Final Results

19 February 2020

RPS GROUP PLC

('RPS' or the 'Group')

Final Results

'FY 2019 in line with expectations, continued strategic progress'

RPS, a leading multi-sector global professional services firm, today announces its Final Results for the year ended 31 December 2019 ('FY 2019').

Financial headlines

·; Fee income £556.5m (FY 2018: £574.2m)

·; PBTA £37.3m (FY 2018: £50.2m)

·; EPS (adjusted, diluted) 12.31p (FY 2018: 16.34p)

·; Exceptional items totalling £23.4m (FY 2018: £nil) including goodwill impairment in AAP of £19.8m (FY 2018: £nil)

·; Statutory profit before tax £4.8m (FY 2018: £41.0m)

·; Strong cash conversion 90% (FY 2018: 94%)

·; Net bank borrowing £94.1m (FY 2018: £73.9m; H1 2019: £101.3m); leverage 2.0x (FY 2018: 1.3x)

·; Successfully refinanced the RCF with a committed £100m facility and uncommitted £60m accordion facility

·; Proposed final dividend of 2.00p (FY 2018: 5.08p) providing full year dividend of 4.42p (FY 2018: 9.88p). This follows the rebasing of the dividend announced at H1 2019 and reflects the stated new, sustainable dividend policy of paying out 40% of adjusted earnings

Operational highlights

·; Energy growth strong, reflecting continuing recovery in oil and gas markets

·; Republic of Ireland and Northern Ireland performed well in Consulting

·; As expected, Services impacted ahead of new water regulatory cycle in England and Wales

·; North America impacted by retention and recruitment issues

·; Market conditions in Australia improved in the second half of the year after a difficult first half

·; Designed and built global ERP, implemented in Netherlands and part of Australia

Commenting on the Final Results, John Douglas, Chief Executive, said:

"In FY2019 we had to contend with several headwinds which significantly impacted on the results. We responded to difficult trading conditions, particularly in our Australia Asia Pacific segment. Pleasingly, we saw some stabilisation of market conditions in the UK and elsewhere towards the end of the year.

Despite these headwinds, we made considerable progress in respect of our strategic priorities. We have revitalised our energy business, launched a bold, client-driven brand delivered effectively with measurable impact, are making RPS a great place to do great work and are increasing the connectivity of our businesses. I would like to thank all our people who have worked tirelessly to deliver this progress.

As we enter 2020, trading conditions in our markets are generally satisfactory and we anticipate more stable results from our segments. We will continue to invest, especially to deliver better connectivity, but we will do so in a measured way. We remain focused on building a business that in due course is capable of delivering mid-single digit rates of organic growth and a double-digit operating margin. The Board remains confident in the medium term outlook for the Group and anticipates that the year ahead will be broadly in line with 2019 with growth accelerating in 2021."

(1) Alternative Performance Measures are used consistently throughout this announcement: these include PBTA, fee income, items prefaced 'adjusted' such as adjusted EPS, segment profit, underlying profit, underlying operating profit, amounts labelled 'at constant currency', EBITDAS, conversion of profit into cash, net bank borrowings, leverage. For further details of their purpose, definition and reconciliation to the equivalent statutory measures see note 2.

(2) The Board considers market expectations to be the consensus fee income, PBTA and fully diluted adjusted earnings per share published in the notes of those analysts who regularly follow and interact with the Group.

A meeting for analysts will be held at the office of Buchanan, 107 Cheapside, London, EC2V 6DN commencing at 9.30am. Attendance is strictly limited.

A video webcast of the meeting will be available from 12 noon via the following link:

https://webcasting.buchanan.uk.com/broadcast/5e31691cb9710760e292473b

Founded in 1970, RPS is a leading global professional services firm of 5,000 consultants and service providers. Having operated in 125 countries across six continents RPS defines, designs and manages projects that create shared value for a complex, urbanising and resource scarce world.

RPS delivers a broad range of services in six sectors: property, energy, transport, water, defence and government services and resources. Services provided across RPS' six sectors cover twelve service clusters: project and program management, design and development, water services, environment, advisory and management consulting, exploration and development, planning and approvals, heath, safety and risk, oceans and coastal, laboratories, training and communication and creative services.

RPS stands out for its clients by using its deep expertise to solve problems that matter, making them easy to understand. Making complex easy.

RPS' London Stock Exchange ticker is RPS.L. For further information, please visit www.rpsgroup.com.

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 many 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.

Next trading update: RPS will announce a Q1 2020 trading update in late April 2020. 

Results

PBTA was £37.3m (2018: £50.2m, £49.9m at constant currency) on fee income of £556.5m (2018: £574.2m, £571.4m at constant currency). Exceptional items in the year resulted in charges totalling £23.4m (2018: £nil). Profit before tax was £4.8m (2018: £41.0m). The effective rate of tax on PBTA is 25.4% (2018: 26.8%). Adjusted diluted EPS was 12.31p (2018: 16.34p, 16.24p at constant currency). Statutory diluted loss per share was 0.54p (2018 earnings: 13.23p, 13.16p at constant currency).

Profit in FY 2019 suffered marginally from exchange movements on the conversion of non-UK results in comparison to FY 2018. PBTA would have been £0.3m higher than reported had 2018 exchange rates repeated in 2019. PBTA in FY 2018 would have been £0.3m lower than reported if 2019 rates had prevailed in 2018. Statutory profit before tax in FY 2018 would have been £0.2m lower than reported if 2019 exchange rates prevailed in 2018.

Trading performance

Notwithstanding a good performance from Energy, 2019 was a difficult year. Energy benefited from improving market conditions and had a good year. The political uncertainty in the UK impacted on Consulting UK and Ireland for much of the year, although the uncertainty was significantly reduced by the UK general election that took place in December. The performance of Services UK and Netherlands was impacted, as anticipated, by the usual reduction in activity on the England and Wales water business as the current AMP regulatory cycle entered its final year. Despite strong markets in North America our performance was disappointing, largely due to ongoing retention and recruitment challenges in the region and management has accordingly been strengthened, as it was in Norway where we were impacted by the loss of some senior staff during the year. The results of AAP were impacted by the hiatus caused by state and federal elections at the start of the year and a slow property market, although there was some improvement in trading conditions in the latter part of the year. The increase in unallocated costs reflects increased investment in IT to improve the connectivity of our various businesses.

Borrowings and cash flow

Net bank borrowings at the year end were £94.1m (31 December 2018: £73.9m). Net cash from operating activities remained strong at £37.6m (2018: £44.5m). Our conversion of profit into operating cash was again good at 90% (2018: 94%) reflecting our continued focus on collections. Excluding the effect of exceptional items our conversion was 89%. Net cash used in investing activities was £30.9m (2018: £13.4m), the increase reflecting investment in new acquisitions of £10.1m (2018: £0.2m) and higher net capital expenditure of £20.8m (2018: £11.7m) mainly due to investment in a new ERP. The amount paid in respect of dividends was £16.9m (2018: £22.1m).

Deferred consideration outstanding at the year end was £8.7m (31 December 2018: £0.3m). Our leverage (being net bank debt plus deferred consideration expressed as a ratio of adjusted EBITDA) was 2.0x at the year end (31 December 2018: 1.3x). This is at the top end of our desired operating range of between 1.0x and 2.0x other than immediately following an acquisition.

Net finance costs were £6.1m (2018: £3.9m) and include IFRS16 interest of £1.9m (2018: £nil). We expect that net finance costs will rise in 2020 due to a higher average total borrowings and deferred consideration than in 2019.

In July 2019 the Group successfully refinanced its revolving credit facility. We arranged a committed £100m facility and an uncommitted £60m accordion facility. The facilities have a term of three years with the possibility of extending for another two years, with NatWest joining Lloyds Bank and HSBC who provided the original facility.

IFRS 16

IFRS 16 'Leases' was applied from 1 January 2019 (see note 17) and has impacted the balance sheet and the profit for the year. Right-of-use assets have been recognised at the year end totalling £44.8m (31 December 2018: £nil) whilst lease liabilities associated with those assets totalled £49.8m (31 December 2018: £nil). PBTA in 2019 was reduced by £0.6m (2018: £nil), operating profit increased by £1.3m and finance costs increased by £1.9m.

Amortisation of intangible assets and transaction-related costs

Amortisation of intangible assets and transaction-related costs totalled £9.1m (2018: £9.2m), of which £8.6m was amortisation (2018: £9.2m).

Exceptional items

Exceptional items in 2019 resulted in costs totalling £23.4m (2018: £nil).

These included a goodwill impairment charge of £19.8m relating to the impairment of our business in AAP. Performance of this business was poor in the first half of 2019 and although it improved in the second half, was not as good as anticipated. The Board considered the risks faced by the Australian economy and concluded that the prospects for the business, particularly from historic acquisitions, are less certain than in previous impairment reviews. Consequently, this resulted in the impairment of goodwill.

We completed the global rebranding of RPS, which included a new logo, colour scheme, office signage and a new website for a total cost of £1.0m.

Legal fees totalling £1.4m were incurred investigating potential issues regarding the administration of US government contracts and/or projects. We are continuing to investigate this matter and identify the implications if any of the conduct under review. The impact if any is unknown. The investigation is ongoing and further exceptional costs for legal fees will be incurred in 2020.

Our new ERP has been implemented in the Netherlands and part of Australia. The amount expensed in 2019 in respect of change management and data migration was £1.2m (2018: £nil). Further exceptional cost of this nature will be incurred in 2020 as the roll out of the ERP continues.

We anticipate that total exceptional costs in 2020 will be broadly similar to the amount incurred in 2019 excluding the goodwill impairment charge of £19.8m.

Dividends

In the Group's Interim Results issued on 1 August 2019 we announced that the dividend had been rebased to reflect a new, sustainable dividend policy. The total dividend payment for the year will be 40% of the adjusted earnings (being profit after tax before amortisation of intangibles and transaction-related costs and tax thereon) for the financial year. Accordingly, the total (paid and proposed) dividend for the year amounts to £10.0m (2018: £22.1m), equivalent to 4.42p per share (2018: 9.88p). The proposed final dividend amounts to £4.5m, equivalent to 2.00p per share (2018: 5.08p) and will be paid on 15 May 2020 to shareholders on the register of members at close of business on 24 April 2020.

Markets and trading

Energy

The oil and gas industry continued to recover, especially marine exploration and development, and we benefited from strong demand for our exploration and development, oceans and coastal, and training services. Following debt recoveries, £0.4m of associated bad debt provisions (2018: £1.2m) were reversed in the year. Our work advising clients on renewables is increasing and we remain confident this will provide a robust revenue stream in the future. We intend to invest further in functional support in 2020 and as we do not expect any further bad debt provision reversals, anticipate a broadly similar profit performance to that in 2019.

Consulting - UK and Ireland

Demand for our Consulting services in the Republic of Ireland and Northern Ireland was strong, leading to good fee growth. In the rest of the United Kingdom, market conditions were affected by political uncertainty which impacted clients' investment decisions leading to lower demand in some of our higher margin business units. Following the general election in the UK in December 2019 political uncertainty has reduced although activity levels currently remain subdued in the UK. The segment is capable of fee growth in 2020 but investment in strategic priorities, including preparation for the new ERP, will temper profit performance that we expect will be slightly down compared to 2019.

Services - UK and Netherlands

The demand for our water services in England and Wales was adversely impacted, as expected, as the industry prepared for the new AMP cycle that will commence in April 2020. The Netherlands business performed well, growing both fees and profit having benefitted from organic investments made in 2018. Our health and safety business, which is the smallest division within the segment, had a disappointing year, especially in the provision of occupational health services. Prospects for the segment in FY 2020 rely on the ability of our strong water services business to take advantage of the anticipated cyclical upturn in the sector arising in H2 2020. Our Netherlands business is diversified and operating in satisfactory markets and we expect an improvement in the performance of our health and safety business. Overall, we anticipate growth in this segment in 2020.

Norway

We remain a leading project and program management services provider in a very attractive and stable economy. The co-location of our teams in Oslo was completed and we are benefitting from working as a fully integrated business. Performance in the first half of the year was good. However, due to the loss of senior staff following the end of acquisition-related restrictive covenants, our second half performance suffered. The process to replace those staff who left us is almost complete. We expect that market conditions will remain stable and anticipate a similar performance in 2020.

North America

Ongoing retention and recruitment challenges posed serious challenges in strong markets. During the first half we suffered low work levels in our environment business and project delays in our design and development business During H2 2019 we felt the impact of the loss of a small environmental risk team in California whilst recruitment challenges in very strong design and development markets made it difficult to fulfil all available work. Our ocean and coastal business had a consistently good year. After a difficult year for this segment we are better positioned to take advantage of good market conditions in 2020 and anticipate no further decline.

