8th Mar 2005 07:00
RPS Group PLC08 March 2005 RPS GROUP PLC Preliminary Results for the year ended 31 December 2004 RPS Group plc today announces record results for the year ended 31 December2004, with earnings per share (before goodwill amortisation) increased 9% overlast year. • Profit (before taxation and goodwill amortisation) increased by 9% to £23.0 million (2003: £21.1 million) • Earnings per share (before goodwill amortisation) increased by 9% to 9.41 pence (2003: 8.62 pence) • Recommended final dividend 1.08 pence per share: full year dividend increased to 2.09 pence (2003: 1.82 pence) • Successful integration and development of energy business, which has good prospects • Acquisitions completed in 2004 have accelerated development of the Group's major businesses • NCE "International Consultancy of the Year" 2004. Brook Land, Chairman, said: "As envisaged at the Interim stage, the second half of 2004 produced goodresults enabling RPS to report its thirteenth consecutive year of growth. Thisdemonstrates that we operate effectively in market segments with long termattractions. We remain confident that the strength of our business, the talentand commitment of our staff and the acquisitions made during the course of 2004should help us maintain our momentum." 8 March 2005 ENQUIRIES: RPS Group plcDr Alan Hearne, Chief Executive Today: 020 7457 2020Gary Young, Finance Director Thereafter: 01235 863206 College HillJustine Warren Tel: 020 7457 2020Matthew Smallwood Group Results Group turnover increased 36% to £169.9 million (2003: £124.6 million). Profit(before tax and goodwill amortisation) increased 9.3% to £23.0 million (2003:£21.1 million). Undiluted earnings per share (before goodwill amortisation)increased 9.2% to 9.41 pence (2003: 8.62 pence). Dividend The Directors are recommending a final dividend of 1.08 pence per share payableon 1 June 2005 to shareholders on the register on 8 April 2005. The totaldividend for the full year will be 2.09 pence (2003: 1.82 pence). Strategy The strategy of the Group has been clear, consistent and successful for a numberof years. We are building market leading positions in high value segments of ourexpanding market through a combination of organic growth and the acquisition ofhigh quality businesses. The effective implementation of this strategy explainsthe strong growth RPS has achieved over the last decade and the successfuldevelopment of an increasingly international business. A pleasing aspect of ouractivities in 2004 was the completion of a number of significant acquisitionswhich underpin the future expansion of the Group. The Board remains committedto this strategy and confident in its success. Markets and Operations During the year we invested further in developing our presence in the energysector. The acquisition of Hydrosearch (September 2003) formed the core of thisactivity and was, during 2004, supplemented with the addition of Troy-Ikoda(March), Bowman Bishaw Gorham (April) and Cambrian Consultants (July). Thesebusinesses broadened the scope of our skills and geographical reach in thissector, as well as providing an introduction to the planning and developmentmarket in Australia. In addition, we have included our existing geological teamand engineering and safety group in this business, the latter in order tosupplement its nuclear sector client base with oil and gas exploration andproduction clients. Managing the acquisition and integration of theseadditional businesses is being satisfactorily progressed, with the result thatwe have positioned ourselves strongly in this market and done so ahead of ourexpectations. We believe that further significant growth in this business ispossible. The oil and gas sector is likely to be attractive for a number ofyears, driven by high commodity prices, coupled with increasing pressures forimproved environmental and social performance from exploration and productioncompanies. Improved public sector support for renewable energy schemes,particularly wind farms, also makes this market attractive. Stabilisation ofthe nuclear decommissioning and clean up industries should follow theestablishment of the Nuclear Decommissioning Authority in April 2005 and createadditional opportunities. The planning and development market in both the UK and Ireland remain buoyant.We remain market leaders in both countries. This position was strengthened bythe acquisition of Mason Richards Partnership in April. In the UK we are highprofile participants in both private and public sector developments andinfrastructure projects. In the private sector we advise upon all major typesof development activity: housing, retail, commercial and leisure. We areproviding