Interim Results

RPS GROUP PLC

("RPS" or "the Group")

Interim Results for the six months ended 30 June 2015

Diverse range of activities and geographies protected the Group from the worst effects of the downturn in the oil and gas sector. Acquisition strategy continued to develop growth markets. Bank facilities refinanced until 2020 and increased to £150 million. Strong operating cash flow. Dividend increased 15%.

(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) 2014 results restated at 2015 currency rates.

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

"RPS is a diverse company: we operate across a broad client base in a wide range of geographies and sectors. These characteristics have protected our trading and balance sheet despite the significant downturn in expenditure by our oil and gas sector clients during the first half of the year. Our BNE business in Europe performed particularly well. The rebalancing of our business in AAP towards the infrastructure and development sectors is gaining momentum.

"Our acquisition strategy has successfully supported our expansion into growth markets. The integration of Klotz, the water and transportation consultancy acquired in February 2015, has progressed well. The process of integrating Metier, the Norwegian Project management consultancy acquired in April 2015, with OEC has also begun successfully. Further acquisition opportunities are being evaluated."

30 July 2015

RPS is a multi-disciplinary international consultancy providing advice upon the development of natural resources, land and property, the management of the environment and the health and safety of people. We have offices in the UK, Ireland, the Netherlands, Norway, North America and Australia Asia Pacific and undertake projects in many other parts of the world.

Results

Profit (before tax, amortisation of acquired intangibles and transaction related costs) was £28.8 million (2014: £31.4 million; £31.2 million on a constant currency basis). Statutory profit before tax was £17.9 million (2014: £21.7 million; £21.6 million on a constant currency basis). Basic earnings per share (before amortisation and transaction related costs) were 9.50 pence (2014: 10.30 pence; 10.21 pence on a constant currency basis). Three of our four reporting segments grew substantially compared with the same period in 2014. Energy suffered from exceptionally weak demand in the exploration and production ("E&P") market. The contribution of the Group's four segments was:

(1) 2014 results restated at 2015 currency rates.

Given the substantial reduction in activity by our clients in the oil and gas sector, a reduction of only 3% (at constant currency) in overall segment profit reflects both the robust nature of the Group's strategy, including acquisitions, and our rapid and effective focus on dealing with the significant changes in the E&P market. The expansion of our BNE businesses limited the effects of the E&P downturn, with the Energy business positioned to grow again as markets allow.

Group central costs were £3.6 million, (2014: £3.4 million) and finance charges were £2.7 million (2014: £1.7 million), reflecting the additional debt taken on to fund acquisitions in 2014 and 2015.

Funding and Dividend

Our balance sheet remains strong and conversion of profit into cash was exceptionally good. We funded acquisition investment of £26.9 million in the period. Net bank borrowings at 30 June 2015 were £72.7 million (31 December 2014: £73.2 million).

Since the period end, we have put in place a five year £150 million revolving credit facility ("RCF") with Lloyds Bank plc and HSBC Bank plc. This replaced an RCF with Lloyds of £125 million, due to expire in July 2016, on more favourable terms. In addition, six years remain on the £52 million fixed term, fixed rate notes issued through Pricoa in 2014.

The Board remains confident about the Group's financial strength and prospects and has, once again, increased the interim dividend by 15% to 4.66 pence per share (2014: 4.05 pence) payable on 15 October 2015 to shareholders on the register on 18 September 2015.

Markets and Trading

Built and Natural Environment ("BNE")

Europe

Within this business we provide a wide range of consultancy services to many aspects of the property and infrastructure development and management sectors. It had a successful first half. This segment now includes the Group's Norwegian business, previously reported in Energy. The process of integrating OEC with Metier to form that country's leading project management consultancy has begun encouragingly.

(1) 2014 results restated at 2015 currency rates

(2) after reorganisation costs of £0.1 million (2014: £0.1 million).

The acquisitions made in 2014 (Clear and CgMs) have been integrated successfully and assisted the growth of the UK water and planning and development businesses respectively. Those activities which assist clients develop new capital projects, particularly our planning and development business in the UK, continued to benefit both from improving market conditions and client confidence. Those exposed to operational environments, such as providing environment management advice, continued to need to offer an efficient, cost effective service to assist clients in managing tight budgets. However, our water business in the UK, along with our laboratory activities in the Netherlands, achieved this and in consequence, performed well in the period.

We have won significant new business in recent months, particularly in the form of large long term contracts and are looking forward to a successful second half.

North America

This business developed from our North American Energy business and has a significant exposure to the provision of environmental services to the energy infrastructure market as a result. This has held back progress in recent months as clients have reduced and delayed expenditure on this type of project.