Australia Asia Pacific

Our performance in H1 2019 was adversely affected by state elections that impacted on infrastructure spend and a federal election that impacted the release of major defence projects. Additionally, the property market was subdued. During H2 2019 we witnessed a more buoyant defence sector and the hiatus in infrastructure spend has abated, although the property market remains subdued. After a very challenging first half but with some recovery in the second half of 2019, we move into FY 2020 anticipating modest progress.

Unallocated expenses

Unallocated expenses comprise the costs of the main Board and the Group marketing, people, finance and IT functions. The total unallocated costs for 2019 were £9.3m (2018: £8.4m) with the increase mainly due to investment in IT. Unallocated costs are expected to increase in 2020, mainly due to further investment in IT and our Group people function.

Strategy

RPS is transitioning from a conglomerate of small consulting and service businesses to becoming a leading mid-sized global firm that uses its combined expertise to deliver professional services around the world. We have made solid progress in respect of each of our strategic priorities:

People:

We have implemented improved processes throughout the Group and have increased the percentage of staff receiving performance reviews to more than 95% this year end (2018: 81%). At the start of 2020 we started the roll-out of a learning and development system that will support all our staff, especially our young professional fee earners. We believe that the measures that we now have in place will lead to further improved employee retention rates in FY 2020 and beyond.

Brand:

The relaunch of the RPS brand, which commenced towards the end of 2018 and was completed in 2019, has had and continues to provide, a positive impact on the Group. We now have a modern, fresh image that resonates with clients and staff. Our new website is generating increased traffic and enables us to communicate our story and range of services much better to our existing and potential clients.

Connectivity:

We have successfully completed the design of our new global ERP system and implemented it in the Netherlands and in a division within our AAP segment. During 2020, we will continue to roll out the system to the remainder of AAP and prepare for implementation in the UK and Ireland. We anticipate that once the system has been fully implemented in 2021, this will provide a substantial competitive edge to the way in which RPS does business.

Energy:

Our priority to revitalise the Energy business has been successful. We have stabilised and grown this business during the last two years and positioned it to take greater advantage of increasing opportunities in the renewables space on a global basis.

Organic growth and selective acquisition:

The strategic priority to focus on organic growth supported by selective acquisitions remains integral to the Group. In 2019, we announced two exciting acquisitions. The integration of Corview, which we acquired in February 2019, has now been successfully completed. This has added depth to our existing strong advisory capability in AAP. In September 2019, we acquired Reservoir Imaging Limited in the UK, a complementary addition to our Energy segment that strengthened our expertise in the global offshore oil and gas sector, a market that is showing strong signs of good recovery.

Board Change / Global Leadership Team

Today, RPS has also announced the retirement of Gary Young, Group Finance Director, who will be stepping down from the Board at the time of the Company's Annual General Meeting on 30th April 2020. Gary has been with RPS for twenty years and has been a very loyal and devoted member of the Board. Gary provided much needed continuity at the time of significant Board renewal in 2017, for which his colleagues on the Board offer sincere thanks. The time is now right to make way for his successor, Judith Cottrell, currently RPS Group Strategy Director, who will be appointed at the Annual General Meeting.

At the Group's AGM on 1 May 2019, having not sought re-election, Robert Miller-Bakewell, a Non-Executive Director resigned as a Director of the Company. On the same date, Liz Peace was appointed as the Senior Independent Director and Catherine Glickman was appointed as Chairman of the Remuneration Committee.

Post period end, Peter Fearn retired as President and CEO of RPS North America and his successor is Doug Matthys, who has also become a member of the Group Leadership Team. Doug has been with RPS for 12 years and has held a range of roles, most recently as Chief Operating Officer for North America. The Board welcomes Doug to his new role and would also like to extend its sincere thanks to Peter for his extensive contribution to RPS over many years.

Group prospects

The future for RPS is about being at the forefront of changing market trends, identifying growth opportunities and delivering complex solutions in a way that is easy to understand and implement. 2020 will see a continuation of the focus on our people and investing in connectivity across the Group allowing us to build on the deep expertise that our clients have recognised and provide us with a stronger competitive edge in all the markets that we operate in.

As we enter 2020, trading conditions in our markets are generally satisfactory and we anticipate more stable results from our segments. We will continue to invest, especially to deliver better connectivity, but we will do so in a measured way. We remain focused on building a business that in due course is capable of delivering mid-single digit rates of organic growth and a double-digit operating margin. The Board remains confident in the medium term outlook for the Group and anticipates that the year ahead will be broadly in line with 2019 with growth accelerating in 2021.

