In 2019, the RPS Board announced a dividend policy of a pay-out ratio of 40% of profit after tax before amortisation of intangibles and transaction-related costs and the tax thereon. To protect the Group's financial position at the start of the COVID-19 pandemic, the Board made the decision to cancel the final dividend in respect of FY 2019 and, due to the ongoing impact of COVID-19 and the uncertainty over timing of recovery of markets, withdrew their dividend policy. The Board recognises the importance of dividends and, given the markets they operate in are starting to recover, is proposing to resume a modest dividend for 2021 and will pay circa one third as an interim dividend. Management intends to hold a Capital Markets Day in early November and plans to set out its capital allocation policy in more detail then.
In light of the need to invest in growth opportunities and the ongoing volatility in some markets, the Board is proposing a modest interim dividend of 0.26p per ordinary share (H1 2020: nil). This is a level which the Board considers appropriate based on the need to balance the size of dividend with the pace of market recovery and the opportunities that exist for RPS to invest for future growth. It will be paid on 8 October 2021 to shareholders on the register of members at the close of business on 10 September 2021.
Other financial highlights include:
H1 2021 performance in line with expectations
Improving Fee Revenue trajectory, with growth in Fee Revenue per day compared to H2 2020 and Q1 2021. Fee Revenue per day returned to Q1 2020 level
Continued focus on margins; adjusted operating margin increased to 5.6% (H1 2020: 3.3%)
Turnaround from statutory loss before tax to statutory profit before tax due to improved performance
Continued strong cash performance on the back of disciplined billing and cash collections with lock up days below industry average at 60 days (H1 2020: 68 days)
Strong cash focus with net bank borrowings of £27.8 million significantly lower than at 30 June 2020 (30 June 2020: £57.8 million, 31 December 2020 £10.8 million). With low net bank borrowings and improving profit, the net debt to EBITDA (leverage) at 30 June 2021 was 1.0x (30 June 2020: 1.7x), at the bottom end of our target range of 1.0x to 2.0x
Revolving credit facility ('RCF') extended for two years to July 2024 and new seven-year financing in place to replace the Pricoa Private Placement loan notes that expire in September 2021. This provides significant liquidity and substantial headroom enabling RPS to make investment decisions for the medium term
