Report and Accounts 2009
creativepeople
making a difference
rpsgroup.com
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Business Review
2009 Results
Key Performance Indicators
Business Review
Operations
Risk Management
Corporate Responsibility
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8
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19
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Management &
Governance
The Board
Committees
Corporate Governance
Accounts
Report of the Directors
Report of the Independent Auditors
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Cash Flow Statement
Consolidated Statement of Changes in Equity
Notes to the Consolidated Financial Statements
Parent Company Balance Sheet
Notes to the Parent Company Financial Statements
Five Year Summary
Report and Accounts 2009
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Our profile
RPS is an international consultancy providing advice upon:
the development of
land, property and
infrastructure
the management of
the environment
3
the exploration and
production of oil and
gas and other natural
resources
the health and safety
of people
We trade in the UK, Ireland, the
Netherlands, the United States, Canada,
Australia and Asia Pacific and undertake
projects in many other parts of the world.
Delivering results for our clients enables
us to offer our employees rewarding
careers and create long-term value
for shareholders.
We employ enthusiastic and talented
staff with a unique blend of skills and
experience that enables them to provide
reliable and practical advice.
%
rpsgroup.com
Integrated services...
4
We deliver services internationally across a broad range of disciplines and sectors.
As such, we are uniquely placed to provide a fully integrated response to our clients’ needs,
whether this is to develop projects, deal with regulation and legislation or manage risk.
We have the knowledge and experience to ensure projects are developed in ways which
are sensitive to their environmental impacts.
Energy
Planning & Development
Environmental Management
RPS delivers global, multi-disciplinary
energy consultancy from offices in Europe,
North and South America, Australia and
Asia. We provide integrated technical,
commercial and project management
support services in the fields of
geoscience, engineering and HS&E.
RPS has expertise in all aspects of the
planning and development process from
site identification and project definition
to implementation and management.
We offer world-class planning, design and
environmental services from our network
of offices.
Our aim is to help clients develop their
energy resources across the complete
asset life-cycle, combining our technical
and commercial skills with an extensive
knowledge of environmental and safety
issues. We have an annual portfolio
of well over 500 projects, in over 100
countries, for more than 300 clients.
Local and national government and
developers set increasingly challenging
sustainability targets. Our environmental
roots mean we have a unique ability
to deliver schemes that meet these
standards. RPS is one of the world’s
most experienced providers of
environmental assessment.
During the course of 40 years’
involvement in environmental
management, we have gained deep
insight into the commercial challenges as
well as the political, ethical and legal risks
facing our clients. Professional advice in
this sector has to be technically excellent
and commercially appropriate, but also
politically aware and culturally sensitive.
We provide advice and services to
both public and private sectors in areas
including safety, health, environment,
water, risk assessment, civil engineering,
surveying and laboratories.
Report and Accounts 2009
...a source of difference and strength
5
PLA
N
N
I
N
Urban Design
& Regeneration
G
&
Architecture
& Landscape
Planning
D
E
V
Transport
& Infrastructure
E
L
O
P
Environmental
Assessment & Management
Engineering
M
E
N
T
Energy
Management
Energy
Infrastructure
Geoscience and
Engineering
Renewable
Energy
Seismic
Operations
Reserves
Reporting
ERGY
N
E
Well
Operations
Asset
Evaluation
LIM
C
S
Equity Determination
A T E CH
A
N
G
E
Y
U
S
TAINA B I L IT
Health & Safety
Laboratory
Services
Risk Management
Waste Management
Utilities Network
Management
Safety
Engineering
Air Quality
& Noise
E
N
Waste Water Engineering
Occupational
Health
Asbestos
VIRONMENTAL M A N A
M E N T
E
G
rpsgroup.com
local allies with
international reach
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6
Report and Accounts 2009
Report and Accounts 2009
Our global reach
RPS employs more than 4,000 people in the UK, Ireland, the Netherlands, the United
States of America, Canada, Australia and Asia Pacific. We undertake projects in many
other parts of the world.
7
For many years our strategy has been
to broaden our range of services and
our geographic footprint. This provides
our clients with better and broader
quality advice. It also enables our staff
to enjoy interesting and rewarding
careers and our shareholders to
receive good returns.
Our unique blend of skills helps
clients understand and respond to
issues fundamental to them and their
place in the environment.
RPS awarded by The Urban Development Institute of
Australia for work at Burns Beach
New RPS office opens in Abu Dhabi
RPS wellsite geologists contracted for ultra-deepwater
drilling operations in the Gulf of Mexico
rpsgroup.com
2009 Results
2009 Results
8
8
Key Performance Indicators
Revenue (£m)
Fee income (£m)
Profit before taxation* (£m)
Earnings per share* (basic) (p)
Operating cash flow (£m)
Net bank borrowings (£m)
2009
2008
443.9
470.5
374.4
392.1
52.5
57.5
17.08
18.92
70.6
32.8
67.4
28.6
*Adjusted to add back the amortisation of acquired intangible assets arising on business
combinations (including tax effects) (2009: £3.9m; 2008: £2.7m).
n diversity of skills and geography enabled
the Group to produce results in line
with expectations
n excellent conversion of profit to cash
n balance sheet remains strong with year end
net bank borrowings at £33m (2008: £29m)
n bank facilities of £125m available until 2013
n dividend increased 15% for sixteenth
consecutive year
n Conics, a strategic acquisition in Australia,
performing well
Report and Accounts 2009
Report and Accounts 2009
Offshore Development Evaluation
- Greenland
Evaluation on behalf of Dong/Nunaoil
of potential development options for
offshore oil reserves.
Business Review
9
Results and Cash Flow
Profit (before tax and amortisation of
acquired intangibles) was £52.5 million
(2008: £57.5 million). Basic earnings per
share (before amortisation) were 17.08
pence (2008: 18.92 pence).
This resilient performance was achieved
after taking a charge for redundancy
and other reorganisation costs of £3.5
million (2008: £1.0 million). Economic
and financial circumstances affected our
trading in the UK. However, these factors
also caused sterling to weaken against
the currencies in other countries in which
we trade. In consequence, and as we
have anticipated for some months, we
benefitted by £3.7 million from foreign
exchange translation of overseas results
compared with 2008. Bonus systems
within the Group have been largely
driven by sharing profit growth; total
bonuses paid in respect of 2009 were, in
consequence, reduced significantly to £1.6
million (2008: £5.4 million). No bonuses
were paid to Group directors.
The conversion of profit into cash
continued at a high level; operating cash
flow was £70.6 million (2008: £67.4
million). We suffered bad debts during
the year in the order of £3.8 million.
Our trade debtor and accrued income
provisions were increased in 2008 in
anticipation of this eventuality. These and
other provisions have now been reduced
by a similar amount.
Funding and Dividend
Our balance sheet remains strong.
We have bank facilities of £125 million
available until 2013. The cost of these
facilities remains at historically low
levels. Net bank borrowings at the year
end were £32.8 million (2008: £28.6
million) after funding acquisitions to the
value of £44.2 million in the year (2008:
£31.2 million). Our cash generation, in
conjunction with these facilities, means
that we are well positioned to continue
to develop the Group.
The Board continues to be confident
about the Group’s financial strength and
is recommending a final dividend of 2.19
pence per share payable on 27 May
2010 to shareholders on the register on
16 April 2010. The total dividend for the
full year will be 4.20 pence, an increase of
15% (2008: 3.66 pence). Our dividend
has risen at about this rate for 16
consecutive years.
Acquisitions
The acquisition of Conics in July 2009
represented a significant step forward
in the development of RPS’s strategy
and our business in Australia. Conics
generated revenue of £15.6 million,
fees of £14.2 million and made a
contribution of £2.6 million during the
time it was part of the Group. Our
existing strength in Western Australia has
been complemented by a business with
considerable presence in Queensland
and which will also assist us create strong
market positions in New South Wales
and Victoria. We continue to find our
combination of energy and environmental
skills is well suited to the Australian
market. For example, in Queensland,
where Conics is primarily based, the
opportunity exists to be at the forefront
of the development of coal bed methane,
which is likely to be a significant new
source of energy in the future.
The main element of the Conics
integration is currently underway; our
enlarged Australian business is being
re-presented to the market with a single
brand, at the same time as our Perth
businesses are being co-located to a new,
purpose built office.
The Australian economy remains strong
relative to those of other developed
nations around the world and has excellent
links with many parts of Asia. Against
this background, the combination of our
existing businesses with Conics gives us
a considerable platform from which to
deliver future growth.
The ten acquisitions made in 2008 have
been successfully integrated. Interesting
new opportunities continue to present
themselves. Our strategy of continuing
to build a multi-disciplinary RPS on an
international basis remains appropriate
and achievable and we believe further
progress can be made this year.
rpsgroup.com
Business Review
10
Energy
We provide internationally recognised
consultancy services to the oil and gas industries
from bases in the UK, USA, Canada, Australia and
Asia Pacific. Projects are undertaken in many
other countries including China, India and Brazil.
In the UK we are market leaders in the provision
of environmental and engineering advice to the
offshore wind energy industry.
RPS is one of the world’s leading
suppliers of independent oil and gas
evaluations encompassing all aspects of
geoscience, engineering and commercial
advice. Our projects include reserve
valuations for IPO and pre-IPO fund
raising, M & A due diligence and
support and Expert Services to a wide
range of clients including major financial
institutions and oil companies alike.
Report and Accounts 2009
Report and Accounts 2009
Report and Accounts 2009
Business Review
Energy
We continued to benefit from our clients’
investment in major oil and gas exploration
and production programmes. National Oil
Companies were increasingly active and
have become a more important part of
our portfolio of clients. Our reputation
within the financial community in respect
of determination of oil and gas reserves for
reporting purposes, asset evaluation and in
support of corporate activity continued to
develop during the year.
Global investment in exploration and
production slowed significantly during
the second quarter and remained at a
subdued level for the rest of the year. This
was apparently in response to continuing
uncertainty in economic outlook and short
term energy demand, as well as oil price
volatility. It had a material impact on our
trading, although this was counterbalanced,
in part, by the strength of our business
which advises our energy clients on
environmental matters.
Outlook
Many of the projects in which we are
involved are of a long term nature,
reflecting the complexity of identifying
and securing sources of oil and gas in
increasingly challenging environments.
This provides a solid underpin for our
business. Asset and corporate transactions
are also likely to remain a good source of
income. New opportunities, for example
in relation to unconventional forms of
gas, as well as carbon capture and storage
are continuing to develop. Towards the
end of the year we saw signs of increased
levels of investment being considered
by our clients, but it currently appears
that market conditions in the first part of
2010 will show little improvement over
the later parts of 2009. In consequence,
pricing pressure is also likely to be a
continuing feature of the commercial
landscape. Conditions could improve in
the second half.
A number of clients we assisted in 2009
to bid for Round 3 licences from the
Crown Estate to develop wind farms off
the UK coast have recently learnt they
were successful. In consequence, we
are well positioned to remain involved
at a significant level in this aspect of the
development of UK energy capacity. Such
projects require multi-disciplinary input
and a number of parts of the Group are
involved in wind energy projects.
11
+38%
149.1
+38%
27.7
158.0
30.5
2009
2008
18.6
19.3
Fee income
(£m’s)
Profit*
(£m’s)
Margin* %
Average number
of employees
Energy
2009
2008
Number of employees
619
621
Days absent (%)
1.1
1.9
Average length
of service (years)
4.9
5.5
Working part time (%)
Retention rate (%)
10
84
Age profile
Employees aged under 25 (%)
4
Employees aged 25-29 (%)
Employees aged 30-49 (%)
Employees aged 50+ (%)
13
49
34
8
87
4
13
50
33
* before amortisation of acquired intangible assets of
£1.8m (2008: £1.1m) and after re-organisation costs of £0.3m
(2008: £nil).
Carbon capture and storage
rpsgroup.com
Business Review
12
12
12
Planning & Development
Within these businesses we provide consultancy
services in respect of town and country planning,
building, landscape and urban design, transport
planning and environmental assessment. We
remain leaders in this market in the UK, Ireland,
Northern Ireland and Western Australia, operating
for blue chip clients in both the public and private
sectors. The acquisition of Conics gives us a
strong presence on the east coast of Australia.
Perth Waterfront
RPS is the lead environmental
consultancy for a major project
to revitalise Perth’s Swan River
shoreline; this ‘city-defining’
initiative will connect the city
to the river and deliver strong
economic and social benefits.
Report and Accounts 2009
Report and Accounts 2009
Report and Accounts 2009
Planning & Development
The economic downturn began to be
felt in these businesses in the last part
of 2008. We moved quickly to reduce
capacity and costs, a process which
continued throughout 2009, although the
bulk of the cost reduction was in the first
half. Our private sector clients, affected by
market uncertainties and a reduced ability
to access credit, significantly reduced
activity levels and, in consequence, the
support needed from consultants. The
private sector market remained affected
by both these characteristics throughout
2009, although in the second half
conditions in Australia began to improve
and in Britain began to stabilise.
Our exposure to the public sector in
Britain is relatively limited, although we
are involved in a number of private sector
infrastructure projects and are increasing
our involvement in this market, as it seems
relatively robust, particularly in relation to
energy related projects. Our businesses in
both the Republic of Ireland and Northern
Ireland depend significantly on public sector
projects. The state of public finances in the
Republic put pressures on our business,
requiring significant cost cutting throughout
the year. In Northern Ireland our business
progressed well until the effects of UK
public finance constraints began to appear
in the last part of the year.
Australian government finances remain
relatively good; as a result stimulus
expenditure was real and beneficial to
us. Conics undertakes a significant number
of projects for the public sector.
Outlook
As climate change, energy efficiency and
other environmental issues grow in
importance, the competitive advantage we
derive in these markets from our broad
range of integrated services should
continue to increase. We remain
optimistic about our activities in Australia,
which will remain underpinned by public
and private sector investment in
infrastructure, particularly related to
energy projects. However, until our
private sector clients elsewhere,
particularly in Britain, experience less
economic uncertainty and have better
access to credit, organic growth is likely
to be constrained.
The economy in the Republic of Ireland
contracted significantly over the last year,
but is now showing signs of stabilising.
The Government budget in December
indicated it still has infrastructure
development as a top priority. How this
translates into specific expenditure has
yet to be seen fully, although the early
signs give some encouragement. In the
meantime we continue to reduce our
cost base and focus even more closely on
working capital management. Business in
Northern Ireland is exposed to possible
expenditure cuts by the UK Government.
However, amidst these difficulties, new
opportunities are arising. We have
recently been commissioned by the
governments of the Republic of Ireland,
Northern Ireland and Scotland to examine
the feasibility of creating an offshore
renewable energy grid in the Irish Sea.
Business Review
This is a reflection of our broad range
of skills and strong market position in all
three countries.
13
2009
Fee income* Profit** Margin
(£m's)
(£m's)
%
GB
Ireland
Australia
64.5
63.5
33.2
10.6
5.0
8.3
Total
160.9
23.9
16.5
7.9
24.9
14.9
2008
GB
Ireland
Australia
Fee income* Profit** Margin*
(£m's)
(£m's)
%
82.0
69.6
15.8
16.7
7.7
5.2
20.3
11.1
32.7
Total
166.9
29.5
17.7
Planning & Development
Average number
of employees
2009
2008
Number of employees
2,277 2,381
Days absent (%)
Average length
of service (years)
Working part time (%)
Retention Rate (%)
Age profile
Employees aged under 25 (%)
Employees aged 25-29 (%)
Employees aged 30-49 (%)
Employees aged 50+ (%)
1.4
1.5
4.5
3.8
11
77
10
21
55
14
6
90
12
21
53
14
* fee income total is after intra segment eliminations of £0.3m
(2008: £0.5m).
** before amortisation of acquired intangibles assets of
£1.7m (2008: £1.1m) and after re-organisation costs of £2.8m
(2008: £1.0m).
rpsgroup.com
Business Review
Business Review
14
Environmental Management
This business provides consultancy services
in respect of health, safety, risk and water
management in the UK and the Netherlands.
The results in 2009 were excellent, given
the economic circumstances in which we
were operating.
Browse Basin Marine Megafauna
Monitoring Programme
RPS has been engaged to design and
conduct extensive surveys of marine
life along the southern Kimberley
coast in northern Western Australia,
for environmental impact assessment
of LNG Developments.
Report and Accounts 2009
Environmental Management
Outlook
Much of the work we do in these markets
is regulatory driven and to a degree non-
discretionary enabling us to maintain our
levels of activity, although we expect
pricing pressure to continue. We are well
positioned in relation to the new round
of investment in the UK water industry
which begins in April, although until the
current round of contract negotiations
is complete we will not know our
exact position.
Our business in the Netherlands has
continued to trade successfully. The
Dutch economy suffered a serious
recession, but we were well positioned to
benefit from increased Government
expenditure related to water and
transport infrastructure. Our health and
safety activities in the UK are largely in
regulated markets; this protects volume to
a degree, but we came under pricing
pressure. As expected, our UK water
activities became subdued in the second
half as the attention and activity of our
clients shifted to the new investment cycle
which begins in April 2010. Our nuclear
safety activities continued to trade well,
as demand held up in a highly regulated
market, short of the specialist skills
we provide.
Business Review
2009
2008
15
+32%
67.1
10.0
14.9
70.3
9.0
12.8
Fee income
(£m’s)
Profit*
(£m’s)
Margin* %
Environmental Management
Average number
of employees
2009
2008
Number of employees
1,262 1,323
Days absent (%)
Average length
of service (years)
Working part time (%)
Retention rate (%)
Age profile
Employees aged under 25 (%)
Employees aged 25-29 (%)
Employees aged 30-49 (%)
Employees aged 50+ (%)
2.8
2.3
5.6
12
77
12
16
51
21
5.1
10
87
14
18
50
18
* before amortisation of acquired intangible assets of £0.3m
(2008: £0.6m) and after re-organisation costs of £0.4m
(2008: nil)
Coastal Awards for Excellence in Port Hedland
rpsgroup.com
Business Review
16
Falkland Islands
Site Investigation
RPS supported BHP Billiton with
their geophysical and geotechnical
site surveys that were conducted
in the deep waters off the Falkland
Islands during the first quarter.
RPS supplied field technical QC
personnel, HSE field representatives
and marine mammal observers to
the client.
Report and Accounts 2009
Report and Accounts 2009
Group Prospects
We have come through the exceptionally
challenging circumstances of last year in
good shape. However, the economies of
the UK and Ireland remain fragile; even
if growth returns in 2010 it seems likely,
at best, to be modest. Against such a
background our clients are likely to remain
cautious and cost conscious. We remain
focussed, therefore, on continuing to
improve the efficiency of our businesses.
The Australian economy and public
finances are in much better shape,
probably leading the developed world.
We anticipate our Australian businesses
will benefit from this and are looking at
further investments to take advantage of
our market leading position. Prospects
in the Dutch public sector are also
reasonably encouraging as sound public
finances enable continued investment in
the type of projects with which we can
become involved. The prospects for our
private sector clients in the Netherlands
are less clear.
The contraction in oil and gas exploration
and production investment by many of our
clients in 2009 was in stark contrast to the
strong growth of previous years. Only
modest growth in investment seems likely
in 2010, although our increased exposure
to National Oil Companies and high profile
areas such as Australia, the Gulf of Mexico,
Brazil and Iraq may magnify the consequent
benefit of that. It seems likely that the
pricing pressure we experienced in the
second half of 2009 will continue until
volumes increase significantly. Our
businesses in North America are currently
operating largely in the oil and gas market.
We see opportunities as these economies
recover to make progress with our strategy
of broadening the base of our activities.
Our profits in the first decade of the
21st Century grew almost eight fold, from
£6.65 million to £52.5 million. Although
the economic crisis stalled our growth last
year and looks likely to constrain growth
this year as well, the Board remains
confident that RPS is well positioned,
internationally, in markets of fundamental
importance to the reshaping of the world
economy and will experience another
extended period of good growth when
conditions allow.
Business Review
17
Arctic offshore exploration
Ormonde gas and wind co-generation project, UK
Development of athlete village and infrastructure ahead
of 2012 Olympics, London
rpsgroup.com
Operations
18
Key Business Drivers
n The commercial advantage our clients can
achieve from sustainable development of land
and buildings;
n
The sustainable provision of infrastructure
including airports, roads, water, waste, public
transport and power;
n Society’s need to secure, in a safe
way, adequate supplies of energy from
environmentally acceptable sources;
n The need to manage environmental and
health & safety risks as well as their related
legislation/regulation and the arising staff,
customer and governance pressures;
n Society’s need to deal with climate change
and global warming.
Report and Accounts 2009
Operations
Employees
The Group remains committed to
creating an employment environment
which will attract, retain and motivate
employees of high calibre. Throughout
the Group emphasis is placed upon
personal development to meet both
current and future needs. Employee
communication and consultation
is encouraged at all levels of the
business. The criteria for selection and
promotion are the individual’s suitability
for the position offered based on their
qualifications, experience, skills and
abilities. Business units manage the
remuneration of staff within the guidelines
of approved annual budgets. We have
appropriate human resource structures
and systems managed by personnel
professionals throughout the businesses
and countries in which we operate.
The Company operates a Share
Incentive Plan in the United Kingdom
and similar plans overseas. These
plans, which are open to the majority
of the Group’s employees, enable
employees to purchase RPS shares with
the Company providing a matching
share contribution. The Company
also operates a Performance Share
Plan in which more senior employees
participate and which offers the
potential to build a significant equity
interest over a number of years.
Operating Structure
Our operating structure has developed
as the Group has grown in size and
complexity driven by the need to
achieve the correct balance between the
autonomy that enables our businesses
to operate in a flexible and responsive
fashion, whilst ensuring transparency and
accountability throughout the Group. The
Group is split into a number of operating
divisions and companies, which focus on
the principal markets that we serve both
by sector and geography. Our smaller
business units focus on specialised areas
but are accountable to the relevant
divisional or operating company Board.
Underpinning this structure is a set of
clear obligations in terms of reporting and
authorities that operates throughout the
Group and as is described on pages 26
and 27. Our principal businesses in both
the UK and overseas employ appropriately
qualified accounting, human resource and
other support staff. In the recent period
of economic uncertainty this structure has
enabled the extra attention to detail that
is vital to ensure operational efficiency and
careful cost management.
In addition to retaining appropriate
control, the Group provides support
to the sales and marketing activities
of our businesses through its business
information unit which is also responsible
for the maintenance and development
of the Group’s intranet and website.
We have continued to invest in
information technology to facilitate better
communication and flow of information
both internally and externally.
Business Review
19
Equal Opportunities in
Employment
RPS provides equal opportunities for all
its employees and potential employees
regardless of their sex, sexual orientation,
age, race, religion, ethnic origin, disability,
marital status, colour and nationality.
The policy applies to all aspects of
employment including the advertisement
of jobs, recruitment and appointment,
training, conditions of work and pay.
Planning advisors for the largest healthcare PFI in
Europe at St Bartholomew and Royal London Hospitals
rpsgroup.com
Operations
20
We recognise our obligations to ensure
that people with disabilities are afforded
equal opportunities to employment and
progress within the Group.
RPS’ policy on equal opportunities covers
all areas of discrimination.
Training and Continuous
Professional Development
RPS is committed to the training,
education and development of its
employees to increase effectiveness,
develop potential and ensure adequate
Radioactive waste retrieval and treatment at Sellafield
Expert witness to the Appeal Court of the Hague
Report and Accounts 2009
succession planning. RPS came third
in Britain’s Top Employers 2009, a
book researched and published by the
Corporate Research Foundation. This
organisation has been given special
recognition by the EU Commission for its
outstanding contribution to employer best
practice in several EU countries.
Divisional Directors, their appointed
project managers and professional
trainers are responsible for the
management of training and for the
verification of technical competence for
project personnel, in accordance with
our quality management system.
We aim to identify and provide
training, education and development
for employees, in order that they can
develop and apply this knowledge to
greater and more demanding roles in
the future. Wherever possible we try to
identify successors to key posts within
the organisation as part of our ongoing
succession management policy.
Externally advertised posts are initially
published on the JoinRPS.com careers
website and promoted internally via the
Group’s Intranet. Central to identifying
our training and educational needs is staff
appraisal. This activity is concerned with
developing staff by identifying and meeting
performance and training needs as well as
developing individual potential.
Appraisals are intended to complement
the standard staff induction programme
on Company policy and procedures,
which covers topics including safety
or equipment handling and involves
assessments of competency on a more
administrative level. Staff appraisal is a
continuous process and is not limited
to formal meetings. However, formal
appraisal meetings take place in many
parts of the Group at least once a year.
RPS is a recognised commercial training
provider in a number of specific technical
fields and is certified by such external
bodies as CCNSG (ECITB) on site
safety courses. RPS operates a CIWEM
approved structured training scheme for
its chartered water and environmental
engineers and MICE and MIEI approved
CPD schemes for civil engineers in the
UK and Ireland. Our aim is to help the
development of individuals throughout
their employment with the Company,
by underpinning their strengthening skills
and professional ethics, whilst broadening
their business knowledge. One of the
key objectives of the scheme is the long-
term commitment to CPD of all existing
staff within the organisation. Thereby,
individuals are always able to demonstrate
technical experience in specific sectors,
such as the water industry, or in relevant
aspects of environmental consultancy.
Business Review
n
n
n
n
University of Wales, Newport, BA
(Hons) in Business Studies and HNC
in Business Studies Course
21
University of York,
MSc in Risk Management
University of Bristol,
HNC in Water Management
Birbeck College,
BSc in Computing Science
BioFuels production facility in Houston, Texas
Principal designer and landscape architect for Brisbane
Airport Link
rpsgroup.com
Average number
of employees
Number of employees
Days absent (%)
Average length
of service (years)
Working part time (%)
Retention rate (%)
Age profile
Employees aged under 25 (%)
Employees aged 25-29 (%)
Employees aged 30-49 (%)
Employees aged 50+ (%)
Group
2009
2008
4,254 4,438
1.7
1.8
5.4
11
78
9
19
53
19
5.0
7
90
11
19
52
18
Academic Bursaries
For the seventh consecutive year, RPS in
the UK continued its practice of awarding
academic bursaries to students studying at
university. In 2009, this included students
attending courses at twenty four UK
universities:
n
n
n
n
Christ’s College, University of
Cambridge, MEng in Civil Engineering
and MEng in Structural Engineering
Birmingham City University, BA
(Hons) in Architecture, MA in Urban
Design & PG Dip in Architecture
South Birmingham College, HNC in
Building Construction, HNC
BSE HVAC
University of Central England,
MA in Planning
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
Coventry University,
BEng in Building Services
Stourbridge College, BTEC National
Certificate in Building Service
Engineering in Electrics
University of Southampton,
BSc in Acoustics
Anglia Ruskin University,
BSc in Environmental Planning
University College Cardiff,
MSc in Town Planning
St Andrews University,
MSc in Ecology
Stirling University, M.Phil in Ecology
De Montfort University, MSc in
Energy and Sustainable Buildings,
Post Graduate MSc in Energy and
Sustainable Building
London Southbank University,
HNC in Civil Engineering
University of Nottingham,
MEng in Civil Engineering
Loughborough University,
MEng in Civil Engineering
Nottingham Trent University,
BEng in Civil Engineering
University of Newcastle,
MEng in Mechanical Engineering
Wolverhampton University, BSc in
Architectural Design Technology and
BTEC in Civil Engineering
University of Nottingham, MSc in
Engineering Surveying and Geodesy
Operations
22
n
Queens University Belfast, MEng in
Civil Engineering and a Masters in
Sustainable Development
Ireland
n
University College, Dublin,
CEng in Civil Engineering
Spain
n
University of Valencia, MBA studies in
Building Services Engineering
Wetlands translocation project, Waterford, Ireland
Report and Accounts 2009
Australia
n
n
n
Curtin University, diploma in
Accountancy
Edith Cowan University,
BA in Accountancy
Swinburne University of Technology
in New South Wales
RPS provided funding to Masters level
students to pursue studies in engineering
related disciplines. RPS sponsors the Gold
Medal for the top Civil Engineering student
at University College Dublin and the
Centre for Talented Youth programme.
In Ireland, RPS North South Scholarships
in Sustainable Development continued in
2009. Launched in 2008, these scholarships
are designed to promote all-island
co-operation and assist the economic
development of the North South Business
corridor as part of the implementation
of the structures set up under the Good
Friday Agreement. Two equivalent RPS
bursaries were open to graduates with
a primary degree from one jurisdiction
proposing to do a Masters degree in the
other jurisdiction.
Growth and Funding
Despite current economic circumstances
RPS operates in markets which are
generally attractive and expanding with
good long-term prospects, but which are
fast changing. We need, therefore, to keep
our products and services and how we
market and deliver them under continuous
review. The Board believes that the long-
term health and growth of the Group will
be best secured by ensuring that RPS is,
and is perceived by clients and staff to be,
a market leader in each of our business
areas. Our corporate strategy is designed
to achieve this.
