14th Mar 2006 07:01
RPS Group PLC14 March 2006 RPS GROUP PLC Preliminary Announcement for the year ended 31 December 2005 RPS Group Plc ("RPS" or "the Group") today announces record results for the yearended 31 December 2005 with profit before tax up 32% and earnings per share up27%. 2005 2004 Revenue (£m) 217.8 168.2 +30% Profit before taxation (£m) 24.3 18.4 +32% Earnings per share (basic) (pence) 9.01 7.12 +27% Highlights Financial • revenue, profit before tax and earnings per share all increased significantly; • operating cash flow up 77% to £28.1 million: (2004 £15.9 million); • net bank debt at £25.9 million: (2004: £16.2 million); • recommended final dividend 1.25 pence; full year dividend increased 15% to 2.40 pence (2004: 2.09 pence). Operational • Energy markets growing strongly and offer substantial opportunities; • Planning and Development markets in the UK and Ireland remain encouraging; • Environmental Management had a good year with water and Dutch businesses improving. Brook Land, Chairman, commenting on the results, said: "RPS has achieved growth in revenue, profits and earnings in every year since wejoined the full list in 1995, which is an impressive achievement. 2005 wasparticularly pleasing as it saw our investment in the energy sector begin toflourish in a major way. The growth in demand for energy and the difficultiesin meeting that demand suggest that the development of this business willcontinue and will support the Group's future expansion." 14 March 2006 ENQUIRIESRPS Group plc Today: 020 7457 2020Dr Alan Hearne, Chief Executive Thereafter: 01235 863206Gary Young, Finance Director College HillJustine Warren Tel: 020 7457 2020Matthew Smallwood RPS is an international consultancy providing advice upon the development ofnatural resources, land and property, the management of the environment and thehealth and safety of people. We trade in the UK, Ireland, the Netherlands,North America and Australia and undertake projects in many other parts of theworld. CHAIRMAN'S STATEMENT Introduction RPS is an international consultancy providing advice upon the development ofnatural resources, land and property, the management of the environment and thehealth and safety of people. The Group was listed on the London Stock Exchangein April 1995; since then profits have increased 20 fold. This expansionreflects both the increasing importance of the issues with which we deal and thesuccessful implementation of a strategy which has consistently delivered growth. 2005 has been another successful year for the Group with each of our businessesmaking good progress. We continue to benefit from generally positive economicand regulatory trends. Results Profit before tax was £24.3 million (2004: £18.4 million). Basic earnings pershare were 9.01 pence (2004: 7.12 pence). Operating cash flow was £28.1 million(2004: £15.9 million). The Group had net bank debt of £25.9 million at 31December (31 December 2004: £16.2 million). Dividend The Board is recommending a final dividend of 1.25 pence per share payable on 31May 2006 to shareholders on the register on 7 April 2006. The total dividendfor the full year will be 2.40 pence, an increase of 15% over 2004 (2004: 2.09pence). Our dividend has risen at this rate for a number of years, providingshareholders with a significant increase in real income. Strategy The strategy of the Group has been clear, consistent and successful for a numberof years. We are building market leading positions, both organically and by theselective acquisition of quality businesses, in high value segments of anexpanding market. The effective implementation of this strategy accounts forthe strong growth RPS has achieved over the last decade and the successfuldevelopment of an increasingly international business. The Board remainscommitted to this strategy and confident in its success. Operations and Markets During the course of 2005 we refined our operating structure in order toaccommodate the significant expansion of our Energy business, which nowcomprises one of three main segments of the Group along with Planning andDevelopment and Environmental Management. Whilst these businesses operateindependently, they also collaborate in respect of both client projects and thedevelopment of Group policies such as the recruitment and retention of staff. Ashortage of good staff affects all of our businesses to varying degrees, butduring 2005 we demonstrated once again that our market leading position assistsgreatly in our ability to attract top quality talent. Energy We are significant participants in the international oil and gas, UK wind energyand UK nuclear power consultancy markets. All three of these are currentlyactive, driven both by the particular issues confronting those managing theseresources as well as by the global issues of climate change