Concerns about how a lower oil price may effect exploration activity have weighed on RPS's share price in the first half due to the group's consultancy activities in this area. However, a 33 per cent surge in first-half underlying operating profit provides little credence for such fears.
During the six-month period, a number of headwinds faced by RPS last year relented, for example the impact of floods in Australia and the hiatus in exploration in the Gulf of Mexico following the BP oil spill. Acquisitions made in 2011 also aided progress. The energy business was the star performer, with fee income up 26 per cent and operating profit - which accounts for 55 per cent of the total - rising by a third to £19.1m. The group's built and natural environment consultancy business wasn't far behind, either, as a leap in operating margins there, from 9.8 per cent to 12 per cent, meant that a 2 per cent increase in fee income became a 25 per cent leap in profits, to £15.7m.
RPS has renegotiated bank facilities on favourable terms and the strong balance sheet helped underpin the habitual 15 per cent-plus dividend increase. Broker Peel Hunt forecasts full-year pre-tax profit of £59.4m and EPS of 19.2p (£50.8m and 16.6p for 2011).
| RPS (RPS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 237p | MARKET VALUE: | £519m | |
| TOUCH: | 236-237p | 12-MONTH HIGH: | 249p | LOW: 155p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 168p* | NET DEBT: | 6% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 252 | 19.1 | 6.31 | 2.66 |
| 2012 | 276 | 19.9 | 5.68 | 3.06 |
| % change | +10 | +4 | -10 | +15 |
Ex-div:19 Sep Payment:18 Oct * Includes intangible assets of £321m, or 146p a share | ||||
