31st Oct 2013 07:00
RPS Group plc
("RPS" or "the Group")
Interim Management Statement (31 October 2013)
Trading on track to meet full year expectations. Continuing investment has created a strong international platform for future growth.
We remain on track to meet current market expectations for the full year. We have committed a maximum of £61 million to acquisitions since 30 June 2013 and anticipate this and the investments made earlier this year should result in significantly improved trading for the Group in 2014. Our balance sheet remains strong.
Energy
Our Energy business continued to trade encouragingly in the second half, as a result of our growing market presence and significant investment by our clients in the oil and gas exploration and production sector. We benefitted from good levels of demand in many areas of the world, although parts of the Canadian market, particularly the potash sector, remain challenging. Our independent advice and reports in respect of transactions and asset valuations, continue to be highly valued by our clients and our activities are supported by the level of global exploration and production spend. The high profile we have in a broad range of markets, combined with geographical diversity, enables us to continue to take advantage of these favourable circumstances.
Built and Natural Environment
Australia Asia Pacific: in the second half of last year and first half of this year a significant number of natural resources projects, particularly mining and offshore gas, were delayed. This trend has been less noticeable in recent months and there are early signs that investment by some clients may be starting to increase again. In other sectors of the economy, following the change of the Australian Federal Government in September, a range of clients, have started to make investments to take advantage of the weaker Australian dollar and lower interest rates. The ingredients, therefore, seem to be coming together for a recovery and a rebalancing of the economy. We remain of the view this is likely to take some time to work through completely. The weaker dollar will impact our results on consolidation, but our cost reductions over the last year will enable us to benefit from growth as it develops.
Europe: this business continued to perform well, despite continuing economic uncertainty. Our UK commercial development clients, particularly in the house building sector, retained the confidence we saw develop in the first half. Our laboratories in the Netherlands continued to trade well. The UK water market remained challenging. Our health, safety and risk management businesses are strongly positioned and continued to perform encouragingly. Our strategic position in the energy infrastructure market enabled us to continue to win work at rates which reflect our market leading position. Despite continuing fee rate pressure, the improved efficiencies resulting from actions taken previously, sustained our margin.
Acquisitions
Since 30 June we have completed the acquisition of APASA (18 July: Australia), HMA (15 August: Canada) and Ichron (26 September: UK). The detail of each of these transactions was announced at the time of completion. The integration of these acquisitions and those made earlier this year is progressing well.
On 18 October we announced the proposed acquisition of OEC, a leading project management consultancy in Norway. This transaction is likely to complete in November after the receipt of approval from the Norwegian Competition Authority.
After the OEC completion, we will have committed a maximum of about £80 million to acquisitions in the current year, of which about £42 million will have been paid out (including acquired debt). In addition we have paid £10.7 million of deferred consideration during the year to date.
Cash, Debt and Funding
Our conversion of profit into cash was again good and the Group balance sheet remains strong. At a time of currency volatility, we are protected at the operating level by our transactional hedging arrangements. Net bank debt at the end of September was £28.5 million (30 June 2013: £20.5 million). The Group has adequate facilities to continue its acquisition strategy.
Management Structure and Segmentation
We have recently made two important changes in the management of the Group in order to improve our growth prospects. These have resulted in changes in the way the Board reviews the performance and results of the Group. This requires two changes in the segmentation of the results we present:
1) due to the successful expansion of our environmental activities in North America we have separated out the relevant elements of our business there in order to form a Built and Natural Environment: North America business and segment;
2) in order to take full advantage of developments in the integrated energy and energy infrastructure market in AAP we have merged our BNE: AAP business with that part of Energy which trades in AAP to create a new segment known as "AAP"; the Energy element of AAP will, however, continue to provide an integral part of the service offering to our international oil and gas clients.
In future, therefore, we will report in following segments:
- Energy
- BNE: Europe
: North America
- AAP.
Annex 1 contains our results for H1 2012, FY2012 and H1 2013 restated as if these segments had existed when those results were published.
Brook Land, chairman, commented:
"RPS remains in a strong position and on track to deliver results in line with market expectations for the full year. We have invested extensively this year in order to diversify and expand further internationally and believe that, with the integration and development of these acquisitions, 2014 will be a good year for the Group."
31 October 2013
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, 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.
