Green investor Hidden depths
With vast experience of consultancy, from alternative to nuclear energy, RPS is set to lead the field, writes Tom Stevenson
 If you were to design from scratch a company to capitalise on the world’s hopes and fears at the beginning of the 21st century it might look a little like RPS. The UK-based – but now fairly global – energy, planning and environmental consultant is as well placed as any business to answer the questions of a world grappling with how to grow its economy without killing the planet.
“Balancing the way energy is secured from various sources, managing its use to limit further environmental damage while planning further economic growth and urban development has become a fundamental challenge of this century,” is how Brook Land, RPS’s chairman, put it recently, before adding sotto voce: “It is one which RPS is extremely well positioned to advise upon.”
That understatement is typical of a company which has been quietly addressing the interface between economic growth and environmental good management for 35 years. Most of that time it has been under the leadership of impressive chief executive Dr Alan Hearne, who not coincidentally has a degree in economics and a doctorate in environmental planning. It seems that his, and RPS’s, time has come.
Full year results for 2007 confirmed that all three of RPS’s areas of focus have the wind in their sails, with profits up 30% to €59m on sales 22% better at €475m. Earnings per share rose 26% to 15.2p, allowing the dividend to be raised by 15% for the eighth successive year.
Fastest growth came from the energy division, where RPS advises both traditional fossil fuel companies, which are increasingly interested in the company’s combination of geological, engineering, environmental and safety expertise, and the alternative energy businesses of the future.
RPS is involved in projects accounting for 90% of the UK’s offshore wind farm capacity, including the London Array, which is the world’s largest offshore scheme. In Texas, a recent acquisition means it is also advising on one of the world’s largest onshore projects.
Growing political interest in climate change and energy security is also playing to RPS’s Planning and Development arm. It expects years of work securing permissions for the next generation of nuclear power plants. As planning gets ever more complex in the waste and minerals sectors, RPS’s experience of handling large, complicated schemes is at a premium.
In environmental management, RPS has a long record of working with the UK’s water industry, putting it in pole position to advise on the looming water shortages that represent another of the world’s greatest developmental challenges.
Operating in such fast-expanding markets, it is unsurprising that RPS should have appeared in KPMG’s recent survey of the 500 fastest growing businesses in Europe. An advisory company like RPS is only as good as the people it can attract; it is to its credit that it was highlighted recently as one of the top 20 employers in Britain.
High and sustainable growth like RPS’s does not come cheap but the recent, indiscriminate market shake-out has brought the shares back from a peak last year of 392p to 300p at which level they trade on 17 times this year’s earnings, falling to 15.5 times 2009 profits. That’s good value for such a well-managed, sustainable growth stock. |