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2020

Half Year Results for the six months ended 30 June 2014

31 July 2014

Half Year Results for the six months ended 30 June 2014

PBTA ahead 11% on a constant currency basis. Agreement entered into for additional 7 year £50 million fixed rate loan. Interim dividend increased 15% for 21st consecutive year.

2014 2013 2013(3)
Business Performance H1 H1 H1
Revenue (£m) 279.4 280.9 261.1
Fee income (£m) 248.6 241.8 224.9
PBTA (1) (£m) 31.4 30.2 28.2
Adjusted earnings per share (2)(basic) (p) 10.30 9.81 9.16
Dividend per share (p) 4.05 3.52 3.52
Statutory Reporting
Profit before tax (£m) 21.7 21.0 19.8
Earnings per share (basic) (p) 6.99 6.53 6.17

(1) PBTA is profit before tax, amortisation of acquired intangibles and transaction related costs.
(2) Adjusted earnings per share is before amortisation of acquired intangibles and transaction related costs and the related tax.
(3) 2013 results restated at 2014 currency rates.

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

"On a constant currency basis our PBTA improved significantly. Our European business continued its steady growth. Conditions remained challenging in the Australian resources market and, during the period, some softness developed in parts of the oil and gas exploration and production sector. However, our business model again delivered robust results, with acquisitions making a significant contribution. RPS is financially strong. Following the recent agreement with Pricoa to provide additional long term debt we have ample resources to continue our growth strategy.".

31 July 2014

 

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

 

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, Norway, the Americas and Australia Asia Pacific 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.

 

Results

Profit (before tax, amortisation of acquired intangibles and transaction related costs) was £31.4 million (2013: £30.2 million; £28.2 million on a constant currency basis). Profit before tax was £21.7m (2013: £21.0m; £19.8m on a constant currency basis). Basic earnings per share (before amortisation and transaction related costs) were 10.30 pence (2013: 9.81 pence; 9.16 pence on a constant currency basis). The strengthening of sterling caused a significant reduction in year on year profit growth. The contribution of the Group's four segments was:

Underlying Profit(£m)(1) 2014 2013 2013(2)
H1 H1 H1
Energy 18.3 16.7 15.8
Built and Natural Environment: Europe 10.1 9.6 9.4
Built and Natural Environment: North America 4.2 3.9 3.5
Australia Asia Pacific ("AAP") 4.8 5.5 4.7
Total 37.4 35.7 33.4

(1) as defined in note 3; stated before reorganisation costs of £1.0m (2013: £1.1m)

(2) 2013 results restated at 2014 currency rates.

Group central costs were £3.4 million, (2013: £3.4 million) and finance charges were £1.7 million (2013: £1.0 million).

Funding and Dividend

Our balance sheet remains strong. We funded acquisition investment of £38.8 million in the period, including £20.2 million in respect of GaiaTech (announced on 20 May). Net bank borrowings at 30 June were £63.8 million (31 December 2013: £32.4 million). We have in place until 2016 a £125 million facility with Lloyds Bank Plc and have recently secured a US$150 million US private placement shelf facility with Pricoa. Initial notes with an aggregate value of £50 million, seven year term and 4% fixed coupon will be issued in September. Cash conversion was a little below the normal run rate as some major clients managed payment around their own half year. We expect the full year outcome to be at the normal level.

The Board remains confident about the Group's financial strength and has, once again, increased the interim dividend by 15% to 4.05 pence per share (2013: 3.52 pence) payable on 16 October 2014 to shareholders on the register on 19 September 2014.

Markets and Trading

Energy

We provide internationally recognised consultancy services to the oil and gas exploration and production industry from bases in the UK, USA and Canada. These act as regional centres for projects undertaken in many other countries. The business delivered good growth in the first half.

2014 2013 2013(2)
H1 H1 H1
Fee income (£m) 104.1 87.8 83.3
Underlying profit(1) (£m) 18.3 16.7 15.8
Margin % 17.6 19.0 18.9

(1) as defined in note 3, stated before reorganisation costs of £nil (2013: £0.1m)

(2) 2013 results restated at 2014 currency rates.

We continued to benefit from our prominent position in the oil and gas sector in many parts of the world, as well as increasing demand for our advice from the financial services sector. The acquisitions made in 2013 are integrating well and will contribute to the delivery of another year of good growth for this business.

During the second quarter some of our clients began to manage expenditure more tightly and political instability in parts of the Middle East has slowed investment. The Canadian potash market, which turned down in the middle of 2013, remains subdued and has impacted the year on year performance.

With long term demand for energy resources set to grow significantly, the current softness in some markets should be relatively short lived. During this period our robust business model and strong market presence should ensure continued high performance.

Built and Natural Environment ("BNE")

Within these businesses we provide a wide range of consultancy services to many aspects of the property and infrastructure development and management sectors. In recent years we have developed extensive experience in respect of the infrastructure projects necessary to bring energy resources, both conventional and renewable, to market.

Europe

2014 2013 2013(2)
H1 H1 H1
Fee income (£m) 75.5 74.7 73.7
Underlying Profit(1) (£m) 10.1 9.6 9.4
Margin % 13.4 12.8 12.8

(1) as defined in note 3, stated before reorganisation costs of £0.1m (2013: £0.3m)

(2) 2013 results restated at 2014 currency rates

Our BNE business in Europe performed well in the first half of the year. Those activities which assist clients develop new capital projects, particularly our planning and development business, continued to benefit both from improving market conditions and client confidence. Those exposed to operational environments, such as providing environment management advice, continue to need to offer an efficient, cost effective service to assist clients manage tight budgets.

The acquisition of Clear Environmental Consultants (announced on 10 April) has extended the range of our UK water activities and will assist the strategic development of this business. We have agreed terms to bring a market leading planning and development business into the Group . This will support a growing part of the business, with excellent prospects. Overall, our European business remains on track to achieve growth this year.

North America

2014 2013 2013(2)
H1 H1 H1
Fee income (£m) 19.0 15.7 14.4
Underlying Profit(1) (£m) 4.2 3.9 3.5
Margin % 22.0 24.9 24.7

(1) as defined in note 3, stated before reorganisation costs of £nil (2013: £nil)

(2) 2013 results restated at 2014 currency rates

We remain well positioned in the expanding North American energy infrastructure market. The acquisition of HMA Land Services in September 2013 gave us access to the substantial pipeline development market. Those parts of the business closest to E&P activities also experienced some of the expenditure tightening from clients seen in the Energy business during the first half. In the most buoyant part of our market, permitting and licensing of facilities, staff retention and recruitment has become exceptionally difficult and staff losses caused significant disruption.

The acquisition of GaiaTech was an important step in the development of this business, giving us access to new markets and geography. It will make an important contribution in the second half and subsequent years. Opportunities remain to expand our North American business significantly both organically and by acquisition.

AAP

This business is a combination of the former BNE: AAP and the AAP component of Energy. They were brought together in 2013 to take advantage of the opportunities in the integrated energy and energy infrastructure markets and, specifically, help counter the impact of the slowdown in the resources sector on our businesses.

2014 2013 2013(2)
H1 H1 H1
Fee income (£m) 50.8 65.9 55.4
Underlying Profit(1) (£m) 4.8 5.5 4.7
Margin % 9.4 8.4 8.4

(1) as defined in note 3, stated before reorganisation costs of £nil (2013: £nil)

(2) 2013 results restated at 2014 currency rates

Throughout the first half our mining and energy clients in AAP remained focused on operational efficiency rather than capital expenditure on project development. As a result further projects have been delayed or cancelled. As expected, therefore, our level of activity in the first half was at a lower level than last year and we continued with the plan to reduce our cost base in order to improve efficiency.

The rebalancing of our business away from the resources sector has, however, continued positively. There has been increased optimism and investment in private and public sector urban development and infrastructure projects, particularly in and around Sydney and Melbourne. The second quarter, as a result, showed a significant improvement over the first and we currently anticipate the second half should see further improvement. In order to support this change of emphasis, we have agreed terms to acquire a consultancy with a strong public sector client base and offices in all major cities. It will make a significant contribution to the development of our business.

Group Prospects

Our flexible and robust business model has demonstrated in recent years that it is capable of generating growth in challenging circumstances. A number of acquisitions are under active consideration. The Board remains focussed on delivering a good result for the full year.

Board of Directors
RPS Group plc

31 July 2014

 

Condensed consolidated income statement

Notes Six months
ended
30 June
Six months
ended
30 June
Year
ended
31 December
£000's 2014 2013 2013
Revenue 3 279,376 280,850 567,614
Recharged expenses 3 (30,778) (39,006) (75,493)
Fee income 3 248,598 241,844 492,121
Operating profit before amortisation of acquired intangibles and transaction related costs 3 33,058 31,179 65,305
Amortisation of acquired intangibles and transaction related costs 4 (9,686) (9,174) (19,425)
Operating profit 3 23,372 22,005 45,880
Finance costs (1,741) (1,006) (2,430)
Finance income 35 48 157
Profit before tax, amortisation of acquired intangibles and transaction related costs 31,352 30,221 63,032
Profit before tax 21,666 21,047 43,607
Tax expense 5 (6,348) (6,807) (14,987)
Profit for the period attributable to equity holders of the parent 15,318 14,240 28,620
Basic earnings per share (pence) 6 6.99 6.53 13.11
Diluted earnings per share (pence) 6 6.95 6.50 13.05
Adjusted basic earnings per share (pence) 6 10.30 9.81 20.22
Adjusted diluted earnings per share (pence) 6 10.25 9.76 20.14

 

Condensed consolidated statement of comprehensive income

Six months
ended
30 June
Six months
ended
30 June
Year
ended
31 December
£000's 2014 2013 2013
Profit for the period 15,318 14,240 28,620
Exchange differences* (1,785) (1,706) (18,200)
Remeasurement of net defined benefit liability (256) - -
Total recognised comprehensive income for the period attributable to equity holders of the parent 13,277 12,534 10,420

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

 

Condensed consolidated balance sheet

As at 30 June As at 30 June As at 31 December
£000's Notes 2014 2013 2013
Assets
Non-current assets
Intangible assets 387,691 340,408 375,279
Property, plant and equipment 7 28,753 30,200 27,785
Deferred tax asset 3,630 - 2,018
420,074 370,608 405,082
Current assets
Trade and other receivables 170,075 162,064 161,741
Cash at bank 19,019 12,713 18,699
189,094 174,777 180,440
Liabilities
Current liabilities
Borrowings 3,411 1,474 1,465
Deferred consideration 13,722 11,369 20,919
Trade and other payables 100,520 98,102 103,260
Corporation tax liabilities 3,932 1,638 3,058
Provisions 1,420 2,560 2,134
123,005 115,143 130,836
Net current assets 66,089 59,634 49,604
Non-current liabilities
Borrowings 79,440 31,973 49,602
Deferred consideration 11,690 6,910 14,923
Other creditors 2,747 3,022 2,471
Deferred tax 12,366 6,578 13,645
Provisions 2,009 1,469 2,007
108.252 49,952 82,648
Net assets 377,911 380,290 372,038
Equity
Share capital 9 6,630 6,600 6,619
Share premium 109,235 106,922 108,307
Other reserves 10 15,226 34,839 17,652
Retained earnings 246,820 231,929 239,460
Total shareholders' equity 377,911 380,290 372,038

 

Condensed consolidated cash flow statement

Six months
ended
30 June
Six months
ended
30 June
Year
ended
31 December
£000's Notes 2014 2013 2013
Adjusted cash generated from operations 12 29,441 33,831 72,030
Deferred consideration treated as remuneration (2,792) (4,204) (7,714)
Cash generated from operations 26,649 29,627 64,316
Interest paid (1,503) (1,091) (1,991)
Interest received 35 48 157
Income taxes paid (8,751) (11,381) (19,829)
Net cash from operating activities 16,430 17,203 42,653
Cash flows from investing activities
Purchases of subsidiaries net of cash acquired (22,138) (11,178) (31,174)
Deferred consideration (9,767) - (3,466)
Purchase of property, plant and equipment (4,299) (4,722) (8,034)
Sale of property, plant and equipment 148 272 523
Net cash used in investing activities (36,056) (15,628) (42,151)
Cash flows from financing activities
Proceeds from issue of share capital 1 211 555
Proceeds from bank borrowings 26,870 2,935 18,609
Payment of finance lease liabilities (117) (353) (580)
Dividends paid 11 (8,453) (7,308) (15,034)
Payment of pre-acquisition dividend - (87) (247)
Net cash from/(used in) financing activities 18,301 (4,602) (3,303)
Net (decrease)/increase in cash and cash equivalents (1,325) (3,027) (3,805)
Cash and cash equivalents at beginning of period 17,791 14,804 14,804
Effect of exchange rate fluctuations (368) (12) (818)
Cash and cash equivalents at end of period 16,098 11,765 17,791
Cash and cash equivalents comprise:
Cash at bank 19,019 12,713 18,699
Bank overdraft (2,921) (948) (908)
Cash and cash equivalents at end of period 16,098 11,765 17,791

 

Consolidated statement of changes in equity

£000's Share capital Share premium Retained earnings Other reserves Total equity
At 1 January 2014 6,619 108,307 239,460 17,652 372,038
Total comprehensive income for the period - - 15,062 (1,785) 13,277
Issue of new ordinary shares 11 928 (296) (641) 2
Release of own shares - - - 756 756
Share based payment expense - - 1,047 - 1,047
Dividends - - (8,453) - (8,453)
At 30 June 2014 6,630 109,235 246,820 15,226 377,911
At 1 January 2013 6,587 106,198 224,959 36,070 373,814
Total comprehensive income for the period - - 14,240 (1,706) 12,534
Issue of new ordinary shares 13 724 (1,003) (281) (547)
Purchase of own shares - - - 756 756
Share based payment expense - - 1,041 - 1,041
Dividends - - (7,308) - (7,308))
At 30 June 2013 6,600 106,922 231,929 34,839 380,290

An analysis of other reserves is provided in Note 10.

 

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 2014 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 2013 and in accordance with IAS 34. They are unaudited but have been reviewed by the Company's auditor. The results for the year end 31 December 2013 and the balance sheet as at that date are abridged from the Company's Report and Accounts 2013 which have been delivered to the Registrar of Companies. The auditor's report on those accounts was not qualified, did not include a reference to any matters for which the auditors drew attention by way of emphasis without qualifying the report and did not contain statements under sections 498 (2) or (3) of the Companies Act 2006.

The condensed interim financial statements do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006.

In assessing the going concern basis, the directors considered the Group's business activities, the financial position of the Group and the Group's financial risk management objectives and policies. The directors have a reasonable expectation that the Company and Group have adequate resources to continue in operational existence for the foreseeable future and that it is, therefore, appropriate to adopt the going concern basis in preparing the Group's interim financial statements.

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 4.2.4R, DTR 4.2.7R and DTR 4.2.8R.

On behalf of the Board

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

31 July 2014

3. Business segments

Segment information is presented in respect of the Group's business segments which are reported to the Chief Operating Decision Maker. The business segment reporting format reflects the Group's management and internal structure. Inter-segment pricing is determined on an arm's length basis. Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

As noted in the March 2014 Interim Management Statement, HMA (a business acquired in August 2013) is now reported in the BNE North America Segment. Previously it was reported in the Energy Segment. Accordingly the December 2013 segmental results have been restated.

The segment results and the total segment assets table at 30 June 2013 have been restated to reflect the separate reporting of BNE North America segment and the integrated management and reporting of the Group's BNE and Energy businesses in Australia Asia Pacific as announced in October 2013.

The business segments of the Group are as follows:

Energy - the provision of integrated technical, commercial and project management support and training in the fields of geoscience, engineering and health, safety and environmental on a global basis to the energy sector.

Built and Natural Environment ("BNE") - consultancy services to many aspects of the property and infrastructure development and management sectors. These include: environmental assessment, the management of water resources, oceanography, health and safety, risk management, town and country planning, building, landscape and urban design, surveying and transport planning. Consulting services are provided on a regional basis in Europe and North America.

Australia Asia Pacific ("AAP") - in the AAP region there is a single board that manages the BNE and Energy services we provide in that region. Accordingly, the results of this business are reported as a separate segment.

Unallocated expenses - certain central costs are not allocated to the segments because either they predominantly relate to the running of the Group Head Office function or could only be allocated to the segments on an arbitrary basis, such costs include the remuneration and support costs of the main board and the costs of the Group Finance and marketing functions.

"Segment profit" is defined as profit before interest, tax, amortisation of acquired intangibles, transaction related costs and unallocated expenses.

"Underlying profit" is defined as segment profit before reorganisation costs.

"Reorganisation costs" comprises costs and income arising as a consequence of reorganisation including redundancy costs, profit or loss of disposal of plant, property and equipment, the costs of consolidating office space and rebranding costs.

Segment results for the period ended 30 June 2014:

£000's Fees Expenses Intersegment revenue External Revenue
Energy 104,130 14,426 (328) 118,228
BNE - Europe 75,541 9,410 (372) 84,579
BNE - North America 19,017 2,319 (413) 20,923
AAP 50,843 4,843 (40) 55,646
Group eliminations (933) (220) 1,153 -
Total 248,598 30,778 - 279,376

 

£000's Underlying profit Reorganisation costs Segment profit
Energy 18,304 - 18,304
BNE - Europe 10,140 (144) 9,996
BNE - North America 4,185 - 4,185
AAP 4,782 (853) 3,929
Total 37,411 (997) 36,414

Segment results for the period ended 30 June 2013 (restated):

£000's Fees Expenses Intersegment revenue External revenue
Energy 87,797 17,206 (604) 104,399
BNE - Europe 74,682 9,504 (265) 83,921
BNE - North America 15,668 2,242 (464) 17,446
AAP 65,912 10,288 (1,116) 75,084
Group eliminations (2,215) (234) 2,449 -
Total 241,844 39,006 - 280,850

 

£000's Underlying profit Reorganisation costs Segment profit
Energy 16,688 (52) 16,636
BNE - Europe 9,550 (259) 9,291
BNE - North America 3,907 - 3,907
AAP 5,528 (833) 4,695
Total 35,673 (1,144) 34,529

Segment results for the period ended 31 December 2013 (restated):

£000's Fees Expenses Intersegment revenue External revenue
Energy 186,915 33,224 (1,141) 218,998
BNE - Europe 149,292 20,171 (603) 168,860
BNE - North America 32,664 5,117 (1,111) 36,670
AAP 127,194 17,380 (1,488) 143,086
Group eliminations (3,944) (399) 4,343 -
Total 492,121 75,493 - 567,614

 

£000's Underlying profit Reorganisation costs Segment profit
Energy 36,403 (78) 36,325
BNE - Europe 19,164 (487) 18,677
BNE - North America 8,287 - 8,287
AAP 10,020 (1,192) 8,828
Total 73,874 (1,757) 72,117

Group reconciliation

£000's 30 June 2014 30 June 2013 31 Dec 2013
Revenue 279,376 280,850 567,614
Recharged expenses (30,778) (39,006) (75,493)
Fees 248,598 241,844 492,121
Underlying profit 37,411 35,673 73,874
Reorganisation costs (997) (1,144) (1,757)
Segment profit 36,414 34,529 72,117
Unallocated expenses (3,356) (3,350) (6,812)
Operating profit before amortisation of acquired intangibles and transaction related costs 33,058 31,179 65,305
Amortisation of acquired intangibles and transaction related costs (9,686) (9,174) (19,425)
Operating profit 23,372 22,005 45,880
Net finance costs (1,706) (958) (2,273)
Profit before tax 21,666 21,047 43,607

Total segment assets were as follows:

£000's 30 June 2014 30 June 2013 (restated) 31 December 2013 (restated)
Energy 199,583 149,474 198,910
BNE - Europe 229,044 229,401 219,112
BNE - North America 53,129 30,596 43,151
AAP 118,669 132,966 117,769
Unallocated 8,743 2,948 6,580
Total 609,168 545,385 585,522

4. Amortisation of acquired intangibles and transaction related costs

£000's 30 June 2014 30 June 2013 31 December 2013
Amortisation of acquired intangibles 8,205 5,337 12,217
Contingent deferred consideration treated as remuneration 870 3,470 6,009
Deferred consideration fair value adjustment (66) - -
Third party advisory costs 677 367 1,199
Total 9,686 9,174 19,425

5. Income taxes

The tax charge for the period has been calculated using an estimate of the effective annual rate of tax for each taxing jurisdiction for the full year. These rates have been applied to the pre-tax profits for each jurisdiction for the six months ended 30 June 2014. The Group has separately calculated the tax rates applicable to amortisation of intangibles and transaction related costs for the period. Tax rate changes that were substantively enacted at the balance sheet date have been factored into the calculation of the effective tax rates.

Analysis of the tax expense/(credit) in the income statement for the period:

£000's 30 June 2014 30 June 2013 31 December 2013
Current tax expense 7,977 8,332 16,448
Deferred tax credit (1,629) (1,525) (1,461)
Total tax expense in the income statement 6,348 6,807 14,987
Add back:
Tax on amortisation of acquired intangibles and acquisition related costs 2,432 2,033 3,889
Adjusted tax charge on PBTA for the period 8,780 8,840 18,876
Tax rate on PBT 29.3% 32.3% 34.4%
Tax rate on PBTA 28.0% 29.3% 29.9%

6. 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
£000's 2014 2013 2013
Profit attributable to ordinary shareholders 15,318 14,240 28,620
000's
Weighted average number of ordinary shares for the purposes of basic earnings per share 219,188 217,953 218,355
Effect of employee share schemes 1,105 1,034 909
Weighted average number of ordinary shares for the purposes of diluted earnings per share 220,293 218,987 219,264
Basic earning per share (pence) 6.99 6.53 13.11
Diluted earnings per share (pence) 6.95 6.50 13.05

The directors consider that earnings per share before amortisation of acquired intangibles and transaction related costs provides a more meaningful measure of the Group's performance than statutory earnings per share. The calculations of adjusted earnings per share were based on the number of shares as above, and are shown in the table below:

£000's Six months ended 30 June 2014 Six months ended 30 June 2013 Year ended 31 Dec 2013
Profit attributable to ordinary shareholders 15,318 14,240 28,620
Amortisation of acquired intangibles and transaction related costs 9,686 9,174 19,425
Tax on amortisation of acquired intangibles and transaction related costs (2,432) (2,033) (3,889)
Adjusted profit attributable to ordinary shareholders 22,572 21,381 44,156
Adjusted basic earnings before per share (pence) 10.30 9.81 20.22
Adjusted diluted earnings per share (pence) 10.25 9.76 20.14

7. Property, plant and equipment

During the six months ended 30 June 2014 the Group acquired assets with a
cost of £5,497,000 (six months to 30 June 2013: £4,732,000), which includes £1,045,000 acquired through business combinations (six months to 30 June 2013: £89,000). Assets with a net book value of £90,000 were disposed of during the six months ended 30 June 2014 (six months ended 30 June 2013: £86,000).

8. Acquisitions

The Group has completed the following acquisitions to strengthen and broaden the skill base of the Group, during the first half of 2014:

Entity Business Segment Date of Acquisition Place of incorporation Percentageof entity acquired Nature of business acquired
Whelans Corporation Pty Ltd AAP 5 Feb 2014 Australia 100% Surveying
Clear Environmental Consultants Ltd BNE Europe 9 April 2014 UK 100% Water Consultancy
GaiaTech Holdings Inc BNE NA 15 May 2014 UK 100% Environmental Consultancy

Their contributions to the Group's results for the period is given below:

£000's Revenue Operating profit
Whelans 1,927 172
Clear 1,249 102
GaiaTech 1,459 273

Had the Group acquired these entities on the first day of the period, the Group estimates revenue would have been £285,469,000 and operating profit would have been £23,965,000.

The Group has allocated provisional fair values to the net assets acquired as follows:

 

£000's Order book Customer relationships Brand PPE Cash Other assets Other liabilities Net assets acquired
Whelans 142 186 104 369 396 1,290 (1,209) 1,278
Clear 480 2,660 200 274 1,943 1,221 (2,057) 4,721
GaiaTech 143 4,477 327 402 1,702 5,511 (5,286) 7,276
765 7,323 631 1,045 4,041 8,022 (8,552) 13,275

 

£000's Initial cash consideration Contingent cash consideration Deferred cashl consideration Total consideration Net assets acquired Goodwill acquired
Whelans 1,443 - 619 2,062 1,278 784
Clear 6,841 1,156 - 7,997 4,721 3,276
GaiaTech 17,894 - - 17,894 7,276 10,618
26,178 1,156 619 27,953 13,275 14,678

The consideration payable in future for Clear is contingent upon renewal of a key contract. The payment made will be in the range of £nil to £1,500,000 and the fair value has been determined by estimating the likelihood of payment.

There was no tax deductable goodwill acquired.

Provisional values are given in the table above as information about facts or circumstances that existed at the acquisition date is incomplete.

Goodwill represents the value of the accumulated workforce and synergies with RPS associated with these acquisitions.

The total fair value of receivables acquired was £5,668,000. The gross contractual receivables acquired were £5,786,000 and £118,000 was estimated to be irrecoverable.

The vendors of the acquired companies have entered into indemnity arrangements with the Group. The total undiscounted cash flow that could be receivable by the Group is between £nil and £5,668,000. As the Group does not expect that these warranties will become receivable, it has not recognised an indemnification asset on acquisition.

The Group incurred acquisition-related costs of £677,000 (6 months to 30 June 2013: £314,000), which have been expensed through the consolidated income statement and included within "amortisation of acquired intangibles and transaction related costs".

A reconciliation of the goodwill movement in 2014 in respect of acquisitions completed in 2013 and 2014 is given below.

£000's PEICE KR APASA HMA Ichron OEC Whelans Clear GT
Goodwill at 1 January 2014 3,007 1,399 1,955 6,997 5,538 17,273 - - -
Additions through acquisition - - - - - - 784 3,276 10,618
Adjustments to opening balance sheet - 9 - - - - - - -
Foreign exchange gains and losses (102) (44) 41 (236) - (731) 7 - (161)
Goodwill at 30 June 2014 2,905 1,364 1,996 6,761 5,538 16,542 791 3,276 10,457

There were no accumulated impairment losses at the beginning or the end of the period.

Commitments and contingencies

The Group completed a number of acquisitions between 1 January 2010 and 31 December 2011 where deferred consideration payments to vendors are contingent on the vendor's continued employment with the Group and so are required to be recognised as employment costs over the deferred consideration period. The Group considers it probable that the remaining deferred consideration payments will be settled.

The total remaining cash commitments at 30 June 2014 in respect of contingent deferred consideration treated as remuneration that the Group expects to settle is £789,000 and payment will be made before the end of this year. The related estimated remuneration charge to be incurred by the year end is £263,000.

The balance sheet at 30 June 2014 includes, within deferred consideration current liabilities, contingent deferred consideration remuneration expense accrued but not paid totalling £526,000 (31 December 2013: £2,457,000).

9. Share capital

2014 Number 000's 2014 £000's 2013 Number 000's 2013 £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 220,632 6,619 219,566 6,587
Issued under employee share schemes 362 11 424 13
At 30 June 220,994 6,630 219,990 6,600

10. Other reserves

£000's Merger reserve Employee trust Translation reserve Total
At 1 January 2014 21,256 (9,277) 5,673 17,652
Exchange differences - - (1,785) (1,785)
Issue of new shares - (641) - (641)
At 30 June 2014 21,256 (9,918) 3,888 15,226
At 1 January 2013 21,256 (9,059) 23,873 36,070
Exchange differences - - (1,706) (1,706)
Issue of new shares - (281) - (281)
Purchase of own shares - 756 - 756
At 30 June 2013 21,256 (8,584) 22,167 34,839

11. Dividends

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

£000's Six months ended 30 June 2014 Six months ended 30 June 2013 Year ended 31 Dec 2013
Final dividend for 2013 3.84p per share 8,453 - -
Interim dividend for 2013 3.52p per share - - 7,726
Final dividend for 2012 3.34p per share - 7,308 7,308
8,453 7,308 15,034

An interim dividend in respect of the six months ended 30 June 2014 of 4.05 pence per share, amounting to a total dividend of £8,921,000 was approved by the Directors of RPS Group Plc on 29 July 2014. 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
£000's 2014 2013 2013
Operating profit 23,372 22,005 45,880
Adjustments for:
Depreciation 4,216 5,051 9,432
Amortisation of acquired intangibles 8,205 5,337 12,217
Contingent deferred consideration treated as remuneration 870 3,470 6,009
Deferred consideration fair value adjustment (66) - -
Share based payment expense 960 1,041 1,938
Profit on sale of property, plant and equipment (61) (186) (241)
37,496 36,718 75,235
(Increase)/(decrease) in trade and other receivables (4,154) 1,604 8,838
Decrease in trade and other payables (3,901) (4,491) (12,043)
Adjusted cash generated from operations 29,441 33,831 72,030

* Adjusted cash generated from operations is before payment of deferred consideration treated as remuneration.

The table below provides an analysis of net bank borrowings, comprising cash and cash equivalents, interest bearing bank loans and finance leases, during the six months ended 30 June 2014.

£000's At 1 January 2014 Cash flow Acquisition debt Foreign exchange At 30 June 2014
Cash and cash equivalents 18,699 674 - (354) 19,019
Overdrafts (908) (1,999) - (14) (2,921)
Bank Loans (49,637) (26,870) (4,003) 1,120 (79,390)
Finance lease creditor (522) 117 (124) (11) (540)
Net bank borrowings (32,368) (28,078) (4,127) 741 (63,832)

The cash balance includes £7,680,000 (31 December 2013: £6,028,000) that is restricted in its use.

13. Events after the balance sheet date

On 24 July the Group agreed a US$150m private placement 3 year "shelf" facility with Prudential Investment Inc ("Pricoa"). Initial notes with a value of £30m and US$34.1m (equivalent to £20m) each with a 7 year term and fixed coupon of 3.98% and 3.84% respectively will be issued on 30 September 2014. The balance of the facility is uncommitted but is available from 24 July 2015.

14. Principal risks and uncertainties

The nature of the principal risks and uncertainties faced by the Group have not changed significantly since the 2013 Report and Accounts was published. These risks, together with a description of the approach to mitigate them, are set out on pages 8 and 9 of the 2013 Report and Accounts (available on the Group's website at www.rpsgroup.com) and are summarised as follows:

- Economic environment
- Material adverse events
- Information systems
- Recruitment and retention of key personnel
- Market position and reputation
- Litigation
- Compliance
- Business acquisitions
- Funding
- Health and safety

From time to time the Group receives claims from clients and suppliers. Some of these result in payments to the claimants by the Group and its insurers. The Board reviews all significant claims at each board meeting and more regularly if required. The Board is currently satisfied that the Group has sufficient provisions in its balance sheet to meet all likely uninsured liabilities.

The Board keeps under review the potential effect of economic circumstances. The continuing uncertainty in the global economic outlook inevitably increases the trading and balance sheet risks to which the Group is exposed.

15. Related party transactions

There are no significant changes in the nature and size of related party transactions for the period to those reported in the 2013 Report and Accounts.

16. 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. The continuing uncertainty in global economic outlook inevitably increases the risks to which the Group is exposed. Statements in respect of the Group's performance in the year to date are based upon unaudited management accounts for the period January to June 2014. Nothing in this announcement should be construed as a profit forecast.

17. Publication

A copy of this announcement will be posted on the Company's website at www.rpsgroup.com.

INDEPENDENT REVIEW REPORT TO RPS GROUP PLC

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 2014, which comprises the Condensed consolidated income statement, the Condensed consolidated statement of comprehensive income, the Condensed consolidated balance sheet, the Condensed consolidated cash flow statement, the Condensed consolidated statement of changes in equity and the related notes 1 to 17. 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.

This report is made solely to the company 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. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.

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 Finance Conduct Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with 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.

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 2014 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 Finance Conduct Authority.

 

Deloitte LLP
Chartered Accountants and Statutory Auditor
Reading, United Kingdom

31 July 2014

 

2019

Half Year Results for the six months ended 30 June 2014

31 July 2014

Half Year Results for the six months ended 30 June 2014

PBTA ahead 11% on a constant currency basis. Agreement entered into for additional 7 year £50 million fixed rate loan. Interim dividend increased 15% for 21st consecutive year.

2014 2013 2013(3)
Business Performance H1 H1 H1
Revenue (£m) 279.4 280.9 261.1
Fee income (£m) 248.6 241.8 224.9
PBTA (1) (£m) 31.4 30.2 28.2
Adjusted earnings per share (2)(basic) (p) 10.30 9.81 9.16
Dividend per share (p) 4.05 3.52 3.52
Statutory Reporting
Profit before tax (£m) 21.7 21.0 19.8
Earnings per share (basic) (p) 6.99 6.53 6.17

(1) PBTA is profit before tax, amortisation of acquired intangibles and transaction related costs.
(2) Adjusted earnings per share is before amortisation of acquired intangibles and transaction related costs and the related tax.
(3) 2013 results restated at 2014 currency rates.

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

"On a constant currency basis our PBTA improved significantly. Our European business continued its steady growth. Conditions remained challenging in the Australian resources market and, during the period, some softness developed in parts of the oil and gas exploration and production sector. However, our business model again delivered robust results, with acquisitions making a significant contribution. RPS is financially strong. Following the recent agreement with Pricoa to provide additional long term debt we have ample resources to continue our growth strategy.".

31 July 2014

 

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

 

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, Norway, the Americas and Australia Asia Pacific 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.

