TIDMRPS
RNS Number : 6093R
RPS Group PLC
09 March 2021
For immediate release 9 March 2021
RPS GROUP PLC
('RPS' or the 'Group')
Final Results
'Strong financial discipline, robust platform, well-positioned
for growth'
RPS, a leading multi-sector global professional services firm,
today announces its Final Results for the year ended 31 December
2020 ('FY-2020').
FY-2020 FY-2019 % change
at % change constant
FY-2019 constant currency
currency(1)
Alternative performance measures
(1)
Fee revenue (GBPm) (2) 457.3 528.2 522.2 (13%) (12%)
Adjusted operating profit
(GBPm) (1) 20.5 43.4 42.9 (53%) (52%)
Adjusted profit before tax
(GBPm) (1) 13.4 37.4 36.9 (64%) (64%)
Adjusted earnings per share
(diluted) (p) (1) 4.29 12.31 12.17 (65%) (65%)
Cash and debt measures
Conversion of profit into
cash (%) (1) 239% 90% 90%
Net bank borrowings (GBPm)
(1) 10.8 94.1 93.1
Leverage 0.7x 2.0x
Statutory measures
Revenue (GBPm) 542.1 612.6 606.4 (12%) (11%)
Operating (loss)/profit (GBPm) (24.2) 10.9 9.4 (322%) (357%)
Statutory (loss)/profit before
tax (GBPm) (31.3) 4.9 3.4 (739%) (1021%)
Statutory diluted loss per
share (p) (12.83) (0.54) (1.09) (2276%) (1077%)
Dividend per share (p) - 2.42 2.42
---------------------------------- --------- ---------- ------------- ----------- ----------
Financial highlights
-- After a promising first quarter, trading was impacted by
COVID-19, and fee revenue and adjusted operating profit ended down
on the prior year. Nonetheless, Q3-2020 and Q4-2020 showed
encouraging momentum and an improving fee trajectory.
-- All segments remained profitable for the year on an adjusted operating profit basis.
-- Statutory loss before tax includes GBP39.2 million of
exceptional items, of which GBP32.6 million are non-cash costs
relating to onerous property provisions and the impairment of
goodwill and other assets, largely as a result of COVID-19.
-- Strong cash performance on the back of disciplined billing
and cash collections and COVID-19 related tax deferrals, delivering
a cash conversion of 239% (FY-2019: 90%), 213% excluding tax
deferrals.
-- Focused cash management and a successful placing raising net
proceeds of GBP19.4 million, resulted in a significant reduction in
net bank borrowings with net debt to EBITDA leverage of 0.7x as at
31 December 2020 (31 December 2019: 2.0x). This is below the bottom
end of our target range of 1.0x to 2.0x. Net debt is expected to
increase during 2021 as fee revenue growth returns, lock up days
normalise and tax deferrals are paid.
-- Amendments to banking facilities secured in 2020 provide
significant liquidity and good headroom and, together with the
placing, this is enabling RPS to make investment decisions for the
medium term.
-- Due to uncertainty over timing of recovery of markets, no
final dividend is proposed (FY-2019: 2.42 pence per share).
Business headlines
-- The diversity of RPS' sectors and services and exposure to
government and quasi-government organisations provided resilience
to COVID-19 impact. Government exposed business streams in
Australia and the US delivered growth in fee revenue and/or
adjusted operating profit. We are well positioned to benefit from
increased spending by government.
-- Adapted service offerings and utilised technology to enable
clients to manage COVID-19 impact, as well as enabling RPS to
capitalise on longer term opportunities as we emerge from the
pandemic.
-- Developed Net Zero Carbon proposition and secured a project
in this space with a key blue-chip client.
-- Responded quickly to COVID-19 and took prudent and proactive
steps to reduce costs and contain cash outflows. Matched capacity
to market demand while preserving jobs, maintaining capability and
expertise, and positioning ourselves for recovery.
-- Quickly mobilised our workforce to operate remotely. Rapidly
adapted ways of working to maintain quality of work, continue to
deliver for clients and networked our people to ensure teams
continued to work effectively together.
-- Continued focus on renewables with fee revenue increasing
from 7.5% of Energy segment fee revenue to 15%.
Strategic progress
Our investment in people, clients and connectivity in recent
years has meant we were able to stay connected with our clients and
each other and deliver uninterrupted high levels of technology
enabled service throughout the pandemic. In 2020, we continued to
progress these strategic initiatives, including:
-- People - continued with a deliberate strategy of technology
enabled performance management with the global adoption of online
tools to support recruitment, performance, development and
learning.
-- Clients - initiated global client experience project to
connect marketing, business development and sales and focus on how
we will grow the business by repeatedly delivering experiences our
clients value and digitally connecting them to our expertise.
-- Connectivity - focus on technology enabled consulting and
modern workplace tools led to an acceleration in digital
collaboration between RPS teams and greater connectivity with
clients, supporting creation of new services such a virtual
consultation, and facilitating cross-sell within and between
segments.
In addition:
-- As we work towards a thoughtful diversified energy offering,
RPS continued to reshape the Global Energy portfolio with the
divestment of our Specialist Geology business to Petrostrat in
December 2020 and creation of a global renewables offering.
-- The strategic review of our North America segment is
resulting in a reshaping of the Environmental Risk business to add
resilience to our mid-market private equity exposure.
Commenting on the Final Results, John Douglas, Chief Executive,
said:
"Our focus through the pandemic ensured the wellbeing and safety
of our employees, preserved jobs, retained capability, and
protected value. This focus resulted in an improving revenue trend
in H2, with all segments profitable, debt significantly reduced,
and leverage lowered.
"Our business model, diversification and cohesion, exposure to
government stimulus via public spending as well as private sector
work, means that RPS is well positioned globally to grow as we
emerge from the pandemic.
"We have started 2021 well and expect 2021 to be a year of
progress. Looking ahead, we are optimistic that the roll-out of
vaccination programmes and easing of lockdowns in a number of key
markets will stimulate economic activity and demand for our range
of services. We will benefit from the strong structural growth
drivers in the markets we serve and client demand for sustainable
operations. This underpins our strategic focus on renewables,
sustainability, project management and transport infrastructure. We
will continue to invest in people, clients and connectivity and
drive cross-selling opportunities thereby further strengthening our
platforms. We will also continue to consider strategic acquisitions
where there is a clear value proposition that adds density not
further diversity. We remain focused on building a business that
can deliver mid-single digit rates of organic growth and a
double-digit operating margin in the medium term and are confident
about our ability to do so.
"I would like to take this opportunity to thank all of our
stakeholders - including our employees, our clients and our
shareholders - for their support in 2020. As we move ahead, we
remain committed to delivering great work for clients and to our
promise of making complex easy."
(1) Alternative Performance Measures are used consistently
throughout this announcement: these include adjusted profit before
tax, fee revenue, items prefaced 'adjusted' such as adjusted EPS,
segment profit, underlying profit, adjusted 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) Fee revenue has been restated - see note 2 for further
information
An analyst presentation will be held via video webcast at 9.30am
today. To participate, please contact Buchanan via
RPS@buchanan.uk.com to request joining details. A recording of the
presentation will be available later today at the RPS website,
www.rpsgroup.com .
Enquiries:
RPS Group plc
John Douglas, Chief Executive Today: +44 (0) 20 7466 5000
Judith Cottrell, Group Finance Director Thereafter: +44 (0) 1235 863
206
Buchanan
Henry Harrison-Topham / Chris Lane Tel: +44 (0) 20 7466 5000
/ Tilly Abraham
RPS@buchanan.uk.com www.buchanan.uk.com
Founded in 1970, RPS is a leading global professional services
firm of c.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 programme management, design and
development, water services, environment, advisory and management
consulting, exploration and development, planning and approvals,
health, safety and risk, oceans and coastal, laboratories, training
and communications, creative & digital 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 Q1-2021 trading update
in late April 2021.
Trading summary
Revenue for 2020 was GBP542.1 million (2019: GBP612.6 million,
GBP606.4 million at constant currency). Our key performance measure
is fee revenue; for 2020 this was GBP457.3 million (2019: GBP528.2
million, GBP522.2 million at constant currency). While the Group
made a statutory loss before tax of GBP31.3 million (2019: profit
GBP4.9 million, GBP3.4 million at constant currency) this was after
significant exceptional items, many of which were non-cash items
and largely driven by actions taken to mitigate the impact of
COVID-19. The profit performance of the business is measured using
adjusted operating profit. For 2020 this was GBP20.5 million (2019:
GBP43.4 million, GBP42.9 million at constant currency). The trading
performance of the Group by segment is summarised in the tables
below.
The effective tax rate for the year on Adjusted profit before
tax (PBT) was 22.4% (2019: 25.4%). The reduction was mainly due to
the impact of carrying back losses in the US under the US CARES Act
and recognising UK deferred tax balances at 19% rather than 17% .
