RPS Group PLC slips to loss and launches fundraising as coronavirus impact lasts

PLC () is launching an accelerated fundraising as it slumped to a first-half loss and said the impact of the coronavirus pandemic is likely to last longer than it initially expected. 

The energy and environmental consultancy said the placing, priced at 44p per share, will see shares issues up to no more than 19.99% of its current share capital, with directors agreeing to subscribe to £555,000.

Moreover, its banks have agreed to extend the term of the additional revolving credit facility agreed in April by fifteen months to bring them into line with its main borrowing facility. 

RPS said the reason for it needing the extra cash is that the board “believes that the impact of COVID-19 on RPS and its markets will potentially last for longer than expected at the start of the pandemic with a slower recovery in H2 2020”.

Results for the first six months of the year showed reported revenues down 11% to £272.4mln and a £34.1mln loss before tax compared to a £13.1mln profit a year earlier. Its dividend had been cancelled earlier. 

Net debt was reduced to £57.8mln at the half year, and to £53.4mln at 31 July, but management said that net borrowings and leverage are expected to increase in the second half, so the new funds “will allow the group to continue to maintain balance sheet flexibility and ensure RPS can retain capability for when markets improve post the equity raise”, with a reduction in leverage expected from December 2021 onwards.

Looking ahead, chief executive John Douglas said: “businesses serving government and quasi-government organisations have strong order books. Those servicing the private sector are well positioned to recover as lockdown and travel restrictions ease. We will continue to demonstrate the resilience of our business and take advantage of opportunities as they arise.”

RPS shares rose 10% to 42.05p on Thursday morning.