RNS Number:0530O
RPS Group PLC
29 July 2003
RPS GROUP PLC
Interim Results for the six months to 30 June 2003
RPS Group plc, Europe's leading environmental consultancy, today announces
results for the six months ended 30 June 2003, with earnings per share
increased 24% over the same period last year.
Highlights
* Profit (before taxation and goodwill amortisation) increased 22% to
#10.36 million (2002: #8.49 million)
* Earnings per share (before goodwill amortisation) increased 24% to 4.12
pence (2002: 3.33 pence)
* Operating margin increased to 17.3% (2002: 16.5%)
* Strong operating cash flow of #9.3 million (2002: #6.4 million)
* Interim dividend increased 16% to 0.88 pence (2002: 0.76 pence)
* Significant benefits already evident from the integration of businesses
in Ireland
* Entered FTSE250 in January 2003
Brook Land, Chairman, commenting on the results, said:
"RPS has produced another strong set of results, extending its long record of
achieving significant year on year growth. This has resulted in entry into the
FTSE250, which is fitting recognition of the efforts of all our staff.
We have a professional services business which is second to none in our sector
in Europe and intend to build upon this position. The Board remains confident
that we can continue to produce high quality work for our clients and rewarding
careers for our staff, resulting in good returns for shareholders."
29 July 2003
ENQUIRIES
RPS Group plc Today: 020 7457 2020
Dr Alan Hearne, Chief Executive Thereafter: 01235 863206
Gary Young, Finance Director
College Hill
Justine Warren Tel: 020 7457 2020
Matthew Smallwood
RPS GROUP PLC
Interim Results for the six months to 30 June 2003
CHAIRMAN'S STATEMENT
I am delighted to be able to report another set of record results. Our entry
into the FTSE250 in January reflects the sustained long-term achievement of RPS.
Results
Profit before tax (and goodwill amortisation) increased 22% to #10.36 million
(2002: #8.49 million). The operating margin increased to 17.3% (2002: 16.5%).
Basic earnings per share (before goodwill amortisation) increased 24% to 4.12
pence (2002: 3.33 pence). Net assets at 30 June were #115.8 million, including
#28.1 million of cash (net assets at 30 June 2002: #107.1 million). The Group
has no bank debt.
Dividend
The Board has increased the interim dividend 16% to 0.88 pence (2002: 0.76
pence). This will be paid on 23rd October 2003 to shareholders on the register
on 3rd October 2003.
Operations and Markets
The major operational task for the year so far has been the continued
integration of our businesses in Ireland. We are already seeing significant
benefits from this much-enlarged business, which has a strong position in both
the public and private sectors. The integration process will be complete in the
first half of 2004. The Irish economy is growing faster than other European
economies, enabling us to secure encouraging volumes of work.
The continued development of our planning, transport and environment business in
the UK was impressive. The clients of this division showed little adverse
response to economic and political uncertainty. The favourable combination of
low interest rates and low inflation undoubtedly encouraged them to invest in
adding value to land and buildings through the planning process. Our objective
to lead and manage major complex planning projects on behalf of our clients is
being achieved with property companies, major corporates and a growing number of
public sector clients.
Our water services businesses had another good half year. The water and waste
sectors have been identified as offering an ideal opportunity to enable our
Irish and UK staff to collaborate; this initiative has started well. In
England and Wales activity has started towards the regulatory review in 2005.
There are encouraging signs that the regulator will focus the water companies
upon solving the problems of water supply and waste water disposal that we
advise upon, although we are likely to have to deal with some pricing pressure
in the run up to the review. We anticipate that, as more technical support is
needed, the volume of strategic consultancy with Scottish Water will begin to
reduce.
RPS's other business in Scotland also progressed well, improving both its
financial performance as well as its profile. We are reviewing how we can
broaden our involvement within the energy sector and a growing workload advising
upon wind energy projects has already been secured by this division.