The acquisition of Klotz in February 2015 continued the process of diversifying into more traditional planning and development and environmental consultancy activities; this was also assisted by the acquisition of GaiaTech in 2014. Both these businesses have performed well in the first half and assisted the North American business to secure year on year growth.

(1) 2014 results restated at 2015 currency rates

(2) after reorganisation costs of £0.1 million (2014: nil)

We are expecting the first half trends to continue for the rest of the year, with full year growth being achieved.

Energy

We provide internationally recognised consultancy services to the oil and gas industry from bases in the UK, USA and Canada. These act as regional centres for projects undertaken in many other countries.

During the course of the first half of the year, our experienced management team has responded well to a significant reduction in our clients' spend and an extended period of uncertainty about whether -and when - projects might commence. The maintenance of a margin well into double figures in these circumstances confirms both the quality of this business and the added value it provides to our clients.

(1) 2014 results restated at 2015 currency rates.

(2) after reorganisation costs of £0.4m (2014 nil).

We continued to benefit from our prominent position in the sector in many parts of the world, as well as good demand for our range of advisory services, particularly in relation to transactions and valuations. Our clients' E&P budgets for 2015 remain substantial, although many of them have delayed project start-up decisions. As a result, the total volume of work available so far this year has reduced significantly and fee rates have, inevitably, come under pressure. National oil companies and Government agencies have been less affected than the international companies. We have, therefore, continued to develop our relationships with these clients.

As previously reported, the year started slowly, but our activity in Q2 was at a somewhat higher level than in Q1. Profit in Q2 was well ahead of Q1. We have significantly reduced our cost base and anticipate the second half should deliver further improvement.

The global demand for oil and gas remains substantial. Once market uncertainty reduces it will be possible for us, as a market leader in this sector, to produce attractive and growing returns again.

AAP

This business is a combination of the former BNE, AAP and the AAP component of Energy. They were brought together in 2013 to help counter the impact of the slowdown in the resources sector by focusing more upon the buoyant infrastructure sector. The business grew in the first half and improved its margin, primarily as a result of our repositioning strategy and, in particular, the acquisition of the project management consultancy, Point.

(1) 2014 results restated at 2015 currency rates

(2) after reorganisation costs of £0.3 million (2014: £0.9 million)

We see activity in the resources sector remaining flat at best, as Australia unwinds its high cost production structure. Acquired in September 2014, Point has made a significant contribution to our strategy to take advantage of increased public expenditure upon infrastructure. Following recent elections in New South Wales, Victoria and Queensland, this is an increasingly attractive market. In consequence, we see further growth being achieved in the second half.

Group Prospects

Our adaptable business model and broad spread of clients, services and geographies has once again demonstrated that it is capable of delivering in difficult market conditions. Energy profit grew significantly in Q2, relative to Q1 and we expect H2 to show further improvement. After a much improved first half, AAP is expected to achieve further growth in the second half of the year.

We anticipate our BNE businesses will also continue to perform well and with AAP should help balance any further softness in Energy for the remainder of this year. Further acquisition opportunities are being evaluated.

RPS Group plc

30 July 2015

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

Condensed consolidated balance sheet

Condensed consolidated cash flow statement

Condensed consolidated statement of changes in equity

An analysis of other reserves is provided in Note 10.

Notes to the condensed consolidated financial statements

1. Basis of preparation 

RPS Group Plc (the "Company") is a company domiciled in England. The condensed consolidated interim financial statements of the Company for the six months ended 30 June 2015 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 2014 and in accordance with IAS 34. They are unaudited but have been reviewed by the Company's auditor. The results for the year end 31 December 2014 and the balance sheet as at that date are abridged from the Company's Report and Accounts 2014 which have been delivered to the Registrar of Companies. The auditor's report on those accounts was not qualified, did not include a reference to any matters for which the auditor drew attention by way of emphasis without qualifying the report and did not contain statements under sections 498 (2) or (3) of the Companies Act 2006.

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

In assessing the going concern basis, the directors considered the Group's business activities, the financial position of the Group and the Group's financial risk management objectives and policies. The directors have a reasonable expectation that, 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.

2. Responsibility Statement

The directors confirm that, to the best of their knowledge this condensed set of financial statements has been prepared in accordance with IAS 34 and that this Interim Report includes a fair review of the information required by DTR 4.2.4R, DTR 4.2.7R and DTR 4.2.8R.

On behalf of the Board

30 July 2015

3. Business segments

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

As noted in the April 2015 Trading Update, our Norwegian business is now reported in the BNE: Europe segment. Previously it was reported in the Energy segment. Accordingly, the June and December 2014 segmental results have been restated.

