RNS Announcements

2020

Half Year Results for the six months ended 30 June 2008

31 July 2008

RPS Group Plc ("RPS" or "the Group") today announces excellent results for the six months ended 30 June 2008 with profit (before tax and amortisation) up 32% and earnings per share up 30%

2008 2007
Revenue (£m) 225.9 173.9 +30%
Fee income (£m) 189.9 144.4 +32%
Profit before taxation* (£m) 28.5 21.6 +32%
Earnings per share* (basic) (pence) 9.49 7.31 +30%
* before amortisation of acquired intangible assets of £1.1m (2007: £0.2m

Highlights

  • all three segments of the Group substantially increased operating profit
  • excellent conversion of profit into cash
  • the international footprint of the Group continues to extend
  • the acquisition of quality businesses has continued
  • dividend raised 15% to 1.75p (2007: 1.52p)
  • balance sheet remains strong with net bank borrowings at £38.8m (2007: £27.4m)
  • committed bank facilities increased from £70m to £100m and extended to 2013
  • major opportunities for future growth are developing from accelerating concerns about global energy supply and climate change
  • the Board remains confident about the Group's prospects.

Brook Land, Chairman, commenting on the results, said:

"Trading in the first half of 2008 was robust. All parts of the Group grew significantly. Our strategy of supplementing organic growth with the acquisition of quality businesses continued to be successfully implemented. Acquisitions made in 2007 and the first half of 2008 support our growth and further acquisitions are being considered. The Group's balance sheet remains strong.

"The integrated services offered by our three successful businesses mean we remain well positioned to assist our clients deal with the related challenges of adapting to climate change and the need to access sustainable, safe and secure sources of energy.

"RPS is diverse and resilient, with a proven business model. Our broad range of services combined with our expanding geographic footprint, gives the Board continuing confidence about prospects for the Group."

31 July 2008

 

ENQUIRIES
RPS Group plc Today: 020 7457 2020
Dr Alan Hearne, Chief Executive Thereafter: 01235 863206
Gary Young, Finance Director
College Hill
Justine Warren Tel: 020 7457 2020
Matthew Smallwood

 

RPS is an international consultancy providing advice upon the development of natural resources, land and property, the management of the environment and the health and safety of people. We have offices in the UK, Ireland, the Netherlands, North America, Eastern Europe, South East Asia and Australia and undertake projects in many other parts of the world. The Group is a constituent of both the FTSE 250 and FTSE 4 Good Indices.

In order to assist in the reduction of greenhouse gas emissions and eventually reduce global warming, the staff of RPS have set themselves the task of reducing energy consumption by 5% each year, using 2007 as the base. If successful we will halve our (per capita) energy use by 2020.

 

Introduction

RPS is an international consultancy providing advice upon the development of natural resources, land and property, the management of the environment and the health and safety of people.

The Group seeks to ensure continuous improvement in the range and quality of our services and our financial performance by:

  • operating in markets where we can add value to our clients' activities;
  • endeavouring to achieve and maintain leadership in those markets; and
  • making acquisitions of quality businesses in order to extend our expertise and geographical presence.

The Board remains confident that this strategy will continue to offer our staff challenging and rewarding careers, whilst continuing to deliver growth and good returns for our shareholders.

 

Results

Profit (before tax and amortisation of acquired intangibles) was £28.5 million (2007: £21.6 million). Basic earnings per share (before amortisation) were 9.49 pence (2007: 7.31 pence). Cash generated from operations was £29.0 million (2007: £21.9 million). After funding acquisition consideration of £22.1 million, the Group had net borrowings of £38.8 million at 30 June (2007: £27.4 million).

The Board has increased the interim dividend by 15% to 1.75 pence per share (2007: 1.52 pence) payable on 23rd October 2008 to shareholders on the register on 26th September 2008. Our dividend has risen at this rate for a number of years.

Operations and Markets

Energy

2008 2007
Fee income (£m) 64.9 46.9 +39%
Segment profit* (£m) 12.4 8.6 +44%
Margin 19.2% 18.4%
* before amortisation of acquired intangible assets of £0.2m (2007: £0.1m)

We provide consultancy services on an international basis to the oil and gas industries from bases in the UK, USA, Canada, Australia, Malaysia and Singapore. Projects are undertaken in many other countries including China, India, Brazil and Russia. In the UK we also provide advice to the renewables industry. The business continued to perform extremely well, with good organic growth being supplemented by further acquisitions. This reflects both buoyant market conditions, which we expect to continue, as well as our position as a world leader in this sector.

Demand for our services from oil and, increasingly, gas exploration and production companies continues to grow. We see accelerating interest from clients in the combination of the geological, engineering, environmental and safety expertise that we provide. The requirements of the developed world to identify and secure long term supplies of energy, coupled with the increasing energy needs of developing nations, suggest that activity in this market will remain at a high level for the foreseeable future. The acquisition of WTW has expanded our operational capability and Oceanfix has enabled us to become more involved in the planning of survey aspects of offshore construction, another fast growing area.

RPS's reputation within the financial community in respect of determination of oil and gas reserves for reporting purposes, and in support of corporate activity developed encouragingly. The oil and gas companies and their advisors value the breadth and depth of our expertise, including our environmental experience.

Our international profile has helped us to create successful staff recruitment and retention strategies. Rising fee rates have enabled us to increase rewards to our staff, a trend we see continuing. The acquisitions made during the course of 2007 and the first half of this year enhanced our staff base, whilst also enabling us to develop our businesses in North America and Australia.

High oil and gas prices support not only our business in those markets, but also investment in renewable energy. The geological, engineering and environmental skills we have are proving to be of significant value to developers of offshore wind farms and other offshore renewable technologies around the UK coast. Working with the planning and environmental assessment capability we have in our Planning & Development business, our Energy staff have been involved in schemes which account for about 90% of the UK offshore wind farm capacity. Recent policy statements from the UK government are expected to bring forward further significant investment in wind farm development, from which we are likely to benefit.

Planning and Development

2008 2007
Fee income (£m) 80.9 65.1 +24%
Segment profit* (£m) 15.1 12.7 +18%
Margin 18.6% 19.6%
* before amortisation of acquired intangible assets of £0.4m (2007: £0.1m)

Within this business we provide consultancy services in respect of town and country planning, building, landscape and urban design, transport planning and highway design, environmental assessment and energy use and efficiency. The growth in this part of the Group was encouraging with the operating margin remaining high. We remain leaders in this market in the UK, Ireland, and Western Australia, acting for blue chip clients in both the public and private sectors.

Our planning business is also able to assist clients in other parts of the Group secure planning permissions for capital projects, for example, in the energy and water sectors. This is particularly marked in Australia, but is increasingly the case in the UK, Ireland and the US, where JD Consulting, acquired in December 2007 and located in Texas, is currently advising upon a proposal for one of the world's largest onshore wind farms.

In the UK our ability to advise upon the full range of issues relevant to the development of sustainable communities and secure planning permission for large complex schemes remains attractive to clients. Our ability to handle complex sustainability issues helps us to secure this work and execute it at the high level needed to achieve the permissions required by our clients. In consequence, we continue to work on some of the largest regeneration and infrastructure projects; these provide long term activity for us. We are also involved in both the waste and minerals sectors, in which securing planning permission has become far more complex. Current economic circumstances are affecting the volume of housebuilding and other speculative property development undertaken by some of our clients. The limited effect of this on our UK Planning and Development business is being mitigated by opportunities in new markets which continue to develop, particularly in respect of securing planning permissions for energy infrastructure investment. This involves projects such as LNG plants, new nuclear power stations, renewable energy schemes and gas storage facilities. We also benefit from the need to integrate energy efficiency into planning proposals and development schemes. The acquisition of RW Gregory increased our capability in this field materially.

Our activities in the planning and development market in Australia showed good growth. The long term potential of this market has encouraged us to develop a plan to grow these activities substantially. We are now seeing the benefits of this and expect our Australian business to continue to grow in the coming years.

The Irish Government maintains its commitment to invest in ambitious plans for infrastructure development, despite a slowdown in the economy. Implementing The National Development Plan 2007-2013 which targets "Economic Infrastructure" remains a priority, with €54.6bn identified for expenditure on roads, public transport, water, airports and energy infrastructure. We benefit significantly from this investment and, as in the UK, our sustainability credentials give us a competitive advantage.

Environmental Management

2008 2007
Fee income (£m) 46.3 34.6 +34%
Segment profit* (£m) 6.8 4.3 +57%
Margin 14.8% 12.6%
* before amortisation of acquired intangible assets of £0.5m (2007: nil)

This business provides consultancy services in respect of health, safety, risk and environmental management in the UK and the Netherlands and the management of water resources in the UK. The results in the first half were excellent. Through the acquisition of MetOcean in Australia in the second half of 2007, we extended both the range of our services and geographical reach of the business. The acquisitions of RBA and Geocet increased our capability to provide oil and gas clients with health, safety and environmental expertise directly relevant to their activities. Our growing health, safety and risk management involvement with the oil and gas and nuclear industries is becoming strategically important. Our Dutch business performed well; the acquisition of Kraan signals our increasing confidence in both the market and prospects for our business there.

RPS's strength in the water industry, coupled with our environmental credentials, position us well to advise our clients in the water sector on a broad range of issues. As a result our business servicing the UK water industry, which had a good year in 2007, continued this performance into 2008. We are working on long term commissions for the majority of the privatised water companies, as well as undertaking significant work in Scotland. The UK markets in health and safety and occupational health and hygiene have generally remained strong, driven by increasing statutory obligations. Although some clients in this market are confronted with economic uncertainty, awareness of the importance of managing these matters more carefully has heightened.

Funding

The conversion of profit into cash continued at a good level and our balance sheet remains strong. Net borrowings at 30 June were £38.8 million.

Following the seven acquisitions made in the period the book value of deferred consideration and outstanding loan notes related to acquisitions amounts to £4.7 million falling due for settlement in cash during the second half of 2008, £13.8 million in 2009, £7.2 million in 2010 and £1.1 million in 2011.

We have increased our committed bank facilities from £70 million to £100 million and extended them until 2013, on broadly unchanged terms. Our cash generation, in conjunction with these facilities and an ability to use equity in transactions, means that we are able to continue our acquisition strategy.

Prospects

Balancing the way energy is secured from various sources, managing its use to limit environmental damage, whilst planning further economic growth and urban development has become a fundamental challenge of this century. It is one which RPS is extremely well positioned to advise upon and will enable us to build further momentum and provides opportunities for all our businesses. The Board believes these opportunities will continue to outweigh the adverse consequences of economic turbulence.

Our continued investment in the energy sector has enabled us to internationalise our activities in a significant way. As a result, we now have strong businesses in the USA, Canada and Australia as well as substantial contracts relating to oil and gas exploration and production in many parts of the developing world, including India, Russia and China.

We have successfully begun the process of expanding our activities in Australia into planning and development and environmental management. We are confident these can be extended substantially. Australia is also a good base from which to develop our activities in Asia. Opportunities also exist to develop the full range of our activities in both the USA and Canada.

The integrated services offered by our three successful businesses mean we remain well positioned to assist our clients deal with the related challenges of adapting to climate change and the need to access sustainable, safe and secure sources of energy.

RPS is diverse and resilient with a proven business model. Our broad range of services, coupled with our expanding geographic footprint, gives the Board continuing confidence about prospects for the Group.

Board of Directors
RPS Group plc
31 July 2008

 

Condensed consolidated income statement

Notes Six months
ended
30 June
Six months
ended
30 June
Year
ended 31
December
2008 2007 2007
unaudited unaudited audited
£000's £000's £000's
Revenue 3 225,867 173,908 362,674
Recharged expenses 3 (35,944) (29,542) (57,566)
Fee income 3 189,923 144,366 305,108
Operating profit 3 29,526 23,024 47,975
Finance costs (2,299) (1,755) (3,792)
Finance income 172 132 296
Profit before tax and amortisation
of acquired intangibles
28,536 21,607 45,010
Amortisation of acquired intangibles (1,137) (206) (531)
Profit before tax 27,399 21,401 44,479
Tax expense 4 (8,302) (6,588) (13,569)
Profit for the period attributable to
equity holders of the parent
19,097 14,813 30,910
Basic earnings per share (pence) 5 9.10 7.24 14.99
Diluted earnings per share (pence) 5 8.97 7.07 14.78
Basic earnings per share before
amortisation of acquired
intangibles (pence)
5 9.49 7.31 15.17
Diluted earnings per share before
amortisation of acquired
intangibles (pence)
5 9.36 7.14 14.95

 

Condensed consolidated statement of recognised income and expense

Six months
ended
30 June
Six months
ended
30 June
Year
ended 31
December
2008 2007 2007
unaudited unaudited audited
£000's £000's £000's
Exchange differences 5,839 300 5,787
Tax recognised directly in equity 10 678 743
Income recognised directly in equity 5,849 978 6,530
Profit for the period 19,097 14,813 30,910
Total recognised income for the
period attributable to equity
holders of the parent
24,946 15,791 37,440

 

Condensed consolidated balance sheet

As at
30 June
As at
30 June
As at
31 December
2008 2007 2007
unaudited unaudited audited
Notes £000's £000's £000's
Assets
Non-current assets
Intangible assets 245,828 187,019 210,839
Property, plant and equipment 6 22,779 19,202 21,706
Deferred tax assets - 2,401 114
268,607 208,622 232,659
Current assets
Trade and other receivables 146.462 109,921 119,504
Cash at bank 13,584 10,052 10,884
160,046 119,973 130,388
Liabilities
Current liabilities
Borrowings 204 262 174
Deferred consideration 12,753 9,745 8,939
Trade and other payables 78,842 60,351 62,750
Corporation tax liabilities 6,907 4,786 3,434
Provisions 1,279 332 595
99,985 75,476 75,892
Net current assets 60,061 44,497 54,496
Non-current liabilities
Borrowings 52,171 37,156 43,340
Deferred consideration 15,293 9,350 10,453
Other creditors 1,511 330 1,320
Deferred tax liabilities 3,844 - -
Provisions 3,623 1,564 4,508
76,442 48,400 59,621
Net assets 252,226 204,719 227,534
Equity
Share capital 9 6,359 6,217 6,319
Share premium 9 94,337 91,561 93,225
Other reserves 10 24,804 13,918 17,516
Retained earnings 9 126,726 93,023 110,474
Total shareholders' equity 9 252,226 204,719 227,534

 

Condensed consolidated cash flow statement

Six months
ended 30
June
Six months
ended 30
June
Year
ended 31 December
2008 2007 2007
Notes unaudited
£000's
unaudited
£000's
audited
£000's
Cash generated from operations 12 28,993 21,919 45,393
Interest paid (2,009) (1,888) (3,967)
Interest received 172 132 296
Income taxes paid (5,513) (5,139) (12,925)
Net cash from operating activities 21,643 15,024 28,797
Cash flows from investing activities
Purchases of subsidiaries net of cash acquired (17,555) (5,698) (15,758)
Deferred consideration (4,539) (3,665) (10,846)
Purchase of property, plant and equipment (3,338) (2,785) (5,811)
Sale of property, plant and equipment 1,112 49 4,239
Net cash used in investing activities (24,320) (12,099) (28,176)
Cash flows from financing activities
Proceeds from issue of share capital 171 1,608 1,730
Proceeds from sale of own shares - 1,293 1,293
Proceeds from bank borrowings 8,366 (2,635) 3,001
Payment of finance lease liabilities (98) (109) (149)
Dividends paid (3,498) (2,967) (6,144)
Payment of pre-acquisition dividend (115) - -
Net cash used in financing activities 4,826 (2,810) (269)
Net increase in cash and cash equivalents 2,149 115 352
Cash and cash equivalents at beginning of period 10,884 9,805 9,805
Effect of exchange rate fluctuations 551 39 727
Cash and cash equivalents at end of period 12 13,584 9,959 10,884
Cash and cash equivalents comprise:
Cash at bank 13,584 10,052 10,884
Bank overdraft - (93) -
Cash and cash equivalents at end of period 13,584 9,959 10,884

 

Notes to the condensed consolidated financial statements

1. Basis of preparation

RPS Group plc (the "Company") is a company domiciled in England. The condensed consolidated interim financial statements of the Company for the six months ended 30 June 2008 comprise the Company and its subsidiaries (together referred to as the "Group").

The condensed interim financial statements have been prepared using accounting policies set out in the Report and Accounts 2007 and are in accordance with IAS 34. The condensed interim financial statements are unaudited but have been reviewed by the Company's auditors. The results for the year end 31 December 2007 and the balance sheet as at that date are abridged from the Company's Report and Accounts 2007 which have been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not contain references to any matters to which the auditors drew attention by way of emphasis without qualifying the report and did not contain a statement under Section 272(2) or (3) of the Companies Act 1985.

The condensed interim financial statements do not constitute full accounts within the meaning of Section 240 of the Companies Act 1985.

2. Responsibility Statement

The directors confirm that, to the best of their knowledge this condensed set of financial statements has been prepared in accordance with IAS 34 and that this Interim Report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R.

On behalf of the Board

A. S. Hearne G. Young
Chief Executive Group Finance Director

3. Business segments

The Board believes that one of the Group's important strengths is the way in which we deploy our broad range of skills in an integrated way. The success of this part of our strategy results in projects being undertaken in a multi-disciplinary way. In consequence, there are Group activities which could be placed in more than one business segment. This becomes increasingly the case as our energy and international activities grow. The segments currently used to present and analyse the Group's performance are described below. They are kept under review by the Board.

Planning and Development - consultancy services in the UK, Ireland, Australia and the US related to town and country planning, urban design, architecture, transport planning and highway design, environmental impact assessment and provision of water and waste utilities and energy infrastructure.

Environmental Management - consultancy services in the UK, the Netherlands and Australia related to health, safety and risk management, environmental science and the management of water and energy resources.

Energy - the provision of technical consultancy services, on an international basis, to the upstream oil and gas and offshore renewable energy sectors.

Segment results for the six months ended 30 June 2008

Planning &
Development
Environmental
Management
Energy Eliminations Consolidated
£000's £000's £000's £000's £000's
Revenue 98,560 54,105 75,449 (2,247) 225,867
Recharged expenses (17,645) (7,792) (10,507) - (35,944)
Fee Income 80,915 46,313 64,942 (2,247) 189,923
Segment profit 15,057 6,835 12,445 - 34,337
Amortisation (439) (467) (231) - (1,137)
33,200
Unallocated expenses (3,674)
Operating profit 29,526

Segment results for the six months ended 30 June 2007

Planning &
Development
Environmental
Management
Energy Eliminations Consolidated
£000's £000's £000's £000's £000's
Revenue 78,547 40,909 56,585 (2,133) 173,908
Recharged expenses (13,481) (6,328) (9,733) - (29,542)
Fee Income 65,066 34,581 46,852 (2,133) 144,366
Segment profit 12,728 4,345 8,625 - 25,698
Amortisation (146) - (60) - (206)
25,492
Unallocated expenses (2,468)
Operating profit 23,024

4. Income taxes

The Group's consolidated effective tax rate for the six months ended 30 June 2008 was 30.3%, (for the year ended 31 December 2007: 30.5%; for the six months ended 30 June 2007: 30.8%).

5. Earnings per share

The calculations of earnings per share are based on the profit attributable to ordinary shareholders and a weighted average number of ordinary shares outstanding during the period as shown below:

Six months
ended 30 June
Six months
ended
30 June
Year ended
31 Dec
2008 2007 2007
£000's £000's £000's
Profit attributable to ordinary shareholders 19,097 14,813 30,910
000's 000's 000's
Weighted average number of ordinary shares for the purposes of basic earnings per share 209,865 204,592 206,256
Effect of shares to be issued as deferred consideration 505 1,059 92
Effect of employee share schemes 2,412 3,760 2,827
Weighted average number of ordinary shares for the purposes of diluted earnings per share 212,782 209,411 209,175
Basic earning per share (pence) 9.10 7.24 14.99
Diluted earnings per share (pence) 8.97 7.07 14.78

The directors consider that earnings per share before amortisation provides a more meaningful measure of the Group's performance than statutory earnings per share. The calculation of basic and diluted earnings per share before amortisation is based on the weighted average number of ordinary shares outstanding during the year as shown above and the profit attributable to ordinary shareholders before the amortisation on acquired intangible assets and the tax thereon as shown in the table below and the weighted average number of ordinary shares during the period as shown above.

Six months
ended 30 June
2008
Six months
ended 30 June
2007
Year ended
31 Dec
2007
£000's £000's £000's
Profit attributable to ordinary shareholders 19,097 14,813 30,910
Amortisation of acquired intangibles 1,137 206 531
Tax on amortisation of acquired intangibles (318) (62) (159)
Adjusted profit attributable to ordinary shareholders 19,916 14,957 31,282
Basic earnings before per share before amortisation (pence) 9.49 7.31 15.17
Diluted earnings per share before amortisation (pence) 9.36 7.14 14.95

6. Property, plant and equipment

During the six months ended 30 June 2008, the Group acquired assets with a cost of £4,036,000 (six months to 30 June 2007: £3,113,000), which includes £698,000 acquired through business combinations (six months to 30 June 2007: £328,000). Assets with a net book value of £932,000 were disposed of during the six months ended 30 June 2008 (six months ended 30 June 2007: £30,000).

7. Acquisitions

The Group completed the acquisition of seven businesses during the first half of 2008. Each purchase has been accounted for as an acquisition. Prior to completion of the transactions each acquired business kept its own management accounts. Adding the results shown in these accounts to the Group results produces Group revenue for the period of £233,708,000 and Group operating profit before amortisation of acquired intangibles of £30,316,000.

All intangible assets were recognised at their respective fair values. The residual excess over the net assets acquired, including intangible assets, is recognised as goodwill in the financial statements.

Date of Acquisition Place of incorporation Percentage of entity acquired Nature of business acquired
Kraan Consulting Holding BV 6 Feb 2008 The Netherlands 100% of issued share capital Urban planning
consultancy
RW Gregory LLP 12 Mar 2008 UK Assets and certain
liabilities
Engineering
consultancy
WTW and Associates Ltd 17 Mar 2008 UK 100% of issued share capital Oil and gas consultancy
Oceanfix International Ltd 19 Mar 2008 UK 100% of issued share capital Oil and gas consultancy
Land Management Trust
("Koltasz Smith")
27 Mar 2008 Australia Assets and certain
liabilities
Urban planning consultancy
Rudall Blanchard Associates Group Ltd 30 Mar 2008 UK 100% of issued share capital Health and Safety consultancy
The GeoCet Group LLC 18 Apr 2008 USA 100% of issued share capital Environmental consultancy

These businesses have been integrated with other parts of the Group and are no longer managed separately. They share resources, revenues, costs and market opportunities with other parts of the Group and should no longer be considered individual businesses. Their contributions to the revenue and operating profit before amortisation of acquired intangibles to the Group's results for the period, as shown below, reflects those relationships.

Revenue £'000 Operating profit £'000
Kraan Consulting Holding BV 2,723 341
RW Gregory LLP 3,457 442
Oceanfix International Ltd 3,392 402
Land Management Trust 857 191
Rudall Blanchard Group Ltd 1,861 479
The GeoCet Group LLC 779 213

It is impracticable to identify separately the revenue and operating profit contribution of WTW and Associates Ltd for the period since acquisition as this entity has been fully hived up into existing Group operations.

Details of the carrying values of the acquired net assets and the provisional fair values assigned to them by the Group are as follows:

Intangible assets
Customer relationships Order backlog Trade names Other intangibles Property, plant & equipment Cash Other assets Other liabilities Net assets
£000's £000's £000's £000's £000's £000's £000's £000's £000's
Pre acquisition carrying values
Kraan - - - 119 146 (248) 1,695 (955) 757
RWG - - - - 252 2,002 4,147 (4,900) 1,501
WTW - - - - 20 (3) 1,007 (455) 569
Oceanfix - - - - 81 533 2,454 (978) 2,090
LMT - - - - 191 - 701 (313) 579
RBA - - - 21 120 928 1,604 (774) 1,899
Geocet - - - - - 337 611 (774) 174
- - - 140 810 3,549 12,219 (9,149) 7,569
Provisional fair values
Kraan 2,714 - 374 - 124 (248) 1,654 (1,849) 2,769
RWG 2,960 1,080 200 - 252 2,002 4,221 (6,140) 4,575
WTW - 190 - - 19 (3) 1,007 (455) 758
Oceanfix 3,121 148 - - 25 533 2,454 (1,893) 4,388
LMT 550 - 632 - 191 - 701 (644) 1,430
RBA 1,207 107 - - 87 928 1,604 (1,142) 2,791
Geocet - - - - - 337 611 (774) 174
10,552 1,525 1,206 - 698 3,549 12,252 (12,897) 16,885

The fair value adjustments made to the pre acquisition carrying values to determine provisional fair values relate to the alignment of depreciation accounting policies, the identification of intangibles and the deferred tax recognised on the fair value adjustments.

Initial consideration Fair value of deferred consideration
Cash Shares Acquisition expenses Cash Shares Total consideration Net assets acquired Goodwill acquired
£000's £000's £000's £000's £000's £000's £000's £000's
Consideration
Kraan 3,009 - 344 1,720 - 5,073 2,769 2,304
RWG 5,200 1,700 217 3,238 - 10,355 4,575 5,780
WTW 1,344 - 118 468 - 1,930 758 1,172
Oceanfix 4,491 - 163 2,445 - 7,099 4,388 2,711
LMT 1,857 - 290 1,238 - 3,385 1,430 1,955
RBA 3,460 - 162 1,340 1,240 6,202 2,791 3,411
Geocet 590 - 75 554 - 1,219 174 1,045
19,951 1,700 1,369 11,003 1,240 35,263 16,885 18,378

As part of the consideration for RWG, 572,970 ordinary shares of RPS Group plc were allotted to the vendors.

As part of the deferred consideration for RBA, £1,240,000 of ordinary shares of RPS Group plc will be allotted to the vendors.

Goodwill represents the value of the assembled professional workforce acquired with these businesses.

Prior period acquisitions

The Group acquired the entire share capital of APA Petroleum Engineering Inc. in February 2007, acquired the trade, assets and certain liabilities of Safety and Risk Practice Pty Ltd in March 2007 and acquired the entire share capital of Geocon Group Services Ltd, also in March 2007.

At 30 June 2007 and 31 December 2007, the Group allotted provisional fair values to the assets and liabilities acquired as a result of these acquisitions. These provisional fair values have now been finalised. The only adjustment to the acquisitions made in the first half of 2007 has been a credit to net assets of APA Petroleum Engineering Inc. of £159,000 representing an adjustment to the opening tax balances of this entity.

8. Share capital

2008
Number
000's
2008
£000's
2007
Number
000's
2007
£000's
Authorised
Ordinary shares of 3p each at 30 June 240,000 7,200 240,000 7,200
Issued and fully paid
Ordinary shares of 3p each at 1 January 210,632 6,319 205,446 6,163
Issued under employee share schemes 737 23 1,294 39
Issued as acquisition initial consideration 573 17 512 15
At 30 June 211,942 6,359 207,252 6,217

9. Statement of changes in equity

Share capital Share premium Retained earnings Other reserves Total equity
£000's £000's £000's £000's £000's
At 1 January 2007 6,163 89,836 79,828 11,107 186,934
Changes in equity during 2007
Tax recognised directly in equity - - 678 - 678
Exchange differences - - - 300 300
Net income recognised directly in equity - - 678 300 978
Profit for the period - - 14,813 - 14,813
Total recognised income for the period - - 15,491 300 15,791
Issue of new ordinary shares 54 1,725 - 1,418 3,197
Sale of own shares - - 671 622 1,293
Share based payment expense - - - 919 919
Tax on share based payment expense - - - (448) (448)
Dividends - - (2,967) - (2,967)
At 30 June 2007 6,217 91,561 93,023 13,918 204,719
Changes in equity during 2008
At 1 January 2008 6,319 93,225 110,474 17,516 227,534
Tax recognised directly in equity - - 10 - 10
Exchange differences - - - 5,839 5,839
Net income recognised directly in equity - - 10 5,839 5,849
Profit for the period - - 19,097 - 19,097
Total recognised income for the period - - 19,107 5,839 24,946
Issue of new ordinary shares 40 1,112 (705) 1,449 1,896
Share based payment expense - - 1,348 - 1,348
Dividends - - (3,498) - (3,498)
At 30 June 2008 6,359 94,337 126,726 24,804 252,226

10. Other reserves

Merger reserve Employee trust shares Share scheme reserve Shares to be issued Translation reserve Total other reserves
£000's £000's £000's £000's £000's £000's
At 1 January 2007 10,642 (3,042) 4,053 1,997 (2,543) 11,107
Changes in equity during 2007
Exchange differences - - - - 300 300
Issue of new shares 1,572 (154) - - - 1,418
Sale of own shares - 622 - - - 622
Share based payment expense - - 919 - - 919
Tax on share based payment
expense
(448) (448)
At 30 June 2007 12,214 (2,574) 4,524 1,997 (2,243) 13,918
Changes in equity during 2008
At 1 January 2008 16,993 (2,943) - 222 3,244 17,516
Exchange differences - - - - 5,839 5,839
Issue of new shares 1,682 (233) - - - 1,449
At 30 June 2008 18,675 (3,176) - 222 9,083 24,804

11. Dividends

The following dividends were recognised as distributions to equity holders in
the period:

Six months
ended 30 June
2008
£000's
Six months
ended 30 June
2007
£000's
Year Ended
31 December
2007
£000's
Final dividend for 2007 1.66p per share 3,498 - -
Interim dividend for 2007 1.52p per share - - 3,177
Final dividend for 2006 1.44p per share - 2,967 2,967
3,498 2,967 6,144

An interim divided in respect of the six months ended 30 June 2008 of 1.75 pence per share, amounting to a total dividend of £3,712,000 was approved by the Directors of RPS Group plc on 29th July 2008. These condensed consolidated interim financial statements do not reflect this dividend payable.

12. Note to the condensed consolidated cash flow statement

Six months ended
30 June
Six months ended
30 June
Year ended 31 Dec
2008 2007 2007
£000's £000's £000's
Profit before tax 27,399 21,401 44,479
Adjustments for:
Interest payable and similar charges 2,299 1,755 3,792
Interest receivable (172) (132) (296)
Depreciation 2,966 2,244 4,758
Amortisation of acquired intangibles 1,137 206 531
Share based payment expense 1,348 919 2,142
Profit on sale of property, plant and equipment (180) - (3,224)
Provision for dilapidations - - 2,514
Increase in trade and other receivables (11,277) (11,883) (14,018)
Increase in trade and other payables 5,473 7,409 4,715
Cash generated from operations 28,993 21,919 45,393

During the period, the Group increased its loan facilities to £100 million and extended them to 2013.

The table below provides an analysis of net borrowings, comprising cash and cash equivalents, interest bearing bank loans and finance leases, during the six months ended 30 June 2008.

At 1 January 2008 Cash flow Acquisition Foreign exchange At 30 June 2008
£000's £000's £000's £000's £000's
Cash and cash equivalents 10,884 2,149 - 551 13,584
Bank loans (43,346) (8,366) - (520) (52,232)
Finance lease creditor (168) 98 (38) (35) (143)
Net borrowings (32,630) (6,119) (38) (4) (38,791)

13. Principal risks and uncertainties

The principal risks and uncertainties faced by the Group have not changed significantly since the 2007 Report and Accounts was published. The Board keeps under review the potential effect of economic circumstances.

14. Related party transactions

There were no related party transactions required to be disclosed in the period.

15. Forward-looking statements

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 a number of 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.

INDEPENDENT REVIEW REPORT TO RPS GROUP PLC

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half yearly financial report for the six months ended 30 June 2008 which comprise the Condensed Consolidated Income Statement, the Condensed Consolidated Statement of Recognised Income and Expense, the Condensed Consolidated Balance Sheet, the Condensed Consolidated Cash Flow Statement and the related notes.