Over the last year we have made a significant investment in our engineering and
safety division in order to be able to participate more fully in cleaning up the
UK's legacy of nuclear waste. As a result, in the first half, we won a number
of important new commissions with AWE and BNFL Magnox to advise upon safety
matters and expect these to deliver significant revenues in the coming months.
The Government has recently published proposals for the establishment, in 2005,
of the Nuclear Decommissioning Authority (NDA) which will be responsible for a
work programme worth many billions of pounds and lasting for decades. For this
programme to succeed the NDA has to develop an extensive, qualified supply
chain; RPS is well positioned to form part of this. Although there has begun to
be some volatility in commissioning whilst responsibilities are transferred to
the NDA, we are confident this market presents an important long term
opportunity for RPS.
The health & safety division is beginning to see the benefits of investments in
two significant marketing initiatives. Our involvement in Homecheck an online
service enabling house buyers to understand whether a property is built on
contaminated land and our internet delivery system Building Health Interactive
have both begun to deliver revenue. This division is also being assisted by the
implementation of new asbestos regulations, which are serving to reduce the
level of competition in this market.
The RPS Groep Netherland board dealt well with the combined difficulties of a
slow down in public sector commissioning resulting from a long period without a
Government following the election in January, as well as an economy in recession
for most of the period. Against such a background it produced creditable
results. The next stage in the development of this business is to simplify the
corporate structure and fully rebrand all businesses in order to integrate all
of our activities. We intend to strengthen our Dutch presence by making further
acquisitions.
Growth Strategy
We continue to build market-leading positions in high value segments of our
market in the UK, Ireland and the Netherlands, through a combination of organic
growth and the acquisition of high quality businesses. The effective
implementation of this strategy explains the strong growth RPS has achieved over
the last decade.
The markets in which we are operating continue to grow as a consequence of
society's increasing desire to secure greater levels of environmental
protection. Such growth is not, however, uniform. This makes it important for
us to monitor closely all aspects of our business in order to be able to take
advantage of buoyant markets and avoid the problems associated with markets in
decline. We have, therefore, built an organisation which is flexible and can
both anticipate and respond to market shifts.
Our sector also remains highly fragmented. This gives us a significant
competitive advantage over our smaller competitors, both in scope and quality of
service and presents us with a broad range of acquisition opportunities, a
number of which are under active consideration.
As a result of these factors, the opportunities for RPS to continue growing
remain good.
Funding the Strategy
The RPS balance sheet remains strong. At the end of the first half we had cash
balances of #28.1 million, no bank debt and available acquisition debt funding
of up to #20 million. We have maximum cash commitments in respect of deferred
consideration and outstanding loan notes related to acquisitions of #10.2
million in 2003 and #5.7 million in 2004. The Group's operating cash flow funds
its working capital requirements. During the course of the first half operating
cash flow was #9.3 million. Such cash generation, in conjunction with our
available banking finance and an ability to use equity in transactions, means
that we will be able to continue to fund our acquisition programme.
Corporate Governance
Rob Thielen joined the Board as a non-executive director on 1 January 2003. Rob
founded Waterland Private Equity Investments BV in the Netherlands in 1999
following a career in corporate finance in Europe and the US. He will assist in
the continuing development of our Dutch business and possible expansion into
other European countries. Chris Wood stepped down as a non-executive director
on 30 April at the end of an agreed three year term. The nomination committee
has retained independent consultants in Ireland to assist in the recruitment of
an additional non-executive.
In anticipation of changes to the Combined Code, in May the Board reviewed the
roles of each of our independent non-executive directors. Roger Devlin was
appointed senior independent director. The contract for Paul Martin, who is
reaching the end of a second three year term, was extended for a year, to
December 2004. This will enable Paul to remain as Chairman of the Audit
Committee until the 2003 results are finalised, when this position will be
reviewed. As I sat on all three main committees I stepped down from the
remuneration committee; Roger Devlin took on my position in the chair and Rob
Thielen joined this committee. Andrew Troup has stepped down from the
nominations committee in order to produce an appropriate balance between
executive and non-executive directors.