 

Results

Profit (before tax, amortisation of acquired intangibles and transaction related costs) was £31.4 million (2013: £30.2 million; £28.2 million on a constant currency basis). Profit before tax was £21.7m (2013: £21.0m; £19.8m on a constant currency basis). Basic earnings per share (before amortisation and transaction related costs) were 10.30 pence (2013: 9.81 pence; 9.16 pence on a constant currency basis). The strengthening of sterling caused a significant reduction in year on year profit growth. The contribution of the Group's four segments was:

Underlying Profit(£m)(1) 2014 2013 2013(2)
H1 H1 H1
Energy 18.3 16.7 15.8
Built and Natural Environment: Europe 10.1 9.6 9.4
Built and Natural Environment: North America 4.2 3.9 3.5
Australia Asia Pacific ("AAP") 4.8 5.5 4.7
Total 37.4 35.7 33.4

(1) as defined in note 3; stated before reorganisation costs of £1.0m (2013: £1.1m)

(2) 2013 results restated at 2014 currency rates.

Group central costs were £3.4 million, (2013: £3.4 million) and finance charges were £1.7 million (2013: £1.0 million).

Funding and Dividend

Our balance sheet remains strong. We funded acquisition investment of £38.8 million in the period, including £20.2 million in respect of GaiaTech (announced on 20 May). Net bank borrowings at 30 June were £63.8 million (31 December 2013: £32.4 million). We have in place until 2016 a £125 million facility with Lloyds Bank Plc and have recently secured a US$150 million US private placement shelf facility with Pricoa. Initial notes with an aggregate value of £50 million, seven year term and 4% fixed coupon will be issued in September. Cash conversion was a little below the normal run rate as some major clients managed payment around their own half year. We expect the full year outcome to be at the normal level.

The Board remains confident about the Group's financial strength and has, once again, increased the interim dividend by 15% to 4.05 pence per share (2013: 3.52 pence) payable on 16 October 2014 to shareholders on the register on 19 September 2014.

Markets and Trading

Energy

We provide internationally recognised consultancy services to the oil and gas exploration and production industry from bases in the UK, USA and Canada. These act as regional centres for projects undertaken in many other countries. The business delivered good growth in the first half.

2014 2013 2013(2)
H1 H1 H1
Fee income (£m) 104.1 87.8 83.3
Underlying profit(1) (£m) 18.3 16.7 15.8
Margin % 17.6 19.0 18.9

(1) as defined in note 3, stated before reorganisation costs of £nil (2013: £0.1m)

(2) 2013 results restated at 2014 currency rates.

We continued to benefit from our prominent position in the oil and gas sector in many parts of the world, as well as increasing demand for our advice from the financial services sector. The acquisitions made in 2013 are integrating well and will contribute to the delivery of another year of good growth for this business.

During the second quarter some of our clients began to manage expenditure more tightly and political instability in parts of the Middle East has slowed investment. The Canadian potash market, which turned down in the middle of 2013, remains subdued and has impacted the year on year performance.

With long term demand for energy resources set to grow significantly, the current softness in some markets should be relatively short lived. During this period our robust business model and strong market presence should ensure continued high performance.

Built and Natural Environment ("BNE")

Within these businesses we provide a wide range of consultancy services to many aspects of the property and infrastructure development and management sectors. In recent years we have developed extensive experience in respect of the infrastructure projects necessary to bring energy resources, both conventional and renewable, to market.

Europe

2014 2013 2013(2)
H1 H1 H1
Fee income (£m) 75.5 74.7 73.7
Underlying Profit(1) (£m) 10.1 9.6 9.4
Margin % 13.4 12.8 12.8

(1) as defined in note 3, stated before reorganisation costs of £0.1m (2013: £0.3m)

(2) 2013 results restated at 2014 currency rates

Our BNE business in Europe performed well in the first half of the year. Those activities which assist clients develop new capital projects, particularly our planning and development business, continued to benefit both from improving market conditions and client confidence. Those exposed to operational environments, such as providing environment management advice, continue to need to offer an efficient, cost effective service to assist clients manage tight budgets.

The acquisition of Clear Environmental Consultants (announced on 10 April) has extended the range of our UK water activities and will assist the strategic development of this business. We have agreed terms to bring a market leading planning and development business into the Group . This will support a growing part of the business, with excellent prospects. Overall, our European business remains on track to achieve growth this year.

North America

2014 2013 2013(2)
H1 H1 H1
Fee income (£m) 19.0 15.7 14.4
Underlying Profit(1) (£m) 4.2 3.9 3.5
Margin % 22.0 24.9 24.7

(1) as defined in note 3, stated before reorganisation costs of £nil (2013: £nil)

(2) 2013 results restated at 2014 currency rates

We remain well positioned in the expanding North American energy infrastructure market. The acquisition of HMA Land Services in September 2013 gave us access to the substantial pipeline development market. Those parts of the business closest to E&P activities also experienced some of the expenditure tightening from clients seen in the Energy business during the first half. In the most buoyant part of our market, permitting and licensing of facilities, staff retention and recruitment has become exceptionally difficult and staff losses caused significant disruption.

The acquisition of GaiaTech was an important step in the development of this business, giving us access to new markets and geography. It will make an important contribution in the second half and subsequent years. Opportunities remain to expand our North American business significantly both organically and by acquisition.

AAP

This business is a combination of the former BNE: AAP and the AAP component of Energy. They were brought together in 2013 to take advantage of the opportunities in the integrated energy and energy infrastructure markets and, specifically, help counter the impact of the slowdown in the resources sector on our businesses.

2014 2013 2013(2)
H1 H1 H1
Fee income (£m) 50.8 65.9 55.4
Underlying Profit(1) (£m) 4.8 5.5 4.7
Margin % 9.4 8.4 8.4

(1) as defined in note 3, stated before reorganisation costs of £nil (2013: £nil)

(2) 2013 results restated at 2014 currency rates

Throughout the first half our mining and energy clients in AAP remained focused on operational efficiency rather than capital expenditure on project development. As a result further projects have been delayed or cancelled. As expected, therefore, our level of activity in the first half was at a lower level than last year and we continued with the plan to reduce our cost base in order to improve efficiency.

The rebalancing of our business away from the resources sector has, however, continued positively. There has been increased optimism and investment in private and public sector urban development and infrastructure projects, particularly in and around Sydney and Melbourne. The second quarter, as a result, showed a significant improvement over the first and we currently anticipate the second half should see further improvement. In order to support this change of emphasis, we have agreed terms to acquire a consultancy with a strong public sector client base and offices in all major cities. It will make a significant contribution to the development of our business.

Group Prospects

Our flexible and robust business model has demonstrated in recent years that it is capable of generating growth in challenging circumstances. A number of acquisitions are under active consideration. The Board remains focussed on delivering a good result for the full year.

Board of Directors
RPS Group plc

31 July 2014

 

Condensed consolidated income statement

Notes Six months
ended
30 June
Six months
ended
30 June
Year
ended
31 December
£000's 2014 2013 2013
Revenue 3 279,376 280,850 567,614
Recharged expenses 3 (30,778) (39,006) (75,493)
Fee income 3 248,598 241,844 492,121
Operating profit before amortisation of acquired intangibles and transaction related costs 3 33,058 31,179 65,305
Amortisation of acquired intangibles and transaction related costs 4 (9,686) (9,174) (19,425)
Operating profit 3 23,372 22,005 45,880
Finance costs (1,741) (1,006) (2,430)
Finance income 35 48 157
Profit before tax, amortisation of acquired intangibles and transaction related costs 31,352 30,221 63,032
Profit before tax 21,666 21,047 43,607
Tax expense 5 (6,348) (6,807) (14,987)
Profit for the period attributable to equity holders of the parent 15,318 14,240 28,620
Basic earnings per share (pence) 6 6.99 6.53 13.11
Diluted earnings per share (pence) 6 6.95 6.50 13.05
Adjusted basic earnings per share (pence) 6 10.30 9.81 20.22
Adjusted diluted earnings per share (pence) 6 10.25 9.76 20.14

 

Condensed consolidated statement of comprehensive income

Six months
ended
30 June
Six months
ended
30 June
Year
ended
31 December
£000's 2014 2013 2013
Profit for the period 15,318 14,240 28,620
Exchange differences* (1,785) (1,706) (18,200)
Remeasurement of net defined benefit liability (256) - -
Total recognised comprehensive income for the period attributable to equity holders of the parent 13,277 12,534 10,420

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

 

Condensed consolidated balance sheet

As at 30 June As at 30 June As at 31 December
£000's Notes 2014 2013 2013
Assets
Non-current assets
Intangible assets 387,691 340,408 375,279
Property, plant and equipment 7 28,753 30,200 27,785
Deferred tax asset 3,630 - 2,018
420,074 370,608 405,082
Current assets
Trade and other receivables 170,075 162,064 161,741
Cash at bank 19,019 12,713 18,699
189,094 174,777 180,440
Liabilities
Current liabilities
Borrowings 3,411 1,474 1,465
Deferred consideration 13,722 11,369 20,919
Trade and other payables 100,520 98,102 103,260
Corporation tax liabilities 3,932 1,638 3,058
Provisions 1,420 2,560 2,134
123,005 115,143 130,836
Net current assets 66,089 59,634 49,604
Non-current liabilities
Borrowings 79,440 31,973 49,602
Deferred consideration 11,690 6,910 14,923
Other creditors 2,747 3,022 2,471
Deferred tax 12,366 6,578 13,645
Provisions 2,009 1,469 2,007
108.252 49,952 82,648
Net assets 377,911 380,290 372,038
Equity
Share capital 9 6,630 6,600 6,619
Share premium 109,235 106,922 108,307
Other reserves 10 15,226 34,839 17,652
Retained earnings 246,820 231,929 239,460
Total shareholders' equity 377,911 380,290 372,038

 

Condensed consolidated cash flow statement

Six months
ended
30 June
Six months
ended
30 June
Year
ended
31 December
£000's Notes 2014 2013 2013
Adjusted cash generated from operations 12 29,441 33,831 72,030
Deferred consideration treated as remuneration (2,792) (4,204) (7,714)
Cash generated from operations 26,649 29,627 64,316
Interest paid (1,503) (1,091) (1,991)
Interest received 35 48 157
Income taxes paid (8,751) (11,381) (19,829)
Net cash from operating activities 16,430 17,203 42,653
Cash flows from investing activities
Purchases of subsidiaries net of cash acquired (22,138) (11,178) (31,174)
Deferred consideration (9,767) - (3,466)
Purchase of property, plant and equipment (4,299) (4,722) (8,034)
Sale of property, plant and equipment 148 272 523
Net cash used in investing activities (36,056) (15,628) (42,151)
Cash flows from financing activities
Proceeds from issue of share capital 1 211 555
Proceeds from bank borrowings 26,870 2,935 18,609
Payment of finance lease liabilities (117) (353) (580)
Dividends paid 11 (8,453) (7,308) (15,034)
Payment of pre-acquisition dividend - (87) (247)
Net cash from/(used in) financing activities 18,301 (4,602) (3,303)
Net (decrease)/increase in cash and cash equivalents (1,325) (3,027) (3,805)
Cash and cash equivalents at beginning of period 17,791 14,804 14,804
Effect of exchange rate fluctuations (368) (12) (818)
Cash and cash equivalents at end of period 16,098 11,765 17,791
Cash and cash equivalents comprise:
Cash at bank 19,019 12,713 18,699
Bank overdraft (2,921) (948) (908)
Cash and cash equivalents at end of period 16,098 11,765 17,791

 

Consolidated statement of changes in equity

£000's Share capital Share premium Retained earnings Other reserves Total equity
At 1 January 2014 6,619 108,307 239,460 17,652 372,038
Total comprehensive income for the period - - 15,062 (1,785) 13,277
Issue of new ordinary shares 11 928 (296) (641) 2
Release of own shares - - - 756 756
Share based payment expense - - 1,047 - 1,047
Dividends - - (8,453) - (8,453)
At 30 June 2014 6,630 109,235 246,820 15,226 377,911
At 1 January 2013 6,587 106,198 224,959 36,070 373,814
Total comprehensive income for the period - - 14,240 (1,706) 12,534
Issue of new ordinary shares 13 724 (1,003) (281) (547)
Purchase of own shares - - - 756 756
Share based payment expense - - 1,041 - 1,041
Dividends - - (7,308) - (7,308))
At 30 June 2013 6,600 106,922 231,929 34,839 380,290

An analysis of other reserves is provided in Note 10.

 

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 2014 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 2013 and in accordance with IAS 34. They are unaudited but have been reviewed by the Company's auditor. The results for the year end 31 December 2013 and the balance sheet as at that date are abridged from the Company's Report and Accounts 2013 which have been delivered to the Registrar of Companies. The auditor's report on those accounts was not qualified, did not include a reference to any matters for which the auditors drew attention by way of emphasis without qualifying the report and did not contain statements under sections 498 (2) or (3) of the Companies Act 2006.

The condensed interim financial statements do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006.

In assessing the going concern basis, the directors considered the Group's business activities, the financial position of the Group and the Group's financial risk management objectives and policies. The directors have a reasonable expectation that the Company and Group have adequate resources to continue in operational existence for the foreseeable future and that it is, therefore, appropriate to adopt the going concern basis in preparing the Group's interim financial statements.

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 4.2.4R, DTR 4.2.7R and DTR 4.2.8R.

On behalf of the Board

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

31 July 2014

3. Business segments

Segment information is presented in respect of the Group's business segments which are reported to the Chief Operating Decision Maker. The business segment reporting format reflects the Group's management and internal structure. Inter-segment pricing is determined on an arm's length basis. Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

As noted in the March 2014 Interim Management Statement, HMA (a business acquired in August 2013) is now reported in the BNE North America Segment. Previously it was reported in the Energy Segment. Accordingly the December 2013 segmental results have been restated.

The segment results and the total segment assets table at 30 June 2013 have been restated to reflect the separate reporting of BNE North America segment and the integrated management and reporting of the Group's BNE and Energy businesses in Australia Asia Pacific as announced in October 2013.

The business segments of the Group are as follows:

Energy - the provision of integrated technical, commercial and project management support and training in the fields of geoscience, engineering and health, safety and environmental on a global basis to the energy sector.

Built and Natural Environment ("BNE") - consultancy services to many aspects of the property and infrastructure development and management sectors. These include: environmental assessment, the management of water resources, oceanography, health and safety, risk management, town and country planning, building, landscape and urban design, surveying and transport planning. Consulting services are provided on a regional basis in Europe and North America.

Australia Asia Pacific ("AAP") - in the AAP region there is a single board that manages the BNE and Energy services we provide in that region. Accordingly, the results of this business are reported as a separate segment.

Unallocated expenses - certain central costs are not allocated to the segments because either they predominantly relate to the running of the Group Head Office function or could only be allocated to the segments on an arbitrary basis, such costs include the remuneration and support costs of the main board and the costs of the Group Finance and marketing functions.

"Segment profit" is defined as profit before interest, tax, amortisation of acquired intangibles, transaction related costs and unallocated expenses.

"Underlying profit" is defined as segment profit before reorganisation costs.

"Reorganisation costs" comprises costs and income arising as a consequence of reorganisation including redundancy costs, profit or loss of disposal of plant, property and equipment, the costs of consolidating office space and rebranding costs.

Segment results for the period ended 30 June 2014:

£000's Fees Expenses Intersegment revenue External Revenue
Energy 104,130 14,426 (328) 118,228
BNE - Europe 75,541 9,410 (372) 84,579
BNE - North America 19,017 2,319 (413) 20,923
AAP 50,843 4,843 (40) 55,646
Group eliminations (933) (220) 1,153 -
Total 248,598 30,778 - 279,376

 

£000's Underlying profit Reorganisation costs Segment profit
Energy 18,304 - 18,304
BNE - Europe 10,140 (144) 9,996
BNE - North America 4,185 - 4,185
AAP 4,782 (853) 3,929
Total 37,411 (997) 36,414

Segment results for the period ended 30 June 2013 (restated):

£000's Fees Expenses Intersegment revenue External revenue
Energy 87,797 17,206 (604) 104,399
BNE - Europe 74,682 9,504 (265) 83,921
BNE - North America 15,668 2,242 (464) 17,446
AAP 65,912 10,288 (1,116) 75,084
Group eliminations (2,215) (234) 2,449 -
Total 241,844 39,006 - 280,850

 

£000's Underlying profit Reorganisation costs Segment profit
Energy 16,688 (52) 16,636
BNE - Europe 9,550 (259) 9,291
BNE - North America 3,907 - 3,907
AAP 5,528 (833) 4,695
Total 35,673 (1,144) 34,529

Segment results for the period ended 31 December 2013 (restated):

£000's Fees Expenses Intersegment revenue External revenue
Energy 186,915 33,224 (1,141) 218,998
BNE - Europe 149,292 20,171 (603) 168,860
BNE - North America 32,664 5,117 (1,111) 36,670
AAP 127,194 17,380 (1,488) 143,086
Group eliminations (3,944) (399) 4,343 -
Total 492,121 75,493 - 567,614

 

£000's Underlying profit Reorganisation costs Segment profit
Energy 36,403 (78) 36,325
BNE - Europe 19,164 (487) 18,677
BNE - North America 8,287 - 8,287
AAP 10,020 (1,192) 8,828
Total 73,874 (1,757) 72,117

Group reconciliation

£000's 30 June 2014 30 June 2013 31 Dec 2013
Revenue 279,376 280,850 567,614
Recharged expenses (30,778) (39,006) (75,493)
Fees 248,598 241,844 492,121
Underlying profit 37,411 35,673 73,874
Reorganisation costs (997) (1,144) (1,757)
Segment profit 36,414 34,529 72,117
Unallocated expenses (3,356) (3,350) (6,812)
Operating profit before amortisation of acquired intangibles and transaction related costs 33,058 31,179 65,305
Amortisation of acquired intangibles and transaction related costs (9,686) (9,174) (19,425)
Operating profit 23,372 22,005 45,880
Net finance costs (1,706) (958) (2,273)
Profit before tax 21,666 21,047 43,607

Total segment assets were as follows:

£000's 30 June 2014 30 June 2013 (restated) 31 December 2013 (restated)
Energy 199,583 149,474 198,910
BNE - Europe 229,044 229,401 219,112
BNE - North America 53,129 30,596 43,151
AAP 118,669 132,966 117,769
Unallocated 8,743 2,948 6,580
Total 609,168 545,385 585,522

4. Amortisation of acquired intangibles and transaction related costs

£000's 30 June 2014 30 June 2013 31 December 2013
Amortisation of acquired intangibles 8,205 5,337 12,217
Contingent deferred consideration treated as remuneration 870 3,470 6,009
Deferred consideration fair value adjustment (66) - -
Third party advisory costs 677 367 1,199
Total 9,686 9,174 19,425

5. Income taxes

The tax charge for the period has been calculated using an estimate of the effective annual rate of tax for each taxing jurisdiction for the full year. These rates have been applied to the pre-tax profits for each jurisdiction for the six months ended 30 June 2014. The Group has separately calculated the tax rates applicable to amortisation of intangibles and transaction related costs for the period. Tax rate changes that were substantively enacted at the balance sheet date have been factored into the calculation of the effective tax rates.

Analysis of the tax expense/(credit) in the income statement for the period:

£000's 30 June 2014 30 June 2013 31 December 2013
Current tax expense 7,977 8,332 16,448
Deferred tax credit (1,629) (1,525) (1,461)
Total tax expense in the income statement 6,348 6,807 14,987
Add back:
Tax on amortisation of acquired intangibles and acquisition related costs 2,432 2,033 3,889
Adjusted tax charge on PBTA for the period 8,780 8,840 18,876
Tax rate on PBT 29.3% 32.3% 34.4%
Tax rate on PBTA 28.0% 29.3% 29.9%

6. 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
£000's 2014 2013 2013
Profit attributable to ordinary shareholders 15,318 14,240 28,620
000's
Weighted average number of ordinary shares for the purposes of basic earnings per share 219,188 217,953 218,355
Effect of employee share schemes 1,105 1,034 909
Weighted average number of ordinary shares for the purposes of diluted earnings per share 220,293 218,987 219,264
Basic earning per share (pence) 6.99 6.53 13.11
Diluted earnings per share (pence) 6.95 6.50 13.05

The directors consider that earnings per share before amortisation of acquired intangibles and transaction related costs provides a more meaningful measure of the Group's performance than statutory earnings per share. The calculations of adjusted earnings per share were based on the number of shares as above, and are shown in the table below:

£000's Six months ended 30 June 2014 Six months ended 30 June 2013 Year ended 31 Dec 2013
Profit attributable to ordinary shareholders 15,318 14,240 28,620
Amortisation of acquired intangibles and transaction related costs 9,686 9,174 19,425
Tax on amortisation of acquired intangibles and transaction related costs (2,432) (2,033) (3,889)
Adjusted profit attributable to ordinary shareholders 22,572 21,381 44,156
Adjusted basic earnings before per share (pence) 10.30 9.81 20.22
Adjusted diluted earnings per share (pence) 10.25 9.76 20.14

7. Property, plant and equipment

During the six months ended 30 June 2014 the Group acquired assets with a
cost of £5,497,000 (six months to 30 June 2013: £4,732,000), which includes £1,045,000 acquired through business combinations (six months to 30 June 2013: £89,000). Assets with a net book value of £90,000 were disposed of during the six months ended 30 June 2014 (six months ended 30 June 2013: £86,000).

8. Acquisitions

The Group has completed the following acquisitions to strengthen and broaden the skill base of the Group, during the first half of 2014:

Entity Business Segment Date of Acquisition Place of incorporation Percentageof entity acquired Nature of business acquired
Whelans Corporation Pty Ltd AAP 5 Feb 2014 Australia 100% Surveying
Clear Environmental Consultants Ltd BNE Europe 9 April 2014 UK 100% Water Consultancy
GaiaTech Holdings Inc BNE NA 15 May 2014 UK 100% Environmental Consultancy

Their contributions to the Group's results for the period is given below:

£000's Revenue Operating profit
Whelans 1,927 172
Clear 1,249 102
GaiaTech 1,459 273

Had the Group acquired these entities on the first day of the period, the Group estimates revenue would have been £285,469,000 and operating profit would have been £23,965,000.

The Group has allocated provisional fair values to the net assets acquired as follows:

 

£000's Order book Customer relationships Brand PPE Cash Other assets Other liabilities Net assets acquired
Whelans 142 186 104 369 396 1,290 (1,209) 1,278
Clear 480 2,660 200 274 1,943 1,221 (2,057) 4,721
GaiaTech 143 4,477 327 402 1,702 5,511 (5,286) 7,276
765 7,323 631 1,045 4,041 8,022 (8,552) 13,275

 

£000's Initial cash consideration Contingent cash consideration Deferred cashl consideration Total consideration Net assets acquired Goodwill acquired
Whelans 1,443 - 619 2,062 1,278 784
Clear 6,841 1,156 - 7,997 4,721 3,276
GaiaTech 17,894 - - 17,894 7,276 10,618
26,178 1,156 619 27,953 13,275 14,678

The consideration payable in future for Clear is contingent upon renewal of a key contract. The payment made will be in the range of £nil to £1,500,000 and the fair value has been determined by estimating the likelihood of payment.

There was no tax deductable goodwill acquired.

Provisional values are given in the table above as information about facts or circumstances that existed at the acquisition date is incomplete.

Goodwill represents the value of the accumulated workforce and synergies with RPS associated with these acquisitions.

The total fair value of receivables acquired was £5,668,000. The gross contractual receivables acquired were £5,786,000 and £118,000 was estimated to be irrecoverable.

The vendors of the acquired companies have entered into indemnity arrangements with the Group. The total undiscounted cash flow that could be receivable by the Group is between £nil and £5,668,000. As the Group does not expect that these warranties will become receivable, it has not recognised an indemnification asset on acquisition.

The Group incurred acquisition-related costs of £677,000 (6 months to 30 June 2013: £314,000), which have been expensed through the consolidated income statement and included within "amortisation of acquired intangibles and transaction related costs".

A reconciliation of the goodwill movement in 2014 in respect of acquisitions completed in 2013 and 2014 is given below.

£000's PEICE KR APASA HMA Ichron OEC Whelans Clear GT
Goodwill at 1 January 2014 3,007 1,399 1,955 6,997 5,538 17,273 - - -
Additions through acquisition - - - - - - 784 3,276 10,618
Adjustments to opening balance sheet - 9 - - - - - - -
Foreign exchange gains and losses (102) (44) 41 (236) - (731) 7 - (161)
Goodwill at 30 June 2014 2,905 1,364 1,996 6,761 5,538 16,542 791 3,276 10,457

There were no accumulated impairment losses at the beginning or the end of the period.

Commitments and contingencies

The Group completed a number of acquisitions between 1 January 2010 and 31 December 2011 where deferred consideration payments to vendors are contingent on the vendor's continued employment with the Group and so are required to be recognised as employment costs over the deferred consideration period. The Group considers it probable that the remaining deferred consideration payments will be settled.

The total remaining cash commitments at 30 June 2014 in respect of contingent deferred consideration treated as remuneration that the Group expects to settle is £789,000 and payment will be made before the end of this year. The related estimated remuneration charge to be incurred by the year end is £263,000.

The balance sheet at 30 June 2014 includes, within deferred consideration current liabilities, contingent deferred consideration remuneration expense accrued but not paid totalling £526,000 (31 December 2013: £2,457,000).

9. Share capital

2014 Number 000's 2014 £000's 2013 Number 000's 2013 £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 220,632 6,619 219,566 6,587
Issued under employee share schemes 362 11 424 13
At 30 June 220,994 6,630 219,990 6,600

10. Other reserves

£000's Merger reserve Employee trust Translation reserve Total
At 1 January 2014 21,256 (9,277) 5,673 17,652
Exchange differences - - (1,785) (1,785)
Issue of new shares - (641) - (641)
At 30 June 2014 21,256 (9,918) 3,888 15,226
At 1 January 2013 21,256 (9,059) 23,873 36,070
Exchange differences - - (1,706) (1,706)
Issue of new shares - (281) - (281)
Purchase of own shares - 756 - 756
At 30 June 2013 21,256 (8,584) 22,167 34,839

11. Dividends

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

£000's Six months ended 30 June 2014 Six months ended 30 June 2013 Year ended 31 Dec 2013
Final dividend for 2013 3.84p per share 8,453 - -
Interim dividend for 2013 3.52p per share - - 7,726
Final dividend for 2012 3.34p per share - 7,308 7,308
8,453 7,308 15,034

An interim dividend in respect of the six months ended 30 June 2014 of 4.05 pence per share, amounting to a total dividend of £8,921,000 was approved by the Directors of RPS Group Plc on 29 July 2014. 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
£000's 2014 2013 2013
Operating profit 23,372 22,005 45,880
Adjustments for:
Depreciation 4,216 5,051 9,432
Amortisation of acquired intangibles 8,205 5,337 12,217
Contingent deferred consideration treated as remuneration 870 3,470 6,009
Deferred consideration fair value adjustment (66) - -
Share based payment expense 960 1,041 1,938
Profit on sale of property, plant and equipment (61) (186) (241)
37,496 36,718 75,235
(Increase)/(decrease) in trade and other receivables (4,154) 1,604 8,838
Decrease in trade and other payables (3,901) (4,491) (12,043)
Adjusted cash generated from operations 29,441 33,831 72,030

* Adjusted cash generated from operations is before payment of deferred consideration treated as remuneration.

The table below provides an analysis of net bank borrowings, comprising cash and cash equivalents, interest bearing bank loans and finance leases, during the six months ended 30 June 2014.

£000's At 1 January 2014 Cash flow Acquisition debt Foreign exchange At 30 June 2014
Cash and cash equivalents 18,699 674 - (354) 19,019
Overdrafts (908) (1,999) - (14) (2,921)
Bank Loans (49,637) (26,870) (4,003) 1,120 (79,390)
Finance lease creditor (522) 117 (124) (11) (540)
Net bank borrowings (32,368) (28,078) (4,127) 741 (63,832)

The cash balance includes £7,680,000 (31 December 2013: £6,028,000) that is restricted in its use.

13. Events after the balance sheet date

On 24 July the Group agreed a US$150m private placement 3 year "shelf" facility with Prudential Investment Inc ("Pricoa"). Initial notes with a value of £30m and US$34.1m (equivalent to £20m) each with a 7 year term and fixed coupon of 3.98% and 3.84% respectively will be issued on 30 September 2014. The balance of the facility is uncommitted but is available from 24 July 2015.

14. Principal risks and uncertainties

The nature of the principal risks and uncertainties faced by the Group have not changed significantly since the 2013 Report and Accounts was published. These risks, together with a description of the approach to mitigate them, are set out on pages 8 and 9 of the 2013 Report and Accounts (available on the Group's website at www.rpsgroup.com) and are summarised as follows:

- Economic environment
- Material adverse events
- Information systems
- Recruitment and retention of key personnel
- Market position and reputation
- Litigation
- Compliance
- Business acquisitions
- Funding
- Health and safety

From time to time the Group receives claims from clients and suppliers. Some of these result in payments to the claimants by the Group and its insurers. The Board reviews all significant claims at each board meeting and more regularly if required. The Board is currently satisfied that the Group has sufficient provisions in its balance sheet to meet all likely uninsured liabilities.

The Board keeps under review the potential effect of economic circumstances. The continuing uncertainty in the global economic outlook inevitably increases the trading and balance sheet risks to which the Group is exposed.

15. Related party transactions

There are no significant changes in the nature and size of related party transactions for the period to those reported in the 2013 Report and Accounts.

16. 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. The continuing uncertainty in global economic outlook inevitably increases the risks to which the Group is exposed. Statements in respect of the Group's performance in the year to date are based upon unaudited management accounts for the period January to June 2014. Nothing in this announcement should be construed as a profit forecast.

17. Publication

A copy of this announcement will be posted on the Company's website at www.rpsgroup.com.

INDEPENDENT REVIEW REPORT TO RPS GROUP PLC

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 2014, which comprises the Condensed consolidated income statement, the Condensed consolidated statement of comprehensive income, the Condensed consolidated balance sheet, the Condensed consolidated cash flow statement, the Condensed consolidated statement of changes in equity and the related notes 1 to 17. 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.

This report is made solely to the company 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. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.

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 Finance Conduct Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with 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.

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 2014 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 Finance Conduct Authority.

 

Deloitte LLP
Chartered Accountants and Statutory Auditor
Reading, United Kingdom

31 July 2014

 

2018

Half Year Results for the six months ended 30 June 2014

31 July 2014

Half Year Results for the six months ended 30 June 2014

PBTA ahead 11% on a constant currency basis. Agreement entered into for additional 7 year £50 million fixed rate loan. Interim dividend increased 15% for 21st consecutive year.

2014 2013 2013(3)
Business Performance H1 H1 H1
Revenue (£m) 279.4 280.9 261.1
Fee income (£m) 248.6 241.8 224.9
PBTA (1) (£m) 31.4 30.2 28.2
Adjusted earnings per share (2)(basic) (p) 10.30 9.81 9.16
Dividend per share (p) 4.05 3.52 3.52
Statutory Reporting
Profit before tax (£m) 21.7 21.0 19.8
Earnings per share (basic) (p) 6.99 6.53 6.17

(1) PBTA is profit before tax, amortisation of acquired intangibles and transaction related costs.
(2) Adjusted earnings per share is before amortisation of acquired intangibles and transaction related costs and the related tax.
(3) 2013 results restated at 2014 currency rates.

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

"On a constant currency basis our PBTA improved significantly. Our European business continued its steady growth. Conditions remained challenging in the Australian resources market and, during the period, some softness developed in parts of the oil and gas exploration and production sector. However, our business model again delivered robust results, with acquisitions making a significant contribution. RPS is financially strong. Following the recent agreement with Pricoa to provide additional long term debt we have ample resources to continue our growth strategy.".

31 July 2014

 

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

 

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, Norway, the Americas and Australia Asia Pacific 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.

 

Results

Profit (before tax, amortisation of acquired intangibles and transaction related costs) was £31.4 million (2013: £30.2 million; £28.2 million on a constant currency basis). Profit before tax was £21.7m (2013: £21.0m; £19.8m on a constant currency basis). Basic earnings per share (before amortisation and transaction related costs) were 10.30 pence (2013: 9.81 pence; 9.16 pence on a constant currency basis). The strengthening of sterling caused a significant reduction in year on year profit growth. The contribution of the Group's four segments was:

Underlying Profit(£m)(1) 2014 2013 2013(2)
H1 H1 H1
Energy 18.3 16.7 15.8
Built and Natural Environment: Europe 10.1 9.6 9.4
Built and Natural Environment: North America 4.2 3.9 3.5
Australia Asia Pacific ("AAP") 4.8 5.5 4.7
Total 37.4 35.7 33.4

(1) as defined in note 3; stated before reorganisation costs of £1.0m (2013: £1.1m)

(2) 2013 results restated at 2014 currency rates.

Group central costs were £3.4 million, (2013: £3.4 million) and finance charges were £1.7 million (2013: £1.0 million).

Funding and Dividend

Our balance sheet remains strong. We funded acquisition investment of £38.8 million in the period, including £20.2 million in respect of GaiaTech (announced on 20 May). Net bank borrowings at 30 June were £63.8 million (31 December 2013: £32.4 million). We have in place until 2016 a £125 million facility with Lloyds Bank Plc and have recently secured a US$150 million US private placement shelf facility with Pricoa. Initial notes with an aggregate value of £50 million, seven year term and 4% fixed coupon will be issued in September. Cash conversion was a little below the normal run rate as some major clients managed payment around their own half year. We expect the full year outcome to be at the normal level.