We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The half-yearly financial report is the responsibility of and has been approved by the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, ‘‘Interim Financial Reporting'', as adopted by the European Union.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Our report has been prepared in accordance with the terms of our engagement to assist the company in meeting its responsibilities in respect to half-yearly financial reporting in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ‘‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity'', issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2008 is not prepared, in all material respects, in accordance with International Accounting Standard 34, as adopted by the European Union, and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

BDO Stoy Hayward LLP
Chartered Accountants and Registered Auditors
55 Baker Street
London
W1U 7EU
31 July 2008

 

2019

Half Year Results for the six months ended 30 June 2008

31 July 2008

RPS Group Plc ("RPS" or "the Group") today announces excellent results for the six months ended 30 June 2008 with profit (before tax and amortisation) up 32% and earnings per share up 30%

2008 2007
Revenue (£m) 225.9 173.9 +30%
Fee income (£m) 189.9 144.4 +32%
Profit before taxation* (£m) 28.5 21.6 +32%
Earnings per share* (basic) (pence) 9.49 7.31 +30%
* before amortisation of acquired intangible assets of £1.1m (2007: £0.2m

Highlights

  • all three segments of the Group substantially increased operating profit
  • excellent conversion of profit into cash
  • the international footprint of the Group continues to extend
  • the acquisition of quality businesses has continued
  • dividend raised 15% to 1.75p (2007: 1.52p)
  • balance sheet remains strong with net bank borrowings at £38.8m (2007: £27.4m)
  • committed bank facilities increased from £70m to £100m and extended to 2013
  • major opportunities for future growth are developing from accelerating concerns about global energy supply and climate change
  • the Board remains confident about the Group's prospects.

Brook Land, Chairman, commenting on the results, said:

"Trading in the first half of 2008 was robust. All parts of the Group grew significantly. Our strategy of supplementing organic growth with the acquisition of quality businesses continued to be successfully implemented. Acquisitions made in 2007 and the first half of 2008 support our growth and further acquisitions are being considered. The Group's balance sheet remains strong.

"The integrated services offered by our three successful businesses mean we remain well positioned to assist our clients deal with the related challenges of adapting to climate change and the need to access sustainable, safe and secure sources of energy.

"RPS is diverse and resilient, with a proven business model. Our broad range of services combined with our expanding geographic footprint, gives the Board continuing confidence about prospects for the Group."

31 July 2008

 

ENQUIRIES
RPS Group plc Today: 020 7457 2020
Dr Alan Hearne, Chief Executive Thereafter: 01235 863206
Gary Young, Finance Director
College Hill
Justine Warren Tel: 020 7457 2020
Matthew Smallwood

 

RPS is an international consultancy providing advice upon the development of natural resources, land and property, the management of the environment and the health and safety of people. We have offices in the UK, Ireland, the Netherlands, North America, Eastern Europe, South East Asia and Australia and undertake projects in many other parts of the world. The Group is a constituent of both the FTSE 250 and FTSE 4 Good Indices.

In order to assist in the reduction of greenhouse gas emissions and eventually reduce global warming, the staff of RPS have set themselves the task of reducing energy consumption by 5% each year, using 2007 as the base. If successful we will halve our (per capita) energy use by 2020.

 

Introduction

RPS is an international consultancy providing advice upon the development of natural resources, land and property, the management of the environment and the health and safety of people.

The Group seeks to ensure continuous improvement in the range and quality of our services and our financial performance by:

  • operating in markets where we can add value to our clients' activities;
  • endeavouring to achieve and maintain leadership in those markets; and
  • making acquisitions of quality businesses in order to extend our expertise and geographical presence.

The Board remains confident that this strategy will continue to offer our staff challenging and rewarding careers, whilst continuing to deliver growth and good returns for our shareholders.

 

Results

Profit (before tax and amortisation of acquired intangibles) was £28.5 million (2007: £21.6 million). Basic earnings per share (before amortisation) were 9.49 pence (2007: 7.31 pence). Cash generated from operations was £29.0 million (2007: £21.9 million). After funding acquisition consideration of £22.1 million, the Group had net borrowings of £38.8 million at 30 June (2007: £27.4 million).

The Board has increased the interim dividend by 15% to 1.75 pence per share (2007: 1.52 pence) payable on 23rd October 2008 to shareholders on the register on 26th September 2008. Our dividend has risen at this rate for a number of years.

Operations and Markets

Energy

2008 2007
Fee income (£m) 64.9 46.9 +39%
Segment profit* (£m) 12.4 8.6 +44%
Margin 19.2% 18.4%
* before amortisation of acquired intangible assets of £0.2m (2007: £0.1m)

We provide consultancy services on an international basis to the oil and gas industries from bases in the UK, USA, Canada, Australia, Malaysia and Singapore. Projects are undertaken in many other countries including China, India, Brazil and Russia. In the UK we also provide advice to the renewables industry. The business continued to perform extremely well, with good organic growth being supplemented by further acquisitions. This reflects both buoyant market conditions, which we expect to continue, as well as our position as a world leader in this sector.

Demand for our services from oil and, increasingly, gas exploration and production companies continues to grow. We see accelerating interest from clients in the combination of the geological, engineering, environmental and safety expertise that we provide. The requirements of the developed world to identify and secure long term supplies of energy, coupled with the increasing energy needs of developing nations, suggest that activity in this market will remain at a high level for the foreseeable future. The acquisition of WTW has expanded our operational capability and Oceanfix has enabled us to become more involved in the planning of survey aspects of offshore construction, another fast growing area.

RPS's reputation within the financial community in respect of determination of oil and gas reserves for reporting purposes, and in support of corporate activity developed encouragingly. The oil and gas companies and their advisors value the breadth and depth of our expertise, including our environmental experience.

Our international profile has helped us to create successful staff recruitment and retention strategies. Rising fee rates have enabled us to increase rewards to our staff, a trend we see continuing. The acquisitions made during the course of 2007 and the first half of this year enhanced our staff base, whilst also enabling us to develop our businesses in North America and Australia.

High oil and gas prices support not only our business in those markets, but also investment in renewable energy. The geological, engineering and environmental skills we have are proving to be of significant value to developers of offshore wind farms and other offshore renewable technologies around the UK coast. Working with the planning and environmental assessment capability we have in our Planning & Development business, our Energy staff have been involved in schemes which account for about 90% of the UK offshore wind farm capacity. Recent policy statements from the UK government are expected to bring forward further significant investment in wind farm development, from which we are likely to benefit.

Planning and Development

2008 2007
Fee income (£m) 80.9 65.1 +24%
Segment profit* (£m) 15.1 12.7 +18%
Margin 18.6% 19.6%
* before amortisation of acquired intangible assets of £0.4m (2007: £0.1m)

Within this business we provide consultancy services in respect of town and country planning, building, landscape and urban design, transport planning and highway design, environmental assessment and energy use and efficiency. The growth in this part of the Group was encouraging with the operating margin remaining high. We remain leaders in this market in the UK, Ireland, and Western Australia, acting for blue chip clients in both the public and private sectors.

Our planning business is also able to assist clients in other parts of the Group secure planning permissions for capital projects, for example, in the energy and water sectors. This is particularly marked in Australia, but is increasingly the case in the UK, Ireland and the US, where JD Consulting, acquired in December 2007 and located in Texas, is currently advising upon a proposal for one of the world's largest onshore wind farms.

In the UK our ability to advise upon the full range of issues relevant to the development of sustainable communities and secure planning permission for large complex schemes remains attractive to clients. Our ability to handle complex sustainability issues helps us to secure this work and execute it at the high level needed to achieve the permissions required by our clients. In consequence, we continue to work on some of the largest regeneration and infrastructure projects; these provide long term activity for us. We are also involved in both the waste and minerals sectors, in which securing planning permission has become far more complex. Current economic circumstances are affecting the volume of housebuilding and other speculative property development undertaken by some of our clients. The limited effect of this on our UK Planning and Development business is being mitigated by opportunities in new markets which continue to develop, particularly in respect of securing planning permissions for energy infrastructure investment. This involves projects such as LNG plants, new nuclear power stations, renewable energy schemes and gas storage facilities. We also benefit from the need to integrate energy efficiency into planning proposals and development schemes. The acquisition of RW Gregory increased our capability in this field materially.

Our activities in the planning and development market in Australia showed good growth. The long term potential of this market has encouraged us to develop a plan to grow these activities substantially. We are now seeing the benefits of this and expect our Australian business to continue to grow in the coming years.

The Irish Government maintains its commitment to invest in ambitious plans for infrastructure development, despite a slowdown in the economy. Implementing The National Development Plan 2007-2013 which targets "Economic Infrastructure" remains a priority, with €54.6bn identified for expenditure on roads, public transport, water, airports and energy infrastructure. We benefit significantly from this investment and, as in the UK, our sustainability credentials give us a competitive advantage.

Environmental Management

2008 2007
Fee income (£m) 46.3 34.6 +34%
Segment profit* (£m) 6.8 4.3 +57%
Margin 14.8% 12.6%
* before amortisation of acquired intangible assets of £0.5m (2007: nil)

This business provides consultancy services in respect of health, safety, risk and environmental management in the UK and the Netherlands and the management of water resources in the UK. The results in the first half were excellent. Through the acquisition of MetOcean in Australia in the second half of 2007, we extended both the range of our services and geographical reach of the business. The acquisitions of RBA and Geocet increased our capability to provide oil and gas clients with health, safety and environmental expertise directly relevant to their activities. Our growing health, safety and risk management involvement with the oil and gas and nuclear industries is becoming strategically important. Our Dutch business performed well; the acquisition of Kraan signals our increasing confidence in both the market and prospects for our business there.

RPS's strength in the water industry, coupled with our environmental credentials, position us well to advise our clients in the water sector on a broad range of issues. As a result our business servicing the UK water industry, which had a good year in 2007, continued this performance into 2008. We are working on long term commissions for the majority of the privatised water companies, as well as undertaking significant work in Scotland. The UK markets in health and safety and occupational health and hygiene have generally remained strong, driven by increasing statutory obligations. Although some clients in this market are confronted with economic uncertainty, awareness of the importance of managing these matters more carefully has heightened.

Funding

The conversion of profit into cash continued at a good level and our balance sheet remains strong. Net borrowings at 30 June were £38.8 million.

Following the seven acquisitions made in the period the book value of deferred consideration and outstanding loan notes related to acquisitions amounts to £4.7 million falling due for settlement in cash during the second half of 2008, £13.8 million in 2009, £7.2 million in 2010 and £1.1 million in 2011.

We have increased our committed bank facilities from £70 million to £100 million and extended them until 2013, on broadly unchanged terms. Our cash generation, in conjunction with these facilities and an ability to use equity in transactions, means that we are able to continue our acquisition strategy.

Prospects

Balancing the way energy is secured from various sources, managing its use to limit environmental damage, whilst planning further economic growth and urban development has become a fundamental challenge of this century. It is one which RPS is extremely well positioned to advise upon and will enable us to build further momentum and provides opportunities for all our businesses. The Board believes these opportunities will continue to outweigh the adverse consequences of economic turbulence.

Our continued investment in the energy sector has enabled us to internationalise our activities in a significant way. As a result, we now have strong businesses in the USA, Canada and Australia as well as substantial contracts relating to oil and gas exploration and production in many parts of the developing world, including India, Russia and China.

We have successfully begun the process of expanding our activities in Australia into planning and development and environmental management. We are confident these can be extended substantially. Australia is also a good base from which to develop our activities in Asia. Opportunities also exist to develop the full range of our activities in both the USA and Canada.

The integrated services offered by our three successful businesses mean we remain well positioned to assist our clients deal with the related challenges of adapting to climate change and the need to access sustainable, safe and secure sources of energy.

RPS is diverse and resilient with a proven business model. Our broad range of services, coupled with our expanding geographic footprint, gives the Board continuing confidence about prospects for the Group.

Board of Directors
RPS Group plc
31 July 2008

 

Condensed consolidated income statement

Notes Six months
ended
30 June
Six months
ended
30 June
Year
ended 31
December
2008 2007 2007
unaudited unaudited audited
£000's £000's £000's
Revenue 3 225,867 173,908 362,674
Recharged expenses 3 (35,944) (29,542) (57,566)
Fee income 3 189,923 144,366 305,108
Operating profit 3 29,526 23,024 47,975
Finance costs (2,299) (1,755) (3,792)
Finance income 172 132 296
Profit before tax and amortisation
of acquired intangibles
28,536 21,607 45,010
Amortisation of acquired intangibles (1,137) (206) (531)
Profit before tax 27,399 21,401 44,479
Tax expense 4 (8,302) (6,588) (13,569)
Profit for the period attributable to
equity holders of the parent
19,097 14,813 30,910
Basic earnings per share (pence) 5 9.10 7.24 14.99
Diluted earnings per share (pence) 5 8.97 7.07 14.78
Basic earnings per share before
amortisation of acquired
intangibles (pence)
5 9.49 7.31 15.17
Diluted earnings per share before
amortisation of acquired
intangibles (pence)
5 9.36 7.14 14.95

 

Condensed consolidated statement of recognised income and expense

Six months
ended
30 June
Six months
ended
30 June
Year
ended 31
December
2008 2007 2007
unaudited unaudited audited
£000's £000's £000's
Exchange differences 5,839 300 5,787
Tax recognised directly in equity 10 678 743
Income recognised directly in equity 5,849 978 6,530
Profit for the period 19,097 14,813 30,910
Total recognised income for the
period attributable to equity
holders of the parent
24,946 15,791 37,440

 

Condensed consolidated balance sheet

As at
30 June
As at
30 June
As at
31 December
2008 2007 2007
unaudited unaudited audited
Notes £000's £000's £000's
Assets
Non-current assets
Intangible assets 245,828 187,019 210,839
Property, plant and equipment 6 22,779 19,202 21,706
Deferred tax assets - 2,401 114
268,607 208,622 232,659
Current assets
Trade and other receivables 146.462 109,921 119,504
Cash at bank 13,584 10,052 10,884
160,046 119,973 130,388
Liabilities
Current liabilities
Borrowings 204 262 174
Deferred consideration 12,753 9,745 8,939
Trade and other payables 78,842 60,351 62,750
Corporation tax liabilities 6,907 4,786 3,434
Provisions 1,279 332 595
99,985 75,476 75,892
Net current assets 60,061 44,497 54,496
Non-current liabilities
Borrowings 52,171 37,156 43,340
Deferred consideration 15,293 9,350 10,453
Other creditors 1,511 330 1,320
Deferred tax liabilities 3,844 - -
Provisions 3,623 1,564 4,508
76,442 48,400 59,621
Net assets 252,226 204,719 227,534
Equity
Share capital 9 6,359 6,217 6,319
Share premium 9 94,337 91,561 93,225
Other reserves 10 24,804 13,918 17,516
Retained earnings 9 126,726 93,023 110,474
Total shareholders' equity 9 252,226 204,719 227,534

 

Condensed consolidated cash flow statement

Six months
ended 30
June
Six months
ended 30
June
Year
ended 31 December
2008 2007 2007
Notes unaudited
£000's
unaudited
£000's
audited
£000's
Cash generated from operations 12 28,993 21,919 45,393
Interest paid (2,009) (1,888) (3,967)
Interest received 172 132 296
Income taxes paid (5,513) (5,139) (12,925)
Net cash from operating activities 21,643 15,024 28,797
Cash flows from investing activities
Purchases of subsidiaries net of cash acquired (17,555) (5,698) (15,758)
Deferred consideration (4,539) (3,665) (10,846)
Purchase of property, plant and equipment (3,338) (2,785) (5,811)
Sale of property, plant and equipment 1,112 49 4,239
Net cash used in investing activities (24,320) (12,099) (28,176)
Cash flows from financing activities
Proceeds from issue of share capital 171 1,608 1,730
Proceeds from sale of own shares - 1,293 1,293
Proceeds from bank borrowings 8,366 (2,635) 3,001
Payment of finance lease liabilities (98) (109) (149)
Dividends paid (3,498) (2,967) (6,144)
Payment of pre-acquisition dividend (115) - -
Net cash used in financing activities 4,826 (2,810) (269)
Net increase in cash and cash equivalents 2,149 115 352
Cash and cash equivalents at beginning of period 10,884 9,805 9,805
Effect of exchange rate fluctuations 551 39 727
Cash and cash equivalents at end of period 12 13,584 9,959 10,884
Cash and cash equivalents comprise:
Cash at bank 13,584 10,052 10,884
Bank overdraft - (93) -
Cash and cash equivalents at end of period 13,584 9,959 10,884

 

Notes to the condensed consolidated financial statements

1. Basis of preparation

RPS Group plc (the "Company") is a company domiciled in England. The condensed consolidated interim financial statements of the Company for the six months ended 30 June 2008 comprise the Company and its subsidiaries (together referred to as the "Group").

The condensed interim financial statements have been prepared using accounting policies set out in the Report and Accounts 2007 and are in accordance with IAS 34. The condensed interim financial statements are unaudited but have been reviewed by the Company's auditors. The results for the year end 31 December 2007 and the balance sheet as at that date are abridged from the Company's Report and Accounts 2007 which have been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not contain references to any matters to which the auditors drew attention by way of emphasis without qualifying the report and did not contain a statement under Section 272(2) or (3) of the Companies Act 1985.

The condensed interim financial statements do not constitute full accounts within the meaning of Section 240 of the Companies Act 1985.

2. Responsibility Statement

The directors confirm that, to the best of their knowledge this condensed set of financial statements has been prepared in accordance with IAS 34 and that this Interim Report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R.

On behalf of the Board

A. S. Hearne G. Young
Chief Executive Group Finance Director

3. Business segments

The Board believes that one of the Group's important strengths is the way in which we deploy our broad range of skills in an integrated way. The success of this part of our strategy results in projects being undertaken in a multi-disciplinary way. In consequence, there are Group activities which could be placed in more than one business segment. This becomes increasingly the case as our energy and international activities grow. The segments currently used to present and analyse the Group's performance are described below. They are kept under review by the Board.

Planning and Development - consultancy services in the UK, Ireland, Australia and the US related to town and country planning, urban design, architecture, transport planning and highway design, environmental impact assessment and provision of water and waste utilities and energy infrastructure.

Environmental Management - consultancy services in the UK, the Netherlands and Australia related to health, safety and risk management, environmental science and the management of water and energy resources.

Energy - the provision of technical consultancy services, on an international basis, to the upstream oil and gas and offshore renewable energy sectors.

Segment results for the six months ended 30 June 2008

Planning &
Development
Environmental
Management
Energy Eliminations Consolidated
£000's £000's £000's £000's £000's
Revenue 98,560 54,105 75,449 (2,247) 225,867
Recharged expenses (17,645) (7,792) (10,507) - (35,944)
Fee Income 80,915 46,313 64,942 (2,247) 189,923
Segment profit 15,057 6,835 12,445 - 34,337
Amortisation (439) (467) (231) - (1,137)
33,200
Unallocated expenses (3,674)
Operating profit 29,526

Segment results for the six months ended 30 June 2007

Planning &
Development
Environmental
Management
Energy Eliminations Consolidated
£000's £000's £000's £000's £000's
Revenue 78,547 40,909 56,585 (2,133) 173,908
Recharged expenses (13,481) (6,328) (9,733) - (29,542)
Fee Income 65,066 34,581 46,852 (2,133) 144,366
Segment profit 12,728 4,345 8,625 - 25,698
Amortisation (146) - (60) - (206)
25,492
Unallocated expenses (2,468)
Operating profit 23,024

4. Income taxes

The Group's consolidated effective tax rate for the six months ended 30 June 2008 was 30.3%, (for the year ended 31 December 2007: 30.5%; for the six months ended 30 June 2007: 30.8%).

5. Earnings per share

The calculations of earnings per share are based on the profit attributable to ordinary shareholders and a weighted average number of ordinary shares outstanding during the period as shown below:

Six months
ended 30 June
Six months
ended
30 June
Year ended
31 Dec
2008 2007 2007
£000's £000's £000's
Profit attributable to ordinary shareholders 19,097 14,813 30,910
000's 000's 000's
Weighted average number of ordinary shares for the purposes of basic earnings per share 209,865 204,592 206,256
Effect of shares to be issued as deferred consideration 505 1,059 92
Effect of employee share schemes 2,412 3,760 2,827
Weighted average number of ordinary shares for the purposes of diluted earnings per share 212,782 209,411 209,175
Basic earning per share (pence) 9.10 7.24 14.99
Diluted earnings per share (pence) 8.97 7.07 14.78

The directors consider that earnings per share before amortisation provides a more meaningful measure of the Group's performance than statutory earnings per share. The calculation of basic and diluted earnings per share before amortisation is based on the weighted average number of ordinary shares outstanding during the year as shown above and the profit attributable to ordinary shareholders before the amortisation on acquired intangible assets and the tax thereon as shown in the table below and the weighted average number of ordinary shares during the period as shown above.

Six months
ended 30 June
2008
Six months
ended 30 June
2007
Year ended
31 Dec
2007
£000's £000's £000's
Profit attributable to ordinary shareholders 19,097 14,813 30,910
Amortisation of acquired intangibles 1,137 206 531
Tax on amortisation of acquired intangibles (318) (62) (159)
Adjusted profit attributable to ordinary shareholders 19,916 14,957 31,282
Basic earnings before per share before amortisation (pence) 9.49 7.31 15.17
Diluted earnings per share before amortisation (pence) 9.36 7.14 14.95

6. Property, plant and equipment

During the six months ended 30 June 2008, the Group acquired assets with a cost of £4,036,000 (six months to 30 June 2007: £3,113,000), which includes £698,000 acquired through business combinations (six months to 30 June 2007: £328,000). Assets with a net book value of £932,000 were disposed of during the six months ended 30 June 2008 (six months ended 30 June 2007: £30,000).

7. Acquisitions

The Group completed the acquisition of seven businesses during the first half of 2008. Each purchase has been accounted for as an acquisition. Prior to completion of the transactions each acquired business kept its own management accounts. Adding the results shown in these accounts to the Group results produces Group revenue for the period of £233,708,000 and Group operating profit before amortisation of acquired intangibles of £30,316,000.

All intangible assets were recognised at their respective fair values. The residual excess over the net assets acquired, including intangible assets, is recognised as goodwill in the financial statements.

Date of Acquisition Place of incorporation Percentage of entity acquired Nature of business acquired
Kraan Consulting Holding BV 6 Feb 2008 The Netherlands 100% of issued share capital Urban planning
consultancy
RW Gregory LLP 12 Mar 2008 UK Assets and certain
liabilities
Engineering
consultancy
WTW and Associates Ltd 17 Mar 2008 UK 100% of issued share capital Oil and gas consultancy
Oceanfix International Ltd 19 Mar 2008 UK 100% of issued share capital Oil and gas consultancy
Land Management Trust
("Koltasz Smith")
27 Mar 2008 Australia Assets and certain
liabilities
Urban planning consultancy
Rudall Blanchard Associates Group Ltd 30 Mar 2008 UK 100% of issued share capital Health and Safety consultancy
The GeoCet Group LLC 18 Apr 2008 USA 100% of issued share capital Environmental consultancy

These businesses have been integrated with other parts of the Group and are no longer managed separately. They share resources, revenues, costs and market opportunities with other parts of the Group and should no longer be considered individual businesses. Their contributions to the revenue and operating profit before amortisation of acquired intangibles to the Group's results for the period, as shown below, reflects those relationships.

Revenue £'000 Operating profit £'000
Kraan Consulting Holding BV 2,723 341
RW Gregory LLP 3,457 442
Oceanfix International Ltd 3,392 402
Land Management Trust 857 191
Rudall Blanchard Group Ltd 1,861 479
The GeoCet Group LLC 779 213

It is impracticable to identify separately the revenue and operating profit contribution of WTW and Associates Ltd for the period since acquisition as this entity has been fully hived up into existing Group operations.

Details of the carrying values of the acquired net assets and the provisional fair values assigned to them by the Group are as follows:

Intangible assets
Customer relationships Order backlog Trade names Other intangibles Property, plant & equipment Cash Other assets Other liabilities Net assets
£000's £000's £000's £000's £000's £000's £000's £000's £000's
Pre acquisition carrying values
Kraan - - - 119 146 (248) 1,695 (955) 757
RWG - - - - 252 2,002 4,147 (4,900) 1,501
WTW - - - - 20 (3) 1,007 (455) 569
Oceanfix - - - - 81 533 2,454 (978) 2,090
LMT - - - - 191 - 701 (313) 579
RBA - - - 21 120 928 1,604 (774) 1,899
Geocet - - - - - 337 611 (774) 174
- - - 140 810 3,549 12,219 (9,149) 7,569
Provisional fair values
Kraan 2,714 - 374 - 124 (248) 1,654 (1,849) 2,769
RWG 2,960 1,080 200 - 252 2,002 4,221 (6,140) 4,575
WTW - 190 - - 19 (3) 1,007 (455) 758
Oceanfix 3,121 148 - - 25 533 2,454 (1,893) 4,388
LMT 550 - 632 - 191 - 701 (644) 1,430
RBA 1,207 107 - - 87 928 1,604 (1,142) 2,791
Geocet - - - - - 337 611 (774) 174
10,552 1,525 1,206 - 698 3,549 12,252 (12,897) 16,885

The fair value adjustments made to the pre acquisition carrying values to determine provisional fair values relate to the alignment of depreciation accounting policies, the identification of intangibles and the deferred tax recognised on the fair value adjustments.

Initial consideration Fair value of deferred consideration
Cash Shares Acquisition expenses Cash Shares Total consideration Net assets acquired Goodwill acquired
£000's £000's £000's £000's £000's £000's £000's £000's
Consideration
Kraan 3,009 - 344 1,720 - 5,073 2,769 2,304
RWG 5,200 1,700 217 3,238 - 10,355 4,575 5,780
WTW 1,344 - 118 468 - 1,930 758 1,172
Oceanfix 4,491 - 163 2,445 - 7,099 4,388 2,711
LMT 1,857 - 290 1,238 - 3,385 1,430 1,955
RBA 3,460 - 162 1,340 1,240 6,202 2,791 3,411
Geocet 590 - 75 554 - 1,219 174 1,045
19,951 1,700 1,369 11,003 1,240 35,263 16,885 18,378

As part of the consideration for RWG, 572,970 ordinary shares of RPS Group plc were allotted to the vendors.

As part of the deferred consideration for RBA, £1,240,000 of ordinary shares of RPS Group plc will be allotted to the vendors.

Goodwill represents the value of the assembled professional workforce acquired with these businesses.

Prior period acquisitions

The Group acquired the entire share capital of APA Petroleum Engineering Inc. in February 2007, acquired the trade, assets and certain liabilities of Safety and Risk Practice Pty Ltd in March 2007 and acquired the entire share capital of Geocon Group Services Ltd, also in March 2007.

At 30 June 2007 and 31 December 2007, the Group allotted provisional fair values to the assets and liabilities acquired as a result of these acquisitions. These provisional fair values have now been finalised. The only adjustment to the acquisitions made in the first half of 2007 has been a credit to net assets of APA Petroleum Engineering Inc. of £159,000 representing an adjustment to the opening tax balances of this entity.

8. Share capital

2008
Number
000's
2008
£000's
2007
Number
000's
2007
£000's
Authorised
Ordinary shares of 3p each at 30 June 240,000 7,200 240,000 7,200
Issued and fully paid
Ordinary shares of 3p each at 1 January 210,632 6,319 205,446 6,163
Issued under employee share schemes 737 23 1,294 39
Issued as acquisition initial consideration 573 17 512 15
At 30 June 211,942 6,359 207,252 6,217

9. Statement of changes in equity

Share capital Share premium Retained earnings Other reserves Total equity
£000's £000's £000's £000's £000's
At 1 January 2007 6,163 89,836 79,828 11,107 186,934
Changes in equity during 2007
Tax recognised directly in equity - - 678 - 678
Exchange differences - - - 300 300
Net income recognised directly in equity - - 678 300 978
Profit for the period - - 14,813 - 14,813
Total recognised income for the period - - 15,491 300 15,791
Issue of new ordinary shares 54 1,725 - 1,418 3,197
Sale of own shares - - 671 622 1,293
Share based payment expense - - - 919 919
Tax on share based payment expense - - - (448) (448)
Dividends - - (2,967) - (2,967)
At 30 June 2007 6,217 91,561 93,023 13,918 204,719
Changes in equity during 2008
At 1 January 2008 6,319 93,225 110,474 17,516 227,534
Tax recognised directly in equity - - 10 - 10
Exchange differences - - - 5,839 5,839
Net income recognised directly in equity - - 10 5,839 5,849
Profit for the period - - 19,097 - 19,097
Total recognised income for the period - - 19,107 5,839 24,946
Issue of new ordinary shares 40 1,112 (705) 1,449 1,896
Share based payment expense - - 1,348 - 1,348
Dividends - - (3,498) - (3,498)
At 30 June 2008 6,359 94,337 126,726 24,804 252,226

10. Other reserves

Merger reserve Employee trust shares Share scheme reserve Shares to be issued Translation reserve Total other reserves
£000's £000's £000's £000's £000's £000's
At 1 January 2007 10,642 (3,042) 4,053 1,997 (2,543) 11,107
Changes in equity during 2007
Exchange differences - - - - 300 300
Issue of new shares 1,572 (154) - - - 1,418
Sale of own shares - 622 - - - 622
Share based payment expense - - 919 - - 919
Tax on share based payment
expense
(448) (448)
At 30 June 2007 12,214 (2,574) 4,524 1,997 (2,243) 13,918
Changes in equity during 2008
At 1 January 2008 16,993 (2,943) - 222 3,244 17,516
Exchange differences - - - - 5,839 5,839
Issue of new shares 1,682 (233) - - - 1,449
At 30 June 2008 18,675 (3,176) - 222 9,083 24,804

11. Dividends

The following dividends were recognised as distributions to equity holders in
the period:

Six months
ended 30 June
2008
£000's
Six months
ended 30 June
2007
£000's
Year Ended
31 December
2007
£000's
Final dividend for 2007 1.66p per share 3,498 - -
Interim dividend for 2007 1.52p per share - - 3,177
Final dividend for 2006 1.44p per share - 2,967 2,967
3,498 2,967 6,144

An interim divided in respect of the six months ended 30 June 2008 of 1.75 pence per share, amounting to a total dividend of £3,712,000 was approved by the Directors of RPS Group plc on 29th July 2008. These condensed consolidated interim financial statements do not reflect this dividend payable.

12. Note to the condensed consolidated cash flow statement

Six months ended
30 June
Six months ended
30 June
Year ended 31 Dec
2008 2007 2007
£000's £000's £000's
Profit before tax 27,399 21,401 44,479
Adjustments for:
Interest payable and similar charges 2,299 1,755 3,792
Interest receivable (172) (132) (296)
Depreciation 2,966 2,244 4,758
Amortisation of acquired intangibles 1,137 206 531
Share based payment expense 1,348 919 2,142
Profit on sale of property, plant and equipment (180) - (3,224)
Provision for dilapidations - - 2,514
Increase in trade and other receivables (11,277) (11,883) (14,018)
Increase in trade and other payables 5,473 7,409 4,715
Cash generated from operations 28,993 21,919 45,393

During the period, the Group increased its loan facilities to £100 million and extended them to 2013.

The table below provides an analysis of net borrowings, comprising cash and cash equivalents, interest bearing bank loans and finance leases, during the six months ended 30 June 2008.

At 1 January 2008 Cash flow Acquisition Foreign exchange At 30 June 2008
£000's £000's £000's £000's £000's
Cash and cash equivalents 10,884 2,149 - 551 13,584
Bank loans (43,346) (8,366) - (520) (52,232)
Finance lease creditor (168) 98 (38) (35) (143)
Net borrowings (32,630) (6,119) (38) (4) (38,791)

13. Principal risks and uncertainties

The principal risks and uncertainties faced by the Group have not changed significantly since the 2007 Report and Accounts was published. The Board keeps under review the potential effect of economic circumstances.

14. Related party transactions

There were no related party transactions required to be disclosed in the period.

15. Forward-looking statements

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 a number of 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.

INDEPENDENT REVIEW REPORT TO RPS GROUP PLC

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half yearly financial report for the six months ended 30 June 2008 which comprise the Condensed Consolidated Income Statement, the Condensed Consolidated Statement of Recognised Income and Expense, the Condensed Consolidated Balance Sheet, the Condensed Consolidated Cash Flow Statement and the related notes.

