Q3-2021 Trading Update
27 October 2021
‘Continued momentum, positive industry tailwinds, increasing confidence’
RPS, a leading multi-sector global professional services firm, provides the following trading update for the quarter ended 1 October 2021 (‘Q3-2021’ or the ‘period’).
Performance for the period was in line with the Board’s expectations with Fee Revenue on an upward trajectory and margins improving. The trends in our markets and business performance that we signalled in the H1-2021 results have continued. Fee
Revenue in Q3-2021 increased 13% on Q3-2020 at constant currency to £120.1 million (Q3-2020: £109.0 million, £106.6 million at constant currency). Year to date Fee Revenue is up 4% at constant currency at £353.6 million (2020:
£341.5 million, £340.1 million at constant currency).
Commentary on the Group’s statutory segments during Q3-2021, using constant currency comparisons, is provided below:
- Energy – margin improvement despite activity remaining subdued in gas and oil
Q3-2021 Fee Revenue was up 19% on Q3-2020 and Contracted Order Book (COB) was up 5% on December 2020. Demand for renewables remains strong, but COVID-related travel restrictions are continuing to impact delivery of some projects. Activity in gas and oil remains subdued despite increased oil prices. However, demand for conventional energy is expected to continue and we expect activity levels in this area to pick up. We continue to manage costs carefully through the variable associate model and margins have improved.
- Consulting UK & Ireland – continued good recovery out of COVID; margins improving
Q3-2021 Fee Revenue was up 14% on Q3-2020. Demand remains strong in our markets and the (COB) was up 28% on December 2020. With continued growth in COB, recruitment and retention is our key focus to deliver further Fee Revenue growth.
- Services UK & Netherlands – ongoing ramp up of AMP7; improved margins
Q3-2021 Fee Revenue was up 7% on Q3-2020. The AMP7 cycle ramp up has been slower than expected but is now in line with our forecasts. Performance in our Netherlands business is improving steadily as the country relaxes COVID restrictions. COB was up 10% on December 2020.
- Norway – steady performance; improving margins
Q3-2021 Fee Revenue was up 14% on Q3-2020. Whilst COB has reduced by 10% on December 2020, it has increased by 3% on June 2021 as demand for our consultancy services remains strong and, as lock down restrictions ease, demand for our training activities is improving.
- North America – tighter, better business; improved margins due to restructuring in 2020
Q3-2021 Fee Revenue was down 2% on Q3-2020 because of delays in the activation of government project awards in our Infrastructure business. These delays eased in September 2021 as the government entered the new fiscal year and COB in the Infrastructure business has increased by 12% since June 2021. Our markets remain strong with good order books in our Environmental Risk and Ocean Science businesses. Whilst total North American COB is down 6% since December 2020, it is up 7% on June 2021.
- Australia Asia Pacific (AAP) – strong performance ahead; margins improving
Q3-2021 Fee Revenue was up 16% on Q3-2020. Ongoing government spending in project management and transport infrastructure, plus a buoyant property market, means demand for our services remains strong and the COB continued to grow, up 23% on December 2020.
Strong cash performance
Cashflow continues to be tightly managed with net bank borrowings on 1 October 2021 at the lower end of management expectations at £34.3 million (30 September 2020: £32.8 million, 30 June 2021: £27.8 million). A disciplined focus on
billing and collections means lock up days remain below prior year levels at 61 days at 1 October 2021 (30 September 2020: 70 days, 30 June 2021: 60 days). Deferred payroll and sales taxes of £1.8 million were repaid in the quarter with £3.2
million outstanding on 1 October 2021.
With continued strong cash management and improved trading, financial leverage of Net Debt/rolling 12-month EBITDA at 1 October 2021 was 1.2x. This remains towards the bottom end of our target range of 1.0x to 2.0x.
The Group continues to have significant headroom in our debt facilities, which have long maturity. The Pricoa private placement notes have been repaid and a new seven-year refinancing of £55.0 million is in place. As at 1 October 2021 headroom was
£100.0 million, which is in addition to £18.8 million of cash held on that date.
The outlook for H2-2021 is unchanged and RPS is increasingly confident in its ability to deliver in 2021, as the good momentum achieved in H1-2021 has continued into H2-2021. The COB continues to strengthen and has increased by 15% since December
2020, with growth in four out of six segments. RPS remains well positioned to continue to benefit from operating in favourable markets with significant growth opportunities.
We remain focused on building a business that can deliver mid-single digit rates of organic revenue growth and a double-digit operating margin in the medium term and are confident in our ability to do so.
John Douglas, Chief Executive of RPS, said:
“Since our interim results in August, market confidence in general has continued to build, resulting in a corresponding and ongoing improvement in RPS’ financial performance.
“We continue to manage the business tightly and focus on improving margins, while taking advantage of macro factors that drive demand in our markets. These positive and evolving tailwinds include a renewed global focus on energy security that is bringing renewable energy and hydrocarbons back to the forefront; in the UK construction industry, there is increasing confidence and activity, both in the public and private sector; and in North America, the anticipated Bipartisan infrastructure bill coupled with a new fiscal year, signalling increased government spending.
“Group performance has, as anticipated, strengthened as we have progressed through the year, and we expect momentum and business performance improvement to continue in the final quarter.”
Capital Markets Event
RPS is hosting a virtual Capital Markets Event for investors and analysts between 10am and 12pm UK time on Tuesday, 2 November 2021. To register for the event, please click here and follow a simple registration process.
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|
|Henry Harrison-Topham / Chris Lane / Tilly Abraham||Tel: +44 (0) 20 7466 5000|
Notes to Editors
Founded in 1970, RPS is a leading global professional services firm with proven ESG credentials. With c.5,000 consultants and service providers and 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.
Our three thematics – natural resources, urbanisation, and sustainability – are specifically targeted to growth markets where 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 program 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 and digital services.
RPS stands out for its clients by using technology enabled consulting, combined with 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