  As previously outlined, this provides increased flexibility and financial liquidity over the medium-term to enable RPS to navigate the ongoing challenges of the COVID-19 pandemic and to take advantage of the economic and market recovery as it comes through.  The Group now has available a £160.0 million Revolving Credit Facility (‘RCF’) until July 2022 as well as the US private placement notes of circa £56.0 million.

The Group continues to have significant liquidity and substantial headroom in respect of the committed bank facilities of £160.0 million at 30 September 2020 in addition to cash available of £22.6 million at that date.  At the end of September 2020, RPS has not had to draw down the RCF facility due to the proactive management actions the Group has taken.


There are pleasing signs of recovery within RPS.  The contracted order book continues to improve, with all segments either holding or improving their three-month order book and contributing to a 4% increase overall at the end of September 2020 compared to June 2020.  Our AAP Advisory and Project Management divisions and the majority of the Consulting UK & Ireland divisions are experiencing growth in their three-month order book compared to September 2019.  Despite this encouraging trajectory, we remain cautious and continue to suspend guidance due to the uncertain macro-economic climate and the potential further restrictions arising from the increasing number of COVID-19 cases in the UK and North America.

Our strong cash management is continuing to deliver reduced debt and leverage.  However, debt levels are expected to increase in Q4-2020 as growth in Fee Revenue drives an increase in working capital and the tax deferrals continue to be settled.  At the end of September 2020, deferrals for payroll taxes and VAT totaled £7.0 million (June 2020: £8.0 million) with circa £2.5 million to be repaid in Q4-2020.

The Group has a strong balance sheet and the placing proceeds coupled with the revised banking arrangements are enabling us to protect capability, start returning to pre-COVID-19 salaries and hours worked in most segments as well as returning people from furlough.  Our financial position provides the flexibility to make medium-term decisions on headcount and longer-term investments across the Group.  As this trading update illustrates, RPS is well positioned to benefit as market conditions improve.

John Douglas, Chief Executive of RPS, commented:

“Our performance in Q3-2020 is consistent with our expectations at the half year and RPS is now starting to benefit as market conditions show some improvement.

“With the successful share placing and amendments to our banking arrangements now complete, we have the flexibility to take a medium to longer-term view on our business and remain confident in our ability to continue to benefit as market conditions improve.

“I would like to take this opportunity to thank all of our employees around the world for their unstinting dedication, professionalism and hard work in recent months under the most challenging and unusual circumstances.”

RPS will issue a Trading Update for the period ending 31 December 2020 (Q4-2020) in January 2021. RPS will announce its final results for the year ended 31 December 2020 in early March 2021.

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 many 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.

The above announcement contains inside information for the purpose of Article 7 of the Market Abuse Regulation.


For further information:


John Douglas, Chief Executive Tel: +44 (0) 1235 863 206
Judith Cottrell, Finance Director www.rpsgroup.com


Media enquiries:

Henry Harrison-Topham / Chris Lane / Tilly Abraham Tel: +44 (0) 20 7466 5000
[email protected]www.buchanan.uk.com

Notes to Editors

Founded in 1970, RPS is a leading global professional services firm of 5,000 consultants and service providers.  Having operated in 125 countries across six continents RPS defines, designs and manages projects that create shared value for a complex, urbanising and resource scarce world.

RPS delivers a broad range of services in six sectors: property, energy, transport, water, defence and government services and resources.  Services provided across RPS' six sectors cover twelve service clusters: project and programme management, design and development, water services, environment, advisory and management consulting, exploration and development, planning and approvals, health, safety and risk, oceans and coastal, laboratories, training and communications, creative & digital 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.

RPS' London Stock Exchange ticker is RPS.L.  For further information, please visit www.rpsgroup.com.