We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The half-yearly financial report is the responsibility of and has been approved by the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, ‘‘Interim Financial Reporting'', as adopted by the European Union.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Our report has been prepared in accordance with the terms of our engagement to assist the company in meeting its responsibilities in respect to half-yearly financial reporting in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ‘‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity'', issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2008 is not prepared, in all material respects, in accordance with International Accounting Standard 34, as adopted by the European Union, and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

BDO Stoy Hayward LLP
Chartered Accountants and Registered Auditors
55 Baker Street
London
W1U 7EU
31 July 2008

 

2018

Half Year Results for the six months ended 30 June 2008

31 July 2008

RPS Group Plc ("RPS" or "the Group") today announces excellent results for the six months ended 30 June 2008 with profit (before tax and amortisation) up 32% and earnings per share up 30%

2008 2007
Revenue (£m) 225.9 173.9 +30%
Fee income (£m) 189.9 144.4 +32%
Profit before taxation* (£m) 28.5 21.6 +32%
Earnings per share* (basic) (pence) 9.49 7.31 +30%
* before amortisation of acquired intangible assets of £1.1m (2007: £0.2m

Highlights

  • all three segments of the Group substantially increased operating profit
  • excellent conversion of profit into cash
  • the international footprint of the Group continues to extend
  • the acquisition of quality businesses has continued
  • dividend raised 15% to 1.75p (2007: 1.52p)
  • balance sheet remains strong with net bank borrowings at £38.8m (2007: £27.4m)
  • committed bank facilities increased from £70m to £100m and extended to 2013
  • major opportunities for future growth are developing from accelerating concerns about global energy supply and climate change
  • the Board remains confident about the Group's prospects.

Brook Land, Chairman, commenting on the results, said:

"Trading in the first half of 2008 was robust. All parts of the Group grew significantly. Our strategy of supplementing organic growth with the acquisition of quality businesses continued to be successfully implemented. Acquisitions made in 2007 and the first half of 2008 support our growth and further acquisitions are being considered. The Group's balance sheet remains strong.

"The integrated services offered by our three successful businesses mean we remain well positioned to assist our clients deal with the related challenges of adapting to climate change and the need to access sustainable, safe and secure sources of energy.

"RPS is diverse and resilient, with a proven business model. Our broad range of services combined with our expanding geographic footprint, gives the Board continuing confidence about prospects for the Group."

31 July 2008

 

ENQUIRIES
RPS Group plc Today: 020 7457 2020
Dr Alan Hearne, Chief Executive Thereafter: 01235 863206
Gary Young, Finance Director
College Hill
Justine Warren Tel: 020 7457 2020
Matthew Smallwood

 

RPS is an international consultancy providing advice upon the development of natural resources, land and property, the management of the environment and the health and safety of people. We have offices in the UK, Ireland, the Netherlands, North America, Eastern Europe, South East Asia and Australia and undertake projects in many other parts of the world. The Group is a constituent of both the FTSE 250 and FTSE 4 Good Indices.

In order to assist in the reduction of greenhouse gas emissions and eventually reduce global warming, the staff of RPS have set themselves the task of reducing energy consumption by 5% each year, using 2007 as the base. If successful we will halve our (per capita) energy use by 2020.

 

Introduction

RPS is an international consultancy providing advice upon the development of natural resources, land and property, the management of the environment and the health and safety of people.

The Group seeks to ensure continuous improvement in the range and quality of our services and our financial performance by:

  • operating in markets where we can add value to our clients' activities;
  • endeavouring to achieve and maintain leadership in those markets; and
  • making acquisitions of quality businesses in order to extend our expertise and geographical presence.

The Board remains confident that this strategy will continue to offer our staff challenging and rewarding careers, whilst continuing to deliver growth and good returns for our shareholders.

 

Results

Profit (before tax and amortisation of acquired intangibles) was £28.5 million (2007: £21.6 million). Basic earnings per share (before amortisation) were 9.49 pence (2007: 7.31 pence). Cash generated from operations was £29.0 million (2007: £21.9 million). After funding acquisition consideration of £22.1 million, the Group had net borrowings of £38.8 million at 30 June (2007: £27.4 million).

The Board has increased the interim dividend by 15% to 1.75 pence per share (2007: 1.52 pence) payable on 23rd October 2008 to shareholders on the register on 26th September 2008. Our dividend has risen at this rate for a number of years.

Operations and Markets

Energy

2008 2007
Fee income (£m) 64.9 46.9 +39%
Segment profit* (£m) 12.4 8.6 +44%
Margin 19.2% 18.4%
* before amortisation of acquired intangible assets of £0.2m (2007: £0.1m)

We provide consultancy services on an international basis to the oil and gas industries from bases in the UK, USA, Canada, Australia, Malaysia and Singapore. Projects are undertaken in many other countries including China, India, Brazil and Russia. In the UK we also provide advice to the renewables industry. The business continued to perform extremely well, with good organic growth being supplemented by further acquisitions. This reflects both buoyant market conditions, which we expect to continue, as well as our position as a world leader in this sector.

Demand for our services from oil and, increasingly, gas exploration and production companies continues to grow. We see accelerating interest from clients in the combination of the geological, engineering, environmental and safety expertise that we provide. The requirements of the developed world to identify and secure long term supplies of energy, coupled with the increasing energy needs of developing nations, suggest that activity in this market will remain at a high level for the foreseeable future. The acquisition of WTW has expanded our operational capability and Oceanfix has enabled us to become more involved in the planning of survey aspects of offshore construction, another fast growing area.

RPS's reputation within the financial community in respect of determination of oil and gas reserves for reporting purposes, and in support of corporate activity developed encouragingly. The oil and gas companies and their advisors value the breadth and depth of our expertise, including our environmental experience.

Our international profile has helped us to create successful staff recruitment and retention strategies. Rising fee rates have enabled us to increase rewards to our staff, a trend we see continuing. The acquisitions made during the course of 2007 and the first half of this year enhanced our staff base, whilst also enabling us to develop our businesses in North America and Australia.

High oil and gas prices support not only our business in those markets, but also investment in renewable energy. The geological, engineering and environmental skills we have are proving to be of significant value to developers of offshore wind farms and other offshore renewable technologies around the UK coast. Working with the planning and environmental assessment capability we have in our Planning & Development business, our Energy staff have been involved in schemes which account for about 90% of the UK offshore wind farm capacity. Recent policy statements from the UK government are expected to bring forward further significant investment in wind farm development, from which we are likely to benefit.

Planning and Development

2008 2007
Fee income (£m) 80.9 65.1 +24%
Segment profit* (£m) 15.1 12.7 +18%
Margin 18.6% 19.6%
* before amortisation of acquired intangible assets of £0.4m (2007: £0.1m)

Within this business we provide consultancy services in respect of town and country planning, building, landscape and urban design, transport planning and highway design, environmental assessment and energy use and efficiency. The growth in this part of the Group was encouraging with the operating margin remaining high. We remain leaders in this market in the UK, Ireland, and Western Australia, acting for blue chip clients in both the public and private sectors.

Our planning business is also able to assist clients in other parts of the Group secure planning permissions for capital projects, for example, in the energy and water sectors. This is particularly marked in Australia, but is increasingly the case in the UK, Ireland and the US, where JD Consulting, acquired in December 2007 and located in Texas, is currently advising upon a proposal for one of the world's largest onshore wind farms.

In the UK our ability to advise upon the full range of issues relevant to the development of sustainable communities and secure planning permission for large complex schemes remains attractive to clients. Our ability to handle complex sustainability issues helps us to secure this work and execute it at the high level needed to achieve the permissions required by our clients. In consequence, we continue to work on some of the largest regeneration and infrastructure projects; these provide long term activity for us. We are also involved in both the waste and minerals sectors, in which securing planning permission has become far more complex. Current economic circumstances are affecting the volume of housebuilding and other speculative property development undertaken by some of our clients. The limited effect of this on our UK Planning and Development business is being mitigated by opportunities in new markets which continue to develop, particularly in respect of securing planning permissions for energy infrastructure investment. This involves projects such as LNG plants, new nuclear power stations, renewable energy schemes and gas storage facilities. We also benefit from the need to integrate energy efficiency into planning proposals and development schemes. The acquisition of RW Gregory increased our capability in this field materially.

Our activities in the planning and development market in Australia showed good growth. The long term potential of this market has encouraged us to develop a plan to grow these activities substantially. We are now seeing the benefits of this and expect our Australian business to continue to grow in the coming years.

The Irish Government maintains its commitment to invest in ambitious plans for infrastructure development, despite a slowdown in the economy. Implementing The National Development Plan 2007-2013 which targets "Economic Infrastructure" remains a priority, with €54.6bn identified for expenditure on roads, public transport, water, airports and energy infrastructure. We benefit significantly from this investment and, as in the UK, our sustainability credentials give us a competitive advantage.

Environmental Management

2008 2007
Fee income (£m) 46.3 34.6 +34%
Segment profit* (£m) 6.8 4.3 +57%
Margin 14.8% 12.6%
* before amortisation of acquired intangible assets of £0.5m (2007: nil)

This business provides consultancy services in respect of health, safety, risk and environmental management in the UK and the Netherlands and the management of water resources in the UK. The results in the first half were excellent. Through the acquisition of MetOcean in Australia in the second half of 2007, we extended both the range of our services and geographical reach of the business. The acquisitions of RBA and Geocet increased our capability to provide oil and gas clients with health, safety and environmental expertise directly relevant to their activities. Our growing health, safety and risk management involvement with the oil and gas and nuclear industries is becoming strategically important. Our Dutch business performed well; the acquisition of Kraan signals our increasing confidence in both the market and prospects for our business there.

RPS's strength in the water industry, coupled with our environmental credentials, position us well to advise our clients in the water sector on a broad range of issues. As a result our business servicing the UK water industry, which had a good year in 2007, continued this performance into 2008. We are working on long term commissions for the majority of the privatised water companies, as well as undertaking significant work in Scotland. The UK markets in health and safety and occupational health and hygiene have generally remained strong, driven by increasing statutory obligations. Although some clients in this market are confronted with economic uncertainty, awareness of the importance of managing these matters more carefully has heightened.

Funding

The conversion of profit into cash continued at a good level and our balance sheet remains strong. Net borrowings at 30 June were £38.8 million.

Following the seven acquisitions made in the period the book value of deferred consideration and outstanding loan notes related to acquisitions amounts to £4.7 million falling due for settlement in cash during the second half of 2008, £13.8 million in 2009, £7.2 million in 2010 and £1.1 million in 2011.

We have increased our committed bank facilities from £70 million to £100 million and extended them until 2013, on broadly unchanged terms. Our cash generation, in conjunction with these facilities and an ability to use equity in transactions, means that we are able to continue our acquisition strategy.

Prospects

Balancing the way energy is secured from various sources, managing its use to limit environmental damage, whilst planning further economic growth and urban development has become a fundamental challenge of this century. It is one which RPS is extremely well positioned to advise upon and will enable us to build further momentum and provides opportunities for all our businesses. The Board believes these opportunities will continue to outweigh the adverse consequences of economic turbulence.

Our continued investment in the energy sector has enabled us to internationalise our activities in a significant way. As a result, we now have strong businesses in the USA, Canada and Australia as well as substantial contracts relating to oil and gas exploration and production in many parts of the developing world, including India, Russia and China.

We have successfully begun the process of expanding our activities in Australia into planning and development and environmental management. We are confident these can be extended substantially. Australia is also a good base from which to develop our activities in Asia. Opportunities also exist to develop the full range of our activities in both the USA and Canada.

The integrated services offered by our three successful businesses mean we remain well positioned to assist our clients deal with the related challenges of adapting to climate change and the need to access sustainable, safe and secure sources of energy.

RPS is diverse and resilient with a proven business model. Our broad range of services, coupled with our expanding geographic footprint, gives the Board continuing confidence about prospects for the Group.

Board of Directors
RPS Group plc
31 July 2008

 

Condensed consolidated income statement

Notes Six months
ended
30 June
Six months
ended
30 June
Year
ended 31
December
2008 2007 2007
unaudited unaudited audited
£000's £000's £000's
Revenue 3 225,867 173,908 362,674
Recharged expenses 3 (35,944) (29,542) (57,566)
Fee income 3 189,923 144,366 305,108
Operating profit 3 29,526 23,024 47,975
Finance costs (2,299) (1,755) (3,792)
Finance income 172 132 296
Profit before tax and amortisation
of acquired intangibles
28,536 21,607 45,010
Amortisation of acquired intangibles (1,137) (206) (531)
Profit before tax 27,399 21,401 44,479
Tax expense 4 (8,302) (6,588) (13,569)
Profit for the period attributable to
equity holders of the parent
19,097 14,813 30,910
Basic earnings per share (pence) 5 9.10 7.24 14.99
Diluted earnings per share (pence) 5 8.97 7.07 14.78
Basic earnings per share before
amortisation of acquired
intangibles (pence)
5 9.49 7.31 15.17
Diluted earnings per share before
amortisation of acquired
intangibles (pence)
5 9.36 7.14 14.95

 

Condensed consolidated statement of recognised income and expense

Six months
ended
30 June
Six months
ended
30 June
Year
ended 31
December
2008 2007 2007
unaudited unaudited audited
£000's £000's £000's
Exchange differences 5,839 300 5,787
Tax recognised directly in equity 10 678 743
Income recognised directly in equity 5,849 978 6,530
Profit for the period 19,097 14,813 30,910
Total recognised income for the
period attributable to equity
holders of the parent
24,946 15,791 37,440

 

Condensed consolidated balance sheet

As at
30 June
As at
30 June
As at
31 December
2008 2007 2007
unaudited unaudited audited
Notes £000's £000's £000's
Assets
Non-current assets
Intangible assets 245,828 187,019 210,839
Property, plant and equipment 6 22,779 19,202 21,706
Deferred tax assets - 2,401 114
268,607 208,622 232,659
Current assets
Trade and other receivables 146.462 109,921 119,504
Cash at bank 13,584 10,052 10,884
160,046 119,973 130,388
Liabilities
Current liabilities
Borrowings 204 262 174
Deferred consideration 12,753 9,745 8,939
Trade and other payables 78,842 60,351 62,750
Corporation tax liabilities 6,907 4,786 3,434
Provisions 1,279 332 595
99,985 75,476 75,892
Net current assets 60,061 44,497 54,496
Non-current liabilities
Borrowings 52,171 37,156 43,340
Deferred consideration 15,293 9,350 10,453
Other creditors 1,511 330 1,320
Deferred tax liabilities 3,844 - -
Provisions 3,623 1,564 4,508
76,442 48,400 59,621
Net assets 252,226 204,719 227,534
Equity
Share capital 9 6,359 6,217 6,319
Share premium 9 94,337 91,561 93,225
Other reserves 10 24,804 13,918 17,516
Retained earnings 9 126,726 93,023 110,474
Total shareholders' equity 9 252,226 204,719 227,534

 

Condensed consolidated cash flow statement

Six months
ended 30
June
Six months
ended 30
June
Year
ended 31 December
2008 2007 2007
Notes unaudited
£000's
unaudited
£000's
audited
£000's
Cash generated from operations 12 28,993 21,919 45,393
Interest paid (2,009) (1,888) (3,967)
Interest received 172 132 296
Income taxes paid (5,513) (5,139) (12,925)
Net cash from operating activities 21,643 15,024 28,797
Cash flows from investing activities
Purchases of subsidiaries net of cash acquired (17,555) (5,698) (15,758)
Deferred consideration (4,539) (3,665) (10,846)
Purchase of property, plant and equipment (3,338) (2,785) (5,811)
Sale of property, plant and equipment 1,112 49 4,239
Net cash used in investing activities (24,320) (12,099) (28,176)
Cash flows from financing activities
Proceeds from issue of share capital 171 1,608 1,730
Proceeds from sale of own shares - 1,293 1,293
Proceeds from bank borrowings 8,366 (2,635) 3,001
Payment of finance lease liabilities (98) (109) (149)
Dividends paid (3,498) (2,967) (6,144)
Payment of pre-acquisition dividend (115) - -
Net cash used in financing activities 4,826 (2,810) (269)
Net increase in cash and cash equivalents 2,149 115 352
Cash and cash equivalents at beginning of period 10,884 9,805 9,805
Effect of exchange rate fluctuations 551 39 727
Cash and cash equivalents at end of period 12 13,584 9,959 10,884
Cash and cash equivalents comprise:
Cash at bank 13,584 10,052 10,884
Bank overdraft - (93) -
Cash and cash equivalents at end of period 13,584 9,959 10,884

 

Notes to the condensed consolidated financial statements

1. Basis of preparation

RPS Group plc (the "Company") is a company domiciled in England. The condensed consolidated interim financial statements of the Company for the six months ended 30 June 2008 comprise the Company and its subsidiaries (together referred to as the "Group").

The condensed interim financial statements have been prepared using accounting policies set out in the Report and Accounts 2007 and are in accordance with IAS 34. The condensed interim financial statements are unaudited but have been reviewed by the Company's auditors. The results for the year end 31 December 2007 and the balance sheet as at that date are abridged from the Company's Report and Accounts 2007 which have been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not contain references to any matters to which the auditors drew attention by way of emphasis without qualifying the report and did not contain a statement under Section 272(2) or (3) of the Companies Act 1985.

The condensed interim financial statements do not constitute full accounts within the meaning of Section 240 of the Companies Act 1985.

2. Responsibility Statement

The directors confirm that, to the best of their knowledge this condensed set of financial statements has been prepared in accordance with IAS 34 and that this Interim Report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R.

On behalf of the Board

A. S. Hearne G. Young
Chief Executive Group Finance Director

3. Business segments

The Board believes that one of the Group's important strengths is the way in which we deploy our broad range of skills in an integrated way. The success of this part of our strategy results in projects being undertaken in a multi-disciplinary way. In consequence, there are Group activities which could be placed in more than one business segment. This becomes increasingly the case as our energy and international activities grow. The segments currently used to present and analyse the Group's performance are described below. They are kept under review by the Board.

Planning and Development - consultancy services in the UK, Ireland, Australia and the US related to town and country planning, urban design, architecture, transport planning and highway design, environmental impact assessment and provision of water and waste utilities and energy infrastructure.

Environmental Management - consultancy services in the UK, the Netherlands and Australia related to health, safety and risk management, environmental science and the management of water and energy resources.

Energy - the provision of technical consultancy services, on an international basis, to the upstream oil and gas and offshore renewable energy sectors.

Segment results for the six months ended 30 June 2008

Planning &
Development
Environmental
Management
Energy Eliminations Consolidated
£000's £000's £000's £000's £000's
Revenue 98,560 54,105 75,449 (2,247) 225,867
Recharged expenses (17,645) (7,792) (10,507) - (35,944)
Fee Income 80,915 46,313 64,942 (2,247) 189,923
Segment profit 15,057 6,835 12,445 - 34,337
Amortisation (439) (467) (231) - (1,137)
33,200
Unallocated expenses (3,674)
Operating profit 29,526

Segment results for the six months ended 30 June 2007

Planning &
Development
Environmental
Management
Energy Eliminations Consolidated
£000's £000's £000's £000's £000's
Revenue 78,547 40,909 56,585 (2,133) 173,908
Recharged expenses (13,481) (6,328) (9,733) - (29,542)
Fee Income 65,066 34,581 46,852 (2,133) 144,366
Segment profit 12,728 4,345 8,625 - 25,698
Amortisation (146) - (60) - (206)
25,492
Unallocated expenses (2,468)
Operating profit 23,024

4. Income taxes

The Group's consolidated effective tax rate for the six months ended 30 June 2008 was 30.3%, (for the year ended 31 December 2007: 30.5%; for the six months ended 30 June 2007: 30.8%).

5. Earnings per share

The calculations of earnings per share are based on the profit attributable to ordinary shareholders and a weighted average number of ordinary shares outstanding during the period as shown below:

Six months
ended 30 June
Six months
ended
30 June
Year ended
31 Dec
2008 2007 2007
£000's £000's £000's
Profit attributable to ordinary shareholders 19,097 14,813 30,910
000's 000's 000's
Weighted average number of ordinary shares for the purposes of basic earnings per share 209,865 204,592 206,256
Effect of shares to be issued as deferred consideration 505 1,059 92
Effect of employee share schemes 2,412 3,760 2,827
Weighted average number of ordinary shares for the purposes of diluted earnings per share 212,782 209,411 209,175
Basic earning per share (pence) 9.10 7.24 14.99
Diluted earnings per share (pence) 8.97 7.07 14.78

The directors consider that earnings per share before amortisation provides a more meaningful measure of the Group's performance than statutory earnings per share. The calculation of basic and diluted earnings per share before amortisation is based on the weighted average number of ordinary shares outstanding during the year as shown above and the profit attributable to ordinary shareholders before the amortisation on acquired intangible assets and the tax thereon as shown in the table below and the weighted average number of ordinary shares during the period as shown above.

Six months
ended 30 June
2008
Six months
ended 30 June
2007
Year ended
31 Dec
2007
£000's £000's £000's
Profit attributable to ordinary shareholders 19,097 14,813 30,910
Amortisation of acquired intangibles 1,137 206 531
Tax on amortisation of acquired intangibles (318) (62) (159)
Adjusted profit attributable to ordinary shareholders 19,916 14,957 31,282
Basic earnings before per share before amortisation (pence) 9.49 7.31 15.17
Diluted earnings per share before amortisation (pence) 9.36 7.14 14.95

6. Property, plant and equipment

During the six months ended 30 June 2008, the Group acquired assets with a cost of £4,036,000 (six months to 30 June 2007: £3,113,000), which includes £698,000 acquired through business combinations (six months to 30 June 2007: £328,000). Assets with a net book value of £932,000 were disposed of during the six months ended 30 June 2008 (six months ended 30 June 2007: £30,000).

7. Acquisitions

The Group completed the acquisition of seven businesses during the first half of 2008. Each purchase has been accounted for as an acquisition. Prior to completion of the transactions each acquired business kept its own management accounts. Adding the results shown in these accounts to the Group results produces Group revenue for the period of £233,708,000 and Group operating profit before amortisation of acquired intangibles of £30,316,000.

All intangible assets were recognised at their respective fair values. The residual excess over the net assets acquired, including intangible assets, is recognised as goodwill in the financial statements.

Date of Acquisition Place of incorporation Percentage of entity acquired Nature of business acquired
Kraan Consulting Holding BV 6 Feb 2008 The Netherlands 100% of issued share capital Urban planning
consultancy
RW Gregory LLP 12 Mar 2008 UK Assets and certain
liabilities
Engineering
consultancy
WTW and Associates Ltd 17 Mar 2008 UK 100% of issued share capital Oil and gas consultancy
Oceanfix International Ltd 19 Mar 2008 UK 100% of issued share capital Oil and gas consultancy
Land Management Trust
("Koltasz Smith")
27 Mar 2008 Australia Assets and certain
liabilities
Urban planning consultancy
Rudall Blanchard Associates Group Ltd 30 Mar 2008 UK 100% of issued share capital Health and Safety consultancy
The GeoCet Group LLC 18 Apr 2008 USA 100% of issued share capital Environmental consultancy

These businesses have been integrated with other parts of the Group and are no longer managed separately. They share resources, revenues, costs and market opportunities with other parts of the Group and should no longer be considered individual businesses. Their contributions to the revenue and operating profit before amortisation of acquired intangibles to the Group's results for the period, as shown below, reflects those relationships.

Revenue £'000 Operating profit £'000
Kraan Consulting Holding BV 2,723 341
RW Gregory LLP 3,457 442
Oceanfix International Ltd 3,392 402
Land Management Trust 857 191
Rudall Blanchard Group Ltd 1,861 479
The GeoCet Group LLC 779 213

It is impracticable to identify separately the revenue and operating profit contribution of WTW and Associates Ltd for the period since acquisition as this entity has been fully hived up into existing Group operations.

Details of the carrying values of the acquired net assets and the provisional fair values assigned to them by the Group are as follows:

Intangible assets
Customer relationships Order backlog Trade names Other intangibles Property, plant & equipment Cash Other assets Other liabilities Net assets
£000's £000's £000's £000's £000's £000's £000's £000's £000's
Pre acquisition carrying values
Kraan - - - 119 146 (248) 1,695 (955) 757
RWG - - - - 252 2,002 4,147 (4,900) 1,501
WTW - - - - 20 (3) 1,007 (455) 569
Oceanfix - - - - 81 533 2,454 (978) 2,090
LMT - - - - 191 - 701 (313) 579
RBA - - - 21 120 928 1,604 (774) 1,899
Geocet - - - - - 337 611 (774) 174
- - - 140 810 3,549 12,219 (9,149) 7,569
Provisional fair values
Kraan 2,714 - 374 - 124 (248) 1,654 (1,849) 2,769
RWG 2,960 1,080 200 - 252 2,002 4,221 (6,140) 4,575
WTW - 190 - - 19 (3) 1,007 (455) 758
Oceanfix 3,121 148 - - 25 533 2,454 (1,893) 4,388
LMT 550 - 632 - 191 - 701 (644) 1,430
RBA 1,207 107 - - 87 928 1,604 (1,142) 2,791
Geocet - - - - - 337 611 (774) 174
10,552 1,525 1,206 - 698 3,549 12,252 (12,897) 16,885

The fair value adjustments made to the pre acquisition carrying values to determine provisional fair values relate to the alignment of depreciation accounting policies, the identification of intangibles and the deferred tax recognised on the fair value adjustments.

Initial consideration Fair value of deferred consideration
Cash Shares Acquisition expenses Cash Shares Total consideration Net assets acquired Goodwill acquired
£000's £000's £000's £000's £000's £000's £000's £000's
Consideration
Kraan 3,009 - 344 1,720 - 5,073 2,769 2,304
RWG 5,200 1,700 217 3,238 - 10,355 4,575 5,780
WTW 1,344 - 118 468 - 1,930 758 1,172
Oceanfix 4,491 - 163 2,445 - 7,099 4,388 2,711
LMT 1,857 - 290 1,238 - 3,385 1,430 1,955
RBA 3,460 - 162 1,340 1,240 6,202 2,791 3,411
Geocet 590 - 75 554 - 1,219 174 1,045
19,951 1,700 1,369 11,003 1,240 35,263 16,885 18,378

As part of the consideration for RWG, 572,970 ordinary shares of RPS Group plc were allotted to the vendors.

As part of the deferred consideration for RBA, £1,240,000 of ordinary shares of RPS Group plc will be allotted to the vendors.

Goodwill represents the value of the assembled professional workforce acquired with these businesses.

Prior period acquisitions

The Group acquired the entire share capital of APA Petroleum Engineering Inc. in February 2007, acquired the trade, assets and certain liabilities of Safety and Risk Practice Pty Ltd in March 2007 and acquired the entire share capital of Geocon Group Services Ltd, also in March 2007.

At 30 June 2007 and 31 December 2007, the Group allotted provisional fair values to the assets and liabilities acquired as a result of these acquisitions. These provisional fair values have now been finalised. The only adjustment to the acquisitions made in the first half of 2007 has been a credit to net assets of APA Petroleum Engineering Inc. of £159,000 representing an adjustment to the opening tax balances of this entity.

8. Share capital

2008
Number
000's
2008
£000's
2007
Number
000's
2007
£000's
Authorised
Ordinary shares of 3p each at 30 June 240,000 7,200 240,000 7,200
Issued and fully paid
Ordinary shares of 3p each at 1 January 210,632 6,319 205,446 6,163
Issued under employee share schemes 737 23 1,294 39
Issued as acquisition initial consideration 573 17 512 15
At 30 June 211,942 6,359 207,252 6,217

9. Statement of changes in equity

Share capital Share premium Retained earnings Other reserves Total equity
£000's £000's £000's £000's £000's
At 1 January 2007 6,163 89,836 79,828 11,107 186,934
Changes in equity during 2007
Tax recognised directly in equity - - 678 - 678
Exchange differences - - - 300 300
Net income recognised directly in equity - - 678 300 978
Profit for the period - - 14,813 - 14,813
Total recognised income for the period - - 15,491 300 15,791
Issue of new ordinary shares 54 1,725 - 1,418 3,197
Sale of own shares - - 671 622 1,293
Share based payment expense - - - 919 919
Tax on share based payment expense - - - (448) (448)
Dividends - - (2,967) - (2,967)
At 30 June 2007 6,217 91,561 93,023 13,918 204,719
Changes in equity during 2008
At 1 January 2008 6,319 93,225 110,474 17,516 227,534
Tax recognised directly in equity - - 10 - 10
Exchange differences - - - 5,839 5,839
Net income recognised directly in equity - - 10 5,839 5,849
Profit for the period - - 19,097 - 19,097
Total recognised income for the period - - 19,107 5,839 24,946
Issue of new ordinary shares 40 1,112 (705) 1,449 1,896
Share based payment expense - - 1,348 - 1,348
Dividends - - (3,498) - (3,498)
At 30 June 2008 6,359 94,337 126,726 24,804 252,226

10. Other reserves

Merger reserve Employee trust shares Share scheme reserve Shares to be issued Translation reserve Total other reserves
£000's £000's £000's £000's £000's £000's
At 1 January 2007 10,642 (3,042) 4,053 1,997 (2,543) 11,107
Changes in equity during 2007
Exchange differences - - - - 300 300
Issue of new shares 1,572 (154) - - - 1,418
Sale of own shares - 622 - - - 622
Share based payment expense - - 919 - - 919
Tax on share based payment
expense
(448) (448)
At 30 June 2007 12,214 (2,574) 4,524 1,997 (2,243) 13,918
Changes in equity during 2008
At 1 January 2008 16,993 (2,943) - 222 3,244 17,516
Exchange differences - - - - 5,839 5,839
Issue of new shares 1,682 (233) - - - 1,449
At 30 June 2008 18,675 (3,176) - 222 9,083 24,804

11. Dividends

The following dividends were recognised as distributions to equity holders in
the period:

Six months
ended 30 June
2008
£000's
Six months
ended 30 June
2007
£000's
Year Ended
31 December
2007
£000's
Final dividend for 2007 1.66p per share 3,498 - -
Interim dividend for 2007 1.52p per share - - 3,177
Final dividend for 2006 1.44p per share - 2,967 2,967
3,498 2,967 6,144

An interim divided in respect of the six months ended 30 June 2008 of 1.75 pence per share, amounting to a total dividend of £3,712,000 was approved by the Directors of RPS Group plc on 29th July 2008. These condensed consolidated interim financial statements do not reflect this dividend payable.

12. Note to the condensed consolidated cash flow statement

Six months ended
30 June
Six months ended
30 June
Year ended 31 Dec
2008 2007 2007
£000's £000's £000's
Profit before tax 27,399 21,401 44,479
Adjustments for:
Interest payable and similar charges 2,299 1,755 3,792
Interest receivable (172) (132) (296)
Depreciation 2,966 2,244 4,758
Amortisation of acquired intangibles 1,137 206 531
Share based payment expense 1,348 919 2,142
Profit on sale of property, plant and equipment (180) - (3,224)
Provision for dilapidations - - 2,514
Increase in trade and other receivables (11,277) (11,883) (14,018)
Increase in trade and other payables 5,473 7,409 4,715
Cash generated from operations 28,993 21,919 45,393

During the period, the Group increased its loan facilities to £100 million and extended them to 2013.

The table below provides an analysis of net borrowings, comprising cash and cash equivalents, interest bearing bank loans and finance leases, during the six months ended 30 June 2008.

At 1 January 2008 Cash flow Acquisition Foreign exchange At 30 June 2008
£000's £000's £000's £000's £000's
Cash and cash equivalents 10,884 2,149 - 551 13,584
Bank loans (43,346) (8,366) - (520) (52,232)
Finance lease creditor (168) 98 (38) (35) (143)
Net borrowings (32,630) (6,119) (38) (4) (38,791)

13. Principal risks and uncertainties

The principal risks and uncertainties faced by the Group have not changed significantly since the 2007 Report and Accounts was published. The Board keeps under review the potential effect of economic circumstances.

14. Related party transactions

There were no related party transactions required to be disclosed in the period.

15. Forward-looking statements

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 a number of 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.