The Board remains confident about the Group's financial strength and has, once again, increased the interim dividend by 15% to 4.05 pence per share (2013: 3.52 pence) payable on 16 October 2014 to shareholders on the register on 19 September 2014.

Markets and Trading

Energy

We provide internationally recognised consultancy services to the oil and gas exploration and production industry from bases in the UK, USA and Canada. These act as regional centres for projects undertaken in many other countries. The business delivered good growth in the first half.

2014 2013 2013(2)
H1 H1 H1
Fee income (£m) 104.1 87.8 83.3
Underlying profit(1) (£m) 18.3 16.7 15.8
Margin % 17.6 19.0 18.9

(1) as defined in note 3, stated before reorganisation costs of £nil (2013: £0.1m)

(2) 2013 results restated at 2014 currency rates.

We continued to benefit from our prominent position in the oil and gas sector in many parts of the world, as well as increasing demand for our advice from the financial services sector. The acquisitions made in 2013 are integrating well and will contribute to the delivery of another year of good growth for this business.

During the second quarter some of our clients began to manage expenditure more tightly and political instability in parts of the Middle East has slowed investment. The Canadian potash market, which turned down in the middle of 2013, remains subdued and has impacted the year on year performance.

With long term demand for energy resources set to grow significantly, the current softness in some markets should be relatively short lived. During this period our robust business model and strong market presence should ensure continued high performance.

Built and Natural Environment ("BNE")

Within these businesses we provide a wide range of consultancy services to many aspects of the property and infrastructure development and management sectors. In recent years we have developed extensive experience in respect of the infrastructure projects necessary to bring energy resources, both conventional and renewable, to market.

Europe

2014 2013 2013(2)
H1 H1 H1
Fee income (£m) 75.5 74.7 73.7
Underlying Profit(1) (£m) 10.1 9.6 9.4
Margin % 13.4 12.8 12.8

(1) as defined in note 3, stated before reorganisation costs of £0.1m (2013: £0.3m)

(2) 2013 results restated at 2014 currency rates

Our BNE business in Europe performed well in the first half of the year. Those activities which assist clients develop new capital projects, particularly our planning and development business, continued to benefit both from improving market conditions and client confidence. Those exposed to operational environments, such as providing environment management advice, continue to need to offer an efficient, cost effective service to assist clients manage tight budgets.

The acquisition of Clear Environmental Consultants (announced on 10 April) has extended the range of our UK water activities and will assist the strategic development of this business. We have agreed terms to bring a market leading planning and development business into the Group . This will support a growing part of the business, with excellent prospects. Overall, our European business remains on track to achieve growth this year.

North America

2014 2013 2013(2)
H1 H1 H1
Fee income (£m) 19.0 15.7 14.4
Underlying Profit(1) (£m) 4.2 3.9 3.5
Margin % 22.0 24.9 24.7

(1) as defined in note 3, stated before reorganisation costs of £nil (2013: £nil)

(2) 2013 results restated at 2014 currency rates

We remain well positioned in the expanding North American energy infrastructure market. The acquisition of HMA Land Services in September 2013 gave us access to the substantial pipeline development market. Those parts of the business closest to E&P activities also experienced some of the expenditure tightening from clients seen in the Energy business during the first half. In the most buoyant part of our market, permitting and licensing of facilities, staff retention and recruitment has become exceptionally difficult and staff losses caused significant disruption.

The acquisition of GaiaTech was an important step in the development of this business, giving us access to new markets and geography. It will make an important contribution in the second half and subsequent years. Opportunities remain to expand our North American business significantly both organically and by acquisition.

AAP

This business is a combination of the former BNE: AAP and the AAP component of Energy. They were brought together in 2013 to take advantage of the opportunities in the integrated energy and energy infrastructure markets and, specifically, help counter the impact of the slowdown in the resources sector on our businesses.

2014 2013 2013(2)
H1 H1 H1
Fee income (£m) 50.8 65.9 55.4
Underlying Profit(1) (£m) 4.8 5.5 4.7
Margin % 9.4 8.4 8.4

(1) as defined in note 3, stated before reorganisation costs of £nil (2013: £nil)

(2) 2013 results restated at 2014 currency rates

Throughout the first half our mining and energy clients in AAP remained focused on operational efficiency rather than capital expenditure on project development. As a result further projects have been delayed or cancelled. As expected, therefore, our level of activity in the first half was at a lower level than last year and we continued with the plan to reduce our cost base in order to improve efficiency.

The rebalancing of our business away from the resources sector has, however, continued positively. There has been increased optimism and investment in private and public sector urban development and infrastructure projects, particularly in and around Sydney and Melbourne. The second quarter, as a result, showed a significant improvement over the first and we currently anticipate the second half should see further improvement. In order to support this change of emphasis, we have agreed terms to acquire a consultancy with a strong public sector client base and offices in all major cities. It will make a significant contribution to the development of our business.

Group Prospects

Our flexible and robust business model has demonstrated in recent years that it is capable of generating growth in challenging circumstances. A number of acquisitions are under active consideration. The Board remains focussed on delivering a good result for the full year.

Board of Directors
RPS Group plc

31 July 2014

 

Condensed consolidated income statement

Notes Six months
ended
30 June
Six months
ended
30 June
Year
ended
31 December
£000's 2014 2013 2013
Revenue 3 279,376 280,850 567,614
Recharged expenses 3 (30,778) (39,006) (75,493)
Fee income 3 248,598 241,844 492,121
Operating profit before amortisation of acquired intangibles and transaction related costs 3 33,058 31,179 65,305
Amortisation of acquired intangibles and transaction related costs 4 (9,686) (9,174) (19,425)
Operating profit 3 23,372 22,005 45,880
Finance costs (1,741) (1,006) (2,430)
Finance income 35 48 157
Profit before tax, amortisation of acquired intangibles and transaction related costs 31,352 30,221 63,032
Profit before tax 21,666 21,047 43,607
Tax expense 5 (6,348) (6,807) (14,987)
Profit for the period attributable to equity holders of the parent 15,318 14,240 28,620
Basic earnings per share (pence) 6 6.99 6.53 13.11
Diluted earnings per share (pence) 6 6.95 6.50 13.05
Adjusted basic earnings per share (pence) 6 10.30 9.81 20.22
Adjusted diluted earnings per share (pence) 6 10.25 9.76 20.14

 

Condensed consolidated statement of comprehensive income

Six months
ended
30 June
Six months
ended
30 June
Year
ended
31 December
£000's 2014 2013 2013
Profit for the period 15,318 14,240 28,620
Exchange differences* (1,785) (1,706) (18,200)
Remeasurement of net defined benefit liability (256) - -
Total recognised comprehensive income for the period attributable to equity holders of the parent 13,277 12,534 10,420

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

 

Condensed consolidated balance sheet

As at 30 June As at 30 June As at 31 December
£000's Notes 2014 2013 2013
Assets
Non-current assets
Intangible assets 387,691 340,408 375,279
Property, plant and equipment 7 28,753 30,200 27,785
Deferred tax asset 3,630 - 2,018
420,074 370,608 405,082
Current assets
Trade and other receivables 170,075 162,064 161,741
Cash at bank 19,019 12,713 18,699
189,094 174,777 180,440
Liabilities
Current liabilities
Borrowings 3,411 1,474 1,465
Deferred consideration 13,722 11,369 20,919
Trade and other payables 100,520 98,102 103,260
Corporation tax liabilities 3,932 1,638 3,058
Provisions 1,420 2,560 2,134
123,005 115,143 130,836
Net current assets 66,089 59,634 49,604
Non-current liabilities
Borrowings 79,440 31,973 49,602
Deferred consideration 11,690 6,910 14,923
Other creditors 2,747 3,022 2,471
Deferred tax 12,366 6,578 13,645
Provisions 2,009 1,469 2,007
108.252 49,952 82,648
Net assets 377,911 380,290 372,038
Equity
Share capital 9 6,630 6,600 6,619
Share premium 109,235 106,922 108,307
Other reserves 10 15,226 34,839 17,652
Retained earnings 246,820 231,929 239,460
Total shareholders' equity 377,911 380,290 372,038

 

Condensed consolidated cash flow statement

Six months
ended
30 June
Six months
ended
30 June
Year
ended
31 December
£000's Notes 2014 2013 2013
Adjusted cash generated from operations 12 29,441 33,831 72,030
Deferred consideration treated as remuneration (2,792) (4,204) (7,714)
Cash generated from operations 26,649 29,627 64,316
Interest paid (1,503) (1,091) (1,991)
Interest received 35 48 157
Income taxes paid (8,751) (11,381) (19,829)
Net cash from operating activities 16,430 17,203 42,653
Cash flows from investing activities
Purchases of subsidiaries net of cash acquired (22,138) (11,178) (31,174)
Deferred consideration (9,767) - (3,466)
Purchase of property, plant and equipment (4,299) (4,722) (8,034)
Sale of property, plant and equipment 148 272 523
Net cash used in investing activities (36,056) (15,628) (42,151)
Cash flows from financing activities
Proceeds from issue of share capital 1 211 555
Proceeds from bank borrowings 26,870 2,935 18,609
Payment of finance lease liabilities (117) (353) (580)
Dividends paid 11 (8,453) (7,308) (15,034)
Payment of pre-acquisition dividend - (87) (247)
Net cash from/(used in) financing activities 18,301 (4,602) (3,303)
Net (decrease)/increase in cash and cash equivalents (1,325) (3,027) (3,805)
Cash and cash equivalents at beginning of period 17,791 14,804 14,804
Effect of exchange rate fluctuations (368) (12) (818)
Cash and cash equivalents at end of period 16,098 11,765 17,791
Cash and cash equivalents comprise:
Cash at bank 19,019 12,713 18,699
Bank overdraft (2,921) (948) (908)
Cash and cash equivalents at end of period 16,098 11,765 17,791

 

Consolidated statement of changes in equity

£000's Share capital Share premium Retained earnings Other reserves Total equity
At 1 January 2014 6,619 108,307 239,460 17,652 372,038
Total comprehensive income for the period - - 15,062 (1,785) 13,277
Issue of new ordinary shares 11 928 (296) (641) 2
Release of own shares - - - 756 756
Share based payment expense - - 1,047 - 1,047
Dividends - - (8,453) - (8,453)
At 30 June 2014 6,630 109,235 246,820 15,226 377,911
At 1 January 2013 6,587 106,198 224,959 36,070 373,814
Total comprehensive income for the period - - 14,240 (1,706) 12,534
Issue of new ordinary shares 13 724 (1,003) (281) (547)
Purchase of own shares - - - 756 756
Share based payment expense - - 1,041 - 1,041
Dividends - - (7,308) - (7,308))
At 30 June 2013 6,600 106,922 231,929 34,839 380,290

An analysis of other reserves is provided in Note 10.

 

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 2014 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 2013 and in accordance with IAS 34. They are unaudited but have been reviewed by the Company's auditor. The results for the year end 31 December 2013 and the balance sheet as at that date are abridged from the Company's Report and Accounts 2013 which have been delivered to the Registrar of Companies. The auditor's report on those accounts was not qualified, did not include a reference to any matters for which the auditors drew attention by way of emphasis without qualifying the report and did not contain statements under sections 498 (2) or (3) of the Companies Act 2006.

The condensed interim financial statements do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006.

In assessing the going concern basis, the directors considered the Group's business activities, the financial position of the Group and the Group's financial risk management objectives and policies. The directors have a reasonable expectation that the Company and Group have adequate resources to continue in operational existence for the foreseeable future and that it is, therefore, appropriate to adopt the going concern basis in preparing the Group's interim financial statements.

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 4.2.4R, DTR 4.2.7R and DTR 4.2.8R.

On behalf of the Board

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

31 July 2014

3. Business segments

Segment information is presented in respect of the Group's business segments which are reported to the Chief Operating Decision Maker. The business segment reporting format reflects the Group's management and internal structure. Inter-segment pricing is determined on an arm's length basis. Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

As noted in the March 2014 Interim Management Statement, HMA (a business acquired in August 2013) is now reported in the BNE North America Segment. Previously it was reported in the Energy Segment. Accordingly the December 2013 segmental results have been restated.

The segment results and the total segment assets table at 30 June 2013 have been restated to reflect the separate reporting of BNE North America segment and the integrated management and reporting of the Group's BNE and Energy businesses in Australia Asia Pacific as announced in October 2013.

The business segments of the Group are as follows:

Energy - the provision of integrated technical, commercial and project management support and training in the fields of geoscience, engineering and health, safety and environmental on a global basis to the energy sector.

Built and Natural Environment ("BNE") - consultancy services to many aspects of the property and infrastructure development and management sectors. These include: environmental assessment, the management of water resources, oceanography, health and safety, risk management, town and country planning, building, landscape and urban design, surveying and transport planning. Consulting services are provided on a regional basis in Europe and North America.

Australia Asia Pacific ("AAP") - in the AAP region there is a single board that manages the BNE and Energy services we provide in that region. Accordingly, the results of this business are reported as a separate segment.

Unallocated expenses - certain central costs are not allocated to the segments because either they predominantly relate to the running of the Group Head Office function or could only be allocated to the segments on an arbitrary basis, such costs include the remuneration and support costs of the main board and the costs of the Group Finance and marketing functions.

"Segment profit" is defined as profit before interest, tax, amortisation of acquired intangibles, transaction related costs and unallocated expenses.

"Underlying profit" is defined as segment profit before reorganisation costs.

"Reorganisation costs" comprises costs and income arising as a consequence of reorganisation including redundancy costs, profit or loss of disposal of plant, property and equipment, the costs of consolidating office space and rebranding costs.

Segment results for the period ended 30 June 2014:

£000's Fees Expenses Intersegment revenue External Revenue
Energy 104,130 14,426 (328) 118,228
BNE - Europe 75,541 9,410 (372) 84,579
BNE - North America 19,017 2,319 (413) 20,923
AAP 50,843 4,843 (40) 55,646
Group eliminations (933) (220) 1,153 -
Total 248,598 30,778 - 279,376

 

£000's Underlying profit Reorganisation costs Segment profit
Energy 18,304 - 18,304
BNE - Europe 10,140 (144) 9,996
BNE - North America 4,185 - 4,185
AAP 4,782 (853) 3,929
Total 37,411 (997) 36,414

Segment results for the period ended 30 June 2013 (restated):

£000's Fees Expenses Intersegment revenue External revenue
Energy 87,797 17,206 (604) 104,399
BNE - Europe 74,682 9,504 (265) 83,921
BNE - North America 15,668 2,242 (464) 17,446
AAP 65,912 10,288 (1,116) 75,084
Group eliminations (2,215) (234) 2,449 -
Total 241,844 39,006 - 280,850

 

£000's Underlying profit Reorganisation costs Segment profit
Energy 16,688 (52) 16,636
BNE - Europe 9,550 (259) 9,291
BNE - North America 3,907 - 3,907
AAP 5,528 (833) 4,695
Total 35,673 (1,144) 34,529

Segment results for the period ended 31 December 2013 (restated):

£000's Fees Expenses Intersegment revenue External revenue
Energy 186,915 33,224 (1,141) 218,998
BNE - Europe 149,292 20,171 (603) 168,860
BNE - North America 32,664 5,117 (1,111) 36,670
AAP 127,194 17,380 (1,488) 143,086
Group eliminations (3,944) (399) 4,343 -
Total 492,121 75,493 - 567,614

 

£000's Underlying profit Reorganisation costs Segment profit
Energy 36,403 (78) 36,325
BNE - Europe 19,164 (487) 18,677
BNE - North America 8,287 - 8,287
AAP 10,020 (1,192) 8,828
Total 73,874 (1,757) 72,117

Group reconciliation

£000's 30 June 2014 30 June 2013 31 Dec 2013
Revenue 279,376 280,850 567,614
Recharged expenses (30,778) (39,006) (75,493)
Fees 248,598 241,844 492,121
Underlying profit 37,411 35,673 73,874
Reorganisation costs (997) (1,144) (1,757)
Segment profit 36,414 34,529 72,117
Unallocated expenses (3,356) (3,350) (6,812)
Operating profit before amortisation of acquired intangibles and transaction related costs 33,058 31,179 65,305
Amortisation of acquired intangibles and transaction related costs (9,686) (9,174) (19,425)
Operating profit 23,372 22,005 45,880
Net finance costs (1,706) (958) (2,273)
Profit before tax 21,666 21,047 43,607

Total segment assets were as follows:

£000's 30 June 2014 30 June 2013 (restated) 31 December 2013 (restated)
Energy 199,583 149,474 198,910
BNE - Europe 229,044 229,401 219,112
BNE - North America 53,129 30,596 43,151
AAP 118,669 132,966 117,769
Unallocated 8,743 2,948 6,580
Total 609,168 545,385 585,522

4. Amortisation of acquired intangibles and transaction related costs

£000's 30 June 2014 30 June 2013 31 December 2013
Amortisation of acquired intangibles 8,205 5,337 12,217
Contingent deferred consideration treated as remuneration 870 3,470 6,009
Deferred consideration fair value adjustment (66) - -
Third party advisory costs 677 367 1,199
Total 9,686 9,174 19,425

5. Income taxes

The tax charge for the period has been calculated using an estimate of the effective annual rate of tax for each taxing jurisdiction for the full year. These rates have been applied to the pre-tax profits for each jurisdiction for the six months ended 30 June 2014. The Group has separately calculated the tax rates applicable to amortisation of intangibles and transaction related costs for the period. Tax rate changes that were substantively enacted at the balance sheet date have been factored into the calculation of the effective tax rates.

Analysis of the tax expense/(credit) in the income statement for the period:

£000's 30 June 2014 30 June 2013 31 December 2013
Current tax expense 7,977 8,332 16,448
Deferred tax credit (1,629) (1,525) (1,461)
Total tax expense in the income statement 6,348 6,807 14,987
Add back:
Tax on amortisation of acquired intangibles and acquisition related costs 2,432 2,033 3,889
Adjusted tax charge on PBTA for the period 8,780 8,840 18,876
Tax rate on PBT 29.3% 32.3% 34.4%
Tax rate on PBTA 28.0% 29.3% 29.9%

6. 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
£000's 2014 2013 2013
Profit attributable to ordinary shareholders 15,318 14,240 28,620
000's
Weighted average number of ordinary shares for the purposes of basic earnings per share 219,188 217,953 218,355
Effect of employee share schemes 1,105 1,034 909
Weighted average number of ordinary shares for the purposes of diluted earnings per share 220,293 218,987 219,264
Basic earning per share (pence) 6.99 6.53 13.11
Diluted earnings per share (pence) 6.95 6.50 13.05

The directors consider that earnings per share before amortisation of acquired intangibles and transaction related costs provides a more meaningful measure of the Group's performance than statutory earnings per share. The calculations of adjusted earnings per share were based on the number of shares as above, and are shown in the table below:

£000's Six months ended 30 June 2014 Six months ended 30 June 2013 Year ended 31 Dec 2013
Profit attributable to ordinary shareholders 15,318 14,240 28,620
Amortisation of acquired intangibles and transaction related costs 9,686 9,174 19,425
Tax on amortisation of acquired intangibles and transaction related costs (2,432) (2,033) (3,889)
Adjusted profit attributable to ordinary shareholders 22,572 21,381 44,156
Adjusted basic earnings before per share (pence) 10.30 9.81 20.22
Adjusted diluted earnings per share (pence) 10.25 9.76 20.14

7. Property, plant and equipment

During the six months ended 30 June 2014 the Group acquired assets with a
cost of £5,497,000 (six months to 30 June 2013: £4,732,000), which includes £1,045,000 acquired through business combinations (six months to 30 June 2013: £89,000). Assets with a net book value of £90,000 were disposed of during the six months ended 30 June 2014 (six months ended 30 June 2013: £86,000).

8. Acquisitions

The Group has completed the following acquisitions to strengthen and broaden the skill base of the Group, during the first half of 2014:

Entity Business Segment Date of Acquisition Place of incorporation Percentageof entity acquired Nature of business acquired
Whelans Corporation Pty Ltd AAP 5 Feb 2014 Australia 100% Surveying
Clear Environmental Consultants Ltd BNE Europe 9 April 2014 UK 100% Water Consultancy
GaiaTech Holdings Inc BNE NA 15 May 2014 UK 100% Environmental Consultancy

Their contributions to the Group's results for the period is given below:

£000's Revenue Operating profit
Whelans 1,927 172
Clear 1,249 102
GaiaTech 1,459 273

Had the Group acquired these entities on the first day of the period, the Group estimates revenue would have been £285,469,000 and operating profit would have been £23,965,000.

The Group has allocated provisional fair values to the net assets acquired as follows:

 

£000's Order book Customer relationships Brand PPE Cash Other assets Other liabilities Net assets acquired
Whelans 142 186 104 369 396 1,290 (1,209) 1,278
Clear 480 2,660 200 274 1,943 1,221 (2,057) 4,721
GaiaTech 143 4,477 327 402 1,702 5,511 (5,286) 7,276
765 7,323 631 1,045 4,041 8,022 (8,552) 13,275

 

£000's Initial cash consideration Contingent cash consideration Deferred cashl consideration Total consideration Net assets acquired Goodwill acquired
Whelans 1,443 - 619 2,062 1,278 784
Clear 6,841 1,156 - 7,997 4,721 3,276
GaiaTech 17,894 - - 17,894 7,276 10,618
26,178 1,156 619 27,953 13,275 14,678

The consideration payable in future for Clear is contingent upon renewal of a key contract. The payment made will be in the range of £nil to £1,500,000 and the fair value has been determined by estimating the likelihood of payment.

There was no tax deductable goodwill acquired.

Provisional values are given in the table above as information about facts or circumstances that existed at the acquisition date is incomplete.

Goodwill represents the value of the accumulated workforce and synergies with RPS associated with these acquisitions.

The total fair value of receivables acquired was £5,668,000. The gross contractual receivables acquired were £5,786,000 and £118,000 was estimated to be irrecoverable.

The vendors of the acquired companies have entered into indemnity arrangements with the Group. The total undiscounted cash flow that could be receivable by the Group is between £nil and £5,668,000. As the Group does not expect that these warranties will become receivable, it has not recognised an indemnification asset on acquisition.

The Group incurred acquisition-related costs of £677,000 (6 months to 30 June 2013: £314,000), which have been expensed through the consolidated income statement and included within "amortisation of acquired intangibles and transaction related costs".

A reconciliation of the goodwill movement in 2014 in respect of acquisitions completed in 2013 and 2014 is given below.

£000's PEICE KR APASA HMA Ichron OEC Whelans Clear GT
Goodwill at 1 January 2014 3,007 1,399 1,955 6,997 5,538 17,273 - - -
Additions through acquisition - - - - - - 784 3,276 10,618
Adjustments to opening balance sheet - 9 - - - - - - -
Foreign exchange gains and losses (102) (44) 41 (236) - (731) 7 - (161)
Goodwill at 30 June 2014 2,905 1,364 1,996 6,761 5,538 16,542 791 3,276 10,457

There were no accumulated impairment losses at the beginning or the end of the period.

Commitments and contingencies

The Group completed a number of acquisitions between 1 January 2010 and 31 December 2011 where deferred consideration payments to vendors are contingent on the vendor's continued employment with the Group and so are required to be recognised as employment costs over the deferred consideration period. The Group considers it probable that the remaining deferred consideration payments will be settled.

The total remaining cash commitments at 30 June 2014 in respect of contingent deferred consideration treated as remuneration that the Group expects to settle is £789,000 and payment will be made before the end of this year. The related estimated remuneration charge to be incurred by the year end is £263,000.

The balance sheet at 30 June 2014 includes, within deferred consideration current liabilities, contingent deferred consideration remuneration expense accrued but not paid totalling £526,000 (31 December 2013: £2,457,000).

9. Share capital

2014 Number 000's 2014 £000's 2013 Number 000's 2013 £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 220,632 6,619 219,566 6,587
Issued under employee share schemes 362 11 424 13
At 30 June 220,994 6,630 219,990 6,600

10. Other reserves

£000's Merger reserve Employee trust Translation reserve Total
At 1 January 2014 21,256 (9,277) 5,673 17,652
Exchange differences - - (1,785) (1,785)
Issue of new shares - (641) - (641)
At 30 June 2014 21,256 (9,918) 3,888 15,226
At 1 January 2013 21,256 (9,059) 23,873 36,070
Exchange differences - - (1,706) (1,706)
Issue of new shares - (281) - (281)
Purchase of own shares - 756 - 756
At 30 June 2013 21,256 (8,584) 22,167 34,839

11. Dividends

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

£000's Six months ended 30 June 2014 Six months ended 30 June 2013 Year ended 31 Dec 2013
Final dividend for 2013 3.84p per share 8,453 - -
Interim dividend for 2013 3.52p per share - - 7,726
Final dividend for 2012 3.34p per share - 7,308 7,308
8,453 7,308 15,034

An interim dividend in respect of the six months ended 30 June 2014 of 4.05 pence per share, amounting to a total dividend of £8,921,000 was approved by the Directors of RPS Group Plc on 29 July 2014. 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
£000's 2014 2013 2013
Operating profit 23,372 22,005 45,880
Adjustments for:
Depreciation 4,216 5,051 9,432
Amortisation of acquired intangibles 8,205 5,337 12,217
Contingent deferred consideration treated as remuneration 870 3,470 6,009
Deferred consideration fair value adjustment (66) - -
Share based payment expense 960 1,041 1,938
Profit on sale of property, plant and equipment (61) (186) (241)
37,496 36,718 75,235
(Increase)/(decrease) in trade and other receivables (4,154) 1,604 8,838
Decrease in trade and other payables (3,901) (4,491) (12,043)
Adjusted cash generated from operations 29,441 33,831 72,030

* Adjusted cash generated from operations is before payment of deferred consideration treated as remuneration.

The table below provides an analysis of net bank borrowings, comprising cash and cash equivalents, interest bearing bank loans and finance leases, during the six months ended 30 June 2014.

£000's At 1 January 2014 Cash flow Acquisition debt Foreign exchange At 30 June 2014
Cash and cash equivalents 18,699 674 - (354) 19,019
Overdrafts (908) (1,999) - (14) (2,921)
Bank Loans (49,637) (26,870) (4,003) 1,120 (79,390)
Finance lease creditor (522) 117 (124) (11) (540)
Net bank borrowings (32,368) (28,078) (4,127) 741 (63,832)

The cash balance includes £7,680,000 (31 December 2013: £6,028,000) that is restricted in its use.

13. Events after the balance sheet date

On 24 July the Group agreed a US$150m private placement 3 year "shelf" facility with Prudential Investment Inc ("Pricoa"). Initial notes with a value of £30m and US$34.1m (equivalent to £20m) each with a 7 year term and fixed coupon of 3.98% and 3.84% respectively will be issued on 30 September 2014. The balance of the facility is uncommitted but is available from 24 July 2015.

14. Principal risks and uncertainties

The nature of the principal risks and uncertainties faced by the Group have not changed significantly since the 2013 Report and Accounts was published. These risks, together with a description of the approach to mitigate them, are set out on pages 8 and 9 of the 2013 Report and Accounts (available on the Group's website at www.rpsgroup.com) and are summarised as follows:

- Economic environment
- Material adverse events
- Information systems
- Recruitment and retention of key personnel
- Market position and reputation
- Litigation
- Compliance
- Business acquisitions
- Funding
- Health and safety

From time to time the Group receives claims from clients and suppliers. Some of these result in payments to the claimants by the Group and its insurers. The Board reviews all significant claims at each board meeting and more regularly if required. The Board is currently satisfied that the Group has sufficient provisions in its balance sheet to meet all likely uninsured liabilities.

The Board keeps under review the potential effect of economic circumstances. The continuing uncertainty in the global economic outlook inevitably increases the trading and balance sheet risks to which the Group is exposed.

15. Related party transactions

There are no significant changes in the nature and size of related party transactions for the period to those reported in the 2013 Report and Accounts.

16. 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. The continuing uncertainty in global economic outlook inevitably increases the risks to which the Group is exposed. Statements in respect of the Group's performance in the year to date are based upon unaudited management accounts for the period January to June 2014. Nothing in this announcement should be construed as a profit forecast.

17. Publication

A copy of this announcement will be posted on the Company's website at www.rpsgroup.com.

INDEPENDENT REVIEW REPORT TO RPS GROUP PLC

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 2014, which comprises the Condensed consolidated income statement, the Condensed consolidated statement of comprehensive income, the Condensed consolidated balance sheet, the Condensed consolidated cash flow statement, the Condensed consolidated statement of changes in equity and the related notes 1 to 17. 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.

This report is made solely to the company 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. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.

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 Finance Conduct Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with 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.

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 2014 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 Finance Conduct Authority.

 

Deloitte LLP
Chartered Accountants and Statutory Auditor
Reading, United Kingdom

31 July 2014

 

2017

Half Year Results for the six months ended 30 June 2014

31 July 2014

Half Year Results for the six months ended 30 June 2014

PBTA ahead 11% on a constant currency basis. Agreement entered into for additional 7 year £50 million fixed rate loan. Interim dividend increased 15% for 21st consecutive year.

2014 2013 2013(3)
Business Performance H1 H1 H1
Revenue (£m) 279.4 280.9 261.1
Fee income (£m) 248.6 241.8 224.9
PBTA (1) (£m) 31.4 30.2 28.2
Adjusted earnings per share (2)(basic) (p) 10.30 9.81 9.16
Dividend per share (p) 4.05 3.52 3.52
Statutory Reporting
Profit before tax (£m) 21.7 21.0 19.8
Earnings per share (basic) (p) 6.99 6.53 6.17

(1) PBTA is profit before tax, amortisation of acquired intangibles and transaction related costs.
(2) Adjusted earnings per share is before amortisation of acquired intangibles and transaction related costs and the related tax.
(3) 2013 results restated at 2014 currency rates.

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

"On a constant currency basis our PBTA improved significantly. Our European business continued its steady growth. Conditions remained challenging in the Australian resources market and, during the period, some softness developed in parts of the oil and gas exploration and production sector. However, our business model again delivered robust results, with acquisitions making a significant contribution. RPS is financially strong. Following the recent agreement with Pricoa to provide additional long term debt we have ample resources to continue our growth strategy.".

31 July 2014

 

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

 

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, Norway, the Americas and Australia Asia Pacific 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.

 

Results

Profit (before tax, amortisation of acquired intangibles and transaction related costs) was £31.4 million (2013: £30.2 million; £28.2 million on a constant currency basis). Profit before tax was £21.7m (2013: £21.0m; £19.8m on a constant currency basis). Basic earnings per share (before amortisation and transaction related costs) were 10.30 pence (2013: 9.81 pence; 9.16 pence on a constant currency basis). The strengthening of sterling caused a significant reduction in year on year profit growth. The contribution of the Group's four segments was:

Underlying Profit(£m)(1) 2014 2013 2013(2)
H1 H1 H1
Energy 18.3 16.7 15.8
Built and Natural Environment: Europe 10.1 9.6 9.4
Built and Natural Environment: North America 4.2 3.9 3.5
Australia Asia Pacific ("AAP") 4.8 5.5 4.7
Total 37.4 35.7 33.4

(1) as defined in note 3; stated before reorganisation costs of £1.0m (2013: £1.1m)

(2) 2013 results restated at 2014 currency rates.

Group central costs were £3.4 million, (2013: £3.4 million) and finance charges were £1.7 million (2013: £1.0 million).

Funding and Dividend

Our balance sheet remains strong. We funded acquisition investment of £38.8 million in the period, including £20.2 million in respect of GaiaTech (announced on 20 May). Net bank borrowings at 30 June were £63.8 million (31 December 2013: £32.4 million). We have in place until 2016 a £125 million facility with Lloyds Bank Plc and have recently secured a US$150 million US private placement shelf facility with Pricoa. Initial notes with an aggregate value of £50 million, seven year term and 4% fixed coupon will be issued in September. Cash conversion was a little below the normal run rate as some major clients managed payment around their own half year. We expect the full year outcome to be at the normal level.

The Board remains confident about the Group's financial strength and has, once again, increased the interim dividend by 15% to 4.05 pence per share (2013: 3.52 pence) payable on 16 October 2014 to shareholders on the register on 19 September 2014.

Markets and Trading

Energy

We provide internationally recognised consultancy services to the oil and gas exploration and production industry from bases in the UK, USA and Canada. These act as regional centres for projects undertaken in many other countries. The business delivered good growth in the first half.

2014 2013 2013(2)
H1 H1 H1
Fee income (£m) 104.1 87.8 83.3
Underlying profit(1) (£m) 18.3 16.7 15.8
Margin % 17.6 19.0 18.9

(1) as defined in note 3, stated before reorganisation costs of £nil (2013: £0.1m)

(2) 2013 results restated at 2014 currency rates.

We continued to benefit from our prominent position in the oil and gas sector in many parts of the world, as well as increasing demand for our advice from the financial services sector. The acquisitions made in 2013 are integrating well and will contribute to the delivery of another year of good growth for this business.

During the second quarter some of our clients began to manage expenditure more tightly and political instability in parts of the Middle East has slowed investment. The Canadian potash market, which turned down in the middle of 2013, remains subdued and has impacted the year on year performance.

With long term demand for energy resources set to grow significantly, the current softness in some markets should be relatively short lived. During this period our robust business model and strong market presence should ensure continued high performance.

Built and Natural Environment ("BNE")

Within these businesses we provide a wide range of consultancy services to many aspects of the property and infrastructure development and management sectors. In recent years we have developed extensive experience in respect of the infrastructure projects necessary to bring energy resources, both conventional and renewable, to market.