planning and environmental advice on large, mixed regenerationschemes, in Wembley, Stratford and Kings Cross designed to maintain and enhanceLondon's position as a world city. Our infrastructure work embraces transport,renewable energy, water and waste projects. Our appointment as planning andenvironmental advisors to BAA plc on the project to achieve planning permissionto construct a new runway and associated facilities at Stansted, follows on fromour successful work on the Terminal 5 project at Heathrow. In the UK theimminent loss of crown immunity in respect of development planning matters,introduced in the Planning & Compensation Act 2004 is causing a number of ourpublic sector clients to have to review their approach towards achievingpermission for new capital works. Our planning business in Ireland continues to serve a wide range of private andpublic sector clients. The acquisition of Kirk McClure Morton (October), theleading Northern Ireland consultancy, has further strengthened the Group'soperations in coastal projects and studies and in river catchment management.Opportunities will emerge for the Group as greater political emphasis is placedon cross-border policies and co-operation. This is already evidenced withcommon cross-border policies being put in place on environmental protection. Ourrole advising the Irish Government on its waste disposal strategy was ofparticular note during the year and this contract has been extended to 2006. Wehave, as a result, consolidated our position as Ireland's leading wastemanagement expert and this has resulted in a number of strategic appointments.Our Irish business is also well positioned in the transport sector with majorappointments secured on a number of long term highway projects. The UK markets for health & safety consulting were strong throughout the yeardriven in part by new regulations regarding the investigation and discovery ofasbestos in the workplace. This was supported by the general awareness of thesignificance of health & safety issues in the public and private sector. Inconsequence, we are continuing to have success with the delivery of riskmanagement information using our bespoke internet platform with both propertyowners and those who manage property on their behalf. In the Netherlands thepoor economy has held back property development which tends to drive much of theasbestos market. The continuing adverse economic conditions have alsorestricted other elements of our business in the Netherlands. There were,however, signs of recovery at the end of the year. The acquisition ofIngenieursbureau BCC in October has broadened our business and enabled us tosecure a major contract advising upon water levels and land use for 23 Dutchpolders (4,660 hectares). We also have a strong business in the water sector in all parts of the UK andIreland. In England and Wales Ofwat's final determination of its quinquennialreview was made in December. This put significant cost pressures on theprivatised water companies. Since the final determination we have beenestablishing what support our clients will need and positioning ourselves forthe available work. Volumes of work are likely to grow over the next few years,the principal uncertainty relating to rates and margins and the extent to whichwe will be able to add value for our clients in respect of particular types ofwork. Clarity on this may not be available for some months. The acquisition ofFlow Control in June has, in any event, enabled us to strengthen the quality ofour consultancy offering. In Ireland we achieved significant appointments duringthe year, particularly as advisors to Dublin City Council for the identificationof a new water supply source for the Dublin Region, a project likely to continueuntil 2013, and appointment as regional project managers and technical advisorsfor the integrated waste water framework for Northern Ireland. Building on ourexperience of the catchment study of the River Shannon we were successful inbeing appointed as consultants for the North South Share Catchment Study whichcovers all of Northern Ireland and four border counties in Southern Ireland,with completion scheduled for 2008. In Scotland the recent reorganisation ofScottish Water is now generating a range of projects; we are well positioned tobenefit from this. Balance Sheet and Cash Flow Net assets at the year end stood at £134.6 million (2003: £122.3 million). Thenet cash inflow from operating activities was £15.9 million. During the courseof 2004 £30.9 million of cash was spent on new acquisitions and 3.5 million newshares to the value of £4.2 million issued to the vendors of those companies.Net debt at the year end was £16.2 