INDEPENDENT REVIEW REPORT TO RPS GROUP PLC

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half yearly financial report for the six months ended 30 June 2008 which comprise the Condensed Consolidated Income Statement, the Condensed Consolidated Statement of Recognised Income and Expense, the Condensed Consolidated Balance Sheet, the Condensed Consolidated Cash Flow Statement and the related notes.

We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The half-yearly financial report is the responsibility of and has been approved by the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, ‘‘Interim Financial Reporting'', as adopted by the European Union.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Our report has been prepared in accordance with the terms of our engagement to assist the company in meeting its responsibilities in respect to half-yearly financial reporting in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ‘‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity'', issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2008 is not prepared, in all material respects, in accordance with International Accounting Standard 34, as adopted by the European Union, and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

BDO Stoy Hayward LLP
Chartered Accountants and Registered Auditors
55 Baker Street
London
W1U 7EU
31 July 2008

 

2017

Half Year Results for the six months ended 30 June 2008

31 July 2008

RPS Group Plc ("RPS" or "the Group") today announces excellent results for the six months ended 30 June 2008 with profit (before tax and amortisation) up 32% and earnings per share up 30%

2008 2007
Revenue (£m) 225.9 173.9 +30%
Fee income (£m) 189.9 144.4 +32%
Profit before taxation* (£m) 28.5 21.6 +32%
Earnings per share* (basic) (pence) 9.49 7.31 +30%
* before amortisation of acquired intangible assets of £1.1m (2007: £0.2m

Highlights

  • all three segments of the Group substantially increased operating profit
  • excellent conversion of profit into cash
  • the international footprint of the Group continues to extend
  • the acquisition of quality businesses has continued
  • dividend raised 15% to 1.75p (2007: 1.52p)
  • balance sheet remains strong with net bank borrowings at £38.8m (2007: £27.4m)
  • committed bank facilities increased from £70m to £100m and extended to 2013
  • major opportunities for future growth are developing from accelerating concerns about global energy supply and climate change
  • the Board remains confident about the Group's prospects.

Brook Land, Chairman, commenting on the results, said:

"Trading in the first half of 2008 was robust. All parts of the Group grew significantly. Our strategy of supplementing organic growth with the acquisition of quality businesses continued to be successfully implemented. Acquisitions made in 2007 and the first half of 2008 support our growth and further acquisitions are being considered. The Group's balance sheet remains strong.

"The integrated services offered by our three successful businesses mean we remain well positioned to assist our clients deal with the related challenges of adapting to climate change and the need to access sustainable, safe and secure sources of energy.

"RPS is diverse and resilient, with a proven business model. Our broad range of services combined with our expanding geographic footprint, gives the Board continuing confidence about prospects for the Group."

31 July 2008

 

ENQUIRIES
RPS Group plc Today: 020 7457 2020
Dr Alan Hearne, Chief Executive Thereafter: 01235 863206
Gary Young, Finance Director
College Hill
Justine Warren Tel: 020 7457 2020
Matthew Smallwood

 

RPS is an international consultancy providing advice upon the development of natural resources, land and property, the management of the environment and the health and safety of people. We have offices in the UK, Ireland, the Netherlands, North America, Eastern Europe, South East Asia and Australia and undertake projects in many other parts of the world. The Group is a constituent of both the FTSE 250 and FTSE 4 Good Indices.

In order to assist in the reduction of greenhouse gas emissions and eventually reduce global warming, the staff of RPS have set themselves the task of reducing energy consumption by 5% each year, using 2007 as the base. If successful we will halve our (per capita) energy use by 2020.

 

Introduction

RPS is an international consultancy providing advice upon the development of natural resources, land and property, the management of the environment and the health and safety of people.

The Group seeks to ensure continuous improvement in the range and quality of our services and our financial performance by:

  • operating in markets where we can add value to our clients' activities;
  • endeavouring to achieve and maintain leadership in those markets; and
  • making acquisitions of quality businesses in order to extend our expertise and geographical presence.

The Board remains confident that this strategy will continue to offer our staff challenging and rewarding careers, whilst continuing to deliver growth and good returns for our shareholders.

 

Results

Profit (before tax and amortisation of acquired intangibles) was £28.5 million (2007: £21.6 million). Basic earnings per share (before amortisation) were 9.49 pence (2007: 7.31 pence). Cash generated from operations was £29.0 million (2007: £21.9 million). After funding acquisition consideration of £22.1 million, the Group had net borrowings of £38.8 million at 30 June (2007: £27.4 million).

The Board has increased the interim dividend by 15% to 1.75 pence per share (2007: 1.52 pence) payable on 23rd October 2008 to shareholders on the register on 26th September 2008. Our dividend has risen at this rate for a number of years.

Operations and Markets

Energy

2008 2007
Fee income (£m) 64.9 46.9 +39%
Segment profit* (£m) 12.4 8.6 +44%
Margin 19.2% 18.4%
* before amortisation of acquired intangible assets of £0.2m (2007: £0.1m)

We provide consultancy services on an international basis to the oil and gas industries from bases in the UK, USA, Canada, Australia, Malaysia and Singapore. Projects are undertaken in many other countries including China, India, Brazil and Russia. In the UK we also provide advice to the renewables industry. The business continued to perform extremely well, with good organic growth being supplemented by further acquisitions. This reflects both buoyant market conditions, which we expect to continue, as well as our position as a world leader in this sector.

Demand for our services from oil and, increasingly, gas exploration and production companies continues to grow. We see accelerating interest from clients in the combination of the geological, engineering, environmental and safety expertise that we provide. The requirements of the developed world to identify and secure long term supplies of energy, coupled with the increasing energy needs of developing nations, suggest that activity in this market will remain at a high level for the foreseeable future. The acquisition of WTW has expanded our operational capability and Oceanfix has enabled us to become more involved in the planning of survey aspects of offshore construction, another fast growing area.

RPS's reputation within the financial community in respect of determination of oil and gas reserves for reporting purposes, and in support of corporate activity developed encouragingly. The oil and gas companies and their advisors value the breadth and depth of our expertise, including our environmental experience.

Our international profile has helped us to create successful staff recruitment and retention strategies. Rising fee rates have enabled us to increase rewards to our staff, a trend we see continuing. The acquisitions made during the course of 2007 and the first half of this year enhanced our staff base, whilst also enabling us to develop our businesses in North America and Australia.

High oil and gas prices support not only our business in those markets, but also investment in renewable energy. The geological, engineering and environmental skills we have are proving to be of significant value to developers of offshore wind farms and other offshore renewable technologies around the UK coast. Working with the planning and environmental assessment capability we have in our Planning & Development business, our Energy staff have been involved in schemes which account for about 90% of the UK offshore wind farm capacity. Recent policy statements from the UK government are expected to bring forward further significant investment in wind farm development, from which we are likely to benefit.

Planning and Development

2008 2007
Fee income (£m) 80.9 65.1 +24%
Segment profit* (£m) 15.1 12.7 +18%
Margin 18.6% 19.6%
* before amortisation of acquired intangible assets of £0.4m (2007: £0.1m)

Within this business we provide consultancy services in respect of town and country planning, building, landscape and urban design, transport planning and highway design, environmental assessment and energy use and efficiency. The growth in this part of the Group was encouraging with the operating margin remaining high. We remain leaders in this market in the UK, Ireland, and Western Australia, acting for blue chip clients in both the public and private sectors.

Our planning business is also able to assist clients in other parts of the Group secure planning permissions for capital projects, for example, in the energy and water sectors. This is particularly marked in Australia, but is increasingly the case in the UK, Ireland and the US, where JD Consulting, acquired in December 2007 and located in Texas, is currently advising upon a proposal for one of the world's largest onshore wind farms.

In the UK our ability to advise upon the full range of issues relevant to the development of sustainable communities and secure planning permission for large complex schemes remains attractive to clients. Our ability to handle complex sustainability issues helps us to secure this work and execute it at the high level needed to achieve the permissions required by our clients. In consequence, we continue to work on some of the largest regeneration and infrastructure projects; these provide long term activity for us. We are also involved in both the waste and minerals sectors, in which securing planning permission has become far more complex. Current economic circumstances are affecting the volume of housebuilding and other speculative property development undertaken by some of our clients. The limited effect of this on our UK Planning and Development business is being mitigated by opportunities in new markets which continue to develop, particularly in respect of securing planning permissions for energy infrastructure investment. This involves projects such as LNG plants, new nuclear power stations, renewable energy schemes and gas storage facilities. We also benefit from the need to integrate energy efficiency into planning proposals and development schemes. The acquisition of RW Gregory increased our capability in this field materially.

Our activities in the planning and development market in Australia showed good growth. The long term potential of this market has encouraged us to develop a plan to grow these activities substantially. We are now seeing the benefits of this and expect our Australian business to continue to grow in the coming years.

The Irish Government maintains its commitment to invest in ambitious plans for infrastructure development, despite a slowdown in the economy. Implementing The National Development Plan 2007-2013 which targets "Economic Infrastructure" remains a priority, with €54.6bn identified for expenditure on roads, public transport, water, airports and energy infrastructure. We benefit significantly from this investment and, as in the UK, our sustainability credentials give us a competitive advantage.

Environmental Management

2008 2007
Fee income (£m) 46.3 34.6 +34%
Segment profit* (£m) 6.8 4.3 +57%
Margin 14.8% 12.6%
* before amortisation of acquired intangible assets of £0.5m (2007: nil)

This business provides consultancy services in respect of health, safety, risk and environmental management in the UK and the Netherlands and the management of water resources in the UK. The results in the first half were excellent. Through the acquisition of MetOcean in Australia in the second half of 2007, we extended both the range of our services and geographical reach of the business. The acquisitions of RBA and Geocet increased our capability to provide oil and gas clients with health, safety and environmental expertise directly relevant to their activities. Our growing health, safety and risk management involvement with the oil and gas and nuclear industries is becoming strategically important. Our Dutch business performed well; the acquisition of Kraan signals our increasing confidence in both the market and prospects for our business there.

RPS's strength in the water industry, coupled with our environmental credentials, position us well to advise our clients in the water sector on a broad range of issues. As a result our business servicing the UK water industry, which had a good year in 2007, continued this performance into 2008. We are working on long term commissions for the majority of the privatised water companies, as well as undertaking significant work in Scotland. The UK markets in health and safety and occupational health and hygiene have generally remained strong, driven by increasing statutory obligations. Although some clients in this market are confronted with economic uncertainty, awareness of the importance of managing these matters more carefully has heightened.

Funding

The conversion of profit into cash continued at a good level and our balance sheet remains strong. Net borrowings at 30 June were £38.8 million.

Following the seven acquisitions made in the period the book value of deferred consideration and outstanding loan notes related to acquisitions amounts to £4.7 million falling due for settlement in cash during the second half of 2008, £13.8 million in 2009, £7.2 million in 2010 and £1.1 million in 2011.

We have increased our committed bank facilities from £70 million to £100 million and extended them until 2013, on broadly unchanged terms. Our cash generation, in conjunction with these facilities and an ability to use equity in transactions, means that we are able to continue our acquisition strategy.

Prospects

Balancing the way energy is secured from various sources, managing its use to limit environmental damage, whilst planning further economic growth and urban development has become a fundamental challenge of this century. It is one which RPS is extremely well positioned to advise upon and will enable us to build further momentum and provides opportunities for all our businesses. The Board believes these opportunities will continue to outweigh the adverse consequences of economic turbulence.

Our continued investment in the energy sector has enabled us to internationalise our activities in a significant way. As a result, we now have strong businesses in the USA, Canada and Australia as well as substantial contracts relating to oil and gas exploration and production in many parts of the developing world, including India, Russia and China.

We have successfully begun the process of expanding our activities in Australia into planning and development and environmental management. We are confident these can be extended substantially. Australia is also a good base from which to develop our activities in Asia. Opportunities also exist to develop the full range of our activities in both the USA and Canada.

The integrated services offered by our three successful businesses mean we remain well positioned to assist our clients deal with the related challenges of adapting to climate change and the need to access sustainable, safe and secure sources of energy.

RPS is diverse and resilient with a proven business model. Our broad range of services, coupled with our expanding geographic footprint, gives the Board continuing confidence about prospects for the Group.

Board of Directors
RPS Group plc
31 July 2008

 

Condensed consolidated income statement

Notes Six months
ended
30 June
Six months
ended
30 June
Year
ended 31
December
2008 2007 2007
unaudited unaudited audited
£000's £000's £000's
Revenue 3 225,867 173,908 362,674
Recharged expenses 3 (35,944) (29,542) (57,566)
Fee income 3 189,923 144,366 305,108
Operating profit 3 29,526 23,024 47,975
Finance costs (2,299) (1,755) (3,792)
Finance income 172 132 296
Profit before tax and amortisation
of acquired intangibles
28,536 21,607 45,010
Amortisation of acquired intangibles (1,137) (206) (531)
Profit before tax 27,399 21,401 44,479
Tax expense 4 (8,302) (6,588) (13,569)
Profit for the period attributable to
equity holders of the parent
19,097 14,813 30,910
Basic earnings per share (pence) 5 9.10 7.24 14.99
Diluted earnings per share (pence) 5 8.97 7.07 14.78
Basic earnings per share before
amortisation of acquired
intangibles (pence)
5 9.49 7.31 15.17
Diluted earnings per share before
amortisation of acquired
intangibles (pence)
5 9.36 7.14 14.95

 

Condensed consolidated statement of recognised income and expense

Six months
ended
30 June
Six months
ended
30 June
Year
ended 31
December
2008 2007 2007
unaudited unaudited audited
£000's £000's £000's
Exchange differences 5,839 300 5,787
Tax recognised directly in equity 10 678 743
Income recognised directly in equity 5,849 978 6,530
Profit for the period 19,097 14,813 30,910
Total recognised income for the
period attributable to equity
holders of the parent
24,946 15,791 37,440

 

Condensed consolidated balance sheet

As at
30 June
As at
30 June
As at
31 December
2008 2007 2007
unaudited unaudited audited
Notes £000's £000's £000's
Assets
Non-current assets
Intangible assets 245,828 187,019 210,839
Property, plant and equipment 6 22,779 19,202 21,706
Deferred tax assets - 2,401 114
268,607 208,622 232,659
Current assets
Trade and other receivables 146.462 109,921 119,504
Cash at bank 13,584 10,052 10,884
160,046 119,973 130,388
Liabilities
Current liabilities
Borrowings 204 262 174
Deferred consideration 12,753 9,745 8,939
Trade and other payables 78,842 60,351 62,750
Corporation tax liabilities 6,907 4,786 3,434
Provisions 1,279 332 595
99,985 75,476 75,892
Net current assets 60,061 44,497 54,496
Non-current liabilities
Borrowings 52,171 37,156 43,340
Deferred consideration 15,293 9,350 10,453
Other creditors 1,511 330 1,320
Deferred tax liabilities 3,844 - -
Provisions 3,623 1,564 4,508
76,442 48,400 59,621
Net assets 252,226 204,719 227,534
Equity
Share capital 9 6,359 6,217 6,319
Share premium 9 94,337 91,561 93,225
Other reserves 10 24,804 13,918 17,516
Retained earnings 9 126,726 93,023 110,474
Total shareholders' equity 9 252,226 204,719 227,534

 

Condensed consolidated cash flow statement

Six months
ended 30
June
Six months
ended 30
June
Year
ended 31 December
2008 2007 2007
Notes unaudited
£000's
unaudited
£000's
audited
£000's
Cash generated from operations 12 28,993 21,919 45,393
Interest paid (2,009) (1,888) (3,967)
Interest received 172 132 296
Income taxes paid (5,513) (5,139) (12,925)
Net cash from operating activities 21,643 15,024 28,797
Cash flows from investing activities
Purchases of subsidiaries net of cash acquired (17,555) (5,698) (15,758)
Deferred consideration (4,539) (3,665) (10,846)
Purchase of property, plant and equipment (3,338) (2,785) (5,811)
Sale of property, plant and equipment 1,112 49 4,239
Net cash used in investing activities (24,320) (12,099) (28,176)
Cash flows from financing activities
Proceeds from issue of share capital 171 1,608 1,730
Proceeds from sale of own shares - 1,293 1,293
Proceeds from bank borrowings 8,366 (2,635) 3,001
Payment of finance lease liabilities (98) (109) (149)
Dividends paid (3,498) (2,967) (6,144)
Payment of pre-acquisition dividend (115) - -
Net cash used in financing activities 4,826 (2,810) (269)
Net increase in cash and cash equivalents 2,149 115 352
Cash and cash equivalents at beginning of period 10,884 9,805 9,805
Effect of exchange rate fluctuations 551 39 727
Cash and cash equivalents at end of period 12 13,584 9,959 10,884
Cash and cash equivalents comprise:
Cash at bank 13,584 10,052 10,884
Bank overdraft - (93) -
Cash and cash equivalents at end of period 13,584 9,959 10,884

 

Notes to the condensed consolidated financial statements

1. Basis of preparation

RPS Group plc (the "Company") is a company domiciled in England. The condensed consolidated interim financial statements of the Company for the six months ended 30 June 2008 comprise the Company and its subsidiaries (together referred to as the "Group").

The condensed interim financial statements have been prepared using accounting policies set out in the Report and Accounts 2007 and are in accordance with IAS 34. The condensed interim financial statements are unaudited but have been reviewed by the Company's auditors. The results for the year end 31 December 2007 and the balance sheet as at that date are abridged from the Company's Report and Accounts 2007 which have been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not contain references to any matters to which the auditors drew attention by way of emphasis without qualifying the report and did not contain a statement under Section 272(2) or (3) of the Companies Act 1985.

The condensed interim financial statements do not constitute full accounts within the meaning of Section 240 of the Companies Act 1985.

2. Responsibility Statement

The directors confirm that, to the best of their knowledge this condensed set of financial statements has been prepared in accordance with IAS 34 and that this Interim Report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R.

On behalf of the Board

A. S. Hearne G. Young
Chief Executive Group Finance Director

3. Business segments

The Board believes that one of the Group's important strengths is the way in which we deploy our broad range of skills in an integrated way. The success of this part of our strategy results in projects being undertaken in a multi-disciplinary way. In consequence, there are Group activities which could be placed in more than one business segment. This becomes increasingly the case as our energy and international activities grow. The segments currently used to present and analyse the Group's performance are described below. They are kept under review by the Board.

Planning and Development - consultancy services in the UK, Ireland, Australia and the US related to town and country planning, urban design, architecture, transport planning and highway design, environmental impact assessment and provision of water and waste utilities and energy infrastructure.

Environmental Management - consultancy services in the UK, the Netherlands and Australia related to health, safety and risk management, environmental science and the management of water and energy resources.

Energy - the provision of technical consultancy services, on an international basis, to the upstream oil and gas and offshore renewable energy sectors.

Segment results for the six months ended 30 June 2008

Planning &
Development
Environmental
Management
Energy Eliminations Consolidated
£000's £000's £000's £000's £000's
Revenue 98,560 54,105 75,449 (2,247) 225,867
Recharged expenses (17,645) (7,792) (10,507) - (35,944)
Fee Income 80,915 46,313 64,942 (2,247) 189,923
Segment profit 15,057 6,835 12,445 - 34,337
Amortisation (439) (467) (231) - (1,137)
33,200
Unallocated expenses (3,674)
Operating profit 29,526

Segment results for the six months ended 30 June 2007

Planning &
Development
Environmental
Management
Energy Eliminations Consolidated
£000's £000's £000's £000's £000's
Revenue 78,547 40,909 56,585 (2,133) 173,908
Recharged expenses (13,481) (6,328) (9,733) - (29,542)
Fee Income 65,066 34,581 46,852 (2,133) 144,366
Segment profit 12,728 4,345 8,625 - 25,698
Amortisation (146) - (60) - (206)
25,492
Unallocated expenses (2,468)
Operating profit 23,024

4. Income taxes

The Group's consolidated effective tax rate for the six months ended 30 June 2008 was 30.3%, (for the year ended 31 December 2007: 30.5%; for the six months ended 30 June 2007: 30.8%).

5. Earnings per share

The calculations of earnings per share are based on the profit attributable to ordinary shareholders and a weighted average number of ordinary shares outstanding during the period as shown below:

Six months
ended 30 June
Six months
ended
30 June
Year ended
31 Dec
2008 2007 2007
£000's £000's £000's
Profit attributable to ordinary shareholders 19,097 14,813 30,910
000's 000's 000's
Weighted average number of ordinary shares for the purposes of basic earnings per share 209,865 204,592 206,256
Effect of shares to be issued as deferred consideration 505 1,059 92
Effect of employee share schemes 2,412 3,760 2,827
Weighted average number of ordinary shares for the purposes of diluted earnings per share 212,782 209,411 209,175
Basic earning per share (pence) 9.10 7.24 14.99
Diluted earnings per share (pence) 8.97 7.07 14.78

The directors consider that earnings per share before amortisation provides a more meaningful measure of the Group's performance than statutory earnings per share. The calculation of basic and diluted earnings per share before amortisation is based on the weighted average number of ordinary shares outstanding during the year as shown above and the profit attributable to ordinary shareholders before the amortisation on acquired intangible assets and the tax thereon as shown in the table below and the weighted average number of ordinary shares during the period as shown above.

Six months
ended 30 June
2008
Six months
ended 30 June
2007
Year ended
31 Dec
2007
£000's £000's £000's
Profit attributable to ordinary shareholders 19,097 14,813 30,910
Amortisation of acquired intangibles 1,137 206 531
Tax on amortisation of acquired intangibles (318) (62) (159)
Adjusted profit attributable to ordinary shareholders 19,916 14,957 31,282
Basic earnings before per share before amortisation (pence) 9.49 7.31 15.17
Diluted earnings per share before amortisation (pence) 9.36 7.14 14.95

6. Property, plant and equipment

During the six months ended 30 June 2008, the Group acquired assets with a cost of £4,036,000 (six months to 30 June 2007: £3,113,000), which includes £698,000 acquired through business combinations (six months to 30 June 2007: £328,000). Assets with a net book value of £932,000 were disposed of during the six months ended 30 June 2008 (six months ended 30 June 2007: £30,000).

7. Acquisitions

The Group completed the acquisition of seven businesses during the first half of 2008. Each purchase has been accounted for as an acquisition. Prior to completion of the transactions each acquired business kept its own management accounts. Adding the results shown in these accounts to the Group results produces Group revenue for the period of £233,708,000 and Group operating profit before amortisation of acquired intangibles of £30,316,000.

All intangible assets were recognised at their respective fair values. The residual excess over the net assets acquired, including intangible assets, is recognised as goodwill in the financial statements.

Date of Acquisition Place of incorporation Percentage of entity acquired Nature of business acquired
Kraan Consulting Holding BV 6 Feb 2008 The Netherlands 100% of issued share capital Urban planning
consultancy
RW Gregory LLP 12 Mar 2008 UK Assets and certain
liabilities
Engineering
consultancy
WTW and Associates Ltd 17 Mar 2008 UK 100% of issued share capital Oil and gas consultancy
Oceanfix International Ltd 19 Mar 2008 UK 100% of issued share capital Oil and gas consultancy
Land Management Trust
("Koltasz Smith")
27 Mar 2008 Australia Assets and certain
liabilities
Urban planning consultancy
Rudall Blanchard Associates Group Ltd 30 Mar 2008 UK 100% of issued share capital Health and Safety consultancy
The GeoCet Group LLC 18 Apr 2008 USA 100% of issued share capital Environmental consultancy

These businesses have been integrated with other parts of the Group and are no longer managed separately. They share resources, revenues, costs and market opportunities with other parts of the Group and should no longer be considered individual businesses. Their contributions to the revenue and operating profit before amortisation of acquired intangibles to the Group's results for the period, as shown below, reflects those relationships.

Revenue £'000 Operating profit £'000
Kraan Consulting Holding BV 2,723 341
RW Gregory LLP 3,457 442
Oceanfix International Ltd 3,392 402
Land Management Trust 857 191
Rudall Blanchard Group Ltd 1,861 479
The GeoCet Group LLC 779 213

It is impracticable to identify separately the revenue and operating profit contribution of WTW and Associates Ltd for the period since acquisition as this entity has been fully hived up into existing Group operations.

Details of the carrying values of the acquired net assets and the provisional fair values assigned to them by the Group are as follows:

Intangible assets
Customer relationships Order backlog Trade names Other intangibles Property, plant & equipment Cash Other assets Other liabilities Net assets
£000's £000's £000's £000's £000's £000's £000's £000's £000's
Pre acquisition carrying values
Kraan - - - 119 146 (248) 1,695 (955) 757
RWG - - - - 252 2,002 4,147 (4,900) 1,501
WTW - - - - 20 (3) 1,007 (455) 569
Oceanfix - - - - 81 533 2,454 (978) 2,090
LMT - - - - 191 - 701 (313) 579
RBA - - - 21 120 928 1,604 (774) 1,899
Geocet - - - - - 337 611 (774) 174
- - - 140 810 3,549 12,219 (9,149) 7,569
Provisional fair values
Kraan 2,714 - 374 - 124 (248) 1,654 (1,849) 2,769
RWG 2,960 1,080 200 - 252 2,002 4,221 (6,140) 4,575
WTW - 190 - - 19 (3) 1,007 (455) 758
Oceanfix 3,121 148 - - 25 533 2,454 (1,893) 4,388
LMT 550 - 632 - 191 - 701 (644) 1,430
RBA 1,207 107 - - 87 928 1,604 (1,142) 2,791
Geocet - - - - - 337 611 (774) 174
10,552 1,525 1,206 - 698 3,549 12,252 (12,897) 16,885

The fair value adjustments made to the pre acquisition carrying values to determine provisional fair values relate to the alignment of depreciation accounting policies, the identification of intangibles and the deferred tax recognised on the fair value adjustments.

Initial consideration Fair value of deferred consideration
Cash Shares Acquisition expenses Cash Shares Total consideration Net assets acquired Goodwill acquired
£000's £000's £000's £000's £000's £000's £000's £000's
Consideration
Kraan 3,009 - 344 1,720 - 5,073 2,769 2,304
RWG 5,200 1,700 217 3,238 - 10,355 4,575 5,780
WTW 1,344 - 118 468 - 1,930 758 1,172
Oceanfix 4,491 - 163 2,445 - 7,099 4,388 2,711
LMT 1,857 - 290 1,238 - 3,385 1,430 1,955
RBA 3,460 - 162 1,340 1,240 6,202 2,791 3,411
Geocet 590 - 75 554 - 1,219 174 1,045
19,951 1,700 1,369 11,003 1,240 35,263 16,885 18,378

As part of the consideration for RWG, 572,970 ordinary shares of RPS Group plc were allotted to the vendors.

As part of the deferred consideration for RBA, £1,240,000 of ordinary shares of RPS Group plc will be allotted to the vendors.

Goodwill represents the value of the assembled professional workforce acquired with these businesses.

Prior period acquisitions

The Group acquired the entire share capital of APA Petroleum Engineering Inc. in February 2007, acquired the trade, assets and certain liabilities of Safety and Risk Practice Pty Ltd in March 2007 and acquired the entire share capital of Geocon Group Services Ltd, also in March 2007.

At 30 June 2007 and 31 December 2007, the Group allotted provisional fair values to the assets and liabilities acquired as a result of these acquisitions. These provisional fair values have now been finalised. The only adjustment to the acquisitions made in the first half of 2007 has been a credit to net assets of APA Petroleum Engineering Inc. of £159,000 representing an adjustment to the opening tax balances of this entity.

8. Share capital

2008
Number
000's
2008
£000's
2007
Number
000's
2007
£000's
Authorised
Ordinary shares of 3p each at 30 June 240,000 7,200 240,000 7,200
Issued and fully paid
Ordinary shares of 3p each at 1 January 210,632 6,319 205,446 6,163
Issued under employee share schemes 737 23 1,294 39
Issued as acquisition initial consideration 573 17 512 15
At 30 June 211,942 6,359 207,252 6,217

9. Statement of changes in equity

Share capital Share premium Retained earnings Other reserves Total equity
£000's £000's £000's £000's £000's
At 1 January 2007 6,163 89,836 79,828 11,107 186,934
Changes in equity during 2007
Tax recognised directly in equity - - 678 - 678
Exchange differences - - - 300 300
Net income recognised directly in equity - - 678 300 978
Profit for the period - - 14,813 - 14,813
Total recognised income for the period - - 15,491 300 15,791
Issue of new ordinary shares 54 1,725 - 1,418 3,197
Sale of own shares - - 671 622 1,293
Share based payment expense - - - 919 919
Tax on share based payment expense - - - (448) (448)
Dividends - - (2,967) - (2,967)
At 30 June 2007 6,217 91,561 93,023 13,918 204,719
Changes in equity during 2008
At 1 January 2008 6,319 93,225 110,474 17,516 227,534
Tax recognised directly in equity - - 10 - 10
Exchange differences - - - 5,839 5,839
Net income recognised directly in equity - - 10 5,839 5,849
Profit for the period - - 19,097 - 19,097
Total recognised income for the period - - 19,107 5,839 24,946
Issue of new ordinary shares 40 1,112 (705) 1,449 1,896
Share based payment expense - - 1,348 - 1,348
Dividends - - (3,498) - (3,498)
At 30 June 2008 6,359 94,337 126,726 24,804 252,226

10. Other reserves

Merger reserve Employee trust shares Share scheme reserve Shares to be issued Translation reserve Total other reserves
£000's £000's £000's £000's £000's £000's
At 1 January 2007 10,642 (3,042) 4,053 1,997 (2,543) 11,107
Changes in equity during 2007
Exchange differences - - - - 300 300
Issue of new shares 1,572 (154) - - - 1,418
Sale of own shares - 622 - - - 622
Share based payment expense - - 919 - - 919
Tax on share based payment
expense
(448) (448)
At 30 June 2007 12,214 (2,574) 4,524 1,997 (2,243) 13,918
Changes in equity during 2008
At 1 January 2008 16,993 (2,943) - 222 3,244 17,516
Exchange differences - - - - 5,839 5,839
Issue of new shares 1,682 (233) - - - 1,449
At 30 June 2008 18,675 (3,176) - 222 9,083 24,804

11. Dividends

The following dividends were recognised as distributions to equity holders in
the period:

Six months
ended 30 June
2008
£000's
Six months
ended 30 June
2007
£000's
Year Ended
31 December
2007
£000's
Final dividend for 2007 1.66p per share 3,498 - -
Interim dividend for 2007 1.52p per share - - 3,177
Final dividend for 2006 1.44p per share - 2,967 2,967
3,498 2,967 6,144

An interim divided in respect of the six months ended 30 June 2008 of 1.75 pence per share, amounting to a total dividend of £3,712,000 was approved by the Directors of RPS Group plc on 29th July 2008. These condensed consolidated interim financial statements do not reflect this dividend payable.

12. Note to the condensed consolidated cash flow statement

Six months ended
30 June
Six months ended
30 June
Year ended 31 Dec
2008 2007 2007
£000's £000's £000's
Profit before tax 27,399 21,401 44,479
Adjustments for:
Interest payable and similar charges 2,299 1,755 3,792
Interest receivable (172) (132) (296)
Depreciation 2,966 2,244 4,758
Amortisation of acquired intangibles 1,137 206 531
Share based payment expense 1,348 919 2,142
Profit on sale of property, plant and equipment (180) - (3,224)
Provision for dilapidations - - 2,514
Increase in trade and other receivables (11,277) (11,883) (14,018)
Increase in trade and other payables 5,473 7,409 4,715
Cash generated from operations 28,993 21,919 45,393

During the period, the Group increased its loan facilities to £100 million and extended them to 2013.

The table below provides an analysis of net borrowings, comprising cash and cash equivalents, interest bearing bank loans and finance leases, during the six months ended 30 June 2008.

At 1 January 2008 Cash flow Acquisition Foreign exchange At 30 June 2008
£000's £000's £000's £000's £000's
Cash and cash equivalents 10,884 2,149 - 551 13,584
Bank loans (43,346) (8,366) - (520) (52,232)
Finance lease creditor (168) 98 (38) (35) (143)
Net borrowings (32,630) (6,119) (38) (4) (38,791)

13. Principal risks and uncertainties

The principal risks and uncertainties faced by the Group have not changed significantly since the 2007 Report and Accounts was published. The Board keeps under review the potential effect of economic circumstances.