Enquiries:
| |
RPS Group plc | Tel: 01235 863206 |
Dr Alan Hearne, Chief Executive | |
Gary Young, Finance Director | |
| |
College Hill | Tel: 020 7457 2020 |
Justine Warren | |
Matthew Smallwood |
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. The continuing uncertainty in global economic outlook inevitable increases the risks to which the Group is exposed. Statements in respect of the Group's performance in 2013 in the year to date are based upon unaudited management accounts for the period January to September 2013. The Board considers market expectations for 2013 are best defined by taking the range of forecasts of PBTA for the full year published by analysts who consistently follow the Group. The current range of forecasts of which the Board is aware is £60.0 to £63.9 million. Nothing in this announcement should be construed as a profit forecast.
Annex 1
Segmental results for the year ended 31 December 2012 as restated | ||||
£000s | Fees | Expenses | Intersegment revenue | External revenue |
BNE - Europe | 157,200 | 21,433 | (1,301) | 177,332 |
BNE - North America | 26,938 | 4,264 | (123) | 31,079 |
AAP | 133,888 | 22,393 | (1,529) | 154,752 |
Energy | 164,363 | 29,160 | (823) | 192,700 |
Group eliminations | (3,554) | (222) | 3,776 | 0 |
Total | 478,835 | 77,028 | 0 | 555,863 |
£000s | Underlying profit | Reorganisation costs | Segment profit | |
BNE - Europe | 18,874 | (754) | 18,120 | |
BNE - North America | 6,252 | 0 | 6,252 | |
AAP | 15,188 | (946) | 14,242 | |
Energy | 31,243 | (46) | 31,197 | |
Total | 71,557 | (1,746) | 69,811 |
Segmental results for the year ended 31 December 2012 as originally presented | ||||
£000s | Fees | Expenses | Intersegment revenue | External revenue |
BNE - Europe | 157,200 | 21,433 | (1,301) | 177,332 |
BNE - AAP | 98,300 | 19,827 | (786) | 117,341 |
BNE - Eliminations | (193) | (41) | 234 | 0 |
BNE total | 255,307 | 41,219 | (1,853) | 294,673 |
Energy | 225,875 | 36,017 | (702) | 261,190 |
Group eliminations | (2,347) | (208) | 2,555 | 0 |
Total | 478,835 | 77,028 | 0 | 555,863 |
£000s | Underlying profit | Reorganisation costs | Segment profit | |
BNE - Europe | 18,874 | (754) | 18,120 | |
BNE - AAP | 12,974 | (920) | 12,054 | |
BNE total | 31,848 | (1,674) | 30,174 | |
Energy | 39,709 | (72) | 39,637 | |
Total | 71,557 | (1,746) | 69,811 |
Detailed reclassifications for the year ended 31 December 2012 | ||||
£000s | Fees | Expenses | Intersegment revenue | External revenue |
BNE - North America | 26,938 | 4,264 | (123) | 31,079 |
BNE - Eliminations | 193 | 41 | (234) | 0 |
AAP | 35,588 | 2,566 | (743) | 37,411 |
Energy | (61,512) | (6,857) | (121) | (68,490) |
Group eliminations | (1,207) | (14) | 1,221 | 0 |
Total | 0 | 0 | 0 | 0 |
£000s | Underlying profit | Reorganisation costs | Segment profit | |
BNE - North America | 6,252 | 0 | 6,252 | |
AAP | 2,214 | (26) | 2,188 | |
Energy | (8,466) | 26 | (8,440) | |
Total | 0 | 0 | 0 |
Segmental results for the half year ended 30 June 2013 as restated | ||||
£000s | Fees | Expenses | Intersegment revenue | External revenue |
BNE - Europe | 74,682 | 9,504 | (265) | 83,921 |
BNE - North America | 15,668 | 2,242 | (464) | 17,446 |
AAP | 65,912 | 10,288 | (1,116) | 75,084 |
Energy | 87,797 | 17,206 | (604) | 104,399 |
Group eliminations | (2,215) | (234) | 2,449 | 0 |
Total | 241,844 | 39,006 | 0 | 280,850 |
£000s | Underlying profit | Reorganisation costs | Segment profit | |
BNE - Europe | 9,550 | (259) | 9,291 | |
BNE - North America | 3,907 | 0 | 3,907 | |
