(Alliance News) - RPS Group PLC on Tuesday reported a significant knock from Covid-19 in the second quarter, but fee revenue from government organisations is providing some stability.
Fee revenue was down to GBP107.0 million in the second quarter that ended June 30 from GBP131.7 million a year prior.
The environmental consultancy generated over 55% of its fee revenue from government and quasi-government organisations, which has helped moderate the impact of Covid-19 in the first half. The lower fee revenue of 18% in the second quarter, compared with last year, is in line with expectations, RPS said.
RPS will be taking GBP35.0 million in exceptional items in the first half on Covid-19 cost-cutting efforts and impairments, of which GBP31.0 are non-cash.
Net bank borrowings were at GBP57.8 million on June 30 which is down from GBP101.3 million last year. This improvement was helped by Covid-19 government support mechanisms, including tax deferrals, and tight cost control measures, RPS said.
The GBP60.0 million in revolving credit facility, announced April 27, has been secured as an insurance policy in case the RPS needs further financial flexibility, it said. However, it has not had to draw on these funds as of yet. Committed bank facilities at June 30 totalled GBP142.3 million.
RPS's Energy business segment is responding to the reduced demand for fossil fuels by focusing on renewables and offshore wind, using transferable skills within its consulting team.
The Services UK & Netherlands business is expected to return to normal as lockdown restrictions are eased in the second half.
North America trading was mixed in the second quarter after a strong performance in the first quarter ending March 31, RPS said.
Consulting and services in the UK & Ireland, Norway, and Australia Asia Pacific all saw "strong" or "solid" performances given the virus, according to RPS.
RPS will not be providing guidance for FY-2020 until the duration and extent of the impact of the COVID-19 pandemic is better known.
Chief Executive John Douglas said: "The board's belief is that the disruption to markets caused by the Covid-19 pandemic will last for longer, with a slower than expected recovery in the second half of this year.
"This means this year will no longer be the year that RPS returns to solid organic growth, as we had previously anticipated. This year is instead a period where we are demonstrating the resilience of our business and our ability to manage uncertainty, and we will come through it ready to take advantage of the opportunities that will present themselves.
RPS shares were down 5.9% at 49.97 pence each in London on Tuesday morning.
By Greg Roxburgh; gregroxburgh@alliancenews.com
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