Q4-2021 Trading Update
27 January 2022
Delivering growth, strong balance sheet
RPS, a leading multi-sector global professional services firm, provides the following trading update for the quarter ended 31 December 2021 (‘Q4-2021’ or the ‘period’), based on a preliminary unaudited summary for the period (1).
Positive trends in our markets and the business momentum as highlighted in recent trading updates have continued into Q4-2021. Fee Revenue for the period of £122.5 million (Q4-2020: £115.8 million, £114.1 million at constant currency) was in line with the Board’s expectations and delivered growth of 7% on Q4-2020 at constant currency.
Fee Revenue continues to recover with strong Q4 year-on-year growth in Energy, Consulting UK & Ireland, Norway and Australia Asia Pacific. Urbanisation trends continue to drive strong demand for our services and we have seen improved private sector confidence in the UK, a buoyant property market in Australia, and ongoing investment by governments in transport infrastructure in the UK, Australia and the US. Demand for natural resources also continued to drive Fee Revenue growth in renewables and the ongoing ramp up of projects under the UK AMP7 water cycle. Our UK and US based businesses have also benefited from a continued focus in sustainability, particularly supporting mid-market private equity in the US.
Performance in our Services segment was held back by the Netherlands business which had been improving steadily in Q3-2021 but was impacted in Q4-2021 by increased COVID restrictions; longer term prospects however remain positive.
Full year Fee Revenue for 2021 is up 5% at constant currency at £476.1 million (2020: £457.3 million, £454.3 million at constant currency).
As a result of the fee performance and improving margins, draft Adjusted Profit Before Tax is currently expected to be in line with the average of analysts’ forecasts(2).
Disciplined cash performance and strong balance sheet
Cash flow continues to be tightly managed resulting in 31 December 2021 net bank borrowings better than the average of analysts’ forecasts(2) at £13.5 million (31 December 2020: £10.8 million, 1 October 2021 £34.3 million, 30 June 2021: £27.8 million).
An ongoing disciplined focus on billing and collections, and government clients continuing to pay within terms, resulted in significant cash collections in December 2021. As a result, lock up days at 31 December 2021 were exceptionally low at 49 days (31 December 2020: 48 days, 30 June 2021: 60 days, 31 December 2019: 69 days), which is best in class in the industry. Deferred payroll and sales taxes of £2.7 million were repaid in the quarter to bring the total for the year to £9.4 million, leaving only £0.6 million outstanding on 31 December 2021.
Financial leverage of Net Debt/EBITDA is expected to be in the range of 0.6x to 0.7x at 31 December 2021, compared to the Group’s target range of 1.0x to 2.0x Net Debt/EBITDA. Leverage is expected to increase in FY-2022 as we invest in the business to support growth.
The Group continues to have significant headroom in our debt facilities, which have long maturity. As at 31 December 2021 headroom was £100.0 million, which is in addition to £40.1 million of cash held on that date.
John Douglas, Chief Executive of RPS, said:
“The successful implementation of our strategy has seen RPS return to growth and I am delighted to see the business finish 2021 with a strong balance sheet to support future growth, and very encouraging Q4 performance, with profit for the year expected to be in line with the average of analysts’ forecasts. I would like to take this opportunity to thank our people across all of RPS’ geographies, whose consistency and excellence continues to drive the business forwards.
“While the macroeconomic outlook for the coming year remains volatile, conditions in RPS’ core markets continue to improve and with sustained growth in our order book, we are confident in our ability to maintain momentum into the new financial year. Demand for our services across our core thematics – natural resources, urbanisation and sustainability – remains strong, and our focus now is on developing our team by recruiting and retaining the best talent in the industry in order to drive further growth in 2022.
“We entered the new financial year with optimism, delivering on our promise to make complex easy for our clients and on creating sustainable shared value for all stakeholders. We look forward to providing a fuller update on FY-2021 at our Full Year results in mid-March.”
(1)The Group provides this information based on a preliminary summary of Q4-2021. These figures are yet to undergo full audit review and are therefore subject to change until the 2021 financial statements are finally approved and released in March 2022.
(2) The Board considers the consensus Adjusted Profit before Tax (PBT) and net bank borrowings to be the average of existing analysts’ forecasts published in the notes of those analysts who regularly follow the Group. For FY-2021 the Adjusted PBT is an average of £21.0 million and net bank borrowings an average of £43.6 million.
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