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RPS Group surges as it acquires Aussie transport consultancy Corview

Published: 10:21 04 Feb 2019 GMT

Transport network
Corview provides a mixture of project and investment services primarily in New South Wales and Queensland

RPS Group PLC (LON:RPS) shares surged in mid-morning trading Monday after it agreed to acquire Australian transport consultancy Corview.

The consultancy group said it would purchase Corview for a maximum consideration of A$32mln (£17.8mln), in a move the company said would “strengthen” its expertise in the region.

READ: RPS shares rise on news of takeover talks with Charterhouse Capital Partners

Corview is focused mainly on the transport sectors in New South Wales and Queensland, providing assistance for both public and private transport projects in Australia.

John Douglas, RPS’s chief executive, said the firm looked for acquisitions that added “density, not greater diversity” to its business while also being “value creative”.

“Corview is known for its expertise in enabling clients to make informed investment decisions and manage complex infrastructure transactions across all phases of project development and delivery. This makes them a natural fit for our business,” he added.

RPS also released a trading update for the year ended 31 December in which it forecast a profit before tax and amortisation (PBTA) of £50.2mln, down from £53.9mln in 2017, while trading had been in line with market expectations for the year.

RPS also said that its operating cash flow had been “again strong”, with net bank borrowing at the end of the year falling to £73.9mln from £80.6mln. The company also reaffirmed its existing dividend policy and to “improve dividend cover over time”.

“The Group has healthy margins, excellent cash conversion and a robust balance sheet,” Douglas said.

RPS will release its full-year results on 21 February.

Corview re-balances toward infrastructure, says broker

In a note to clients, analysts at broker Liberum said the Corview acquisition added “density” to the firm as well as re-balancing it towards infrastructure.

Analysts also upped their earnings per share (EPS) estimates by 2% for 2019 and 3% for 2020, adding that net debt was better than their estimates.

“We see the macro environment as challenging, although there are some areas of self-help,” the broker said, retaining its ‘buy’ rating and 230p price target on the stock.

RPS shares were up 8.3% at 151p.

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