Ricardo Regulatory News (RCDO)

25 July 2018

Ricardo plc

Ricardo plc ("Ricardo") is a global engineering, technical, environmental and strategic consultancy business, which also manufactures and assembles niche, high-quality and high-performance products.

Ricardo is today providing a trading update ahead of its results in respect of the year ended 30 June 2018. Ricardo plans to announce its full year results on 13 September 2018.

In the year to 30 June 2018, order intake was good at over £410m, up from £366m in the prior year. The order intake includes £10m in respect of Control Point Corporation which was acquired on 8 September 2017. The order book at 30 June 2018 was in excess of £285m compared to the prior year of £248m.

Within our Technical Consulting business in the second half of the year, we have continued to see strong order intake in Asia, from both Rail and Automotive customers, while in the UK, orders from our Automotive customers have seen a further decline driven by current uncertainty in the market. Our Performance Products business continues to perform well with a further increase in orders in the second half of the year. The proportion of our total Group order intake that relates to electric and hybrid vehicles was 21% (c£85m) compared to 17% (£64m) in the prior year.

Overall, we have a good pipeline which includes a number of significant opportunities. We have now received the first orders for the HMMWV brake kit programme in respect of new vehicles in the US and delivery commenced in July 2018.

Total Group revenue in the year ended 30 June 2018 was in excess of £380m, up from £352m in the prior year. This revenue includes £10m in respect of Control Point Corporation.

Despite the good order intake overall, and the increased revenue, we expect underlying profit before tax for the year ended 30 June 2018 to be towards the lower end of the range of analyst forecasts.1 This is mainly due to reduced performance within our EMEA Automotive business following the low level of UK orders in the second half of the year together with some difficult projects which were delivered in the year. Actions have been taken to improve project delivery in the future and in June we saw orders for the EMEA business overall recover to a good level. In addition, our Energy and Environment business recruited in anticipation of a higher level of growth in orders than the level of growth actually achieved.

Operationally, further progress has been made in reducing our fixed costs and improving efficiency in our international test operations. Following the disposal of our test assets in Chicago earlier in the year, we have now completed the disposal of our test facility in Germany for Euro 5m. The first tranche of the proceeds was received in June (Euro 2.2m) and the remainder (Euro 2.8m) was received in July.

Net debt at 30 June 2018 was £26m, down from £38m at 30 June 2017 and ahead of expectations due to continued good working capital performance. We are also pleased to announce that in July 2018 we completed the refinancing of our bank facilities increasing our committed facilities from £75m to £150m in support of our acquisition and investment growth strategy. The maturity of these facilities has been extended until July 2023 on enhanced terms. As a part of the refinancing, we have also broadened our banking relationships from Lloyds and HSBC to now include both NatWest and Bank of Ireland.

Looking forward to the year ending 30 June 2019, we enter the year against the backdrop of uncertainty surrounding the outcome of Brexit. Assuming that UK market conditions remain as they are today, we are planning for revenue growth of 3% to 5% in the year ahead.

Dave Shemmans, Chief Executive Officer, commented:

"It has been a busy year across the Group with mixed performance in our different market sectors and regions which underlines the importance of our diversification strategy. I am very pleased with the continued strong performance in Asia across both our Automotive and Rail businesses which, together with a strong pipeline, provide great opportunity for the future. In the US, we have made significant progress in the restructuring of our Automotive business, the Control Point acquisition is performing well and I am very pleased to see the HMMWV programme now underway. The EMEA Automotive business has had a challenging year with a reduced level of work in the UK and some challenging projects to deliver and we have taken action to address this. Performance Products has had another very good year and has some significant opportunities in the pipeline. Overall, therefore, despite some uncertainty in the UK in the short term, we enter the new financial year in good shape and I remain confident about the future.

This announcement contains inside information.

The Ricardo plc LEI number is 213800ZNYAY35F4XB814

Further enquiries: