Upbeat RPS eyes strong year

By Fiona Harvey, Environment Correspondent
Published: October 29 2008 23:18

RPS Group defied the gloom in other parts of the market on Wednesday with an upbeat management statement predicting a strong year.
The environmental consultancy said trading in the first half had been “robust” and that this trend had continued, leaving the company “well positioned” to deliver results in line with expectations for the full year.
The company cut its net bank debt from £38.8m at the end of June to £36.7m by the end of September, and said it had bank facilities of £100m in place until 2013.
RPS’s turnover for the first half was £226m, up by almost a third on the same period for 2007, with a similar increase in pre-tax profits to £28.5m. Earnings per share were 9.5p.
RPS shares rose by more than 10 per cent in early trading but gave up most of their gains to end about 2 per cent higher at 142p.
Although some of the company’s planning and development clients in the UK postponed investment decisions owing to the falling property market, the company said its energy and environmental management businesses made up for the decline.
Brook Land, chairman, said: “RPS is diverse and resilient with a proven business model. Our broad range of services, combined with our expanding geographic footprint, give the board continued confidence about the outlook for [this] year.”
Several analysts reacted positively to the statement. RBS said the company’s shares “looked cheap” and rated them an “add”.
RPS, along with companies such as Environmental Resources Management, WSP Group and SLR Consulting, is one of a handful of big environmental consultancies in the UK, in a highly fragmented market. It has pursued an aggressive strategy of acquisitions, buying nine smaller companies so far this year.
Most recent acquisitions were of Paras, an energy consultancy, for about £6.4m this month, and a specialist laboratory, Mountainheath Services, for about £1.9m last month.
Numis, house broker along with Investec, said in a note: “We believe RPS has the ability to offset deteriorating trading conditions through acquisition.”
Copyright The Financial Times Limited 2008