We are endeavouring to deliver long-term
shareholder value and have, therefore,
to balance annual earnings growth with
investment in both our existing clients, staff
and products and the development of our
product offering and capability.
The acquisition strategy RPS has pursued
over the last decade has brought
considerable benefit to shareholders,
clients and staff. The companies acquired
have enabled us to build strong positions
in a number of markets. This has included
the creation of a substantial business in
the energy sector. This, in turn, enables us
to offer a broader, higher quality service
to our clients and attractive employment
to staff and potential recruits. The financial
performance of the companies which have
been acquired has increased the Group’s
growth. The Board sees the maintenance
of this element of the strategy as being of
importance to the continued growth of
Shareholder Value
The Board manages the Group in order
to achieve good levels of growth in
shareholder value on a consistent long-
term basis. The Board, however,
recognises that this can only be achieved
by providing a competitive service which
adds value to our clients’ organisations
and offering an attractive working
environment and career prospects to our
staff. Striking this balance whilst also
respecting our responsibility to society
at large is the main task facing
the Board. Current economic
circumstances make the achievement of
this balance even more challenging.
Corporate Governance
RPS operates to a strong system of
governance in order to safeguard
the interests of its shareholders. The
structures and policies that are in place
to achieve this are set out on pages 49
to 60.
RPS and will consider more significant
acquisitions, as well as making acquisitions
outside the countries in which we
currently operate. At the year end the
Group had net bank borrowings of £32.8
million (Note 25). RPS normally generates
sufficient free cash to fund its working
capital and capital expenditure
requirements. Additional cash resources
are, therefore, only needed in order to
pursue the Group’s acquisition strategy.
From time to time, the Board therefore
secures funds by means of arranging debt
finance or equity placings.
The Board believes the Group’s current
bank facilities of £125 million are adequate
for current purposes, but would be
prepared to increase them in order to
make appropriate investments.
Dividend Policy
For a number of years our dividend per
share has grown at an average annual
compound rate of about 15%. Our
ability to maintain this level of growth
will depend upon the scale of earnings
growth, the nature and scale of future
acquisitions and how that investment is
funded. The final dividend will normally
be greater than the interim payment.
Business Review
23
Cross border power grid, Ireland
Northshore Riverside Park: award-winning landscape
design by Conics
rpsgroup.com
Risk Management
24
With our unique energy and
environmental experience we
can offer broad support in
developing carbon capture and
storage (CCS) projects.
Report and Accounts 2009
Business Review
Risk Management
25
RPS Group Risk Analysis
RPS supplies a wide range of services
to many sectors of the economy in a
significant number of countries. This gives
rise to a range of potential risks that need
to be individually recognised, assessed and
effectively managed. Due to the robust
structure of the business, the management
of these risks is not separated from the
business, but is treated as an integral part
of the way we operate. A key role of the
Executive Directors is to assess the risks
to which the Group may be exposed, to
report material risks to the Board and to
recommend measures for their mitigation.
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. Whilst the Group Board
has overall responsibility for the Group’s
system of internal control and for
reviewing its effectiveness, it is the role
of management to implement policies
relating to risk and control.
The principal risks identified by the Group
can be described under the following
categories:
n
n
Business Strategy - the risk of not
delivering the Group’s long-term
strategy. Principal risks of the Group
include loss of competitive position
and strategic risks in relation to
specific activities.
Business Continuity - the risk that in
the event of an adverse occurrence
the business operations will not be
able to operate. Main areas of risk
n
n
n
here are failure of IT systems and the
recruitment and retention of key staff.
Financial and Commercial - the
risk of performance falling short of
expectations including the reputational
risk linked to quality of work.
Legal and Compliance - the risk of
failing to comply with all relevant
legislation and regulations and liabilities
arising from trading activities which are
not covered by professional indemnity
insurance.
Health, Safety and Environment - the
risk related to the safety of staff,
clients, sub-contractors, members of
the public and the environment.
Business Strategy
The Group’s strategy seeks to ensure
continuous improvement in the range and
quality of our services and our financial
performance by:
n
n
n
operating in markets where we can
add value to our clients’ activities;
endeavouring to achieve leadership in
those markets; and
making acquisitions of quality
businesses in order to extend our
expertise and geographical presence.
Successful implementation of the strategy
requires the Board to identify appropriate
markets and how to operate in them
successfully. Each year the Board sets itself
a series of specific objectives and priorities.
Progress against these is measured on a
regular basis.
The Executive Committee reviews and
has to approve all acquisitions before
any binding commitment is made. For
acquisitions with an enterprise value in
excess of £20 million, full Group
Board approval is required prior to any
binding commitment being made. In the
current economic climate the
full Group Board is being kept informed
about all potential acquisitions.
The Executives have developed
comprehensive methods to evaluate
potential acquisitions, including the legal
framework within which businesses are
acquired and methods of integration.
Despite the economic downturn seen
in 2009 the goodwill impairment review
carried out at the year end concluded
that no impairment was necessary.
The business in Ireland was that most
affected by the downturn and is potentially
susceptible to goodwill impairment (see
note 10 on page 86).
Business Continuity
Failure to recruit and retain qualified and
talented staff can disrupt the Group’s
ability to win new contracts and/or
execute contracts effectively.
Each of the Group’s businesses has, as
a management priority, the successful
implementation of a recruitment and
retention strategy that is appropriate to
the markets in which they operate. At
Group level advice is provided to the
businesses about recruitment techniques,
remuneration strategies and people
management. In addition share schemes
are put in place to assist staff motivation
and retention.
rpsgroup.com
Risk Management
26
Phosphogypsum Stack Complex - Houston
Heyco Energy Group, acreage evaluation
Waha Land Masterplan industrial park outside
Abu Dhabi
Report and Accounts 2009
RPS Technology Services (RPSTS) manages
all the Group’s IT systems although some
detailed functions are carried out locally on
site. Each year RPSTS produces a plan for
the improvement of the Group’s systems.
The Board approves that plan and allocates
the appropriate budget. The plan includes
measures designed to ensure the reliability
and resilience of the Group’s systems.
The fact that the Group has operations in
a large number of locations increases its
ability to withstand events which cut power
and communications, cause equipment
malfunction or result from theft.
Financial and Commercial
Management
The financial management of the Group
is undertaken within the framework of
the operating structure that is described
on page 19. The operating companies
and divisions as well as the business
units within them are treated as separate
entities for the purposes of budgeting
and accounting.
Each business unit prepares a Business
Plan which defines the activities and
scope of business to be conducted. The
budgets quantify the expectations for the
Group and comprise a key element of
the Business Plans. The Plans (including
budgets) are agreed with the Group
Board. The businesses in the UK are
supported by centrally run accountancy
and personnel functions. Our overseas
businesses have their own accounting and
personnel functions. RPS has a detailed
financial reporting management system,
which incorporates checks and reviews,
financial modelling, accountability and
transparency at every level.
Operational staff have no access to the
underlying processing of transactions.
Invoices from suppliers are approved by
the Operational Directors and are sent
to the finance function for processing
and payment. Remittances from clients
are received by the finance function.
Segregation of duties within the finance
team itself and between the offices
and the accounting function ensures
accountability and sound financial practice
at every level.
Business unit and office financial results
are reviewed monthly by relevant boards
and directors.
This detailed review, together with the
checking and reconciliation work done
by the accounting team, ensures the high
degree of scrutiny required to minimise
the possibility of mistakes, irregularity or
fraud remaining undetected.
The Group’s Executive Committee, which
comprises the Group’s Executive Directors
and the Company Secretary, meets at
least once a month and discusses newly
emerging risks as they occur. The minutes
of these meetings are provided to the
Non-Executive Directors.
The RPS Board monitors the Group’s
financial performance on a monthly basis
using detailed budgets as the benchmark.
Future performance is estimated by
reference to forward order books,
although the nature of most contracts
Business Review
27
Internal space and facilities planning - Deloitte
We act for parts of the air travel industry in the
emissions debate
rpsgroup.com
means that such forecasting cannot be
completely accurate and the degree of
imprecision cannot be statistically tested.
The Group’s financial instruments comprise
cash, bank loans and items such as
receivables and payables that arise directly
from its operations. The main purpose of
these instruments is to provide finance for
the Group’s operations.
The Group reports its results in sterling
but has operations in Australia, Ireland,
USA, Canada, Malaysia and Singapore
that have functional currencies other than
sterling. As a result the Group’s balance
sheet, income statement and statement of
comprehensive income can be affected by
movement in the exchange rate between
sterling and the functional currencies of
the overseas operations. The Group does
not hedge such translation exposures.
The internal audit function is undertaken
by the Group financial accounting team as
part of its other functions. Given the current
structure of the Group, the Board and the
Audit Committee consider that a separate
internal audit function is not at present
required. The Board recognises that control
risks increase during the integration of newly
acquired businesses and during this period
monitors closely the status of the systems
and commercial integration.
RPS is a multi-disciplinary Group
operating across international boundaries
with a broad base of clients and skilled
professional employees. Correspondingly
and consistent with its size and complexity,
the Group has a large number of
contractual relationships. In the Directors’
view, there is no single contract which is
essential to the Group’s business.
Where operations have part of their trade
in currencies other than their functional
currency they endeavour where possible
to match the currency of revenues and
cost of sales. The Group uses foreign
exchange contracts and loans to manage
transactional risks for commercial but not
accounting purposes.
Compliance, Litigation
and Insurance
It is essential that RPS complies with
prevailing legislation and with the terms
of its contracts with clients, staff and
suppliers. In order to ensure this the
Group has in place a series of quality
management systems.
It has been and remains the Group’s policy
that no trading in financial instruments shall
be conducted.
The Group has strong review procedures
for monitoring and controlling cash flows
and the requirements for debt. This
includes the production of regular cash flow
projections and the reporting and review of
daily cash collections against targets.
In certain parts of its business RPS
maintains and implements documented
Quality Management Systems which satisfy,
as a minimum, the requirements of ISO
9001:2000 through the:
n
documenting of procedures to control
the quality of services;
Risk Management
28
n
n
n
maintaining records to control and
show compliance with quality and
client requirements;
recording the implementation of
corrective measures necessary to
ensure the quality of service provided;
taking appropriate preventative
measures to improve quality
and minimise the possibility of
unsatisfactory service; and
Western Newfoundland exploration program
RPS provides consultancy in relation to the prevention
and control of Major Accident Hazards
Report and Accounts 2009
n
monitoring the quality management
system in operation at each office at
regular intervals in order to ensure its
continuing and improving effectiveness.
Formal certification to ISO 9001:2000
standard is a required procedure for some
aspects of RPS’ business; therefore a
number of RPS’ offices in the UK, Ireland
and the Netherlands are certified to ISO
9001. Offices in North America and
Australia have quality systems that are
based on formal procedures that have
been developed in line with ISO 9001
guidelines.
Those RPS offices providing environmental
monitoring and analytical services hold
external accreditations from additional
quality assurance schemes. Quality
accreditations held by individual RPS
offices include those externally audited
by UKAS, Aquacheck, RICE, UK NEQAS
and the UK Health and Safety Executive’s
WASP scheme.
In Ireland our offices are quality accredited
through the NSAI (National Standards
Authority of Ireland) and SGS and for
Safety Management through the NISO
(National Irish Safety Organisation).
However, even when these systems work
well issues can arise which may give rise
to litigation in which RPS needs to
participate. There are procedures in place
for managing such litigation. The Group
also has extensive insurance cover in place
to ensure against such losses and potential
losses. A range of policies are in place, the
principal of which relate to professional
indemnity, employers, public and third
party liability.
Health and Safety
The health and safety performance of the
Group is fundamental to RPS operations
worldwide. Safeguarding the employee’s
well-being is of paramount importance
with the responsibility resting with the
Board. This responsibility is shared with
the local management boards within the
organisation and is passed down to each
manager and employee.
The Board sets the policy and objectives
for health and safety management.
The Company Secretary oversees
implementation of the health and safety
management within the Group. An analysis
of accidents and incidents is presented and
discussed at every Board meeting.
The Board requires that each business
provides and maintains safe working
conditions, suitable equipment and
resources to implement safe systems of
work to protect employees, contractors,
visitors and other people who could be
affected by the Group’s activities.
Compliance with legislation in all the
countries where activities are carried out
is a mandatory requirement although
wherever possible the Group aims to
surpass minimum standards and develop
best-practice within the industry.
Each business in the Group has appointed
health and safety professionals to
implement appropriate management
systems. OHSAS 18001 is an
internationally recognised standard for
health and safety management that is
aligned with the ISO 9000 (Quality
Management) and ISO 14000
Business Review
Accident incident rates
29
Group
2009
2008
19
4.6
17
3.8
Reportable
injuries
Reportable
injuries incident
rate per 1,000
employees
(Environmental Management) standards.
29.3% of employees across the Group
work in offices that now have third party
accreditation to the OHSAS 18001
standard (2008: 25.1%).
All activities that are undertaken are
assessed for hazards with appropriate
controls put in place to ensure the risk
is reduced to a satisfactory level. Where
necessary safe systems of work are
documented. There are systems in place
throughout the organisation to audit
activities to ensure compliance.
All employees are trained to ensure that
they have the appropriate skills to carry
out their job safely. Senior management
are trained to ensure that they can
discharge their responsibilities to their staff.
Each Group business has a system for
reporting and investigating accidents,
dangerous occurrences and near misses.
All incidents are investigated to determine
the root cause. Any significant incidents
are reported throughout the organisation
and brought to the attention of the Board.
In 2009, the reportable accident rate
was 4.6 accidents per 1,000 employees
(2008: 3.8). This increase followed a
substantial reduction in 2008, the reportable
accident rate in 2007 having been 6.3
accidents per 1,000 employees. The Group
continues to develop its health and safety
management systems in order to establish
an improving trend in its performance.
Typically the accidents that occurred
are related to manual handling activities,
however, slips and falls also account for a
significant proportion of the accidents.
RPS offers clients a range of health and
safety consultancy services including
process safety, asbestos management, fire
safety, occupational health and hygiene,
safety auditing and safety engineering.
RPS employees include highly qualified
specialists who work on safety critical
systems in the defence, nuclear, offshore,
petrochemical, transport, construction and
manufacturing industries.
Carbon Sequestration Analysis – Western Canada
We have developed assessment techniques for many
forms of renewable energy
rpsgroup.com
Corporate Responsibility
30
RPS has supported TreeAid for
over four years with charitable
contributions for some of Africa’s
poorest rural communities to help
in the fight against poverty and the
effects of climate change.
Report and Accounts 2009
Business Review
Corporate Responsibility
Social Responsibility
and Sustainability
RPS is committed to ensuring that it
conducts its business in a responsible
and sustainable way. Taking care of
our clients, suppliers, employees, the
wider community and the environment
and conducting operations with a high
standard of business integrity are all
essential to the success of our business.
The Group requires its staff to adopt
high standards of behaviour in their daily
professional conduct or when travelling
on business. Employees are required to
be sympathetic to the cultures of and
comply with the laws and regulations of the
countries in which they operate, also giving
due regard to the safety, the well being and
the human rights of all project personnel
and relevant local communities.
RPS has set itself the task of reducing per
capita energy consumption by 5% each
year using 2007 as the base. This would,
if acheived, halve our (per capita) energy
use by 2020.
Clients
The Group aims to develop and maintain
strong and lasting relationships with its
clients. RPS endeavours to deliver all
services and reports to the required
quality and specification within the
time frame agreed with the client. RPS’
employees work with their clients to meet
and anticipate their needs.
31
Conflicts of Interest
All RPS employees must avoid personal or
professional activities and financial interests
that could conflict with their responsibilities
to the Group. If a conflict of interest does
arise then this must be acknowledged and
openly reported. Employees must not
seek personal gain from third parties, or
abuse their position within the Group for
personal gain. Any gifts received must be
reported and acknowledged.
Community Involvement
RPS has supported community and
charitable fund raising with gifts in kind and
financial contributions throughout the year,
mostly at office level. In 2009 the Group
and its staff gave or raised £480,000 in
charitable contributions (2008: £421,000).
Taking into account the £105,000 spent
on academic bursaries and educational
initiatives (2008: £168,000), the Group’s
total contribution to the communities in
which it operates was £585,000 (2008:
£589,000). While the value of social
contributions decreased slightly by 0.7%
on the previous year, this represents
a small increase as a proportion of
Group turnover: 0.130% (2008: 0.125%).
The continuing efforts of our staff in
contributing to this are greatly appreciated.
Across our businesses we have
contributed to a wide range of charities
and initiatives. At Group level we made
a donation of £25,500 to Tree Aid in
support of its educational, tree planting
and woodland conservation programmes
in Sub-Saharan Africa. RPS has supported
Tree Aid for several years with charitable
contributions, fund raising and gifts in kind.
In 2009 RPS was acknowledged as the
leading corporate sponsor of Tree Aid.
We are proud to be associated with their
award winning work that assists some
of Africa’s poorest rural communities to
succeed in the fight against poverty and
the effects of climate change.
Environmental Management
RPS contributes to environmental
management through the projects that
it undertakes for clients. The Group
advises international bodies, governments,
local authorities and private companies
on improving their environmental
performance. A wide range of services
are available from conducting ecological
surveys through to carbon trading.
In the organisation there are many
employees with professional qualifications
in environmental management, some
have achieved international recognition
for their work and play a leading role in
professional bodies.
rpsgroup.com
Corporate Responsibility
32
RPS seeks to manage and reduce its own
environmental impact. All businesses in
the Group are required to put in place
systems to ensure that they identify and
reduce potential environmental liabilities.
Using these management techniques, RPS
endeavours to:
n comply with all relevant national and
regional legislation as a minimum
standard;
n comply with codes of practice and
other requirements such as those
specified by regulators and our clients;
n utilise suppliers that offer products
which are sustainable, recyclable or
environmentally sensitive wherever
practicable and economic;
n promote practical energy efficiency
and waste minimisation measures; and
n provide a shared inter-office IT
network and communications
technology that reduces the need for
business travel.
In order to achieve this RPS:
n ensures employees are trained and
motivated to conduct their activities in
an environmentally responsible manner;
n
reviews the policy on a regular
basis to take into account any
new developments in legislation,
or environmental management or
shareholder expectations; and
n allocates sufficient management
resources to ensure effective
implementation of the environmental
policies.
Report and Accounts 2009
The specific target set by the Board is to
reduce energy consumption by 5% per
annum on a per capita basis. This target
was not achieved in 2009 with overall
energy consumption increasing by 8.5%
over the prior year. This increase was
roughly proportionate to the increase in
office space occupied as noted above.
Despite the challenging economic climate
RPS will continue in efforts to reduce
energy consumption and its related impact
on carbon emissions. Over 80% of
electricity purchased in the UK during 2009
was on Green tariffs, which compared with
70% in 2008. This is from energy sources
that are either derived from renewable
sources such as wind, capture waste energy
such as landfill gas or are from ‘good
quality’ combined heat and power plants.
Due to the ongoing debate over the
integrity of using green tariffs in carbon
footprint calculations and in accordance
with government guidance the green
tariff element was not included within
the above calculations.
A significant proportion of the Group has
achieved ISO14001, the internationally
recognised environmental management
system standard.
Waste recycling facilities are in place at
most of our offices.
Climate Change
RPS has extensive skills that enable us to
understand and advise upon the causes and
effects of climate change. RPS undertakes
projects that involve developing strategies
to reduce our clients’ carbon emissions and
adapt buildings and infrastructure to cope
with anticipated climatic changes. We
expect the workload in this area
to increase.
The carbon footprint for RPS in
2008, recalculated in accordance with
Greenhouse Gas Protocol and current
Defra guidance amounted to 14,258
tonnes, which was equivalent to 3.2 tonnes
for each employee. In 2009 the total
footprint increased to 14,695 tonnes. In
a year that saw a significant reduction in
overall headcount, this was equivalent to
3.7 tonnes for each employee. Despite
the reduction in headcount, office space
occupied showed a small increase with
a corresponding impact on both the
overall and per capita numbers. In addition
numbers were affected by the expansion
in the Australian business and its related
impact on travel patterns.
Corporate Responsibility
33
Cardiff Waterfront
RPS is shaping major regeneration
schemes across the UK, including
landmark urban renewal projects in
Belfast, Bristol, Cardiff, Edinburgh,
Glasgow, London, Leeds, Liverpool,
Manchester, Nottingham, Plymouth
and Sheffield.
rpsgroup.com
Corporate Responsibility
34
Shareholders
The Group conducts its operations in accordance with what it believes are
principles of good corporate governance. Our aim is to provide shareholders with
a return on investment that rewards their financial commitment. The Board
understands the importance of strong cash flows and earnings and develops its
business in such a way as to grow these in a sustainable way as far as possible.
The Board endeavours to maintain involvement of shareholders by keeping
them informed on major actions or decisions affecting their investment, through
a year-round Investor Relations programme. RPS employees in possession
of information which, if disclosed, could affect the market price of its shares
are prohibited from trading in securities until after public disclosure of such
information.
The Chairmen of the Audit Committee, Remuneration Committee and
Nomination Committee attend the Annual General Meeting, and are available to
answer shareholders’ questions. The Chairman and the Senior Independent Non-
Executive Director are available to discuss governance, strategy and any issues of
concern or interest with any major shareholders. The Chief Executive and Finance
Director meet frequently with major institutional shareholders and fund managers.
Investor Relations is discussed at every Board meeting which enables the Board
to keep abreast of and develop an understanding of the views expressed by
major shareholders.
Liveability Volunteers Day, London
RPS sponsor Galaxy Under 14’s Girls football team
Report and Accounts 2009
Management & Governance
RPS Offices in Perth, Australia
Management & Governance
35
Management &
Governance
The Board
Committees
Corporate Governance
35
36
48
49
rpsgroup.com
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The Board
36
Board Responsibilities
As indicated in the Corporate
Governance report the Board has defined
responsibilities which are as follows:
1. Ensure that the Group has in place at
all times a strategy that is capable of
delivering realistic returns
to shareholders.
2. Continue to organise and monitor the
performance of the Group’s operations
through the Divisional structure.
3. Keep that structure under review and
be prepared to change the number
and nature of the Divisions in order
both to take account of market
opportunities and also to deal with
management issues.
4. Clarify any ambiguities in the authority,
responsibilities and obligations of the
various parts of the Divisions both in
terms of managing their businesses
and reporting upon those businesses.
5. Keep under review the composition
of the Divisional Management teams
and monitor their performance, being
prepared to make changes in order to
maintain or improve performance in
terms of both delivery to clients and
financial results.
6. Ensure the Group and Divisional
Boards have policies in place to attract
and retain high quality staff.
7. Manage and promote the RPS brand
vigorously and vigilantly, by ensuring it
has an adequate profile amongst the
client base and is respected and
strengthened.
8. Keep under review opportunities
to extend the range of products
RPS offers and the sectors in which
it operates.
9. Keep under review opportunities to
extend the geographic areas in which
RPS operates.
10. Ensure that the Board has available
an appropriate and effective advisory
team including brokers, financial
advisers, auditors, lawyers and financial
public relations professionals.
11. Together with our brokers, maintain
an active Investor Relations
programme designed to ensure full
exposure of the RPS investment case
to appropriate fund managers in the
UK, Europe and USA.
12. Maintain contact with a wide range of
analysts and brokers to ensure current
independent research is available to
the market.
13. Maintain systems of corporate
governance compliant with the
Combined Code and appropriate for
a company of RPS’ type and size.
Discuss these matters with major
shareholders on a regular basis.
14. Ensure that the Group operates
appropriate risk management systems
in respect of all aspects of its business.
15. Ensure that the Group has in place
IT systems appropriate for the proper
operation of the business and its likely
expansion.
16. Ensure that the Group has in place
both a web-site and an intranet that
provides an effective communication
medium for staff, clients and others
with an interest in RPS.
17. Ensure that the Group has sufficient
and adequate funding in place to
maintain its strategy.
Composition and Operations
The Board currently comprises four
Executive and five Non-Executive
Directors including the Chairman.
Mr A Troup resigned as a director on
5 November 2009.The Executive
Directors are responsible for the
management of all the Group’s business
activities. The Non-Executive Directors are
all independent of management and
contribute independent judgement and
extensive knowledge and experience to
the proceedings of the Board. The
Chairman was independent
on appointment.
The Board generally meets on a monthly
basis (other than during holiday periods)
and more frequently when business needs
require.The Board has a schedule of
matters referred to it for decision and the
requirement for Board approval on these
matters is communicated widely
throughout the senior management of the
Group. Its principal tasks are to formulate
strategy and to monitor and control
operating and financial performance in
pursuit of the Group’s strategic objectives.
The Executive Directors meet at least
once a month.The Executive Committee
is responsible for all operational matters
within the Group except in respect of any
decision, or group of decisions, which
could not be executed within the limit of
funds available to the Group or which are
Report and Accounts 2009
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 37
Management & Governance
likely to have a material effect upon the
trading prospects of the Group.The
minutes of meetings are circulated to the
Non-Executive Directors for review.
Operational matters do not include the
setting of the Group Strategy or budgets
for the Group as a whole or raising of
equity or debt finance; these remain
matters for the full Board to decide on
along with anything which requires
shareholder consultation or approval, such
as results announcements, the Annual
Report or Circulars.
Where Directors have concerns which
cannot be resolved about the running of
the Company or a proposed action, these
concerns are recorded in the Board
minutes. It is the policy of the Company
that if a Director resigns any concerns
expressed are provided, in a written
statement, to the Chairman for circulation
to the Board.
The provisions of the Companies Act
2006 concerning a director’s duties in
dealing with actual or particular conflicts
of interest are now effective. In
accordance with these provisions
shareholders approved changes to the
Company’s Articles of Association to
allow directors to authorise such conflicts.
These provisions enable the Directors to
authorise a conflict, subject to such terms
as they may think fit, which may include
exclusion from voting in respect of the
relevant issue and exclusion from
information and discussion relating to the
matter. The procedure approved by the
Board for authorising conflicts reminds
directors of the need to consider their
duties as directors and not grant an
authorisation unless they believe, in good
faith, that this would be likely to promote
the success of the Company. A potentially
conflicted Director cannot vote on an
authorising resolution or be counted in a
quorum for that purpose. Any authority
granted may be terminated at any time
and the director is informed of his
obligation to inform the Company without
delay should there be any change in the
nature of the conflict authorised. In
addition, the Board requires the
Nomination Committee to check that any
individual it nominates to the Board is free
of any potential conflict of interest. Since
the time that these arrangements were
introduced no actual or potential conflicts
of interest have arisen.
It is the responsibility of the Company
Secretary to ensure appropriate insurance
cover is maintained in respect of legal
actions against Directors.The level of
cover is currently £20 million.
The Board is also responsible for the
financing of the Group, material capital
commitments, commencing or settling
major litigation, corporate acquisitions and
disposals and appointments to subsidiary
company boards and anything else which
may materially affect the Group’s
performance. Comprehensive papers
which deal with all material issues are
circulated in advance of each meeting.
There is an agreed procedure for Non-
Executive Directors, as well as Executive
Directors, to take independent
professional advice and training at the
Company’s expense.This is in addition to
the access which every Director has to
the Company Secretary.
The Secretary is charged by the
Board with ensuring that Board
procedures are followed.
37
The Board undertakes an annual appraisal
of its performance. Directors are asked to
complete a detailed review relating to the
general operation of the Board and its
Committees as well as performance
against group strategy. The results are
discussed with the Chairman and a
summary of the principal findings is
presented to and discussed by the Board.
Where appropriate the Board agrees
changes to process and structure that are
necessary to address the issues arising.
When new members are appointed to
the Board, access is available to
appropriate external training courses and
to advice from the Company’s solicitors in
respect of their role and duties as a public
company Director if required.
The Non-Executive Directors are
appointed for three year terms which
are subject to re-election. Any term
beyond six years for a Non-Executive
is rigorously reviewed, looking at the
requirement to refresh the Board.The
current Chairman is subject to annual
re-election.
The differing roles of Chairman and Chief
Executive are acknowledged and are
separate.The key functions of the
Chairman are to conduct Board meetings
and meetings of shareholders and to
ensure that all Directors are properly
briefed in order to take a full and
constructive part in Board discussions.The
Chief Executive is required to develop
and lead business strategies and processes
to enable the Group’s business to meet
rpsgroup.com
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The Board continued
The Board agenda gives significant focus
to business performance and strategy.
Full details of Directors’ remuneration
and a statement of the Company’s
remuneration policy are set out on
pages 52 to 57.The current members
of the Remuneration Committee are
identified on page 48. Executive Directors
abstain from any discussion or voting at
full Board meetings on Remuneration
Committee recommendations where the
recommendations have a direct bearing
on his own remuneration package.
38
the requirements of its clients and the
needs of its staff and shareholders.The
Non-Executive Directors hold meetings
with the Chairman without the Executives
present at least twice a year.The Non-
Executives, led by the Senior Non-
Executive Director, meet on an annual
basis to appraise the Chairman’s
performance.The Executive Directors
have their performance individually
reviewed by the Chief Executive against
annually set objectives.The Chief
Executive has his performance reviewed
by the Chairman and Senior Independent
Non-Executive Director.The Board’s
annual appraisal process incorporates a
review of the performance of Non-
Executive Directors.
Concerns relating to the executive
management of the Company or the
performance of the other Non-Executive
Directors may be raised with the Senior
Independent Non-Executive Director.
The Senior Independent Director is
available to shareholders if they have
concerns which contact through the
Chairman, Chief Executive or Finance
Director has failed to resolve.
The Board is assisted by five committees -
Audit, Remuneration, Nomination,
Corporate Governance and Executive.
Report and Accounts 2009
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:23 Page 39
Management & Governance
Brook Land
Independent Non-Executive Chairman
Aged 60. Brook Land was formerly a
partner of and is now a consultant to
Nabarro. He is a director of a number of
private companies. Until June 2008 he was
Senior Independent Director of Signet
Group plc. He was appointed to the
Board in 1997 and is being put forward
for re-election on an annual basis.
Contract
Date of contract
September 1997
Unexpired term at 31 December 2009
Until AGM 2010
Notice period
N/A
39
Emoluments and compensation
Basic salary
£000s
–
Bonus
£000s
–
Emoluments excluding pensions
Benefits
£000s
–
Fees
£000s
95
2009
£000s
95
2008
£000s
87
Pension (paid and provided)
2008
2009
£000s
£000s
–
–
Beneficial interests
Number of shares at 31 December 2009 and at 3 March 2010
30,000
Number of shares at 31 December 2008 and at 13 February 2009
30,000
Committee membership – Board and Committee
Number of Board and Committee meetings attended
* Chairman
Full
Board*
8
Audit
Committee
–
Remuneration
Committee
–
Nomination
Committee*
2
Corporate
Governance*
2
rpsgroup.com
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 40
The Board continued
Dr Alan Hearne
Chief Executive
Aged 57. Alan Hearne holds a degree
in economics and a doctorate in
environmental planning. Following a period
of academic research into environmental
planning he joined RPS in 1978, became a
Director in 1979 and Chief Executive in
1981. Alan Hearne was the plc Entrepreneur
of the Year in 2001, was made a Companion
of the Institute of Management in 2002, a
member of the Board of the Companions
in 2007 and fellow of Aston Business
School in 2006.
Service Contract
Date of contract
February 1997
Emoluments and compensation
Unexpired term at 31 December 2009
12 months
Notice period
12 months
Basic salary
£000s
395
Bonus
£000s
–
Emoluments excluding pensions
Fees
£000s
–
Benefits
£000s
19
2009
£000s
414
2008
£000s
739
Pension (paid and provided)
2009
£000s
–
2008
£000s
**
40
Share options
1 Jan
2009
Number
62,500
28,157
Exercised
Number
–
–
31 Dec
2009
Number
62,500
28,157
Exercise
price
111.0p
146.5p
Market value
at date
of exercise
N/A
N/A
Date from
which
exercisable
20/3/2008
12/8/2008
LTIP award
2006
2007
2008
2009
Total
1 Jan 2009 number
145,652
124,893
127,419
–
397,964
Granted number
–
–
127,4–
275,261
275,261
Released
145,652
–
–
–
145,652
31 Dec 2009
145,6–2
124,893
127,419
275,261
527,573
Market value
of shares at grant
184p
292.3p
310p
143.5p
–
Expiry date
20/3/2015
12/8/2015
Market value
at date of release
146.59p
–
–
–
–
Share Incentive Plan
Partnership shares
Matching shares
Total
Beneficial interests
Total
Beneficial interest at 31 December 2009
2,437
2,437
4,874
Beneficial interest at 31 December 2008
1,611
1,611
3,222
Number of shares at 31 December 2009 and at 3 March 2010
482,030
Number of shares at 31 December 2008 and at 13 February 2009
482,030
Committee membership – Board and Committee
Number of Board and Committee meetings attended
* meets at least once a month
Full
Board
8
Audit
Committee
–
Remuneration
Committee
–
Nomination
Committee
–
Corporate
Governance
2
Executive
Committee
*
** In 2006 the Remuneration Committee agreed to make a one-off payment of £300,000 to the pension plan of the CEO prior to 6 April 2006 representing six years of future
annual contributions. No further pension contributions will be made during this period.
Report and Accounts 2009
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 41
Management & Governance
Gary Young
Finance Director
Aged 50. Gary Young graduated from
Southampton University in 1982 and
qualified as a Chartered Accountant in
1986 with Price Waterhouse. Before joining
RPS he held a number of financial director
roles including positions within Rutland
Trust plc and AT&T Capital. He joined RPS
in September 2000 and was appointed to
the Board in November 2000.
Service Contract
Date of contract
September 2000
Emoluments and compensation
Unexpired term at 31 December 2009
12 months
Notice period
12 months
Basic salary
£000s
200
Bonus
£000s
–
Fees
£000s
–
Benefits
£000s
10
2009
£000s
210
Emoluments excluding pensions
2008
£000s
342
Pension (paid and provided)
2008
£000s
30
2009
£000s
30
41
Share options
1 Jan
2009
Number
13,720
Exercised
Number
–
31 Dec
2009
Number
13,720
Exercise
price
146.5p
Market value
at date
of exercise
N/A
Date from
which
exercisable
12/8/2008
LTIP award
2006
2007
2008
2009
Total
1 Jan 2009 number
55,434
49,272
51,612
–
156,318
Granted number
–
–
–
111,498
111,498
Released
55,434
–
–
–
55,434
31 Dec 2009
–
49,272
51,612
111,498
212,382
Market value
of shares at grant
184p
292.3p
310p
143.5p
Expiry date
12/8/2015
Market value
at date of release
146.59p
–
–
–
Share Incentive Plan
Partnership Shares
Matching Shares
Total
Beneficial interests
Total
Pensions
Beneficial Interest at 31 December 2009
3,868
3,868
7,736
Beneficial Interest at 31 December 2008
3,041
3,041
6,082
Number of shares at 31 December 2009 and at 3 March 2010
59,409
Number of shares at 31 December 2008 and at 13 February 2009
27,500
Pension contributions are paid into a Group personal pension.
Committee membership – Board and Committee
Number of Board and Committee meetings attended
* meets at least once a month
Full
Board
8
Audit
Committee
–
Remuneration
Committee
–
Nomination
Committee
–
Executive
Committee
*
rpsgroup.com
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:23 Page 42
The Board continued
Peter Dowen
Executive Director
Aged 61. Peter Dowen graduated from
Leeds School of Architecture in 1972 and
qualified as a Chartered Architect in 1973.
After a period in private practice he
became a director of Brian Clouston
and Partners in 1980 before joining RPS
in 1989 when he was appointed to
the Board.
Service Contract
Date of contract
February 1997
42
Emoluments and compensation
Unexpired term at 31 December 2009
12 months
Notice period
12 months
Basic salary
£000s
228
Bonus
£000s
–
Emoluments excluding pensions
Fees
£000s
–
Benefits
£000s
10
2009
£000s
238
2008
£000s
323
Pension (paid and provided)
2008
£000s
34
2009
£000s
34
Share options
1 Jan
2009
Number
32,500
15,051
LTIP award
2006
2007
2008
2009
Total
1 Jan 2009 number
68,478
60,022
44,129
–
172,629
Beneficial interests
Total
Pensions
Exercised
Number
–
–
31 Dec
2009
Number
32,500
15,051
Exercise
price
111.0p
146.5p
Market value
at date
of exercise
N/A
N/A
Date from
which
exercisable
20/3/2008
12/8/2008
Granted number
–
–
–
95,331
95,331
Released
68,478
–
–
–
68,478
31 Dec 2009
–
60,022
44,129
95,331
199,482
Market value
of shares at grant
184p
292.3p
310p
143.5p
–
Expiry date
20/3/2015
12/8/2015
Market value
at date of release
146.59p
–
–
–
–
Number of shares at 31 December 2009 and at 3 March 2010
575,910
Number of shares at 31 December 2008 and at 13 February 2009
575,910
Pension contributons are paid into a Group personal pension.
Committee membership – Board and Committee
Number of Board and Committee meetings attended
* meets at least once a month
Full
Board
8
Audit
Committee
–
Remuneration
Committee
–
Nomination
Committee
–
Executive
Committee
*
Report and Accounts 2009
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 43
Management & Governance
Dr Phil Williams
Executive Director
Aged 56. Phil Williams joined the Group in
September 2003 through the acquisition of
Hydrosearch Associates Limited where he
held the position of Managing Director. Phil
joined Hydrosearch in 1981 and was
appointed Managing Director in 1983. Over
the next 20 years he led Hydrosearch as
the company developed into one of the
world’s largest energy sector consulting
groups. Phil was appointed to the Board
in December 2005.
Service Contract
Date of contract
November 2005
Emoluments and compensation
Unexpired term at 31 December 2009
12 months
Notice period
12 months
Basic salary
£000s
280
Bonus
£000s
–
Emoluments excluding pensions
Fees
£000s
–
Benefits
£000s
13
2009
£000s
293
2008
£000s
429
Pension (paid and provided)
2008
£000s
39
2009
£000s
42
43
LTIP award
2006
2007
2008
2009
Total
1 Jan 2009 number
57,065
60,222
61,935
–
179,222
Share Incentive Plan
Partnership Shares
Matching Shares
Total
Beneficial interests
Total
Pensions
Granted number
–
_
–
156,098
156,098
Released
57,065
–
–
–
57,065
31 Dec 2009
–
60,222
61,935
156,098
278,255
Market value
of shares at grant
184p
292.3p
310p
143.5P
–
Market value
at date of release
146.59p
–
–
–
–
Beneficial Interest at 31 December 2009
1,360
1,360
2,720
Beneficial Interest at 31 December 2008
1,181
1,181
2,362
Number of shares at 31 December 2009 and at 3 March 2010
382,987
Number of shares at 31 December 2008 and at 13 February 2009
350,000
Pension contributons are paid into a Group personal pension.
Committee membership – Board and Committee
Number of Board and Committee meetings attended
* meets at least once a month
Full
Board
8
Audit
Committee
–
Remuneration
Committee
–
Nomination
Committee
–
Executive
Committee
*
rpsgroup.com
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 44
The Board continued
Roger Devlin
Senior Independent Non-Executive
Director
Aged 52. Roger Devlin chairs four private
companies - Principal Hotels (on behalf of
Permira),Traveljigsaw, Gamesys and
Satellite Information Services. He is also a
non-executive director of National
Express Group Plc. Roger read Law at
Oxford and trained in the City with Hill
Samuel, before going on to join the
boards of both Hilton International and
Ladbrokes. He joined the Board on 29
April 2002 and is serving a third three-
year term.
Contract
Date of contract
April 2002
44
Emoluments and compensation
Unexpired term at 31 December 2009
16 months
Notice period
N/A
Basic salary
£000s
–
Bonus
£000s
–
Emoluments excluding pensions
Fees
£000s
35
Benefits
£000s
–
2009
£000s
35
2008
£000s
32
Pension (paid and provided)
2008
£000s
–
2009
£000s
–
Beneficial interests
Number of shares at 31 December 2009 and at 3 March 2010
30,000
Number of shares at 31 December 2008 and at 13 February 2009
30,000
Committee membership – Board and Committee
Number of Board and Committee meetings attended
Full
Board
7
Audit
Committee
3
Remuneration
Committee
5
Nomination
Committee
–
Report and Accounts 2009
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 45
Management & Governance
Karen McPherson
Independent Non-Executive Director
Aged 58. Karen was a Non-Executive
Director of F&C Asset Management Plc
from 1985 to October 2006. Karen has
extensive Human Resources experience
and currently runs her own independent
HR consultancy business, Potential
Unlimited, which she founded in
2000. Prior to this Karen worked for F&C
Management Plc from 1996 to 1998 as
Director and Head of Human Resources.
She previously worked for JP Morgan and
Chemical Bank. Karen was appointed to
the Board in June 2005 and is serving a
second three-year term.
Contract
Date of contract
June 2005
Emoluments and compensation
Unexpired term at 31 December 2009
17 months
Notice period
N/A
45
Basic salary
£000s
–
Bonus
£000s
–
Emoluments excluding pensions
Fees
£000s
40
Benefits
£000s
–
2009
£000s
40
2008
£000s
35
Pension (paid and provided)
2008
£000s
–
2009
£000s
–
Beneficial interests
Committee membership – Board and Committee
Number of Board and Committee meetings attended
* Chairman
Number of shares at 31 December 2009 and at 3 March 2010
–
Number of shares at 31 December 2008 and at 13 February 2009
–
Full
Board
8
Audit
Committee
–
Remuneration
Committee*
5
Nomination
Committee
2
rpsgroup.com
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 46
The Board continued
John Bennett
Independent Non-Executive Director
Aged 62. John was appointed to the
Board on 1 June 2006. He is a Chartered
Accountant with 30 years experience in
the house building industry. He was
Finance Director of Westbury plc, until it
was acquired early in 2006. He has wide
experience of financial management,
capital and debt raising, acquisitions and
investor relations and he played a leading
role in the strategic development of
Westbury into a top ten volume house
builder in the UK.
Contract
Date of contract
June 2006
46
Emoluments and compensation
Unexpired term at 31 December 2009
29 months
Notice period
N/A
Basic salary
£000s
–
Bonus
£000s
–
Emoluments excluding pensions
Fees
£000s
35
Benefits
£000s
–
2009
£000s
35
2008
£000s
32
Pension (paid and provided)
2008
£000s
–
2009
£000s
–
Beneficial interests
Committee membership – Board and Committee
Number of Board and Committee meetings attended
* Chairman
Number of shares at 31 December 2009 and at 3 March 2010
–
Number of shares at 31 December 2008 and at 13 February 2009
–
Full
Board
7
Audit
Committee*
3
Remuneration
Committee
4
Nomination
Committee
–
Report and Accounts 2009
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 47
Management & Governance
Louise Charlton
Independent Non-Executive Director
Aged 49. Louise was appointed to the
Board on 22 May 2008. She is Group
Senior Partner of Brunswick Group LLP,
the international corporate
communications group of which she is a
co-founder. Louise is a Director and
Trustee of the Natural History Museum.
She is serving an initial three-year term.
Contract
Date of contract
May 2008
Emoluments and compensation
Unexpired term at 31 December 2009
17 months
Notice period
N/A
47
Basic salary
£000s
–
Bonus
£000s
–
Emoluments excluding pensions
Fees
£000s
30
Benefits
£000s
–
2009
£000s
30
2008
£000s
20
Pension (paid and provided)
2008
£000s
–
2009
£000s
Beneficial interests
Committee membership – Board and Committee
Number of Board and Committee meetings attended
Number of shares at 31 December 2009 and at 3 March 2010
–
Number of shares at 31 December 2008 and at 13 February 2009
–
Full
Board
8
Audit
Committee
–
Remuneration
Committee
–
Nomination
Committee
2
rpsgroup.com
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 48
Committees
Committee membership
Audit Committee
Executive Committee
John Bennett (Chairman)
Alan Hearne (Chairman)
Roger Devlin
Remuneration Committee
Peter Dowen
Phil Williams
Gary Young
Karen McPherson (Chairman)
Nicholas Rowe (Secretary)
John Bennett
Roger Devlin*
48
Corporate Governance
Alan Hearne (Chairman)
Nomination Committee
Brook Land
Brook Land (Chairman)
Nicholas Rowe (Secretary)
Louise Charlton**
Karen McPherson
The number of Board and Committee meetings attended by each of the Directors during the year was as follows:
Full
Board
Audit
Committee
Remuneration
Committee
Nomination
Committee
Corporate
Governance
Brook Land
Alan Hearne
Gary Young
Peter Dowen
Andrew Troup***
Phil Williams
Roger Devlin
Karen McPherson
John Bennett
Louise Charlton
Number of meetings held
8
8
8
8
7
8
7
8
7
8
8
–
–
–
–
–
–
3
–
3
–
3
* Roger Devlin joined the Remuneration Committeee during the year.
** Louise Charlton joined the Nomination Committee during the year.
*** Andrew Troup resigned during the year.
–
–
–
–
–
–
5
5
4
–
5
2
–
–
–
–
–
–
2
–
2
2
2
2
–
–
–
–
–
–
–
–
2
Report and Accounts 2009
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 49
Corporate Governance
Committee
To ensure the effective management of
the Group’s structure and organisation
during a time when expectations about
the nature and standards of Corporate
Governance have been evolving rapidly,
RPS has established a Corporate
Governance Committee.This comprises
the Chairman, Chief Executive and
Company Secretary; other Directors are
consulted as necessary.The Committee
reviews issues as they arise and is also
responsible for keeping the Board and its
committees appraised about the
implications of changes to the Combined
Code and other developments in the field
of corporate governance.The work of the
Corporate Governance Committee is,
therefore, reflected in the activities of the
Audit, Nomination and Remuneration
Committees as well as the structure,
composition and operation of the Group
Board.This includes the production of the
policies described in the Corporate
Responsibility Report (pages 31 to 34).
The Board should meet regularly to discharge its duties.There should be a formal
schedule of matters specifically reserved for its decision.The annual report should
include a statement of how the Board operates, including a high level statement of
which types of decisions are to be taken by the Board and which are delegated
to management.
The Annual Report should identify the Chairman, Chief Executive, Senior
Director and Chairman and Independent Non-Executive members of Nomination,
Audit and Remuneration Committees. It should also set out the number of meetings
held and individual attendance.
The Chairman should hold meetings with Non-Executive Directors without
the Executives present. Led by the Senior Independent Non-Executive Director,
the Non-Executive Directors should meet without the Chairman present
at least annually to appraise the Chairman’s performance.
Where Directors have concerns which cannot be resolved about the running of
the Company or a proposed action these concerns should be recorded in
the Board minutes. On resignation these concerns should be provided in a written
statement to the Chairman for circulation to the Board.
The Company should arrange appropriate insurance cover in respect of legal
action against Directors.
The roles of the Chairman and Chief Executive should be split. The division of
responsibilities between the Chairman and Chief Executive should be clearly
established, set out in writing and agreed by the Board.
The Chairman on appointment should be independent.
The Board should identify in the annual report each Non-Executive Director it
considers to be independent.
At least half the board, excluding the Chairman, should comprise Non-Executive
Directors determined by the board to be independent.
* Since the resignation of A.Troup in November 2009 the Board has been compliant with this provision.
Management & Governance
Combined Code
In the opinion of the Board, the Chairman
and all the other Non-Executive Directors
are independent from the Group.The
Board is accountable to the Company’s
shareholders for good governance and the
statement set out below describes how
the principles identified in the Combined
Code 2008 already referred to above are
applied by the Company.The Corporate
Governance Committee has reviewed
RPS’ performance against the
recommendations in the Code. In
summary the position is as follows:
Combined
Code
paragraph
Comment
A.1.1
Compliant
Page
36-37
49
A.1.2
Compliant
39-48
A.1.3
Compliant
A.1.4
Compliant
A.1.5
Compliant
A.2.1
Compliant
38
37
37
37
A.2.2
A.3.1
Compliant
Compliant
36
39-48
A.3.2
Compliant * 36
rpsgroup.com
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 50
Corporate Governance continued
50
The Board should appoint one of the Independent Non-Executive Directors to be
the Senior Independent Non-Executive Director.The Senior Independent Director
should be available to shareholders if they have concerns which contact through the
normal channels of Chairman, Chief Executive or Finance Director has failed to resolve
or for which such contact is inappropriate.
There should be a Nomination Committee. A majority of the members should be
independent Non-Executive Directors.The Chairman or independent non-executive director
should chair the committee unless it is dealing with the appointment of a successor to the
Chairmanship. The Nomination Committee should make available its terms of reference.
The Nomination Committee should evaluate the balance of skills, knowledge and
experience on the Board and evaluate the role and capabilities required for a
particular appointment.
On appointment of a Chairman, the Nomination Committee should prepare a job
specification. A Chairman’s other significant commitments should be disclosed to the
Board before appointment and included in the Annual Report.
The terms and conditions of appointment of Non-Executive Directors should be made
available for inspection by any person at the Company’s registered office and at
the AGM.
The annual report should describe the work of the Nomination Committee, including
processes it has used in relation to Board appointments.
New Directors should receive a full, formal and tailored induction on joining the Board.
Shareholders should be offered the opportunity to meet the new Non-Executive.
All Directors should have access to independent professional advice.
Committees should be provided with sufficient resources to undertake their duties.
All Directors should have access to the advice and services of the Company
Secretary, who is responsible to the Board for ensuring that Board procedures are
complied with.
The Board should state in the Annual Report how it evaluates the performance of the Board,
its committees and its individual Directors.The Non-Executive Directors led by the Senior
Independent Director should be responsible for performance evaluation of the Chairman.
All Directors should be subject to election by shareholders at the first Annual General
Meeting after their appointment, and to re-election thereafter at intervals of no more
than three years. The names of Directors submitted for election or re-election should
be accompanied by sufficient biographical details and any other relevant information.
The Non-Executive Directors should be appointed for specified terms subject to
re-election. Any term beyond six years for a Non-Executive should be subject to
particularly rigorous review, and take into account the need for progressive refreshing
of the Board.
Performance-related elements of remuneration should form a significant
proportion of the total remuneration package of the Executive Directors.
Share options should not be offered at a discount.
Remuneration for Non-Executive Directors should reflect the time commitment and
responsibilities of the role and should not include share options.
The Remuneration Committee should consider what compensation commitments
the Directors’ terms of appointment would entail in the event of early termination.
Notice or contract periods of Executive Directors should be one year or less.
A Remuneration Committee should be established with at least three Independent
Non-Executives.
Combined
Code
paragraph
Comment
A.3.3
Compliant
Page
37-38
A.4.1
Compliant
59-60
A.4.2
Compliant
59-60
A.4.3
Compliant
59-60
A.4.4
Compliant
56
A.4.6
Compliant
59-60
A.5.1
Compliant
A.5.2
Compliant
A.5.3
Compliant
37
37
37
A.6.1
Compliant
37-38
A.7.1
Compliant
Notice
of
Meeting
A.7.2
Compliant
B.1.1
Compliant
B.1.2
B.1.3
Compliant
Compliant
B.1.5
Compliant
37
52
55
56
56
56
B.1.6
B.2.1
Compliant
Compliant * 52
The Remuneration Committee should make available its terms of reference.
B.2.1
Compliant
53
* Following the appointment of an additional Non-Executive Director in January 2009 the Committee has been compliant with this provision.
Report and Accounts 2009
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 51
The Remuneration Committee should set remuneration for all executives.
The Remuneration Committee should recommend and monitor the
level and structure of remuneration for senior management.
The Board should determine the remuneration of the Non-Executive Directors.
Shareholders should be invited specifically to approve all new long-term incentive
schemes (as defined in the Listing Rules) and significant changes to existing schemes.
The Directors should explain in the annual report their responsibility for preparing accounts
and there should be a statement by the auditors about their reporting responsibilities.
The Directors should report that the business is a going concern.
The Board should conduct at least annually, a review of the effectiveness of the Group’s
system of internal controls and should report to shareholders that they have done so.
The Board should establish an Audit Committee with at least three members
who should all be Independent Non-Executive Directors. At least one member of the
Audit Committee should have recent and relevant financial experience.
The role and responsibility of the Audit Committee should be set out in written terms
of reference.This should be disclosed in the annual report.
The Audit Committee should review arrangements by which staff of the Company
may, in confidence, raise concerns about possible improprieties in matters of financial
reporting or other matters.
The Audit Committee should consider annually whether there is a need for an
internal audit function and make a recommendation to the Board.
The Audit Committee should have primary responsibility for making a recommendation
on the appointment, reappointment or removal of the external auditors.
If the Board does not accept the Audit Committee’s recommendation it should
include in its annual report a statement explaining why the Board take a
different position.
The annual report should explain to shareholders how independence is
safeguarded if the auditor provides non audit services.
The Chairman should ensure that the views of the shareholders are disclosed to the
Board as a whole.The Chairman is available to discuss governance and strategy with the
shareholders.The Senior Independent Director should attend sufficient meetings
with a range of major shareholders in order to develop a balanced understanding of the
issues and concerns of the shareholders.
The Board should state in their Annual Report the steps they have taken to ensure Board
members develop an understanding of the views of major shareholders about
their Company.
The Company should propose a separate resolution at the AGM on each substantially
separate issue and should in particular propose a resolution at the AGM relating
to the report and accounts.
The Company should count all proxy votes and indicate the level of proxies
lodged on each resolution, and the balance for and against the resolution
and the number of abstentions. The Company should ensure that votes cast are
properly received and recorded.
Chairmen of the Audit, Remuneration and Nomination Committees should attend the
AGM in order to be available to answer questions.
Management & Governance
Combined
Code
paragraph
Comment
B.2.2
Compliant
B.2.3
B.2.4
Compliant
Compliant
Page
52-56
56
55
C.1.1
Compliant
65-67
C.1.2
C.2.1
Compliant
65
Compliant
52 & 59
C.3.1
Non-Compliant
***
51
C.3.2/3.3
Compliant
58-59
C.3.4
Compliant
C.3.5
Compliant
C.3.6
Compliant
C3.6
Compliant
C.3.7
Compliant
D.1.1
Compliant
58
59
59
n/a
59
34
D.1.2
Compliant
34
D.2.1
Compliant
D.2.2
Compliant
Notice
of
Meeting
D.2.3
Compliant
34
The Company should arrange for the Notice of AGM and related papers to be sent to
shareholders at least 20 working days before the meeting.
D.2.4
Compliant
Notice of
Meeting
*** The Board has been satisfied that the two current members of the Audit Committee have sufficient expertise to ensure that the affairs of that Committee are
conducted in a professional and effective manner. Notwithstanding this a process is in train to recruit a new Non-Executive Director who will serve as an additional
member of this Committee.
rpsgroup.com
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 52
52
Corporate Governance continued
Communication
The Company attaches great importance
to communication with its shareholders
and other stakeholders.The full report
and accounts is made available to all
shareholders and to other parties who
have an interest in the Group’s
performance on the Group’s website.
In addition the Company’s website
provides up-to-date information about
its organisation, the services it offers
and newsworthy subjects.The Company
also responds to numerous letters
and enquiries from shareholders and
others with an interest in the Group.
There is regular dialogue with individual
institutional shareholders as well as
presentations after the interim and annual
results and at other events. All
shareholders have the opportunity to
ask questions at the Company’s Annual
General Meeting.
Audit and internal controls
The respective responsibilities of the
Directors and the independent auditors
in connection with the accounts are
explained on pages 65-67 and the
statement of the Directors in respect
of going concern appears on page 65.
The Board has procedures in place
as recommended in the guidance in
“The Combined Code on Corporate
Governance” and “Turnbull: Guidance on
Internal Controls”.These have been in
place for the whole year and up to the
date of approval of the financial statements.
The risk management policies are
described on pages 25-29.
The Board is responsible for the Group’s
system of internal control which is
designed to provide reasonable but not
absolute assurance against material
misstatement or loss.The Board reviews
from time to time the effectiveness of the
system of internal control from
information provided by management and
the Group’s external auditors. The key
procedures that the Directors have
established to provide effective internal
financial controls are as follows:
Report and Accounts 2009
Financial reporting: A detailed formal
budgeting process for all Group
businesses culminates in an annual Group
budget which is approved by the Board.
The results for the Group are reported
monthly against this budget to the Board.
Financial and accounting principles and
internal financial controls assurance:
Compliance with these is reviewed as
requested. A detailed financial and
accounting controls manual sets out the
principles of and minimum standards
required by the Board for effective
financial control.
Capital investment:The Company has
clearly defined guidelines for capital
expenditure.These include annual budgets,
detailed appraisal and review procedures,
levels of authority and due diligence
requirements where businesses are
being acquired.
Remuneration Report
The Directors who were members of
the Remuneration Committee throughout
the year were: Karen McPherson and
John Bennett. Roger Devlin joined the
Committee during the year.
The Chairman and Chief Executive have
assisted the Remuneration Committee in
their deliberations on other Directors’
remuneration.The Company Secretary is in
attendance at the meeting to provide the
committee with any additional advice that
is required.
The Remuneration Committee indicated
in its 2008 Report that it was reviewing
the operation of the Company’s executive
annual bonus arrangements and long-term
incentives upon the expiry of the
shareholder approval for the RPS Group
Plc Long-Term Incentive Plan (the “LTIP”)
in the context of its whole remuneration
policy in line with best practice.
The Remuneration Committee started
the consultation process with the
Company’s major shareholders in
November 2009 on new proposals. It is
intended that the consultation will be
completed in the first quarter of 2010.