14. Related party transactions

There were no related party transactions required to be disclosed in the period.

15. Forward-looking statements

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 a number of 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.

INDEPENDENT REVIEW REPORT TO RPS GROUP PLC

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half yearly financial report for the six months ended 30 June 2008 which comprise the Condensed Consolidated Income Statement, the Condensed Consolidated Statement of Recognised Income and Expense, the Condensed Consolidated Balance Sheet, the Condensed Consolidated Cash Flow Statement and the related notes.

We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The half-yearly financial report is the responsibility of and has been approved by the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, ‘‘Interim Financial Reporting'', as adopted by the European Union.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Our report has been prepared in accordance with the terms of our engagement to assist the company in meeting its responsibilities in respect to half-yearly financial reporting in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ‘‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity'', issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2008 is not prepared, in all material respects, in accordance with International Accounting Standard 34, as adopted by the European Union, and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

BDO Stoy Hayward LLP
Chartered Accountants and Registered Auditors
55 Baker Street
London
W1U 7EU
31 July 2008

 

2016

Half Year Results for the six months ended 30 June 2008

31 July 2008

RPS Group Plc ("RPS" or "the Group") today announces excellent results for the six months ended 30 June 2008 with profit (before tax and amortisation) up 32% and earnings per share up 30%

2008 2007
Revenue (£m) 225.9 173.9 +30%
Fee income (£m) 189.9 144.4 +32%
Profit before taxation* (£m) 28.5 21.6 +32%
Earnings per share* (basic) (pence) 9.49 7.31 +30%
* before amortisation of acquired intangible assets of £1.1m (2007: £0.2m

Highlights

  • all three segments of the Group substantially increased operating profit
  • excellent conversion of profit into cash
  • the international footprint of the Group continues to extend
  • the acquisition of quality businesses has continued
  • dividend raised 15% to 1.75p (2007: 1.52p)
  • balance sheet remains strong with net bank borrowings at £38.8m (2007: £27.4m)
  • committed bank facilities increased from £70m to £100m and extended to 2013
  • major opportunities for future growth are developing from accelerating concerns about global energy supply and climate change
  • the Board remains confident about the Group's prospects.

Brook Land, Chairman, commenting on the results, said:

"Trading in the first half of 2008 was robust. All parts of the Group grew significantly. Our strategy of supplementing organic growth with the acquisition of quality businesses continued to be successfully implemented. Acquisitions made in 2007 and the first half of 2008 support our growth and further acquisitions are being considered. The Group's balance sheet remains strong.

"The integrated services offered by our three successful businesses mean we remain well positioned to assist our clients deal with the related challenges of adapting to climate change and the need to access sustainable, safe and secure sources of energy.

"RPS is diverse and resilient, with a proven business model. Our broad range of services combined with our expanding geographic footprint, gives the Board continuing confidence about prospects for the Group."

31 July 2008

 

ENQUIRIES
RPS Group plc Today: 020 7457 2020
Dr Alan Hearne, Chief Executive Thereafter: 01235 863206
Gary Young, Finance Director
College Hill
Justine Warren Tel: 020 7457 2020
Matthew Smallwood

 

RPS is an international consultancy providing advice upon the development of natural resources, land and property, the management of the environment and the health and safety of people. We have offices in the UK, Ireland, the Netherlands, North America, Eastern Europe, South East Asia and Australia and undertake projects in many other parts of the world. The Group is a constituent of both the FTSE 250 and FTSE 4 Good Indices.

In order to assist in the reduction of greenhouse gas emissions and eventually reduce global warming, the staff of RPS have set themselves the task of reducing energy consumption by 5% each year, using 2007 as the base. If successful we will halve our (per capita) energy use by 2020.

 

Introduction

RPS is an international consultancy providing advice upon the development of natural resources, land and property, the management of the environment and the health and safety of people.

The Group seeks to ensure continuous improvement in the range and quality of our services and our financial performance by:

  • operating in markets where we can add value to our clients' activities;
  • endeavouring to achieve and maintain leadership in those markets; and
  • making acquisitions of quality businesses in order to extend our expertise and geographical presence.

The Board remains confident that this strategy will continue to offer our staff challenging and rewarding careers, whilst continuing to deliver growth and good returns for our shareholders.

 

Results

Profit (before tax and amortisation of acquired intangibles) was £28.5 million (2007: £21.6 million). Basic earnings per share (before amortisation) were 9.49 pence (2007: 7.31 pence). Cash generated from operations was £29.0 million (2007: £21.9 million). After funding acquisition consideration of £22.1 million, the Group had net borrowings of £38.8 million at 30 June (2007: £27.4 million).

The Board has increased the interim dividend by 15% to 1.75 pence per share (2007: 1.52 pence) payable on 23rd October 2008 to shareholders on the register on 26th September 2008. Our dividend has risen at this rate for a number of years.

Operations and Markets

Energy

2008 2007
Fee income (£m) 64.9 46.9 +39%
Segment profit* (£m) 12.4 8.6 +44%
Margin 19.2% 18.4%
* before amortisation of acquired intangible assets of £0.2m (2007: £0.1m)

We provide consultancy services on an international basis to the oil and gas industries from bases in the UK, USA, Canada, Australia, Malaysia and Singapore. Projects are undertaken in many other countries including China, India, Brazil and Russia. In the UK we also provide advice to the renewables industry. The business continued to perform extremely well, with good organic growth being supplemented by further acquisitions. This reflects both buoyant market conditions, which we expect to continue, as well as our position as a world leader in this sector.

Demand for our services from oil and, increasingly, gas exploration and production companies continues to grow. We see accelerating interest from clients in the combination of the geological, engineering, environmental and safety expertise that we provide. The requirements of the developed world to identify and secure long term supplies of energy, coupled with the increasing energy needs of developing nations, suggest that activity in this market will remain at a high level for the foreseeable future. The acquisition of WTW has expanded our operational capability and Oceanfix has enabled us to become more involved in the planning of survey aspects of offshore construction, another fast growing area.

RPS's reputation within the financial community in respect of determination of oil and gas reserves for reporting purposes, and in support of corporate activity developed encouragingly. The oil and gas companies and their advisors value the breadth and depth of our expertise, including our environmental experience.

Our international profile has helped us to create successful staff recruitment and retention strategies. Rising fee rates have enabled us to increase rewards to our staff, a trend we see continuing. The acquisitions made during the course of 2007 and the first half of this year enhanced our staff base, whilst also enabling us to develop our businesses in North America and Australia.

High oil and gas prices support not only our business in those markets, but also investment in renewable energy. The geological, engineering and environmental skills we have are proving to be of significant value to developers of offshore wind farms and other offshore renewable technologies around the UK coast. Working with the planning and environmental assessment capability we have in our Planning & Development business, our Energy staff have been involved in schemes which account for about 90% of the UK offshore wind farm capacity. Recent policy statements from the UK government are expected to bring forward further significant investment in wind farm development, from which we are likely to benefit.

Planning and Development

2008 2007
Fee income (£m) 80.9 65.1 +24%
Segment profit* (£m) 15.1 12.7 +18%
Margin 18.6% 19.6%
* before amortisation of acquired intangible assets of £0.4m (2007: £0.1m)

Within this business we provide consultancy services in respect of town and country planning, building, landscape and urban design, transport planning and highway design, environmental assessment and energy use and efficiency. The growth in this part of the Group was encouraging with the operating margin remaining high. We remain leaders in this market in the UK, Ireland, and Western Australia, acting for blue chip clients in both the public and private sectors.

Our planning business is also able to assist clients in other parts of the Group secure planning permissions for capital projects, for example, in the energy and water sectors. This is particularly marked in Australia, but is increasingly the case in the UK, Ireland and the US, where JD Consulting, acquired in December 2007 and located in Texas, is currently advising upon a proposal for one of the world's largest onshore wind farms.

In the UK our ability to advise upon the full range of issues relevant to the development of sustainable communities and secure planning permission for large complex schemes remains attractive to clients. Our ability to handle complex sustainability issues helps us to secure this work and execute it at the high level needed to achieve the permissions required by our clients. In consequence, we continue to work on some of the largest regeneration and infrastructure projects; these provide long term activity for us. We are also involved in both the waste and minerals sectors, in which securing planning permission has become far more complex. Current economic circumstances are affecting the volume of housebuilding and other speculative property development undertaken by some of our clients. The limited effect of this on our UK Planning and Development business is being mitigated by opportunities in new markets which continue to develop, particularly in respect of securing planning permissions for energy infrastructure investment. This involves projects such as LNG plants, new nuclear power stations, renewable energy schemes and gas storage facilities. We also benefit from the need to integrate energy efficiency into planning proposals and development schemes. The acquisition of RW Gregory increased our capability in this field materially.

Our activities in the planning and development market in Australia showed good growth. The long term potential of this market has encouraged us to develop a plan to grow these activities substantially. We are now seeing the benefits of this and expect our Australian business to continue to grow in the coming years.

The Irish Government maintains its commitment to invest in ambitious plans for infrastructure development, despite a slowdown in the economy. Implementing The National Development Plan 2007-2013 which targets "Economic Infrastructure" remains a priority, with €54.6bn identified for expenditure on roads, public transport, water, airports and energy infrastructure. We benefit significantly from this investment and, as in the UK, our sustainability credentials give us a competitive advantage.

Environmental Management

2008 2007
Fee income (£m) 46.3 34.6 +34%
Segment profit* (£m) 6.8 4.3 +57%
Margin 14.8% 12.6%
* before amortisation of acquired intangible assets of £0.5m (2007: nil)

This business provides consultancy services in respect of health, safety, risk and environmental management in the UK and the Netherlands and the management of water resources in the UK. The results in the first half were excellent. Through the acquisition of MetOcean in Australia in the second half of 2007, we extended both the range of our services and geographical reach of the business. The acquisitions of RBA and Geocet increased our capability to provide oil and gas clients with health, safety and environmental expertise directly relevant to their activities. Our growing health, safety and risk management involvement with the oil and gas and nuclear industries is becoming strategically important. Our Dutch business performed well; the acquisition of Kraan signals our increasing confidence in both the market and prospects for our business there.

RPS's strength in the water industry, coupled with our environmental credentials, position us well to advise our clients in the water sector on a broad range of issues. As a result our business servicing the UK water industry, which had a good year in 2007, continued this performance into 2008. We are working on long term commissions for the majority of the privatised water companies, as well as undertaking significant work in Scotland. The UK markets in health and safety and occupational health and hygiene have generally remained strong, driven by increasing statutory obligations. Although some clients in this market are confronted with economic uncertainty, awareness of the importance of managing these matters more carefully has heightened.

Funding

The conversion of profit into cash continued at a good level and our balance sheet remains strong. Net borrowings at 30 June were £38.8 million.

Following the seven acquisitions made in the period the book value of deferred consideration and outstanding loan notes related to acquisitions amounts to £4.7 million falling due for settlement in cash during the second half of 2008, £13.8 million in 2009, £7.2 million in 2010 and £1.1 million in 2011.

We have increased our committed bank facilities from £70 million to £100 million and extended them until 2013, on broadly unchanged terms. Our cash generation, in conjunction with these facilities and an ability to use equity in transactions, means that we are able to continue our acquisition strategy.

Prospects

Balancing the way energy is secured from various sources, managing its use to limit environmental damage, whilst planning further economic growth and urban development has become a fundamental challenge of this century. It is one which RPS is extremely well positioned to advise upon and will enable us to build further momentum and provides opportunities for all our businesses. The Board believes these opportunities will continue to outweigh the adverse consequences of economic turbulence.

Our continued investment in the energy sector has enabled us to internationalise our activities in a significant way. As a result, we now have strong businesses in the USA, Canada and Australia as well as substantial contracts relating to oil and gas exploration and production in many parts of the developing world, including India, Russia and China.

We have successfully begun the process of expanding our activities in Australia into planning and development and environmental management. We are confident these can be extended substantially. Australia is also a good base from which to develop our activities in Asia. Opportunities also exist to develop the full range of our activities in both the USA and Canada.

The integrated services offered by our three successful businesses mean we remain well positioned to assist our clients deal with the related challenges of adapting to climate change and the need to access sustainable, safe and secure sources of energy.

RPS is diverse and resilient with a proven business model. Our broad range of services, coupled with our expanding geographic footprint, gives the Board continuing confidence about prospects for the Group.

Board of Directors
RPS Group plc
31 July 2008

 

Condensed consolidated income statement

Notes Six months
ended
30 June
Six months
ended
30 June
Year
ended 31
December
2008 2007 2007
unaudited unaudited audited
£000's £000's £000's
Revenue 3 225,867 173,908 362,674
Recharged expenses 3 (35,944) (29,542) (57,566)
Fee income 3 189,923 144,366 305,108
Operating profit 3 29,526 23,024 47,975
Finance costs (2,299) (1,755) (3,792)
Finance income 172 132 296
Profit before tax and amortisation
of acquired intangibles
28,536 21,607 45,010
Amortisation of acquired intangibles (1,137) (206) (531)
Profit before tax 27,399 21,401 44,479
Tax expense 4 (8,302) (6,588) (13,569)
Profit for the period attributable to
equity holders of the parent
19,097 14,813 30,910
Basic earnings per share (pence) 5 9.10 7.24 14.99
Diluted earnings per share (pence) 5 8.97 7.07 14.78
Basic earnings per share before
amortisation of acquired
intangibles (pence)
5 9.49 7.31 15.17
Diluted earnings per share before
amortisation of acquired
intangibles (pence)
5 9.36 7.14 14.95

 

Condensed consolidated statement of recognised income and expense

Six months
ended
30 June
Six months
ended
30 June
Year
ended 31
December
2008 2007 2007
unaudited unaudited audited
£000's £000's £000's
Exchange differences 5,839 300 5,787
Tax recognised directly in equity 10 678 743
Income recognised directly in equity 5,849 978 6,530
Profit for the period 19,097 14,813 30,910
Total recognised income for the
period attributable to equity
holders of the parent
24,946 15,791 37,440

 

Condensed consolidated balance sheet

As at
30 June
As at
30 June
As at
31 December
2008 2007 2007
unaudited unaudited audited
Notes £000's £000's £000's
Assets
Non-current assets
Intangible assets 245,828 187,019 210,839
Property, plant and equipment 6 22,779 19,202 21,706
Deferred tax assets - 2,401 114
268,607 208,622 232,659
Current assets
Trade and other receivables 146.462 109,921 119,504
Cash at bank 13,584 10,052 10,884
160,046 119,973 130,388
Liabilities
Current liabilities
Borrowings 204 262 174
Deferred consideration 12,753 9,745 8,939
Trade and other payables 78,842 60,351 62,750
Corporation tax liabilities 6,907 4,786 3,434
Provisions 1,279 332 595
99,985 75,476 75,892
Net current assets 60,061 44,497 54,496
Non-current liabilities
Borrowings 52,171 37,156 43,340
Deferred consideration 15,293 9,350 10,453
Other creditors 1,511 330 1,320
Deferred tax liabilities 3,844 - -
Provisions 3,623 1,564 4,508
76,442 48,400 59,621
Net assets 252,226 204,719 227,534
Equity
Share capital 9 6,359 6,217 6,319
Share premium 9 94,337 91,561 93,225
Other reserves 10 24,804 13,918 17,516
Retained earnings 9 126,726 93,023 110,474
Total shareholders' equity 9 252,226 204,719 227,534

 

Condensed consolidated cash flow statement

Six months
ended 30
June
Six months
ended 30
June
Year
ended 31 December
2008 2007 2007
Notes unaudited
£000's
unaudited
£000's
audited
£000's
Cash generated from operations 12 28,993 21,919 45,393
Interest paid (2,009) (1,888) (3,967)
Interest received 172 132 296
Income taxes paid (5,513) (5,139) (12,925)
Net cash from operating activities 21,643 15,024 28,797
Cash flows from investing activities
Purchases of subsidiaries net of cash acquired (17,555) (5,698) (15,758)
Deferred consideration (4,539) (3,665) (10,846)
Purchase of property, plant and equipment (3,338) (2,785) (5,811)
Sale of property, plant and equipment 1,112 49 4,239
Net cash used in investing activities (24,320) (12,099) (28,176)
Cash flows from financing activities
Proceeds from issue of share capital 171 1,608 1,730
Proceeds from sale of own shares - 1,293 1,293
Proceeds from bank borrowings 8,366 (2,635) 3,001
Payment of finance lease liabilities (98) (109) (149)
Dividends paid (3,498) (2,967) (6,144)
Payment of pre-acquisition dividend (115) - -
Net cash used in financing activities 4,826 (2,810) (269)
Net increase in cash and cash equivalents 2,149 115 352
Cash and cash equivalents at beginning of period 10,884 9,805 9,805
Effect of exchange rate fluctuations 551 39 727
Cash and cash equivalents at end of period 12 13,584 9,959 10,884
Cash and cash equivalents comprise:
Cash at bank 13,584 10,052 10,884
Bank overdraft - (93) -
Cash and cash equivalents at end of period 13,584 9,959 10,884

 

Notes to the condensed consolidated financial statements

1. Basis of preparation

RPS Group plc (the "Company") is a company domiciled in England. The condensed consolidated interim financial statements of the Company for the six months ended 30 June 2008 comprise the Company and its subsidiaries (together referred to as the "Group").

The condensed interim financial statements have been prepared using accounting policies set out in the Report and Accounts 2007 and are in accordance with IAS 34. The condensed interim financial statements are unaudited but have been reviewed by the Company's auditors. The results for the year end 31 December 2007 and the balance sheet as at that date are abridged from the Company's Report and Accounts 2007 which have been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not contain references to any matters to which the auditors drew attention by way of emphasis without qualifying the report and did not contain a statement under Section 272(2) or (3) of the Companies Act 1985.

The condensed interim financial statements do not constitute full accounts within the meaning of Section 240 of the Companies Act 1985.

2. Responsibility Statement

The directors confirm that, to the best of their knowledge this condensed set of financial statements has been prepared in accordance with IAS 34 and that this Interim Report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R.

On behalf of the Board

A. S. Hearne G. Young
Chief Executive Group Finance Director

3. Business segments

The Board believes that one of the Group's important strengths is the way in which we deploy our broad range of skills in an integrated way. The success of this part of our strategy results in projects being undertaken in a multi-disciplinary way. In consequence, there are Group activities which could be placed in more than one business segment. This becomes increasingly the case as our energy and international activities grow. The segments currently used to present and analyse the Group's performance are described below. They are kept under review by the Board.

Planning and Development - consultancy services in the UK, Ireland, Australia and the US related to town and country planning, urban design, architecture, transport planning and highway design, environmental impact assessment and provision of water and waste utilities and energy infrastructure.

Environmental Management - consultancy services in the UK, the Netherlands and Australia related to health, safety and risk management, environmental science and the management of water and energy resources.

Energy - the provision of technical consultancy services, on an international basis, to the upstream oil and gas and offshore renewable energy sectors.

Segment results for the six months ended 30 June 2008

Planning &
Development
Environmental
Management
Energy Eliminations Consolidated
£000's £000's £000's £000's £000's
Revenue 98,560 54,105 75,449 (2,247) 225,867
Recharged expenses (17,645) (7,792) (10,507) - (35,944)
Fee Income 80,915 46,313 64,942 (2,247) 189,923
Segment profit 15,057 6,835 12,445 - 34,337
Amortisation (439) (467) (231) - (1,137)
33,200
Unallocated expenses (3,674)
Operating profit 29,526

Segment results for the six months ended 30 June 2007

Planning &
Development
Environmental
Management
Energy Eliminations Consolidated
£000's £000's £000's £000's £000's
Revenue 78,547 40,909 56,585 (2,133) 173,908
Recharged expenses (13,481) (6,328) (9,733) - (29,542)
Fee Income 65,066 34,581 46,852 (2,133) 144,366
Segment profit 12,728 4,345 8,625 - 25,698
Amortisation (146) - (60) - (206)
25,492
Unallocated expenses (2,468)
Operating profit 23,024

4. Income taxes

The Group's consolidated effective tax rate for the six months ended 30 June 2008 was 30.3%, (for the year ended 31 December 2007: 30.5%; for the six months ended 30 June 2007: 30.8%).

5. Earnings per share

The calculations of earnings per share are based on the profit attributable to ordinary shareholders and a weighted average number of ordinary shares outstanding during the period as shown below:

Six months
ended 30 June
Six months
ended
30 June
Year ended
31 Dec
2008 2007 2007
£000's £000's £000's
Profit attributable to ordinary shareholders 19,097 14,813 30,910
000's 000's 000's
Weighted average number of ordinary shares for the purposes of basic earnings per share 209,865 204,592 206,256
Effect of shares to be issued as deferred consideration 505 1,059 92
Effect of employee share schemes 2,412 3,760 2,827
Weighted average number of ordinary shares for the purposes of diluted earnings per share 212,782 209,411 209,175
Basic earning per share (pence) 9.10 7.24 14.99
Diluted earnings per share (pence) 8.97 7.07 14.78

The directors consider that earnings per share before amortisation provides a more meaningful measure of the Group's performance than statutory earnings per share. The calculation of basic and diluted earnings per share before amortisation is based on the weighted average number of ordinary shares outstanding during the year as shown above and the profit attributable to ordinary shareholders before the amortisation on acquired intangible assets and the tax thereon as shown in the table below and the weighted average number of ordinary shares during the period as shown above.

Six months
ended 30 June
2008
Six months
ended 30 June
2007
Year ended
31 Dec
2007
£000's £000's £000's
Profit attributable to ordinary shareholders 19,097 14,813 30,910
Amortisation of acquired intangibles 1,137 206 531
Tax on amortisation of acquired intangibles (318) (62) (159)
Adjusted profit attributable to ordinary shareholders 19,916 14,957 31,282
Basic earnings before per share before amortisation (pence) 9.49 7.31 15.17
Diluted earnings per share before amortisation (pence) 9.36 7.14 14.95

6. Property, plant and equipment

During the six months ended 30 June 2008, the Group acquired assets with a cost of £4,036,000 (six months to 30 June 2007: £3,113,000), which includes £698,000 acquired through business combinations (six months to 30 June 2007: £328,000). Assets with a net book value of £932,000 were disposed of during the six months ended 30 June 2008 (six months ended 30 June 2007: £30,000).

7. Acquisitions

The Group completed the acquisition of seven businesses during the first half of 2008. Each purchase has been accounted for as an acquisition. Prior to completion of the transactions each acquired business kept its own management accounts. Adding the results shown in these accounts to the Group results produces Group revenue for the period of £233,708,000 and Group operating profit before amortisation of acquired intangibles of £30,316,000.

All intangible assets were recognised at their respective fair values. The residual excess over the net assets acquired, including intangible assets, is recognised as goodwill in the financial statements.

Date of Acquisition Place of incorporation Percentage of entity acquired Nature of business acquired
Kraan Consulting Holding BV 6 Feb 2008 The Netherlands 100% of issued share capital Urban planning
consultancy
RW Gregory LLP 12 Mar 2008 UK Assets and certain
liabilities
Engineering
consultancy
WTW and Associates Ltd 17 Mar 2008 UK 100% of issued share capital Oil and gas consultancy
Oceanfix International Ltd 19 Mar 2008 UK 100% of issued share capital Oil and gas consultancy
Land Management Trust
("Koltasz Smith")
27 Mar 2008 Australia Assets and certain
liabilities
Urban planning consultancy
Rudall Blanchard Associates Group Ltd 30 Mar 2008 UK 100% of issued share capital Health and Safety consultancy
The GeoCet Group LLC 18 Apr 2008 USA 100% of issued share capital Environmental consultancy

These businesses have been integrated with other parts of the Group and are no longer managed separately. They share resources, revenues, costs and market opportunities with other parts of the Group and should no longer be considered individual businesses. Their contributions to the revenue and operating profit before amortisation of acquired intangibles to the Group's results for the period, as shown below, reflects those relationships.

Revenue £'000 Operating profit £'000
Kraan Consulting Holding BV 2,723 341
RW Gregory LLP 3,457 442
Oceanfix International Ltd 3,392 402
Land Management Trust 857 191
Rudall Blanchard Group Ltd 1,861 479
The GeoCet Group LLC 779 213

It is impracticable to identify separately the revenue and operating profit contribution of WTW and Associates Ltd for the period since acquisition as this entity has been fully hived up into existing Group operations.

Details of the carrying values of the acquired net assets and the provisional fair values assigned to them by the Group are as follows:

Intangible assets
Customer relationships Order backlog Trade names Other intangibles Property, plant & equipment Cash Other assets Other liabilities Net assets
£000's £000's £000's £000's £000's £000's £000's £000's £000's
Pre acquisition carrying values
Kraan - - - 119 146 (248) 1,695 (955) 757
RWG - - - - 252 2,002 4,147 (4,900) 1,501
WTW - - - - 20 (3) 1,007 (455) 569
Oceanfix - - - - 81 533 2,454 (978) 2,090
LMT - - - - 191 - 701 (313) 579
RBA - - - 21 120 928 1,604 (774) 1,899
Geocet - - - - - 337 611 (774) 174
- - - 140 810 3,549 12,219 (9,149) 7,569
Provisional fair values
Kraan 2,714 - 374 - 124 (248) 1,654 (1,849) 2,769
RWG 2,960 1,080 200 - 252 2,002 4,221 (6,140) 4,575
WTW - 190 - - 19 (3) 1,007 (455) 758
Oceanfix 3,121 148 - - 25 533 2,454 (1,893) 4,388
LMT 550 - 632 - 191 - 701 (644) 1,430
RBA 1,207 107 - - 87 928 1,604 (1,142) 2,791
Geocet - - - - - 337 611 (774) 174
10,552 1,525 1,206 - 698 3,549 12,252 (12,897) 16,885

The fair value adjustments made to the pre acquisition carrying values to determine provisional fair values relate to the alignment of depreciation accounting policies, the identification of intangibles and the deferred tax recognised on the fair value adjustments.

Initial consideration Fair value of deferred consideration
Cash Shares Acquisition expenses Cash Shares Total consideration Net assets acquired Goodwill acquired
£000's £000's £000's £000's £000's £000's £000's £000's
Consideration
Kraan 3,009 - 344 1,720 - 5,073 2,769 2,304
RWG 5,200 1,700 217 3,238 - 10,355 4,575 5,780
WTW 1,344 - 118 468 - 1,930 758 1,172
Oceanfix 4,491 - 163 2,445 - 7,099 4,388 2,711
LMT 1,857 - 290 1,238 - 3,385 1,430 1,955
RBA 3,460 - 162 1,340 1,240 6,202 2,791 3,411
Geocet 590 - 75 554 - 1,219 174 1,045
19,951 1,700 1,369 11,003 1,240 35,263 16,885 18,378

As part of the consideration for RWG, 572,970 ordinary shares of RPS Group plc were allotted to the vendors.

As part of the deferred consideration for RBA, £1,240,000 of ordinary shares of RPS Group plc will be allotted to the vendors.

Goodwill represents the value of the assembled professional workforce acquired with these businesses.

Prior period acquisitions

The Group acquired the entire share capital of APA Petroleum Engineering Inc. in February 2007, acquired the trade, assets and certain liabilities of Safety and Risk Practice Pty Ltd in March 2007 and acquired the entire share capital of Geocon Group Services Ltd, also in March 2007.

At 30 June 2007 and 31 December 2007, the Group allotted provisional fair values to the assets and liabilities acquired as a result of these acquisitions. These provisional fair values have now been finalised. The only adjustment to the acquisitions made in the first half of 2007 has been a credit to net assets of APA Petroleum Engineering Inc. of £159,000 representing an adjustment to the opening tax balances of this entity.

8. Share capital

2008
Number
000's
2008
£000's
2007
Number
000's
2007
£000's
Authorised
Ordinary shares of 3p each at 30 June 240,000 7,200 240,000 7,200
Issued and fully paid
Ordinary shares of 3p each at 1 January 210,632 6,319 205,446 6,163
Issued under employee share schemes 737 23 1,294 39
Issued as acquisition initial consideration 573 17 512 15
At 30 June 211,942 6,359 207,252 6,217

9. Statement of changes in equity

Share capital Share premium Retained earnings Other reserves Total equity
£000's £000's £000's £000's £000's
At 1 January 2007 6,163 89,836 79,828 11,107 186,934
Changes in equity during 2007
Tax recognised directly in equity - - 678 - 678
Exchange differences - - - 300 300
Net income recognised directly in equity - - 678 300 978
Profit for the period - - 14,813 - 14,813
Total recognised income for the period - - 15,491 300 15,791
Issue of new ordinary shares 54 1,725 - 1,418 3,197
Sale of own shares - - 671 622 1,293
Share based payment expense - - - 919 919
Tax on share based payment expense - - - (448) (448)
Dividends - - (2,967) - (2,967)
At 30 June 2007 6,217 91,561 93,023 13,918 204,719
Changes in equity during 2008
At 1 January 2008 6,319 93,225 110,474 17,516 227,534
Tax recognised directly in equity - - 10 - 10
Exchange differences - - - 5,839 5,839
Net income recognised directly in equity - - 10 5,839 5,849
Profit for the period - - 19,097 - 19,097
Total recognised income for the period - - 19,107 5,839 24,946
Issue of new ordinary shares 40 1,112 (705) 1,449 1,896
Share based payment expense - - 1,348 - 1,348
Dividends - - (3,498) - (3,498)
At 30 June 2008 6,359 94,337 126,726 24,804 252,226

10. Other reserves

Merger reserve Employee trust shares Share scheme reserve Shares to be issued Translation reserve Total other reserves
£000's £000's £000's £000's £000's £000's
At 1 January 2007 10,642 (3,042) 4,053 1,997 (2,543) 11,107
Changes in equity during 2007
Exchange differences - - - - 300 300
Issue of new shares 1,572 (154) - - - 1,418
Sale of own shares - 622 - - - 622
Share based payment expense - - 919 - - 919
Tax on share based payment
expense
(448) (448)
At 30 June 2007 12,214 (2,574) 4,524 1,997 (2,243) 13,918
Changes in equity during 2008
At 1 January 2008 16,993 (2,943) - 222 3,244 17,516
Exchange differences - - - - 5,839 5,839
Issue of new shares 1,682 (233) - - - 1,449
At 30 June 2008 18,675 (3,176) - 222 9,083 24,804

11. Dividends

The following dividends were recognised as distributions to equity holders in
the period:

Six months
ended 30 June
2008
£000's
Six months
ended 30 June
2007
£000's
Year Ended
31 December
2007
£000's
Final dividend for 2007 1.66p per share 3,498 - -
Interim dividend for 2007 1.52p per share - - 3,177
Final dividend for 2006 1.44p per share - 2,967 2,967
3,498 2,967 6,144

An interim divided in respect of the six months ended 30 June 2008 of 1.75 pence per share, amounting to a total dividend of £3,712,000 was approved by the Directors of RPS Group plc on 29th July 2008. These condensed consolidated interim financial statements do not reflect this dividend payable.

12. Note to the condensed consolidated cash flow statement

Six months ended
30 June
Six months ended
30 June
Year ended 31 Dec
2008 2007 2007
£000's £000's £000's
Profit before tax 27,399 21,401 44,479
Adjustments for:
Interest payable and similar charges 2,299 1,755 3,792
Interest receivable (172) (132) (296)
Depreciation 2,966 2,244 4,758
Amortisation of acquired intangibles 1,137 206 531
Share based payment expense 1,348 919 2,142
Profit on sale of property, plant and equipment (180) - (3,224)
Provision for dilapidations - - 2,514
Increase in trade and other receivables (11,277) (11,883) (14,018)
Increase in trade and other payables 5,473 7,409 4,715
Cash generated from operations 28,993 21,919 45,393

During the period, the Group increased its loan facilities to £100 million and extended them to 2013.

The table below provides an analysis of net borrowings, comprising cash and cash equivalents, interest bearing bank loans and finance leases, during the six months ended 30 June 2008.

