Report and Accounts 2012
rpsgroup.com
Introduction
Strategy and Business Model
RPS is an international consultancy providing independent advice upon:
n
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the exploration and production of oil and gas and other natural resources, and
the development and management of the built and natural environment
We provide a wide range of services for our clients and accordingly operate in a large number of markets both functionally and
internationally. The long term drivers of our business are:
n
n
n
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the world’s need to secure adequate supplies of energy and other natural resources from environmentally acceptable sources
the commercial advantage resulting from the sustainable development of land and buildings
the need to provide adequate infrastructure such as airports, power stations, public transport, water treatment plants
the need to manage environmental, health and safety risks
Our strategy, which is determined and monitored by the Board, is to operate in those markets that exhibit these drivers, have sound
longer-term prospects and where we can potentially achieve leading positions. Each year the Board sets a series of priorities consistent
with that strategy and reviews progress against its strategy and priorities on a regular basis. Within that context we seek to improve
continuously the range and quality of the services we offer our clients and where we can best can add value to their activities. We are
aiming to build multi-disciplinary businesses in North America and Australia as we have in Europe as well as building a presence in the
developing world through oil, gas and mineral exploration and production projects.
The development of our business in this way is important in attracting and retaining high quality employees. This is achieved by
providing opportunities for professional growth and advancement as well as by providing competitive remuneration and benefits
packages, and striving to maintain an open, creative and positive culture.
Client retention and the maintenance of longstanding relationships with our clients are at the heart of our success. We achieve this by
seeking to deliver focussed and cost-effective advice on both well understood problems and emerging challenges. We also maintain an
international reputation for meeting the challenges posed by large complex projects and problems and conducting business in an open
and responsible manner.
The increasing diversity and geographical spread of our businesses requires us to continuously monitor and seek to improve the
operational efficiency of our businesses. This entails consideration of management organisation, controls, processes, systems and
support services.
Acquisitions have played an important part in our growth in the past and will continue to be a key part of our strategy. We acquire
businesses that are well managed, deliver sound results and have good reputations in their markets. They may be in sectors where we
are already operating or offer services that are closely related to our own. We already have well established and strong businesses in a
number of countries, which provide a platform for acquisitive growth there. We are seeking to acquire high quality businesses in North
America, Australia and Europe that either add depth to or complement the services we offer clients in those countries. The Board will
consider larger acquisitions as well as acquisitions in countries in which we do not currently operate that are consistent with overall
strategy and provide our international clients with greater local support.
The markets in which we operate are fast moving and so our strategy also needs to be sufficiently flexible to ensure that we can
respond quickly to changing conditions. The Key Performance Indicators the Group employs are monitored monthly and provide the
means by which the Board measures the success of its strategy.
Group Structure
The Group consists of two primary reporting segments: Energy and Built & Natural Environment, the latter being split into two
geographic sub-segments covering Europe and Australia Asia Pacific.
Energy
This is a global, multi-disciplinary consultancy, providing integrated technical, commercial and project management support and training
in the fields of geoscience, engineering, health, safety and environment to the energy sector. Our aim is to help clients develop
their energy resources across the complete life cycle, combining our technical and commercial skills with an extensive knowledge of
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3
environmental and safety issues. The business has regional offices in UK, North America, Australia and Asia and undertakes projects in
many other countries. The segment is managed by a single divisional Board to which subsidiary operating Boards, with responsibility for
UK, North America and Australia Asia Pacific, report.
Built and Natural Environment
This is a leading multi-disciplinary consultancy providing a wide but related range of advisory services on all aspects of the built and
natural environment. Built Environment activities, provided from offices throughout the UK and Ireland, the Netherlands, as well from
offices primarily on the East and West Coasts of Australia, include planning, urban design and regeneration, environmental assessment
and management, transport and infrastructure, architecture and landscape, engineering and surveying. Natural Environmental based
services in the UK and The Netherlands include environmental science, the management of water resources, health safety and
risk management, laboratory testing, asbestos consulting, air quality and noise and property services; whilst in Australia we provide
oceanographic and mining services. The businesses in Europe are managed by a single regional Board. Our businesses in the Australia
Asia Pacific region are similarly managed by a single regional Board whilst both are supported by a number of subsidiary operating Boards.
Further Information
A sample of the projects and activities that we undertake is described on our website at www.rpsgroup.com.
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Report and Accounts 2012
Business Review
2012 Results
Results
PBTA was at the top end of market expectations at £60.1 million (2011: £50.8 million). Adjusted basic earnings per share were 19.48
pence (2011: 16.68 pence). The contribution of each segment grew significantly:
Underlying Profit*
(£m)
Energy
Built and Natural Environment
Total
* as defined in note 1(g) to the Consolidated Financial Statements.
2012
39.7
31.8
71.6
2011
32.1
29.0
61.1
+24%
+10%
+17%
Our Energy activities are largely conducted on a worldwide basis. In combination with our Built and Natural Environment business in
Australia Asia Pacific, we now have over 70% of our underlying profit generated outside Europe. During 2012 this generally exposed
us to higher growth economies and good opportunities. A significant proportion of our Built and Natural Environment activity relates
to projects providing the infrastructure necessary to process and deliver energy and power resources. Consequently, we estimate that
approximately 70% of our underlying profit is now earned in the global Energy and associated infrastructure markets.
Cash Flow, Funding and Dividend
The Group continued its excellent conversion of profit into cash. Adjusted operating cash flow was £76.0 million (2011: £71.1 million).
Our balance sheet remains strong, with no defined benefit pension schemes or historic pension liabilities. We have bank facilities of £125
million available until July 2016. These comprise a £75 million committed facility, with an additional £50 million available as required. The
cost of these facilities remains at a low level. Net bank borrowings at the year end were £13.5 million (2011: £23.5 million), after investing
£24.2 million in acquisitions (2011: £27.2 million). We remain well positioned to continue to fund the Group’s growth strategy.
The Board continues to be confident about the Group’s financial strength and is recommending a final dividend of 3.34 pence per
share payable on 24 May 2013 to shareholders on the register on 12 April 2013. If approved the total dividend for the full year would
be 6.40 pence per share, an increase of 15% (2011: 5.56 pence per share). Our dividend has risen at about this rate for 19
consecutive years. It increased 75% over the 4 years of the global financial crisis, whilst our net debt has reduced substantially,
to an 8 year low, after investing £120.6 million in acquisitions in the same period.
Markets and Trading
Energy
We provide internationally recognised consultancy services to the energy sector from bases in the UK, USA, Canada, Australia and
Asia. These act as regional centres for projects undertaken in many other countries. The 2012 results show the significant growth
anticipated, with a strong margin:
Fee income (£m’s)
Underlying profit* (£m’s)
Margin (%)
* as defined in note 1(g) to the Consolidated Financial Statements.
2012
2011
225.9
39.7
17.6
186.1
32.1
17.2
As anticipated, this business continued to make good progress in the final months of the year. Our clients’ investment in conventional
oil and gas exploration and production was generally strong throughout the year. Our activity in the unconventionals market remained
buoyant internationally, with a shift from shale gas to liquids in the USA. We experienced an encouraging uplift in activity in most parts
of the world and continued to see a particularly strong performance in the US. This was based on both domestic and international
projects, including good activity levels in the Gulf of Mexico. Following last year’s political disturbances, our activity in North Africa was
subdued throughout 2012, although opportunities elsewhere in Africa and parts of the Middle East continued to improve.
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5
Our training and oceanographic businesses performed well and our reputation as independent advisors to the financial services market
in respect of transactions and asset valuations continued to grow. The acquisition of PEICE, announced on 16 January 2013, accelerates
the development of our training business, particularly in Canada.
Good margins have been maintained. With global E&P capital expenditure forecast to grow in 2013, it seems likely that the positive
trends in this business will continue.
Built and Natural Environment (BNE)
Within these businesses we provide a wide range of consultancy services to many aspects of the property and infrastructure
development and management sectors. These include: environmental assessment, the management of water resources, health and
safety, risk management, town and country planning, building, landscape and urban design, surveying and transport planning. Profit in
the year improved, as did the margin:
Fee income (£m’s)
Underlying profit* (£m’s)
Margin (%)
* as defined in note 1(g) to the Consolidated Financial Statements.
BNE: Europe
Fee income (£m’s)
Underlying profit* (£m’s)
Margin (%)
* as defined in note 1(g) to the Consolidated Financial Statements.
2012
2011
255.3
31.8
12.5
269.1
29.0
10.8
2012
2011
157.2
18.9
12.0
178.2
18.0
10.1
Our BNE business in Europe increased its contribution compared with the same period last year, despite markets remaining uncertain.
In this business we provide support to our clients’ operations in the water, health and safety and risk management sectors, in order to
enable them to comply with legislation and regulation. We continued to see reasonable levels of activity in these markets, although a
number of significant projects for UK water clients came to an end around the middle of the year. Both our Irish and Dutch businesses
also performed well despite being exposed directly to the economic uncertainty of the eurozone. We concluded the sale of our Irish
facilities management business in March. This accounts for most of the year on year reduction in fee income.
Many of our traditional commercial development clients became more cautious about investing in new capital projects during the second
half. We have, therefore, been even more selective about the market sectors in which we invest and have, in particular, focussed on
providing further support to those clients developing energy infrastructure, such as on and off shore windfarms, pipelines and interconnectors,
power stations and waste to energy plants. Investment potential is greater in this market; recent UK Government statements about energy
production from gas were encouraging.
It currently seems that market conditions are unlikely to improve in 2013, so we continue to focus upon efficiency improvements to maintain
our performance.
BNE: Australia Asia Pacific
Fee income (£m’s)
Underlying profit* (£m’s)
Margin (%)
* as defined in note 1(g) to the Consolidated Financial Statements.
2012
98.3
13.0
13.2
2011
91.0
11.0
12.1
Our BNE business in Australia Asia Pacific produced significantly better results than in 2011. In the first part of the year we continued
to benefit from the high levels of investment in the activities and associated infrastructure necessary to deliver mining, coal seam
gas and associated LNG projects, in Queensland and the conventional gas projects offshore Western Australia. These provide the
opportunity for us to deliver a wide range of services to clients.
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Report and Accounts 2012
Business Review
There was, however, a change in client sentiment in the second half of the year in these markets. This resulted from a combination
of lower levels of Asian demand for certain natural resources, heightened concerns over escalating project costs and a trimming of
growth in the Australian economy. We are taking steps to improve the efficiency of this business, enabling us to remain well positioned
in sectors which may increase activity again during 2013 and which have excellent medium and long term prospects.
Outside the natural resources sector the Australian economy remained under pressure, as global economic concerns reduced
consumer and business confidence. As a result, conditions in the commercial development market remained subdued. The acquisition
of Manidis Roberts, completed in July, significantly strengthens our business in New South Wales, as well as increasing our penetration
into parts of Australian public sector infrastructure market, including water, transport and power supply. The integration of this business
is progressing well, although the run up to the recently called national election in September is likely to cause uncertainty in its markets.
Subject to global economic progress continuing, conditions in some of our markets should improve during the course of 2013, enabling
us to benefit from our strong profile.
Group Strategy and Prospects
RPS remains well positioned in markets of long term importance to the global economy. Our focus on Energy and energy
infrastructure markets provides the Group with an excellent underpin to its prospects. We continue to believe that our strategy
of building multi-disciplinary businesses in each of the regions in which we operate is attractive and achievable. We will, therefore,
continue to develop our business organically, whilst seeking further acquisition opportunities. Our balance sheet is strong and supports
this strategy.
We have come through the exceptionally challenging circumstances of the last four years in a strong position. We were able to deliver
good growth in 2012, which takes us above our previous high, achieved in 2008. Although the outlook in some of our markets is still
uncertain, we remain on track to produce further growth in 2013, anticipating this is likely to be more marked in the second half.
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Risk Management
The Group supplies a wide range of services in many markets and countries. This gives rise to a range of risks that are recognised,
assessed and effectively managed. The Group’s system of planning, budgeting and performance review assists with the identification
and management of risk. The management of these risks is not separated from the business, but is treated as an integral part of our
culture and the way we operate. Each of our businesses is expected to identify and take appropriate steps to mitigate risks associated
with its operations. The Executive Committee oversees the management of risk to which the Group is exposed and reports those of
a material nature to the Board together with recommendations for their mitigation. The principal risks to which the Group is currently
exposed and is likely to be exposed in the future are outlined below.
Economic Environment
Continuing economic uncertainty may cause the Group’s clients to cancel, postpone or reduce existing or future projects. Continuing
projects may be subject to greater cost pressures. The consequence is that we could have staff levels that exceed current workload
and therefore incur the cost of un-productive time.
Although market factors are beyond our control, our exposure to a wide range of markets across the world mitigates the impact of
downturn in any single market. Our contractual order book is monitored regularly in comparison to the productive capacity of our
fee earning staff. Changing economic conditions in our various markets are closely monitored in order that pre-emptive action can,
as far as possible, be taken. The risks associated with the Eurozone crisis are limited to the extent that only the Group’s businesses in
The Netherlands and Republic of Ireland are located within Eurozone and trade through its currency. The wider global downturn that
might be triggered by a deterioration in the position are beyond the Group’s direct control but may be mitigated to a degree by the
factors listed above.
Material Adverse Events
Adverse occurrences may impact our ability to deliver our services and our clients’ demand for them. These are most likely to be
of an environmental nature such as the catastrophic flooding that adversely affected both our own and our clients operations in
Queensland in 2011 and the Macondo oil spill in 2010 that led to a moratorium on deep water drilling in the Gulf of Mexico.
Events of this type are impossible to predict but the range of countries within which we operate and markets we serve limits the
impact upon the Group as a whole. No new events of this type and scale affected us during the year.
A lengthy failure or discontinuity in our IT systems could also have a significant impact upon our operations.
The Group’s IT systems are centrally managed with certain specific functions carried out locally. An annual Group plan is produced
which includes measures designed to ensure reliability and resilience of the Group’s systems as well as appropriate catastrophe
planning. The Group has operations in a large number of locations, which would enhance its ability to withstand any individual failure
or malfunction. The Group has never experienced a significant failure or discontinuity of this type.
Recruitment and Retention of Key Personnel
The Group’s services are performed by well-qualified and professional employees with expertise across a wide range of areas. A
failure to recruit and retain employees of appropriate calibre will, accordingly, impact our ability to meet our clients’ requirements and
correspondingly to maintain and grow our business.
As described on pages 10 and 11 the Group maintains appropriate remuneration and incentive structures which are reviewed on a
regular basis and maintains an environment that is supportive of professional development through training and career opportunity.
Market Position and Reputation
The Group’s reputation for project delivery relies upon its public portrayal and the perception of existing and prospective clients.
A major failure of project management or delivery could, accordingly, impact our ability to win future work.
The Group operates a range of appropriate management and quality control systems, many of which are externally accredited and are
designed to enable our employees to provide a consistently high standard of work.
Compliance and Litigation
A failure to deliver our services in accordance with our contractual obligations may lead to a risk of the Group becoming involved in
litigation. In addition, as the contracting environment has evolved, clients in some of our businesses have sought to transfer certain risks
to the consultants it employs.
The internal review processes operated by the Group seek to ensure that contractual risks are properly scrutinised and mitigated as far
as possible whilst the management and quality control systems highlighted above minimise the risk of shortfalls in performance
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Report and Accounts 2012
Business Review
that may give rise to litigation. Appropriate professional indemnity insurance is also maintained in addition to a normal range of other
commercial insurance covers.
From time to time the Group receives claims from clients and suppliers. Some of these result in payments to the claimants by the Group
and its insurers. The Board reviews all significant claims at each board meeting and the Board is currently satisfied that the Group has
sufficient provisions in its balance sheet to meet all uninsured liabilities, including those which have arisen for the first time in 2012.
The Group is subject to a range of taxation and legal requirements. A failure to comply with these obligations could give rise to legal
liability, financial loss and reputational damage.
The Group has in place appropriate internal controls to deal with such matters and employs appropriately qualified employees through
whom it monitors and responds to the regulatory requirements of the countries in which it operates.
Business Acquisitions
As in the past the Group intends to develop and grow the business, in part, by making acquisitions. A failure to identify acquired
liabilities or to integrate acquired businesses could have an adverse impact on the Group’s performance and prospects.
Detailed due diligence is performed on all potential acquisitions drawing upon both internal and external resources. This will include an
assessment of the ability to integrate the acquired business within the Group. When a business is acquired detailed integration plans
are developed and monitored to ensure successful integration into the Group and its control framework. The integration of Manidis
Roberts has been succesful thus far.
Funding
The availability of sufficient and appropriate funding through the Group’s bank facilities is important to support the Group’s growth and
in particular to fund acquisitions.
The Group’s facilities which were due to expire in 2013 were renewed during 2012. The Group now has in place a revolving credit
facility with Lloyds Bank for £75m, together with an additional £50m in the form of an accordion facility that is available upon request
by the Group, subject to credit approval being given by the bank. This new facility will expire in July 2016.
Health and Safety
The Group’s activities require the monitoring and management of the health and safety of its employees as well as to sub-contractors,
client personnel and the general public. A failure to manage this risk could expose the Group to significant potential liabilities as well as
damage to reputation.
Detailed health and safety policies and procedures are in place to minimise such risk. The Group’s approach to the management of
health and safety is described on page 12.
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Employees
The current profile of the Group’s employees and the changes over the last year are as detailed below.
Group
Average number of employees
Energy*
Built and Natural Environment – Europe
Built and Natural Environment – Australia Asia Pacific
Central
Group total
Days absent (%)
Average length of service (years)
Working part time (%)
Retention rate (%)**
Female (%)
Age profile
Employees aged under 25 (%)
Employees aged 25-29 (%)
Employees aged 30-49 (%)
Employees aged 50+ (%)
2012
2011
812
2,662
924
109
722
3,000
855
109
4,507
4,686
2
6
9
81
29
9
16
54
21
2
6
10
80
30
9
16
55
20
*Additionally Energy makes extensive use of associates and sub-consultants (these equated to approximately 750 full time equivalent employees in 2012)
**excluding redundancies
The attraction, retention and motivation of high calibre employees is a strategic imperative for all businesses within the Group. To
achieve this, businesses maintain appropriate remuneration structures as well as an environment in which employees are able to
develop their skills in a way that can be applied to our clients’ requirements.
Each of the businesses has the remit to put in place arrangements that meet their specific demands whilst working within a framework
of structures and systems that are overseen at Group level. Human resource professionals are employed throughout the Group to
support the achievement of this objective. Each of the Executive Directors has overall accountability for the development of human
resource practice within the businesses for which they are responsible.
The Group’s policies in relation to health and safety are described on page 12.
Employee Engagement
Building an environment in which employees feel engaged with their business and the Group as a whole is a key component of our
strategy. This is of particular importance in ensuring the successful integration of newly acquired businesses. We use the Group intranet
as a means to communicate the Group’s businesses and achievements as well as policies and procedures. Corporate newsletters
also facilitate this flow of information. New employees receive an induction and regular staff appraisals facilitate open communication
between employer and employee as well as identifying developmental needs.
The Group operates share plans across all its businesses aimed at giving employees a tangible interest in the Group’s overall
performance. Share purchase plans are accordingly open to the vast majority of our employees and enable them to purchase shares
in the Company with the benefit of a matching share contribution from the Company. A performance share plan is also operated for
more senior employees, which offers the potential to build an interest in the Company over a number of years.
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Report and Accounts 2012
Business Review
Training and Development
The Group is committed to the education and development of its employees to enable them to realise their potential and
effectiveness. Divisional directors and project managers are responsible for the management of training and verification of technical
competence for project personnel in accordance with our quality management systems. Continuing professional development is of
particular importance for our professional employees who are required to demonstrate technical competence within their specific
sectors. The Group accordingly supports a range of schemes through professional bodies and is a recognised training provider in a
number of technical fields. The Group provides training to the oil and gas sector through its Nautilus business, which also assists in
providing technical training within the Group. It has also continued to operate approved structured training schemes for its chartered
and water engineers in the UK as well as for civil engineers in the UK and Ireland.
During 2012 RPS continued its long-term practice of supporting staff in pursuing relevant higher education courses. This involved
sponsoring courses at a total of 34 universities and colleges across the United Kingdom, Ireland, USA and Australia.
Vacant positions within the Group are, wherever possible, filled from within and our developmental and training programmes support
this objective.
Equal Opportunities
RPS provides equal opportunities for all its employees and potential employees regardless of their sex, sexual orientation, trans-gender
status, religion or belief, marital status, civil partnership status, pregnancy, age, disability, race, colour, nationality, national or ethnic
origins. The policy applies to the process of recruitment and selection, promotion, training and development, conditions of work, pay
and benefits and to every other aspect of employment.
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Corporate Responsibility
Commitment
The Group’s corporate governance policies are described in detail elsewhere in the Report and Accounts and provide a framework
within which it can look to achieve attractive levels of return for its shareholders whilst striking a balance between this objective and
recognition of its obligations to its employees, clients and society in general. The Corporate Governance Committee exercises general
oversight in relation to environmental, social and governance (‘ESG’) matters although in the normal course of business the Board
and the Executive Committee assess the risks and opportunities to which such issues give rise. In the Board’s view it has adequate
information to enable the proper assessment of these issues.
As noted in the Risk Management section of this report environmental issues are most likely to effect the Group through the impact
material adverse events may have on the Group’s trading. Whilst given the nature of it’s activities the Group’s own impact on the
environment is comparatively modest, the Group’s performance is monitored as outlined below and appropriate action to minimise
impact taken where possible. The Group can, however, make a greater contribution to the environment through its own expertise and
many of the projects with which it is involved. The Group advises international bodies, governments, local authorities and companies
on the improvement of environmental performance. Projects include the development of strategies to reduce carbon emissions as well
as the adaptation of buildings and infrastructure to anticipate climate changes.
The policies adopted by the Group in relation to employees are described elsewhere in this report and those relating to health and
safety are described below; the risks associated with failures in both of these areas are described in the Risk Management section
on pages 8 and 9. The Group recognises the importance of maintaining high standards of business conduct and contributing to the
communities with which it is involved as detailed below. In the Board’s view the challenges, risks and opportunities created by ESG
issues as outlined in the Report and Accounts are unlikely to change significantly in the foreseeable future.
The Group remains a constituent member of the FTSE4Good Index, which consists of those companies that satisfy a set of globally
recognised standards in the area of corporate responsibility. It is also a participating member of the Carbon Disclosure Project
providing data on an annual basis.
Standards of Business
The Group aims to be honest and fair in all aspects of its business. Through codes of conduct employees are required to adopt high
standards of behaviour in their daily professional roles or when travelling on business. Employees are also required to be sympathetic
to the cultures of and comply with the laws and regulations of the countries in which they operate, as well as giving due regard to
the safety, the well being and the human rights of all project personnel and relevant local communities. 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 reported. Employees must not seek personal gain from third parties, or abuse
their position within the Group for personal gain; the Group has a policy of zero tolerance towards acts of bribery.
Health and Safety
The health and safety of the Group’s employees and others we affect is of paramount importance and we remain committed to good
practice that as a minimum complies with the requirements of law. The Board receives and considers a report relating to health and
safety at all regular meetings. The Board also sets the overall framework and standards for the management of health and safety the
implementation of which is overseen by the Company Secretary. Within this context each of the Group’s businesses is responsible for
the development of appropriate safe working conditions and systems to protect employees, contractors, visitors and others who may
be affected by the Group’s activities. Each business has appropriately qualified health and safety advisors to develop and implement
these systems. Health and safety performance is reported to and reviewed by the Board as well as at operating company level. Each
business within the Group has a system for reporting and investigating accidents, dangerous occurrences and work-related diseases. All
such incidents are investigated to determine the root cause. Any significant incidents are reported within the Group as a whole and
specifically brought to the attention of the Board.
Where appropriate work activities are assessed for health and safety risks and appropriate controls put in place. Health and safety
systems are subject to regular audit. 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 obligations to employees for whom they are responsible are properly discharged.
OHSAS 18001 is an internationally recognised standard for health and safety management that is aligned with the ISO 9000 (Quality
Management) and ISO 14000 (Environmental Management) standards. 32% of employees across the Group work in offices that now
have third party accreditation to the OHSAS 18001 standard.
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Report and Accounts 2012
During the year the Group was neither prosecuted for the breach of health safety regulations nor subject to any investigation by
regulatory authority. In 2012, the reportable accident rate was 2.7 accidents per 1,000 employees (2011: 2.3). Accidents that do occur
most commonly relate to manual handling activities, slips and falls.
Business Review
Reportable Accident Rates
Group
Reportable injuries
Reportable injuries incident rate per 1,000 employees
2012
14
2.7
2011
12
2.3
Community Involvement
RPS has supported a range of community and charitable initiatives with gifts in kind and financial contributions throughout the year,
mostly at office level. In 2012 the Group and its staff gave or raised £797,000 in charitable contributions (2011: £438,000). Taking into
account the £168,000 spent on academic bursaries and educational initiatives (2011: £250,000), the total contribution of the Group
and its employees to the communities in which it operates was £965,000 (2011: £688,000).
Tree Aid
The Group has for a number of years been an active supporter of Tree Aid and its programme of education, tree planting and
woodland conservation programmes in sub-Saharan Africa. The Group has increasingly focused its charitable contribution upon its
work and is acknowledged as being Tree Aid’s largest corporate sponsor, having contributed a total of £153,000 towards projects
in Ghana and Mali in 2012. The Group has also committed further funding of £210,000 over the next two years. In addition to its
financial support the Group has been able to utilise the skills of its employees to make an increasingly important technical contribution
to Tree Aid’s work. This has seen a number of employees working on the ground with Tree Aid and has included soil erosion
mapping, a biodiversity study and GIS mapping of relevant geographic features. Both Tree Aid and RPS are grateful for the important
contribution these employees have made.
We are proud to have further developed our association with this 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 and Climate Change
Although as a consultancy organisation our impact on the environment is comparatively moderate, the Group seeks to keep this to a
minimum through the adoption of appropriate standards and the setting of specific targets.
The Group 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 together with communications and video conferencing technology that reduces the need
for business travel.
To achieve these objectives appropriate training is provided to enable activities to be conducted in an environmentally sensitive
manner and sufficient management resources are allocated to enable effective implementation of policies. Appropriate parts of the
Group have achieved ISO14001, the internationally recognised environmental management system standard. Facilities for recycling
office waste are in place at our offices. During 2012 our offices continued to recycle waste paper, spent toner and ink cartridges,
obsolete computer hardware, printers and mobile phones. Proceeds from this recycling are donated to charity.
The carbon footprint for RPS in 2011, recalculated in accordance with Greenhouse Gas Protocol and current Defra guidance
amounted to 20,168 tonnes. Calculated on a similar basis the overall carbon footprint decreased to 19,584 tonnes in 2012. This small
decrease reflects the fact that the company operations were relatively consistent with previous years and demonstrates the continued
success of efficiency programmes.
The specific target set by the Board is to reduce energy consumption per capita by 5% per annum for office energy consumption. This
target was not quite achieved in 2012 with office gas and electricity consumption decreasing by 3% over the prior year from 3.5 MwH
to 3.4 MwH per employee. The target was set in 2008 and in each year since, with the exception of 2009 when restructuring within
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13
the Group resulted in an increase, a decrease either marginally above or below it has been achieved. As previously our ability to sustain
improvement will be dependent on economic circumstances; the continuing uncertain environment in which we operate means that
the structure of our businesses may be affected in ways that make the achievements of our targets more challenging.
The Group’s policies and objectives for environmental management are reviewed from time to time in the light of changes within
the Group’s businesses, new legislation and emerging practice. As an environmental consultancy the Group is fully cognisant of the
mandatory carbon reporting regulations that will apply to company’s listed on the London Stock Exchange and which will apply to the
Group for the financial year ending 31 December 2013. To the limited extent necessary the Group’s reporting for that year will be
adjusted to fully reflect the new obligations.
14
Report and Accounts 2012
The Board
Brook Land
Non-Executive Chairman
Aged 63. Brook Land was formerly a
senior 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 also Chairman of
the Nomination Committee.
Dr Alan Hearne
Chief Executive
Aged 60. 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, becoming a Director in 1979 and
Chief Executive in 1981. Alan 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, a
fellow of Aston Business School in 2006
and an honorary Doctor of the University
of Kent in 2011.
Gary Young
Finance Director
Aged 53. 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 finance 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 of that year.
Dr Phil Williams
Executive Director
Aged 60. 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.
Robert Miller-Bakewell
Independent Non-Executive Director
Aged 60. Robert joined the Board in May
2010, is nearing the end of an initial three
year term and has agreed to serve for a
further three years. Robert was a Senior
Director of Investment Research at Merrill
Lynch from 1998 to 2008 and prior to
this worked as an investment analyst with
NatWest Markets and its predecessor
companies. Over the previous twenty years
his focus was on analysing and advising
water, waste, transport and environmental
infrastructure companies both in the UK
and internationally. Until the end of 2012
he was a member of OFWAT’s Future
Regulation Panel. Robert is a member of
the Audit and Nomination Committees as
well as being Senior Independent Director.
Management & Governance
John Bennett
Independent Non-Executive Director
Aged 65. John was appointed to the
Board in 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. John is serving a third
three-year term. He is Chairman of the
Audit Committee and a member of the
Remuneration Committee.
Louise Charlton
Independent Non-Executive Director
Aged 52. Louise was appointed to the
Board in May 2008. She is Group Senior
Partner of Brunswick Group LLP, the
international corporate communications
group of which she was a co-founder.
Louise is also a Director and Trustee of the
Natural History Museum. She is serving a
second three-year term and is a member
of the Remuneration and Nomination
Committees.
Tracey Graham
Independent Non-Executive Director
Aged 47. Tracey Graham joined the
Board in September 2011 having been
Chief Executive of Talaris Limited, an
international cash management business,
until 2010. Tracey led the management
buy-out of Talaris from De La Rue Plc,
backed by private equity house Carlyle
in 2008. Tracey is also an independent
Non-Executive Director of Dialight Plc,
Albemarle and Bond Plc, and the
Royal London Group. She chairs the
Remuneration Committee and is a
member of the Audit Committee.
rpsgroup.com
15
Report of the Directors
The Directors present their report together with the audited financial statements of RPS Group Plc and its subsidiary undertakings (the
‘Group’) for the year ended 31 December 2012.
Results and dividend
The Consolidated Income Statement is set out on page 35 and shows the profit for the year. The Directors recommend a final
dividend of 3.34p (2011: 2.9p) per share. This together with the interim dividend of 3.06p (2011: 2.66p) per share paid on 18 October
2012 gives a total dividend of 6.40p (2011: 5.56p) per share for the year ended 31 December 2012.
Principal activities and business review
The Group’s principal activities and performance during the year and future prospects as well as its business model and strategy are
described on pages 3 to 14. Financial key performance indicators can be found on page 2. The directors review performance using
these non-statutory measures as well as segmental and underlying profit, as they consider these to be more meaningful measures
of performance. These performance measures are defined in note 1(g) of the Consolidated Financial Statements. Note 3 includes
a ‘Group Reconciliation’ of the adjusted measures to the statutory results. The Board does not use non-financial key performance
indicators to assess the Group as a whole, although parts of the Group do use non-financial key performance indicators from time
to time.
Consistent with its size and complexity, the Group has a large number of contractual relationships with clients and suppliers. In the
Directors’ view, however, there is no single contract or client relationship, which is essential to the Group’s business. 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 pages 8 and 9 in the Risk Management section of the Business Review.
Corporate Governance
The Directors report on corporate governance can be found on pages 21 to 25 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 27 February 2013
Aberforth Partners
F & C Asset Management
Kames Capital
Montanaro Investment Managers
Legal & General Investment Management
William Blair & Co
Impax Asset Management
Franklin Templeton Fund Management
No. of shares
16,670,521
11,508,831
10,528,536
7,844,549
7,685,447
7,431,022
6,894,063
6,875,000
Percentage
7.59
5.24
4.79
3.57
3.50
3.38
3.14
3.13
16
Report and Accounts 2012
Directors
The Directors of the Company as at 31 December 2012 and their beneficial interests in the ordinary share capital of the Company were:
Management & Governance
Brook Land
John Bennett
Louise Charlton
Robert Miller-Bakewell
Tracey Graham
Alan Hearne
Phil Williams
Gary Young
The Directors’ interests under the Company’s Share Incentive Plan were:
Alan Hearne
Phil Williams
Gary Young
No. of shares at
31/12/12 and at
27/02/13
No. of shares at
31/12/11 and at
02/03/12
30,000
30,000
–
–
5,000
5,000
12,030
418,439
88,416
–
–
5,000
5,000
12,030
418,439
88,416
No. of shares at
31/12/12
No. of shares at
31/12/11
9,883
7,459
13,182
8,154
5,799
11,361
The Directors’ interests under the Company’s Executive Share Option Plan during the year are set out below:
Director
Alan Hearne
1 Jan
2012
number
62,500
28,157
Gary Young
13,720
Exercised
number
–
–
–
31 Dec
2012
number
62,500
28,157
Exercise
price
111.0p
146.5p
13,720
146.5p
Market value
at date of
exercise
Date from
which
exercisable
Expiry date
–
–
_
20/3/2008
20/3/2013
12/8/2008
12/8/2013
12/8/2008
12/8/2013
rpsgroup.com
17
The Directors’ interests under the Company’s Long Term Incentive Plan during the year are set out below:
Director
Alan Hearne
Phil Williams
Gary Young
Year of
award
1 Jan 2012
number
2009
275,261
2009
156,098
2009
111,498
Value of
grant at date
of grant
£000s
395
224
160
Released
Lapsed
31 Dec 2012
number
Market Value
of Shares
at Grant
–
–
–
275,261
156,098
111,498
–
–
–
143.5p
143.5p
143.5p
The awards made in 2009 having lapsed during the year, the Long Term Incentive Plan has now ceased to operate.
The market price of the shares at 31 December 2012 was 211.90p and the range during the financial year was 179.6p to 256.6p.
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 10 and 11.
Charitable and community donations
During the year the Group made charitable donations in cash of £237,000. The Group made no contribution to political organisations
during the year.
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 22 days’ purchases outstanding in respect of payments to suppliers and sub-
contractors (2011: 38 days). At the year end the Company had 29 days’ purchases outstanding in respect of payments to suppliers and
sub-contractors (2011: 8 days).
Going concern
The Group’s business activities, a review of the 2012 results together with factors likely to affect its future development and prospects
are set out on pages 3 to 7. Note 16 to the Consolidated Financial Statements sets out the borrowings of the Group and considers
liquidity risk, whilst note 29 describes the Group’s approach to capital management, and financial risk management in general.
The Group has had good cash flow for a number of years, had a modest amount of net bank debt at the year end and operates well
within the financial covenants applying to the main bank facility. The Group’s banking facilities were renewed during the year and will
not now expire until July 2016.
The Group has a diverse range of businesses in a spread of geographies and as a consequence the Directors believe that the Group is
well placed to manage its business risks successfully.
The Directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the
foreseeable future despite the current uncertain economic outlook. Thus they continue to adopt the going concern basis of accounting
in preparing the annual financial statements.
Directors’ responsibilities statement
The Directors are responsible for keeping adequate 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 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.
18
Report and Accounts 2012
Management & Governance
Each of the persons who is a Director at the time of this report confirms that:
n
n
so far as the Director is aware, there is no relevant audit information of which the Company’s auditors are unaware; and
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 (United Kingdom
Accounting Standards and applicable law).
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 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:
n properly select and apply appropriate accounting policies;
n
n
present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable
information;
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; and
n
make an assessment of the Company’s ability to continue as a going concern.
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:
n
select suitable accounting policies and then apply them consistently;
n
make judgements and estimates that are reasonable and prudent;
n
n
state whether applicable UK 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.
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:
n
n
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.
rpsgroup.com
19
Financial instruments
Details on the use of financial instruments and financial risk are included in note 16 to the Consolidated Financial Statements.
Post balance sheet events
On16 January 2013 the Company announced the acquisition of Petroleum Institute for Continuing Education (‘PEICE’), a Canadian
based business providing geoscience and engineering training to the oil and gas industries, for a maximum consideration of C $11.7m.
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 2012 the Company’s issued share capital consisted of 219,566,269 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
that 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. Under the Articles of Association 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.
It Is the Company’s policy, however, that all Directors should stand for annual re-election.
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. No such power was exercised
during the year under review.
Directors’ interests in the share capital of the Company are shown in the table on page 17. Substantial shareholder interests of which
the Company is aware are shown on page 16.
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
resulting from a takeover bid.
Annual General Meeting
The Annual General Meeting will be held on 3 May 2013. 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 Deloitte
LLP as the Company’s Auditors.
By order of the Board
Nicholas Rowe
Secretary
28 February 2013
Registered Office:
20 Western Avenue
Milton Park
Abingdon
Oxfordshire OX14 4SH
Registered in England No. 02087786
20
Report and Accounts 2012
Management & Governance
Corporate Governance
Chairman’s Introduction
I am pleased to have the opportunity to report for the second time on how the principles relating to the role and effectiveness of the
Board contained within the UK Corporate Governance Code (‘the Code’) have been applied at RPS. The report below explains our
compliance against the detailed provisions of the Code during 2012 as well as giving a more detailed view of the activities of the Board
and its Committees. It is satisfying to be able to report that we have been fully compliant throughout the year. As Chairman I have the
key roles of providing leadership to the Board and ensuring we maintain an environment to enable the Board to perform effectively. I
remain of the view that we have the appropriate governance structures in place as a key component of achieving these objectives and
that these are provided in a practical and cost effective way. In addition to myself, the Board comprises three executive and four non-
executive Directors.
As explained in my first report, 2011 saw a number of changes to the Board. There have been no further changes during 2012
and a welcome stability. Our executive team has many years of experience within RPS and its predecessor companies, whilst our
non-executives are from a range of highly relevant backgrounds and disciplines as outlined elsewhere in this document. As the year
progressed the Board developed into an increasingly cohesive team able and willing to draw on the breadth of talent and experience
it possesses. This is particularly reassuring as, in common with many businesses, we continue to face an uncertain trading environment,
caused by the continuing turbulence in the financial markets and consequent slow economic growth. The continuing strength of the
Group and the quality of its management, was demonstrated by the terms and manner on which we were able to renew our banking
facilities in July 2012.
Succession planning remains under continuous review. I am personally of the view that over-planning succession accelerates unwanted
change, which is neither in the best interests of the Company, nor its shareholders.
Robert Miller-Bakewell, who is our Senior Independent Director, was appointed for a three year term which will expire in 2013 and I
am very pleased to report that he has agreed to continue for a further three years.
The Board’s agenda continues to reflect the key issues that we face. Our discussions in relation to Group strategy, performance and
potential acquisitions are balanced by consideration of appropriate controls, systems and policies to underpin our progress. This year
increased prominence has been given to Health & Safety reporting focussing on maintaining a high standard of performance and where
appropriate, improvement.
In addition, our non-executive directors continue to visit and engage with our businesses globally in a manner that assists and informs
their contributions at Board level.
Our Board Committees, supported by external professional advice as required, continue to operate in an effective and professional
manner and enjoy good lines of communication to the Board as a whole.
The Board completed its annual review process in September, which gave rise to no major issues or difficulties. The Board has recently
commissioned an externally facilitated review for the first time. This will take place soon and be reported on in the 2013 Report
and Accounts.
The Group’s performance has remained solid notwithstanding the continuing economic uncertainty. Much of this is down to the hard
work and loyalty of our employees, to whom I would like to extend the Board’s thanks. I am confident that the strength of our Board
and the manner in which it operates will continue to be a key element in sustaining this performance.
Brook Land
Chairman
Corporate Governance Committee
The Corporate Governance Committee is responsible for overseeing the Group structure and organisation and evaluating these in the
context of developments in standards of corporate governance. The Committee keeps the Board and its other committees appraised of
developments that may impact their structure and activities. It also oversees the policies described in the Corporate Responsibility Statement
as well as the Group’s environmental policies. The Committee consists of the Chairman, Chief Executive and Company Secretary.
UK Corporate Governance Code
The Board is pleased to report that the Company complied with all provisions of the UK Corporate Governance Code (the ‘Code’)
throughout the year. A new version of the Code was published in September 2012 which is applicable for financial reporting periods
commencing on after 1 October 2012 and against which the Board will report in future years.
rpsgroup.com
21
Board Responsibilities
The Board has a schedule of matters that are reserved for its decision, which includes the matters summarised below.
n Determining the Group’s overall strategy
n
Approving annual budgets and financial reporting including
annual and half year results and interim management
statements
n
The approval and recommendation of dividends
n
The approval of significant acquisitions and disposals
n
The approval of policies and systems for risk management
and assurance
n
The approval of overall policies and plans for human resources
n
The appointment of key advisers to the Group
n
The approval of major items of capital expenditure
n
The settlement of major litigation.
Board Structure
At the date of this report the Board comprised three Executive, four Non-Executive Directors and the Chairman. There were no
changes to Board membership during the year. The Executive Directors are responsible for the day-to-day management of all the
Group’s business activities.
The Non-Executive Directors are, in the opinion of the Board, all independent of management and contribute independent judgement
as well as extensive knowledge and experience to the proceedings of the Board. The Chairman was independent on appointment.
The Non-Executive Directors are appointed for three-year terms, which may subsequently be extended. Any term beyond six years
for a Non-Executive is rigorously reviewed, taking account of the requirement to refresh the Board. All directors are subject to annual
re-election by shareholders.
The Chairman and Chief Executive have clear and distinct roles. The key functions of the Chairman are to conduct Board meetings as
well as 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‘s role is to develop and lead business strategies and processes to enable the Group’s to meet
the requirements of its clients as well the needs of its employees and shareholders.
The Senior Independent Director is available to shareholders who wish to raise concerns that cannot be resolved through the
Chairman, Chief Executive or Finance Director. Robert Miller-Bakewell acted as the Senior Independent Director throughout the year.
The Board is assisted by the Audit, Remuneration, Nomination and Corporate Governance Committees, all of which activities are
described in this report. The Chairman of each Committee provides updates as to its activities at Board meetings.
The table below shows the number of Board and Committee meetings attended by each of the Directors during the year.
Brook Land
Alan Hearne
Gary Young
Phil Williams
John Bennett
Louise Charlton
Robert Miller-Bakewell
Tracey Graham
Number of meetings held
Full
Board
9
Audit
Committee
–
Remuneration
Committee
–
Nomination
Committee
1
Corporate
Governance
2
9
9
9
9
8
9
8 *
9
–
–
–
5
–
5
5
5
–
–
–
5
5
–
5
5
–
–
–
–
1
–
–
1
2
–
–
–
–
–
–
2
*Attended BNE AAP board meeting instead of one Group board meeting
Board Operations
The Board generally meets on a monthly basis, except during holiday periods, although additional meetings may be held should
circumstances require. The Board agenda gives significant focus to business performance and strategy. Comprehensive papers are
circulated well in advance of Board meetings. These include general updates and briefings on significant issues from each of the
Executive Directors and the Company Secretary. These reports and other matters of immediate importance are discussed by the
Board. Presentations on the operations of particular operating companies are made from time to time. The Company Secretary assists
the Chairman in ensuring that Board procedures are followed and advises on matters of Corporate Governance. The services of the
Company Secretary are available to Directors generally.
The Executive Directors meet formally at least once a month. The Executive Committee, which consists of the three Executive
Directors supported by the Company Secretary, is responsible for all operational matters within the Group subject to those matters
that remain reserved for the Board. The minutes of Executive Committee meetings are circulated to the Non-Executive Directors
for review.
22
Report and Accounts 2012
Management & Governance
Where Directors have concerns that cannot be resolved regarding the management of the Company or a proposed action, these
concerns are recorded in the Board minutes. In accordance with Company policy any concerns expressed by a Director on resignation
are provided, in a written statement, to the Chairman for circulation to the Board. No issues of this nature have arisen during the year.
The Company’s Articles of Association contain provisions that allow Directors to authorise conflicts in accordance with the Companies
Act 2006. 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 such 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 for appointment to the Board is free of any potential conflict of interest. No actual or potential
conflicts of interest arose during the year under review.
There is an agreed procedure for Directors to take independent professional advice and training at the Company’s expense. The
Company maintains Directors and Officers liability insurance with a current limit of indemnity of £20m.
The Group’s strategy and its business model are described on page 3.
Board Performance
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 reviewed by 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. Such a review was undertaken during 2012 and identified the
need for directors to be better informed in relation to developments in the area of Corporate Governance. Steps have been taken
to address this issue through the availability of an educational and updating service available through the Company’s Auditors and the
inclusion of additional items within Board papers.
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.
Directors receive an induction on appointment including considerable information on the Company as well as the Board and its
procedures. They also meet other members of the Board to be briefed on strategy, financial matters and other key issues. Advice is
available from the Company’s solicitors if required. During the year updates are provided on key technical issues as required including
those relating to corporate governance and corporate social responsibility. Non-Executive Directors undertake visits to operating
companies in order to improve understanding of more operational issues.
The Chairman is mindful of the provisions of the Code providing that an externally facilitated performance review should be carried
out at least once in every three years and has commissioned such a review for 2013. This will be carried out shortly and the results
reported in the 2013 Report and Accounts.
Communication
The Company attaches great importance to communication with its shareholders and other stakeholders. In addition to regular
financial reporting the Group website provides up-to-date information about its organisation, the services it offers and newsworthy
subjects. The Company also responds to letters and enquiries from shareholders and others with an interest in the Group.
In addition to presentations of full and half-year results, senior executives led by the Chief Executive hold meetings with the company’s
principal shareholders to discuss the Company’s strategy and performance. The Chairman and Senior Independent Director are also
available to discuss issues with major shareholders. An investor relations report is presented at all regular Board meetings to ensure
that the Board is kept aware of the views of major shareholders and the investment community generally.
The Chairman of each of the Board Committees attends the Annual General Meeting and is available to answer questions.
Audit and internal controls
The respective responsibilities of the Directors and the independent auditors in connection with the accounts are explained on pages
18, 19 and 33 and the statement of the Directors in respect of going concern appears on page 18.
The Board has throughout the year and up to the date of approval of the financial statements had procedures in place as
recommended in the guidance in the UK Corporate Governance Code and the supporting document issued by the Financial Reporting
rpsgroup.com
23
Council ,“Internal Control: Guidance for Directors on the Combined Code”. The principal risks to which the Group is exposed and
the measures to mitigate such risks are described on pages 8 and 9.
The Board is responsible for the Group’s system of risk management and internal control, which are 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 and risk management from information provided by management and the Group’s external auditors. Such a review
was undertaken by the Committee and the Board during 2012 the outcome of which was satisfactory. The key procedures that the
Directors have established to provide effective internal financial controls are as follows:
Financial reporting: The results for the Group are reported to and reviewed by the Board on a monthly basis. A detailed formal
budgeting process for all Group businesses culminates in an annual Group budget which is approved by the Board.
Financial and accounting principles and internal financial controls assurance: The Group’s accounting policies, principles and minimum
standards required for effective financial control are communicated to all accounting teams. The Group Finance function undertakes
periodic detailed reviews to ensure compliance and to follow up any weaknesses previously identified.
Capital investment: The Group has clearly defined guidelines for capital expenditure. These include detailed appraisal and review
procedures, levels of authority and due diligence procedures in respect of potential business acquisitions.
Treasury: the Group operates a central treasury function that undertakes required borrowing and foreign exchange transactions as
well as the daily monitoring of bank balances and cash receipts. Appropriate payment authorisation processes are in place in all parts
of the Group.
Audit Committee
The Audit Committee comprises three Independent Non-Executive Directors; John Bennett, Robert Miller-Bakewell and Tracey
Graham. The Committee has written terms of reference which are available on the Company’s website and on request from the
Company Secretary. Although the Board considers that all current members of the Committee have experience that is relevant to
the role, John Bennett, who is a Chartered Accountant, is the member of the Committee specifically identified as having recent and
relevant financial experience.
The major difference of opinion that arose between the Company and its former auditors Ernst & Young LLP(‘EY’) during 2011 in
relation to IFRS3 (2008) Business Combinations and specifically the appropriate treatment contingent deferred consideration was
reported in some detail last year. Although the Committee fundamentally disagreed with EY’s interpretation of this standard the Board
accepted the Committee’s recommendation that EY’s interpretation be adopted in respect of the 2011 report and accounts.
Against the background of this fundamental disagreement the Board accepted the Committee’s recommendation that the external
audit appointment be reviewed. During 2012 the Committee, accordingly, undertook a competitive tender process of the external
audit appointment following which Deloitte LLP were appointed as the Group’s auditors. EY had held the audit appointment for only
one year following a similar review undertaken in 2011 and a further change of external auditors at that time was therefore unusual.
The Committee and the Board were however, firmly of the view that the nature of the disagreement with EY was so fundamental that
a further review was appropriate and in the best interest of shareholders.
At its annual planning meeting the Committee reviews and approves plans with the Auditors including the locations to be audited and
the key areas of audit focus. The committee also reviews the integrity of the Group’s financial statements prior to their submission to
the Board. This review includes ensuring that statutory and associated legal and regulatory requirements are met as well as considering
significant reporting judgements, the adoption of appropriate accounting policies and practices and compliance with accounting
standards. As part of this process, the Committee receives reports on the scope and outcome of the annual audit and management’s
response to this. The Committee also monitors the effectiveness of the Group’s internal financial controls and risk management
processes; this included assisting the Board in conducting the review of internal controls described above. The Audit Committee
regularly reviews the need for an internal audit function and remains of the view that at present the financial controls operating
throughout the Group and the reviews undertaken by the Group Finance function are adequate without a dedicated internal audit
function. In addition, during the year members of the Audit Committee visited Australia and North America to discuss internal control
with senior management and were able to report positively in respect of their findings.
The Audit Committee keeps the scope, cost and effectiveness of the external audit under review as well as making recommendations
as to the annual re-appointment of Auditors. The independence and effectiveness of the external auditor will continue to be subject to
annual review and audit partners rotated at least every five years. As part of its responsibility to ensure independence and objectivity
the Committee has 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:
n bookkeeping services
n design and implementation of financial systems
n preparation of financial statements
n valuation services
24
Report and Accounts 2012
Management & Governance
n
investment advisory, broker and dealing services
n 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:
n
n
taxation services
n advice relating to risk management and controls
transaction support including due diligence
n 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 49. Taxation services undertaken by Deloitte
LLP during the year were handled by a team that was separate and independent from the external audit team and led by a different
senior partner. The Committee was satisfied that appropriate safeguards were in place and that the provision of these additional
services by Deloitte LLP did not affect their independence as external auditor.
The Committee also keeps under review the means by which staff may, in confidence, raise concerns about financial improprieties
relating to financial reporting, internal control or other matters. The company’s procedure allows for any such matters to be reported
to the Company Secretary who will ensure that any such matters are properly investigated and reported to the Audit Committee
and the Board. An individual raising a concern need not disclose their identity and if such identity is disclosed it will not be passed on
without the consent of that individual.
Nomination Committee
The Committee meets as required, but not less than once a year, and comprises the Non-executive Chairman, Brook Land and two
Independent Non-Executive Directors, Louise Charlton and Robert Miller-Bakewell. The Committee’s key responsibilities include reviewing
the Board structure, size and composition as well as evaluating the balance of skills, knowledge and experience which may be required
in the future and making recommendations to the Board accordingly. It is also responsible for nominating candidates to the Board when
vacancies arise, recommending Directors who are retiring to be put forward for re-election and where appropriate considering any issues
relating to the continuation in office of any Director. It has written terms of reference which are available on the Company’s website and
on request from the Company Secretary.
The range of skills and experience offered by the current directors is highlighted in the Chairman’s Statement above and the Committee is
satisfied with the balance and membership of the current Board. The Committee does, however, remain mindful of the need to ensure its
periodic refreshment. The Committee also keeps succession planning under continuous review and has, at all times, a clear plan which is
designed to ensure a smooth transition, whenever that is needed, for all posts.
Account is also taken of the need to ensure that the Non-Executive Directors continue to provide the range and balance of skills
required. The Committee and the Board recognise the importance of diversity. One quarter of the Board as currently constituted is
female which is line with Group’s previously announced 25% target in this regard.
When Directors are appointed to the Board, this is through a formal, rigorous and transparent process. No appointments were made to
the Board during the year although on the last occasion that an appointment was made such a process was followed as fully detailed in
last year’s report.
As noted above Robert Miller Bakewell’s initial three year term as a Non-Executive Director will expire at the forthcoming Annual
General meeting and he has agreed to continue for a further three year term. This further term was agreed after careful scrutiny, bearing
in mind the need to achieve the appropriate balance between the retention of acquired experience and refreshment of the Board.
Remuneration Committee
The membership and activities of the Remuneration Committee are described in the Remuneration Report on pages 26 to 32.
Takeover Directive
Disclosures required under the Takeover Directive are included on page 20 and form part of the Group’s Corporate Governance report.
rpsgroup.com
25
Remuneration Report
This report has been prepared in accordance with schedule 8 to the Accounting Regulations under the Companies Act 2006. The
Act requires the auditors to report to the Company’s members on certain parts of the Directors’ Remuneration Report and to state
whether in their opinion those parts of the report have been prepared in accordance with the Accounting Regulations. This report has
therefore been divided into separate sections for audited and non-audited information.
The Committee currently comprises Tracey Graham (Chair), John Bennett, and Louise Charlton all of whom are Independent Non-
Executive Directors. There were no changes in Committee membership during the year. The principal responsibility of the Committee
is to determine the remuneration of the Executive directors including pension rights and any compensation payments. The Committee
also monitors the level and structure of remuneration for the Group’s senior management. The Committee’s detailed terms of
reference are available on the Company’s website and on request from the Company Secretary.
The Chairman of the Company and the Chief Executive have both assisted the Remuneration Committee in its 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 Committee has continued to receive wholly independent advice on executive compensation from
PricewaterhouseCoopers (‘PwC’). PwC provide no other services to the Group.
Details of frequency and attendance at meetings of the Committee are detailed on page 22.
Unaudited Information
Remuneration policy
The Remuneration Committee’s policy for 2012 was to set the main elements of the remuneration package in order to reflect:
n
the performance of the Group as a whole;
n
the performance of the individual Executive Director both for the Group and the businesses under his control;
n pay and conditions throughout the Company;
n
the market conditions in the sectors in which the Group operates and
n
the increasingly international and complex nature of the Group.
The Committee recognises that the main competitors of the Group and, therefore, comparators for their 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 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 Directors’ interests with those of the Company,
employees and shareholders.
The table below shows the proportion of the maximum potential compensation that is performance related for each Executive Director.
Alan Hearne
Phil Williams
Gary Young
Notes:
Fixed compensation comprises: Basic salary, Pension Contribution, Benefits
Variable compensation comprises: Maximum contribution under the Bonus Plan
Fixed
%
39.3
41.1
44.8
Variable
%
60.7
58.9
55.2
Changes for 2013
The current three year bonus banking plan, the operation of which is detailed below, finished at the end of 2012.
The Remuneration Committee has consulted with its main shareholders and shareholder representative bodies (ISS and ABI) regarding
a new bonus plan to operate from 2013 onwards. The Committee would like to thank those who took part in the consultation and is
26
Report and Accounts 2012
Management & Governance
pleased that the large majority of shareholders both by number and percentage holding who were consulted were supportive of the
proposed new plan. Approval of the new plan is being sought at the Company’s Annual General Meeting and full details are contained
in the notice of that meeting.
Base salary and Benchmarking
The Committee sets basic salaries as a part of its overall remuneration policy and therefore takes account of all of those matters
listed above. As part of this process the Committee takes account of relevant comparator data. The principal grouping used by the
Committee for benchmarking of salaries and other benefits consists of companies with the support services sector and with a range of
market capitalisations such that the Company sits within the middle of that grouping. This consists of the following companies:
Aggreko Plc
Amec Plc
Ashtead Group Plc
Atkins WS PLC
Babock International Group
Bunzl PLC
De La Rue Plc
Electrocomponents Plc
Filtrona PLC
Hays PLC
Homeserve PLC
Interserve PLC
Intertek Group PLC
John Menzies Plc
Lavendon Group Plc
Michael Page International Plc
Mitie Group
PayPoint PLC
Premier Farnell PLC
Regus PLC
Serco Group Plc
Shanks Group Plc
SIG PLC
Speedy Hire PLC
SThree PLC
Travis Perkins PLC
White Young Green PLC
As disclosed in detail in last year’s report during 2011 a full and independent benchmarking exercise that considered base salaries and
total compensation was carried out on the Committee’s behalf by PwC. This exercise also looked at an international sub-set of the
main comparator group to reflect the international nature of the Group as well as a review of the UK Energy sector at Divisional level.
Having conducted a comprehensive review of this type during 2011 the Committee did not consider it necessary to repeat such an
exercise in 2012.
The Committee has access to pay and conditions of other employees within the Group when determining remuneration for the
Executive Directors and also considered the relationship between general changes to pay and conditions within the Group as a whole.
As fully disclosed and explained in last year’s report, with effect from 1 January 2012 the Committee increased the base salary of Alan
Hearne by 5% to £446,000, the base salary of Phil Williams by 6.25% to £340,000 and that of Gary Young by 3% to £231,750. The
report was approved by shareholders at the 2012 Annual General Meeting of the Company.
With effect from 1 January 2013 the Committee increased the basic salary of all of the directors by 3%, to £459,400 for Alan Hearne,
£350,200 for Phil Williams and £238,700 for Gary Young.
RPS Group Plc Bonus Banking Plan (the ‘Bonus Plan’)
Background
The Bonus Plan was introduced with effect from 1 January 2010 to cover a three year period and 2012 was therefore its third and
final year of operation. This single plan replaced the Company’s Long Term Incentive Plan (‘LTIP’) and the annual bonus plan that
operated up to 31 December 2009. The Bonus Plan, the rationale for which was set out in the 2010 report, was introduced following
consultation with the Company’s major shareholders. The principal details of the Bonus Plan and its operation in 2012 are set out
below. As this was the Bonus Plan’s final year of operation the sums previously deferred under it will, subject to the rules of the plan,
be eligible for release along with the 2012 Company contribution.
Summary of the Main Features of the current Bonus Plan
The Bonus Plan is based on a percentage of the PBTA earned during a three year period which is used to create a bonus pool. 50% of
the bonus pool is paid out in year 1, 50% of the cumulative balance of the bonus pool may be paid out in year 2 and the cumulative
balance (after payments in years 1 and 2 and contribution to the pool in respect of year 3) may be paid out as a larger final payment
at the end of year 3.
The key features of the Bonus Plan are:
n
at the beginning of the plan period participants have a plan account to which Company bonus contributions are allocated. There
will only be value in a participant’s plan account if the Company makes a contribution to the Plan. On the basis that the threshold
profit is exceeded and a contribution is made into the Plan participants will be entitled to an annual payment from their plan
accounts. The Remuneration Committee has discretion when determining the level of annual payment received by the participant
to take into account individual and wider Company and divisional financial and non financial performance; including the Company’s
sustainability, environmental and corporate governance record;
rpsgroup.com
27
n
the Remuneration Committee sets the threshold profit at the beginning of each financial year;
n
up to 3% of the total PBTA for the financial year will be contributed to the Bonus Plan for the Executive Directors provided
that the threshold profit is met or exceeded. This is subject to an individual cap as a percentage of salary. The Remuneration
Committee considers a 3% maximum contribution to be appropriate based on the historic incentives costs of the Executive
Directors of the Company and their counterparts in the other constituents of the Support Services Sector;
n
if the actual PBTA for the financial year is less than the threshold profit, 15% of the difference will be deducted from the bonus
pool in the Plan provided that the value cannot be less than zero;
n
there is a maximum contribution that can be made to a participant’s plan account in respect of any financial year (see below);
n
the value of deferred contributions in a participant’s plan account is held in shares;
n
participants will be eligible for a payment equal to 50% of the balance of their Plan accounts at the end of each financial year, with
the final balance of the Plan account paid at the end of the third year.
Maximum Contribution 2012
Name
Alan Hearne
Phil Williams
Gary Young
Maximum Contribution under the Plan
(%age Salary)
Maximum Contribution
for 2012
200%
175%
150%
200%
175%
150%
As disclosed in last year’s report the Committee increased the maximum contribution in respect of Phil Williams from 150% to 175%
with effect from 1 January 2012.
Profit & Contribution Thresholds for 2012
Level
PBTA Threshold
(this figure is net of all bonus costs including the bonus costs under the Plan for this financial year))
Bonus Plan Contribution Percentage
Bonus Plan Deduction Percentage
*Straight line between points.
Level 0
<£53.5m
15%
Level 1
<£53.5m
1%*
Level 2
£62.5m
3%*
The Bonus Plan PBTA for 2012 was £60.1m which generated a Total Plan Contribution of £1,482,000.
For 2012 the Committee introduced a second performance condition relating to the Group’s cash collection performance. This
provided that for every percentile by which the Group’s conversion of profit into cash for the year exceeded 100%, subject to an
upper limit of 120% and the maximum contribution under the plan, an additional bonus equal to 1% of basic salary would be paid.
This also provided that in the event that this measure was below 80% for 2012, a deduction equal to 10% of the normal profit
related bonus would be made. The Group’s conversion of profit into cash for 2012 was equal to 105% which resulted in an additional
contribution of £51,000.
Participant Plan Accounts
The following table sets out the details of the Plan Accounts for the Executive Directors:
Plan Account Details
Opening Balance
2012 Plan Contribution
2012 Plan Deduction
Total Payable
Alan Hearne
£000s
334
689
–
1,023
Phil Williams
£000s
218
491
–
709
Gary Young
£000s
234
348
–
582
Shares previously deferred under the Bonus Plan together with value of dividends paid on those shares are held within the Company’s
employee benefit trust. The shares held in respect of each director as at the date of this report are as follows:
Alan Hearne
Phil Williams
Gary Young
142,816
93,544
100,650
28
Report and Accounts 2012
Management & Governance
The opening balance shown above represents the value of these shares and related dividends based upon the company’s average
share price in the three months to 31 December 2012. The plan contribution for 2012 is the final contribution to the Bonus Plan and
is ascertained by application of the formula shown above. There were no plan deductions for 2012. The 2012 contribution will, subject
to the rules of the plan, be paid in cash and is shown in the directors’ remuneration table on page 32. The deferred shares and value
of the related dividends will, subject to the rules of the plan, be released to participants.
Long Term Incentive Plan (‘LTIP’)
The LTIP operated from 2004 until the introduction of the Bonus Banking Plan, the final award under this plan having been made in
2009. As anticipated in last year’s report the performance conditions attached to this final award were not satisfied and this award
lapsed on 31 March 2012.
The table below confirms the position in relation to the one award under the LTIP that was outstanding at the beginning of the year.
Executive
Maximum Annual Grant
Chief Executive
Finance Director
Executive Directors
Performance Condition
Status
2009 Grant
% of Salary/
Condition
100
100
80
60-80
EPS Growth
(see table below)
This award
lapsed on
31 March 2012
The performance conditions that attached to the release of LTIP awards related to EPS growth and were as follows:
% Average Basic EPS Growth p.a. above RPI
% of 3 Award Released*
3
4
5
6
7
8
9
10
12.5
25
37.5
50
62.5
75
87.5
100
*Straight line release applies between these points.
The Remuneration Committee determined the satisfaction of the performance conditions in respect of the LTIP. The EPS figure used
by the Committee was 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
would only be received against a background of sustained real increase in the financial performance of the Company. Details of the
Directors individual LTIP awards are set out on page 18.
Executive Share Option Plan
In years prior to 2004 when the LTIP was introduced, the Company operated an Executive Share Option Plan. All performance
conditions under this Plan were met, details of which have been set out in previous reports of the Committee. No options were
issued at a discount under this plan. All outstanding options under this plan are set out on page 17.
Benefits
The Executive Directors are eligible to participate in defined contribution pension schemes. As fully disclosed in last year’s report, with
effect from 1 January 2012, the employer contribution was increased from 15% to 17.5% for Phil Williams and remained at 15% for
Gary Young. As also previously disclosed the Committee agreed that with effect from 1 January 2012, a salary supplement of 25%
of basic salary would be payable to Alan Hearne in lieu of pension contributions. This payment does not rank for the purposes of
calculating payments under the Bonus Banking Plan or other employee benefits linked to salary.
Executive Directors can also participate in the all-employee HMRC 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. In addition they receive the following benefits:
rpsgroup.com
29
n healthcare;
n
life assurance and dependents’ pensions;
n disability schemes; and
n company car or car allowance.
Shareholding Guideline
The Committee operates a system of shareholding guidelines to encourage long-term share ownership by the Executive Directors.
The Committee believes this forms a stable 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 their shareholding by their participation in the
Company’s incentive plans. The committee considers that deferred shares held through the RPS Group Plc Bonus Banking Plan and
the plan that will replace it, should count for the purposes of meeting these guidelines.
The current guidelines are as detailed below.
Name
Alan Hearne
Gary Young
Phil Williams
Recommended shareholding
requirement as percentage of salary
150%
100%
100%
Service contracts
It remains the Company’s policy that Executive Directors should have rolling service contracts terminable on no more than one year’s
notice served by the Company or the Director.
Details of the Executive Directors’ service contracts are shown below.
Name
Alan Hearne
Phil Williams
Gary Young
Date of Contract
February 1997
November 2005
September 2000
Notice Period
(months)
12
12
12
The only event on the occurrence of which the Company is liable to make a payment to any of the Executive Directors is cessation
of employment. The Company’s policy on termination payments is not to 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 extended notice periods or compensation in the event of a change of control. None of the Directors’ contracts provide
for liquidated damages.
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 whilst
Committee Chairmen and the Senior Independent Director receive an additional payment. The fees paid to the Chairman and the Non-
Executive Directors are detailed on page 32.
Non-Executive Directors are appointed for three years term which may be renewed by mutual agreement. In common with the
Executive Directors all Non-Executives are subject to annual re-election by shareholders.
Details of the terms of appointment of the serving Non-Executive Directors are set out in the table below:
Name
Brook Land
John Bennett
Louise Charlton
Robert Miller-Bakewell
Tracey Graham
*Has agreed to serve a second three year term
Initial Contract date
September 1997
June 2006
May 2008
May 2010
August 2011
Unexpired term of contract as
at 31 Dec 2012 (months)
Annual Review
31
17
5*
20
30
Report and Accounts 2012
Management & Governance
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 Annual General Meeting.
TSR 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 and the FTSE All Share Support Services
sector. The Remuneration Committee has selected these benchmarks as they provide a good indication of the Company’s
general performance.
Total shareholder return from 1st January 2008
160
140
120
£
100
80
60
40
2008
2009
2010
2011
2012
RPS Group - Tot Return Ind
FTSE All Share - Tot Return Ind
FTSE All Share Support SVS £ - Tot Return Ind
Source: Thomson Datastream
rpsgroup.com
31
Audited Information
Directors’ emoluments and compensation
The table below sets out details of the emoluments and compensation received during the year by each Director.
Executive:
Alan Hearne
Gary Young
Phil Williams
Peter Dowen*
Non-Executive:
Brook Land
John Bennett
Louise Charlton
Robert Miller-Bakewell
Tracey Graham**
Roger Devlin*
Karen McPherson*
Total 2012
Total 2011
Basic
salary
£000s
446
232
340
–
–
–
–
–
–
–
–
1,018
1,145
Bonus
£000s
689
348
491
–
–
–
–
–
–
–
–
1,528
628
Fees
£000s
Benefits
£000s
–
–
–
–
110
50
35
41
43
279
249
19
16
16
–
–
–
–
–
–
–
–
51
59
Emoluments excluding pensions
Pension (paid and provided)
2012
£000s
1,154
596
847
–
110
50
35
41
43
2,876
–
2011
£000s
777
319
554
182
101
40
32
36
12
13
15
–
2,081
2012
£000s
111
35
59
–
–
–
–
–
–
–
205
–
2011
£000s
16
34
48
26
–
–
–
–
–
–
–
124
The total Directors’ emoluments were £2,876,000 (2011: £2,081,000) excluding pension contributions. In addition Employers National Insurance Contribution
paid in respect of these emoluments were £379,000 (2011: £250,000).
* Peter Dowen, Roger Devlin and Karen McPherson ceased to be directors during 2011 and the emoluments shown for that year represent those paid for a part
of that year up to date of retirement.
** Tracey Graham was appointed to the Board during 2011 and emoluments shown for that year represent those paid for a part of the year from date
of appointment.
Share awards
The tables on pages 17 and 18 set out details of the share options and LTIPs held by each Director during the year.
The Company operates its share schemes within the dilution limits specified by the ABI.
Pensions
The executive directors participate in Group Money Purchase (defined contribution) pension plans. As explained above Alan Hearne is
in receipt of a salary supplement in lieu of employer pension contributions, this payment being included under the Pension column in
the table above.
An Ordinary Resolution to approve this report will be proposed at the Company’s Annual General Meeting on 3 May 2013.
Signed on behalf of the Board
Tracey Graham
Chair of the Remuneration Committee
28 February 2013
32
Report and Accounts 2012
Accounts
Accounts
Report of the Independent Auditor
To the members of RPS Group Plc
We have audited the financial statements of RPS Group PLC (registered number: 02087786) for the year ended 31 December 2012
which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated
Balance Sheet, the Consolidated Cash Flow Statement, the Consolidated Statement of Changes in Equity, the Parent Company Balance
Sheet and the related notes 1 to 32 to the consolidated financial statements and 1 to 13 to the parent company financial statements.
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 the 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 auditor
As explained more fully in the Directors’ responsibilities statement, 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 and express an opinion on the
group 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 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. In addition, we read all the financial and non-financial information in the annual report
to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements
or inconsistencies we consider the implications for our report.
Opinion on financial statements
In our opinion:
n
n
n
n
the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December
2012 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; and
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 ststements, Article 4 of the IAS Regulation.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion:
n
n
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.
rpsgroup.com
33
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you if, in our opinion:
n
n
n
n
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 Remuneration Report to be audited are not in agreement with the
accounting records or 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:
n
n
the directors’ statement, set out on page 18, 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 UK
Corporate Governance Code specified for our review; and
n
certain elements of the report to shareholders by the Board on directors’ remuneration.
John Clennett FCA (Senior statutory auditor)
for and on behalf of Deloitte LLP
Chartered Accountants and Statutory Auditor
Reading, United Kingdom
28 February 2013
34
Report and Accounts 2012
Report of the Independent Auditors continued
Consolidated Income Statement
£000s
Revenue
Recharged expenses
Fee income
Operating profit before amortisation of acquired intangibles
and transaction related costs
Amortisation of acquired intangibles and transaction related costs
Operating profit
Finance costs
Finance income
Profit before tax, amortisation of acquired intangibles
and transaction related costs
Profit before tax
Tax expense
Accounts
Year ended
31 Dec
2012
Year ended
31 Dec
2011
555,863
(77,028)
478,835
528,710
(75,981)
452,729
Note
3
3
3
1(g),3,4,5
62,069
53,045
1(g),4
6
6
(19,925)
42,144
(2,128)
158
(10,361)
42,684
(2,541)
308
60,099
50,812
40,174
40,451
9
(14,263)
(11,340)
Profit for the year attributable to equity holders of the parent
25,911
29,111
Basic earnings per share (pence)
Diluted earnings per share (pence)
Adjusted basic earnings per share (pence)
Adjusted diluted earnings per share (pence)
10
10
10
10
11.94
11.87
19.48
19.36
13.49
13.40
16.68
16.56
Consolidated Statement of Comprehensive Income
£000s
Profit for the year
Exchange differences
Total recognised comprehensive income for the year
attributable to equity holders of the parent
The notes on pages 39 to 71 form part of these financial statements.
Year ended
31 Dec
2012
Year ended
31 Dec
2011
25,911
(5,545)
29,111
(811)
20,366
28,300
rpsgroup.com
35
Consolidated Balance Sheet
£000s
Assets
Non-current assets:
Intangible assets
Property, plant and equipment
Investments
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 payables
Deferred tax liability
Provisions
Net assets
Equity
Share capital
Share premium
Other reserves
Retained earnings
Total shareholders’ equity
As at
31 Dec
2012
As at
31 Dec
2011
Note
11
12
14
16
18
15
19
16
18
20
19
21
22
328,440
30,632
–
359,072
159,381
14,804
174,185
748
7,842
101,921
3,582
2,633
116,726
57,459
27,557
3,543
1,745
8,436
1,436
42,717
373,814
6,587
106,198
36,070
224,959
373,814
329,112
30,070
41
359,223
171,751
25,989
197,740
2,959
10,327
109,496
3,331
3,903
130,016
67,724
46,554
–
1,665
11,594
2,684
62,497
364,450
6,544
103,717
43,299
210,890
364,450
These financial statements were approved and authorised for issue by the Board on 28 February 2013.
The notes on pages 39 to 71 form part of these financial statements.
Dr Alan Hearne, Director
Gary Young, Director
On behalf of the Board of RPS Group Plc.
36
Report and Accounts 2012
Consolidated Cash Flow Statement
£000s
Adjusted cash generated from operations
Deferred consideration treated as remuneration
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
Proceeds from disposal of business
Dividends received
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from issue of share capital
Purchase of own shares
(Proceeds from) / 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
* See note 1a.
The notes on pages 39 to 71 form part of these financial statements.
Accounts
Year ended
31 Dec
2012
Year ended
31 Dec
*
2011
76,045
(9,969)
66,076
(2,204)
158
(18,162)
45,868
(9,774)
(4,130)
(9,909)
713
298
–
(22,802)
240
(400)
(17,409)
(1,350)
(13,007)
(399)
(32,325)
71,053
(3,743)
67,310
(2,373)
308
(12,781)
52,464
(17,090)
(5,084)
(9,024)
362
–
256
(30,580)
179
(356)
2,222
(1,410)
(11,233)
(402)
(11,000)
(9,259)
10,884
24,458
(395)
14,804
14,804
–
14,804
13,933
(359)
24,458
25,989
(1,531)
24,458
Note
26
23
26
26
rpsgroup.com
37
Consolidated Statement of Changes in Equity
£000s
At January 2011
Total comprehensive income
Issue of new ordinary shares
Purchase of own shares
Share based payment expense
Tax recognised directly in equity
Dividends paid
At 31 December 2011
Total comprehensive income
Issue of new ordinary shares
Purchase of own shares
Share based payment expense
Tax recognised directly in equity
Dividends paid
At 31 December 2012
Share
capital
6,516
–
28
–
–
–
–
6,544
–
43
–
–
–
–
6,587
Share
premium
101,941
–
1,776
–
–
–
–
103,717
–
2,481
–
–
–
–
106,198
Retained
earnings
190,955
29,111
(509)
–
2,431
135
(11,233)
210,890
25,911
(1,000)
–
2,070
95
(13,007)
224,959
Other
reserves
45,581
(811)
(1,115)
(356)
–
–
–
43,299
(5,545)
(1,284)
(400)
–
–
–
36,070
Total
equity
344,993
28,300
180
(356)
2,431
135
(11,233)
364,450
20,366
240
(400)
2,070
95
(13,007)
373,814
An analysis of other reserves is provided in note 22 and details of dividends paid are provided in note 23.
The notes on pages 39 to 71 form part of these financial statements.
38
Report and Accounts 2012
Accounts
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 2012 comprise the Company and its subsidiaries (together referred to as the “Group”).
The consolidated financial statements were authorised for issuance on 28 February 2013.
(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.
No new or revised standards or interpretations have been adopted in the current year.
Restatement
As reported in the Interim Results for the six months ended 30 June 2012, the consolidated cash flow statement for the year ended
31 December 2011 has been restated so that deferred consideration treated as remuneration is included within cash generated from
operating activities rather than cash flows from investing activities. Otherwise these financial statements have been prepared using
accounting policies set out in the Report and Accounts 2011.
The accounting policies set out below have been applied consistently to both periods presented in these consolidated financial
statements.
(b) Basis of consolidation
Where the company has the power, either directly or indirectly, to govern the financial and operating policies of another entity or
business so as to obtain benefits from its activities, it is classified as a subsidiary. The consolidated financial statements present the
results of the company and its subsidiaries as if they formed a single entity. Intercompany transactions and balances between group
companies are therefore eliminated in full. The consolidated financial statements incorporate the results of business combinations using
the purchase method. In the Consolidated Balance Sheet, the acquiree’s identifiable assets, liabilities and contingent liabilities are initially
recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of
comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases.
(c) Revenue
Revenue is stated net of sales tax. Revenue is recognised only when the outcome of a transaction can be measured reliably and it is
probable that economic benefits will flow to the Group.
i Fees / expenses
Revenue is classified into Fee revenue and Expense revenue. Fee revenue represents the Group’s personnel, subcontractor and
equipment time and expertise sold to clients. Expense revenue is the recharge of costs incidental to fulfilling the Group’s contracts, for
example mileage, flights, subsistence and accommodation.
ii Time and materials
In the case of time and materials projects, revenue represents the fair value of services provided using time spent at agreed rates as
the basis.
iii Fixed price
In the case of fixed price contracts, revenue is recognised in proportion to the stage of completion of the transaction at the balance
sheet date measured by reference to the milestones achieved or cost incurred as a proportion of the total forecast cost. No revenue
is recognised if there are significant uncertainties regarding the recovery of the consideration due or associated costs. An expected loss
on a contract is recognised immediately in the income statement.
iv Tuition
Tuition fees in respect of courses run by RPS are recognised over the period of instruction.
v Agency agreements
The Group enters into certain agreements with clients where it manages client expenditure as an agent. It is obliged to purchase third
party services and recharges those costs, plus a management fee, to the client. In these cases only the management fee is recognised as
revenue. Receivables, payables and cash related to these transactions are included in the consolidated balance sheet.
rpsgroup.com
39
1. Significant accounting policies continued
Accrued revenue is booked as a receivable in the consolidated balance sheet when the amount of revenue recognised on a contract
exceeds the amount invoiced. Where the amount invoiced exceeds the amount of revenue recognised, the difference is booked as a
payable on the balance sheet in deferred income.
(d) Deferred consideration
Deferred consideration arises when settlement of all or part of the cost of a business combination falls due after the date the
acquisition was completed.
i IFRS 3 (2004)
At the date of acquisition, deferred consideration is stated at the fair value of the total consideration outstanding. In these cases
all deferred consideration has been treated as part of the cost of investment. At each balance sheet date deferred consideration
comprises the fair value of the remaining deferred consideration valued at acquisition.
ii IFRS 3 (2008)
Where the payment of deferred consideration is not contingent upon continuing employment of the vendors by the Group, deferred
consideration is treated in the same way as under IFRS 3 (2004).
Where the payment of deferred consideration is contingent upon the continuing employment of vendors by the Group, it is treated as
a remuneration expense and accounted for as an employment benefit under IAS 19. A charge is made through the consolidated income
statement as a cost of employment. The cost associated with each payment is accrued over the period it is earned. At each balance sheet
date the contingent deferred consideration balance comprises the accrual for unsettled remuneration which has been expensed to the
balance sheet date.
(e) Intangible assets
i Goodwill
All business combinations are accounted for by applying the purchase method. Goodwill has been recognised on acquisitions of
subsidiaries and the business, assets and liabilities of partnerships. Goodwill represents the difference between the cost of the
acquisition and the fair value of the identifiable assets acquired.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to groups of cash-generating units and is
tested annually for impairment.
ii Negative Goodwill
Negative goodwill arises where the purchase price of acquisitions for accounting purposes is less than the fair value of the net assets
acquired and is immediately credited to the consolidated income statement in accordance with IFRS 3 (2008).
iii Other intangible assets
Intangible assets other than goodwill that are acquired by the Group are stated at cost less accumulated amortisation and
impairment losses.
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 or 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.
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
Trade names
Order backlog
Non compete agreements
Software
Intellectual property rights
3 to 15 years
1 to 5 years
1 to 4 years
3 years
10 years
10 years
40
Report and Accounts 2012
Accounts
(f) Impairment of non financial assets
The carrying amounts of the Group’s non financial 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 asset’s 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.
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 does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no
impairment loss had been recognised.
(g) Non statutory performance measures
The Board has disclosed four non statutory performance measures as part of the Consolidated Income Statement. These are
“Operating profit before amortisation of acquired intangibles and transaction related costs”, “Profit before tax, amortisation of acquired
intangibles and transaction related costs”, “Adjusted basic earnings per share” and “Adjusted diluted earnings per share”.
The Board considers these to be more meaningful measures of business performance than the statutory measures “Operating profit”,
“Profit before tax”, “Basic earnings per share” and “Diluted earnings per share”.
The Board has shown in note 3 segment profit and underlying profit.
“Segment profit” is defined as profit before interest, tax, amortisation of acquired intangibles and transaction related costs.
“Underlying profit” is defined as segment profit before reorganisation costs.
In 2011 the Group reported segment profit after amortisation of acquired intangibles and transaction related costs. In 2012 it has
chosen not to as this measure is not reported to the Group’s CODM.
i Amortisation of acquired intangibles and transaction related costs (note 4)
This classification of income and expense comprises amortisation of acquired intangibles (see note 1 (e) iv), deferred consideration
payments that are contingent on continuing employment and are treated as remuneration (see note 1 (d) ii), negative goodwill
that has been credited to the income statement (see note 1 (e) ii), gain on revaluation to fair value of investment in associate upon
acquisition of all outstanding share capital (note 28) and third party transaction related costs.
ii Reorganisation costs
This classification of income and expense comprises costs arising as a consequence of reorganisation including redundancy costs, profit
or loss on disposal of plant, property and equipment, the costs of consolidating office space and rebranding costs.
An explanation of adjusted earning per share is given in note 10.
(h) Key accounting estimates and judgements
The Group considers that the accounting policies above all require judgement to be exercised.
Judgements that could have a material effect on the Group’s financial statements include the following:
1.
2.
Revenue recognition – judgement is required to identify when it is appropriate to recognise revenue on contracts,
particularly with respect to fixed price contracts.
Acquisition accounting – judgements are made with respect to the fair value of the net assets acquired and with respect to
the fair value of the consideration transferred. Market rates of interest are used to discount expected cash flows to derive
the fair value of the investment. See note 28 for detail of the acquisition completed in 2012.
rpsgroup.com
41
Notes to the Consolidated Financial Statements continued
3.
4.
Impairment of non-financial assets – when impairment reviews are undertaken, judgements are made with respect to the
discount rates applicable to the Group’s cash generating units, along with the expected cash flows of those cash generating
units and the growth rates applied to them. Detail of the results of the impairment reviews performed in 2012 can be
found in note 11 along with the judgements applied.
Impairment of financial assets – management considers in detail when it is appropriate to recognise impairment reserves
against specific financial assets. This judgement will take into account our previous experience with the client in question,
their particular circumstances and the markets that they work in. Details of the impairment reserves held for financial assets
can be found in note 14.
2. Other accounting policies
(a) 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 the translation reserve. They
are recycled and taken to income upon disposal of the operation.
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 the income statement
as they arise.
(b) Property, plant and equipment
i Owned assets
Items of property, plant and equipment are stated at cost less accumulated depreciation (see below) and impairment losses (see
accounting policy 1 (f) above).
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.
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.
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 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.
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. The estimated useful lives are as follows:
42
Report and Accounts 2012
Freehold buildings
Alterations to leasehold premises
Motor vehicles
Fixtures, fittings, IT and equipment
(c) Trade and other receivables
Accounts
50 years
Life of lease
4 years
3 to 8 years
Trade and other receivables are recognised at cost and carried at cost less impairment losses. 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.
(d) 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 integral part of the Group’s cash management are included as a component of cash and cash
equivalents for the purposes of the consolidated cash flow statement.
(e) Employee benefits
i Defined contribution plans
Obligations for contributions to defined contribution retirement benefit plans are recognised as an expense in the income statement
as incurred.
ii Share-based payments
The Group operates share based payment arrangements with employees. The fair value of equity settled awards for share based
payments is determined at grant and expensed straight line over the period from grant to the date of earliest unconditional exercise.
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.
Since 2004 the Group has incentivised and motivated employees through the grant of conditional share awards under the Long Term
Incentive Plan (“LTIP”) and Bonus Banking Plan (BBP) 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, BBP and PSP are subject to the satisfaction
of corporate performance conditions and continuity of employment provisions. Shareholder approval has lapsed for the LTIP and
therefore no further grants will be made under this plan. The release of shares under the SIP are subject to continuity of employment
provisions.
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.
(f) 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.
(g) Trade and other payables
Trade and other payables are stated at cost. Trade payables with a short useful life are not discounted.
(h) Borrowings
Bank overdrafts and interest bearing loans are initially measured at cost. Borrowings are not discounted.
rpsgroup.com
43
Notes to the Consolidated Financial Statements continued
2. Other accounting policies continued
(i) Reserves
The description and purpose of the Group’s reserves are as follows:
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.
Translation reserve
Cumulative gains and 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.
(j) Expenses
i Operating lease payments
Payments made under operating leases are recognised in the income statement 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.
(k) Income tax
Income tax on the income for the periods presented comprises current and deferred tax. Income tax is recognised in the income
statement except to the extent that it relates to items recognised 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.
(l) Dividends
Dividends are recognised when they become legally payable. In the case of 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 Annual General Meeting.
(m) 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.
44
Report and Accounts 2012
Accounts
(n) Accounting standards issued but not adopted
At the date of authorisation of these financial statements, the following standards and relevant interpretations, which have not been
applied in these financial statements, were in issue but not yet effective (and some of which were pending endorsement by the EU):
n Amendments to IAS 19 “Employee benefits”
n
n
n
n
n
n
n
n
IFRS 9 “Financial Instruments: Classification and measurement”
– effective for accounting periods beginning on or after
1 January 2015.
IAS 12 “Income Taxes – Limited Scope Amendment”
IFRS 10 “Consolidated Financial Statements”
IFRS 11 “Joint Arrangements”
IFRS 12 “Disclosure of Interest in Other Entities”
IFRS 13 “Fair Value Measurement”
IAS 27 (amended) “Separate Financial Statements”
IAS 28 (amended) “Investments in Associates and
Joint Ventures”
n
n
n
IAS 1 (amended) “Presentation of Items in Other
Comprehensive Income”
IFRIC 20 “Stripping Costs in the Production Phase of a
Surface Mine”
IFRS 1 (amended) “ First-time Adoption of IFRS” – Severe
Hyperinflation, Removal of Fixed Dates for First-time Adopters
and Government Loans
n Annual improvements to IFRSs: 2009-2011 Cycle
n
n
n
IAS 32 (amended) “Offsetting Financial Assets and
Financial Liabilities”
IFRS 7 (amended) “Disclosures – Offsetting Financial Assets
and Financial Liabilities”
IFRS 10 (amended), IFRS 12 (amended) and IAS 27
(amended) – “Investment Entities”
The Directors anticipate that the adoption of these Standards and Interpretations in future periods will not have a material impact on
the financial statements of the Group.
3. Business and geographical segments
Segment information is presented in the financial statements in respect of the Group’s business segments, as reported to the Chief
Operating Decision Maker. The business segment reporting format reflects the Group’s management and internal reporting structure.
Inter-segment pricing is determined on an arm’s length basis. Segment results include items directly attributable to a segment as well as
those that can be allocated on a reasonable basis.
Business segments
The business segments of the Group are as follows:
Built and Natural Environment (“BNE”) - consultancy services to many aspects of the property and infrastructure development
and management sectors. These include: environmental assessment, the management of water resources, health and safety, risk
management, town and country planning, building, landscape and urban design, surveying and transport planning. Consulting services are
provided on a regional basis in Europe and Australia Asia Pacific (“AAP”).
Energy - the provision of integrated technical, commercial and project management support and training in the fields of geoscience,
engineering and health, safety and environment on a global basis to the energy sector.
Central costs - certain central costs are not allocated to the segments because either they predominently relate to the running of the
Group Head Office function or could only be allocated to the segments on an arbitrary basis, such costs include the remuneration and
support costs of the main board and the costs of the Group Finance and marketing functions. These costs are included in the category
“unallocated expenses”.
“Segment profit” and “Underlying profit” are defined in note 1(g)
rpsgroup.com
45
Notes to the Consolidated Financial Statements continued
3. Business and geographical segments continued
Segment results for the year ended 31st December 2012
£000s
Built and Natural Environment:
Europe
AAP
Intra BNE eliminations
Total BNE
Energy
Group eliminations
Total
£000s
Built and Natural Environment:
Europe
AAP
Total BNE
Energy
Total
Fees
Recharged
expenses
Intersegment
revenue
External
revenue
157,200
98,300
(193)
255,307
225,875
(2,347)
478,835
21,433
19,827
(41)
41,219
36,017
(208)
77,028
(1,301)
(786)
234
(1,853)
(702)
2,555
–
Underlying
profit
Reorganisation
costs
18,874
12,974
31,848
39,709
71,557
(754)
(920)
(1,674)
(72)
(1,746)
177,332
117,341
–
294,673
261,190
–
555,863
Segment
profit
18,120
12,054
30,174
39,637
69,811
Segment results for the year ended 31st December 2011
Fees
Recharged
expenses
Intersegment
revenue
External
revenue
Built and Natural Environment:
Europe
AAP
Intra BNE eliminations
Total BNE
Energy
Group eliminations
Total
£000s
Built and Natural Environment:
Europe
AAP
Total BNE
Energy
Total
178,215
90,992
(89)
269,118
186,117
(2,506)
452,729
24,548
15,451
–
39,999
36,619
(637)
75,981
(1,935)
(945)
89
(2,791)
(352)
3,143
–
Underlying
profit
Reorganisation
costs
18,002
11,017
29,019
32,099
61,118
(1,572)
(103)
(1,675)
(77)
(1,752)
200,828
105,498
–
306,326
222,384
–
528,710
Segment
profit
16,430
10,914
27,344
32,022
59,366
46
Report and Accounts 2012
Group Reconciliation
£000s
Revenue
Recharged expenses
Fees
Underlying profit
Reorganisation costs
Segment profit
Unallocated expenses
Operating profit before amortisation of acquired intangibles and transaction related costs
Amortisation of acquired intangibles and transaction related costs
Operating profit
Finance costs
Profit before tax
Accounts
Year ended
31 Dec
2012
Year ended
31 Dec
2011
555,863
(77,028)
478,835
71,557
(1,746)
69,811
(7,742)
62,069
(19,925)
42,144
(1,970)
40,174
528,710
(75,981)
452,729
61,118
(1,752)
59,366
(6,321)
53,045
(10,361)
42,684
(2,233)
40,451
The table below shows revenue and fees to external customers based upon the country from which billing took place:
Carrying amount of
segment assets
As at
31 Dec
2011
As at
31 Dec
2012
Segment depreciation
and amortisation
As at
31 Dec
2011
As at
31 Dec
2012
226,861
124,908
351,769
179,163
2,325
533,257
237,335
120,029
357,364
195,362
4,237
556,963
3,607
7,978
11,585
7,217
784
19,586
Year ended
31 Dec
2012
238,481
144,753
71,506
32,769
30,917
28,159
9,278
555,863
Revenue
Year ended
31 Dec
2011
234,344
129,501
46,573
38,285
44,365
28,092
7,550
528,710
Year ended
31 Dec
2012
204,436
123,782
63,736
28,658
24,607
24,483
9,133
478,835
3,927
10,297
14,224
4,109
538
18,871
Fees
Year ended
31 Dec
2011
198,884
110,561
41,993
32,454
37,050
24,393
7,394
452,729
Carrying amount of
non current segment assets
As at
31 Dec
2011
As at
31 Dec
2012
174,829
96,433
26,419
4,434
39,064
17,832
61
359,072
170,190
86,967
30,618
5,097
48,942
17,322
87
359,223
rpsgroup.com
47
£000s
Built and Natural Environment
Europe
AAP
Total BNE
Energy
Unallocated
Group total
£000s
UK
Australia
USA
Canada
Ireland
Netherlands
Other
Total
£000s
UK
Australia
USA
Canada
Ireland
Netherlands
Other
Total
Notes to the Consolidated Financial Statements continued
4. Amortisation of acquired intangibles and transaction related costs
£000s
Amortisation of acquired intangibles
Contingent deferred consideration treated as remuneration
Negative goodwill (see note 28)
Transaction costs
Loss on disposal of business
Revaluation of investment in associate
5. Operating profit - by nature of expense
£000s
Revenue
Staff costs
Subconsultants costs
Other employment related costs
Depreciation of owned assets
Depreciation of assets held under finance leases
Profit on disposal of fixed assets
Operating lease rentals payable - property
Operating lease rentals payable - equipment and motor vehicles
Travel costs
Office costs
Amortisation of acquired intangibles
Other transaction related costs
Other costs
Operating profit
6. Net financing costs
£000s
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
48
Report and Accounts 2012
Year ended
31 Dec
2012
Year ended
31 Dec
2011
10,636
8,593
(266)
827
135
–
19,925
10,839
9,256
(9,067)
823
–
(1,490)
10,361
Year ended
31 Dec
2012
Year ended
31 Dec
2011
555,863
528,710
(217,932)
(121,354)
(17,444)
(8,205)
(745)
138
(11,998)
(4,218)
(14,041)
(18,259)
(10,636)
(9,289)
(79,736)
42,144
(216,206)
(105,222)
(17,896)
(7,281)
(751)
39
(12,258)
(4,312)
(15,125)
(19,182)
(10,839)
(30)
(76,963)
42,684
Year ended
31 Dec
2012
Year ended
31 Dec
2011
(1,583)
(28)
(517)
(2,128)
158
(1,970)
(1,710)
(190)
(641)
(2,541)
308
(2,233)
7. Employee benefit expense
£000s
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:
Fee earning staff
Support staff
Accounts
Year ended
31 Dec
2012
Year ended
31 Dec
2011
187,555
17,536
10,771
2,070
217,932
3,583
924
4,507
186,943
16,927
9,905
2,431
216,206
3,799
887
4,686
In addition to statutory staff costs, contingent deferred consideration treated as remuneration amounts to £8,593,000
(2011: £9,256,000).
The Group considers the Directors to be the key management personnel and details of directors’ remuneration are included in the
Remuneration Report from page 26. The share based payment charge in respect of key management personnel was £221,000
(2011: £325,000).
8. Auditors’ remuneration
During the year, the Group (including its overseas subsidiaries) obtained the following services from the Group’s auditors (2012:
Deloitte, 2011: Ernst & Young) at costs as detailed below:
£000s
Statutory audit of the Company's annual accounts
Statutory audit of the Group's subsidiaries
Total audit fees
Interim review
Total assurance services
Tax compliance services
Tax advisory services
Services in relation to taxation
Total fees
Year ended
31 Dec
2012
Year ended
31 Dec
2011
45
289
334
25
359
68
200
268
627
33
297
330
20
350
75
–
75
425
rpsgroup.com
49
Notes to the Consolidated Financial Statements continued
9. Income taxes
Analysis of tax expense/(credit) in the income statement for the year:
£000s
Current tax:
UK Corporation tax
Overseas tax
Adjustments in respect of prior years
Deferred tax:
Origination and reversal of timing differences
Effect of change in tax rate
Adjustments in respect of prior years
Year ended
31 Dec
2012
Year ended
31 Dec
2011
4,596
13,133
618
18,347
(2,932)
(21)
(1,131)
(4,084)
4,899
9,019
(715)
13,203
(1,866)
(176)
179
(1,863)
Total tax charge to income for the year
14,263
11,340
Analysis of tax credits in equity for the year:
Current tax
Deferred tax
Total tax credit to equity for the year
–
(95)
(95)
(18)
(117)
(135)
The effective tax rate for the year on profit before tax is 35.5% (2011: 28.0%). The effective tax rate for the year on profit before tax,
amortisation of acquired intangibles and transaction related costs is 29.7% (2011: 28.7%) as shown in the table below:
£000s
Total tax expense in Income Statement
Add back:
Tax on amortisation of acquired intangibles and transaction related costs
Adjusted tax charge on the profit for the year
Profit before tax, amortisation of acquired intangibles and transaction related costs
Adjusted effective tax rate
Year ended
31 Dec
2012
Year ended
31 Dec
2011
14,263
11,340
3,569
17,832
60,099
29.7%
3,256
14,596
50,812
28.7%
50
Report and Accounts 2012
The UK rate of corporate tax was reduced from 26% to 24% from 1 April 2012. The UK tax expense for the group’s UK companies
is 24.5% (2011: 26.5%) representing the weighted average annual corporate tax rate for the full financial year.
The actual tax expense for 2012 is different from 24.5% (2011: 26.5%) of profit before tax for the reasons set out in the
following reconciliation:
Accounts
£000s
Profit before tax
Tax at the standard rate of 24.5% (2010: 26.5%)
Effect of:
Non deductible acquisition consideration treated as remuneration
Effect of overseas tax rates
Expenses not deductible for tax purposes
Negative goodwill not taxable
Effect of change in tax rates
Revaluation of investment not taxable
Effect of change in Australian tax law
Adjustments in respect of prior years
Total tax charge on the profit for the period
Year ended
31 Dec
2012
Year ended
31 Dec
2011
40,174
40,451
9,843
10,720
2,105
2,339
632
(65)
(78)
–
–
(513)
14,263
2,453
1,123
627
(2,403)
(249)
(395)
(238)
(298)
11,340
The UK government has announced a future decrease in the UK corporation tax rate from 24% to 23% from April 2014. This change
has resulted in a deferred tax credit arising from the reduction in the balance sheet carrying value of deferred tax liabilities to reflect the
anticipated rate of tax at which those liabilities are expected to reverse.
rpsgroup.com
51
Notes to the Consolidated Financial Statements continued
10. 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 table below:
£000s/000s
Profit attributable to ordinary shareholders
Weighted average number of ordinary shares for the purposes of basic earnings per share
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
2012
Year ended
31 Dec
2011
25,911
29,111
216,980
1,313
218,293
11.94
11.87
215,727
1,547
217,274
13.49
13.40
The directors consider that earnings per share before amortisation of acquired intangible and transaction related costs and, in respect
of 2011, the effect of the change in Australian tax law provides a more meaningful measure of the Group’s performance than statutory
earnings per share. The calculations of adjusted earnings per share were based on the number of shares as above and are shown in
the table below:
£000s
Profit attributable to ordinary shareholders
Amortisation of acquired intangibles and transaction related costs (note 4)
Tax on amortisation of acquired intangibles and transaction related costs
Change in Australian tax law
Adjusted profit attributable to ordinary shareholders
Adjusted basic earnings per share (pence)
Adjusted diluted earnings per share (pence)
Year ended
31 Dec
2012
Year ended
31 Dec
2011
25,911
19,925
(3,569)
–
42,267
19.48
19.36
29,111
10,361
(3,256)
(238)
35,978
16.68
16.56
52
Report and Accounts 2012
Accounts
11. Intangible assets
£000s
Intellectual
property
rights
Customer
relationships
Order
backlog
Trade
names
Non
compete
agreements
Software
Goodwill
Total
Cost:
At 1 January 2012
Additions
Reduction due to disposal
Reduction in deferred consideration payable
Adjustment to prior year estimates
Foreign exchange differences
At 31 December 2012
Aggregate amortisation and impairment losses:
At 1 January 2012
Amortisation
Foreign exchange differences
At 31 December 2012
Net book value at 31 December 2012
2,782
–
–
–
–
(109)
2,673
285
283
(9)
559
2,114
67,213
2,993
–
–
–
(1,727)
68,479
17,694
8,023
(475)
25,242
43,237
6,267
839
–
–
–
(152)
6,954
5,215
1,700
(109)
6,806
148
2,367
–
–
–
–
(45)
2,322
1,426
333
(40)
1,719
603
561
–
–
–
–
(13)
548
156
184
(5)
335
213
1,158
–
–
–
–
(51)
1,107
285,780
12,357
(1,135)
(107)
232
(3,759)
293,368
366,128
16,189
(1,135)
(107)
232
(5,856)
375,451
19
113
(3)
129
978
12,221
–
–
12,221
281,147
37,016
10,636
(641)
47,011
328,440
Intangible asset additions that are recorded in 2012 have been recognised at their provisional fair values (see note 28).
Acquisitions in 2011 were originally stated at provisional values. These fair values have now been finalised and no adjustments have
been made to the prior year balance sheet on grounds of immateriality in accordance with IAS 8.
£000s
Intellectual
property
rights
Customer
relationships
Order
backlog
Trade
names
Non
compete
agreements
Software
Goodwill
Total
Cost:
At 1 January 2011
Additions
Deferred consideration treated as remuneration
Reduction in deferred consideration payable
Adjustment to prior year estimates
Foreign exchange differences
At 31 December 2011
Aggregate amortisation and impairment losses:
At 1 January 2011
Amortisation
Foreign exchange differences
At 31 December 2011
Net book value at 31 December 2011
201
2,501
–
–
–
80
2,782
201
84
–
285
2,497
44,404
22,229
–
–
–
580
67,213
10,554
7,039
101
17,694
49,519
3,094
3,105
–
–
–
68
6,267
1,891
3,285
39
5,215
1,052
1,547
812
–
–
–
8
2,367
1,160
259
7
1,426
941
–
547
–
–
–
14
561
–
153
3
156
405
–
1,121
–
–
–
37
1,158
–
19
–
19
1,139
291,402
3,094
(7,439)
(334)
(162)
(781)
285,780
340,648
33,409
(7,439)
(334)
(162)
6
366,128
12,221
–
–
12,221
273,559
26,027
10,839
150
37,016
329,112
rpsgroup.com
53
Notes to the Consolidated Financial Statements continued
11. Intangible assets continued
Goodwill
Goodwill acquired in a business combination is allocated at acquisition to the groups of cash generating units (CGUs) that are expected
to benefit from that business combination. The carrying amount of goodwill has been allocated as follows:
£000s
Built and Natural Environment
UK and Ireland
Netherlands
Europe
Australia Asia Pacific
Energy
As at
31 Dec
2012
As at
31 Dec
2011
140,870
9,574
150,444
64,220
214,664
66,483
281,147
142,910
9,723
152,633
54,060
206,693
66,866
273,559
The Group tests annually for impairment or more frequently if there are indications that goodwill might be impaired. Management have
not identified any impairment triggering events in the period since the last annual review.
The determination of whether or not goodwill has been impaired requires an estimate to be made of the value in use of the CGUs to
which goodwill has been allocated.
The value in use calculation includes estimates about the future financial performance of the CGUs. In all cases the approved budget for
the following financial year forms the basis for the cash flow projections for a CGU. The cash flow projections in the four financial years
following the budget year reflect management’s expectations of the medium-term operating performance of the CGU and the growth
prospects in the CGU’s market. Thereafter, a perpetuity is applied to the final year’s cash flows.
Key assumptions
The key assumptions in the value in use calculations are the discount rates applied, the growth rates and margins assumed over the
forecast period.
Discount rate applied
The discount rate applied to a CGU represents a pre-tax rate that reflects the market assessment of the time value of money at the end
of the reporting period and the risks specific to the CGU. The Group bases its estimate for the long term pre-tax discount rate on its
weighted average cost of capital (WACC). The inputs to this calculation are derived from long term market and industry data.
The discount rates applied to the CGUs are in the range 10.8% to 12.0% (2011: 11.0% to 13.0%).
Growth rates
The growth rates applied reflect management’s expectations regarding the future performance of the business. These incorporate the
effects of the global recession over the last three years, the expected recovery of the CGUs affected and the past experience of the
Group as it emerged from previous recessions.
The long term growth rate applied to the perpetuity calculations was 2.1% per annum (2011: 2.25% to 2.4%) reflecting the average long
term growth rates of the economies in which the CGUs are based.
Summary of results
During the year, all goodwill was tested for impairment with no impairment charge resulting (2011: £nil).
In the Directors’ view, the results are most sensitive to the discount rate used and a 1% absolute movement in the value of the discount
rate is reasonably possible. If that movement occurred the Group would not recognise any impairment in the carrying value of the
goodwill in any CGU.
54
Report and Accounts 2012
12. Property, plant and equipment
£000s
Cost:
At 1 January 2012
Additions
Disposals
Additions through acquisition
Foreign exchange differences
At 31 December 2012
Depreciation:
At 1 January 2012
Charge for the year
Disposals
Foreign exchange differences
At 31 December 2012
Net book value at 31 December 2012
Freehold
land and
buildings
Alterations
to leasehold
premises
9,071
4
(450)
–
(229)
8,396
2,242
239
(208)
(44)
2,229
6,167
6,373
1,632
(251)
–
(156)
7,598
1,822
1,012
(230)
(50)
2,554
5,044
Fixtures,
fittings,
IT and
equipment
55,671
7,089
(1,652)
844
(861)
61,091
39,253
6,883
(1,466)
(494)
44,176
16,915
Motor
vehicles
3,718
1,218
(641)
18
(115)
4,198
1,446
816
(522)
(48)
1,692
2,506
Accounts
Total
74,833
9,943
(2,994)
862
(1,361)
81,283
44,763
8,950
(2,426)
(636)
50,651
30,632
At 31 December 2012 the Group held under finance lease contracts alterations to leasehold properties, motor vehicles and equipment
with net book values of £711,000, £40,000 and £262,000 respectively.
£000s
Cost:
At 1 January 2011
Additions
Disposals
Additions through acquisition
Transfers
Foreign exchange differences
At 31 December 2011
Depreciation:
At 1 January 2011
Charge for the year
Disposals
Foreign exchange differences
At 31 December 2011
Net book value at 31 December 2011
Freehold
land and
buildings
Alterations
to leasehold
premises
9,392
23
–
–
(140)
(204)
9,071
2,089
194
–
(41)
2,242
6,829
5,300
761
(218)
353
140
37
6,373
1,203
827
(213)
5
1,822
4,551
Fixtures,
fittings,
IT and
equipment
50,189
7,187
(2,673)
1,042
–
(74)
55,671
35,406
6,405
(2,447)
(111)
39,253
16,418
Motor
vehicles
3,023
1,087
(429)
4
–
33
3,718
1,099
606
(271)
12
1,446
2,272
Total
67,904
9,058
(3,320)
1,399
–
(208)
74,833
39,797
8,032
(2,931)
(135)
44,763
30,070
At 31 December 2011 the Group held under finance lease contracts alterations to leasehold properties, motor vehicles and equipment
with net book values of £894,000, £435,000 and £812,000 respectively.
rpsgroup.com
55
Notes to the Consolidated Financial Statements continued
13. 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 76.
14. Trade and other receivables
£000s
Trade receivables
Provision for impairment
Trade receivables net
Accrued income
Provision for impairment
Accrued income net
Prepayments
Other receivables
As at
31 Dec
2012
126,920
(8,820)
118,100
35,576
(5,621)
29,955
7,503
3,823
159,381
As at
31 Dec
2011
130,528
(8,228)
122,300
45,984
(6,496)
39,488
6,590
3,373
171,751
All amounts shown under trade and other receivables fall due within one year.
The carrying value of trade and other receivables is considered a reasonable approximation of fair value due to their short term nature
and the provisions for impairment recorded against them. The individually impaired balances mainly relate to items under discussion
with customers.
Certain trade receivables are past due but have not been impaired. These relate to customers where we have no history of default and
no concerns over their financial situation. The age of financial assets past due but not impaired is as follows:
£000s
Not more than three months
More than three months
As at
31 Dec
2012
10,535
11,341
21,876
As at
31 Dec
2011
11,778
13,468
25,246
56
Report and Accounts 2012
14. Trade and other receivables continued
Movements in impairment
£000s
As at 1 January 2012
Income statement charge
Receivables written off during the year as uncollectible
Additions through acquisitions
Foreign exchange
As at 31 December 2012
As at 1 January 2011
Income statement charge
Receivables written off during the year as uncollectible
Additions through acquisitions
Foreign exchange
As at 31 December 2011
Trade receivables Accrued income
8,228
2,589
(2,159)
51
111
8,820
6,580
3,585
(2,477)
209
331
8,228
Accounts
Total
14,724
5,548
(5,874)
51
(8)
14,441
12,576
6,776
(5,139)
209
302
14,724
31 Dec
2011
59,521
28,256
31,336
14,892
35,607
2,139
171,751
6,496
2,959
(3,715)
–
(119)
5,621
5,996
3,191
(2,662)
–
(29)
6,496
31 Dec
2012
56,399
23,760
29,697
14,449
31,797
3,279
159,381
The carrying amounts of the Group’s trade and other receivables are denominated as follows:
£000s
UK Pound Sterling
Euro
US Dollar
Canadian Dollar
Australian Dollar
Other
The maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivable mentioned above.
15. Trade and other payables
£000s
Trade payables
Accruals
Deferred income
Creditors for taxation and social security
Other payables
As at
31 Dec
2012
31,174
30,932
20,386
13,779
5,650
101,921
As at
31 Dec
2011
31,371
37,402
21,041
14,223
5,459
109,496
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
57
Notes to the Consolidated Financial Statements continued
16. Borrowings
£000s
Bank loans
Bank overdraft
Finance lease creditor
As at
31 Dec
2012
27,098
–
1,207
28,305
As at
31 Dec
2011
45,705
1,531
2,277
49,513
£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
as at 31 December 2012
as at 31 December 2011
Bank
loans and
overdraft
Finance
lease
creditor
158
70
26,870
27,098
(158)
26,940
590
588
29
1,207
(590)
617
Bank
loans and
overdraft
Finance
lease
creditor
1,728
45,345
163
47,236
(1,728)
45,508
1,231
524
522
2,277
(1,231)
1,046
Total
748
658
26,899
28,305
(748)
27,557
Total
2,959
45,869
685
49,513
(2,959)
46,554
During the year the Group renewed its main bank facility with Lloyds TSB Bank plc.
The principal features of the Group’s borrowings are as follows:
(i) An uncommitted £1,000,000 bank overdraft facility, repayable on demand.
(ii) An uncommitted Australian Dollar denominated overdraft facility of AUD 3,000,000 repayable on demand.
(iii) The Group has two principal bank loans:
(a) A revolving credit facility of £125,000,000 with Lloyds TSB Bank plc, the Group’s principal bank, expiring in 2016. This
comprises of a £75,000,000 committed facility, with an additional £50,000,000 available as required, subject to credit approval.
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 £26,870,000 (2011: £45,272,000) at 31 December 2012.
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 AUD 358,000. The loans are guaranteed by interlocking guarantees between the
acquired company’s entities and fixed and floating charges over its assets.
(iv) Bonding facility utilisation of £3,594,000 (2011: £4,725,000) drawn against a £10,000,000 ancillary facility with Lloyds TSB Bank Plc.
The carrying amounts of short term borrowings approximate their fair values, as the impact of discounting is not significant.
The carrying amounts of our long term borrowings also approximate fair value.
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.
Loan liquidity risk profile
£000s
<1 year
1-2 years
>2 but <5 years
2012
2011
693
594
27,389
28,676
856
45,783
79
46,718
The liquidity risk profile above shows the expected cashflows in respect of the Group’s loan facilities comprising payments of capital
and interest assuming that the loan balance at year end remains constant until expiry of the facilities and foreign exchange rates remain
constant at the rates existing at the year end.
58
Report and Accounts 2012
Accounts
17. Obligations under finance leases
Amounts payable under finance leases:
£000s
Within one year
In two to five years
as at 31 December 2012
Present
value of
minimum
lease
payments
Less
future
interest
charges
(80)
(35)
(115)
590
617
1,207
Minimum
lease
payments
670
652
1,322
as at 31 December 2011
Present
value of
minimum
lease
payments
Less
future
interest
charges
(147)
(95)
(242)
1,231
1,046
2,277
Minimum
lease
payments
1,378
1,141
2,519
For the year ended 31 December 2012, the average effective borrowing rate was 8%. 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, 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.
18. Deferred consideration
£000s
Amount due within one year
Amount due between one and two years
Total deferred consideration payable
As at
31 Dec
2012
7,842
3,543
11,385
As at
31 Dec
2011
10,327
–
10,327
The amount due within one year as at 31 December 2012 includes contingent deferred consideration treated as remuneration expense
accrued but not paid totalling £4,157,000 (31 December 2011: £5,697,000). See note 32 for detail of the commitment in respect of
contingent deferred consideration treated as remuneration.
rpsgroup.com
59
Notes to the Consolidated Financial Statements continued
19. Provisions
Property
The provision for property costs relates to onerous operating lease rentals and related costs on vacated property and will be utilised
within 6 years.
Warranty
This provision is in respect of contractual obligations and is expected to be utilised within one year.
Dilapidations
The dilapidations provision is in respect of reinstatement obligations related to leasehold properties and will be utilised within 12 years.
£000s
As at 1 January 2012
Additional provision in the year
Utilised in year
Arising on acquisition of subsidiary
Exchange difference
At 31 December 2012
£000s
Due as follows:
Within one year
After more than one year
Property
Warranty
Dilapidations
1,453
222
(1,034)
–
(42)
599
2,649
299
(1,514)
–
(15)
1,419
2,485
70
(527)
50
(27)
2,051
As at
31 Dec
2012
2,633
1,436
4,069
Total
6,587
591
(3,075)
50
(84)
4,069
As at
31 Dec
2011
3,903
2,684
6,587
The carrying value of the provisions disclosed above is a reasonable approximation of their fair value.
60
Report and Accounts 2012
Accounts
20. Deferred taxation
£000s
At 1 January 2011
(Charge)/credit to income for the year
(Charge)/credit to income due to change in tax rate
(Charge)/credit to equity for the year
Owned by subsidiaries acquired
Fair value adjustment to prior year acquisitions
Exchange differences
At 31 December 2011
(Charge)/credit to income for the year
(Charge)/credit to income due to change in tax rate
(Charge)/credit to equity for the year
Owned by subsidiaries acquired
Exchange differences
At 31 December 2012
Fixed asset
timing
differences
Goodwill
and
intangible
assets
Foreign
exchange
on
investments
Employment
benefits
Share based
payments
Provisions
and other
timing
differences
584
(1,297)
(76)
–
(54)
(14)
(26)
(883)
26
(80)
–
(32)
48
(921)
(12,055)
2,265
330
220
(2,876)
–
(5)
(12,121)
2,284
183
–
(1,150)
244
(10,560)
(584)
56
–
–
–
–
–
(528)
–
–
–
–
–
(528)
2,408
(27)
(17)
–
292
89
55
2,800
147
(15)
–
–
(117)
2,815
71
121
1
(103)
–
–
(2)
88
41
3
95
–
–
227
(1,715)
569
(62)
–
203
–
55
(950)
1,565
(70)
–
–
(14)
531
Total
(11,291)
1,687
176
117
(2,435)
75
77
(11,594)
4,063
21
95
(1,182)
161
(8,436)
The balances at 1 January 2011, 31 December 2011 and 31 December 2012 were disclosed within liabilities.
No deferred tax liability is recognised on temporary differences of £21,309,000 (2011: £17,137,000) relating to the unremitted
earnings of overseas subsidiaries as the group is able to control the timing of the reversal of these temporary differences and it is
probable that they will not reverse in the foreseeable future. The temporary differences at 31 December 2012 represent only the
unremitted earnings of those overseas subsidiaries where remittance to the UK of those earnings may result in a tax liability, principally
as a result of dividend withholding taxes levied by the overseas tax jurisdictions in which they operate.
rpsgroup.com
61
Notes to the Consolidated Financial Statements continued
21. Share capital
Ordinary shares of 3p each
240,000,000
7,200
240,000,000
7,200
as at 31 December 2012
Authorised
£000s
Authorised
Number
as at 31 December 2011
Authorised
£000s
Authorised
Number
Issued and fully paid
Ordinary shares of 3p each
At 1 January
Issued under share option schemes
Issued under the Share Incentive Plan
Issued in respect of the Performance Share Plan
At 31 December
Number
218,138,273
193,905
579,283
654,808
219,566,269
Number
Ordinary shares held by the ESOP Trust
Ordinary shares held by the SIP Trust
The ESOP Trust has elected to waive any dividend on the unallocated ordinary shares held.
The table below shows options outstanding at 31 December 2012:
Period exercisable
2006 - 2013
2007 - 2014
2008 - 2015
2011 - 2018
2013 - 2020
2014 - 2021
2012
£000s
6,544
6
17
20
6,587
Number
217,218,591
136,670
523,766
259,246
218,138,273
As at
31 Dec
2012
2011
£000s
6,516
4
16
8
6,544
As at
31 Dec
2011
2,340,216
3,602,403
1,982,771
3,339,807
Number
Exercise price (p)
71,038
750
136,269
205,000
215,000
205,000
833,057
111
118
111 - 147
295
195
212
62
Report and Accounts 2012
22. Other reserves
£000s
At 1 January 2011
Exchange differences
Issue of new shares
Purchase of own shares
At 31 December 2011
Exchange differences
Issue of new shares
Purchase of own shares
At 31 December 2012
23. Dividends
£000s
Merger
reserve
21,256
–
–
–
21,256
–
–
–
21,256
Amounts recognised as distributions to equity holders during the year:
Final dividend for the year ended 31 December 2011 of 2.90p (2010: 2.52p) per share
Interim dividend for the year ended 31 December 2012 of 3.06p (2011: 2.66p) per share
Employee
trust
Translation
reserve
(5,904)
–
(1,115)
(356)
(7,375)
–
(1,284)
(400)
(9,059)
30,229
(811)
–
–
29,418
(5,545)
–
–
23,873
Year
ended
31 Dec
2012
6,325
6,682
13,007
Accounts
Total
45,581
(811)
(1,115)
(356)
43,299
(5,545)
(1,284)
(400)
36,070
Year
ended
31 Dec
2011
5,460
5,773
11,233
Proposed final dividend for the year ended 31 December 2012 of 3.34p (2011: 2.90p) per share
7,317
6,319
The proposed final dividend for the year ended 31 December 2012 is subject to approval by shareholders at the Annual General
Meeting and has not been included as a liability in the financial statements.
24. Operating lease arrangements
At 31 December 2012 the Group’s total remaining commitments as lessee under non-cancellable operating leases were as follows:
£000s
Within one year
In two to five years
After five years
as at 31 December 2012
Other
Property
as at 31 December 2011
Other
Property
10,063
24,528
3,199
37,790
3,004
3,947
6
6,957
11,178
26,067
10,742
47,987
2,929
4,322
–
7,251
rpsgroup.com
63
Notes to the Consolidated Financial Statements continued
25. Related party transactions
Related parties, following the definitions within IAS 24, are the subsidiary companies and members of the Board and their families.
Transactions between the Company and its subsidiaries have been eliminated on consolidation and are not disclosed in this note.
The Group considers the Directors to be the key management personnel. There were no transactions within the year in which the
Directors had any interest. The Remuneration Report contains details of Board emoluments.
26. Notes to the Consolidated Cash Flow Statement
£000s
Operating profit
Adjustments for:
Depreciation
Amortisation of acquired intangibles
Contingent consideration treated as remuneration
Share based payment expense
Negative goodwill
Profit / (loss) on sale of property, plant and equipment
Loss on disposal of business
Share of profit of associates
Revaluation of investment in associate
Decrease / (increase) in trade and other receivables
(Decrease) / increase in trade and other payables
Adjusted cash generated from operations
Year ended
31 Dec
2012
Year ended
31 Dec
2011
42,144
42,684
8,950
10,636
8,593
2,070
(266)
(119)
135
–
–
72,143
12,491
(8,589)
76,045
8,032
10,839
9,256
2,431
(9,067)
27
–
(24)
(1,490)
62,688
(3,924)
12,289
71,053
Adjusted cash generated from operations is before payment of deferred consideration treated as remuneration.
The table below provides an analysis of net bank borrowings, comprising cash and cash equivalents, interest bearing loans and finance
leases, during the year ended 31 December 2012.
£000s
Cash and cash equivalents
Bank loans
Finance lease creditor
At 31 Dec
2011
24,458
(45,705)
(2,276)
(23,523)
Cash flow
(9,259)
17,409
1,350
9,500
Acquisition
debt
Foreign
Exchange
At 31 Dec
2012
–
–
(334)
(334)
(395)
1,198
53
856
14,804
(27,098)
(1,207)
(13,501)
The cash balance at 31 December 2012 includes £3,566,000 (2011: £3,304,000) that is restricted in its use.
27. Major non-cash transactions
Major non cash transactions during the year are as follows:
£000s
Depreciation
Amortisation of acquired intangibles
Share based payment expense
Negative goodwill
Share of profit of associates
Revaluation of investment in associate
64
Report and Accounts 2012
Year ended
31 Dec
2012
Year ended
31 Dec
2011
8,950
10,636
2,070
(266)
–
–
21,390
8,032
10,839
2,431
(9,067)
(24)
(1,490)
10,721
28. Acquisitions
On 18 July 2012, RPS acquired 100% of the issued share capital of Manidis Roberts Pty Ltd (MR), an Australian consultancy firm.
The Group has allocated provisional fair values to the net assets of MR. Details of the carrying values of the acquired net assets, the
provisional fair values assigned to them by the Group and the fair value of consideration are as follows:
Accounts
£000s
Intangible assets
Order book
Customer relationships
Property, plant and equipment
Cash
Other assets
Other liabilities
Net assets acquired
Initial cash consideration
Fair value of deferred cash consideration
Total consideration
Goodwill
Manidis Roberts
839
2,993
862
2,155
3,544
(3,377)
7,016
11,895
7,478
19,373
12,357
Goodwill arising of £12,357,000 represents the value of the accumulated workforce and synergies with RPS associated with this
acquisition. There is no tax deductible goodwill arising.
The total fair value of receivables acquired was £3,418,000. The gross contractual receivables acquired were £3,469,000 and £51,000
was estimated to be irrecoverable.
The vendors of the acquired companies have entered into warranty arrangements with the Group. The total undiscounted cash flow
that could be receivable by the Group is between £nil and £3,418,000. The Group does not expect that these warranties will become
receivable and therefore has not recognised an indemnification asset on acquisition.
The contribution of MR to the Group’s results for the year was £6,027,000 revenue and £37,000 operating profit.
The Group incurred acquisition costs of £449,000 which have been expensed through the consolidated income statement and included
within “amortisation of acquired intangibles and transaction related expenses”.
The proforma Group revenue and operating profit assuming the acquisition had been completed on the first day of the year would
have been £564,716,000 and £43,188,000 respectively.
A reconciliation of the goodwill movement in 2012 in respect of the acquisitions in 2011 and 2012 is given in the table below.
£000’s
Goodwill at 1 January 2012
Additions through acquisition
Adjustments to opening balance sheet
Foreign exchange gains and losses
Goodwill at 31 December 2012
EHI
1,509
–
232
(69)
1,672
TMT
1,669
–
–
(53)
1,616
MR
–
12,357
–
(414)
11,943
There were no accumulated impairment losses at the beginning or the end of the period.
Negative goodwill of £266,000 was recognised in 2012 relating to an opening balance sheet adjustment in ASA. This was not
recognised in 2011 on the basis of materiality.
rpsgroup.com
65
Notes to the Consolidated Financial Statements continued
29. Financial Risk Management
(a) Capital management
The capital of the Group consists of debt, which includes the borrowings and facilities disclosed in note 16, cash and cash equivalents
and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings as disclosed in the
consolidated balance sheet and notes 21 and 22. The Group manages its capital to support its strategy, and there were no changes
in approach to capital management during the year.
The borrowings are managed centrally and funds are onward lent to operating subsidiaries as required. The main borrowing facility of
the Group is a £75 million multi currency revolving credit facility that provides a high degree of flexibility. An additional £50 million is
available as required subject to credit approval. There are two financial covenants related to this facility, interest cover must be no less
than 400% and the ratio of group net borrowings to EBITDA should be no greater than 250%. These covenants are tested regularly
and were not breached during the year and have not been since.
The Group’s businesses provide a good level of cash generation which helps fund future growth. The Group seeks to minimise
borrowings by utilising cash generated by operations that is surplus to the immediate operating needs of the business and an objective
is to maintain a minimum level of cash at bank.
(b) Financial instruments
The Group’s financial assets comprise cash and trade and other receivables. The Group’s financial liabilities comprise bank loans,
deferred consideration and trade and other payables. It is, and has been throughout the period under review, the Group’s policy that
no trading in financial instruments shall be undertaken.
Fair values
The fair value of the financial assets and liabilities of the Group are considered to be materially equivalent to their book value. The
classification of financial instruments is shown in the table below.
£000s
Cash
Trade receivables
Financial assets
Borrowings
Deferred consideration
Trade and other payables
Financial liabilities
As at
31 Dec
2012
14,804
148,055
162,859
28,305
11,385
73,570
113,260
As at
31 Dec
2011
25,989
161,788
187,777
49,513
10,327
82,484
142,324
The prior year comparatives have been restated to exclude deferred income, creditors for tax and social security, prepayments and
other receivables and to include provisions.
Interest rate and currency risk are the most significant aspects for the Group in the area of financial instruments. It is exposed to a
lesser extent to liquidity risk that is reviewed in note 16. The Board reviews and agrees policies for managing each of these risks and
they are summarised below.
(c) Interest rate risk
The Group draws down term loans, typically between one and three months, against its revolving credit facility in US Dollars, GB
Pounds, Australian Dollars and Canadian Dollars at fixed rates of interest for the term of the loan. The Group has not entered any
contracts to fix interest rates beyond the period of the term loans but will consider doing so if borrowings becomes significantly larger
and longer term. The Group’s overdraft bears interest at floating rates. Surplus funds are placed on short-term deposit or held within
instant access deposit accounts earning floating rate interest.
66
Report and Accounts 2012
(c) Interest rate risk continued
Interest rate risk and profile of financial liabilities
The interest rate risk profile of the Group’s financial liabilities at 31 December was as follows:
£000s
Sterling
Euro
Australian Dollar
Canadian Dollar
US Dollar
Other
At 31 December
Floating rate
2011
2012
2012
Fixed rate
2011
Non interest bearing
2011
2012
–
–
–
–
–
–
–
–
–
3,902
–
–
–
3,902
5,239
–
8,767
361
25,323
–
39,690
4,778
–
5,951
514
44,695
–
55,938
27,907
9,009
14,379
12,135
9,856
284
73,570
27,902
11,297
16,724
13,873
12,327
361
82,484
The maturity profile of financial liabilities at 31 December was as follows:
£000s
Within one year
In one to two years
In two to five years
Floating rate
2011
2012
2012
Fixed rate
2011
Non interest bearing
2011
2012
–
–
–
–
3,902
–
–
3,902
8,590
4,201
26,899
39,690
9,383
45,948
607
55,938
70,389
985
2,196
73,570
78,135
1,956
2,393
82,484
The weighted average interest rate and term for interest bearing financial liabilities is shown below:
Accounts
2012
33,146
9,009
23,146
12,496
35,179
284
113,260
2012
78,979
5,186
29,095
113,260
Total
2011
32,680
11,297
26,577
14,387
57,022
361
142,324
Total
2011
91,420
47,904
3,000
142,324
Sterling
Australian Dollar
Canadian Dollar
US Dollar
Fixed and floating rate
financial liabilities
Weighted average interest rate %
2011
2012
Fixed rate
financial liabilities
Weighted average period for
which rate is fixed – months
2011
2012
2.6
4.8
1.0
1.8
2.6
2.4
7.1
1.0
1.3
2.3
1
13
8
1
4
2
9
8
2
3
rpsgroup.com
67
Notes to the Consolidated Financial Statements continued
29. Financial Risk Management continued
Cash balances at year end
£000s
Sterling
Euro
US Dollar
Australian Dollar
Canadian Dollar
Mongolian Tugrik
Other
At 31 December
As at
31 Dec
2012
2,356
226
4,572
2,210
3,473
878
1,089
14,804
As at
31 Dec
2011
3,042
1,249
6,300
3,990
8,864
1,567
977
25,989
Cash balances are held in either non-interest bearing current accounts or instant access deposit accounts earning floating rate interest.
There are no interest bearing trade and other receivables.
Borrowing facilities
The Group’s undrawn borrowing facilities comprise revolving credit facilities that expire in 2016 where interest costs are fixed at the
time drawings are made. During 2012, the Group had an uncommitted overdraft facility, carrying floating rate interest.
The Group has the following undrawn committed borrowing facilities available in respect of which all conditions precedent had
been met.
£000s
Expiring in more than one year but not more than 2 years
Expiring in more than 2 years but not more than 5 years
Interest rate sensitivity
As at
31 Dec
2012
–
48,130
As at
31 Dec
2011
79,728
–
A 1.0% decrease in interest rates would increase Group profit before tax by £547,000. A 1.0% increase in interest rates would
decrease Group profit before tax by £547,000.
(d) Foreign currency risk
The Group, which is based in the UK and reports in sterling, has significant 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 rates as far as the Group is concerned is the GB Pound to Australian Dollar 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.
A number of the Group’s operations transact in currencies other than their functional currency. This creates a foreign currency exposure
that is monitored and hedged centrally.
Foreign currency sensitivity
Since the Group hedges the majority its transactional foreign currency exposures, the sensitivity of the results to transactional foreign
currency risk is not material.
68
Report and Accounts 2012
Accounts
(e) Credit Risk
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. The Group’s exposure to credit risk is limited to the carrying amount of financial
assets recognised at the balance sheet date. The directors consider the Group’s financial assets that are not impaired to be of good
credit quality including those that are past due. See note 14 for further detail on receivables that are past due. The group’s financial
assets are not secured by collateral advanced by counterparties. In respect of trade and other receivables, the group is not exposed
to any significant credit risk exposure to any single counterparty or any group of counterparties with similar characteristics. The credit
risk for cash and cash equivalents is considered negligible, since the counterparties are reputable banks with high quality external
credit ratings.
30. Share-based payments
Share scheme costs
£000s
Share Incentive Plan (“SIP”)
Performance Share Plan (“PSP”)
Share Option Plan
Bonus Plan
Year ended
31 Dec
2012
Year ended
31 Dec
2011
1,097
663
94
216
2,070
1,126
866
118
321
2,431
The following tables set out details of material share schemes activity:
PSP
Year of grant
2006
2007
2009
2010
2011
2012
Year of grant
2006
2007
2008
2009
2010
2011
Number
outstanding
31 Dec 2011
2,148
5,129
1,026,659
31,124
450,772
–
1,515,832
Number
outstanding
31 Dec 2010
4,296
54,098
58,796
1,288,603
38,453
–
1,444,246
New grants
Releases
Lapses
–
–
–
–
–
426,403
426,403
–
(786)
(650,310)
–
(3,712)
–
(654,808)
–
–
(66,522)
(22,137)
(41,287)
(7,127)
(137,073)
New grants
Releases
Lapses
–
–
–
–
–
485,118
485,118
(2,148)
(48,969)
(56,285)
(148,149)
–
(3,695)
(259,246)
–
–
(2,511)
(113,795)
(7,329)
(30,651)
(154,286)
Number
outstanding
31 Dec 2012
2,148
4,343
309,827
8,987
405,773
419,276
1,150,354
Number
outstanding
31 Dec 2011
2,148
5,129
–
1,026,659
31,124
450,772
1,515,832
Vesting
conditions
2 or 3 years
1, 2 or 3 years
3 years
3 years
3 years
Vesting
conditions
2 or 3 years
1, 2 or 3 years
3 years
3 years
3 years
3 years
rpsgroup.com
69
Notes to the Consolidated Financial Statements continued
30. Share-based payments continued
SIP
Year of grant
2009
2010
2011
2012
Year of grant
2008
2009
2010
2011
Number
outstanding
31 Dec 2011
460,278
543,057
541,159
–
1,544,494
Number
outstanding
31 Dec 2010
489,162
527,491
608,652
–
1,625,305
New grants
Releases
Forfeits
–
–
–
541,850
541,850
(442,542)
(19,645)
(18,111)
(12,940)
(493,238)
(17,736)
(31,127)
(44,958)
(18,247)
(112,068)
New grants
Releases
Forfeits
–
–
–
566,108
566,108
(462,262)
(33,069)
(29,517)
(10,880)
(535,728)
(26,900)
(34,144)
(36,078)
(14,069)
(111,191)
Number
outstanding
31 Dec 2012
–
492,285
478,090
510,663
1,481,038
Number
outstanding
31 Dec 2011
–
460,278
543,057
541,159
1,544,494
Vesting
conditions
3 years
3 years
3 years
3 years
Vesting
conditions
3 years
3 years
3 years
3 years
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 that participants are not entitled to receive dividends over the performance
period.
Fair value at measurement date
Weighted fair value
Holding period
Expected dividend yield
PSP awards
130.01p - 288.75p
196.83p
3 years
0.99% - 2.44%
SIP
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 as participants are entitled to receive dividends over the three year holding period.
Fair value at measurement date
Weighted fair value
Holding period
SIP awards
160.20p - 255.71p
210.14p
3 years
The Group assumed a 5% annual lapse rated as at the date of grant for the above schemes and all non-market based performance
conditions would be satisfied in full (see accounting policy 2(e)ii).
70
Report and Accounts 2012
Accounts
31. Events after the balance sheet date
In January 2013, RPS completed the acquisition of the entire issued share capital of Petroleum Institute for Continuing Education
Inc. (“PEICE”), a Canadian based business providing geoscience and engineering training to the oil and gas industry, for a maximum
consideration of C$11.7 million (equivalent to approximately £7.4 million) all payable in cash.
Consideration paid at completion was C$5.7m (£3.6m). Subject to further operational conditions being met, two further sums of
C$3.0m (£1.9m) will be paid on the first and second anniversaries of the transaction.
Due to the proximity of the acquisition date to the date of approval of the Report and Accounts, it is impracticable to provide
further information.
32. Commitments and contingencies
The Group completed a number of acquisitions between 1st January 2010 and 31 December 2011 where deferred consideration
payments to vendors are contingent on the vendors’ continued employment with the Group and so are recognised as employment
costs over the deferred consideration period. The Group consider it probable that the remaining deferred consideration payments will
be settled.
The total cash commitments in respect of contingent deferred consideration treated as remuneration that the Group expects to settle
and the estimated remuneration charge for each financial year assuming exchange rates remain constant are disclosed in the table below:
£000s
2013
2014
Cash
commitment
Remuneration
charge
7,564
3,592
11,156
5,833
1,165
6,998
The cash commitment due in 2013 includes contingent deferred consideration expense accrued, but not paid, totalling £4,157,000 as
referred to in note 18.
rpsgroup.com
71
Parent Company Balance Sheet
£000s
Fixed assets:
Intangible assets
Tangible assets
Investments
Current assets:
Debtors:
Amounts due from subsidiary undertakings
Other debtors
Prepayments and accrued income
Cash at bank and in hand
Current liabilities:
Creditors: amounts falling due within one year:
Borrowings
Trade creditors
Amounts due to subsidiary undertakings
Other creditors
Accruals and deferred income
Net current assets
Total assets less current liabilities
Creditors: amounts falling due after more than one year
Provision for liabilities
Net assets
Capital and reserves
Called up share capital
Share premium account
Profit and loss reserve
Merger reserve
Revaluation reserve
Employee trust shares
Total shareholders’ equity
Notes
3
4
5
6
7
9,10
10
10
10
10
10
As at
31 Dec
2012
646
2,554
246,154
249,354
33,759
1,816
1,529
37,104
–
37,104
2,556
1,139
19,005
476
3,640
26,816
10,288
259,642
26,870
205
232,567
6,587
106,198
107,585
21,256
–
(9,059)
232,567
As at
31 Dec
2011
712
2,437
234,259
237,408
44,602
544
1,152
46,298
371
46,669
–
363
13,247
377
1,714
15,701
30,968
268,376
45,272
154
222,950
6,544
103,717
98,776
21,256
32
(7,375)
222,950
These financial statements were approved and authorised for issue by the Board on 28 February 2013.
The notes on pages 73 to 79 form part of these financial statements.
Dr Alan Hearne, Director
Gary Young, Director
On behalf of the Board of RPS Group Plc.
72
Report and Accounts 2012
Accounts
Notes to the Parent Company Financial Statements
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.
Tangible fixed assets
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 as follows:
Freehold buildings
Alterations to leasehold premises
Motor vehicles
Fixtures, fittings, IT and equipment
50 years
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.
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.
Foreign currency translation
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. Where the Company will be issuing shares to satisfy share awards made by its subsidiaries, the Company makes a change to its
subsidiaries equal to the fair value of the share-based payment incurred.
rpsgroup.com
73
Notes to the Parent Company Financial Statements continued
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.
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 financial assets that 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.
Amounts held at amortised cost
Trade creditors and other payables including bank loans are financial liabilities that 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 disclosed by the Parent Company as allowed by Section 408 of the Companies Act 2006.
£000s
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 £45,000 (2011: £33,000).
Year
ended
31 Dec
2012
Year
ended
31 Dec
2011
20,714
14,377
74
Report and Accounts 2012
3. Intangible Assets
£000s
Cost
At 1 January 2012 and at 31 December 2012
Amortisation
At 1 January 2012
Charge for the year
At 31 December 2012
Net book value at 31 December 2012
Net book value at 31 December 2011
4. Tangible Assets
£000s
Cost or valuation
At 1 January 2012
Additions
Disposals
Transfers
At 31 December 2012
Depreciation
At 1 January 2012
Provided for the year
Disposals
Transfers
At 31 December 2012
Net book value at 31 December 2012
Net book value at 31 December 2011
Accounts
Goodwill
2,134
1,422
66
1,488
646
712
Total
6,605
1,142
(699)
19
7,067
4,168
784
(458)
19
4,513
2,554
2,437
Freehold
land and
buildings
Alterations
to leasehold
premises
Fixtures,
fittings,
IT and
equipment
432
–
(432)
–
–
185
6
(191)
–
–
–
247
734
291
(5)
–
1,020
79
182
(5)
–
256
764
655
5,439
851
(262)
19
6,047
3,904
596
(262)
19
4,257
1,790
1,535
rpsgroup.com
75
Notes to the Parent Company Financial Statements continued
5. Investments
£000s
Subsidiary undertakings
Cost
At 1 January
Additions
At 31 December
Provisions
At 1 January and 31 December
Net book value at 31 December
2012
2011
235,097
11,895
246,992
235,097
–
235,097
838
246,154
838
234,259
During 2012 RPS Group Plc invested a further £11,895,000 in RPS Consultants Pty Ltd to fund the acquisition of Manidis Roberts Pty
Ltd. See note 28 to the Consolidated Financial Statements.
Subsidiary undertakings
The majority of our trading subsidiaries provide consulting services, although we also provide training and laboratory testing.
The following were the principal operating subsidiaries during the year. Shares are held directly by RPS Group Plc except where
marked by an asterisk where they are held by a subsidiary undertaking.
Proportion of
registration and operation ordinary share capital held
Country of
The Environmental Consultancy Limited
RPS Environmental Management Limited (formerly RPS Consultants (UK) Limited)
RPS Energy Limited
RPS Health in Business Limited
Nautilus Limited
RPS Energy Consultants Limited
RPS Ireland Limited
RPS bv
RPS Advies-en ingenieursbureau bv
RPS Analyse bv
RPS Detachering bv
RPS Group Limited
RPS Engineering Services Limited
RPS Consulting Engineers Limited
RPS Consultants Pty Limited
RPS Environment Pty Limited
MetOcean Engineers Pty Limited
RPS Australia East Pty Limited
Aquaterra Consulting Pty Limited
Manidis Roberts Pty Ltd
Cambrian Consultants America Inc
RPS JD Consulting Inc
Nautilus World Limited
Evans Hamilton Inc
Espey Consultants Inc
Applied Science Associates Inc
RPS Energy Canada Limited
Geoprojects Canada Limited
Boyd Exploration Consultants Limited
England
England
England
England
England
England
Northern Ireland
Netherlands
Netherlands
Netherlands
Netherlands
Ireland
Ireland
Ireland
Australia
Australia
Australia
Australia
Australia
Australia
USA
USA
USA
USA
USA
USA
Canada
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% *
100% *
100% *
76
Report and Accounts 2012
6. Creditors: amounts falling due after more than one year
£000s
Bank loans
Due as follows:
After one year and within two years
After two years and within five years
7. Provision for liabilities
£000s
As at 1 January 2012
Additional provision in the year
Utilised in the year
As at 31 December 2012
This provision is expected to be utilised as follows:
£000s
Within one year
After more than one year
Accounts
31 Dec
2012
31 Dec
2011
26,870
45,272
–
26,870
26,870
45,272
–
45,272
Property
Dilapidations
–
71
–
71
154
–
(20)
134
As at
31 Dec
2012
85
120
205
Total
154
71
(20)
205
As at
31 Dec
2011
100
54
154
The provision booked during the year relates to an onerous operating lease and related costs on vacated property and will be utilised
within 3 years.
8. Deferred taxation
The movement on deferred taxation in the year was as follows:
£000s
Net asset at beginning of year
Credit / (charge) to income for the year
Net asset at year end
The deferred taxation balances comprise:
£000s
Short term timing differences
Depreciation in excess of capital allowances
Deferred tax asset
Deferred tax is included within other debtors in the balance sheet.
As at
31 Dec
2012
267
14
281
As at
31 Dec
2012
165
116
281
As at
31 Dec
2011
460
(193)
267
As at
31 Dec
2011
136
131
267
rpsgroup.com
77
Notes to the Parent Company Financial Statements continued
9. Share capital
Ordinary shares of 3p each
At 1 January 2012
At 31 December 2012
Number
Authorised
Value
£000s
Allotted and fully paid
Value
£000s
Number
240,000,000
240,000,000
7,200
7,200
218,138,213
219,566,269
6,544
6,587
Full details of the share capital of the Company are disclosed in Note 21 to the Consolidated Financial Statements.
10. Reconciliation of movements in shareholders’ funds
£000s
At 1 January 2011
Issue of new shares
Purchase of own shares
Share-based payment expense
Retained profit for the year
Dividend paid
At 31 December 2011
Issue of new shares
Purchase of own shares
Share-based payment expense
Retained profit for the year
Transfer
Dividend paid
At 31 December 2012
Share
capital
Share
premium
Merger
reserve
Revaluation
reserve
Employee
trust
shares
Profit and
loss reserve
6,516 101,941
1,776
–
–
–
–
6,544 103,717
28
–
–
–
–
43
–
–
–
–
–
6,587
2,481
–
–
–
–
–
106,198
21,256
–
–
–
–
–
21,256
–
–
–
–
–
–
21,256
32
–
–
–
–
–
32
–
–
–
–
(32)
–
–
(5,904) 93,710
(509)
(1,115)
–
(356)
2,431
–
14,377
–
(11,233)
–
(7,375) 98,776
(1,284)
(400)
–
–
–
–
(1,000)
–
2,070
20,714
32
(13,007)
(9,059) 107,585
Total
217,551
180
(356)
2,431
14,377
(11,233)
222,950
240
(400)
2,070
20,714
–
(13,007)
232,567
78
Report and Accounts 2012
11. Dividends
Full details of dividends paid by the Company are disclosed in Note 23 of the Consolidated Financial Statements.
Accounts
12. Commitments under operating leases
The Company had annual commitments under non-cancellable operating leases as set out below:
£000s
Operating leases which expire:
Within one year
In two to five years
After five years
Land and buildings
31 Dec
2011
31 Dec
2012
–
1,002
–
1,002
127
2,450
1,722
4,299
31 Dec
2012
–
107
–
107
Other
31 Dec
2011
17
208
–
225
13. Directors’ interests in transactions
There were no transactions during the year in which the Directors had any interest.
rpsgroup.com
79
Five Year Summary
£000s
2012
2011
2010
2009
2008
Revenue
Fee income
PBTA
Net bank debt
Net assets
Adjusted cash generated from operating activities
Average number of employees
Dividend per share
Adjusted basic EPS
Adjusted diluted EPS
555,863
478,835
60,099
(13,501)
373,814
76,045
4,507
6.40p
19.48p
19.36p
528,710
452,729
50,812
(23,523)
364,450
71,053
4,686
5.56p
16.68p
16.56p
461,830
393,262
47,993
(31,537)
344,993
57,874
4,422
4.83p
15.79p
15.69p
443,909
374,351
52,472
(32,763)
313,468
70,583
4,254
4.20p
17.08p
16.87p
470,465
392,096
57,512
(28,555)
287,607
67,386
4,438
3.66p
18.92p
18.66p
The Five Year Summary does not form part of the audited financial statements.
80
Report and Accounts 2012
Corporate & Social
RESPONSIBILITY
RPS has supported TREE
AID for over 7 years with
charitable contributions for
some of Africa’s poorest rural
communities to succeed in the
fight against poverty and the
effects of climate change.
Corporate & Social
RESPONSIBILITY
RPS conducts business in a responsible, safe and sustainable manner, through effective
interaction with our clients and suppliers, the wider community and the environment.
Our people
TREE AID
Only by paying full regard to
the welfare and development
of all our staff, can we
expect to reach and maintain
the level of service that we
believe is essential to our
continued success.
Our clients
We conduct business to
the highest standards. Our
continued reputation and
integrity is essential for us to
present to regulatory bodies
and government agencies on
behalf of our clients.
Our shareholders
The Group conducts its
operations in accordance
with the principles of good
corporate governance.
Our aim is to provide
shareholders with a long
term return on investment
that rewards their financial
commitment.
RPS supports TREE AID through donations to
some of Africa’s poorest regions and is its leading
corporate sponsor.
Our contributions to TREE AID in 2012 and
2013, have supported projects to the value of
£2m, helping communities in Africa become more
independent. RPS is proud of its continued
support of people and the environment in the
fight against poverty.
The aim of TREE AID’s Bongo River Trees project,
which was launched on 24 January 2012, is to break
the cycle of environmental decline and poverty in
one of the poorest traditional communities
in Africa.
According to TREE AID, progressive deforestation,
soil erosion, soil fertility decline and the increased
seasonal flooding and landscape aridity of recent
years can be combated very successfully at
community level with the right education, community
ownership, community volunteers (TREE AID has
over 50,000) and the strategic deployment of trees,
shrubs and vetiver grasses. Key to the strategy is
the establishment of protected tree corridors and
agroforestry zones along the Nabakulga, Akulpielga
and Akorisi river corridors north of the Vea Dam.
RPS has not only pledged the budgeted funding for
the Bongo River Trees project but is providing advice
and support on erosion risk mapping; land cover
and land use mapping using remote sensing and
biodiversity baseline mapping and monitoring.
The Bongo District’s Queen Mother
at the launch of the Bongo River
Trees project.
Palakaye Villagers proudly show
off their shea nuts harvest.
Cover image: Danakil Basin, Ethiopia.
RPS is a leader in potash exploration techniques and has
recently assisted a client with potash delineation studies in
the Danakil region.
RPS Group Plc
20 Western Avenue, Milton Park
Abingdon, Oxon OX14 4SH
T +44 (0)1235 863206
rpsgroup.com
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