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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Rps Group Plc | LSE:RPS | London | Ordinary Share | GB0007594764 | ORD 3P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 221.00 | 221.00 | 222.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMRPS
RNS Number : 0754N
RPS Group PLC
04 August 2017
RPS GROUP PLC
("RPS" or "the Group")
Interim Results for the six months ended 30 June 2017
Significant profit improvement over H1 2016, resulting from organic growth, margin improvement, reduced re-organisation costs and currency benefit. New regional structure delivering. Interim dividend increased 3%.
Hot Features
Premium
H1 H1 H1
2017 2016 2016 (constant
currency)
(3)
------ ------ ---------------
Revenue (GBPm) 314.5 291.4 312.6
Fee income (GBPm) 281.1 260.8 279.9
PBTA (1) (GBPm) 27.2 20.2 22.0
Adjusted earnings per share
(basic) (p) (2) 8.71 6.44 7.03
Dividend per share (p) 4.80 4.66 4.66
Statutory profit before tax
(GBPm) 20.4 10.9 11.8
Statutory earnings per share
(basic) (p) 6.55 3.93 4.26
------------------------------ ------ ------ ---------------
(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) 2016 results restated at 2017 currency rates
Key Points
-- PBTA up 35% to GBP27.2m (2016: GBP20.2m) -- Adjusted EPS (basic) up 35% to 8.71p (2016: 6.44p) -- Statutory profit before tax up 88% to GBP20.4m (2016: GBP10.9m) -- Net bank borrowings GBP93.4m (June 2016: GBP95.0m) -- Leverage reduced to 1.5 times (June 2016: 2.2 times) -- Cash conversion 62% (2016: 101%) -- Dividend increased 3% to 4.80 pence (2016: 4.66 pence) -- Three regional segments working well -- Platform established to return to growth in 2017.
Alan Hearne, Chief Executive, commenting on the results, said:
"The Group's strategy of building a diverse international business has enabled RPS to emerge rapidly and effectively from the severe oil and gas downturn of the last two years. The creation of our three regional businesses enables us to look confidently to the future."
In recent years our acquisitions in both Norway and Australia have been directed towards project management consultancy, particularly in respect of large scale infrastructure projects. These businesses performed well. We see this as an important new activity for the Group, reducing our dependency on the resources sectors and providing a more flexible business model.
The reduction in our dependence upon the oil and gas market, the continuing impact of good cost management and the strong results for the first half of the year enable us to anticipate modestly exceeding market expectations for the full year".
4 August 2017
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 independent advice upon: the development and management of the built and natural environment, the planning and development of strategic infrastructure and the evaluation and development of energy, water and other resources. We have offices in the UK, Ireland, the Netherlands, Norway, the United States, Canada and Australia/Asia Pacific and undertake projects in many other parts of the world. The Group has been a constituent of the FTSE4Good index since its inception in 2001.
This announcement contains certain forward-looking statements with respect to the financial condition, results of operations and businesses of RPS Group plc. These statements involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements. Nothing in this announcement should be construed as a profit forecast.
Results
Profit (before tax, amortisation of acquired intangibles and transaction related costs) was GBP27.2 million (2016: GBP20.2 million; GBP22.0 million on a constant currency basis). Statutory profit before tax was GBP20.4 million (2016: GBP10.9 million; GBP11.8 million on a constant currency basis). Adjusted earnings per share (basic) were 8.71 pence (2016: 6.44 pence; 7.03 pence on a constant currency basis). Statutory earnings per share (basic) were 6.55 pence (2016: 3.93 pence; 4.26 pence on a constant currency basis).
Group segment profit increased to GBP34.5 million (2016: GBP25.8 million; GBP27.8 million on a constant currency basis). Group unallocated expenses increased to GBP4.9 million (2016: GBP3.1 million), largely reflecting the cost of Board changes. Finance charges were unchanged at GBP2.5 million (2016: GBP2.5 million).
Segmentation and Services
As previously announced, the Group began operating two new regional, multi-disciplinary businesses in addition to our existing AAP business with effect from 1 January 2017. The contribution of the three regional businesses in the period was:
H1 H1 H1
Segment profit (GBPm) 2017 2016 restated 2016
(1)
(constant
currency)
(2)
------------------------ ------ --------------- ------------
Europe 21.2 14.6 15.2
Australia Asia Pacific
("AAP") 8.0 6.3 7.1
North America 5.4 4.9 5.5
Total (3) 34.5 25.8 27.8
------------------------ ------ --------------- ------------
(1) restated for segment changes (see note 4)
(2) 2016 results restated at 2017 currency rates
(3) after reorganisation costs of GBP0.7 million (2016: GBP3.9 million, GBP4.2m at constant currency)
Each segment provides a broad range of services across many sectors of the economy, serving both the public and private sectors. They each remain exposed to oil and gas projects in varying degrees, with North America having the greatest exposure. The contribution from oil and gas and Australian natural resources projects to total Group segment results in the first half as a whole was about 18% in respect of fees and 10% in respect of segment profit, significantly reduced from the top of the oil and gas cycle in 2014.
We committed c. GBP126 million to acquisitions in 2014-2016, none with direct exposure to oil and gas markets. These broadened the Group's activities and geographical footprint and materially assisted the Group maintain its profits as the effects of the oil and gas downturn were felt, clearly demonstrating the value of this part of our strategy.
Funding and Dividend
Net bank borrowings at 30 June 2017 were GBP93.4 million (30 June 2016: GBP95.0 million). We settled GBP7.4 million of deferred consideration in respect of acquisitions made in prior years. Deferred consideration of up to GBP5.6 million is payable in the second half of 2017, leaving only GBP1.7 million remaining to be paid in 2018. Our conversion of profit into cash in the period was modest, due to the timing of annual payments and the un-winding of prepayments made by clients in 2016; we expect a much improved performance in the second half.
Since July 2015 we have had in place a five year GBP150 million revolving credit facility with Lloyds Bank plc and HSBC Bank plc. In addition, about 4 years remain on the GBP30.0 million and $34.1 million fixed term, fixed rate notes issued through Pricoa in 2014. Our interest cover at 30 June was 14 times, well above the bank covenant of four times. The Board indicated in the 2016 Interim Results announcement that it had decided to take a more cautious approach to investment in acquisitions because leverage (defined in note 3) had reached 2.2 at 30 June 2016, even though it was well below the bank covenant of 3.0. Our leverage at 30 June 2017 has reduced to 1.5 and the search for suitable investment opportunities has recommenced.
The Board remains confident about the Group's financial strength and will distribute an increased interim dividend of 4.80 pence (2016: 4.66 pence), payable on 13 October 2017 to shareholders on the register on 15 September 2017.
Markets and Trading
Europe
Within this business we provide a wide range of services to many aspects of the property and infrastructure development and management sectors. From 1 January 2017 it also includes the Energy: EAME business, which undertakes oil and gas projects globally. Overall, this is our largest business and it has delivered a good performance in the period.
H1 H1 H1
2017 2016 restated 2016
(1)
(constant
currency)
(2)
----------------------- ------ --------------- ------------
Fee income (GBPm) 164.4 151.4 156.8
Segment profit (GBPm)
(3) 21.2 14.6 15.2
Margin % 12.9 9.7 9.7
----------------------- ------ --------------- ------------
(1) restated for segment changes (see note 4)
(2) 2016 results restated at 2017 currency rates
(3) after reorganisation costs of GBP0.2 million (2016: GBP2.5 million, GBP2.5m at constant currency)
Our planning and development businesses in the UK and Ireland, continued to benefit both from good market conditions and client confidence in respect of both private sector development, as well as public infrastructure projects.
Our activities exposed to operational environments continued to need to offer an efficient, cost effective service to assist clients in managing tight budgets, but generally traded well, particularly our water business in the UK, which continues to benefit from its strong market presence.
The oil and gas activities remain confronted by a difficult market. However, as a result of effective cost management our Energy businesses returned a profit contribution significantly better than in the same period last year.
In Norway the business performed very well, transitioning away from oil and gas to the buoyant infrastructure markets.
This segment is capable of delivering good growth in 2017.
AAP
We continue to benefit from the development of our project management capability, which was expanded significantly by the acquisition of Point in 2014 and EIG in 2015.
H1 H1 H1
2017 2016 2016
(constant
currency)
(1)
----------------------- ------ ------ ------------
Fee income (GBPm) 67.0 63.2 71.7
Segment profit (GBPm)
(2) 8.0 6.3 7.1
Margin % 11.9 10.0 10.0
----------------------- ------ ------ ------------
(1) 2016 results restated at 2017 currency rates
(2) after reorganisation costs of GBP0.3 million (2016: GBP1.0 million, GBP1.2m at constant currency)
Our resources business in Western Australia continued to face sluggish markets and produced a significantly reduced underlying contribution compared with the first half of 2016. Our businesses on the east coast, particularly those involved in the management of major infrastructure projects and private sector development, had a successful first half. Our work for a growing number of Australian Federal Government agencies also continued to expand.
Our activities on the east coast give us confidence that the AAP business has a good platform to achieve further growth in 2017. The Federal budget in May allocated significant funds to infrastructure projects and underpinned this confidence.
North America
This business was created by the merger of our Built and Natural Environment: North America and Energy: North America businesses at the beginning of 2017. The BNE business had a significant exposure to clients operating in the oil and gas sector. In consequence, the new business as a whole remains significantly exposed to this sector. However, our non-energy activities now form the majority of this business, providing a platform from which to achieve long term growth, both organic and by acquisition.
H1 H1 H1
2017 2016 restated 2016
(1)
(constant
currency)
(2)
----------------------- ------ --------------- ------------
Fee income (GBPm) 50.3 47.3 52.5
Segment profit (GBPm)
(3) 5.4 4.9 5.5
Margin % 10.7 10.3 10.5
----------------------- ------ --------------- ------------
(1) restated for segment changes (see note 4)
(2) 2016 results restated at 2017 currency rates
(3) after reorganisation costs of GBP0.1 million (2016: GBP0.4m, GBP0.5 million at constant currency)
The acquisition of Iris, based in San Francisco, in October 2015 continued the process of diversifying into more traditional environmental consultancy activities. Following integration, it is working successfully with our other environmental risk businesses.
Although growth remains possible in the second half, the continuing low level of activity in the energy sector is likely to hold back the performance of this segment overall in 2017. This is particularly the case in Canada where the energy market is extremely sluggish. Developing our US business in the environmental, infrastructure and project management markets remains a Group priority.
Board Composition
There have been a number of changes to the Board. On 18 May 2017 it was announced that Alan Hearne is to step down as Chief Executive and retire from the Board by the end of August. John Douglas has been appointed as Chief Executive designate and will assume the role of Chief Executive when Alan steps down. We have also announced the appointment of Allison Bainbridge (1 June 2017) and Liz Peace (11 July 2017) as non-executive directors and John Bennett's retirement from the Board (1 June 2017). With the release of these Interim results Louise Charlton has also retired from the Board.
Prospects
The Group's strategy of building a diverse international business has enabled RPS to emerge rapidly and effectively from the severe oil and gas downturn of the last two years. The creation of our three regional businesses enables us to look confidently to the future.
In recent years our acquisitions in both Norway and Australia have been directed towards project management consultancy, particularly in respect of large scale infrastructure projects. These businesses performed well. We see this as an important new activity for the Group, reducing our dependency on the resources sectors and providing a more flexible business model.
The reduction in our dependence upon the oil and gas market, the continuing impact of good cost management and the strong results for the first half of the year enable us to anticipate modestly exceeding market expectations for the full year.
Board of Directors
RPS Group plc
4 August 2017
Condensed consolidated income statement (unaudited)
Notes Six months Six months Year
ended ended ended 31
30 June 30 June December
GBP000's 2017 2016 2016
Revenue 4 314,516 291,431 594,471
Recharged expenses 4 (33,461) (30,627) (60,175)
----------------------------------------- ----- ---------- ---------- ----------
Fee income 4 281,055 260,804 534,296
Operating profit before amortisation
of acquired intangibles and transaction
related costs 4 29,681 22,691 55,877
----------------------------------------- ----- ---------- ---------- ----------
Amortisation of acquired intangibles
and transaction related costs 5 (6,807) (9,278) (17,890)
----------------------------------------- ----- ---------- ---------- ----------
Operating profit 4 22,874 13,413 37,987
Finance costs (2,493) (2,574) (5,331)
Finance income 39 44 158
----------------------------------------- ----- ---------- ---------- ----------
Profit before tax and amortisation
of acquired intangibles and transaction
related costs 27,227 20,161 50,704
----------------------------------------- ----- ---------- ---------- ----------
Profit before tax 20,420 10,883 32,814
Tax expense 6 (5,911) (2,215) (7,733)
----------------------------------------- ----- ---------- ---------- ----------
Profit for the period attributable
to equity
holders of the parent 14,509 8,668 25,081
----------------------------------------- ----- ---------- ---------- ----------
Basic earnings per share (pence) 7 6.55 3.93 11.35
----------------------------------------- ----- ---------- ---------- ----------
Diluted earnings per share (pence) 7 6.50 3.91 11.29
----------------------------------------- ----- ---------- ---------- ----------
Adjusted basic earnings per share
(pence) 7 8.71 6.44 16.60
Adjusted diluted earnings per
share (pence) 7 8.65 6.41 16.51
----------------------------------------- ----- ---------- ---------- ----------
Condensed consolidated statement of comprehensive income (unaudited)
Six months Six months Year
ended ended ended
30 June 30 June 31 December
GBP000's 2017 2016 2016
---------------------------------------------- ---------- ----------- -------------
Profit for the period 14,509 8,668 25,081
Exchange differences* (1,105) 28,516 41,429
Re-measurement of net defined benefit
liability - - (261)
Tax on re-measurement of defined benefit liability - - 65 Total recognised comprehensive income for the period attributable to equity holders of the parent 13,404 37,184 66,314 ---------------------------------------------- ---------- ----------- -------------
*may be reclassified subsequently to profit or loss in accordance with IFRS.
