There was more good news from RPS (RPS) with the release of its half-year results, sending the share price up 5 per cent on the day. The infrastructure consultancy reported an adjusted pre-tax profit increase of 22 per cent at constant currencies, prompting analyst upgrades. Alan Hearne, chief executive of the group, attributed the performance to RPS's reduced dependence on the oil and gas market, and its tight control of costs. Management expect to "modestly" exceed full-year profit expectations.
Between 2014 and 2016, the group spent £126m on acquisitions to reduce its dependence on oil and gas. The sector, combined with Australian natural resources projects, accounted for around 18 per cent of fees in the reported period. Europe, the biggest geography, led the way thanks to a healthy market in private sector development and public infrastructure in the UK and Ireland.
The group also looks set to get back on the acquisition trail. It became more cautious following the release of last year’s half-year results after net debt crept up to around 2.2 times adjusted cash profit, closer to the 3.0 times ceiling in its banking covenants. However, this has now come down to 1.5 times and “the search for suitable investment opportunities has recommenced".
Analysts at Numis forecast pre-tax profit of £55.2m, giving EPS of 17.5p for the full year 2017 (from £50.7m and 16.5p in 2016).
| RPS GROUP (RPS) | ||||
| ORD PRICE: | 277p | MARKET VALUE: | £621m | |
| TOUCH: | 277-277.5p | 12-MONTH HIGH: | 285p | LOW: 163p |
| DIVIDEND YIELD: | 3.6% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 185p* | NET DEBT: | 23% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 291 | 10.9 | 3.93 | 4.66 |
| 2017 | 315 | 20.4 | 6.55 | 4.80 |
| % change | +8 | +88 | +67 | +3 |
| Ex-div: | 14 Sep | |||
| Payment: | 13 Oct | |||
| *Includes intangible assets of £446m, or 199p a share | ||||
