27 January 2022
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 in respect of the six months ended 31 December 2021.
Good growth in the first half
In the six months to 31 December 2021 (the period), Ricardo has continued to trade in line with the Board's expectations, with a good level of new orders and a strong cash performance.
Order intake was strong at £210m, up 16% on the six months to 31 December 2020 (the prior period) and up 23% on the six months to 30 June 2021 (growth of 18% and 23%, respectively on a constant currency basis). The order book at 31 December 2021 was in excess of £310m, compared to £294m at 30 June 2021 and £318m at 31 December 2020.
Within our segments:
· Strong growth in Energy & Environment ('EE'), with an acceleration in climate related work, supporting international organisations and governments in the lead up to and then following COP26. This includes a heightened focus on environmental, social and corporate governance ('ESG') from private sector clients which are seeking support and advice in respect to Net Zero strategy development, target setting, monitoring and reporting.
· Rail delivered a similar level of order intake and revenue compared to the prior period, with improving margin due to higher utilisation rates. Rail was successful in winning its first significant contract in North America.
· Overall, performance in Automotive & Industrial ('A&I') continues to be challenging, due to the impact of the slow recovery from COVID-19. Nevertheless, we are starting to see improved momentum with order intake growth in our new mobility solutions.
· A resilient performance in Performance Products ('PP'), driven by an increase in volumes on key client programmes as well as industrial engineering work. Supply chain issues and chip shortages continue to provide challenges which we have proactively worked to overcome.
· Strong growth in Defense, with revenue and profitability both improving on the prior period, driven by a combination of an increase in ABS/ESC deliveries, field support activities, and software and systems engineering work.
Strong cash generation
At 31 December 2021, net debt was £39m compared to £47m at 30 June 2021 and £50m at 31 December 2020. Excluding specific adjusting items, the business has generated a net cash inflow of £16m in the period. This has been achieved through a combination of the profits in the period, together with a reduction in working capital in excess of £10m. In the period, we paid earn out costs in relation to previous acquisitions of £5m and exceptional redundancy costs of £2m.
The Revolving Credit Facility ('RCF') of £200m continues to provide the Group with committed funding available for the remaining term through to July 2023, alongside the Group's uncommitted overdraft facilities of £16m. At 31 December 2021, the amount undrawn on the RCF was £113m and we held net liquid cash reserves of £54m. This provides the Group with total cash and liquidity of £183m as at 31 December 2021.
Ricardo plans to announce its half-year results on 24 February 2022. As well as reporting on the half year business performance, we will cover the Group's objectives and the future direction of our Automotive & Industrial business unit.
We also look forward to hosting a capital-markets event in May to present our sharpened strategy and our plans for transitioning to the future.
Our strategy is to refocus the Group on the growing mega-trends within our core markets including climate change, energy transition and rapid urbanisation, which will support long-term sustainability and value for all stakeholders.
Graham Ritchie, Chief Executive Officer, commented:
"We are pleased with the progress that we made in the first half-year of trading, particularly the increase in order intake and the strong cash generation to enable ongoing investment for growth.
Our half-year results are in line with our expectations, and although we are seeing continued momentum in the second half, we remain cautiously optimistic as economic uncertainties remain.
As we look ahead, we are focused on accelerating growth across the business and sustainably delivering enhanced value for all our stakeholders. The capital-markets event planned for late spring will set out how we will drive performance to achieve our full potential."
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.
About Ricardo plc
Ricardo plc is a world-class environmental, engineering and strategic consulting company listed on the London Stock Exchange. With over 100 years of engineering excellence, we provide exceptional levels of expertise in delivering leading edge and innovative cross sector sustainable products and solutions, helping our global customers increase efficiencies, achieve growth and create a clear and safer future. Our mission is clear -- to create a world fit for the future. For more information visit www.ricardo.com
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.
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