and the security ofenergy supplies. High oil and gas prices have stimulated significant extraexploration and production activity as well as stimulating the interest of thecapital markets. Following the acquisition of ECL in September 2005 we have, inless than three years, created a world leader in this market, offering a rangeof advisory and project management services, supported by extensive technicalexpertise. This has allowed us to develop further our position as a provider ofstrategic consultancy both directly to oil/gas companies and also to thefinancial community which invests in them. We believe there is potential forfurther significant growth in this business. We are uniquely qualified to deal with both on and offshore wind, wave and tidalenergy schemes and were involved in a number in 2005. This included a leadingrole in the London Array project in the Thames Estuary which is the first of theRound 2 UK offshore wind farm projects to apply for consent and will be thelargest offshore wind farm in the world. The creation of the NuclearDecommissioning Authority (NDA) in April 2005 is intended to have the effect ofsimplifying the decommissioning and clean up of nuclear sites. We arebeginning to benefit from this and will undoubtedly see further activity in thismarket as the NDA moves its programme forward. We are also well positioned toadvise how to secure permission for a new generation of nuclear power stationsshould the UK Government move in favour of this form of power generation. Planning and Development We are leaders in this consultancy market in the UK and Ireland, north andsouth, operating on behalf of blue chip clients in the public and privatesectors. The Irish Government and Northern Ireland Office both continue topursue ambitious plans for infrastructure development. We are currently workingon long term projects in Dublin providing advice in respect of the replacementof the gas distribution system and rehabilitation of the water supply network.Our work in the waste management sector continues to grow and our involvement inhighways projects continues at an encouraging level, including theDublin-Belfast motorway. We are adapting to new methods of procurement, such asdesign and build, in this market. In the UK the market also remains active. Our leading role advising BAA plc onits proposed expansion at Stansted Airport gathers momentum. Our profile withleading UK house builders, once again, generated significant revenue on majorsites across the country, including a number of significant brownfielddevelopments. We continue to work on some of London's largest regenerationprojects including Stratford City, where our work has been recognised with theRoyal Town Planning Institute award for Metropolitan and City Regeneration.This project will create a 1,200,000m2 mixed use strategic centre on formerrailway lands also being used to establish a Channel Tunnel Rail LinkInterchange and which is being modified to accommodate elements of the OlympicGames facilities. The approach used by RPS in respect of this project has beenadopted as best practice by the Office of the Deputy Prime Minister. In accordance with government policy, our retail work has moved more towardstown centre regeneration. We are involved in major city centre projectsincluding the New Retail Quarter in Sheffield City Centre and the redevelopmentof regional shopping centres such as Brent Cross and Merry Hill. We are helpingtraditional out of centre retailers develop innovative solutions to town centredevelopments, for example, the landmark IKEA proposals in Coventry.Conversely, the volume of work in respect of out of town food retaildevelopments has reduced significantly as a result of these changes in retailplanning policy. Our planning skills are also able to assist clients of otherparts of the Group; for example, in respect of the development of LNG plants atMilford Haven and the Isle of Grain and Southern Water's need to secureapproval for a major wastewater treatment works near Brighton in order tocomply with European and UK environmental regulations. Our fast growing planning and environmental assessment business in Australia hada very successful year and we are looking to expand this further. Environmental Management Our business servicing the UK water industry progressed well in 2005. Followingthe completion of the Ofwat review at the end of 2004 the water companies havereturned to the market to find support to implement the programme of worknecessary to meet the environmental targets agreed with the Regulator. We havesignificant commissions with the majority of the UK's major water companies andwe look forward with confidence in this business. The increasing cost ofenergy used in the supply of water, water shortages resulting from drought andthe increasing importance of