RPS Group plc

19 February 2020

Consolidated balance sheet

Consolidated cash flow statement

Notes to the results

1. Basis of preparation

The financial information attached has been extracted from the audited financial statements for the year ended 31 December 2019 which have been prepared under International Financial Reporting Standards (IFRS) adopted by the EU and IFRIC interpretations issued and effective at the time of preparing those financial statements.

During the year, the Group has applied IFRS 16 'Leases' for the first time and detail of the impact of the adoption can be found in note 17. Otherwise the Group has prepared these accounts on the same basis as the 2018 Report and Accounts.

2. Alternative performance measures

Throughout this document the Group presents various non-GAAP performance measures ('alternative performance measures'). The measures presented are those adopted by the Chief Operating Decision Maker and analysts who follow us in assessing the performance of the business.

Group profit and earnings measures

PBTA and adjusted operating profit

Profit before tax and amortisation of acquired intangibles and transaction-related costs and exceptional items (PBTA) is used by the Board to monitor and measure the trading performance of the Group.

Delivering the Group's strategy includes investment in selected acquisitions that enhance the depth and breadth of services that the Group offers in the territories in which it operates. In addition, from time to time the Group chooses to exit a particular market or service offering because it is not offering the desired returns. By excluding acquisition and disposal related items from PBTA, the Board has a clear and consistent view of the performance of the Group and is able to make informed operational decisions to support its strategy.

Accordingly, transaction-related costs including costs of acquisition and disposal, losses on the closure of businesses and amortisation of intangible assets are excluded from the Group's preferred performance measure, PBTA. Similarly, exceptional items (which because of their size, nature or expected infrequency merit separate presentation in the consolidated income statement), are excluded as they are not reflective of the Group's trading performance in the year.

Items are treated consistently year-on-year, and these adjustments are also consistent with the way that performance is measured under the Group's incentive plans and its banking covenants.

Adjusted operating profit is a derivative of PBTA. A reconciliation is shown below.

Adjusted profit attributable to ordinary shareholders and adjusted earnings per share

It follows that the Group uses adjusted profit attributable to ordinary shareholders as the input to its adjusted EPS measures. Again, this profit measure excludes amortisation of acquired intangibles, transaction-related costs and exceptional items, but is an after tax measure. The Board considers adjusted EPS measures to be more reflective of the Group's trading performance in the year.

Constant currency

The Group generates revenues and profits in various territories and currencies because of its international footprint. Those results are translated on consolidation at the foreign exchange rates prevailing at the time. These exchange rates vary from year to year, so the Group presents some of its results on a constant currency basis. This means that the prior year's results have been retranslated using current year exchange rates. This eliminates the effect of exchange from the year-on-year comparison of results. The difference between the reported numbers and the constant currency numbers is the constant currency effect.

Segment profit and underlying profit

Segment profit is presented in our segmental disclosures. This excludes the effects of financing, amortisation and exceptional items which are metrics outside of the control of segment management. It also excludes unallocated costs. Segment profit is then adjusted by excluding the costs of reorganisation to give underlying profit for the segment. This reflects the underlying trading of the business. A reconciliation between segment profit and operating profit is given in note 3.

Reorganisation costs

This classification comprises costs and income arising as a consequence of reorganisation such as redundancy costs, profit or loss on disposal of plant, property and equipment and the costs of consolidating office space.

Unallocated expenses

Certain central 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 and the Group marketing, HR, finance functions and related IT costs.

Revenue measures

The Group disaggregates revenue into fee income and recharged expenses. This provides insight into the performance of the business and our productive output. This is reconciled on the face of the income statement. Fee income by segment is reconciled in note 3.

Cash flow measures

EBITDAS

EBITDAS is operating profit adjusted by adding back non-cash expenses, tax and financing costs. The adjustments include interest, tax, depreciation, amortisation, transaction-related costs and share scheme costs. This generates a cash-based operating profit figure which is the input into the cash flow statement. A reconciliation between operating profit and EBITDAS is given in note 12.

Conversion of profit into cash

A key measure of the Group's cash generation is the conversion of profit into cash. This is the cash generated from operations divided by EBITDAS expressed as a percentage. This metric is used as a measure against which the Group's long and short-term performance incentive schemes are judged and reflects how much of the Group's profit has been collected as cash in the year.

Net bank borrowings

Net bank borrowings is the total of cash and cash equivalents and interest bearing bank loans. This measure gives the external indebtedness of the Group (excluding lease liabilities) and is an input into the leverage calculations. This is reconciled in note 11.