Our underlying tax rate prior to these adjustments increased in the
year due to a rise in the proportion of taxable profit from higher
rate tax jurisdictions, mainly Australia. The statutory tax credit
for the year was GBP0.2 million (2019 charge: GBP6.1 million) on a
loss before tax of GBP31.3 million (2019 profit before tax: GBP4.9
million). The effect of tax on the impairment of goodwill incurred
in the year of GBP25.9 million was GBPnil.
Adjusted diluted EPS was 4.29p (2019: 12.31p, 12.17p at constant
currency), a decrease of 65% over last year at constant currency.
Statutory diluted loss per share was 12.83p (2019: 0.54p).
In addition to the impact of the pandemic, profit in 2020
suffered marginally in comparison to 2019 from exchange movements
on the conversion of overseas results. Adjusted PBT in 2020 would
have been GBP0.4 million higher than reported had 2019 exchange
rates been repeated in 2020. The Adjusted PBT in 2019 would have
been GBP0.5 million lower than reported if 2020 exchange rates have
prevailed in 2019. Statutory PBT in 2019 would have been GBP1.5
million lower than reported if 2020 exchange rates had prevailed in
2019.
Fee revenue
FY-2019
at constant
GBPm FY-2020 FY-2019 currency
------------------------------ ------- ------- ------------
Energy 75.7 104.3 103.5
Consulting - UK and Ireland 108.0 126.2 126.6
Services - UK and Netherlands 85.7 96.6 97.1
Norway 56.0 64.7 60.1
North America 39.0 46.1 45.8
Australia Asia Pacific 92.9 90.3 89.1
Fee Revenue 457.3 528.2 522.2
------------------------------ ------- ------- ------------
The period under review started well with good growth in Energy,
North America, and Australia Asia Pacific. As expected, the level
of activity in Water Services was lower in Q1-2020 ahead of the UK
water industry's new five-year asset management period (AMP7). O ur
Consulting - UK and Ireland and Norway segments were impacted
during the early period of the pandemic.
From the second quarter COVID-19 impacted our business across
all segments of the Group, with fee revenue reducing by 18.1% (at
constant currency) compared to Q2-2019. As restrictions eased in
Q3-2020, the business started to recover with fee reduction
improving as our people began to return from furlough or reduced
hours, with the reduction on prior year of 15.6% (at constant
currency). This improving trend continued into Q4-2020 and coupled
with a ramp up in the AMP7 cycle as well as increased activity with
mid-market PE in the US resulted in a 12.1% (at constant currency)
decline in Q4-2020 fee revenue compared to Q4-2019.
Full year fees of GBP457.3 million were down 12.4% (at constant
currency) on the prior year. RPS generates circa 55% of fee revenue
from government or quasi-government organisations, which provided
resilience to the impact of COVID-19 and enabled Australia Asia
Pacific to continue to deliver fee revenue growth in 2020.
Adjusted operating profit
FY-2019 at
GBPm FY-2020 FY-2019 constant currency
------------------------------- -------- -------- -------------------
Energy 4.5 11.1 11.0
Consulting - UK and
Ireland 6.3 15.1 15.1
Services - UK and Netherlands 5.4 10.8 10.9
Norway 4.5 6.0 5.5
North America 2.9 3.3 3.4
Australia and Asia
Pacific 8.2 6.4 6.3
------------------------------- -------- -------- -------------------
Total segment profit 31.8 52.7 52.2
Unallocated costs (11.3) (9.3) (9.3)
------------------------------- -------- -------- -------------------
Adjusted operating
profit 20.5 43.4 42.9
------------------------------- -------- -------- -------------------
In response to COVID-19 the Group took swift and considered
action to match capacity to market demand, reduce discretionary
spend, and make changes to our operating model. As a result of
these actions, which included the receipt of GBP4.2 million of
furlough income, segment costs reduced by 9.5% at constant
currency, versus 12.4% lower fee revenue at constant currency.
Segment profit margin was 7.0% (2019 at constant currency: 10.0%),
reflecting the impact of lower fee revenue, fixed costs in the
business that were not able to be reduced in line with fees and a
GBP0.6 million cost for maintenance of a property in the Republic
of Ireland.
Unallocated costs were higher in 2020 as a result of continued
investment in the strategic initiatives of People and Connectivity
and the retirement package for the outgoing Group Finance Director.
The investment in People and Connectivity includes investment in an
online performance development tool, operating costs of the new ERP
system and strategic hires within the technology team.
Exceptional items
Exceptional items of GBP39.2 million have been recognised in
2020 (2019: GBP23.4 million), of which GBP32.6 million are
non-cash. The exceptional items are detailed in note 5 and
include:
-- A goodwill impairment charge of GBP25.9 million after
revising our view on the assumptions used for impairment modelling
given the market uncertainty caused by the pandemic. This led to an
impairment of goodwill at the Half Year in our Consulting UK and
Ireland and North American segments, where the impact of the
pandemic was more pronounced.
-- Restructuring costs of GBP6.0 million as a result of the cost
mitigating actions taken in light of the impact of the pandemic on
the Group and aligning our operating models to the new environment.
These costs included redundancy for a limited number of roles, and
closure of offices with surplus space resulting in impairment of
right-of-use assets and onerous contract provisions for associated
property costs.
-- ERP stabilisation activities of GBP2.2 million for the new
ERP implemented in the Netherlands and parts of Australia in
addition to an impairment of the ERP of GBP2.9 million in respect
of those parts of the system which were identified in 2020 as
needing to be redeveloped or are no longer part of the global
design for future implementations. Further exceptional costs in
respect of change management and data migration will be incurred in
2021 as the roll-out of the ERP continues.
-- Further legal fees of GBP1.8 million investigating potential
issues regarding the administration of US government contracts
and/or projects. The investigation is ongoing and further
exceptional costs for legal fees will be incurred in 2021. This
matter is disclosed as a contingent liability in note 16.
-- A loss of GBP0.4 million on divestment of our Specialist
Geology business in the Energy Segment, supporting our strategy of
migrating the business away from traditional oil and gas to
renewables. The divestment took the form of an asset and trade sale
with proceeds of GBP0.7 million in return for net assets
transferred of GBPnil. Goodwill in respect of this business of
GBP1.0 million was written off and transaction costs of GBP0.1
million were incurred resulting in a small loss on disposal.
We anticipate that exceptional costs will be incurred in 2021
associated with the continued rollout of the ERP system and ongoing
legal fees in respect of the US government contracts
investigation.
Amortisation of intangible assets and transaction-related
costs
Amortisation of intangible assets and transaction related costs
totalled GBP5.5 million (2019: GBP9.1 million). Included in this
total is amortisation of acquired intangibles GBP5.5 million (2019:
GBP8.6 million), and acquisition related third-party transaction
costs of GBPnil (2019: GBP0.5 million).
Borrowings and cash flow
During the 12-month period, significant focus was placed on cash
management and ensuring disciplined billings and cash collections.
This focus and the equity placing in September, which raised a net
GBP19.4 million, reduced net bank borrowings by GBP83.3 million to
GBP10.8 million at 31 December 2020 (31 December 2019: GBP94.1
million).
Net cash from operating activities was GBP84.0 million (2019:
GBP37.6 million). Our conversion of operating profit into operating
cash was excellent at 239% (2019: 90%). This reflected a
significant focus on billing and collections, the actions taken to
protect cash in light of COVID-19, the unwinding of working capital
as a result of a reduction in revenue, reduced corporate taxes and
GBP10.2 million deferral of payroll/sales taxes under government
COVID-19 schemes. Excluding the tax deferrals, cash conversion was
213%. Lock-up days at the end of December 2020 were exceptionally
low at 48 days compared to 69 days at the end of 2019. Our focus on
improving collections is demonstrated by average lock-up days for
the year that were 65 days for 2020 compared to 69 days for
2019.
Net cash used in investing activities was GBP9.7 million (2019:
GBP30.9 million), the decrease due to no acquisition costs in 2020
(2019: GBP10.1 million), lower net capital expenditure of GBP7.8
million (2019: GBP21.1 million) and proceeds on the divestment of
Specialist Geology. The capital expenditure figure includes GBP2.5
million (2019: GBP7.8 million) invested in our new ERP system. In
2019 we completed the global design phase and implemented pilots in
the Netherlands and part of Australia. The pilot implementation
identified issues with the global design created by our
implementation partner, and hence in 2020 the investment has been
focused on progressing revisions to the global design and
stabilisation of the initial rollout. In 2021 we plan to finalise
the revised global design and continue with the global rollout
programme.
Deferred consideration outstanding at the year end was GBP5.8
million (31 December 2019: GBP8.7 million).
The amount paid in respect of dividends was GBPnil (2019:
GBP16.9 million) reflecting the cancellation of the 2019 final
dividend and the decision not to pay an interim 2020 dividend.
Included within financing activities are the GBP19.4 million net
proceeds of the September share placing.