million (2003: net cash £21.5 million). TheGroup has total facilities of £42 million, which are adequate to maintain ourstrategy. Our acquisition model has a significant proportion of the consideration fromeach transaction deferred, normally over a two or three year period. This helpsto ensure that goodwill acquired is transferred to RPS. During the course of2004, £10.6 million of deferred consideration was paid in cash and 0.8 millionshares to the value of £1.0 million were issued to the vendors of businessesacquired in previous years. At 31 December 2004 the total considerationoutstanding was £21.5 million, of which £20.9 million is payable in cash and£0.6 million in new RPS shares. Of the total due at the end of 2004, £10.3million is payable in 2005, of which £9.7million is payable in cash and £0.6million in shares. The year end balance sheet includes, within intangible fixed assets, "goodwill"of £129.6 million (2003: £87.7 million). Since the introduction of FRS 10 in1998, our acquisition strategy has given rise to increasing levels of goodwillon the balance sheet. The Board has adopted the generally accepted policy ofamortising goodwill over its useful economic life which is estimated to be up to20 years. Such a policy does not, however, reflect the Board's view that theoverall value of the investments made has actually increased rather thandiminished. Staffing Staff numbers grew from 2,061 on 1 January 2004 to 3,056 on 31 December 2004.The average number of employees during the year was 2,525. The share incentiveschemes approved by shareholders at the Annual General Meeting in April 2004have begun to be rolled out and represent an attractive component of our overallbenefits package. In most of our activities there is a skill shortage,particularly for more senior, qualified individuals. In the energy sector aparticular dimension of this is that clients (both oil and gas and nuclearsafety) have begun significant recruitment campaigns in order to fulfil theirown requirements. We need, therefore, to review the issues of recruitment andretention on a regular basis, but believe we are currently well placed. Foreign Currency We have had operations in Ireland and Netherlands for a number of years andconsequently have been exposed to exchange movements between Sterling and theEuro. The expansion of our energy business has increased our exposure to the USand Australian Dollars. The Euro strengthened relative to Sterling during muchof the year with a beneficial effect on consolidated results whilst in the lastquarter the US Dollar weakened which had the opposite effect. We have in placevarious management and organisational systems to reduce the impact of currencymovements. Five year record In the five years ended 31 December 2004 Group turnover increased from £32.4million to £169.9 million and profit (before tax and goodwill amortisation) from£6.7 million to £23.0 million. Earnings per share (before goodwillamortisation) have grown from 3.47 pence to 9.41 pence. During this period thebreadth of our activities has increased significantly, thereby increasing thestrength of the Group's market position. This long term growth confirms thatRPS operates in attractive markets and does so effectively. Corporate Governance We have undertaken a full review of our performance measured against the newCombined Code, the results of which will be published in our Annual Report. Webelieve this demonstrates a high level of compliance. We are well advanced in preparing for the introduction of IFRS. The mostsignificant change in our reported results will relate to the treatment ofgoodwill. Amortisation will no longer be required unless impairment isdemonstrated. Prospects We are encouraged that most of our markets are buoyant and we are wellpositioned in them. Securing and retaining the services of talented staffremains challenging; however, our market leading position and employmentconditions make us an attractive employer. The acquisitions made in 2004 shouldsupport our growth in 2005 and beyond. The success of our business in the energysector in 2004 and its prospects for the future are particularly encouraging.Overall, the Group remains well positioned to achieve continued growth. Brook Land Chairman 8 March 2005 Consolidated Profit & Loss Accountfor the year ended 31 December 2004 2004 2003 Note £'000 £'000Turnover Continuing operations 3 165,884 124,549 Acquisitions 4,040 - 169,924 124,549 Operating profit before goodwill amortisation Continuing operations 3 22,980 20,445 Acquisitions 591 - 23,571 20,445 Goodwill amortisation 6,340 4,585 Operating profit 17,231 15,860 Net interest (payable)/receivable (558) 607 Profit on ordinary