Europe

2014 2013 2013(2)
H1 H1 H1
Fee income (£m) 75.5 74.7 73.7
Underlying Profit(1) (£m) 10.1 9.6 9.4
Margin % 13.4 12.8 12.8

(1) as defined in note 3, stated before reorganisation costs of £0.1m (2013: £0.3m)

(2) 2013 results restated at 2014 currency rates

Our BNE business in Europe performed well in the first half of the year. Those activities which assist clients develop new capital projects, particularly our planning and development business, continued to benefit both from improving market conditions and client confidence. Those exposed to operational environments, such as providing environment management advice, continue to need to offer an efficient, cost effective service to assist clients manage tight budgets.

The acquisition of Clear Environmental Consultants (announced on 10 April) has extended the range of our UK water activities and will assist the strategic development of this business. We have agreed terms to bring a market leading planning and development business into the Group . This will support a growing part of the business, with excellent prospects. Overall, our European business remains on track to achieve growth this year.

North America

2014 2013 2013(2)
H1 H1 H1
Fee income (£m) 19.0 15.7 14.4
Underlying Profit(1) (£m) 4.2 3.9 3.5
Margin % 22.0 24.9 24.7

(1) as defined in note 3, stated before reorganisation costs of £nil (2013: £nil)

(2) 2013 results restated at 2014 currency rates

We remain well positioned in the expanding North American energy infrastructure market. The acquisition of HMA Land Services in September 2013 gave us access to the substantial pipeline development market. Those parts of the business closest to E&P activities also experienced some of the expenditure tightening from clients seen in the Energy business during the first half. In the most buoyant part of our market, permitting and licensing of facilities, staff retention and recruitment has become exceptionally difficult and staff losses caused significant disruption.

The acquisition of GaiaTech was an important step in the development of this business, giving us access to new markets and geography. It will make an important contribution in the second half and subsequent years. Opportunities remain to expand our North American business significantly both organically and by acquisition.

AAP

This business is a combination of the former BNE: AAP and the AAP component of Energy. They were brought together in 2013 to take advantage of the opportunities in the integrated energy and energy infrastructure markets and, specifically, help counter the impact of the slowdown in the resources sector on our businesses.

2014 2013 2013(2)
H1 H1 H1
Fee income (£m) 50.8 65.9 55.4
Underlying Profit(1) (£m) 4.8 5.5 4.7
Margin % 9.4 8.4 8.4

(1) as defined in note 3, stated before reorganisation costs of £nil (2013: £nil)

(2) 2013 results restated at 2014 currency rates

Throughout the first half our mining and energy clients in AAP remained focused on operational efficiency rather than capital expenditure on project development. As a result further projects have been delayed or cancelled. As expected, therefore, our level of activity in the first half was at a lower level than last year and we continued with the plan to reduce our cost base in order to improve efficiency.

The rebalancing of our business away from the resources sector has, however, continued positively. There has been increased optimism and investment in private and public sector urban development and infrastructure projects, particularly in and around Sydney and Melbourne. The second quarter, as a result, showed a significant improvement over the first and we currently anticipate the second half should see further improvement. In order to support this change of emphasis, we have agreed terms to acquire a consultancy with a strong public sector client base and offices in all major cities. It will make a significant contribution to the development of our business.

Group Prospects

Our flexible and robust business model has demonstrated in recent years that it is capable of generating growth in challenging circumstances. A number of acquisitions are under active consideration. The Board remains focussed on delivering a good result for the full year.

Board of Directors
RPS Group plc

31 July 2014

 

Condensed consolidated income statement

Notes Six months
ended
30 June
Six months
ended
30 June
Year
ended
31 December
£000's 2014 2013 2013
Revenue 3 279,376 280,850 567,614
Recharged expenses 3 (30,778) (39,006) (75,493)
Fee income 3 248,598 241,844 492,121
Operating profit before amortisation of acquired intangibles and transaction related costs 3 33,058 31,179 65,305
Amortisation of acquired intangibles and transaction related costs 4 (9,686) (9,174) (19,425)
Operating profit 3 23,372 22,005 45,880
Finance costs (1,741) (1,006) (2,430)
Finance income 35 48 157
Profit before tax, amortisation of acquired intangibles and transaction related costs 31,352 30,221 63,032
Profit before tax 21,666 21,047 43,607
Tax expense 5 (6,348) (6,807) (14,987)
Profit for the period attributable to equity holders of the parent 15,318 14,240 28,620
Basic earnings per share (pence) 6 6.99 6.53 13.11
Diluted earnings per share (pence) 6 6.95 6.50 13.05
Adjusted basic earnings per share (pence) 6 10.30 9.81 20.22
Adjusted diluted earnings per share (pence) 6 10.25 9.76 20.14

 

Condensed consolidated statement of comprehensive income

Six months
ended
30 June
Six months
ended
30 June
Year
ended
31 December
£000's 2014 2013 2013
Profit for the period 15,318 14,240 28,620
Exchange differences* (1,785) (1,706) (18,200)
Remeasurement of net defined benefit liability (256) - -
Total recognised comprehensive income for the period attributable to equity holders of the parent 13,277 12,534 10,420

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

 

Condensed consolidated balance sheet

As at 30 June As at 30 June As at 31 December
£000's Notes 2014 2013 2013
Assets
Non-current assets
Intangible assets 387,691 340,408 375,279
Property, plant and equipment 7 28,753 30,200 27,785
Deferred tax asset 3,630 - 2,018
420,074 370,608 405,082
Current assets
Trade and other receivables 170,075 162,064 161,741
Cash at bank 19,019 12,713 18,699
189,094 174,777 180,440
Liabilities
Current liabilities
Borrowings 3,411 1,474 1,465
Deferred consideration 13,722 11,369 20,919
Trade and other payables 100,520 98,102 103,260
Corporation tax liabilities 3,932 1,638 3,058
Provisions 1,420 2,560 2,134
123,005 115,143 130,836
Net current assets 66,089 59,634 49,604
Non-current liabilities
Borrowings 79,440 31,973 49,602
Deferred consideration 11,690 6,910 14,923
Other creditors 2,747 3,022 2,471
Deferred tax 12,366 6,578 13,645
Provisions 2,009 1,469 2,007
108.252 49,952 82,648
Net assets 377,911 380,290 372,038
Equity
Share capital 9 6,630 6,600 6,619
Share premium 109,235 106,922 108,307
Other reserves 10 15,226 34,839 17,652
Retained earnings 246,820 231,929 239,460
Total shareholders' equity 377,911 380,290 372,038

 

Condensed consolidated cash flow statement

Six months
ended
30 June
Six months
ended
30 June
Year
ended
31 December
£000's Notes 2014 2013 2013
Adjusted cash generated from operations 12 29,441 33,831 72,030
Deferred consideration treated as remuneration (2,792) (4,204) (7,714)
Cash generated from operations 26,649 29,627 64,316
Interest paid (1,503) (1,091) (1,991)
Interest received 35 48 157
Income taxes paid (8,751) (11,381) (19,829)
Net cash from operating activities 16,430 17,203 42,653
Cash flows from investing activities
Purchases of subsidiaries net of cash acquired (22,138) (11,178) (31,174)
Deferred consideration (9,767) - (3,466)
Purchase of property, plant and equipment (4,299) (4,722) (8,034)
Sale of property, plant and equipment 148 272 523
Net cash used in investing activities (36,056) (15,628) (42,151)
Cash flows from financing activities
Proceeds from issue of share capital 1 211 555
Proceeds from bank borrowings 26,870 2,935 18,609
Payment of finance lease liabilities (117) (353) (580)
Dividends paid 11 (8,453) (7,308) (15,034)
Payment of pre-acquisition dividend - (87) (247)
Net cash from/(used in) financing activities 18,301 (4,602) (3,303)
Net (decrease)/increase in cash and cash equivalents (1,325) (3,027) (3,805)
Cash and cash equivalents at beginning of period 17,791 14,804 14,804
Effect of exchange rate fluctuations (368) (12) (818)
Cash and cash equivalents at end of period 16,098 11,765 17,791
Cash and cash equivalents comprise:
Cash at bank 19,019 12,713 18,699
Bank overdraft (2,921) (948) (908)
Cash and cash equivalents at end of period 16,098 11,765 17,791

 

Consolidated statement of changes in equity

£000's Share capital Share premium Retained earnings Other reserves Total equity
At 1 January 2014 6,619 108,307 239,460 17,652 372,038
Total comprehensive income for the period - - 15,062 (1,785) 13,277
Issue of new ordinary shares 11 928 (296) (641) 2
Release of own shares - - - 756 756
Share based payment expense - - 1,047 - 1,047
Dividends - - (8,453) - (8,453)
At 30 June 2014 6,630 109,235 246,820 15,226 377,911
At 1 January 2013 6,587 106,198 224,959 36,070 373,814
Total comprehensive income for the period - - 14,240 (1,706) 12,534
Issue of new ordinary shares 13 724 (1,003) (281) (547)
Purchase of own shares - - - 756 756
Share based payment expense - - 1,041 - 1,041
Dividends - - (7,308) - (7,308))
At 30 June 2013 6,600 106,922 231,929 34,839 380,290

An analysis of other reserves is provided in Note 10.

 

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 2014 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 2013 and in accordance with IAS 34. They are unaudited but have been reviewed by the Company's auditor. The results for the year end 31 December 2013 and the balance sheet as at that date are abridged from the Company's Report and Accounts 2013 which have been delivered to the Registrar of Companies. The auditor's report on those accounts was not qualified, did not include a reference to any matters for which the auditors drew attention by way of emphasis without qualifying the report and did not contain statements under sections 498 (2) or (3) of the Companies Act 2006.

The condensed interim financial statements do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006.

In assessing the going concern basis, the directors considered the Group's business activities, the financial position of the Group and the Group's financial risk management objectives and policies. The directors have a reasonable expectation that the Company and Group have adequate resources to continue in operational existence for the foreseeable future and that it is, therefore, appropriate to adopt the going concern basis in preparing the Group's interim financial statements.

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 4.2.4R, DTR 4.2.7R and DTR 4.2.8R.

On behalf of the Board

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

31 July 2014

3. Business segments

Segment information is presented in respect of the Group's business segments which are reported to the Chief Operating Decision Maker. The business segment reporting format reflects the Group's management and internal structure. Inter-segment pricing is determined on an arm's length basis. Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

As noted in the March 2014 Interim Management Statement, HMA (a business acquired in August 2013) is now reported in the BNE North America Segment. Previously it was reported in the Energy Segment. Accordingly the December 2013 segmental results have been restated.

The segment results and the total segment assets table at 30 June 2013 have been restated to reflect the separate reporting of BNE North America segment and the integrated management and reporting of the Group's BNE and Energy businesses in Australia Asia Pacific as announced in October 2013.

The business segments of the Group are as follows:

Energy - the provision of integrated technical, commercial and project management support and training in the fields of geoscience, engineering and health, safety and environmental on a global basis to the energy sector.

Built and Natural Environment ("BNE") - consultancy services to many aspects of the property and infrastructure development and management sectors. These include: environmental assessment, the management of water resources, oceanography, health and safety, risk management, town and country planning, building, landscape and urban design, surveying and transport planning. Consulting services are provided on a regional basis in Europe and North America.

Australia Asia Pacific ("AAP") - in the AAP region there is a single board that manages the BNE and Energy services we provide in that region. Accordingly, the results of this business are reported as a separate segment.

Unallocated expenses - certain central costs are not allocated to the segments because either they predominantly relate to the running of the Group Head Office function or could only be allocated to the segments on an arbitrary basis, such costs include the remuneration and support costs of the main board and the costs of the Group Finance and marketing functions.

"Segment profit" is defined as profit before interest, tax, amortisation of acquired intangibles, transaction related costs and unallocated expenses.

"Underlying profit" is defined as segment profit before reorganisation costs.

"Reorganisation costs" comprises costs and income arising as a consequence of reorganisation including redundancy costs, profit or loss of disposal of plant, property and equipment, the costs of consolidating office space and rebranding costs.

Segment results for the period ended 30 June 2014:

£000's Fees Expenses Intersegment revenue External Revenue
Energy 104,130 14,426 (328) 118,228
BNE - Europe 75,541 9,410 (372) 84,579
BNE - North America 19,017 2,319 (413) 20,923
AAP 50,843 4,843 (40) 55,646
Group eliminations (933) (220) 1,153 -
Total 248,598 30,778 - 279,376

 

£000's Underlying profit Reorganisation costs Segment profit
Energy 18,304 - 18,304
BNE - Europe 10,140 (144) 9,996
BNE - North America 4,185 - 4,185
AAP 4,782 (853) 3,929
Total 37,411 (997) 36,414

Segment results for the period ended 30 June 2013 (restated):

£000's Fees Expenses Intersegment revenue External revenue
Energy 87,797 17,206 (604) 104,399
BNE - Europe 74,682 9,504 (265) 83,921
BNE - North America 15,668 2,242 (464) 17,446
AAP 65,912 10,288 (1,116) 75,084
Group eliminations (2,215) (234) 2,449 -
Total 241,844 39,006 - 280,850

 

£000's Underlying profit Reorganisation costs Segment profit
Energy 16,688 (52) 16,636
BNE - Europe 9,550 (259) 9,291
BNE - North America 3,907 - 3,907
AAP 5,528 (833) 4,695
Total 35,673 (1,144) 34,529

Segment results for the period ended 31 December 2013 (restated):

£000's Fees Expenses Intersegment revenue External revenue
Energy 186,915 33,224 (1,141) 218,998
BNE - Europe 149,292 20,171 (603) 168,860
BNE - North America 32,664 5,117 (1,111) 36,670
AAP 127,194 17,380 (1,488) 143,086
Group eliminations (3,944) (399) 4,343 -
Total 492,121 75,493 - 567,614

 

£000's Underlying profit Reorganisation costs Segment profit
Energy 36,403 (78) 36,325
BNE - Europe 19,164 (487) 18,677
BNE - North America 8,287 - 8,287
AAP 10,020 (1,192) 8,828
Total 73,874 (1,757) 72,117

Group reconciliation

£000's 30 June 2014 30 June 2013 31 Dec 2013
Revenue 279,376 280,850 567,614
Recharged expenses (30,778) (39,006) (75,493)
Fees 248,598 241,844 492,121
Underlying profit 37,411 35,673 73,874
Reorganisation costs (997) (1,144) (1,757)
Segment profit 36,414 34,529 72,117
Unallocated expenses (3,356) (3,350) (6,812)
Operating profit before amortisation of acquired intangibles and transaction related costs 33,058 31,179 65,305
Amortisation of acquired intangibles and transaction related costs (9,686) (9,174) (19,425)
Operating profit 23,372 22,005 45,880
Net finance costs (1,706) (958) (2,273)
Profit before tax 21,666 21,047 43,607

Total segment assets were as follows:

£000's 30 June 2014 30 June 2013 (restated) 31 December 2013 (restated)
Energy 199,583 149,474 198,910
BNE - Europe 229,044 229,401 219,112
BNE - North America 53,129 30,596 43,151
AAP 118,669 132,966 117,769
Unallocated 8,743 2,948 6,580
Total 609,168 545,385 585,522

4. Amortisation of acquired intangibles and transaction related costs

£000's 30 June 2014 30 June 2013 31 December 2013
Amortisation of acquired intangibles 8,205 5,337 12,217
Contingent deferred consideration treated as remuneration 870 3,470 6,009
Deferred consideration fair value adjustment (66) - -
Third party advisory costs 677 367 1,199
Total 9,686 9,174 19,425

5. Income taxes

The tax charge for the period has been calculated using an estimate of the effective annual rate of tax for each taxing jurisdiction for the full year. These rates have been applied to the pre-tax profits for each jurisdiction for the six months ended 30 June 2014. The Group has separately calculated the tax rates applicable to amortisation of intangibles and transaction related costs for the period. Tax rate changes that were substantively enacted at the balance sheet date have been factored into the calculation of the effective tax rates.

Analysis of the tax expense/(credit) in the income statement for the period:

£000's 30 June 2014 30 June 2013 31 December 2013
Current tax expense 7,977 8,332 16,448
Deferred tax credit (1,629) (1,525) (1,461)
Total tax expense in the income statement 6,348 6,807 14,987
Add back:
Tax on amortisation of acquired intangibles and acquisition related costs 2,432 2,033 3,889
Adjusted tax charge on PBTA for the period 8,780 8,840 18,876
Tax rate on PBT 29.3% 32.3% 34.4%
Tax rate on PBTA 28.0% 29.3% 29.9%

6. 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
£000's 2014 2013 2013
Profit attributable to ordinary shareholders 15,318 14,240 28,620
000's
Weighted average number of ordinary shares for the purposes of basic earnings per share 219,188 217,953 218,355
Effect of employee share schemes 1,105 1,034 909
Weighted average number of ordinary shares for the purposes of diluted earnings per share 220,293 218,987 219,264
Basic earning per share (pence) 6.99 6.53 13.11
Diluted earnings per share (pence) 6.95 6.50 13.05

The directors consider that earnings per share before amortisation of acquired intangibles and transaction related costs provides a more meaningful measure of the Group's performance than statutory earnings per share. The calculations of adjusted earnings per share were based on the number of shares as above, and are shown in the table below:

£000's Six months ended 30 June 2014 Six months ended 30 June 2013 Year ended 31 Dec 2013
Profit attributable to ordinary shareholders 15,318 14,240 28,620
Amortisation of acquired intangibles and transaction related costs 9,686 9,174 19,425
Tax on amortisation of acquired intangibles and transaction related costs (2,432) (2,033) (3,889)
Adjusted profit attributable to ordinary shareholders 22,572 21,381 44,156
Adjusted basic earnings before per share (pence) 10.30 9.81 20.22
Adjusted diluted earnings per share (pence) 10.25 9.76 20.14

7. Property, plant and equipment

During the six months ended 30 June 2014 the Group acquired assets with a
cost of £5,497,000 (six months to 30 June 2013: £4,732,000), which includes £1,045,000 acquired through business combinations (six months to 30 June 2013: £89,000). Assets with a net book value of £90,000 were disposed of during the six months ended 30 June 2014 (six months ended 30 June 2013: £86,000).

8. Acquisitions

The Group has completed the following acquisitions to strengthen and broaden the skill base of the Group, during the first half of 2014:

Entity Business Segment Date of Acquisition Place of incorporation Percentageof entity acquired Nature of business acquired
Whelans Corporation Pty Ltd AAP 5 Feb 2014 Australia 100% Surveying
Clear Environmental Consultants Ltd BNE Europe 9 April 2014 UK 100% Water Consultancy
GaiaTech Holdings Inc BNE NA 15 May 2014 UK 100% Environmental Consultancy

Their contributions to the Group's results for the period is given below:

£000's Revenue Operating profit
Whelans 1,927 172
Clear 1,249 102
GaiaTech 1,459 273

Had the Group acquired these entities on the first day of the period, the Group estimates revenue would have been £285,469,000 and operating profit would have been £23,965,000.

The Group has allocated provisional fair values to the net assets acquired as follows:

 

£000's Order book Customer relationships Brand PPE Cash Other assets Other liabilities Net assets acquired
Whelans 142 186 104 369 396 1,290 (1,209) 1,278
Clear 480 2,660 200 274 1,943 1,221 (2,057) 4,721
GaiaTech 143 4,477 327 402 1,702 5,511 (5,286) 7,276
765 7,323 631 1,045 4,041 8,022 (8,552) 13,275

 

£000's Initial cash consideration Contingent cash consideration Deferred cashl consideration Total consideration Net assets acquired Goodwill acquired
Whelans 1,443 - 619 2,062 1,278 784
Clear 6,841 1,156 - 7,997 4,721 3,276
GaiaTech 17,894 - - 17,894 7,276 10,618
26,178 1,156 619 27,953 13,275 14,678

The consideration payable in future for Clear is contingent upon renewal of a key contract. The payment made will be in the range of £nil to £1,500,000 and the fair value has been determined by estimating the likelihood of payment.

There was no tax deductable goodwill acquired.

Provisional values are given in the table above as information about facts or circumstances that existed at the acquisition date is incomplete.

Goodwill represents the value of the accumulated workforce and synergies with RPS associated with these acquisitions.

The total fair value of receivables acquired was £5,668,000. The gross contractual receivables acquired were £5,786,000 and £118,000 was estimated to be irrecoverable.

The vendors of the acquired companies have entered into indemnity arrangements with the Group. The total undiscounted cash flow that could be receivable by the Group is between £nil and £5,668,000. As the Group does not expect that these warranties will become receivable, it has not recognised an indemnification asset on acquisition.

The Group incurred acquisition-related costs of £677,000 (6 months to 30 June 2013: £314,000), which have been expensed through the consolidated income statement and included within "amortisation of acquired intangibles and transaction related costs".

A reconciliation of the goodwill movement in 2014 in respect of acquisitions completed in 2013 and 2014 is given below.

£000's PEICE KR APASA HMA Ichron OEC Whelans Clear GT
Goodwill at 1 January 2014 3,007 1,399 1,955 6,997 5,538 17,273 - - -
Additions through acquisition - - - - - - 784 3,276 10,618
Adjustments to opening balance sheet - 9 - - - - - - -
Foreign exchange gains and losses (102) (44) 41 (236) - (731) 7 - (161)
Goodwill at 30 June 2014 2,905 1,364 1,996 6,761 5,538 16,542 791 3,276 10,457

There were no accumulated impairment losses at the beginning or the end of the period.

Commitments and contingencies

The Group completed a number of acquisitions between 1 January 2010 and 31 December 2011 where deferred consideration payments to vendors are contingent on the vendor's continued employment with the Group and so are required to be recognised as employment costs over the deferred consideration period. The Group considers it probable that the remaining deferred consideration payments will be settled.

The total remaining cash commitments at 30 June 2014 in respect of contingent deferred consideration treated as remuneration that the Group expects to settle is £789,000 and payment will be made before the end of this year. The related estimated remuneration charge to be incurred by the year end is £263,000.

The balance sheet at 30 June 2014 includes, within deferred consideration current liabilities, contingent deferred consideration remuneration expense accrued but not paid totalling £526,000 (31 December 2013: £2,457,000).

9. Share capital

2014 Number 000's 2014 £000's 2013 Number 000's 2013 £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 220,632 6,619 219,566 6,587
Issued under employee share schemes 362 11 424 13
At 30 June 220,994 6,630 219,990 6,600

10. Other reserves

£000's Merger reserve Employee trust Translation reserve Total
At 1 January 2014 21,256 (9,277) 5,673 17,652
Exchange differences - - (1,785) (1,785)
Issue of new shares - (641) - (641)
At 30 June 2014 21,256 (9,918) 3,888 15,226
At 1 January 2013 21,256 (9,059) 23,873 36,070
Exchange differences - - (1,706) (1,706)
Issue of new shares - (281) - (281)
Purchase of own shares - 756 - 756
At 30 June 2013 21,256 (8,584) 22,167 34,839

11. Dividends

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

£000's Six months ended 30 June 2014 Six months ended 30 June 2013 Year ended 31 Dec 2013
Final dividend for 2013 3.84p per share 8,453 - -
Interim dividend for 2013 3.52p per share - - 7,726
Final dividend for 2012 3.34p per share - 7,308 7,308
8,453 7,308 15,034

An interim dividend in respect of the six months ended 30 June 2014 of 4.05 pence per share, amounting to a total dividend of £8,921,000 was approved by the Directors of RPS Group Plc on 29 July 2014. 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
£000's 2014 2013 2013
Operating profit 23,372 22,005 45,880
Adjustments for:
Depreciation 4,216 5,051 9,432
Amortisation of acquired intangibles 8,205 5,337 12,217
Contingent deferred consideration treated as remuneration 870 3,470 6,009
Deferred consideration fair value adjustment (66) - -
Share based payment expense 960 1,041 1,938
Profit on sale of property, plant and equipment (61) (186) (241)
37,496 36,718 75,235
(Increase)/(decrease) in trade and other receivables (4,154) 1,604 8,838
Decrease in trade and other payables (3,901) (4,491) (12,043)
Adjusted cash generated from operations 29,441 33,831 72,030

* Adjusted cash generated from operations is before payment of deferred consideration treated as remuneration.

The table below provides an analysis of net bank borrowings, comprising cash and cash equivalents, interest bearing bank loans and finance leases, during the six months ended 30 June 2014.

£000's At 1 January 2014 Cash flow Acquisition debt Foreign exchange At 30 June 2014
Cash and cash equivalents 18,699 674 - (354) 19,019
Overdrafts (908) (1,999) - (14) (2,921)
Bank Loans (49,637) (26,870) (4,003) 1,120 (79,390)
Finance lease creditor (522) 117 (124) (11) (540)
Net bank borrowings (32,368) (28,078) (4,127) 741 (63,832)

The cash balance includes £7,680,000 (31 December 2013: £6,028,000) that is restricted in its use.

13. Events after the balance sheet date

On 24 July the Group agreed a US$150m private placement 3 year "shelf" facility with Prudential Investment Inc ("Pricoa"). Initial notes with a value of £30m and US$34.1m (equivalent to £20m) each with a 7 year term and fixed coupon of 3.98% and 3.84% respectively will be issued on 30 September 2014. The balance of the facility is uncommitted but is available from 24 July 2015.

14. Principal risks and uncertainties

The nature of the principal risks and uncertainties faced by the Group have not changed significantly since the 2013 Report and Accounts was published. These risks, together with a description of the approach to mitigate them, are set out on pages 8 and 9 of the 2013 Report and Accounts (available on the Group's website at www.rpsgroup.com) and are summarised as follows:

- Economic environment
- Material adverse events
- Information systems
- Recruitment and retention of key personnel
- Market position and reputation
- Litigation
- Compliance
- Business acquisitions
- Funding
- Health and safety

From time to time the Group receives claims from clients and suppliers. Some of these result in payments to the claimants by the Group and its insurers. The Board reviews all significant claims at each board meeting and more regularly if required. The Board is currently satisfied that the Group has sufficient provisions in its balance sheet to meet all likely uninsured liabilities.

The Board keeps under review the potential effect of economic circumstances. The continuing uncertainty in the global economic outlook inevitably increases the trading and balance sheet risks to which the Group is exposed.

15. Related party transactions

There are no significant changes in the nature and size of related party transactions for the period to those reported in the 2013 Report and Accounts.

16. 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. The continuing uncertainty in global economic outlook inevitably increases the risks to which the Group is exposed. Statements in respect of the Group's performance in the year to date are based upon unaudited management accounts for the period January to June 2014. Nothing in this announcement should be construed as a profit forecast.

17. Publication

A copy of this announcement will be posted on the Company's website at www.rpsgroup.com.

INDEPENDENT REVIEW REPORT TO RPS GROUP PLC

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 2014, which comprises the Condensed consolidated income statement, the Condensed consolidated statement of comprehensive income, the Condensed consolidated balance sheet, the Condensed consolidated cash flow statement, the Condensed consolidated statement of changes in equity and the related notes 1 to 17. 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.

This report is made solely to the company 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. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.

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 Finance Conduct Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with 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.

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 2014 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 Finance Conduct Authority.

 

Deloitte LLP
Chartered Accountants and Statutory Auditor
Reading, United Kingdom

31 July 2014

 

2016

Half Year Results for the six months ended 30 June 2014

31 July 2014

Half Year Results for the six months ended 30 June 2014

PBTA ahead 11% on a constant currency basis. Agreement entered into for additional 7 year £50 million fixed rate loan. Interim dividend increased 15% for 21st consecutive year.

2014 2013 2013(3)
Business Performance H1 H1 H1
Revenue (£m) 279.4 280.9 261.1
Fee income (£m) 248.6 241.8 224.9
PBTA (1) (£m) 31.4 30.2 28.2
Adjusted earnings per share (2)(basic) (p) 10.30 9.81 9.16
Dividend per share (p) 4.05 3.52 3.52
Statutory Reporting
Profit before tax (£m) 21.7 21.0 19.8
Earnings per share (basic) (p) 6.99 6.53 6.17

(1) PBTA is profit before tax, amortisation of acquired intangibles and transaction related costs.
(2) Adjusted earnings per share is before amortisation of acquired intangibles and transaction related costs and the related tax.
(3) 2013 results restated at 2014 currency rates.

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

"On a constant currency basis our PBTA improved significantly. Our European business continued its steady growth. Conditions remained challenging in the Australian resources market and, during the period, some softness developed in parts of the oil and gas exploration and production sector. However, our business model again delivered robust results, with acquisitions making a significant contribution. RPS is financially strong. Following the recent agreement with Pricoa to provide additional long term debt we have ample resources to continue our growth strategy.".

31 July 2014

 

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

 

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, Norway, the Americas and Australia Asia Pacific 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.

 

Results

Profit (before tax, amortisation of acquired intangibles and transaction related costs) was £31.4 million (2013: £30.2 million; £28.2 million on a constant currency basis). Profit before tax was £21.7m (2013: £21.0m; £19.8m on a constant currency basis). Basic earnings per share (before amortisation and transaction related costs) were 10.30 pence (2013: 9.81 pence; 9.16 pence on a constant currency basis). The strengthening of sterling caused a significant reduction in year on year profit growth. The contribution of the Group's four segments was:

Underlying Profit(£m)(1) 2014 2013 2013(2)
H1 H1 H1
Energy 18.3 16.7 15.8
Built and Natural Environment: Europe 10.1 9.6 9.4
Built and Natural Environment: North America 4.2 3.9 3.5
Australia Asia Pacific ("AAP") 4.8 5.5 4.7
Total 37.4 35.7 33.4

(1) as defined in note 3; stated before reorganisation costs of £1.0m (2013: £1.1m)

(2) 2013 results restated at 2014 currency rates.

Group central costs were £3.4 million, (2013: £3.4 million) and finance charges were £1.7 million (2013: £1.0 million).

Funding and Dividend

Our balance sheet remains strong. We funded acquisition investment of £38.8 million in the period, including £20.2 million in respect of GaiaTech (announced on 20 May). Net bank borrowings at 30 June were £63.8 million (31 December 2013: £32.4 million). We have in place until 2016 a £125 million facility with Lloyds Bank Plc and have recently secured a US$150 million US private placement shelf facility with Pricoa. Initial notes with an aggregate value of £50 million, seven year term and 4% fixed coupon will be issued in September. Cash conversion was a little below the normal run rate as some major clients managed payment around their own half year. We expect the full year outcome to be at the normal level.

The Board remains confident about the Group's financial strength and has, once again, increased the interim dividend by 15% to 4.05 pence per share (2013: 3.52 pence) payable on 16 October 2014 to shareholders on the register on 19 September 2014.

Markets and Trading

Energy

We provide internationally recognised consultancy services to the oil and gas exploration and production industry from bases in the UK, USA and Canada. These act as regional centres for projects undertaken in many other countries. The business delivered good growth in the first half.

2014 2013 2013(2)
H1 H1 H1
Fee income (£m) 104.1 87.8 83.3
Underlying profit(1) (£m) 18.3 16.7 15.8
Margin % 17.6 19.0 18.9

(1) as defined in note 3, stated before reorganisation costs of £nil (2013: £0.1m)

(2) 2013 results restated at 2014 currency rates.

We continued to benefit from our prominent position in the oil and gas sector in many parts of the world, as well as increasing demand for our advice from the financial services sector. The acquisitions made in 2013 are integrating well and will contribute to the delivery of another year of good growth for this business.

During the second quarter some of our clients began to manage expenditure more tightly and political instability in parts of the Middle East has slowed investment. The Canadian potash market, which turned down in the middle of 2013, remains subdued and has impacted the year on year performance.

With long term demand for energy resources set to grow significantly, the current softness in some markets should be relatively short lived. During this period our robust business model and strong market presence should ensure continued high performance.

Built and Natural Environment ("BNE")

Within these businesses we provide a wide range of consultancy services to many aspects of the property and infrastructure development and management sectors. In recent years we have developed extensive experience in respect of the infrastructure projects necessary to bring energy resources, both conventional and renewable, to market.

Europe

2014 2013 2013(2)
H1 H1 H1
Fee income (£m) 75.5 74.7 73.7
Underlying Profit(1) (£m) 10.1 9.6 9.4
Margin % 13.4 12.8 12.8

(1) as defined in note 3, stated before reorganisation costs of £0.1m (2013: £0.3m)

(2) 2013 results restated at 2014 currency rates

Our BNE business in Europe performed well in the first half of the year. Those activities which assist clients develop new capital projects, particularly our planning and development business, continued to benefit both from improving market conditions and client confidence. Those exposed to operational environments, such as providing environment management advice, continue to need to offer an efficient, cost effective service to assist clients manage tight budgets.

The acquisition of Clear Environmental Consultants (announced on 10 April) has extended the range of our UK water activities and will assist the strategic development of this business. We have agreed terms to bring a market leading planning and development business into the Group . This will support a growing part of the business, with excellent prospects. Overall, our European business remains on track to achieve growth this year.

North America

2014 2013 2013(2)
H1 H1 H1
Fee income (£m) 19.0 15.7 14.4
Underlying Profit(1) (£m) 4.2 3.9 3.5
Margin % 22.0 24.9 24.7

(1) as defined in note 3, stated before reorganisation costs of £nil (2013: £nil)

(2) 2013 results restated at 2014 currency rates

We remain well positioned in the expanding North American energy infrastructure market. The acquisition of HMA Land Services in September 2013 gave us access to the substantial pipeline development market. Those parts of the business closest to E&P activities also experienced some of the expenditure tightening from clients seen in the Energy business during the first half. In the most buoyant part of our market, permitting and licensing of facilities, staff retention and recruitment has become exceptionally difficult and staff losses caused significant disruption.