1
1
2
1
2
1
1
2
2
Alan Hearne
1 Fixed
34.4%
2 Variable 65.6%
2
Peter Dowen
42.7%
1 Fixed
2 Variable 57.3%
Andrew Troup
1 Fixed
42.9%
2 Variable 57.1%
Gary Young
1 Fixed
39.6%
2 Variable 60.4%
Phil Williams
1 Fixed
39.5%
2 Variable 60.5%
Analysis of fixed versus performance
related pay for Executive Directors 2009
Notes:
Fixed compensation comprises:
Basic salary
Benefits
Variable compensation comprises:
Maximum Bonus Potential
Face Value of LTIP Awards
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 53
Remuneration Committee -
Terms of Reference
■ the Committee has been delegated
responsibility by the Board to
determine and agree with the Board
the framework or broad policy for
the remuneration of the Executive
Directors and Senior Employees of
the Company; the remuneration of
Non-Executive Directors is a matter
for the executive members of the
Board who take advice from the
independent consultants. No Director
or manager is involved in any
decisions as to their own
remuneration;
■ within the terms of the agreed
policy, determine the total individual
remuneration package of each
Executive Director including, where
appropriate, bonuses, benefits, and
long-term incentive allocations;
■ the quorum necessary for the
transaction of business is two
members. A duly convened meeting
of the Committee at which a quorum
is present shall be competent to
exercise all or any of the authorities,
powers and discretions vested in or
exercisable by the Committee;
■ determine the policy for and scope of
pension arrangements for each
Executive Director;
■ determine targets for any
performance-related pay and share
schemes operated by the Company;
■ in determining such packages and
arrangements, give due regard to the
comments and recommendations of
the Combined Code as well as the
Listing Rules of the Financial Services
Authority and associated guidance;
■ ensure that contractual terms on
termination, and any payments made,
are fair to the individual and the
Company, that failure is not rewarded
and that the duty to mitigate loss is
fully recognised, in line with the
statement of best practice in the
ABI Guidelines;
■ ensure that provisions regarding
disclosure of remuneration, including
pensions, as set out in the Directors’
Remuneration Report Regulations
2002 and the Code, are fulfilled;
■ be aware of and advise on any
major changes in employee benefit
structures throughout the Company
or Group;
■ be exclusively responsible for
establishing the selection criteria,
selecting, appointing and setting
the terms of reference for any
remuneration consultants who
advise the Committee;
■ meet as required during the year; and
■ report the frequency of, and
attendance by members at,
Remuneration Committee meetings in
the annual report (see page 48).
Remuneration policy
The Remuneration Committee’s policy for
2009 was to set the main elements of the
remuneration package in order to reflect:
■ the performance of the individual
concerned;
■ the performance of the business
unit(s) for which he/she is responsible;
■ in the case of Group directors, the
performance of the Group as a
whole; and
■ the relevant market(s) for executives
and the terms and conditions
prevailing in those markets.
The Committee recognises that the main
competitors of the Group and, therefore,
comparators for remuneration are found
outside the group of companies that are
listed. In consequence, the Committee
needs to reflect that in its deliberations
including RPS’ market leading position in a
number of those markets.
The Committee is, in addition, mindful of
trends and best practice amongst listed
companies of a similar size in the Support
Services sector.
The policy is designed to attract, retain and
motivate individuals by providing the
53
Management & Governance
opportunity to earn competitive levels of
compensation provided performance
is delivered, whilst remaining within the
range of compensation offered by
similar companies.
Directors’ remuneration is the subject of
annual review in accordance with this
policy. Additionally, it focuses on the
contribution to the continued long term
growth and success of the Company and
seeks to align their interests with those of
the Company, employees and shareholders.
The charts on page 52 demonstrate the
proportion of the maximum potential
compensation which is performance
related for each Executive Director.
The Remuneration Committee appointed
and received wholly independent advice
on executive compensation from
PricewaterhouseCoopers (‘PwC’).
Base salary
When determining the salary of the
Executive Directors the Remuneration
Committee takes into consideration:
■ the performance of the Group as
a whole;
■ the performance of the individual
Executive Director both for the
Group and the businesses under
his control;
■ pay and conditions throughout the
Company; and
■ the market conditions in the sector
the Group operates in.
The results of this exercise are then
benchmarked against an independently
established group of listed companies.
This group is identified independently
by PwC.
The basis of selection of the group is:
■ companies within the same sector as
the Company; and
■ companies with a range of market
capitalisations such that the Company
sits within the middle of the
comparator group.This group is
reviewed on an annual basis.
rpsgroup.com
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 54
Corporate Governance continued
The companies comprising the comparator
group used in the last review were
as follows:
54
Aggreko Plc
Alfred McAlpine Plc
Amec Plc
Ashtead Group Plc
Atkins WS PLC
Babock International Group
BPP Holdings PLC
BSS Group PLC
Bunzl PLC
Connaught Plc
Davis Service Group PLC
De La Rue Plc
Diploma Plc
Electrocomponents Plc
Filtrona PLC
Galiform Plc
Hays PLC
Homeserve PLC
Interserve PLC
Intertek Group PLC
John Menzies Plc
Lavendon Group Plc
Michael Page International Plc
Mitie Group
Mouchel Group PLC
PayPoint PLC
Premier Farnell PLC
Regus PLC
Scott Wilson Group Plc
Serco Group Plc
Shanks Group Plc
SIG PLC
Speedy Hire PLC
SThree PLC
Travis Perkins PLC
White Young Green PLC
WSP Group PLC
The Remuneration Committee accepted
a recommendation from the Executive
Directors that base salaries of the latter
would not be increased as at 1 January
2009.
Performance bonus
The tables set out:
The earnings per share growth targets that applied in 2009 are set out below:
% Earnings per Share
Growth Inclusive of RPI
% Bonus Payable
for EPS Element
% Earnings per Share
Growth Inclusive of RPI
% Bonus Payable
for EPS Element
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
14.00
23.10
28.70
34.30
39.90
45.50
47.95
50.40
52.85
55.30
57.75
60.20
62.65
65.10
67.55
20
21
22
23
24
25
26
27
28
29
30
31
32
32.2
70.00
72.45
74.90
77.35
79.80
82.25
84.70
87.15
89.60
92.05
94.50
96.95
99.40
100.00
EPS figures are based upon the
Company’s adjusted figures under IAS 33.
The EPS performance targets were not
satisfied in 2009 and therefore no
bonuses were payable in respect of this
element of the annual bonus.
The table below shows the maximum bonus potential that applied for Executive
Directors in 2009:
% Maximum Bonus Potential
% of Maximum Bonus subject to each Target 2008
Executive
Chief Executive
Finance Director
Executive Directors
2009
100
80
80
EPS Target
2009
100
50
50
Divisional & Individual Targets
2009
–
50
50
No bonuses were earned under the
Divisional and Individual target elements
of the 2009 bonus.Therefore no bonuses
were payable to Executive Directors in
respect of 2009 under any elements of
the bonus plan.
As stated earlier in the Report the
Company is in active dialogue with its
major shareholders about new incentive
arrangements for 2010.
Long-term Incentives
The following table and paragraphs summarise the operation of the Company’s LTIP:
Executive
2006 Grant
% of Salary/
Condition
2007 Grant
% of Salary/
Condition
2008 Grant
% of Salary/
Condition
2009 Grant
% of Salary/
Condition
Maximum Annual Grant
Chief Executive
Finance Director
Executive Directors
Performance Condition EPS Growth
100
80
60
60
(see table below)
100
100
80
80
EPS Growth
(see table below)
100
100
80
60-80
EPS Growth
(see table below)
100
100
80
60-80
EPS Growth
(see table below)
Release Date
31 March 2012
■ maximum Bonus Potential for
Executive Directors for 2009.
■ bonus targets which applied for 2009.
Status
Released in full Based on current Release Date
on 30 March
performance it is 8 April 2011
2009 as the EPS anticipated that
the grant will be
performance
released in full on
condition was
satisfied (see
14 March 2010
table below)
Report and Accounts 2009
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 55
100% of the shares subject to the third
grant were released on 30 March 2009.
The following shares were awarded at the
grant price of £1.84:
Full details of the Directors LTIP awards
are set out on page 64.The LTIP was
approved by shareholders in 2004 for a
period of five years.
Name
Number of ordinary shares
Alan Hearne
Gary Young
Andrew Troup
Peter Dowen
Phil Williams
145,652
55,434
60,326
68,478
57,065
The market price of the shares on release
was £1.4659.
The performance conditions attached to
the release of LTIP shares related to EPS
growth is as follows:
% Average Basic EPS
Growth p.a. above RPI
% of LTIP
Award Released*
3
4
5
6
7
8
9
10
12.5
25
37.5
50
62.5
75
87.5
100
* There will be straight line release
between these points.
The Remuneration Committee will
determine the satisfaction of the
performance conditions in respect of both
the LTIP and historic options.The EPS
figure used by the Company will be the
audited basic EPS figure disclosed in the
Company’s Financial Statements.
The performance condition comparing
increases in earnings per share against
inflation was chosen in order to ensure
that LTIP awards and options would only
be received against a background of a
sustained real increase in the financial
performance of the Company.
The grant of awards for 2009 is set out in
the following table:
Name
Alan Hearne
Gary Young
Andrew Troup
Peter Dowen
Phil Williams
Shares
Granted
Market value
of shares
275,261
111,498
83,624
95,331
156,098
143.5p
143.5p
143.5p
143.5p
143.5p
For 2003 and earlier years long-term
incentives consisted of annual grants of
options.The Remuneration Committee
set out the level of the option grant to
the Executive Directors of the Company
at the median level.
The maximum annual grant under the
Executive Share Option Scheme was 75%
of salary. Options were not issued at a
discount.The Performance Conditions
attached to the Share Options granted to
the Directors under the Executive Share
Option Schemes are that:
■ Ordinary Options may only be
exercised if, over any three year
measurement period of the Company,
beginning no earlier than the financial
year during which the option is
granted, the percentage growth in
earnings per share exceeds the
growth in the Retail Prices Index over
the same period by at least 3% per
annum, being 9% for the three year
period; and
■ Super Options may only be exercised
if, over any five year measurement
period of the Company, beginning no
earlier than the financial year during
which the option is granted, the
percentage growth in earnings per
share exceeds the growth in the Retail
Price Index over the same period by
at least 6% per annum, being 30% for
the five year period. It is also
necessary for the share price to rise
over both the three and five year
periods to make the exercise
worthwhile.
Options are not able to be exercised if
performance is below target, and there is
no reward for below target performance.
The performance conditions are
measured at the end of the three and five
year holding periods applying to the
relevant grants of Options.There is no
re-testing of the performance conditions.
The Directors are required to refund to
the Company all National Insurance
contributions payable at exercise.
55
Management & Governance
The Directors’ individual share options
are detailed in the Directors’ report on
page 63.
Benefits
The Executive Directors participate in
a Company money purchase (defined
contribution) scheme for which the
Employer Contribution is 15%.
Executive Directors can also participate
in the all-employee Inland Revenue Share
Incentive Plan (SIP).The SIP gives
employees the opportunity to purchase
up to £1,500 of shares a year with the
Company providing one additional
matching share for every employee
purchased share.Total participation
in the SIP scheme across the Group is
35% of eligible employees.
The Executive Directors also receive the
following additional benefits:
■ healthcare;
■ life assurance and dependants’
pensions;
■ disability schemes; and
■ company car or car allowance.
Shareholding guideline
Shareholdings across the Executive
Directors and Senior Executives are not
uniform.Therefore, three years ago the
Remuneration Committee introduced
shareholding guidelines to encourage long-
term share ownership by the Executives.
The guidelines encourage Executive
Directors to build up and retain a holding
of shares.The Remuneration Committee
believes this forms a stable incentive pay
platform on which to build a responsible
relationship between shareholders, the
Executives and the Company.
It is intended that the Executives
will be able to build up the necessary
shareholding by their participation in
the Company’s long term incentive plans. If
the shareholding requirement is not
proportionately satisfied the Remuneration
Committee may take this into account
when determining the levels of future
awards under the LTIP.
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Corporate Governance continued
Recommended shareholding
requirement as percentage of salary
Details of the Directors’ service contracts
are included in the table below.
The fees paid to the Chairman and each
Non-Executive Director are detailed on
page 39 and pages 44-47.
Details of the terms of appointment of
the serving Non-Executive Directors are
set out in the table below:
Name
Unexpired term
of contract as
at 31 Dec
Initial Contract date 2009 (months)
Brook Land
September 1997
Roger Devlin
Karen McPherson
John Bennett
Louise Charlton
April 2002
June 2005
June 2006
May 2008
Annual
Review
16
17
29
17
Non-Executive Directors are not entitled
to participate in the pension plan or the
performance based pay schemes including
annual bonus and share schemes.Terms
and conditions of appointment of Non-
Executive Directors are available for
inspection by any person at the Company’s
registered office and at the AGM.
The table below confirms that the only
event on the occurrence of which the
Company is liable to make a payment to
Executive Directors is on cessation of
employment.
Potential
payment in event
of Company
takeover
or liquidation
Potential
termination payment
Name
Alan Hearne
12 months’ notice
Peter Dowen
12 months’ notice
Andrew Troup 12 months’ notice
Gary Young
12 months’ notice
Phil Williams
12 months’ notice
Nil
Nil
Nil
Nil
Nil
All Directors are required to seek re-
election at least once in every three years.
Non-Executive Directors
The fees paid to the Non-Executive
Directors are determined by the Board
and aim to be competitive with other fully
listed companies of equivalent size and
complexity.The Chairman of the Company
receives a higher fee than the other Non-
Executive Directors and Committee
Chairmen and the Senior Independent
Director receive an additional payment.
Total shareholder return from 1st January 2005
260
240
220
200
180
160
140
120
100
80
2005
2006
2007
2008
2009
RPS Group - Tot Return Ind
FTSE All Share - Tot Return Ind
FTSE All Share Support SVS £ - Tot Return Ind
Name
Alan Hearne
Gary Young
Peter Dowen
Phil Williams
150%
100%
100%
100%
56
Service contracts
The Company’s policy on the duration of
service contracts is that:
■ Executive Directors should have
rolling service contracts terminable on
no more than one year’s notice
served by the Company or the
Director; and
■ Non-Executive Directors are
appointed for fixed terms of three
years, renewable on agreement of
both the Company and the Director.
The policy on termination payments
is that the Company does not make
payments beyond its contractual
obligations, including any payment in
respect of notice to which a Director is
entitled after mitigation is considered.
None of the Directors’ contracts provide
for automatic payments in excess of one
year. None of the Directors’ contracts
provide for liquidated damages.
Performance Graph
The graph shows a comparison of
the total shareholder return from the
Company’s shares for each of the last
five financial years against the total
shareholder return for the companies
comprising the FTSE All Share, the FTSE
All Share Support Services sector and
the comparator group.The Remuneration
Committee has selected these
benchmarks as they provide a good
indication of the Company’s general
performance.
Report and Accounts 2009
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 57
Emoluments excluding
pensions
Pension
(paid and provided)
Bonus
£000s
Fees
£000s
Benefits
£000s
2009
£000s
2008
£000s
2009
£000s
2008
£000s
–
–
–
–
–
–
–
–
–
–
–
795
–
–
–
–
–
95
35
40
35
30
235
206
19
10
9
10
13
–
–
–
–
–
61
61
414
210
178
238
293
95
35
40
35
30
1,568
–
739
342
309
323
429
87
32
35
32
20
–
2,348
–
30
27
34
42
–
–
–
–
–
133
–
–
30
30
34
39
–
–
–
–
–
–
133
Basic
salary
£000s
395
200
169
228
280
–
–
–
–
–
1,272
1,283
Executive:
Alan Hearne
Gary Young
Andrew Troup*
Peter Dowen
Phil Williams
Non-Executive:
Brook Land
Roger Devlin
Karen McPherson
John Bennett
Louise Charlton
Total 2009
Total 2008
The total Directors’ emoluments were £1,568,000 (2008: £2,348,000) excluding pension contributions.
*Remuneration for Mr Troup in 2009 is that covered up to his resignation from the Board on
5 November 2009. Following the resignation of Mr Troup as a director and the cessation of his
employment on 20 November 2009 it was agreed that the Company would, subject to an appropriate
provision for mitigation, continue to pay him an amount which represents his net salary for the period
which would otherwise have been his notice period being 12 months.
Directors’ emoluments
and compensation
The following disclosures on Directors’
remuneration and share incentives have
been audited as required by Part 3 of
Schedule 8 of the Large and Medium-
sized Companies and Groups (Accounts
and Reports) Regulations 2008.The table
above sets out details of the emoluments
and compensation received during the
year by each Director.
Share awards
The tables on pages 63 and 64 set out
details of the audited share options and
LTIPs held by each Director during the
year. A description of the terms and
conditions of the scheme is on on pages
54-55.
The Company operates its share schemes
within the dilution limits specified by the
ABI.
Pensions
The Executive Directors of the Company
earned pensions benefits in a company
money purchase (defined contribution)
scheme apart from Phil Williams whose
pension benefits are in a Group Personal
Pension plan (defined contribution) during
the year.
An Ordinary Resolution to approve this
report will be proposed at the Company’s
Annual General Meeting on 4 May 2010.
This report was approved by
the Board on 3 March 2010.
Signed on behalf of the Board
Karen McPherson
Chairman of the Remuneration
Committee 3 March 2010
Management & Governance
57
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58
Corporate Governance continued
Audit Committee
The Audit Committee has written terms
of reference set out below.These are also
available on the Group website. It reviews
the draft financial statements prior to
submission to the Board and monitors
and makes recommendations to the
Board regarding the Group’s accounting
policies and considers significant matters
relating to internal control procedures.
The Audit Committee keeps the scope
and cost effectiveness of the external
audit under review. The Committee takes
seriously its responsibility to put in place
safeguards to ensure auditor objectivity
and independence. It has therefore
adopted a policy to determine the
circumstances in which Auditors may be
permitted to undertake non-audit work
for the Group. Under the terms of this
policy the provision of certain services are
prohibited and include those listed below:
■ bookkeeping services
■ preparation of financial statements
■ design and implementation of
financial systems
■ valuation services
■ investment advisory, broker and
dealing services
■ general management services
Certain other services are approved up to
agreed financial limits with the provision of
such services beyond those limits
requiring approval of the Committee.The
following fall within this category:
■ taxation services
■ transaction support including due
diligence
■ advice relating to risk management
and controls
■ accountancy advice and training
The provision of any service at any level
that does not fall within the above
categories requires the approval of the
Committee.
The split between audit and non-audit
fees for the year under review appears on
page 82.
Report and Accounts 2009
The Company has in place formal
whistleblowing procedures which allow
staff of the Company to, in confidence,
raise concerns about possible
improprieties in matters of financial
reporting and other issues.These
procedures are reviewed by the Audit
Committee and are as follows:
■ any employee wishing to raise a
concern regarding internal controls,
accounting or audit matters may do
so with the Senior Non-Executive
Director, Roger Devlin, or the
Company Secretary, Nicholas Rowe;
■ any concerns raised will be treated in
confidence, and will be investigated
and any action proposed reported to
the Audit Committee; and
■ the person raising the concern need
not disclose their identity. If their
identity is disclosed this will not be
passed on by the person receiving the
complaint without the individual’s
consent.
Audit Committee -
Terms of Reference
Committee composition, capabilities
and meetings
The Committee shall comprise two
Independent Non-Executive Directors
(with a quorum of two), appointed by the
Board, all of whom possess an adequate
understanding of the financial management
and reporting requirements of publicly
quoted companies.
The Board will appoint a suitably qualified
Director other than the Chairman to chair
the Committee.The Company Secretary is
secretary to the Committee.
The Committee shall meet at least twice
per annum and may invite to attend: the
Chief Executive and the Finance Director,
representatives of the external auditors
and anyone else who may assist the
Committee from time to time.
Current membership: John Bennett
(Chairman) and Roger Devlin.The
Company Secretary attends all meetings.
Relationship between the Committee and
the Board
The RPS Group Plc Board:
■ reviews and agrees terms of reference
put forward by the Audit Committee;
■ considers changes to the terms of
reference when recommended by
the Committee;
■ receives prompt summary reports
after each meeting of the Committee;
■ is advised of matters for its attention
at other times as deemed necessary
by the Committee;
■ will refer matters to the Committee
for its attention as necessary;
■ reviews annually the Committee’s
policies, practices and performance;
and
■ ensures that funds are available to the
Committee for external advice when
needed, which shall be obtained via an
Executive Director.
Committee authority
The Committee shall have the authority to
consider any matters relating to the
financial affairs of the Group.
The Committee shall have the authority
to request relevant information from any
employee and employees shall be
expected to respond accordingly.
The Committee may take external
professional advice with respect to its
responsibilities and duties.
The Committee shall have no executive
responsibilities with respect to
implementation of its recommendations.
Committee responsibilities and duties
Financial matters
The Committee shall review accounting
policies and practices used by the Group,
as well as information to be published to
the London Stock Exchange prior to its
submission to the Board.
The Committee shall ensure that the
information presented by the Group
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 59
Management & Governance
59
supports a balanced, clear and
understandable view of its financial
position and prospects.
External audit
The Committee shall make
recommendations to the Board
with respect to the appointment
of external auditors and will take
steps necessary to satisfy itself about the
continuing independence of relevant firms.
The Committee shall review the level of
external audit fees.
Board structure, size and composition,
nominating candidates to the Board when
vacancies arise and recommending
Directors who are retiring by rotation to
be put forward for re-election. Although
no directors were recruited during the
year where there is such recruitment this
is undertaken through a formal, rigorous
and transparent process.
The Nomination Committee’s written
terms of reference are set out below:
Membership
The Committee shall review the scope of,
approach to and findings from external
audit work.
The Committee shall be appointed by the
Board and shall comprise of a Chairman
and at least two other members.
The Committee shall discuss with the
external auditors any proposed changes in
accounting policies.
A majority of members of the Committee
shall be Independent Non-Executive
Directors.
The Committee Chairman will liaise
directly with the external auditors in order
to ensure a full understanding of any
issues that arise from their work and will
report to the Committee accordingly.
Risk management
Internal controls
The Committee shall review the means by
which sound systems of internal control
are maintained across the Group and shall
review reports on the effectiveness of
those systems.
Internal audit
The Committee shall review at least
annually the internal audit function
and will make appropriate
recommendations to the Board.
Other risk management systems
The Committee shall consider the
adequacy of other systems which help to
manage the Group’s exposures to damage
or loss.
Nomination Committee -
Terms of Reference
The Committee meets as required, but not
less than once a year, and comprises three
Independent Non-Executive Directors.The
Company Secretary attends all meetings.
Its responsibilities include reviewing the
The Board shall appoint the Committee
Chairman. In the absence of the
Committee Chairman and/or an
appointed deputy, the remaining members
present shall elect one of their number to
chair the meeting.
If a regular member is unable to act due
to absence, illness or any other cause, the
Chairman of the Committee may appoint
another Director of the Company to
serve as an alternate member having due
regard to maintaining the required balance
of Executive and Independent Non-
Executive members.
Care should be taken to minimise the risk
of any conflict of interest that might be
seen to give rise to an unacceptable
influence. Current membership: Brook
Land (Chairman), Louise Charlton and
Karen McPherson.
Secretary
The Company Secretary shall act as the
Secretary of the Committee and attend
all meetings.
Quorum
The quorum necessary for the transaction
of business is two. A duly convened
meeting of the Committee at which a
quorum is present shall be competent to
exercise all or any of the authorities,
powers and discretions vested in or
exercisable by the Committee.
Frequency of meetings
The Committee shall meet not less than
once a year and at such other times as
the Board or any member of the
Committee shall require.
Notice of meetings
Meetings of the Committee shall be
summoned by the Secretary of the
Committee at the request of the
Chairman of the Committee.
Unless otherwise agreed, notice of each
meeting confirming the venue, time and
date together with an agenda of items to
be discussed, shall be forwarded to each
member of the Committee no fewer than
five working days prior to the date of the
meeting. As far as practical meetings shall
be held before or after meetings of the
Main Board.
Minutes of meetings
The Secretary shall minute the
proceedings and resolutions of all
Committee meetings, including the names
of those present and in attendance.
Minutes of Committee meetings shall be
circulated to all members of the
Committee and to the Chairman of the
Board and made available on request to
other members of the Board.
Annual General Meeting
The Chairman of the Committee shall
attend the Annual General Meeting
prepared to respond to any shareholder
questions on the Committee’s activities.
The terms and conditions of appointment
of Non-Executive Directors should be
made available for inspection by any
person at the Company’s registered office
and at the AGM.
Duties
The Committee shall:
■ regularly review the structure, size and
composition of the Board and make
recommendations to the Board with
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Corporate Governance continued
regard to any adjustments that are
deemed necessary;
“retirement by rotation” provisions in
the Company’s articles of association;
■ prepare a description of the role and
capabilities required for a particular
appointment;
■ concerning any matters relating to the
continuation in office as a Director of
any Director at any time; and
■ be responsible for identifying and
■ concerning the appointment of any
Director to Executive or other office
other than to the positions of
Chairman and Chief Executive, the
recommendation for which would be
considered at a meeting of:
■ all the Non-Executive Directors
regarding the position of Chief
Executive;
■ all the Directors regarding the
position of Chairman; and
■ detailing items that should be
published in the Company’s
Annual Report relating to the
activities of the Committee.
Authority
The Committee is authorised to seek any
information it requires from any employee
of the Company in order to perform
its duties.
The Committee is authorised to obtain, at
the Company’s expense, outside legal or
other professional advice on any matters
within its terms of reference.
Takeover Directive
Disclosures required under the Takeover
Directive are included on page 66 and
form part of the Group’s Corporate
Governance report.
60
nominating for the approval of the
Board candidates to fill Board
vacancies as and when they arise;
■ satisfy itself with regard to succession
planning, that the processes and plans
are in place with regard to the Board
and senior appointments;
■ assess and articulate the time needed
to fulfil the role of Chairman, Senior
Independent Director and Non-
Executive Director, and undertake
an annual performance evaluation
to ensure that all members of the
Board have devoted sufficient time
to their duties;
■ ensure on appointment that a
candidate has sufficient time to
undertake the role and review his
commitments; and
■ ensure that the Secretary on behalf of
the Board has formally written to any
appointees, detailing the role and time
commitments and proposing an
induction plan produced in conjunction
with the Chairman.
It shall also make recommendations to
the Board:
■ with regard to the Chairman having
assessed every three years whether
the present incumbent shall continue
in post, taking into account the needs
of continuity versus freshness of
approach;
■ as regards the reappointment of any
Non-Executive Director at the
conclusion of his or her specified term
of office; especially when they have
concluded their second term;
■ for the continuation (or not) in service
of any Director who has reached the
age of 70;
■ concerning the re-election by
shareholders of any Director under the
Report and Accounts 2009
Report and Accounts 2009
Accounts
Accounts
61
Accounts
Report of the Directors
Report of the Independent Auditors
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Cash Flow Statement
Consolidated Statement of Changes in Equity
Notes to the Consolidated Financial Statements
Parent Company Balance Sheet
Notes to the Parent Company Financial Statements
Five Year Summary
61
62
67
68
68
69
70
71
72
108
109
116
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Report of the Directors
The Directors present their report together
with the audited financial statements for the
year ended 31 December 2009.
Results and dividend
The income statement is set out on page
68 and shows the profit for the year. The
Directors recommend a final dividend of
2.19p (2008: 1.91p) per share.
This together with the interim dividend
of 2.01p (2008: 1.75p) per share paid on
22 October 2009 gives a total dividend
of 4.20p (2008: 3.66p) per share for the
year ended 31 December 2009.
Principal activities and
business review
Business review information can be found
within the Business Review (pages 9 to 32)
which reports on RPS Group’s principal
activities and performance during the past
year and prospects for the future. Financial
key performance indicators can be found on
page 8. The Board does not use non-
financial key performance indicators to assess
the Group as a whole, but component parts
of the Group do use non-financial key
performance indicators from time to time.
The principal operating subsidiary
undertakings are listed in Note 5 to the
Parent Company Financial Statements.
The Business Review contains certain
forward looking statements with respect to
the financial condition, results of operations
and businesses of RPS. These statements
involve risk and uncertainty because they
relate to events and depend upon
circumstances that may occur in the future.
There are a number of factors that could
cause actual results or developments to
differ materially from those expressed or
implied by these forward looking
statements.The current uncertainty in
global economic outlook inevitably
increases the risks to which the Group is
exposed. Nothing in the Business Review
should be construed as a profit forecast.
Principal risks and uncertainties
The principal risks and uncertainties
are reported on page 25 in the Risk
Management section of the Operating
and Financial Review.
Corporate Governance
The Directors report on corporate
governance can be found on pages 49-60
and incorporates other parts of the Report
and Accounts as detailed therein.