At 1 January 2008 Cash flow Acquisition Foreign exchange At 30 June 2008
£000's £000's £000's £000's £000's
Cash and cash equivalents 10,884 2,149 - 551 13,584
Bank loans (43,346) (8,366) - (520) (52,232)
Finance lease creditor (168) 98 (38) (35) (143)
Net borrowings (32,630) (6,119) (38) (4) (38,791)

13. Principal risks and uncertainties

The principal risks and uncertainties faced by the Group have not changed significantly since the 2007 Report and Accounts was published. The Board keeps under review the potential effect of economic circumstances.

14. Related party transactions

There were no related party transactions required to be disclosed in the period.

15. Forward-looking statements

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 a number of 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.

INDEPENDENT REVIEW REPORT TO RPS GROUP PLC

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half yearly financial report for the six months ended 30 June 2008 which comprise the Condensed Consolidated Income Statement, the Condensed Consolidated Statement of Recognised Income and Expense, the Condensed Consolidated Balance Sheet, the Condensed Consolidated Cash Flow Statement and the related notes.

We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The half-yearly financial report is the responsibility of and has been approved by the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, ‘‘Interim Financial Reporting'', as adopted by the European Union.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Our report has been prepared in accordance with the terms of our engagement to assist the company in meeting its responsibilities in respect to half-yearly financial reporting in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ‘‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity'', issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2008 is not prepared, in all material respects, in accordance with International Accounting Standard 34, as adopted by the European Union, and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

BDO Stoy Hayward LLP
Chartered Accountants and Registered Auditors
55 Baker Street
London
W1U 7EU
31 July 2008

 

2015

Half Year Results for the six months ended 30 June 2008

31 July 2008

RPS Group Plc ("RPS" or "the Group") today announces excellent results for the six months ended 30 June 2008 with profit (before tax and amortisation) up 32% and earnings per share up 30%

2008 2007
Revenue (£m) 225.9 173.9 +30%
Fee income (£m) 189.9 144.4 +32%
Profit before taxation* (£m) 28.5 21.6 +32%
Earnings per share* (basic) (pence) 9.49 7.31 +30%
* before amortisation of acquired intangible assets of £1.1m (2007: £0.2m

Highlights

  • all three segments of the Group substantially increased operating profit
  • excellent conversion of profit into cash
  • the international footprint of the Group continues to extend
  • the acquisition of quality businesses has continued
  • dividend raised 15% to 1.75p (2007: 1.52p)
  • balance sheet remains strong with net bank borrowings at £38.8m (2007: £27.4m)
  • committed bank facilities increased from £70m to £100m and extended to 2013
  • major opportunities for future growth are developing from accelerating concerns about global energy supply and climate change
  • the Board remains confident about the Group's prospects.

Brook Land, Chairman, commenting on the results, said:

"Trading in the first half of 2008 was robust. All parts of the Group grew significantly. Our strategy of supplementing organic growth with the acquisition of quality businesses continued to be successfully implemented. Acquisitions made in 2007 and the first half of 2008 support our growth and further acquisitions are being considered. The Group's balance sheet remains strong.

"The integrated services offered by our three successful businesses mean we remain well positioned to assist our clients deal with the related challenges of adapting to climate change and the need to access sustainable, safe and secure sources of energy.

"RPS is diverse and resilient, with a proven business model. Our broad range of services combined with our expanding geographic footprint, gives the Board continuing confidence about prospects for the Group."

31 July 2008

 

ENQUIRIES
RPS Group plc Today: 020 7457 2020
Dr Alan Hearne, Chief Executive Thereafter: 01235 863206
Gary Young, Finance Director
College Hill
Justine Warren Tel: 020 7457 2020
Matthew Smallwood

 

RPS is an international consultancy providing advice upon the development of natural resources, land and property, the management of the environment and the health and safety of people. We have offices in the UK, Ireland, the Netherlands, North America, Eastern Europe, South East Asia and Australia and undertake projects in many other parts of the world. The Group is a constituent of both the FTSE 250 and FTSE 4 Good Indices.

In order to assist in the reduction of greenhouse gas emissions and eventually reduce global warming, the staff of RPS have set themselves the task of reducing energy consumption by 5% each year, using 2007 as the base. If successful we will halve our (per capita) energy use by 2020.

 

Introduction

RPS is an international consultancy providing advice upon the development of natural resources, land and property, the management of the environment and the health and safety of people.

The Group seeks to ensure continuous improvement in the range and quality of our services and our financial performance by:

  • operating in markets where we can add value to our clients' activities;
  • endeavouring to achieve and maintain leadership in those markets; and
  • making acquisitions of quality businesses in order to extend our expertise and geographical presence.

The Board remains confident that this strategy will continue to offer our staff challenging and rewarding careers, whilst continuing to deliver growth and good returns for our shareholders.

 

Results

Profit (before tax and amortisation of acquired intangibles) was £28.5 million (2007: £21.6 million). Basic earnings per share (before amortisation) were 9.49 pence (2007: 7.31 pence). Cash generated from operations was £29.0 million (2007: £21.9 million). After funding acquisition consideration of £22.1 million, the Group had net borrowings of £38.8 million at 30 June (2007: £27.4 million).

The Board has increased the interim dividend by 15% to 1.75 pence per share (2007: 1.52 pence) payable on 23rd October 2008 to shareholders on the register on 26th September 2008. Our dividend has risen at this rate for a number of years.

Operations and Markets

Energy

2008 2007
Fee income (£m) 64.9 46.9 +39%
Segment profit* (£m) 12.4 8.6 +44%
Margin 19.2% 18.4%
* before amortisation of acquired intangible assets of £0.2m (2007: £0.1m)

We provide consultancy services on an international basis to the oil and gas industries from bases in the UK, USA, Canada, Australia, Malaysia and Singapore. Projects are undertaken in many other countries including China, India, Brazil and Russia. In the UK we also provide advice to the renewables industry. The business continued to perform extremely well, with good organic growth being supplemented by further acquisitions. This reflects both buoyant market conditions, which we expect to continue, as well as our position as a world leader in this sector.

Demand for our services from oil and, increasingly, gas exploration and production companies continues to grow. We see accelerating interest from clients in the combination of the geological, engineering, environmental and safety expertise that we provide. The requirements of the developed world to identify and secure long term supplies of energy, coupled with the increasing energy needs of developing nations, suggest that activity in this market will remain at a high level for the foreseeable future. The acquisition of WTW has expanded our operational capability and Oceanfix has enabled us to become more involved in the planning of survey aspects of offshore construction, another fast growing area.

RPS's reputation within the financial community in respect of determination of oil and gas reserves for reporting purposes, and in support of corporate activity developed encouragingly. The oil and gas companies and their advisors value the breadth and depth of our expertise, including our environmental experience.

Our international profile has helped us to create successful staff recruitment and retention strategies. Rising fee rates have enabled us to increase rewards to our staff, a trend we see continuing. The acquisitions made during the course of 2007 and the first half of this year enhanced our staff base, whilst also enabling us to develop our businesses in North America and Australia.

High oil and gas prices support not only our business in those markets, but also investment in renewable energy. The geological, engineering and environmental skills we have are proving to be of significant value to developers of offshore wind farms and other offshore renewable technologies around the UK coast. Working with the planning and environmental assessment capability we have in our Planning & Development business, our Energy staff have been involved in schemes which account for about 90% of the UK offshore wind farm capacity. Recent policy statements from the UK government are expected to bring forward further significant investment in wind farm development, from which we are likely to benefit.

Planning and Development

2008 2007
Fee income (£m) 80.9 65.1 +24%
Segment profit* (£m) 15.1 12.7 +18%
Margin 18.6% 19.6%
* before amortisation of acquired intangible assets of £0.4m (2007: £0.1m)

Within this business we provide consultancy services in respect of town and country planning, building, landscape and urban design, transport planning and highway design, environmental assessment and energy use and efficiency. The growth in this part of the Group was encouraging with the operating margin remaining high. We remain leaders in this market in the UK, Ireland, and Western Australia, acting for blue chip clients in both the public and private sectors.

Our planning business is also able to assist clients in other parts of the Group secure planning permissions for capital projects, for example, in the energy and water sectors. This is particularly marked in Australia, but is increasingly the case in the UK, Ireland and the US, where JD Consulting, acquired in December 2007 and located in Texas, is currently advising upon a proposal for one of the world's largest onshore wind farms.

In the UK our ability to advise upon the full range of issues relevant to the development of sustainable communities and secure planning permission for large complex schemes remains attractive to clients. Our ability to handle complex sustainability issues helps us to secure this work and execute it at the high level needed to achieve the permissions required by our clients. In consequence, we continue to work on some of the largest regeneration and infrastructure projects; these provide long term activity for us. We are also involved in both the waste and minerals sectors, in which securing planning permission has become far more complex. Current economic circumstances are affecting the volume of housebuilding and other speculative property development undertaken by some of our clients. The limited effect of this on our UK Planning and Development business is being mitigated by opportunities in new markets which continue to develop, particularly in respect of securing planning permissions for energy infrastructure investment. This involves projects such as LNG plants, new nuclear power stations, renewable energy schemes and gas storage facilities. We also benefit from the need to integrate energy efficiency into planning proposals and development schemes. The acquisition of RW Gregory increased our capability in this field materially.

Our activities in the planning and development market in Australia showed good growth. The long term potential of this market has encouraged us to develop a plan to grow these activities substantially. We are now seeing the benefits of this and expect our Australian business to continue to grow in the coming years.

The Irish Government maintains its commitment to invest in ambitious plans for infrastructure development, despite a slowdown in the economy. Implementing The National Development Plan 2007-2013 which targets "Economic Infrastructure" remains a priority, with €54.6bn identified for expenditure on roads, public transport, water, airports and energy infrastructure. We benefit significantly from this investment and, as in the UK, our sustainability credentials give us a competitive advantage.

Environmental Management

2008 2007
Fee income (£m) 46.3 34.6 +34%
Segment profit* (£m) 6.8 4.3 +57%
Margin 14.8% 12.6%
* before amortisation of acquired intangible assets of £0.5m (2007: nil)

This business provides consultancy services in respect of health, safety, risk and environmental management in the UK and the Netherlands and the management of water resources in the UK. The results in the first half were excellent. Through the acquisition of MetOcean in Australia in the second half of 2007, we extended both the range of our services and geographical reach of the business. The acquisitions of RBA and Geocet increased our capability to provide oil and gas clients with health, safety and environmental expertise directly relevant to their activities. Our growing health, safety and risk management involvement with the oil and gas and nuclear industries is becoming strategically important. Our Dutch business performed well; the acquisition of Kraan signals our increasing confidence in both the market and prospects for our business there.

RPS's strength in the water industry, coupled with our environmental credentials, position us well to advise our clients in the water sector on a broad range of issues. As a result our business servicing the UK water industry, which had a good year in 2007, continued this performance into 2008. We are working on long term commissions for the majority of the privatised water companies, as well as undertaking significant work in Scotland. The UK markets in health and safety and occupational health and hygiene have generally remained strong, driven by increasing statutory obligations. Although some clients in this market are confronted with economic uncertainty, awareness of the importance of managing these matters more carefully has heightened.

Funding

The conversion of profit into cash continued at a good level and our balance sheet remains strong. Net borrowings at 30 June were £38.8 million.

Following the seven acquisitions made in the period the book value of deferred consideration and outstanding loan notes related to acquisitions amounts to £4.7 million falling due for settlement in cash during the second half of 2008, £13.8 million in 2009, £7.2 million in 2010 and £1.1 million in 2011.

We have increased our committed bank facilities from £70 million to £100 million and extended them until 2013, on broadly unchanged terms. Our cash generation, in conjunction with these facilities and an ability to use equity in transactions, means that we are able to continue our acquisition strategy.

Prospects

Balancing the way energy is secured from various sources, managing its use to limit environmental damage, whilst planning further economic growth and urban development has become a fundamental challenge of this century. It is one which RPS is extremely well positioned to advise upon and will enable us to build further momentum and provides opportunities for all our businesses. The Board believes these opportunities will continue to outweigh the adverse consequences of economic turbulence.

Our continued investment in the energy sector has enabled us to internationalise our activities in a significant way. As a result, we now have strong businesses in the USA, Canada and Australia as well as substantial contracts relating to oil and gas exploration and production in many parts of the developing world, including India, Russia and China.

We have successfully begun the process of expanding our activities in Australia into planning and development and environmental management. We are confident these can be extended substantially. Australia is also a good base from which to develop our activities in Asia. Opportunities also exist to develop the full range of our activities in both the USA and Canada.

The integrated services offered by our three successful businesses mean we remain well positioned to assist our clients deal with the related challenges of adapting to climate change and the need to access sustainable, safe and secure sources of energy.

RPS is diverse and resilient with a proven business model. Our broad range of services, coupled with our expanding geographic footprint, gives the Board continuing confidence about prospects for the Group.

Board of Directors
RPS Group plc
31 July 2008

 

Condensed consolidated income statement

Notes Six months
ended
30 June
Six months
ended
30 June
Year
ended 31
December
2008 2007 2007
unaudited unaudited audited
£000's £000's £000's
Revenue 3 225,867 173,908 362,674
Recharged expenses 3 (35,944) (29,542) (57,566)
Fee income 3 189,923 144,366 305,108
Operating profit 3 29,526 23,024 47,975
Finance costs (2,299) (1,755) (3,792)
Finance income 172 132 296
Profit before tax and amortisation
of acquired intangibles
28,536 21,607 45,010
Amortisation of acquired intangibles (1,137) (206) (531)
Profit before tax 27,399 21,401 44,479
Tax expense 4 (8,302) (6,588) (13,569)
Profit for the period attributable to
equity holders of the parent
19,097 14,813 30,910
Basic earnings per share (pence) 5 9.10 7.24 14.99
Diluted earnings per share (pence) 5 8.97 7.07 14.78
Basic earnings per share before
amortisation of acquired
intangibles (pence)
5 9.49 7.31 15.17
Diluted earnings per share before
amortisation of acquired
intangibles (pence)
5 9.36 7.14 14.95

 

Condensed consolidated statement of recognised income and expense

Six months
ended
30 June
Six months
ended
30 June
Year
ended 31
December
2008 2007 2007
unaudited unaudited audited
£000's £000's £000's
Exchange differences 5,839 300 5,787
Tax recognised directly in equity 10 678 743
Income recognised directly in equity 5,849 978 6,530
Profit for the period 19,097 14,813 30,910
Total recognised income for the
period attributable to equity
holders of the parent
24,946 15,791 37,440

 

Condensed consolidated balance sheet

As at
30 June
As at
30 June
As at
31 December
2008 2007 2007
unaudited unaudited audited
Notes £000's £000's £000's
Assets
Non-current assets
Intangible assets 245,828 187,019 210,839
Property, plant and equipment 6 22,779 19,202 21,706
Deferred tax assets - 2,401 114
268,607 208,622 232,659
Current assets
Trade and other receivables 146.462 109,921 119,504
Cash at bank 13,584 10,052 10,884
160,046 119,973 130,388
Liabilities
Current liabilities
Borrowings 204 262 174
Deferred consideration 12,753 9,745 8,939
Trade and other payables 78,842 60,351 62,750
Corporation tax liabilities 6,907 4,786 3,434
Provisions 1,279 332 595
99,985 75,476 75,892
Net current assets 60,061 44,497 54,496
Non-current liabilities
Borrowings 52,171 37,156 43,340
Deferred consideration 15,293 9,350 10,453
Other creditors 1,511 330 1,320
Deferred tax liabilities 3,844 - -
Provisions 3,623 1,564 4,508
76,442 48,400 59,621
Net assets 252,226 204,719 227,534
Equity
Share capital 9 6,359 6,217 6,319
Share premium 9 94,337 91,561 93,225
Other reserves 10 24,804 13,918 17,516
Retained earnings 9 126,726 93,023 110,474
Total shareholders' equity 9 252,226 204,719 227,534

 

Condensed consolidated cash flow statement

Six months
ended 30
June
Six months
ended 30
June
Year
ended 31 December
2008 2007 2007
Notes unaudited
£000's
unaudited
£000's
audited
£000's
Cash generated from operations 12 28,993 21,919 45,393
Interest paid (2,009) (1,888) (3,967)
Interest received 172 132 296
Income taxes paid (5,513) (5,139) (12,925)
Net cash from operating activities 21,643 15,024 28,797
Cash flows from investing activities
Purchases of subsidiaries net of cash acquired (17,555) (5,698) (15,758)
Deferred consideration (4,539) (3,665) (10,846)
Purchase of property, plant and equipment (3,338) (2,785) (5,811)
Sale of property, plant and equipment 1,112 49 4,239
Net cash used in investing activities (24,320) (12,099) (28,176)
Cash flows from financing activities
Proceeds from issue of share capital 171 1,608 1,730
Proceeds from sale of own shares - 1,293 1,293
Proceeds from bank borrowings 8,366 (2,635) 3,001
Payment of finance lease liabilities (98) (109) (149)
Dividends paid (3,498) (2,967) (6,144)
Payment of pre-acquisition dividend (115) - -
Net cash used in financing activities 4,826 (2,810) (269)
Net increase in cash and cash equivalents 2,149 115 352
Cash and cash equivalents at beginning of period 10,884 9,805 9,805
Effect of exchange rate fluctuations 551 39 727
Cash and cash equivalents at end of period 12 13,584 9,959 10,884
Cash and cash equivalents comprise:
Cash at bank 13,584 10,052 10,884
Bank overdraft - (93) -
Cash and cash equivalents at end of period 13,584 9,959 10,884

 

Notes to the condensed consolidated financial statements

1. Basis of preparation

RPS Group plc (the "Company") is a company domiciled in England. The condensed consolidated interim financial statements of the Company for the six months ended 30 June 2008 comprise the Company and its subsidiaries (together referred to as the "Group").

The condensed interim financial statements have been prepared using accounting policies set out in the Report and Accounts 2007 and are in accordance with IAS 34. The condensed interim financial statements are unaudited but have been reviewed by the Company's auditors. The results for the year end 31 December 2007 and the balance sheet as at that date are abridged from the Company's Report and Accounts 2007 which have been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not contain references to any matters to which the auditors drew attention by way of emphasis without qualifying the report and did not contain a statement under Section 272(2) or (3) of the Companies Act 1985.

The condensed interim financial statements do not constitute full accounts within the meaning of Section 240 of the Companies Act 1985.

2. Responsibility Statement

The directors confirm that, to the best of their knowledge this condensed set of financial statements has been prepared in accordance with IAS 34 and that this Interim Report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R.

On behalf of the Board

A. S. Hearne G. Young
Chief Executive Group Finance Director

3. Business segments

The Board believes that one of the Group's important strengths is the way in which we deploy our broad range of skills in an integrated way. The success of this part of our strategy results in projects being undertaken in a multi-disciplinary way. In consequence, there are Group activities which could be placed in more than one business segment. This becomes increasingly the case as our energy and international activities grow. The segments currently used to present and analyse the Group's performance are described below. They are kept under review by the Board.

Planning and Development - consultancy services in the UK, Ireland, Australia and the US related to town and country planning, urban design, architecture, transport planning and highway design, environmental impact assessment and provision of water and waste utilities and energy infrastructure.

Environmental Management - consultancy services in the UK, the Netherlands and Australia related to health, safety and risk management, environmental science and the management of water and energy resources.

Energy - the provision of technical consultancy services, on an international basis, to the upstream oil and gas and offshore renewable energy sectors.

Segment results for the six months ended 30 June 2008

Planning &
Development
Environmental
Management
Energy Eliminations Consolidated
£000's £000's £000's £000's £000's
Revenue 98,560 54,105 75,449 (2,247) 225,867
Recharged expenses (17,645) (7,792) (10,507) - (35,944)
Fee Income 80,915 46,313 64,942 (2,247) 189,923
Segment profit 15,057 6,835 12,445 - 34,337
Amortisation (439) (467) (231) - (1,137)
33,200
Unallocated expenses (3,674)
Operating profit 29,526

Segment results for the six months ended 30 June 2007

Planning &
Development
Environmental
Management
Energy Eliminations Consolidated
£000's £000's £000's £000's £000's
Revenue 78,547 40,909 56,585 (2,133) 173,908
Recharged expenses (13,481) (6,328) (9,733) - (29,542)
Fee Income 65,066 34,581 46,852 (2,133) 144,366
Segment profit 12,728 4,345 8,625 - 25,698
Amortisation (146) - (60) - (206)
25,492
Unallocated expenses (2,468)
Operating profit 23,024

4. Income taxes

The Group's consolidated effective tax rate for the six months ended 30 June 2008 was 30.3%, (for the year ended 31 December 2007: 30.5%; for the six months ended 30 June 2007: 30.8%).

5. Earnings per share

The calculations of earnings per share are based on the profit attributable to ordinary shareholders and a weighted average number of ordinary shares outstanding during the period as shown below:

Six months
ended 30 June
Six months
ended
30 June
Year ended
31 Dec
2008 2007 2007
£000's £000's £000's
Profit attributable to ordinary shareholders 19,097 14,813 30,910
000's 000's 000's
Weighted average number of ordinary shares for the purposes of basic earnings per share 209,865 204,592 206,256
Effect of shares to be issued as deferred consideration 505 1,059 92
Effect of employee share schemes 2,412 3,760 2,827
Weighted average number of ordinary shares for the purposes of diluted earnings per share 212,782 209,411 209,175
Basic earning per share (pence) 9.10 7.24 14.99
Diluted earnings per share (pence) 8.97 7.07 14.78

The directors consider that earnings per share before amortisation provides a more meaningful measure of the Group's performance than statutory earnings per share. The calculation of basic and diluted earnings per share before amortisation is based on the weighted average number of ordinary shares outstanding during the year as shown above and the profit attributable to ordinary shareholders before the amortisation on acquired intangible assets and the tax thereon as shown in the table below and the weighted average number of ordinary shares during the period as shown above.

Six months
ended 30 June
2008
Six months
ended 30 June
2007
Year ended
31 Dec
2007
£000's £000's £000's
Profit attributable to ordinary shareholders 19,097 14,813 30,910
Amortisation of acquired intangibles 1,137 206 531
Tax on amortisation of acquired intangibles (318) (62) (159)
Adjusted profit attributable to ordinary shareholders 19,916 14,957 31,282
Basic earnings before per share before amortisation (pence) 9.49 7.31 15.17
Diluted earnings per share before amortisation (pence) 9.36 7.14 14.95

6. Property, plant and equipment

During the six months ended 30 June 2008, the Group acquired assets with a cost of £4,036,000 (six months to 30 June 2007: £3,113,000), which includes £698,000 acquired through business combinations (six months to 30 June 2007: £328,000). Assets with a net book value of £932,000 were disposed of during the six months ended 30 June 2008 (six months ended 30 June 2007: £30,000).

7. Acquisitions

The Group completed the acquisition of seven businesses during the first half of 2008. Each purchase has been accounted for as an acquisition. Prior to completion of the transactions each acquired business kept its own management accounts. Adding the results shown in these accounts to the Group results produces Group revenue for the period of £233,708,000 and Group operating profit before amortisation of acquired intangibles of £30,316,000.

All intangible assets were recognised at their respective fair values. The residual excess over the net assets acquired, including intangible assets, is recognised as goodwill in the financial statements.

Date of Acquisition Place of incorporation Percentage of entity acquired Nature of business acquired
Kraan Consulting Holding BV 6 Feb 2008 The Netherlands 100% of issued share capital Urban planning
consultancy
RW Gregory LLP 12 Mar 2008 UK Assets and certain
liabilities
Engineering
consultancy
WTW and Associates Ltd 17 Mar 2008 UK 100% of issued share capital Oil and gas consultancy
Oceanfix International Ltd 19 Mar 2008 UK 100% of issued share capital Oil and gas consultancy
Land Management Trust
("Koltasz Smith")
27 Mar 2008 Australia Assets and certain
liabilities
Urban planning consultancy
Rudall Blanchard Associates Group Ltd 30 Mar 2008 UK 100% of issued share capital Health and Safety consultancy
The GeoCet Group LLC 18 Apr 2008 USA 100% of issued share capital Environmental consultancy

These businesses have been integrated with other parts of the Group and are no longer managed separately. They share resources, revenues, costs and market opportunities with other parts of the Group and should no longer be considered individual businesses. Their contributions to the revenue and operating profit before amortisation of acquired intangibles to the Group's results for the period, as shown below, reflects those relationships.

Revenue £'000 Operating profit £'000
Kraan Consulting Holding BV 2,723 341
RW Gregory LLP 3,457 442
Oceanfix International Ltd 3,392 402
Land Management Trust 857 191
Rudall Blanchard Group Ltd 1,861 479
The GeoCet Group LLC 779 213

It is impracticable to identify separately the revenue and operating profit contribution of WTW and Associates Ltd for the period since acquisition as this entity has been fully hived up into existing Group operations.

Details of the carrying values of the acquired net assets and the provisional fair values assigned to them by the Group are as follows:

Intangible assets
Customer relationships Order backlog Trade names Other intangibles Property, plant & equipment Cash Other assets Other liabilities Net assets
£000's £000's £000's £000's £000's £000's £000's £000's £000's
Pre acquisition carrying values
Kraan - - - 119 146 (248) 1,695 (955) 757
RWG - - - - 252 2,002 4,147 (4,900) 1,501
WTW - - - - 20 (3) 1,007 (455) 569
Oceanfix - - - - 81 533 2,454 (978) 2,090
LMT - - - - 191 - 701 (313) 579
RBA - - - 21 120 928 1,604 (774) 1,899
Geocet - - - - - 337 611 (774) 174
- - - 140 810 3,549 12,219 (9,149) 7,569
Provisional fair values
Kraan 2,714 - 374 - 124 (248) 1,654 (1,849) 2,769
RWG 2,960 1,080 200 - 252 2,002 4,221 (6,140) 4,575
WTW - 190 - - 19 (3) 1,007 (455) 758
Oceanfix 3,121 148 - - 25 533 2,454 (1,893) 4,388
LMT 550 - 632 - 191 - 701 (644) 1,430
RBA 1,207 107 - - 87 928 1,604 (1,142) 2,791
Geocet - - - - - 337 611 (774) 174
10,552 1,525 1,206 - 698 3,549 12,252 (12,897) 16,885

The fair value adjustments made to the pre acquisition carrying values to determine provisional fair values relate to the alignment of depreciation accounting policies, the identification of intangibles and the deferred tax recognised on the fair value adjustments.

Initial consideration Fair value of deferred consideration
Cash Shares Acquisition expenses Cash Shares Total consideration Net assets acquired Goodwill acquired
£000's £000's £000's £000's £000's £000's £000's £000's
Consideration
Kraan 3,009 - 344 1,720 - 5,073 2,769 2,304
RWG 5,200 1,700 217 3,238 - 10,355 4,575 5,780
WTW 1,344 - 118 468 - 1,930 758 1,172
Oceanfix 4,491 - 163 2,445 - 7,099 4,388 2,711
LMT 1,857 - 290 1,238 - 3,385 1,430 1,955
RBA 3,460 - 162 1,340 1,240 6,202 2,791 3,411
Geocet 590 - 75 554 - 1,219 174 1,045
19,951 1,700 1,369 11,003 1,240 35,263 16,885 18,378

As part of the consideration for RWG, 572,970 ordinary shares of RPS Group plc were allotted to the vendors.

As part of the deferred consideration for RBA, £1,240,000 of ordinary shares of RPS Group plc will be allotted to the vendors.

Goodwill represents the value of the assembled professional workforce acquired with these businesses.

Prior period acquisitions

The Group acquired the entire share capital of APA Petroleum Engineering Inc. in February 2007, acquired the trade, assets and certain liabilities of Safety and Risk Practice Pty Ltd in March 2007 and acquired the entire share capital of Geocon Group Services Ltd, also in March 2007.

At 30 June 2007 and 31 December 2007, the Group allotted provisional fair values to the assets and liabilities acquired as a result of these acquisitions. These provisional fair values have now been finalised. The only adjustment to the acquisitions made in the first half of 2007 has been a credit to net assets of APA Petroleum Engineering Inc. of £159,000 representing an adjustment to the opening tax balances of this entity.

8. Share capital

2008
Number
000's
2008
£000's
2007
Number
000's
2007
£000's
Authorised
Ordinary shares of 3p each at 30 June 240,000 7,200 240,000 7,200
Issued and fully paid
Ordinary shares of 3p each at 1 January 210,632 6,319 205,446 6,163
Issued under employee share schemes 737 23 1,294 39
Issued as acquisition initial consideration 573 17 512 15
At 30 June 211,942 6,359 207,252 6,217

9. Statement of changes in equity

Share capital Share premium Retained earnings Other reserves Total equity
£000's £000's £000's £000's £000's
At 1 January 2007 6,163 89,836 79,828 11,107 186,934
Changes in equity during 2007
Tax recognised directly in equity - - 678 - 678
Exchange differences - - - 300 300
Net income recognised directly in equity - - 678 300 978
Profit for the period - - 14,813 - 14,813
Total recognised income for the period - - 15,491 300 15,791
Issue of new ordinary shares 54 1,725 - 1,418 3,197
Sale of own shares - - 671 622 1,293
Share based payment expense - - - 919 919
Tax on share based payment expense - - - (448) (448)
Dividends - - (2,967) - (2,967)
At 30 June 2007 6,217 91,561 93,023 13,918 204,719
Changes in equity during 2008
At 1 January 2008 6,319 93,225 110,474 17,516 227,534
Tax recognised directly in equity - - 10 - 10
Exchange differences - - - 5,839 5,839
Net income recognised directly in equity - - 10 5,839 5,849
Profit for the period - - 19,097 - 19,097
Total recognised income for the period - - 19,107 5,839 24,946
Issue of new ordinary shares 40 1,112 (705) 1,449 1,896
Share based payment expense - - 1,348 - 1,348
Dividends - - (3,498) - (3,498)
At 30 June 2008 6,359 94,337 126,726 24,804 252,226

10. Other reserves

Merger reserve Employee trust shares Share scheme reserve Shares to be issued Translation reserve Total other reserves
£000's £000's £000's £000's £000's £000's
At 1 January 2007 10,642 (3,042) 4,053 1,997 (2,543) 11,107
Changes in equity during 2007
Exchange differences - - - - 300 300
Issue of new shares 1,572 (154) - - - 1,418
Sale of own shares - 622 - - - 622
Share based payment expense - - 919 - - 919
Tax on share based payment
expense
(448) (448)
At 30 June 2007 12,214 (2,574) 4,524 1,997 (2,243) 13,918
Changes in equity during 2008
At 1 January 2008 16,993 (2,943) - 222 3,244 17,516
Exchange differences - - - - 5,839 5,839
Issue of new shares 1,682 (233) - - - 1,449
At 30 June 2008 18,675 (3,176) - 222 9,083 24,804

11. Dividends

The following dividends were recognised as distributions to equity holders in
the period:

Six months
ended 30 June
2008
£000's
Six months
ended 30 June
2007
£000's
Year Ended
31 December
2007
£000's
Final dividend for 2007 1.66p per share 3,498 - -
Interim dividend for 2007 1.52p per share - - 3,177
Final dividend for 2006 1.44p per share - 2,967 2,967
3,498 2,967 6,144

An interim divided in respect of the six months ended 30 June 2008 of 1.75 pence per share, amounting to a total dividend of £3,712,000 was approved by the Directors of RPS Group plc on 29th July 2008. These condensed consolidated interim financial statements do not reflect this dividend payable.

12. Note to the condensed consolidated cash flow statement

Six months ended
30 June
Six months ended
30 June
Year ended 31 Dec
2008 2007 2007
£000's £000's £000's
Profit before tax 27,399 21,401 44,479
Adjustments for:
Interest payable and similar charges 2,299 1,755 3,792
Interest receivable (172) (132) (296)
Depreciation 2,966 2,244 4,758
Amortisation of acquired intangibles 1,137 206 531
Share based payment expense 1,348 919 2,142
Profit on sale of property, plant and equipment (180) - (3,224)
Provision for dilapidations - - 2,514
Increase in trade and other receivables (11,277) (11,883) (14,018)
Increase in trade and other payables 5,473 7,409 4,715
Cash generated from operations 28,993 21,919 45,393

During the period, the Group increased its loan facilities to £100 million and extended them to 2013.