Condensed consolidated balance sheet (unaudited)
As at As at As at
30 June 30 June 31 December
GBP000's Notes 2017 2016 2016
------------------------------ ----- -------- -------- ------------
Assets
Non-current assets:
Intangible assets 446,482 450,367 455,508
Property, plant and equipment 8 28,278 27,973 28,448
Deferred tax asset 6,962 5,225 5,953
481,722 483,565 489,909
------------------------------- ----- -------- -------- ------------
Current assets:
Trade and other receivables 174,187 173,376 165,604
Cash at bank 13,026 18,878 16,503
------------------------------ ----- -------- -------- ------------
187,213 192,254 182,107
------------------------------- ----- -------- -------- ------------
Liabilities
Current liabilities:
Borrowings 306 2,054 36
Deferred consideration 6,806 22,273 13,376
Trade and other payables 119,610 122,928 125,165
Corporation tax 4,604 2,872 4,472
Provisions 2,624 1,584 1,809
------------------------------- ----- -------- -------- ------------
133,950 151,711 144,858
------------------------------- ----- -------- -------- ------------
Net current assets 53,263 40,543 37,249
------------------------------- ----- -------- -------- ------------
Non-current liabilities:
Borrowings 106,077 111,862 99,886
Deferred consideration 523 6,652 1,634
Other creditors 2,391 2,442 2,496
Deferred tax 9,489 9,993 10,045
Provisions 1,670 1,669 1,790
------------------------------- ----- -------- -------- ------------
120,150 132,618 115,851
------------------------------- ----- -------- -------- ------------
Net assets 414,835 391,490 411,307
------------------------------- ----- -------- -------- ------------
Equity
Share capital 10 6,721 6,686 6,703
Share premium 115,962 113,352 114,353
Other reserves 11 38,974 28,871 40,898
Retained earnings 253,178 242,581 249,353
------------------------------ ----- -------- -------- ------------
Total shareholders' equity 414,835 391,490 411,307
------------------------------ ----- -------- -------- ------------
Condensed consolidated cash flow statement (unaudited)
Six months Six months Year
ended 30 ended 30 ended 31
June June December
GBP000's Notes 2017 2016 2016
Cash generated from operations 13 21,766 28,257 78,253
Interest paid (2,633) (2,054) (5,077)
Interest received 39 44 158
Income taxes paid (7,716) (8,088) (11,057)
Net cash from operating activities 11,456 18,159 62,277
-------------------------------------------- ----- ---------- ---------- ---------
Cash flows from investing activities:
Purchases of subsidiaries net of
cash acquired - (6,557) (6,557)
Deferred consideration (7,378) (7,784) (23,672)
Purchase of property, plant and
equipment (3,992) (3,641) (8,130)
Sale of property, plant and equipment 147 116 225
Net cash used in investing activities (11,223) (17,866) (38,134)
-------------------------------------------- ----- ---------- ---------- ---------
Cash flows from financing activities:
Cost of issue of share capital (8) - (5)
Proceeds from/(repayment of) bank
borrowings 7,625 8,420 (6,921)
Payment of finance lease liabilities (24) (23) (47)
Dividends paid 12 (11,308) (11,267) (21,613)
Payment of pre-acquisition dividend - - (850)
-------------------------------------------- ----- ---------- ---------- ---------
Net cash used in financing activities (3,715) (2,870) (29,436)
-------------------------------------------- ----- ---------- ---------- ---------
Net decrease in cash and cash equivalents: (3,482) (2,577) (5,293)
Cash and cash equivalents at beginning
of period 16,503 17,322 17,322
Effect of exchange rate fluctuations (289) 2,079 4,474
-------------------------------------------- ----- ---------- ---------- ---------
Cash and cash equivalents at end
of period 12,732 16,824 16,503
-------------------------------------------- ----- ---------- ---------- ---------
Cash and cash equivalents comprise:
Cash at bank 13,026 18,878 16,503
Bank overdraft (294) (2,054) -
-------------------------------------------- ----- ---------- ---------- ---------
Cash and cash equivalents at end
of period 12,732 16,824 16,503
-------------------------------------------- ----- ---------- ---------- ---------
Condensed consolidated statement of changes in equity (unaudited)
Share Share Retained Other Total
GBP000's capital premium earnings reserves equity
------------------------------ ---------- ---------- ----------- ----------- ---------
At 1 January 2017 6,703 114,353 249,353 40,898 411,307
Total comprehensive income
for the period - - 14,509 (1,105) 13,404
Issue of new ordinary shares 18 1,609 (816) (819) (8)
Share based payment expense - - 1,440 - 1,440
Dividends - - (11,308) - (11,308)
At 30 June 2017 6,721 115,962 253,178 38,974 414,835
------------------------------ ---------- ---------- ----------- ----------- ---------
At 1 January 2016 6,667 112,026 244,648 1,149 364,490
Total comprehensive expense
for the period - - 8,668 28,516 37,184
Issue of new ordinary shares 19 1,326 (555) (794) (4)
Share based payment expense - - 1,087 - 1,087
Dividends - - (11,267) - (11,267)
At 30 June 2016 6,686 113,352 242,581 28,871 391,490
------------------------------ ---------- ---------- ----------- ----------- ---------
An analysis of other reserves is provided in Note 11.
