Final Results

21 February 2019

"Investing to accelerate growth. Dividend maintained. Strong cash conversion."

RPS, a leading multi-sector global professional services firm, today announces its Final Results for the year ended 31 December 2018 ('FY 2018').

FY 2018 FY 2017 FY 2017 at
currency (1)
Revenue (£m) 637.4 630.6 619.9
Fee income (1) (£m) 574.2 562.3 552.6
PBTA(1) (£m) 50.2 53.9 52.8
Adjusted diluted earnings per share (1) (p) 16.34 17.01 16.65
Total dividend per share (p) 9.88 9.88 9.88
Statutory profit/(loss) before tax (£m) 41.0 (1.6) (2.4)
Statutory diluted earnings/(loss) per share (p) 13.23p (7.47)p (7.66)p

Financial headlines

  • Fee income £574.2m (FY 2017: £562.3m); 4% growth at constant currency; in line with market expectations (2)
  • PBTA £50.2m (FY 2017: £53.9m); in line with market expectations (2)
  • Effective tax rate on PBTA lower at 26.8% (2017: 29.6%)
  • EPS (adjusted, diluted) 16.34p (FY 2017: 17.01p); ahead of market expectations (2)
  • Statutory profit before tax £41.0m (FY 2017: loss £1.6m)
  • Strong cash conversion 94% (FY 2017: 91%)
  • Net bank borrowings reduced to £73.9m (FY 2017: £80.6m); leverage (1) 1.3x (FY 2017: 1.3x)
  • Proposed final dividend maintained at 5.08p (FY 2017: 5.08p) holding full year dividend at 9.88p (FY 2017: 9.88p)

Business highlights

  • Significant progress made on all strategic priorities
  • Energy growth strong, reflecting continuing recovery in oil and gas markets
  • Retention and recruitment challenges impacted Consulting UK & Ireland, North America and AAP

Post year-end highlights

  • Acquisition of Corview, an Australian based transport advisory consultancy, for a maximum consideration of AUS$32.0m (equivalent to £17.8m)
  • New global brand launched to position the Group for future growth

Commenting on the Final Results, John Douglas, Chief Executive, said:

"2018 has been a year of transition and investment for the Group. We have made significant progress in respect of our five strategic priorities. Our people have been integral to delivering this progress. I would like to thank them all for their vision, hard work and dedication in delivering these results.

Alongside investment in RPS' brand, 2019 will see a continuation of the focus and investment in its people, technology and innovation. Trading conditions in most of our markets appear satisfactory and against this background, the Board's view of the 2019 outlook for the Group is unchanged and is in line with market expectations."


(1) Alternative Performance Measures are used consistently throughout this announcement: these include PBTA, fee income, items prefaced "adjusted" such as adjusted EPS, segment profit, underlying profit, underlying operating profit, amounts labelled "at constant currency", EBITDAS, conversion of profit into cash, net bank borrowings, leverage. For further details of their purpose, definition and reconciliation to the equivalent statutory measures see note 2.

(2) The Board considers market expectations to be the consensus fee income, PBTA and fully diluted adjusted earnings per share published in the notes of those analysts who regularly follow and interact with the Group.


A meeting for analysts will be held at the office of Buchanan, 107 Cheapside, London, EC2V 6DN commencing at 9.30am. Attendance is strictly limited.

A video webcast of the meeting will be available later today via the following link:


21 February 2019


RPS Group plc
John Douglas, Chief Executive Today: +44 (0) 20 7466 5000
Gary Young, Finance Director Thereafter: +44 (0) 1235 863 206
Henry Harrison-Topham / Chris Lane / Maddie Seacombe Tel: +44 (0) 20 7466 5000
[email protected]


Founded in 1970, RPS is a leading global professional services firm of 5,600 consultants and service providers. Having operated in 125 countries across six continents RPS defines, designs and manages projects that create shared value for a complex, urbanising and resource scarce world.

