(Alliance News) - RPS Group PLC on Wednesday reported a drop in first-quarter fee revenue, as the professional services firm looked to bolster its funding by increasing its available banking facilities.
Shares in RPS were 21% higher at 47.60 pence on Monday in London. However, the stock started 2020 at 174.00p.
In addition to its existing GBP100 million committed revolving credit facility, a further GBP60 million facility for 12 months has been provided by HSBC, Lloyds Banking and NatWest.
Drawing down against this additional facility requires RPS to provide several non-UK subsidiary guarantees to the banks.
RPS also agreed to new financial covenant tests that allow operational flexibility during the next 12 months. The tests include a monthly minimum threshold covenant and leverage and interest cover tests as on December 31, 2020 and March 31, 2021.
The new facility is intended to provide increased liquidity to RPS during the Covid-19 pandemic.
For the three months to the end of March, fee revenue was down 6.6% year-on-year to GBP125.4 million from GBP134.3 million the year before, due to lower levels of activity from Consulting UK & Ireland, and subdued trading in Services UK & Netherlands.
Looking ahead, RPS has taken additional measures to manage its costs, including its board, leadership team and senior leadership group agreeing to salary reductions of 20%.
RPS said the impact of Covid-19 on its business and markets increased as RPS entered the second quarter of 2020. It is not possible to forecast the full extent of the financial damage, so RPS will not provide guidance for 2020 until the impact becomes clear.
"We are continuing with targeted strategic priorities as outlined in our 2020 strategy. These include pursuing our global efforts in renewables, specifically offshore wind, as well as a carefully considered roll-out of ongoing learning and development initiatives that lend themselves to working from home," said Chief Executive John Douglas.
"The board is pleased to have agreed increased committed banking facilities to provide us with more flexibility during this period. With over half of our business exposed to the public sector, we believe that we are well placed to recover in due course and are doing everything we possibly can to protect our business in the interim," Douglas added.
By Dayo Laniyan; dayolaniyan@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