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 2017 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 2016 and in accordance with IAS 34 as adopted by the European Union. They are unaudited but have been reviewed by the Company's auditor. The results for the year end 31 December 2016 and the balance sheet as at that date are abridged from the Company's Report and Accounts 2016 which have been delivered to the Registrar of Companies. The auditor's report on those accounts was unqualified and did not draw attention to any matters by way of emphasis 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, despite the current uncertain economic environment, 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.
The Group is undertaking a detailed review of the potential impact of IFRS 15 "Revenue from Contracts" and IFRS 9 "Financial Instruments" that will both be first applied to the Group's financial statements for the year ended 31 December 2018. At this stage we do not believe that either standard will significantly affect the Group's results.
2. Responsibility Statement
The directors confirm that, to the best of their knowledge this condensed set of financial statements has been prepared in accordance with IAS 34 and that this Interim Report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R.
On behalf of the Board
A. S. Hearne G. R. Young Chief Executive Group Finance Director
4 August 2017
3. Alternative Performance Measures
The Group defines and presents various non-GAAP performance measures in this results announcement. The measures presented are those adopted by management and analysts who follow us in assessing the performance of the business. Our principal non-GAAP measure is profit before tax, amortisation of acquired intangibles and transaction related costs (PBTA). We adjust for amortisation of acquired intangible assets as these are non-cash item and their measurement is based on estimates of asset lives and fair values at acquisition where underlying assumptions are subjective in nature. We adjust for acquisition related costs as they are not dependent on the performance of the business and are only incurred when acquisitions arise. The alternative performance measures and adjusting items are defined below and these have been applied consistently throughout the interim results:
Fee income and recharged Revenue is classified into fee income
expenses and recharged expenses. Fee income represents
the Groups' personnel, subcontractor and
equipment time and expertise sold to clients.
Recharged expenses is the revenue recognised
on the recharge of costs incidental to
fulfilling the Group's contracts, for
example mileage, flights, subsistence
and accommodation
----------------------------- ------------------------------------------------
Operating profit before Statutory operating profit before amortisation
amortisation of acquired of acquired intangibles and transaction
intangibles and transaction related costs
related costs
----------------------------- ------------------------------------------------
Profit before tax and Statutory profit before tax and amortisation
amortisation of acquired of acquired intangibles and transaction
intangibles and transaction related costs
related costs (PBTA)
----------------------------- ------------------------------------------------
Amortisation of acquired Amortisation of acquired intangibles,
intangibles and transaction plus third party costs related to business
related costs combinations, plus adjustments to book
values of deferred consideration (note
5)
----------------------------- ------------------------------------------------
Segment profit Statutory profit before tax before interest,
amortisation of acquired intangibles,
transaction related costs and unallocated
expenses (note 4)
----------------------------- ------------------------------------------------
Underlying profit Segment profit before reorganisation costs
(note 4)
----------------------------- ------------------------------------------------
Reorganisation costs Cost arising from reorganisation including
redundancy costs, profit or loss on disposal
of plant, property and equipment, the
costs of consolidating office space and
rebranding (note 4)
----------------------------- ------------------------------------------------
Unallocated expenses Certain costs are not allocated to the
segments because they predominantly relate
to the stewardship of the Group. They
include the costs of the main Board, the
Group finance and marketing functions
and related IT costs (note 4)
----------------------------- ------------------------------------------------
Adjusted tax charge on Tax expense before tax on amortisation
PBTA of acquired intangibles and acquisition
related costs (see note 6)
----------------------------- ------------------------------------------------
Tax rate on PBT Tax expense expressed as a percentage
of profit before tax for the year (note
6)
----------------------------- ------------------------------------------------
Tax rate on PBTA Adjusted tax charge on PBTA as a percentage
of PBTA (note 6)
----------------------------- ------------------------------------------------
Adjusted earnings per Earnings per share before amortisation
share, basic and diluted and impairment of acquired intangibles,
transaction related costs and related
tax expense (note 7)
----------------------------- ------------------------------------------------
EBITDAS Earnings before interest, tax, depreciation,
amortisation of intangibles and share
scheme costs (note 13)
----------------------------- ------------------------------------------------
Cash conversion The ratio of cash from operations to EBITDAS
expressed as a percentage
----------------------------- ------------------------------------------------
Net bank borrowings The total of cash and cash equivalents,
interest bearing bank loans and finance
leases (note 13)
----------------------------- ------------------------------------------------
Leverage Ratio of net bank borrowings, plus deferred
consideration to EBITDAS, adjusted to
comply with lender requirements
----------------------------- ------------------------------------------------
Comparative measures Measures from prior periods that are translated
at constant currency into sterling at current period exchange
rates in order to eliminate the effect
of exchange differences on translation
----------------------------- ------------------------------------------------
4. Business segments
Segment information is presented in the financial statements in respect of the Group's business segments, as reported to the Chief Operating Decision Maker. The business segment reporting format reflects the Group's management and internal reporting structure.