RPS delivers a broad range of services in six sectors: property, energy, transport, water, defence and government services and resources. Services provided across RPS' six sectors cover twelve service clusters: project and program management, design and development, water services, environment, advisory and management consulting, exploration and development, planning and approvals, heath, safety and risk, oceans and coastal, laboratories, training and communication and creative services.

RPS stands out for its clients by using its deep expertise to solve problems that matter, making them easy to understand. Making complex easy.

RPS' London Stock Exchange ticker is RPS.L. For further information, please visit

This announcement contains certain forward-looking statements with respect to the financial condition, results of operations and businesses of RPS Group plc. These statements involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. There are many factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements. Nothing in this announcement should be construed as a profit forecast.

Next trading update: RPS will announce a Q1 2019 trading update in early May 2019.



PBTA was £50.2m (2017: £53.9m, £52.8m at constant currency) on fee income of £574.2m (2017: £562.3m, £552.6m at constant currency), both in line with market expectations. Profit before tax was £41.0m (2017: loss £1.6m, following £40.0m goodwill impairment charge). The effective tax rate for the year on PBTA is lower at 26.8% (2017: 29.6%), due mainly to the reduction in the Federal tax rate in USA. Adjusted diluted EPS was 16.34p (2017 17.01p, 16.65p at constant currency) and ahead of market expectations. Statutory diluted earnings / (loss) per share was 13.23p (2017 (7.47p), (7.66p) at constant currency).

The profit in 2018 suffered from exchange movements on the conversion of overseas results. PBTA in 2018 would have been £1.3m higher than reported had 2017 exchange rates been repeated in 2018. The PBTA in 2017 would have been £1.2m lower than reported if 2018 exchange rates have prevailed in 2017. Statutory profit in 2017 would have been £0.4m lower than reported if 2018 exchange rates prevailed in 2017.

Trading performance

£m FY 2018 FY 2017 FY 2017 at constant
Energy 8.9 8.0 7.9
Consulting UK & Ireland 15.4 16.6 16.7
Services UK & Netherlands 13.5 14.0 14.0
Norway 6.2 6.4 6.3
North America 5.1 7.3 7.0
AAP 13.3 14.8 14.0
Total segment profit 62.4 67.0 65.8
Unallocated expenses (8.4) (8.5) (8.5)
Underlying operating profit 54.0 58.5 57.3

Energy benefited from improving market conditions and Norway traded well although reported slightly reduced profits having incurred a £0.8m cost in respect of consolidating premises. The results of Consulting UK & Ireland, North America and AAP each suffered from the impact of retention and recruitment challenges in the year. Investments supporting organic initiatives tempered the results of Services UK & Netherlands. Unallocated expenses incurred in 2018 was £8.4m, slightly lower than the prior year (2017: £8.5m). In support of our strategic priorities, HR, marketing and IT expenditure was increased, off-set by less cost in relation to board room changes and bonuses.

Borrowings and cash flow

Net bank borrowings at the year-end were lower at £73.9m (31 Dec 2017: £80.6m). Net cash from operating activities remained strong at £44.5m (2017: £43.7m). Our conversion of profit into operating cash was again good at 94% (2017: 91%) reflecting our continued strong focus on collections. Net cash used in investing activities was £13.4m (2017: £21.1m), the reduction due to lower expenditure on deferred consideration for acquisitions of £1.6m (2017: £12.9m) and higher net capital expenditure of £11.7m (2018: £8.4m). The amount paid in respect of dividends was £22.1m (2017: £22.0m).

Deferred consideration outstanding at the year-end was £0.3m (31 December 2017: £1.8m). Our leverage (being net bank debt plus deferred consideration expressed as a ratio of adjusted EBITDA) calculated in accordance with our bank's financial covenants was 1.3x at the year end, the same as at the end of 2017.