The acquisition of GaiaTech was an important step in the development of this business, giving us access to new markets and geography. It will make an important contribution in the second half and subsequent years. Opportunities remain to expand our North American business significantly both organically and by acquisition.

AAP

This business is a combination of the former BNE: AAP and the AAP component of Energy. They were brought together in 2013 to take advantage of the opportunities in the integrated energy and energy infrastructure markets and, specifically, help counter the impact of the slowdown in the resources sector on our businesses.

2014 2013 2013(2)
H1 H1 H1
Fee income (£m) 50.8 65.9 55.4
Underlying Profit(1) (£m) 4.8 5.5 4.7
Margin % 9.4 8.4 8.4

(1) as defined in note 3, stated before reorganisation costs of £nil (2013: £nil)

(2) 2013 results restated at 2014 currency rates

Throughout the first half our mining and energy clients in AAP remained focused on operational efficiency rather than capital expenditure on project development. As a result further projects have been delayed or cancelled. As expected, therefore, our level of activity in the first half was at a lower level than last year and we continued with the plan to reduce our cost base in order to improve efficiency.

The rebalancing of our business away from the resources sector has, however, continued positively. There has been increased optimism and investment in private and public sector urban development and infrastructure projects, particularly in and around Sydney and Melbourne. The second quarter, as a result, showed a significant improvement over the first and we currently anticipate the second half should see further improvement. In order to support this change of emphasis, we have agreed terms to acquire a consultancy with a strong public sector client base and offices in all major cities. It will make a significant contribution to the development of our business.

Group Prospects

Our flexible and robust business model has demonstrated in recent years that it is capable of generating growth in challenging circumstances. A number of acquisitions are under active consideration. The Board remains focussed on delivering a good result for the full year.

Board of Directors
RPS Group plc

31 July 2014

 

Condensed consolidated income statement

Notes Six months
ended
30 June
Six months
ended
30 June
Year
ended
31 December
£000's 2014 2013 2013
Revenue 3 279,376 280,850 567,614
Recharged expenses 3 (30,778) (39,006) (75,493)
Fee income 3 248,598 241,844 492,121
Operating profit before amortisation of acquired intangibles and transaction related costs 3 33,058 31,179 65,305
Amortisation of acquired intangibles and transaction related costs 4 (9,686) (9,174) (19,425)
Operating profit 3 23,372 22,005 45,880
Finance costs (1,741) (1,006) (2,430)
Finance income 35 48 157
Profit before tax, amortisation of acquired intangibles and transaction related costs 31,352 30,221 63,032
Profit before tax 21,666 21,047 43,607
Tax expense 5 (6,348) (6,807) (14,987)
Profit for the period attributable to equity holders of the parent 15,318 14,240 28,620
Basic earnings per share (pence) 6 6.99 6.53 13.11
Diluted earnings per share (pence) 6 6.95 6.50 13.05
Adjusted basic earnings per share (pence) 6 10.30 9.81 20.22
Adjusted diluted earnings per share (pence) 6 10.25 9.76 20.14

 

Condensed consolidated statement of comprehensive income

Six months
ended
30 June
Six months
ended
30 June
Year
ended
31 December
£000's 2014 2013 2013
Profit for the period 15,318 14,240 28,620
Exchange differences* (1,785) (1,706) (18,200)
Remeasurement of net defined benefit liability (256) - -
Total recognised comprehensive income for the period attributable to equity holders of the parent 13,277 12,534 10,420

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

 

Condensed consolidated balance sheet

As at 30 June As at 30 June As at 31 December
£000's Notes 2014 2013 2013
Assets
Non-current assets
Intangible assets 387,691 340,408 375,279
Property, plant and equipment 7 28,753 30,200 27,785
Deferred tax asset 3,630 - 2,018
420,074 370,608 405,082
Current assets
Trade and other receivables 170,075 162,064 161,741
Cash at bank 19,019 12,713 18,699
189,094 174,777 180,440
Liabilities
Current liabilities
Borrowings 3,411 1,474 1,465
Deferred consideration 13,722 11,369 20,919
Trade and other payables 100,520 98,102 103,260
Corporation tax liabilities 3,932 1,638 3,058
Provisions 1,420 2,560 2,134
123,005 115,143 130,836
Net current assets 66,089 59,634 49,604
Non-current liabilities
Borrowings 79,440 31,973 49,602
Deferred consideration 11,690 6,910 14,923
Other creditors 2,747 3,022 2,471
Deferred tax 12,366 6,578 13,645
Provisions 2,009 1,469 2,007
108.252 49,952 82,648
Net assets 377,911 380,290 372,038
Equity
Share capital 9 6,630 6,600 6,619
Share premium 109,235 106,922 108,307
Other reserves 10 15,226 34,839 17,652
Retained earnings 246,820 231,929 239,460
Total shareholders' equity 377,911 380,290 372,038

 

Condensed consolidated cash flow statement

Six months
ended
30 June
Six months
ended
30 June
Year
ended
31 December
£000's Notes 2014 2013 2013
Adjusted cash generated from operations 12 29,441 33,831 72,030
Deferred consideration treated as remuneration (2,792) (4,204) (7,714)
Cash generated from operations 26,649 29,627 64,316
Interest paid (1,503) (1,091) (1,991)
Interest received 35 48 157
Income taxes paid (8,751) (11,381) (19,829)
Net cash from operating activities 16,430 17,203 42,653
Cash flows from investing activities
Purchases of subsidiaries net of cash acquired (22,138) (11,178) (31,174)
Deferred consideration (9,767) - (3,466)
Purchase of property, plant and equipment (4,299) (4,722) (8,034)
Sale of property, plant and equipment 148 272 523
Net cash used in investing activities (36,056) (15,628) (42,151)
Cash flows from financing activities
Proceeds from issue of share capital 1 211 555
Proceeds from bank borrowings 26,870 2,935 18,609
Payment of finance lease liabilities (117) (353) (580)
Dividends paid 11 (8,453) (7,308) (15,034)
Payment of pre-acquisition dividend - (87) (247)
Net cash from/(used in) financing activities 18,301 (4,602) (3,303)
Net (decrease)/increase in cash and cash equivalents (1,325) (3,027) (3,805)
Cash and cash equivalents at beginning of period 17,791 14,804 14,804
Effect of exchange rate fluctuations (368) (12) (818)
Cash and cash equivalents at end of period 16,098 11,765 17,791
Cash and cash equivalents comprise:
Cash at bank 19,019 12,713 18,699
Bank overdraft (2,921) (948) (908)
Cash and cash equivalents at end of period 16,098 11,765 17,791

 

Consolidated statement of changes in equity

£000's Share capital Share premium Retained earnings Other reserves Total equity
At 1 January 2014 6,619 108,307 239,460 17,652 372,038
Total comprehensive income for the period - - 15,062 (1,785) 13,277
Issue of new ordinary shares 11 928 (296) (641) 2
Release of own shares - - - 756 756
Share based payment expense - - 1,047 - 1,047
Dividends - - (8,453) - (8,453)
At 30 June 2014 6,630 109,235 246,820 15,226 377,911
At 1 January 2013 6,587 106,198 224,959 36,070 373,814
Total comprehensive income for the period - - 14,240 (1,706) 12,534
Issue of new ordinary shares 13 724 (1,003) (281) (547)
Purchase of own shares - - - 756 756
Share based payment expense - - 1,041 - 1,041
Dividends - - (7,308) - (7,308))
At 30 June 2013 6,600 106,922 231,929 34,839 380,290

An analysis of other reserves is provided in Note 10.

 

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 2014 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 2013 and in accordance with IAS 34. They are unaudited but have been reviewed by the Company's auditor. The results for the year end 31 December 2013 and the balance sheet as at that date are abridged from the Company's Report and Accounts 2013 which have been delivered to the Registrar of Companies. The auditor's report on those accounts was not qualified, did not include a reference to any matters for which the auditors drew attention by way of emphasis without qualifying the report and did not contain statements under sections 498 (2) or (3) of the Companies Act 2006.

The condensed interim financial statements do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006.

In assessing the going concern basis, the directors considered the Group's business activities, the financial position of the Group and the Group's financial risk management objectives and policies. The directors have a reasonable expectation that the Company and Group have adequate resources to continue in operational existence for the foreseeable future and that it is, therefore, appropriate to adopt the going concern basis in preparing the Group's interim financial statements.

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 4.2.4R, DTR 4.2.7R and DTR 4.2.8R.

On behalf of the Board

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

31 July 2014

3. Business segments

Segment information is presented in respect of the Group's business segments which are reported to the Chief Operating Decision Maker. The business segment reporting format reflects the Group's management and internal structure. Inter-segment pricing is determined on an arm's length basis. Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

As noted in the March 2014 Interim Management Statement, HMA (a business acquired in August 2013) is now reported in the BNE North America Segment. Previously it was reported in the Energy Segment. Accordingly the December 2013 segmental results have been restated.

The segment results and the total segment assets table at 30 June 2013 have been restated to reflect the separate reporting of BNE North America segment and the integrated management and reporting of the Group's BNE and Energy businesses in Australia Asia Pacific as announced in October 2013.

The business segments of the Group are as follows:

Energy - the provision of integrated technical, commercial and project management support and training in the fields of geoscience, engineering and health, safety and environmental on a global basis to the energy sector.

Built and Natural Environment ("BNE") - consultancy services to many aspects of the property and infrastructure development and management sectors. These include: environmental assessment, the management of water resources, oceanography, health and safety, risk management, town and country planning, building, landscape and urban design, surveying and transport planning. Consulting services are provided on a regional basis in Europe and North America.

Australia Asia Pacific ("AAP") - in the AAP region there is a single board that manages the BNE and Energy services we provide in that region. Accordingly, the results of this business are reported as a separate segment.

Unallocated expenses - certain central costs are not allocated to the segments because either they predominantly relate to the running of the Group Head Office function or could only be allocated to the segments on an arbitrary basis, such costs include the remuneration and support costs of the main board and the costs of the Group Finance and marketing functions.

"Segment profit" is defined as profit before interest, tax, amortisation of acquired intangibles, transaction related costs and unallocated expenses.

"Underlying profit" is defined as segment profit before reorganisation costs.

"Reorganisation costs" comprises costs and income arising as a consequence of reorganisation including redundancy costs, profit or loss of disposal of plant, property and equipment, the costs of consolidating office space and rebranding costs.

Segment results for the period ended 30 June 2014:

£000's Fees Expenses Intersegment revenue External Revenue
Energy 104,130 14,426 (328) 118,228
BNE - Europe 75,541 9,410 (372) 84,579
BNE - North America 19,017 2,319 (413) 20,923
AAP 50,843 4,843 (40) 55,646
Group eliminations (933) (220) 1,153 -
Total 248,598 30,778 - 279,376

 

£000's Underlying profit Reorganisation costs Segment profit
Energy 18,304 - 18,304
BNE - Europe 10,140 (144) 9,996
BNE - North America 4,185 - 4,185
AAP 4,782 (853) 3,929
Total 37,411 (997) 36,414

Segment results for the period ended 30 June 2013 (restated):

£000's Fees Expenses Intersegment revenue External revenue
Energy 87,797 17,206 (604) 104,399
BNE - Europe 74,682 9,504 (265) 83,921
BNE - North America 15,668 2,242 (464) 17,446
AAP 65,912 10,288 (1,116) 75,084
Group eliminations (2,215) (234) 2,449 -
Total 241,844 39,006 - 280,850

 

£000's Underlying profit Reorganisation costs Segment profit
Energy 16,688 (52) 16,636
BNE - Europe 9,550 (259) 9,291
BNE - North America 3,907 - 3,907
AAP 5,528 (833) 4,695
Total 35,673 (1,144) 34,529

Segment results for the period ended 31 December 2013 (restated):

£000's Fees Expenses Intersegment revenue External revenue
Energy 186,915 33,224 (1,141) 218,998
BNE - Europe 149,292 20,171 (603) 168,860
BNE - North America 32,664 5,117 (1,111) 36,670
AAP 127,194 17,380 (1,488) 143,086
Group eliminations (3,944) (399) 4,343 -
Total 492,121 75,493 - 567,614

 

£000's Underlying profit Reorganisation costs Segment profit
Energy 36,403 (78) 36,325
BNE - Europe 19,164 (487) 18,677
BNE - North America 8,287 - 8,287
AAP 10,020 (1,192) 8,828
Total 73,874 (1,757) 72,117

Group reconciliation

£000's 30 June 2014 30 June 2013 31 Dec 2013
Revenue 279,376 280,850 567,614
Recharged expenses (30,778) (39,006) (75,493)
Fees 248,598 241,844 492,121
Underlying profit 37,411 35,673 73,874
Reorganisation costs (997) (1,144) (1,757)
Segment profit 36,414 34,529 72,117
Unallocated expenses (3,356) (3,350) (6,812)
Operating profit before amortisation of acquired intangibles and transaction related costs 33,058 31,179 65,305
Amortisation of acquired intangibles and transaction related costs (9,686) (9,174) (19,425)
Operating profit 23,372 22,005 45,880
Net finance costs (1,706) (958) (2,273)
Profit before tax 21,666 21,047 43,607

Total segment assets were as follows:

£000's 30 June 2014 30 June 2013 (restated) 31 December 2013 (restated)
Energy 199,583 149,474 198,910
BNE - Europe 229,044 229,401 219,112
BNE - North America 53,129 30,596 43,151
AAP 118,669 132,966 117,769
Unallocated 8,743 2,948 6,580
Total 609,168 545,385 585,522

4. Amortisation of acquired intangibles and transaction related costs

£000's 30 June 2014 30 June 2013 31 December 2013
Amortisation of acquired intangibles 8,205 5,337 12,217
Contingent deferred consideration treated as remuneration 870 3,470 6,009
Deferred consideration fair value adjustment (66) - -
Third party advisory costs 677 367 1,199
Total 9,686 9,174 19,425

5. Income taxes

The tax charge for the period has been calculated using an estimate of the effective annual rate of tax for each taxing jurisdiction for the full year. These rates have been applied to the pre-tax profits for each jurisdiction for the six months ended 30 June 2014. The Group has separately calculated the tax rates applicable to amortisation of intangibles and transaction related costs for the period. Tax rate changes that were substantively enacted at the balance sheet date have been factored into the calculation of the effective tax rates.

Analysis of the tax expense/(credit) in the income statement for the period:

£000's 30 June 2014 30 June 2013 31 December 2013
Current tax expense 7,977 8,332 16,448
Deferred tax credit (1,629) (1,525) (1,461)
Total tax expense in the income statement 6,348 6,807 14,987
Add back:
Tax on amortisation of acquired intangibles and acquisition related costs 2,432 2,033 3,889
Adjusted tax charge on PBTA for the period 8,780 8,840 18,876
Tax rate on PBT 29.3% 32.3% 34.4%
Tax rate on PBTA 28.0% 29.3% 29.9%

6. 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
£000's 2014 2013 2013
Profit attributable to ordinary shareholders 15,318 14,240 28,620
000's
Weighted average number of ordinary shares for the purposes of basic earnings per share 219,188 217,953 218,355
Effect of employee share schemes 1,105 1,034 909
Weighted average number of ordinary shares for the purposes of diluted earnings per share 220,293 218,987 219,264
Basic earning per share (pence) 6.99 6.53 13.11
Diluted earnings per share (pence) 6.95 6.50 13.05

The directors consider that earnings per share before amortisation of acquired intangibles and transaction related costs provides a more meaningful measure of the Group's performance than statutory earnings per share. The calculations of adjusted earnings per share were based on the number of shares as above, and are shown in the table below:

£000's Six months ended 30 June 2014 Six months ended 30 June 2013 Year ended 31 Dec 2013
Profit attributable to ordinary shareholders 15,318 14,240 28,620
Amortisation of acquired intangibles and transaction related costs 9,686 9,174 19,425
Tax on amortisation of acquired intangibles and transaction related costs (2,432) (2,033) (3,889)
Adjusted profit attributable to ordinary shareholders 22,572 21,381 44,156
Adjusted basic earnings before per share (pence) 10.30 9.81 20.22
Adjusted diluted earnings per share (pence) 10.25 9.76 20.14

7. Property, plant and equipment

During the six months ended 30 June 2014 the Group acquired assets with a
cost of £5,497,000 (six months to 30 June 2013: £4,732,000), which includes £1,045,000 acquired through business combinations (six months to 30 June 2013: £89,000). Assets with a net book value of £90,000 were disposed of during the six months ended 30 June 2014 (six months ended 30 June 2013: £86,000).

8. Acquisitions

The Group has completed the following acquisitions to strengthen and broaden the skill base of the Group, during the first half of 2014:

Entity Business Segment Date of Acquisition Place of incorporation Percentageof entity acquired Nature of business acquired
Whelans Corporation Pty Ltd AAP 5 Feb 2014 Australia 100% Surveying
Clear Environmental Consultants Ltd BNE Europe 9 April 2014 UK 100% Water Consultancy
GaiaTech Holdings Inc BNE NA 15 May 2014 UK 100% Environmental Consultancy

Their contributions to the Group's results for the period is given below:

£000's Revenue Operating profit
Whelans 1,927 172
Clear 1,249 102
GaiaTech 1,459 273

Had the Group acquired these entities on the first day of the period, the Group estimates revenue would have been £285,469,000 and operating profit would have been £23,965,000.

The Group has allocated provisional fair values to the net assets acquired as follows:

 

£000's Order book Customer relationships Brand PPE Cash Other assets Other liabilities Net assets acquired
Whelans 142 186 104 369 396 1,290 (1,209) 1,278
Clear 480 2,660 200 274 1,943 1,221 (2,057) 4,721
GaiaTech 143 4,477 327 402 1,702 5,511 (5,286) 7,276
765 7,323 631 1,045 4,041 8,022 (8,552) 13,275

 

£000's Initial cash consideration Contingent cash consideration Deferred cashl consideration Total consideration Net assets acquired Goodwill acquired
Whelans 1,443 - 619 2,062 1,278 784
Clear 6,841 1,156 - 7,997 4,721 3,276
GaiaTech 17,894 - - 17,894 7,276 10,618
26,178 1,156 619 27,953 13,275 14,678

The consideration payable in future for Clear is contingent upon renewal of a key contract. The payment made will be in the range of £nil to £1,500,000 and the fair value has been determined by estimating the likelihood of payment.

There was no tax deductable goodwill acquired.

Provisional values are given in the table above as information about facts or circumstances that existed at the acquisition date is incomplete.

Goodwill represents the value of the accumulated workforce and synergies with RPS associated with these acquisitions.

The total fair value of receivables acquired was £5,668,000. The gross contractual receivables acquired were £5,786,000 and £118,000 was estimated to be irrecoverable.

The vendors of the acquired companies have entered into indemnity arrangements with the Group. The total undiscounted cash flow that could be receivable by the Group is between £nil and £5,668,000. As the Group does not expect that these warranties will become receivable, it has not recognised an indemnification asset on acquisition.

The Group incurred acquisition-related costs of £677,000 (6 months to 30 June 2013: £314,000), which have been expensed through the consolidated income statement and included within "amortisation of acquired intangibles and transaction related costs".

A reconciliation of the goodwill movement in 2014 in respect of acquisitions completed in 2013 and 2014 is given below.

£000's PEICE KR APASA HMA Ichron OEC Whelans Clear GT
Goodwill at 1 January 2014 3,007 1,399 1,955 6,997 5,538 17,273 - - -
Additions through acquisition - - - - - - 784 3,276 10,618
Adjustments to opening balance sheet - 9 - - - - - - -
Foreign exchange gains and losses (102) (44) 41 (236) - (731) 7 - (161)
Goodwill at 30 June 2014 2,905 1,364 1,996 6,761 5,538 16,542 791 3,276 10,457

There were no accumulated impairment losses at the beginning or the end of the period.

Commitments and contingencies

The Group completed a number of acquisitions between 1 January 2010 and 31 December 2011 where deferred consideration payments to vendors are contingent on the vendor's continued employment with the Group and so are required to be recognised as employment costs over the deferred consideration period. The Group considers it probable that the remaining deferred consideration payments will be settled.

The total remaining cash commitments at 30 June 2014 in respect of contingent deferred consideration treated as remuneration that the Group expects to settle is £789,000 and payment will be made before the end of this year. The related estimated remuneration charge to be incurred by the year end is £263,000.

The balance sheet at 30 June 2014 includes, within deferred consideration current liabilities, contingent deferred consideration remuneration expense accrued but not paid totalling £526,000 (31 December 2013: £2,457,000).

9. Share capital

2014 Number 000's 2014 £000's 2013 Number 000's 2013 £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 220,632 6,619 219,566 6,587
Issued under employee share schemes 362 11 424 13
At 30 June 220,994 6,630 219,990 6,600

10. Other reserves

£000's Merger reserve Employee trust Translation reserve Total
At 1 January 2014 21,256 (9,277) 5,673 17,652
Exchange differences - - (1,785) (1,785)
Issue of new shares - (641) - (641)
At 30 June 2014 21,256 (9,918) 3,888 15,226
At 1 January 2013 21,256 (9,059) 23,873 36,070
Exchange differences - - (1,706) (1,706)
Issue of new shares - (281) - (281)
Purchase of own shares - 756 - 756
At 30 June 2013 21,256 (8,584) 22,167 34,839

11. Dividends

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

£000's Six months ended 30 June 2014 Six months ended 30 June 2013 Year ended 31 Dec 2013
Final dividend for 2013 3.84p per share 8,453 - -
Interim dividend for 2013 3.52p per share - - 7,726
Final dividend for 2012 3.34p per share - 7,308 7,308
8,453 7,308 15,034

An interim dividend in respect of the six months ended 30 June 2014 of 4.05 pence per share, amounting to a total dividend of £8,921,000 was approved by the Directors of RPS Group Plc on 29 July 2014. 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
£000's 2014 2013 2013
Operating profit 23,372 22,005 45,880
Adjustments for:
Depreciation 4,216 5,051 9,432
Amortisation of acquired intangibles 8,205 5,337 12,217
Contingent deferred consideration treated as remuneration 870 3,470 6,009
Deferred consideration fair value adjustment (66) - -
Share based payment expense 960 1,041 1,938
Profit on sale of property, plant and equipment (61) (186) (241)
37,496 36,718 75,235
(Increase)/(decrease) in trade and other receivables (4,154) 1,604 8,838
Decrease in trade and other payables (3,901) (4,491) (12,043)
Adjusted cash generated from operations 29,441 33,831 72,030

* Adjusted cash generated from operations is before payment of deferred consideration treated as remuneration.

The table below provides an analysis of net bank borrowings, comprising cash and cash equivalents, interest bearing bank loans and finance leases, during the six months ended 30 June 2014.

£000's At 1 January 2014 Cash flow Acquisition debt Foreign exchange At 30 June 2014
Cash and cash equivalents 18,699 674 - (354) 19,019
Overdrafts (908) (1,999) - (14) (2,921)
Bank Loans (49,637) (26,870) (4,003) 1,120 (79,390)
Finance lease creditor (522) 117 (124) (11) (540)
Net bank borrowings (32,368) (28,078) (4,127) 741 (63,832)

The cash balance includes £7,680,000 (31 December 2013: £6,028,000) that is restricted in its use.

13. Events after the balance sheet date

On 24 July the Group agreed a US$150m private placement 3 year "shelf" facility with Prudential Investment Inc ("Pricoa"). Initial notes with a value of £30m and US$34.1m (equivalent to £20m) each with a 7 year term and fixed coupon of 3.98% and 3.84% respectively will be issued on 30 September 2014. The balance of the facility is uncommitted but is available from 24 July 2015.

14. Principal risks and uncertainties

The nature of the principal risks and uncertainties faced by the Group have not changed significantly since the 2013 Report and Accounts was published. These risks, together with a description of the approach to mitigate them, are set out on pages 8 and 9 of the 2013 Report and Accounts (available on the Group's website at www.rpsgroup.com) and are summarised as follows:

- Economic environment
- Material adverse events
- Information systems
- Recruitment and retention of key personnel
- Market position and reputation
- Litigation
- Compliance
- Business acquisitions
- Funding
- Health and safety

From time to time the Group receives claims from clients and suppliers. Some of these result in payments to the claimants by the Group and its insurers. The Board reviews all significant claims at each board meeting and more regularly if required. The Board is currently satisfied that the Group has sufficient provisions in its balance sheet to meet all likely uninsured liabilities.

The Board keeps under review the potential effect of economic circumstances. The continuing uncertainty in the global economic outlook inevitably increases the trading and balance sheet risks to which the Group is exposed.

15. Related party transactions

There are no significant changes in the nature and size of related party transactions for the period to those reported in the 2013 Report and Accounts.

16. 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. The continuing uncertainty in global economic outlook inevitably increases the risks to which the Group is exposed. Statements in respect of the Group's performance in the year to date are based upon unaudited management accounts for the period January to June 2014. Nothing in this announcement should be construed as a profit forecast.

17. Publication

A copy of this announcement will be posted on the Company's website at www.rpsgroup.com.

INDEPENDENT REVIEW REPORT TO RPS GROUP PLC

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 2014, which comprises the Condensed consolidated income statement, the Condensed consolidated statement of comprehensive income, the Condensed consolidated balance sheet, the Condensed consolidated cash flow statement, the Condensed consolidated statement of changes in equity and the related notes 1 to 17. 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.

This report is made solely to the company 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. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.

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 Finance Conduct Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with 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.

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 2014 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 Finance Conduct Authority.

 

Deloitte LLP
Chartered Accountants and Statutory Auditor
Reading, United Kingdom

31 July 2014

 

2015

Half Year Results for the six months ended 30 June 2014

31 July 2014

Half Year Results for the six months ended 30 June 2014

PBTA ahead 11% on a constant currency basis. Agreement entered into for additional 7 year £50 million fixed rate loan. Interim dividend increased 15% for 21st consecutive year.

2014 2013 2013(3)
Business Performance H1 H1 H1
Revenue (£m) 279.4 280.9 261.1
Fee income (£m) 248.6 241.8 224.9
PBTA (1) (£m) 31.4 30.2 28.2
Adjusted earnings per share (2)(basic) (p) 10.30 9.81 9.16
Dividend per share (p) 4.05 3.52 3.52
Statutory Reporting
Profit before tax (£m) 21.7 21.0 19.8
Earnings per share (basic) (p) 6.99 6.53 6.17

(1) PBTA is profit before tax, amortisation of acquired intangibles and transaction related costs.
(2) Adjusted earnings per share is before amortisation of acquired intangibles and transaction related costs and the related tax.
(3) 2013 results restated at 2014 currency rates.

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

"On a constant currency basis our PBTA improved significantly. Our European business continued its steady growth. Conditions remained challenging in the Australian resources market and, during the period, some softness developed in parts of the oil and gas exploration and production sector. However, our business model again delivered robust results, with acquisitions making a significant contribution. RPS is financially strong. Following the recent agreement with Pricoa to provide additional long term debt we have ample resources to continue our growth strategy.".

31 July 2014

 

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

 

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, Norway, the Americas and Australia Asia Pacific 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.

 

Results

Profit (before tax, amortisation of acquired intangibles and transaction related costs) was £31.4 million (2013: £30.2 million; £28.2 million on a constant currency basis). Profit before tax was £21.7m (2013: £21.0m; £19.8m on a constant currency basis). Basic earnings per share (before amortisation and transaction related costs) were 10.30 pence (2013: 9.81 pence; 9.16 pence on a constant currency basis). The strengthening of sterling caused a significant reduction in year on year profit growth. The contribution of the Group's four segments was:

Underlying Profit(£m)(1) 2014 2013 2013(2)
H1 H1 H1
Energy 18.3 16.7 15.8
Built and Natural Environment: Europe 10.1 9.6 9.4
Built and Natural Environment: North America 4.2 3.9 3.5
Australia Asia Pacific ("AAP") 4.8 5.5 4.7
Total 37.4 35.7 33.4

(1) as defined in note 3; stated before reorganisation costs of £1.0m (2013: £1.1m)

(2) 2013 results restated at 2014 currency rates.

Group central costs were £3.4 million, (2013: £3.4 million) and finance charges were £1.7 million (2013: £1.0 million).

Funding and Dividend

Our balance sheet remains strong. We funded acquisition investment of £38.8 million in the period, including £20.2 million in respect of GaiaTech (announced on 20 May). Net bank borrowings at 30 June were £63.8 million (31 December 2013: £32.4 million). We have in place until 2016 a £125 million facility with Lloyds Bank Plc and have recently secured a US$150 million US private placement shelf facility with Pricoa. Initial notes with an aggregate value of £50 million, seven year term and 4% fixed coupon will be issued in September. Cash conversion was a little below the normal run rate as some major clients managed payment around their own half year. We expect the full year outcome to be at the normal level.

The Board remains confident about the Group's financial strength and has, once again, increased the interim dividend by 15% to 4.05 pence per share (2013: 3.52 pence) payable on 16 October 2014 to shareholders on the register on 19 September 2014.

Markets and Trading

Energy

We provide internationally recognised consultancy services to the oil and gas exploration and production industry from bases in the UK, USA and Canada. These act as regional centres for projects undertaken in many other countries. The business delivered good growth in the first half.

2014 2013 2013(2)
H1 H1 H1
Fee income (£m) 104.1 87.8 83.3
Underlying profit(1) (£m) 18.3 16.7 15.8
Margin % 17.6 19.0 18.9

(1) as defined in note 3, stated before reorganisation costs of £nil (2013: £0.1m)

(2) 2013 results restated at 2014 currency rates.

We continued to benefit from our prominent position in the oil and gas sector in many parts of the world, as well as increasing demand for our advice from the financial services sector. The acquisitions made in 2013 are integrating well and will contribute to the delivery of another year of good growth for this business.

During the second quarter some of our clients began to manage expenditure more tightly and political instability in parts of the Middle East has slowed investment. The Canadian potash market, which turned down in the middle of 2013, remains subdued and has impacted the year on year performance.

With long term demand for energy resources set to grow significantly, the current softness in some markets should be relatively short lived. During this period our robust business model and strong market presence should ensure continued high performance.

Built and Natural Environment ("BNE")

Within these businesses we provide a wide range of consultancy services to many aspects of the property and infrastructure development and management sectors. In recent years we have developed extensive experience in respect of the infrastructure projects necessary to bring energy resources, both conventional and renewable, to market.

Europe

2014 2013 2013(2)
H1 H1 H1
Fee income (£m) 75.5 74.7 73.7
Underlying Profit(1) (£m) 10.1 9.6 9.4
Margin % 13.4 12.8 12.8

(1) as defined in note 3, stated before reorganisation costs of £0.1m (2013: £0.3m)

(2) 2013 results restated at 2014 currency rates

Our BNE business in Europe performed well in the first half of the year. Those activities which assist clients develop new capital projects, particularly our planning and development business, continued to benefit both from improving market conditions and client confidence. Those exposed to operational environments, such as providing environment management advice, continue to need to offer an efficient, cost effective service to assist clients manage tight budgets.

The acquisition of Clear Environmental Consultants (announced on 10 April) has extended the range of our UK water activities and will assist the strategic development of this business. We have agreed terms to bring a market leading planning and development business into the Group . This will support a growing part of the business, with excellent prospects. Overall, our European business remains on track to achieve growth this year.

North America

2014 2013 2013(2)
H1 H1 H1
Fee income (£m) 19.0 15.7 14.4
Underlying Profit(1) (£m) 4.2 3.9 3.5
Margin % 22.0 24.9 24.7

(1) as defined in note 3, stated before reorganisation costs of £nil (2013: £nil)

(2) 2013 results restated at 2014 currency rates

We remain well positioned in the expanding North American energy infrastructure market. The acquisition of HMA Land Services in September 2013 gave us access to the substantial pipeline development market. Those parts of the business closest to E&P activities also experienced some of the expenditure tightening from clients seen in the Energy business during the first half. In the most buoyant part of our market, permitting and licensing of facilities, staff retention and recruitment has become exceptionally difficult and staff losses caused significant disruption.

The acquisition of GaiaTech was an important step in the development of this business, giving us access to new markets and geography. It will make an important contribution in the second half and subsequent years. Opportunities remain to expand our North American business significantly both organically and by acquisition.

AAP

This business is a combination of the former BNE: AAP and the AAP component of Energy. They were brought together in 2013 to take advantage of the opportunities in the integrated energy and energy infrastructure markets and, specifically, help counter the impact of the slowdown in the resources sector on our businesses.

2014 2013 2013(2)
H1 H1 H1
Fee income (£m) 50.8 65.9 55.4
Underlying Profit(1) (£m) 4.8 5.5 4.7
Margin % 9.4 8.4 8.4

(1) as defined in note 3, stated before reorganisation costs of £nil (2013: £nil)

(2) 2013 results restated at 2014 currency rates

Throughout the first half our mining and energy clients in AAP remained focused on operational efficiency rather than capital expenditure on project development. As a result further projects have been delayed or cancelled. As expected, therefore, our level of activity in the first half was at a lower level than last year and we continued with the plan to reduce our cost base in order to improve efficiency.

The rebalancing of our business away from the resources sector has, however, continued positively. There has been increased optimism and investment in private and public sector urban development and infrastructure projects, particularly in and around Sydney and Melbourne. The second quarter, as a result, showed a significant improvement over the first and we currently anticipate the second half should see further improvement. In order to support this change of emphasis, we have agreed terms to acquire a consultancy with a strong public sector client base and offices in all major cities. It will make a significant contribution to the development of our business.