AAP | 5,528 | (833) | 4,695 | |
Energy | 16,688 | (52) | 16,636 | |
Total | 35,673 | (1,144) | 34,529 |
Segmental results for the half year ended 30 June 2013 as originally presented | ||||
£000s | Fees | Expenses | Intersegment revenue | External revenue |
BNE - Europe | 74,682 | 9,504 | (265) | 83,921 |
BNE - AAP | 46,413 | 8,829 | (272) | 54,970 |
BNE - Eliminations | (52) | 0 | 52 | 0 |
BNE total | 121,043 | 18,333 | (485) | 138,891 |
Energy | 121,738 | 20,834 | (613) | 141,959 |
Group eliminations | (937) | (161) | 1,098 | 0 |
Total | 241,844 | 39,006 | 0 | 280,850 |
£000s | Underlying profit | Reorganisation costs | Segment profit | |
BNE - Europe | 9,550 | (259) | 9,291 | |
BNE - AAP | 4,584 | (759) | 3,825 | |
BNE total | 14,134 | (1,018) | 13,116 | |
Energy | 21,539 | (126) | 21,413 | |
Total | 35,673 | (1,144) | 34,529 |
Detailed reclassifications for the half year ended 30 June 2013 | ||||
£000s | Fees | Expenses | Intersegment revenue | External revenue |
BNE - North America | 15,668 | 2,242 | (464) | 17,446 |
BNE - Eliminations | 52 | 0 | (52) | 0 |
AAP | 19,499 | 1,459 | (844) | 20,114 |
Energy | (33,941) | (3,628) | 9 | (37,560) |
Group eliminations | (1,278) | (73) | 1,351 | 0 |
Total | 0 | 0 | 0 | 0 |
£000s | Underlying profit | Reorganisation costs | Segment profit | |
BNE - North America | 3,907 | 0 | 3,907 | |
AAP | 944 | (74) | 870 | |
Energy | (4,851) | 74 | (4,777) | |
Total | 0 | 0 | 0 |
Segmental results for the half year ended 30 June 2012 as restated | ||||
£000s | Fees | Expenses | Intersegment revenue | External revenue |
BNE - Europe | 83,323 | 10,151 | (719) | 92,755 |
BNE - North America | 13,593 | 1,653 | (48) | 15,198 |
AAP | 64,587 | 12,592 | (721) | 76,458 |
Energy | 78,406 | 13,558 | (232) | 91,732 |
Group eliminations | (1,583) | (137) | 1,720 | 0 |
Total | 238,326 | 37,817 | 0 | 276,143 |
£000s | Underlying profit | Reorganisation costs | Segment profit | |
BNE - Europe | 9,825 | (307) | 9,518 | |
BNE - North America | 3,477 | 0 | 3,477 | |
AAP | 7,286 | (56) | 7,230 | |
Energy | 14,642 | (43) | 14,599 | |
Total | 35,230 | (406) | 34,824 |
Segmental results for the half year ended 30 June 2012 as originally presented | ||||
£000s | Fees | Expenses | Intersegment revenue | External revenue |
BNE - Europe | 83,323 | 10,151 | (719) | 92,755 |
BNE - AAP | 47,940 | 11,090 | (101) | 58,929 |
BNE - Eliminations | (104) | (3) | 107 | 0 |
BNE total | 131,159 | 21,238 | (713) | 151,684 |
Energy | 108,024 | 16,646 | (211) | 124,459 |
Group eliminations | (857) | (67) | 924 | 0 |
Total | 238,326 | 37,817 | 0 | 276,143 |
£000s | Underlying profit | Reorganisation costs | Segment profit | |
Europe | 9,825 | (307) | 9,518 | |
AAP | 6,286 | (56) | 6,230 | |
BNE total | 16,111 | (363) | 15,748 | |
Energy | 19,119 | (43) | 19,076 | |
Total | 35,230 | (406) | 34,824 |
Detailed reclassifications for the half year ended 30 June 2012 | ||||
£000s | Fees | Expenses | Intersegment revenue | External revenue |
BNE - North America | 13,593 | 1,653 | (48) | 15,198 |
BNE - Eliminations | 104 | 3 | (107) | 0 |
AAP | 16,647 | 1,502 | (620) | 17,529 |
Energy | (29,618) | (3,088) | (21) | (32,727) |
Group eliminations | (726) | (70) | 796 | 0 |
Total | 0 | 0 | 0 | 0 |
£000s | Underlying profit | Reorganisation costs | Segment profit | |
BNE - North America | 3,477 | 0 | 3,477 | |
AAP | 1,000 | 0 | 1,000 | |
Energy | (4,477) | 0 | (4,477) | |
Total | 0 | 0 | 0 | |
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