RPS announces more cost cutting amid deteriorating market conditions

RPS Group said its results for 2015 fell within the range of market expectations despite turmoil in the oil and gas sector.

The energy consultancy said its oil and gas clients significantly reduced their investments last year and even after major cost reductions the contribution from its energy unit fell substantially.

RPS pointed to a 40% drop in oil prices in the second half, noting market conditions deteriorated further in the final months of the year.

As a result, the company has decided to cut capacity again in its energy business as it reckons clients will reduce investment even further following the sharp oil price drop in the early weeks of the year.

The company said this was likely to result in a non-cash impairment charge of up to about £20m, which will be accounted for in the 2015 results.

“This reflects current market conditions, but does not affect the strong position of our energy business in this long term market,” it said.

RPS said the risk of suffering bad debts has increased due to the unfavourable backdrop, so it is reviewing the debtor exposure in the energy business and may need to provide for doubtful debts up to about £7m. Any charge needed would also be taken in respect of the 2015 results, it said.

At 0940 GMT, RPS shares were down 14% to 179p.