Group Prospects

Our flexible and robust business model has demonstrated in recent years that it is capable of generating growth in challenging circumstances. A number of acquisitions are under active consideration. The Board remains focussed on delivering a good result for the full year.

Board of Directors
RPS Group plc

31 July 2014

 

Condensed consolidated income statement

Notes Six months
ended
30 June
Six months
ended
30 June
Year
ended
31 December
£000's 2014 2013 2013
Revenue 3 279,376 280,850 567,614
Recharged expenses 3 (30,778) (39,006) (75,493)
Fee income 3 248,598 241,844 492,121
Operating profit before amortisation of acquired intangibles and transaction related costs 3 33,058 31,179 65,305
Amortisation of acquired intangibles and transaction related costs 4 (9,686) (9,174) (19,425)
Operating profit 3 23,372 22,005 45,880
Finance costs (1,741) (1,006) (2,430)
Finance income 35 48 157
Profit before tax, amortisation of acquired intangibles and transaction related costs 31,352 30,221 63,032
Profit before tax 21,666 21,047 43,607
Tax expense 5 (6,348) (6,807) (14,987)
Profit for the period attributable to equity holders of the parent 15,318 14,240 28,620
Basic earnings per share (pence) 6 6.99 6.53 13.11
Diluted earnings per share (pence) 6 6.95 6.50 13.05
Adjusted basic earnings per share (pence) 6 10.30 9.81 20.22
Adjusted diluted earnings per share (pence) 6 10.25 9.76 20.14

 

Condensed consolidated statement of comprehensive income

Six months
ended
30 June
Six months
ended
30 June
Year
ended
31 December
£000's 2014 2013 2013
Profit for the period 15,318 14,240 28,620
Exchange differences* (1,785) (1,706) (18,200)
Remeasurement of net defined benefit liability (256) - -
Total recognised comprehensive income for the period attributable to equity holders of the parent 13,277 12,534 10,420

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

 

Condensed consolidated balance sheet

As at 30 June As at 30 June As at 31 December
£000's Notes 2014 2013 2013
Assets
Non-current assets
Intangible assets 387,691 340,408 375,279
Property, plant and equipment 7 28,753 30,200 27,785
Deferred tax asset 3,630 - 2,018
420,074 370,608 405,082
Current assets
Trade and other receivables 170,075 162,064 161,741
Cash at bank 19,019 12,713 18,699
189,094 174,777 180,440
Liabilities
Current liabilities
Borrowings 3,411 1,474 1,465
Deferred consideration 13,722 11,369 20,919
Trade and other payables 100,520 98,102 103,260
Corporation tax liabilities 3,932 1,638 3,058
Provisions 1,420 2,560 2,134
123,005 115,143 130,836
Net current assets 66,089 59,634 49,604
Non-current liabilities
Borrowings 79,440 31,973 49,602
Deferred consideration 11,690 6,910 14,923
Other creditors 2,747 3,022 2,471
Deferred tax 12,366 6,578 13,645
Provisions 2,009 1,469 2,007
108.252 49,952 82,648
Net assets 377,911 380,290 372,038
Equity
Share capital 9 6,630 6,600 6,619
Share premium 109,235 106,922 108,307
Other reserves 10 15,226 34,839 17,652
Retained earnings 246,820 231,929 239,460
Total shareholders' equity 377,911 380,290 372,038

 

Condensed consolidated cash flow statement

Six months
ended
30 June
Six months
ended
30 June
Year
ended
31 December
£000's Notes 2014 2013 2013
Adjusted cash generated from operations 12 29,441 33,831 72,030
Deferred consideration treated as remuneration (2,792) (4,204) (7,714)
Cash generated from operations 26,649 29,627 64,316
Interest paid (1,503) (1,091) (1,991)
Interest received 35 48 157
Income taxes paid (8,751) (11,381) (19,829)
Net cash from operating activities 16,430 17,203 42,653
Cash flows from investing activities
Purchases of subsidiaries net of cash acquired (22,138) (11,178) (31,174)
Deferred consideration (9,767) - (3,466)
Purchase of property, plant and equipment (4,299) (4,722) (8,034)
Sale of property, plant and equipment 148 272 523
Net cash used in investing activities (36,056) (15,628) (42,151)
Cash flows from financing activities
Proceeds from issue of share capital 1 211 555
Proceeds from bank borrowings 26,870 2,935 18,609
Payment of finance lease liabilities (117) (353) (580)
Dividends paid 11 (8,453) (7,308) (15,034)
Payment of pre-acquisition dividend - (87) (247)
Net cash from/(used in) financing activities 18,301 (4,602) (3,303)
Net (decrease)/increase in cash and cash equivalents (1,325) (3,027) (3,805)
Cash and cash equivalents at beginning of period 17,791 14,804 14,804
Effect of exchange rate fluctuations (368) (12) (818)
Cash and cash equivalents at end of period 16,098 11,765 17,791
Cash and cash equivalents comprise:
Cash at bank 19,019 12,713 18,699
Bank overdraft (2,921) (948) (908)
Cash and cash equivalents at end of period 16,098 11,765 17,791

 

Consolidated statement of changes in equity

£000's Share capital Share premium Retained earnings Other reserves Total equity
At 1 January 2014 6,619 108,307 239,460 17,652 372,038
Total comprehensive income for the period - - 15,062 (1,785) 13,277
Issue of new ordinary shares 11 928 (296) (641) 2
Release of own shares - - - 756 756
Share based payment expense - - 1,047 - 1,047
Dividends - - (8,453) - (8,453)
At 30 June 2014 6,630 109,235 246,820 15,226 377,911
At 1 January 2013 6,587 106,198 224,959 36,070 373,814
Total comprehensive income for the period - - 14,240 (1,706) 12,534
Issue of new ordinary shares 13 724 (1,003) (281) (547)
Purchase of own shares - - - 756 756
Share based payment expense - - 1,041 - 1,041
Dividends - - (7,308) - (7,308))
At 30 June 2013 6,600 106,922 231,929 34,839 380,290

An analysis of other reserves is provided in Note 10.

 

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 2014 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 2013 and in accordance with IAS 34. They are unaudited but have been reviewed by the Company's auditor. The results for the year end 31 December 2013 and the balance sheet as at that date are abridged from the Company's Report and Accounts 2013 which have been delivered to the Registrar of Companies. The auditor's report on those accounts was not qualified, did not include a reference to any matters for which the auditors drew attention by way of emphasis without qualifying the report and did not contain statements under sections 498 (2) or (3) of the Companies Act 2006.

The condensed interim financial statements do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006.

In assessing the going concern basis, the directors considered the Group's business activities, the financial position of the Group and the Group's financial risk management objectives and policies. The directors have a reasonable expectation that the Company and Group have adequate resources to continue in operational existence for the foreseeable future and that it is, therefore, appropriate to adopt the going concern basis in preparing the Group's interim financial statements.

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 4.2.4R, DTR 4.2.7R and DTR 4.2.8R.

On behalf of the Board

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

31 July 2014

3. Business segments

Segment information is presented in respect of the Group's business segments which are reported to the Chief Operating Decision Maker. The business segment reporting format reflects the Group's management and internal structure. Inter-segment pricing is determined on an arm's length basis. Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

As noted in the March 2014 Interim Management Statement, HMA (a business acquired in August 2013) is now reported in the BNE North America Segment. Previously it was reported in the Energy Segment. Accordingly the December 2013 segmental results have been restated.

The segment results and the total segment assets table at 30 June 2013 have been restated to reflect the separate reporting of BNE North America segment and the integrated management and reporting of the Group's BNE and Energy businesses in Australia Asia Pacific as announced in October 2013.

The business segments of the Group are as follows:

Energy - the provision of integrated technical, commercial and project management support and training in the fields of geoscience, engineering and health, safety and environmental on a global basis to the energy sector.

Built and Natural Environment ("BNE") - consultancy services to many aspects of the property and infrastructure development and management sectors. These include: environmental assessment, the management of water resources, oceanography, health and safety, risk management, town and country planning, building, landscape and urban design, surveying and transport planning. Consulting services are provided on a regional basis in Europe and North America.

Australia Asia Pacific ("AAP") - in the AAP region there is a single board that manages the BNE and Energy services we provide in that region. Accordingly, the results of this business are reported as a separate segment.

Unallocated expenses - certain central costs are not allocated to the segments because either they predominantly relate to the running of the Group Head Office function or could only be allocated to the segments on an arbitrary basis, such costs include the remuneration and support costs of the main board and the costs of the Group Finance and marketing functions.

"Segment profit" is defined as profit before interest, tax, amortisation of acquired intangibles, transaction related costs and unallocated expenses.

"Underlying profit" is defined as segment profit before reorganisation costs.

"Reorganisation costs" comprises costs and income arising as a consequence of reorganisation including redundancy costs, profit or loss of disposal of plant, property and equipment, the costs of consolidating office space and rebranding costs.

Segment results for the period ended 30 June 2014:

£000's Fees Expenses Intersegment revenue External Revenue
Energy 104,130 14,426 (328) 118,228
BNE - Europe 75,541 9,410 (372) 84,579
BNE - North America 19,017 2,319 (413) 20,923
AAP 50,843 4,843 (40) 55,646
Group eliminations (933) (220) 1,153 -
Total 248,598 30,778 - 279,376

 

£000's Underlying profit Reorganisation costs Segment profit
Energy 18,304 - 18,304
BNE - Europe 10,140 (144) 9,996
BNE - North America 4,185 - 4,185
AAP 4,782 (853) 3,929
Total 37,411 (997) 36,414

Segment results for the period ended 30 June 2013 (restated):

£000's Fees Expenses Intersegment revenue External revenue
Energy 87,797 17,206 (604) 104,399
BNE - Europe 74,682 9,504 (265) 83,921
BNE - North America 15,668 2,242 (464) 17,446
AAP 65,912 10,288 (1,116) 75,084
Group eliminations (2,215) (234) 2,449 -
Total 241,844 39,006 - 280,850

 

£000's Underlying profit Reorganisation costs Segment profit
Energy 16,688 (52) 16,636
BNE - Europe 9,550 (259) 9,291
BNE - North America 3,907 - 3,907
AAP 5,528 (833) 4,695
Total 35,673 (1,144) 34,529

Segment results for the period ended 31 December 2013 (restated):

£000's Fees Expenses Intersegment revenue External revenue
Energy 186,915 33,224 (1,141) 218,998
BNE - Europe 149,292 20,171 (603) 168,860
BNE - North America 32,664 5,117 (1,111) 36,670
AAP 127,194 17,380 (1,488) 143,086
Group eliminations (3,944) (399) 4,343 -
Total 492,121 75,493 - 567,614

 

£000's Underlying profit Reorganisation costs Segment profit
Energy 36,403 (78) 36,325
BNE - Europe 19,164 (487) 18,677
BNE - North America 8,287 - 8,287
AAP 10,020 (1,192) 8,828
Total 73,874 (1,757) 72,117

Group reconciliation

£000's 30 June 2014 30 June 2013 31 Dec 2013
Revenue 279,376 280,850 567,614
Recharged expenses (30,778) (39,006) (75,493)
Fees 248,598 241,844 492,121
Underlying profit 37,411 35,673 73,874
Reorganisation costs (997) (1,144) (1,757)
Segment profit 36,414 34,529 72,117
Unallocated expenses (3,356) (3,350) (6,812)
Operating profit before amortisation of acquired intangibles and transaction related costs 33,058 31,179 65,305
Amortisation of acquired intangibles and transaction related costs (9,686) (9,174) (19,425)
Operating profit 23,372 22,005 45,880
Net finance costs (1,706) (958) (2,273)
Profit before tax 21,666 21,047 43,607

Total segment assets were as follows:

£000's 30 June 2014 30 June 2013 (restated) 31 December 2013 (restated)
Energy 199,583 149,474 198,910
BNE - Europe 229,044 229,401 219,112
BNE - North America 53,129 30,596 43,151
AAP 118,669 132,966 117,769
Unallocated 8,743 2,948 6,580
Total 609,168 545,385 585,522

4. Amortisation of acquired intangibles and transaction related costs

£000's 30 June 2014 30 June 2013 31 December 2013
Amortisation of acquired intangibles 8,205 5,337 12,217
Contingent deferred consideration treated as remuneration 870 3,470 6,009
Deferred consideration fair value adjustment (66) - -
Third party advisory costs 677 367 1,199
Total 9,686 9,174 19,425

5. Income taxes

The tax charge for the period has been calculated using an estimate of the effective annual rate of tax for each taxing jurisdiction for the full year. These rates have been applied to the pre-tax profits for each jurisdiction for the six months ended 30 June 2014. The Group has separately calculated the tax rates applicable to amortisation of intangibles and transaction related costs for the period. Tax rate changes that were substantively enacted at the balance sheet date have been factored into the calculation of the effective tax rates.

Analysis of the tax expense/(credit) in the income statement for the period:

£000's 30 June 2014 30 June 2013 31 December 2013
Current tax expense 7,977 8,332 16,448
Deferred tax credit (1,629) (1,525) (1,461)
Total tax expense in the income statement 6,348 6,807 14,987
Add back:
Tax on amortisation of acquired intangibles and acquisition related costs 2,432 2,033 3,889
Adjusted tax charge on PBTA for the period 8,780 8,840 18,876
Tax rate on PBT 29.3% 32.3% 34.4%
Tax rate on PBTA 28.0% 29.3% 29.9%

6. 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
£000's 2014 2013 2013
Profit attributable to ordinary shareholders 15,318 14,240 28,620
000's
Weighted average number of ordinary shares for the purposes of basic earnings per share 219,188 217,953 218,355
Effect of employee share schemes 1,105 1,034 909
Weighted average number of ordinary shares for the purposes of diluted earnings per share 220,293 218,987 219,264
Basic earning per share (pence) 6.99 6.53 13.11
Diluted earnings per share (pence) 6.95 6.50 13.05

The directors consider that earnings per share before amortisation of acquired intangibles and transaction related costs provides a more meaningful measure of the Group's performance than statutory earnings per share. The calculations of adjusted earnings per share were based on the number of shares as above, and are shown in the table below:

£000's Six months ended 30 June 2014 Six months ended 30 June 2013 Year ended 31 Dec 2013
Profit attributable to ordinary shareholders 15,318 14,240 28,620
Amortisation of acquired intangibles and transaction related costs 9,686 9,174 19,425
Tax on amortisation of acquired intangibles and transaction related costs (2,432) (2,033) (3,889)
Adjusted profit attributable to ordinary shareholders 22,572 21,381 44,156
Adjusted basic earnings before per share (pence) 10.30 9.81 20.22
Adjusted diluted earnings per share (pence) 10.25 9.76 20.14

7. Property, plant and equipment

During the six months ended 30 June 2014 the Group acquired assets with a
cost of £5,497,000 (six months to 30 June 2013: £4,732,000), which includes £1,045,000 acquired through business combinations (six months to 30 June 2013: £89,000). Assets with a net book value of £90,000 were disposed of during the six months ended 30 June 2014 (six months ended 30 June 2013: £86,000).

8. Acquisitions

The Group has completed the following acquisitions to strengthen and broaden the skill base of the Group, during the first half of 2014:

Entity Business Segment Date of Acquisition Place of incorporation Percentageof entity acquired Nature of business acquired
Whelans Corporation Pty Ltd AAP 5 Feb 2014 Australia 100% Surveying
Clear Environmental Consultants Ltd BNE Europe 9 April 2014 UK 100% Water Consultancy
GaiaTech Holdings Inc BNE NA 15 May 2014 UK 100% Environmental Consultancy

Their contributions to the Group's results for the period is given below:

£000's Revenue Operating profit
Whelans 1,927 172
Clear 1,249 102
GaiaTech 1,459 273

Had the Group acquired these entities on the first day of the period, the Group estimates revenue would have been £285,469,000 and operating profit would have been £23,965,000.

The Group has allocated provisional fair values to the net assets acquired as follows:

 

£000's Order book Customer relationships Brand PPE Cash Other assets Other liabilities Net assets acquired
Whelans 142 186 104 369 396 1,290 (1,209) 1,278
Clear 480 2,660 200 274 1,943 1,221 (2,057) 4,721
GaiaTech 143 4,477 327 402 1,702 5,511 (5,286) 7,276
765 7,323 631 1,045 4,041 8,022 (8,552) 13,275

 

£000's Initial cash consideration Contingent cash consideration Deferred cashl consideration Total consideration Net assets acquired Goodwill acquired
Whelans 1,443 - 619 2,062 1,278 784
Clear 6,841 1,156 - 7,997 4,721 3,276
GaiaTech 17,894 - - 17,894 7,276 10,618
26,178 1,156 619 27,953 13,275 14,678

The consideration payable in future for Clear is contingent upon renewal of a key contract. The payment made will be in the range of £nil to £1,500,000 and the fair value has been determined by estimating the likelihood of payment.

There was no tax deductable goodwill acquired.

Provisional values are given in the table above as information about facts or circumstances that existed at the acquisition date is incomplete.

Goodwill represents the value of the accumulated workforce and synergies with RPS associated with these acquisitions.

The total fair value of receivables acquired was £5,668,000. The gross contractual receivables acquired were £5,786,000 and £118,000 was estimated to be irrecoverable.

The vendors of the acquired companies have entered into indemnity arrangements with the Group. The total undiscounted cash flow that could be receivable by the Group is between £nil and £5,668,000. As the Group does not expect that these warranties will become receivable, it has not recognised an indemnification asset on acquisition.

The Group incurred acquisition-related costs of £677,000 (6 months to 30 June 2013: £314,000), which have been expensed through the consolidated income statement and included within "amortisation of acquired intangibles and transaction related costs".

A reconciliation of the goodwill movement in 2014 in respect of acquisitions completed in 2013 and 2014 is given below.

£000's PEICE KR APASA HMA Ichron OEC Whelans Clear GT
Goodwill at 1 January 2014 3,007 1,399 1,955 6,997 5,538 17,273 - - -
Additions through acquisition - - - - - - 784 3,276 10,618
Adjustments to opening balance sheet - 9 - - - - - - -
Foreign exchange gains and losses (102) (44) 41 (236) - (731) 7 - (161)
Goodwill at 30 June 2014 2,905 1,364 1,996 6,761 5,538 16,542 791 3,276 10,457

There were no accumulated impairment losses at the beginning or the end of the period.

Commitments and contingencies

The Group completed a number of acquisitions between 1 January 2010 and 31 December 2011 where deferred consideration payments to vendors are contingent on the vendor's continued employment with the Group and so are required to be recognised as employment costs over the deferred consideration period. The Group considers it probable that the remaining deferred consideration payments will be settled.

The total remaining cash commitments at 30 June 2014 in respect of contingent deferred consideration treated as remuneration that the Group expects to settle is £789,000 and payment will be made before the end of this year. The related estimated remuneration charge to be incurred by the year end is £263,000.

The balance sheet at 30 June 2014 includes, within deferred consideration current liabilities, contingent deferred consideration remuneration expense accrued but not paid totalling £526,000 (31 December 2013: £2,457,000).

9. Share capital

2014 Number 000's 2014 £000's 2013 Number 000's 2013 £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 220,632 6,619 219,566 6,587
Issued under employee share schemes 362 11 424 13
At 30 June 220,994 6,630 219,990 6,600

10. Other reserves

£000's Merger reserve Employee trust Translation reserve Total
At 1 January 2014 21,256 (9,277) 5,673 17,652
Exchange differences - - (1,785) (1,785)
Issue of new shares - (641) - (641)
At 30 June 2014 21,256 (9,918) 3,888 15,226
At 1 January 2013 21,256 (9,059) 23,873 36,070
Exchange differences - - (1,706) (1,706)
Issue of new shares - (281) - (281)
Purchase of own shares - 756 - 756
At 30 June 2013 21,256 (8,584) 22,167 34,839

11. Dividends

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

£000's Six months ended 30 June 2014 Six months ended 30 June 2013 Year ended 31 Dec 2013
Final dividend for 2013 3.84p per share 8,453 - -
Interim dividend for 2013 3.52p per share - - 7,726
Final dividend for 2012 3.34p per share - 7,308 7,308
8,453 7,308 15,034

An interim dividend in respect of the six months ended 30 June 2014 of 4.05 pence per share, amounting to a total dividend of £8,921,000 was approved by the Directors of RPS Group Plc on 29 July 2014. 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
£000's 2014 2013 2013
Operating profit 23,372 22,005 45,880
Adjustments for:
Depreciation 4,216 5,051 9,432
Amortisation of acquired intangibles 8,205 5,337 12,217
Contingent deferred consideration treated as remuneration 870 3,470 6,009
Deferred consideration fair value adjustment (66) - -
Share based payment expense 960 1,041 1,938
Profit on sale of property, plant and equipment (61) (186) (241)
37,496 36,718 75,235
(Increase)/(decrease) in trade and other receivables (4,154) 1,604 8,838
Decrease in trade and other payables (3,901) (4,491) (12,043)
Adjusted cash generated from operations 29,441 33,831 72,030

* Adjusted cash generated from operations is before payment of deferred consideration treated as remuneration.

The table below provides an analysis of net bank borrowings, comprising cash and cash equivalents, interest bearing bank loans and finance leases, during the six months ended 30 June 2014.

£000's At 1 January 2014 Cash flow Acquisition debt Foreign exchange At 30 June 2014
Cash and cash equivalents 18,699 674 - (354) 19,019
Overdrafts (908) (1,999) - (14) (2,921)
Bank Loans (49,637) (26,870) (4,003) 1,120 (79,390)
Finance lease creditor (522) 117 (124) (11) (540)
Net bank borrowings (32,368) (28,078) (4,127) 741 (63,832)

The cash balance includes £7,680,000 (31 December 2013: £6,028,000) that is restricted in its use.

13. Events after the balance sheet date

On 24 July the Group agreed a US$150m private placement 3 year "shelf" facility with Prudential Investment Inc ("Pricoa"). Initial notes with a value of £30m and US$34.1m (equivalent to £20m) each with a 7 year term and fixed coupon of 3.98% and 3.84% respectively will be issued on 30 September 2014. The balance of the facility is uncommitted but is available from 24 July 2015.

14. Principal risks and uncertainties

The nature of the principal risks and uncertainties faced by the Group have not changed significantly since the 2013 Report and Accounts was published. These risks, together with a description of the approach to mitigate them, are set out on pages 8 and 9 of the 2013 Report and Accounts (available on the Group's website at www.rpsgroup.com) and are summarised as follows:

- Economic environment
- Material adverse events
- Information systems
- Recruitment and retention of key personnel
- Market position and reputation
- Litigation
- Compliance
- Business acquisitions
- Funding
- Health and safety

From time to time the Group receives claims from clients and suppliers. Some of these result in payments to the claimants by the Group and its insurers. The Board reviews all significant claims at each board meeting and more regularly if required. The Board is currently satisfied that the Group has sufficient provisions in its balance sheet to meet all likely uninsured liabilities.

The Board keeps under review the potential effect of economic circumstances. The continuing uncertainty in the global economic outlook inevitably increases the trading and balance sheet risks to which the Group is exposed.

15. Related party transactions

There are no significant changes in the nature and size of related party transactions for the period to those reported in the 2013 Report and Accounts.

16. 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. The continuing uncertainty in global economic outlook inevitably increases the risks to which the Group is exposed. Statements in respect of the Group's performance in the year to date are based upon unaudited management accounts for the period January to June 2014. Nothing in this announcement should be construed as a profit forecast.

17. Publication

A copy of this announcement will be posted on the Company's website at www.rpsgroup.com.

INDEPENDENT REVIEW REPORT TO RPS GROUP PLC

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 2014, which comprises the Condensed consolidated income statement, the Condensed consolidated statement of comprehensive income, the Condensed consolidated balance sheet, the Condensed consolidated cash flow statement, the Condensed consolidated statement of changes in equity and the related notes 1 to 17. 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.

This report is made solely to the company 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. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.

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 Finance Conduct Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with 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.

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 2014 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 Finance Conduct Authority.

 

Deloitte LLP
Chartered Accountants and Statutory Auditor
Reading, United Kingdom

31 July 2014

 

2014

Half Year Results for the six months ended 30 June 2014

31 July 2014

Half Year Results for the six months ended 30 June 2014

PBTA ahead 11% on a constant currency basis. Agreement entered into for additional 7 year £50 million fixed rate loan. Interim dividend increased 15% for 21st consecutive year.

2014 2013 2013(3)
Business Performance H1 H1 H1
Revenue (£m) 279.4 280.9 261.1
Fee income (£m) 248.6 241.8 224.9
PBTA (1) (£m) 31.4 30.2 28.2
Adjusted earnings per share (2)(basic) (p) 10.30 9.81 9.16
Dividend per share (p) 4.05 3.52 3.52
Statutory Reporting
Profit before tax (£m) 21.7 21.0 19.8
Earnings per share (basic) (p) 6.99 6.53 6.17

(1) PBTA is profit before tax, amortisation of acquired intangibles and transaction related costs.
(2) Adjusted earnings per share is before amortisation of acquired intangibles and transaction related costs and the related tax.
(3) 2013 results restated at 2014 currency rates.

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

"On a constant currency basis our PBTA improved significantly. Our European business continued its steady growth. Conditions remained challenging in the Australian resources market and, during the period, some softness developed in parts of the oil and gas exploration and production sector. However, our business model again delivered robust results, with acquisitions making a significant contribution. RPS is financially strong. Following the recent agreement with Pricoa to provide additional long term debt we have ample resources to continue our growth strategy.".

31 July 2014

 

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

 

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, Norway, the Americas and Australia Asia Pacific 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.

 

Results

Profit (before tax, amortisation of acquired intangibles and transaction related costs) was £31.4 million (2013: £30.2 million; £28.2 million on a constant currency basis). Profit before tax was £21.7m (2013: £21.0m; £19.8m on a constant currency basis). Basic earnings per share (before amortisation and transaction related costs) were 10.30 pence (2013: 9.81 pence; 9.16 pence on a constant currency basis). The strengthening of sterling caused a significant reduction in year on year profit growth. The contribution of the Group's four segments was:

Underlying Profit(£m)(1) 2014 2013 2013(2)
H1 H1 H1
Energy 18.3 16.7 15.8
Built and Natural Environment: Europe 10.1 9.6 9.4
Built and Natural Environment: North America 4.2 3.9 3.5
Australia Asia Pacific ("AAP") 4.8 5.5 4.7
Total 37.4 35.7 33.4

(1) as defined in note 3; stated before reorganisation costs of £1.0m (2013: £1.1m)

(2) 2013 results restated at 2014 currency rates.

Group central costs were £3.4 million, (2013: £3.4 million) and finance charges were £1.7 million (2013: £1.0 million).

Funding and Dividend

Our balance sheet remains strong. We funded acquisition investment of £38.8 million in the period, including £20.2 million in respect of GaiaTech (announced on 20 May). Net bank borrowings at 30 June were £63.8 million (31 December 2013: £32.4 million). We have in place until 2016 a £125 million facility with Lloyds Bank Plc and have recently secured a US$150 million US private placement shelf facility with Pricoa. Initial notes with an aggregate value of £50 million, seven year term and 4% fixed coupon will be issued in September. Cash conversion was a little below the normal run rate as some major clients managed payment around their own half year. We expect the full year outcome to be at the normal level.

The Board remains confident about the Group's financial strength and has, once again, increased the interim dividend by 15% to 4.05 pence per share (2013: 3.52 pence) payable on 16 October 2014 to shareholders on the register on 19 September 2014.

Markets and Trading

Energy

We provide internationally recognised consultancy services to the oil and gas exploration and production industry from bases in the UK, USA and Canada. These act as regional centres for projects undertaken in many other countries. The business delivered good growth in the first half.

2014 2013 2013(2)
H1 H1 H1
Fee income (£m) 104.1 87.8 83.3
Underlying profit(1) (£m) 18.3 16.7 15.8
Margin % 17.6 19.0 18.9

(1) as defined in note 3, stated before reorganisation costs of £nil (2013: £0.1m)

(2) 2013 results restated at 2014 currency rates.

We continued to benefit from our prominent position in the oil and gas sector in many parts of the world, as well as increasing demand for our advice from the financial services sector. The acquisitions made in 2013 are integrating well and will contribute to the delivery of another year of good growth for this business.

During the second quarter some of our clients began to manage expenditure more tightly and political instability in parts of the Middle East has slowed investment. The Canadian potash market, which turned down in the middle of 2013, remains subdued and has impacted the year on year performance.

With long term demand for energy resources set to grow significantly, the current softness in some markets should be relatively short lived. During this period our robust business model and strong market presence should ensure continued high performance.

Built and Natural Environment ("BNE")

Within these businesses we provide a wide range of consultancy services to many aspects of the property and infrastructure development and management sectors. In recent years we have developed extensive experience in respect of the infrastructure projects necessary to bring energy resources, both conventional and renewable, to market.

Europe

2014 2013 2013(2)
H1 H1 H1
Fee income (£m) 75.5 74.7 73.7
Underlying Profit(1) (£m) 10.1 9.6 9.4
Margin % 13.4 12.8 12.8

(1) as defined in note 3, stated before reorganisation costs of £0.1m (2013: £0.3m)

(2) 2013 results restated at 2014 currency rates

Our BNE business in Europe performed well in the first half of the year. Those activities which assist clients develop new capital projects, particularly our planning and development business, continued to benefit both from improving market conditions and client confidence. Those exposed to operational environments, such as providing environment management advice, continue to need to offer an efficient, cost effective service to assist clients manage tight budgets.

The acquisition of Clear Environmental Consultants (announced on 10 April) has extended the range of our UK water activities and will assist the strategic development of this business. We have agreed terms to bring a market leading planning and development business into the Group . This will support a growing part of the business, with excellent prospects. Overall, our European business remains on track to achieve growth this year.

North America

2014 2013 2013(2)
H1 H1 H1
Fee income (£m) 19.0 15.7 14.4
Underlying Profit(1) (£m) 4.2 3.9 3.5
Margin % 22.0 24.9 24.7

(1) as defined in note 3, stated before reorganisation costs of £nil (2013: £nil)

(2) 2013 results restated at 2014 currency rates

We remain well positioned in the expanding North American energy infrastructure market. The acquisition of HMA Land Services in September 2013 gave us access to the substantial pipeline development market. Those parts of the business closest to E&P activities also experienced some of the expenditure tightening from clients seen in the Energy business during the first half. In the most buoyant part of our market, permitting and licensing of facilities, staff retention and recruitment has become exceptionally difficult and staff losses caused significant disruption.

The acquisition of GaiaTech was an important step in the development of this business, giving us access to new markets and geography. It will make an important contribution in the second half and subsequent years. Opportunities remain to expand our North American business significantly both organically and by acquisition.

AAP

This business is a combination of the former BNE: AAP and the AAP component of Energy. They were brought together in 2013 to take advantage of the opportunities in the integrated energy and energy infrastructure markets and, specifically, help counter the impact of the slowdown in the resources sector on our businesses.

2014 2013 2013(2)
H1 H1 H1
Fee income (£m) 50.8 65.9 55.4
Underlying Profit(1) (£m) 4.8 5.5 4.7
Margin % 9.4 8.4 8.4

(1) as defined in note 3, stated before reorganisation costs of £nil (2013: £nil)

(2) 2013 results restated at 2014 currency rates

Throughout the first half our mining and energy clients in AAP remained focused on operational efficiency rather than capital expenditure on project development. As a result further projects have been delayed or cancelled. As expected, therefore, our level of activity in the first half was at a lower level than last year and we continued with the plan to reduce our cost base in order to improve efficiency.

The rebalancing of our business away from the resources sector has, however, continued positively. There has been increased optimism and investment in private and public sector urban development and infrastructure projects, particularly in and around Sydney and Melbourne. The second quarter, as a result, showed a significant improvement over the first and we currently anticipate the second half should see further improvement. In order to support this change of emphasis, we have agreed terms to acquire a consultancy with a strong public sector client base and offices in all major cities. It will make a significant contribution to the development of our business.

Group Prospects

Our flexible and robust business model has demonstrated in recent years that it is capable of generating growth in challenging circumstances. A number of acquisitions are under active consideration. The Board remains focussed on delivering a good result for the full year.