Our leverage (being net bank debt plus deferred consideration
expressed as a percentage of adjusted EBITDA) at the year end was
0.7x (31 December 2019: 2.0x) compared to our target operating
range of 1.0x to 2.0x. We expect this will increase during 2021 to
within our target operating range of 1.0x to 2.0x as we invest in
growing the business, as government clients revert to normal
payment terms and as the COVID-19 cash initiatives reverse. The
bank covenant limit that applies to all our facilities is 3.75x for
December 2020 and March 2021, 3.25x for June 2021 and 3.0x
thereafter.
The Group's main banking facility is a committed multi-currency
revolving credit facility (RCF) with Lloyds, HSBC and NatWest
totalling GBP100.0 million which expires in July 2022. This may be
extended to July 2024 with the banks' agreement.
On 28 April 2020, to ensure adequate liquidity and financial
flexibility through the pandemic, the Group secured an additional
GBP60.0 million 12-month COVID-19 liquidity facility which formed
part of the RCF facility. In September 2020 the expiry of this
facility was extended to July 2022.
In addition, the Group has in issue 7-year US Private placement
notes of US$34.1 million and GBP30.0 million that are repayable in
September 2021. The Group is currently investigation options for
refinancing these loan notes.
Net finance costs were GBP7.1 million (2019: GBP6.0 million),
which includes GBP1.9 million in respect of IFRS 16 (2019: GBP1.9
million).
Dividends
In 2019 an interim dividend of 2.42 pence per share was paid in
respect of H1 2019 but the payment of the proposed final dividend
of 2.00 pence per ordinary share was cancelled as one of the
measures in response to COVID-19.
Due to the ongoing restrictions in the UK and wider uncertainty
over the timing of recovery in our markets, the Board of Directors
has taken a prudent approach and decided not to recommend a
dividend in respect of 2020. The Board recognises the importance of
dividends to shareholders and anticipates resuming the dividend
payment for 2021 providing markets continue to recover. When
dividends resume the Board will assess the appropriate level of
dividend to be paid.
Segment review
Energy
FY-2019 at
FY-2020 FY-2019 constant currency
----------------------- -------- -------- -------------------
Fee revenue (GBPm) 75.7 104.3 103.5
Segment profit (GBPm) 4.5 11.1 11.0
Margin (%) 5.9 10.6 10.6
----------------------- -------- -------- -------------------
Energy started the year with a strong performance in the
Operations business and, although activity in Technical Advisory
was muted, fee revenue in Q1-2020 grew by 8% at constant currency.
From Q2-2020 our Energy businesses were significantly affected by
COVID-19 due to the global travel restrictions, resulting in 2020
segment fee revenue being down 27% at constant currency on 2019.
Our flexible, associate-based employee model enabled us to reduce
costs as fee revenue reduced and in June 2020, we restructured our
Technical Advisory business, providing the segment with increased
flexibility and resilience to offset revenue fluctuations during
H2-2020. This enabled the segment to remain profitable despite the
significant impact from COVID-19.
During 2020 we continued to increase our exposure to renewables,
accounting for 15% of fee revenue in 2020 compared to 7.5% in 2019,
thereby reducing the segment's dependence on oil and fossil fuels.
The focus on renewables and offshore wind has been supported
in-house with existing expertise, where the skills are easily
transferrable.
Markets will continue to be impacted in 2021 while COVID-19
travel restrictions remain in place. However, the transition to
sustainable energy is creating significant opportunities for our
business and fees from offshore wind are expected to continue to
increase in 2021.
Consulting - UK and Ireland
FY-2019 at
FY-2020 FY-2019 constant currency
----------------------- -------- -------- -------------------
Fee revenue (GBPm) 108.0 126.2 126.6
Segment profit (GBPm) 6.3 15.1 15.1
Margin (%) 5.8 12.0 11.9
----------------------- -------- -------- -------------------
Since March 2020 performance in Consulting UK and Ireland has
been significantly affected by COVID-19. Strong public sector
demand provided some resilience to our Ireland and Northern Ireland
business.
The remainder of the segment has greater exposure to private
sector work and the property sector. Overall fee revenue at
constant currency was down 15% on 2019 but with the trajectory
improving throughout H2-2020. Careful matching of capacity to
demand and the development of innovative services to help our
clients emerge from COVID-19 has resulted in a profitable outturn
for 2020.
Whilst we will still experience the impact of COVID-19 in 2021,
there are a number of sectors where we have core strengths that are
expected to outperform such as affordable residential property,
health, logistics, and datacentres. Our Net Zero Carbon proposition
for blue chip clients is delivering and private sector
opportunities are expected to recover as the impact of COVID-19
reduces.
Services - UK and Netherlands
FY-2019 at
FY-2020 FY-2019 constant currency
----------------------- -------- -------- -------------------
Fee revenue (GBPm) 85.7 96.6 97.1
Segment profit (GBPm) 5.4 10.8 10.9
Margin (%) 6.3 11.2 11.2
----------------------- -------- -------- -------------------
As expected, the level of activity in the Water Services
business in Q1-2020 was low ahead of the new AMP cycle. Whilst
activity ramped up through H2-2020 this was at a slower pace than
usual. Health and Laboratories and Netherlands experienced some
short-term impact of COVID-19, caused by the impact of lock down
and travel restrictions on our markets and specific client
contracts. Overall fee revenue was down 12% at constant currency
but a continued improvement in fees occurred across H2-2020 and
returned to year-on-year growth in Q4-2020.
The UK water market is expected to improve through 2021, whilst
in the Netherlands we have secured long term frameworks with key
water boards and provinces. Our UK laboratory secured Good
Laboratory Practice accreditation, which will open up new markets
and should drive increased fee revenue as COVID-19 restrictions
ease.
Norway
FY-2019 at
FY-2020 FY-2019 constant currency
----------------------- -------- -------- -------------------
Fee revenue (GBPm) 56.0 64.7 60.1
Segment profit (GBPm) 4.5 6.0 5.5
Margin (%) 8.0 9.3 9.2
----------------------- -------- -------- -------------------
Notwithstanding the pressure on the economy due to COVID-19 and
its exposure to oil, the business delivered a solid performance,
retaining its market leading position within Project and Program
Management in Norway. Fee revenue improved in H2-2020, resulting in
a 7% fee revenue reduction for the year as a whole at constant
currency. Whilst revenue from private sector clients was lower, it
was partially offset by an increasing exposure to the public sector
where investment levels are good and stable. A strong focus on cost
control enabled the business to deliver a good profit
performance.
COVID-19 is still expected to impact the business in 2021, but
activity and investment levels remain strong in the public sector
with the segment well placed to benefit from this and new
opportunities in emerging markets such as green technology and
aquaculture.
North America
FY-2019 at
FY-2020 FY-2019 constant currency
----------------------- -------- -------- -------------------
Fee revenue (GBPm) 39.0 46.1 45.8
Segment profit (GBPm) 2.9 3.3 3.4
Margin (%) 7.4 7.2 7.4
----------------------- -------- -------- -------------------
The segment had an encouraging start with a good all-round
performance in Q1-2020, during which fee revenue was up 2% at
constant currency. Q2-2020 onwards was affected by the pandemic
with trading mixed and the 2020 overall fee revenue for the year
reduced by 15% at constant currency on 2019. Infrastructure
benefited from high public sector exposure and delivered strong
profit growth with improved margins. Although fee revenue growth
was held back by delays in project activations in the last quarter
of the year, activations have picked up in January 2021. Ocean
Science delivered fee growth in the year on the back of good public
sector activity. In the Environmental Risk business, subdued
private equity activity in Q2-2020 reduced overall fee revenue in
the year, although the business capitalised on buoyant activity in
H2-2020 to deliver an improving performance in the second half.
Restructuring during the year means the segment is now leaner and
maintained its profit margin.
Good foundations are in place to return to growth in 2021 with a
strong public sector order book to support activity in
Infrastructure and Ocean Science and an enhanced sustainability
offering in Environmental Risk.
Australia Asia Pacific
FY-2019 at
FY-2020 FY-2019 constant currency
----------------------- -------- -------- -------------------
Fee revenue (GBPm) 92.9 90.3 89.1
Segment profit (GBPm) 8.2 6.4 6.3
Margin (%) 8.8 7.1 7.1
----------------------- -------- -------- -------------------
The significant exposure of the segment to the public sector
(over 70%), as well as the early implementation of several cost
saving measures, enabled the segment to deliver solid fee revenue
growth of 4% at constant currency on the prior year and improved
profitability. Government stimulus spending in defence, transport
infrastructure and property provided benefits across the segment.
The acquisition of Corview in 2019 continues to deliver benefits,
enhancing our exposure in transport and defence.
Whilst uncertainty remains due to the Australian government's
strong response to COVID-19 and the end of the property stimulus,
we are well positioned to win new Federal and State government
infrastructure work. An increased focus on renewables, leveraging
our experience in wind and solar markets, is expected to generate
benefits in H2-2021.
Board Change
On 30 April 2020 Gary Young stepped down from the Board as Group
Finance Director and Judith Cottrell was appointed to the Board in
this role.
Group Outlook
Looking ahead, our businesses serving government and
quasi-government organisations have solid order books. Those
servicing the private sector are well positioned to recover as
lockdown and travel restrictions ease. Whilst the disruption of
COVID-19 will continue through the first half of 2021 and the pace
of recovery is uncertain, we will continue to demonstrate the
resilience of our business by managing the uncertainty and taking
advantage of opportunities as they arise.
With a strong cash position and significant debt facilities
available, RPS is well placed to deal with any further challenges
that the continuing effect of COVID-19 may bring, although as the
working capital benefits of 2020 unwind and as the Group returns to
growth, it will start to absorb working capital and net bank
borrowings are expected to increase from current low levels.
The enduring thematics that underpin our business of
urbanisation, natural resources and sustainability are becoming
ever more relevant and benefiting from government stimulus and
future investment. The diverse nature of RPS, coupled with our
expertise and global reach, positions us well to capitalise on
recovery in our end markets.
Our investment to date in people, clients and connectivity has
strengthened the business and provides a stronger platform from
which to deliver growth. We remain focused on building a business
that can deliver mid-single digit rates of organic growth and a
double-digit operating margin in the medium term and are confident
about our ability to do so.
We are optimistic that the roll-out of vaccination programmes
and easing of lockdowns in a number of key markets in which we
operate will stimulate economic activity and demand for our range
of services. We expect 2021 to be a year of progress for RPS, but
with the current uncertainty over the pace of recovery, we are not
resuming guidance at this time.
Board of Directors
RPS Group plc
8 March 2021
Consolidated income statement
Restated
(1)
Notes Year ended Year ended
31 December 31 December
GBPm 2020 2019
-------------------------------------------- ----- ------------ ------------
Revenue 3 542.1 612.6
2,
Less: passthrough costs 3 (84.8) (84.4)
----------------------------------------------- ----- ------------ ------------
2,
Fee revenue 3 457.3 528.2
2,
Adjusted operating profit 3 20.5 43.4
2,
3
----------------------------------------------- ----- ------------ ------------
Amortisation of acquired intangibles and 2,
transaction-related costs 4 (5.5) (9.1)
2,
Exceptional items 5 (39.2) (23.4)
----------------------------------------------- ----- ------------ ------------
Operating (loss)/profit (24.2) 10.9
Finance costs 6 (7.2) (6.2)
Finance income 6 0.1 0.2
----------------------------------------------- ----- ------------ ------------
Adjusted profit before tax 2 13.4 37.4
(Loss)/profit before tax (31.3) 4.9
Tax credit/(expense) 7 0.2 (6.1)
----------------------------------------------- ----- ------------ ------------
Loss for the year attributable to equity
holders of the parent (31.1) (1.2)
----------------------------------------------- ----- ------------ ------------
Basic loss per share (pence) 8 (12.95) (0.55)
Diluted loss per share (pence) 8 (12.83) (0.54)
2,
Adjusted basic earnings per share (pence) 8 4.33 12.43
2,
Adjusted diluted earnings per share (pence) 8 4.29 12.31
----------------------------------------------- ----- ------------ ------------
(1) See note 2
Consolidated statement of comprehensive income
Year ended Year ended
31 December 31 December
GBPm 2020 2019
------------------------------------------------ ------------ ------------
Loss for the year (31.1) (1.2)
Actuarial gains and losses on remeasurement
of defined benefit pension scheme (0.1) (0.1)
Tax on remeasurement of defined benefit pension - -
scheme
Foreign exchange differences on translation
of foreign operations* 8.9 (12.3)
Total other comprehensive expense 8.8 (12.4)
Total recognised comprehensive loss for the
year attributable to equity holders of the
parent (22.3) (13.6)
------------------------------------------------ ------------ ------------
* may be reclassified to profit or loss in
accordance with IFRS
Consolidated balance sheet
As at As at
31 December 31 December
GBPm Notes 2020 2019
----------------------------------- ----- ------------ ------------
Assets
Non -current assets :
Intangible assets 9 350.5 378.7
Property, plant and equipment 28.5 32.3
Right-of-use assets 42.1 44.8
Deferred tax asset 11.2 3.8
----------------------------------- ----- ------------ ------------
432.3 459.6
------------------------------------ ----- ------------ ------------
Current assets:
Trade and other receivables 10 130.8 157.1
Corporation tax receivable 2.4 0.9
Cash at bank 43.2 17.7
----------------------------------- ----- ------------ ------------
176.4 175.7
------------------------------------ ----- ------------ ------------
Liabilities
Current liabilities:
Borrowings 12 54.0 1.3
Lease liabilities 10.8 10.0
Deferred consideration 14 3.1 3.1
Trade and other payables 11 129.2 104.9
Corporation tax liability 3.0 -
Provisions 5.7 0.9
------------------------------------ ----- ------------ ------------
205.8 120.2
------------------------------------ ----- ------------ ------------
Net current (liabilities)/assets (29.4) 55.5
------------------------------------ ----- ------------ ------------
Non-current liabilities:
Borrowings 12 - 110.5
Lease liabilities 38.1 39.8
Deferred consideration 14 2.7 5.6
Other payables 0.2 1.5
Deferred tax liability 8.4 6.3
Provisions 4.5 2.9
------------------------------------ ----- ------------ ------------
53.9 166.6
------------------------------------ ----- ------------ ------------
Net assets 349.0 348.5
------------------------------------ ----- ------------ ------------
Equity
Share capital 8.3 6.8
Share premium 125.3 121.9
Retained earnings 166.3 195.7
Merger reserve 38.7 21.2
Employee trust (11.5) (10.1)
Translation reserve 21.9 13.0
Total shareholders' equity 349.0 348.5
----------------------------------- ----- ------------ ------------
Consolidated cash flow statement
Year ended Year ended
31 December 31 December
GBPm Notes 2020 2019
------------------------------------------ ----- ------------ ------------
Net cash from operating activities 13 84.0 37.6
------------------------------------------ ----- ------------ ------------
Cash flows from investing activities:
Purchases of subsidiaries net of
cash acquired - (10.1)
Deferred consideration (3.0) (0.1)
Purchase of property, plant and equipment (5.0) (13.3)
Purchase of intangible assets (2.8) (7.8)
Proceeds from sale of assets 0.4 0.4
Proceeds from sale of business 0.7 -
Net cash used in investing activities (9.7) (30.9)
------------------------------------------ ----- ------------ ------------
Cash flows from financing activities:
Proceeds from issue of share capital 19.4 -
(Decrease)/increase in bank borrowings (55.4) 23.5
Payment of bank arrangement fees (1.0) (0.7)
Payment of lease liabilities (11.0) (9.2)
Dividends paid - (16.9)
Net cash used in financing activities (48.0) (3.3)
------------------------------------------ ----- ------------ ------------
Net increase in cash and cash equivalents 26.3 3.4
Cash and cash equivalents at beginning
of year 16.4 15.4
Effect of exchange rate fluctuations 0.5 (2.4)
------------------------------------------ ----- ------------ ------------
Cash and cash equivalents at end
of year 43.2 16.4
------------------------------------------ ----- ------------ ------------
Cash and cash equivalents comprise:
Cash at bank 13 43.2 17.7
Bank overdraft 13 - (1.3)
------------------------------------------ ----- ------------ ------------
Cash and cash equivalents at end
of year 43.2 16.4
------------------------------------------ ----- ------------ ------------
Consolidated statement of changes in equity
Share Share Retained Merger Employee Translation Total
capital premium earnings reserve trust reserve equity
----------------------- --------- --------- ---------------- --------- --------- ------------ ----------
At 1 January 2019 6.8 120.4 212.4 21.2 (9.8) 25.3 376.3
Loss for the year - - (1.2) - - - (1.2)
Other comprehensive
expense - - (0.1) - - (12.3) (12.4)
----------------------- --------- --------- ---------------- --------- --------- ------------ ----------
Total comprehensive
expense for the
year - - (1.3) - - (12.3) (13.6)
Issue of new ordinary
shares - 1.5 (0.5) - (1.0) - -
Share-based payment
expense - - 2.7 - - - 2.7
Transfer on release
of shares - - (0.7) - 0.7 - -
Dividends paid - - (16.9) - - - (16.9)
----------------------- --------- --------- ---------------- --------- --------- ------------ ----------
At 31 December 2019 6.8 121.9 195.7 21.2 (10.1) 13.0 348.5
Loss for the year - - (31.1) - - - (31.1)
Other comprehensive
income/(expense) - - (0.1) - - 8.9 8.8
----------------------- --------- --------- ---------------- --------- --------- ------------ ----------
Total comprehensive
income/(expense)
for the year - - (31.2) - - 8.9 (22.3)
Issue of new ordinary
shares 1.5 3.4 (0.9) 17.5 (2.1) - 19.4
Share-based payment
expense - - 3.4 - - - 3.4
Transfer on release
of shares - - (0.7) - 0.7 - -
At 31 December 2020 8.3 125.3 166.3 38.7 (11.5) 21.9 349.0
----------------------- --------- --------- ---------------- --------- --------- ------------ ----------
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 2020
which have been prepared in accordance with international
accounting standards in conformity with the requirements of the
Companies Act 2006 and International Financial Reporting Standards
adopted pursuant to Regulation (EC) No 1606/2002 as it applies in
the European Union. The financial statements have also been
prepared in accordance with International Financial Reporting
Standards as issued by the IASB.