The table below provides an analysis of net borrowings, comprising cash and cash equivalents, interest bearing bank loans and finance leases, during the six months ended 30 June 2008.

At 1 January 2008 Cash flow Acquisition Foreign exchange At 30 June 2008
£000's £000's £000's £000's £000's
Cash and cash equivalents 10,884 2,149 - 551 13,584
Bank loans (43,346) (8,366) - (520) (52,232)
Finance lease creditor (168) 98 (38) (35) (143)
Net borrowings (32,630) (6,119) (38) (4) (38,791)

13. Principal risks and uncertainties

The principal risks and uncertainties faced by the Group have not changed significantly since the 2007 Report and Accounts was published. The Board keeps under review the potential effect of economic circumstances.

14. Related party transactions

There were no related party transactions required to be disclosed in the period.

15. Forward-looking statements

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 a number of 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.

INDEPENDENT REVIEW REPORT TO RPS GROUP PLC

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half yearly financial report for the six months ended 30 June 2008 which comprise the Condensed Consolidated Income Statement, the Condensed Consolidated Statement of Recognised Income and Expense, the Condensed Consolidated Balance Sheet, the Condensed Consolidated Cash Flow Statement and the related notes.

We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The half-yearly financial report is the responsibility of and has been approved by the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, ‘‘Interim Financial Reporting'', as adopted by the European Union.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Our report has been prepared in accordance with the terms of our engagement to assist the company in meeting its responsibilities in respect to half-yearly financial reporting in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ‘‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity'', issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2008 is not prepared, in all material respects, in accordance with International Accounting Standard 34, as adopted by the European Union, and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

BDO Stoy Hayward LLP
Chartered Accountants and Registered Auditors
55 Baker Street
London
W1U 7EU
31 July 2008

 

2014

Half Year Results for the six months ended 30 June 2008

31 July 2008

RPS Group Plc ("RPS" or "the Group") today announces excellent results for the six months ended 30 June 2008 with profit (before tax and amortisation) up 32% and earnings per share up 30%

2008 2007
Revenue (£m) 225.9 173.9 +30%
Fee income (£m) 189.9 144.4 +32%
Profit before taxation* (£m) 28.5 21.6 +32%
Earnings per share* (basic) (pence) 9.49 7.31 +30%
* before amortisation of acquired intangible assets of £1.1m (2007: £0.2m

Highlights

  • all three segments of the Group substantially increased operating profit
  • excellent conversion of profit into cash
  • the international footprint of the Group continues to extend
  • the acquisition of quality businesses has continued
  • dividend raised 15% to 1.75p (2007: 1.52p)
  • balance sheet remains strong with net bank borrowings at £38.8m (2007: £27.4m)
  • committed bank facilities increased from £70m to £100m and extended to 2013
  • major opportunities for future growth are developing from accelerating concerns about global energy supply and climate change
  • the Board remains confident about the Group's prospects.

Brook Land, Chairman, commenting on the results, said:

"Trading in the first half of 2008 was robust. All parts of the Group grew significantly. Our strategy of supplementing organic growth with the acquisition of quality businesses continued to be successfully implemented. Acquisitions made in 2007 and the first half of 2008 support our growth and further acquisitions are being considered. The Group's balance sheet remains strong.

"The integrated services offered by our three successful businesses mean we remain well positioned to assist our clients deal with the related challenges of adapting to climate change and the need to access sustainable, safe and secure sources of energy.

"RPS is diverse and resilient, with a proven business model. Our broad range of services combined with our expanding geographic footprint, gives the Board continuing confidence about prospects for the Group."

31 July 2008

 

ENQUIRIES
RPS Group plc Today: 020 7457 2020
Dr Alan Hearne, Chief Executive Thereafter: 01235 863206
Gary Young, Finance Director
College Hill
Justine Warren Tel: 020 7457 2020
Matthew Smallwood

 

RPS is an international consultancy providing advice upon the development of natural resources, land and property, the management of the environment and the health and safety of people. We have offices in the UK, Ireland, the Netherlands, North America, Eastern Europe, South East Asia and Australia and undertake projects in many other parts of the world. The Group is a constituent of both the FTSE 250 and FTSE 4 Good Indices.

In order to assist in the reduction of greenhouse gas emissions and eventually reduce global warming, the staff of RPS have set themselves the task of reducing energy consumption by 5% each year, using 2007 as the base. If successful we will halve our (per capita) energy use by 2020.

 

Introduction

RPS is an international consultancy providing advice upon the development of natural resources, land and property, the management of the environment and the health and safety of people.

The Group seeks to ensure continuous improvement in the range and quality of our services and our financial performance by:

  • operating in markets where we can add value to our clients' activities;
  • endeavouring to achieve and maintain leadership in those markets; and
  • making acquisitions of quality businesses in order to extend our expertise and geographical presence.

The Board remains confident that this strategy will continue to offer our staff challenging and rewarding careers, whilst continuing to deliver growth and good returns for our shareholders.

 

Results

Profit (before tax and amortisation of acquired intangibles) was £28.5 million (2007: £21.6 million). Basic earnings per share (before amortisation) were 9.49 pence (2007: 7.31 pence). Cash generated from operations was £29.0 million (2007: £21.9 million). After funding acquisition consideration of £22.1 million, the Group had net borrowings of £38.8 million at 30 June (2007: £27.4 million).

The Board has increased the interim dividend by 15% to 1.75 pence per share (2007: 1.52 pence) payable on 23rd October 2008 to shareholders on the register on 26th September 2008. Our dividend has risen at this rate for a number of years.

Operations and Markets

Energy

2008 2007
Fee income (£m) 64.9 46.9 +39%
Segment profit* (£m) 12.4 8.6 +44%
Margin 19.2% 18.4%
* before amortisation of acquired intangible assets of £0.2m (2007: £0.1m)

We provide consultancy services on an international basis to the oil and gas industries from bases in the UK, USA, Canada, Australia, Malaysia and Singapore. Projects are undertaken in many other countries including China, India, Brazil and Russia. In the UK we also provide advice to the renewables industry. The business continued to perform extremely well, with good organic growth being supplemented by further acquisitions. This reflects both buoyant market conditions, which we expect to continue, as well as our position as a world leader in this sector.

Demand for our services from oil and, increasingly, gas exploration and production companies continues to grow. We see accelerating interest from clients in the combination of the geological, engineering, environmental and safety expertise that we provide. The requirements of the developed world to identify and secure long term supplies of energy, coupled with the increasing energy needs of developing nations, suggest that activity in this market will remain at a high level for the foreseeable future. The acquisition of WTW has expanded our operational capability and Oceanfix has enabled us to become more involved in the planning of survey aspects of offshore construction, another fast growing area.

RPS's reputation within the financial community in respect of determination of oil and gas reserves for reporting purposes, and in support of corporate activity developed encouragingly. The oil and gas companies and their advisors value the breadth and depth of our expertise, including our environmental experience.

Our international profile has helped us to create successful staff recruitment and retention strategies. Rising fee rates have enabled us to increase rewards to our staff, a trend we see continuing. The acquisitions made during the course of 2007 and the first half of this year enhanced our staff base, whilst also enabling us to develop our businesses in North America and Australia.

High oil and gas prices support not only our business in those markets, but also investment in renewable energy. The geological, engineering and environmental skills we have are proving to be of significant value to developers of offshore wind farms and other offshore renewable technologies around the UK coast. Working with the planning and environmental assessment capability we have in our Planning & Development business, our Energy staff have been involved in schemes which account for about 90% of the UK offshore wind farm capacity. Recent policy statements from the UK government are expected to bring forward further significant investment in wind farm development, from which we are likely to benefit.

Planning and Development

2008 2007
Fee income (£m) 80.9 65.1 +24%
Segment profit* (£m) 15.1 12.7 +18%
Margin 18.6% 19.6%
* before amortisation of acquired intangible assets of £0.4m (2007: £0.1m)

Within this business we provide consultancy services in respect of town and country planning, building, landscape and urban design, transport planning and highway design, environmental assessment and energy use and efficiency. The growth in this part of the Group was encouraging with the operating margin remaining high. We remain leaders in this market in the UK, Ireland, and Western Australia, acting for blue chip clients in both the public and private sectors.

Our planning business is also able to assist clients in other parts of the Group secure planning permissions for capital projects, for example, in the energy and water sectors. This is particularly marked in Australia, but is increasingly the case in the UK, Ireland and the US, where JD Consulting, acquired in December 2007 and located in Texas, is currently advising upon a proposal for one of the world's largest onshore wind farms.

In the UK our ability to advise upon the full range of issues relevant to the development of sustainable communities and secure planning permission for large complex schemes remains attractive to clients. Our ability to handle complex sustainability issues helps us to secure this work and execute it at the high level needed to achieve the permissions required by our clients. In consequence, we continue to work on some of the largest regeneration and infrastructure projects; these provide long term activity for us. We are also involved in both the waste and minerals sectors, in which securing planning permission has become far more complex. Current economic circumstances are affecting the volume of housebuilding and other speculative property development undertaken by some of our clients. The limited effect of this on our UK Planning and Development business is being mitigated by opportunities in new markets which continue to develop, particularly in respect of securing planning permissions for energy infrastructure investment. This involves projects such as LNG plants, new nuclear power stations, renewable energy schemes and gas storage facilities. We also benefit from the need to integrate energy efficiency into planning proposals and development schemes. The acquisition of RW Gregory increased our capability in this field materially.

Our activities in the planning and development market in Australia showed good growth. The long term potential of this market has encouraged us to develop a plan to grow these activities substantially. We are now seeing the benefits of this and expect our Australian business to continue to grow in the coming years.

The Irish Government maintains its commitment to invest in ambitious plans for infrastructure development, despite a slowdown in the economy. Implementing The National Development Plan 2007-2013 which targets "Economic Infrastructure" remains a priority, with €54.6bn identified for expenditure on roads, public transport, water, airports and energy infrastructure. We benefit significantly from this investment and, as in the UK, our sustainability credentials give us a competitive advantage.

Environmental Management

2008 2007
Fee income (£m) 46.3 34.6 +34%
Segment profit* (£m) 6.8 4.3 +57%
Margin 14.8% 12.6%
* before amortisation of acquired intangible assets of £0.5m (2007: nil)

This business provides consultancy services in respect of health, safety, risk and environmental management in the UK and the Netherlands and the management of water resources in the UK. The results in the first half were excellent. Through the acquisition of MetOcean in Australia in the second half of 2007, we extended both the range of our services and geographical reach of the business. The acquisitions of RBA and Geocet increased our capability to provide oil and gas clients with health, safety and environmental expertise directly relevant to their activities. Our growing health, safety and risk management involvement with the oil and gas and nuclear industries is becoming strategically important. Our Dutch business performed well; the acquisition of Kraan signals our increasing confidence in both the market and prospects for our business there.

RPS's strength in the water industry, coupled with our environmental credentials, position us well to advise our clients in the water sector on a broad range of issues. As a result our business servicing the UK water industry, which had a good year in 2007, continued this performance into 2008. We are working on long term commissions for the majority of the privatised water companies, as well as undertaking significant work in Scotland. The UK markets in health and safety and occupational health and hygiene have generally remained strong, driven by increasing statutory obligations. Although some clients in this market are confronted with economic uncertainty, awareness of the importance of managing these matters more carefully has heightened.

Funding

The conversion of profit into cash continued at a good level and our balance sheet remains strong. Net borrowings at 30 June were £38.8 million.

Following the seven acquisitions made in the period the book value of deferred consideration and outstanding loan notes related to acquisitions amounts to £4.7 million falling due for settlement in cash during the second half of 2008, £13.8 million in 2009, £7.2 million in 2010 and £1.1 million in 2011.

We have increased our committed bank facilities from £70 million to £100 million and extended them until 2013, on broadly unchanged terms. Our cash generation, in conjunction with these facilities and an ability to use equity in transactions, means that we are able to continue our acquisition strategy.

Prospects

Balancing the way energy is secured from various sources, managing its use to limit environmental damage, whilst planning further economic growth and urban development has become a fundamental challenge of this century. It is one which RPS is extremely well positioned to advise upon and will enable us to build further momentum and provides opportunities for all our businesses. The Board believes these opportunities will continue to outweigh the adverse consequences of economic turbulence.

Our continued investment in the energy sector has enabled us to internationalise our activities in a significant way. As a result, we now have strong businesses in the USA, Canada and Australia as well as substantial contracts relating to oil and gas exploration and production in many parts of the developing world, including India, Russia and China.

We have successfully begun the process of expanding our activities in Australia into planning and development and environmental management. We are confident these can be extended substantially. Australia is also a good base from which to develop our activities in Asia. Opportunities also exist to develop the full range of our activities in both the USA and Canada.

The integrated services offered by our three successful businesses mean we remain well positioned to assist our clients deal with the related challenges of adapting to climate change and the need to access sustainable, safe and secure sources of energy.

RPS is diverse and resilient with a proven business model. Our broad range of services, coupled with our expanding geographic footprint, gives the Board continuing confidence about prospects for the Group.

Board of Directors
RPS Group plc
31 July 2008

 

Condensed consolidated income statement

Notes Six months
ended
30 June
Six months
ended
30 June
Year
ended 31
December
2008 2007 2007
unaudited unaudited audited
£000's £000's £000's
Revenue 3 225,867 173,908 362,674
Recharged expenses 3 (35,944) (29,542) (57,566)
Fee income 3 189,923 144,366 305,108
Operating profit 3 29,526 23,024 47,975
Finance costs (2,299) (1,755) (3,792)
Finance income 172 132 296
Profit before tax and amortisation
of acquired intangibles
28,536 21,607 45,010
Amortisation of acquired intangibles (1,137) (206) (531)
Profit before tax 27,399 21,401 44,479
Tax expense 4 (8,302) (6,588) (13,569)
Profit for the period attributable to
equity holders of the parent
19,097 14,813 30,910
Basic earnings per share (pence) 5 9.10 7.24 14.99
Diluted earnings per share (pence) 5 8.97 7.07 14.78
Basic earnings per share before
amortisation of acquired
intangibles (pence)
5 9.49 7.31 15.17
Diluted earnings per share before
amortisation of acquired
intangibles (pence)
5 9.36 7.14 14.95

 

Condensed consolidated statement of recognised income and expense

Six months
ended
30 June
Six months
ended
30 June
Year
ended 31
December
2008 2007 2007
unaudited unaudited audited
£000's £000's £000's
Exchange differences 5,839 300 5,787
Tax recognised directly in equity 10 678 743
Income recognised directly in equity 5,849 978 6,530
Profit for the period 19,097 14,813 30,910
Total recognised income for the
period attributable to equity
holders of the parent
24,946 15,791 37,440

 

Condensed consolidated balance sheet

As at
30 June
As at
30 June
As at
31 December
2008 2007 2007
unaudited unaudited audited
Notes £000's £000's £000's
Assets
Non-current assets
Intangible assets 245,828 187,019 210,839
Property, plant and equipment 6 22,779 19,202 21,706
Deferred tax assets - 2,401 114
268,607 208,622 232,659
Current assets
Trade and other receivables 146.462 109,921 119,504
Cash at bank 13,584 10,052 10,884
160,046 119,973 130,388
Liabilities
Current liabilities
Borrowings 204 262 174
Deferred consideration 12,753 9,745 8,939
Trade and other payables 78,842 60,351 62,750
Corporation tax liabilities 6,907 4,786 3,434
Provisions 1,279 332 595
99,985 75,476 75,892
Net current assets 60,061 44,497 54,496
Non-current liabilities
Borrowings 52,171 37,156 43,340
Deferred consideration 15,293 9,350 10,453
Other creditors 1,511 330 1,320
Deferred tax liabilities 3,844 - -
Provisions 3,623 1,564 4,508
76,442 48,400 59,621
Net assets 252,226 204,719 227,534
Equity
Share capital 9 6,359 6,217 6,319
Share premium 9 94,337 91,561 93,225
Other reserves 10 24,804 13,918 17,516
Retained earnings 9 126,726 93,023 110,474
Total shareholders' equity 9 252,226 204,719 227,534

 

Condensed consolidated cash flow statement

Six months
ended 30
June
Six months
ended 30
June
Year
ended 31 December
2008 2007 2007
Notes unaudited
£000's
unaudited
£000's
audited
£000's
Cash generated from operations 12 28,993 21,919 45,393
Interest paid (2,009) (1,888) (3,967)
Interest received 172 132 296
Income taxes paid (5,513) (5,139) (12,925)
Net cash from operating activities 21,643 15,024 28,797
Cash flows from investing activities
Purchases of subsidiaries net of cash acquired (17,555) (5,698) (15,758)
Deferred consideration (4,539) (3,665) (10,846)
Purchase of property, plant and equipment (3,338) (2,785) (5,811)
Sale of property, plant and equipment 1,112 49 4,239
Net cash used in investing activities (24,320) (12,099) (28,176)
Cash flows from financing activities
Proceeds from issue of share capital 171 1,608 1,730
Proceeds from sale of own shares - 1,293 1,293
Proceeds from bank borrowings 8,366 (2,635) 3,001
Payment of finance lease liabilities (98) (109) (149)
Dividends paid (3,498) (2,967) (6,144)
Payment of pre-acquisition dividend (115) - -
Net cash used in financing activities 4,826 (2,810) (269)
Net increase in cash and cash equivalents 2,149 115 352
Cash and cash equivalents at beginning of period 10,884 9,805 9,805
Effect of exchange rate fluctuations 551 39 727
Cash and cash equivalents at end of period 12 13,584 9,959 10,884
Cash and cash equivalents comprise:
Cash at bank 13,584 10,052 10,884
Bank overdraft - (93) -
Cash and cash equivalents at end of period 13,584 9,959 10,884

 

Notes to the condensed consolidated financial statements

1. Basis of preparation

RPS Group plc (the "Company") is a company domiciled in England. The condensed consolidated interim financial statements of the Company for the six months ended 30 June 2008 comprise the Company and its subsidiaries (together referred to as the "Group").

The condensed interim financial statements have been prepared using accounting policies set out in the Report and Accounts 2007 and are in accordance with IAS 34. The condensed interim financial statements are unaudited but have been reviewed by the Company's auditors. The results for the year end 31 December 2007 and the balance sheet as at that date are abridged from the Company's Report and Accounts 2007 which have been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not contain references to any matters to which the auditors drew attention by way of emphasis without qualifying the report and did not contain a statement under Section 272(2) or (3) of the Companies Act 1985.

The condensed interim financial statements do not constitute full accounts within the meaning of Section 240 of the Companies Act 1985.

2. Responsibility Statement

The directors confirm that, to the best of their knowledge this condensed set of financial statements has been prepared in accordance with IAS 34 and that this Interim Report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R.

On behalf of the Board

A. S. Hearne G. Young
Chief Executive Group Finance Director

3. Business segments

The Board believes that one of the Group's important strengths is the way in which we deploy our broad range of skills in an integrated way. The success of this part of our strategy results in projects being undertaken in a multi-disciplinary way. In consequence, there are Group activities which could be placed in more than one business segment. This becomes increasingly the case as our energy and international activities grow. The segments currently used to present and analyse the Group's performance are described below. They are kept under review by the Board.

Planning and Development - consultancy services in the UK, Ireland, Australia and the US related to town and country planning, urban design, architecture, transport planning and highway design, environmental impact assessment and provision of water and waste utilities and energy infrastructure.

Environmental Management - consultancy services in the UK, the Netherlands and Australia related to health, safety and risk management, environmental science and the management of water and energy resources.

Energy - the provision of technical consultancy services, on an international basis, to the upstream oil and gas and offshore renewable energy sectors.

Segment results for the six months ended 30 June 2008

Planning &
Development
Environmental
Management
Energy Eliminations Consolidated
£000's £000's £000's £000's £000's
Revenue 98,560 54,105 75,449 (2,247) 225,867
Recharged expenses (17,645) (7,792) (10,507) - (35,944)
Fee Income 80,915 46,313 64,942 (2,247) 189,923
Segment profit 15,057 6,835 12,445 - 34,337
Amortisation (439) (467) (231) - (1,137)
33,200
Unallocated expenses (3,674)
Operating profit 29,526

Segment results for the six months ended 30 June 2007

Planning &
Development
Environmental
Management
Energy Eliminations Consolidated
£000's £000's £000's £000's £000's
Revenue 78,547 40,909 56,585 (2,133) 173,908
Recharged expenses (13,481) (6,328) (9,733) - (29,542)
Fee Income 65,066 34,581 46,852 (2,133) 144,366
Segment profit 12,728 4,345 8,625 - 25,698
Amortisation (146) - (60) - (206)
25,492
Unallocated expenses (2,468)
Operating profit 23,024

4. Income taxes

The Group's consolidated effective tax rate for the six months ended 30 June 2008 was 30.3%, (for the year ended 31 December 2007: 30.5%; for the six months ended 30 June 2007: 30.8%).

5. Earnings per share

The calculations of earnings per share are based on the profit attributable to ordinary shareholders and a weighted average number of ordinary shares outstanding during the period as shown below:

Six months
ended 30 June
Six months
ended
30 June
Year ended
31 Dec
2008 2007 2007
£000's £000's £000's
Profit attributable to ordinary shareholders 19,097 14,813 30,910
000's 000's 000's
Weighted average number of ordinary shares for the purposes of basic earnings per share 209,865 204,592 206,256
Effect of shares to be issued as deferred consideration 505 1,059 92
Effect of employee share schemes 2,412 3,760 2,827
Weighted average number of ordinary shares for the purposes of diluted earnings per share 212,782 209,411 209,175
Basic earning per share (pence) 9.10 7.24 14.99
Diluted earnings per share (pence) 8.97 7.07 14.78

The directors consider that earnings per share before amortisation provides a more meaningful measure of the Group's performance than statutory earnings per share. The calculation of basic and diluted earnings per share before amortisation is based on the weighted average number of ordinary shares outstanding during the year as shown above and the profit attributable to ordinary shareholders before the amortisation on acquired intangible assets and the tax thereon as shown in the table below and the weighted average number of ordinary shares during the period as shown above.

Six months
ended 30 June
2008
Six months
ended 30 June
2007
Year ended
31 Dec
2007
£000's £000's £000's
Profit attributable to ordinary shareholders 19,097 14,813 30,910
Amortisation of acquired intangibles 1,137 206 531
Tax on amortisation of acquired intangibles (318) (62) (159)
Adjusted profit attributable to ordinary shareholders 19,916 14,957 31,282
Basic earnings before per share before amortisation (pence) 9.49 7.31 15.17
Diluted earnings per share before amortisation (pence) 9.36 7.14 14.95

6. Property, plant and equipment

During the six months ended 30 June 2008, the Group acquired assets with a cost of £4,036,000 (six months to 30 June 2007: £3,113,000), which includes £698,000 acquired through business combinations (six months to 30 June 2007: £328,000). Assets with a net book value of £932,000 were disposed of during the six months ended 30 June 2008 (six months ended 30 June 2007: £30,000).

7. Acquisitions

The Group completed the acquisition of seven businesses during the first half of 2008. Each purchase has been accounted for as an acquisition. Prior to completion of the transactions each acquired business kept its own management accounts. Adding the results shown in these accounts to the Group results produces Group revenue for the period of £233,708,000 and Group operating profit before amortisation of acquired intangibles of £30,316,000.

All intangible assets were recognised at their respective fair values. The residual excess over the net assets acquired, including intangible assets, is recognised as goodwill in the financial statements.

Date of Acquisition Place of incorporation Percentage of entity acquired Nature of business acquired
Kraan Consulting Holding BV 6 Feb 2008 The Netherlands 100% of issued share capital Urban planning
consultancy
RW Gregory LLP 12 Mar 2008 UK Assets and certain
liabilities
Engineering
consultancy
WTW and Associates Ltd 17 Mar 2008 UK 100% of issued share capital Oil and gas consultancy
Oceanfix International Ltd 19 Mar 2008 UK 100% of issued share capital Oil and gas consultancy
Land Management Trust
("Koltasz Smith")
27 Mar 2008 Australia Assets and certain
liabilities
Urban planning consultancy
Rudall Blanchard Associates Group Ltd 30 Mar 2008 UK 100% of issued share capital Health and Safety consultancy
The GeoCet Group LLC 18 Apr 2008 USA 100% of issued share capital Environmental consultancy

These businesses have been integrated with other parts of the Group and are no longer managed separately. They share resources, revenues, costs and market opportunities with other parts of the Group and should no longer be considered individual businesses. Their contributions to the revenue and operating profit before amortisation of acquired intangibles to the Group's results for the period, as shown below, reflects those relationships.

Revenue £'000 Operating profit £'000
Kraan Consulting Holding BV 2,723 341
RW Gregory LLP 3,457 442
Oceanfix International Ltd 3,392 402
Land Management Trust 857 191
Rudall Blanchard Group Ltd 1,861 479
The GeoCet Group LLC 779 213

It is impracticable to identify separately the revenue and operating profit contribution of WTW and Associates Ltd for the period since acquisition as this entity has been fully hived up into existing Group operations.

Details of the carrying values of the acquired net assets and the provisional fair values assigned to them by the Group are as follows:

Intangible assets
Customer relationships Order backlog Trade names Other intangibles Property, plant & equipment Cash Other assets Other liabilities Net assets
£000's £000's £000's £000's £000's £000's £000's £000's £000's
Pre acquisition carrying values
Kraan - - - 119 146 (248) 1,695 (955) 757
RWG - - - - 252 2,002 4,147 (4,900) 1,501
WTW - - - - 20 (3) 1,007 (455) 569
Oceanfix - - - - 81 533 2,454 (978) 2,090
LMT - - - - 191 - 701 (313) 579
RBA - - - 21 120 928 1,604 (774) 1,899
Geocet - - - - - 337 611 (774) 174
- - - 140 810 3,549 12,219 (9,149) 7,569
Provisional fair values
Kraan 2,714 - 374 - 124 (248) 1,654 (1,849) 2,769
RWG 2,960 1,080 200 - 252 2,002 4,221 (6,140) 4,575
WTW - 190 - - 19 (3) 1,007 (455) 758
Oceanfix 3,121 148 - - 25 533 2,454 (1,893) 4,388
LMT 550 - 632 - 191 - 701 (644) 1,430
RBA 1,207 107 - - 87 928 1,604 (1,142) 2,791
Geocet - - - - - 337 611 (774) 174
10,552 1,525 1,206 - 698 3,549 12,252 (12,897) 16,885

The fair value adjustments made to the pre acquisition carrying values to determine provisional fair values relate to the alignment of depreciation accounting policies, the identification of intangibles and the deferred tax recognised on the fair value adjustments.

Initial consideration Fair value of deferred consideration
Cash Shares Acquisition expenses Cash Shares Total consideration Net assets acquired Goodwill acquired
£000's £000's £000's £000's £000's £000's £000's £000's
Consideration
Kraan 3,009 - 344 1,720 - 5,073 2,769 2,304
RWG 5,200 1,700 217 3,238 - 10,355 4,575 5,780
WTW 1,344 - 118 468 - 1,930 758 1,172
Oceanfix 4,491 - 163 2,445 - 7,099 4,388 2,711
LMT 1,857 - 290 1,238 - 3,385 1,430 1,955
RBA 3,460 - 162 1,340 1,240 6,202 2,791 3,411
Geocet 590 - 75 554 - 1,219 174 1,045
19,951 1,700 1,369 11,003 1,240 35,263 16,885 18,378

As part of the consideration for RWG, 572,970 ordinary shares of RPS Group plc were allotted to the vendors.

As part of the deferred consideration for RBA, £1,240,000 of ordinary shares of RPS Group plc will be allotted to the vendors.

Goodwill represents the value of the assembled professional workforce acquired with these businesses.

Prior period acquisitions

The Group acquired the entire share capital of APA Petroleum Engineering Inc. in February 2007, acquired the trade, assets and certain liabilities of Safety and Risk Practice Pty Ltd in March 2007 and acquired the entire share capital of Geocon Group Services Ltd, also in March 2007.

At 30 June 2007 and 31 December 2007, the Group allotted provisional fair values to the assets and liabilities acquired as a result of these acquisitions. These provisional fair values have now been finalised. The only adjustment to the acquisitions made in the first half of 2007 has been a credit to net assets of APA Petroleum Engineering Inc. of £159,000 representing an adjustment to the opening tax balances of this entity.

8. Share capital

2008
Number
000's
2008
£000's
2007
Number
000's
2007
£000's
Authorised
Ordinary shares of 3p each at 30 June 240,000 7,200 240,000 7,200
Issued and fully paid
Ordinary shares of 3p each at 1 January 210,632 6,319 205,446 6,163
Issued under employee share schemes 737 23 1,294 39
Issued as acquisition initial consideration 573 17 512 15
At 30 June 211,942 6,359 207,252 6,217

9. Statement of changes in equity

Share capital Share premium Retained earnings Other reserves Total equity
£000's £000's £000's £000's £000's
At 1 January 2007 6,163 89,836 79,828 11,107 186,934
Changes in equity during 2007
Tax recognised directly in equity - - 678 - 678
Exchange differences - - - 300 300
Net income recognised directly in equity - - 678 300 978
Profit for the period - - 14,813 - 14,813
Total recognised income for the period - - 15,491 300 15,791
Issue of new ordinary shares 54 1,725 - 1,418 3,197
Sale of own shares - - 671 622 1,293
Share based payment expense - - - 919 919
Tax on share based payment expense - - - (448) (448)
Dividends - - (2,967) - (2,967)
At 30 June 2007 6,217 91,561 93,023 13,918 204,719
Changes in equity during 2008
At 1 January 2008 6,319 93,225 110,474 17,516 227,534
Tax recognised directly in equity - - 10 - 10
Exchange differences - - - 5,839 5,839
Net income recognised directly in equity - - 10 5,839 5,849
Profit for the period - - 19,097 - 19,097
Total recognised income for the period - - 19,107 5,839 24,946
Issue of new ordinary shares 40 1,112 (705) 1,449 1,896
Share based payment expense - - 1,348 - 1,348
Dividends - - (3,498) - (3,498)
At 30 June 2008 6,359 94,337 126,726 24,804 252,226

10. Other reserves

Merger reserve Employee trust shares Share scheme reserve Shares to be issued Translation reserve Total other reserves
£000's £000's £000's £000's £000's £000's
At 1 January 2007 10,642 (3,042) 4,053 1,997 (2,543) 11,107
Changes in equity during 2007
Exchange differences - - - - 300 300
Issue of new shares 1,572 (154) - - - 1,418
Sale of own shares - 622 - - - 622
Share based payment expense - - 919 - - 919
Tax on share based payment
expense
(448) (448)
At 30 June 2007 12,214 (2,574) 4,524 1,997 (2,243) 13,918
Changes in equity during 2008
At 1 January 2008 16,993 (2,943) - 222 3,244 17,516
Exchange differences - - - - 5,839 5,839
Issue of new shares 1,682 (233) - - - 1,449
At 30 June 2008 18,675 (3,176) - 222 9,083 24,804

11. Dividends

The following dividends were recognised as distributions to equity holders in
the period:

Six months
ended 30 June
2008
£000's
Six months
ended 30 June
2007
£000's
Year Ended
31 December
2007
£000's
Final dividend for 2007 1.66p per share 3,498 - -
Interim dividend for 2007 1.52p per share - - 3,177
Final dividend for 2006 1.44p per share - 2,967 2,967
3,498 2,967 6,144

An interim divided in respect of the six months ended 30 June 2008 of 1.75 pence per share, amounting to a total dividend of £3,712,000 was approved by the Directors of RPS Group plc on 29th July 2008. These condensed consolidated interim financial statements do not reflect this dividend payable.

12. Note to the condensed consolidated cash flow statement

Six months ended
30 June
Six months ended
30 June
Year ended 31 Dec
2008 2007 2007
£000's £000's £000's
Profit before tax 27,399 21,401 44,479
Adjustments for:
Interest payable and similar charges 2,299 1,755 3,792
Interest receivable (172) (132) (296)
Depreciation 2,966 2,244 4,758
Amortisation of acquired intangibles 1,137 206 531
Share based payment expense 1,348 919 2,142
Profit on sale of property, plant and equipment (180) - (3,224)
Provision for dilapidations - - 2,514
Increase in trade and other receivables (11,277) (11,883) (14,018)
Increase in trade and other payables 5,473 7,409 4,715
Cash generated from operations 28,993 21,919 45,393

During the period, the Group increased its loan facilities to £100 million and extended them to 2013.