Board of Directors
RPS Group plc

31 July 2014

 

Condensed consolidated income statement

Notes Six months
ended
30 June
Six months
ended
30 June
Year
ended
31 December
£000's 2014 2013 2013
Revenue 3 279,376 280,850 567,614
Recharged expenses 3 (30,778) (39,006) (75,493)
Fee income 3 248,598 241,844 492,121
Operating profit before amortisation of acquired intangibles and transaction related costs 3 33,058 31,179 65,305
Amortisation of acquired intangibles and transaction related costs 4 (9,686) (9,174) (19,425)
Operating profit 3 23,372 22,005 45,880
Finance costs (1,741) (1,006) (2,430)
Finance income 35 48 157
Profit before tax, amortisation of acquired intangibles and transaction related costs 31,352 30,221 63,032
Profit before tax 21,666 21,047 43,607
Tax expense 5 (6,348) (6,807) (14,987)
Profit for the period attributable to equity holders of the parent 15,318 14,240 28,620
Basic earnings per share (pence) 6 6.99 6.53 13.11
Diluted earnings per share (pence) 6 6.95 6.50 13.05
Adjusted basic earnings per share (pence) 6 10.30 9.81 20.22
Adjusted diluted earnings per share (pence) 6 10.25 9.76 20.14

 

Condensed consolidated statement of comprehensive income

Six months
ended
30 June
Six months
ended
30 June
Year
ended
31 December
£000's 2014 2013 2013
Profit for the period 15,318 14,240 28,620
Exchange differences* (1,785) (1,706) (18,200)
Remeasurement of net defined benefit liability (256) - -
Total recognised comprehensive income for the period attributable to equity holders of the parent 13,277 12,534 10,420

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

 

Condensed consolidated balance sheet

As at 30 June As at 30 June As at 31 December
£000's Notes 2014 2013 2013
Assets
Non-current assets
Intangible assets 387,691 340,408 375,279
Property, plant and equipment 7 28,753 30,200 27,785
Deferred tax asset 3,630 - 2,018
420,074 370,608 405,082
Current assets
Trade and other receivables 170,075 162,064 161,741
Cash at bank 19,019 12,713 18,699
189,094 174,777 180,440
Liabilities
Current liabilities
Borrowings 3,411 1,474 1,465
Deferred consideration 13,722 11,369 20,919
Trade and other payables 100,520 98,102 103,260
Corporation tax liabilities 3,932 1,638 3,058
Provisions 1,420 2,560 2,134
123,005 115,143 130,836
Net current assets 66,089 59,634 49,604
Non-current liabilities
Borrowings 79,440 31,973 49,602
Deferred consideration 11,690 6,910 14,923
Other creditors 2,747 3,022 2,471
Deferred tax 12,366 6,578 13,645
Provisions 2,009 1,469 2,007
108.252 49,952 82,648
Net assets 377,911 380,290 372,038
Equity
Share capital 9 6,630 6,600 6,619
Share premium 109,235 106,922 108,307
Other reserves 10 15,226 34,839 17,652
Retained earnings 246,820 231,929 239,460
Total shareholders' equity 377,911 380,290 372,038

 

Condensed consolidated cash flow statement

Six months
ended
30 June
Six months
ended
30 June
Year
ended
31 December
£000's Notes 2014 2013 2013
Adjusted cash generated from operations 12 29,441 33,831 72,030
Deferred consideration treated as remuneration (2,792) (4,204) (7,714)
Cash generated from operations 26,649 29,627 64,316
Interest paid (1,503) (1,091) (1,991)
Interest received 35 48 157
Income taxes paid (8,751) (11,381) (19,829)
Net cash from operating activities 16,430 17,203 42,653
Cash flows from investing activities
Purchases of subsidiaries net of cash acquired (22,138) (11,178) (31,174)
Deferred consideration (9,767) - (3,466)
Purchase of property, plant and equipment (4,299) (4,722) (8,034)
Sale of property, plant and equipment 148 272 523
Net cash used in investing activities (36,056) (15,628) (42,151)
Cash flows from financing activities
Proceeds from issue of share capital 1 211 555
Proceeds from bank borrowings 26,870 2,935 18,609
Payment of finance lease liabilities (117) (353) (580)
Dividends paid 11 (8,453) (7,308) (15,034)
Payment of pre-acquisition dividend - (87) (247)
Net cash from/(used in) financing activities 18,301 (4,602) (3,303)
Net (decrease)/increase in cash and cash equivalents (1,325) (3,027) (3,805)
Cash and cash equivalents at beginning of period 17,791 14,804 14,804
Effect of exchange rate fluctuations (368) (12) (818)
Cash and cash equivalents at end of period 16,098 11,765 17,791
Cash and cash equivalents comprise:
Cash at bank 19,019 12,713 18,699
Bank overdraft (2,921) (948) (908)
Cash and cash equivalents at end of period 16,098 11,765 17,791

 

Consolidated statement of changes in equity

£000's Share capital Share premium Retained earnings Other reserves Total equity
At 1 January 2014 6,619 108,307 239,460 17,652 372,038
Total comprehensive income for the period - - 15,062 (1,785) 13,277
Issue of new ordinary shares 11 928 (296) (641) 2
Release of own shares - - - 756 756
Share based payment expense - - 1,047 - 1,047
Dividends - - (8,453) - (8,453)
At 30 June 2014 6,630 109,235 246,820 15,226 377,911
At 1 January 2013 6,587 106,198 224,959 36,070 373,814
Total comprehensive income for the period - - 14,240 (1,706) 12,534
Issue of new ordinary shares 13 724 (1,003) (281) (547)
Purchase of own shares - - - 756 756
Share based payment expense - - 1,041 - 1,041
Dividends - - (7,308) - (7,308))
At 30 June 2013 6,600 106,922 231,929 34,839 380,290

An analysis of other reserves is provided in Note 10.

 

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 2014 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 2013 and in accordance with IAS 34. They are unaudited but have been reviewed by the Company's auditor. The results for the year end 31 December 2013 and the balance sheet as at that date are abridged from the Company's Report and Accounts 2013 which have been delivered to the Registrar of Companies. The auditor's report on those accounts was not qualified, did not include a reference to any matters for which the auditors drew attention by way of emphasis without qualifying the report and did not contain statements under sections 498 (2) or (3) of the Companies Act 2006.

The condensed interim financial statements do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006.

In assessing the going concern basis, the directors considered the Group's business activities, the financial position of the Group and the Group's financial risk management objectives and policies. The directors have a reasonable expectation that the Company and Group have adequate resources to continue in operational existence for the foreseeable future and that it is, therefore, appropriate to adopt the going concern basis in preparing the Group's interim financial statements.

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 4.2.4R, DTR 4.2.7R and DTR 4.2.8R.

On behalf of the Board

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

31 July 2014

3. Business segments

Segment information is presented in respect of the Group's business segments which are reported to the Chief Operating Decision Maker. The business segment reporting format reflects the Group's management and internal structure. Inter-segment pricing is determined on an arm's length basis. Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

As noted in the March 2014 Interim Management Statement, HMA (a business acquired in August 2013) is now reported in the BNE North America Segment. Previously it was reported in the Energy Segment. Accordingly the December 2013 segmental results have been restated.

The segment results and the total segment assets table at 30 June 2013 have been restated to reflect the separate reporting of BNE North America segment and the integrated management and reporting of the Group's BNE and Energy businesses in Australia Asia Pacific as announced in October 2013.

The business segments of the Group are as follows:

Energy - the provision of integrated technical, commercial and project management support and training in the fields of geoscience, engineering and health, safety and environmental on a global basis to the energy sector.

Built and Natural Environment ("BNE") - consultancy services to many aspects of the property and infrastructure development and management sectors. These include: environmental assessment, the management of water resources, oceanography, health and safety, risk management, town and country planning, building, landscape and urban design, surveying and transport planning. Consulting services are provided on a regional basis in Europe and North America.

Australia Asia Pacific ("AAP") - in the AAP region there is a single board that manages the BNE and Energy services we provide in that region. Accordingly, the results of this business are reported as a separate segment.

Unallocated expenses - certain central costs are not allocated to the segments because either they predominantly relate to the running of the Group Head Office function or could only be allocated to the segments on an arbitrary basis, such costs include the remuneration and support costs of the main board and the costs of the Group Finance and marketing functions.

"Segment profit" is defined as profit before interest, tax, amortisation of acquired intangibles, transaction related costs and unallocated expenses.

"Underlying profit" is defined as segment profit before reorganisation costs.

"Reorganisation costs" comprises costs and income arising as a consequence of reorganisation including redundancy costs, profit or loss of disposal of plant, property and equipment, the costs of consolidating office space and rebranding costs.

Segment results for the period ended 30 June 2014:

£000's Fees Expenses Intersegment revenue External Revenue
Energy 104,130 14,426 (328) 118,228
BNE - Europe 75,541 9,410 (372) 84,579
BNE - North America 19,017 2,319 (413) 20,923
AAP 50,843 4,843 (40) 55,646
Group eliminations (933) (220) 1,153 -
Total 248,598 30,778 - 279,376

 

£000's Underlying profit Reorganisation costs Segment profit
Energy 18,304 - 18,304
BNE - Europe 10,140 (144) 9,996
BNE - North America 4,185 - 4,185
AAP 4,782 (853) 3,929
Total 37,411 (997) 36,414

Segment results for the period ended 30 June 2013 (restated):

£000's Fees Expenses Intersegment revenue External revenue
Energy 87,797 17,206 (604) 104,399
BNE - Europe 74,682 9,504 (265) 83,921
BNE - North America 15,668 2,242 (464) 17,446
AAP 65,912 10,288 (1,116) 75,084
Group eliminations (2,215) (234) 2,449 -
Total 241,844 39,006 - 280,850

 

£000's Underlying profit Reorganisation costs Segment profit
Energy 16,688 (52) 16,636
BNE - Europe 9,550 (259) 9,291
BNE - North America 3,907 - 3,907
AAP 5,528 (833) 4,695
Total 35,673 (1,144) 34,529

Segment results for the period ended 31 December 2013 (restated):

£000's Fees Expenses Intersegment revenue External revenue
Energy 186,915 33,224 (1,141) 218,998
BNE - Europe 149,292 20,171 (603) 168,860
BNE - North America 32,664 5,117 (1,111) 36,670
AAP 127,194 17,380 (1,488) 143,086
Group eliminations (3,944) (399) 4,343 -
Total 492,121 75,493 - 567,614

 

£000's Underlying profit Reorganisation costs Segment profit
Energy 36,403 (78) 36,325
BNE - Europe 19,164 (487) 18,677
BNE - North America 8,287 - 8,287
AAP 10,020 (1,192) 8,828
Total 73,874 (1,757) 72,117

Group reconciliation

£000's 30 June 2014 30 June 2013 31 Dec 2013
Revenue 279,376 280,850 567,614
Recharged expenses (30,778) (39,006) (75,493)
Fees 248,598 241,844 492,121
Underlying profit 37,411 35,673 73,874
Reorganisation costs (997) (1,144) (1,757)
Segment profit 36,414 34,529 72,117
Unallocated expenses (3,356) (3,350) (6,812)
Operating profit before amortisation of acquired intangibles and transaction related costs 33,058 31,179 65,305
Amortisation of acquired intangibles and transaction related costs (9,686) (9,174) (19,425)
Operating profit 23,372 22,005 45,880
Net finance costs (1,706) (958) (2,273)
Profit before tax 21,666 21,047 43,607

Total segment assets were as follows:

£000's 30 June 2014 30 June 2013 (restated) 31 December 2013 (restated)
Energy 199,583 149,474 198,910
BNE - Europe 229,044 229,401 219,112
BNE - North America 53,129 30,596 43,151
AAP 118,669 132,966 117,769
Unallocated 8,743 2,948 6,580
Total 609,168 545,385 585,522

4. Amortisation of acquired intangibles and transaction related costs

£000's 30 June 2014 30 June 2013 31 December 2013
Amortisation of acquired intangibles 8,205 5,337 12,217
Contingent deferred consideration treated as remuneration 870 3,470 6,009
Deferred consideration fair value adjustment (66) - -
Third party advisory costs 677 367 1,199
Total 9,686 9,174 19,425

5. Income taxes

The tax charge for the period has been calculated using an estimate of the effective annual rate of tax for each taxing jurisdiction for the full year. These rates have been applied to the pre-tax profits for each jurisdiction for the six months ended 30 June 2014. The Group has separately calculated the tax rates applicable to amortisation of intangibles and transaction related costs for the period. Tax rate changes that were substantively enacted at the balance sheet date have been factored into the calculation of the effective tax rates.

Analysis of the tax expense/(credit) in the income statement for the period:

£000's 30 June 2014 30 June 2013 31 December 2013
Current tax expense 7,977 8,332 16,448
Deferred tax credit (1,629) (1,525) (1,461)
Total tax expense in the income statement 6,348 6,807 14,987
Add back:
Tax on amortisation of acquired intangibles and acquisition related costs 2,432 2,033 3,889
Adjusted tax charge on PBTA for the period 8,780 8,840 18,876
Tax rate on PBT 29.3% 32.3% 34.4%
Tax rate on PBTA 28.0% 29.3% 29.9%

6. 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
£000's 2014 2013 2013
Profit attributable to ordinary shareholders 15,318 14,240 28,620
000's
Weighted average number of ordinary shares for the purposes of basic earnings per share 219,188 217,953 218,355
Effect of employee share schemes 1,105 1,034 909
Weighted average number of ordinary shares for the purposes of diluted earnings per share 220,293 218,987 219,264
Basic earning per share (pence) 6.99 6.53 13.11
Diluted earnings per share (pence) 6.95 6.50 13.05

The directors consider that earnings per share before amortisation of acquired intangibles and transaction related costs provides a more meaningful measure of the Group's performance than statutory earnings per share. The calculations of adjusted earnings per share were based on the number of shares as above, and are shown in the table below:

£000's Six months ended 30 June 2014 Six months ended 30 June 2013 Year ended 31 Dec 2013
Profit attributable to ordinary shareholders 15,318 14,240 28,620
Amortisation of acquired intangibles and transaction related costs 9,686 9,174 19,425
Tax on amortisation of acquired intangibles and transaction related costs (2,432) (2,033) (3,889)
Adjusted profit attributable to ordinary shareholders 22,572 21,381 44,156
Adjusted basic earnings before per share (pence) 10.30 9.81 20.22
Adjusted diluted earnings per share (pence) 10.25 9.76 20.14

7. Property, plant and equipment

During the six months ended 30 June 2014 the Group acquired assets with a
cost of £5,497,000 (six months to 30 June 2013: £4,732,000), which includes £1,045,000 acquired through business combinations (six months to 30 June 2013: £89,000). Assets with a net book value of £90,000 were disposed of during the six months ended 30 June 2014 (six months ended 30 June 2013: £86,000).

8. Acquisitions

The Group has completed the following acquisitions to strengthen and broaden the skill base of the Group, during the first half of 2014:

Entity Business Segment Date of Acquisition Place of incorporation Percentageof entity acquired Nature of business acquired
Whelans Corporation Pty Ltd AAP 5 Feb 2014 Australia 100% Surveying
Clear Environmental Consultants Ltd BNE Europe 9 April 2014 UK 100% Water Consultancy
GaiaTech Holdings Inc BNE NA 15 May 2014 UK 100% Environmental Consultancy

Their contributions to the Group's results for the period is given below:

£000's Revenue Operating profit
Whelans 1,927 172
Clear 1,249 102
GaiaTech 1,459 273

Had the Group acquired these entities on the first day of the period, the Group estimates revenue would have been £285,469,000 and operating profit would have been £23,965,000.

The Group has allocated provisional fair values to the net assets acquired as follows:

 

£000's Order book Customer relationships Brand PPE Cash Other assets Other liabilities Net assets acquired
Whelans 142 186 104 369 396 1,290 (1,209) 1,278
Clear 480 2,660 200 274 1,943 1,221 (2,057) 4,721
GaiaTech 143 4,477 327 402 1,702 5,511 (5,286) 7,276
765 7,323 631 1,045 4,041 8,022 (8,552) 13,275

 

£000's Initial cash consideration Contingent cash consideration Deferred cashl consideration Total consideration Net assets acquired Goodwill acquired
Whelans 1,443 - 619 2,062 1,278 784
Clear 6,841 1,156 - 7,997 4,721 3,276
GaiaTech 17,894 - - 17,894 7,276 10,618
26,178 1,156 619 27,953 13,275 14,678

The consideration payable in future for Clear is contingent upon renewal of a key contract. The payment made will be in the range of £nil to £1,500,000 and the fair value has been determined by estimating the likelihood of payment.

There was no tax deductable goodwill acquired.

Provisional values are given in the table above as information about facts or circumstances that existed at the acquisition date is incomplete.

Goodwill represents the value of the accumulated workforce and synergies with RPS associated with these acquisitions.

The total fair value of receivables acquired was £5,668,000. The gross contractual receivables acquired were £5,786,000 and £118,000 was estimated to be irrecoverable.

The vendors of the acquired companies have entered into indemnity arrangements with the Group. The total undiscounted cash flow that could be receivable by the Group is between £nil and £5,668,000. As the Group does not expect that these warranties will become receivable, it has not recognised an indemnification asset on acquisition.

The Group incurred acquisition-related costs of £677,000 (6 months to 30 June 2013: £314,000), which have been expensed through the consolidated income statement and included within "amortisation of acquired intangibles and transaction related costs".

A reconciliation of the goodwill movement in 2014 in respect of acquisitions completed in 2013 and 2014 is given below.

£000's PEICE KR APASA HMA Ichron OEC Whelans Clear GT
Goodwill at 1 January 2014 3,007 1,399 1,955 6,997 5,538 17,273 - - -
Additions through acquisition - - - - - - 784 3,276 10,618
Adjustments to opening balance sheet - 9 - - - - - - -
Foreign exchange gains and losses (102) (44) 41 (236) - (731) 7 - (161)
Goodwill at 30 June 2014 2,905 1,364 1,996 6,761 5,538 16,542 791 3,276 10,457

There were no accumulated impairment losses at the beginning or the end of the period.

Commitments and contingencies

The Group completed a number of acquisitions between 1 January 2010 and 31 December 2011 where deferred consideration payments to vendors are contingent on the vendor's continued employment with the Group and so are required to be recognised as employment costs over the deferred consideration period. The Group considers it probable that the remaining deferred consideration payments will be settled.

The total remaining cash commitments at 30 June 2014 in respect of contingent deferred consideration treated as remuneration that the Group expects to settle is £789,000 and payment will be made before the end of this year. The related estimated remuneration charge to be incurred by the year end is £263,000.

The balance sheet at 30 June 2014 includes, within deferred consideration current liabilities, contingent deferred consideration remuneration expense accrued but not paid totalling £526,000 (31 December 2013: £2,457,000).

9. Share capital

2014 Number 000's 2014 £000's 2013 Number 000's 2013 £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 220,632 6,619 219,566 6,587
Issued under employee share schemes 362 11 424 13
At 30 June 220,994 6,630 219,990 6,600

10. Other reserves

£000's Merger reserve Employee trust Translation reserve Total
At 1 January 2014 21,256 (9,277) 5,673 17,652
Exchange differences - - (1,785) (1,785)
Issue of new shares - (641) - (641)
At 30 June 2014 21,256 (9,918) 3,888 15,226
At 1 January 2013 21,256 (9,059) 23,873 36,070
Exchange differences - - (1,706) (1,706)
Issue of new shares - (281) - (281)
Purchase of own shares - 756 - 756
At 30 June 2013 21,256 (8,584) 22,167 34,839

11. Dividends

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

£000's Six months ended 30 June 2014 Six months ended 30 June 2013 Year ended 31 Dec 2013
Final dividend for 2013 3.84p per share 8,453 - -
Interim dividend for 2013 3.52p per share - - 7,726
Final dividend for 2012 3.34p per share - 7,308 7,308
8,453 7,308 15,034

An interim dividend in respect of the six months ended 30 June 2014 of 4.05 pence per share, amounting to a total dividend of £8,921,000 was approved by the Directors of RPS Group Plc on 29 July 2014. 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
£000's 2014 2013 2013
Operating profit 23,372 22,005 45,880
Adjustments for:
Depreciation 4,216 5,051 9,432
Amortisation of acquired intangibles 8,205 5,337 12,217
Contingent deferred consideration treated as remuneration 870 3,470 6,009
Deferred consideration fair value adjustment (66) - -
Share based payment expense 960 1,041 1,938
Profit on sale of property, plant and equipment (61) (186) (241)
37,496 36,718 75,235
(Increase)/(decrease) in trade and other receivables (4,154) 1,604 8,838
Decrease in trade and other payables (3,901) (4,491) (12,043)
Adjusted cash generated from operations 29,441 33,831 72,030

* Adjusted cash generated from operations is before payment of deferred consideration treated as remuneration.

The table below provides an analysis of net bank borrowings, comprising cash and cash equivalents, interest bearing bank loans and finance leases, during the six months ended 30 June 2014.

£000's At 1 January 2014 Cash flow Acquisition debt Foreign exchange At 30 June 2014
Cash and cash equivalents 18,699 674 - (354) 19,019
Overdrafts (908) (1,999) - (14) (2,921)
Bank Loans (49,637) (26,870) (4,003) 1,120 (79,390)
Finance lease creditor (522) 117 (124) (11) (540)
Net bank borrowings (32,368) (28,078) (4,127) 741 (63,832)

The cash balance includes £7,680,000 (31 December 2013: £6,028,000) that is restricted in its use.

13. Events after the balance sheet date

On 24 July the Group agreed a US$150m private placement 3 year "shelf" facility with Prudential Investment Inc ("Pricoa"). Initial notes with a value of £30m and US$34.1m (equivalent to £20m) each with a 7 year term and fixed coupon of 3.98% and 3.84% respectively will be issued on 30 September 2014. The balance of the facility is uncommitted but is available from 24 July 2015.

14. Principal risks and uncertainties

The nature of the principal risks and uncertainties faced by the Group have not changed significantly since the 2013 Report and Accounts was published. These risks, together with a description of the approach to mitigate them, are set out on pages 8 and 9 of the 2013 Report and Accounts (available on the Group's website at www.rpsgroup.com) and are summarised as follows:

- Economic environment
- Material adverse events
- Information systems
- Recruitment and retention of key personnel
- Market position and reputation
- Litigation
- Compliance
- Business acquisitions
- Funding
- Health and safety

From time to time the Group receives claims from clients and suppliers. Some of these result in payments to the claimants by the Group and its insurers. The Board reviews all significant claims at each board meeting and more regularly if required. The Board is currently satisfied that the Group has sufficient provisions in its balance sheet to meet all likely uninsured liabilities.

The Board keeps under review the potential effect of economic circumstances. The continuing uncertainty in the global economic outlook inevitably increases the trading and balance sheet risks to which the Group is exposed.

15. Related party transactions

There are no significant changes in the nature and size of related party transactions for the period to those reported in the 2013 Report and Accounts.

16. 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. The continuing uncertainty in global economic outlook inevitably increases the risks to which the Group is exposed. Statements in respect of the Group's performance in the year to date are based upon unaudited management accounts for the period January to June 2014. Nothing in this announcement should be construed as a profit forecast.

17. Publication

A copy of this announcement will be posted on the Company's website at www.rpsgroup.com.

INDEPENDENT REVIEW REPORT TO RPS GROUP PLC

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 2014, which comprises the Condensed consolidated income statement, the Condensed consolidated statement of comprehensive income, the Condensed consolidated balance sheet, the Condensed consolidated cash flow statement, the Condensed consolidated statement of changes in equity and the related notes 1 to 17. 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.

This report is made solely to the company 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. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.

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 Finance Conduct Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with 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.

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 2014 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 Finance Conduct Authority.

 

Deloitte LLP
Chartered Accountants and Statutory Auditor
Reading, United Kingdom

31 July 2014

 

2013

Half Year Results for the six months ended 30 June 2014

31 July 2014

Half Year Results for the six months ended 30 June 2014

PBTA ahead 11% on a constant currency basis. Agreement entered into for additional 7 year £50 million fixed rate loan. Interim dividend increased 15% for 21st consecutive year.

2014 2013 2013(3)
Business Performance H1 H1 H1
Revenue (£m) 279.4 280.9 261.1
Fee income (£m) 248.6 241.8 224.9
PBTA (1) (£m) 31.4 30.2 28.2
Adjusted earnings per share (2)(basic) (p) 10.30 9.81 9.16
Dividend per share (p) 4.05 3.52 3.52
Statutory Reporting
Profit before tax (£m) 21.7 21.0 19.8
Earnings per share (basic) (p) 6.99 6.53 6.17

(1) PBTA is profit before tax, amortisation of acquired intangibles and transaction related costs.
(2) Adjusted earnings per share is before amortisation of acquired intangibles and transaction related costs and the related tax.
(3) 2013 results restated at 2014 currency rates.

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

"On a constant currency basis our PBTA improved significantly. Our European business continued its steady growth. Conditions remained challenging in the Australian resources market and, during the period, some softness developed in parts of the oil and gas exploration and production sector. However, our business model again delivered robust results, with acquisitions making a significant contribution. RPS is financially strong. Following the recent agreement with Pricoa to provide additional long term debt we have ample resources to continue our growth strategy.".

31 July 2014

 

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

 

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, Norway, the Americas and Australia Asia Pacific 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.

 

Results

Profit (before tax, amortisation of acquired intangibles and transaction related costs) was £31.4 million (2013: £30.2 million; £28.2 million on a constant currency basis). Profit before tax was £21.7m (2013: £21.0m; £19.8m on a constant currency basis). Basic earnings per share (before amortisation and transaction related costs) were 10.30 pence (2013: 9.81 pence; 9.16 pence on a constant currency basis). The strengthening of sterling caused a significant reduction in year on year profit growth. The contribution of the Group's four segments was:

Underlying Profit(£m)(1) 2014 2013 2013(2)
H1 H1 H1
Energy 18.3 16.7 15.8
Built and Natural Environment: Europe 10.1 9.6 9.4
Built and Natural Environment: North America 4.2 3.9 3.5
Australia Asia Pacific ("AAP") 4.8 5.5 4.7
Total 37.4 35.7 33.4

(1) as defined in note 3; stated before reorganisation costs of £1.0m (2013: £1.1m)

(2) 2013 results restated at 2014 currency rates.

Group central costs were £3.4 million, (2013: £3.4 million) and finance charges were £1.7 million (2013: £1.0 million).

Funding and Dividend

Our balance sheet remains strong. We funded acquisition investment of £38.8 million in the period, including £20.2 million in respect of GaiaTech (announced on 20 May). Net bank borrowings at 30 June were £63.8 million (31 December 2013: £32.4 million). We have in place until 2016 a £125 million facility with Lloyds Bank Plc and have recently secured a US$150 million US private placement shelf facility with Pricoa. Initial notes with an aggregate value of £50 million, seven year term and 4% fixed coupon will be issued in September. Cash conversion was a little below the normal run rate as some major clients managed payment around their own half year. We expect the full year outcome to be at the normal level.

The Board remains confident about the Group's financial strength and has, once again, increased the interim dividend by 15% to 4.05 pence per share (2013: 3.52 pence) payable on 16 October 2014 to shareholders on the register on 19 September 2014.

Markets and Trading

Energy

We provide internationally recognised consultancy services to the oil and gas exploration and production industry from bases in the UK, USA and Canada. These act as regional centres for projects undertaken in many other countries. The business delivered good growth in the first half.

2014 2013 2013(2)
H1 H1 H1
Fee income (£m) 104.1 87.8 83.3
Underlying profit(1) (£m) 18.3 16.7 15.8
Margin % 17.6 19.0 18.9

(1) as defined in note 3, stated before reorganisation costs of £nil (2013: £0.1m)

(2) 2013 results restated at 2014 currency rates.

We continued to benefit from our prominent position in the oil and gas sector in many parts of the world, as well as increasing demand for our advice from the financial services sector. The acquisitions made in 2013 are integrating well and will contribute to the delivery of another year of good growth for this business.

During the second quarter some of our clients began to manage expenditure more tightly and political instability in parts of the Middle East has slowed investment. The Canadian potash market, which turned down in the middle of 2013, remains subdued and has impacted the year on year performance.

With long term demand for energy resources set to grow significantly, the current softness in some markets should be relatively short lived. During this period our robust business model and strong market presence should ensure continued high performance.

Built and Natural Environment ("BNE")

Within these businesses we provide a wide range of consultancy services to many aspects of the property and infrastructure development and management sectors. In recent years we have developed extensive experience in respect of the infrastructure projects necessary to bring energy resources, both conventional and renewable, to market.

Europe

2014 2013 2013(2)
H1 H1 H1
Fee income (£m) 75.5 74.7 73.7
Underlying Profit(1) (£m) 10.1 9.6 9.4
Margin % 13.4 12.8 12.8

(1) as defined in note 3, stated before reorganisation costs of £0.1m (2013: £0.3m)

(2) 2013 results restated at 2014 currency rates

Our BNE business in Europe performed well in the first half of the year. Those activities which assist clients develop new capital projects, particularly our planning and development business, continued to benefit both from improving market conditions and client confidence. Those exposed to operational environments, such as providing environment management advice, continue to need to offer an efficient, cost effective service to assist clients manage tight budgets.

The acquisition of Clear Environmental Consultants (announced on 10 April) has extended the range of our UK water activities and will assist the strategic development of this business. We have agreed terms to bring a market leading planning and development business into the Group . This will support a growing part of the business, with excellent prospects. Overall, our European business remains on track to achieve growth this year.

North America

2014 2013 2013(2)
H1 H1 H1
Fee income (£m) 19.0 15.7 14.4
Underlying Profit(1) (£m) 4.2 3.9 3.5
Margin % 22.0 24.9 24.7

(1) as defined in note 3, stated before reorganisation costs of £nil (2013: £nil)

(2) 2013 results restated at 2014 currency rates

We remain well positioned in the expanding North American energy infrastructure market. The acquisition of HMA Land Services in September 2013 gave us access to the substantial pipeline development market. Those parts of the business closest to E&P activities also experienced some of the expenditure tightening from clients seen in the Energy business during the first half. In the most buoyant part of our market, permitting and licensing of facilities, staff retention and recruitment has become exceptionally difficult and staff losses caused significant disruption.

The acquisition of GaiaTech was an important step in the development of this business, giving us access to new markets and geography. It will make an important contribution in the second half and subsequent years. Opportunities remain to expand our North American business significantly both organically and by acquisition.

AAP

This business is a combination of the former BNE: AAP and the AAP component of Energy. They were brought together in 2013 to take advantage of the opportunities in the integrated energy and energy infrastructure markets and, specifically, help counter the impact of the slowdown in the resources sector on our businesses.

2014 2013 2013(2)
H1 H1 H1
Fee income (£m) 50.8 65.9 55.4
Underlying Profit(1) (£m) 4.8 5.5 4.7
Margin % 9.4 8.4 8.4

(1) as defined in note 3, stated before reorganisation costs of £nil (2013: £nil)

(2) 2013 results restated at 2014 currency rates

Throughout the first half our mining and energy clients in AAP remained focused on operational efficiency rather than capital expenditure on project development. As a result further projects have been delayed or cancelled. As expected, therefore, our level of activity in the first half was at a lower level than last year and we continued with the plan to reduce our cost base in order to improve efficiency.

The rebalancing of our business away from the resources sector has, however, continued positively. There has been increased optimism and investment in private and public sector urban development and infrastructure projects, particularly in and around Sydney and Melbourne. The second quarter, as a result, showed a significant improvement over the first and we currently anticipate the second half should see further improvement. In order to support this change of emphasis, we have agreed terms to acquire a consultancy with a strong public sector client base and offices in all major cities. It will make a significant contribution to the development of our business.

Group Prospects

Our flexible and robust business model has demonstrated in recent years that it is capable of generating growth in challenging circumstances. A number of acquisitions are under active consideration. The Board remains focussed on delivering a good result for the full year.