Net finance costs were £3.9m (2017: £4.5m) reflecting a lower average level of bank debt and deferred consideration in 2018 than in 2017.

Amortisation and impairment of intangible assets and transaction related costs

Amortisation and impairment of intangible assets and transaction related costs totalled £9.2m (2017: £55.5m). Included in this total is amortisation of acquired intangibles £9.1m (2017: £12.8m), goodwill impairment of nil (2017: £40.0m, in respect of our Energy businesses) and loss on disposal of business nil (2017: £2.7m).


The total (paid and proposed) dividend for the year is 9.88p per ordinary share (2017: 9.88p) and amounts to £22.1m. The proposed final dividend of 5.08p (2017: 5.08p) will be paid on 17 May 2019 to shareholders on the register of members at the close of business on 23 April 2019 subject to approval at the Annual General Meeting on 1 May 2019.

Capital allocation policy

The Group intends to create long term shareholder value by growing organically and through prudent, selective acquisitions. To support organic growth RPS will continue to re-invest capital in the business. In support of the five strategic priorities, the Group is currently investing in HR, marketing and IT functions and has commenced the design and implementation of a global Enterprise Resource and Planning system.

The Board reaffirms its intention to operate with a leverage up to 2.0x, unless immediately following an acquisition, which provides substantial headroom compared to the current facilities limit of 3.0x.

The full year proposed dividend represents 60% (2017: 58%) of adjusted basic earnings per share. Prior to 2015 the dividend pay-out ratio was less than 40%. The Board reaffirms that the pay-out percentage currently is too high and in future should be more in line with the previous norm. Whilst the Board has no current intention of reducing the future full year dividend, increases are only likely once earnings have grown and the pay-out ratio is at or around this level.

Markets and trading


FY 2018 FY 2017 FY 2017 at constant
Fee income (£m) 101.1 93.0 91.7
Segment profit * (£m) 8.9 8.0 7.9
Margin (%) 8.8 8.6 8.7

* after reorganisation costs: 2018 £0.7m, 2017 £0.5m

Activity in oil and gas markets increased throughout the year although there remained pressure on rates. The main service clusters comprising Exploration and Development, Oceans and Coastal, and Advisory and Management Consulting each posted good fee and profit growth. Following debt recoveries, £1.2m of associated debtor provisions (2017: £1.8m) were reversed in the year. Subject to the continuing recovery in oil and gas markets growth in this business is anticipated in 2019 although further significant debt recoveries are unlikely.

Consulting - UK and Ireland

FY 2018 FY 2017 FY 2017 at constant
Fee income (£m) 122.1 120.8 121.1
Segment profit * (£m) 15.4 16.6 16.7
Margin (%) 12.6 13.8 13.8

* after reorganisation costs: 2018 £0.1m, 2017 £nil

The Design and Development businesses in Ireland and Northern Ireland performed well, where public infrastructure spending is strong. Our businesses in Great Britain enjoyed generally good market conditions in both private sector development and public infrastructure projects although have been held back by retention and recruitment challenges in London and to a lesser extent in Birmingham.

Subject to continuing favourable conditions and a more stable professional team we believe growth in this business is likely. However, the UK decision to leave the EU could cause disruption to activities if clients decide to change their investment plans although we are seeing little sign of this yet.

Services - UK and Netherlands

FY 2018 FY 2017 FY 2017 at constant
Fee income (£m) 110.6 95.7 96.1
Segment profit * (£m) 13.5 14.0 14.0
Margin (%) 12.2 14.6 14.6

* after reorganisation costs: 2018 £0.1m, 2017 £nil

The UK Water business grew fees strongly, benefiting from poor weather during the first half of the year, albeit at a reduced margin. The businesses in Netherlands and in UK Health Safety and Risk both grew fees however due to investment in organic initiatives, primarily in the Laboratories business, they each made a reduced profit contribution. In April 2018 the UK Water business entered the fourth year of the current Asset Management Plan ('AMP') regulatory cycle and at this stage client demand for the services we provide traditionally becomes more uncertain than in the earlier part of the cycle. This may temper the performance of the segment until the new AMP cycle commences in 2020. There is limited risk to this business from the impact of Brexit given the nature of the services we provide in the UK and customer need.