The Group has prepared these accounts on the same basis as the
2019 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
Adjusted operating profit and adjusted profit before tax
Adjusted profit before tax is used by the Board to monitor and
measure the trading performance of the Group. It excludes certain
items which the Board believes distorts the trading performance of
the Group. These items are either acquisition or disposal related,
non-cash items, or they are exceptional in nature.
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
adjusted profit before tax, 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. Similarly, exceptional items 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 adjusted profit
before tax. A reconciliation is shown below.
Year ended Year ended
31 December 31 December
GBPm 2020 2019
-------------------------------------- ------------- -------------
(Loss)/profit before tax (31.3) 4.9
Amortisation of acquired intangibles
Add: and transaction-related costs 5.5 9.1
Exceptional items 39.2 23.4
--------------------------------------------- ------------- -------------
Adjusted profit before tax 13.4 37.4
Add: Net finance costs 7.1 6.0
-------------------------------------- ------------- -------------
Adjusted operating profit 20.5 43.4
--------------------------------------------- ------------- -------------
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 to be
more reflective of the Group's trading performance in the year.
Year ended Year ended
31 December 31 December
GBPm 2020 2019
---------------------------------------------- ------------- -------------
Loss attributable to equity holders
of the parent (31.1) (1.2)
Amortisation of acquired intangibles
Add: and transaction-related costs 5.5 9.1
Exceptional items 39.2 23.4
Tax on amortisation of acquired intangibles,
transaction-related costs and exceptional
Deduct: items (3.2) (3.4)
---------------------------------------------- ------------- -------------
Adjusted profit attributable to equity
holders of the parent 10.4 27.9
-------------------------------------------------------- ------------- -------------
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.
Constant 2019 at
currency constant
GBPm 2019 effect currency
---------------------------- ------ ---------- ----------
Revenue 612.6 (6.2) 606.4
Fee revenue 528.2 (6.0) 522.2
Adjusted profit before tax 37.4 (0.5) 36.9
Profit before tax 4.9 (1.5) 3.4
---------------------------- ------ ---------- ----------
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 expenses. 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 finance,
marketing and people functions and related IT costs.
Revenue measures
The Group disaggregates revenue into fee revenue and passthrough
costs. This provides insight into the performance of the business
and our productive output. This is reconciled on the face of the
income statement. Fee revenue by segment is reconciled in note
3.
Fee revenue is revenue from activity where RPS adds value.
Specifically, this is the revenue from the Group's resource pool,
that consists of its employees and associates, equipment and
software, plus profit on passthrough costs.
Passthrough costs is a category of revenue representing costs
incurred when delivering projects that are not directly related to
the Group's resource pool. Such costs are recovered from clients
and examples include the cost of subcontractors, travel,
accommodation and subsistence.
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 13.
EBITAS is an equivalent measure, but is after depreciation
costs.
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
13.
Leverage
Leverage is the ratio of net bank borrowings (adjusted to
include bonds, indemnities and guarantees and to exclude restricted
cash) 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
adjusted profit before tax ('adjusted effective tax rate'). This is
the tax charge applicable to adjusted profit before tax as a
percentage of adjusted profit before tax and is set out in note
7.
Changes in definition of alternative performance measures and
restatements of comparatives
The Group has changed its definition for non-IFRS revenue
measures with effect from 1 January 2020 as follows:
-- Definition of fee income amended
-- New category of revenue called passthrough costs introduced
-- Recharged expenses no longer reported
There is no impact on profit or cash flow as a result of these
changes in any reporting period. The changes in definition ensure
alignment with the global ERP design.
The benefits from this change in definition are that it reduces
judgement when determining what is fee revenue, provides a better
indication of the underlying growth in revenue, gives improved
information on resource requirements and allows for a better
reflection of productivity and profitability.
The effects of the change in definitions are that the revenue
from recharging the cost of subcontractors will be treated as
passthrough costs and will not be included in fee revenue and the
profit earned on recharging subcontractor costs and other
incidental costs will be reported in fee revenue.
The Alternative Performance Measures relating to revenue
measures have been restated for the year ended 31 December 2019
(note 3). Further details on these restatements are included in the
appendix to the Group's RNS announcement made on 22 April 2020.
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 those that can be allocated on a reasonable basis.
The business segments of the Group are as follows:
- Energy
- Consulting - UK and Ireland
- Services - UK and Netherlands
- Norway
- North America
- Australia Asia Pacific
Segment results for the year ended 31 December 2020
Fee Passthrough Intersegment External
GBPm revenue costs revenue revenue
------------------------------- --------- ------------ ------------- ---------
Energy 75.7 14.8 (1.0) 89.5
Consulting - UK and
Ireland 108.0 28.7 (1.2) 135.5
Services - UK and Netherlands 85.7 12.8 (1.9) 96.6
Norway 56.0 1.9 (0.1) 57.8
North America 39.0 10.3 (0.6) 48.7
Australia Asia Pacific 92.9 21.2 (0.1) 114.0
Group eliminations - (4.9) 4.9 -
------------------------------- --------- ------------ ------------- ---------
Total 457.3 84.8 - 542.1
------------------------------- --------- ------------ ------------- ---------
Underlying Reorganisation
GBPm profit costs Segment
profit
------------------------------- ----------- --------------- ----------
Energy 4.5 - 4.5
Consulting - UK and
Ireland 6.3 - 6.3
Services - UK and Netherlands 5.4 - 5.4
Norway 4.5 - 4.5
North America 2.9 - 2.9
Australia Asia Pacific 8.2 - 8.2
Total 31.8 - 31.8
------------------------------- ----------- --------------- ----------
Segment results for the year ended 31 December 2019
(restated)
Fee Passthrough Intersegment External
GBPm revenue costs revenue revenue
------------------------------- --------- ------------ ------------- ---------
Energy 104.3 16.8 (1.0) 120.1
Consulting - UK and
Ireland 126.2 29.2 (1.3) 154.1
Services - UK and Netherlands 96.6 14.5 (1.7) 109.4
Norway 64.7 0.8 (0.2) 65.3
North America 46.1 13.3 (0.5) 58.9
Australia Asia Pacific 90.3 14.7 (0.2) 104.8
Group eliminations - (4.9) 4.9 -
------------------------------- --------- ------------ ------------- ---------
Total 528.2 84.4 - 612.6
------------------------------- --------- ------------ ------------- ---------
Underlying Reorganisation
GBPm profit costs Segment
profit
------------------------------- ----------- --------------- ----------
Energy 11.1 - 11.1
Consulting - UK and
Ireland 15.1 - 15.1
Services - UK and Netherlands 10.8 - 10.8
Norway 6.1 (0.1) 6.0
North America 3.4 (0.1) 3.3
Australia Asia Pacific 7.0 (0.6) 6.4
Total 53.5 (0.8) 52.7
------------------------------- ----------- --------------- ----------
Group reconciliation
Restated
Year ended Year ended
31 December 31 December
GBPm 2020 2019
-------------------------------------- ------------- -------------
Revenue 542.1 612.6
Less: passthrough costs (84.8) (84.4)
-------------------------------------- ------------- -------------
Fee revenue 457.3 528.2
-------------------------------------- ------------- -------------
Underlying profit 31.8 53.5
Reorganisation costs - (0.8)
-------------------------------------- ------------- -------------
Segment profit 31.8 52.7
Unallocated expenses (11.3) (9.3)
-------------------------------------- ------------- -------------
Adjusted operating profit 20.5 43.4
Amortisation of acquired intangibles
and transaction-related costs (5.5) (9.1)
Exceptional items (39.2) (23.4)
-------------------------------------- ------------- -------------
Operating (loss)/profit (24.2) 10.9
Net finance costs (7.1) (6.0)
(Loss)/profit before tax (31.3) 4.9
-------------------------------------- ------------- -------------
The table below shows revenue and fee revenue to external
customers based upon the country from which billing took place:
Revenue Fee revenue
----------------------------- ----------------------------
Restated
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
GBPm 2020 2019 2020 2019
------------- -------------- ------------- -------------
UK 190.9 232.4 160.8 193.6
Australia 128.6 123.4 105.5 106.0
USA 81.1 97.5 64.7 76.9
Norway 57.7 66.2 56.0 65.2
Netherlands 39.9 40.5 32.6 34.7
Ireland 34.4 38.3 30.5 40.1
Canada 6.4 10.4 5.2 9.2
Other 3.1 3.9 2.0 2.5
------------- ------------- -------------- ------------- -------------
Total 542.1 612.6 457.3 528.2
------------- ------------- -------------- ------------- -------------
4. Amortisation of acquired intangibles and transaction-related costs
Year ended Year ended
31 December 31 December
GBPm 2020 2019
-------------------------------------- ------------- -------------
Amortisation of acquired intangibles 5.5 8.6
Transaction-related costs - 0.5
Total 5.5 9.1
-------------------------------------- ------------- -------------
5. Exceptional items
Year ended Year ended
31 December 31 December
GBPm 2020 2019
-------------------------- ------------- -------------
Impairment of goodwill 25.9 19.8
Restructuring costs 6.0 -
Loss on disposal 0.4 -
Legal fees 1.8 1.4
ERP implementation costs 2.2 1.2
Impairment of ERP 2.9 -
Rebranding costs - 1.0
Total 39.2 23.4
-------------------------- ------------- -------------
The Group has recognised a goodwill impairment charge of GBP25.9
million (2019: GBP19.8 million) relating to the impairment of the
Consulting and North America (2019: AAP) CGU groups. The market
uncertainty caused by the COVID-19 pandemic has meant that we
revised our short-term assumptions in the impairment modelling. We
undertook further impairment testing (as normal) on the December
balance sheet. No further impairment charges were recognised as a
result of this testing.