Inter-segment pricing is determined on an arm's length basis. Segment results include items directly attributable to a segment as well as an allocation of central costs.
The segment results for the half year ended 30 June 2016 and the year ended 31 December 2016 were restated following changes to segmentation, as announced on 21 April 2017.
The business segments of the Group are as follows:
Europe
Australia Asia Pacific ("AAP")
North America
Segment results for the period ended 30 June 2017:
Intersegment
GBP000s Fee income Expenses revenue External revenue
-------------------- ----------- ----------- --------------- -----------------
Europe 164,449 23,474 (398) 187,525
AAP 66,970 5,593 (219) 72,344
North America 50,335 4,509 (197) 54,647
Group eliminations (699) (115) 814 -
Total 281,055 33,461 - 314,516
-------------------- ----------- ----------- --------------- -----------------
Underlying Reorganisation
GBP000s profit costs Segment profit
-------------------- ----------- ----------- --------------- -----------------
Europe 21,432 (229) 21,203
AAP 8,302 (349) 7,953
North America 5,494 (116) 5,378
Total 35,228 (694) 34,534
-------------------- ----------- ----------- --------------- -----------------
Segment results for the period ended 30 June 2016
as restated:
Intersegment
GBP000s Fee income Expenses revenue External revenue
-------------------- ----------- ----------- --------------- -----------------
Europe 151,363 20,406 (835) 170,934
AAP 63,171 5,358 (209) 68,320
North America 47,312 5,052 (187) 52,177
Group eliminations (1,042) (189) 1,231 -
Total 260,804 30,627 - 291,431
-------------------- ----------- ----------- --------------- -----------------
Underlying Reorganisation
GBP000s profit costs Segment profit
-------------------- ----------- ----------- --------------- -----------------
Europe 17,093 (2,452) 14,641
AAP 7,344 (1,037) 6,307
North America 5,339 (448) 4,891
Total 29,776 (3,937) 25,839
-------------------- ----------- ----------- --------------- -----------------
Segment results for the period ended 31 December 2016 as restated:
Intersegment External
GBP000s Fee income Expenses revenue revenue
-------------------- ----------- ----------- --------------- -----------------
Europe 307,671 42,406 (1,603) 348,474
AAP 130,140 8,439 (541) 138,038
North America 98,560 9,722 (323) 107,959
Group eliminations (2,075) (392) 2,467 -
Total 534,296 60,175 - 594,471
-------------------- ----------- ----------- --------------- -----------------
Underlying Reorganisation
GBP000s profit costs Segment profit
-------------------- ----------- ----------- --------------- -----------------
Europe 42,120 (3,289) 38,831
AAP 15,481 (1,246) 14,235
North America 10,623 (1,079) 9,544
Total 68,224 (5,614) 62,610
-------------------- ----------- ----------- --------------- -----------------
Group reconciliation
30 June 30 June 31 Dec
GBP000's 2017 2016 2016
------------------------------------- -------- -------- --------
Revenue 314,516 291,431 594,471
Recharged expenses (33,461) (30,627) (60,175)
-------------------------------------- -------- --------
Fee income 281,055 260,804 534,296
-------------------------------------- -------- -------- --------
Underlying profit 35,228 29,776 68,224
Reorganisation costs (694) (3,937) (5,614)
-------------------------------------- -------- -------- --------
Segment profit 34,534 25,839 62,610
Unallocated expenses (4,853) (3,148) (6,733)
-------------------------------------- -------- -------- --------
Operating profit before amortisation
of acquired intangibles and
transaction related costs 29,681 22,691 55,877
Amortisation of acquired intangibles
and transaction related costs (6,807) (9,278) (17,890)
-------------------------------------- -------- -------- --------
Operating profit 22,874 13,413 37,987
Net finance costs (2,454) (2,530) (5,173)
Profit before tax 20,420 10,883 32,814
-------------------------------------- -------- -------- --------
Total segment assets were as
follows:
30 June 31 Dec
30 June 2016 2016
GBP000's 2017 as restated as restated
----------------------------- ------- ------------ ------------