FY 2018 FY 2017 FY 2017 at constant
Fee income (£m) 69.0 68.0 67.1
Segment profit * (£m) 6.2 6.4 6.3
Margin (%) 9.0 9.4 9.3

* after reorganisation costs: 2018 £0.8m, 2017 £nil

This business provides project and program management, management consulting and training to public and private sector clients in Norway. Market conditions were generally favourable. The integration of our two business, Metier and OEC, is now complete other than the co-location of their offices in Oslo that will occur in early 2019. A significant cost associated with this move, £0.8m in respect of the termination of a property lease, was incurred in 2018 and included in reorganisation costs. Subject to market conditions remaining favourable, growth is expected in 2019.

North America

FY 2018 FY 2017 FY 2017 at constant
Fee income (£m) 58.7 68.3 66.8
Segment profit * (£m) 5.1 7.3 7.0
Margin (%) 8.7 10.7 10.5

* after reorganisation costs: 2018 £0.1m, 2017 £0.2m

General economic conditions in the USA were good, with buoyant demand. This put pressure on our cost base, where the Design and Development business based in Texas suffered retention and recruitment issues resulting in only a modest profit contribution, much lower than in prior years. The environmental risk business suffered from retention issues in the second half of the year and profits declined year on year. We have invested in management and in the professional teams in both businesses and have more stability now. The Ocean Science business, that is indirectly exposed to the oil and gas sector, generated healthy fee growth and benefited from greater spend from clients in that sector. Subject to market conditions remaining good an improved performance overall is anticipated in 2019.

Australia Asia Pacific

FY 2018 FY 2017 FY 2017 at constant
Fee income (£m) 116.8 119.7 113.1
Segment profit * (£m) 13.3 14.8 14.0
Margin (%) 11.4 12.4 12.3

* after reorganisation costs: 2018 £0.1m, 2017 £0.5m

The project management business continued to benefit from an active Australian defence sector and grew fees. However, a greater use of sub-consultants reduced the profit margin of this business. The government infrastructure and land development markets were good benefiting the Water & Environment and Project Communications businesses. However, due to staff retention issues within the Advisory Services business its fees and profit declined. In support of our businesses in the region, investment was made in support functions during the year. The acquisition of Corview, a leading Australian transport advisory consultancy, which we announced on 4 February 2019, has added breadth and depth to our existing strong advisory capabilities. We anticipate that there may be some softening of the property market but subject to conditions remaining strong in public and private infrastructure markets and defence spending remaining high this segment is capable of growth in 2019.


RPS has made significant progress towards achieving its five strategic priorities that were outlined last year.

In respect of the priority to be rated by its people as a great place to do great work, the Group has recruited a Group People Director and established a group people strategy to address its recruitment and retention challenges. Implementation of the strategy is substantially underway. An inaugural global employee survey has been conducted and the Group has redesigned the development and appraisal framework for all staff and is introducing a new global incentive scheme for senior staff. The Group has also finalised its Group Leadership Team structure with key appointments to create a flatter, more responsive, organisational structure combining new and existing leaders who together provide deep expertise, global perspective and strong functional support.

Excellent progress was made in respect of the Group's ambition to tell its story better. In January 2019 RPS unveiled a new global brand to position the group for future growth. Informed by an independent client perception audit and comprehensive engagement with employees, along with expert third-party research, the brand encapsulates the essence of the Group via three core concepts: its purpose (why it exists), its promise (what it does) and its behaviours (how it does it). As previously announced the Group will incur significant one-off global brand relaunch expense in 2019.