Restructuring costs of GBP6.0 million have been incurred as a
result of the actions taken to mitigate the impact of COVID-19 on
the Group. These costs comprise the impairment of right-of-use
assets for properties that have been vacated, onerous contract
provisions for associated property costs and the redundancy costs
incurred when matching our resource base to market demand.
On 31 December 2020, the Group disposed of the trade and assets
of its specialist geology business in the Energy segment. The cash
consideration was GBP0.7 million and the loss on disposal of GBP0.4
million primarily related to the goodwill associated with the
business.
Further legal fees of GBP 1.8 million were incurred
investigating potential issues regarding the administration of US
government contracts and/or projects and the investigation is
ongoing (note 16).
The new ERP was implemented in the Netherlands and part of
Australia towards the end of 2019 and stabilisation activities
proceeded throughout 2020. Further costs of GBP 2.2 million were
incurred in the current year on support through the stabilisation
period. Substantial rewrites of key elements of the system were
required post go live as part of the stabilisation activities. The
Group has recognised an impairment charge of GBP2.9 million in
respect of those parts of the system which have needed to be
redeveloped or are no longer part of the global design for future
implementations.
In the prior year, the Group undertook a global rebranding of
RPS which included a new logo, colour scheme, office signage and a
new website. This project was completed in 2019 and no further
costs have been incurred in 2020.
6. Net financing costs
Year ended Year ended
31 December 31 December
GBPm 2020 2019
---------------------------------------------- ------------- -------------
Finance costs:
Interest on loans and overdraft (4.4) (3.8)
Interest on lease liabilities (1.9) (1.9)
Amortisation of prepaid financing costs (0.7) (0.3)
Unwind of discount on deferred consideration (0.2) (0.2)
---------------------------------------------- ------------- -------------
(7.2) (6.2)
Finance income:
Deposit interest receivable 0.1 0.2
---------------------------------------------- ------------- -------------
Net financing costs (7.1) (6.0)
---------------------------------------------- ------------- -------------
7. Income taxes
Analysis of the tax (credit)/expense in the consolidated income
statement for the year:
Year ended Year ended
31 December 31 December
GBPm 2020 2019
------------------------------------------ ------------- -------------
Current tax:
UK corporation tax 0.1 1.8
Overseas tax 6.2 6.0
Adjustments in respect of prior years (1.1) (0.5)
------------------------------------------ ------------- -------------
5.2 7.3
Deferred tax:
Origination and reversal of temporary
differences (5.5) (0.9)
Effect of change in tax rate 0.6 -
Adjustments in respect of prior years (0.5) (0.3)
------------------------------------------ ------------- -------------
(5.4) (1.2)
Total tax (credit)/charge for the year (0.2) 6.1
------------------------------------------ ------------- -------------
In addition to the amount (credited)/charged to the consolidated
income statement, the following items related to tax have been
recognised:
Year ended Year ended
31 December 31 December
GBPm 2020 2019
------------------------------------------- ------------- -------------
Deferred tax charge in other comprehensive - -
income
------------------------------------------- ------------- -------------
The effective tax rate for the year on (loss)/profit before tax
was 0.6% (2019: 125.4%). The effective tax rate for the year on
adjusted profit before tax was 22.4% (2019: 25.4%) as shown in the
table below:
Year ended Year ended
31 December 31 December
GBPm 2020 2019
------------------------------------------------ ------------- -------------
Total tax (credit)/expense in income statement (0.2) 6.1
Add back:
Tax on amortisation of acquired intangibles,
transaction-related costs and exceptional
items 3.2 3.4
Adjusted tax charge on the profit for
the year 3.0 9.5
Adjusted profit before tax 13.4 37.4
Adjusted effective tax rate 22.4% 25.4%
------------------------------------------------ ------------- -------------
Tax rate impact of amortisation of acquired
intangibles, transaction-related costs
and exceptional items (21.8%) 100%
Statutory effective tax rate 0.6% 125.4%
------------------------------------------------ ------------- -------------
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% (2019:
19.0%) and Australia 30% (2019: 30%) and the weighted average tax
rate reduced to 16.8% in 2020 (2019: 21.3%).
The actual tax charge differs from the weighted average tax
charge for the reasons set out in the following reconciliation:
Year ended Year ended
31 December 31 December
GBPm 2020 2019
-------------------------------------------- ------------- -------------
(Loss)/profit before tax (31.3) 4.9
Tax at the weighted average rate of 16.8%%
(2019: 21.3%) (5.3) 1.0
Effect of:
Irrecoverable withholding tax suffered 0.8 1.2
Adjustments in respect of prior years (1.6) (0.8)
Effect of change in tax rates (0.1) -
Impairment of goodwill 5.7 4.2
Other differences 0.3 0.5
Total tax (credit)/expense for the year (0.2) 6.1
-------------------------------------------- ------------- -------------
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. Whilst the overall irrecoverable withholding tax
decreased in the year, it represented a larger proportion of the
overall tax rate.
Enacted changes in the tax rate impact the carrying value of
deferred tax balances, principally those related to the
amortisation of intangible assets. The impact in 2020 is a result
of the recognising UK balances at 19% rather than 17% as at the end
of 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. In 2020 the credit was mainly the result
of losses being recognised in the US due to changes in the carry
back rules under the CARES Act.
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.
In the Chancellor's Budget on 3 March 2021, it was announced
that the UK rate of corporation tax will increase from 19% to 25%
on 1 April 2023. In addition, measures to increase losses that can
be carried back to previous periods were announced. We will
undertake a detailed analysis of the impact of these changes on the
Group's UK tax position in due course but the changes would result
in a material increase in the liability recognised on goodwill
offset by the increased carrying value of losses.
8. Earnings per share
The calculations of basic and diluted earnings per share were
based on the loss attributable to ordinary shareholders and a
weighted average number of ordinary shares outstanding during the
year as shown in the table below:
Year ended Year ended
31 December 31 December
GBPm / 000's 2020 2019
-------------------------------------------- ------------ ------------
Loss attributable to equity holders of
the parent (31.1) (1.2)
Weighted average number of ordinary shares
for the purposes of basic earnings per
share 240,155 223,958
Effect of employee share schemes 2,162 2,264
-------------------------------------------- ------------ ------------
Diluted weighted average number of ordinary
shares 242,317 226,222
Basic loss per share (pence) (12.95) (0.55)
Diluted loss per share (pence) (12.83) (0.54)
-------------------------------------------- ------------ ------------
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:
Year ended Year ended
31 December 31 December
GBPm 2020 2019
---------------------------------------------- ------------- -------------
Loss attributable to equity holders of
the parent (31.1) (1.2)
Amortisation of acquired intangibles
and transaction-related costs (note 4) 5.5 9.1
Exceptional items (note 5) 39.2 23.4
Tax on amortisation of acquired intangibles,
transaction-related costs and exceptional
items (3.2) (3.4)
Adjusted profit attributable to equity
holders of the parent 10.4 27.9
---------------------------------------------- ------------- -------------
Adjusted basic earnings per share (pence) 4.33 12.43
Adjusted diluted earnings per share (pence) 4.29 12.31
---------------------------------------------- ------------- -------------
9. Intangible assets
Goodwill
The Group tests annually for impairment or when there are any
impairment triggers. Due to the impact of COVID-19 on the
performance of the Group in the first half of the year a full
impairment review was performed as at 31 May 2020 as well as at the
year end date.
