RPS Group, an energy resources and environmental consultancy company, announced Thursday a dividend increase of 15 per cent as it reported record annual profits.
The company recommended a total dividend per share of 6.40p for 2012, compared to 5.56p the year before, as profits before tax and amortisation (PBTA) jumped 18% to £60.1m. It beat the £59.5m PBTA estimate by analysts at Investec.
Revenues grew 5.1% year-on-year to £555.9m as the group benefited from its diversified portfolio and geography, particularly from demand in the energy sector and its presence in the strong Australian market.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
In the first part of the year, the company gained from investments in mining, coal seam gas and associated liquefied natural gas projects in the Australian state of Queensland and conventional gas projects offshore Western Australia.
The energy business saw underlying operating profits climb 24% to £39.7m, with an increased margin of 17.6%, up from 17.2% in 2011. Profits in the Built and Natural Environment division rose by 16% to £31.8m, with self-help driving margins up from 10.8% to 12.5%.
"The group delivered a record performance in 2012 and remains in a strong position operationally and financially," Chairman Brook Land said.
"Our strategy has proved successful over an extended period. 2012 marked the 25th anniversary of RPS's introduction to the public markets.
"Over this period we have delivered strong growth. The board is confident that, as economic conditions improve, the group's strategy will enable us to produce another period of sustained growth."
Profits before tax, were however down slightly by 0.7% to £40.2m, compared to £40.5m in 2011 as client sentiment changed in the second half of the year. Earnings per share fell 11.4% to 11.94p.
RPS said in the last half it experienced lower demand in Asia for natural resources, heightened concerns over escalating project costs and a trimming of growth in the Australian economy.
"We are taking steps to improve the efficiency of this business, enabling us to remain well positioned in sectors which may increase activity again during 2013 and which have excellent medium and long term prospects," the firm said.
Outside the natural resources sector, the Australian economy remained under pressure as global concerns reduced consumer and business confidence, the company added.
"Subject to global economic progress continuing, conditions in some of our markets should improve during the course of 2013, enabling us to benefit from our strong profile."
Investec reiterated its 'buy' rating and earnings based target price of 275p.
"RPS achieved new milestones last year with record profits (PBTA up 18%), a 105% cash conversion ratio, net debt at an eight-year low (£13.5m) and the group has once again increased its dividend per share by 15%," the broker said.
"Energy has been the main driving force of this growth (now circa 70% of the group's operating profits, including related infrastructure work) and the outlook for this business looks very encouraging. RPS is still undervalued and we re-iterate our 'buy'."
Shares rose 2.47% to 244.30p at 08:46 Thursday.
RD
-
Nvidia's earnings live: stock gains as investors brace for key resultsNvidia's stock opened strongly ahead of its earnings, as analysts question whether Blackwell sales can make up for lost China revenue
-
8 of the best lakeside properties for saleThe best lakeside properties – from a house on the southeastern shore of Loch Lomond, to a 15th-century hall overlooking a lake in King’s Lynn, Norfolk