The table below provides an analysis of net borrowings, comprising cash and cash equivalents, interest bearing bank loans and finance leases, during the six months ended 30 June 2008.

At 1 January 2008 Cash flow Acquisition Foreign exchange At 30 June 2008
£000's £000's £000's £000's £000's
Cash and cash equivalents 10,884 2,149 - 551 13,584
Bank loans (43,346) (8,366) - (520) (52,232)
Finance lease creditor (168) 98 (38) (35) (143)
Net borrowings (32,630) (6,119) (38) (4) (38,791)

13. Principal risks and uncertainties

The principal risks and uncertainties faced by the Group have not changed significantly since the 2007 Report and Accounts was published. The Board keeps under review the potential effect of economic circumstances.

14. Related party transactions

There were no related party transactions required to be disclosed in the period.

15. Forward-looking statements

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 a number of 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.

INDEPENDENT REVIEW REPORT TO RPS GROUP PLC

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half yearly financial report for the six months ended 30 June 2008 which comprise the Condensed Consolidated Income Statement, the Condensed Consolidated Statement of Recognised Income and Expense, the Condensed Consolidated Balance Sheet, the Condensed Consolidated Cash Flow Statement and the related notes.

We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The half-yearly financial report is the responsibility of and has been approved by the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, ‘‘Interim Financial Reporting'', as adopted by the European Union.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Our report has been prepared in accordance with the terms of our engagement to assist the company in meeting its responsibilities in respect to half-yearly financial reporting in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ‘‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity'', issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2008 is not prepared, in all material respects, in accordance with International Accounting Standard 34, as adopted by the European Union, and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

BDO Stoy Hayward LLP
Chartered Accountants and Registered Auditors
55 Baker Street
London
W1U 7EU
31 July 2008

 

2013

Half Year Results for the six months ended 30 June 2008

31 July 2008

RPS Group Plc ("RPS" or "the Group") today announces excellent results for the six months ended 30 June 2008 with profit (before tax and amortisation) up 32% and earnings per share up 30%

2008 2007
Revenue (£m) 225.9 173.9 +30%
Fee income (£m) 189.9 144.4 +32%
Profit before taxation* (£m) 28.5 21.6 +32%
Earnings per share* (basic) (pence) 9.49 7.31 +30%
* before amortisation of acquired intangible assets of £1.1m (2007: £0.2m

Highlights

  • all three segments of the Group substantially increased operating profit
  • excellent conversion of profit into cash
  • the international footprint of the Group continues to extend
  • the acquisition of quality businesses has continued
  • dividend raised 15% to 1.75p (2007: 1.52p)
  • balance sheet remains strong with net bank borrowings at £38.8m (2007: £27.4m)
  • committed bank facilities increased from £70m to £100m and extended to 2013
  • major opportunities for future growth are developing from accelerating concerns about global energy supply and climate change
  • the Board remains confident about the Group's prospects.

Brook Land, Chairman, commenting on the results, said:

"Trading in the first half of 2008 was robust. All parts of the Group grew significantly. Our strategy of supplementing organic growth with the acquisition of quality businesses continued to be successfully implemented. Acquisitions made in 2007 and the first half of 2008 support our growth and further acquisitions are being considered. The Group's balance sheet remains strong.

"The integrated services offered by our three successful businesses mean we remain well positioned to assist our clients deal with the related challenges of adapting to climate change and the need to access sustainable, safe and secure sources of energy.

"RPS is diverse and resilient, with a proven business model. Our broad range of services combined with our expanding geographic footprint, gives the Board continuing confidence about prospects for the Group."

31 July 2008

 

ENQUIRIES
RPS Group plc Today: 020 7457 2020
Dr Alan Hearne, Chief Executive Thereafter: 01235 863206
Gary Young, Finance Director
College Hill
Justine Warren Tel: 020 7457 2020
Matthew Smallwood

 

RPS is an international consultancy providing advice upon the development of natural resources, land and property, the management of the environment and the health and safety of people. We have offices in the UK, Ireland, the Netherlands, North America, Eastern Europe, South East Asia and Australia and undertake projects in many other parts of the world. The Group is a constituent of both the FTSE 250 and FTSE 4 Good Indices.

In order to assist in the reduction of greenhouse gas emissions and eventually reduce global warming, the staff of RPS have set themselves the task of reducing energy consumption by 5% each year, using 2007 as the base. If successful we will halve our (per capita) energy use by 2020.

 

Introduction

RPS is an international consultancy providing advice upon the development of natural resources, land and property, the management of the environment and the health and safety of people.

The Group seeks to ensure continuous improvement in the range and quality of our services and our financial performance by:

  • operating in markets where we can add value to our clients' activities;
  • endeavouring to achieve and maintain leadership in those markets; and
  • making acquisitions of quality businesses in order to extend our expertise and geographical presence.

The Board remains confident that this strategy will continue to offer our staff challenging and rewarding careers, whilst continuing to deliver growth and good returns for our shareholders.

 

Results

Profit (before tax and amortisation of acquired intangibles) was £28.5 million (2007: £21.6 million). Basic earnings per share (before amortisation) were 9.49 pence (2007: 7.31 pence). Cash generated from operations was £29.0 million (2007: £21.9 million). After funding acquisition consideration of £22.1 million, the Group had net borrowings of £38.8 million at 30 June (2007: £27.4 million).

The Board has increased the interim dividend by 15% to 1.75 pence per share (2007: 1.52 pence) payable on 23rd October 2008 to shareholders on the register on 26th September 2008. Our dividend has risen at this rate for a number of years.

Operations and Markets

Energy

2008 2007
Fee income (£m) 64.9 46.9 +39%
Segment profit* (£m) 12.4 8.6 +44%
Margin 19.2% 18.4%
* before amortisation of acquired intangible assets of £0.2m (2007: £0.1m)

We provide consultancy services on an international basis to the oil and gas industries from bases in the UK, USA, Canada, Australia, Malaysia and Singapore. Projects are undertaken in many other countries including China, India, Brazil and Russia. In the UK we also provide advice to the renewables industry. The business continued to perform extremely well, with good organic growth being supplemented by further acquisitions. This reflects both buoyant market conditions, which we expect to continue, as well as our position as a world leader in this sector.

Demand for our services from oil and, increasingly, gas exploration and production companies continues to grow. We see accelerating interest from clients in the combination of the geological, engineering, environmental and safety expertise that we provide. The requirements of the developed world to identify and secure long term supplies of energy, coupled with the increasing energy needs of developing nations, suggest that activity in this market will remain at a high level for the foreseeable future. The acquisition of WTW has expanded our operational capability and Oceanfix has enabled us to become more involved in the planning of survey aspects of offshore construction, another fast growing area.

RPS's reputation within the financial community in respect of determination of oil and gas reserves for reporting purposes, and in support of corporate activity developed encouragingly. The oil and gas companies and their advisors value the breadth and depth of our expertise, including our environmental experience.

Our international profile has helped us to create successful staff recruitment and retention strategies. Rising fee rates have enabled us to increase rewards to our staff, a trend we see continuing. The acquisitions made during the course of 2007 and the first half of this year enhanced our staff base, whilst also enabling us to develop our businesses in North America and Australia.

High oil and gas prices support not only our business in those markets, but also investment in renewable energy. The geological, engineering and environmental skills we have are proving to be of significant value to developers of offshore wind farms and other offshore renewable technologies around the UK coast. Working with the planning and environmental assessment capability we have in our Planning & Development business, our Energy staff have been involved in schemes which account for about 90% of the UK offshore wind farm capacity. Recent policy statements from the UK government are expected to bring forward further significant investment in wind farm development, from which we are likely to benefit.

Planning and Development

2008 2007
Fee income (£m) 80.9 65.1 +24%
Segment profit* (£m) 15.1 12.7 +18%
Margin 18.6% 19.6%
* before amortisation of acquired intangible assets of £0.4m (2007: £0.1m)

Within this business we provide consultancy services in respect of town and country planning, building, landscape and urban design, transport planning and highway design, environmental assessment and energy use and efficiency. The growth in this part of the Group was encouraging with the operating margin remaining high. We remain leaders in this market in the UK, Ireland, and Western Australia, acting for blue chip clients in both the public and private sectors.

Our planning business is also able to assist clients in other parts of the Group secure planning permissions for capital projects, for example, in the energy and water sectors. This is particularly marked in Australia, but is increasingly the case in the UK, Ireland and the US, where JD Consulting, acquired in December 2007 and located in Texas, is currently advising upon a proposal for one of the world's largest onshore wind farms.

In the UK our ability to advise upon the full range of issues relevant to the development of sustainable communities and secure planning permission for large complex schemes remains attractive to clients. Our ability to handle complex sustainability issues helps us to secure this work and execute it at the high level needed to achieve the permissions required by our clients. In consequence, we continue to work on some of the largest regeneration and infrastructure projects; these provide long term activity for us. We are also involved in both the waste and minerals sectors, in which securing planning permission has become far more complex. Current economic circumstances are affecting the volume of housebuilding and other speculative property development undertaken by some of our clients. The limited effect of this on our UK Planning and Development business is being mitigated by opportunities in new markets which continue to develop, particularly in respect of securing planning permissions for energy infrastructure investment. This involves projects such as LNG plants, new nuclear power stations, renewable energy schemes and gas storage facilities. We also benefit from the need to integrate energy efficiency into planning proposals and development schemes. The acquisition of RW Gregory increased our capability in this field materially.

Our activities in the planning and development market in Australia showed good growth. The long term potential of this market has encouraged us to develop a plan to grow these activities substantially. We are now seeing the benefits of this and expect our Australian business to continue to grow in the coming years.

The Irish Government maintains its commitment to invest in ambitious plans for infrastructure development, despite a slowdown in the economy. Implementing The National Development Plan 2007-2013 which targets "Economic Infrastructure" remains a priority, with €54.6bn identified for expenditure on roads, public transport, water, airports and energy infrastructure. We benefit significantly from this investment and, as in the UK, our sustainability credentials give us a competitive advantage.

Environmental Management

2008 2007
Fee income (£m) 46.3 34.6 +34%
Segment profit* (£m) 6.8 4.3 +57%
Margin 14.8% 12.6%
* before amortisation of acquired intangible assets of £0.5m (2007: nil)

This business provides consultancy services in respect of health, safety, risk and environmental management in the UK and the Netherlands and the management of water resources in the UK. The results in the first half were excellent. Through the acquisition of MetOcean in Australia in the second half of 2007, we extended both the range of our services and geographical reach of the business. The acquisitions of RBA and Geocet increased our capability to provide oil and gas clients with health, safety and environmental expertise directly relevant to their activities. Our growing health, safety and risk management involvement with the oil and gas and nuclear industries is becoming strategically important. Our Dutch business performed well; the acquisition of Kraan signals our increasing confidence in both the market and prospects for our business there.

RPS's strength in the water industry, coupled with our environmental credentials, position us well to advise our clients in the water sector on a broad range of issues. As a result our business servicing the UK water industry, which had a good year in 2007, continued this performance into 2008. We are working on long term commissions for the majority of the privatised water companies, as well as undertaking significant work in Scotland. The UK markets in health and safety and occupational health and hygiene have generally remained strong, driven by increasing statutory obligations. Although some clients in this market are confronted with economic uncertainty, awareness of the importance of managing these matters more carefully has heightened.

Funding

The conversion of profit into cash continued at a good level and our balance sheet remains strong. Net borrowings at 30 June were £38.8 million.

Following the seven acquisitions made in the period the book value of deferred consideration and outstanding loan notes related to acquisitions amounts to £4.7 million falling due for settlement in cash during the second half of 2008, £13.8 million in 2009, £7.2 million in 2010 and £1.1 million in 2011.

We have increased our committed bank facilities from £70 million to £100 million and extended them until 2013, on broadly unchanged terms. Our cash generation, in conjunction with these facilities and an ability to use equity in transactions, means that we are able to continue our acquisition strategy.

Prospects

Balancing the way energy is secured from various sources, managing its use to limit environmental damage, whilst planning further economic growth and urban development has become a fundamental challenge of this century. It is one which RPS is extremely well positioned to advise upon and will enable us to build further momentum and provides opportunities for all our businesses. The Board believes these opportunities will continue to outweigh the adverse consequences of economic turbulence.

Our continued investment in the energy sector has enabled us to internationalise our activities in a significant way. As a result, we now have strong businesses in the USA, Canada and Australia as well as substantial contracts relating to oil and gas exploration and production in many parts of the developing world, including India, Russia and China.

We have successfully begun the process of expanding our activities in Australia into planning and development and environmental management. We are confident these can be extended substantially. Australia is also a good base from which to develop our activities in Asia. Opportunities also exist to develop the full range of our activities in both the USA and Canada.

The integrated services offered by our three successful businesses mean we remain well positioned to assist our clients deal with the related challenges of adapting to climate change and the need to access sustainable, safe and secure sources of energy.

RPS is diverse and resilient with a proven business model. Our broad range of services, coupled with our expanding geographic footprint, gives the Board continuing confidence about prospects for the Group.

Board of Directors
RPS Group plc
31 July 2008

 

Condensed consolidated income statement

Notes Six months
ended
30 June
Six months
ended
30 June
Year
ended 31
December
2008 2007 2007
unaudited unaudited audited
£000's £000's £000's
Revenue 3 225,867 173,908 362,674
Recharged expenses 3 (35,944) (29,542) (57,566)
Fee income 3 189,923 144,366 305,108
Operating profit 3 29,526 23,024 47,975
Finance costs (2,299) (1,755) (3,792)
Finance income 172 132 296
Profit before tax and amortisation
of acquired intangibles
28,536 21,607 45,010
Amortisation of acquired intangibles (1,137) (206) (531)
Profit before tax 27,399 21,401 44,479
Tax expense 4 (8,302) (6,588) (13,569)
Profit for the period attributable to
equity holders of the parent
19,097 14,813 30,910
Basic earnings per share (pence) 5 9.10 7.24 14.99
Diluted earnings per share (pence) 5 8.97 7.07 14.78
Basic earnings per share before
amortisation of acquired
intangibles (pence)
5 9.49 7.31 15.17
Diluted earnings per share before
amortisation of acquired
intangibles (pence)
5 9.36 7.14 14.95

 

Condensed consolidated statement of recognised income and expense

Six months
ended
30 June
Six months
ended
30 June
Year
ended 31
December
2008 2007 2007
unaudited unaudited audited
£000's £000's £000's
Exchange differences 5,839 300 5,787
Tax recognised directly in equity 10 678 743
Income recognised directly in equity 5,849 978 6,530
Profit for the period 19,097 14,813 30,910
Total recognised income for the
period attributable to equity
holders of the parent
24,946 15,791 37,440

 

Condensed consolidated balance sheet

As at
30 June
As at
30 June
As at
31 December
2008 2007 2007
unaudited unaudited audited
Notes £000's £000's £000's
Assets
Non-current assets
Intangible assets 245,828 187,019 210,839
Property, plant and equipment 6 22,779 19,202 21,706
Deferred tax assets - 2,401 114
268,607 208,622 232,659
Current assets
Trade and other receivables 146.462 109,921 119,504
Cash at bank 13,584 10,052 10,884
160,046 119,973 130,388
Liabilities
Current liabilities
Borrowings 204 262 174
Deferred consideration 12,753 9,745 8,939
Trade and other payables 78,842 60,351 62,750
Corporation tax liabilities 6,907 4,786 3,434
Provisions 1,279 332 595
99,985 75,476 75,892
Net current assets 60,061 44,497 54,496
Non-current liabilities
Borrowings 52,171 37,156 43,340
Deferred consideration 15,293 9,350 10,453
Other creditors 1,511 330 1,320
Deferred tax liabilities 3,844 - -
Provisions 3,623 1,564 4,508
76,442 48,400 59,621
Net assets 252,226 204,719 227,534
Equity
Share capital 9 6,359 6,217 6,319
Share premium 9 94,337 91,561 93,225
Other reserves 10 24,804 13,918 17,516
Retained earnings 9 126,726 93,023 110,474
Total shareholders' equity 9 252,226 204,719 227,534

 

Condensed consolidated cash flow statement

Six months
ended 30
June
Six months
ended 30
June
Year
ended 31 December
2008 2007 2007
Notes unaudited
£000's
unaudited
£000's
audited
£000's
Cash generated from operations 12 28,993 21,919 45,393
Interest paid (2,009) (1,888) (3,967)
Interest received 172 132 296
Income taxes paid (5,513) (5,139) (12,925)
Net cash from operating activities 21,643 15,024 28,797
Cash flows from investing activities
Purchases of subsidiaries net of cash acquired (17,555) (5,698) (15,758)
Deferred consideration (4,539) (3,665) (10,846)
Purchase of property, plant and equipment (3,338) (2,785) (5,811)
Sale of property, plant and equipment 1,112 49 4,239
Net cash used in investing activities (24,320) (12,099) (28,176)
Cash flows from financing activities
Proceeds from issue of share capital 171 1,608 1,730
Proceeds from sale of own shares - 1,293 1,293
Proceeds from bank borrowings 8,366 (2,635) 3,001
Payment of finance lease liabilities (98) (109) (149)
Dividends paid (3,498) (2,967) (6,144)
Payment of pre-acquisition dividend (115) - -
Net cash used in financing activities 4,826 (2,810) (269)
Net increase in cash and cash equivalents 2,149 115 352
Cash and cash equivalents at beginning of period 10,884 9,805 9,805
Effect of exchange rate fluctuations 551 39 727
Cash and cash equivalents at end of period 12 13,584 9,959 10,884
Cash and cash equivalents comprise:
Cash at bank 13,584 10,052 10,884
Bank overdraft - (93) -
Cash and cash equivalents at end of period 13,584 9,959 10,884

 

Notes to the condensed consolidated financial statements

1. Basis of preparation

RPS Group plc (the "Company") is a company domiciled in England. The condensed consolidated interim financial statements of the Company for the six months ended 30 June 2008 comprise the Company and its subsidiaries (together referred to as the "Group").

The condensed interim financial statements have been prepared using accounting policies set out in the Report and Accounts 2007 and are in accordance with IAS 34. The condensed interim financial statements are unaudited but have been reviewed by the Company's auditors. The results for the year end 31 December 2007 and the balance sheet as at that date are abridged from the Company's Report and Accounts 2007 which have been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not contain references to any matters to which the auditors drew attention by way of emphasis without qualifying the report and did not contain a statement under Section 272(2) or (3) of the Companies Act 1985.

The condensed interim financial statements do not constitute full accounts within the meaning of Section 240 of the Companies Act 1985.

2. Responsibility Statement

The directors confirm that, to the best of their knowledge this condensed set of financial statements has been prepared in accordance with IAS 34 and that this Interim Report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R.

On behalf of the Board

A. S. Hearne G. Young
Chief Executive Group Finance Director

3. Business segments

The Board believes that one of the Group's important strengths is the way in which we deploy our broad range of skills in an integrated way. The success of this part of our strategy results in projects being undertaken in a multi-disciplinary way. In consequence, there are Group activities which could be placed in more than one business segment. This becomes increasingly the case as our energy and international activities grow. The segments currently used to present and analyse the Group's performance are described below. They are kept under review by the Board.

Planning and Development - consultancy services in the UK, Ireland, Australia and the US related to town and country planning, urban design, architecture, transport planning and highway design, environmental impact assessment and provision of water and waste utilities and energy infrastructure.

Environmental Management - consultancy services in the UK, the Netherlands and Australia related to health, safety and risk management, environmental science and the management of water and energy resources.

Energy - the provision of technical consultancy services, on an international basis, to the upstream oil and gas and offshore renewable energy sectors.

Segment results for the six months ended 30 June 2008

Planning &
Development
Environmental
Management
Energy Eliminations Consolidated
£000's £000's £000's £000's £000's
Revenue 98,560 54,105 75,449 (2,247) 225,867
Recharged expenses (17,645) (7,792) (10,507) - (35,944)
Fee Income 80,915 46,313 64,942 (2,247) 189,923
Segment profit 15,057 6,835 12,445 - 34,337
Amortisation (439) (467) (231) - (1,137)
33,200
Unallocated expenses (3,674)
Operating profit 29,526

Segment results for the six months ended 30 June 2007

Planning &
Development
Environmental
Management
Energy Eliminations Consolidated
£000's £000's £000's £000's £000's
Revenue 78,547 40,909 56,585 (2,133) 173,908
Recharged expenses (13,481) (6,328) (9,733) - (29,542)
Fee Income 65,066 34,581 46,852 (2,133) 144,366
Segment profit 12,728 4,345 8,625 - 25,698
Amortisation (146) - (60) - (206)
25,492
Unallocated expenses (2,468)
Operating profit 23,024

4. Income taxes

The Group's consolidated effective tax rate for the six months ended 30 June 2008 was 30.3%, (for the year ended 31 December 2007: 30.5%; for the six months ended 30 June 2007: 30.8%).

5. Earnings per share

The calculations of earnings per share are based on the profit attributable to ordinary shareholders and a weighted average number of ordinary shares outstanding during the period as shown below:

Six months
ended 30 June
Six months
ended
30 June
Year ended
31 Dec
2008 2007 2007
£000's £000's £000's
Profit attributable to ordinary shareholders 19,097 14,813 30,910
000's 000's 000's
Weighted average number of ordinary shares for the purposes of basic earnings per share 209,865 204,592 206,256
Effect of shares to be issued as deferred consideration 505 1,059 92
Effect of employee share schemes 2,412 3,760 2,827
Weighted average number of ordinary shares for the purposes of diluted earnings per share 212,782 209,411 209,175
Basic earning per share (pence) 9.10 7.24 14.99
Diluted earnings per share (pence) 8.97 7.07 14.78

The directors consider that earnings per share before amortisation provides a more meaningful measure of the Group's performance than statutory earnings per share. The calculation of basic and diluted earnings per share before amortisation is based on the weighted average number of ordinary shares outstanding during the year as shown above and the profit attributable to ordinary shareholders before the amortisation on acquired intangible assets and the tax thereon as shown in the table below and the weighted average number of ordinary shares during the period as shown above.

Six months
ended 30 June
2008
Six months
ended 30 June
2007
Year ended
31 Dec
2007
£000's £000's £000's
Profit attributable to ordinary shareholders 19,097 14,813 30,910
Amortisation of acquired intangibles 1,137 206 531
Tax on amortisation of acquired intangibles (318) (62) (159)
Adjusted profit attributable to ordinary shareholders 19,916 14,957 31,282
Basic earnings before per share before amortisation (pence) 9.49 7.31 15.17
Diluted earnings per share before amortisation (pence) 9.36 7.14 14.95

6. Property, plant and equipment

During the six months ended 30 June 2008, the Group acquired assets with a cost of £4,036,000 (six months to 30 June 2007: £3,113,000), which includes £698,000 acquired through business combinations (six months to 30 June 2007: £328,000). Assets with a net book value of £932,000 were disposed of during the six months ended 30 June 2008 (six months ended 30 June 2007: £30,000).

7. Acquisitions

The Group completed the acquisition of seven businesses during the first half of 2008. Each purchase has been accounted for as an acquisition. Prior to completion of the transactions each acquired business kept its own management accounts. Adding the results shown in these accounts to the Group results produces Group revenue for the period of £233,708,000 and Group operating profit before amortisation of acquired intangibles of £30,316,000.

All intangible assets were recognised at their respective fair values. The residual excess over the net assets acquired, including intangible assets, is recognised as goodwill in the financial statements.

Date of Acquisition Place of incorporation Percentage of entity acquired Nature of business acquired
Kraan Consulting Holding BV 6 Feb 2008 The Netherlands 100% of issued share capital Urban planning
consultancy
RW Gregory LLP 12 Mar 2008 UK Assets and certain
liabilities
Engineering
consultancy
WTW and Associates Ltd 17 Mar 2008 UK 100% of issued share capital Oil and gas consultancy
Oceanfix International Ltd 19 Mar 2008 UK 100% of issued share capital Oil and gas consultancy
Land Management Trust
("Koltasz Smith")
27 Mar 2008 Australia Assets and certain
liabilities
Urban planning consultancy
Rudall Blanchard Associates Group Ltd 30 Mar 2008 UK 100% of issued share capital Health and Safety consultancy
The GeoCet Group LLC 18 Apr 2008 USA 100% of issued share capital Environmental consultancy

These businesses have been integrated with other parts of the Group and are no longer managed separately. They share resources, revenues, costs and market opportunities with other parts of the Group and should no longer be considered individual businesses. Their contributions to the revenue and operating profit before amortisation of acquired intangibles to the Group's results for the period, as shown below, reflects those relationships.

Revenue £'000 Operating profit £'000
Kraan Consulting Holding BV 2,723 341
RW Gregory LLP 3,457 442
Oceanfix International Ltd 3,392 402
Land Management Trust 857 191
Rudall Blanchard Group Ltd 1,861 479
The GeoCet Group LLC 779 213

It is impracticable to identify separately the revenue and operating profit contribution of WTW and Associates Ltd for the period since acquisition as this entity has been fully hived up into existing Group operations.

Details of the carrying values of the acquired net assets and the provisional fair values assigned to them by the Group are as follows:

Intangible assets
Customer relationships Order backlog Trade names Other intangibles Property, plant & equipment Cash Other assets Other liabilities Net assets
£000's £000's £000's £000's £000's £000's £000's £000's £000's
Pre acquisition carrying values
Kraan - - - 119 146 (248) 1,695 (955) 757
RWG - - - - 252 2,002 4,147 (4,900) 1,501
WTW - - - - 20 (3) 1,007 (455) 569
Oceanfix - - - - 81 533 2,454 (978) 2,090
LMT - - - - 191 - 701 (313) 579
RBA - - - 21 120 928 1,604 (774) 1,899
Geocet - - - - - 337 611 (774) 174
- - - 140 810 3,549 12,219 (9,149) 7,569
Provisional fair values
Kraan 2,714 - 374 - 124 (248) 1,654 (1,849) 2,769
RWG 2,960 1,080 200 - 252 2,002 4,221 (6,140) 4,575
WTW - 190 - - 19 (3) 1,007 (455) 758
Oceanfix 3,121 148 - - 25 533 2,454 (1,893) 4,388
LMT 550 - 632 - 191 - 701 (644) 1,430
RBA 1,207 107 - - 87 928 1,604 (1,142) 2,791
Geocet - - - - - 337 611 (774) 174
10,552 1,525 1,206 - 698 3,549 12,252 (12,897) 16,885

The fair value adjustments made to the pre acquisition carrying values to determine provisional fair values relate to the alignment of depreciation accounting policies, the identification of intangibles and the deferred tax recognised on the fair value adjustments.

Initial consideration Fair value of deferred consideration
Cash Shares Acquisition expenses Cash Shares Total consideration Net assets acquired Goodwill acquired
£000's £000's £000's £000's £000's £000's £000's £000's
Consideration
Kraan 3,009 - 344 1,720 - 5,073 2,769 2,304
RWG 5,200 1,700 217 3,238 - 10,355 4,575 5,780
WTW 1,344 - 118 468 - 1,930 758 1,172
Oceanfix 4,491 - 163 2,445 - 7,099 4,388 2,711
LMT 1,857 - 290 1,238 - 3,385 1,430 1,955
RBA 3,460 - 162 1,340 1,240 6,202 2,791 3,411
Geocet 590 - 75 554 - 1,219 174 1,045
19,951 1,700 1,369 11,003 1,240 35,263 16,885 18,378

As part of the consideration for RWG, 572,970 ordinary shares of RPS Group plc were allotted to the vendors.

As part of the deferred consideration for RBA, £1,240,000 of ordinary shares of RPS Group plc will be allotted to the vendors.

Goodwill represents the value of the assembled professional workforce acquired with these businesses.

Prior period acquisitions

The Group acquired the entire share capital of APA Petroleum Engineering Inc. in February 2007, acquired the trade, assets and certain liabilities of Safety and Risk Practice Pty Ltd in March 2007 and acquired the entire share capital of Geocon Group Services Ltd, also in March 2007.

At 30 June 2007 and 31 December 2007, the Group allotted provisional fair values to the assets and liabilities acquired as a result of these acquisitions. These provisional fair values have now been finalised. The only adjustment to the acquisitions made in the first half of 2007 has been a credit to net assets of APA Petroleum Engineering Inc. of £159,000 representing an adjustment to the opening tax balances of this entity.

8. Share capital

2008
Number
000's
2008
£000's
2007
Number
000's
2007
£000's
Authorised
Ordinary shares of 3p each at 30 June 240,000 7,200 240,000 7,200
Issued and fully paid
Ordinary shares of 3p each at 1 January 210,632 6,319 205,446 6,163
Issued under employee share schemes 737 23 1,294 39
Issued as acquisition initial consideration 573 17 512 15
At 30 June 211,942 6,359 207,252 6,217

9. Statement of changes in equity

Share capital Share premium Retained earnings Other reserves Total equity
£000's £000's £000's £000's £000's
At 1 January 2007 6,163 89,836 79,828 11,107 186,934
Changes in equity during 2007
Tax recognised directly in equity - - 678 - 678
Exchange differences - - - 300 300
Net income recognised directly in equity - - 678 300 978
Profit for the period - - 14,813 - 14,813
Total recognised income for the period - - 15,491 300 15,791
Issue of new ordinary shares 54 1,725 - 1,418 3,197
Sale of own shares - - 671 622 1,293
Share based payment expense - - - 919 919
Tax on share based payment expense - - - (448) (448)
Dividends - - (2,967) - (2,967)
At 30 June 2007 6,217 91,561 93,023 13,918 204,719
Changes in equity during 2008
At 1 January 2008 6,319 93,225 110,474 17,516 227,534
Tax recognised directly in equity - - 10 - 10
Exchange differences - - - 5,839 5,839
Net income recognised directly in equity - - 10 5,839 5,849
Profit for the period - - 19,097 - 19,097
Total recognised income for the period - - 19,107 5,839 24,946
Issue of new ordinary shares 40 1,112 (705) 1,449 1,896
Share based payment expense - - 1,348 - 1,348
Dividends - - (3,498) - (3,498)
At 30 June 2008 6,359 94,337 126,726 24,804 252,226

10. Other reserves

Merger reserve Employee trust shares Share scheme reserve Shares to be issued Translation reserve Total other reserves
£000's £000's £000's £000's £000's £000's
At 1 January 2007 10,642 (3,042) 4,053 1,997 (2,543) 11,107
Changes in equity during 2007
Exchange differences - - - - 300 300
Issue of new shares 1,572 (154) - - - 1,418
Sale of own shares - 622 - - - 622
Share based payment expense - - 919 - - 919
Tax on share based payment
expense
(448) (448)
At 30 June 2007 12,214 (2,574) 4,524 1,997 (2,243) 13,918
Changes in equity during 2008
At 1 January 2008 16,993 (2,943) - 222 3,244 17,516
Exchange differences - - - - 5,839 5,839
Issue of new shares 1,682 (233) - - - 1,449
At 30 June 2008 18,675 (3,176) - 222 9,083 24,804

11. Dividends

The following dividends were recognised as distributions to equity holders in
the period:

Six months
ended 30 June
2008
£000's
Six months
ended 30 June
2007
£000's
Year Ended
31 December
2007
£000's
Final dividend for 2007 1.66p per share 3,498 - -
Interim dividend for 2007 1.52p per share - - 3,177
Final dividend for 2006 1.44p per share - 2,967 2,967
3,498 2,967 6,144

An interim divided in respect of the six months ended 30 June 2008 of 1.75 pence per share, amounting to a total dividend of £3,712,000 was approved by the Directors of RPS Group plc on 29th July 2008. These condensed consolidated interim financial statements do not reflect this dividend payable.

12. Note to the condensed consolidated cash flow statement

Six months ended
30 June
Six months ended
30 June
Year ended 31 Dec
2008 2007 2007
£000's £000's £000's
Profit before tax 27,399 21,401 44,479
Adjustments for:
Interest payable and similar charges 2,299 1,755 3,792
Interest receivab