TIDMRCDO
RNS Number : 5160G
Ricardo PLC
27 July 2021
27 July 2021
Ricardo plc
Ricardo plc ("Ricardo") is a world class global engineering,
technical, environmental and strategic consultancy business, which
also manufactures and assembles niche, high-quality and
high-performance products.
Ricardo is today providing a trading update ahead of its full
year results in respect of the year ended 30 June 2021. Ricardo
plans to announce its full year results in September 2021. The
results in this trading update are subject to audit.
Trading update
During the course of the year ended 30 June 2021, Ricardo has
continued to recover from the impact of COVID-19. In the first half
of the financial year, both revenue and operating profit increased
on the prior six-month period and this trend has continued in the
second half of the financial year. All divisions saw a higher level
of activity and increased their revenues in the second half of the
year.
In the year ended 30 June 2021, Order Intake was over GBP350m,
compared to GBP369m in the prior year. Total Group revenue in the
year was c.GBP350m, at a similar level to the prior year.
Underlying profit before tax for the financial year is in line with
market consensus [1] . Net debt at 30 June 2021 was GBP47m compared
to GBP50m at 31 December 2020 and GBP74m at 30 June 2020.
Trading in our Energy & Environment business has been strong
during the year with order intake and revenue increasing by c.14%
and c.12% respectively on the prior year. Significant contributions
were made by both the Policy segment, due to increased services to
the European Commission, and the Water segment, which benefitted
from an upsurge in water resource-management services to the UK
water sector. Within Sustainability, revenues remained strong for
all aspects of Net Zero, from strategy development to establishing
targets and producing implementation plans. At the same time, there
are growing opportunities to support technology solutions,
particularly in connection with electricity network engineering,
innovation, and the evolution of 'e-fuels' such as green
hydrogen.
Rail has delivered a good performance throughout the year with
revenue up c.3% on the prior year together with improving profit
margins. Order intake was down on the prior year by c.7%,
reflecting the timing of large program wins each year. Australia
continues to be a flourishing market, together with Asia and the
Middle East, while the European market remains cautious due to
reduced passenger numbers.
Defense saw order intake and revenue increase on the prior year
by c.70% and c.14%, respectively. The growth in order intake
included the receipt of the first $10m order from the $89m award of
the three-year Anti-lock braking system/electronic stability
control ('ABS/ESC') retrofit contract to provide critical safety
upgrades for the US Army's fleet of High-Mobility Multipurpose
Wheeled Vehicles ('HMMWV'). Order intake also included a
significant multi-year production contract from General Motors to
produce and field the US Army's new Infantry Squad Vehicle ('ISV').
In addition to the increased ABS/ESC volumes the increase in
revenue also included further growth in Engineering Services.
Performance Products, including our Software business, saw
revenue increase by c.1% during the financial year. Order intake
was c.18% lower than the prior year, in line with our expectations,
primarily due to the recognition of two large transmission orders
in the prior year. Following the shut-down of the McLaren
manufacturing plant in the quarter ended 30 June 2020, production
re-commenced in July 2020 and, as expected, volumes have increased
steadily throughout the financial year to 30 June 2021.
Transmission deliveries across all customers during the year have
broadly been in line with our expectations .
Automotive & Industrial ('A&I') has seen a reduction in
order intake of c.20% compared to the prior year. A&I received
a higher level of orders in both the US and China and a lower level
in EMEA. Although revenue was c.13% lower than the prior year, this
segment returned to profit in the second half of the financial
year. During the year, strategic and structural changes have been
undertaken within A&I to focus on higher-growth services and
markets, and the associated costs will be reported within specific
adjusting items. The changes reflect the global shift within the
automotive industry which has been heavily impacted by COVID-19,
seeing a temporary halt to passenger-car purchases and deliveries
across the world, as well as ongoing US-China tensions and border
tariffs.
As announced to the market on 25 January 2021, the Board of
Ricardo and Dave Shemmans jointly agreed that Dave Shemmans would
be leaving his role as Ricardo's Chief Executive Officer. The Board
is well advanced in the recruitment of a successor.
Cashflow
The net cash inflow for the year was GBP26.5m. This includes the
net share placing proceeds of GBP28.2m, acquisition-related cash
costs, including earn outs and external fees paid, of GBP5.7m,
exceptional redundancy and restructuring payments of GBP3.2m and
dividend paid of GBP1.0m. Net Debt at 30 June 2021 was GBP46.9m
compared to GBP73.4m at 30 June 2020.
The Revolving Credit Facility ('RCF') of GBP200m continues to
provide the Group with committed funding available for the
remaining term through to July 2023. At 30 June 2021, the amount
undrawn on the RCF was GBP123m and we held net liquid cash reserves
of GBP30m together with uncommitted overdraft facilities of
GBP15m.
Dave Shemmans, Chief Executive Officer, commented :
We continue to navigate the COVID-19 backdrop and I am pleased
to see performance improving again in the second half of the
financial year.
Energy & Environment, Rail, Defense and Performance Products
performed well and all achieved an increase in Operating Profit
compared to the prior year. Within Performance Products, McLaren
volumes have increased steadily during the year and in the Defense
business the ABS Fleet retrofit programme is underway. A&I
continues to face a challenging market and some further
restructuring has been necessary, leading to a return to
profitability in this segment in the second half of the financial
year.
We have established a firm and diversified platform for our
business based around the global environmental agenda and looking
forward I remain confident of the prospects for the Group.
About Ricardo plc
Ricardo plc is a global engineering, technical, environmental
and strategic consultancy business. We also manufacture and
assemble low-volume, high-quality and high-performance products and
develop advanced virtual engineering tools for conventional and
electrified powertrains as well as for complex physical
systems.
Our ambition is to be the world's pre-eminent organisation
focused on the design, development and application of solutions to
meet the challenges within the markets of automotive, rail,
environmental & planning, resource management and defence. Our
vision is to create a world fit for the future, and we will achieve
this through the activities of our portfolio of businesses, each of
them underpinned by our talented team of professionals. The Ricardo
plc LEI number is 213800ZNYAY35F4XB814.
This announcement is released by Ricardo plc and contains inside
information for the purposes of Article 7 of the Market Abuse
Regulation (EU) 596/2014 as it forms part of UK domestic law by
virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the Company's obligations under
Article 17 of MAR.
For the purposes of MAR and Article 2 of Commission Implementing
Regulation (EU) 2016/1055 (as amended by the FCA pursuant to
Technical Standards (Market Abuse Regulation) (EU Exit)
Instrument 2019), the person responsible for releasing this
announcement is Patricia Ryan, Company Secretary of Ricardo
plc.
Further enquiries:
Ricardo plc Tel: 01273 4556611
Dave Shemmans, Chief Executive
Officer
Ian Gibson, Chief Financial
Officer
Investec Tel: 020 7597 5970
David Flin
Liberum Tel: 020 3100 2000
Richard Crawley
SEC Newgate Communications Tel: 020 7653 9850
Adam Lloyd/ Richard Bicknell/Isabelle
Smurfit
Website: www.ricardo.com
[1] Based on company compiled analysts' consensus of GBP18.0m,
with a range of GBP15.1m to GBP19.6m
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