water conservation are creating new challenges forthe UK water industry. RPS is well placed to provide support and advice inrespect of these matters. The economy in the Netherlands is showing signs of recovery. The steps we tookin 2004 to reduce our exposure to the more vulnerable parts of the economy andinvest in stable markets are also producing benefit. We have extended our range of services in the UK into occupational healthservices such as in-service medicals and sickness absence management to majororganisations in the construction, mining, quarrying, engineering, chemical andfood sectors. This is a growth market and, along with new fire safetyregulations due later in 2006, will support this division, as the recent highlevels of work identifying asbestos following legislation in 2003 begin toreduce. Funding the Strategy Operating cash flow, particularly in the second half, was good and our balancesheet remains strong. Net bank debt at the year end was £25.9 million, withoutstanding deferred cash consideration of £18.9 million payable over the nextthree years. The Group's operating cash flow normally funds its working capitalrequirements. Our cash generation, in conjunction with committed and availablebanking finance of £50 million and an ability to use equity in transactions,means that we have flexibility in funding the continued growth of RPS. Prospects As our business grows so too does the nature and breadth of opportunities opento us. Our expanded position in the energy sector is particularly encouraging.There are a number of strongly positive factors driving the markets we operatein, notably the high oil price and Government support for renewables. Inaddition, the global warming debate brings the need for new nuclear powerstations into sharp focus. Property development activity in the public andprivate sector currently remain at high levels in the UK, Ireland and Australiaand environmental management issues continue to increase in importance. TheBoard of RPS looks forward to further progress in 2006. Brook Land Chairman 14 March 2006 Consolidated income statement Notes year ended 31 year ended 31 December December 2005 2004 audited audited £000's £000's Revenue 2 217,830 168,189 Less: recharged expenses 2 (34,310) (23,197) Fee income 2 183,520 144,992 Operating profit 2 26,900 19,766 Interest payable and similar charges 3 (2,757) (1,564) Interest receivable 3 110 223 Profit before tax 24,253 18,425 Tax expense 4 (6,436) (4,584) Profit for the year attributable to equity 17,817 13,841 holders of the parent Basic earnings per share (pence) 5 9.01 7.12 Diluted earnings per share (pence) 5 8.82 7.05 Consolidated statement of recognised income and expense year year ended 31 ended 31 December December 2005 2004 audited audited £000's £000's Exchange differences on translation of foreign (1,042) 464 operations recognised in translation reserveActuarial loss on defined benefit pension scheme (197) (1,080)Tax on items taken directly to equity 1 135Revaluation reserve movement - (5)Income and expense recognised directly in equity (1,238) (486) Profit for the year 17,817 13,841 Total recognised income and expense for the year 16,579 13,355attributable to equity holders of the parent Consolidated balance sheet Notes as at as at 31 December 31 December 2005 2004 audited audited £000's £000'sAssets Non-current assets Intangible assets 155,471 133,233 Property, plant and equipment 17,947 17,719 Deferred tax assets 1,565 1,027 174,983 151,979 Current assets Trade and other receivables 79,961 65,517 Cash at bank 10,370 4,982 90,331 70,499Total assets 265,314 222,478 Equity and liabilities Shareholders' equity Share capital 6 6,048 5,933 Share premium 6 88,043 87,308 Merger reserve 7 5,738 - Employee trust shares 7 (2,400) (1,867) Share schemes reserve 7 2,394 859 Shares to be issued 7 3,307 - Translation reserve 7 (604) 438 Retained earnings 6 59,345 46,128 Total equity attributable to equity 6 161,871 138,799 holders of the parent Liabilities Non-current liabilities Deferred consideration 7,988 10,209 Bank loans 35,472 20,811 Retirement benefit obligation 8 2,050 1,731 Provisions 1,951 2,389 47,461 35,140 Current liabilities Bank loans and overdraft 838 390 Trade and other payables 39,991 33,567 Corporation tax liabilities 4,632 3,950 Deferred consideration 10,082 10,080 Provisions 439 552 55,982 48,539Total liabilities 103,443 83,679Total equity and liabilities 265,314 222,478 Consolidated cash flow statement Notes year year ended ended 31 December 31 December audited audited 2005 2004 £000's £000's Cash generated from operations 9 28,149 15,863Interest paid (1,872) (781)Interest received 110 223Income taxes paid (5,612) (4,411)Net cash generated from operating activities 20,775 10,894 Net cash used in investing activitiesPurchases of subsidiary undertakings