The business segments of the Group are as follows:

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

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

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

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

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

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

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

Segment results for the period ended 30 June 2015:

4. Amortisation of acquired intangibles and transaction related costs

5. Income taxes

The tax charge for the period has been calculated using an estimate of the effective annual rate of tax for each taxing jurisdiction for the full year. These rates have been applied to the pre-tax profits for each jurisdiction for the six months ended 30 June 2015. 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:

6. Earnings per share

The calculations of earnings per share are based on the profit attributable to ordinary shareholders and a weighted average number of ordinary shares outstanding during the period as shown below:

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:

7. Property, plant and equipment

During the six months ended 30 June 2015 the Group acquired assets with a cost of £3,904,000 (six months to 30 June 2014: £5,497,000), which includes £511,000 acquired through business combinations (six months to 30 June 2014: £1,045,000). Assets with a net book value of £352,000 were disposed of during the six months ended 30 June 2015 (six months ended 30 June 2014: £90,000).

8. Acquisitions

The Group completed the following acquisitions during the six months ended 30 June 2015. Each of these broadens and strengthens the services the Group offers.

The Group has allocated provisional fair values to the net assets of these acquisitions as it did not have complete information at the balance sheet date.

Details of the carrying values of their acquired net assets, the provisional fair values assigned to them by the Group, the fair value of consideration and the resulting goodwill are as follows:

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

The total fair value of receivables acquired was £8,548,000. The breakdown between gross receivables and amounts estimated irrecoverable was as follows:

The vendors of the acquired companies have entered into warranty agreements with the Group. The total undiscounted cash flow that could be receivable by the Group is between £nil and £12,455,000. The Group does not expect that these warranties will become receivable and therefore has not recognised an indemnification asset on acquisition.

The Group incurred acquisition related costs of £629,000 (six months to 30 June 2014: £677,000) which have been expensed through the income statement and are included within amortisation of acquired intangibles and transaction related expenses.

The contribution of the acquisitions to the Group's results for the period is given below.

The proforma Group revenue and operating profit assuming that all of the acquisitions had been completed on the first day of the year would have been £299,283,000 and £21,007,000 respectively.

A reconciliation of the goodwill movement in 2015 in respect of acquisitions made in 2014 and 2015 is given in the table below.

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

No negative goodwill was recognised in 2014 or 2015.

9. Share capital

10. Other reserves

11. Dividends

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

An interim dividend in respect of the six months ended 30 June 2015 of 4.66 pence per share, amounting to a total dividend of £10,303,000 was approved by the Directors of RPS Group Plc on 28 July 2015. These condensed consolidated interim financial statements do not reflect this dividend payable.

12. Note to the condensed consolidated cash flow statement

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

The table below provides an analysis of net bank borrowings, comprising cash and cash equivalents, interest bearing bank loans and finance leases, during the six months ended 30 June 2015.

The cash balance includes £3,783,000 (31 December 2014: £4,139,000) that is restricted in its use.

13. Events after the balance sheet date

There have been no material non-adjusting events since the balance sheet date.

14. Principal risks and uncertainties

The nature of the principal risks and uncertainties faced by the Group have not changed significantly since the 2014 Report and Accounts was published. These risks, together with a description of the approach to mitigate them, are set out on pages 10 and 11 of the 2014 Report and Accounts (available on the Group's website at www.rpsgroup.com) and are summarised as follows:

- Health and safety

- Economic environment

- Political events

- Environmental and health risks

- Information systems

- Recruitment and retention of key personnel

- Market position and reputation

- Litigation

- Compliance

- Business acquisitions

- Funding

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

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

15. Related party transactions

There are no significant changes to the nature and treatment of related party transactions for the period to those reported in the 2014 Report and Accounts.

16. Forward-looking statements

This announcement contains certain forward-looking statements with respect to the financial condition, results of operations and businesses of RPS Group plc. These statements involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements. The continuing uncertainty in global economic outlook inevitably increases the risks to which the Group is exposed. Statements in respect of the Group's performance in the year to date are based upon unaudited management accounts for the period January to June 2015. Nothing in this announcement should be construed as a profit forecast.

17. Publication

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

INDEPENDENT REVIEW REPORT TO RPS GROUP PLC

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2015, which comprises the Condensed consolidated income statement, the Condensed consolidated statement of comprehensive income, the Condensed consolidated balance sheet, the Condensed consolidated cash flow statement, the Condensed consolidated statement of changes in equity and the related notes 1 to 17. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.

Directors' Responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Finance Conduct Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

Our Responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2015 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Finance Conduct Authority.

Deloitte LLP

Chartered Accountants and Statutory Auditor

Reading, United Kingdom

30 July 2015