Last year, the Group restructured into six segments and identified six sectors and 12 services clusters. This provides it with consistent global market focus and further enables its people to meet the requirements of its clients.

This greater focus in the business model and market proposition will connect its deep expertise and capability more effectively to support the strategic priority to 'exploit synergies where they exist but not where they don't'.

The strategic priority to focus on organic growth supported by selective acquisitions remains very important. RPS is pleased to have delivered Group organic fee growth of 4% at constant currency against a backdrop where the performance of Consulting UK and Ireland, North America and AAP were adversely impacted by retention and recruitment issues. The recent acquisition, by the Group, of Corview in Australia is an example of a leading consultancy wishing to join RPS, adding density and breadth to the existing strong capabilities in the region. The Group continues to seek acquisitions in North America, in sectors in which it has strength and familiarity, and is also seeking opportunities in Europe.

The priority to revitalise the Energy business is proving to be successful. The inclusion of all the directly exposed oil and gas businesses in Energy enables the Group to provide globally recognised consultancy and services to this important global market. This, together with the appointment of a new, experienced management team has enabled the reinvigoration of our Energy business in markets that are showing greater levels of activity.

To underpin these priorities work is well underway to design a new global ERP system with deployment commencing this year and expected to be completed in 2021. The total capital investment is estimated to be £14 million. Our Norwegian business, MetierOEC, is managing the project which is currently running to time, schedule and cost budget.

Group prospects

The future for RPS is about being at the forefront of changing market trends, identifying growth opportunities and delivering complex solutions in a way that is easy to understand and implement. Alongside investment in RPS' brand, 2019 will see a continuation of the focus and investment in its people, technology and innovation to build on the deep expertise that its clients have recognised and give it a stronger competitive edge in all the markets that it operates in. RPS is pragmatic in its aspirations and has the capability to utilise the means available to achieve its goals and further strengthen the business.

Trading conditions in most of its markets appear satisfactory and supportive of organic growth although necessary investment previously announced will temper performance this year before accelerating growth in future years. The risks associated with Brexit are contained mainly within the Consulting UK and Ireland business and they have seen little impact so far. Against this background, the Board's view of the 2019 outlook for the Group is unchanged and is in line with market expectations. The transition the Group is undertaking is providing a strong foundation to deliver long term shareholder value.


Board of Directors
RPS Group plc

21 February 2019


Consolidated income statement

Notes Year ended
31 December
Year ended
31 December
£000's 2018 2017
Revenue 3 637,383 630,636
Recharged expenses 2, 3 (63,226) (68,316)
Fee income 2, 3 574,157 562,320
Operating profit before amortisation and impairment of acquired intangibles and transaction related costs 2, 3 54,041 58,467
Amortisation and impairment of acquired intangibles and transaction related costs 4 (9,181) (55,541)
Operating profit 44,860 2,926
Finance costs 5 (4,111) (4,639)
Finance income 5 232 113
Profit before tax, amortisation and impairment of acquired intangibles and transaction related costs 2 50,162 53,941
Profit/(loss) before tax 40,981 (1,600)
Tax expense 6 (11,240) (15,072)
Profit/(loss) for the year attributable to equity
holders of the parent
29,741 (16,672)
Basic earnings/(loss) per share (pence) 7 13.34 (7.52)
Diluted earnings/(loss) per share (pence) 7 13.23 (7.47)
Adjusted basic earnings per share (pence) 2, 7 16.47 17.13
Adjusted diluted earnings per share (pence) 2, 7 16.34 17.01


Consolidated statement of comprehensive income

Year ended
31 December
Year ended
31 December
£000's 2018 2017
Profit/(loss) for the year 29,741 (16,672)
Exchange differences* (2,174) (5,867)
Actuarial gains and losses on re-measurement of defined benefit pension liability 677 (66)
Tax on re-measurement of defined benefit pension liability (149) 15
Total recognised comprehensive income/(loss) for the year attributable to equity holders of the parent 28,095 (22,590)