We continue to support good governance and are pleased with the strong support
we received from our shareholders at our AGM and the positive response to the
level of disclosure in our Annual Report. I am, however, concerned about the
burden that the new Combined Code will impose on the business. We will be
reviewing the new Code in detail and will make further comment in our 2003
Annual Report.
Prospects
Governments across Europe maintain a desire to improve environmental performance
and the protection of the health and safety of their citizens. This manifests
itself in additional legislation and regulation, as well as consumer and
shareholder pressure. It is clear that the quest for "sustainability" will
continue for many years and will fuel RPS's continued expansion. The Board,
therefore, remains confident in the Group's ability to continue to deliver good
returns for our shareholders.
Brook Land
Chairman
29 July 2003
Consolidated Profit and Loss Account
Notes 6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2003 2002 2002
#'000's #'000's #'000's
Turnover from continuing operations 58,211 47,185 104,822
Operating profit before goodwill amortisation 10,058 7,802 16,898
Goodwill amortisation 2,134 1,508 3,564
Operating profit 7,924 6,294 13,334
Interest receivable 298 687 924
Profit on ordinary activities before taxation 8,222 6,981 14,258
Taxation 2,589 2,270 4,429
Profit for the period attributable to 5,633 4,711 9,829
shareholders of RPS Group Plc
Dividends 2 1,674 1,443 3,018
Retained profit for the period 3,959 3,268 6,811
Profit before goodwill amortisation and tax 10,356 8,489 17,822
Earnings per share (pence)
Basic earnings per ordinary share after 3 2.99 2.52 5.25
goodwill amortisation
Basic earnings per share before goodwill 3 4.12 3.33 7.15
amortisation
Statement of Total Recognised Gains and Losses
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2003 2002 2002
#000's #000's #000's
Retained profit for the financial period 3,959 3,268 6,811
Currency translation differences on foreign 571 556 792
currency investments
Total recognised gains and losses relating to 4,530 3,824 7,603
the period
Consolidated Balance Sheet
Notes
As at As at As at
30 June 30 June 31 December
2003 2002 2002
#000's #000's #000's
Fixed assets
Intangible assets 77,006 78,223 76,368
Tangible assets 13,792 13,049 13,698
Investments 1,805 3,298 3,018
92,603 94,570 93,084
Current assets
Work in progress 9,565 5,464 7,057
Debtors 31,229 31,867 31,876
Cash at bank 28,078 22,891 23,046
68,872 60,222 61,979
Creditors: Amounts falling due within one 40,935 36,791 35,797
year
Net current assets 27,937 23,431 26,182
Total assets less current liabilities 120,540 118,001 119,266
Creditors: Amounts falling due after more 2,983 8,342 6,239
than one year
Provision for liabilities and charges 1,769 2,578 2,346
Net assets 115,788 107,081 110,681
Capital and reserves
Called up share capital 5,740 5,697 5,708
Share premium account 79,342 78,426 78,797
Shares to be issued 941 1,502 941
Revaluation reserve 37 37 37
Profit and loss reserve 29,728 21,419 25,198
Equity shareholders' funds 4 115,788 107,081 110,681
Consolidated Cash Flow Statement
Notes Six months Six months Year
ended ended ended
30 June 30 June 31 December
2003 2002 2002
#000's #000's #000's
Net cash inflow from operating activities 5 9,285 6,434 15,174
Returns on investments and servicing of 298 924
finance 687
Corporation tax paid (1,801) (1,912) (4,606)
Capital expenditure (1,098) (891) (2,318)
6,684 4,318
9,174
Acquisitions (1,006) (16,729) (20,023)
Dividends paid (1,551) (1,332) (2,767)
Cash inflow/(outflow) before financing 4,127 (13,743) (13,616)
Financing 500 273 301
Increase / (decrease) in cash 4,627 (13,470) (13,315)
Reconciliation of Net Cash Flow to Movement in Net Cash
Six months Six Year
months ended
ended ended 31 December
30 June 30 June 2002