Europe 408,082 408,905 401,880
North America 110,520 115,626 123,013
AAP 149,150 147,732 147,164
Unallocated 1,183 3,557 373
------------------------------ ------- ------------ ------------
Total 668,935 675,820 672,430
------------------------------ ------- ------------ ------------
5. Amortisation of acquired intangibles and transaction related costs
30 June 30 June 31 Dec
GBP000s 2017 2016 2016
------------------------------ -------- -------- -------
Amortisation of acquired
intangibles 6,807 9,069 17,470
Adjustments to consideration
payment - - 187
Third party advisory costs - 209 233
------------------------------ -------- -------- -------
Total 6,807 9,278 17,890
------------------------------ -------- -------- -------
6. 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 2017. 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 in the income statement for the period:
30 June 30 June 31 Dec
GBP000's 2017 2016 2016
-------------------------------------- -------- -------- ---------
Current tax expense 7,823 4,559 10,363
Deferred tax credit (1,912) (2,344) (2,630)
-------------------------------------- -------- -------- ---------
Total tax expense in the income
statement 5,911 2,215 7,733
Add back:
Tax on amortisation of acquired
intangibles and acquisition related
costs 2,010 3,725 6,292
-------------------------------------- -------- -------- ---------
Adjusted tax charge on PBTA for
the period 7,921 5,940 14,025
Tax rate on PBT 28.9% 20.3% 23.6%
Tax rate on PBTA 29.1% 29.5% 27.7%
7. 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:
30 June 30 June 31 Dec
GBP000's 2017 2016 2016
------------------------------------ --------- --------- --------
Profit attributable to ordinary
shareholders 14,509 8,668 25,081
000's
Weighted average number of ordinary
shares for the purposes of basic
earnings per share 221,558 220,748 220,977
Effect of employee share schemes 1,592 1,163 1,237
------------------------------------ --------- --------- --------
Weighted average number of ordinary
shares for the purposes of diluted
earnings per share 223,150 221,911 222,214
Basic earnings per share (pence) 6.55 3.93 11.35
------------------------------------ --------- --------- --------
Diluted earnings per share (pence) 6.50 3.91 11.29
------------------------------------ --------- --------- --------
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:
Six months Six months Year ended
ended ended 30 31 Dec
30 June June 2016
GBP000's 2017 2016
-------------------------------------- ----------- ----------- -----------
Profit attributable to ordinary
shareholders 14,509 8,668 25,081
Amortisation of acquired intangibles
and transaction related costs 6,807 9,278 17,890
Tax on amortisation of acquired
intangibles and transaction related
costs (2,010) (3,725) (6,292)
Adjusted profit attributable to ordinary shareholders 19,306 14,221 36,679 -------------------------------------- ----------- ----------- ----------- Adjusted basic earnings per share (pence) 8.71 6.44 16.60 -------------------------------------- ----------- ----------- ----------- Adjusted diluted earnings per share (pence) 8.65 6.41 16.51 -------------------------------------- ----------- ----------- -----------
8. Property, plant and equipment
During the six months ended 30 June 2017 the Group acquired assets with a cost of GBP3,992,000 (six months to 30 June 2016: GBP3,647,000), which includes nil acquired through business combinations (six months to 30 June 2016: GBP131,000). Assets with a net book value of GBP113,000 were disposed of during the six months ended 30 June 2017 (six months ended 30 June 2016: GBP449,000).
9. Goodwill
A reconciliation of the goodwill movement in 2017 in respect of acquisitions made in 2016 is given in the table below.
GBP000s Goodwill Additions Adjustments Foreign Goodwill
at through to prior exchange at 30/6/17
1/1/17 acquisition year estimates movement
---------- --------- ------------- ---------------- ---------- ------------
DBK 9,279 - - - 9,279
There were no accumulated impairment losses at the beginning or end of the period.
No negative goodwill was recognised in 2016 or 2017.
