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RPS ready for recovery

The energy company is laying down the foundations for a long-term recovery
RPS ready for recovery

Earlier this year, RPS (RPS) unveiled five strategic priorities tasked with re-energising growth and catapulting the energy and environmental consultancy back into the FTSE 250. Several months later, those measures, helped along by better trading conditions in some of the group’s main markets, culminated in fee income rising a respectable 6 per cent at constant currencies.

IC TIP: Buy at 243.5p

RPS’ energy segment was the star performer. Appointing an experienced global management team and bringing all its directly exposed oil and gas businesses together left the consultancy better placed to capitalise on increased activity in the market. The upshot was a 10 per cent uptick in fees and a 52 per cent surge in adjusted divisional profit to £4.7m. Aside from introducing a new six-division structure to provide greater transparency, chief John Douglas also made good on his pledge to boost RPS’ human resources’ ranks. He said the group must stem staff turnover to achieve its goal of delivering strong organic growth.

Analysts at Liberum forecast pre-tax profit of £55.7m and EPS of 17.8p for the December year-end, up from £53.9m and 17p in 2017.

RPS (RPS)    
ORD PRICE:244pMARKET VALUE:£549m
TOUCH:243-244p12-MONTH HIGH:308pLOW: 226p
DIVIDEND YIELD:4.0%PE RATIO:NA
NET ASSET VALUE:165p*NET DEBT:24%
Half-year to 30 JuneTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201731520.46.554.8
201832122.67.354.8
% change+2+11+12 
Ex-div:13 Sep   
Payment:12 Oct   
*Includes intangible assets of £390m, or 173p a share