2003 2002 #000's
#000's #000's
Net cash at beginning of period 23,046 36,361 36,361
Increase / (decrease) in cash in period 4,627 (13,470) (13,315)
Translation differences 405 - -
Net cash at end of period 28,078 22,891 23,046
Notes
1. Basis of preparation
The interim statement has been prepared using accounting policies set out in the
Annual Report and Financial Statements 2002. The interim statement is unaudited
but has been reviewed by the Company's auditors who concluded that they were not
aware of any material modifications that should be made to the financial
information. The results for the year end 31 December 2002 and the balance
sheet as at that date are abridged from the Company's Annual Report and
Financial Statements 2002 which have been delivered to the Registrars of
Companies. The interim statement does not constitute full accounts within the
meaning of section 240 of the Companies Act 1985. The auditors' report on those
accounts was unqualified and did not contain a statement under Section 237(2) or
(3) of the Companies Act 1985. Copies of the interim results are being
dispatched to shareholders. Further copies can be obtained from the Company's
registered office, Centurion Court, 85 Milton Park, Abingdon, Oxon OX14 4RY.
2. Dividends
The Directors propose an interim dividend of 0.88p per share (2002:0.76p per
share) which will be paid on 23rd October 2003 to those shareholders on the
register at the close of business on 3rd October 2003.
3. Earnings per share
Six months Six months Year
ended ended ended
30 June 30 June 31 December 2002
2003 2002 #000's
#000's #000's
Earnings after goodwill amortisation
Profit attributable to shareholders 5,633 4,711 9,829
Earnings before goodwill amortisation
Profit attributable to shareholders 5,633 4,711 9,829
Goodwill amortisation 2,134 1,508 3,564
7,767 6,219 13,393
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2003 2002 2002
Basic Diluted Basic Diluted Basic Diluted
Earnings per share (pence)
After goodwill amortisation 2.99 2.96 2.52 2.51 5.25 5.18
Effect of goodwill 1.13 1.13 0.81 0.80 1.90 1.88
Amortisation
Before goodwill amortisation 4.12 4.09 3.33 3.31 7.15 7.06
Six months Six months Year
ended ended ended
30 June 30 June 31 December 2002
2003 2002 Number
Number Number 000's
000's 000's
Reconciliation of weighted average number of shares
Basic 188,540 186,574 187,368
Dilutive effect of options 785 572 1,400
Dilutive effect of shares to be issued for 714 814 834
consideration
Diluted number of shares 190,039 187,960 189,602
4. Reconciliation of movements in shareholders' funds
Six months Six months Year
ended ended ended
30 June 30 June 31 December 2002
2003 2002 #000's
#000's #000's
Profit for the financial period 5,633 4,711 9,829
Dividends 1,674 1,443 3,018
Retained profit for the financial period 3,959 3,268 6,811
New ordinary shares issued 577 2,517 2,899
Movement in shares to be issued - 19 (542)
Translation differences on foreign currency 571 556 792
investments
Net addition to shareholders' funds 5,107 6,360 9,960
Shareholders' funds at period start 110,681 100,721 100,721
Shareholders' funds at period end 115,788 107,081 110,681
5. Reconciliation of operating profit to net cash inflow from operating
activities
Six months Six months Year
ended ended ended
30 June 30 June 31 December 2002
2003 2002 #000's
#000's #000's
Operating profit 7,924 6,294 13,334
Depreciation and goodwill amortisation 3,620 2,524 5,755
(Increase)/decrease in WIP (2,282) 271 (16)
Decrease / (increase) in debtors 806 (4,365) (1,467)
(Decrease)/increase in creditors (776) 1,738 (2,397)
Profit on sale of fixed assets (7) (28) (35)
Net cash inflow from operating activities 9,285 6,434 15,174
This information is provided by RNS
The company news service from the London Stock Exchange
END
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