and businesses in the (15,740) (31,720)current periodNet cash acquired with subsidiary undertakings 1,734 815Proceeds from sale of fixed assets 198 113Deferred consideration (8,756) (10,554)Purchase of property, plant and equipment (3,906) (2,636)Net cash used in investing activities (26,470) (43,982) Cash flows from financing activitiesProceeds from issue of share capital 217 65Proceeds from bank borrowings 14,670 20,472Payment of finance lease liabilities (45) (100)Dividends paid (4,404) (3,780) Purchase of own shares - (176)Net cash from financing activities 10,438 16,481 Net increase / (decrease) in cash and cash equivalents 4,743 (16,607) Cash and cash equivalents at beginning of period 4,701 21,678 Effect of exchange rate fluctuations 149 (370) Cash and cash equivalents at end of period 9,593 4,701 9 Cash and cash equivalents comprise: Cash at bank 10,370 4,982 Bank overdraft (777) (281) Cash and cash equivalents at end of period 9,593 4,701 Notes to the consolidated financial statements 1. Basis of preparation This is the first year when the consolidated financial statements have beenprepared under International Financial Reporting Standards (IFRS) adopted by theEU. The comparatives for 2004 have accordingly been restated from UK GenerallyAccepted Accounting Practice (GAAP). The accounting polices of the Group under IFRS, including the exemptions takenunder IFRS 1 "First-time Adoption of International Financial Reporting Standards", together with the restated IFRS financial statements for 2004, which includereconciliations of UK GAAP to IFRS, are set out in detail in the interimstatement published on 15 September 2005 which are available on www.rpsgroup.comand will be included in the full 2005 annual report and accounts. 2. Business segments The Group comprises the following main business segments: Planning and Development - consultancy services in the UK, Ireland and Australiarelated to town and country planning, urban design, transport planning andhighway design, environmental impact assessment and provision of water and wasteutilities and energy infrastructure. Environmental Management - consultancy services in the UK and the Netherlandsrelated to health, safety and risk management; and the management of waterservices. Energy - the provision of consultancy services, on an international basis, tothe oil and gas, renewable energy and nuclear sectors. Business segment results for the year ended 31 December 2005 Planning and Environmental Energy Eliminations Consolidated Development Management _______________ ________________ _______________ _______________ ______________ 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 £000's £000's £000's £000's £000's £000's £000's £000's £000's £000's Segment revenue 122,133 105,975 46,276 36,188 51,354 27,617 (1,933) (1,591) 217,830 168,189Recharged expenses (21,196) (15,126) (5,557) (5,013) (7,557) (3,280) - 222 (34,310) (23,197) Segment fee income 100,937 90,849 40,719 31,175 43,797 24,337 (1,933) (1,369) 183,520 144,992 Segment result 18,885 17,670 4,349 2,903 5,723 3,131 - (2,221) 28,957 21,483 Unallocated expenses (2,057) (1,717) Operating profit 26,900 19,766 Net financing costs (2,647) (1,341) Profit before tax 24,253 18,425 Income tax expense (6,436) (4,584) Profit for the year 17,817 13,841 3. Net financing costs year ended year ended 31 Dec 31 Dec 2005 2004 £000's £000'sInterest payable and similar charges Interest on loans and overdraft (1,849) (745)Interest imputed on deferred consideration (885) (783)Interest paid on deferred consideration - (18)Finance lease (23) (18) (2,757) (1,564)Interest receivable Deposit interest receivable 110 223 Net financing costs (2,647) (1,341) 4. Income taxes year ended year ended 31 Dec 31 Dec 2005 2004 £000's £000'sCurrent tax UK corporation tax 5,274 3,471 Foreign tax 1,034 930 6,308 4,401 Deferred tax expense 128 183 Tax expense for the year 6,436 4,584 5. Earnings per share The calculations of basic and diluted earnings per share were based on theprofit attributable to ordinary shareholders and a weighted average number ofordinary shares outstanding during the related period as shown in the tablesbelow: year ended year ended 31 Dec 31 Dec 2005 2004 £000's £000's Profit attributable to ordinary shareholders 17,817 13,841 year ended year ended 31 Dec 31 Dec 2005 2004 000's 000's Weighted average number of ordinary shares for the purposes of 197,677 194,491basic earnings per share Effect of shares to be issued as deferred consideration 1,862 408Effect of employee shares schemes 2,472 1,522Weighted average number of ordinary shares for the purposes of 202,011 196,421diluted earnings per share Basic earning per share (pence) 9.01 7.12 Diluted earnings per share (pence) 8.82 7.05 6. Statement of changes in equity Share Share Retained Other Total equity capital