The determination of whether or not goodwill is impaired
requires an estimate to be made of the value in use of the CGU
groups to which goodwill has been allocated. Those value in use
calculations include estimates about the future financial
performance of the CGUs based on budgets and forecasts, medium-term
and long-term growth rates, discount rates and the markets in which
the business operates. A more cautious view has been taken in our
short-term forecasts and assumptions due to the COVID-19
uncertainty and the resulting disruption in our markets and the
wider economy. The cash flow projections in the four financial
years following the forecast year reflect management's expectations
of the medium-term operating performance of the CGU and the growth
prospects in the CGU's market, including recovery from the impact
of COVID-19. Thereafter a perpetuity is applied.
The key assumptions in the value in use calculations are the
discount rates applied, the growth rates and margins assumed over
the forecast period.
Discount rate applied
The discount rate applied to a CGU represents a pre-tax rate
that reflects the market assessment of the time value of money at
the end of the reporting period and the risks specific to the CGU.
The Group bases its estimate for the pre-tax discount rate on its
weighted average cost of capital (WACC). The inputs to this
calculation are a combination of market, industry and
company-specific data.
31 December 31 December
2020 2019
----------------------------- ------------ ------------
Consulting (UK and Ireland) 12.2% 10.7%
Services (UK) 13.1% 11.2%
Services (Netherlands) 14.2% 12.4%
Norway 12.2% 10.8%
North America 12.3% 11.0%
AAP 14.7% 12.9%
Energy 15.8% 14.2%
----------------------------- ------------ ------------
Growth rates
The growth rates applied reflect management's judgement
regarding the potential future performance of the business. The
medium term comprises the years 2022 to 2025 and includes higher
growth rates in the first couple of years as the economies and
markets in which we operate recover from the current COVID-19
related downturn. COVID-19 is expected to impact on all CGUs, to
varying degrees, in 2021 but have less of an impact on profit
compared to the initial lockdown in 2020. Recovery to the level of
profits seen prior to the pandemic will be gradual.
The long-term growth rate applied to the perpetuity calculations
was between -2.0% and 2.5% per annum and is unchanged from the
rates used in the 31 December 2019 goodwill impairment testing.
These rates reflect the average long-term growth rates of the
economies in which the CGUs are based and our assessment of the
longer term prospects of the businesses including the impact that
climate change may have on the Energy CGU.
31 December 31 December
2020 2019
----------------------------- ------------ ------------
Consulting (UK and Ireland) 2.1%-2.5% 2.1%-2.5%
Services (UK) 2.1% 2.1%
Services (Netherlands) 2.0% 2.0%
Norway 2.3% 2.3%
North America 2.3% 2.3%
AAP 2.5% 2.5%
Energy (2.0%) (2.0%)
----------------------------- ------------ ------------
Summary of results
The Group recognised impairment charges of GBP17.4 million and
GBP8.5 million against the goodwill allocated to the Consulting (UK
& Ireland) CGU and North America CGU groups respectively in the
interim results for the six months ended 30 June 2020. The Board
had considered the prospects of and uncertainty in these two CGUs
following the impact that COVID-19 was forecast to have on their
medium-term performance. All other CGUs were tested for impairment
and no impairment charges were identified.
The impairment testing was updated at the year end, based on the
latest budget and forecasts for medium-term growth and no further
impairments were identified.
The Group's market capitalisation is below the net assets of the
Group. The Directors are comfortable with this difference as they
consider the Group to be undervalued during these challenging
times. The post year and share price performance has narrowed the
gap between value in use and market capitalisation.
Sensitivity of results to changes in estimates
The Group's CGU groups all have headroom in the year end
impairment review following the impairments made to the Consulting
(UK & Ireland) and North America CGUs at the half year as a
result of better than forecast performance in the second half.
The valuation of goodwill allocated to CGU groups is most
sensitive to the achievement of the 2021 budget, the medium-term
growth rates assumed for the following four years and the discount
rate. Whilst we are able to manage staff costs, direct costs and
overheads, the revenue projections are inherently uncertain due to
the short-term nature of our order books and the current impact
COVID-19 is having on market conditions in some of our sectors.
Consequently, further underperformance against the budget and
medium-term growth rates is possible which could lead to an
additional reduction in the carrying value of the CGUs. It is also
reasonably possible that the budget and growth rates are exceeded
if market conditions allow.
A 0.7% increase in the discount rate or a 7% reduction in the
2021 budgeted profit would lead to the recoverable amount of the
Services (UK) CGU to equal its carrying amount of GBP50.1 million.
Furthermore, a 1% increase in the discount rate will lead to an
impairment charge of GBP1.8 million and a 15% decrease in the 2021
budgeted profit will lead to an impairment charge of GBP5.4 million
in the next 12 months. There are no other reasonable changes in
estimates that would result in a material adjustment to the
carrying amounts of assets and liabilities as at 31 December
2020.
10. Trade and other receivables
Trade and other receivables comprise the following balances:
31 December 31 December
GBPm 2020 2019
----------------------------------- ------------ ------------
Trade receivables 78.4 95.9
Contract assets 36.8 45.7
Prepayments 12.5 10.9
Other receivables 3.1 4.6
----------------------------------- ------------ ------------
Total trade and other receivables 130.8 157.1
----------------------------------- ------------ ------------
Trade receivables and contract assets net of loss allowance are
shown below:
31 December 31 December
GBPm 2020 2019
----------------------- ------------ ------------
Trade receivables 81.2 98.9
Loss allowance (2.8) (3.0)
----------------------- ------------ ------------
Trade receivables net 78.4 95.9
----------------------- ------------ ------------
31 December 31 December
GBPm 2020 2019
----------------------- ------------ ------------
Contract assets 42.9 51.0
Loss allowance (6.1) (5.3)
----------------------- ------------ ------------
Contract assets net 36.8 45.7
----------------------- ------------ ------------
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 loss allowances recorded against them. The
individually impaired balances mainly relate to items under
discussion with customers.
At the year end the debtor days of the Group were 41 (2019:
52).
The following table shows the movement in lifetime expected
credit losses that have been recognised for trade receivables and
contract assets in accordance with the simplified approach set out
in IFRS 9:
Trade receivables Contract
GBPm assets Total
------------------------------------- ------------------ --------- --------
As at 1 January 2020 3.0 5.3 8.3
Income statement impact of movement
on loss allowance 0.5 2.0 2.5
Amounts written off (0.8) (1.4) (2.2)
Exchange differences 0.1 0.2 0.3
------------------------------------- ------------------ --------- --------
As at 31 December 2020 2.8 6.1 8.9
------------------------------------- ------------------ --------- --------
Trade receivables Contract
GBPm assets Total
------------------------------------- ------------------ --------- --------
As at 1 January 2019 5.2 6.6 11.8
Income statement impact of movement
on loss allowance (0.9) 0.2 (0.7)
Amounts written off (1.3) (1.4) (2.7)
Exchange differences - (0.1) (0.1)
------------------------------------- ------------------ --------- --------
As at 31 December 2019 3.0 5.3 8.3
------------------------------------- ------------------ --------- --------
The maximum exposure to credit risk at the reporting date is the
carrying amount of each class of receivable mentioned above.
11. Trade and other payables
31 December 31 December
GBPm 2020 2019
-------------------------------------------- ------------ ------------
Trade payables 30.4 26.4
Accruals 43.5 37.0
Contract liabilities 25.7 21.1
Creditors for taxation and social security 27.5 15.8
Other payables 2.1 4.6
-------------------------------------------- ------------ ------------
Total trade and other payables 129.2 104.9
-------------------------------------------- ------------ ------------
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.
12. Borrowings
31 December 31 December
GBPm 2020 2019
---------------------------------------- ------------ ------------
Bank loans - 55.4
US loan notes 54.9 55.8
Bank overdraft - 1.3
---------------------------------------- ------------ ------------
Total bank loans, notes and overdrafts 54.9 112.5
Arrangement fees (0.9) (0.7)
---------------------------------------- ------------ ------------
Net bank debt 54.0 111.8
Lease liabilities 48.9 49.8
---------------------------------------- ------------ ------------
Total borrowings 102.9 161.6
---------------------------------------- ------------ ------------
The bank loans, notes and overdrafts are repayable as
follows:
31 December 31 December
GBPm 2020 2019
--------------------------------------------- ------------ ------------
Amounts due for settlement within 12 months 54.9 1.3
In the second year - 55.8
In the third to fifth years inclusive - 55.4
Total 54.9 112.5
--------------------------------------------- ------------ ------------
The principal features of the Group's borrowings are as
follows:
i) an uncommitted GBP3.0 million bank overdraft facility,
repayable on demand.
ii) an uncommitted Australian Dollar denominated overdraft
facility of AUD 1.5 million repayable on demand.
iii) The Group has one principal bank facility: a multicurrency
revolving credit facility of GBP100.0 million with Lloyds Bank plc,
HSBC Bank plc and NatWest Bank plc, expiring in 2022 (the 'A'
facility). 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 GBPnil at 31 December 2020
(2019: GBP55.4 million).