* may be reclassified to profit or loss in accordance with IFRS


Consolidated balance sheet

As at
31 December
As at
31 December
£000's Notes 2018 2017
Non-current assets:
Intangible assets 385,699 395,730
Property, plant and equipment 32,005 28,344
Deferred tax asset 3,795 3,312
421,499 427,386
Current assets:
Trade and other receivables 8 166,418 169,755
Cash at bank 17,986 15,588
184,404 185,343
Current liabilities:
Borrowings 10 2,581 212
Deferred consideration 12 53 1,608
Trade and other payables 9 117,914 123,406
Corporation tax liabilities 3,648 3,415
Provisions 2,119 2,953
126,315 131,594

Net current assets

58,089 53,749
Non-current liabilities:
Borrowings 89,280 96,008
Deferred consideration 12 249 148
Other payables 1,719 2,543
Deferred tax liability 6,405 8,340
Provisions 4,363 4,312
102,016 111,351


Net assets 377,572 369,784
Share capital 6,783 6,745
Share premium 120,400 117,790
Retained earnings 213,656 205,143
Merger reserve 21,256 21,256
Employee Trust (9,801) (8,602)
Translation reserve 25,278 27,452
Total shareholders' equity 377,572 369,784


Consolidated cash flow statement

Year ended
31 December
Year ended
31 December
£000's Notes 2018 2017
Net cash from operating activities 11 44,488 43,744
Cash flows from investing activities:
Purchases of subsidiaries net of cash acquired (165) -
Deferred consideration (1,611) (12,879)
Purchase of property, plant and equipment (11,872) (8,651)
Proceeds from sale of business - 234
Proceeds from sale of property, plant and equipment 222 221
Net cash used in investing activities (13,426) (21,075)
Cash flows from financing activities:
Costs of issue of share capital (9) (8)
Proceeds from issue of share capital - 382
Repayment of bank borrowings (8,891) (1,424)
Payment of finance lease liabilities - (36)
Dividends paid (22,115) (22,007)
Net cash used in financing activities (31,015) (23,093)
Net increase / (decrease) in cash and cash equivalents 47 (424)
Cash and cash equivalents at beginning of year 15,376 16,503
Effect of exchange rate fluctuations (18) (703)
Cash and cash equivalents at end of year 15,405 15,376
Cash and cash equivalents comprise:
Cash at bank 11 17,986 15,588
Bank overdraft 11 (2,581) (212)
Cash and cash equivalents at end of year 15,405 15,376


Consolidated statement of changes in equity

At 1 January 2017 6,703 114,353 249,353 21,256 (13,677) 33,319 411,307
Loss for the year - - (16,672) - - - (16,672)
Other comprehensive income - - (51) - - (5,867) (5,918)
Total comprehensive income for the year - - (16,723) - - (5,867) (22,590)
Issue of new ordinary shares 42 3,437 (1,352) - (1,753) - 374
Share based payment expense - - 2,700 - - - 2,700
Transfer on release of shares - - (6,828) - 6,828 - -
Dividends paid - - (22,007) - - - (22,007)
At 31 December 2017 6,745 117,790 205,143 21,256 (8,602) 27,452 369,784
Effect of changes in accounting standards - - (521) - - - (521)
Profit for the year - - 29,741 - - - 29,741
Other comprehensive income - - 528 - - (2,174) (1,646)
Total comprehensive income for the year - - 30,269 - _ (2,174) 28,095
Issue of new ordinary shares 38 2,610 (799) - (1,858) - (9)
Share based payment expense - - 2,338 - - - 2,338
Transfer on release of shares - - (659) - 659 - -
Dividends paid - - (22,115) - - - (22,115)
At 31 December 2018 6,783 120,400 213,656 21,256 (9,801) 25,278 377,572



The notes are available in the printable pdf of the results. To download it, please click here.