Board of Directors
RPS Group plc

31 July 2014

 

Condensed consolidated income statement

Notes Six months
ended
30 June
Six months
ended
30 June
Year
ended
31 December
£000's 2014 2013 2013
Revenue 3 279,376 280,850 567,614
Recharged expenses 3 (30,778) (39,006) (75,493)
Fee income 3 248,598 241,844 492,121
Operating profit before amortisation of acquired intangibles and transaction related costs 3 33,058 31,179 65,305
Amortisation of acquired intangibles and transaction related costs 4 (9,686) (9,174) (19,425)
Operating profit 3 23,372 22,005 45,880
Finance costs (1,741) (1,006) (2,430)
Finance income 35 48 157
Profit before tax, amortisation of acquired intangibles and transaction related costs 31,352 30,221 63,032
Profit before tax 21,666 21,047 43,607
Tax expense 5 (6,348) (6,807) (14,987)
Profit for the period attributable to equity holders of the parent 15,318 14,240 28,620
Basic earnings per share (pence) 6 6.99 6.53 13.11
Diluted earnings per share (pence) 6 6.95 6.50 13.05
Adjusted basic earnings per share (pence) 6 10.30 9.81 20.22
Adjusted diluted earnings per share (pence) 6 10.25 9.76 20.14

 

Condensed consolidated statement of comprehensive income

Six months
ended
30 June
Six months
ended
30 June
Year
ended
31 December
£000's 2014 2013 2013
Profit for the period 15,318 14,240 28,620
Exchange differences* (1,785) (1,706) (18,200)
Remeasurement of net defined benefit liability (256) - -
Total recognised comprehensive income for the period attributable to equity holders of the parent 13,277 12,534 10,420

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

 

Condensed consolidated balance sheet

As at 30 June As at 30 June As at 31 December
£000's Notes 2014 2013 2013
Assets
Non-current assets
Intangible assets 387,691 340,408 375,279
Property, plant and equipment 7 28,753 30,200 27,785
Deferred tax asset 3,630 - 2,018
420,074 370,608 405,082
Current assets
Trade and other receivables 170,075 162,064 161,741
Cash at bank 19,019 12,713 18,699
189,094 174,777 180,440
Liabilities
Current liabilities
Borrowings 3,411 1,474 1,465
Deferred consideration 13,722 11,369 20,919
Trade and other payables 100,520 98,102 103,260
Corporation tax liabilities 3,932 1,638 3,058
Provisions 1,420 2,560 2,134
123,005 115,143 130,836
Net current assets 66,089 59,634 49,604
Non-current liabilities
Borrowings 79,440 31,973 49,602
Deferred consideration 11,690 6,910 14,923
Other creditors 2,747 3,022 2,471
Deferred tax 12,366 6,578 13,645
Provisions 2,009 1,469 2,007
108.252 49,952 82,648
Net assets 377,911 380,290 372,038
Equity
Share capital 9 6,630 6,600 6,619
Share premium 109,235 106,922 108,307
Other reserves 10 15,226 34,839 17,652
Retained earnings 246,820 231,929 239,460
Total shareholders' equity 377,911 380,290 372,038

 

Condensed consolidated cash flow statement

Six months
ended
30 June
Six months
ended
30 June
Year
ended
31 December
£000's Notes 2014 2013 2013
Adjusted cash generated from operations 12 29,441 33,831 72,030
Deferred consideration treated as remuneration (2,792) (4,204) (7,714)
Cash generated from operations 26,649 29,627 64,316
Interest paid (1,503) (1,091) (1,991)
Interest received 35 48 157
Income taxes paid (8,751) (11,381) (19,829)
Net cash from operating activities 16,430 17,203 42,653
Cash flows from investing activities
Purchases of subsidiaries net of cash acquired (22,138) (11,178) (31,174)
Deferred consideration (9,767) - (3,466)
Purchase of property, plant and equipment (4,299) (4,722) (8,034)
Sale of property, plant and equipment 148 272 523
Net cash used in investing activities (36,056) (15,628) (42,151)
Cash flows from financing activities
Proceeds from issue of share capital 1 211 555
Proceeds from bank borrowings 26,870 2,935 18,609
Payment of finance lease liabilities (117) (353) (580)
Dividends paid 11 (8,453) (7,308) (15,034)
Payment of pre-acquisition dividend - (87) (247)
Net cash from/(used in) financing activities 18,301 (4,602) (3,303)
Net (decrease)/increase in cash and cash equivalents (1,325) (3,027) (3,805)
Cash and cash equivalents at beginning of period 17,791 14,804 14,804
Effect of exchange rate fluctuations (368) (12) (818)
Cash and cash equivalents at end of period 16,098 11,765 17,791
Cash and cash equivalents comprise:
Cash at bank 19,019 12,713 18,699
Bank overdraft (2,921) (948) (908)
Cash and cash equivalents at end of period 16,098 11,765 17,791

 

Consolidated statement of changes in equity

£000's Share capital Share premium Retained earnings Other reserves Total equity
At 1 January 2014 6,619 108,307 239,460 17,652 372,038
Total comprehensive income for the period - - 15,062 (1,785) 13,277
Issue of new ordinary shares 11 928 (296) (641) 2
Release of own shares - - - 756 756
Share based payment expense - - 1,047 - 1,047
Dividends - - (8,453) - (8,453)
At 30 June 2014 6,630 109,235 246,820 15,226 377,911
At 1 January 2013 6,587 106,198 224,959 36,070 373,814
Total comprehensive income for the period - - 14,240 (1,706) 12,534
Issue of new ordinary shares 13 724 (1,003) (281) (547)
Purchase of own shares - - - 756 756
Share based payment expense - - 1,041 - 1,041
Dividends - - (7,308) - (7,308))
At 30 June 2013 6,600 106,922 231,929 34,839 380,290

An analysis of other reserves is provided in Note 10.

 

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 2014 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 2013 and in accordance with IAS 34. They are unaudited but have been reviewed by the Company's auditor. The results for the year end 31 December 2013 and the balance sheet as at that date are abridged from the Company's Report and Accounts 2013 which have been delivered to the Registrar of Companies. The auditor's report on those accounts was not qualified, did not include a reference to any matters for which the auditors drew attention by way of emphasis without qualifying the report and did not contain statements under sections 498 (2) or (3) of the Companies Act 2006.

The condensed interim financial statements do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006.

In assessing the going concern basis, the directors considered the Group's business activities, the financial position of the Group and the Group's financial risk management objectives and policies. The directors have a reasonable expectation that the Company and Group have adequate resources to continue in operational existence for the foreseeable future and that it is, therefore, appropriate to adopt the going concern basis in preparing the Group's interim financial statements.

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 4.2.4R, DTR 4.2.7R and DTR 4.2.8R.

On behalf of the Board

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

31 July 2014

3. Business segments

Segment information is presented in respect of the Group's business segments which are reported to the Chief Operating Decision Maker. The business segment reporting format reflects the Group's management and internal structure. Inter-segment pricing is determined on an arm's length basis. Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

As noted in the March 2014 Interim Management Statement, HMA (a business acquired in August 2013) is now reported in the BNE North America Segment. Previously it was reported in the Energy Segment. Accordingly the December 2013 segmental results have been restated.

The segment results and the total segment assets table at 30 June 2013 have been restated to reflect the separate reporting of BNE North America segment and the integrated management and reporting of the Group's BNE and Energy businesses in Australia Asia Pacific as announced in October 2013.

The business segments of the Group are as follows:

Energy - the provision of integrated technical, commercial and project management support and training in the fields of geoscience, engineering and health, safety and environmental on a global basis to the energy sector.

Built and Natural Environment ("BNE") - consultancy services to many aspects of the property and infrastructure development and management sectors. These include: environmental assessment, the management of water resources, oceanography, health and safety, risk management, town and country planning, building, landscape and urban design, surveying and transport planning. Consulting services are provided on a regional basis in Europe and North America.

Australia Asia Pacific ("AAP") - in the AAP region there is a single board that manages the BNE and Energy services we provide in that region. Accordingly, the results of this business are reported as a separate segment.

Unallocated expenses - certain central costs are not allocated to the segments because either they predominantly relate to the running of the Group Head Office function or could only be allocated to the segments on an arbitrary basis, such costs include the remuneration and support costs of the main board and the costs of the Group Finance and marketing functions.

"Segment profit" is defined as profit before interest, tax, amortisation of acquired intangibles, transaction related costs and unallocated expenses.

"Underlying profit" is defined as segment profit before reorganisation costs.

"Reorganisation costs" comprises costs and income arising as a consequence of reorganisation including redundancy costs, profit or loss of disposal of plant, property and equipment, the costs of consolidating office space and rebranding costs.

Segment results for the period ended 30 June 2014:

£000's Fees Expenses Intersegment revenue External Revenue
Energy 104,130 14,426 (328) 118,228
BNE - Europe 75,541 9,410 (372) 84,579
BNE - North America 19,017 2,319 (413) 20,923
AAP 50,843 4,843 (40) 55,646
Group eliminations (933) (220) 1,153 -
Total 248,598 30,778 - 279,376

 

£000's Underlying profit Reorganisation costs Segment profit
Energy 18,304 - 18,304
BNE - Europe 10,140 (144) 9,996
BNE - North America 4,185 - 4,185
AAP 4,782 (853) 3,929
Total 37,411 (997) 36,414

Segment results for the period ended 30 June 2013 (restated):

£000's Fees Expenses Intersegment revenue External revenue
Energy 87,797 17,206 (604) 104,399
BNE - Europe 74,682 9,504 (265) 83,921
BNE - North America 15,668 2,242 (464) 17,446
AAP 65,912 10,288 (1,116) 75,084
Group eliminations (2,215) (234) 2,449 -
Total 241,844 39,006 - 280,850

 

£000's Underlying profit Reorganisation costs Segment profit
Energy 16,688 (52) 16,636
BNE - Europe 9,550 (259) 9,291
BNE - North America 3,907 - 3,907
AAP 5,528 (833) 4,695
Total 35,673 (1,144) 34,529

Segment results for the period ended 31 December 2013 (restated):

£000's Fees Expenses Intersegment revenue External revenue
Energy 186,915 33,224 (1,141) 218,998
BNE - Europe 149,292 20,171 (603) 168,860
BNE - North America 32,664 5,117 (1,111) 36,670
AAP 127,194 17,380 (1,488) 143,086
Group eliminations (3,944) (399) 4,343 -
Total 492,121 75,493 - 567,614

 

£000's Underlying profit Reorganisation costs Segment profit
Energy 36,403 (78) 36,325
BNE - Europe 19,164 (487) 18,677
BNE - North America 8,287 - 8,287
AAP 10,020 (1,192) 8,828
Total 73,874 (1,757) 72,117

Group reconciliation

£000's 30 June 2014 30 June 2013 31 Dec 2013
Revenue 279,376 280,850 567,614
Recharged expenses (30,778) (39,006) (75,493)
Fees 248,598 241,844 492,121
Underlying profit 37,411 35,673 73,874
Reorganisation costs (997) (1,144) (1,757)
Segment profit 36,414 34,529 72,117
Unallocated expenses (3,356) (3,350) (6,812)
Operating profit before amortisation of acquired intangibles and transaction related costs 33,058 31,179 65,305
Amortisation of acquired intangibles and transaction related costs (9,686) (9,174) (19,425)
Operating profit 23,372 22,005 45,880
Net finance costs (1,706) (958) (2,273)
Profit before tax 21,666 21,047 43,607

Total segment assets were as follows:

£000's 30 June 2014 30 June 2013 (restated) 31 December 2013 (restated)
Energy 199,583 149,474 198,910
BNE - Europe 229,044 229,401 219,112
BNE - North America 53,129 30,596 43,151
AAP 118,669 132,966 117,769
Unallocated 8,743 2,948 6,580
Total 609,168 545,385 585,522

4. Amortisation of acquired intangibles and transaction related costs

£000's 30 June 2014 30 June 2013 31 December 2013
Amortisation of acquired intangibles 8,205 5,337 12,217
Contingent deferred consideration treated as remuneration 870 3,470 6,009
Deferred consideration fair value adjustment (66) - -
Third party advisory costs 677 367 1,199
Total 9,686 9,174 19,425

5. Income taxes

The tax charge for the period has been calculated using an estimate of the effective annual rate of tax for each taxing jurisdiction for the full year. These rates have been applied to the pre-tax profits for each jurisdiction for the six months ended 30 June 2014. The Group has separately calculated the tax rates applicable to amortisation of intangibles and transaction related costs for the period. Tax rate changes that were substantively enacted at the balance sheet date have been factored into the calculation of the effective tax rates.

Analysis of the tax expense/(credit) in the income statement for the period:

£000's 30 June 2014 30 June 2013 31 December 2013
Current tax expense 7,977 8,332 16,448
Deferred tax credit (1,629) (1,525) (1,461)
Total tax expense in the income statement 6,348 6,807 14,987
Add back:
Tax on amortisation of acquired intangibles and acquisition related costs 2,432 2,033 3,889
Adjusted tax charge on PBTA for the period 8,780 8,840 18,876
Tax rate on PBT 29.3% 32.3% 34.4%
Tax rate on PBTA 28.0% 29.3% 29.9%

6. 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
£000's 2014 2013 2013
Profit attributable to ordinary shareholders 15,318 14,240 28,620
000's
Weighted average number of ordinary shares for the purposes of basic earnings per share 219,188 217,953 218,355
Effect of employee share schemes 1,105 1,034 909
Weighted average number of ordinary shares for the purposes of diluted earnings per share 220,293 218,987 219,264
Basic earning per share (pence) 6.99 6.53 13.11
Diluted earnings per share (pence) 6.95 6.50 13.05

The directors consider that earnings per share before amortisation of acquired intangibles and transaction related costs provides a more meaningful measure of the Group's performance than statutory earnings per share. The calculations of adjusted earnings per share were based on the number of shares as above, and are shown in the table below:

£000's Six months ended 30 June 2014 Six months ended 30 June 2013 Year ended 31 Dec 2013
Profit attributable to ordinary shareholders 15,318 14,240 28,620
Amortisation of acquired intangibles and transaction related costs 9,686 9,174 19,425
Tax on amortisation of acquired intangibles and transaction related costs (2,432) (2,033) (3,889)
Adjusted profit attributable to ordinary shareholders 22,572 21,381 44,156
Adjusted basic earnings before per share (pence) 10.30 9.81 20.22
Adjusted diluted earnings per share (pence) 10.25 9.76 20.14

7. Property, plant and equipment

During the six months ended 30 June 2014 the Group acquired assets with a
cost of £5,497,000 (six months to 30 June 2013: £4,732,000), which includes £1,045,000 acquired through business combinations (six months to 30 June 2013: £89,000). Assets with a net book value of £90,000 were disposed of during the six months ended 30 June 2014 (six months ended 30 June 2013: £86,000).

8. Acquisitions

The Group has completed the following acquisitions to strengthen and broaden the skill base of the Group, during the first half of 2014:

Entity Business Segment Date of Acquisition Place of incorporation Percentageof entity acquired Nature of business acquired
Whelans Corporation Pty Ltd AAP 5 Feb 2014 Australia 100% Surveying
Clear Environmental Consultants Ltd BNE Europe 9 April 2014 UK 100% Water Consultancy
GaiaTech Holdings Inc BNE NA 15 May 2014 UK 100% Environmental Consultancy

Their contributions to the Group's results for the period is given below:

£000's Revenue Operating profit
Whelans 1,927 172
Clear 1,249 102
GaiaTech 1,459 273

Had the Group acquired these entities on the first day of the period, the Group estimates revenue would have been £285,469,000 and operating profit would have been £23,965,000.

The Group has allocated provisional fair values to the net assets acquired as follows:

 

£000's Order book Customer relationships Brand PPE Cash Other assets Other liabilities Net assets acquired
Whelans 142 186 104 369 396 1,290 (1,209) 1,278
Clear 480 2,660 200 274 1,943 1,221 (2,057) 4,721
GaiaTech 143 4,477 327 402 1,702 5,511 (5,286) 7,276
765 7,323 631 1,045 4,041 8,022 (8,552) 13,275

 

£000's Initial cash consideration Contingent cash consideration Deferred cashl consideration Total consideration Net assets acquired Goodwill acquired
Whelans 1,443 - 619 2,062 1,278 784
Clear 6,841 1,156 - 7,997 4,721 3,276
GaiaTech 17,894 - - 17,894 7,276 10,618
26,178 1,156 619 27,953 13,275 14,678

The consideration payable in future for Clear is contingent upon renewal of a key contract. The payment made will be in the range of £nil to £1,500,000 and the fair value has been determined by estimating the likelihood of payment.

There was no tax deductable goodwill acquired.

Provisional values are given in the table above as information about facts or circumstances that existed at the acquisition date is incomplete.

Goodwill represents the value of the accumulated workforce and synergies with RPS associated with these acquisitions.

The total fair value of receivables acquired was £5,668,000. The gross contractual receivables acquired were £5,786,000 and £118,000 was estimated to be irrecoverable.

The vendors of the acquired companies have entered into indemnity arrangements with the Group. The total undiscounted cash flow that could be receivable by the Group is between £nil and £5,668,000. As the Group does not expect that these warranties will become receivable, it has not recognised an indemnification asset on acquisition.

The Group incurred acquisition-related costs of £677,000 (6 months to 30 June 2013: £314,000), which have been expensed through the consolidated income statement and included within "amortisation of acquired intangibles and transaction related costs".

A reconciliation of the goodwill movement in 2014 in respect of acquisitions completed in 2013 and 2014 is given below.

£000's PEICE KR APASA HMA Ichron OEC Whelans Clear GT
Goodwill at 1 January 2014 3,007 1,399 1,955 6,997 5,538 17,273 - - -
Additions through acquisition - - - - - - 784 3,276 10,618
Adjustments to opening balance sheet - 9 - - - - - - -
Foreign exchange gains and losses (102) (44) 41 (236) - (731) 7 - (161)
Goodwill at 30 June 2014 2,905 1,364 1,996 6,761 5,538 16,542 791 3,276 10,457

There were no accumulated impairment losses at the beginning or the end of the period.

Commitments and contingencies

The Group completed a number of acquisitions between 1 January 2010 and 31 December 2011 where deferred consideration payments to vendors are contingent on the vendor's continued employment with the Group and so are required to be recognised as employment costs over the deferred consideration period. The Group considers it probable that the remaining deferred consideration payments will be settled.

The total remaining cash commitments at 30 June 2014 in respect of contingent deferred consideration treated as remuneration that the Group expects to settle is £789,000 and payment will be made before the end of this year. The related estimated remuneration charge to be incurred by the year end is £263,000.

The balance sheet at 30 June 2014 includes, within deferred consideration current liabilities, contingent deferred consideration remuneration expense accrued but not paid totalling £526,000 (31 December 2013: £2,457,000).

9. Share capital

2014 Number 000's 2014 £000's 2013 Number 000's 2013 £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 220,632 6,619 219,566 6,587
Issued under employee share schemes 362 11 424 13
At 30 June 220,994 6,630 219,990 6,600

10. Other reserves

£000's Merger reserve Employee trust Translation reserve Total
At 1 January 2014 21,256 (9,277) 5,673 17,652
Exchange differences - - (1,785) (1,785)
Issue of new shares - (641) - (641)
At 30 June 2014 21,256 (9,918) 3,888 15,226
At 1 January 2013 21,256 (9,059) 23,873 36,070
Exchange differences - - (1,706) (1,706)
Issue of new shares - (281) - (281)
Purchase of own shares - 756 - 756
At 30 June 2013 21,256 (8,584) 22,167 34,839

11. Dividends

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

£000's Six months ended 30 June 2014 Six months ended 30 June 2013 Year ended 31 Dec 2013
Final dividend for 2013 3.84p per share 8,453 - -
Interim dividend for 2013 3.52p per share - - 7,726
Final dividend for 2012 3.34p per share - 7,308 7,308
8,453 7,308 15,034

An interim dividend in respect of the six months ended 30 June 2014 of 4.05 pence per share, amounting to a total dividend of £8,921,000 was approved by the Directors of RPS Group Plc on 29 July 2014. 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
£000's 2014 2013 2013
Operating profit 23,372 22,005 45,880
Adjustments for:
Depreciation 4,216 5,051 9,432
Amortisation of acquired intangibles 8,205 5,337 12,217
Contingent deferred consideration treated as remuneration 870 3,470 6,009
Deferred consideration fair value adjustment (66) - -
Share based payment expense 960 1,041 1,938
Profit on sale of property, plant and equipment (61) (186) (241)
37,496 36,718 75,235
(Increase)/(decrease) in trade and other receivables (4,154) 1,604 8,838
Decrease in trade and other payables (3,901) (4,491) (12,043)
Adjusted cash generated from operations 29,441 33,831 72,030

* Adjusted cash generated from operations is before payment of deferred consideration treated as remuneration.

The table below provides an analysis of net bank borrowings, comprising cash and cash equivalents, interest bearing bank loans and finance leases, during the six months ended 30 June 2014.

£000's At 1 January 2014 Cash flow Acquisition debt Foreign exchange At 30 June 2014
Cash and cash equivalents 18,699 674 - (354) 19,019
Overdrafts (908) (1,999) - (14) (2,921)
Bank Loans (49,637) (26,870) (4,003) 1,120 (79,390)
Finance lease creditor (522) 117 (124) (11) (540)
Net bank borrowings (32,368) (28,078) (4,127) 741 (63,832)

The cash balance includes £7,680,000 (31 December 2013: £6,028,000) that is restricted in its use.

13. Events after the balance sheet date

On 24 July the Group agreed a US$150m private placement 3 year "shelf" facility with Prudential Investment Inc ("Pricoa"). Initial notes with a value of £30m and US$34.1m (equivalent to £20m) each with a 7 year term and fixed coupon of 3.98% and 3.84% respectively will be issued on 30 September 2014. The balance of the facility is uncommitted but is available from 24 July 2015.

14. Principal risks and uncertainties

The nature of the principal risks and uncertainties faced by the Group have not changed significantly since the 2013 Report and Accounts was published. These risks, together with a description of the approach to mitigate them, are set out on pages 8 and 9 of the 2013 Report and Accounts (available on the Group's website at www.rpsgroup.com) and are summarised as follows:

- Economic environment
- Material adverse events
- Information systems
- Recruitment and retention of key personnel
- Market position and reputation
- Litigation
- Compliance
- Business acquisitions
- Funding
- Health and safety

From time to time the Group receives claims from clients and suppliers. Some of these result in payments to the claimants by the Group and its insurers. The Board reviews all significant claims at each board meeting and more regularly if required. The Board is currently satisfied that the Group has sufficient provisions in its balance sheet to meet all likely uninsured liabilities.

The Board keeps under review the potential effect of economic circumstances. The continuing uncertainty in the global economic outlook inevitably increases the trading and balance sheet risks to which the Group is exposed.

15. Related party transactions

There are no significant changes in the nature and size of related party transactions for the period to those reported in the 2013 Report and Accounts.

16. 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. The continuing uncertainty in global economic outlook inevitably increases the risks to which the Group is exposed. Statements in respect of the Group's performance in the year to date are based upon unaudited management accounts for the period January to June 2014. Nothing in this announcement should be construed as a profit forecast.

17. Publication

A copy of this announcement will be posted on the Company's website at www.rpsgroup.com.

INDEPENDENT REVIEW REPORT TO RPS GROUP PLC

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 2014, which comprises the Condensed consolidated income statement, the Condensed consolidated statement of comprehensive income, the Condensed consolidated balance sheet, the Condensed consolidated cash flow statement, the Condensed consolidated statement of changes in equity and the related notes 1 to 17. 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.

This report is made solely to the company 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. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.

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 Finance Conduct Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with 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.

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 2014 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 Finance Conduct Authority.

 

Deloitte LLP
Chartered Accountants and Statutory Auditor
Reading, United Kingdom

31 July 2014

 

2012

Half Year Results for the six months ended 30 June 2014

31 July 2014

Half Year Results for the six months ended 30 June 2014

PBTA ahead 11% on a constant currency basis. Agreement entered into for additional 7 year £50 million fixed rate loan. Interim dividend increased 15% for 21st consecutive year.

2014 2013 2013(3)
Business Performance H1 H1 H1
Revenue (£m) 279.4 280.9 261.1
Fee income (£m) 248.6 241.8 224.9
PBTA (1) (£m) 31.4 30.2 28.2
Adjusted earnings per share (2)(basic) (p) 10.30 9.81 9.16
Dividend per share (p) 4.05 3.52 3.52
Statutory Reporting
Profit before tax (£m) 21.7 21.0 19.8
Earnings per share (basic) (p) 6.99 6.53 6.17

(1) PBTA is profit before tax, amortisation of acquired intangibles and transaction related costs.
(2) Adjusted earnings per share is before amortisation of acquired intangibles and transaction related costs and the related tax.
(3) 2013 results restated at 2014 currency rates.

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

"On a constant currency basis our PBTA improved significantly. Our European business continued its steady growth. Conditions remained challenging in the Australian resources market and, during the period, some softness developed in parts of the oil and gas exploration and production sector. However, our business model again delivered robust results, with acquisitions making a significant contribution. RPS is financially strong. Following the recent agreement with Pricoa to provide additional long term debt we have ample resources to continue our growth strategy.".

31 July 2014

 

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

 

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, Norway, the Americas and Australia Asia Pacific 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.

 

Results

Profit (before tax, amortisation of acquired intangibles and transaction related costs) was £31.4 million (2013: £30.2 million; £28.2 million on a constant currency basis). Profit before tax was £21.7m (2013: £21.0m; £19.8m on a constant currency basis). Basic earnings per share (before amortisation and transaction related costs) were 10.30 pence (2013: 9.81 pence; 9.16 pence on a constant currency basis). The strengthening of sterling caused a significant reduction in year on year profit growth. The contribution of the Group's four segments was:

Underlying Profit(£m)(1) 2014 2013 2013(2)
H1 H1 H1
Energy 18.3 16.7 15.8
Built and Natural Environment: Europe 10.1 9.6 9.4
Built and Natural Environment: North America 4.2 3.9 3.5
Australia Asia Pacific ("AAP") 4.8 5.5 4.7
Total 37.4 35.7 33.4

(1) as defined in note 3; stated before reorganisation costs of £1.0m (2013: £1.1m)

(2) 2013 results restated at 2014 currency rates.

Group central costs were £3.4 million, (2013: £3.4 million) and finance charges were £1.7 million (2013: £1.0 million).

Funding and Dividend

Our balance sheet remains strong. We funded acquisition investment of £38.8 million in the period, including £20.2 million in respect of GaiaTech (announced on 20 May). Net bank borrowings at 30 June were £63.8 million (31 December 2013: £32.4 million). We have in place until 2016 a £125 million facility with Lloyds Bank Plc and have recently secured a US$150 million US private placement shelf facility with Pricoa. Initial notes with an aggregate value of £50 million, seven year term and 4% fixed coupon will be issued in September. Cash conversion was a little below the normal run rate as some major clients managed payment around their own half year. We expect the full year outcome to be at the normal level.

The Board remains confident about the Group's financial strength and has, once again, increased the interim dividend by 15% to 4.05 pence per share (2013: 3.52 pence) payable on 16 October 2014 to shareholders on the register on 19 September 2014.

Markets and Trading

Energy

We provide internationally recognised consultancy services to the oil and gas exploration and production industry from bases in the UK, USA and Canada. These act as regional centres for projects undertaken in many other countries. The business delivered good growth in the first half.

2014 2013 2013(2)
H1 H1 H1
Fee income (£m) 104.1 87.8 83.3
Underlying profit(1) (£m) 18.3 16.7 15.8
Margin % 17.6 19.0 18.9

(1) as defined in note 3, stated before reorganisation costs of £nil (2013: £0.1m)

(2) 2013 results restated at 2014 currency rates.

We continued to benefit from our prominent position in the oil and gas sector in many parts of the world, as well as increasing demand for our advice from the financial services sector. The acquisitions made in 2013 are integrating well and will contribute to the delivery of another year of good growth for this business.

During the second quarter some of our clients began to manage expenditure more tightly and political instability in parts of the Middle East has slowed investment. The Canadian potash market, which turned down in the middle of 2013, remains subdued and has impacted the year on year performance.

With long term demand for energy resources set to grow significantly, the current softness in some markets should be relatively short lived. During this period our robust business model and strong market presence should ensure continued high performance.

Built and Natural Environment ("BNE")

Within these businesses we provide a wide range of consultancy services to many aspects of the property and infrastructure development and management sectors. In recent years we have developed extensive experience in respect of the infrastructure projects necessary to bring energy resources, both conventional and renewable, to market.

Europe

2014 2013 2013(2)
H1 H1 H1
Fee income (£m) 75.5 74.7 73.7
Underlying Profit(1) (£m) 10.1 9.6 9.4
Margin % 13.4 12.8 12.8

(1) as defined in note 3, stated before reorganisation costs of £0.1m (2013: £0.3m)

(2) 2013 results restated at 2014 currency rates

Our BNE business in Europe performed well in the first half of the year. Those activities which assist clients develop new capital projects, particularly our planning and development business, continued to benefit both from improving market conditions and client confidence. Those exposed to operational environments, such as providing environment management advice, continue to need to offer an efficient, cost effective service to assist clients manage tight budgets.

The acquisition of Clear Environmental Consultants (announced on 10 April) has extended the range of our UK water activities and will assist the strategic development of this business. We have agreed terms to bring a market leading planning and development business into the Group . This will support a growing part of the business, with excellent prospects. Overall, our European business remains on track to achieve growth this year.

North America

2014 2013 2013(2)
H1 H1 H1
Fee income (£m) 19.0 15.7 14.4
Underlying Profit(1) (£m) 4.2 3.9 3.5
Margin % 22.0 24.9 24.7

(1) as defined in note 3, stated before reorganisation costs of £nil (2013: £nil)

(2) 2013 results restated at 2014 currency rates

We remain well positioned in the expanding North American energy infrastructure market. The acquisition of HMA Land Services in September 2013 gave us access to the substantial pipeline development market. Those parts of the business closest to E&P activities also experienced some of the expenditure tightening from clients seen in the Energy business during the first half. In the most buoyant part of our market, permitting and licensing of facilities, staff retention and recruitment has become exceptionally difficult and staff losses caused significant disruption.

The acquisition of GaiaTech was an important step in the development of this business, giving us access to new markets and geography. It will make an important contribution in the second half and subsequent years. Opportunities remain to expand our North American business significantly both organically and by acquisition.

AAP

This business is a combination of the former BNE: AAP and the AAP component of Energy. They were brought together in 2013 to take advantage of the opportunities in the integrated energy and energy infrastructure markets and, specifically, help counter the impact of the slowdown in the resources sector on our businesses.

2014 2013 2013(2)
H1 H1 H1
Fee income (£m) 50.8 65.9 55.4
Underlying Profit(1) (£m) 4.8 5.5 4.7
Margin % 9.4 8.4 8.4

(1) as defined in note 3, stated before reorganisation costs of £nil (2013: £nil)

(2) 2013 results restated at 2014 currency rates

Throughout the first half our mining and energy clients in AAP remained focused on operational efficiency rather than capital expenditure on project development. As a result further projects have been delayed or cancelled. As expected, therefore, our level of activity in the first half was at a lower level than last year and we continued with the plan to reduce our cost base in order to improve efficiency.

The rebalancing of our business away from the resources sector has, however, continued positively. There has been increased optimism and investment in private and public sector urban development and infrastructure projects, particularly in and around Sydney and Melbourne. The second quarter, as a result, showed a significant improvement over the first and we currently anticipate the second half should see further improvement. In order to support this change of emphasis, we have agreed terms to acquire a consultancy with a strong public sector client base and offices in all major cities. It will make a significant contribution to the development of our business.

Group Prospects

Our flexible and robust business model has demonstrated in recent years that it is capable of generating growth in challenging circumstances. A number of acquisitions are under active consideration. The Board remains focussed on delivering a good result for the full year.

Board of Directors
RPS Group plc

31 July 2014

 

Condensed consolidated income statement

Notes Six months
ended
30 June
Six months
ended
30 June
Year
ended
31 December
£000's 2014 2013 2013
Revenue 3 279,376 280,850 567,614
Recharged expenses 3 (30,778) (39,006) (75,493)
Fee income 3 248,598 241,844 492,121
Operating profit before amortisation of acquired intangibles and transaction related costs 3 33,058 31,179 65,305
Amortisation of acquired intangibles and transaction related costs 4 (9,686) (9,174) (19,425)
Operating profit 3 23,372 22,005 45,880
Finance costs (1,741) (1,006) (2,430)
Finance income 35 48 157
Profit before tax, amortisation of acquired intangibles and transaction related costs 31,352 30,221 63,032
Profit before tax 21,666 21,047 43,607
Tax expense 5 (6,348) (6,807) (14,987)
Profit for the period attributable to equity holders of the parent 15,318 14,240 28,620
Basic earnings per share (pence) 6 6.99 6.53 13.11
Diluted earnings per share (pence) 6 6.95 6.50 13.05
Adjusted basic earnings per share (pence) 6 10.30 9.81 20.22
Adjusted diluted earnings per share (pence) 6 10.25 9.76 20.14

 

Condensed consolidated statement of comprehensive income

Six months
ended
30 June
Six months
ended
30 June
Year
ended
31 December
£000's 2014 2013 2013
Profit for the period 15,318 14,240 28,620
Exchange differences* (1,785) (1,706) (18,200)
Remeasurement of net defined benefit liability (256) - -
Total recognised comprehensive income for the period attributable to equity holders of the parent 13,277 12,534 10,420

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

 

Condensed consolidated balance sheet

As at 30 June As at 30 June As at 31 December
£000's Notes 2014 2013 2013
Assets
Non-current assets
Intangible assets 387,691 340,408 375,279
Property, plant and equipment 7 28,753 30,200 27,785
Deferred tax asset 3,630 - 2,018
420,074 370,608 405,082
Current assets
Trade and other receivables 170,075 162,064 161,741
Cash at bank 19,019 12,713 18,699
189,094 174,777 180,440
Liabilities
Current liabilities
Borrowings 3,411 1,474 1,465
Deferred consideration 13,722 11,369 20,919
Trade and other payables 100,520 98,102 103,260
Corporation tax liabilities 3,932 1,638 3,058
Provisions 1,420 2,560 2,134
123,005 115,143 130,836
Net current assets 66,089 59,634 49,604
Non-current liabilities
Borrowings 79,440 31,973 49,602
Deferred consideration 11,690 6,910 14,923
Other creditors 2,747 3,022 2,471
Deferred tax 12,366 6,578 13,645
Provisions 2,009 1,469 2,007
108.252 49,952 82,648
Net assets 377,911 380,290 372,038
Equity
Share capital 9 6,630 6,600 6,619
Share premium 109,235 106,922 108,307
Other reserves 10 15,226 34,839 17,652
Retained earnings 246,820 231,929 239,460
Total shareholders' equity 377,911 380,290 372,038

 

Condensed consolidated cash flow statement

Six months
ended
30 June
Six months
ended
30 June
Year
ended
31 December
£000's Notes 2014 2013 2013
Adjusted cash generated from operations 12 29,441 33,831 72,030
Deferred consideration treated as remuneration (2,792) (4,204) (7,714)
Cash generated from operations 26,649 29,627 64,316
Interest paid (1,503) (1,091) (1,991)
Interest received 35 48 157
Income taxes paid (8,751) (11,381) (19,829)
Net cash from operating activities 16,430 17,203 42,653
Cash flows from investing activities
Purchases of subsidiaries net of cash acquired (22,138) (11,178) (31,174)
Deferred consideration (9,767) - (3,466)
Purchase of property, plant and equipment (4,299) (4,722) (8,034)
Sale of property, plant and equipment 148 272 523
Net cash used in investing activities (36,056) (15,628) (42,151)
Cash flows from financing activities
Proceeds from issue of share capital 1 211 555
Proceeds from bank borrowings 26,870 2,935 18,609
Payment of finance lease liabilities (117) (353) (580)
Dividends paid 11 (8,453) (7,308) (15,034)
Payment of pre-acquisition dividend - (87) (247)
Net cash from/(used in) financing activities 18,301 (4,602) (3,303)
Net (decrease)/increase in cash and cash equivalents