activities before taxation 16,673 16,467 Taxation 4,717 4,636 Profit for the year attributable to shareholders of 11,956 11,831RPS Group Plc Dividends 4,100 3,480 Retained profit for the year 7,856 8,351 Profit before goodwill amortisation and tax 23,013 21,052 Earnings Per Share Note 2004 2003 Basic earnings per share (pence) 5 After goodwill amortisation 6.15 6.21Before goodwill amortisation 9.41 8.62 Fully diluted earnings per share (pence) 5After goodwill amortisation 6.09 6.16Before goodwill amortisation 9.31 8.54 Statement of Total Recognised Gains and Losses 2004 2003 £'000 £'000 Retained profit for the financial year 7,856 8,351 Currency translation differences on foreign 144 919currency investments Total recognised gains and losses relating to the year 8,000 9,270 Consolidated Balance Sheetas at 31 December 2004 2004 2003 £'000 £'000 £'000 £'000 Fixed assetsIntangible assets 129,729 87,911Tangible assets 17,719 13,727 147,448 101,638Current assetsWork in progress 13,955 9,456Debtors 52,258 37,057Cash at bank and in hand 4,982 21,678 71,195 68,191 Creditors: amounts falling due within one 69,242 42,724yearNet current assets 1,953 25,467 Total assets less current liabilities 149,401 127,105 Creditors: amounts falling due after more 11,516 3,461than one yearProvision for liabilities & charges 3,313 1,315 Net assets 134,572 122,329 Capital and reservesCalled up share capital 5,933 5,803Share premium account 87,308 82,201Shares to be issued 598 1,625Revaluation reserve 32 37Employee trust shares (1,867) (1,805)Share scheme reserve 100 -Profit and loss reserve 42,468 34,468Equity shareholder's funds 134,572 122,329 Consolidated Cash Flow Statementfor the year ended 31 December 2004 2004 2003 £'000 £'000 Net cash inflow from operating activities 15,863 20,630 Returns on investments and servicing of finance (558) 607 Corporation tax paid (4,411) (5,110) Capital expenditure (2,523) (2,138) Acquisitions & disposals (41,459) (13,630) (33,088) 359 Equity dividends paid (3,780) (3,231)Cash outflow before financing (36,868) (2,872) Financing 20,261 877 Decrease in cash in year (16,607) (1,995) Reconciliation of Operating Profit to Net Cash flow from Operating Activities 2004 2003 £'000 £'000 Operating profit 17,231 15,860Depreciation and goodwill amortisation 10,040 7,588Increase in work in progress (270) (275)Increase in debtors (9,693) (2,086)Decrease in creditors (1,432) (458)(Profit)/loss on sale of fixed assets (13) 1Net cash inflow from operating activities 15,863 20,630 Reconciliation of Net Cash Flow to Movement in Net Debt 2004 2003 £'000 £'000 Decrease in cash in the year (16,607) (1,995)Cash inflow from increase in debt (20,472) -Cash outflow from hire purchase repayments 100 19Change in net debt resulting from cash flows (36,979) (1,976)Loans and hire purchase creditors acquired with subsidiary (333) (10)Translation difference (368) 627Movement in net (debt)/cash in year (37,680) (1,359)Net cash at 1 January 21,461 22,820Net (debt)/cash at 31 December (16,219) 21,461 Notes: 1. These financial statements were approved by the Board on 8 March 2005. 2. The accounts have been prepared using the same policies that have been used in the 2004 accounts. 3. Continuing activities include turnover and operating profit of acquisitions made during the year that have been merged with existing businesses. 4. The undiluted earnings per share calculations for 2004 are based on the weighted average number of ordinary shares in issue of 194,491,000 during the period. The diluted earnings per share calculations are based upon there being a weighted average of 196,421,000 shares. 5. The total dividend payable has been calculated on the basis that 196,606,000 shares will be in issue on 8 April 2005 (the record date). 6. The financial information set out above does not constitute the company's full statutory accounts for the years ended 31 December 2004 or 2003 for the purposes of section 240 of the Companies Act 1985, but it is derived from those accounts. Statutory accounts for 2003 have been delivered to the Registrar of Companies and those for 2004 will be delivered following the company's annual general meeting. The auditors have reported on those accounts; their reports were unqualified and did not contain statements under the Companies Act 1985, s237 (2) or (3). 7. It is expected that the annual report and accounts will be posted to shareholders on or before 14 April 2005. Further copies may be obtained after that date from the Company Secretary, RPS Group plc, Centurion Court, 85 Milton Park, Abingdon, Oxfordshire OX14 4RY. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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