Leverage

Leverage is the ratio of net bank borrowings plus deferred consideration to annualised EBITDAS and is one of the financial covenants included in our bank facilities.

Tax measures

We report one adjusted tax measure, which is the tax rate on PBTA ('adjusted effective tax rate'). This is the tax charge applicable to PBTA as a percentage of PBTA and is set out in note 7.

3. 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 business segments of the Group are as follows:

- Energy

- Consulting - UK and Ireland

- Services - UK and Netherlands

- Norway

- North America

- AAP

Segment results for the year ended 31 December 2019

Segment results for the year ended 31 December 2018

The table below shows revenue and fees to external customers based upon the country from which billing took place:

4. Amortisation of acquired intangibles and transaction-related costs

5. Exceptional items

The Group has recognised a goodwill impairment charge of £19,806,000 relating to the impairment of our business in AAP. Performance of this business was poor in the first half of 2019 and although it improved in the second half, was not as good as expected The Board considered the risks faced by the Australian economy and concluded that the prospects for the business, particularly from historic acquisitions, are less certain than in previous impairment reviews. Consequently, this resulted in the impairment of goodwill.

The recoverable amount for the AAP CGU group was calculated using value in use. That recoverable amount is £70,895,000 and the pre-tax discount rate used for the valuation was 12.9%.

During the year we completed the global rebranding of RPS, which included a new logo, colour scheme, office signage and a new website for a total cost of £1,012,000 (2018: £nil).

Legal fees were incurred investigating potential issues regarding the administration of US government contracts and/or projects (see note 15). The investigation is ongoing and further exceptional costs for legal fees will be incurred in 2020.

Our new ERP has been implemented in the Netherlands and part of Australia. The amount expensed in 2019 in respect of change management and data migration was £1,168,000 (2018: £nil). Further exceptional cost of this nature will be incurred in 2020 as the roll out of the ERP continues.

6. Net financing costs

7. Income taxes

Analysis of the tax expense in the consolidated income statement for the year:

In addition to the amount charged to the consolidated income statement, the following items related to tax have been recognised:

The effective tax rate for the year on profit before tax was 125.4% (2018: 27.4%), distorted by the effect of the goodwill impairment (note 5). The effective tax rate for the year on PBTA was 25.4% (2018: 26.8%) as shown in the table below:

The Group operates in and is subject to tax in many jurisdictions. The weighted average tax rate is derived by weighting the rates in those jurisdictions by the profits before tax earned there. It is sensitive to the statutory tax rates that apply in each jurisdiction and the geographic mix of profits. The statutory tax rates in our main jurisdictions were UK 19.0% (2018: 19.0%) and Australia 30% (2018: 30%) and the weighted average tax rate reduced to 21.3% in 2019 (2018: 23.1%).

The actual tax charge differs from the weighted average tax charge for the reasons set out in the following reconciliation:

The Group operates, mainly through our oil and gas exposed businesses, in jurisdictions that impose withholding taxes on revenue earned in those jurisdictions. This tax may be off-set against domestic corporation tax either in the current year or in the future within certain time limits. To the extent that full recovery is not achieved in the current year or is not considered possible in future years the withholding tax is charged to the income statement. The impact of irrecoverable withholding tax suffered increased in 2019 as more work was undertaken in these jurisdictions.

The impact of intercompany financing relates to the funding of US operations from the UK.

Enacted changes in tax rates impact the carrying value of deferred tax balances, principally those related to the amortisation of intangible assets. The impact in 2018 relates to the Norwegian tax rate that reduced from 23% to 22% with effect from 1 January 2019.

Adjustments in respect of prior years arise when amounts of tax due calculated when tax returns are submitted differ from those estimated at the year end. The 2019 credit arose mainly in the USA.

Other differences include expenses not deductible for tax purposes such as entertaining, share scheme charges, depreciation of property, plant and equipment which do not qualify for capital allowances and transaction-related costs. They also include items that are deductible for tax purposes, such as goodwill and other asset amortisation, but are not included in the income statement.

8. Earnings per share

The calculations of basic and diluted (loss) / earnings per share were based on the (loss) / profit attributable to ordinary shareholders and a weighted average number of ordinary shares outstanding during the year as shown in the table below:

The calculations of adjusted earnings per share (see note 2) were based on the number of shares as above and are shown in the table below:

9. Trade and other receivables

Trade and other receivables comprise the following balances:

Trade receivables and contract assets net of provision for impairment are shown below:

All amounts shown under trade and other receivables fall due within one year.