Substantial shareholdings
The Company is aware of the following
interests in excess of 3% of the ordinary
share capital of the Company as
at 11 February 2010:
62
No. of shares
Percentage
18,126,453
12,201,232
11,587,492
9,009,918
7,903,576
7,726,902
7,316,583
6,791,950
6,576,769
8.42
5.67
5.38
4.18
3.67
3.59
3.40
3.15
3.05
Co-operative Asset Management
William Blair & Company
Aberforth Partners
Legal & General Investment Management
Neuberger Berman
Threadneedle Investments
Aegon Asset Management
Impax Asset Management
Black Rock
Report and Accounts 2009
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 63
Accounts
Directors
The Directors of the Company during the year and their beneficial interests in the ordinary share capital of the Company were:
Brook Land
Roger Devlin
Karen McPherson
John Bennett
Louise Charlton
Alan Hearne
Peter Dowen
Andrew Troup (resigned 5 November 2009)
Phil Williams
Gary Young
* As at date of resignation
No. of shares at
31/12/09 and at
03/03/10
No. of shares at
31/12/08 and at
06/03/09
30,000
30,000
–
–
–
482,030
575,910
269,266*
382,987
59,409
30,000
30,000
–
–
–
482,030
575,910
269,266
350,000
27,500
63
The share options of the Directors under the Executive share option scheme are set out below:
Director
Alan Hearne
Peter Dowen
Andrew Troup
1 Jan
2009
number
62,500
28,157
32,500
15,051
35,000
35,000
14,437
14,437
Gary Young
13,720
Exercised
number
–
–
–
–
–
–
–
–
–
31 Dec
2009
number
62,500
28,157
32,500
15,051
35,000*
35,000*
14,437*
14,437*
Exercise
price
111.0p
146.5p
111.0p
146.5p
111.0p
111.0p
146.5p
146.5p
13,720
146.5p
Market value
at date of
exercise
Date from
which
exercisable
Expiry date
–
–
–
–
–
–
–
–
_
20/3/2008
12/8/2008
20/3/2015
12/8/2015
20/3/2008
12/8/2008
20/3/2015
12/8/2015
20/3/2006
20/3/2008
12/8/2006
12/8/2008
20/3/2013
20/3/2015
12/8/2013
12/8/2015
12/8/2008
12/8/2015
* Mr Troup’s outstanding share options are as at his date of resignation. Following cessation of employment on 20 November 2009 and in accordance with
the rules of the scheme Mr Troup had a period of six months within which to exercise his outstanding options. Mr Troup exercised all outstanding options
within this period. At date of exercise the market price was 207.5p.
rpsgroup.com
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Report of the Directors continued
The LTIP awards of the Directors are set out below:
Director
Alan Hearne
Peter Dowen
64
Andrew Troup
Phil Williams
Gary Young
1 Jan 2009
number
145,652
124,893
127,419
–
68,478
60,222
44,129
–
60,326
53,378
38,709
–
57,065
60,222
61,935
–
55,434
49,272
51,612
–
2006
2007
2008
2009
2006
2007
2008
2009
2006
2007
2008
2009
2006
2007
2008
2009
2006
2007
2008
2009
Value of
grant at date
of grant
£000s
Granted
number
Released 31 Dec 2009
number
Market Value Market Value Market Value
of release
£000s
at date of
release
of Shares
at Grant
268
365
395
395
126
176
137
137
111
156
120
120
105
176
192
224
102
144
160
160
–
–
–
275,261
–
–
–
95,331
–
–
–
83,624
–
–
–
156,098
–
–
–
111,498
145,652
–
–
–
68,478
–
–
–
60,326
–
–
–
57,065
–
–
–
55,434
–
–
–
–
124,893
127,419
275,261
–
60,222
44,129
95,331
–
53,378*
38,709*
83,624*
–
60,222
61,935
156,098
–
49,272
51,612
111,498
184.0p
292.3p
310p
143.5p
184.0p
292.3p
310p
143.5p
184.0p
292.3p
310p
143.5p
184.0p
292.3p
310p
143.5p
184.0p
292.3p
310p
143.5p
146.59p
214
–
–
–
–
–
–
146.59p
100
–
–
–
146.59p
–
–
–
146.59p
–
–
–
146.59p
–
–
–
–
–
–
88
–
–
–
84
–
–
–
81
–
–
–
The total value of LTIP awards released in 2009 was £567,000 (2008: £1,392,000).
* Mr Troup’s outstanding awards are as at date of resignation.The LTIP award made to Mr Troup in 2007 will, subject to satisfaction of the normal
performance conditions and in accordance with the original terms of the award, be released on 14 March 2010.The LTIP awards made to Mr Troup in 2008
and 2009 lapsed on cessation of employment on 20 November 2009.
Report and Accounts 2009
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:24 Page 65
The market price of the shares at
31 December 2009 was 217p and the
range during the financial year was 121.25p
to 250p.
None of the Directors were materially
interested in any significant contract to
which the Company or any of its
subsidiaries were party during the year.
Employees
The Group’s policies in relation to
employees are disclosed on pages 19
and 20.
Charitable and community
donations
comply with the requirements of the
Companies Act 2006.
Financial statements are published on the
Group’s website in accordance with
legislation in the United Kingdom governing
the preparation and dissemination of
financial statements, which may vary from
legislation in other jurisdictions.The
maintenance and accuracy of the Group’s
website is the responsibility of the
Directors. The Directors’ responsibility also
extends to the ongoing integrity of the
financial statements contained therein.
Each of the persons who is a Director at
the time of this report confirms that:
During the year the Group made charitable
donations of £480,000 to non-political
organisations.Total contributions including
contributions in kind amounted to £585,000.
■ so far as the Director is aware, there is
no relevant audit information of which
the Company’s auditors are unaware;
and
Supplier payment policy
The Group has due regard to the payment
terms of suppliers and settles all undisputed
accounts in accordance with payment
terms agreed with the supplier. At the year
end the Group had 36 days’ purchases
outstanding in respect of payments to
suppliers and sub-contractors (2008: 36
days). At the year end the Company had
16 days’ purchases outstanding in respect of
payments to suppliers and sub-contractors
(2008: 36 days).
Going concern
The financial statements have been
prepared on a going concern basis as the
Directors have a reasonable expectation
that the Group has adequate resources
to continue in business for the
foreseeable future.
Directors’ responsibilities
statement
The Directors are responsible for keeping
proper accounting records which disclose
with reasonable accuracy at any time the
financial position of the Company, for
safeguarding the assets, for taking
reasonable steps for the prevention and
detection of fraud and other irregularities
and for the preparation of a Directors’
Report and Remuneration Report which
■ the Director has taken all the steps that
he or she ought to have taken as a
Director in order to make
himself/herself aware of any relevant
audit information and to establish that
the Company’s auditors are aware of
that information.
This confirmation is given and should be
interpreted in accordance with the
provisions of the Companies Act 2006.
The Directors are responsible for preparing
the Annual Report and the Financial
Statements in accordance with the
Companies Act 2006.The Directors are
also required to prepare financial
statements for the Group in accordance
with International Financial Reporting
Standards (IFRS) as adopted by the
European Union and Article 4 of the IAS
Regulation.The Directors have chosen to
prepare financial statements for the
Company in accordance with UK Generally
Accepted Accounting Practice.
Group financial statements
International Accounting Standard 1
requires that financial statements present
fairly for each financial year the Group’s
financial position, financial performance and
cash flows.This requires the faithful
representation of the effects of transactions,
other events and conditions in accordance
Accounts
with the definitions and recognition criteria
for assets, liabilities, income and expenses
set out in the International Accounting
Standards Board’s ‘Framework for the
Preparation and Presentation of Financial
Statements’. In virtually all circumstances,
a fair presentation will be achieved by
compliance with all applicable IFRS. A fair
presentation also requires the Directors to:
■ consistently select and apply
appropriate accounting policies;
■ present information, including
accounting policies, in a manner that
provides relevant, reliable, comparable
and understandable information; and
65
■ provide additional disclosures when
compliance with the specific
requirements in IFRS is insufficient to
enable users to understand the impact
of particular transactions, other events
and conditions on the entity’s financial
position and financial performance.
Under company law the directors must not
approve the financial statements unless they
are satisfied that they give a true and fair
view of the state of affairs of the Group
and its profit or loss for that period.
Parent company financial statements
Company law requires the Directors to
prepare financial statements for each
financial year which give a true and fair view
of the state of affairs of the Company and
of the profit or loss of the Company for
that period.
In preparing these financial
statements, the Directors are required to:
■ select suitable accounting policies and
then apply them consistently;
■ make judgements and estimates that
are reasonable and prudent;
■ state whether applicable accounting
standards have been followed, subject
to any material departures disclosed
and explained in the financial
statements; and
■ prepare the financial statements on the
going concern basis unless it is
inappropriate to presume that the
Company will continue in business.
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Amendments to the Company’s Articles
of Association are being proposed at this
year’s Annual General Meeting which have
some impact on the rights attaching to the
Company’s shares. Explanatory notes
relating to these changes are included in
the notice of this meeting which
accompanies this report.
Directors’ interests in the share capital of
the Company are shown in the table on
page 63. Substantial shareholder interests of
which the Company is aware are shown on
page 62.
The Company is party to a number of
commercial agreements which, in line with
normal practice in the industry, may be
affected by a change of control following a
takeover bid. None of these agreements
are, however, considered to be of material
significance.There are no agreements
between the Company and its directors or
employees providing for compensation for
loss of office of employment that occurs
because of a takeover bid.
Annual General Meeting
The Annual General Meeting will be held
on 4 May 2010.The Notice of Annual
General Meeting circulated with this
Report and Accounts contains a full
explanation of the business to be
conducted at that meeting.This includes a
resolution to re-appoint BDO LLP as the
Company’s Auditors.
By order of the Board
Nicholas Rowe
Secretary
3 March 2010
Post balance sheet events
There are no significant post balance sheet
events to report.
Additional information
The following additional information is
provided for shareholders as a result of the
implementation of the Takeover Directive
into UK Law.
As at 31 December 2009 the Company’s
issued share capital consisted of
215, 247, 277 ordinary shares of 3p each.
At a general meeting of the Company
every holder of ordinary shares present in
person is entitled to vote on a show of
hands and on a poll every member present
in person or by proxy and entitled to vote
has one vote for every ordinary share held.
There are no shares in issue which carry
special rights with regard to control of the
Company. There are no restrictions on the
transfer of ordinary shares in the Company
other than those that may be imposed by
law or regulation from time to time.
The Company’s Articles of Association may
be amended by special resolution at a
general meeting of the shareholders.
Directors are appointed by ordinary
resolution at a general meeting of the
shareholders.The Board can appoint a
Director but anyone so appointed must be
elected by an ordinary resolution at the
next general meeting. Any Director who
has held office for more than three years
since their last appointment must offer
themselves for re-election at the next
annual general meeting.
The Directors have power to manage
the Company’s business subject to the
provision of the Company’s Articles of
Association, law and applicable regulations.
The Directors have power to issue and buy
back shares in the Company pursuant to
the terms and limitations of resolutions
passed by shareholders at each annual
general meeting of the Company.
Report of the Directors continued
Under company law the directors must not
approve the financial statements unless they
are satisfied that they give a true and fair
view of the state of affairs of the company
for that period.
The Directors confirm that they have
complied with the above requirements in
preparing the financial statements.
Directors’ responsibilities statement pursuant
to DTR 4
The Directors confirm that to the best of
their knowledge:
66
■ the financial statements, prepared in
accordance with International Financial
Reporting Standards as adopted by the
EU, 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; and
■ the ‘Business Review’ 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, and
that the ‘Risk Management’ report
includes a description of the principal
risks and uncertainties that they face.
Financial instruments
Information about the Group’s management
of financial risk can be found in notes 28 to
31 of the consolidated financial statements.
Capital management
The Group manages its capital to ensure
that entities in the Group will be able to
continue as going concerns while
maximising the return to stakeholders
through the optimisation of the debt and
equity balance.The capital structure of the
Group consists of debt, which includes the
borrowings disclosed in note 15 to the
consolidated financial statements, cash and
cash equivalents and equity attributable to
equity holders of the parent, comprising
issued capital, reserves and retained
earnings as disclosed in notes 20 to 22.
Report and Accounts 2009
Report and Accounts 2009
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 67
Independent Auditors Report
To the members of
RPS Group Plc
We have audited the financial statements
of RPS Group Plc for the year ended
31 December 2009 which comprise the
Consolidated Income Statement, the
Consolidated Statement of Comprehensive
Income, the Consolidated and Parent
Company Balance Sheets, the Consolidated
Cash Flow Statement, the Consolidated
Statement of Changes in Equity and the
related notes.The financial reporting
framework that has been applied in the
preparation of the Group financial
statements is applicable law and
International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
The financial reporting framework that has
been applied in preparation of the Parent
Company financial statements is applicable
law and United Kingdom Accounting
Standards (United Kingdom Generally
Accepted Accounting Practice).
This report is made solely to the
Company's members, as a body, in
accordance with Chapter 3 of part 16 of
the Companies Act 2006. Our audit work
has been undertaken so that we might
state to the Company's members those
matters we are required to state to them
in an auditor's report and for no other
purpose.To the fullest extent permitted
by law, we do not accept or assume
responsibility to anyone other than the
Company and the Company's members as
a body, for our audit work, for this report,
or for the opinions we have formed.
Respective responsibilities of
directors and auditors
As explained more fully in the statement of
directors' responsibilities, the directors are
responsible for the preparation of the
financial statements and for being satisfied
that they give a true and fair view. Our
responsibility is to audit the financial
statements in accordance with applicable
law and International Standards on Auditing
(UK and Ireland).Those standards require
us to comply with the Auditing Practices
Board’s (APB’s) Ethical Standards for
Auditors.
Scope of the audit of the
financial statements
An audit involves obtaining evidence about
the amounts and disclosures in the financial
statements sufficient to give reasonable
assurance that the financial statements are
free from material misstatement, whether
caused by fraud or error. This includes an
assessment of: whether the accounting
policies are appropriate to the Group’s and
the Parent Company’s circumstances and
have been consistently applied and
adequately disclosed; the reasonableness of
significant accounting estimates made by
the directors; and the overall presentation
of the financial statements.
Opinion on financial statements
In our opinion:
■ the financial statements give a true and
fair view of the state of the Group’s
and the Parent Company’s affairs as at
31 December 2009 and of the Group’s
profit for the year then ended;
■ the Group financial statements have
been properly prepared in accordance
with IFRSs as adopted by the European
Union;
■ the Parent Company financial
statements have been properly
prepared in accordance with United
Kingdom Generally Accepted
Accounting Practice; and
■ the financial statements have been
prepared in accordance with the
requirements of the Companies Act
2006; and, as regards the group financial
statements, Article 4 of the lAS
Regulation.
Opinion on other matters
prescribed by the Companies
Act 2006
In our opinion:
■ the part of the directors’ remuneration
report to be audited has been properly
prepared in accordance with the
Companies Act 2006; and
■ the information given in the directors’
report for the financial year for which
the financial statements are prepared is
consistent with the financial statements.
67
Accounts
Matters on which we are
required to report by exception
We have nothing to report in respect of
the following matters where the
Companies Act 2006 requires us to report
to you if, in our opinion:
■ adequate accounting records have not
been kept by the Parent Company, or
returns adequate for our audit have not
been received from branches not
visited by us; or
■ the Parent Company financial
statements and the part of the
directors’ remuneration report to be
audited are not in agreement with the
accounting records and returns; or
■ certain disclosures of directors’
remuneration specified by law are not
made; or
■ we have not received all the
information and explanations we
require for our audit.
Under the Listing Rules we are required to
review:
■ the directors’ statement, set out on
page 62, in relation to going concern;
and
■ the part of the corporate governance
statement relating to the Company’s
compliance with the nine provisions of
the June 2008 Combined Code
specified for our review.
Graham Clayworth (Senior Statutory Auditor)
For and on behalf of BDO LLP, statutory
auditor
55 Baker Street
London
W1U 7EU
United Kingdom
3 March 2010
BDO LLP is a limited liability partnership
registered in England and Wales (with
registered number OC305127).
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23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:24 Page 68
Consolidated Income Statement
Revenue
Recharged expenses
Fee income
Operating profit
Finance costs
Finance income
68
Profit before tax and amortisation of acquired intangibles
Amortisation of acquired intangibles
Profit before tax
Tax expense
Profit for the year attributable to equity holders of the parent
Basic earnings per share (pence)
Diluted earnings per share (pence)
Basic earnings per share before amortisation of
acquired intangibles (pence)
Diluted earnings per share before amortisation of
acquired intangibles (pence)
Year ended
31 Dec
2009
£000s
Year ended
31 Dec
2008
£000s
Notes
3
3
3
443,909
(69,558)
374,351
470,465
(78,369)
392,096
3, 4
51,448
58,862
5
5
8
9
9
9
9
(3,113)
268
52,472
(3,869)
(4,424)
384
57,512
(2,690)
48,603
54,822
(14,997)
(16,933)
33,606
37,889
15.78
15.59
17.08
16.87
18.00
17.75
18.92
18.66
Consolidated Statement of Comprehensive Income
Year ended
31 Dec
2009
£000s
Year ended
31 Dec
2008
£000s
33,606
37,889
(3,804)
188
23,811
(573)
29,990
61,127
Profit for the year
Other Comprehensive Income
Exchange differences
Tax recognised directly in equity
Total recognised comprehensive income for the year
attributable to equity holders of the parent
The notes on pages 72 to 115 form part of these financial statements.
Report and Accounts 2009
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 69
Consolidated Balance Sheet
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Investments in associates
Current assets
Trade and other receivables
Cash at bank
Liabilities
Current liabilities
Borrowings
Deferred consideration
Trade and other payables
Corporation tax liabilities
Provisions
Net current assets
Non-current liabilities
Borrowings
Deferred consideration
Other creditors
Deferred tax liabilities
Provisions
Net assets
Equity
Share capital
Share premium
Other reserves
Retained earnings
Total shareholders’ equity
69
Accounts
As at
31 Dec
2009
£000s
As at
31 Dec
2008
£000s
Notes
10
11
13
15
17
14
18
15
17
19
18
20
21
293,943
28,226
204
322,373
139,247
13,691
152,938
1,802
15,652
68,678
6,135
1,324
93,591
59,347
44,652
9,289
1,301
9,791
3,219
68,252
313,468
6,457
98,238
39,519
169,254
313,468
264,733
24,575
–
289,308
157,607
17,088
174,695
456
16,585
87,868
2,688
1,417
109,014
65,681
45,187
11,463
417
6,746
3,569
67,382
287,607
6,399
95,531
43,551
142,126
287,607
These financial statements were approved and authorised for issue by the Board on 3 March 2010.
The notes on pages 72 to 115 form part of these financial statements.
Dr Alan Hearne, Director
Gary Young, Director
On behalf of the Board of RPS Group Plc.
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23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 70
Consolidated Cash Flow Statement
Cash generated from operations
Interest paid
Interest received
Income taxes paid
Net cash from operating activities
Cash flows from investing activities
Purchases of subsidiaries net of cash acquired
Deferred consideration
Purchase of property, plant and equipment
Sale of property, plant and equipment
Net cash used in investing activities
70
Cash flows from financing activities
Proceeds from issue of share capital
Repayments of bank borrowings
Payment of finance lease liabilities
Dividends paid
Payment of pre-acquisition dividend
Net cash used in financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of exchange rate fluctuations
Cash and cash equivalents at end of year
Cash and cash equivalents comprise:
Cash at bank
Bank overdraft
Cash and cash equivalents at end of year
The notes on pages 72 to 115 form part of these financial statements.
Report and Accounts 2009
Notes
25
11
22
25
Year ended
31 Dec
2009
£000s
Year ended
31 Dec
2008
£000s
70,583
(3,839)
268
(12,550)
54,462
(20,616)
(15,075)
(4,061)
86
(39,666)
381
(9,023)
(599)
(8,410)
(1,511)
(19,162)
67,386
(3,770)
384
(15,574)
48,426
(22,332)
(8,854)
(5,935)
1,094
(36,027)
464
(2,174)
(117)
(7,211)
(1,471)
(10,509)
(4,366)
1,890
16,707
1,350
13,691
13,691
–
13,691
10,884
3,933
16,707
17,088
(381)
16,707
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 71
Consolidated Statement of Changes in Equity
Accounts
At 1 January 2008
Changes in equity during 2008
Total comprehensive income for the year
Issue of new ordinary shares
Share based payment expense
Dividends
At 31 December 2008
Changes in equity during 2009
Total comprehensive income for the year
Issue of new ordinary shares
Share based payment expense
Dividends
At 31 December 2009
Share
capital
£000s
6,319
–
80
–
–
6,399
–
58
–
–
6,457
Share
premium
£000s
Retained
earnings
£000s
Other
reserves
£000s
Total
equity
£000s
93,225
110,474
17,516
227,534
–
2,306
–
–
95,531
–
2,707
–
–
98,238
37,316
(1,247)
2,794
(7,211)
142,126
33,794
(1,536)
3,280
(8,410)
169,254
23,811
2,224
–
–
43,551
(3,804)
(228)
–
–
39,519
61,127
3,363
2,794
(7,211)
287,607
29,990
1,001
3,280
(8,410)
313,468
71
The notes on pages 72 to 115 form part of these financial statements.
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23846_DRAFT_27_Mar19_back.qxd 23/3/10 15:25 Page 72
72
Notes to the Consolidated Financial Statements
1. Significant accounting policies
RPS Group Plc (the “Company”) is a
company domiciled in England. The
consolidated financial statements of the
Company for the year ended 31 December
2009 comprises the Company and its
subsidiaries (together referred to as
the “Group”).
The consolidated financial statements were
authorised for issuance on 3 March 2010.
(a) Basis of preparation
The Group has prepared its annual financial
statements in accordance with International
Financial Reporting Standards (IFRS) as
endorsed by the European Union and
implemented in the UK. The financial
statements are presented in pounds
sterling, rounded to the nearest thousand.
The IASB has issued the following revised
and updated standards that are applicable
to the Group and that resulted in changes
in presentation for this accounting period;
lAS 1 (revised) “Presentation of financial
statements”, and IFRS 8 “Operating
Segments”.
lAS 1 (revised) updates the presentation of
the key statements of performance and
position for the Group.
IFRS 8 introduces new requirements for
segmental reporting to be based on the
information provided to the Chief
Operating Decision Maker (CODM). It also
introduces additional disclosure and
reconciliation requirements.
In addition, the IASB has updated IFRS 7
“Financial Instruments: Disclosures” and
issued a variety of IFRIC amendments.The
only impact on the Group’s reporting is in
respect of disclosure.
Otherwise, these financial statements have
been prepared using accounting policies set
out in the Report and Accounts 2008.
The accounting policies set out below
have been applied consistently to all
periods presented in these consolidated
financial statements.
(b) Basis of consolidation
Company has the power, directly or
indirectly, to govern the financial and
operating policies of an entity so as to
obtain benefits from its activities.
The Group’s consolidated financial
statements incorporate the financial
statements of the Company together with
those of subsidiaries from the date control
commences to the date that control ceases.
Intragroup balances, and any unrealised
gains and losses or income and expenses
arising from intragroup transactions, are
eliminated in preparing the financial
statements.
(c) Foreign currency
i Foreign currency transactions
Transactions in foreign currency are
translated at the foreign exchange rate
ruling at the date of the transaction.
Monetary assets and liabilities denominated
in foreign currencies at the balance sheet
date are translated to pounds sterling at
the foreign exchange rate ruling at that
date. Foreign exchange differences arising
on translation are recognised in income.
ii Financial statements of foreign operations
The assets and liabilities of foreign
operations, including goodwill and fair value
adjustments arising on consolidation, are
translated to pounds sterling at the
exchange rate ruling at the balance sheet
date.The revenues and expenses of foreign
operations are translated to pounds sterling
at rates approximating the foreign exchange
rates ruling at the dates of the transactions.
Foreign exchange differences arising on
retranslation are recognised directly in the
translation reserve.
iii Net investment in foreign operations
Exchange differences arising from the
translation of the net investment in foreign
operations are taken to translation reserve.
They are recycled and taken to income upon
disposal of the operation.The Company has
elected, in accordance with IFRS 1, that in
respect of all foreign operations, any
differences that have arisen before 1 January
2004 have been set to zero.
Subsidiaries are entities controlled by
the Company. Control exists when the
iv Foreign currency forward contracts
Foreign currency forward contracts are
initially recognised at nil value, being priced-
at-the-money at origination. Subsequently
they are measured at fair value (determined
by price changes in the underlying forward
rate, the interest rate, the time to expiration
of the contract and the amount of foreign
currency specified in the contract).
Changes in fair value are recognised in
income as they arise.
(d) Property, plant and
equipment
i Owned assets
Items of property, plant and equipment
are stated at cost or deemed cost less
accumulated depreciation (see below) and
impairment losses (see accounting policy (h)).
Certain items of property, plant and
equipment that had been revalued to fair
value on or prior to 1 January 2004, the
date of transition to IFRS, are measured on
the basis of deemed cost, being the revalued
amount at the date of that revaluation, an
exemption allowed under IFRS 1.
ii Leased assets
Leases which contain terms whereby the
Group assumes substantially all the risks
and rewards incidental to ownership of the
leased item are classified as finance leases.
Assets acquired under a finance lease are
capitalised at the inception of the lease at
fair value of the leased assets, or if lower,
the present value of the minimum
lease payments.
The land and buildings elements of
property leases are considered separately
for the purposes of lease classification.
Obligations under finance leases are
included in liabilities net of finance costs
allocated to future periods.
All other leases are classified as operating
leases and are not capitalised.
Lease payments are accounted for as
described in accounting policy note (o).
iii Subsequent costs
The Group recognises in the carrying
amount of an item of property, plant and
equipment the cost of replacing part of
such an item when that cost is incurred if it
is probable that the future economic
Report and Accounts 2009
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 73
benefits embodied within the item will flow
to the Group and the cost of the item can
be measured reliably. All other costs are
recognised in the income statement
as incurred.
ii Other intangible assets
Intangible assets other than goodwill that are
acquired by the Group are stated at cost less
accumulated amortisation (see below) and
impairment losses (see accounting policy (h)).
iv Depreciation
Depreciation is charged to income on a
straight-line basis over the estimated useful
lives of each part of an item of property,
plant and equipment. Land is not
depreciated.The estimated useful lives are
as follows:
Freehold buildings
50 years
Alterations to
leasehold premises
Motor vehicles
Fixtures, fittings, IT
and equipment
Life of lease
4 years
3 to 8 years
(e) Intangible assets
i Goodwill
All business combinations are accounted for
by applying the purchase method. Goodwill
has been recognised in acquisitions of
subsidiaries and the business, assets and
liabilities of partnerships.The Board has
elected, in accordance with IFRS 1, that the
date from which it applies IFRS 3 shall be 26
June 2002. In respect of business
combinations that have occurred since that
date, goodwill represents the difference
between the cost of the acquisition and the
fair value of the identifiable assets acquired.
In respect of acquisitions prior to this date,
goodwill is included on the basis of its
deemed cost, which represents the amount
recorded under previous GAAP. The
classification and accounting treatment of
business combinations that occurred prior
to 26 June 2002 has not been restated in
preparing the Group’s opening IFRS balance
sheet at 1 January 2004, in accordance
with IFRS.1.
Goodwill is stated at cost less any
accumulated impairment losses. Goodwill is
allocated to cash-generating units and is
tested annually for impairment (see
accounting policy (h)).
Intangible assets identified in a business
combination are capitalised at fair value at
the date of acquisition if they are separable
from the acquired entity or give rise to
other contractual/legal rights.The fair values
ascribed to such intangibles are arrived at
by using appropriate valuation techniques.
Expenditure on internally generated
goodwill and brands is recognised in
income as an expense as incurred.
iii Subsequent expenditure
Subsequent expenditure on capitalised
intangible assets is capitalised only when it
increases the future economic benefits
embodied in the specific asset to which it
relates. All other expenditure is expensed
as incurred.
iv Amortisation
Amortisation is charged to profit or loss on
a straight-line basis from the date that the
intangible assets are available for use over
their estimated useful lives unless such lives
are indefinite.The estimated useful lives of
the Group’s intangible assets are as follows:
Customer relationships
3 to 15 years
Trade names
Order backlog
1 to 5 years
1 to 4 years
(f) Trade and other receivables
Trade and other receivables are recognised
at inception at fair value and then carried at
their amortised cost less impairment losses
(see accounting policy (h)).Trade and other
receivables are subject to impairment
tests whenever events or changes in
circumstances indicate that their carrying
amount may not be recoverable.
Impairment losses are taken to the
income statement as incurred.
(g) Cash and cash equivalents
Cash at bank comprises cash balances and
call deposits with an original maturity of
three months or less. Bank overdrafts that
are repayable on demand and form an
73
Accounts
integral part of the Group’s cash
management are included as a component
of cash and cash equivalents for the
purposes of the statement of cash flows.
Cash is a loan and receivable and is carried
at amortised cost.
(h) Impairment of non
financial assets
The carrying amount of the Group’s assets,
other than deferred tax assets, are
reviewed at each balance sheet date to
determine whether there is any indication
of impairment. If any such indication exists,
the assets’ recoverable amount is estimated.
For goodwill the recoverable amount is
estimated at each annual balance sheet date.
An impairment loss is recognised whenever
the carrying amount of an asset or its cash
generating unit exceeds its recoverable
amount. Impairment losses are recognised in
the income statement unless the asset is
recorded at a revalued amount in which
case it is treated as a revaluation decrease
to the extent that a surplus has previously
been recorded.
Impairment losses recognised in respect of
cash generating units are allocated first to
reduce the carrying value of goodwill
allocated to the cash generating unit and
then to reduce the carrying amount of the
other assets in the unit on a pro-rata basis.
Goodwill was tested for impairment at
31 December 2008 and 31 December 2009.
i Calculation of recoverable amount
The recoverable amount is the greater of
the net selling price and value in use. In
assessing value in use, the estimated future
cash flows are discounted to their present
value using a pre-tax discount rate that
reflects current market assessments of the
time value of money and the risks specific
to the asset.
ii Reversals of impairment
An impairment loss in respect of goodwill is
not reversed.
In respect of other assets, an
impairment loss is reversed if there has
been a change in the estimates used to
determine the recoverable amount. An
impairment loss is reversed only to the
extent that the assets carrying amount
rpsgroup.com
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 74
Notes to the Consolidated Financial Statements continued
1. Significant accounting policies continued
does not exceed the carrying amount that
would have been determined, net of
depreciation or amortisation, if no
impairment loss had been recognised.
■ the life of the option;
■ the market price on the date of grant
of the option;
■ the expected volatility of the share
(i) Employee benefits
price;
i Defined contribution plans
Obligations for contributions to defined
contribution retirement benefit plans are
recognised as an expense in the income
statement as incurred.
74
ii Share-based payment transactions
The Group operates a range of equity
settled share option and conditional share
award schemes for employees.
The Company has applied IFRS 2 to all
share options and conditional share awards
which were granted to employees and had
not vested as at 1 January 2005.
The fair value of the employee services
received in exchange for the grant of
options or conditional share awards is
recognised as an expense to the income
statement. Fair value has been determined
by using IFRS accepted valuation
methodologies (see below). The amount
expensed to the income statement over the
vesting period is determined by reference
to the fair value of the options and
conditional share awards, excluding the
impact of any non-market vesting
conditions. Non-market vesting conditions
are included in assumptions about the
number of options and conditional share
awards that are expected to vest. At each
balance sheet date the Group revises its
estimates of the number of options and
conditional share awards that are expected
to vest.The impact of the revision of original
estimates, if any, is recognised in the income
statement, with a corresponding adjustment
to equity, over the remaining vesting period.
No adjustment is made for failure to
achieve market vesting conditions.
The fair value of options granted under the
Executive Share Option Scheme (“ESOS”)
and Save As You Earn (“SAYE”) scheme
have been calculated using a binomial model
taking into account the following inputs:
■ the exercise price of the option;
Report and Accounts 2009
■ the dividends expected on the shares;
and
■ the risk free interest rate for the life of
the option.
The fair value of conditional share awards
has been calculated using the market value
of the shares on the date of grant adjusted
for any non-entitlement to dividends over
the vesting period and market based
performance conditions such as total
shareholder return.
iii Accrued holiday pay
Provision is made at each balance sheet
date for holidays accrued but not taken, to
the extent that they may be carried
forward, calculated at the salary of the
relevant employee at that date.
(j) Provisions
A provision is recognised in the balance
sheet when the Group has a present legal or
constructive obligation as a result of a past
event and it is probable that an outflow of
economic benefits will be required to settle
the obligation. If the effect is material,
provisions are determined by discounting the
expected future cash flows at a pre-tax rate
that reflects current market assessments of
the time value of money and, when
appropriate, the risks specific to the liability.
A provision for onerous contracts is
recognised when the expected benefits to
be derived by the Group from a contract
are lower than the unavoidable cost of
meeting its obligations under the contract.
(k) Trade and other payables
Trade and other payables are recognised on
inception at fair value and then carried at
amortised cost.
(l) Borrowings
Bank overdrafts and interest bearing loans
are initially measured at fair value and then
held at amortised cost. Obligations under
finance leases are dealt with in accordance
with accounting policy note (o).
(m) Deferred consideration
Deferred consideration arises when
settlement of all or any part of the cost
of a business combination is deferred.
It is stated at fair value at the date of
acquisition, which is determined by
discounting the amount due to present
value at that date. Interest is imputed on
the fair value of non interest bearing
deferred consideration at the discount rate
and expensed within interest payable and
similar charges. At each balance sheet date
deferred consideration comprises the
remaining deferred consideration valued at
acquisition plus interest imputed on such
amounts from acquisition to the balance
sheet date.
Where deferred consideration is in the
form of shares and the number of shares to
be issued is fixed, the fair value is credited
to equity under the heading “Shares to
be issued”.
(n) Revenue
Revenue from services rendered is
recognised in income in proportion to the
stage of completion of the transaction at
the balance sheet date. No revenue is
recognised if there are significant
uncertainties regarding recovery of the
consideration due or associated costs. An
expected loss on a contract is recognised
immediately in the income statement.
Revenue includes expenses recharged to
clients. Such expenses include mileage,
accommodation, planning applications,
counsels’ fees and fees from sub-consultants
charged on at low margin.
Revenue which has been recognised but
not invoiced by the balance sheet date is
included in trade and other receivables in
accrued income. Amounts invoiced in
advance are included in trade and other
payables within deferred income.
(o) Expenses
i Operating lease payments
Payments made under operating leases
are recognised in the income statement
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 75
on a straight-line basis over the term of
the lease. Lease incentives received are
recognised as an integral part of the
total lease expense.
ii Finance lease payments
Minimum lease payments are apportioned
between the finance charge and the
reduction of the outstanding liability.The
finance charge is allocated to each period
during the lease term so as to produce a
constant periodic rate of interest on the
remaining balance of the liability.
iii Interest payable and similar charges
Finance costs comprise interest payable on
bank overdrafts and loans, interest imputed
on deferred consideration (see accounting
policy (m)) and interest on finance leases.
iv Interest receivable
Finance income comprises interest
receivable on funds invested.
(p) Income tax
Income tax on the income for the periods
presented comprises current and deferred
tax. Income tax is recognised in income
except to the extent that it relates to items
recognised directly in equity, in which case it
is recognised in equity.
Current tax is the expected tax payable on
the taxable income for the year, using tax
rates enacted or substantially enacted at
the balance sheet date, and any adjustment
to tax payable in respect of previous years.
Deferred tax is provided using the balance
sheet liability method, providing for
temporary differences between the carrying
amounts of assets and liabilities for financial
reporting purposes and the amounts used
for taxation purposes.The following
temporary differences are not provided for:
goodwill not deductible for tax purposes, the
initial recognition of assets or liabilities that
affect neither accounting nor taxable profit
and the differences relating to investments
in subsidiaries to the extent that they will
probably not reverse in the foreseeable
future. In accordance with IAS12, deferred
tax is taken directly to equity to the extent
that the intrinsic value of the outstanding
share awards (based on the closing share
price) is greater than the share based
payment expense already charged to the
income statement.The amount of deferred
tax provided is based on the expected
manner of realisation or settlement of the
carrying amount of assets and liabilities, using
tax rates enacted or substantively enacted at
the balance sheet date.
A deferred tax asset is recognised only to
the extent that it is probable that future
taxable profits will be available against
which the asset can be utilised. Deferred
tax assets are reduced to the extent that it
is no longer probable that the related tax
benefit will be realised.
Additional income taxes that arise from the
distribution of dividends are recognised at
the same time as the liability to pay the
related dividend.
(q) Dividends
In the case of
Dividends are recognised when they
become legally payable.
interim dividends to equity shareholders,
this is when they are paid. In the case of
final dividends, this is when approved by
the shareholders at the AGM.
(r) Employee Share Ownership
Plan (ESOP)
As the Company is deemed to have
control of its ESOP trust, it is treated as a
subsidiary and consolidated for the purpose
of the Group accounts. The ESOP’s assets
(other than investments in the Company’s
shares), liabilities, income and expenses are
included on a line-by-line basis in the
Group financial statements. The ESOP’s
investment in the Company’s shares is
deducted from shareholders’ funds in the
Group balance sheet as if they were
treasury shares, except that profits on the
sale of ESOP shares are not credited to the
share premium account.
(s) Key accounting estimates
and judgements
In the process of applying the Group’s
accounting policies described above,
management has made the following
judgements, which have the most significant
effect on the amounts recognised in the
financial statements. Any other estimates or
75
Accounts
judgements are made as described in the
accounting policies above.
i Intangible assets
As described in accounting policy (e)
above, the Group recognises certain
intangible assets on acquisition other than
goodwill.
Judgements are made in respect
of useful lives and valuation methods
affecting the carrying value and
amortisation charges in respect of
these assets.
ii Goodwill
As described in accounting policy (e)
above, the Group undertakes annual
impairment reviews of goodwill.
Judgements in respect of discount and
growth rates are made in respect of these
assets. These judgements are shown in
note 10.
In
iii Revenue recognition
The Group’s revenue recognition policy is
stated in accounting policy note (n).
some cases, judgement is required to
determine the appropriate proportion of
the services performed to date on the
contract and the extent to which fees will
be recoverable. Actual results could differ
from these estimates.
Any subsequent changes are accounted for
with an effect on income at the time such
updated information becomes available.
(t) Accounting standards issued
but not adopted
During the year, the IASB and the IFRIC
issued additional standards which are
effective for periods starting after the date
of these financial statements.The following
standards and interpretations which would
have an impact on the Group’s reporting,
have yet to be adopted by the Group:
■ Revised IFRS 3 “Business combinations”;
■ Improvements to IFRSs (2009);
■ Amendments to IFRS 2 “Group cash
settled share-based payment
transactions”; and
■ Revised IAS 24 “Related Party
Disclosures”.
rpsgroup.com
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 76
Notes to the Consolidated Financial Statements continued
2. Revised business segments
As announced on 4th February 2010, the
Group reviewed the composition of its
business segments as a result of the
acquisition of Conics (see note 27) and the
following two changes have been made.
1. In respect of Planning and Development
the results of Britain, Ireland and Australia
have been separated.
supply services to Energy clients and
projects have been moved to the
Energy segment.
2.The results of those activities in
Environmental Management which primarily
The effect of these changes to the 2008
results is shown below.
Revised segment results for the year ended 31st December 2008
Planning &
Development
£000s
Energy
£000s
Environmental
Management
£000s
Group
eliminations
£000s
Consolidated
£000s
165,180
1,670
166,850
(41,341)
(2,113)
(43,454)
206,521
2,200
208,721
30,316
238
30,554
(1,013)
–
(1,013)
(1,057)
–
(1,057)
28,246
238
28,484
139,586
18,404
157,990
(21,802)
(2,532)
(24,334)
161,388
20,493
181,881
25,842
4,621
30,463
–
–
–
(663)
(406)
(1,069)
25,179
4,215
29,394
92,741
(22,481)
70,260
(15,226)
4,645
(10,581)
107,967
(28,104)
79,863
13,841
(4,859)
8,982
–
–
–
(970)
406
(564)
12,871
(4,453)
8,418
(5,411)
2,407
(3,004)
–
–
–
(5,411)
5,411
–
–
–
–
–
–
–
–
–
–
–
–
–
392,096
–
392,096
(78,369)
–
(78,369)
470,465
–
470,465
69,999
–
69,999
(1,013)
–
(1,013)
(2,690)
–
(2,690)
66,296
–
66,296
76
Fees
Previously reported
Reallocation
Revised
Recharged expenses
Previously reported
Reallocation
Revised
External revenue
Previously reported
Reallocation
Revised
Underlying profit
Previously reported
Reallocation
Revised
Reorganisation costs
Previously reported
Reallocation
Revised
Amortisation of acquired intangibles
Previously reported
Reallocation
Revised
Segment result
Previously reported
Reallocation
Revised
Report and Accounts 2009
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 77
Accounts
2. Revised business segments continued
Revised segmental balance sheet disclosures for the year ended 31 December 2008
Planning &
Development
£000s
Energy
£000s
Environmental
Management
£000s
Unallocated
Corporate
£000s
Consolidated
£000s
Assets
Segment assets as previously reported
Reallocation
Revised segment assets
245,096
(6,932)
238,164
115,927
37,253
153,180
Depreciation and amortisation
Depreciation and amortisation as previously reported
Reallocation
Revised depreciation and amortisation
3,496
168
3,664
1,452
934
2,386
95,612
(30,321)
65,291
3,305
(1,102)
2,203
7,368
–
7,368
549
–
549
464,003
–
464,003
8,802
–
8,802
77
rpsgroup.com
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 78
3. Business and geographical segments
Segment information is presented in the
financial statements in respect of the
Group’s business segments, which are
reported to the Chief Operating Decision
Maker (CODM).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.
78
Business segments
The Group comprises the following
business segments:
Planning & Development - consultancy
services in GB, Ireland (comprising the
Republic of Ireland and Northern Ireland)
and Australia related to town and country
planning, urban design, architecture,
transport planning and highway design,
environmental impact assessment and
provision of water and waste utilities and
energy infrastructure.
Environmental Management - consultancy
services in the UK and the Netherlands,
related to environmental science, the
management of water resources and health,
safety and risk management other than to
the oil and gas sector.
Energy - the provision of a wide range of
consultancy services including those relating
to health, safety and risk management,
on an international basis, to the upstream
oil and gas and offshore renewable
energy sectors.
Segment results for the year ended 31st December 2009
Fees
£000s
64,511
63,496
33,235
(300)
160,942
149,057
67,106
(2,754)
374,351
Recharged
expenses
£000s
Intersegment
revenue
£000s
8,090
18,747
8,648
(27)
35,458
24,616
9,771
(287)
69,558
(1,272)
(167)
(544)
327
(1,656)
(601)
(784)
3,041
–
Underlying
profit
£000s
Reorganisation
costs
£000s
Amortisation
of acquired
intangibles
£000s
12,387
5,990
8,287
26,664
27,979
10,349
64,992
(1,770)
(985)
(21)
(2,776)
(306)
(371)
(3,453)
(887)
–
(855)
(1,742)
(1,793)
(334)
(3,869)
External
revenue
£000s
71,329
82,076
41,339
–
194,744
173,072
76,093
–
443,909
Operating
profit
£000s
9,730
5,005
7,411
22,146
25,880
9,644
57,670
Planning and Development:
GB
Ireland
Australia
Intra P&D eliminations
Total Planning and Development
Energy
Environmental Management
Group eliminations
Total
Planning and Development:
GB
Ireland
Australia
Total Planning and Development
Energy
Environmental Management
Total
Report and Accounts 2009
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 79
3. Business and geographical segments continued
Revised segment results for the year ended 31st December 2008
Planning and Development:
GB
Ireland
Australia
Intra P&D eliminations
Total Planning and Development
Energy
Environmental Management
Group eliminations
Total
Planning and Development:
GB
Ireland
Australia
Total Planning and Development
Energy
Environmental Management
Total
Group Reconciliation
Revenue
Recharged expenses
Fees
Underlying profit
Reorganisation costs
Unallocated expenses
Operating profit before amortisation
Amortisation
Operating profit
Finance costs
Profit before tax
79
Accounts
External
revenue
£000s
93,544
92,381
22,796
–
208,721
181,881
79,863
–
470,465
Segment
result
£000s
15,815
7,699
4,970
28,484
29,394
8,418
66,296
2008
£000s
470,465
(78,369)
392,096
69,999
(1,013)
(7,434)
61,552
(2,690)
58,862
Fees
£000s
81,962
69,569
15,840
(521)
166,850
157,990
70,260
(3,004)
392,096
Recharged
expenses
£000s
Intersegment
revenue
£000s
13,274
23,111
7,069
–
43,454
24,334
10,581
–
78,369
(1,692)
(299)
(113)
521
(1,583)
(443)
(978)
3,004
–
Underlying
profit
£000s
Reorganisation
costs
£000s
Amortisation
of acquired
intangibles
£000s
17,672
7,699
5,183
30,554
30,463
8,982
69,999
(1,013)
–
–
(1,013)
–
–
(1,013)
(844)
–
(213)
(1,057)
(1,069)
(564)
(2,690)
2009
£000s
443,909
(69,558)
374,351
64,992
(3,453)
(6,222)
55,317
(3,869)
51,448
(2,845)
(4,040)
48,603
54,822
rpsgroup.com
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 80
Notes to the Consolidated Financial Statements continued
3. Business and geographical segments continued
Planning and Development:
GB
Ireland
Australia
Planning and Development total
Energy
Environmental Management
Unallocated
Group total
80
Geographical analysis
Great Britain
Ireland
Australia
USA
Netherlands
Canada
Other
Total
Carrying amount of
segment assets
2008
£000s
2009
£000s
Segment depreciation
and amortisation
2008
£000s
2009
£000s
107,356
87,660
76,432
271,448
138,310
58,886
6,667
475,311
2009
£000s
209,970
82,076
70,590
32,762
28,947
18,003
1,561
443,909
112,957
106,606
18,601
238,164
153,180
65,291
7,368
464,003
Revenue
2008
£000s
246,075
92,381
51,975
31,352
27,087
20,504
1,091
470,465
1,948
984
1,837
4,769
3,295
2,131
542
10,737
2009
£000s
180,509
63,327
60,340
29,745
24,268
14,601
1,561
374,351
2,169
1,033
462
3,664
2,386
2,203
549
8,802
Fees
2008
£000s
211,434
69,274
42,913
26,286
23,283
17,815
1,091
392,096
The table above shows revenue and fees to external customers based upon the location from which billing took place.
Carrying amount of
segment assets
2008
£000s
2009
£000s
224,273
87,660
105,860
21,444
25,970
9,501
603
475,311
241,191
106,606
46,600
26,553
30,061
12,343
649
464,003
Great Britain
Ireland
Australia
USA
Netherlands
Canada
Other
Total
Report and Accounts 2009
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 81
4. Operating profit - by nature of expense
Revenue
Recharged expenses
Fee income
Staff costs
Depreciation and amortisation
Other operating costs
Operating profit
The following items have been included in arriving at profit:
Depreciation of property, plant and equipment
– owned assets
– under finance leases
Amortisation of intangible assets
Loss/(profit) on disposal of fixed assets
Reorganisation costs
Other operating lease rentals payable
– property
– equipment and motor vehicles
Operating sublease income receivable
5. Net financing costs
Finance costs
Interest on loans, overdraft and finance leases
Interest imputed on deferred consideration
Interest payable on deferred consideration
Finance income
Deposit interest receivable
Net financing costs
81
Accounts
Year ended
31 Dec
2009
£000s
Year ended
31 Dec
2008
£000s
443,909
(69,558)
374,351
(184,232)
(10,737)
(127,934)
51,448
470,465
(78,369)
392,096
(187,280)
(8,802)
(137,152)
58,862
Year ended
31 Dec
2009
£000s
Year ended
31 Dec
2008
£000s
6,429
439
3,869
122
3,453
10,028
4,128
191
6,076
36
2,690
(179)
1,013
5,969
3,367
111
Year ended
31 Dec
2009
£000s
Year ended
31 Dec
2008
£000s
(1,975)
(428)
(710)
(3,113)
268
(2,845)
(3,121)
(793)
(510)
(4,424)
384
(4,040)
rpsgroup.com
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 82
Notes to the Consolidated Financial Statements continued
6. Employee benefit expense
Staff costs (including Directors’ emoluments) consist of:
Wages and salaries
Social security costs
Pension costs - defined contribution plans
Share based payment expense - equity settled
Average number of employees (including Executive Directors) was:
Professional
Support
82
Details of directors’ remuneration are included on page 57.
Year ended
31 Dec
2009
£000s
Year ended
31 Dec
2008
£000s
157,648
15,906
7,398
3,280
184,232
3,411
843
4,254
161,676
15,983
6,827
2,794
187,280
3,609
829
4,438
7. Auditors’ remuneration
During the year, the Group (including its overseas subsidiaries) obtained the following services from the Group’s auditors at costs as
detailed below:
Principal auditors
Audit services
Statutory audit of the Group’s annual accounts
Statutory audit of the Group’s subsidiaries
Other services
Network firms of principal auditors
Audit services
Statutory audit of the Group’s subsidiaries
Other auditors
Corporate finance
Other services
Audit services
Statutory audit
Tax services
Year ended
31 Dec
2009
£000s
Year ended
31 Dec
2008
£000s
84
95
23
144
–
–
51
8
405
92
103
25
162
193
3
36
30
644
Report and Accounts 2009
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 83
8. Income taxes
Analysis of charge in the year
Current tax
UK corporation tax
Foreign tax
Deferred tax (credit)/charge
Tax expense for the year
Analysis of (credit)/charge to equity
Current tax on share based payments
Deferred tax on share based payments
Tax (credit)/charge in equity for the year
The charge for the year can be reconciled to the profit per the income statement as follows:
Profit before tax
Tax at the UK effective rate of 28% (2008: 28.5%)
Expenses not deductible for tax purposes
Different tax rates applied in overseas jurisdictions
Effect of change in tax rates
Prior year adjustments
Total tax expense for the year
Accounts
2009
£000s
8,377
7,441
15,818
2008
£000s
7,046
7,465
14,511
(821)
2,422
14,997
16,933
(40)
(148)
(188)
(398)
971
573
2009
£000s
48,603
13,609
439
894
–
55
14,997
2008
£000s
54,822
15,624
924
424
(4)
(35)
16,933
83
rpsgroup.com
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 84
Notes to the Consolidated Financial Statements continued
9. Earnings per share
The calculations of basic and diluted earnings per share were based on the profit attributable to ordinary shareholders and a weighted
average number of ordinary shares outstanding during the related period as shown in the tables below:
Profit attributable to ordinary shareholders
84
Weighted average number of ordinary shares for the purposes of basic earnings per share
Effect of shares to be issued as deferred consideration
Effect of employee share schemes
Weighted average number of ordinary shares for the purposes of diluted earnings per share
Basic earnings per share (pence)
Diluted earnings per share (pence)
Year
ended
31 Dec
2009
£000s
Year
ended
31 Dec
2008
£000s
33,606
37,889
000s
000s
212,943
286
2,347
215,576
15.78
15.59
210,546
886
2,049
213,481
18.00
17.75
The directors consider that earnings per share before amortisation provides a more meaningful measure of the Group’s performance than
statutory earnings per share.The calculation of basic and diluted earnings per share before amortisation of acquired intangibles was based
on the weighted average number of ordinary shares outstanding during the year as shown above, the profit attributable to ordinary
shareholders before the amortisation of acquired intangible assets and the tax thereon as shown in the table below:
Year
ended
31 Dec
2009
£000s
33,606
3,869
(1,106)
36,369
17.08
16.87
Year
ended
31 Dec
2008
£000s
37,889
2,690
(752)
39,827
18.92
18.66
Profit attributable to ordinary shareholders
Amortisation of acquired intangibles
Tax on amortisation of acquired intangibles
Adjusted profit attributable to shareholders
Basic earnings per share before amortisation (pence)
Diluted earnings per share before amortisation (pence)
Report and Accounts 2009
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 85
10. Intangible assets
Intellectual
property rights
£000s
Customer
relationships
£000s
Cost
At 1 January 2009
Additions
Reduction in deferred consideration
Adjustment to prior year estimates
Foreign exchange differences
At 31 December 2009
201
–
–
–
–
201
Aggregate amortisation and impairment losses
At 1 January 2009
Amortisation
Foreign exchange differences
At 31 December 2009
Net book value at 31 December 2009
201
–
–
201
–
22,355
12,045
–
–
990
35,390
2,387
3,129
94
5,610
29,780
Intellectual
property rights
£000s
Customer
relationships
£000s
Cost
At 1 January 2008
Additions
Adjustment to prior year estimates
Foreign exchange differences
At 31 December 2008
201
–
–
–
201
Aggregate amortisation and impairment losses
At 1 January 2008
Amortisation
Foreign exchange differences
At 31 December 2008
Net book value at 31 December 2008
Net book value at 31 December 2007
201
–
–
201
–
–
4,872
12,727
2,508
2,248
22,355
672
1,607
108
2,387
19,968
4,200
Order
backlog
£000s
1,682
170
–
–
20
1,872
469
519
–
988
884
Order
backlog
£000s
–
1,682
–
–
1,682
–
469
–
469
1,213
–
Accounts
Trade
names
£000s
1,327
–
–
–
56
1,383
700
221
(6)
915
468
Goodwill
£000s
Total
£000s
255,146
18,742
(32)
269
907
275,032
12,221
–
–
12,221
262,811
280,711
30,957
(32)
269
1,973
313,878
15,978
3,869
88
19,935
293,943
85
Trade names
£000s
Goodwill
£000s
Total
£000s
–
1,206
–
121
1,327
–
614
86
700
627
–
218,860
24,628
(2,488)
14,146
255,146
12,221
–
–
12,221
242,925
206,639
223,933
40,243
20
16,515
280,711
13,094
2,690
194
15,978
264,733
210,839
rpsgroup.com
23846_DRAFT_27_Mar19_back.qxd 23/3/10 15:25 Page 86
Notes to the Consolidated Financial Statements continued
10. Intangible assets continued
Adjustment to prior year estimates
Acquisitions in 2008 were originally stated
at provisional values.These fair values have
now been finalised.
These adjustments have not been adjusted
in the prior year balance sheet on grounds
of immateriality in accordance with IAS 8.
Of the adjustment to 2008 prior year
estimates, £2,508,000 related to the
recognition of customer relationship
intangibles in respect of JD Consulting.
Goodwill acquired in a business
combination is allocated at acquisition to
the cash generating units (CGUs) that are
expected to benefit from that business
combination.The Group has re-presented
the allocation to CGUs on the basis of this
year’s revised segmentation.
86
Planning and Development
GB
Ireland
Australia
Total Planning and Development
Energy
Environmental Management
31 Dec 2009
£000s
31 Dec 2008
£000s
75,160
48,420
30,236
153,816
74,979
51,193
8,188
134,360
77,797
77,545
31,198
262,811
31,020
242,925
The Group tests annually for impairment, or
more frequently if there are indications that
goodwill might be impaired.
The recoverable amounts of the cash
generating units have been determined
from value in use calculations.The key
assumptions for the value in use
calculations are those regarding the
discount rates, growth rates and expected
changes to charge out rates during the
period. Management estimates discount
rates using post-tax rates that reflect
current market assessments of the time
value of money and the risks specific to the
cash generating units.The Group used a
discount rate of 10.6% based on its WACC.
Growth rates are based on management’s
expectations of future business volumes
and range from 0.6% to 3.6% per annum.
Changes in charge out rates are based on
past practices and expectations of future
changes in the respective markets.
The Group prepares cash flow forecasts
derived from the most recent financial
budgets approved by management and
extrapolates cash flows for the following
four years.The Group assumes a perpetuity
based terminal value.
Irish CGU
The Irish CGU’s recoverable amount
exceeds its carrying amount by £12.0m. If
the Group’s forecast growth rates in
respect of the Irish CGU (estimated to be
between 1.0% and 2.6%) reduce by 6
percentage points (to between - 5.0% and -
3.4%) or the Group’s discount rate
increases by 1.5 percentage points, the
CGU’s carrying amount would equal its
recoverable amount.
Report and Accounts 2009
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 87
11. Property, plant and equipment
Cost or valuation
At 1 January 2009
Additions
Disposals
Additions through acquisition
Foreign exchange differences
At 31 December 2009
Depreciation
At 1 January 2009
Charge for the year
Disposals
Foreign exchange differences
At 31 December 2009
Net book value at 31 December 2008
Net book value at 31 December 2009
Freehold
land and
buildings
£000s
Alterations
to leasehold
premises
£000s
12,142
–
–
–
(736)
11,406
2,148
226
–
(94)
2,280
9,994
9,126
1,636
275
(160)
1,339
208
3,298
725
313
(161)
21
898
911
2,400
Fixtures,
fittings,
IT and
equipment
£000s
47,208
3,511
(4,775)
3,886
38
49,868
34,019
5,999
(4,608)
(518)
34,892
13,189
14,976
Motor
vehicles
£000s
1,407
163
(272)
1,315
180
2,793
926
330
(198)
11
1,069
481
1,724
Accounts
Total
£000s
62,393
3,949
(5,207)
6,540
(310)
67,365
37,818
6,868
(4,967)
(580)
39,139
24,575
28,226
87
At 31 December 2009 the Group had alterations to leasehold properties, motor vehicles and office equipment held under finance lease
contracts with net book values of £1,313,000, £1,078,000 and £2,092,000 respectively.
Cost or valuation
At 1 January 2008
Additions through acquisition
Additions
Disposals
Foreign exchange differences
At 31 December 2008
Depreciation
At 1 January 2008
Provided for the year
Disposals
Foreign exchange differences
At 31 December 2008
Net book value at 31 December 2007
Net book value at 31 December 2008
Freehold
land and
buildings
£000s
Alterations
to leasehold
premises
£000s
11,042
–
–
(1,080)
2,180
12,142
1,839
207
(170)
272
2,148
9,203
9,994
1,211
57
403
(109)
74
1,636
557
228
(109)
49
725
654
911
Fixtures,
fittings,
IT and
equipment
£000s
43,155
729
5,435
(5,802)
3,691
47,208
31,849
5,448
(5,812)
2,534
34,019
11,306
13,189
Motor
vehicles
£000s
1,276
68
106
(170)
127
1,407
733
229
(124)
88
926
543
481
Total
£000s
56,684
854
5,944
(7,161)
6,072
62,393
34,978
6,112
(6,215)
2,943
37,818
21,706
24,575
At 31 December 2008 the Group had motor vehicles and office equipment held under finance lease contracts with net book values of
£111,000 and £2,000 respectively.
rpsgroup.com
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 88
Notes to the Consolidated Financial Statements continued
12. Subsidiaries
A list of the significant subsidiaries, including the name, country of incorporation and proportion of ownership interests is given in Note 5
to the Parent Company’s financial statements on page 112.
13.Trade and other receivables
88
Trade receivables
Less provision for impairment of trade receivables
Trade receivables net
Accrued income
Less provision for impairment of accrued income
Accrued income net
Prepayments
Other debtors
31 Dec
2009
£000s
98,138
(5,281)
92,857
41,598
(4,005)
37,593
5,364
3,433
139,247
31 Dec
2008
£000s
117,433
(6,143)
111,290
41,536
(4,136)
37,400
6,555
2,362
157,607
The Group’s trade and other receivables
All amounts shown under trade and other
All amounts shown under trade and other receivables fall due within one year.
have been reviewed for signs of impairment.
receivables fall due within one year.
The carrying value of trade and other receivables is considered a reasonable approximation of fair value.
Certain trade receivables were found to be
The carrying value of trade and other
The Group’s trade and other receivables have been reviewed for signs of impairment. Certain trade receivables were found to be impaired
impaired and a provision of £5,281,000
Certain trade receivables are past due but
receivables is considered a reasonable
and a provision of £[x] (2006:£[x]) has been recorded accordingly. Certain accrued income balances have been found to be impaired and
(2008: £6,143,000) has been recorded
have not been impaired.These relate to
approximation of fair value due to their
a provision of £[x] (2006: £[x]) have been recorded against them.The individ4a00aired balances mainly relate to customers who are
accordingly. Certain accrued income balances
customers where we have no history of
short term nature and the provisions for
experiencing unexpected financial difficulties.
have been found to be impaired and a
default and no concerns over their financial
impairment recorded against them.
provision of £4,005,000 (2008: £4,136,000)
Certain trade and other receivables are past due but have not been impaired.These relate to customers where we have no history of
situation.The ages of financial assets past
has been recorded against them.
default and no concerns over their financial situation.The age of financial assets past due but not impaired is as follows:
due but not impaired is as follows:
The individually impaired balances
mainly relate to items under discussion
with customers.
Ageing
Not more than three months
More than three months
Movements in impairment
As at 1 January 2009
Income statement charge
Receivables written off during the year as uncollectible
Additions through acquisitions
Foreign exchange
As at 31 December 2009
As at 1 January 2008
Income statement charge
Receivables written off during the year as uncollectible
Additions through acquisitions
Foreign exchange
As at 31 December 2008
Report and Accounts 2009
2009
£000s
11,131
14,524
25,655
Trade receivables Accrued income
£000s
£000s
6,143
11
(1,809)
1,066
(130)
5,281
2,695
3,098
(164)
117
397
6,143
4,136
873
(1,714)
848
(138)
4,005
2,383
2,398
(1,220)
–
575
4,136
2008
£000s
15,375
16,906
32,281
Total
£000s
10,279
884
(3,523)
1,914
(268)
9,286
5,078
5,496
(1,384)
117
972
10,279
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 89
13.Trade and other receivables continued
The carrying amounts of the Group’s trade and other receivables are denominated as follows:
UK Pound Sterling
Euro
US Dollar
Canadian Dollar
Australian Dollar
Other
Accounts
31 Dec
2009
£000s
54,913
37,904
13,285
3,651
29,056
438
139,247
31 Dec
2008
£000s
63,045
51,058
24,899
5,887
10,794
1,924
157,607
The maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivable mentioned above.
89
14.Trade and other payables
Trade creditors
Creditors for taxation and social security
Other creditors
Deferred income
Accruals
31 Dec
2009
£000s
16,822
11,053
3,039
13,120
24,644
68,678
31 Dec
2008
£000s
23,042
13,555
3,476
14,408
33,387
87,868
All amounts shown under trade and other payables fall due for payment within one year.
The carrying values of trade and other payables are considered to be a reasonable approximation of fair value due to the short term
nature of these liabilities.
rpsgroup.com
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 90
Notes to the Consolidated Financial Statements continued
15. Borrowings
Bank loans
Bank overdraft
Finance lease creditor
31 Dec
2009
£000s
41,949
–
4,505
46,454
90
Bank
loans
2009
£000s
Other
loans
2009
£000s
Total
2009
£000s
Bank
loans
2008
£000s
Other
loans
2008
£000s
The borrowings are repayable as follows:
On demand or in not more than one year
In the second year
In the third to fifth years inclusive
Less amount due for settlement within 12 months
Amount due for settlement after 12 months
419
256
41,274
41,949
419
41,530
1,383
1,213
1,909
4,505
1,383
3,122
1,802
1,469
43,183
46,454
1,802
44,652
407
–
45,148
45,555
407
45,148
49
27
12
88
49
39
31 Dec
2008
£000s
45,174
381
88
45,643
Total
2008
£000s
456
27
45,160
45,643
456
45,187
The principal features of the Group’s
borrowings are as follows:
(i)
(ii)
An uncommitted £1,000,000 bank
overdraft facility, repayable on
demand.
The Group has two principal
bank loans:
(a) A revolving credit facility of
£125,000,000, incorporating a
bonding facility, with Lloyds TSB Bank
Plc, the Group’s principal bank,
expiring in 2013. Loans carry interest
equal to LIBOR plus a margin
determined by reference to the total
bank borrowing of the Group.
There were loans drawn totalling
£40,931,000 (2008: £45,148,000)
and bonding facility utilisation of
£7,165,000 (2008: £6,316,000) at
31 December 2009.
The facility is guaranteed by the
Company and certain subsidiaries
but no security over the Group’s
assets exists.
(b) Australian Dollar denominated loans
of £1,018,000.The loans were taken
out between September 2004 and
October 2009 by a company that was
acquired by the Group in July 2009.
Repayments commenced in
September 2004 and will continue
until September 2014.The loans are
guaranteed by interlocking guarantees
between the acquired company’s
entities, fixed and floating charges
over its assets and a letter of credit
provided by Lloyds TSB Bank Plc.
The carrying amounts of our long term
borrowings approximate fair value as the
borrowings have been transacted in the
past two months and the loan is revolving
in nature.
Loan liquidity risk profile
2009
2008
< 1 year
2 years
3-5 years
1,736,668
1,736,668
43,604,715
47,078,051
1,303,839
1,303,839
48,459,132
51,066,810
The liquidity risk profile above shows the
expected cashflows in respect of the
Group’s loan facilities assuming that the
loan balance at year end remains constant
until expiry of the facilities. It also assumes
that interest and foreign exchange rates
remain constant at the rates existing at the
year end for that period.
Report and Accounts 2009
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 91
Accounts
16. Obligations under finance leases
Amounts payable under finance leases:
Minimum
lease
payments
2009
£000s
1,717
3,550
5,267
Less
future
interest
charges
2009
£000s
(334)
(428)
(762)
Present
value of
minimum
lease
payments
2009
£000s
1,383
3,122
4,505
Minimum
lease
payments
2008
£000s
54
42
96
Less
future
interest
charges
2008
£000s
(5)
(3)
(8)
Present
value of
minimum
lease
payments
2008
£000s
49
39
88
Within one year
In two to five years
During the year the Group was assigned a number of motor vehicles under finance lease agreements as part of its acquired businesses.The
For the year ended 31 December 2009, the
average lease term is three years.
average effective borrowing rate was 8.9%.
Interest rates are fixed at the contract date.
All leases are on a fixed repayment basis
and no arrangements have been entered
into for contingent rental payments.
The Group’s obligations under finance
leases are secured by interlocking
guarantees between certain Group entities,
fixed and floating charges over Group
assets, the lessors’ rights over the leased
assets and a letter of credit provided by
Lloyds TSB Bank Plc.
The carrying amount of obligations under
finance leases is considered to be a
reasonable approximation of fair value.
91
17. Deferred consideration
The liability in respect of deferred consideration comprises shares and interest bearing and non-interest bearing cash obligations due to the
vendors of acquired businesses.
Cash due within one year:
Interest bearing
Non-interest bearing
Shares due within one year
Cash due between one and two years:
Interest bearing
Non-interest bearing
Shares due between one and two years
Cash due between two and five years:
Interest bearing
Total deferred consideration payable
Less amount due for settlement within 12 months
Amount due for settlement after 12 months
31 Dec
2009
£000s
10,210
4,822
620
15,652
5,640
–
–
5,640
3,649
3,649
24,941
15,652
9,289
31 Dec
2008
£000s
7,525
8,440
620
16,585
4,517
4,386
620
9,523
1,940
1,940
28,048
16,585
11,463
Deferred consideration is recorded at present value calculated with reference to the local rates of the acquisitions concerned (varying
between 2.84% and 6.34%).The movement in fair value is taken through the profit and loss in the financing costs line.
rpsgroup.com
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 92
Notes to the Consolidated Financial Statements continued
18. Provisions
Warranty
Property
Property
The provision for property costs relates to operating lease rentals and related costs on vacated property and will be utilised within [7]
This provision is in respect of contractual
The provision for property costs relates to
years.
obligations and will be utilised within
operating lease rentals and related costs on
5 years.
vacated property and will be utilised within
Warranty
16 years.
This provision is in respect of the pre-acquisition contractual obligations of acquired entities and will be utilised within
[9] years.
This provision is in respect of reinstatement
obligations related to leasehold properties
and will be utilised within 16 years.
Dilapidations
Property
£000s
Warranty
£000s
Dilapidations
£000s
92
As at 1 January 2009
Additional provision in the year
Utilised in year
On acquisition of subsidiary
Exchange difference
At 31 December 2009
Due as follows:
Within one year
After more than one year
1,337
585
(273)
75
(56)
1,668
951
–
(429)
–
(12)
510
The carrying value of the provisions disclosed above is a reasonable approximation of their fair value.
19. Deferred taxation
The movement for the year in the Group’s net deferred tax position was as follows:
At 1 January
Charge to income for the year
Charge to equity for the year
Liability acquired on acquisition of subsidiary
Exchange differences
At 31 December
2,698
35
(511)
140
3
2,365
2009
£000s
1,324
3,219
4,543
2009
£000s
(6,746)
821
148
(4,015)
1
(9,791)
Total
£000s
4,986
620
(1,213)
215
(65)
4,543
2008
£000s
1,417
3,569
4,986
2008
£000s
114
(2,421)
(971)
(3,380)
(88)
(6,746)
Report and Accounts 2009
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 93
Accounts
19. Deferred taxation continued
Deferred tax assets
At 1 January 2008
Reclassifications
Charge to income for the year
Charge to equity for the year
Asset acquired on acquisition of subsidiary
Exchange differences
At 1 January 2009
Reclassifications
Charge to income for the year
Charge to equity for the year
Asset acquired on acquisition of subsidiary
Exchange differences
At 31 December 2009
Deferred tax liabilities
At 1 January 2008
Reclassifications
Charge to income for the year
Asset acquired on acquisition of subsidiary
Exchange differences
At 1 January 2009
Reclassifications
Charge to income for the year
Asset acquired on acquisition of subsidiary
Exchange differences
At 31 December 2009
Depreciation
in excess of
capital
allowances
£000s
Employment
benefits
£000s
Tax losses
£000s
Provisions
£000s
Share based
payments
£000s
487
426
(194)
–
5
28
752
–
66
–
(6)
18
830
805
–
5
–
62
44
916
–
(208)
–
851
63
1,622
63
–
(35)
–
–
–
28
–
(228)
–
230
(1)
29
344
211
(286)
–
179
28
476
(476)
–
–
–
–
–
1,392
–
(364)
(971)
–
–
57
–
265
148
–
–
470
Total
£000s
3,091
637
(874)
(971)
246
100
2,229
(476)
(105)
148
1,075
80
2,951
93
Foreign
exchange on
investments
£000s
Revaluation
of properties
£000s
Tax
deductible
goodwill
£000s
Provisions
£000s
Other
£000s
Total
£000s
–
(211)
(1,416)
–
–
(1,627)
–
742
–
–
(885)
(274)
–
–
–
(87)
(361)
–
–
–
29
(332)
(2,492)
(417)
(56)
(3,775)
(34)
(6,774)
(82)
569
(4,070)
25
(10,332)
–
–
–
–
–
–
476
(288)
(1,020)
(137)
(969)
(211)
(9)
(75)
149
(67)
(213)
82
(97)
–
4
(224)
(2,977)
(637)
(1,547)
(3,626)
(188)
(8,975)
476
926
(5,090)
(79)
(12,742)
rpsgroup.com
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 94
Notes to the Consolidated Financial Statements continued
20. Share capital
Ordinary shares of 3p each
240,000,000
7,200
240,000,000
7,200
Authorised
2009
Number
Authorised
2009
£000s
Authorised
2008
Number
Authorised
2008
£000s
94
Ordinary shares of 3p each
At 1 January
Issued under share option schemes
Issued under save as you earn schemes
Issued under the Share Incentive Plan
Issued in respect of the Performance Share Plan
Issued in respect of the Long Term Incentive Plan
Issued in consideration for acquisitions during the year
Issued in respect of deferred consideration related to
acquisitions in prior years
At 31 December
Ordinary shares held by the ESOP Trust
Ordinary shares held by the SIP Trust
Issued and fully paid
2009
£000s
2009
Number
Issued and fully paid
2008
£000s
2008
Number
213,286,497
313,713
1,000
457,668
384,006
386,955
–
417,438
215,247,277
6,399
9
–
14
11
12
–
12
6,457
210,632,004
283,011
56,148
317,623
409,940
407,194
1,088,665
91,912
213,286,497
6,319
8
2
10
12
12
33
3
6,399
2009
Number
2008
Number
859,575
2,905,608
668,111
2,442,526
The ESOP Trust has elected to waive the dividend on the unallocated ordinary shares held.
The table below shows options outstanding at 31 December 2009.
There are options over 15,000 of the shares held in the ESOP Trust outstanding that are included in the table below.These are exercisable
between 2005 and 2011 at an exercisable price range of 153p to 171p.
Period exercisable
Number
Exercise price (p)
2003 - 2010
2004 - 2011
2005 - 2012
2006 - 2013
2007 - 2014
2008 - 2015
2011 - 2018
86,600
62,750
116,166
233,312
61,455
297,948
315,000
1,173,231
125 - 143
136 - 154
125 - 149
111 - 171
149
111 - 147
295
Please see page 66 in the Report of the Directors for details of the Group’s capital management procedures.
Report and Accounts 2009
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 95
21. Other reserves
At 1 January 2008
Changes in equity during 2008
Exchange differences
Issue of new shares
At 31 December 2008
Changes in equity during 2009
Exchange differences
Issue of new shares
At 31 December 2009
Accounts
Merger
reserve
£000s
Employee
trust
£000s
Shares to
be issued
£000s
Translation
reserve
£000s
Total
other
£000s
16,993
(2,943)
222
3,244
17,516
–
3,086
20,079
–
608
20,687
–
(640)
(3,583)
–
(836)
(4,419)
–
(222)
–
23,811
–
27,055
23,811
2,224
43,551
–
–
–
(3,804)
–
23,251
(3,804)
(228)
39,519
95
The following describes the nature and purpose of each reserve within equity:
Reserve
Description and purpose
Share premium
Premium on shares issued in excess of nominal value, other than on shares issued in respect of acquisitions when
merger relief is taken.
Merger reserve
Premium on shares issued in respect of acquisitions when merger relief is taken.
Employee trust
Own shares held by the SIP and ESOP trusts.
Shares to be issued
Shares to be issued in respect of deferred consideration, where the number of shares to be issued
is fixed.
Translation reserve
Cumulative gains/losses arising on retranslating the net assets of overseas operations into sterling.
Retained earnings
Cumulative net gains and losses recognised in the consolidated statement of comprehensive income and
consolidated statement of changes in equity.
rpsgroup.com
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 96
Notes to the Consolidated Financial Statements continued
22. Dividends
Amounts recognised as distributions to equity holders during the period:
Final dividend for the year ended 31 December 2008 of 1.91p (2007: 1.66p) per share
Interim dividend for the year ended 31 December 2009 of 2.01p (2008: 1.75p) per share
Proposed final dividend for the year ended 31 December 2009 of 2.19p (2008: 1.91p) per share
Year
ended
31 Dec
2009
£000s
4,093
4,317
8,410
4,728
Year
ended
31 Dec
2008
£000s
3,498
3,713
7,211
4,088
The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in
the financial statements.
96
23. Operating lease arrangements
At 31 December 2009 the Group’s total remaining commitments as lessee under non-cancellable operating leases for certain of its office
properties and motor vehicles was as follows:
Commitments
Within one year
In two to five years
After five years
Operating leases - lessor
Property
2009
£000s
9,639
24,456
17,941
52,036
Property
2008
£000s
6,815
19,914
22,876
49,605
Other
2009
£000s
2,710
2,713
–
5,423
Other
2008
£000s
2,961
3,677
–
6,638
Certain properties have been vacated prior to the end of the lease term. Where possible the Group always endeavours to sub-lease such
vacant space on short term lets. The sub-lease rental income during the year ended 31 December 2009 was £191,000 (2008: £111,000).
The minimum rent receivable under non-cancellable operating leases is as follows:
Receivables
Within one year
In two to five years
After five years
2009
£000s
107
171
14
292
2008
£000s
127
260
36
423
Report and Accounts 2009
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 97
Accounts
24. Related party transactions
Related parties as defined by IAS 24, are the subsidiary companies and members of the Executive Board.Transactions between the
the Company and its subsidiaries have been
Related parties, as defined by IAS 24, are
Company and its subsidiaries have been eliminated on consolidation and are not disclosed in this note.There were no transactions within
eliminated on consolidation and are not
the subsidiary companies and members of
the year in which the Directors had any interest.
disclosed in this note.There were no
the Executive Board.Transactions between
transactions within the year in which the
Directors had any interest.
25. Notes to the Consolidated Cash Flow Statement
Profit before tax
Adjustments for:
Interest payable and similar charges
Interest receivable
Depreciation
Amortisation of acquired intangibles
Share based payment expense
Loss/(profit) on sale of property, plant and equipment
Share of profit of associates
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade and other payables
Cash generated from operations
Year ended
31 Dec
2009
£000s
Year ended
31 Dec
2008
£000s
48,603
54,822
97
3,113
(268)
6,868
3,869
3,280
152
(78)
31,223
(26,179)
70,583
4,424
(384)
6,112
2,690
2,794
(179)
–
(8,175)
5,282
67,386
The table below provides an analysis of net bank borrowings, comprising cash and cash equivalents, interest bearing bank loans and finance
leases, during the year ended 31 December 2009.
Cash and cash equivalents
Bank loans
Finance lease creditor
Net bank borrowings
At
31 Dec 2008
£000s
16,707
(45,174)
(88)
(28,555)
Cash flow
£000s
Acquisitions
£000s
Foreign
Exchange
£000s
At
31 Dec 2009
£000s
(4,366)
9,023
599
5,256
_
(4,007)
(4,519)
(8,526)
1,350
(1,791)
(497)
(938)
13,691
(41,949)
(4,505)
(32,763)
26. Major non-cash transactions
There were no major non-cash transactions during the year.
rpsgroup.com
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 98
Notes to the Consolidated Financial Statements continued
27. Acquisitions
Conics Ltd
The Group completed the acquisition of
100% of the issued share capital of Conics
Ltd on 30 July 2009. Conics is a multi-
disciplinary consultancy based on the East
coast of Australia, primarily in Queensland.
This transaction has been accounted for
under the purchase method of accounting.
Prior to acquisition, Conics kept their own
management accounts and adding their
results to those of the rest of the Group
would produce Group revenue for the
period of £464,154,000 and Group profit
before tax of £51,950,000. Intangible assets
arising on acquisition have been recognised
at fair value.The residual excess over the
net assets acquired, including intangible
assets, is recognised as goodwill in the
financial statements.
The Group has allotted provisional fair
values to the net assets acquired as it did
not have complete information at the
balance sheet date. Details of the carrying
values of the acquired net assets and the
provisional fair values allotted to them by
the Group are as follows:
98
Intangible assets:
Customer relationships
Order backlog
Other intangibles
Property, plant and equipment
Cash
Other assets
Other liabilities
Net assets acquired
Consideration
Initial consideration - cash
Deferred consideration - cash
Expenses of acquisition
Total cost of acquisition
Goodwill arising on acquisition
Book value
£000s
Fair value
£000s
–
–
5,259
6,540
505
11,764
(13,373)
10,695
12,045
170
–
6,540
505
11,764
(17,037)
13,987
21,132
11,162
435
32,729
18,742
The fair value adjustments made to the
preacquisition carrying values to determine
provisional fair values relate to the
recognition of intangible fixed assets and
the associated deferred tax.
The Group has not recognised a trade
name intangible on the basis of materiality
and has recently commenced the
rebranding of Conics to RPS.
Goodwill represents the value of the
assembled workforce acquired.The
contribution of Conics for the period post
acquisition to Group revenue has been
£15,559,000 and to Group profit before
tax has been £2,595,000.
Prior period acquisitions
In 2008 the Group completed the
acquisition of ten companies - Kraan
Consulting Holding BV, RW Gregory LLP,
WTW and Associates Ltd, Oceanfix
International Ltd,The Land Management
Unit Trust Ltd, Rudall Blanchard Associates
Group Ltd,The Geocet Group LLC,
Mountainheath Services Ltd, Paras Ltd and
Business and Environmental
Communications Ltd.The provisional fair
values allotted to the net assets of these
acquisitions have now been finalised.The
net effect has been to credit net assets
acquired by £237,000 relating to the
recognition of additional liabilities and the
associated tax effects.
Report and Accounts 2009
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 99
28.Derivatives and other
financial instruments
Set out below are the narrative disclosures
relating to financial instruments.
It is exposed to a lesser extent to liquidity
risk.The Board reviews and agrees policies
for managing each of these risks and they
are summarised below.
Financial instruments
Foreign currency risk
The Group’s financial assets comprise cash
and trade and other receivables which are
categorised as “Loans and other
receivables” and held at amortised cost.
The Group’s financial liabilities comprise
bank loans and trade and other payables
which are categorised as “Other financial
liabilities” and held at amortised cost. The
fair value of the loan is determined by
discounting at the loan interest rate. The
Group occasionally uses forward foreign
currency contracts to manage transactional
currency risks arising from the Group’s
operations.
It is, and has been throughout the period
under review, the Group’s policy that no
trading in financial instruments shall be
undertaken.
Foreign currency risk and interest rate risk
are the most significant aspects for the
Group in the area of financial instruments.
The Group, which is based in the UK and
reports in sterling, has investments in
overseas operations in the Netherlands,
Ireland, USA, Canada and Australia that
have functional currencies other than
sterling. As a result the Group’s balance
sheet and income statement can be
affected by movement in the exchange rate
between sterling and the functional
currencies of overseas operations.The most
important exchange rate as far as the
Group is concerned is the pound/euro rate.
The fair value of the forward foreign
exchange contracts held at year end was
not material.
The Group does not hedge balance sheet
and income statement translation exposures.
Accounts
credit facility principally in sterling at fixed
rates of interest for the term of the loan.
The Group’s overdraft bears interest at
floating rates. Surplus funds are placed on
short-term deposit or held within accounts
bearing interest related to bank base rate.
Liquidity risk
The Group has strong cash flow and the
funds generated by operating companies
are managed on a country basis.The Group
also considers its long-term funding
requirements as part of the annual business
planning cycle. Please see note 15 for
further detail of the Group’s bank facilities.
Credit risk
The Group is mainly exposed to credit risk
from credit sales. It is Group policy,
implemented locally, to assess the credit risk
of new customers before entering
contracts.The Group does not enter into
complex derivatives to manage credit risk.
Fair values
99
Interest rate risk
The Group draws down short term loans,
that may be renewed, against its revolving
The fair value of the financial assets and
liabilities of the Group are considered to be
materially equivalent to their book value.
Classification of financial instruments
Cash
Trade and other receivables
Loans and other receivables
Bank loans
Trade and other payables
Other financial liabilities
2009
£000s
13,691
139,247
152,938
41,949
68,678
110,627
2008
£000s
17,088
157,607
174,695
45,555
87,868
133,423
rpsgroup.com
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 100
Notes to the Consolidated Financial Statements continued
29. Foreign currency risk
The table below shows the extent to which
Group companies have monetary assets
and liabilities in currencies other than their
own functional currency. Foreign exchange
differences arising on the translation of
these assets and liabilities were taken to the
income statement of the Group companies
during the year.
Net foreign currency monetary assets/(liabilities) at 31 December 2009
Sterling
£000s
Euro US Dollar
£000s
£000s
Norwegian Australian
Dollar
£000s
Krone
£000s
Central
African
Francs
£000s
Russian
Roubles
£000s
Canadian
Dollars
£000s
Other
£000s
Total
£000s
100
Functional currency of
Group operation
Sterling
Euro
Australian Dollar
Canadian Dollar
Malaysian Ringgit
At 31 December 2009
–
90
(181)
(252)
–
(343)
12,370
–
–
(5)
–
12,365
1,018
(21)
790
(89)
(246)
1,452
177
–
–
–
–
177
1,104
–
–
–
(36)
1,068
99
–
–
–
–
99
80
–
–
–
–
80
(1,045)
–
(28)
–
–
(1,073)
(152)
–
39
–
–
(113)
13,651
69
620
(346)
(282)
13,712
Net foreign currency monetary assets/(liabilities) at 31 December 2008
Sterling
£000s
Euro US Dollar
£000s
£000s
Norwegian Australian
Dollar
£000s
Krone
£000s
Canadian
Dollar
£000s
Danish
Krone
£000s
Russian
Rouble
£000s
Other
£000s
Total
£000s
Functional currency of
Group operation
Sterling
Euro
Australian Dollar
Canadian Dollar
Malaysian Ringitt
At 31 December 2008
–
224
111
143
–
478
(641)
–
59
–
–
(582)
1,376
(32)
(138)
(279)
(91)
836
325
–
–
–
–
325
183
–
–
–
–
183
162
–
(3)
–
–
159
131
–
–
–
–
131
310
–
–
–
–
310
30
–
88
–
–
118
1,876
192
117
(136)
(91)
1,958
Foreign currency sensitivity
The Group considers the volatility of
currency markets over the year to be
representative of the foreign currency risk
it is exposed to.The main exposures the
Group had at year end were Euros and US
Dollars. Over the year these currencies
showed volatilities of up to 14% and 24%
respectively. If Sterling strengthened against
these currencies by 14% and 24%, the
impact would be to reduce Group profit by
£69,000.
these currencies the impact would have
If Sterling had weakened against
been to increase Group profit by £95,000.
This impact is calculated by applying a
typical contract period of 14 days.These
movements would have had no impact on
Group equity and reserves.
Report and Accounts 2009
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 101
Accounts
30. Interest rate risk
Interest rate risk and profile of financial liabilities and assets
The interest rate risk profile of the Group’s financial liabilities which at 31 December 2009 comprised deferred consideration, finance lease
obligations and bank loans, were as follows:
Currency
Sterling
Euro
Australian Dollar
Canadian Dollar
US Dollar
At 31 December
Floating rate financial liabilities
2008
£000s
2009
£000s
Fixed rate financial liabilities
2008
£000s
2009
£000s
–
–
–
–
–
–
–
257
–
124
–
381
7,509
1,567
52,951
443
8,925
71,395
37,803
6,047
11,725
842
16,893
73,310
The maturity profile of financial liabilities is as follows:
Floating rate financial liabilities
2008
£000s
2009
£000s
Fixed rate financial liabilities
2008
£000s
2009
£000s
Within one year
In one to two years
In two to five years
–
–
–
–
381
–
–
381
17,454
7,110
46,831
71,395
Currency
Sterling
Euro
Australian Dollar
Canadian Dollar
US Dollar
Weighted
average
interest
rate
%
2009
4.9
4.1
5.4
1.4
1.4
4.8
16,660
9,325
47,325
73,310
Weighted
average
interest
rate
%
2008
3.6
3.8
5.9
3.7
2.2
3.7
101
2009
£000s
7,509
1,567
52,951
443
8,925
71,395
2009
£000s
17,454
7,110
46,831
71,395
Total
2008
£000s
37,803
6,304
11,725
966
16,893
73,691
Total
2008
£000s
17,041
9,325
47,325
73,691
Fixed rate financial liabilities
Weighted
average
period for
which rate
is fixed
– months
2008
Weighted
average
period for
which rate
is fixed
– months
2009
7
7
9
1
1
7
5
5
6
1
2
5
rpsgroup.com
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 102
Notes to the Consolidated Financial Statements continued
30. Interest rate risk continued
Cash balances at year end
Currency
Sterling
Euro
US Dollar
Australian Dollar
Canadian Dollar
Other
At 31 December
2009
£000s
(1,816)
8,207
2,980
2,396
1,559
365
13,691
2008
£000s
(1,153)
11,004
3,569
2,399
409
860
17,088
102
Cash balances are held in either non-interest bearing current accounts or instant access deposit accounts bearing floating rate interest.
Borrowing facilities
The Group has the following undrawn committed borrowing facilities available in respect of which all conditions precedent had been met.
The undrawn borrowing facilities comprise revolving credit facilities that expire between two and five years where interest costs are fixed
at the time drawings are made. During 2009, the Group had an overdraft facility expiring within one year, carrying floating rate interest.
Expiring in more than 2 years but not more than 5 years
31 Dec
2009
£000s
31 Dec
2008
£000s
76,904
48,536
Interest rate sensitivity
The Group considers the volatility of interest rates over the year to be representative of the potential interest rate risk it is exposed to.
Over 2009, the weighted average interest rates the Group pays have increased by 1.1%. A 1.1% decrease in interest rates would increase
Group profit by £460,000. A further 1.1% increase in interest rates would decrease Group profit by £460,000.
Report and Accounts 2009
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 103
Accounts
31. Credit Risk
The Group’s exposure to credit risk is limited to the carrying amount of financial assets recognised at the balance sheet date, as
summarised below:
Class of financial asset
Cash and cash equivalents
Trade and other receivables
2009
£000s
2008
£000s
13,691
130,450
144,141
17,088
148,690
165,778
The directors consider the above financial assets that are not impaired to be of good credit quality including those that are past due. See
In respect of trade and other receivables,
The directors consider the above financial
note 12 for further detail on receivables that are past due.
the group is not exposed to any significant
assets that are not impaired to be of good
credit risk exposure to any single
credit quality including those that are past
None of the group’s assets are secured by collateral.
counterparty or any group of
due. See note 13 for further detail on
In respect of trade and other receivables, the group is not exposed to any significant credit risk exposure to any single counterparty or any
counterparties with similar characteristics.
receivables that are past due.
group of counterparties with similar characteristics.
None of the group’s assets are secured
The credit risk for liquid funds is considered negligible, since the counterparties are reputable banks with high quality external credit ratings.
by collateral.
The credit risk for liquid funds is considered
negligible, since the counterparties are
reputable banks with high quality external
credit ratings and are supported by the
government.
103
32. Share-based payments
In accordance with IFRS 2, the Group has
recognised an expense to the income
statement representing the fair value of
outstanding equity settled share based
payment awards to employees which have
not vested as at 1 January 2009 for the
period ended 31 December 2009.
The Group has calculated the fair market
value of options using a binomial model
and for whole share awards the fair value
has been based on the market value of
the shares at the date of grant adjusted
to take into account some of the terms
and conditions upon which the shares
were granted.
Those fair values were charged to the
income statement over the relevant vesting
period adjusted to reflect actual and
expected vesting levels.
It should be noted that the Group has not
relied on the exemption afforded under
IFRS 1 to exclude instruments granted
before 7 November 2002.
Prior to 2004, the Group granted options
and super options to employees under the
Executive Share Option Scheme (“ESOS”)
and Save as You Earn (“SAYE”) scheme.
Under the ESOS, share options are granted
at the market price on the date of grant
with the exercise of options subject to the
satisfaction of corporate performance
conditions and continuity of employment
provisions. For SAYE options, share options
are granted at the market price on the date
of grant. Employees can exercise the SAYE
option at the end of their savings contract.
Since 2004 the Group has incentivised and
motivated employees through the grant of
conditional share awards under the Long
Term Incentive Plan (“LTIP”) for Executive
Directors and other senior directors; the
Performance Share Plan (“PSP”), for senior
managers and staff, and the Share Incentive
Plan (“SIP”), available to staff. Under these
arrangements shares are granted at no cost
to the employee.The release of shares
granted under the LTIP and PSP are subject
to the satisfaction of corporate
performance conditions and continuity of
employment provisions.The release of
shares under the SIP are subject to
continuity of employment provisions.
The following tables set out details of share
schemes activity over the year from
1 January 2009:
rpsgroup.com
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 104
Notes to the Consolidated Financial Statements continued
32. Share-based payments continued
Share Options
Year of
grant
1999
2000
2001
2002
2003
2004
2008
Weighted
average
exercise
price
104
Number
outstanding
31 Dec 2008
19,500
140,600
96,500
240,347
695,744
1,750
315,000
1,509,441
New grants
Exercised
Lapsed
–
–
–
–
–
–
–
–
(18,000)
(49,000)
(8,000)
(62,976)
(175,737)
–
–
(313,713)
(1,500)
(500)
(1,000)
(8,000)
(16,947)
–
–
(27,947)
Grants
replaced
Number
outstanding
31 Dec 2009
Weighted
average
exercise
price
–
1,500
2,750
500
700
–
–
5,450
–
92,600
90,250
169,871
503,760
1,750
315,000
1,173,231
73p
128p
166p
149p
111p
118p
295p
Vesting
conditions
3 or 5 years
3 or 5 years
3 or 5 years
3 or 5 years
3 or 5 years
3 years
3 years
162p
124p
122p
145p
173p
The weighted average share price at the date of exercise during the period was £1.99.
Number
outstanding
31 Dec 2007
19,500
21,000
161,100
114,623
343,975
810,714
1,750
–
1,472,662
New grants
Exercised
Lapsed
–
–
–
–
–
–
–
315,000
315,000
(9,000)
(1,500)
(21,000)
(57,996)
(90,921)
(102,594)
–
–
(283,011)
(10,500)
–
(1,000)
–
(13,957)
(14,376)
–
–
(39,833)
Grants
replaced
Number
outstanding
31 Dec 2008
Weighted
average
exercise
price
–
–
1,500
39,873
1,250
2,000
–
–
44,623
–
19,500
140,600
96,500
240,347
695,744
1,750
315,000
1,509,441
53p
73p
128p
166p
149p
111p
118p
295p
Vesting
conditions
3 or 5 years
3 or 5 years
3 or 5 years
3 or 5 years
3 or 5 years
3 or 5 years
3 years
3 years
126p
295p
134p
109p
167p
162p
Year of
grant
1998
1999
2000
2001
2002
2003
2004
2008
Weighted
average
exercise
price
The weighted average share price at the date of exercise during the period was £3.10.
Report and Accounts 2009
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 105
Accounts
SAYE
Year of grant
2003
Year of grant
2003
LTIP
Year of grant
2006
2007
2008
2009
Year of grant
2005
2006
2007
2008
Number
outstanding
31 Dec 2008
Exercised
Lapsed
Number
outstanding
31 Dec 2009
42,508
42,508
(1,000)
(1,000)
(41,508)
(41,508)
–
–
Number
outstanding
31 Dec 2007
98,656
98,656
Exercised
(56,148)
(56,148)
Number
outstanding
31 Dec 2008
42,508
42,508
Lapsed
–
–
Number
outstanding
31 Dec 2008
386,955
347,987
323,804
–
1,058,746
Number
outstanding
31 Dec 2007
407,194
386,955
347,987
–
1,142,136
New grants
Releases
Forfeits
–
–
–
721,812
721,812
(386,955)
–
–
–
(386,955)
–
–
(38,709)
(83,624)
(122,333)
New grants
Releases
Forfeits
–
–
–
323,804
323,804
(407,194)
–
–
–
(407,194)
–
–
–
–
–
Exercise
price
Vesting
conditions
147p
3 or 5 years
Exercise
price
Vesting
conditions
147p
3 or 5 years
105
Number
outstanding
31 Dec 2009
–
347,987
285,095
638,188
1,271,270
Number
outstanding
31 Dec 2008
–
386,955
347,987
323,804
1,058,746
Vesting
conditions
3 years
3 years
3 years
3 years
Vesting
conditions
3 years
3 years
3 years
3 years
rpsgroup.com
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 106
Notes to the Consolidated Financial Statements continued
32. Share-based payments continued
PSP
Year of grant
2005
2006
2007
2008
2009
106
Year of grant
2005
2006
2007
2008
SIP
Year of grant
2005
2006
2007
2008
2009
Year of grant
2004
2005
2006
2007
2008
Number
outstanding
31 Dec 2008
9,869
339,111
519,161
108,387
–
976,528
Number
outstanding
31 Dec 2007
299,089
443,719
575,525
–
1,318,333
Number
outstanding
31 Dec 2008
3,539
301,828
272,241
643,794
–
1,221,402
Number
outstanding
31 Dec 2007
57,382
350,984
354,522
324,003
–
1,086,891
New grants
Releases
Lapses
–
–
–
–
1,520,898
1,520,898
(9,869)
(308,064)
(65,098)
(978)
(7,972)
(391,981)
–
(19,003)
(23,872)
(6,508)
(18,292)
(67,675)
New grants
Releases
Lapses
–
–
–
111,058
111,058
(288,335)
(90,640)
(30,848)
(117)
(409,940)
(885)
(13,968)
(25,516)
(2,554)
(42,923)
New grants
Releases
Forfeits
–
–
–
–
639,297
639,297
(100)
(5,754)
(9,306)
(23,244)
(12,525)
(50,929)
(3,439)
(280,702)
(29,075)
(66,449)
(26,944)
(406,609)
New grants
Releases
Forfeits
–
–
–
–
666,448
666,448
(57,382)
(328,884)
(18,799)
(15,652)
(10,189)
(430,906)
–
(18,561)
(33,895)
(36,110)
(12,465)
(101,031)
Number
outstanding
31 Dec 2009
–
12,044
430,191
100,901
1,494,634
2,037,770
Number
outstanding
31 Dec 2008
9,869
339,111
519,161
108,387
976,528
Number
outstanding
31 Dec 2009
–
15,372
233,860
554,101
599,828
1,403,161
Number
outstanding
31 Dec 2008
–
3,539
301,828
272,241
643,794
1,221,402
Vesting
conditions
3 years
3 years
2 or 3 years
1, 2 or 3 years
3 years
Vesting
conditions
3 years
3 years
2 or 3 years
1, 2 or 3 years
Vesting
conditions
3 years
3 years
3 years
3 years
3 years
Vesting
conditions
3 years
3 years
3 years
3 years
3 years
Report and Accounts 2009
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 107
Accounts
33. Events after the balance
sheet date
There were no material post balance
sheet events.
34. Contingent liabilities
As at 31 December 2009, the Group had
contingent liabilities in respect of contractual
performance guarantees and other matters
entered into, for or on behalf of certain
Group undertakings. It is not expected that
any material liability will arise in respect
thereof, and the Directors estimate that the
fair value of such guarantees is not material.
107
PSP
For the purposes of calculating the fair
value of conditional shares awarded under
the PSP the fair value was calculated as the
market value of the shares at the date of
grant adjusted to reflect the fact that a
participant is not entitled to receive
dividends over the performance period.
Fair value at
measurement date
Weighted fair value
PSP awards
130.01p - 346.32p
193.55p
1, 2 or 3 years
1.45% - 1.50%
1.45%
Holding period
4.1% - 5.2%
4.1% - 4.5%
SIP
Expected dividend yield
0.76% - 2.44%
For the purposes of calculating the fair
value of conditional shares awarded under
the SIP, the fair value was calculated as the
market value of the shares at the date of
grant. Participants are entitled to receive
dividends over the three year holding
period therefore no adjustment was made
to the market value.
Fair value at
measurement date
Weighted fair value
Holding period
SIP awards
126.00p - 389.75p
209.22p
3 years
During the year ended 31 December 2009,
the Group recognised expense of
£3,280,000 related to the fair value of the
share based payment arrangements (year
ended 31 December 2008: £2,794,000).
In determining the charge to the income
statement the Group made the following
assumptions with regard to annual lapse
rates as at the date of grant:
Share scheme
Annual lapse rate
ESOS
SAYE
LTIP
PSP
SIP
13%
5%
0%
5%
5%
In addition, the Group estimated that all
other non-market based performance
conditions would be satisfied in full.
rpsgroup.com
Share Options and SAYE
Options
The fair values of the above equity
instruments have been determined
using the following criteria:
Share Options
SAYE
Share price
on grant
Expected
volatility
111 - 295.25p
147p
26.8% - 31.6% 26.3% - 28.5%
Expected life
3 or 5 years
3 or 5 years
Expected
dividend yield
Risk-free
interest rate
Fair value at
measurement
date
Weighted
fair value
33.01p - 94.22p 43.51p - 54.83p
42.93p
50.13p
The volatility has been based on the
annualised average of the standard
deviations of the daily historical
continuously compounded returns of the
Group’s share price over the most
appropriate period from the date of grant.
The risk-free rate of interest was assumed
to be the yield to maturity on a UK Gilt
strip with the term to maturity equal to the
expected life of the option.
The expected dividend yield is an estimate
of the dividend yield at the date of grant for
the duration of the option’s life.
LTIP
For LTIP awards with an earnings per share
performance condition, the fair value has
been calculated as the market value of the
shares on the date of grant adjusted to
reflect the fact that a participant is not
entitled to receive dividends over the three
year performance period.
Fair value at
measurement date
Weighted fair value
Holding period
LTIP awards
133.12p - 301.25p
189.95p
3 years
Expected dividend yield
0.88% - 2.38%
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 108
Parent Company Balance Sheet
Fixed assets
Intangible assets
Tangible assets
Investments
Current assets
Debtors
Cash at bank and in hand
108
Creditors: amounts falling due within one year
Net current assets
Total assets less current liabilities
Creditors: amounts falling due after more than one year
Provisions for liabilities
Net assets
Capital and reserves
Called up share capital
Share premium account
Profit and loss reserve
Other reserves
Shareholders’ funds
Note
3
4
5
6
7
8
9
11, 12
12
12
12
As at
31 Dec
2009
£000s
844
2,469
192,132
195,445
77,473
3,115
80,588
28,115
52,473
247,918
40,931
52
206,935
6,457
98,238
85,940
16,300
206,935
As at
31 Dec
2008
£000s
910
2,724
177,270
180,904
53,914
2,465
56,379
51,059
5,320
186,224
45,635
52
140,537
6,399
95,531
22,079
16,528
140,537
These financial statements were approved and authorised for issue by the Board on 3 March 2010.
The notes on pages 109 to 115 form part of these financial statements.
Dr Alan Hearne, Director
Gary Young, Director
On behalf of the Board of RPS Group Plc.
Report and Accounts 2009
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 109
Notes to the Parent Company Financial Statements
Accounts
1. Accounting policies
The financial statements have been
prepared under the historical cost
convention as modified by the revaluation
of certain assets and are in accordance with
applicable UK accounting standards.The
following principal accounting policies have
been applied:
Goodwill
Goodwill arising on the acquisition of
businesses, representing any excess of the
fair value of the consideration given over
the fair value of the identifiable assets and
liabilities acquired is capitalised. Purchased
goodwill is written off on a straight line
basis over its useful economic life of
up to 20 years.
Valuation of investments
Investments held as fixed assets are stated
at cost, less any provision for impairment
in value.
Leased assets and assets held under hire
purchase contracts
Where assets are financed by hire purchase
or leasing agreements that give rights
approximating to ownership (finance
leases), the assets are treated as if they had
been purchased outright.The amount
capitalised is the present value of the
minimum lease payments payable during
the lease term.The corresponding leasing
commitments are shown as amounts
payable to the lessor. Depreciation on the
relevant assets is charged to the profit and
loss account.
Lease payments are split between capital
and interest using the actuarial method and
the interest element is charged to the profit
and loss account.
All other leases are treated as operating
leases.Their annual rentals are charged to
the profit and loss account on a straight
line basis over the lease term.
Tangible fixed assets
Foreign currency translation
Tangible fixed assets are stated at cost or
valuation, net of depreciation and any
provision for impairment.
Depreciation is provided to write off the
cost, less estimated residual values, of all
tangible fixed assets, excluding freehold
land, over their expected useful lives.
It is calculated at the following rates:
Freehold buildings
50 years
Alterations to
leasehold premises
Motor vehicles
Fixtures, fittings,
IT and equipment
Life of lease
4 years
3 to 8 years
Revaluation of properties
The Company has taken advantage of the
transitional arrangements in FRS 15
“Tangible Fixed Assets” and retained the
book values of certain freehold properties
that were revalued prior to implementation
of that standard. Where an asset that was
previously revalued is disposed of, its book
value is eliminated and an appropriate
transfer made from the revaluation reserve
to the profit and loss reserve.
Foreign currency transactions are translated
at the rates ruling when they occurred.
Foreign currency monetary assets and
liabilities are translated at the rates ruling
at the balance sheet date.
Pension costs
Contributions to the Company’s defined
contribution pension schemes are charged
to the profit and loss account in the year in
which they become payable.
Share based employee remuneration
The Company has applied FRS 20 “Share-
based payment” to all share options and
conditional share awards which were
granted to employees and had not vested
at 1 January 2005. A charge is recognised
on the same basis as that recognised for
the Group under IFRS 2 (see page 103).
Where the Company will be issuing shares
to satisfy share awards made by its
subsidiaries, the Company records a capital
contribution equal to the fair value of the
share-based payment incurred by its
subsidiaries except to the extent that the
subsidiaries reimburse the Company.
109
Taxation
Current tax, including UK corporation tax, is
provided at amounts expected to be paid
(or recovered) using the tax rates and laws
that have been enacted or substantively
enacted by the balance sheet date.
Deferred tax is recognised in respect of
timing differences that have originated but
not reversed at the balance sheet date
where transactions or events that result in
an obligation to pay more tax in the future
or a right to pay less tax in the future have
occurred at the balance sheet date.Timing
differences are differences between the
Company’s taxable profits and its results as
stated in the financial statements that arise
from the inclusion of gains and losses in tax
assessments in periods different from those
in which they are recognised in the
financial statements.
A net deferred tax asset is regarded as
recoverable and therefore recognised only
when, on the basis of all available evidence, it
can be regarded as more likely than not that
there will be suitable taxable profits from
which the future reversal of the underlying
timing differences can be deducted.
Deferred tax is not recognised when fixed
assets are sold and it is more likely than not
that the taxable gain will be rolled over,
being charged to tax only if and when the
replacement assets are sold.
Deferred tax is measured at the average
tax rates that are expected to apply in the
periods in which the timing differences are
expected to reverse, based on tax rates
and laws that have been enacted or
substantively enacted by the balance sheet
date. Deferred tax is measured on a non-
discounted basis.
Employee Share Ownership Plan (ESOP)
In accordance with UITF 32, the assets,
income and expenditure of the ESOP Trust
are incorporated into the Company
Financial Statements.
Financial instruments
Disclosures on financial instruments have not
been included in the Company’s financial
statements as its consolidated financial
statements include appropriate disclosures.
rpsgroup.com
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 110
Notes to the Parent Company Financial Statements continued
Financial assets
Loans and receivables
Loans and receivables are non-derivative
financial assets with fixed or determinable
payments that are not quoted in an
active market.
Trade debtors and other receivables are
recognised at fair value on inception and are
subsequently carried at amortised cost.They
are subject to impairment tests whenever
events or changes in circumstances indicate
that their carrying value may not be
recoverable. Impairment losses are taken to
the profit and loss account as incurred.
Financial liabilities
Amounts held at amortised cost
Trade creditors and other payables
including bank loans are recognised at fair
value on inception and are subsequently
carried at amortised cost.
2. Profit attributable to shareholders
No profit and loss account is provided for the Parent Company as allowed by Section 408 of the Companies Act 2006.
Year
ended
31 Dec
2009
£000s
Year
ended
31 Dec
2008
£000s
70,527
4,124
Goodwill
£000s
2,134
1,224
66
1,290
844
910
110
Profit for the year attributable to the shareholders of the Parent Company,
dealt with in the accounts of the Parent Company
The remuneration of the auditors for the statutory audit of the Company was £37,000 (2008: £40,000)
3. Intangible Assets
Cost
At 1 January 2009 and at 31 December 2009
Amortisation
At 1 January 2009
Charge for the year
At 31 December 2009
Net book value at 31 December 2009
Net book value at 31 December 2008
Report and Accounts 2009
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 111
4.Tangible Assets
Cost or valuation
At 1 January 2009
Transfers
Additions
Disposals
At 31 December 2009
Depreciation
At 1 January 2009
Transfers
Provided for the year
Disposals
At 31 December 2009
Net book value at 31 December 2009
Net book value at 31 December 2008
Accounts
Freehold
land and
buildings
£000s
Alterations
to leasehold
premises
£000s
Fixtures,
fittings,
IT and
equipment
£000s
2,045
(1)
–
–
2,044
440
–
44
–
484
1,560
1,605
253
(1)
–
(90)
162
114
–
3
(90)
27
135
139
3,334
127
273
(8)
3,726
2,354
111
495
(8)
2,952
774
980
Total
£000s
5,632
125
273
(98)
5,932
2,908
111
542
(98)
3,463
2,469
2,724
111
rpsgroup.com
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 112
Notes to the Parent Company Financial Statements continued
5. Investments
Shares are held directly by RPS Group Plc except where marked by an asterisk where they are held by a subsidiary undertaking.
All trading subsidiaries provide environmental consultancy services.
Subsidiary undertakings
Cost
At 1 January 2009
Additions
At 31 December 2009
Provisions
At 1 January 2009 and 31 December 2009
Net book value at 31 December 2009
Net book value at 31 December 2008
112
£000s
178,108
14,862
192,970
838
192,132
177,270
Additions in 2009 relate to restructuring of the USA companies and represent RPS Group Plc’s investment in the new US
holding company.
Subsidiary undertakings
The following were the principal operating subsidiaries during the year:
Proportion of
registration and operation ordinary share capital held
Country of
The Environmental Consultancy Limited
RPS Water Services Limited
RPS Energy Limited
RPS Energy Consultants Limited
RPS Ireland Limited
RPS Groep BV
RPS Advies BV
RPS Analyse BV
RPS BCC BV
RPS Kraan Consulting BV
RPS Kraan Detachering BV
RPS Group Limited
RPS Engineering Services Limited
RPS Planning & Environment Limited
RPS Consulting Engineers Limited
RPS Consultants Pty Limited
RPS Energy Pty Limited
RPS Environment Pty Limited
Harper Somers O’Sullivan Pty Limited
MetOcean Engineers Pty Limited
Conics Limited
Cambrian Consultants (CC) America Inc
Exploration Consultants Limited Inc
Scotia Group Inc
RPS JD Consulting Inc
RPS Energy Canada Limited
Geoprojects Canada Limited
Report and Accounts 2009
England
England
England
England
Northern Ireland
Netherlands
Netherlands
Netherlands
Netherlands
Netherlands
Netherlands
Ireland
Ireland
Ireland
Ireland
Australia
Australia
Australia
Australia
Australia
Australia
USA
USA
USA
USA
Canada
Canada
100%
100%
100%
100%*
100%*
100%
100%*
100%*
100%*
100%*
100%*
100%*
100%*
100%*
100%*
100%*
100%*
100%*
100%*
100%*
100%*
100%*
100%*
100%*
100%*
100%*
100%*
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 113
6. Debtors
Trade debtors
Amounts due from subsidiary undertakings
Other debtors
Corporation tax
Deferred tax
Prepayments and accrued income
All amounts shown under debtors fall due for payment within one year.
7. Creditors: amounts falling due within one year
Amounts due to subsidiary undertakings
Deferred consideration
Trade creditors
Corporation tax
Other creditors
Accruals
The liability in respect of deferred consideration is due to the vendors of acquired businesses.
8. Creditors: amounts falling due after more than one year
Bank loans
Deferred consideration
Due as follows:
After one year and within two years
After two years and within five years
113
Accounts
31 Dec
2008
£000s
128
51,266
196
–
469
1,855
53,914
31 Dec
2008
£000s
43,722
3,153
571
99
633
2,881
51,059
31 Dec
2008
£000s
45,148
487
45,635
487
45,148
45,635
31 Dec
2009
£000s
26
75,516
469
161
713
588
77,473
31 Dec
2009
£000s
25,744
487
188
–
419
1,277
28,115
31 Dec
2009
£000s
40,931
–
40,931
–
40,931
40,931
rpsgroup.com
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 114
Notes to the Parent Company Financial Statements continued
9. Provision for liabilities
At 1 January 2009 and at 31 December 2009
10. Deferred taxation
114
Movement on deferred taxation:
Net asset at beginning of year
Credit/(charge) to income for the year
Net asset at year end
Deferred taxation balances comprise:
Short term timing differences
Depreciation in excess of capital allowances
Deferred tax asset
11. Share capital
Ordinary shares of 3p each
At 1 January 2009
At 31 December 2009
Dilapidations
£000s
52
31 Dec
2008
£000s
644
(175)
469
31 Dec
2008
£000s
285
184
469
31 Dec
2009
£000s
469
244
713
31 Dec
2009
£000s
496
217
713
Number
240,000,000
240,000,000
Authorised
Value
£000s
Allotted and fully paid
Value
£000s
Number
7,200
7,200
213,286,497
215,247,277
6,399
6,457
Full details of the share capital of the Company are disclosed in Note 20 of the Consolidated Financial Statements.
Report and Accounts 2009
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 115
Accounts
12. Reconciliation of movements in shareholders’ funds
Share
capital
£000s
Share
premium
£000s
Merger
reserve
£000s
Shares to Revaluation
reserve
be issued
£000s
£000s
Employee
trust
Profit and
shares loss reserve
£000s
£000s
6,319
80
–
–
–
6,399
58
–
–
–
6,457
93,225
2,306
–
–
–
95,531
2,707
–
–
–
98,238
16,993
3,086
–
–
–
20,079
608
–
–
–
20,687
222
(222)
–
–
–
–
–
–
–
–
–
32
–
–
–
–
32
–
–
–
–
32
(2,943)
(640)
–
–
–
(3,583)
(836)
–
–
–
(4,419)
23,619
(1,247)
2,794
4,124
(7,211)
22,079
(1,536)
3,280
70,527
(8,410)
85,940
Total
£000s
137,467
3,363
2,794
4,124
(7,211)
140,537
1,001
3,280
70,527
(8,410)
206,935
115
At 1 January 2008
Issue of new shares
Share based payment expense
Retained profit for the year
Dividend paid
At 31 December 2008
Issue of new shares
Share based payment expense
Retained profit for the year
Dividend paid
At 31 December 2009
13. Dividends
Full details of dividends paid by the Company are disclosed in Note 22 of the Consolidated Financial Statements.
14. Commitments under operating leases
At 31 December 2009 the Company had annual commitments under non-cancellable operating leases as set out below:
Operating leases which expire:
Within one year
In two to five years
After five years
31 Dec
2009
£000s
Land and buildings
31 Dec
2008
£000s
240
514
14
768
20
192
48
260
31 Dec
2009
£000s
83
51
–
134
Other
31 Dec
2008
£000s
8
89
–
97
15. Directors’ interests in transactions
There were no transactions during the year in which the Directors had any interest.
16. Purchase of undertakings
The Company did not make any acquisitions during the year. The increase in investments relates to the restructuring of the Company’s
USA subsidiaries.
rpsgroup.com
23846_DRAFT_27_Mar19_back.qxd 22/3/10 12:08 Page 116
Five Year Summary
Revenue
Fee income
Profit from operations before tax and amortisation
Net bank debt
Net assets
Cash generated from operating activities
Average number of employees
Dividend per share
Basic EPS before amortisation
Diluted EPS before amortisation
2009
£000s
443,909
374,351
52,472
(32,763)
313,468
70,583
4,254
4.20p
17.08p
16.87p
2008
£000s
470,465
392,096
57,512
(28,555)
287,607
67,386
4,438
3.66p
18.92p
18.66p
2007
£000s
362,674
305,108
45,010
(32,630)
227,534
45,393
4,093
3.18p
15.17p
14.95p
2006
£000s
296,843
246,011
34,719
(30,129)
186,934
40,663
3,438
2.76p
12.01p
11.74p
2005
£000s
217,830
183,520
24,253
(25,940)
161,871
28,149
3,158
2.40p
9.01p
8.82p
116
The Five Year Summary does not form part of the audited financial statements.
Report and Accounts 2009
Report and Accounts 2009
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