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Consultancy group RPS has beaten forecasts once again and expects things to hot-up as increased concerns about climate change create more demand for its services.
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The main reason for RPS's outperformance was a stunning 52 per cent increase in operating profits, to £8.6m, from its energy consultancy business. This division has benefited from three canny bolt-on acquisitions since the start of the year and strong demand from the oil and gas industry.
At the same time, the group's largest division, planning and development, continued to benefit from buoyant conditions in its core UK market and reported a 30 per cent rise in operating profits for the year to £12.7m. In fact, trading across all three of its divisions, which also includes environmental management, remains strong, and the group is now positioning itself to benefit from increased awareness of global warming.
A strong balance sheet means there's plenty of scope for RPS to continue making acquisitions to enhance its earnings and move it into new markets. So, broker Citigroup has boosted its full-year EPS forecast by 7 per cent to 14.7p (11.7p in 2006) and has pencilled in 16.8p for 2008.
| RPS Group (RPS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 333p | MARKET VALUE: | £690m | |
| TOUCH: | 332-333p | 12-MONTH HIGH: | 373p | LOW: 213p |
| DIVIDEND YIELD: | 0.9% | PE RATIO: | 24 | |
| NET ASSET VALUE: | 99p* | NET DEBT: | 13% | |
| Half-year to 30 Jun |
Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 143 | 15.9 | 5.54 | 1.32 |
| 2007 | 174 | 21.4 | 7.24 | 1.52 |
| % change | +22 | +35 | +31 | +15 |
*Includes intangible assets of £187m, or 90p a share Ex-div:26 Sep Payment:26 Oct |
||||
RPS is a leading light in a buoyant sector, but the shares are rated at a 30 per cent premium to those of its peers. Given RPS' virtues, that's not so obscene - but it's also no better than fairly priced.
Last IC View: Fairly priced, 304p, 9 Mar 2007
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-IC-1.6.1b-prod - 17/12/2008 12:46:12 - jonathan.furseftb