premium earnings reserves £000's £000's £000's £000's £000's At 1 January 2004 5,803 82,201 37,004 (1,487) 123,521Changes in equity during 2004Actuarial loss (1,080) (1,080)Revaluation reserve movement (5) (5)Tax on items taken to equity 135 135Exchange differences 464 464Net income recognised directly in equity - - (950) 464 (486)Profit for the year 13,841 13,841Total recognised income and expense for the - - 12,891 464 13,355yearIssue of new ordinary shares 130 5,107 5,237Own shares (62) (62)Included in income statement 515 515Dividends (3,767) (3,767)At 31 December 2004 5,933 87,308 46,128 (570) 138,799 Changes in equity during 2005Actuarial loss (197) (197)Tax on items taken to equity 1 1Exchange differences (1,042) (1,042)Net income recognised directly in equity - - (196) (1,042) (1,238)Profit for the year 17,817 17,817Total recognised income and expense for the - - 17,621 (1,042) 16,579yearIssue of new ordinary shares 115 735 5,738 6,588Own shares (533) (533)Included in income statement 1,535 1,535Shares to be issued 3,307 3,307Dividends (4,404) (4,404)At 31 December 2005 6,048 88,043 59,345 8,435 161,871 7. Other reserves Merger Employee Share scheme Shares to be Translation Total other reserve trust shares reserve issued reserve reserves £000's £000's £000's £000's £000's £000's At 1 January 2004 - (1,805) 344 - (26) (1,487)Exchange differences 464 464Own shares (62) (62)Included in income statement 515 515At 31 December 2004 - (1,867) 859 - 438 (570) Exchange differences (1,042) (1,042)Issue of new shares 5,738 5,738Own shares (533) (533)Included in income statement 1,535 1,535Shares to be issued 3,307 3,307At 31 December 2005 5,738 (2,400) 2,394 3,307 (604) 8,435 8. Retirement benefit obligation The amounts recognised in income in respect of the Group's only defined benefitretirement benefit scheme, operated in southern Ireland, are as follows: year ended year ended 31 Dec 2005 31 Dec 2004 £000's £000's Current service cost 476 321Interest costs 186 203Expected return on plan assets (164) (233)Total pension cost in income statement 498 291 The actual return on plan assets was £470,000 (2004: £291,000). The amount included in the balance sheet arising from the Group's obligation inrespect of its defined benefit retirement benefit scheme is as follows: At 31 Dec At 31 Dec 2005 2004 £000's £000's Present value of obligations 5,416 4,295Fair value of plan assets 3,366 2,564Recognised liability for defined benefit obligations 2,050 1,731 Movements in the net liability in the current period were as follows: At 31 Dec At 31 Dec 2005 2004 £000's £000's At 1 January 1,731 709Exchange differences (48) 34Amount charged to income 498 291Actuarial gains/(losses) 197 1,080Contributions (328) (383)At 31 December 2,050 1,731 Key assumptions used: At 31 Dec At 31 Dec 2005 2004Discount rate 4.25% 4.50%Long-term rate of return on assets 6.00% 6.07%Rate of increase in pensionable salaries 4.00% 4.00%Rate of increase in pensions 2.50% 2.50%Rate of price inflation 2.50% 2.50% 9. Notes to the cash flow statement year ended year ended 31 Dec 31 Dec 2005 2004 £000's £000's Profit before tax 24,253 18,425Adjustments for: Interest payable and similar charges 2,757 1,564 Interest receivable (110) (223) Depreciation and goodwill 3,848 5,908 Share based payment expense 1,535 825 32,283 26,499 Increase in trade and other receivables (4,247) (9,501) Increase / (decrease) in trade and other payables 113 (1,135)Cash generated from operations 28,149 15,863 The table below provides an analysis of net bank debt, comprising cash and cashequivalents, interest bearing bank loans and finance leases, during the yearended 31 December 2005. At 31 Dec Cash flow New advances Foreign At 31 Dec 2004 net of capital exchange 2005 repaid £000's £000's £000's £000's £000's Cash and cash equivalents 4,701 4,743 - 149 9,593Bank loans (20,869) - (14,670) 12 (35,527)Finance lease creditor (51) - 45 - (6)Net bank debt (16,219) 4,743 (14,625) 161 (25,940) 10. The financial information set out above does not constitute thecompany's full statutory accounts for the year ended 31 December 2005 for thepurposes of section 240 of the Companies Act 1985, but it is derived from thoseaccounts that have been audited. Statutory accounts for 2004 have beendelivered to the Registrar of Companies. The auditors have reported on thoseaccounts; their report was unqualified and did not contain statements under theCompanies Act 1985, S237 (2) or (3). 11. It is expected that the annual report and accounts will be posted toshareholders on or before 24 April 2006. Further copies may be obtained afterthat date from the Company Secretary, RPS Group plc, Centurion Court, 85 MiltonPark, Abingdon, Oxfordshire OX14 4RY. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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