RPS fee revenue drops but debt declines
RPS Group said fee revenue fell by 17% in April and May because of the impact of Covid-19 as the government-focused professional services company reduced its debt.
In an update RPS said the revenue decline was in line with modelling for the effect of the disease that it carried out in March.
Bank borrowing fell to £77.2m at the end of May from £102.8m as it conserved cash, used government support programmes, deferred tax payments and speeded up cash collection. Many government clients paid well within the agreed terms, RPS said.
RPS shares rose 11% to 58.40p at 09:37 BST. The shares have lost two-thirds of their value in 2020.
RPS, which specialises in government, energy, defence and transport, said it had not drawn on the extra £60m revolving credit facility it announced in late April because of its other actions. It had £119.8m financial headroom on committed bank facilities at the end of May and £19.9m in cash.
More than half the group's fees come from government and quasi-government work, insulating it partly from the effects of Covid-19 on the wider economy, RPS said. The company has scrapped its dividend, cut spending, reduced pay and furloughed workers during the crisis.
"Due to the rapidly evolving nature of the Covid-19 pandemic it is not possible to forecast the full extent of the impact on the group and our markets," RPS said. "RPS will not be providing guidance for the 2020 financial year until the duration and extent of this impact becomes clearer. RPS will continue to keep the market up to date.
RPS said it would publish a first-half trading update on 21 July and aim to report interim results by early September.