10. Share capital
2017 2016
Number 2017 Number 2016
000's GBP000's 000's GBP000'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 223,435 6,703 222,234 6,667
Issued under employee
share schemes 614 18 651 19
At 30 June 224,049 6,721 222,885 6,686
------------------------ -------- ----------- -------- -----------
11. Other reserves
Merger Employee Translation
GBP000's reserve trust reserve Total
---------------------- ---------- ----------- -------------- --------
At 1 January 2017 21,256 (13,677) 33,319 40,898
Exchange differences - - (1,105) (1,105)
Issue of new shares - (819) - (819)
At 30 June 2017 21,256 (14,496) 32,214 38,974
---------------------- ---------- ----------- -------------- --------
At 1 January 2016 21,256 (11,997) (8,110) 1,149
Exchange differences - - 28,516 28,516
Issue of new shares - (794) - (794)
At 30 June 2016 21,256 (12,791) 20,406 28,871
---------------------- ---------- ----------- -------------- --------
12. Dividends
The following dividends were recognised as distributions to equity holders in the period:
Six months Six months Year Ended
ended 30 ended 30 31 Dec
GBP000's June 2017 June 2016 2016
--------------------------- ------------- ------------- -------------
Final dividend for 2016 11,308 - -
5.08p per share
Interim dividend for 2016
4.66p per share - - 10,346
Final dividend for 2015
5.08p per share - 11,267 11,267
--------------------------- ------------- ------------- -------------
11,308 11,267 21,613
--------------------------- ------------- ------------- -------------
An interim dividend in respect of the six months ended 30 June 2017 of 4.80 pence per share, amounting to a total dividend of GBP10,705,000 was approved by the Directors of RPS Group Plc on 2 August 2017. These condensed consolidated interim financial statements do not reflect this dividend payable.
13. Note to the condensed consolidated cash flow statement
Six months Six months Year ended
ended 30 ended 31 Dec
GBP000's June 30 June 2016
Operating profit 22,874 13,413 37,987
Adjustments for:
Depreciation 4,233 4,081 8,390
Amortisation of acquired intangibles 6,807 9,069 17,470
Consideration fair value adjustment - - 187
Share based payment expense 1,440 1,087 2,184
(Profit)/loss on sale of property,
plant and equipment (39) 333 537
EBITDAS 35,315 27,983 66,755
(Increase)/decrease in trade
and other receivables (9,256) (340) 9,522
(Decrease)/ increase in trade
and other payables (4,293) 614 1,976
Cash generated from operations 21,766 28,257 78,253
---------------------------------------- ----------- ----------- -----------
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 2017.
At 1 January
2017 Cash Prepaid Foreign At 30
GBP000's flow arrangement exchange June 2017
fees
--------------------- --------------- --------- -------------- ----------- ------------
Cash at bank 16,503 (3,188) - (289) 13,026
Overdrafts - (294) - - (294)
--------------------- --------------- --------- -------------- ----------- ------------
Cash and cash
equivalents 16,503 (3,482) - (289) 12,732
Bank loans and
notes (99,886) (7,625) (189) 1,623 (106,077)
Finance lease
creditor (36) 24 - - (12)
Net bank borrowings (83,419) (11,083) (189) 1,334 (93,357)
--------------------- --------------- --------- -------------- ----------- ------------
The cash balance includes GBP2,545,000 (31 December 2016: GBP3,036,000) that is restricted in its use.
14. Events after the balance sheet date
There have been no material events since the balance sheet date.
15. Principal risks and uncertainties
The nature of the principal risks and uncertainties faced by the Group have not changed significantly since the 2016 Report and Accounts was published. These risks, together with a description of the approach to mitigate them, are set out on pages 11 to 13 of the 2016 Report and Accounts (available on the Group's website at www.rpsgroup.com) and are summarised as follows:
- Economic environment
- Retention of key personnel
- Business acquisitions
- Political events
- Environmental and health risks
- Information systems
- Health and safety
- Market position and reputation
- Claims and Litigation
- Compliance
- Funding
- Financial risk management
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 decision of the UK to leave the EU has created uncertainty, although it is too early to say what the overall impact on the Group will be.
16. Related party transactions
There are no significant changes to the nature and treatment of related party transactions for the period to those reported in the 2016 Report and Accounts.
17. 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 and the 2016 EU referendum vote in UK creates another source of potentially significant risk. 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 2017. Nothing in this announcement should be construed as a profit forecast.
18. 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 2017 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 Financial 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 inquiries, 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 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 2017 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Deloitte LLP
Statutory Auditor
Reading, United Kingdom
4 August 2017
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR UGUAPRUPMGAW
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