In April 2020 the Group agreed a further GBP60.0 million
revolving credit facility for a period of 12 months with the
existing lenders (the 'B' facility). At the same time the Group
also agreed new financial covenant tests for the RCF and US private
placement notes as at 31 December 2020, 31 March 2021 and 30 June
2021. In September 2020 the B facility was extended to July 2022
and further changes were made to the covenant tests. The covenant
tests will revert back to the original tests from December
2021.
The A and B facilities are 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 $34.1 million and GBP30.0 million
with fixed interest chargeable at 3.84% and 3.98% respectively that
are repayable in 30 September 2021. Following the amendment to the
Group's facilities in April 2020 the interest payable on the notes
increased by 75 bps for the duration of the B facility. The notes
are guaranteed by the Company and certain subsidiaries but no
security over the Group's assets exists. The Group is currently
investigated its options on refinancing these loans.
The carrying amounts of short-term borrowings approximate their
fair values as the impact of discounting is not significant.
13. Notes to the consolidated cash flow statement
Year ended Year ended
31 December 31 December
GBPm 2020 2019
----------------------------------------------- ------------- -------------
Operating (loss)/profit (24.2) 10.9
Adjustments for:
Depreciation of owned assets 9.4 9.2
Depreciation of right-of-use assets 10.9 10.0
Impairment of right-of-use assets 2.0 -
Amortisation of internally generated
software 0.5 0.1
Amortisation of acquired intangibles 5.5 8.6
Impairment of goodwill 25.9 19.8
Impairment of internally generated software 2.9 -
Non-cash movement on provisions 2.3 -
Share-based payment expense 3.4 2.7
Loss on sale of business 0.4 -
Profit on sale of assets - (0.1)
EBITDAS 39.0 61.2
Decrease in trade and other receivables 29.0 6.4
Increase/(decrease) in trade and other
payables 25.4 (12.7)
----------------------------------------------- ------------- -------------
Cash generated from operations 93.4 54.9
----------------------------------------------- ------------- -------------
Interest paid (6.0) (5.9)
Interest received 0.1 0.2
Income taxes paid (3.5) (11.6)
----------------------------------------------- ------------- -------------
Net cash from operating activities 84.0 37.6
----------------------------------------------- ------------- -------------
The table below provides an analysis of liabilities arising from
financing during the year ended 31 December 2020:
Non-cash changes
-------------------------------------------
Lease
At 31 Financing Prepaid accounting At 31
December cash Acquisitions arrangement adjustments(1) Foreign December
GBPm 2019 flows fees exchange 2020
------------------ ---------- ------------ --------------- ------------- ---------------- ---------- ----------
Cash at bank 17.7 25.0 - - - 0.5 43.2
Overdrafts (1.3) 1.3 - - - - -
------------------ ---------- ------------ --------------- ------------- ---------------- ---------- ----------
Cash and cash
equivalents 16.4 26.3 - - - 0.5 43.2
Bank loans and
notes (110.5) 56.4 - (0.7) - 0.8 (54.0)
------------------ ---------- ------------ --------------- ------------- ---------------- ---------- ----------
Net bank
borrowings (94.1) 82.7 - (0.7) - 1.3 (10.8)
------------------ ---------- ------------ --------------- ------------- ---------------- ---------- ----------
Less: cash and
cash
equivalents (16.4) (26.3) - - - (0.5) (43.2)
Leases (49.8) 11.0 - - (9.2) (0.9) (48.9)
------------------ ---------- ------------ --------------- ------------- ---------------- ---------- ----------
Liabilities
arising
from
financing (160.3) 67.4 - (0.7) (9.2) (0.1) (102.9)
------------------ ---------- ------------ --------------- ------------- ---------------- ---------- ----------
Non-cash changes
-------------------------------------------
Lease
At 31 Financing Prepaid accounting At 31
December cash Acquisitions arrangement adjustments(1) Foreign December
GBPm 2018 flows fees exchange 2019
------------------ ---------- ------------ --------------- ------------- ---------------- ---------- ----------
Cash at bank 18.0 0.9 1.2 - - (2.4) 17.7
Overdrafts (2.6) 1.3 - - - - (1.3)
------------------ ---------- ------------ --------------- ------------- ---------------- ---------- ----------
Cash and cash
equivalents 15.4 2.2 1.2 - - (2.4) 16.4
Bank loans and
notes (89.3) (22.8) - (0.3) - 1.9 (110.5)
------------------ ---------- ------------ --------------- ------------- ---------------- ---------- ----------
Net bank
borrowings (73.9) (20.6) 1.2 (0.3) - (0.5) (94.1)
Less: cash and
cash
equivalents (15.4) (2.2) (1.2) - - 2.4 (16.4)
Leases (49.2) 9.2 - - (10.8) 1.0 (49.8)
------------------ ---------- ------------ --------------- ------------- ---------------- ---------- ----------
Liabilities
arising
from
financing (138.5) (13.6) - (0.3) (10.8) 2.9 (160.3)
------------------ ---------- ------------ --------------- ------------- ---------------- ---------- ----------
(1) Includes lease additions, remeasurements and disposals
The cash balance at 31 December 2020 includes GBP1.4 million
(2019: GBP1.3 million) that is restricted in its use, either as
security or client deposits.
14. Deferred consideration
31 December 31 December
GBPm 2020 2019
--------------------------------------- ------------ ------------
Amount due within one year 3.1 3.1
Amount due between one and two years 2.4 3.0
Amount due between two and five years - 2.2
Amount due after five years 0.3 0.4
--------------------------------------- ------------ ------------
Total deferred consideration 5.8 8.7
--------------------------------------- ------------ ------------
15. Dividends
Amounts recognised as distributions during the year:
Year ended Year ended
31 December 31 December
GBPm 2020 2019
----------------------------------------------- -------------- -------------
Final dividend for the year ended 31 December
2019 of GBPnil (2018: 5.08p) per share - 11.4
Interim dividend for the year ended 31
December 2020 of GBP nil (2019: 2.42p)
per share - 5.5
- 16.9
-------------------------------------------------------------- -------------
The proposed final dividend for the year ended 31 December 2019
was cancelled. No final dividend is proposed for 2020.
16. 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.
As previously announced, 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 the year legal fees totalling GBP 1.8
million (2019: GBP1.4 million) were incurred investigating this
matter and were presented within exceptional items (note 5).
17. Auditor's report on Report and Accounts 2020
The financial information set out above does not constitute the
Company's full statutory accounts for the year ended 31 December
2020 for the purposes of section 435 of the Companies Act 2006, but
it is derived from those accounts. The auditors have reported on
those accounts; their report was unqualified, did not draw
attention to any matters by way of emphasis without qualifying
their report and did not contain statements under s498(2) or (3)
Companies Act 2006. Statutory accounts for 2019 have been delivered
to the Registrar of Companies. The auditors have reported on those
accounts; their report was unqualified and did not include an
emphasis of matter statement. The auditor's report did not contain
statements under the Companies Act 2006, s498 (2) or (3).
18. Publication of Report and Accounts 2020
This announcement has been posted on the Company's website at
www.rpsgroup.com . A copy of the Report and Accounts will be posted
on this website on 9(th) March 2021. It is expected that the Report
and Accounts together with the notice of the Company's Annual
General Meeting will be posted to shareholders on or before 26(th)
March 2021. Further copies may be obtained after that date from the
Company Secretary, RPS Group plc, 20 Western Avenue, Milton Park,
Abingdon, Oxfordshire OX14 4SH. Copies of these documents, together
with the form proxy for use at the Company's Annual General
Meeting, have or will be submitted to the Financial Conduct
Authority via the National Storage Mechanism.
19. Risk management
The Group has a well-established and embedded system of internal
control and risk management that is designed to safeguard
shareholders' investment as well as the Group's personnel, assets
and reputation. The principal risks and uncertainties for the Group
are described in the Group's Report and Accounts. These risks
include the recruitment and retention of staff, the COVID-19
pandemic, political events, the economic environment, business
acquisitions, health and safety, regulatory and compliance risks,
service failures, financial risks and information technology and
security risks.
Responsibility statement of the Directors in respect of the
Report and Accounts 2020
The Directors confirm that to the best of their knowledge:
- the financial statements, prepared in accordance with the
relevant financial reporting framework, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Company and the undertakings included in the consolidation
taken as a whole;
- the strategic report includes a fair review of the development
and performance of the business and the position of the Company and
the undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and
uncertainties that they face and;
- the annual report and financial statements, taken as a whole,
are fair, balanced and understandable and provide the information
necessary for shareholders to assess the Company's performance,
business model and strategy.
- Ends -
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