The carrying value of trade and other receivables is considered a reasonable approximation of fair value due to their short-term nature and the provisions for impairment recorded against them. The individually impaired balances mainly relate to items under discussion with customers.

Certain trade receivables are past due but have not been impaired. These relate to customers where we have no concerns over the recovery of the amount due. The age of trade receivables past due but not impaired are as follows:

At the year end the debtor days of the Group were 52 (2018: 50).

Movements in impairment:

The maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivable mentioned above.

10. Trade and other payables

All amounts shown under trade and other payables fall due for payment within one year. The carrying values of trade and other payables are a reasonable approximation of fair value due to the short-term nature of these liabilities.

11. Borrowings

The bank loans, notes and overdrafts are repayable as follows:

The principal features of the Group's borrowings are as follows:

i) an uncommitted £3,000,000 bank overdraft facility, repayable on demand.

ii) an uncommitted Australian Dollar denominated overdraft facility of AUD 1,500,000, repayable on demand.

iii) The Group has one principal bank facility: a multicurrency revolving credit facility of £100,000,000 with Lloyds Bank plc, HSBC Bank plc and NatWest Bank plc, expiring in 2022. Term loans drawn down under this facility carry interest fixed for the term of the loan equal to LIBOR (or the currency equivalent) plus a margin determined by reference to the leverage of the Group.

There were loans drawn totalling £55,400,000 at 31 December 2018 (2018: £32,800,000).

The facility is guaranteed by the Company and certain subsidiaries but no security over the Group's assets exists.

iv) In September 2014 the Group issued seven year non-amortising US private placement notes of $34,070,000 and £30,000,000 with fixed interest chargeable at 3.84% and 3.98% respectively that are repayable in 30 September 2021. The notes are guaranteed by the Company and certain subsidiaries but no security over the Group's assets exists.

The carrying amounts of short-term borrowings approximate their fair values as the impact of discounting is not significant. The carrying value of our long-term borrowings approximate fair value.

12. Notes to the consolidated cash flow statement

The table below provides an analysis of net bank borrowings, comprising cash and cash equivalents, interest bearing bank loans and leases, during the year ended 31 December 2019:

1 Includes lease additions, remeasurements and disposals

The cash balance at 31 December 2019 includes £1,301,000 (2018: £2,164,000) that is restricted in its use, either as security or client deposits.

13. Deferred consideration

14. Dividends

Amounts recognised as distributions during the year:

The proposed final dividend for the year ended 31 December 2019 is subject to approval by the shareholders at the Annual General Meeting and has not been included as a liability in the financial statements.

15. Contingent liabilities

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 satisfied that the Group has sufficient provisions at the balance sheet date to meet all likely uninsured liabilities.

RPS has notified the US government of potential issues regarding its administration of government contracts and/or projects. We are continuing to identify the implications, if any, of the conduct under review. The impact, if any, is unknown. During 2019 legal fees totalling £1,373,000 were incurred investigating this matter and were presented within exceptional items (note 5). Related to this matter are certain employment claims made against RPS, the outcome of which are also unknown.

16. Acquisitions

On 1 February 2019 the Group acquired the trade and assets of Corview Pty Ltd, an Australian transport advisory consultancy that is included in the AAP segment. This acquisition further strengthens RPS' deep expertise in the region.

On 30 September 2019 the Group acquired the entire issued share capital of Reservoir Imaging Limited, a UK-based seismic data acquisition software services company that will add a new growth area to the Energy segment.

The amounts recognised in respect of identifiable assets acquired and liabilities assumed, the fair value of consideration and the resulting goodwill are as follows:

The fair values of the net assets are provisional.

The goodwill arising on both acquisitions represents the value of the workforce acquired, potential synergies, future contracts and access to new markets and customers. There is no tax deductible goodwill.

The fair value of the receivables acquired and the breakdown between gross receivables and estimated irrecoverable amounts was as follows:

The Group incurred acquisition-related costs of £398,000 for Corview and £106,000 for Reservoir Imaging Limited which have been expensed through the consolidated income statement and are included within amortisation of acquired intangibles and transaction-related costs.

The contribution of Corview and Reservoir Imaging Limited to the Group's results for the year is given below: