2020
REPORT AND
ACCOUNTS
rpsgroup.com
Founded in 1970, RPS is a leading global professional services firm.
We define, design and manage projects that create shared value
by solving problems that matter to a complex, urbanising and
resource-scarce world. This is our purpose. We work across six sectors:
property, energy, transport, water, resources, defence and government
services. Our services span 12 clusters: project and program
management; design and development; water services; environment;
advisory and management consulting; exploration and development;
planning and approvals; health, safety and risk; oceans and coastal;
laboratories; training and communication; and creative services.
2020 was a year in which the COVID-19 pandemic changed the way we live, work and
operate as a business. Coming together, our people, clients and investors rose to the
challenge. RPS acted quickly, remained focused and stuck to our purpose.
Thank you for your support.
#strongertogether
Ken Lever
Chairman
Report and Accounts 2020
Contents
Making a difference
that matters
Where to find corporate responsibility
content throughout the report
3
At a glance .................................................................4
Response to COVID-19 .........................................6
Stakeholder engagement ..................................8
Natural resources ...............................................20
People ......................................................................22
Urbanisation.......................................................... 26
Sustainability ........................................................34
Responsible business report ......................... 36
Deep expertise in project management ...48
Risk and risk management .............................50
Non-financial reporting.................................... 57
Corporate Governance .....................................73
Remuneration ......................................................99
CONTENTS
2020 at a glance
Response to COVID-19
Strategic report
4
6
7
Stakeholder engagement
8
Chairman’s statement
10
Business model
12
Chief Executive's statement
14
Our three year plan
17
Segment strategic progress
18
Market opportunity – natural resources
20
People
22
Market opportunity – urbanisation
26
28
Clients
Commercialising data, tech and connectivity 30
32
Connectivity – data and tech
34
Market opportunity – sustainability
36
Responsible business report
40
Financial review
46
Segment performance
48
Deep expertise in project management
50
Risk and risk management
57
Non-financial reporting
Report of the Directors
Our Board
Corporate governance
Chairman’s introduction
Response to shareholder feedback
Corporate Governance report
Nomination committee report
Audit committee report
Remuneration committee report
Annual report on remuneration
63
70
73
74
78
80
88
90
94
99
Financial statements
119
Cover Image: Services UK Network Technician, Zak Hendry,
carrying out turbidity sampling
Report and Accounts 2020 Headlines
Clients
p. 18–21
p. 26–27
p. 30
p. 34–35
p. 48–49
2020 AT A GLANCE
Our segments – solving problems that matter to a complex, urbanising and
resource-scarce world
Energy
Norway
Initiated project to look
at global, multidiscipline,
renewables service offering
Project managing one of
Europe’s largest ‘green’
battery providers
Consulting UK & Ireland
North America
Net zero carbon strategy
and action plan for major
blue-chip client
Expansion of offshore
renewable activity
Services UK & Netherlands
Australia Asia Pacific
4
WaterNet Pro expansion to
support water and waste water
network management
Suburban Rail Loop - project
changing how people move
around Melbourne
542.1
457.3
13.4
239%
Revenue (£m)
Fee revenue1 (£m)
612.6
528.2
Adjusted profit
before tax (£m)1
37.4
Cash conversion (%)1
90%
−12%
−13%
−64%
+165%
0
2
0
2
9
1
0
2
%
n
o
i
t
a
i
r
a
V
Report and Accounts 2020
Headlines
Delivering on our strategic priorities
People
Clients
Connectivity
Making RPS a great place to do great work
· 98% of employees had a meaningful cycle of performance
conversations with their manager
· 40% increase in employees able to access online learning
Growing our business by delivering great work for our clients
· Digitally connecting clients to our deep expertise with 70%
increase in client direct contact via our website
· Net zero carbon ranking #1 in Google organic search
Making it easy to work together
· Rapid deployment of tools to support technology enabled consulting
· 90% of employees connecting with each other via Microsoft Teams
on a daily basis
5
(31.3)
4.29
–
0.7x
Statutory
(loss)/profit
4.9
Adjusted earnings per
share (diluted)1 (p)
Total dividend
per share (p)
Leverage1 (3.75x bank
leverage limit)
12.31
2.42
2.0x
−65%
0
2
0
2
9
1
0
2
%
n
o
i
t
a
i
r
a
V
1 Alternative performance measures are used consistently throughout the Report and Accounts. These include adjusted profit before
tax, adjusted operating profit, fee revenue and passthrough costs, adjusted EPS, segment profit, underlying profit, reorganisation costs,
unallocated expenses, amounts labelled ‘at constant currency’, EBITDAS and EBITAS, conversion of profit into cash, net bank borrowings,
leverage and adjusted effective tax rate. For further details of their purpose, definition and reconciliation to the equivalent statutory
measures, see note 3 to the consolidated financial statements.
Report and Accounts 2020
A rapid and pragmatic response to COVID-19
A rapid and pragmatic
RESPONSE TO COVID-19
Rapid connectivity focused on
continuity and collaboration
Crisis management response
focused on health and wellbeing
· In April, 90% of employees using Microsoft
Teams daily, collaborating remotely with
colleagues and connecting with clients from
their homes
· Desk-based telephony systems transferred
to PCs
· Ramped up cloud technology capability
during COVID-19
· Rapid virtual and online deployment of some
client services
· Established regional response teams and
appointed office leads to coordinate local
response and communication
· Followed spirit and letter of public health advice
· Employees worked from home where possible
· Offices and vehicles made COVID secure and
suitable personal protective equipment provided
· Risk assessments for visiting client sites
· Assistance programmes and initiatives to
support employee wellbeing and mental health
6
Cost saving and cash management actions focused on preserving jobs
ensuring client delivery
· Tracked utilisation at home, in the field and in our offices and laboratories
· Matched capacity to demand with payroll action and limited redundancies
Furlough
Jun–20
10%
Reduced pay
Jun–20
4%
Reduced hours
and pay
Jun–20
15%
Redundancies
FY–2020
3%
Furlough
Dec–2020
0.8%
People report
p. 22
· Deferral of 2020 salary increases and 2019 senior leadership bonus payments
· Cancellation of proposed final dividend
· Paused implementation of new ERP system
· Cessation of all non-essential capex and discretionary operating expenditure
· Government support from tax deferrals on VAT/PAYE, loss carry back under US CARES and job retention scheme
Supportive stakeholders ensuring adequate liquidity
· Effective cash forecasting a key tool to navigate and ensure liquidity
· Secured additional £60m liquidity facility and renegotiated banking covenants
· Secured £19.4m share placing with investors
· Very disciplined billing and collections
Making complex easy
Report and Accounts 2020 77
STRATEGIC
REPORT
Image: Joel, using a Global Navigation Satellite System (GNSS) to search
for and measure survey marks to define a boundary, North Queensland
STAKEHOLDER
ENGAGEMENT
Open and transparent communication is the key to gaining trust, reducing
risk and getting things done
The Board is mindful of its duties under Section 172 of the Companies Act 2006, to promote the
success of the Company regarding all its stakeholders. To read our S.172 statement, go to p.74 to p.76.
Strategic focus
p.17-19
The following section describes how RPS has engaged with stakeholders over the past year and our rapid and
pragmatic response to COVID-19. Looking ahead, our long term plan will continue to be delivered through our
enduring strategic focus on people, clients and connectivity.
We make it easy to connect with our clients, people, investors and communities we engage with – keeping the
dialogue flowing whether its face-to-face, written or virtually. By doing so, we are stronger together and are
able to deliver on our purpose of creating shared value.
Staying connected with our clients, people, investors and communities in 2020
OUR CLIENTS
OUR PEOPLE
8
Staying connected with our clients throughout the
pandemic was a key focus – to understand what they
were facing, manage their expectations and deliver
on our promise of making complex easy:
· traditional face-to-face training switched
to online
· developed virtual consultation software so
clients could continue to host public forums
· collaborated on research papers with clients
and industry bodies
· presented a briefing paper to the Australian
government with recommendations on
accelerating infrastructure delivery to
support economic recovery
· provided input at conferences which
included research papers on water leakage
and sustainability
More information how our client-centric brand has
proven to be resilient in the face of uncertainty can
be found in our Client report on p.28.
The challenging circumstances in 2020 meant that
technology enabled, two-way conversations with
our employees were a priority:
· 4,500 employees use Microsoft Teams daily
· increased frequency of video, Q&A and email
updates from leaders and executives
· regular global senior leadership events to discuss
performance and strategy, share ideas and to
spark debate
· local COVID-19 management approach ensured
timely, responsive and supportive interactions
· employee consultation resulted in:
– new flexible working principles and
homeworking policies
– greater promotion of health, safety, wellbeing forums
and employee assistance programmes
· second global employee engagement survey
due in 2021
More employee engagement information is
available in our People report on p.22.
Strategic reportReport and Accounts 2020
OUR INVESTORS
Our Board, John Douglas, Chief Executive and Group
Finance Director, Judith Cottrell, maintained regular
dialogue and engagement with investors and
analysts throughout 2020:
· quarterly trading updates
· half and full-year results presentations
· the move to paperless voting
· holding a virtual AGM
· presentations to new investors
· monthly investor relations report published
for the Board
· investor pages that were some of most clicked
content on www.rpsgroup.com
· consulted with shareholders on aspects of our
remuneration policy
share placing
sales desk meetings
increase in
analyst coverage
oversubscribed by 49%
40%
9
5%
2
23%
virtual investor
roadshows
increase in
online voting
increase in new visitors
to investor website
OUR COMMUNITY
RPS has unrivalled global capabilities that enable
our clients to develop environmental and socially
responsible solutions within the communities
in which we operate. Communities needed
unprecedented support as they responded
to the events of 2020:
· We were very proud to partner with community
groups and clients to support responses to events
including the Australian bushfires, the building of
Nightingale Hospitals in the UK, the Mauritius oil
spill and social justice charities in the US.
· We were involved with initiatives to drive change
to create greater inclusivity and opportunity
for some of the communities we serve. In
Australia we supported the creation of education
opportunities with Yalari and career coaching
program for military veterans
· We formed a sustainability and corporate
responsibility working group to shape our
sustainability strategy going forward
· Employees were engaged with non-profits
such as WaterAid, MIND, Tree Aid and
Macmillan Cancer
9
Left: Building and medical gas design for Preston and Deeside Nightingale Hospitals, UK
Right: Tree Aid Village Tree Enterprise Group, Dugda-Meki, Ethiopia
Citizen-led mitigation of urban flooding
Through involvement in the FloodCitiSense European
research project, RPS has worked with citizens to develop
innovative early-warning systems for urban pluvial flooding.
Strategic reportReport and Accounts 2020 10
CHAIRMAN’S
STATEMENT
The business showed great resilience in 2020 – revenues and profits were adversely
impacted but the effect was less than might have been imagined at the time of the
onset of the pandemic demonstrating the resilience of our business
As we entered 2020, we continued to make
solid progress on our journey to build a resilient,
sustainable business with significant upside. The
Board under the leadership of John Douglas, Chief
Executive, had spent the previous three years
focusing on rebuilding a cohesive, integrated
business by pursuing an organic growth strategy
supported by highly targeted acquisitions.
the strength and dedication of the leadership teams
across the business, who were able to take prompt
remedial action in unprecedented challenging
market conditions. They responded extremely
quickly and positively to reduce costs, contain cash
outflows and appropriately leverage government
support, while still matching capacity to market
activity and retaining our operating capability.
Significant progress had been made on various
initiatives over the last three years: including
reorganising the business into more logical
segments in 2018 serving defined market sectors;
making changes to the executive management
team; providing clarity and transparency around
the services we offer; establishing a people-
focused culture around one RPS, with a clear
purpose and expected behaviours; and developing
and implementing action plans for marketing,
technology systems and human resources.
COVID-19 impact
Indeed, 2020 should have been a year of momentum
as we looked to continue building a business
capable of delivering double-digit operating
margins in the medium term. Instead, the year was
dominated by ramifications of a health and economic
crisis of an unprecedented scale with COVID-19.
Not only did the pandemic force governments
across the world to act fast, but it dramatically
changed the way businesses operate and how
employees went about their daily routines.
Resilient leadership
Revenue and profits were subsequently impacted by
COVID-19 but because of the business’s resilience,
the effect was less than might have been imagined
when the severity of the virus emerged towards the
end of February 2020. This resilience is a testament to
Executive Board Directors have also waived their
2020 bonuses with the funds being distributed to
others in the business. Additionally, in recognition
of the critical role executive leadership will play in
driving the recovery and growth of the business
over the coming years, the Remuneration
Committee has decided to make the maximum
Long-Term Incentive Plan awards in 2021. The
Board was very supportive of this decision.
The progress we had made against our strategic
priorities was clear as lockdown restrictions began
to be imposed across the world. As a global business,
with more than c.4,800 employees in 125 global
locations, we were united. Our people put their
trust in us, and the business put our trust in them.
On a practical level, our increased technology
footprint meant that within days of restrictions
being imposed, most employees were able to work
from home to ensure that our clients’ needs were
met – and that from an operational standpoint, a
profitable level of revenue could be sustained.
Creating sustainable growth
We did not stand still in 2020. We continued to
progress our strategic priorities, including a focus
on governance, despite the unsettled environment.
We continued to instil a renewed focus on our
purpose as a business: to create shared value
by solving complex problems that matter to a
complex, urbanising and resource-scarce world.
Strategic reportReport and Accounts 2020 Strategic report
11
Ken Lever
Chairman
Creating sustainable growth has long been a core
principle of RPS: as a consulting business; the
importance of our people; the provision of excellent
service to our customers; making complex easy;
treating our suppliers fairly; and contributing to
the local communities in which we operate due
to our strong credentials in the built and natural
environment. As we move forward, the Group will
be increasingly built on its growing strengths in
renewable energy (particularly offshore wind),
sustainability in the natural and built environments,
transport infrastructure and project management.
Her appointment, the outcome of carefully
executed succession planning, coincided with
saying goodbye to Gary Young, who retired after
more than two decades of loyal and devoted
service. We wish Gary well in his retirement.
I would like to take this opportunity to thank
John and the Board, who have admirably led the
business and committed days of extra time during
this very challenging period. Their commitment
and diligence demonstrate the underlying
resilience and strength of the RPS business.
Shareholder support
Looking ahead
In line with many companies, and considering the
challenging prevailing operating conditions, we
considered it prudent not to pay a dividend in 2020.
We will reinstate the dividend at an appropriate level
as soon as the Board believes it is right to do so.
Disappointingly, our share price, which had performed
solidly in 2019, suffered as stock markets around the
world reacted to the pandemic as it intensified in the
spring. Having started the year at 184.40p, the share
price fell to a low of 30.2p on 3 April 2020. However,
as we all became accustomed to the new normal and
lockdown restrictions eased, the share price rallied
and stabilised from its low to close the year at 70p.
We strongly believe that the year end share price does
not reflect the inherent strength of the business or
its true intrinsic value. The Group’s oversubscribed
share placing in September suggested that our view
is shared by both new and existing shareholders. The
placing, which raised net £19.4m, will help position the
Group to capitalise on future growth opportunities.
Board change
We welcomed Judith Cottrell to the Board as Group
Finance Director at our AGM at the end of April.
Judith had previously led the finance function
of our European business, was CEO, Consulting
UK and Ireland and Group Strategy Director.
Writing this as the Annual Report is finalised, the
timing of economic recovery in the various markets
in which we operate is occurring at different speeds
in different markets. As we continue to manage
the business cautiously and progress the various
strategic initiatives, we know that we are doing the
right things to build a strong and stable business that
can respond to growth in the markets as it occurs.
We enter 2021 with cause for some optimism
but also caution as the continuing pandemic,
particularly in Europe and the US, will cause
inevitable disruption in the first half of the year. We
are hopeful as the year progresses; we will then
benefit from the economic recovery thereafter.
Our people
RPS is fundamentally a people business and the
support from our employees in 2020 was nothing
short of immense. During the initial lockdown
period many people throughout the Group
accepted reductions in salaries, reduced hours,
a delay to bonuses, being furloughed and having
to work from home. Throughout the uncertainty
and upheaval, everyone played their part and
continued to provide excellent service to our
clients. I would like to thank every single one of
our people and look forward to them returning
to a more familiar working environment.
Report and Accounts 2020 12
BUSINESS MODEL
Making complex easy is at the heart of our business model – creating
shared value by designing, delivering and managing sustainable,
innovative, technology enabled solutions for our clients.
A business model with purpose
Our purpose defines the activities we engage in,
the relationships we depend on and the outcomes
we aim to achieve – in the short and long-term
interests of our stakeholders.
A business model driven by our people
We are a people business whose behaviours and
expertise underpin everything we do. We have the
right people in the right place – connecting globally
and locally to deliver best outcomes for our clients.
A business model that lives up to our promise
We deliver solutions that position our clients to
navigate the complexities they face, whether
through the impact of population growth or an
increasing multifaceted legislative and regulatory
landscape. Making complex easy.
A business model that is simple, robust
and creates value
We aim to deliver sustainable profits adopting a
low-risk flexible innovative approach. We are a
consultancy business without the risk of construction
– designing and managing both long and short-term
projects at each stage of an asset lifecycle.
We generate profits by selling our
expertise at rates higher than the
cost of employment. Our financial
framework and suite of KPIs enable
us to manage key business drivers
such as utilisation and control
overheads.
A business model that is resilient and
can manage volatility
Managing volatility is a key component of our
business model. Diversity in our end markets
and the range of project profiles from long-term
to short-term with a blend of cost-plus and fixed
price contracts, is key to managing volatility and
driving resilience. Reinforced by the ability to match
capacity to demand through a flexible resource pool.
A business model that delivers for our clients
We look to grow our business by delivering great
work for our clients through technology enabled
consultancy – building on existing competitive
advantage in our key markets, forging strong
relationships and securing contracts across both
private and public sectors.
A business model underpinned by three
interconnected thematics
Three themes – urbanisation, natural resources and
sustainability – generate demand for our services
and skills. To work with clients to define, design and
manage the sustainable use of our natural resources
to secure water, food and energy supplies and to help
them make informed decisions that future-proof
built environments.
Well positioned for growth
The key themes interconnect with six key market
sectors that enable us to support clients, respond
quickly and maintain flexibility throughout our 12
service clusters from project management to design
and development.
Our business model, coherence and diversification,
exposure to government stimulus via public spending
as well as private sector work, mean that RPS is well
positioned for growth in all our global markets.
Strategic reportReport and Accounts 2020
Coherence and diversification – six segments, three thematics, six sectors, 12 clusters
Health, safety
and risk
Laboratories
Exploration and
development
Oceans and
coastal
Environment
Design and
development
Transport
Defence and
government services
Plannings and
approvals
Project and
program
management
Energy
A T U R A L RESOURCES
N
Water
Communications,
creative and
digital
Property
Advisory and
management
consulting
NISATIO N
A
B
R
U
e the need
fin
e
D
D e s i g n the solution
M
a
n
a
g
e
S
U
S
T
A
I
N
Resources
p
r
o
j
e
c
t
s
12 service
clusters
6 sectors
3 enduring
connected
thematics
Strong leadership, global reach
John
Douglas
CEO
John
Chubb
CEO
Consulting
UK & IRE
Doug
Matthys
CEO
North America
Segment CEOs
John
Tompson
CEO
Energy
Halvard
Kilde
CEO
Norway
A
B
I
L
I
T
Y
Paul
Aitken
CEO
Services
UK & NL
Ross
Thompson
CEO
Australia
Asia Pacific
Training
Water
services
13
Global functional leadership
Judith
Cottrell
Group
Finance
Director
Liza
Kane
Group
People
Director
Chantalle
Meijer
Group
Marketing
Director
Alistair
Rutter
Chief
Information
Officer
Strategic reportReport and Accounts 2020
1414
CHIEF EXECUTIVE’S
STATEMENT
Our strategic focus served us well in 2020. In a difficult environment, we remained
connected with each other and our clients. We preserved jobs, retained capability
and protected intrinsic value. Our business showed very strong financial discipline.
We have continued to invest to make a quality business better. We are well
positioned for future growth.
This was my third year in the role of CEO and it was
a very different year from the one I had planned
for. Despite this, our strategy has proved resilient
in the face of unprecedented change.
We rose to the challenge, we preserved jobs,
retained capability and delivered profitability.
Decisive and resilient
RPS is no longer a conglomerate of small consulting
and services businesses. We are a globally
connected business that has making complex
easy at the heart of its business model. We have
benefited from past investment in people, clients
and connectivity – and have continued to invest.
A clear portfolio strategy has given RPS the right
balance of coherence and diversification.
Our people are behind everything we do. Their
behaviours create opportunity and provide
resilience. Their mental and physical health, safety
and wellbeing were at the forefront of our decisions
during 2020. We acted quickly to provide them with
the support they needed as the pandemic took hold
and looked to preserve as many jobs as possible.
Retaining and building client confidence in a year
when we faced extreme market uncertainty was a
key focus. Despite physical restrictions, we were able
to digitally connect with new and existing clients
and continue to deliver experiences they valued.
Our investment in technology meant we were able to
adapt, at speed, to the challenges of working remotely
and to continue to collaborate with our clients, adding
value and delivering on our project commitments.
This, in turn, has kept the revenue tap on and allowed
us to maintain our strong financial discipline.
Over the past 12 months, our strategy was put
to the test as the global pandemic changed
the way we lived, worked and operated as a
business. It provided a testament to the rapid
progress RPS has made in the past three years.
Our decisive action to counter the impact of the
pandemic helped us retain strong cash performance
and gave us significant headroom on our debt
facilities. Disciplined focus on billing and collections
and tight control over capital spend to boost cash
conversion, cancelling our dividends, and a reduction
in debt and renegotiation of our debt facilities,
gave us the necessary platform to navigate the
uncertainty that prevailed – a year that swayed
between full lockdowns and partial lockdowns.
Our employees are our largest cost base and
subsequently the actions we took in light of the
pandemic impacted our people. We deferred
bonuses (and paid these later in the year) while our
Executive and Non-Executive Directors reduced
their salaries for a period by 20 per cent. Reluctantly,
we made 3% of employees redundant and as at
the end of the financial year 0.8% remained on
furlough – although this had been as high as 10%
at the height of the first wave of the pandemic.
People report p. 22
However, we demonstrated our resilience
in being able to preserve jobs and retain our
capability amid uncertainty and volatility. We
began 2020 with a workforce of 5,000 and ended
the year with an employee count that was still
c.4,800 strong. Despite the undoubted worry
and concern our people endured during what
was the most challenging of years, they proved
resolute and embodied the culture at the heart
of RPS – and for that I thank every one of them.
Strategic reportReport and Accounts 2020
John Douglas
Chief Executive
Strong financial discipline
Our results reflect the uncertainty and challenges
we could not have predicted when the financial
year began in January 2020. Our operation spans
geographies with employees working from multiple
locations worldwide and the pandemic affected some
countries more than others – and some sectors more
than others. In light of the extraordinary support
by national governments across the globe to keep
economies ticking, the public sector fared better
than the private sector. Australia, for instance,
delivered 4% fee revenue growth at constant
currency, in large part due to the performance
of defence and transport infrastructure.
Our fee revenue was down by 12% year-on-year at
constant currency. But all segments of our business
remained profitable (at the adjusted operating profit
level) over the period under review by matching fee
reduction with cost reduction. Our revenues declined
by 18% Q2 on Q2 at constant currency but have since
stabilised and show steady recovery.
15
457.3
Fee revenue
(£m)
(12.83)
Diluted loss
per share (p)
13.4
Adjusted profit
before tax (£m)
4.29
239%
Cash conversion
(%)
0.7x
Adjusted earnings per
share (diluted) (p)
Leverage (3.75x
bank leverage limit)
0
2
0
2
0
2
0
2
542.1
Revenue
(£m)
(31.3)
Statutory
loss
Our 2021 strategy
This year will continue to be impacted by the ongoing
ramifications of COVID-19. We may not be out of
the woods but there are good reasons to believe
that we will see ongoing recovery in 2021. We are
going to invest carefully to make sure that we're well
positioned to take advantage of a recovering market.
Our long-term, enduring strategy is described by our
purpose – creating shared value by solving problems
that matter to a complex, urbanising and resource-
scarce world. Each year we conduct a thoughtful
strategy process to determine current and medium-
term priorities. This year’s strategy process was a little
different from previous years, but no less effective.
Strategic reportReport and Accounts 2020 Our strategy process highlighted four
strategic opportunities
1. Renewables – There is a huge opportunity in
renewables, particularly with wind. RPS is uniquely
well positioned to take advantage of this as it draws
on 10 of our 12 service clusters. We have very
strong expertise in ocean science and in marine
and onshore environment and ecology. Planning
is a critical discipline for distribution infrastructure
and planning is RPS’s genesis: RPS stands for Rural
Planning Services.
2. Sustainability – Post COVID-19, we see increased
demand for sustainability services, both helping
companies with their environmental governance
and assisting clients achieve carbon net zero.
These are areas of historic strength for the
Company. We are conscious of the need to raise
our own standards and have committed to setting
science-based targets for carbon reduction, which
will be reported in 2021.
4. Transport infrastructure – There is great
potential in transport infrastructure to move ideas,
work and people between jurisdictions.
Sitting behind those four priorities is a continuing
focus on people, clients and connectivity:
· We will continue to focus on safety. We want to
keep people safe and we also want to look out for
the wellbeing of our people – we're very mindful
of mental health as well as physical health. We will
continue to focus on creating a winning culture.
We are focused on staff development and on
ensuring that reward is fair and transparent. We
believe that good people practices and a robust
meritocracy are enablers of diversity and inclusion.
· We will continue to use data and insights enabled
by connected technologies to deliver integrated
client experiences that are valued time and time
again. And we will invest in the sales capability of
our people to ensure our clients are getting what
they need.
16
3. Project and program management – We have
strong capability in client-side project and
program management. We are working hard
to share expertise and to ensure we have a
coherent global offering.
Responsible business report p. 36
It has been a tough period for many people, including those at RPS, but we have kept the Company profitable
(based on adjusted profit before tax). As we move through 2021, our focus on global renewables, sustainability,
project management and transport infrastructure will be enabled by the continued investment in our people,
clients and connectivity.
Captions from top left: Aashild, Project Leader, Norway • Mike, TOTAL Metis project, Abu Dhabi • Alexis, undertaking environmental
assessment – FM1488 relief route Texas • Edgar, protected species survey for an offshore wind farm, US Atlantic
Strategic report OUR THREE YEAR PLAN:
2021–2024
An enduring strategy
17
Strategic report SEGMENT STRATEGIC
PROGRESS
Underpinned by three enduring thematics - Natural Resources, Urbanisation and Sustainability
ENERGY
People:
Key renewables appointments in South Korea and
North America
Clients:
Marine science technology services expansion with
new Australian defence client
Connectivity:
John Tompson
CEO
Initiated project to look at global, multidiscipline,
renewables service offering
18
CONSULTING UK & IRELAND
People:
Matched capacity to demand to preserve jobs and
capability during the COVID-19 pandemic
Clients:
Net zero carbon strategy and action plan for major
blue-chip client
Connectivity:
John Chubb
CEO
Virtual technology expertise developed in the UK and
Republic of Ireland leveraged by RPS teams globally
SERVICES UK & NETHERLANDS
People:
Occupational health expertise supported client and
employee mental health and wellbeing
Clients:
Awarded eight long-term water and infrastructure
framework agreements in The Netherlands
Connectivity:
Paul Aitken
CEO
WaterNet Pro expansion to support water and
waste water network management
Strategic reportReport and Accounts 2020 Urbanisation p. 26
Natural Resources p. 20
Sustainability p. 34
NORWAY
People:
Employee engagement during the COVID-19 pandemic
retained talent and influenced decision-making
Clients:
Supporting Norcem Heidelberg with construction of
new carbon capture plant
Connectivity:
Project managing one of Europe’s largest ‘green’ cell
providers with Consulting UK & Ireland team
Halvard Kilde
CEO
NORTH AMERICA
People:
High-potential employees developed through talent
management and succession planning
Clients:
Developed digital Environment, Health & Safety client
offering streamlining compliance-related processes
Connectivity:
Expansion of offshore renewable activity
with Energy
AUSTRALIA ASIA PACIFIC
People:
Introduced flexible work arrangements in response
to new ways of working post COVID-19
Clients:
Project managing one of Department of Defence’s
largest capital works initiatives
Connectivity:
Expansion of services for Inland Rail’s
once-in-a-generation rail infrastructure project
Doug Matthys
CEO
Ross Thompson
CEO
19
Strategic reportReport and Accounts 2020 RPS is at the forefront of a global and
complex shift in resource supply and
consumption. We work with clients to
define, design and manage the sustainable
use and protection of our natural resources
– to secure water, food and energy supply.
RPS works with clients to adapt to
increased demands and manage
existing and potentially finite resources.
Delivering projects in complex offshore
environments is where we have deep
expertise and where we delivered
great work for our clients in 2020.
Oil spill modelling
RPS teams supported the Mauritius
Government oil spill response.
MetOcean North America
and Australia
Consenting
Wind resource management
Ørsted’s Hornsea Project Three received
development consent. RPS was the
lead EIA consultant, Energy and
Consulting UK & Ireland
Equinor and RPS successfully deployed
two new LiDAR (Light Detection and Radar)
buoys in South Korea.
Australian MetOcean Team, Energy
S
E
C
R
U
O
S
E
R
L
A
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T
A
N
s
t
n
e
m
n
o
r
i
v
n
e
e
r
o
h
s
ff
O
20
Strategic reportReport and Accounts 2020
Environmental planning
Seismic survey
RPS is providing environmental services
and planning expertise to support Australia’s
first offshore wind project, Star of the South.
Environment Planning, Australia
and Energy
4D marine seismic survey over the Forties
field in the North Sea.
Operations, Energy
Marine surveys
Geo hazard & survey
RPS are world leaders in the training and
deployment of protected species/marine
mammal observers with expertise in benthic
sampling, global regulatory requirements
and industry best practices and standards.
Marine Biology, North America
and Energy
RPS delivers Bureau of Ocean Energy
Management (BOEM) report on potential
hazards for US Offshore Pacific Wind Farms.
Ocean Sciences, North America
Sediment modelling
21
Sediment dispersion modelling for various
offshore wind developers to determine
the potential effects associated with
burying cables.
Modelling, North America
RPS specialists support responsible natural resource
investment, innovation and com mercialisation
of our offshore resources.
Strategic reportReport and Accounts 2020
2222
PEOPLE
A behaviour driven culture
Liza Kane
Group People Director
Our people have shown tremendous goodwill under extremely
challenging circumstances in 2020 as the global pandemic took hold.
Their actions have been vital in supporting the business through a
challenging 12 months
We are an organisation driven by our people’s
behaviours. Behaviours that embrace an inclusive,
diverse culture building trust, creating opportunity
and providing resilience. These came to the fore
in 2020 as we faced unchartered waters amid the
COVID-19 pandemic.
Health, safety and wellbeing centre stage
In 2020, the health, safety
and wellbeing of all our
employees continued
to be front and centre
of our decision-making.
Deeply alert also to the
impact of COVID-19 on
our employees and their
Dean, installing an electro-
magnetic velocity sensor, UK
families, local initiatives were launched to support
employees, including a Wellbeing Committee for UK
Consulting and Ireland employees. And in Australia,
our partnership with Parents at Work led to the
creation of Families@RPS to support working parents
and carers to thrive. Globally, we also raised the profile
of mental health awareness and trained mental
health first aiders to support employees during this
period. Our local employee assistance programmes
have provided additional support and assistance to
employees and their families.
Lowest level of RIDDOR
incidents for five years
Preserving jobs, preserving capability,
preserving value
We implemented prudent measures in the best
interests of our employees and stakeholders. We
mobilised all our teams in line with local lockdown
restrictions. Employees were able to work from home
or be safe on site and in the field, where teams such
as our UK water services representatives provided
critical national infrastructure support.
We responded quickly and decisively to preserve
as many jobs as possible, preserve capability and
preserve value. In doing so, we were able to draw
on the trust and goodwill of our employees to make
personal sacrifices to preserve as many jobs as
possible during the pandemic. At the peak of the
pandemic, we had 29% of our global workforce
on some form of cost reduction measure, be that
furlough, reduced hours and pay, or reduced pay. The
quantum of pay reduction was at 20% of base pay for
senior leadership across the business. During 2020,
we availed of £4.2m furlough monies, of which we
topped-up furlough pay to 90% for a small number of
employees at the lower end of our pay-grades.
Our people were part of the solution
· At the peak, 29% accepted a reward related
cost reduction
– 10% – furlough
– 4% – reduced pay
– 15% – reduced hours and pay
· 0.8% – on furlough December 2020
· 3% – redundancies in 2020
As restrictions eased, we gave people the choice to
work flexibly at home or in our COVID-secure offices
so they could continue to deliver great outcomes
with their teams for our clients.
Strategic reportReport and Accounts 2020 Decisions guided by established
reward principles
Remuneration Committee Report p. 94
In April 2020 we chose to delay the payment of 2020
base pay awards and FY-19 short-term annual bonuses
by six months. And we were pleased to honour the
2019 short-term bonus awards in October 2020 for
the significant contribution made in 2019. In the
interim, targeted base pay adjustments were made in
Australia, Norway and North America, where markets
had remained buoyant and our talented employees
were being targeted by recruiters.
Trusted
In April 2021 it will be two years since the majority of
employees received a base pay review. Consequently,
we will continue with the April 2021 pay review as
planned. To continue to build trust and motivate our
key employees who will be critical to RPS’s recovery
post COVID-19, we have committed to the 2020
short-term bonus awards, to be paid in 2021.
Aligned
Market benchmarking for pay has increased to ensure
we use like-for-like roles and pay is aligned to the
relevant market median. A 50% reduction in leavers
citing dissatisfaction with pay and benefits as a reason
for leaving gives us confidence our strategic focus on
performance and reward is working.
Targeted
Base pay decisions were linked to annual
performance ratings as we continued to embed a
high-performance culture through Progress@RPS.
Competitive
In 2020 we revised several of our benefits
offerings globally to ensure we are getting
best value for our employees, including the
introduction of a flexible benefits platform for
c.3,000 UK employees to enhance choices.
Responsive
Leadership teams and employees have demonstrated
immense flexibility and responsiveness to ensure
the future health and security of the business. We
introduced an exceptions process to help us retain
our most talented employees who we were at risk
of losing.
RPS’s overriding priority throughout the pandemic
has been to preserve as many jobs as possible while
continuing to deliver for our clients. This led to some
tough decisions in 2020 including, regretfully, making
3% of our global workforce redundant. However, our
swift and pragmatic response prevented that number
being higher.
It has been a challenging and uncertain year
for our employees and we sincerely thank
them for their loyalty, commitment and trust
as we move forward to recovery in 2021
Strengthening leadership capabilities
Despite the challenges, we continued to provide high-
calibre talent with deep expertise to our clients. In
2020 we made strategic hires and promoted internally
to further strengthen our leadership, technical and
specialist capabilities across all areas of the business
and levels of the organisation.
23
NORWAY
Doug Matthys – CEO
North America PROMOTION
UK &
IRELAND
NORTH
AMERICA
Paul Willmott – Managing Director – Planning
Consulting UK & Ireland HIRE
Einar Aaseth – Construction Business Unit Lead
Norway PROMOTION
Ed Turner – Strategy and Business Development Director
UK Water PROMOTION
Renewables Market Lead, Water Environment (incorporating Strategic Flood
Assessment, Waste and clean water project engineers, Utility surveyors,
Stephany Lane – Executive Director
lead –
Water Infrastructure Engineering, Marine cons–ltant, Practice
Environmental Risk, North America PROMOTION
contamination
Hydrogeologist,
management,
Landscape architect, Flood risk engineers, Geotechnical engineers, Waste
and clean water project engineers, Utility surveyors, Project manager,
Water Infrastructure Engineering, Business Development, Management
of Rivers, Coasts and Catchments, Landscape architect, Highways and
Transport Engineering and Planning, Water Infrastructure Engineering,
Artificial Intelligence/ Machine Learning, Water Environment (incorporating
Strategic Flood Assessment, Waste and clean water project engineers,
Utility surveyors, Project manager, Business Development, Management of
Rivers, Coasts and Catchments, Highways and Transport Engineering and
Planning, Water Infrastructure Engineering, Artificial Intelligence/ Machine
Learning, Water Environment (incorporating Strategic Flood Assessment,
lead – contamination
Hydrogeologist Marine consultant, Practice
management, Hydrogeologist, Landscape architect, Flood risk engineers,
Renewables Market Lead, Geotechnical engineers, Waste and clean water
project engineers, Utility surveyors, Project manager, Management of
Rivers, Coasts and Catchments, Highways and Transport Engineering
and Planning, Water Infrastructure Engineering, Artificial Intelligence/
Machine Learning, Water Environment (incorporating Strategic Flood
Assessment, Renewables Market Lead, Marine consultant, Management of
Judith Cottrell – Group Finance Director
Rivers, Coasts and Catchments, Highways and Transport Engineering and
PROMOTION
Planning, Water Infrastructure Engineering, Artificial IntelligenceMachine
Learning, Water Environment (incorporating Strategic Flood Assessment,
Renewables Market Lead, Marine consultant Renewables Market
Lead, Marine consultant, Practice lead – contamination management,
Hydrogeologist, Landscape architect, Flood risk engineers, Geotechnical
engineers, Waste and clean water project engineers, Utility surveyors, Project
manager, Business Development, Management of Rivers, Coasts and
Catchments, Hydrogeologist Highways and Transport Engineering and
Planning, Utility surveyors, Water Infrastructure Engineering, Artificial
Intelligence/ Machine Learning, Utility surveyors Water Environment
(incorporating Strategic Flood Assessment, Renewables Market Lead, Marine
consultant, Hydrogeologist Practice lead – contamination management,
Hydrogeologist, Landscape architect, Flood risk engineers, Geotechnical
engineers, Waste and clean water project engineers, Utility surveyors,
Project manager, Business Development, Management of Rivers, Coasts
and Catchments, Highways and Transport Engineering and Planning,
Water
Intelligence/ Machine
Learning, Water Environment (incorporating Strategic Flood Assessment,
Renewables Market Lead, Marine consultant, Practice lead – contamination
management, Hydrogeologist, Landscape architect, Flood risk engineers,
Geotechnical engineers, Waste and clean water project engineers, Utility
surveyors, Project manager, Business Development, Management of
Rivers, Coasts and Catchments, Highways and Transport Engineering and
Planning, Water Infrastructure Engineering, Artificial Intelligence/ Machine
Learning, Water Environment (incorporating Strategic Flood Assessment,
Renewables Market Lead, Marine consultant, Practice lead – contamination
management, Hydrogeologist, Landscape architect, Flood risk engineers,
Anna Michell – Director – Strategy and investment
Geotechnical engineers, Waste and clean water project engineers, Utility
AAP HIRE
surveyors, Project manager, Business Development, Management of
Rivers, Coasts and Catchments, Highways and Transport Engineering and
Matthew Gygi – Transport Infrastructure Practice Lead,
Planning, Water Infrastructure Engineering, Artificial Intelligence/ Machine
Project Management.
Learning, Water Environment (incorporating Strategic Flood Assessment,
AAP HIRE
Renewables Market Lead, Marine consultant, Practice lead – contamination
management, Hydrogeologist, Landscape architect, Flood risk engineers,
Geotechnical engineers, Waste and clean water project engineers, Utility
Sangmok Roh – Country Manager – Energy
South Korea HIRE
Infrastructure Engineering, Artificial
Conrad Ashby – Managing Director, Water Operations, UK
Services UK & Netherlands HIRE
AUSTRALIA
ASIA
PACIFIC
Alastair Rutter – Chief Information Officer
HIRE
SOUTH
KOREA
Strategic reportReport and Accounts 2020
Inspiration and opportunity
Three years ago we laid the foundations for a long-
term people strategy to make RPS a great place
to do great work – and attract and retain the best
people. Underpinned by six defining principles we
have already highlighted in this report how four
of these principles – culture, leadership, support
and flexibility – came to the fore in 2020. This was
a year where we stayed the course of a deliberate
strategy of performance and development enabled
by technology – investing in our people to provide
opportunity and offer inspiration.
We inspire our
people to deliver
our strategy
We create a high
performance
culture and reward
accordingly
Our organisational
structure supports
clients and growth
RPS a great
place to do
great work
We enable our
employees to shine
and build meaningful
careers
24
We attract and
retain high calibre
talent and offer
them flexibility
We create high
performing
leadership teams
Our long term people strategy
Year end performance and
development discussions
2017 50%
2018 80%
2019 95% (Progress@RPS launched)
2020 98%
2020 40% INCREASE
4,800 employees able to access
online learning
PROGRESS@RPS (POD) – our global, performance
and development framework, symbolised by a
compass, puts employees in the driving seat of
their growth and development at RPS based on
the principle of more frequent and meaningful
conversations. Our people now have joint ownership
of their careers. Since its launch in 2019 we have
seen a dramatic increase in the number of employees
having a meaningful cycle of ongoing conversations
that drive their development throughout the year.
Building a diverse and inclusive culture
RPS is becoming an increasingly inclusive and
diverse organisation. We are committed to doing
everything we can to progress meaningful change –
for our organisation and people to grow and prosper.
It enables us to attract and retain the best talent,
reduce risk, improve decision-making and generate
the best ideas for the benefit of our clients and to
create shared value.
Our behaviours are at the heart of building an
inclusive and diverse culture. And for our new hires
it starts with behaviours training – a key component
of our onboarding experience. From their first day
on site or in the office, we want employees to be
respectful of each other, acknowledge diversity and
recognise the potential and contribution of everyone.
We solve
PROBLEMS
THAT MATTER
Winning mindset
We make it
EASY TO
CONNECT
e
r
a
e
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T
S
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H
T
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W
Initiatives to drive change
In April, we implemented a revised diversity and
inclusion policy, and introduced various initiatives to
create a more inclusive work environment within our
organisation and some of the communities we serve.
Strategic reportReport and Accounts 2020
Networking in North America –
Young Professionals (YoPros)
YoPros is a networking group led
by our more junior employees
that meets regularly to discuss
career progression and other
topics of interest. In 2020
A continued commitment
We are making good progress, but we still have some
way to go in terms of continued promotion of diversity
and inclusion. We will continue to focus on moving the
dial and will be looking for tangible positive actions
to increase the opportunities for under-represented
groups in our workforce.
they developed an internal Mentoring Programme
and contributed to our decision-making about
the Company response to the Black Lives Matter
movement in the US.
Everyone should be
supported to realise their
potential – Our partnership
with Yalari, Australia
Working alongside indigenous
education organisation
Yalari helps us put respect,
compassion and fairness into
Charlea Smith
action. Yalari gives children the opportunity to
receive a full boarding school scholarship for their
secondary education – and in 2020 RPS offered
a scholarship for a Year 8 student to gain the
opportunity they deserve at St Margaret’s Anglican
Girls school in Brisbane. RPS also gave a young
person a three-month intern position in Darwin.
2021 and beyond – creating a winning culture
The strategy we put in place three years ago remains
highly relevant. Our vision to make RPS a great place
to do great work remains. Delayed due to COVID-19,
we will also launch our second bi-annual global
employee engagement survey in 2021 to further
validate and reinforce our plans to:
· build our learning and development provision
· further develop technology enabled tools to
engage with our people
· harness the deep talent we have throughout the
organisation and attract new talent
· drive performance
· bolster line manager capability
· create the bench strength and succession
pipeline for the future
25
Closing the gender diversity gap
– industry leaders
Our Board
2020 F57% : M43%
2019 F43% : M57%
2020 F50% : M50% (target)
UK Government’s FTSE350 Board target –
33% women by the end of 2020
Global senior leadership group
2020 F39% : M61%
2019 F33% : M67%
2025 F40% : M60% (target)
Global employees
2020 F32% : M68%
2025 F40% : M60% (target)
UK 2019/20 gender pay gap is available at
www.rpsgroup.com/company/responsibility
Energy training course delegates, Petronas – Kuala Lumpar
Strategic reportReport and Accounts 2020
Expansion of Houston’s I-10 highway
– one of America’s most congested
interstate highways
North America, Consulting UK & Ireland
RPS used sophisticated 3D visualisation technology,
developed in the the Republic of Ireland, to support
local planning, design and environmental
permitting services.
Rail network transformation – a
shift towards a climate resilient
society in Ireland
Consulting UK & Ireland
RPS planning, environmental, communications and
project supervisor design process services will help
improve the network, reduce CO2 emissions and
create sustainable public transport.
Sustainable and efficient
transportation – supporting
a bold vision in Norway
Norway
RPS supported a project improvement programme
for Mantena, providing advice, project training and
system support to secure Mantena’s leadership
in railway maintenance into the future.
2626
N
O
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A
S
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N
A
B
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Strategic reportReport and Accounts 2020
CITY AND STATE-SHAPING
Suburban Rail Loop, Suburban Rail Loop Authority, Melbourne,
Australia Asia Pacific
Suburban Rail Loop is a city and state-shaping project that will change how people move around
Melbourne, opening new possibilities in the neighbourhoods associated with new stations. With high tech
turn-up-and-go trains and new stations connecting Melbourne’s middle suburbs, Suburban Rail Loop will
deliver fast and convenient travel between major hospitals; universities and technical and further education
institutions; shopping and employment centres; and the airport.
As part of the Aurecon, Jacobs and Mott MacDonald joint venture, RPS was appointed to provide
specialist communications and engagement services for the project’s planning and design phase.
· An engagement programme for residents, businesses and stakeholders to ensure community input
is integrated into decision-making.
· Additional support to the authority in its communications strategies, managing key social research
projects on community sentiment and priorities, issues management, stakeholder workshop
facilitation and in developing digital content.
27
The view within Suburban Rail Loop’s online engagement room
URBANISATION
Strategic reportReport and Accounts 2020
CLIENTS
A resilient brand delivering high value client experiences
Chantalle Meijer
Group Marketing Director
2020 has been the culmination of three years’ hard work by our people
who have built a client-centric brand that has proven to be resilient in
the face of unprecedented market uncertainty.
Strong brands create emotional connections that
build trust and surpass logic. During a period of
unprecedented client and market uncertainty the
three years’ investment that our people have made
towards building a connected, resilient, client-centric
brand has maintained and grown client confidence
and trust. By staying connected with our clients we’ve
recognised that the way investment decisions are
made has changed and we have responded to this.
Our technical client-facing experts have continued to
develop value-driven client solutions, building trust
at every interaction, and delivering on our promise of
making complex easy to understand. This sentiment
continues to resonate with our investors as evidenced
by our £19.4m share placing, which was oversubscribed.
28
Our promise
MAKING
COMPLEX
EASY
CX Project – consistently delivering integrated, recurring, high value client experiences (CX)
at every opportunity
In early 2020, our Group Leadership Team committed to building a client-centric sales culture. Our CX Project is a
global, client-led initiative comprising three distinct, complementary projects designed to connect our clients to
our deep expertise at every stage of the buyer journey and deliver recurring profitable organic growth.
Influencing targeted client buyers' journeys at every
opportunity 1–8. 1. Pre-awareness 2. Awareness
3. Education 4. Consideration 5. Evaluation 6. Rationalisation
7. Decision 8. On-going delivery
Having high value sales conversations and helping our
clients rationalise investment decisions
Enabling technology, capturing, automating, tracking
and reporting on data and insights – client relationship
management, digital asset management and social
media management
Strategic reportReport and Accounts 2020 Accelerated digital client interactions delivering returns
Optimising our social media and website presence through targeted, cross-segment client campaigns
delivering organic Google search rankings at #1.
www.rpsgroup.com
www.rpsgroup.com
Virtual public consultation
Net zero carbon consulting
www.rpsgroup.com
www.rpsgroup.com
Sustainability
p. 35
29
ComplianceMap
One year on
AVERAGE
GOOGLE
RANK
UP 17%
WEBSITE
VISITORS
UP18%
WEBSITE GET
IN TOUCH
UP
68%
Looking ahead
WaterNet Pro
www.rpsgroup.com
65%
WEBINARS
ATTENDANCE RATE
(BENCHMARK 50%)
4%
SOCIAL
ENGAGEMENT
RATE
(BENCHMARK 2%)
3
NEW SOCIAL
CHANNELS
LAUNCHED
LINKEDIN
FOLLOWERS
UP13%
As part of the next phase of the CX project, we will continue to capitalise on the progress we’ve made by
launching multiple client-focused campaigns targeted at key opportunities across each of our thematics –
Urbanisation, Natural Resources and Sustainability.
Strategic reportReport and Accounts 2020 Strategic report
Commercialising data, tech and connectivity
Services UK & Netherlands
In 2020 Services UK & Netherlands provided more
services than ever that brought together our deep
expertise and digital technologies. Helping clients
interpret complex data, while delivering a high value
client and user experience.
Innovation to meet the AMP7 challenge
With the UK in its seventh water asset management
programme (AMP7) – five-year periods that set
out key objectives for water companies – our UK
Services Water division is developing industry
leading water resource management software, and
has done for more than 20 years.
AMP7 objectives
· customer engagement
· affordable bills
· resiliency in the water network
· innovation
30
WaterNet Pro: live data, faster and better-
informed decisions
Our Microsoft Azure cloud-based software platform
provides one location where water catchment data
can be accessed, interrogated and actioned before
an incident occurs. This cuts costs and gives our
clients a deeper understanding of their water
flow network.
Clients have access to live telemetry and monitoring
information so they can make informed, predictive,
proactive and preventative decisions based on live
data supported by historical performance.
Anglian Water: Enabling flood and
pollution prevention
Having developed the tool that enabled Anglian
Water’s analysts to intervene to prevent flooding
and pollution incidents, we were commissioned to
make WaterNet Pro a key part of Anglian Water’s
strategic optimisation toolkit for AMP7. The
platform, which is in production and scheduled
for delivery during 2021, will be fully cloud based
with greater interactivity, additional modules
and functional improvements.
A risk management refurb
BHI – a web-based risk management system
used by blue-chip companies, including British
Airways, proactively manages compliance,
including property assessments, health and
safety, incident reporting and fire, asbestos
and legionella assessments.
With increasingly complex needs to meet and
technology nearing end of life, RPS is refurbishing
BHI to create a single cloud-based application
that will support our business and clients around
the world.
Creating shared value
· improved margins for RPS
· added value for clients
· a single mobile app providing ease
of use and streamlined workflow
· ability to sell and develop feature
enhancements
· more efficient technology enabled consulting
· readiness for increasing data-driven ways
of working
Report and Accounts 2020
31
Captions from top left: Paul, running extracts using one of our stable liquid chromatography–mass spectrometry systems • Mike, TOTAL Metis
project, Abu Dhabi • Scott, undertaking a an unexploded ordnance (UXO) magnetometry survey • Jon, Utility Surveyor Geomatics team, UXO
survey, Netherlands • Harry, monitoring protected species on a nearshore wind farm survey, New Jersey, USA.
Strategic reportReport and Accounts 2020 CONNECTIVITY –
DATA AND TECH
Alastair Rutter
Chief Information Officer
Adapting new technologies, migrating to cloud and being able to
expand capacity on a global basis at pace proved very successful
as the global pandemic took hold
Connecting in a COVID-19 world
The key to a successful response to the pandemic
– for our people and our clients – was being able to
pivot, adapt and embrace our Modern Workplace
initiative implemented in 2019.
The initiative was designed to upgrade our
technology to give our people access to the tools
and information they need to do their job anywhere,
anytime – it would also allow them to easily connect,
meet, chat, share and work on projects together.
The investment of time, money and resources we had
made integrating technology services and migrating
towards cloud technology meant that we were well
placed to react swiftly when the world went into
lockdown. The foundations had already been laid and we
were able to expand capacity and retrain people at pace.
We are a people business and working face-to-face
in the same room was the norm for many of our staff.
We were able to adapt our technology swiftly enabling
virtual consultations with clients, meeting their needs
and keeping the revenue coming in. At the peak of
the first wave of the pandemic in April 2020 around
90% of our employees across our global locations
were collaborating remotely with colleagues and
connecting with clients from their homes.
4,500 employees use Microsoft
Teams on daily basis
We were able to measure and monitor the
effectiveness of working remotely too. We continued
to ramp up our cloud technology capability throughout
the pandemic. When lockdown restrictions eased
and our people began to return to their offices,
they continued to use cloud telephony rather than
switching back to their legacy desk-based phone
systems, which had been removed.
Technology-enabled consulting
Our Services UK and Netherlands business has many
examples of how client-facing teams have embraced
digital, data and technology and put customer
experience at the heart of their strategy. We have
been developing industry-leading water resource
management software for more than two decades
that has been deployed onsite by water companies
up and down the UK, but today WaterNet Pro, using
Microsoft Azure software, is cloud based.
Case study p. 30
Our water company clients in the UK have live
access to the data streams of tens of thousands
of internet of things (IoT) sensors to help detect
leaks, blockages and measure water quality. With
access to live telemetry and monitoring information
these companies can be proactive rather than
reactive, instigating actions before incidents occur.
Using WaterNet Pro’s cloud-based software, water
companies will also be able to retire legacy software
infrastructure and be more agile in developing smart
technology solutions going forward.
32
Strategic reportReport and Accounts 2020
Amsterdam quay project
ERP: reflect and restart
Meanwhile, in The Netherlands, an Amsterdam
quay project utilised data derived from sensors
within the canal walls – so our clients can
understand the movement in the walls, from an
environmental, safety and ecology perspective.
Digital transformation
RPS has deep expertise and rapidly developing digital
capability which add value and make complex easy for
our clients.
· Transforming complex information into interactive,
intuitive and easily navigable content
· Connecting with stakeholders, bringing projects
to life through virtual consultation
· Shaping the world of project management
through artificial intelligence
· Bringing virtual reality into design projects using
augmented reality (AR) computer-aided software
In 2018 we announced the design and implementation
of a global Enterprise Resource and Planning
(ERP) system – a single common platform across
our global business to seamlessly connect our
5,000 professionals working around the world.
In late 2019 we rolled out a pilot of the new ERP
system in the Netherlands and part of Australia.
During the initial stages of the pilot, we became aware
of some issues with the software architecture that
would be problematic for a business of our size and
ambition. In light of this and a reappraisal of our capital
spend in the wake of the pandemic, we decided to
pause the ERP rollout to give us an opportunity to
re-examine the underlying architecture. Following our
reappraisal, we continue to believe that the Microsoft
Dynamics 365 platform is the right platform for an
organisation of our size. In 2021 we will restart the ERP
implementation with a redesigned and more robust
architecture and plan to continue our phased rollout.
A global platform for HR
People p. 22
The Global Technology Team supported HR in
the global rollout of our global performance
on demand (POD) platform that, through some
new applications, supports managers and
employees throughout the employee journey at
RPS. The rollout means that our HR system, from
recruitment to performance management, is no
longer fragmented and is now on one global online
technology platform increasing transparency,
fairness and ease of use and efficiencies worldwide.
33
Looking ahead
In addition to the restart of ERP in 2021, we
have several technology initiatives planned
for 2021, including:
· continuing our migration to the cloud – from
tsunami modelling to WaterNet Pro where our
focus switches from wastewater to clean water
· migrating our risk management system, BHI,
to the cloud too. In the US, our BHI property
map product enables construction-related
organisations to assess prospects and the
impact of what they do
· embracing alternative intelligence (AI) solutions,
for example our Energy segment will use AI to
detect and identify marine mammals in real time,
which is key to offshore and renewable energy
infrastructure planning
We have made significant progress with our
technological advancement over the past year,
connecting our people and enabling them to work
through the pandemic. Our strategic priorities
for 2021 will build on that advancement, with
a particular focus on technology enabled
consulting, developing initiatives to support
new and existing clients.
Strategic reportReport and Accounts 2020 RPS is supporting clients around the world to meet their
sustainability ambitions. From working with clients in
North America to set the strategic direction for ESG planning,
to supporting clients to reduce their greenhouse gas emissions
in the UK and Ireland.
North America – a strategic partner
in ESG planning
ESG is fast becoming a mainstream investment concept. Institutional investors and
management teams are integrating ESG into their investment process to help secure
capital during fundraising, identify risks during due diligence, capitalise on opportunities
post-acquisition and facilitate information disclosure in exit.
$12
TRILLION*
61%
INSTITUTIONAL
INVESTORS**
38%
GROWTH***
With the growing realisation that ESG adds value for financial institutions, private
equity firms are increasingly focused on the effect on the bottom line of environmental
impacts, social performance and governance practices.
Reputations are at stake. Investors and management teams
cannot ignore ESG as an investment consideration
Making complex easy – RPS works with US private equity firms and portfolio
management teams to implement ESG strategies to bolster investment processes, create
short- and long-term value and strengthen a firm’s reputation. From fundraising to exit, we
help across the investment cycle.
Adding value by:
· clarifying the ESG vision, mission statement and priorities
· identifying investors’ motivations and expectations during fundraising
· creating an ESG policy and implementation framework
· constructing a customised ESG action plan to fit present and future goals
· defining Key Performance Indicators (KPIs) to measure the ESG performance
· developing industry trend reviews and risk assessments
· providing tailored ESG training
* Of US professionally managed assets at year end 2017 focused on sustainable, responsible and impact investing
** Have developed ESG strategies, according to a recent survey
*** Of sustainable investments between 2016–2018
34
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Strategic reportReport and Accounts 2020
1.5°c
The goal set by the Paris Agreement
to limit global warming to well below
2, and preferably 1.5 degrees Celsius
2050 net zero target date
2010–2019 warmest decade on record
YOUR CARBON FOOTPRINT MIGHT BE COMPLEX BUT
YOUR JOURNEY TO NET ZERO DOESN’T HAVE TO BE…
CONSULTING UK & IRELAND – OUR NET ZERO CARBON SERVICES
Climate change poses a huge threat to the environment and
society, which is why businesses and governments around the
world are pledging their commitment to net zero carbon. Both
the UK and Irish governments, alongside nations around the
world, have committed to net zero carbon by 2050; but many
organisations and industries are already falling short. Urgent
action is needed to avert a humanitarian and economic disaster.
In the UK, over half of the total carbon footprint is made up of
emissions from the built environment and so the sector has
35
a very important role to play. The transformation to a net zero carbon society requires a shift in the way
supporting infrastructure is planned, designed and built.
Our team makes complex easy by supporting clients at every step of their net zero journey; from
pragmatic advice for strategy and goal setting; to consenting and implementing design and development
solutions; through to assessing and reporting energy usage.
Strategic reportReport and Accounts 2020
RESPONSIBLE
BUSINESS REPORT
Making a difference that matters to our clients, people, investors and our
communities is intrinsic to the way RPS works.
A responsible business culture
We have a responsible business culture built on our
purpose to inform our interactions and decisions
and reinforce our behaviours. A culture underpinned
by our corporate responsibility framework that
ensures good governance and influences the way we
manage our environmental and social impacts. This
framework applies to all elements of our business
and incorporates Sustainability, Environmental Social
Governance (ESG) and Corporate Responsibility
(CR) – all of which overlap and are complementary.
For RPS, sustainability means adopting
practices to ensure we live within our means
and resources available under a sustainable
framework of social, environment and economic
activity. ESG resonates with our corporate
strategy, stewardship and operations, while
CR embraces philanthropy, community
engagement and being socially accountable.
SUSTAINABILITY
Rapidly changing demographics and technological
developments have given rise to a way of living
that brings a range of environmental issues and
global challenges including resource scarcity,
climate change, instability and conflicts,
inequality, achieving sustainable development,
and maintaining biodiversity and food security.
RPS works with clients to identify and design
innovative opportunities and solutions that
embrace sustainability. We understand changing
availability, prices and risk, dependencies
and vulnerability and the nature of evolving
policy, regulation, investor focus and emerging
sustainability standards. Our long-standing
expertise in environmental consultancy and
Our corporate responsibility framework is focused on
9 of 17 United Nations (UN) Sustainable Development
Goals (SDGs)*
* 17 aspirational goals defined with the purpose of progressing and sweeping positive
environmental, social and governance change for the world by the year 2030
SDGs for our clients and investors
SDGs for our people
Responsible business:
a three-pronged approach
These goals have been purposefully aligned to link
to our three thematics – Sustainability (services),
Urbanisation, Natural Resources – growth markets
where we have the services and the people to make
a difference.
the impacts of a changing world puts us in a strong
position to deliver high value sustainable client
solutions in a responsible way.
With deep expertise in:
· environment
· social issues
· governance
· climate change
· compliance
· consenting
Delivering solutions that recognise:
· environmental factors – natural resource use,
efficiency and impacts
· social factors – impact and engagement
· governance factors – oversight and management
36
Sustainability
p. 34
Strategic reportReport and Accounts 2020
Urbanisation
p. 26
37
Natural
Resources
p. 20
URBANISATION
Global megatrends are rapidly changing
demographic patterns and accelerating rates of
urbanisation. Nearly 60% of the world’s population
live in urban areas, and there is strong appetite
for the development of sustainable infrastructure
needed to support growing communities. Striking
a balance between social, environmental and
commercial needs is one of the biggest challenges
in the design and development of our built
environment – but it is also a huge opportunity
to build sustainable infrastructure.
We work with clients to build sustainable futures
for communities through:
· designing new models and planning approaches
· digital and technology – challenging traditional
ways of doing things
· supporting clients to make better choices
We ensure the optimal solution is delivered
through careful management
· enhancing the productivity, sustainability and
liveability of cities
· improving connectivity and delivering integrated
infrastructure networks
· stimulating enterprise and entrepreneurism
NATURAL RESOURCES
Countries and organisations globally are working
hard to develop responsible energy supplies
using renewable resources that are derived from
sustainable sources such as wind and solar to ensure
a sustainable future for the generations to come.
We can be on the front foot of a global and complex
shift in resource consumption. We work with clients
to define, design and manage the sustainable use
of our natural, finite resources to secure water, food
and renewable energy supplies as we adapt to
increased demands.
We work with our clients to optimise the
performance of energy and water networks:
· resource definition and viability
· high yield, low impact infrastructure
· asset survey, monitoring and management
· applying new technologies to reliably collect and
analyse data
We identify ways for clients to manage assets and
projects to deliver viable, sustainable outcomes:
· water management: building asset resilience,
reducing leakage and preventing flooding
and pollution, using data to maximise capital
maintenance programmes
· energy: applying existing expertise in oil and
gas in renewables and leveraging our extensive
renewables experience
Strategic reportReport and Accounts 2020 A responsible, purposeful culture
We are an organisation driven by our people’s
behaviours. Our behaviours are at the heart of an
inclusive and diverse culture. A culture that builds
trust, creates opportunity and provides resilience.
This belief is underpinned by an approach that puts
health, safety and the wellbeing of all our employees
front and centre of our decision-making. An approach
that looks to provide inspiration and opportunity by
creating a great place to do great work that attracts
and retains the best people.
We believe this is how you create meritocracy. This in
turn is a fundamental driver of diversity and inclusion.
Operationally, we are also committed to a responsible
culture. Our people want to be part of a business that
supports our clients in their sustainability ambitions,
but that also delivers positive environmental and
social impact itself.
We solve
PROBLEMS
THAT MATTER
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Winning mindset
We make it
EASY TO
CONNECT
Policies and standards
· RPS Group Tax Strategy
· RPS Group Environmental Policy Statement
· RPS Group Quality Policy Statement
· RPS Group Anti bribery and corruption
Statement
· RPS Group Diversity Inclusion Policy
and Statement
· RPS Group UK Gender Pay Gap Statement
(snapshot 5 April 2019)
· RPS Group UK’s compliance with government
guidance on managing COVID-19 risk
· RPS Group Modern Slavery Act Statement
· RPS Group Health, Safety and Wellbeing
Statement
· RPS Employee Whistleblowing Policy
and Guide
· Committed to setting science-based targets
External benchmarks and standards
· Health and Safety– OHSAS 18001
· Quality management – ISO 9000
· Environmental management and reporting
– ISO 14001, Carbon Disclosure Project,
Streamlined Energy and Carbon Report (SECR),
· Science Based Target Initiative
· Green Economy Mark
(London Stock Exchange)
In 2020, we continued to increase the breadth
of our commitments and policies to reinforce
our responsibilities.
Further information on our corporate responsibility
governance and management can be found on p.73
of this report.
Heightened focus
The COVID-19 pandemic has heightened the focus on
the environmental and sustainability agenda. Yet, it is
an agenda that isn’t new to RPS. It is embedded in our
culture. Our roots are in environmental consultancy
and we support our clients to develop environmental
and socially responsible solutions. Our focus is
unwavering and we will always continue to work
this way.
Left: Beth conducting a stormwater inspection at Tresca Brother Sand and Gravel, Millis, MA, USA
Strategic reportReport and Accounts 2020
RESPONSE TO THE
EVENTS OF 2020
39
From top left: Andrew going the extra mile with his team through the pandemic • Bush fires, Australia • Image by International Maritime
Organization– International Maritime Organization helping to mitigate the impacts of MV Wakashio oil spill in Mauritius • Bush fire LiDAR
research project • Occupational nurse, Vikki, supporting clients through the pandemic • Building and medical gas design for Preston and
Deeside Nightingale Hospitals, UK
Strategic reportReport and Accounts 2020 FINANCIAL REVIEW
Judith Cottrell
Group Finance Director
The business demonstrated its resilience and ability to adapt to the
operational challenges as a consequence of the global pandemic. Our
swift proactive response in making prudent decisions on costs and
actions helped us mitigate the impact on profit with costs broadly
reducing in line with our fee revenue.
Our strong financial management and disciplined
billings and collections delivered an exceptional cash
performance, resulting in a significant reduction
in net bank borrowings. With the actions taken to
reshape the business in 2020 and the low net bank
borrowings the business is well placed to capitalise
on the future growth opportunities as our clients
emerge from the ramifications of the pandemic.
Performance summary
The Group’s key financial performance metrics for the year are summarised in the table below:
40
2020 2019 restated
2019
constant
currency
Alternative performance measures (1)
Fee Revenue (£m) (2)
Adjusted operating profit (£m) (2)
Adjusted operating profit margin (2)
Adjusted profit before tax (£m) (2)
Adjusted earnings per share (diluted) (p) (2)
Cash and debt measures
Conversion of profit into cash
Net bank borrowings (£m)
Leverage
Statutory measures
Revenue (£m)
Operating (loss)/profit)
Statutory (loss)/profit before tax (£m)
Statutory (loss)/earnings per share (diluted) (p)
Dividend per share (p)
457.3
20.5
4.5%
13.4
4.29
239%
10.8
0.7x
542.1
(24.2)
(31.3)
(12.83)
–
528.2
43.4
8.2%
37.4
12.31
90%
94.1
2.0x
612.6
10.9
4.9
(0.54)
2.42
522.2
42.9
8.2%
37.4
12.31
90%
93.1
2.0x
606.4
9.4
3.4
(1.09)
2.42
% change
(13%)
(53%)
(3.7%pts)
(64%)
(65%)
% change
constant
currency
(12%)
(52%)
(3.7%pts)
(64%)
(65%)
(12%)
(322%)
(739%)
(2276%)
n/a
(11%)
(357%)
(1021%)
(1077%)
n/a
(1) Alternative Performance Measures are used consistently throughout the Financial review: these include adjusted profit before tax,
fee Revenue, items prefaced ‘adjusted’ such as adjusted EPS, segment profit, underlying profit, adjusted operating profit, amounts
labelled ‘at constant currency’, EBITDAS, conversion of profit into cash, net bank borrowings, leverage. For further details of their
purpose, definition and reconciliation to the equivalent statutory measures see note 3 to the consolidated financial statements.
(2) Fee Revenue, adjusted operating profit and adjusted profit before tax have been restated – see note 3 to the consolidated financial
statements for further information.
Strategic reportReport and Accounts 2020 Trading performance
Revenue for 2020 was £542.1m (2019: £612.6m,
£606.4m at constant currency). Our key performance
measure is fee revenue. For 2020 this was £457.3m
(2019: £528.2m, £522.2m at constant currency). While
the Group made a statutory loss before tax of £31.3m
(2019: profit £4.9m, £3.4m at constant currency)
this was after significant exceptional items, many
of which were non-cash items and largely driven by
actions taken to mitigate the impact of COVID-19.
The profit performance of the business is measured
using adjusted operating profit. For 2020 this was
£20.5m (2019: £43.4m, £42.9m at constant currency).
The trading performance of the Group by segment is
summarised in the tables below:
Fee revenue
£m
Energy
Consulting – UK and Ireland
Services – UK and Netherlands
Norway
North America
Australia Asia Pacific
Fee Revenue
2020
75.7
108.0
85.7
56.0
39.0
92.9
457.3
2019
104.3
126.2
96.6
64.7
46.1
90.3
528.2
2019
(at constant currency)
103.5
126.6
97.1
60.1
45.8
89.1
522.2
The period under review started well with good
growth in Energy, North America and Australia Asia
Pacific. As expected, the level of activity in Water
Services was lower in Q1–2020 ahead of the UK water
industry’s new five-year asset management period
(AMP7). Our Consulting UK and Ireland and Norway
segments were impacted during the early period of
the pandemic.
From the second quarter COVID-19 impacted our
business across all segments of the Group, with fee
revenue reducing by 18.1% (at constant currency)
compared to Q2–2019. As restrictions eased in
Q3–2020, the business started to recover with fee
reduction improving as our people began to return
from furlough or reduced hours with the reduction
on prior year of 15.6% (at constant currency). This
improving trend continued into Q4–2020 and
coupled with a slow ramp up in the AMP7 cycle as well
as increased activity with mid-market PE in the US
resulted in a 12.1% (at constant currency) decline
in Q4–2020 fee revenue compared to Q4–2019.
Full year fees of £457.3m were down 12.4%
(at constant currency) on the prior year. RPS
generates circa 55% of fee revenue from government
or quasi-government organisations, which provided
resilience to the impact of COVID-19 and enabled
Australia Asia Pacific to continue to deliver fee
revenue growth in 2020.
41
Adjusted operating profit
£m
Energy
Consulting – UK and Ireland
Services – UK and Netherlands
Norway
North America
Australia Asia Pacific
Total segment profit
Unallocated costs
Adjusted operating profit
2020
4.5
6.3
5.4
4.5
2.9
8.2
31.8
(11.3)
20.5
2019
(at constant currency)
2019
11.1
15.1
10.8
6.0
3.3
6.4
52.7
(9.3)
43.4
11.0
15.1
10.9
5.5
3.4
6.3
52.2
(9.3)
42.9
Strategic reportReport and Accounts 2020 In response to COVID-19 the Group took swift and
considered action to match capacity to market
demand, reduce discretionary spend and make
changes to our operating model. As a result of these
actions, which included the receipt of £4.2m of
furlough income, segment costs reduced by 9.5% at
constant currency, versus 12.4% lower fee revenue
at constant currency. Segment profit margin was
7.0% (2019 at constant currency: 10.0%), reflecting
the impact of lower fee revenue, fixed costs in the
business that were not able to be reduced in line with
fees and a £0.6m cost for maintenance of a property
in the Republic of Ireland.
Unallocated costs were higher in 2020 as a result
of continued investment in the strategic initiatives
of People and Connectivity and the retirement
package for the outgoing Group Finance Director.
The investment in People and Connectivity includes
investment in an online performance development
tool, operating costs of the new ERP system and
strategic hires within the technology team.
Net finance costs
Net finance costs were £7.1m (2019: £6.0m), which
includes £1.9m in respect of IFRS 16 (2019: £1.9m).
Excluding lease obligations, the average total net
borrowings in 2020 were £63.9m (2019: £104.4m).
Interest expense includes imputed interest on deferred
consideration of £0.2m in 2020 (2019: £0.2m).
Exceptional items
Exceptional items of £39.2m have been recognised
in 2020 (2019: £23.4m), of which £32.6m are
non-cash. The exceptional items are detailed in
note 7 and include:
· A goodwill impairment charge of £25.9m after
revising our view on the assumptions used
for impairment modelling given the market
uncertainty caused by the pandemic. This led to
an impairment of goodwill at the Half Year in our
Consulting UK and Ireland and North American
segments, where the impact of the pandemic
was more pronounced.
· Restructuring costs of £6.0m as a result of the cost
mitigating actions taken in light of the impact of the
pandemic on the Group and aligning our operating
models to the new environment. These costs
included redundancy for a limited number of roles,
and closure of offices with surplus space resulting
in impairment of right-of-use assets and onerous
contract provisions for associated property costs.
· ERP stabilisation activities of £2.2m for the
new ERP implemented in the Netherlands and
parts of Australia in addition to an impairment
of the ERP of £2.9m in respect of those parts
of the system which were identified in 2020 as
needing to be redeveloped or are no longer part
of the global design for future implementations.
Further exceptional costs in respect of change
management and data migration will be incurred
in 2021 as the rollout of the ERP continues.
· Further legal fees of £1.8m investigating
potential issues regarding the administration of
US government contracts and/or projects. The
investigation is ongoing and further exceptional
costs for legal fees will be incurred in 2021. This
matter is disclosed as a contingent liability in note
26 to the consolidated financial statements.
· A loss of £0.4m on divestment of our Specialist
Geology business in the Energy Segment,
supporting our strategy of migrating the business
away from traditional oil and gas to renewables.
The divestment took the form of an asset and trade
sale with proceeds of £0.7m in return for net assets
transferred of £nil. Goodwill in respect of this
business of £1.0m was written off and transaction
costs of £0.1m were incurred resulting in a small
loss on disposal.
In 2019, the Group invested £1.0m in a global
rebranding of RPS. This project was completed in
2019 and no further costs have been incurred in 2020.
We anticipate that exceptional costs will be incurred
in 2021 associated with the continued rollout of
the ERP system and ongoing legal fees in respect
of the US government contracts investigation.
42
Strategic reportReport and Accounts 2020 Foreign exchange
Over 73% of segment adjusted operating profit
was derived from operations other than in the UK,
mainly in Australia, the US, Norway, Netherlands,
Ireland and Canada. The Group’s consolidated results
are therefore significantly exposed to the effect of
exchange rates when translating the results of
non-UK operations into sterling.
Profit in 2020 suffered marginally from exchange
movements on the conversion of overseas results in
comparison to 2019. Adjusted profit before tax (PBT)
in 2020 would have been £0.4m higher than reported
had 2019 exchange rates been repeated in 2020. The
Adjusted PBT in 2019 would have been £0.5m lower
than reported if 2020 exchange rates had prevailed in
2019. Statutory profit before tax in 2019 would have
been £1.5m lower than reported if 2020 exchange
rates had prevailed in 2019.
Organic growth
The acquisition of Corview was completed in February
2019 and Reservoir Imaging Limited in September
2019. There were no acquisitions in 2020 and the one
divestment was completed on 31 December. Hence,
the impact of acquisitions and divestments on the
reported growth numbers is not material.
Deferred tax assets of £11.2m (2019: £3.8m) include
tax losses in the US and UK, deferred tax on employee
benefits, and deferred tax on provisions and accruals.
The Directors have considered the recoverability of
these assets and remain satisfied that it is probable
that sufficient taxable profits will be generated in the
foreseeable future, against which the recognised
assets can be utilised.
Amortisation of intangible assets
and transaction-related costs
Amortisation of intangible assets and transaction-
related costs totalled £5.5m (2019: £9.1m). Included
in this total is amortisation of acquired intangibles
£5.5m (2019: £8.6m), and acquisition related third-
party transaction costs of £nil (2019: £0.5m).
EPS
Adjusted diluted EPS was 4.29p (2019: 12.31p, 12.17p
at constant currency), a decrease of 65% over last
year at constant currency. The Board considers
that adjusted EPS, which is statutory EPS excluding
exceptional items and amortisation of intangible
assets and transaction-related costs and the tax
thereon, provides a useful indication of performance
and trends over time. Statutory diluted loss per share
was 12.83p (2019: 0.54p).
Tax
Dividends
The effective tax rate for the year on adjusted PBT is
22.4% (2019: 25.4%). The reduction was mainly due
to the impact of carrying back losses in the US under
the US CARES Act and recognising UK deferred tax
balances at 19% rather than 17%. Our underlying tax
rate prior to these adjustments increased in the year
due to a rise in the proportion of taxable profit from
higher rate tax jurisdictions, mainly Australia.
The statutory effective tax rate for the year is 0.6%
(2019: 125.4%). The statutory tax credit for the year
was £0.2m (2019 charge: £6.1m) on a loss before tax
of £31.3m (2019 profit before tax: £4.9m). The effect
of tax on the impairment of goodwill incurred in the
year of £25.9m is nil.
In 2019 an interim dividend of 2.42p per share was
paid in respect of H1 2019, but the payment of the
proposed final dividend of 2.00p per ordinary share
was cancelled as one of the measures in response to
COVID-19.
Due to the ongoing restrictions in the UK and
wider uncertainty over the timing of recovery in
our markets, the Board of Directors has taken a
prudent approach and decided not to recommend
a dividend in respect of 2020. The Board recognises
the importance of dividends to shareholders
and anticipates resuming the dividend payment
for 2021 providing markets continue to recover.
When dividends resume the Board will assess the
appropriate level of dividend to be paid.
43
Strategic reportReport and Accounts 2020 Divestments
On 31 December 2020 we divested the assets and
trade of our Specialist Geology business, part of the
Energy segment, for £0.7m. Specialist Geology is a
niche oil and gas focused business and its divestment
is aligned with our strategy to grow our energy
offering in line with our clients’ needs and to diversify
into new markets, such as renewables.
The consideration of £0.7m was in respect of the
net assets transferred of £nil and the goodwill of the
business of £1.0m. After transaction costs of £0.1m
the loss on disposal was £0.4m.
Intangible assets
The net book value of intangible assets at the year
end was £350.5m (31 December 2019: £378.7m),
which largely comprised goodwill. The decrease
during the year is attributable to intangible
assets divested through the divestment of
Specialist Geology, amortisation and impairment
offset by investment in the new ERP, and the
effect of foreign exchange movements.
44
Borrowings and cash flow
During the 12-month period, significant focus was
placed on cash management and ensuring disciplined
billings and cash collections. This focus and the equity
placing in September, which raised a net £19.4m,
reduced net bank borrowings by £83.3m to £10.8m
at 31 December 2020 (31 December 2019: £94.1m).
Net cash from operating activities was £84.0m
(2019: £37.6m). Our conversion of operating profit
into operating cash was excellent at 239% (2019:
90%). This reflected a significant focus on billing and
collections, the actions taken to protect cash in light
of COVID-19, the unwinding of working capital as a
result of a reduction in revenue, reduced corporate
taxes and £10.2m deferral of payroll/sales taxes under
government COVID-19 schemes. Excluding the tax
deferrals, cash conversion was 213%. Lock-up days
at the end of December 2020 were exceptionally low
at 48 days compared to 69 days at the end of 2019.
Our focus on improving collections is demonstrated
by average lock-up days for the year that were 65
days for 2020 compared to 69 days for 2019.
Net cash used in investing activities was £9.7m
(2019: £30.9m), the decrease due to no acquisition
costs in 2020 (2019: £10.1m), lower net capital
expenditure of £7.8m (2019: £21.1m) and proceeds
on the divestment of Specialist Geology. The
capital expenditure figure includes £2.5m (2019:
£7.8m) invested in our new ERP system. In 2019 we
completed the global design phase and implemented
pilots in the Netherlands and part of Australia.
The pilot implementation identified issues with
the global design created by our implementation
partner, and hence in 2020 the investment has
been focused on progressing revisions to the global
design and stabilisation of the initial rollout. In
2021 we plan to finalise the revised global design
and continue with the global rollout programme.
Deferred consideration outstanding at the year
end was £5.8m (31 December 2019: £8.7m).
The amount paid in respect of dividends was
£nil (2019: £16.9m) reflecting the cancellation
of the 2019 final dividend and the decision
not to pay an interim 2020 dividend. Included
within financing activities are the £19.4m net
proceeds of the September share placing.
Our leverage (being net bank debt plus deferred
consideration expressed as a percentage of adjusted
EBITDA) at the year end was 0.7x (31 December
2019: 2.0x) compared to our target operating
range of 1.0x to 2.0x. We expect this will increase
during 2021 to within our target operating range
of 1.0x to 2.0x as we invest in growing the business,
as government clients revert to normal payment
terms and the COVID-19 cash initiatives reverse.
The bank covenant limit that applies to all our
facilities is 3.75x for December 2020 and March
2021, 3.25x for June 2021 and 3.0x thereafter.
Bank facilities
The Group’s main banking facility is a committed
multicurrency revolving credit facility (RCF)
with Lloyds, HSBC and NatWest totalling £100m
which expires in July 2022. This may be extended
to July 2024 with the banks’ agreement.
On 28 April 2020, to ensure adequate liquidity
and financial flexibility through the pandemic,
the Group secured an additional £60m 12-month
COVID-19 liquidity facility which formed part of
the RCF facility. In September 2020 the expiry
of this facility was extended to July 2022.
Strategic reportReport and Accounts 2020
The amount drawn under the facility at the year
end was nil resulting in headroom of £160m. The
margin payable on the drawn funds is variable and
is set for the following six months dependent on the
leverage of the Group at 31 December and 30 June.
In 2014 the Group issued 7-year US private
placement notes of $34.1m and £30.0m that
are repayable in September 2021. The Group is
currently investigating its options for refinancing
these loan notes. They are non-amortising and,
following the modifications to the covenants in
April 2020, carry fixed interest of 4.59% pa and
4.73% pa respectively (previously 3.84% and 3.98%).
These notes represent the Group’s core debt.
Capital structure
As at 31 December 2020 the Group had shareholders’
funds of £349.0m (31 December 2019: £348.5m). The
Company had shareholders’ funds of £275.7m (2019:
£249.1m) and 277m fully paid ordinary shares in issue
at 31 December 2020 (31 December 2019: 227m).
Basis of preparation and new
accounting standards
The financial statements have been prepared
in accordance with international accounting
standards in conformity with the requirements of
the Companies Act 2006 and International Financial
Reporting Standards adopted pursuant to Regulation
(EC) No 1606/2002 as it applies in the European
Union. The financial statements have also been
prepared in accordance with International Financial
Reporting Standards as issued by the IASB. The
Group’s significant accounting policies are detailed
in note 1 to the consolidated financial statements.
During 2020, the Group changed its adjusted revenue
measure from fee income to fee revenue. Details of
the restatement can be found in notes 3 and 4 to the
consolidated financial statements.
45
Strategic reportReport and Accounts 2020
SEGMENT
PERFORMANCE
Energy
Profitable performance for the year despite significant impact of COVID-19 and oil price
£m
Fee revenue
Segment profit
Margin
FY 2020
75.7
4.5
5.9%
FY 2019
104.3
11.1
10.6%
FY 2020
· Renewable fee revenue doubled from 2019 and
assisted the overall profitability of the Segment in 2020
· Improved performance in H2 by the Technical
Advisory business after the reorganisation
completed in H1
· Continuing impacts on activity through the year
due to COVID-related travel restrictions
Outlook
· Market transition to sustainable energy is creating
significant opportunities for our business –
offshore wind market continues to require our
services at ever increasing levels
· Markets will continue to be impacted by COVID-19
Consulting – UK & Ireland
Public sector demand and matching capacity to demand ensured profitable outturn
46
£m
Fee revenue
Segment profit
Margin
FY 2020
108.0
6.3
5.8%
FY 2019
126.2
15.1
12.0%
FY 2020
· Strong public sector demand in Ireland and UK
providing resilience to parts of the business
· Private sector demand reduced due to COVID-19
· Careful management of staff numbers and pay
resulted in profitable outturn for 2020
· Introduction of agile working has lowered office
rental costs by approx 25%
Outlook
· 2020 marketing efforts are delivering real traction
on ‘outperforming sectors’ in 2021: logistics,
health, affordable residential and data centres
· Net zero carbon market proposition is delivering
blue-chip clients
Services – UK & Netherlands
Fee revenue down due to a slow start to AMP cycle and a reduction in private sector workload
£m
Fee revenue
Segment profit
Margin
FY 2020
85.7
5.4
6.3%
FY 2019
96.6
10.8
11.2%
FY 2020
· Continued improvement in fee revenue seen
across H2 with AMP cycle slowly ramping up
· Increase in demand for water services in UK
and Netherlands
· Markets remain resilient under
unprecedented pressure
Outlook
· UK water market expected to improve through 2021
· In Netherlands long-term frameworks secured with
key water boards and provinces
· Good Laboratory Practice (GLP) accreditation
secured in our UK labs opening up new markets
Strategic reportReport and Accounts 2020
Norway
Good performance in 2020 despite COVID-19 impact from mid-March
£m
Fee revenue
Segment profit
Margin
FY 2020
56.0
4.5
8.0%
FY 2019
64.7
6.0
9.3%
FY 2020
· Retained the market position as #1 within Project
and Programme Management in Norway
· Stable and partly growing investment levels in the
public sector in Norway, increasing our share in
the public sector
· Strong focus on cost control and cash conversion
· Good overall performance in a difficult year due
to COVID-19 impact
Outlook
· Activity and investment levels remain strong in
the public sector
· New opportunities in emerging markets (green
energy, green technology and aquaculture)
· COVID-19 impact on our business during H1
North America
Private sector recovery in H2 and improved efficiency led to strong half-on-half profits growth; fee growth held
back by delays in Infrastructure activations
£m
Fee revenue
Segment profit
Margin
FY 2020
39.0
2.9
7.4%
FY 2019
46.1
3.3
7.2%
FY 2020
· Ocean Science business continued its run of
consistent growth
· Infrastructure delivered strong profit growth and
improved margin
· Environmental risk capitalised on buoyant private
equity market in H2 to deliver credible results
· FY growth undermined by COVID-19 impact but
segment emerged leaner with strong position in
key markets
Outlook
· 2020 groundwork to mature processes in people,
clients and connectivity established foundation for
return to growth in 2021
· Positioned to expand sustainability services with
top level focus and enhanced offering
· Strong public sector order book poised to support
activity in Infrastructure and Ocean Science
47
Australia Asia Pacific
Government stimulus spending in defence, transport and property infrastructure provided benefits across the
AAP business.
£m
Fee revenue
Segment profit
Margin
FY 2020
92.9
8.2
8.8%
FY 2019
90.3
6.4
7.1%
FY 2020
· Government spending in defence, transport and
property infrastructure provided resilience to
COVID-19 and enabled fee growth of 3%
· Continued to benefit from the Corview acquisition
tied to our exposure in transport and defence
· Benefited from a residential property spike due to
temporary government stimulus ‘Home Builder’
· Continued focus on costs and driving efficiency
delivered improved margins
Outlook
· Well positioned to continue to win new federal and
state government infrastructure work
· Market uncertainty remains due to governments’
strong responses to COVID-19 and as property
stimulus ends
· Increased focus on renewables, leveraging our
experience in the wind and solar markets, expecting
to generate benefits in H2
Strategic reportReport and Accounts 2020
Deep expertise in project management
Norway – Metier OEC
Our experience and expertise in project management makes complex
easy and creates value for our clients.
The Norway experience
For more than 30 years our business in Norway has
been operating as strategic advisers, providing expert
help to both private and public project-oriented
businesses to strengthen their capacity and abilities.
We help players from private property developers to
municipalities execute the right projects within the
framework of good practice in project management.
Multisector expertise: construction, real estate,
transport, industry, energy and health buildings.
Value-driven project development that:
· maximises the value of invested capital
· delivers faster completion time for an entire
project process
· increases predictability for the parties
· integrates processes for enhanced collaboration
Delivering successful projects through:
· in-depth project management expertise
· professional project governance
· project excellence framework and best practice
· easy to use project management systems
48
RPS Project Academy
Developed in Norway, RPS Project Academy offers a modular
development programme for external clients covering everything from
the essentials to advanced skills for project and strategic leaders.
The programme is structured, progressive and flexible to accommodate
the differing needs of our global business and teams, delivered through
a blend of e-learning and digital or face-to-face workshops.
RPS Project Academy is a recognised route to professional project
management qualifications.
16,000
client participants
200+
RPS participants
Making complex easy for our clients who are...
Building an 8km
stretch of tramline
combining suburbs in the
west to central Oslo
Planning more than 40 GWh of
lithium battery cell production
Managing Oslo’s new
water supply to 1m people
capacity by 2025 in Northern
Norway to position Norway as one of
Europe’s largest ‘green’ cell suppliers
that needs 1.2m cubic metres
of solid rock to be removed and
three 5km tunnels constructed
myProjects offers cloud-based connectivity and customisation...
… assisting clients in their programme reporting and portfolio information with ease, in real time, with the
click of a mouse. Drawing on our experience supporting the Norwegian Ministry of Defence and Defence
Material Agency, myProjects was customised to give access to the most relevant, up-to-date data for
informed decision-making to support a major ten-year resource management programme.
Deep expertise in project management across RPS
Deep expertise and project management services can be found across RPS. In Global Energy,
Consulting UK & Ireland, Services UK & Netherlands, Norway, North America and Australia Asia Pacific.
Strategic reportReport and Accounts 2020 AUSTRALIAN PROJECT
MANAGEMENT EXPERTISE
Recognised by Australian Institute of Project Management
Australian Capital Territory (ACT)
Defence PFAS Investigation and Management Program
ACT Project of the Year
Queensland (QLD)
Australian Centre to Counter Child Exploitation (ACCCE), Australian
Federal Police
QLD Project of the Year
National
Australian Centre to Counter Child Exploitation (ACCCE),
Australian Federal Police
Australian Project of The Year
Northern Territory (NT)
Palmerston Police Station, Northern Territory,
Department Infrastructure Planning Logistics
Project Award
PROJECT MANAGEMENT
TEAM OF THE YEAR
49
Birmingham (UK) team win at the Insider Property Awards, West Midlands 2020
The Mercian
Broad Street, Birmingham – prestigious build to rent
project. Client: Moda Living
The Mercian stands at 42-storeys high, currently
Birmingham’s tallest residential building in construction
Port Loop
Birmingham – major regeneration project.
Client: Urban Splash
Port Loop is a 43-acre multi-phased residential
development, pivotal in delivering much needed
housing within Birmingham
Beatrice Shilling Building
Coventry. Client: Coventry University – new
education building
The Beatrice Shilling Building is a new 57,000ft² learning
centre for STEM students at Coventry University,
featuring state-of-the-art learning spaces for virtual
reality, 3D printing and more.
Strategic reportReport and Accounts 2020 RISK AND RISK
MANAGEMENT
Risk management
The nature of the activities that the Group undertakes
and its business model are described on p.12 to p.13.
This gives rise to a range of risks consistent with a
commercial organisation of this type, the principal
of which are itemised and explained below. This
explanation encompasses the nature of each risk,
the steps taken to mitigate them and changes in the
magnitude of such risks during the year.
There are two principal components to the Group’s
system of risk management. The Group’s formal
system of Risk Management and Internal Control and
its principal components are described on p.85 to
p.86. Through the adoption of appropriate controls
and related audit this seeks to mitigate financial and
commercial risks which are inherent in the Group’s
operating processes. Given the nature of the Group’s
activities, however, the effective management
of risk also requires collective responsibility and
engagement across the business. The Board is
routinely informed by the Group Leadership Team of
its ongoing management of risks within the business.
The Group CEO meets weekly with the Segment CEOs
and the Group Finance Director meets fortnightly
with the Segment Finance Directors. The Group CEO
and Group Finance Director receive monthly reports
from the Segment CEOs/Finance Directors, the
functional heads and the Company Secretary. These
monthly reports detail key risks and opportunities.
The Segment reports are discussed in monthly
finance reviews between the Group CEO/Group
Finance Director and Segment CEOs/FDs. The Group
CEO talks weekly with the Chairman of the Board
who considers the need to share any current matters
with the other Non-Executive Directors outside the
routine monthly reporting process.
As part of the annual strategy, planning and
budgeting we monitor and manage key risks and, as
part of the annual strategy review with the Board, all
Segment CEOs and function heads present their key
risks and opportunities.
The management of risk is not therefore separated
from the business and is treated as an integral part
of the Group’s culture and the way it operates. Our
Segment Leadership Teams accordingly consider the
risks and emerging risks to which their component
businesses are exposed and their mitigation on an
ongoing basis and at each of their regular meetings.
Against the background of reporting from this level,
the Group Leadership Team oversees the operational
management of the key risks to which the Group as
a whole is exposed. Reporting to the Group Board
incorporates the principal risks and emerging risks
to which the Group is exposed and the specific
manifestation of those risks from time to time. In
considering and challenging this information the
Group Board undertakes robust assessment of the
principal risk and emerging risks facing the Group
including those that would threaten its business
model, future performance, solvency or liquidity.
Management prepares for the Board an Annual
Review of Risk Management and Internal Control. This
process is integral to consideration of the Group’s
Long Term Viability Statement, which is shown below.
Principal risks
The principal risks to which the Group is exposed
as well as the measures taken to achieve their
mitigation, and in each case any change that has
happened in the year, are detailed in the table below.
50
Strategic reportReport and Accounts 2020
RISK – Health, safety and wellbeing
EXPOSURE
MITIGATION
CHANGE IN
THE YEAR
The Group has a legal and moral obligation to ensure the safety of its employees and others
whom its activities may affect. A failure to discharge these obligations could expose individuals
to risk of injury or other harm as well as leaving the Group liable to related damages, regulatory
penalty and reputational harm.
Our Health and safety policy was revised in Q1 to become the Health, safety and wellbeing
(HSW) policy. Procedures are in place throughout the Group and focus on the differing and
emerging risks within the Group’s various businesses. A structured reporting process is in
place to ensure that any incidents are identified and appropriate action taken to investigate
and mitigate future risk. The Group’s approach to HSW is described more fully in the Non-
financial reporting section on p.59.
We implemented our response to COVID-19 rapidly as an employee was one of the first
40 in the UK to test positive. This tested our business continuity plans very early on in the
pandemic. We complied with the local public health advice across the business during the
various lockdowns and easing of restrictions. We mobilised employees rapidly to work from
home while ensuring our offices were COVID-19 compliant. For employees working in critical
national infrastructure we ensure they remained COVID-19 compliant and increased the sick
pay allowances for water services employees.
Across a number of our global businesses this remains an unsettling period for some employees.
We maintain regular contact with our staff through videos from the CEO, all employee emails
briefing them on the regulations and regular townhall meetings with staff over Microsoft Teams.
We have increased the number of mental health first aiders, promoted our Employee Assistance
Programs and offered mental health awareness training. Our RIDDOR reportable cases were down
on 2019 largely due to a focus on homeworking.
RISK – COVID-19
EXPOSURE
MITIGATION
The COVID-19 pandemic has led to a reduction on projects that the Group is able to complete,
with people unable to travel and customers pulling back on projects, which will have an
adverse effect on the Group’s operating performance.
51
The Group has introduced measures to reduce costs, including cancelling the final dividend
for the year ended 31 December 2019, the pausing of all planned work on the further
implementation of the Group’s new ERP system, deferral of salary increases through
to October 2020, where pay reductions were also taken in the year by the Board, Group
Leadership and Senior leadership teams at a rate of 20%. At the peak of the pandemic 10%
(520 employees) were on furlough (see People section on p.22) during the year.
Covenant amendments and an additional RCF providing for increased liquidity were agreed
with the Group’s banks.
The Company issued up to 20% of new shares on a non-pre-emption basis raising circa £19.4m
and further improving the Company’s liquidity.
In order to ensure business continuity in its day-to-day operations, the Group implemented
a series of actions globally to protect the health and safety of our employees following
the advice from local authorities and governments in the jurisdictions in which the Group
operates. These are monitored and reviewed daily and include regular dialogue with
employees and clients, the enforcement of office health and hygiene practices which follow
specific health protection protocols, making offices COVID-19 compliant and the adoption
of flexible working arrangements and restriction on travel and meetings. There is also
unprecedented client uncertainty arising from COVID-19 and we are making investments to
digitally connect with our clients.
We have introduced processes to allow movement of people around the globe. These have
been developed during the year to service clients’ requirements while maintaining the safety
of our people.
CHANGE IN
THE YEAR
This is a new risk and mitigations have been put in place wherever possible.
Strategic reportReport and Accounts 2020 RISK – Recruitment and retention of staff
EXPOSURE
MITIGATION
CHANGE IN
THE YEAR
The Group’s ability to manage and service its clients is dependent upon the skills of well-
qualified and professional employees. A failure to recruit and retain employees of appropriate
calibre will therefore affect our ability to meet client expectations and develop the business.
Linked to this, a failure to adequately consider management succession may lead to
discontinuity in operations.
The Group retains the key strategic priority of being recognised by its people as being a great
place to do great work. This entails the development of an appropriate culture and related
management systems. The ongoing work in this area is fully described on p.22 and p.25, the
successful completion of which will serve to substantially mitigate overall risk in this area.
Stayed the course of a deliberate strategy of performance and reward and maintained our focus
on implementing a global online Performance and Development platform. Launched an online
learning platform which employees could avail of on demand. We moved quickly to preserve
capability in the business by calling on the goodwill of our global employees to accept cost
reduction measures and minimise redundancies. While our offices remain open and COVID-19
secure we have offered flexible homeworking approaches as a means to retain talent. 2020
annual base pay and bonus awards were deferred for six months until more certainty was
apparent. In early Q4 where markets picked up, targeted base pay awards were made and FY19
bonus payments were honoured. An ongoing reward exceptions review process has enabled
a prompt response when required to retain talent at risk. Targeted strategic technical hires
continued to occur with both Group and Senior Leadership team member replacements made
to provide capability upgrade, succession and bench strength. This will remain an ongoing
focus. The competition for talent in a number of the Group’s markets has remained intense. The
planned global all employee engagement survey in early 2021 will further inform initiatives taken
to mitigate risks in this area.
RISK – Political events
52
EXPOSURE
MITIGATION
The changes and uncertainties arising from political events may have an impact upon the
markets in which we operate and the plans of our clients. This may cause the cancellation,
postponement or downsizing of projects, or present further opportunities for the business.
The substantial majority of the Group’s services are provided in relatively stable and predictable
liberal democracies. In addition, the factors serving to mitigate economic risks also operate in this
area whereby the wide range of markets and geographies in which we operate serves to reduce
the impact of political change in any particular region. As far as is practicable, risks in this area are
monitored and plans adjusted accordingly.
CHANGE IN
THE YEAR
Overall risk lessened during the year. The UK left the EU and although there was political unrest
in the US following the presidential elections, the political situation has stabilised.
RISK – Economic environment
EXPOSURE
MITIGATION
CHANGE IN
THE YEAR
Changes in the economic environment have historically proved to be the greatest risk to which
the Group is exposed. Adverse economic changes may cause clients to cancel, postpone or
downsize projects as well as increasing risk associated with recovery of debts and work-in-
progress. The uncertainty around Brexit and the impact that this would have was a constant
factor and although the government entered into a trade deal with the EU, the full economic
impact of this has still to be felt. The COVID-19 outbreak has impacted on many countries with
growth slowing and job losses increasing, particularly within the UK.
Exposure to a wide range of markets and geographies serves to mitigate overall risk. As
far as practicable, economic conditions affecting our markets are monitored in order that
swift action can be taken to address threats or opportunities. The contracted order book is
monitored relative to the productive capacity of fee earning staff and actions taken to match
costs with anticipated workload.
It is too early to say whether the UK leaving the EU will have a positive or negative impact on
the UK, but with the COVID-19 pandemic continuing to have a worldwide impact the risk has
increased during the year. A continuing emerging risk for the business was the fluctuation
of oil prices and how we build resilience against these price fluctuations. We have looked to
diversify the sectors we work in, particularly into renewables. Our Energy segment doubled its
fees in this area during the year.
Strategic reportReport and Accounts 2020 RISK – Financial risks environment
EXPOSURE
MITIGATION
CHANGE IN
THE YEAR
An inability to secure adequate funding for the Group will limit the ability to invest in growth. In
addition, a failure to manage risks related to foreign exchange, interest rates, credit and liquidity
could lead to a significant deterioration in the Group’s financial position and its ability to win work.
During the year the Group successfully raised a further £60m multicurrency revolving credit
facility, on top of the £100m facility already in place, for a 27-month duration and agreed new
covenants for the next 12 months.
In September 2020 the Company raised £19.4m net through a non-pre-emptive issue of 44.6m
shares to existing shareholders and other institutional investors.
The Group also has in issue seven-year US private placement notes of US$34m and £30m
repayable in 2021 under a facility provided by Prudential Management Inc. The raising of funds
through the issue of shares reduced the debt level and increased the availability on the bank
facility, which will enable the Company to repay the notes when they fall due.
Funding and investment requirements are monitored by the Group Finance function, which also
oversees the management of financial risks on a prudent basis and as more fully described in
note 30 to the consolidated financial statements.
Following the actions taken by management during the year to preserve cash, cut back on
expenditure, increase the funds available under the revolving credit facility and the subsequent
share placing, the Group has adequate financing.
The Group continues to manage financial risks on a prudent basis.
Although a number of actions have been taken in the year, the extent and duration of the
COVID-19 pandemic means that the risk has increased during the year.
RISK – Business acquisitions
EXPOSURE
The Group will look for acquisitions that are complementary to the markets that we operate in
and add value to our business proposition. They will continue to be an important element in
support of our strategy. A failure to understand the market conditions affecting an acquired
business, to identify acquired liabilities, or to retain and motivate key employees within acquired
businesses can all result in a business failing to deliver anticipated profit and cash flow.
53
MITIGATION
The Group’s strategy will in general dictate that acquisitions are only made in market areas
with which senior management is familiar. Detailed commercial, financial and legal due
diligence is undertaken prior to completing any acquisition and clear corporate integration
plans are agreed.
CHANGE IN
THE YEAR
There was no change in overall risk in the year. The Group retains considerable acquisition
experience and as activity in this area resumes, risks are unlikely to change materially.
RISK – Regulatory and compliance
EXPOSURE
MITIGATION
The Group is subject to a range of legal, taxation and regulatory requirements at corporate
level and within each of the jurisdictions within which it operates and does business. A failure
to comply with these obligations could give rise to financial penalty, regulatory intervention
and reputational damage.
While the Group is subject to the corporate law and regulation affecting most groups of its size and
complexity, the activities that the Group undertakes are, in general, not subject to industry-specific
regulation. Overseas projects that may carry elevated risk are scrutinised on a case by case basis.
The Group has appropriate internal controls to support regulatory compliance and employs suitably
qualified professionals to monitor and manage regulation within its various jurisdictions.
CHANGE IN
THE YEAR
While the detail of applicable laws and regulations will continue to evolve there have been
no changes anticipated within the Group’s current jurisdictions which are likely to have any
material effect upon overall risks in this area. The range of jurisdictions in which project work is
undertaken may change, although will remain subject to scrutiny as highlighted above.
Strategic reportReport and Accounts 2020 RISK – Information technology and security risks
EXPOSURE
MITIGATION
CHANGE IN
THE YEAR
54
The loss of availability and access to critical business systems and data could cause significant
disruption to the operation of the business and/or to the businesses of our clients. A cyber-
related incident incorporates a wide range of possible attack vectors, some of which are
opportunistic and indiscriminate but high in volume, while others are specifically motivated,
targeted and are therefore more sophisticated in nature. Such an incident could lead to
significant operational disruption to RPS and/or our clients. Furthermore, these could result
in the unauthorised access to, loss and/or disclosure of, personal data, commercially sensitive
data, or intellectual property, and could result in financial theft or fraud, the loss of competitive
advantage, or, in the most extreme cases, the imposition of legal/regulatory action, fines and
the custodial imprisonment of Company executives.
The business continues to move towards a global set of security and quality focused standards
and principles, with a particular focus on delivering a cohesive approach to the design, delivery
and effective management of systems and data, while incorporating the right balance of
visibility, control, resilience and protection. Existing technologies and systems are subject to
close review and will be maintained and upgraded or replaced as necessary throughout their
lifecycle, in order to maintain the right balance of security, operational effectiveness and value.
The Group employs a Security Team that is currently in the process of being re-augmented to
provide the appropriate blend of proactive monitoring and incident response, plus operational
support and engagement with the business, in the form of advice, guidance and the definition
and implementation of effective quality and security standards, to be incorporated into the
products and services that RPS develops and delivers to its clients. The continuous development
of our cybersecurity roadmap remains a high priority, to ensure rigour and effectiveness.
Policies, procedures and security measures are reviewed and enhanced, as necessary. The
deployment of additional technical and operational security measures in the last year includes:
cloud monitoring, vulnerability management, enhanced user authentication, device hardening,
encryption, security awareness training and attack simulations.
As the business has responded to the effects of the global pandemic, and therein moved to
support a more distributed and remote way of working, we have observed a notable rise in
the volume of opportunistic cyber-attacks that seek to exploit individuals through techniques
such as phishing and social engineering. An increase in security awareness has therefore been
at the forefront of our efforts to counteract this as effectively as possible.
The ongoing programme of system and security review and refinement should serve well to
continue to improve the resilience, reliability and security of our systems and data.
Notwithstanding these additional measures, the level of threat from cyber-attacks remains
high and is unlikely to diminish.
RISK – Service failures
EXPOSURE
MITIGATION
A failure to deliver our services in accordance with contractual obligations may lead to
compensatory claims against the Group and damage to reputation as well as possible loss of
future work.
The Group operates quality control systems, many of which are externally certified and which are
designed to mitigate the risk of failures. In addition, the Group operates contract management
systems to ensure that contractual risks are identified, risk assessed and as far as practicable
mitigated. The Group maintains professional indemnity insurance throughout the large majority
of its businesses at a level commensurate with risks. Subject to applicable policy limits and
excesses this will indemnify the Group against claims in the large majority of situations.
CHANGE IN
THE YEAR
There was no overall change in the year. The nature of the Group’s activities and the
environments in which they are conducted have not changed materially.
Strategic reportReport and Accounts 2020 Various scenarios were modelled, some of which took
account of the impact of multiple risks occurring
and these included a slower recovery from the
COVID-19 pandemic than anticipated in our budgets,
the impact of a downturn in one or more markets,
a strengthening of sterling versus all other major
currencies in which we operate, a deterioration in
working capital and a significant uninsured claim
against the Group. These scenarios reflect the
potential impact on the Group resulting from the
manifestation of any of the principal risks identified
on p.51 to p.54, along with combinations of
those risks.
The Directors have also made key assumptions in the
modelling of the long-term funding for the Group.
The Group’s loan notes are repayable in September
2021 and we have a reasonable expectation of
being able to replace these with adequate funding
on acceptable terms. The Group expects to have
sufficient headroom on its other facilities to pay down
these loan notes when they are due if necessary. The
revolving credit facility was successfully refinanced
during 2019 on a three-year term with the possibility
of extending for a further two years and this extension
has been assumed in the modelling.
Based on this assessment, the Directors have a
reasonable expectation that the Group will continue
in operation and be able to meet its liabilities as they
fall due over the period to March 2024.
55
Long-term viability
The Group’s results have been impacted by the
COVID-19 pandemic during 2020 but the Group’s
decisive action during 2020 has helped us retain
strong cash performance and has given us significant
headroom on our debt facilities. While we expect
2021 to continue to be impacted by the ongoing
ramifications of COVID-19, there are good reasons
to believe that we will see an ongoing recovery in
2021. We see four key strategic opportunities around
renewables, sustainability, project and program
management and transport infrastructure where
there are significant growth opportunities that RPS
is well positioned to exploit.
The Group’s short and medium term business plans
assume a recovery from the impact of COVID-19
through 2021 and then growth in 2022 onwards as
we exploit these opportunities. These business plans
have formed the basis of the Group’s assessment
of its longer term viability (which the Board has
undertaken in accordance with the requirements
of the UK Governance Code). This assessment was
undertaken over a three-year period to March 2024
taking account of the principal risks as well as the
Group’s current position, its strategy and the Board’s
risk appetite.
A three-year period was chosen as it is supported
by the detailed strategic review work undertaken,
giving greater certainty over the forecasting
assumptions used.
The Board considered cash flow models derived from
the Group’s budgets and business plans over that
period. The Board monitors performance against
budget on a monthly basis and reviews longer term
strategy and business plans annually. The Board
monitors the management of the key risks to
which the Group is exposed, as described on p.50.
The cash flow scenarios are based on a range of
assumptions relating to trading performance,
working capital management, exchange rates and
other outflows. This modelling included severe but
reasonable scenarios of selected principal risks to
analyse the cash and borrowing levels, covenant tests
and headroom under the Group’s facilities and the
potential for and effectiveness of mitigating actions.
Strategic reportReport and Accounts 2020 Going concern
In assessing the going concern basis for the financial
statements, the Directors considered a range
of scenarios to estimate the potential impact of
COVID-19 on the Group’s activities and our responses
over the next 12 months from signing.
At 31 December 2020 the net bank borrowings
were £10.8 million, down from £94.1 million as at 31
December 2019. In April 2020 we agreed a further
£60 million revolving credit facility (‘B facility’) for a
period of 12 months with the existing lenders and this
was in addition to the existing £100 million revolving
credit facility (‘A facility’). This £60 million facility has
been renegotiated and extended to July 2022. At the
balance sheet date, the B facility was undrawn and the
total headroom on both facilities was £160.0 million.
The US loan notes of £54.9 million are repayable in
September 2021 and our scenario modelling assumes
that these will either be refinanced on similar terms or
will be repaid using funding provided under the RCF.
COVID-19 has impacted our segments and markets
in different ways as detailed in this report. The
key judgement is the likely time period before the
remaining COVID-19 restrictions are lifted in each of
our markets or if further restrictions are implemented
later in the assessment period. For each of our
segments we have considered different recovery
scenarios. In each scenario we have assumed that the
deferrals of tax payments are unwound in accordance
with local requirements and that where we have
taken advantage of job retention schemes all staff
return to work on a phased basis as those schemes
finish. Approximately £10 million of tax payments
were deferred and 0.8% of employees in the UK were
furloughed as at 31 December 2020.
Under each scenario we have modelled the headroom
available on our revolving credit facilities and
calculated the covenants (leverage and interest cover)
at each test date. The covenant calculations required
as at 31 March 2021 and 30 June 2021 were amended
as part of the additional financing in April 2020
and subsequent renegotiation in September 2020.
Leverage is calculated as the ratio of adjusted net
bank borrowings to annualised EBITDAS and must not
exceed 3.75x at March 2021, 3.25x at June 2021 and
reverts to 3.0x thereafter. Interest cover is the ratio of
annualised EBITAS to annualised net finance costs and
must be at least 2.5x at March 2021, 3.0x at June 2021
and 4.0x at all test dates thereafter.
Leverage and interest cover covenant tests are within
the permitted limits at all test dates in the base case
and are within the covenant limits in all scenarios with
no mitigating actions required.
After fully considering the current uncertain
economic environment and the forecasting and
modelling performed, the Directors have a reasonable
expectation that the Company and Group have
adequate resources to continue in operational
existence for at least 12 months from the date of
signing this report and that it is therefore appropriate
to adopt the going concern basis in preparing the
Group’s financial statements.
56
Strategic reportReport and Accounts 2020 NON-FINANCIAL
REPORTING
Corporate responsibility
These incorporate the following:
Our approach to corporate responsibility ensures
good governance and management of our
environmental and social impacts applies to all
elements of our business: our people, our clients,
investors and the communities in which we work.
On p.4, 20-21, 26-27, 34-35 and 48 of this report we
have given examples of the work we are doing across
the business to deliver our purpose. We provide
information on the development, performance and
impact of our activity across environmental and
social matters, our employees, human rights and
business ethics.
People
Recruitment, retention and motivation of employees
is of vital importance for a professional services
organisation and is identified as one of the Group’s
principal risks. They are our greatest asset and have
been a focus of 2019 and 2020.
A full report in relation to this area is presented on
p.22 to p.25.
Environmental management
RPS’s roots are in environmental consultancy and
we have always been mindful of our responsibility
to the environment in which we work. During the
year we updated our Group Environmental Policy so
that it was consistent with our commitment towards
people, place and environment. The Group’s greatest
contribution to the environment is through its own
expertise and many of the projects we work on. We
advise international bodies, governments, local
authorities and companies on the improvement
of environmental performance.
Projects include the development of strategies to
reduce carbon emissions and the adaptation of
buildings and infrastructure to anticipate climate
change as well as the preparation of Environmental
Impact Assessments across several sectors. Our
direct impact on the environment is comparatively
modest; however, policies and standards are in place
which aim to minimise this impact wherever possible.
· Compliance with all relevant national and regional
legislation as a minimum standard
· Compliance with relevant codes of practice and
other requirements such as those specified by
regulators and our clients
· Employment of practical energy efficiency and
waste minimisation measures
· Policies in relation to the purchase and use of
vehicles to minimise environmental impact
· Provision of an inter-office IT network together
with communications and video conferencing
technology in order to reduce business travel
A number of the Group’s operating businesses have
achieved ISO 14001, the internationally recognised
environmental management system standard.
During 2020 many of our offices continued to recycle
waste paper, spent toner and ink cartridges, obsolete
computer hardware, printers and mobile phones.
57
We are a participating member of the Carbon
Disclosure Project to which we provide data on an
annual basis.
Streamlined Energy and Carbon Report
(SECR) 2020
For the reporting year 1 January to 31 December
2020 we have used the GHG Protocol Corporate
Accounting and Reporting Standard (revised edition)
and emission factors from the 2020 UK Government’s
Conversion Factors for Company Reporting and the
International Energy Agency CO2 Emissions from Fuel
Combustion, OECD/IEA, Paris, 2020 for consumption
in our international offices. Greenhouse gas emissions
are reported using the following parameters to
determine what is included within the reporting
boundaries in terms of RPS energy consumption:
Scope 1 – direct emissions includes any gas data
and fuel use for Company owned vehicles. Fugitive
emissions from air conditioning are included where it
is RPS’s responsibility within the tenanted buildings
Scope 2 – indirect energy emissions includes
purchased electricity throughout the Group’s operations
Strategic reportReport and Accounts 2020 2020 Energy consumption and GHG emissions
Due to COVID-19 and the significant impact it has
had on RPS employees’ ability to work from RPS
owned/leased offices as well as the travel restrictions
implemented in all regions where RPS operates,
for the duration of 2020, Scope 1 and 2 emissions
from electricity usage and vehicle usage dropped
significantly compared with the previous
reporting year.
While most RPS employees were working from home
for the majority of the year, offices remained open. As
such, office BMS systems were still functioning at full
capacity, hence why there has not been a significant
decrease in Scope 1 emissions due to natural gas
combustion for space heating. Furthermore, in the
previous reporting year, natural gas consumption
for the RPS Belfast office (a large, relatively energy
intensive building) has been calculated based on
assumptions whereas this year metered annual
gas consumption was available. This represents a
methodological improvement in our GHG
reporting procedure and is partially responsible for
the relatively high natural gas consumption for the
2020 reporting year (given the working from
home situation).
GHG emissions
GHG emissions
Energy consumption
Energy Consumption
2020 (tCO2e)
2019 (tCO2e)
2020 (MWh)
2019 (MWh)
UK
GLOBAL TOTAL
UK
GLOBAL TOTAL
UK
GLOBAL TOTAL
UK
GLOBAL TOTAL
3,808
2,427
6,235
4,677
2,635 7,3121 15,242 8,489 23,731 18,305 9,239 27,543
178
689
868
152
720
873
970
1,684
2,653
829
1,845
2,674
3,618
1,715
5,333
4,498
1,875
6,374 14,272 6,805 21,077 17,476 7,393 24,869
Scope 1
Natural gas
Fuel (diesel & petrol
for Company owned
vehicles)
58
Refrigerant losses
12
23
35
27
39
66
Scope 2 location-based
(electricity)
432
1,306
1,738
873
1,971
2,843
1,855
3,128
4,983
3,414
4,075
7,489
Intensity metric
tCO2e/£M
tCO2e/£M
MWh/£M
MWh/£M
Total emissions and
energy/£m revenue
22.21
10.63
14.7
23.88
12.11
16.58
90
33
53
93
90
57
12019 figures for UK gas usage have been restated due to methodological errors/improvements (namely meter reading errors for UK gas
consumption) in last year’s reporting. This has resulted in an overall restatement of 2019 Scope 1 emissions from 9,074 tCO2e to 7,312 tCO2e.
The Group has set a target to reduce per capita
office energy consumption by 2.5% on a five-year
rolling average basis. Using this approach, the five-
year rolling average up to 2019 was 1.96 MWh per
capita, which decreased to 1.65 MWh per capita up
to 2020. This equates to a decrease of 16%, which is
above our target but can be attributed to the effects
of COVID-19 on working practices. Going forward
for 2021 we will be reviewing our strategy and
approach to our carbon and energy management.
This will include defining new challenging targets
and identifying efficiencies and opportunities such
as expanding the use of electric cars
within the Company car fleet.
Energy efficiency actions undertaken in the
2020 reporting year
RPS has increased the number of alternative vehicles
in the Company fleet since the previous reporting
year. Through the inclusion of electric vehicles (EVs)
into the Company fleet, it is estimated that 99 tCO2e
have been avoided this reporting year (this calculation
is based on the assumption that, in the absence of the
increased proliferation of EVs in the Company fleet,
the equivalent amount of mileage would have been
undertaken by petrol and diesel vehicles).
Strategic reportReport and Accounts 2020 Methodology
The energy and carbon statements disclosed in this
report have been calculated using an operational
control reporting boundary and in accordance with
the following standards:
· WRI/WBCSD (2004). Greenhouse Gas Protocol:
Corporate Accounting and Reporting Standard-
Revised Edition
· Department for Environment, Food & Rural Affairs
and Department for Business, Energy & Industrial
Strategy (2019): Environmental reporting
guidelines: Including Streamlined Energy and
Carbon Reporting requirements
Community involvement
We have a clear responsibility to the communities in
which we work. This is key to delivering our purpose
to create shared value. Our people work in their local
communities every day and we are always mindful
of the impact our work has. In addition to this, our
people take part in a range of activities to support
local communities, organisations and charities.
As a Group, we continued to support Tree Aid.
Since 2006, we have provided £1.0m of funding,
which has been used across projects in Ghana,
Mali and Ethiopia. We are currently supporting
a project in Ethiopia focusing on healthy
ecosystems and sustainable livelihoods.
Health, safety and wellbeing
We have a moral and legal responsibility to safeguard
our employees and others affected by our operations
and services. Health, safety and wellbeing is also
recognised as one of the Group’s principal risks.
The Group sets an overall policy for the management
of health, safety and wellbeing and the Group People
Director retains general oversight in this area. The
Chief Executive takes a direct interest in health, safety
and wellbeing and discusses performance on a regular
basis with business segments. He also reports to the
Board on overall performance and any more serious
incidents that arise. Operational responsibility lies
within the Group’s operating businesses which are
closest and best positioned to manage their risks. The
nature of these risks is dependent on the activities of
particular businesses and health and safety systems
vary accordingly to ensure that key areas are addressed.
All have in common clear policies and procedures and
appropriate risk assessment techniques backed by
training and clear communication.
Training is focused not only on specific hazards but
also on the wider obligations of management. These
activities are overseen by appropriately qualified and
experienced health and safety advisers and systems
are subject to regular audit, both internally and by
external agencies. Where accidents, near-misses or
dangerous incidents occur these are investigated
to ensure they are fully understood and appropriate
action is taken to minimise risk of occurrence.
Health and safety performance is monitored at
business and segment level. This incorporates
analysis of incidents, dangerous occurrences and
near-misses in order that appropriate remedial action
can be taken where required. As noted above, the
Group Board receives and reviews a regular report
which incorporates these elements and any emerging
issues. Any material issues or concerns identified at
Group level are considered by the Chief Executive and
the Group People Director.
OHSAS 18001 is an internationally recognised
standard for health and safety management that is
aligned with the ISO 9000 (Quality Management) and
ISO 14001 (Environmental Management) standards.
A total of 68% (2019: 61%) of employees across the
Group work in offices that now have third-party
accreditation to the OHSAS 18001 standard.
The reportable accident rate in 2020 was 0.8
accidents per 1,000 employees (2019: 1.2). Accidents
that do occur most commonly relate to field staff and
involve manual handling activities, slips and falls.
Reportable accident rates
Group
Reportable injuries
Reportable injuries incident
rate per 1,000 employees
Business relationships
2020
4
0.8
2019
7
1.2
In 2019 we launched our behaviours and embedded
them across the Group with over 75% of employees
completing the online training. Our behaviours are
at the core of how we do business and a key element
of annual employee performance and development
discussions. Sitting alongside our approach to
corporate responsibility, they ensure we conduct
business in a transparent and fair way with a focus
on delivering our purpose of creating shared value.
59
Strategic reportReport and Accounts 2020 We have policies and procedures that support our
people and provide us with a framework to ensure they
act in a consistent way with our behaviours. Employees
are required to be sympathetic to the cultures and
comply with the laws and regulations of the countries
in which they operate, as well as giving due regard
to the safety and wellbeing of all project personnel
and relevant local communities. All RPS employees
are expected to avoid any personal or professional
interests that could conflict with their responsibilities
to the Group and, should such a situation arise, they
are expected to report it promptly.
Policies
Anti-bribery policy
The Group has in place an anti-bribery policy,
which clearly states a number of obligations for our
employees. Under no circumstances to offer, give,
solicit, or accept a bribe whether by cash or other
inducement. Under no circumstances to encourage or
procure any third party to offer, give, solicit or accept a
bribe. To promptly report any suspicion of bribery.
Our anti-bribery policy is communicated to our
suppliers, sub-contractors, agents, partners and
intermediaries with whom we are dealing.
60
The Group has a clearly stated zero tolerance
policy in relation to acts of bribery and corruption
and supports the UN Global Compact and the UN
Convention on Anti-Corruption. There have been no
allegations made under this policy during the year.
Modern slavery statement
We support the objectives of the Modern Slavery
Act and will not tolerate modern slavery or human
trafficking within our own supply chain. During the
year the Group conducted a further review of its
supply chain and published its statement accordingly.
As far as is reasonably ascertainable none of the
Group’s activities has directly or indirectly given
rise to the abuse of human rights. We support the
introduction of the Australian Federal Government’s
Modern Slavery Act and will review our Group position
in line with its guidance.
Health, safety and wellbeing policy
Our commitment to employee health, safety and
wellbeing sits at the core of our Global People
Strategy and is grounded in our Global RPS
behaviours. Explicit in stronger together behaviour
is that “We act reasonably for our own health, safety
and wellbeing and that of others.” It is our belief that
accidents can be prevented, and we are committed
to maintaining exemplary standards of health,
safety and wellbeing. We aim to promote a working
environment that supports the physical and mental
wellbeing of our employees, and it is our intention to
achieve continuous improvement in our management
systems, activities and performance. The policy is
a standing agenda item and discussed at each
Board meeting.
Environmental policy
A new environmental policy was introduced at the
beginning of 2020 and outlines that we recognise that
a changing climate, together with the pressures of
population growth and urbanisation, require that society
and business work together to adapt. RPS has unrivalled
global capabilities that enable our clients to take a
balanced approach to delivering a sustainable future.
Whistleblowing policy
Our whistleblowing policy, which we updated this
year, ensures our employees feel empowered to raise
concerns relating to malpractice or wrongdoing in
confidence through an independent hotline/online
portal administered by Ethics Point. To date we
have had no incidents of whistleblowing reported
into the hotline/online portal. Where any incidents
of whistleblowing are reported, there is a process
of bringing this to the Board’s attention to seek
guidance on how to respond.
Respect for human rights
We do not maintain a standalone human rights policy.
The Group supports and is guided by the Universal
Declaration of Human Rights and the International
Labour Organisation’s Declaration on Fundamental
Principles and Rights at Work. The Group understands
its responsibility to respect the human rights of the
communities and workforces with whom it interacts,
and employees are expected to conduct themselves
in a commensurate manner.
Cyber and data security
Throughout 2020 we have strengthened our approach
with new automatic technical and security measures.
This is a key risk which is referred to on p.54 where we
talk about the mitigations we have put in place.
Signed on behalf of the Board
David Gormley
Company Secretary
8 March 2021
Strategic reportReport and Accounts 2020
Non-Financial Information Statement
Our Annual Report and Accounts details our approach to environmental, social and employee-related matters.
The table below outlines where in this report you can find this information and where additional information
can be found on our website.
Anti-fraud, bribery
and corruption
Anti-bribery policy, see p.60
Whistleblowing policy, see p.60
Code of conduct, https://www.rpsgroup.com/media/6618/hr-78-code-of-conduct.pdf
Business model,
principal risks and
non-financial KPIs
For the business model, see p.12 of the Annual Report and Accounts
For principal risks, see p.50
We currently have no non-financial KPIs. These will be developed during the year as we
review and update our policies.
Employees
Environmental
matters
Human rights
Social matters
Corporate responsibility, see p.36
Environmental policy, see p.60
Diversity and inclusion policy, see p.22 and Nomination committee report
Health, safety and wellbeing policy see p.6, 22 and 60
Recruitment and retention of staff see p.52 of Risk section and p.23 of people section
Corporate responsibility, see p.36
Environmental Policy, see p.60 and p.50 of Risk section
For sustainability, see p.20, 26, 36, 34, 48
Corporate responsibility, see p.36
Modern slavery statement, see p.60
Code of conduct, https://www.rpsgroup.com/media/6618/hr-78-code-of-conduct.pdf
61
Corporate responsibility, see p.36
Environmental policy, see p.60
Diversity and inclusion policy, see p.22
Strategic reportReport and Accounts 2020 63
REPORT OF THE
DIRECTORS
Image: Trine, interview with hospital in TØnsberg, Norway
REPORT OF
THE DIRECTORS
64
Report of the Directors
Results and dividend
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 2020. Certain matters that would
otherwise be disclosed in the Report of Directors
are reported elsewhere in the Annual Report and
Accounts. The Directors’ report should therefore be
read in conjunction with the Strategic Report on p.7
to p.62, the Corporate Governance Report on p.73 to
p.117 and other parts of the Annual Report
and Accounts as referred to below.
The Consolidated Income Statement is set out on
p.129 and shows the profit for the year. Our dividend
policy is to pay 40% of the adjusted earnings for the
financial year as full year dividends. The Directors
have not recommended a final dividend for the year
(see p.43). The Directors did initially recommend
a final dividend of 2.00p (2018: 5.08p) per share
for the year ended 31 December 2019, but after
the outbreak of COVID-19 and forced lockdowns
throughout the year, the Company sought to
retain cash and cancelled the final dividend.
Directors
Strategic report
The Directors of the Company as at 31 December
2020 were those listed on p.70 to p.71. During the
year Gary Young retired as Group Finance Director
at the Company’s AGM on 30 April 2020 and was
replaced by Judith Cottrell. The Directors’ interests
in the share capital of the Company are as shown in
the Annual Report on Remuneration on p.99. None
of the Directors was materially interested in any
significant contract to which the Company or any
of its subsidiaries was party during the year.
The Group’s Strategic Report can be found on p.7 to
p.62. This report is required to contain a fair review
of the Company’s business and a description of the
principal risks and uncertainties that it faces. The
Strategic Report contains certain forward-looking
statements with respect to the financial condition,
results of operations and businesses of RPS as well as
likely future developments. These statements involve
risk and uncertainty as 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
The Board: (left to right) Ken Lever, Liz Peace, John Douglas, Judith Cottrell, Catherine Glickman, Michael McKelvy, Allison Bainbridge, David Gormley
Report and Accounts 2020Report of the Directors
Board Director diversity
2020 F57% : M43%
2019 F43% : M57%
2020 50% : 50% (target)
UK Government’s UK FTSE350 Board target – 33% women
by the end of 2020
The Board: (left to right) Ken Lever, Liz Peace, John Douglas, Judith Cottrell, Catherine Glickman, Michael McKelvy, Allison Bainbridge, David Gormley
from those expressed or implied by these forward-
looking statements. Nothing in the Strategic Report
should be construed as a profit forecast.
The Group obtains enhanced tax relief for these costs
in the United Kingdom and has adopted the RDEC
(Research and Development Expenditure Credit) regime.
65
Financial key performance indicators can be found
on p.4 to p.5. The Directors review performance
using these Alternative Performance Measures
(APMs) as defined in note 3 to the Consolidated
Financial Statements. The APMs used exclude certain
items that the Board believes distort the trading
performance of the Group. These items are either
acquisition and disposal related or non-cash items.
The Board does not at present use non-financial
key performance indicators to assess the Group as
a whole, although parts of the Group do use such
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 Group’s
subsidiary undertakings are listed in note 6 to the
Parent Company Financial Statements. The Group
develops and delivers innovative technical solutions
to its clients, the costs of which are expensed to the
Consolidated Income Statement.
Non-financial information
The Company is required to report on non-financial
information and the risks and polices in place. This
can be found on p.57 to p.61.
Corporate governance
The Directors’ report on Corporate Governance can be
found on p.73 to p.117 and incorporates other parts of
the Annual Report and Accounts as detailed therein.
Engagement
The Company uses various mechanisms to engage
with its employees, suppliers and customers. How we
engage with our employees can be found on p.7 and
p.22 to p.25 and our engagement with our clients is
covered within our Strategic Report on p.28.
Change to the Board during the year –
Judith Cottrell appointed Group
Finance Director, April 2020
Report of the DirectorsReport and Accounts 2020 66
Employees
Directors’ responsibilities statement
The Group’s policies in relation to employees
are disclosed on p.22 to p.25.
Corporate responsibility
The Group’s Corporate Responsibility statement is
included on p.57 to p.61. This includes disclosures
concerning Greenhouse Gas emissions as required
pursuant to part 7 of The Companies Act (Strategic
Report and Directors’ Report) Regulations 2013. The
Group made no contribution to political organisations
during the year.
Substantial shareholdings
The Company is aware of the following interests
in excess of 3% of the ordinary share capital of the
Company as at 5 March 2021.
Shareholder
Aberforth Partners
Total holding % of ISC
39,101,950
14.10
RWC Partners
22,532,118
UBS Asset Management1
18,477,884
Chelverton Asset Management
15,262,117
Columbia Threadneedle
Investments
13,661,069
Artemis Investment Management
13,247,299
BMO Global Asset Management (UK)
10,888,697
8.13
6.67
5.50
4.93
4.78
3.93
Montanaro Investment Managers
10,206,899
3.68
1 Tameside MBC re Greater Manchester Pension Fund holds
16,485,940 (5.95%) shares included within the shares held
by UBS Asset Management.
Going concern
The Group’s business activities, a review of the 2020
results together with factors likely to affect its future
development and prospects are set out on p.7 to p.62.
Note 20 to the Consolidated Financial Statements
sets out the borrowings of the Group and considers
liquidity risk, while note 30 describes the Group’s
approach to capital management and financial risk
management in general.
The going concern statement together with the
viability statement is set out in the Strategic Report
on p.55 to p.56.
The Directors are responsible for preparing the
Annual Report and Accounts in accordance with
applicable laws and regulations. Each of the persons
who is a Director at the time of this report confirms
that, so far as they are aware, there is no relevant
audit information of which the Company’s auditor
is unaware and that they have taken all the steps
necessary to make themselves aware of any relevant
audit information and to establish that the Company’s
auditor is aware of that information.
This confirmation is given and should be interpreted
in accordance with the provisions of s.418 of the
Companies Act 2006.
Company law requires the Directors to prepare
financial statements for each financial year. Under
that law the Directors are required to prepare the
Group financial statements in accordance with
international accounting standards in conformity with
the requirements of the Companies Act 2006 and
International Financial Reporting Standards adopted
pursuant to Regulation (EC) No 1606/2002 as it applies
in the European Union. The financial statements
also comply with International Financial Reporting
Standards (IFRSs) as issued by the IASB. The Directors
have elected to prepare the parent company financial
statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United
Kingdom Accounting Standards and applicable law)
including FRS102 The Financial Reporting Standard
Applicable in the UK and Republic of Ireland. Under
company law the Directors must not approve the
accounts unless they are satisfied they give a true and
fair view of the state of affairs of the Group and of the
profit or loss of the Group for that period.
Group financial statements
In preparing the Group financial statements,
International Accounting Standard 1 requires
that Directors:
· Properly select and apply accounting policies
· 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 IFRSs are
insufficient to enable users to understand the
impact of particular transactions, other events and
conditions on the entity’s financial position and
financial performance
· Make an assessment of the Group’s ability to
continue as a going concern
Report and Accounts 2020Report of the Directors
Parent Company Financial Statements
Financial instruments
Details on the use of financial instruments and
financial risk are included in note 30 to the
consolidated financial statements.
Post balance sheet events
There are no significant post balance sheet
events requiring adjustments to the year-end
results or disclosure.
Takeover Directive
The following additional information is provided for
shareholders pursuant to the requirements of the
Takeover Directive.
Share capital
As at 31 December 2020 the Company’s issued share
capital consisted of 276,903,032 ordinary shares of 3p
each. Substantial shareholder interests of which the
Company is aware are shown on p.66.
Shareholder rights and restrictions
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. Holders
of ordinary shares may receive interim dividends
approved by the Directors and dividends declared
in general meetings. On liquidation and subject to a
special resolution, the liquidator may divide among
members in specie the whole or any part of the
assets of the Company. There are no shares in issue
that carry special rights with regard to control of the
Company and 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.
67
In preparing the Parent Company financial
statements, the Directors are required to:
· Select suitable accounting policies and then apply
them consistently
· Make judgements and accounting estimates that
are reasonable and prudent
· State whether applicable UK Accounting Standards
have been followed, subject to any material
departures disclosed and explained in the
financial statements
· Prepare the financial statements on the going
concern basis unless it is inappropriate to presume
that the Company will continue in business
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Company’s transactions, and disclose
with reasonable accuracy at any time the financial
position of the Company and enable them to
ensure that the financial statements comply with
the Companies Act 2006. They are responsible
for safeguarding the assets of the Company and
taking all reasonable steps for the prevention
and detection of fraud or other irregularities.
The Directors are responsible for the maintenance
and integrity of the corporate and financial
information included on the Company’s website.
Legislation in the United Kingdom governing the
preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Responsibilities pursuant to DTR4
We confirm that to the best of our knowledge:
· The financial statements, prepared in accordance
with the relevant financial reporting framework,
give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company
and the undertakings included in the consolidation
taken as a whole
· The Strategic Report includes a fair review of the
development and performance of the business and
the position of the Company and the undertakings
included in the consolidation taken as a whole,
together with a description of the principal risks
and uncertainties that they face
· The Annual Report and financial statements, taken
as a whole, are fair, balanced and understandable
and provide the information necessary
for shareholders to assess the Company’s
performance, business model and strategy
Report of the DirectorsReport and Accounts 2020 Directors
Annual General Meeting
The Annual General Meeting will be held on
28 April 2021. 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 auditor.
Signed on behalf of the Board
David Gormley
Company Secretary
8 March 2021
Directors are appointed by ordinary resolution at a
General Meeting of the shareholders. While the Board
can appoint a Director, any Director appointed in that
manner 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 p.105.
Change of control
68
The Company’s debt facilities include provisions that
take effect on a change of control and provide that
the Company may be unable to draw down any further
amounts and/or that such facilities may be cancelled,
thus restricting the Company’s ability to operate.
Listing rule 9.8.4c
Pursuant to listing rule 9.8.4c the Company is required
to disclose that an arrangement is in place whereby
the trustee of the Company’s employee benefit trust
has agreed to waive present and future dividend
rights in respect of certain shares that it holds. There
are no other matters requiring disclosure required
pursuant to this listing rule.
Directors’ indemnities
Directors and Officers of the Company benefit from
Directors’ and Officers’ liability insurance cover in
the event of legal actions being brought against
them as Directors of the Company. In addition,
Directors are indemnified under the Company’s
articles of association to the maximum extent
permitted by law, such indemnities being
qualifying third-party indemnities.
Report and Accounts 2020Report of the Directors
69
Report of the DirectorsReport and Accounts 2020 OUR BOARD
Ken Lever
Non-Executive Chairman
Liz Peace
Senior Independent
Non-Executive Director
Appointed: 1 November 2016
Tenure: 4 years 2 months
Appointed: 11 July 2017
Tenure: 3 years 6 months
Skills and competencies: Ken has been RPS
Chairman since November 2016 and has extensive
listed company experience in a number of UK
industry sectors. A former partner at Arthur
Andersen, Ken has spent more than 25 years
working as an executive director at several leading
international companies including Alfred McAlpine,
Albright & Wilson, Tomkins and Xchanging plc. He
holds a number of non-executive roles, including
Chairman of Biffa plc, the FTSE 250 integrated waste
management company.
70
External appointments: Biffa plc, Blue Prism Group
plc, Gresham House Strategic plc, Vertu Motors plc
Skills and competencies: A former policy and
corporate affairs expert at the Ministry of Defence
and subsequently QinetiQ plc, Liz spent the next two
decades as a leading and influential figurehead at the
heart of the UK’s property industry. First, as CEO of the
British Property Federation and latterly as chair and
non-executive director in a number of public and
private entities and as a founding member of Real
Estate Balance, an organisation seeking greater
diversity and inclusion in the property industry.
External appointments: NED at Howard de Walden
Estates and RDI REIT plc; Chair of the Architectural
Heritage Fund, Centre for London, Old Oak and Park
Royal Development Corporation, Sponsor Board for
Houses of Parliament R&R Programme, and
University of Cambridge Property Board
John Douglas
Chief Executive
Judith Cottrell
Group Finance Director
Appointed: 1 June 2017
Tenure: 3 years 7 months
Appointed: 30 April 2020
Tenure: 8 months
Skills and competencies: A civil engineer by
trade, John is an experienced senior executive
having held chief executive officer positions
since 2011. John previously headed Coffey
International, the Australian stock market listed
global engineering and project management
company before joining RPS three years ago.
External appointments: None
Skills and competencies: Appointed to the
Board in 2020, Judith, a former KPMG accountant,
has worked for more than 20 years in senior
finance and operational roles, including Chief
Executive for RPS’s Consulting UK & Ireland
business, Chief Financial Officer for RPS
Europe and Group Strategy Director. Over her
career, Judith has experience of all aspects of
acquisitions and divestments, together with
corporate finance activities such as placings
and rights issues.
External appointments: None
Report and Accounts 2020Report of the Directors Key
Urbanisation
Natural Resources
Sustainability
People
Clients
Connectivity
Allison Bainbridge
Independent Non-Executive
Catherine Glickman
Independent Non-Executive
Appointed: 1 June 2017
Tenure: 3 years 7 months
Appointed: 2 August 2018
Tenure: 2 years 5 months
Skills and competencies: Allison brings her
significant knowledge and expertise of the UK’s
water and utilities sector to RPS, having joined
the Board on a three-year term in 2017. Allison is
currently Group Finance Director of Vp plc, the
stock market listed equipment rental business
having formerly held finance director roles at
Yorkshire Water and Kelda Group.
External appointments: Vp plc
Skills and competencies: Catherine has
40 years of HR experience, which includes two
decades at Tesco – latterly as its Group HR
director but also a member of its CSR committee.
At Tesco, Catherine led major initiatives to deliver
diversity and redesign of employee reward
schemes. During her six years at biotechnology
company, Genus, she led its global sales academy
– and introduced performance management and
talent planning.
External appointments: Renishaw plc,
TheWorks.co.uk plc
71
Michael McKelvy
Independent Non-Executive
David Gormley
Company Secretary
Appointed: 1 May 2018
Tenure: 2 years 8 months
Appointed: 4 December 2018
Tenure: 2 years 1 month
Skills and competencies: Michael brings to the
Board table his deep experience in infrastructure,
environmental and engineering that has spanned
over 40 years across North American and global
markets, including 27 years with CH2M. Michael,
a chartered architect, has been CEO of Gilbane
Building Company, the Rhode Island based global
construction business with commitment to ESG
and the built environment since 2016.
External appointments: Gilbane Building
Company
Skills and competencies: David has held
company secretarial roles since 1985 when he
joined Diageo (formerly Guinness) as Assistant
Secretary during the takeovers of Bells Whisky
and the Distillers Group. Since 1991, David has
extensive listed plc experience having held
various company and group company secretary
roles including those at The Albert Fisher Group,
BskyB and Brit plc, where among other things
he has been involved with company flotations,
capital restructures, acquisitions and disposals.
External appointments: None
Report of the DirectorsReport and Accounts 2020 73
CORPORATE
GOVERNANCE
Image: Surveyor, measuring rail using Amberg Trolley, Willemstunnel Netherlands
CORPORATE
GOVERNANCE
Chairman’s Introduction
Dear Shareholder
Section 172 and Stakeholder Engagement
On behalf of the Board, I am pleased to present the
Group’s Corporate Governance Report for this year.
It was an unprecedented year for the business as the
global COVID-19 pandemic took hold and the Board,
together with management moved quickly to mitigate
our risks. Prudent and pro-active steps were swiftly
taken to reduce costs and contain cash outflows
while continuing to match capacity to market activity
to retain our operational capability.
During this time the health and safety of all our
employees and clients remained paramount and
we initiated a series of actions globally following
the advice from the local authorities and national
governments in the jurisdictions in which we operate.
Details of our response can be found on p.6.
Changes to the Board
During the year, after more than 20 years’ service,
Gary Young retired from the Board and was replaced
by Judith Cottrell as Group Finance Director on
30 April 2020. There have been a number of changes
in the past years, but we now have a settled and
interacting Board, as the results of our Board
Evaluation have confirmed (see p.83 for details).
The Board has demonstrated how it has fulfilled its
Section 172 duties in its quick and swift response
to the COVID-19 crisis, and how it engaged with its
stakeholders during this challenging time. All of
our stakeholders have been affected in some way
and the Board has supported the business to act
fairly at all times. The Board increased the regularity
of its meetings to remain abreast of the business
performance and operating challenges and input
rapidly into the decision-making process. I have held
regular weekly calls with our Chief Executive and
held calls with members of our Group Leadership
Team. There is still some way to go before the effects
of the COVID-19 crisis ease, but the actions that the
management has taken position the business well for
the times ahead.
The Board’s statement in relation to Section 172 and
stakeholder engagement and the matters taken in the
interests of its stakeholders is included on p.8 to p.9.
The requirements of Section 172 and how they have
been met are set out in the table opposite. Directors
of the Company act in a way he or she considers,
in good faith, would be most likely to promote
the success of the Company for the benefit of its
members as a whole and in doing so have regard to:
74
Governance
This is the second year of reporting under the 2018
UK Corporate Governance Code and the Group’s
Corporate Governance Report can be found on
p.73 to p.117. Maintaining high standards of
governance and our values are vital ingredients in
driving success for RPS. The Board is fully committed
to ensuring these standards and values come from
the top and are embedded throughout the Group.
The work to define purpose, promise and behaviours,
which are an important component of this process, is
described throughout the Annual Report.
Report and Accounts 2020Corporate Governance S172 requirements
Actions taken by the Board
the likely consequences of any
decision in the long term
the interests of the Company's
employees
the need to foster the Company's
business relationships with
suppliers, customers and others
the impact of the Company's
operations on the community
and the environment
the desirability of the Company
maintaining a reputation for high
standards of business conduct
the need to act fairly as between
members of the Company
·
·
·
·
Annual strategy process to determine current and medium-term (three years)
priorities and set three year financial plan
COVID-19 impact - cost management, cash outflow, appropriate leverage of
Government support to deliver value for the long term (see p.6)
Undertook share placing to position the Group to capitalise on future growth
opportunities
Cancelled the 2019 dividend to preserve cash and enable protection
of capability
· Health, safety and wellbeing centre stage
· The Directors receive a monthly report from the Group People Director
· Preserved jobs and capability during 2020
·
For examples of how the Directors discharged their responsibilities in this area
go to p.8, People report p.22 to p.25 and workforce engagement on p.76
·
The Directors receive monthly reports from the Segment CEOs and Function
leads which cover these areas, explaining pipelines in progress and how
the Company is engaging with its clients through a renewed focus on client
centric sales culture and initiated client experience projects, all of which are
discussed and reviewed by the Board as a part of the marketing plans see
p.28 to p.31
· Accelerated digital interactions with clients
· Please refer to p.8
·
·
·
·
·
·
·
·
The Board receives monthly updates on health, safety and wellbeing of
our employees
The Board has endorsed the recruitment of a Group Sustainability Lead to
drive our sustainability and corporate responsibility agenda
Group activities aligned to targeted UN sustainability goals p.36 to p.38 and
further community and environmental issues discussed on p.9
Introduce global whistleblowing line for employees and the public
The Company also has in place a code of conduct on how employees are to
conduct themselves
The Board receive a monthly update from the CEO which reviews the
operations of the Company and highlights the reputational and business risks
and opportunities to the Group
The Board also receives a monthly litigation report on any legal actions that
the Company is involved in and how these are being managed
RPS behaviours are embedded across the Group – 75% have completed
online training and our behaviours are a key element of annual employee
performance and reward discussions
· Please see the responsible business report on p.36 to p.39
75
· Annual report sent to all shareholders and available online
·
AGM open to all investors and questions to the Board are welcomed
and encouraged
Investor relations contact details available on website for easy direct
access to the Company, where questions are directed to and answered
by the Board
Please see more information of how we engaged with our shareholders
through the year on p.9
·
·
Corporate GovernanceReport and Accounts 2020 The two-day strategy review took place in October,
when for a short period of time we came out of
lockdown, and was again undertaken in conjunction
with the Group Leadership Team. It provided an
excellent opportunity for the Board to gain greater
insight into the challenges facing our business.
The Non-Executive Board members are encouraged
to visit the offices of the Company individually
and meet and hear from our people about their
expectations and experience of working for RPS.
Catherine Glickman is the Non-Executive Director
with Board responsibility for workforce engagement.
However, with the restrictions imposed by the
pandemic during the year it has curtailed somewhat
the engagement with colleagues.
Looking forward
Needless to say, 2020 was a challenging year for
everyone. We, as a Board, continue to focus on the
performance of the business and to address the
ramifications of the pandemic so that we can emerge
from this as a stronger, more resourceful Company
and take advantage of the economic recovery as it
comes through.
Ken Lever
Chairman
8 March 2021
Shareholder consultations
The Remuneration Committee consulted and
received positive feedback with our major
shareholders in relation to the Chief Executive’s
remuneration. Catherine Glickman, the Chair
of the Remuneration Committee, provides
further information on these discussions in her
Remuneration report found on p.94 to p.97.
Naturally, I was pleased to be reappointed to the
role of Chairman in 2020, and I would like to thank
Liz Peace our Senior Independent Director who
consulted with shareholders on my reappointment.
Liz has again written to our shareholders on my
proposed reappointment for 2021 and her letter
can be found on p.78 to p.79.
During 2020, we also raised £19.4m net in cash via
a non-pre-emptive issue of circa 46m shares into
the market, which was supported by our major
shareholders. I know that the Chief Executive and
Group Finance Director held numerous calls with our
shareholders to secure their support and backing,
for which we are most grateful.
I and our Senior Independent Director also as a
matter of course offer to meet with our major
shareholders in the time between the year-end
results announcement and prior to the Annual
General Meeting.
Workforce engagement
Notwithstanding the formal framework within which
the Board operates, it is important that it remains
connected with and understands the wider business.
The Board receives regular presentations from the
business segments and functions, and we had in
place a programme of holding Board meetings at
operating business locations. However, due to the
various lockdown restrictions, the Board has not been
able to visit RPS businesses and meet with as many
of our employees as we would have liked. Employees
have been receiving regular video updates from John
Douglas, our CEO, and from segment leaders, but we
will look to reintroduce Board visits to our sites as
soon as we are able to do so.
76
Report and Accounts 2020Corporate Governance
77
Corporate GovernanceReport and Accounts 2020 Response to
SHAREHOLDER
FEEDBACK
Liz Peace
Independent Non-Executive Board Member
Report from the Senior Independent Director
The principal role of the Senior Independent Director is to act as a sounding board
and support for the Chairman, to provide an independent means of appraising their
performance and, where necessary, to act as an intermediary between other Directors
and the Chairman.
In the case of Ken Lever, the task has been a straightforward one since, as my most recent appraisal of his
performance has confirmed, he has performed the Chairman role with skill, sensitivity and enthusiasm,
bringing the best out of the Board and managing a highly productive relationship with both Board members
and the rest of the senior executive. This has been particularly important during the past year when the
COVID-19 pandemic has threatened to bring unwelcome pressures on the Company and where a thoughtful
and calm leadership presence has proved invaluable to all of the Board, including the Chief Executive and the
relatively newly appointed Group Finance Director.
78
Prior to last year’s AGM, there were concerns expressed among a small number of shareholders regarding the
number of directorships which the Chairman held. I wrote to our major shareholders setting out the Board’s
reasoning as to why Ken was exactly the right person to lead the Company forward and pointing out that his
other directorships did not impact in any way on the time he devoted to the Company and his availability for
both regular and, where necessary, unscheduled Board meetings and discussions. I am pleased to say that
at the AGM his reappointment to the Board was supported by 81.84% of our shareholders. I should perhaps
add that in my letter to shareholders I offered to meet with any who continued to be concerned about Ken’s
capacity and commitment to the Company; no-one took up that offer.
During the last few months there have been further concerns raised by shareholders regarding the
Chairman’s time commitment given his chairmanship of another listed company and his three other
non-executive directorships. I have discussed this at some length with the other Board members and with the
Chairman and I can confirm that we have not changed our view since last year and are of the firm view that
Ken devotes more than adequate time to his Chairman duties at the Company and has never in our experience
been unavailable when needed or been prevented or distracted from giving the issues at hand the time and
attention they require.
As I have previously pointed out, the Chairman does not hold a full-time executive role and had calculated that
during 2018/2019 he had to commit to circa 150 days in fulfilling his various directorship roles including
as Chairman of RPS. This would have left him with at least 70 free business days within a year to devote to
other activities or to respond to any crises arising in his businesses, including RPS. During 2020 the Chairman
calculated that he committed circa 160 days in fulfilling his various roles, including being Chairman of RPS.
Again, leaving him more than sufficient uncommitted time to deal with any unforeseen issues or problems.
Report and Accounts 2020Corporate Governance Clearly the spare capacity in the Chairman’s working life is more than adequate to provide the required amount
of time for RPS Company duties in a normal year. But this has not been a normal year. Following the lockdown
introduced by the UK Government in March 2020, and in order to keep abreast of how the pandemic was
affecting the Company and its stakeholders, it was agreed that the Board should meet every two weeks and, in
some cases, weekly. In all, over the period that the country was in lockdown, the Board of Directors met on 14
different occasions through to the end of August. The Chairman led the Board through each of these meetings
and in addition made himself available when needed for separate discussions with the Chief Executive and
Group Finance Director. Because of COVID-19 restrictions, he did not carry out as many site visits as in previous
years, nor have the rest of the Non-Executive Directors, but this time was more than taken up with additional
Board discussions and on calls with members of the Executive.
In a separate section of the Annual Report, you will read how we responded to the COVID-19 outbreak and the
measures we as a Board took to act in the best interests of the Company.
The Board of RPS believes that the Chairman plays a pivotal role in helping drive the strategy of the Group
and we remain fully supportive of the role and guidance he provides to the Company, particularly in these
challenging times. We fully endorse his continuation as Chairman of the Company and have absolutely no
concerns about his ability to devote sufficient time and attention to the role.
79
I should mention for completeness that the Board continues to monitor the appointments held by all Non-
Executive Directors in order to avoid any conflicts of interest or any over commitment.
Liz Peace
Senior Independent Director
Corporate GovernanceReport and Accounts 2020
80
CORPORATE
GOVERNANCE REPORT
Effective Board
The Chairman’s statement on p.10 to p.11 incorporates
comments relating to the governance of the Group and
provides a backdrop to this detailed report.
The Board operates within the framework of a
charter incorporating the key aspects of the Group’s
governance arrangements. This includes the
definition of roles, responsibilities and authorities
as applicable to the Board, its Committees and its
individual Directors.
How governance supports strategy
The Board is responsible for delivering value for
shareholders by setting and approving the Group’s
strategy and overseeing its implementation by the
Group Leadership Team. Information on our strategy
is set out on p.16 to p.17.
During the year the Board held a strategy meeting
over two days in October 2020 and plan to have a
follow up to this in spring 2021. With the uncertainty
around COVID-19 the Board is mindful to keep this
under regular review. As previously mentioned, the
Board received a presentation from each member
of the Group Leadership Team on the strategies and
business plans for each segment and functional
area. The Board receives regular updates from each
segment and functional area at Board meetings,
which provide updates on strategy.
At the annual strategy meeting held in October, the
Board confirmed that RPS’s enduring strategy framed
around our purpose, promise and behaviours remains
the right course of action. They also identified four
global key strategic opportunities where there
are known prospects for future growth. These are
renewables, sustainability (ESG), project management
and transport infrastructure.
The Board is responsible for setting the Group’s
purpose, promise and behaviours and we talk about
these extensively throughout the Annual Report.
These core elements of our strategy align to our
focus on making RPS a great place to do great work
(people), to deliver great work for our clients (clients)
and make it easy to work together (connectivity).
This year, 2020, was dominated by uncertainty in our
markets. But RPS is a brand built on a strong sense
of purpose and this feeds through to our culture and
consequently our behaviours. At every level of the
organisation our people worked hard to solve problems
that matter, be confidently pragmatic, make it easy to
connect and focus on absolute delivery for our clients,
all underpinned by an attitude and belief that we are
stronger together (see People Report on p.22 to p.25
and Client Report on p.28 to p.29).
Our behaviours are at the heart of building an
inclusive and diverse culture. And for our new hires it
starts with behaviours training a key component of
our onboarding process. From the first day on site or
in the office we expect employees to be respectful
of each other, acknowledge diversity and recognise
the potential and contribution of everyone. The
Board receives regular reports from the Group People
Director and its activities and actions taken in its
assessment and monitoring of culture are set out on
p.22 to p.25. The Board was satisfied that the policies,
practices and behaviours throughout the business
were aligned to the Company’s values and strategy
and that it did not need to take any corrective
action. In 2020, we published a revised Diversity
and inclusion policy and updated the Health, safety
and wellbeing policy. During 2021, we will launch
our second biannual global employee engagement
survey to further validate and reinforce our plans and
policies in this area.
Workforce policies and practices
The Board and Group Executive Team review and
approve all key workforce policies and practices.
During the year we updated the following policies,
which the Board approved.
The Health, safety and wellbeing policy: The Company
takes the health and safety of its employees very
seriously and the Board receives a regular health and
safety report at all of its meetings.
The Whistleblowing policy: This was updated during
the year following the appointment of a new,
independent whistleblowing line and from concerns
raised by our employees through social changes such
as black lives matter and being able to report on any
issues of significance.
Report and Accounts 2020Corporate Governance We also introduced during the year our Diversity and
inclusion policy, which laid out the foundation stones
on which to build on action items commencing in
2021. This is further discussed in the People report
on p.22 to p.25.
All of our polices are published on the Group intranet.
The Board engages with our stakeholders through
many different forums and in accordance with our
duties under section 172 and this is further
expanded on p.8 to p.9.
Board structure
At the date of this report the Board comprised two
Executive Directors, four Non-Executive Directors and
the Chairman. During the year Gary Young resigned
as the Group Finance Director and was replaced by
Judith Cottrell.
The Board Charter incorporates descriptions of the
distinct roles of the Chairman and Chief Executive.
The Chairman provides leadership to the Board of
Directors, sets its agenda and is responsible for its
overall effectiveness and performance. This includes
ensuring all Directors receive the right information
in order to take a full and constructive part in Board
discussions. The Chairman, with the involvement of
the Executive Directors, also seeks to ensure effective
communication with shareholders and will meet with
major shareholders as reasonably required.
The Chief Executive is responsible for all executive
management matters within the Group. This
incorporates the development of Group strategy,
budgets and business plans as well as providing
effective executive leadership and developing a
culture which strikes an appropriate balance between
entrepreneurship and the management of risk.
The Non-Executive Directors provide independent
and considered advice to the Board in matters of
strategy, risk and performance, while providing
governance oversight through the operation of the
Board’s Committees.
The Senior Independent Director provides
a sounding board for the Chairman to discuss
confidential issues, leads the Board in the evaluation
of the Chairman, leads the process and nomination
for a new Chairman, is the focal point for Directors to
raise any concerns regarding the Chairman, agrees
the Chairman’s portfolio time commitments, acts as a
trusted intermediary for the Non-Executive Directors
and addresses shareholders’ concerns which have
failed to be resolved by the Chairman, Chief Executive
or Group Finance Director.
Independence of the Non-Executive Directors
A review of the independence of the Non-Executive
Directors is carried out on annual basis to determine
whether there are any relationships or circumstances
that would impact on a Non-Executive Director’s
independence and the review has confirmed to the
Board that it considers each of the Non-Executive
Directors being Ken Lever, Allison Bainbridge,
Catherine Glickman, Michael McKelvy and Liz Peace
to be independent in accordance with the Code.
Catherine Glickman was formerly engaged in a
consultancy capacity by the Group for a short period
during 2017-18 to undertake specific tasks. The Board
was satisfied at the time of her appointment that this
did not constitute a material business relationship
that would affect her independence.
The Chairman and Non-Executive Directors are
generally 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.
The Board is assisted by the Audit, Remuneration and
Nomination Committees. Separate reports from each
of these Committees can be found on p.88 to p.117.
The Chairman of each Committee provides regular
updates at Board meetings.
All Directors are subject to annual re-election
by shareholders.
Board responsibilities
The Board Charter incorporates a comprehensive
schedule of matters that are reserved for its decision
and which include the following:
· determination of the Group’s overall strategy
· approval of annual budgets and business plans
· financial reporting including annual and half year
results and market updates
· recommendation and approval of dividends and
other capital distributions
· approval of material corporate transactions
including all acquisitions
· approval of policies and systems for risk
management and internal control
· appointment of key advisers to the Group
81
Corporate GovernanceReport and Accounts 2020 · approval of major items of capital expenditure
· any substantive change in the nature of the
Group’s activities
with the previous year, AAP’s benchmark
increased across all three sectors.
82
Matters falling outside the Board’s reserved list
are delegated to the Group executive under the
leadership of the Chief Executive. Responsibilities
are, subject to clear written limits, delegated further
to the Group’s Business segments. The Group
Leadership Team meets regularly throughout the
year and retains operational oversight of the Group’s
activities. This team currently comprises the Chief
Executive, Group Finance Director, Group Marketing
Director, Group People Director, Chief Information
Officer and the Group’s six Segment CEOs.
Board meetings and operation
The Board has eight scheduled meetings during
the year. Following the outbreak of the COVID-19
pandemic the Board moved to a more regular
meeting schedule and from the end of March through
to the end of September met on a fortnightly (and
sometimes weekly) basis. Overall, the Board met on
21 occasions during the year. The Board’s agenda
seeks to achieve a balance between review of
performance, strategy development, adoption of
appropriate corporate policies, risk management and
regulatory obligations. During the year the following
items were considered at each meeting:
· Safety performance
· Financial and business performance
· Strategic priorities
· Emerging risks
· Material employment issues
· Significant litigation
· Investor and City relations
In addition to these, and at the appropriate point,
the Board also considered:
· The Group’s Annual Budget and Business Plan
· Group results and the Annual Report and Accounts
· Significant market announcements
· Board performance
· Review of internal control and risk management
· Dividends and dividend policy
· Reports from Board Committee Chairpersons
A presentation from the Australian management
team on the Beaton Benchmark survey results,
which measure brand, business development
and client service, showed that in comparison
The Board also received a separate presentation
from Doug Matthys following his appointment as
Chief Executive for North America, sharing the results
from his review of the segment and revised strategy
plan to deliver growth in the market.
As expected, the major focus of the Board during the
year was ensuring that the Group was able to come
through the COVID-19 crisis and also considered a
number of cost saving and cash management actions
focused on preserving jobs, ensuring client delivery,
which included:
· Payroll action included furlough, reduced pay,
reduced hours and pay and redundancies
· Cancellation of the final dividend of 2.00p per
ordinary share, which was initially announced on
19 February 2020, saving £4.5m in cash
· Pause of all planned work on the further
implementation of the Group’s new ERP System,
which was due to be rolled out to the remainder of
Australia towards the end of 2020 and the UK and
Ireland in early 2021. The cessation of works had a
cash flow saving of approximately £5m
· All salary increases for 2020, and 2019 senior
leadership bonuses being deferred. The Directors
and the majority of senior management in the
Company took a 20% pay cut
· Cessation of all non-essential capex and
discretionary operating expenditure
Furthermore, as well as the actions taken to protect
the Group’s operations, the Board agreed with its
bankers, as well as the £100m committed Revolving
Credit Facility (RCF), a further £60m RCF expiring in
July 2022. The Group therefore had available £160m
of committed RCF, which significantly added to
the available headroom. A number of new financial
covenant tests that allowed for financial flexibility were
agreed for the period from April 2020 to June 2021. This
new facility and covenants provided the Group with
increased financial liquidity to enable RPS to navigate
the challenges of the pandemic and take advantage of
the economy when it starts to come through.
In September, the Company also raised an additional
£19.4m net with the placing of 45,881,365 new
ordinary shares to certain existing and other
institutional investors at a price of 44p per share.
A summary of our COVID-19 response can be
Report and Accounts 2020Corporate Governance Full Board
Audit Committee
Remuneration Committee
Nomination Committee
Ken Lever
John Douglas
Judith Cottrell*
Gary Young**
Allison Bainbridge
Liz Peace
Michael McKelvy***
Catherine Glickman
Number of meetings held
21
21
15
6
21
21
21
21
21
–
–
–
–
3
3
2
3
3
–
–
–
–
6
6
6
6
6
1
–
–
–
1
1
1
1
1
* Although Judith Cottrell was appointed to the Board on 30 April 2020 and therefore attended 15 meetings in her role as a Director
of the Board, she attended all the Board meetings in the year in her former role.
** Gary Young resigned as a director of the Company on 30 April 2020.
***Michael McKelvy missed one Audit Committee meeting in the year due to a private family reason as he was travelling but was
able to attend the Board and Remuneration Committee meetings held on the same day.
found on p.6.
Detailed papers are available in advance of Board
meetings in support of relevant agenda items through
a Board portal. The Company Secretary assists the
Chairman in ensuring that Board procedures are
followed and is available to assist Directors generally
as well as advising on matters of corporate governance.
Prior to the holding of a majority of the board
meetings the Chairman will either hold a private
session with the Non-Executive Directors, or phone
each Director individually to discuss the forthcoming
business of the meeting and any particular issues
they should focus on in the Board meeting, or raise
any areas of concern they have. Outside of Board
meetings the Chairman holds regular discussions
with all Directors on issues that may arise between
meetings and to provide briefings. The Non-Executive
Directors met once during the year without the
Chairman present.
Conflicts of interest
as the Board deems relevant. No such conflict arose
during the year under review.
Independent advice
There is an agreed procedure for Directors to take
independent professional advice at the Company’s
expense. The Company maintains Directors and
Officers liability insurance.
Board performance and evaluation
During the year the Board conducted an internal
evaluation of its performance, the performance of
the Committees and the individual Directors, which
was overseen by the Chairman. The evaluation of the
Chairman was overseen by the Senior Independent
Director. The Board Evaluation consisted of each
Director receiving a questionnaire which they were
asked to complete and return to the Company
Secretary and the Chairman and this formed the
basis for one to one discussions held between the
Chairman and the individual Directors.
Each Director is required to declare any matters
that may give rise to a conflict of interest with the
Company on appointment and subsequently as they
may arise, in accordance with the Companies Act
2006. Where such a conflict or potential conflict
arises, the Board is empowered (under the Company’s
articles of association) to consider such conflicts and
authorise as appropriate and subject to such terms
The evaluation of the Chairman was conducted by
the Senior Independent Director who spoke with the
Chief Executive Officer and Group Finance Director,
discussing their working relationship and interaction
with the Chairman. The Senior Independent Director
then held a meeting with the Non-Executive Directors
where she reported on her discussions with the
Chief Executive Officer and Group Finance Director.
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Corporate GovernanceReport and Accounts 2020
84
She also covered a number of areas: the Chairman’s
time commitment to his role; his leadership style;
his ability to engage the Board and Committees in
discussions by drawing on their skills, experience,
knowledge and, where appropriate, independence;
setting an effective agenda for the Board; acting on
the results of the Board evaluation; and working well
with the Chief Executive Officer. The Board concluded
that the Chairman performs a strong role on behalf
of the Company and has an open dialogue with all
members of the Board speaking frequently prior to
and after Board meetings to seek the views ahead of
the meeting and the outcome of the discussions that
have taken place. The Board review identified some
items for the Board to progress through the year:
With the current pandemic the Board has been unable
to visit the various offices of the Company and meet
with the employees. The Board intends to reinstate
site visits as soon as possible.
· Devote additional time on strategic discussions
and further progress the Company’s
sustainability ambitions.
· Continue to enhance the outlook/forward looking
information it receives and work on a framework
to provide details on the contracted order book/
pipeline information.
· Review and consider the Your Voice survey that will
be conducted with the employee workforce during
the year and act on recommendations.
· Conduct a root cause analysis of the challenges
arising in the ERP project.
· Consider more frequent shorter meetings to take
advantage of technology such as Microsoft Teams,
but noting that these should not be a substitute for
in-person meetings.
The Nomination Committee is to further develop
succession planning for the Executive Directors and
the Group Leadership Team members.
The Board noted in the evaluation of the Audit
Committee that the internal audit department
requires additional resources to further develop
the process for monitoring risks and systems of
internal control.
The Remuneration Committee evaluation noted the
need to formalise the reward for the international
workforce, including fair pay, gender pay gaps and
ethnic pay gaps.
The Board will continue to review progress in these
areas as an ongoing action during 2021. We will also
consider for the 2021 evaluation whether we involve
an external facilitator, if we feel it is required.
Training and induction
Directors receive information on the Company as
well as the Board and its procedures on appointment.
They also meet with other members of the Board to
be briefed on strategy, financial matters and other
key issues. The foregoing applied to all Directors
appointed during the year. Advice is available from the
Company’s solicitors, auditor and brokers if required.
Updates on key technical matters are provided
as required including those relating to corporate
governance and corporate social responsibility.
During the year the Chairman and Non-Executive
Directors met with and received presentations from
members of the Group Leadership Team as well as
engaging with the Group’s wider business activities
more generally.
The Non-Executive Directors have access to a training
academy managed by Deloitte LLP.
Communication
The Company attaches great importance to
communication with its shareholders and other
stakeholders. The Group website includes financial
presentations, general information about the Group
and its services, as well as regular corporate reporting
including public details on projects the Company is
engaged on.
In addition to presenting financial results, the
Executive Directors hold meetings with the
Company’s principal shareholders to discuss the
Company’s strategy and performance. The Chairman
and Senior Independent Director also meet with
major shareholders from time to time. An investor
relations update is provided at all regular Board
meetings to ensure that the Board is kept aware of
the views of larger 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.
Report and Accounts 2020Corporate Governance Compliance with the Code
The Board complied with the provisions of the Code
in 2020, with the exception of provision 38 where the
pension of the Chief Executive was not fully aligned
with that of the workforce. The Board intend to bring
his pension contribution down to 15% over time. The
Board recognises this is not in line with provision 38
but, as stated in our Remuneration report on p.99
and the Chair’s letter on p.94, it is consistent with the
fixed remuneration which was agreed with John when
he joined the Company. In future, all new appointees
to the Board, including any future Chief Executives,
pension contributions will be in line with the wider
workforce. The pension contributions of the wider
workforce are 5% rising to 7% after five years’ and
10% after ten years’ service.
Descriptions of how the Board complies with
the principles of the Code can be found on the
following pages:
Board Leadership and Company Purpose – Our
stakeholders report refers to how we engage with our
stakeholders (see p.8 to p.9). We further developed
our purpose and behaviours in the year and this can
be found in the People report (see p.22 to p.25).
We further talk about the Board's activities and action
taken in relation to its assessment and monitoring
of culture on p.82. Our codes and associated policies
ensure our workforce can meet our expected values
(see p.60).
Division of Responsibilities – We clearly define
in this report the roles of the Chairman, the Chief
Executive and the Non-Executive Directors (see
p.81) and we consider external appointments prior to
Board approval to ensure there is no compromise on
time commitment, this is covered in the Nomination
Committee report (see p.88 to p.89). The Directors
also took into account the time commitment of the
Chairman, whose ongoing tenure the Board fully
supports (see p.78 to p.79).
Composition, Succession and Evaluation – We
have a clear process when considering appointments
to the Board (see p.89) and are further developing
our succession plans (p.89). Our Board biographies
demonstrate the skills and competencies of the Board
and the areas in which they contribute to the long-term
success of the Company (see p.70 to p.71). The results
of the Board evaluation and items to progress during
the year are discussed on p.83 to p.84.
Remuneration – The report of the Remuneration
Committee and how we apply the remuneration
policy and determine Executive Director and Group
Leadership Team remuneration, are discussed on
p.94 to p.117. No Director is involved when deciding
their own remuneration.
Audit, Risk and Internal Control – We understand
the importance and benefits of ensuring both the
internal audit function and the external auditor
remain independent and that further the accounts
present a fair, balanced and understandable
assessment of the Company’s position and this is
discussed further in the Audit Committee Report
on p.90 to p.93. The effectiveness of our risk
control environment is reviewed by the Board who
considered both emerging risks and principal risks
during the year (see p.50 to p.54)
The only instance where it varies from the principles
is in relation to the Company’s Whistleblowing policy,
which is overseen by the Audit Committee. The Board
reviewed the current structure of the Company’s
whistleblowing arrangements, resulting in the first
instance that the Whistleblowing policy should
remain under the remit of the Audit Committee but
with the addition that any incidents reported through
the policy be reported to the Board together with
recommendations for follow up actions or processes
to be instigated.
As all Board members attend meetings of the Audit
Committee either as a member or an invitee, it is to be
expected that the Board will be aware at all times of
any incidents that arise in this area.
Risk management and internal controls
Overview
The Board retains overall responsibility for setting the
Group’s risk appetite as well as risk management and
internal control systems. The Board has maintained
procedures in accordance with this throughout the
year and up to the date of approval of the financial
statements, as recommended in the UK Corporate
Governance Code and the supporting document
issued by the Financial Reporting Council ‘Guidance
on Risk Management, Internal Control and Related
Financial and Business Reporting’.
The principal risks to which the Group is exposed and
the measures to mitigate those risks are described on
p.50 to p.56.
85
Corporate GovernanceReport and Accounts 2020
The key procedures established by the Company’s
Directors to ensure effective internal financial
controls are:
Financial reporting
The Financial results for the Group are reviewed at
each Board meeting. The detailed formal budgeting
process for all Group businesses culminates in an
annual Group budget approved by the Board.
Financial and accounting principles and
internal financial controls assurance
The Group’s accounting policies, principles and
standards for effective financial control are clearly
communicated to all its accounting teams, and
are assured by the Internal Audit Manager through
periodic detailed reviews to ensure close adherence
to policies and procedures as well as to identify any
control weaknesses.
Delegated authorities
A system of delegated authorities is in place
throughout the Group, whereby incurring expenditure
and assumption of contractual commitments can
only be approved by specified individuals and within
pre-defined limits.
Review and reporting
Internal controls and in particular any failures are
reported to and reviewed at Group and operating
Board meetings to facilitate effective implementation
of system changes wherever required. The Audit
Committee maintains a brief to keep the overall
internal control systems under review. A detailed
review of the Group’s internal control system and
risk management was undertaken and reviewed by
the Board during the year. The Board and the Audit
Committee were satisfied that the systems in place
are appropriate and effective.
Capital investment
The Group has clearly defined guidelines for capital
expenditure. These include detailed appraisal and
review procedures as well as due diligence procedures
in respect of potential business acquisitions.
Annual review
A detailed report of the Group’s systems of risk
management and internal control was prepared
during the year. Having reviewed and discussed this
report the Board was satisfied that these systems
are effective.
86
Treasury
The Group operates a central treasury function
that undertakes required borrowing and foreign
exchange transactions as well as daily monitoring
of bank balances and cash receipts. Appropriate
payment authorisation processes are in place
throughout the Group. Speculative trading in
financial instruments is not permitted.
Base controls
The internal controls self-assessment system
launched in 2017 by the Group Assurance Manager
is now operational throughout the Group. Within this,
the Finance Directors of the Group’s operating units
regularly assess their operational controls against a
standard base control set, to identify and mitigate
any shortcomings effectively and inform new controls
where appropriate.
The respective responsibilities of the Directors and
the independent auditor in connection with the
financial statements are explained on p.66 and p.120.
The statement of the Directors in respect of going
concern appears on p.55. The long-term viability
statement is on p.55.
Takeover directive
Disclosures required under the Takeover Directive
are included on p.67 and form part of the Report
of the Directors.
Report and Accounts 2020Corporate Governance 87
Corporate GovernanceReport and Accounts 2020 NOMINATION
COMMITTEE REPORT
Ken Lever
Chairman
I am pleased to report to shareholders in my capacity as Chairman of
the Nomination Committee. This report outlines the key responsibilities
of the Committee and activities during the year. Following a number of
changes to the Board over the last three years, the last year has seen a
settling down of the Board.
Membership and meetings
I and all of our Non-Executive Directors, Allison
Bainbridge, Catherine Glickman, Mike McKelvy and
Liz Peace are members of the Committee. The
Company Secretary acts as secretary of the
Committee while Executive Directors and external
agents may be asked to attend as required. The
Committee met once during the year.
88
Responsibilities and activities
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 retiring Directors for re-election as
relevant, and where appropriate considering any
issues relating to any Director’s continuation in office.
The Committee also maintains an ongoing brief to
consider succession planning at Board and Senior
Executive level.
All of these activities were undertaken during the
year, some of which are described in more detail
below. The Committee has written terms of reference,
which are available on the Company’s website.
Board changes
We announced in our Annual Report last year the
appointment of Judith Cottrell to the Board of
Directors with effect from the date of the Annual
General Meeting on 30 April 2020, following her
nomination by the Committee and approval by the
Board. I am pleased to say that 99.45% of votes were
cast in approving Judith’s nomination to the Board.
Election and re-election of Directors
As in previous years and in accordance with the UK
Governance Code all Directors will stand for election
or re-election at the Annual General Meeting. The
range of skills and experience offered by the current
Board is mentioned above and set out in full on p.70
to p.71. The Committee and the Board consider the
performance of each of the Directors standing for
election or re-election to be fully satisfactory and that
they have demonstrated ongoing commitment to
their roles. The Board strongly supports the election
or re-election of all Directors and recommends that
shareholders vote in favour of the relevant resolutions
at the Annual General Meeting.
All of our Non-Executive Directors bring their skills
and expertise to the Board:
· Ken Lever, our Chairman, has extensive experience
of listed companies both in the UK and at an
international level
· Liz Peace brings her property experience,
which is especially relevant to the planning and
development work that RPS undertakes
· Catherine Glickman has 40 years of HR expertise,
which is key to our strategic priority of making
RPS a great place to do great work and brings
considerable HR knowledge in her role as Chair
of the Remuneration Committee
· Allison Bainbridge is the recognised person on the
Board having relevant financial experience from
her role as Group Finance Director of Vp plc and
has considerable knowledge and experience of the
UK water and utilities sectors, particularly relevant
to our Services segment
Report and Accounts 2020Corporate Governance · Michael McKelvy has deep expertise in
infrastructure and environmental engineering
from his role as Chief Executive Officer of Gilbane
and considerable knowledge of the North
American market
Succession planning
The Board and Group Leadership Team have been
through a period of substantial change over the past
three years and subsequently a significant number
of new appointments have been made as the new
team was built. While the Committee has considered
succession issues against the backdrop of a stable
Board and executive team, it intends to further
develop and formalise succession plans for key
roles during 2021 and beyond.
The Committee has recognised the work that has
gone into succession planning with the Group within
the last year. Judith Cottrell succeeded Gary Young as
Group Finance Director, having previously been Group
Strategy Director, and Doug Matthys succeeded
Peter Fearn as President and Chief Executive Officer
for North America having previously been Executive
Director – Infrastructure North America. Both of these
were internal appointments emphasising the strong
talent pool that exists among the Management Team.
We always consider external candidates – Alistair
Rutter, for instance, joined the Group as Chief
Information Officer last year – but we will at the same
time look to promote employees who have shown the
necessary skills and development.
People p. 22
Diversity
The Committee is aware that the Code places an
increased emphasis on the role of the Nomination
Committee in the areas of diversity and inclusion. To
achieve our purpose of creating shared value, deliver
on our promise to ‘make complex easy’ for our clients
and provide our staff with ‘a great place to do great
work’, we aim to create and support a diverse and
inclusive network.
We are committed to embedding diversity and
inclusion principles in all people processes in order to
be as diverse as the communities and clients we work
with, thereby securing, developing and retaining the
best available talent for the Company’s future.
During the year, Black Lives Matter and major
social unrest were highly public prominent issues
across the globe and we were asked by a number
of our employees what our response to this issue
was. We have managed our response locally and
proportionally, where we are seen to be doing rather
than talking. We continue to insist on ‘Stronger
Together’ as a guiding principle for our interactions
with each other and with all people. This reinforces
itself through our new Diversion and Inclusion Policy
detailing our commitment to diversity and inclusion.
When considering appointments to the Board
the Committee evaluates the skills, experience
and knowledge required for a particular role with
due regard to the benefit of diversity. While the
Committee will look to recruit the best available
candidate for any role, the Group has previously set
and announced a target that a minimum of 25% of its
Board should be female. We continue to make great
strides with gender diversity. Females now form the
majority of our Board – the split in their favour is now
57:43. This is a notable landmark and is considerably
higher than the Government’s target of having 33% of
women on FTSE350 Company boards by the end
of 2020.
We continue to increase the number of females in
our leadership teams with the ratio of females in our
senior leadership team rising to 39% from 33% in
2020 – and we are on track to comfortably beat our
target of 40% by 2025. We are also working hard to
address the gender pay gap and we committed to
reporting our gender pay report for 2019/20, even
though compulsory reporting was suspended in light
of the global pandemic.
Further information on gender balance is also given
in the People Report. The Committee is pleased to
report these trends and believes that the enhanced
balance of skills this has brought will be an important
component in achieving the Group’s strategic priorities.
Ken Lever
Chairman
8 March 2021
89
Corporate GovernanceReport and Accounts 2020
90
AUDIT
COMMITTEE REPORT
Allison Bainbridge
Chair of the Audit Committee
I am pleased to present our Audit Committee report for the year
ended 31 December 2020. The report describes the Committee’s
ongoing responsibilities as well as the major activities undertaken
in the year and its policies in a number of key areas.
Membership and meetings
Responsibilities and activities
The membership constitutes myself, Liz Peace,
Catherine Glickman and Mike McKelvy. There were
no changes to the membership of the Committee
during the year.
As the serving Finance Director of a fully listed public
Company I am identified as the Committee member
having recent and relevant financial experience,
although the Board considers that all members of the
Committee have experience that is relevant to the
role. The Company Secretary acts as secretary of
the Committee.
We hold three meetings during the year, one to
consider audit planning and one to coincide with each
publication of the Group’s annual and interim financial
results. Other matters that fall within the Committee’s
terms of reference are included on the agendas of
these meetings as required. The Group Chairman,
Group Chief Executive and Group Finance Director
all attend the Committee’s meetings and members
of the Group Finance team are asked to attend from
time to time. The Deloitte audit partner and director
also attend meetings and in addition, a private session
with the Committee without executive management
present, at least once a year.
The Audit Committee provides an independent
overview of the effectiveness of the financial
reporting process and internal financial control
systems. The Committee also has responsibility for
the appointment of the external auditor including
agreeing their terms of engagement at the start of
each audit, the audit scope and the audit fee.
At the conclusion of the full-year audit and interim
review the Committee receives a detailed report from
the auditor. The Committee reviews this report, as
well as the integrity of the financial statements. This
includes ensuring that statutory and associated legal
and regulatory requirements are met as well as:
· considering significant reporting judgements
and estimates
· the adoption of appropriate accounting
policies and practices and compliance
with accounting standards
It also incorporates consideration of significant
accounting issues as detailed below and advising
the Board in relation to the fairness, balance and
understandability of the Annual Report.
The Committee monitors the external auditor’s
effectiveness, independence and objectivity,
including the nature and appropriateness of any
non-audit fees. The Committee additionally assists
the Board in monitoring and reviewing the Group’s
system of internal control and risk management as
Report and Accounts 2020Corporate Governance described in the Corporate Governance Report. As
part of this it reviews the Group’s Whistleblowing
Policy whereby employees may on a confidential basis
raise concerns where they discover information or
observe behaviour which an employee believes shows
serious malpractice or wrongdoing within the Group.
There have been no whistleblowing reports made
during the year.
All the activities detailed above were undertaken in
the year, a number of which are described in more
detail below. The Committee’s detailed terms of
reference can be found on the Company’s website.
Significant accounting issues
It was a challenging year given the global pandemic
with many countries in which we operate going into
lockdown. This caused the auditor to provide greater
scrutiny of the Group’s accounts specifically around
the area of going concern. The Group reviewed the
going concern assumption at both the half and full
year and more clarity around this can be found on our
going concern statement on p.56.
In respect of the year under review and as part of its
role in reviewing estimates and judgements made by
management, the following significant issues were
reviewed and, in each case, addressed as indicated.
Intangible assets
This classification of assets is by far the largest on
the Group balance sheet and as such receives careful
attention from the Board and Committee who need
to be satisfied that its carrying value is appropriate.
Goodwill impairment testing is normally undertaken
at 30 November each year. In 2020, impairment
testing of all the Group’s cash generating units (CGUs)
was also undertaken as at 31 May due to the impact
of the pandemic upon segment results and their
consequent underperformance against budget.
The Board and the Committee considered the
appropriateness of the CGUs for goodwill testing
along with the assumptions and estimates used in
the modelling, including forecast 2020 performance,
approved budgets for 2021 and the three-year
strategic plan.
Following the May review, and after careful
consideration, the Board and Committee concluded
that it was appropriate to book impairment charges
of £17.4m against the value of the Consulting UK
and Ireland CGU group and £8.5m against the
North American CGU group.
After the year-end review, the Board and Committee
concluded that no further impairment charges
were necessary.
Income statement classifications
The Group Finance Director recommended the Group
adopt a changed definition of fee income, an APM,
for 2020. After careful consideration the Board and
Committee agreed to adopt the change for the 2020
reporting period, and the consequent restatement
of the 2019 financial statements. Further information
on this change can be found in notes 3 and 4 to the
consolidated financial statements.
The Group Finance Director also recommended the
Group adopt new descriptions for its main adjusted
profit measures: Operating profit before amortisation,
transaction costs and exceptional items becomes
Adjusted Operating Profit; and Profit before tax,
amortisation, transaction costs and exceptional items
becomes Adjusted profit before tax (see note 3 to
the consolidated financial statements). The Board
and Committee accepted the Group Finance
Director’s recommendation.
Contingent liability
The Board and Committee considered in detail
potential issues regarding RPS’ administration of
government contracts and/or projects in the US. RPS
has informed the US government of these potential
issues and is continuing to identify the implications,
if any, of the conduct under review. The related
employment claims against the Group were
also considered.
After careful consideration, the Board and
Committee are satisfied that, at this stage, the
impact (if any) is unknown and that it is not
appropriate to recognise a provision in respect
of these matters at this time. The Board and
Committee are also satisfied that it is appropriate
to treat these matters as contingent liabilities.
Exceptional items
The Group has presented exceptional items in the
Income Statement since 2019. A paper was presented
to the Committee detailing the items in question
and confirming that those items are significant in
quantum and are expected to be non-recurring.
The Board and Committee are satisfied that it is
appropriate to separately disclose those items.
91
Corporate GovernanceReport and Accounts 2020
Fair, balanced and understandable view
Having reviewed the Annual Report and Accounts,
the Committee concluded and advised the Board that
in its view the Annual Report and Accounts for 2020,
taken as a whole, is fair, balanced and understandable.
The Board concurred with the Audit Committee’s
recommendation. In reaching this conclusion the
Committee and the Board were satisfied that the
Group’s performance across its segments, as well as
its business model, strategy and the key risks that it
faces, are clearly explained in the relevant sections of
the Annual Report and Accounts.
New accounting standards
No new or revised accounting standards or
interpretations that have a material impact on the
Group have been adopted or early adopted for the
first time in the year.
Auditor independence
Deloitte LLP was appointed as Group auditor in
June 2012 following a tender process. As a matter
of general policy audit partners are rotated at least
every five years and the Group’s policy is that the
Group audit appointment should be retendered at
least every 10 years. The Board will be putting the
appointment of the Group auditor out to tender in
time for the 2022 audit.
The Group audit partner is Alex Butterworth who
performed his first audit of the Group in 2019. The
Committee ensures that the Group auditor remains
independent of the Group and reviews this on an
annual basis, with Deloitte providing a written report
to the Committee showing its compliance with
professional and regulatory requirements designed to
ensure their independence.
92
Recoverability of trade receivables and
accrued income
Potential risks arising from trade debtors not
collected and/or non-billable accrued income
therefore being overstated in the accounts is
considered by the Board at its regular meetings
as part of its review of business performance.
The Committee does not consider this to be a key
area of risk. The number of fee-earning projects
undertaken by the Company at any time is significant
and there are relatively few that are individually
material. The procedures in place for recognising
such revenue are well established and a good level
of assurance is secured through the Committee’s
comprehensive financial review of monthly results.
Internal Audit reviews COVID-19
The office closures and travel restrictions caused
by the COVID-19 pandemic meant that much of the
planned work for the 2020 Internal Audit plan could
not be delivered. In response to the new risks brought
about by the pandemic, Internal Audit delivered
an alternative programme of work which included
carrying out a number of reviews covering COVID-19
assurance work, which covered the following areas:
HR and Payroll: a review of the processes operated to
negotiate with our staff the changes to employment
terms and the calculations for both the payroll and
our Job Retention Scheme (JRS) applications.
Management’s reconciliations found very few errors,
all of which were minor in nature. Management
continues to work through these reconciliations on
a monthly basis and once this is completed, a more
detailed assurance review of controls operated will
be commenced.
IT: A review was conducted of the Group Technology
Team’s (GTT) response to managing external and
internal risks brought about by the lockdown and
remote working from home. The review found that
GTT responded timely to new risks in working with
management to find solutions for remote working,
including where staff do not have use of RPS devices
at home.
Invoice payments: The UK finance team implemented
at very short notice an invoice scanning process
to expedite approvals remotely. The Group has
compensatory controls to ensure full compliance
with the Group’s Delegation of Authority policies.
Report and Accounts 2020Corporate Governance
The Committee is satisfied that Deloitte continues
to provide an effective service across the Group
and accordingly recommended to the Board that
a resolution to re-appoint Deloitte as auditor be
proposed at the Annual General Meeting.
Internal control and audit
The Committee also monitors the ongoing
effectiveness of the Group’s internal financial
controls and risk management processes as
described on p.85 as well as assisting the Board
with its annual assessment of this area. Internal
audit within the Group is undertaken by the Internal
Audit Manager, who has a dual reporting line to
the Chairman of the Audit Committee and the
Group Finance Director. The Internal Audit Manager
undertakes a planned programme of reviews across
the Group’s operations that is approved in advance by
the Audit Committee. Detailed reports are produced
following each review and related follow-up actions
identified. Summary reports are provided to the
Audit Committee for consideration.
Allison Bainbridge
Chair of the Audit Committee
8 March 2021
93
In addition, and as part of its responsibility to ensure
audit independence and objectivity, the Committee
has adopted a policy in relation to the use of the
auditor for the provision of non-audit services. Under
the terms of this policy the provision of certain
services is prohibited, including those listed below:
· Bookkeeping services
· Valuation services
· Investment advisory, broker and dealing services
· General management services
· Preparation of financial statements
· Design and implementation of financial systems
· Taxation services
Notwithstanding the general prohibition in respect
of certain services, any other non-audit service to be
provided by the Group auditor requires the approval
of the Group Finance Director who will in turn refer
the matter to the Audit Committee should any
potential for conflict exist. The split between audit
and non-audit fees for 2020 appears in note 11 in the
consolidated financial statements.
Re-appointment of auditor
As noted above the Audit Committee keeps the
scope, cost and effectiveness of the external
audit under review. The Committee reviews
the effectiveness of the annual audit and the
effectiveness of the audit firm prior to making
recommendations as to the annual re-appointment
of the auditor. This assessment is based upon the
Committee’s interactions with the external auditor
throughout the year and the quality of the reports,
advice and guidance received. The Committee also
receives feedback from finance teams across the
Group on the effectiveness of the audit covering
areas such as procedures performed, suggested
process improvements, competency of audit teams
and their understanding of the Group and markets in
which we operate, and adherence to our timetables.
Corporate GovernanceReport and Accounts 2020
REMUNERATION
COMMITTEE REPORT
Catherine Glickman
Chair of the Remuneration Committee
Our focus in 2020 was to conserve cash and align the reward
experience of our Executive Directors with RPS employees globally.
I write this report while we are still managing
through the global pandemic, which continues to
have a profound impact on all of us. This statement,
together with the People section on p.22 to p.25,
outlines decisions made in relation to reward to
ensure continued business operations and employee
retention while preserving liquidity during 2020
along with our reward plans for FY21. You will find the
Annual Report on Remuneration on p.99 to p.117.
94
Throughout the year, our reward decisions were
guided by our established reward principles.
We adopted a fair, prudent and balanced approach
that considered the experience of our employees,
shareholders and other stakeholders. Decisions for
the Executive Directors were taken in the context
of decisions for the wider workforce and within the
policy approved by shareholders, effective 1 January
2020. The management team is highly valued and
has led the business skilfully and confidently
throughout the crisis.
Pay policy
Our pay policy for Executive Directors is to target
the median for the relevant market taking into
account both geography and role. Annual percentage
increases, should they be awarded, are generally
consistent with the range awarded across the Group.
Percentage increases in salary above this level may
be made in certain circumstances, such as a change
in responsibility or a significant increase in the
scale of a role, or the Group’s size and complexity.
Individuals who are recruited or promoted to the
Board may on occasion have their salaries set
below the targeted policy level until they become
established in their role. In such cases, subsequent
increases in salary may be higher than the average
until the target positioning is achieved.
Further information on RPS’ pay for performance
culture can be found on p.23 of our People Report.
Report and Accounts 2020Corporate Governance In October 2020, as the Group’s financial position
became clear, we reviewed our decision and
all eligible employees received their full FY19
entitlement. The Committee deliberated on Judith
Cottrell’s award (which related to her previous role
in which she was not a member of the Board) and
decided it should be paid in shares rather than cash
and vest after three years.
Executive Director Short-Term Annual
Bonus Plan (STABP)
The Remuneration Committee has met and reviewed
the out-turn of the FY20 STABP. We achieved
Adjusted Profit Before Tax of £13.4m and a stellar cash
conversion of 239% on the back of disciplined billing
and cash collections and COVID-19 tax deferrals. The
results for the year were as follows:
· Adjusted profit before tax of £13.4m failed to meet
the threshold for payout
· Cash conversion was outstanding, achieving 239%
which equates to the maximum payout of 20%
· Personal objectives were rated as 8% out of 10%
for both John Douglas and Judith Cottrell.
We explain performance against the objectives in
the Report.
95
Following discussion with the Executive Directors it
has been agreed that, because of the extraordinary
circumstances surrounding the global pandemic and
its impact on our shareholders, employees and other
stakeholders, it would not be appropriate to pay a
bonus for FY20. The Executive Directors have asked
that the monies accrued should be distributed to the
wider workforce recognising their contribution and
to some RPS supported social justice charities. The
Committee fully supported this.
Response to COVID-19
During March 2020, it became clear that the
pandemic was a health and economic crisis of
an unprecedented scale. Our Executive and
Non-Executive Directors volunteered to accept a
20% reduction in their salaries and fees between April
and October 2020. The Group Leadership Team also
volunteered to accept a 20% reduction in salaries.
Salary adjustments for employees below Director
level were also implemented. In some areas of
the business, up to 80% of employees were asked
to agree to take pay reductions of up to 20%,
take unpaid annual leave, or were furloughed.
Employees on reduced salaries and furlough
were reported to and discussed monthly by the
Board. The reductions contributed to the cash
preservation measures during the year and the
Committee is grateful to the RPS employees for
agreeing to reductions or for accepting being
furloughed. We discuss in more detail the actions
we took in respect of COVID-19 on p.6 and p.23.
Retaining key employees
The Group Leadership Team made the decision
to defer salary awards in April and agreed there
would be no all-employee core awards in 2020, to
conserve cash and preserve jobs. As a Committee,
we supported management in investing in targeted
increases, based on performance, for valued
employees, particularly where their pay was out of
line with the market.
Annual Bonus Plans for FY20
We know bonuses play a key part in retaining
employees in professional services. We introduced
the Annual Discretionary Bonus Plan (ADBP) for
employees in 2019 to reward performance and give
them a share in the success of the business.
At the height of the first wave of the pandemic, the
Group focused on conserving cash until we knew we
had financial stability and adequate liquidity. In March
2020, we reluctantly made the decision to postpone
the FY19 ADBP bonus awards, which were due to be
paid to employees in April.
Corporate GovernanceReport and Accounts 2020 96
Executive Long-Term Incentive Plan (ELTIP)
Chief Executive remuneration
The three-year ELTIP is linked to the long-term
growth of RPS, with performance metrics linked to
total shareholder return (TSR), earnings per share
(EPS) growth and cash conversion.
The 2017 award – the first made to John Douglas –
matured in June 2020 with 12% vesting. Based on
FY20 year-end performance 25% of the 2018 LTIP
will vest on 8 March 2021.
When John Douglas was appointed as CEO, in
determining his remuneration the Committee
structured a package which would appeal to a high
calibre candidate, while taking account of shareholder
feedback and market benchmarks. Fixed pay was an
important discussion between John and Ken Lever
and was agreed at £495,000 (c.15% lower than his
predecessor’s base salary of £581,400) with a pension
contribution of 20%.
The Remuneration Committee agreed that there
should be no adjustment to the inflight ELTIP awards.
FY21 variable incentives
On base pay for 2021, we are planning to make an
award to the wider workforce in recognition of their
commitment, resilience and professionalism. In line
with the UK wider workforce, the Committee reviewed
John’s salary and approved an increase of 2%.
The Committee has agreed that the STABP and
ELTIP structures continue to be appropriate for the
Executive Directors for FY21.
Pension contribution
Targets under the STABP will be disclosed in the
FY21 Remuneration Report as is usual due to market
sensitivity. There will be some small changes to
the measures. Fee growth is critical for FY21. To
reflect its importance, a ‘Fee Growth’ element will
be introduced, worth 20% of the maximum. Given
the significant cash achievement in 2020, for 2021
cash targets will be set in “lock up days”, rather than
cash conversion, to ensure continuous stretch, and
the value reduced from 20% to 10%. Adjusted Profit
Before Tax will be adjusted from 70% to 60%. Personal
objectives remain at 10%.
Details of the FY21 ELTIP can be found on p.112.
There are no changes to the metrics and weightings.
The Committee did consider at length whether to
adjust the number of shares given the share price
movement over the last year. The Committee agreed
to award the full award of 150% to John and 125% to
Judith (who is new to the Board): we want to motivate
them, reward them for resilient future performance
and retain talented executives. The Committee
retains discretion under the policy to adjust out-
turns if their payments are not a fair reflection of
business performance. The Committee decided,
after long debate, that there is too much uncertainty
to set meaningful EPS targets at the time of award,
and that these would be delayed until later in the
year. Similarly, given the stellar FY20 performance
on cash, we agreed to set cash targets at the same
time. Both EPS and cash targets will be published to
shareholders through a RNS, following the release
of the interim results.
As reported in our 2019 Annual Report and Accounts,
John volunteered to offset annual increases in base
salary with a corresponding decrease in pension
contribution. We will continue to do this until the
pension contribution is 15% of salary. Following the
decision of the Committee to increase John’s salary by
2%, there will be a corresponding decrease in his
pension contribution of 2% taking his total
contribution for the year down to 16%. We recognise
this is a higher pension contribution than that
available to the wider workforce, but it is consistent
with the fixed remuneration as detailed in John’s
employment agreement. We sent a letter to our top 20
shareholders confirming our plans, followed up with
meetings over Microsoft Teams in the autumn. We would
like to thank them for their engagement and support.
As we confirmed when we updated the policy, pension
contributions for all new appointees to the RPS Board,
including any future CEO, will be in line with the
wider workforce.
Shareholding
To date, John has voluntarily chosen to invest any cash
element of bonus out-turn in shares. John also made
a significant personal investment at the placing. As
a result, John is the Group’s 28th largest shareholder
and the largest individual one. The Committee
would like to commend John for building such a
significant holding in RPS and demonstrating his
deep commitment to RPS’s growth, aligning himself
with shareholders. The current value of his 1.8m
shareholding, at a share price of 99p, is £1.8m, and
represents 347% of salary.
Report and Accounts 2020Corporate Governance Group Finance Director pay and pension
In conclusion
Judith Cottrell was appointed as Group Finance
Director and Board Director in April 2020 on a base
salary of £250,000 per annum. Judith was internally
promoted and we stated last year that there may be
increases to her salary at a rate higher than general
awards for employees, to ensure she is appropriately
rewarded for her role once established.
Judith took over the reins in the middle of the
pandemic – an immense challenge for even the
most experienced of finance directors. Judith has
demonstrated the skills and calmness of a seasoned
Group Finance Director, delivering a bank refinancing
and renegotiation of covenants, supporting the
placement and providing high quality forecasts
enabling the Group to navigate the most volatile year
in our history. In recognition of this, and to ensure
that she is paid fairly against her internal and external
peers, we intend to increase her salary to £280,000
per annum with effect from 1 January 2021. We will
continue to move her pay in line with performance
until it is aligned with her role, her peers on the
Group Leadership Team and her contribution to
the business.
In accordance with the Group’s revised policy on
pension contributions for future appointees to the
RPS Board and in line with the wider workforce,
Judith’s pension contribution increased from 5%
to 7% in July 2020, after five years’ service with
the Company.
We will continue to review any decision on Executive
Director remuneration in the context of all employees’
remuneration. The Committee receives employee
updates monthly, which include retention, morale,
health and wellbeing, safety, reward, benefits and
flexible working. We believe the decisions we have
made this year align the experience of the Executive
Directors with that of employees.
Both Ken Lever and I thank the shareholders that
engaged with us in 2020. Sadly, because of the
restrictions of the global pandemic, we are not likely
to be able to meet in person for the foreseeable
future. But we encourage you to contact us by
emailing investor.relations@rpsgroup.com to discuss
any aspect of the report. With the full disclosure of the
rest of the remuneration decisions, we hope that you
will be able to support the report and vote in its favour.
Catherine Glickman
Chair of the Remuneration Committee
8 March 2021
97
Corporate GovernanceReport and Accounts 2020 REMUNERATION
AT A GLANCE
Summary of our current Remuneration Policy and structure for FY20
Key reward component
Key features
Base salary and core benefits
Competitive salary and benefits to attract right calibre of executive
Short Term Annual Bonus Plan
(STABP)
70% Adjusted PBT
20% Cash
10% Personal
Executive Long Term Incentive Plan
(ELTIP)
50% TSR
25% EPS
25% Cash
Shareholding
requirements
Max potential 150% of salary for CEO
Max potential 125% of salary for GFD
Key financial KPIs and personal objectives
CEO Award up to 150% of salary
GFD Award up to 125% of salary
CEO: 200% of salary
GFD: 150% of salary
Ensure material personal stake in the business
98
Reward linked to performance. What did we do?
Key reward component
What we have done
Base salary
Increased salary for CEO by 2% and GFD (new appointment) CEO salary effective
from 1 January 2020 and GFD salary effective from 30 April 2020
CEO: £518,600
GFD: £250,000
Short Term Annual Bonus Plan
(STABP)
Bonus
No bonus paid
Executive Long Term Incentive Plan
(ELTIP)
CEO: 533,539 shares, value of £777,900 at grant
GFD: 214,334 shares, value of £312,500 at grant
ELTIP performance of awards vesting in 2021
TSR
TSR
EPS
Cash Conversion
Total weighted result of amount
vesting to Directors
Weighting
Performance Condition
(20% vesting at threshold)
Result
Proportion
Vesting
50%
25%
25%
Threshold of Median TSR
Vest in full at upper quartile
Below Median
0%
3% to 12%
Below Threshold 0%
Threshold of 80% Vest in full for 100% 141%
100%
25%
Report and Accounts 2020Corporate Governance
ANNUAL REPORT
ON REMUNERATION
This Report details how the Company’s Remuneration Policy for Directors
was implemented during the financial year ended 31 December 2020.
It has been prepared in accordance with the provisions of the Companies Act 2016, the Large and
Medium-sized Companies, and Group’s (Accounts and Reports) Regulations 2008 (as amended in 2013)
(the ‘Regulations’). An advisory resolution to approve this report and the Annual Statement will be put to
shareholders at the forthcoming Annual General Meeting scheduled for 28 April 2021. The remuneration for
the Executive Directors has been implemented in line with the disclosures presented to shareholders in 2019.
Director remuneration for the financial year ended 31 December 2020 (audited)
Executive Directors’ total single figure remuneration
The following table sets out the breakdown total of the remuneration received by each of the Executive
Directors during the year under review, with the comparative figures for the prior financial year. Figures
provided have been calculated in accordance with the Regulations.
In response to the impact of the pandemic, John Douglas and Judith Cottrell volunteered to take a 20%
pay reduction for the period 1 April 2020 to 1 October 2020, which is reflected in the following table.
99
Executive
Director
£000s
Base salary
Benefits3
Bonus5
Long-term
incentives
Pension9
Total fixed
remuneration
Total variable
remuneration
Total
Year
2020 2019 2020 2019 2020 2019 20206 2019 2020 2019
2020
2019
2020
2019 2020 2019
Executive
John Douglas
467
508
924
182
–
114
56
227
93
108
652
798
56
136
708
934
Judith Cottrell1 146
–
15
–
–
–
–
–
11
–
172
0
0
0
172
0
Gary Young2
433
325
23
19
–
61
30
78
70
49
526
393
30
68
556
461
Notes:
1. Judith Cottrell was appointed to the Board on 30 April 2020 and the figures in the table pertain to her service from that date.
2. Gary Young retired from the Board on 30 April 2020 and served 12 months’ notice in accordance with his service contract. His
termination date with the Company ended four months short of the 12-month notice date and he was paid the additional four
months’ salary and pension at 31 December 2020. His private medical insurance will cease on 31 March 2021.
3. Benefits – the value for benefits for each Executive Director shown comprises a Company car or Company car allowance, private
medical insurance, life assurance, tax advice and Group income protection.
4. In the case of John Douglas, the benefit figure includes the grossed-up value of a serviced apartment provided which for 2020
amounted to a grossed-up value of £70,000.
5. The Remuneration Committee and Executive Directors agreed that it would not be appropriate for the Executive Directors
to receive any bonus payments in light of the stakeholder experience in 2020; as such any bonus earned will be redistributed
among the broader employee population and RPS social justice charities.
6. Long-term incentives 2020 – this relates to the award made in 2018 that vests in March 2021 and was based on the three-year
financial period ended 31 December 2020. Twenty five per cent of the award vested (including dividend equivalents) and is
calculated using the year-end closing price of 70p per share.
7. Long-term Incentives 2019 – in respect of John Douglas this relates to an exercise of 35,909 shares under the ELTIP which were
exercised on 8 June 2020 at 60.9p per share.
8. Long-term Incentives 2019 – in respect of Gary Young this relates to an exercise of 20,754 shares under the ELTIP which were
exercised on 30 March 2020 at 34.95p per share.
9. Pension – the Executive Directors are eligible to participate in defined contribution pension schemes or receive a salary
supplement or a combination of the two, the value of which has been shown in the single figure remuneration for each.
Corporate GovernanceReport and Accounts 2020
Accommodation allowance
As we shared with our largest shareholders in October 2020, we intend to extend John’s accommodation
allowance for a serviced apartment in the UK. While the original plan was for John’s family to join him in the UK,
due to a change in family circumstances, John’s main family home will remain in Australia. Given the impact
of COVID-19, and the further national lockdown since we spoke to shareholders, we wish to retain a settled UK
base for him for the foreseeable future so that John can operate immediately on his arrival in the UK, subject to
any quarantine restrictions. John remains a UK resident and plans to spend the majority of his time in the UK.
John will continue to be provided with a serviced apartment up to a total cost of £76,000 per annum including
tax and national insurance.
Pension allowance
RPS has committed to aligning pension contributions for any new appointees to the Board with those paid to
the wider workforce. For our incumbent Executive Directors, we have aligned Judith Cottrell’s contributions to
7% of salary and are in the process of reducing John Douglas’ pension contribution from 20% to 15% of salary.
Initially, Judith’s contribution was reduced from 10% to 5% of salary on appointment to the Board; however, on
completing five years’ service this increased to 7% in line with treatment for the wider workforce.
As reported in last year’s Annual Report, John Douglas volunteered to offset any increases in base salary
with a corresponding decrease in pension contribution until this reaches 15% of salary. While this is a higher
percentage of salary than that available to the wider workforce, the total of salary and pension is consistent
with the fixed remuneration detailed in John’s employment agreement on appointment as CEO in 2017. The
Committee believes this is the most appropriate approach going forward and balances our commitment to the
agreed terms provided to John while acting in the spirit of reducing pension contributions to align with those of
the wider workforce. For 2021 John Douglas received a 2% salary increase and a corresponding reduction in his
pension allowance to 16%.
100
Short Term Annual Bonus Plan outcomes for the financial year ending 31 December 2020 (audited)
For 2020, John Douglas and Judith Cottrell had a maximum annual bonus opportunity of 150% and 125%
of salary respectively. For both Executive Directors, the 2020 annual bonus determination was based on
performance against Adjusted PBT (70%), cash conversion (20%) and personal objectives (10%).
The table below shows the FY20 targets for each measure, actual performance and the formulaic result.
The Committee and Executive Directors discussed the experience of shareholders and other stakeholders,
particularly employees, during the year. As a result of this, the Executive Directors and Remuneration
Committee mutually agreed that it would not be appropriate to pay a short-term bonus for FY20 and as such
any bonus earned would be redistributed among the broader employee population and to RPS supported
social justice charities. In addition, the bonus due to the Group Finance Director for the period preceding her
appointment to the board, i.e. January to April 2020, will also not be paid.
Measure
Adjusted Profit
Before Tax
Cash Conversion
Personal Objectives
Weighting
Threshold
(0% vesting)
Performance
required
Maximum
(100% vesting)
Actual
performance
John
Douglas
Judith
Cottrell
Actual % of element
Value £000
Value £000
70%
20%
£35.8m
£39.6m
£13.4m
80%
100%
10% See below.
239%
8%
0%
100%
80%
£0
£0
£155,580
£62,232
£41,667
£16,667
Bonus achieved for FY20
£217,812
£58,334
Bonus to be paid for FY20
£0
£0
1. Judith Cottrell’s award has been pro-rated from her appointment on 30 April 2020.
Report and Accounts 2020Corporate Governance Performance against the personal objectives and the Committee’s assessment of performance for each Executive Director are set
out in the table below. Objectives were reframed in April to pivot towards reacting to and mitigating the implications of COVID-19.
Director
Personal objectives: objectives changed during
the year due to the impact of the pandemic
Assessment against the targets
John Douglas
Objectives April 2020
Ensure we have an intact business at the year end,
with a strong forward order book
Conserve cash
Protect jobs
Objectives January 2020
Develop and implement strategy for North
American business
Leadership team: succession of Group Finance
Director, Segment CEO for North America and
Chief Information Officer (CIO)
Determining future direction of ERP project
Develop a work winning culture and implement
plans to accelerate top line growth
Re-establish credibility with investors following
disappointment of 2019 through enhanced
interaction with investors and capital markets day
Overall performance was judged at 8%
of the 10% maximum
Revenue, cost and cash management were tightened
during the year allowing RPS to emerge in a strong
financial position at the end of FY20. In addition, through
winning new work and delivering on client projects, RPS
has a solid pipeline of work for Q1 FY21.
As a result of tight debt management, we achieved net
bank borrowings of £10.8m in Dec 2020 and lock up days
of 48. Following a successful share placement, RPS raised
£19.4m at a price of £0.44.
Protecting jobs was crucial; balanced utilisation and
workload assisted in managing costs. RPS retained staff
through the use of reduced salaries, furloughing and
minimal redundancies.
Throughout the year, the North American strategy
was developed and delivered through rationalising
the business and focusing on three key areas:
financial performance, operational effectiveness and
strengthened leadership with the internal appointment
of Doug Matthys to the role of CEO North America, who
has reinvigorated the business.
RPS successfully developed internal talent through the
promotion of Judith Cottrell to Group Finance Director.
This resulted in improved financial control and reporting,
and cash and bank facilities management.
During 2020 we also saw the appointment of a seasoned
CIO resulting in retention of key IT staff and adjusting the
IT strategy in line with investment budget.
During the year we were able to review and clarify the
future configuration of ERP under new IT leadership,
governance and with financial control reasserted.
RPS progressed the Sales Academy, encompassing sales
and business development training and client experience
projects: the impact has been delayed due to COVID-19.
RPS continued its interaction with major shareholders;
considerable support was shown for the share placing
in September 2020; our Capital Markets Day has been
deferred until 2021.
101
Corporate GovernanceReport and Accounts 2020 Director
Judith Cottrell
Personal objectives: objectives changed during
the year due to the impact of the pandemic
Assessment against the targets
Secure adequate liquidity to position RPS to
be able to take advantage of medium-term
opportunities and meet banking covenants
Ensure tight cash management to maximise
cash inflow
Upgrade the strategic and financial reporting
processes, so forecasts and monthly financial
accounts inform operational decision-making
Build Finance Team’s capability
ERP implementation – lead the financial
implementation to ensure we achieve the
planned benefits
Build profile and confidence with investors
and analysts
Support business portfolio development
Overall performance was judged at 8%
of the 10% maximum
During the year, Judith renegotiated the RPS banking
facilities and covenants to ensure sufficient liquidity and
significant headroom. She supported the successful
placement, raising £19.4m, and achieved net bank
borrowings of £10.8m, down from £94m.
This resulted in RPS meeting FY20 banking covenants
and is positioned to meet FY21 targets.
Judith led the Company-wide focus on disciplined billing
and cash collection in every segment, delivering cash
conversion of 239% and average lock up days of 65 in
FY20, 48 in December 2020. Financial reporting has
improved significantly: high quality and timely cash
forecasting supported decision-making through the
COVID-19 crisis; rigorous process to develop FY21 budget.
The financial reporting has enabled the business
to match capacity and market demand during the
pandemic, ensuring costs were managed in line with
fee income.
The shared services capability was upgraded. Clear
direction to regional finance directors resulted in
improved regional financial input into operational
reviews.
Judith supported decisions on ERP implementation,
specifically on Essentials software removal; she led the
stabilisation of the platform, enabling us to produce
billing and finance closes. She supported FY19 year end
and City presentations, FY20 results delivery, building
relationships with current and potential investors.
Judith also oversaw the management of the disposal of
Specialist Geology.
Executive Long-Term Incentive Plan (‘ELTIP’) awards vesting in the financial year ending 31 December 2020
ELTIP awards that had been granted to John Douglas, Gary Young and Alan Hearne became exercisable during
the year, subject to the achievement of performance targets. The table below provides the targets and
performance for each measure.
102
Weighting
50%
25%
25%
TSR
EPS
Cash conversion
Total weighted result
Performance condition
(20% vesting at threshold)
Threshold of Median TSR
Vest in full at upper quartile
Result
Proportion vesting
Below Median
4% to 12%
Below Threshold
Threshold of 85%
Vest in full for 105%
92%
0%
0%
48%
12%
Number
of shares
granted at
award
Date of
Vesting
Shares
vested after
pro-rata
Number of
shares that
vested
Market price
at date of
grant
Market price
at date of
exercise
Value on
exercise
Director
John Douglas
08/06/2020
Gary Young
09/03/2020
Alan Hearne
09/03/2020
270,324
153,264
229,956
0
0
27,595
35,909
20,754
5,000
274.67p
252.85p
252.85p
60.9p
£21,868.58
34.95p
40.48p
£7,253.52
£2,024.00
Notes
1. The vested award made to John Douglas included 3,470 shares accrued as a dividend reinvestment under the rules of the ELTIP
2. The vested award exercised by Gary Young included 2,362 shares accrued as a dividend reinvestment under the rules of the ELTIP
3. Alan Hearne resigned as Chief Executive Officer of the Group on 1 September 2017 and it was agreed that his outstanding ELTIP award would be
pro-rated for the period 9 March 2017 to 31 August 2017. The vested award exercised by Alan Hearne included 569 shares accrued as a dividend
reinvestment under the rules of the ELTIP.
Report and Accounts 2020Corporate Governance
Executive Long-Term Incentive Plan (‘ELTIP’) awards vesting in the financial year ending 31 December 2021
ELTIP awards that had been granted to John Douglas and Gary Young become exercisable on 8 March 2021
based on the performance conditions at the end of 31 December 2020. The table below provides the
information on the targets and performance for each measure.
Weighting
50%
25%
25%
TSR
EPS
Cash conversion
Total weighted result
Performance condition
(20% vesting at threshold)
Threshold of Median TSR
Vest in full at upper quartile
Result
Proportion vesting
Below Median
3% to 12%
Below Threshold
Threshold of 80%
Vest in full for 100%
141%
0%
0%
100%
25%
The Remuneration Committee is satisfied that the vesting outcomes in respect of the ELTIP are appropriate
and reflect the underlying performance of the Company.
ELTIP awards granted in the financial year ending 31 December 2020 (audited)
The table below sets out the details of the ELTIP awards granted on 24 February 2020 to John Douglas and
Judith Cottrell. Vesting will be determined according to the achievement of certain performance measures.
The Committee believes that the current application of the ELTIP drives behaviours that are consistent with
the Company’s purpose, values and strategy.
103
Director
John Douglas
Type of award
Basis of award
Nil Cost Options
150% of salary
Judith Cottrell
Nil Cost Options
125% of salary
Note
Face value of
award at grant
date (£)
777,900
312,500
Number of shares
under option
Vesting date
533,539
24-Feb-23
214,334
24-Feb-23
1. The number of shares to constitute these awards was calculated by reference to the average of the Company’s closing share price over the period
19–21 February 2020, being 145.8p.
Corporate GovernanceReport and Accounts 2020
The awards will vest subject to achievement of the following targets over the performance period from
1 January 2020 to 31 December 2022.
Performance
measure
Total Shareholder
Return relative to
the FTSE All Share
Average annual
growth in Earnings
Per Share
(measured on
a constant
currency basis)
Weighting Measurement period
Performance target
Vesting level (% maximum)
Upper Quartile
100%
50%
Over the period to
31 December 2022
Median to Upper Quartile
Pro-rata on a straight-line basis
between 20% and 100%
Below Median
9% p.a.
0%
100%
25%
Over the period to
31 December 2022
Between 3% and 9% p.a.
Pro-rata on a straight-line basis
between 20% and 100%
Below 3% p.a.
100%
0%
100%
Cash conversion
25%
Over the period to
31 December 2022
Between 80% and 100%
Pro-rata on a straight-line basis
between 20% and 100%
80% and below
0%
Inflight ELTIP Awards
The Committee has considered whether, as a result of the pandemic, the targets should be changed for inflight
ELTIP awards and has agreed there should be no adjustment to the targets as published.
Share Incentive Plan (‘SIP’) awards granted in the financial year ending 31 December 2020 (audited)
104
The following table sets out the number and value of matching and dividend shares that were awarded to the
Executive Directors under the all employee Share Incentive Plan during 2020.
Executive Directors
Number of shares
Value of shares (£)
John Douglas
Gary Young
Judith Cottrell
3,365
3,365
3,365
1,800
1,800
1,800
Shares are valued by reference to their price as at date of award.
Payments to past Directors (audited)
On 12 May 2020 Alan Hearne (who resigned as Chief Executive Officer on 1 September 2017) exercised an
option over 5,000 shares at a market price of 40.48p with a value of £2,024.
Gary Young retired from the Board on 30 April 2020 and served 12 months’ notice in accordance with his
service contract. His termination date with the Company ended four months short of the 12-month notice
date and he was paid the additional four months’ salary and pension in lieu of notice at 31 December 2020. His
private medical insurance will cease on 31 March 2021. Gary was not eligible for a bonus in FY20. As announced
to the market on 29 April 2020, Gary’s ELTIP award made in March 2019, subject to good leaver treatment, will
be pro-rated through to 30 April 2021. The pro-rated award amounts to 160,546 shares and will vest subject to
the prevailing performance conditions and the credit of dividend equivalent shares. Gary’s awards under the
STABP will vest in full at the end of their respective three-year deferral periods.
Payments for loss of office (audited)
No payments for loss of office were made during the year.
Report and Accounts 2020Corporate Governance Non-Executive Directors’ total single figure remuneration (audited)
The following table sets out the breakdown total of the remuneration received by each of the Non-Executive
Directors during the year under review, with the comparative figures for the prior financial year. Figures provided
have been calculated in accordance with the Regulations. The Non-Executive Directors took a 20% fee reduction
during FY20 from the period 1 April 2020 to 1 October 2020 and this is reflected in the figures below.
Non-Executive Director £000s
Year
Ken Lever
Allison Bainbridge
Liz Peace
Michael McKelvy
Catherine Glickman
Fee
2020
127
50
54
46
50
Fee
2019
140
55
58
52
54
Note
1. No fees are paid in respect of membership, or Chair, of the Nomination Committee.
Statement of Directors’ shareholding and share interests (audited)
Directors’ share interests as at 31 December 2020 or at date of retirement from the Board are set out below.
Director
John Douglas
Gary Young
Judith Cottrell
Ken Lever
Allison Bainbridge
Liz Peace
Catherine Glickman
Number of
beneficially
owned shares
Interests subject
to performance
conditions1
Interests subject
to employment
conditions2
Total interests
1,817,145
1,249,790
239,554
3,306,489
105
227,223
30,071
126,818
22,078
18,363
55,590
321,122
214,334
89,158
80,796
–
–
–
–
–
–
–
–
637,503
325,201
126,818
22,078
18,363
55,590
Notes:
1. Interests held under the Executive Long Term Incentive Plan.
2. Interests held under (i) The RPS Group Plc Short Term Annual Bonus plan and (ii) matching shares held for less than three years under the Share
Incentive Plan.
3. The Directors participated in the share placing on 3 September 2020. The details are disclosed in note 27 to the consolidated financial statements.
Between 31 December 2020 and 5 March 2021 no changes in the share interests shown above occurred.
The Company’s Remuneration Policy provides that John Douglas and Judith Cottrell are required to build and
maintain shareholdings of 200% and 150% of basic salary respectively. Executive Directors are required to
retain 50% of the post-tax number of shares vesting under the STABP and the ELTIP until this requirement is
met and maintained.
As at 31 December 2020, John Douglas held beneficial shares in the Company equal in value to 245% of his
salary and Judith Cottrell held 8% of her salary.
During 2020, John Douglas invested £770,000 of bonus awards and personal wealth in RPS shares, increasing
his shareholding by 1.3m shares. At 31 December 2020, he owned 1.8m shares, ranking him as our 28th largest
shareholder. Given he joined RPS in 2017, this demonstrates his commitment to RPS and alignment with
shareholders. As at 5 March 2021, his personal shareholding of 1.8m shares is worth £1.8m.
Corporate GovernanceReport and Accounts 2020
Corporate Governance
Short Term Annual Bonus Plan
The interests of the Executive Directors under the STABP are set out below:
Number of
awards at
1 January
2020
56,789
98,198
–
–
–
–
78,456
34,982
25,403
49,005
–
–
John Douglas
Judith Cottrell
Gary Young
Number
of awards
granted
Number
of awards
lapsed
Number
of awards
exercised
Number
of awards
as at 31
December
2020
Market
price at
date of
grant
Market
price at
date of
exercise
Date from
which
released
–
–
–
–
–
–
–
–
–
–
–
–
56,789
250.83p
– 08/03/2021
98,198
181.47p
– 07/03/2022
78,456
145.80p
– 24/02/2020
34,982
50.50p
– 13/10/2023
25,403
250.83p
– 08/03/2021
49,005
181.47p
– 07/03/2022
106
Note
1. The award made to Judith Cottrell represents her bonus earned in FY19 in her previous role as Group Strategy Director: originally due to be paid
in April 2020, bonuses were delayed until the business stabilised. When FY19 bonuses were paid to other staff in October, the Remuneration
Committee agreed that Judith should be awarded the bonus as shares deferred for three years.
Executive Long Term Incentive Plan
The interests of the Executive Directors under the ELTIP are set out below:
Number of
awards at
1 January
2020
Number
of awards
granted
Number
of awards
lapsed
Number
of awards
exercised
Number
of awards
as at 31
December
2020
Market
price at
date of
grant
Market
price at
date of
exercise
Date
from which
released
John Douglas
270,324 (1)
296,017
420,234
–
–
–
Judith Cottrell
Gary Young
–
–
533,539
214,334
153,265
(2)
157,576
(3)
223,866
(4)
–
–
–
237,885
35,909
–
274.67p
60.9p
08/06/2020
–
–
–
–
–
–
–
–
296,017
250.83p
420,234
181.47p
533,539
145.8p
214,334
145.8p
–
–
–
–
08/03/2021
07/03/2022
24/02/2023
24/02/2023
134,873
20,754
–
252.85p
34.95p
09/03/2020
–
60,320
–
–
157,576
250.83p
160,546
181.47p
–
–
08/03/2021
07/03/2022
Notes:
1. The award exercised by John Douglas included 3,470 shares accrued as a dividend reinvestment under the rules of the ELTIP.
2. The award exercised by Gary Young included 2,362 shares accrued as a dividend reinvestment under the rules of the ELTP.
3. Following the retirement from the Board by Gary Young on 30 April 2020 this award will vest in full on 8 March 2021 subject to the prevailing
performance conditions and the credit of dividend equivalent shares.
4. This award will be pro-rated from 7 March 2019 to the 30 April 2021, and the pro-rated award available for vesting will be 160,546 shares, subject to
the prevailing performance conditions and the credit of dividend equivalent shares.
Chief Executive Officer and employee pay
Total Shareholder Return Performance
The graph below shows the value of £100 invested in RPS over the past ten years compared with the value of
£100 invested in the FTSE All Share and FTSE All Share support services. The Company has selected the FTSE
All Share and the FTSE All Share Support Services as the broad equity market indices against which to compare
the Company’s total shareholder return performance as the Company has been a constituent member of these
indices throughout the nine-year period.
Report and Accounts 2020
Corporate Governance
Chief Executive Officer Remuneration
The table below shows the Group Chief Executive’s total remuneration and percentage of opportunity achieved
for variable remuneration elements.
2011
2020
A Hearne A Hearne A Hearne A Hearne A Hearne A Hearne A Hearne J Douglas J Douglas J Douglas J Douglas
20193
2018
2013
2015
2016
2014
20172
20172
20121
793
1,650
883
922
748
981
627
351
888
934
708
107
54%
77%
47%
32%
0%
20%
33%
33%
24%
15%
0%
13%
100%
0%
0%
0%
0%
0%
0%
0%
12%
25%
Element
Total
Remuneration
(single figure for
the year – £000s)
Annual bonus
(% of maximum
opportunity)
Long-term
incentives
(%age of
Maximum
number of
shares capable
of vesting)
Notes
1. Single figure for 2012 includes the payment of deferred balances under the previous bonus banking plan from 2010 and 2011. These balances were earned
during these years but subject to deferral until the end of 2012 and at risk of performance based forfeiture.
2. The remuneration shown for Alan Hearne for 2017 in respect of the period to 31 August at which time he retired from the Board. The total remuneration
shown for John Douglas is in respect of 2017 is the period from 1 September 2017, when he was appointed as Group Chief Executive. The remuneration for
John Douglas in 2017 includes a pro-ration of the annual bonus that was earned from 1 June 2017 being the date at which he joined the Board.
3. The total remuneration figure includes the value of the ELTIP exercised in FY20.
Chief Executive Officer Pay Ratio
As required by the reporting regulations the Committee has set out below the CEO pay ratio. The table provides
the ratio between the CEO single figure total remuneration and total remuneration for all employees and the
details of the salary and total remuneration for UK employees in 2019 and 2020. We have chosen option B as
our method for calculating the pay ratio for this report, consistent with the methodology for reporting of the
gender pay gap. Figures are correct as of 31 December 2020.
Report and Accounts 2020
-501001502002503002011201220132014201520162017201820192020RPS TSRFTSE All Share TSRFTSE All Share Support Services TSR
Salary
Total remuneration
Pay ratio
Remuneration
Year
2019
2020
2019
2020
Method
25th
percentile
Median
75th
percentile
25th
percentile
Median
75th
percentile
B
B
B
B
23
21
40
30
16
15
26
23
12
11
17
16
£22,068
£32,050
£43,890
£21,856
£30,448
£41,336
£22,719
£34,487
£52,387
£23,756
£31,383
£45,588
The Committee is mindful that the ratio of total remuneration will be volatile over time (in large part due to
the relative weighting in the CEO’s package of variable performance-based incentives). The Committee has
therefore decided to calculate and publish the pay ratio for salary only. We believe this additional perspective
on relative pay (in particular the trend over time) will help ensure that RPS Group is delivering against its stated
policy for Executive Director salary increases generally to be consistent with the range awarded across the
Group more broadly.
2020 was an extremely unusual year with pay cuts across Executive Directors and among the wider employee
population as well as Executives redistributing their earned bonuses towards the employee population. Furloughing
of employees occurred during the year and as such neither the CEO’s remuneration nor the quartiles for the wider
workforce are fully reflective of RPS operating in a normal year. The Committee expects that ratios in 2021 will
increase as a result of a return to normal operations.
The Committee has considered the findings of the pay ratio analysis, which appear to be reasonable in the context
of the RPS Group’s sector and taking into account the composition of the Group’s UK workforce against which CEO
remuneration is compared. Going forward, the Committee will review the trend in pay ratios as well as the ratio for
the relevant year and seek to understand the drivers of any short and medium-term changes to this.
108
Percentage change in the remuneration of Directors
The following table shows the percentage change in the Executive and Non-Executive Directors’ salaries,
fees, benefits and annual bonuses between financial years compared to the percentage change for all
global employees.
Percentage change from 2018 Financial Year to 2019 Financial Year
Salary
Taxable benefits
Annual bonus
Employees
1.67%
5.09%
-4.92%
CEO
-8.19%
-49.01%
-100.00%
FD
n/a
n/a
n/a
NEDs
-10.00%
0.00%
0.00%
The salary/fee data for the Executive and Non-Executive Directors takes into account the 20% reduction that
was in place for the six-month period from April to September 2020.
Judith Cottrell was appointed to the Group Finance Director role on 30 April 2020; as such there is no relevant
percentage change in pay for this year. Disclosure will start from next year; however the Committee is aware that
the percentage change will not be fully reflective until 2022 once two full years service have been completed.
Average employee data reflects the earnings of all employees.
Report and Accounts 2020Corporate Governance Relative importance of spend on pay
The chart below shows the total remuneration paid to or receivable by all employees and total distributions
to shareholders by way of dividends for the current and previous financial years. No dividends were paid to
shareholders in 2020.
Adjusted PBT and amortisation is a key performance indicator for the Group and was the principal performance
measure used under the Short Term Annual Bonus Plan.
Total employee pay
0
0
0
£
350,000
300,000
250,000
200,000
150,000
100,000
50,000
-
Adjusted PBT
Dividend
2016
2017
2018
2019
2020
Executive Director service contracts and non-executive letters of appointment
Executive Director service contracts
When setting notice periods, the Remuneration Committee has regard to market practice and best governance
practice. The Company’s general policy is to provide contracts to Executive Directors with no greater than 12
months’ notice.
109
The table below summarises the service contracts for the current Executive Directors.
Executive Director
John Douglas
Judith Cottrell
Date of contract
June 2017
February 2020
Notice period
12 months
12 months
None of the Directors’ contracts provide for extended notice periods or automatic compensation in the event
of a change of control.
Non-Executive Director letters of appointment
The Non-Executive Directors do not have service contracts but are appointed under letters of appointment
which provide for a review after an initial three-year term. Following the expiry of the initial term, each Non-
Executive Director is then subject to annual re-election at the Annual General Meeting, irrespective of which,
all Directors are subject to annual re-election at the Company’s AGM. Details of the terms of appointment of the
Non-Executive Directors are shown below:
Non-Executive Director
Ken Lever
Allison Bainbridge
Liz Peace
Michael McKelvy
Catherine Glickman
Date of appointment
November 2016
June 2017
August 2017
May 2018
August 2018
Unexpired term
as at 31 December 2020
4 months
4 months
4 months
5 months
8 months
Corporate GovernanceReport and Accounts 2020 Committee organisation
Role of the Remuneration Committee (“Committee”)
The Committee held six meetings during the year timed to ensure the proper discharge of the activities
described below. The Group Chairman attends the meetings of the Committee. The Group Chief Executive,
Group Finance Director, Group People Director and Head of Reward also attend meetings, although they are not
present when discussion relates to their own remuneration. The Company Secretary acts as Secretary to the
Committee and representatives from the Committee’s advisors, Mercer Limited, attend meetings as and when
required. The Committee considers reputational and other risks when assessing remuneration, particularly in
relation to excessive and behavioural risks and believe that these risks have been properly mitigated.
The Committee is responsible for determining the overall policy for executive remuneration which is then
subject to Board and shareholder approval. Within the context of the shareholder approved policy, the
Committee is responsible for determining the specific remuneration packages for the Executive Directors.
This incorporates review of salaries as well as determining opportunities under the incentive plans and
performance conditions relating to these plans. Activities also include the determination of terms for any
Executive leaving or joining the Board.
The Committee also has direct responsibility for the terms and conditions of those Senior Executives that sit
immediately below Board level and form the Group Leadership Team. During the year, the Committee reviewed
the terms and conditions of the Group including salary and incentives, approving any changes.
110
The Committee is cognisant of the provisions of the Code as they affect remuneration committees. A key
provision related to the review of wider workforce remuneration and the Committee’s remit has been extended
to cover this. During the year, the Committee received regular updates from the Group People Director on the
number of employees that were on furlough, reduced pay or reduced hours. The decisions taken in respect
of the Executive Directors’ and the Group Leadership Team’s pay were taken whilst always considering the
experience of the wider workforce.
The Committee’s detailed terms of reference can be found on the Company’s website.
Consideration of employee remuneration and shareholders
Consideration of shareholder views
The Remuneration Committee takes the views of shareholders very seriously and these have been influential
in shaping remuneration policy and practice. We consulted with our shareholders and proxy voting agencies in
October 2020, explaining the reasons for continuing the serviced apartment provision for John Douglas and the
Company’s stated intention to reduce John Douglas’ pension contribution to 15% over time. The Chair of the
Remuneration Committee and Company Chair virtually met shareholders in November to update them on the
remuneration policy and the impact of COVID-19 on the wider workforce. We thank all those shareholders who
engaged with us and have taken their feedback into consideration in our decisions. The Remuneration Committee
will continue to consult with shareholders prior to any significant changes to the remuneration policy.
Employment conditions elsewhere in the Group
In setting the remuneration policy for Directors, the Board is regularly updated by the CEO, Group People
Director and Head of Reward on pay, incentive plans and conditions of the RPS wider workforce. Decisions
on the Executive Directors and Group Leadership Team are always taken in alignment with decisions on
employees, including base salary increases, incentive awards and benefit changes.
The Remuneration Committee has not expressly sought the views of employees but the investment in people –
their reward, development and retention - is a topic of debate regularly at the Board meetings. No remuneration
comparison measurements were used when drawing up the Policy.
Report and Accounts 2020Corporate Governance
External advice
During the year the Committee received external advice in relation to executive remuneration from Mercer
Limited (“Mercer”). Mercer is a member of the Remuneration Consultants Group and, as such, voluntarily
operate under the code of conduct in relation to executive remuneration consulting in the UK. The fees paid to
Mercer during the year were £8,700 in respect of advice for the Remuneration Committee and IFRS valuation
of the ELTIP award. Another part of Mercer also provided support to the Company in relation to an employee
engagement survey we propose to commence in 2021. The Committee is confident that the additional fees
earned for the employee engagement survey are not sufficiently large to impact Mercer’s independence as
Remuneration Committee advisers.
Shareholder voting
The Remuneration Committee’s Annual Report for 2019 was approved at the Company’s 2020 Annual General
Meeting on 30 April 2020. The voting for this resolution is shown below.
Annual report
Votes for
Votes against
Total
Withheld
Number of Votes cast
% of Votes cast
178,349,265
6,854,084
185,203,349
10,079
96.30
3.70
100.00
–
The Company’s remuneration policy was approved by shareholders at a General Meeting held on 16 December
2019 and applies for 3 years until 31 December 2022. In respect of the Remuneration Policy that was approved
at a General Meeting on 16 November 2019, the voting in respect of the report was as shown below:
111
Remuneration policy
Number of votes cast
% of votes cast
Votes for
Votes against
Total
Withheld
162,451,438
23,949,709
186,401,147
58,147
87.15
12.85
100.00
–
Implementation of the remuneration policy in 2021
This section of the report details the Committee’s intentions for remuneration arrangements in 2021. The key
components of this policy as they apply to the Executive Directors of the Company are set out in the following
section. The full policy statement is available on the Company’s website.
Base Salary
With effect from 1 January 2021 John Douglas will receive a salary of £529,000 and Judith Cottrell will receive a
salary of £280,000. This represents an increase of 2% for John Douglas and 12% for Judith Cottrell. For John the
increase will follow the agreed position that salary increases will be offset by reductions in pension contribution
until his pension contributions are 15% of salary. The 2% increase received by John Douglas is in line with the
average award within the UK and the wider business.
Judith Cottrell was appointed as Group Finance Director and Board Director in April 2020 on a base salary of
£250,000 per annum. Judith was internally promoted and we stated last year that there may be increases to her
salary at a rate higher than general awards for employees.
Corporate GovernanceReport and Accounts 2020
Judith has performed strongly since her appointment in an extremely challenging environment. In recognition
of this, and to ensure that she is paid fairly against her internal and external peers, we intend to increase her
salary to £280,000 per annum with effect from 1 January 2020. Our intention is to provide further material
increases in line with performance, business context and affordability until it is aligned with her role, her peers
on the Group Leadership Team and her contribution to the business.
Benefits
Benefits will be provided in accordance with the policy. John Douglas will continue to be provided with a
serviced apartment up to a total cost of £76,000 p.a. as explained on p.100.
Pension
Pensions will be provided in accordance with the policy. As previously stated, John Douglas has agreed to
reduce his pension contribution over time to 15%, as an offset against any salary increases. John will receive a
salary increase of 2% and accordingly his pension contribution will reduce to 16%. Judith Cottrell’s contribution
will continue to be 7% of salary in line with treatment for the wider UK workforce.
Annual Bonus
The bonus opportunity is unchanged for 2021 and will be 150% of salary for John Douglas and 125% of salary
for Judith Cottrell.
A key metric this year for RPS relates to fee growth; as such the bonus awards in 2021 will be subject to
achievement of four measures: Adjusted PBT (60% weighting), fee growth (20% weighting), a cash measure
based on lock-up days (10% weighting) and personal objectives (10% weighting).
The Committee considers prospective disclosure of targets to be commercially sensitive but will disclose
targets retrospectively following the financial year end. The bonus will normally be paid 50% in cash and 50% in
shares deferred for a period of three years.
112
ELTIP
ELTIP awards opportunities remain unchanged at 150% of salary for John Douglas and 125% for Judith Cottrell.
Awards will be granted based on the five day average share price prior to the day of grant; the Committee is
mindful of the fall in share price since COVID-19 and will review the appropriateness of any payments when this
award vests at the end of the performance period.
The 2021 ELTIP awards will vest subject to the achievement of three measures: TSR (50% weighting), EPS (25%
weighting) and cash conversion (25% weighting). The performance targets applicable for the 2021 ELTIP award
are summarised on the following page. With the continuing uncertainty arising out of the COVID-19 crisis, the
Committee will finalise the EPS and cash conversion targets later in the year and announce these via an RNS
following the release of the interim results.
Report and Accounts 2020Corporate Governance Performance measure
Weighting Measurement period
Performance target Vesting level (% maximum)
Total Shareholder
Return relative to the
FTSE All Share
Average Annual
Growth in Earnings
Per Share (measured
on a constant
currency basis)
50%
Over the period to
31 December 2023
Median to Upper Quartile
Pro rata on a straight-line
basis between 20% and 100%
Upper Quartile
100%
Below Median
0%
25%
Over the period to
31 December 2023
Figure to be confirmed later
in the year following the
interim results
Cash conversion
25%
Over the period to
31 December 2023
Figure to be confirmed later
in the year following the
interim results
Non-Executive Director Fees
There was no change in Non-Executive Director fees in 2020 other than a 6 month reduction by 20%.
Fees will be reviewed in 2021.
This report was approved by the Board and has been signed on its behalf by:
Catherine Glickman
Chair of the Remuneration Committee
8 March 2021
113
Corporate GovernanceReport and Accounts 2020
Approved remuneration policy
BASE SALARY
Element, purpose and
link to strategy
Operation and
maximum opportunity
To provide competitive fixed remuneration that will attract and retain key
employees and reflect their experience and position in the Group.
An Executive Director’s basic salary is considered by the Remuneration
Committee on appointment and normally reviewed once a year, or when
there is a significant change to the role or responsibility.
When making a determination as to the appropriate remuneration,
the Remuneration Committee, where it is relevant, benchmarks the
remuneration against the Company’s comparator group (organisations of
comparable size and or sector to RPS in the FTSE All Share).
The results of benchmarking will only be one of a number of factors taken
into account by the Remuneration Committee which includes:
·
· pay and conditions for employees across the Group;
·
·
The Remuneration Committee policy in relation to salary is:
·
the general performance of the Group; and
the economic environment
to position this around the median salary for the role on appointment,
depending on experience and background; and
individual performance and experience of the Executive Director;
114
· on promotion, to increase salary up to the median salary for the new role
Annual percentage increases are generally consistent with the range
awarded across the Group. Percentage increases in salary above this level
may be made in certain circumstances - such as change in responsibility
or significant increase in the scale of a role or the Group’s size and
complexity.
Individuals recruited or promoted to the Board may, on occasion, have
their salaries set below the targeted policy level until they become
established in their role. In such cases, subsequent increases in salary may
be higher than the average until the target positioning is achieved.
Performance measures
and assessment
A broad assessment of individual and business performance is used as part
of the salary review.
BENEFITS
Element, purpose and
link to strategy
Operation and
maximum opportunity
To provide competitive benefits and to attract and retain high
calibre employees
The Remuneration Committee’s policy is to provide a market competitive
benefits package.
The Executive Directors may receive the following benefits:
· healthcare;
·
· disability schemes;
· Company car or car allowance; and
·
other benefits as provided from time to time, such as relocation
allowances on recruitment
life assurance;
Benefit values vary year on year depending on premiums and the
maximum potential value is the cost of the provision of these benefits.
Performance measures
and assessment
Not applicable.
Report and Accounts 2020Corporate Governance PENSION
Element, purpose and
link to strategy
Operation and
maximum opportunity
To provide a competitive Company contribution that enables effective
retirement planning
or receive a salary supplement;
or a combination of the two
The Executive Directors are eligible to:
· participate in defined contribution pension schemes;
·
·
Other than basic salary, no element of the Directors’ remuneration is
pensionable. Salary supplements are not included in base salary in order to
calculate other benefits and incentive opportunities.
The CEO’s pension contributions will reduce to 15% in lieu of any salary
increases he receives over time. Under the new policy any new Executive
Director appointments from 1 January 2020 will receive an employer
contribution in line with that available for the wider workforce in the
relevant market.
Performance measures
and assessment
Not applicable.
THE RPS GROUP PLC SHORT TERM ANNUAL BONUS PLAN (THE ‘STABP’)
Element, purpose and
link to strategy
Operation and
maximum opportunity
Performance measures
and assessment
115
To incentivise achievement of annual objectives which support the
Group’s short-term performance goals.
Maximum awards each year under the STABP are equal to 150% of salary.
The performance period is one financial year with pay-out determined
by the Remuneration Committee following the year end, based on
achievement against a range of financial and non-financial targets.
50% of the bonus award will be paid out in cash with the remaining 50%
deferred into shares subject to a further three year vesting period. There
are no further performance targets applicable to the deferred amount.
Malus and clawback provisions may apply at the discretion of the
Remuneration Committee where it considers such actions necessary
and appropriate.
The malus period would be up to the date of the bonus determination
and three years after in respect of deferred shares under the STABP.
The clawback period will be three years from the date of the bonus
determination for any cash payments under the STABP.
Participants may be entitled to dividend equivalents representing the
dividends paid during the deferral period of the shares.
Performance targets will be set by the Remuneration Committee annually
based on a range of financial and non-financial measures.
Financial targets govern the majority of bonus payments, although non-
financial metrics may also be used.
The Remuneration Committee will determine the weighting of the various
measures and targets to ensure that they support the business strategy
and objectives for the relevant year.
Targets are typically structured on a challenging sliding scale, with zero
pay- out accruing for achieving threshold performance through to full pay-
out for maximum performance.
The Remuneration Committee has the discretion to adjust targets or
performance measures for any exceptional events that may occur during
the year.
The Remuneration Committee has the discretion to make downward or
upward movements to the amount of bonus earned resulting from the
application of the performance measures, if it believes that the bonus
outcomes are not a fair and accurate reflection of business performance.
Corporate GovernanceReport and Accounts 2020 THE RPS GROUP PLC EXECUTIVE LONG TERM INCENTIVE PLAN (THE ‘ELTIP’)
Element, purpose and
link to strategy
Operation and
maximum opportunity
Performance measures
and assessment
116
To incentivise Executives to achieve sustainable, strong, long term
performance for the Company, to retain key individuals and to align their
interests with shareholders.
Under the ELTIP, the Remuneration Committee may award annual grants
of performance share awards in the form of nil-cost options or conditional
shares (‘ELTIP awards’).
Maximum ELTIP awards each year are equal to 150% of base salary (200%
of salary in exceptional circumstances).
ELTIP awards will normally vest after a three year performance period
subject to the achievement of the performance measures.
The Remuneration Committee will retain the discretion to determine
whether to attach a holding period to a particular award at the date of
each grant.
Malus and clawback provisions may apply at the discretion of the
Remuneration Committee where it considers such action necessary and
appropriate.
The malus period will be up to the date of vesting (i.e. three years from the
date of grant). The clawback period will be two years from the date
of vesting.
Participants may be entitled to dividend equivalents during the deferral
period of the shares.
Financial and non-financial measures may be applied to awards under
the ELTIP.
Targets are typically structured on a challenging sliding scale, with no
more than 20% of the maximum award vesting for achieving the threshold
performance level through to full vesting for maximum performance.
The Remuneration Committee has the discretion to adjust targets or
performance measures for any exceptional events that may occur during
the vesting period.
The Remuneration Committee has the discretion to make downward
or upward movements in the vesting of the ELTIP resulting from the
application of the performance measures, if the Remuneration Committee
believes that the outcomes are not a fair and accurate reflection of
business performance.
The Remuneration Committee will review the performance measures
annually, in terms of the range of targets, the measures themselves and
weightings applied to each element of the ELTIP. Any revisions to the
measures and/or weightings in future years will only take place if it is
necessary due to developments in the Group’s strategy and, where these
are material, following dialogue with the major shareholders.
Report and Accounts 2020Corporate Governance ALL-EMPLOYEE INCENTIVES
Element, purpose and
link to strategy
Operation and
maximum opportunity
To encourage all employees to become shareholders and thereby align
their interests with those of colleague shareholders.
Eligible employees may participate in the Share Incentive Plan or country
equivalent. Executive Directors will be entitled to participate on the same
terms.
Maximum participation levels for all staff are set by reference to the plan
rules and relevant legislation.
Performance measures
and assessment
Not applicable.
SHAREHOLDING GUIDELINES
Element, purpose and
link to strategy
Operation and
maximum opportunity
To ensure that Executive Directors’ interests are aligned with those of
shareholders over the longer term.
The Executive Directors are required to build or maintain a minimum
shareholding in the Company.
Shares included in this calculation are those held beneficially by the
Executive Director and their spouse/life partner.
The shareholding requirement is determined by the Remuneration
Committee and may be up to 200% of salary.
Executive Directors will be required to retain 50% of their post-tax number
of shares vesting under the STABP and ELTIP until their requirement is met
and then maintained.
Performance measures
and assessment
Not applicable.
117
Element, purpose and
link to strategy
Operation and
maximum opportunity
Post-Employment Shareholding Requirement
The Post-Employment Policy stipulates that the post-employment
shareholding for the Executive Directors will be:
·
In Year One the shareholding to be the lessor of the in-employment
shareholding requirement or the current shareholding
In Year Two this will reduce to 50% of the figure.
·
Performance measures
and assessment
Not applicable.
Corporate GovernanceReport and Accounts 2020 119119
FINANCIAL
STATEMENTS
Image: Mike, TOTAL Metis project, Abu Dhabi,
Report and Accounts 2020
INDEPENDENT
AUDITOR’S REPORT
to the members of RPS Group Plc
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
1. Opinion
In our opinion:
•
•
•
•
the financial statements of RPS Group Plc (the
‘parent company’) and its subsidiaries (the
‘group’) give a true and fair view of the state
of the group’s and of the parent company’s
affairs as at 31 December 2020 and of the
group’s loss for the year then ended;
the group financial statements have been properly
prepared in accordance with international
accounting standards in conformity with the
requirements of the Companies Act 2006, and
International Financial Reporting Standards
(IFRSs) as adopted by the European Union;
the parent company financial statements have
been properly prepared in accordance with
United Kingdom Generally Accepted Accounting
Practice, including Financial Reporting Standard
102 “The Financial Reporting Standard applicable
in the UK and Republic of Ireland”; and
the financial statements have been prepared
in accordance with the requirements
of the Companies Act 2006.
We have audited the financial statements
which comprise:
•
•
•
•
•
•
the consolidated income statement;
the consolidated statement of
comprehensive income;
the consolidated and parent company
balance sheets;
the consolidated and parent company
statements of changes in equity;
the consolidated cash flow statement; and
the related notes to the consolidated financial
statements 1 to 31 and notes to the parent
company financial statements 1 to 15.
The financial reporting framework that has been
applied in the preparation of the group financial
statements is applicable law, and international
accounting standards in conformity with the
requirements of the Companies Act 2006 and 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, including FRS 102 “The
Financial Reporting Standard applicable in the UK
and Republic of Ireland” (United Kingdom Generally
Accepted Accounting Practice).
2. Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (ISAs (UK))
and applicable law. Our responsibilities under those
standards are further described in the auditor’s
responsibilities for the audit of the financial
statements section of our report.
We are independent of the group and the parent
company in accordance with the ethical requirements
that are relevant to our audit of the financial statements
in the UK, including the Financial Reporting Council’s
(the ‘FRC’s’) Ethical Standard as applied to listed public
interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
We confirm that the non-audit services prohibited by
the FRC’s Ethical Standard were not provided to the
group or the parent company.
We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for
our opinion.
120120
Financial statementsReport and Accounts 2020 3. Summary of our audit approach
Key audit matters
The key audit matters that we identified in the current year were:
• Revenue recognition – contract assets cut-off; and
•
Impairment of goodwill and long-lived assets.
Within this report, key audit matters are identified as follows:
Increased level of risk
Similar level of risk
Materiality
Scoping
The materiality that we used for the group financial statements was £1.5m which was determined based on a
range of measures which comprise of Adjusted Profit Before Tax (Adjusted PBT), Revenue and Net Assets.
We focused our group audit scope and work on the business units at 5 locations. Within the 5 locations
18 business units were subject to a full audit scope, whilst 5 business units were subject to specified audit
procedures. Our full scope audit procedures and specified audit procedures covered 92% of revenue, 92% of
the group’s adjusted profit before tax, and 99% of net assets
Significant changes
in our approach
We have changed the basis on which we have determined materiality in the current year to reflect the impact
of COVID-19 on the profit of the group. For further details refer to section 6 of this report.
4. Conclusions relating to going concern
• assessment of the wider macro-economic
In auditing the financial statements, we have
concluded that the directors’ use of the going concern
basis of accounting in the preparation of the financial
statements is appropriate.
Our evaluation of the directors’ assessment of the
group’s and parent company’s ability to continue to
adopt the going concern basis of accounting included:
• understanding the relevant controls relating to the
assessment of the appropriateness of the going
concern assumptions;
• assessment of judgements considered in
modelling the going concern forecasts. This
included analysing the forecast as against historical
performance, including the current year which was
impacted by the COVID-19 pandemic;
• assessment of the re-financing options available
to the Group in respect of the US loan notes of
£54.9m which matures in September 2021;
re-computing existing loan facilities covenants
in order to check compliance over the going
concern period;
•
environment over the going concern period of the
major countries in which the group operates, in
particular expected recovery of the economies from
the COVID-19 pandemic and whether this has been
appropriately reflected in the forecast; and
• assessment of the appropriateness of the going
concern disclosure.
Based on the work we have performed, we have not
identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast
significant doubt on the group’s and parent company’s
ability to continue as a going concern for a period
of at least twelve months from when the financial
statements are authorised for issue.
In relation to the reporting on how the group has
applied the UK Corporate Governance Code, we have
nothing material to add or draw attention to in relation
to the directors’ statement in the financial statements
about whether the directors considered it appropriate
to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the
directors with respect to going concern are described
in the relevant sections of this report.
121
Financial statementsReport and Accounts 2020
5. Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified. These matters included those which had the
greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of
the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
5.1 Revenue recognition – contract assets cut-off
Key audit matter
description
The group is engaged in the provision of consultancy services through contractual arrangements with
its customers. Revenue for the financial year 2020 is £542m (2019: £613m) with contract assets of
£37m (2019: £46m).
How the scope
of our audit
responded to the
key audit matter
122122
The specific key audit matter is around the recognition of contract assets on fixed fee contracts over £50,000
where the contracts remain open at year-end. There is judgement required around the recognition of the
revenue and its recoverability in estimating the stage of completion and the costs to complete fixed fee open
contracts. Given the level of judgement involved in the recognition of revenue in relation to fixed fee contracts,
we identified a risk of potential fraud in the recognition of revenue.
The group’s revenue recognition policy is disclosed in note 1(c) to the financial statements.
We obtained an understanding of the relevant controls over the recognition of revenue (including those
related to contract assets recognition).
Whilst relying on controls where we tested satisfactorily, we tested in detail a sample of contract assets
and work-in-progress balances. We focused on fixed fee contracts over £50,000 by comparing them to the
signed contract terms and where relevant agreeing inputs to the related time records, checking customer
acceptances, billing milestones/schedules, understanding and challenging the estimated costs to complete. In
the locations where we were unable to rely on controls due to the controls not being tested, we increased the
extent of our detail testing.
In our assessment of the stage of completion, wherever relevant, we discussed with the project managers the
status of the projects to understand management’s process as well as evaluated status of projects.
We recalculated the amount of revenue recognised against the percentage completion and checked that they
agreed to the general ledger record.
Key observations
Based on our procedures, revenue recognised in respect of contract assets for fixed fee contracts open at year
end is appropriate.
5.2 Impairment of goodwill and long lived assets
Key audit matter
description
At 31 December 2020, the net book value of goodwill and long lived assets was £379m (2019: £411m).
The assessment of the carrying value of goodwill and long lived assets is a key audit matter due to the
quantum of the balance recorded and the number of estimates and judgements involved in assessing
impairment. The COVID-19 pandemic has had a significant impact on trading performance of the group as
highlighted in the Financial Review section of the Strategic Report.
The key audit matter is focused to the key assumptions in the cash flow forecasts used in value in use
calculations for Australia Asia Pacific, North America, Consulting (UK & Ireland), Services (UK) and Energy CGUs,
specifically assumptions on growth rates and the selection of appropriate discount rates.
At the 2020 half year reporting, management identified an impairment charge of £17.4m and £8.5m
respectively against Consulting (UK & Ireland) and North America CGUs. The associated disclosure is
included in note 14 to the financial statements. Subsequently at the year end, management performed a full
impairment review and concluded that no additional impairment was required.
Financial statementsReport and Accounts 2020 How the scope
of our audit
responded to the
key audit matter
We obtained an understanding of the relevant controls over management review of goodwill and long lived
assets impairment.
We challenged management’s assumptions and the appropriateness of their judgements, estimates and
forecasts used as part of their value in use calculations, specifically the following CGUs: Australia Asia Pacific,
Consulting (UK & Ireland), North America, Services (UK) and Energy. This included discussions with both group
and local management teams and corroboration of information obtained.
We evaluated management’s forecasts in light of current trading conditions as impacted by COVID-19,
comparing them against historical results with particular focus on Australia Asia Pacific, Consulting (UK &
Ireland) North America, Services (UK) and Energy CGUs.
We involved our valuation specialists to calculate an acceptable range of discount rates and compared our
range to that determined by management.
We examined the short-term and medium growth rates by using market data, relevant industry data and
considering historical growth rates, in order to check for any contradictory evidence. We benchmarked
the long-term growth rates against external peer group published rates and market data. We assessed
management sensitivities and also performed sensitivity analysis on the amount and timing of cash flows.
We evaluated the adequacy of the associated disclosures.
Key observations
We concur with management that the impairment charge recorded at half year reporting is reasonable and no
further impairment is required to the carrying value of goodwill and long lived assets as at 31 December 2020.
6. Our application of materiality
6.1 Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable
that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use
materiality both in planning the scope of our audit work and in evaluating the results of our work.
123
Based on our professional judgement, we determined materiality for the financial statements as a whole
as follows:
Group financial statements
Parent company financial statements
Materiality
£1,500,000 (2019: £1,700,000)
£701,000 (2019: £850,000)
Basis for
determining
materiality
Rationale for the
benchmark applied
Materiality has been determined using
professional judgement with reference to
balance sheet and income statement metrics
including adjusted PBT (refer Note 3), net assets
and revenue. In the prior year, materiality was
determined as 5% of adjusted PBT.
Materiality has been determined using
professional judgement with reference to
balance sheet and income statement metrics
including adjusted PBT, net assets and revenue,
in order to set materiality at an appropirate
level which will take into account the impact
of COVID-19 on profit in the current year. The
determined materiality equates to 11% of
Adjusted PBT, 0.43% of net assets and 0.28%
of revenue.
Materiality determined at 3% of the parent company net
assets. In the prior year, materiality was determined as
3% of the parent company net assets, capped at 50%
of group materiality.
Net assets has been chosen as a benchmark as it is
considered the most relevant benchmark for investors
and is a key driver of shareholder value. Materiality has
decreased by 18% from prior year consistent in line with
group materiality due to the application of a component
materiality threshold.
Financial statementsReport and Accounts 2020 124124
6.2 Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate,
uncorrected and undetected misstatements exceed the materiality for the financial statements as a whole.
Group financial statements
Parent company financial statements
Materiality
70% (2019: 70%) of group materiality
70% (2019: 70%) of parent company materiality.
Basis and rationale
for determining
performance
materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate,
uncorrected and undetected misstatements exceed the materiality for the financial statements as a whole.
In determining performance materiality, we considered the following factors:
a.
b.
our risk assessment, including our assessment of the group’s overall control environment and that in
certain components we consider it appropriate to rely on controls for our revenue testing; and
our past experience of the audit, which has indicated a low number of uncorrected misstatements
identified in prior periods.
6.3 Error reporting threshold
We agreed with the audit Committee that we would report to the Committee all audit differences in excess
of £73,500 (2019: £85,000), as well as differences below that threshold that, in our view, warranted reporting
on qualitative grounds. We also report to the audit Committee on disclosure matters that we identified when
assessing the overall presentation of the financial statements.
7. An overview of the scope of our audit
7.1 Identification and scoping of components
Our group audit was scoped by obtaining an
understanding of the group and its environment,
including group-wide controls and assessing the risks of
material misstatement at the group level.
Based on that assessment, we focused our group audit
scope and work on the business units at 5 locations –
UK, Australia, USA, Norway and Netherlands (2019: 5).
Within the 5 locations, 18 (2019:17) business units were
subject to a full audit scope, whilst remaining 5 (2019:
6) were subject to specified audit procedures where the
extent of our testing was based on our assessment of
the risks of material misstatement and of the materiality
of the group’s operations at those locations.
These locations, incorporating those covered by
specified audit procedures, account for 99% (2019:
98%) of the group’s net assets, 92% (2019: 91%) of the
group’s revenue and 92% (2019: 92%) of the group’s
adjusted profit before tax. They were also selected
to provide an appropriate basis for undertaking audit
work to address the risks of material misstatement
identified above. Component materiality ranged from
£0.5m to £0.6m (2019: £0.68m to £0.85m).
At the group level, we also tested the consolidation
process, impairment of goodwill and long lived assets,
accounting for leases, accounting for acquisitions
and related balances, borrowings and intercompany.
We also carried out analytical procedures to support
our conclusion that there were no significant risks of
material misstatement of the aggregated financial
information of the remaining components not subject
to audit or audit of specified account balances.
The group audit team continued to follow a
programme of planned review that has been designed
so that the Senior Statutory Auditor and/or a senior
member of the group audit team reviews overseas
components selected by the Senior Statutory Auditor
based on his judgement. In the current year, we
could not visit any overseas locations due to the
current travel restrictions as a result of the COVID-
19 pandemic. In 2019 we visited three overseas
locations namely, Australia, US and Norway in addition
to the UK component audit. Whilst we were unable
to visit this year, we were involved in the work our
components and reviewed the audit file of our largest
component, Australia remotely. Further, we performed
the audit of US component from the UK. Every year,
regardless of whether we have visited or not, we
include the component audit partner and other senior
members of the component audit team in our team
briefing, discuss their risk assessment and review
documentation of the findings from their work.
Financial statementsReport and Accounts 2020 The extent of our involvement which commenced
from the planning of the group audit included:
• setting the scope of the component auditor
and assessment of the component auditor’s
independence;
• designing the audit procedures for all significant
risks to be addressed by the component auditors
and issuing group audit instructions detailing the
nature and form of the reporting required by the
group engagement team;
• providing direction on enquiries made by the
component auditors and reviewing their reporting
documents submitted to the group audit team;
• a review of the significant risks work for all
component auditors including the three
components we selected this year; and
• participating in the audit close meetings for each
of the operating companies.
17%
8%
14% 8%
10% 1%
Revenue
Profit
before tax
Net assets
• Full audit scope
• Specified audit procedures
• Review at group level
75%
78%
89%
7.2 Our consideration of the control environment
7.3 Working with other auditors
The business units operate under a common control
environment, with a centrally designed and monitored
controls operating framework and utilise different IT
infrastructures. We obtained an understanding of the
relevant controls across all business units.
We involved our IT specialists to perform testing of the
relevant general IT controls associated with the system
used in production of certain system generated data
from the key accounting, reporting and consolidation
systems. We selected a sample of relevant controls for
testing based on the frequency of each control. Based
on the procedures performed, we were able to take a
controls reliance approach on the revenue testing in
certain components within the group.
8. Other information
Working remotely, we exercised close supervision and
oversight of our component audit teams through the
performance of the following procedures:
• sent detailed instructions to all component audit
teams outlining the specified procedures above;
• all component teams were included in team
briefings, planning meetings and component risk
assessments;
• we remotely reviewed supporting working papers
prepared by components and related deliverables
submitted to us; and
• close calls were held to discuss matters raised.
125
The other information comprises the information included in the annual report, other than the financial
statements and our auditor’s report thereon. The directors are responsible for the other information contained
within the annual report. Our opinion on the financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance
conclusion thereon.
We have nothing
to report in this
regard.
Our responsibility is to read the other information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or
otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine
whether this gives rise to a material misstatement in the financial statements themselves. If, based on the
work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact.
Financial statementsReport and Accounts 2020 9. Responsibilities of Directors
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, and for
such internal control as the directors determine
is necessary to enable the preparation of financial
statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors
are responsible for assessing the group’s and the
parent company’s ability to continue as a going
concern, disclosing as applicable, matters related to
going concern and using the going concern basis
of accounting unless the directors either intend to
liquidate the group or the parent company or to cease
operations, or have no realistic alternative but to do so.
10. Auditor’s responsibilities for the audit of
the financial statements
Our objectives are to obtain reasonable assurance
about whether the financial statements as a whole
are free from material misstatement, whether due
to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate,
they could reasonably be expected to influence the
economic decisions of users taken on the basis of
these financial statements.
A further description of our responsibilities
for the audit of the financial statements is
located on the FRC’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part
of our auditor’s report.
11. Extent to which the audit was considered
capable of detecting irregularities,
including fraud
Irregularities, including fraud, are instances of non-
compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect
of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities,
including fraud is detailed below.
11.1 Identifying and assessing potential risks
elated to irregularities
In identifying and assessing risks of material
misstatement in respect of irregularities, including
fraud and non-compliance with laws and regulations,
we considered the following:
•
•
the nature of the industry and sector, control
environment and business performance including
the design of the group’s remuneration policies,
key drivers for directors’ remuneration, bonus levels
and performance targets;
results of our enquiries of management, internal
audit and the audit committee about their own
identification and assessment of the risks of
irregularities;
• any matters we identified having obtained and
reviewed the group’s documentation of their
policies and procedures relating to:
– identifying, evaluating and complying with laws
and regulations and whether they were aware of
any instances of non-compliance;
– detecting and responding to the risks of fraud
and whether they have knowledge of any actual,
suspected or alleged fraud;
– the internal controls established to mitigate
risks of fraud or non-compliance with laws
and regulations;
•
the matters discussed among the audit
engagement team including significant component
audit teams and relevant internal specialists,
including tax, valuations, pensions, IT, and industry
specialists regarding how and where fraud might
occur in the financial statements and any potential
indicators of fraud.
126126
Financial statementsReport and Accounts 2020 As a result of these procedures, we considered the
opportunities and incentives that may exist within
the organisation for fraud and identified the greatest
potential for fraud in revenue recognition – contract
assets cut off. In common with all audits under ISAs (UK),
we are also required to perform specific procedures to
respond to the risk of management override.
We also obtained an understanding of the legal and
regulatory frameworks that the group operates in,
focusing on provisions of those laws and regulations
that had a direct effect on the determination of material
amounts and disclosures in the financial statements.
The key laws and regulations we considered in this
context included the UK Companies Act, Listing Rules,
pensions legislation and tax legislation.
In addition, we considered provisions of other laws
and regulations that do not have a direct effect on the
financial statements but compliance with which may
be fundamental to the group’s ability to operate or to
avoid a material penalty. These included the group’s
operating licence, regulatory solvency requirements
and environmental regulations.
11.2 Audit response to risks identified
As a result of performing the above, we identified
revenue recognition – contract assets cut-off as a key
audit matter related to the potential risk of fraud. The
key audit matters section of our report explains the
matter in more detail and also describes the specific
procedures we performed in response to that key
audit matter.
In addition to the above, our procedures to respond to
risks identified included the following:
•
reviewing the financial statement disclosures and
testing to supporting documentation to assess
compliance with provisions of relevant laws and
regulations described as having a direct effect on
the financial statements;
• enquiring of management, the audit committee
and in-house and external legal counsel concerning
actual and potential litigation and claims;
•
• performing analytical procedures to identify any
unusual or unexpected relationships that may
indicate risks of material misstatement due
to fraud;
reading minutes of meetings of those charged with
governance, reviewing internal audit reports and
reviewing correspondence with correspondence
with tax authorities where the case; and
in addressing the risk of fraud through management
override of controls, testing the appropriateness of
journal entries and other adjustments; assessing
whether the judgements made in making
accounting estimates are indicative of a potential
bias; and evaluating the business rationale of any
significant transactions that are unusual or outside
the normal course of business.
•
We also communicated relevant identified laws and
regulations and potential fraud risks to all engagement
team members including internal specialists and
significant component audit teams, and remained alert
to any indications of fraud or non-compliance with
laws and regulations throughout the audit.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
12. Opinions on other matters prescribed by
the Companies Act 2006
In our opinion the part of the directors’ remuneration
report to be audited has been properly prepared in
accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the
course of the audit:
•
the information given in the strategic report and
the directors’ report for the financial year for which
the financial statements are prepared is consistent
with the financial statements; and
•
the strategic report and the directors’ report have
been prepared in accordance with applicable
legal requirements.
In the light of the knowledge and understanding of the
group and the parent company and their environment
obtained in the course of the audit, we have not
identified any material misstatements in the strategic
report or the directors’ report.
127
Financial statementsReport and Accounts 2020 13. Corporate Governance Statement
The Listing Rules require us to review the directors’
statement in relation to going concern, longer-term
viability and that part of the Corporate Governance
Statement relating to the group’s compliance with
the provisions of the UK Corporate Governance Code
specified for our review.
Based on the work undertaken as part of our audit, we
have concluded that each of the following elements
of the Corporate Governance Statement is materially
consistent with the financial statements and our
knowledge obtained during the audit:
· the directors’ statement with regards to the
appropriateness of adopting the going concern
basis of accounting and any material uncertainties
identified set out on page 56;
the directors’ explanation as to its assessment of
the group’s prospects, the period this assessment
covers and why the period is appropriate set out on
page 55;
the directors’ statement on fair, balanced and
understandable set out on page 67;
the board’s confirmation that it has carried out a
robust assessment of the emerging and principal
risks set out on page 50;
the section of the annual report that describes the
review of effectiveness of risk management and
internal control systems set out on page 50; and
the section describing the work of the audit
committee set out from page 90.
•
•
•
•
•
14. Matters on which we are required to report by exception
14.1 Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
we have not received all the information and explanations we require for our audit; or
•
• 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 are not in agreement with the accounting
records and returns.
•
We have nothing to report in respect
of these matters.
128128
14.2 Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain
disclosures of directors’ remuneration have not been made or the part of the directors’
remuneration report to be audited is not in agreement with the accounting records and returns.
We have nothing to report in respect
of these matters.
15. Other matters which we are
required to address
16. Use of our report
15.1 Auditor tenure
Following the recommendation of the audit
committee, we were appointed by the Board on
27 June 2012 to audit the financial statements
for the year ending 31 December 2012 and
subsequent financial periods. The period of
total uninterrupted engagement including
previous renewals and reappointments of the
firm is 9 years, covering the years ending 31
December 2012 to 31 December 2020.
15.2 Consistency of the audit report with the
additional report to the audit committee
Our audit opinion is consistent with the additional
report to the audit committee we are required to
provide in accordance with ISAs (UK).
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.
Alexander Butterworth ACA
(Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
Reading, United Kingdom
8 March 2021
Financial statementsReport and Accounts 2020 CONSOLIDATED INCOME STATEMENT
£m
Revenue
Less: passthrough costs
Fee revenue
Adjusted operating profit
Amortisation of acquired intangibles and transaction-related costs
Exceptional items
Operating (loss)/profit
Finance costs
Finance income
Adjusted profit before tax
(Loss)/profit before tax
Tax (credit)/expense
Loss for the year attributable to equity holders of the parent
Basic loss per share (pence)
Diluted loss per share (pence)
Adjusted basic earnings per share (pence)
Adjusted diluted earnings per share (pence)
Note
4,5
3,4
3,4
3,4,6,7,8
3,6
3,7
8
9
9
3
12
13
13
3,13
3,13
Year ended
31 December 2020
542.1
(84.8)
457.3
20.5
(5.5)
(39.2)
(24.2)
(7.2)
0.1
13.4
(31.3)
0.2
(31.1)
(12.95)
(12.83)
4.33
4.29
Restated
year ended
31 December 2019
612.6
(84.4)
528.2
43.4
(9.1)
(23.4)
10.9
(6.2)
0.2
37.4
4.9
(6.1)
(1.2)
(0.55)
(0.54)
12.43
12.31
129
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
£m
Loss for the year
Actuarial gains and losses on remeasurement of defined benefit
pension scheme
Tax on remeasurement of defined benefit provision liability
Foreign exchange differences on translation of foreign operations*
Total comprehensive income/(expense)
Total recognised comprehensive expense for the year attributable to
equity holders of the parent
* may be reclassified subsequently to profit or loss in accordance with IFRS.
The notes on pages 133 to 166 form part of these financial statements.
Year ended
31 December 2020
Note
29
12
(31.1)
(0.1)
–
8.9
8.8
(22.3)
Year ended
31 December 2019
(1.2)
(0.1)
–
(12.3)
(12.4)
(13.6)
Financial statementsReport and Accounts 2020 CONSOLIDATED BALANCE SHEET
£m
Assets
Non-current assets:
Intangible assets
Property, plant and equipment
Right-of-use assets
Deferred tax asset
Current assets:
Trade and other receivables
Corporation tax receivable
Cash at bank
Liabilities
Current liabilities:
Borrowings
Lease liabilities
Deferred consideration
Trade and other payables
Corporation tax liabilities
Provisions
Net current (liabilities)/assets
130130
Non-current liabilities:
Borrowings
Lease liabilities
Deferred consideration
Other payables
Deferred tax liability
Provisions
Net assets
Equity
Share capital
Share premium
Retained earnings
Merger reserve
Employee trust
Translation reserve
Total shareholders’ equity
As at
31 December 2020
As at
31 December 2019
Note
14
15
16
23
18
20
16
21
19
22
20
16
21
23
22
24
24
24
350.5
28.5
42.1
11.2
432.3
130.8
2.4
43.2
176.4
54.0
10.8
3.1
129.2
3.0
5.7
205.8
(29.4)
–
38.1
2.7
0.2
8.4
4.5
53.9
349.0
8.3
125.3
166.3
38.7
(11.5)
21.9
349.0
378.7
32.3
44.8
3.8
459.6
157.1
0.9
17.7
175.7
1.3
10.0
3.1
104.9
–
0.9
120.2
55.5
110.5
39.8
5.6
1.5
6.3
2.9
166.6
348.5
6.8
121.9
195.7
21.2
(10.1)
13.0
348.5
These financial statements were approved and authorised for issue by the Board on 8 March 2021.
The notes on pages 133 to 166 form part of these financial statements.
John Douglas, Director
Judith Cottrell, Director
On behalf of the Board of RPS Group Plc (Company number 2087786).
Financial statementsReport and Accounts 2020
CONSOLIDATED BALANCE SHEET
CONSOLIDATED CASH FLOW STATEMENT
£m
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
Purchase of intangible assets
Proceeds from sale of assets
Proceeds from sale of business
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from issue of share capital
Net (decrease)/increase in bank borrowings
Payment of lease liabilities
Bank arrangement fees
Dividends paid
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of exchange rate fluctuations
Cash and cash equivalents at end of year
Cash and cash equivalents comprise:
Cash at bank
Bank overdraft
Cash and cash equivalents at end of year
The notes on pages 133 to 166 form part of these financial statements.
Year ended
31 December 2020
84.0
Year ended
31 December 2019
37.6
Note
28
–
(3.0)
(5.0)
(2.8)
0.4
0.7
(9.7)
19.4
(55.4)
(11.0)
(1.0)
–
(48.0)
26.3
16.4
0.5
43.2
43.2
–
43.2
(10.1)
(0.1)
(13.3)
(7.8)
0.4
–
(30.9)
–
23.5
(9.2)
(0.7)
(16.9)
(3.3)
3.4
15.4
(2.4)
16.4
17.7
(1.3)
16.4
25
28
28
131
Financial statementsReport and Accounts 2020 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
£m
At 1 January 2019
Share
capital
6.8
Share
premium
120.4
Retained
earnings
212.4
Merger
reserve
21.2
Employee
trust
(9.8)
Translation
reserve
25.3
Total
equity
376.3
Loss for the year
Other comprehensive expense
Total comprehensive expense for the year
Issue of new ordinary shares (note 24)
Share-based payment expense (note 31)
Transfer on release of shares
Dividends paid (note 25)
At 31 December 2019
Loss for the year
Other comprehensive income/(expense)
Total comprehensive income/(expense) for
the year
Issue of new ordinary shares (note 24)
Share-based payment expense (note 31)
Transfer on release of shares
At 31 December 2020
–
–
–
–
–
–
–
–
–
–
1.5
–
–
–
6.8
121.9
–
–
–
1.5
–
–
–
–
–
3.4
–
–
(1.2)
(0.1)
(1.3)
(0.5)
2.7
(0.7)
(16.9)
195.7
(31.1)
(0.1)
(31.2)
(0.9)
3.4
(0.7)
–
–
–
–
–
–
–
–
–
–
(1.0)
–
0.7
–
–
(12.3)
(12.3)
–
–
–
–
21.2
(10.1)
13.0
–
–
–
17.5
–
–
–
–
–
(2.1)
–
0.7
–
8.9
8.9
–
–
–
(1.2)
(12.4)
(13.6)
–
2.7
–
(16.9)
348.5
(31.1)
8.8
(22.3)
19.4
3.4
–
8.3
125.3
166.3
38.7
(11.5)
21.9
349.0
The notes on pages 133 to 166 form part of these financial statements.
132132
Financial statementsReport and Accounts 2020
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Classification of liabilities as current or
non-current - amendments to IAS 1
•
•
1. SIGNIFICANT ACCOUNTING POLICIES
RPS Group Plc (the 'Company') is a public
company limited by shares domiciled in
England under the Companies Act.
The address of the registered office is
20 Western Avenue, Milton Park,
Abingdon, Oxon OX14 4SH. The nature
of the Company's operations and its
principal activities are set out in the
strategic report on pages 7 to 62.
The consolidated financial statements
of the Company for the year ended
31 December 2020 comprise the
Company and its subsidiaries (together
referred to as the ‘Group’).
The accounting policies set out below
have been applied consistently to both
years presented in these consolidated
financial statements.
IFRS 17 Insurance Contracts -
amendments to IFRS 17 Insurance
Contracts
(a) Basis of preparation
The financial statements have been
prepared in accordance with international
accounting standards in conformity with
the requirements of the Companies Act
2006 and International Financial Reporting
Standards adopted pursuant to Regulation
(EC) No 1606/2002 as it applies in the
European Union. The financial statements
have also been prepared in accordance
with International Financial Reporting
Standards as issued by the IASB. The
financial statements are presented in
pounds sterling, rounded to the nearest
million. The financial statements have
been prepared on the historical cost basis.
Historical cost is generally based on fair
value of the consideration given in
exchange for goods and services.
There are no new or revised standards
and interpretations that are relevant to
the Group and have been adopted for the
first time in the year that have had a
significant impact on the statements.
Certain new accounting standards and
interpretations have been published that
are not mandatory for 31 December 2020
reporting periods and have not been early
adopted by the Group:
•
•
•
•
•
Onerous contracts; cost of fulfilling a
contract - amendments to IAS 37
Interest Rate Benchmark Reform –
Phase 2 – Amendments to IFRS 9, IAS
39, IFRS 7, IFRS 4 and IFRS 16
Annual improvements to IFRS
standards 2018 – 2020
Property, plant and equipment;
proceeds before intended use –
amendments to IAS 16
Revised Conceptual Framework for
Financial Reporting
(b) Basis of consolidation
The consolidated financial statements
incorporate the financial statements of
the Company and entities controlled by
the Company (its subsidiaries) made up to
31 December each year. Control is
achieved when the Company:
•
•
•
has the power over the investee;
is exposed, or has rights, to variable
returns from its involvement with the
investee; and
has the ability to use its power to
affects its returns.
The Company reassesses whether or not
it controls an investee if facts and
circumstances indicate that there are
changes to one or more of the three
elements of control listed above.
Consolidation of a subsidiary begins when
the Company obtains control over the
subsidiary and ceases when the Company
loses control of the subsidiary.
Specifically, the results of subsidiaries
acquired or disposed of during the year
are included in profit or loss from the date
the Company gains control until the date
when the Company ceases to control
the subsidiary.
Where necessary, adjustments are made
to the financial statements of subsidiaries
to bring the accounting policies used into
line with the Group’s accounting policies.
All intragroup assets and liabilities, equity,
income, expenses and cash flows relating
to transactions between the members of
the Group are eliminated on consolidation.
When the Group loses control of a
subsidiary, the gain or loss on disposal
recognised in profit or loss is calculated as
the difference between (i) the aggregate
of the fair value of the consideration
received and the fair value of any retained
interest and (ii) the previous carrying
amount of the assets (including goodwill),
less liabilities of the subsidiary and any
133
non-controlling interests. All amounts
previously recognised in other
comprehensive income in relation to that
subsidiary are accounted for as if the
Group had directly disposed of the related
assets or liabilities of the subsidiary (i.e.
reclassified to profit or loss or transferred
to another category of equity as required/
permitted by applicable IFRS Standards).
(c) Revenue
Consultancy
The Group delivers consultancy services
to our clients on a time and materials or
fixed fee basis. In both cases, revenue is
recognised over the life of the project, as
the services are performed by our staff.
The Group delivers services that have no
alternative use to us (advice to clients,
which may take the form of reports,
designs, etc.) as the services are
specifically tailored to each client’s
projects and circumstances. The Group
has a right to payment for work
performed to date.
Time and materials projects typically have
a single performance obligation to
provide a variable amount of consultant
hours to the customer at agreed rates.
Revenue is recognised on an output
method based on the number of hours
worked at each rate plus the recharge of
any out of pocket expenses incurred.
Fixed fee projects have a single or series
of performance obligations which are
satisfied over time. For each distinct
performance obligation, revenue is
recognised using an input method based
on total costs incurred to date as a
percentage of total estimated costs to
complete the project or performance
obligation. Revenue and the associated
margin are therefore recognised
progressively as costs are incurred and
the estimated costs to complete are
updated regularly to take account of any
risks. An anticipated loss on a
performance obligation is recognised
immediately when it becomes probable
that the total estimated costs to complete
will exceed the transaction price
allocation to that performance obligation.
Software
The Group sells licences and access to
software and applications. The software
may be customised by RPS for each
client, and where we sell customised
software we recognise revenue over
Financial statementsReport and Accounts 2020 134134
the period of customisation. Access
to applications is provided for a period
and revenue is recognised evenly
over that period.
Training
The Group provides classroom, field-
based and online training services to
clients, either on a course by course basis
or through a program specifying the
numbers of training days available to the
client. Revenue is recognised as the
courses are delivered to the clients.
Equipment
From time to time, the Group sells pieces
of equipment to clients. In these cases,
revenue is recognised when control of
the asset passes to the customer and we
have no remaining rights over the asset.
Laboratory testing
The Group provides Laboratory testing
services and the revenue generated is
recognised as samples are tested.
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 as it becomes due
to the Group. Trade receivables, trade
payables and cash related to these
transactions are included in the
consolidated balance sheet.
Payment terms
For all revenue types, payment is typically
due between 30 and 60 days after the
invoice date, depending on the service,
the client and the territory in which the
Group is operating.
Fee revenue and
passthrough costs
The Group disaggregates revenue into
fee revenue and passthrough costs.
Fee revenue is revenue from activity
where RPS adds value. Specifically, this is
the revenue from the Group’s resource
pool, that consists of its employees and
associates, equipment and software, plus
profit on passthrough costs. Passthrough
costs represent costs incurred when
delivering projects that are not directly
related to the Group’s resource pool.
Such costs are recovered from clients
and examples include the cost of
subcontractors, travel, accommodation
and subsistence.
Contract assets and liabilities
Contract assets are booked when the
amount of revenue recognised on a
contract exceeds the amount invoiced.
Upon invoicing, the contract asset is
reclassified to trade receivables. Where
the amount invoiced exceeds the amount
of revenue recognised, the difference is
booked in contract liabilities.
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
the income statement as an expense
as incurred.
Financing components
The Group does not expect to have any
contracts where the period between the
transfer of the promised goods or services
to the customer and the payment by the
customer exceeds one year.
Consequently, the Group does not adjust
any of the transaction prices for the time
value of money.
(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.
Deferred consideration is stated at fair
value and 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.
(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 and is
not amortised as it has an indefinite life.
Goodwill is allocated to Groups of
cash-generating units and is tested
annually for impairment.
ii Other intangible assets
Intangible assets other than goodwill that
are acquired by the Group and internally
generated software are stated at cost
less accumulated amortisation and
impairment losses. Where assets are
under construction, these are reviewed at
the balance sheet date to determine
whether there is an impairment.
Intangible assets identified in a business
combination are capitalised at fair value
at the date of acquisition if they are
iii Amortisation
Amortisation is charged to profit or loss
in proportion to the timing of the benefits
derived from the related asset from the
date that the intangible assets are
available for use over their estimated
useful lives unless such lives are indefinite.
The Group’s intangible assets are
amortised on a straight-line basis over
their expected useful lives:
Customer relationships
5 to 10 years
Trade names
Order backlog
Software
1 to 5 years
1 to 6 years
4 to 8 years
Internally generated software
10 years
Intellectual property rights
4 years
(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.
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.
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
Financial statementsReport and Accounts 2020
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.
(g) Judgements made in applying
accounting policies
In the course of preparing the financial
statements, no significant judgements
have been made in the process of
applying the Group’s accounting policies
that have had a significant effect on the
amounts recognised in the financial
statements.
in use calculations and these calculations
include estimates about the future
financial performance and discount rates.
(h) Sources of estimation
uncertainty
The Group performs an annual
impairment review on goodwill and
other non-current assets or whenever
there are indicators of impairment. The
recoverable amounts of cash-generating
units have been determined from value
COVID-19 is an impairment indicator.
The Group tested for impairment
resulting in an impairment charge of
£25.9 million (note 14).
There are no other sources of
estimation uncertainty.
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 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.
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 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.
iii 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:
Freehold buildings
50 years
Alterations to
leasehold premises
Motor vehicles
Fixtures, fittings,
IT and equipment
Life of lease
4 years
3 to 8 years
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 level 2 inputs: price
changes in the underlying forward rate,
the interest rate, the time to expiration of
the contract and the amount of foreign
(c) Leases
The Group assesses whether a contract is,
or contains, a lease and recognises a
right-of-use asset and a corresponding
liability at the date at which the leased
asset is available for use by the Group.
i Right-of-use assets
Right-of-use assets are measured at cost
comprising the following:
–
–
–
–
the amount of the initial
measurement of the lease liability;
any lease payments made at or
before the commencement date less
any lease incentives received;
any initial direct costs; and
any restoration costs.
The right-of-use asset is depreciated on a
straight-line basis from the
commencement date to the earlier of the
useful life and the end of the lease term.
In addition, the right-of-use asset may be
periodically reduced by impairment losses
and adjusted for certain remeasurements
such as exercising a break or an extension
option.
ii Lease liabilities
Lease liabilities are measured at the net
present value of the following lease
payments:
–
–
–
fixed payments less any incentives
receivable;
variable lease payments based on an
index or rate; and
payments of penalties for terminating
the lease, if the lease term reflects
the lessee exercising that option.
Extension and termination options are
included in many property leases across
the Group to maximise operational
flexibility and these options tend to be
only exercisable by the Group and not the
lessor. In determining the lease term, the
Group considers the facts and
circumstances that incentivise the Group
to exercise an extension or termination
option. Extension options are included to
the extent they are reasonably certain to
be exercised. Likewise, the period after a
termination option is only excluded from
a lease if the option to terminate is
reasonably certain to be exercised.
135
Financial statementsReport and Accounts 2020 136136
2. OTHER ACCOUNTING POLICIES CONTINUED
The lease payments are discounted using
the incremental borrowing rate in all
cases, as the interest rate implicit in the
Group’s leases cannot be determined. The
lease liability is remeasured when there is
a change in future lease payments arising
from a change in index or rate, or if the
Group changes its assessment of whether
it will exercise an extension or termination
option. A corresponding adjustment is
made to the carrying amount of the right-
of-use asset.
iii Short-term leases and low
value assets
Payments associated with short-term
leases and leases of low value assets are
recognised as an expense in the income
statement on a straight-line basis over the
lease term. Short-term leases are leases
with a term of 12 months or less. Low
value assets generally include small
pieces of office equipment such as coffee
machines and photocopiers where the
total rentals payable are less than £4,000.
(d) Trade and other receivables
Trade and other receivables are
recognised initially at their transaction
price as defined by IFRS 15 and
subsequently measured at amortised cost
less expected credit 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.
Financial assets
The Group’s financial assets consist of
trade receivables, contract assets and
cash. These assets are measured at
amortised cost as the Group’s business
model for managing these assets is to
hold them until realisation of the asset
as cash.
Impairment of financial assets
For trade receivables and contract assets,
the Group applies the simplified approach
permitted by IFRS 9 which requires
expected lifetime losses to be recognised
from initial recognition of the receivables.
To measure the expected credit losses,
trade receivables and contract assets
have been grouped based on shared
credit risk characteristics relating to the
markets we operate in. The Group’s
history of such losses is not material, even
during significant downturns, and
consequently the risk associated with
Brexit and the COVID-19 pandemic are
deemed to be limited.
(e) 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.
(f ) 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 Defined benefit plans
The cost of providing benefits is
determined using the projected unit
credit method, with actuarial valuations
being carried out at the end of each
reporting period. Remeasurement gains
and losses are recognised immediately in
the balance sheet with a charge or credit
to the statement of comprehensive
income in the period in which they occur.
These remeasurement gains and losses
are not recycled to the income statement.
Defined benefit costs are split into
three categories:
–
–
–
current service cost, past service cost
and gains and losses on curtailments
and settlements (recognised in
administrative expenses)
net interest expense or income
(recognised in finance costs); and
remeasurement (recognised in other
comprehensive income)
The retirement benefit obligation
recognised in the consolidated balance
sheet represents the deficit in the
Group’s defined benefit scheme.
iii Share-based payments
The Group operates share-based payment
arrangements with employees for shares
in RPS Group Plc.
The Share Incentive Plan (“SIP”) is an
all-employee share plan which operates
in the UK, Ireland, Australia, Canada,
Netherlands, Norway and USA. Employees
purchase partnership shares on a monthly
or annual basis using deductions from
salary and the Group matches this
by awarding matching shares. These
matching shares are awarded at no cost
to the employee and are released to
the employee subject to continuity of
employment provision after three years.
The Performance Share Plan (“PSP”)
is a discretionary share incentive
arrangement for certain senior employees
of RPS Group Plc. The awards are granted
over a fixed number of shares at no cost
to the employees. At the end of the three
year holding period the award will vest
subject to continuity of employment
conditions.
The Executive Long Term Incentive
Plan (“ELTIP”) is a discretionary share
incentive arrangement for RPS Group
Plc’s senior executives. The awards are
granted over a fixed number of shares at
no cost to the employees. At the end of
the three year holding period the award
will vest subject to the achievement of
the performance measures outlined in
the Remuneration Report. There is then
a two year holding period for awards that
have vested.
The Short Term Annual Bonus Plan
(“STABP”) is an incentive scheme for
RPS Group Plc’s senior employees based on
the achievement of a range of financial and
non-financial targets over a one year period.
50% of the bonus award is paid in cash
and 50% is deferred into shares which are
subject to a three year holding period. There
are no further performance conditions
applicable to the deferred shares.
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 calculates the fair market
value of options using a binomial model
and for whole share awards the fair value
is 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 are
granted.
Those fair values are charged to the
income statement over the relevant
vesting period adjusted to reflect actual
and expected vesting levels.
iv 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.
Financial statementsReport and Accounts 2020 2. OTHER ACCOUNTING POLICIES CONTINUED
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.
(n) 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.
(o) Share Scheme Trusts
The Company administers its share
plans through two Trusts - the Employee
Benefit Trust ('EBT') and the SIP Trust. The
SIP Trust is used for the HMRC-approved
Share Incentive Plan and the EBT as
used for all other plans. As the Company
is deemed to have control of its share
trusts, they are treated as subsidiaries
and consolidated for the purpose of the
Group accounts. The Trusts’ 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 Trusts’
investments in the Company’s shares are
deducted from shareholders’ funds in
the Group balance sheet as if they were
treasury shares.
137
(g) Government grants
Government grants for furlough income
and similar income are not recognised
until there is reasonable assurance that
the Group will comply with the conditions
attaching to them and the income will
be received. Government grants are
recognised in profit or loss on a systematic
basis over the periods in which the Group
recognises as expenses the related costs
for which the grants are intended to
compensate.
(h) 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.
(i) Trade and other payables
Trade and other payables are stated at
cost. Trade payables due within one year
are not discounted.
Financial liabilities
The Group’s financial liabilities consist
of trade and other payables, contract
liabilities and borrowings and are
measured at amortised cost.
(j) Borrowings
Bank overdrafts and interest bearing
loans are initially measured at fair value
and then subsequently measured at
amortised cost using the effective
interest rate method.
(k) 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 Employee
Benefit trusts. When the shares are
released to staff, the related entry to the
employee trust reserve is reversed to
retained earnings.
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.
(l) Exceptional items
Exceptional items are items which,
because of their size, nature or expected
infrequency, merit separate presentation
in the consolidated income statement
to provide a consistent presentation
of adjusted profit measures. Examples
of exceptional items would include
impairment charges, substantial legal
costs, significant restructuring programs
along with other significant non-recurring
items where the Group considers
separate disclosure would be useful.
(m) Income tax
Income tax on the income for the
years presented comprises current and
deferred tax. It is the best estimate of
the tax amount expected to be paid or
received that reflects uncertainty related
to income taxes, if any. 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 and rules 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. The
amount of deferred tax provided is based
Financial statementsReport and Accounts 2020 3. ALTERNATIVE PERFORMANCE MEASURES
Throughout this document the Group
presents various alternative performance
measures. The measures presented are
those adopted by the Chief Operating
Decision Maker (‘CODM’, deemed to be the
main Board) and analysts who follow us in
assessing the performance of the business.
Group profit and earnings
measures
Adjusted operating profit and adjusted
profit before tax
Adjusted profit before tax (2019: PBTA) is
used by the Board to monitor and measure
the trading performance of the Group. It
excludes certain items which the Board
believes distort the trading performance of
the Group. These items are either
acquisition and disposal related, non-cash
items, or they are exceptional in nature.
This alternative performance measure was
renamed in the year but the definition is
unchanged.
Delivering the Group’s strategy includes
investment in selected acquisitions that
enhance the depth and breadth of services
that the Group offers in the territories in
which it operates. In addition, from time to
time the Group chooses to exit a particular
market or service offering because it is not
offering the desired returns. By excluding
acquisition and disposal related items from
adjusted profit before tax, the Board has a
clearer view of the performance of the
Group and is able to make better
operational decisions to support
its strategy.
Accordingly, transaction-related costs
including costs of acquisition and disposal,
losses on the closure of businesses and
amortisation of intangible assets are
excluded from the Group’s preferred
performance measure. Similarly,
exceptional items are excluded as they are
not reflective of the Group's trading
performance in the year.
Items are treated consistently year-on-
year, and these adjustments are also
consistent with the way that performance
is measured under the Group’s incentive
plans and its banking covenants.
Adjusted operating profit is a derivative of
adjusted profit before tax. A reconciliation
is shown below.
£m
(Loss)/profit before tax
Add:
Amortisation of acquired intangibles and transaction-related costs
Exceptional items
Adjusted profit before tax
138138
Add:
Net finance costs
Adjusted operating profit
Year ended
31 December 2020
(31.3)
Year ended
31 December 2019
4.9
5.5
39.2
13.4
7.1
20.5
9.1
23.4
37.4
6.0
43.4
Adjusted profit attributable to ordinary shareholders and adjusted earnings per share
It follows that the Group uses adjusted profit attributable to ordinary shareholders as the input to its adjusted EPS measures. Again,
this profit measure excludes amortisation of acquired intangibles, transaction-related costs and exceptional items, but is an after tax
measure. The Board considers adjusted EPS to be more reflective of the Group's trading performance in the year.
£m
Loss attributable to ordinary shareholders
Add:
Amortisation of acquired intangibles and transaction-related costs
Exceptional items
Tax on amortisation of acquired intangibles, transaction-related costs
and exceptional items
Adjusted profit attributable to ordinary shareholders
Constant currency
The Group generates revenues and
profits in various territories and
currencies because of its international
footprint. Those results are translated on
consolidation at the foreign exchange rates
prevailing at the time. These exchange
rates vary from year to year, so the Group
presents some of its results on a constant
currency basis. This means that the prior
year’s results have been retranslated
using current year exchange rates. This
eliminates the effect of exchange from the
Year ended
31 December 2020
(31.1)
Year ended
31 December 2019
(1.2)
5.5
39.2
(3.2)
10.4
9.1
23.4
(3.4)
27.9
year-on-year comparison of results. The
difference between the reported numbers
and the constant currency numbers is the
‘constant currency effect’.
£m
Revenue
Fee revenue
Adjusted profit before tax
Profit before tax
2019
612.6
528.2
37.4
4.9
Constant
currency effect
(6.2)
2019 at
constant currency
606.4
(6.0)
(0.5)
(1.5)
522.2
36.9
3.4
Financial statementsReport and Accounts 2020 Segment profit and underlying profit
Segment profit is presented in our
segmental disclosures. This excludes
the effects of financing, amortisation
and exceptional items which are metrics
outside of the control of segment
management. It also excludes unallocated
expenses. Segment profit is then adjusted
by excluding the costs of reorganisation
to give underlying profit for the segment.
This reflects the underlying trading of
the business. A reconciliation between
segment profit and operating profit is
given in note 4.
Reorganisation costs
This classification comprises costs and
income arising as a consequence of
reorganisation such as redundancy
costs, profit or loss on disposal of plant,
property and equipment and the costs of
consolidating office space.
Unallocated expenses
Certain central costs are not allocated
to the segments because they
predominantly relate to the stewardship
of the Group. They include the costs of
the main board and the Group finance
and marketing functions and related
IT costs.
Revenue measures
The Group disaggregates revenue into
fee revenue and passthrough costs. This
provides insight into the performance of
the business and our productive output.
(See note 1(c).) This is reconciled on
the face of the income statement. Fee
revenue by segment is reconciled in
note 4.
Cash flow measures
EBITDAS and EBITAS
EBITDAS is operating profit adjusted by
adding back non-cash expenses, tax and
financing costs. The adjustments include
interest, tax, depreciation, amortisation
and transaction-related costs and share
scheme costs. This generates a cash-
based operating profit figure which is
the input into the cash flow statement.
A reconciliation between operating profit
and EBITDAS is given in note 28. EBITAS
is an equivalent measure, but is after
depreciation costs.
Conversion of profit into cash
A key measure of the Group’s cash
generation is the conversion of profit into
cash. This is the cash generated from
operations divided by EBITDAS expressed
as a percentage. This metric is used as a
measure against which the Group’s long
and short-term performance incentive
schemes are judged and reflects how
much of the Group’s profit has been
collected as cash in the year.
Net bank borrowings
Net bank borrowings is the total of
cash and cash equivalents and interest
bearing bank loans. This measure gives
the external indebtedness of the Group
(excluding lease liabilities), and is an input
into the leverage calculations. This is
reconciled in note 28.
Leverage
Leverage is the ratio of net bank
borrowings (adjusted to include bonds,
indemnities and guarantees and to
exclude restricted cash) plus deferred
consideration to annualised EBITDAS and
is one of the financial covenants included
in our bank facilities.
Tax measures
We report one adjusted tax measure,
which is the tax rate on adjusted profit
before tax (‘adjusted effective tax rate’).
This is the tax charge applicable to
adjusted profit before tax expressed as a
percentage of adjusted profit before tax
and is set out in note 12.
Changes in definition of
alternative performance
measures and restatements of
comparatives
The Group has changed its definition for
non-IFRS revenue measures with effect
from 1 January 2020 as follows:
•
•
•
Definition of fee income amended
New category of revenue called
passthrough costs introduced
Recharged expenses no longer
reported
There is no impact on profit or cash
flow as a result of these changes in
any reporting period. The changes in
definition ensure alignment with the
global ERP design.
The benefit from this change in definition
are that it reduces judgement when
determining what is fee revenue, provides
a better indication of the underlying
growth in revenue, gives improved
information of resource requirements
and allows for a better reflection of
productivity and profitability.
The revised definition of fee revenue and
the definition of passthrough costs are as
follows:
Fee revenue
Fee revenue is revenue from activity
where RPS adds value. Specifically, this is
the revenue from the Group’s resource
pool, that consists of its employees and
associates, equipment and software, plus
profit on passthrough costs.
Passthrough costs
Passthrough costs is a category of
revenue representing costs incurred
when delivering projects that are not
directly related to the Group’s resource
pool. Such costs are recovered from
clients and examples include the cost of
subcontractors, travel, accommodation
and subsistence.
The effects of the change in definitions
are that the revenue from recharging the
cost of subcontractors will be treated
as passthrough costs and will not be
included in fee revenue and the profit
earned on recharging subcontractor costs
and other incidental costs will be reported
in fee revenue.
The Alternative Performance Measures
relating to revenue measures have been
restated for the year ended 31 December
2019 and the restatement adjustments
are detailed in note 4.
139
Financial statementsReport and Accounts 2020 4. BUSINESS AND GEOGRAPHICAL SEGMENTS
Segment information is presented in
the financial statements in respect of
the Group’s business segments, as
reported to the CODM. The business
segment reporting format reflects the
Group’s management and internal
reporting structure.
Inter-segment pricing is determined on
an arm’s length basis. Segment results
include items directly attributable to a
segment as well as those that can be
allocated on a reasonable basis.
Segment results for the year ended 31 December 2020:
The business segments of the Group are
as follows:
- Energy
- Consulting - UK and Ireland
- Services - UK and Netherlands
- Norway
- North America
- Australia Asia Pacific
£m
Energy
Consulting - UK and Ireland
Services - UK and Netherlands
Norway
North America
Australia Asia Pacific
Group eliminations
Total
£m
Energy
Consulting - UK and Ireland
Services - UK and Netherlands
Norway
North America
Australia Asia Pacific
Total
140140
Segment results for the year ended 31 December 2019 (restated):
£m
Energy
Consulting – UK and Ireland
Services – UK and Netherlands
Norway
North America
Australia Asia Pacific
Group eliminations
Total
Fee
revenue
75.7
108.0
85.7
56.0
39.0
92.9
–
457.3
Passthrough
costs
14.8
Intersegment
revenue
(1.0)
External
revenue
89.5
28.7
12.8
1.9
10.3
21.2
(4.9)
84.8
(1.2)
(1.9)
(0.1)
(0.6)
(0.1)
4.9
–
135.5
96.6
57.8
48.7
114.0
–
542.1
Underlying
profit
4.5
Reorganisation
costs
–
Segment
profit
4.5
6.3
5.4
4.5
2.9
8.2
31.8
–
–
–
–
–
–
6.3
5.4
4.5
2.9
8.2
31.8
Fee
revenue
104.3
126.2
96.6
64.7
46.1
90.3
–
528.2
Passthrough
costs
16.8
Intersegment
revenue
(1.0)
External
revenue
120.1
29.2
14.5
0.8
13.3
14.7
(4.9)
84.4
(1.3)
(1.7)
(0.2)
(0.5)
(0.2)
4.9
–
154.1
109.4
65.3
58.9
104.8
–
612.6
Fee income for the year ended 31 December 2019 as originally presented:
£m
Energy
Consulting – UK and Ireland
Services – UK and Netherlands
Norway
North America
Australia Asia Pacific
Group eliminations
Total
Fee
income
110.6
Recharged
expenses
10.5
Intersegment
revenue
(1.0)
External
revenue
120.1
127.6
101.4
64.7
58.3
98.3
(4.4)
556.5
27.8
9.7
0.8
1.1
6.7
(0.5)
56.1
(1.3)
(1.7)
(0.2)
(0.5)
(0.2)
4.9
–
154.1
109.4
65.3
58.9
104.8
–
612.6
Financial statementsReport and Accounts 2020 Restatement adjustments for the year ended 31 December 2019:
£m
Energy
Consulting – UK and Ireland
Services – UK and Netherlands
Norway
North America
Australia Asia Pacific
Group eliminations
Total
£m
Energy
Consulting – UK and Ireland
Services – UK and Netherlands
Norway
North America
Australia Asia Pacific
Total
Group reconciliation:
£m
Revenue
Less: passthrough costs
Fee revenue
Underlying profit
Reorganisation costs
Segment profit
Unallocated expenses
Adjusted operating profit
Exceptional items
Operating (loss)/profit
Net finance costs
Loss/(profit) before tax
£m
Energy
Consulting - UK and Ireland
Services - UK and Netherlands
Norway
North America
Australia Asia Pacific
Unallocated
Group total
Fee
revenue
(6.3)
Passthrough
costs
16.8
Recharged
expenses
(10.5)
Intersegment
revenue
–
External
revenue
–
(1.4)
(4.8)
–
(12.2)
(8.0)
4.4
(28.3)
29.2
14.5
0.8
13.3
14.7
(4.9)
84.4
(27.8)
(9.7)
(0.8)
(1.1)
(6.7)
0.5
(56.1)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Underlying
profit
11.1
Reorganisation
costs
–
Segment
profit
11.1
15.1
10.8
6.1
3.4
7.0
53.5
–
–
(0.1)
(0.1)
(0.6)
(0.8)
15.1
10.8
6.0
3.3
6.4
52.7
Year ended
31 December 2020
542.1
Restated
Year ended
31 December 2019
612.6
141
(84.8)
457.3
31.8
–
31.8
(11.3)
20.5
(5.5)
(39.2)
(24.2)
(7.1)
(31.3)
(84.4)
528.2
53.5
(0.8)
52.7
(9.3)
43.4
(9.1)
(23.4)
10.9
(6.0)
4.9
Carrying amount of
segment assets
Segment depreciation
and amortisation
Year ended
31 December 2020
73.0
Year ended
31 December 2019
81.7
Year ended
31 December 2020
3.4
Year ended
31 December 2019
3.0
158.1
102.3
51.8
50.3
115.9
57.3
608.7
184.4
107.6
53.9
66.7
114.0
27.0
635.3
4.6
5.2
2.3
3.4
5.7
1.7
26.3
4.7
5.2
2.9
3.3
7.9
1.0
28.0
Amortisation of acquired intangibles and transaction-related costs
Financial statementsReport and Accounts 2020 4. BUSINESS AND GEOGRAPHICAL SEGMENTS CONTINUED
The table below shows revenue and fee revenue to external customers based upon the country from which billing took place:
£m
UK
Australia
USA
Norway
Netherlands
Ireland
Canada
Other
Total
£m
UK
Australia
USA
Ireland
Norway
Canada
Netherlands
Other
Total
142142
Revenue
Year ended
31 December 2020
190.9
Year ended
31 December 2019
232.4
Year ended
31 December 2020
160.8
Fee revenue
Restated
Year ended
31 December 2019
193.6
128.6
81.1
57.7
39.9
34.4
6.4
3.1
542.1
123.4
97.5
66.2
40.5
38.3
10.4
3.9
612.6
105.5
64.7
56.0
32.6
30.5
5.2
2.0
457.3
106.0
76.9
65.2
34.7
40.1
9.2
2.5
528.2
As at
31 December 2020
Carrying amount of
non-current assets
As at
31 December 2019
177.9
98.4
39.5
45.0
37.8
12.8
20.5
0.4
432.3
193.1
97.0
52.1
39.9
21.0
43.4
13.1
–
459.6
5. REVENUE
Disaggregation of revenue
The Group segmental information disclosed in note 4 best depicts how the nature, timing, amount and uncertainty associated with
our revenues and cash flows are affected by economic factors. Segments are structured along geographical and market lines, and
risks are broadly consistent within the segments as a result.
Unsatisfied performance obligations
The transaction price allocated to partially satisfied or unsatisfied performance obligations at the balance sheet date are set out below.
These obligations equate to the contracted work which the Group has on hand at the year end.
£m
To be undertaken and recognised within one year
To be undertaken and recognised between one and two years
To be undertaken and recognised after two years
These obligations will be recognised as revenue over time.
As at
31 December 2020
235.6
As at
31 December 2019
252.8
31.3
40.0
306.9
37.4
23.6
313.8
Financial statementsReport and Accounts 2020 6. AMORTISATION OF ACQUIRED INTANGIBLES AND
TRANSACTION-RELATED COSTS
£m
Amortisation of acquired intangibles
Transaction-related costs
Total
7. EXCEPTIONAL ITEMS
£m
Impairment of goodwill (note 14)
Restructuring costs
Loss on disposal
Legal fees
ERP implementation costs
Impairment of ERP
Rebranding costs
Total
Year ended
31 December 2020
5.5
Year ended
31 December 2019
8.6
–
5.5
0.5
9.1
Year ended
31 December 2020
25.9
Year ended
31 December 2019
19.8
6.0
0.4
1.8
2.2
2.9
–
39.2
–
–
1.4
1.2
–
1.0
23.4
The Group has recognised a goodwill impairment charge of £25.9 million (2019: £19.8 million) relating to the impairment of the
Consulting and North America (2019: AAP) CGU groups. The market uncertainty caused by the COVID-19 pandemic has meant that we
have revised the short-term assumptions in the impairment modelling.
Restructuring costs of £6.0 million have been incurred as a result of actions taken to mitigate the impact of COVID-19 on the Group.
These costs comprise the impairment of right-of-use assets for properties that have been vacated, onerous contract provisions for
associated property costs and the redundancy costs incurred when matching our resource base to market demand.
143
On 31 December 2020, the Group disposed of the trade and assets of its specialist geology business in the Energy segment. The cash
consideration was £0.7 million and the loss on disposal of £0.4 million primarily related to the goodwill associated with the business.
Further legal fees of £1.8 million were incurred investigating potential issues regarding the administration of US government contracts
and/or projects and the investigation is ongoing (note 26).
The new ERP was implemented in the Netherlands and part of Australia towards the end of 2019 and stabilisation activities proceeded
throughout 2020. Further costs of £2.2 million were incurred in the current year on support through the stabilisation period.
Substantial rewrites of key elements of the system were required post go live as part of the stabilisation activities. The Group has
recognised an impairment charge of £2.9 million in respect of those parts of the system which have needed to be redeveloped or are
no longer part of the global design for future implementations.
In the prior year, the Group undertook a global rebranding of RPS which included a new logo, colour scheme, office signage and a new
website. This project was completed in 2019 and no further costs have been incurred in 2020.
Financial statementsReport and Accounts 2020
8. OPERATING PROFIT - BY NATURE OF EXPENSE
£m
Revenue
Staff costs (note 10)
Furlough income
Subconsultant costs
Other employment-related costs
Depreciation of owned assets
Depreciation of right-of-use assets
Amortisation of internally generated software
Profit on disposal of property, plant and equipment and right-of-use assets
Short-term and low value lease rentals
Travel costs
Office costs
Amortisation of acquired intangibles
Transaction-related costs
Exceptional items (note 7)
Other costs
Operating (loss)/profit
9. NET FINANCING COSTS
144144
£m
Finance costs:
Interest and charges on loans and overdraft
Interest on lease liabilities
Amortisation of prepaid financing costs
Unwind of discount on deferred consideration
Finance income:
Deposit interest receivable
Net financing costs
Year ended
31 December 2020
542.1
(297.7)
4.2
(110.5)
(15.5)
(9.4)
(10.9)
(0.5)
–
(0.2)
(8.7)
(22.1)
(5.5)
–
(39.2)
(50.3)
(24.2)
Year ended
31 December 2019
612.6
(306.7)
–
(137.7)
(27.5)
(9.3)
(10.0)
(0.1)
0.1
(2.7)
(18.2)
(22.4)
(8.6)
(0.5)
(23.4)
(34.7)
10.9
Year ended
31 December 2020
Year ended
31 December 2019
(4.4)
(1.9)
(0.7)
(0.2)
(7.2)
0.1
(7.1)
(3.8)
(1.9)
(0.3)
(0.2)
(6.2)
0.2
(6.0)
Financial statementsReport and Accounts 2020
10. EMPLOYEE BENEFIT EXPENSE
£m
Wages and salaries
Social security costs
Pension costs - defined contribution plans
Pension costs - defined benefit plans
Share-based payment expense - equity settled
Average monthly number of employees (including Executive Directors) was: *
Fee earning staff
Support staff
Year ended
31 December 2020
256.5
Year ended
31 December 2019
262.9
24.2
13.5
0.1
3.4
297.7
4,180
875
5,055
26.9
14.0
0.2
2.7
306.7
4,241
858
5,099
* 2019 restated due to incorrect information provided by Netherlands following implementation of ERP.
The Group considers the Directors to be the key management personnel and details of Directors’ remuneration are included in the
Remuneration Committee Report from page 99. The share-based payment charge in respect of key management personnel was
£1.0 million (2019: £0.6 million). Social security costs in respect of these personnel were £0.2 million (2019: £0.3 million).
11. AUDITORS’ REMUNERATION
During the year, the Group (including its overseas subsidiaries) obtained the following services from the Group’s auditors at costs as
detailed below:
£m
Statutory audit of the Company's annual accounts
Statutory audit of the Group's subsidiaries
Total audit fees
Other assurance services
Total audit-related assurance services
Other services
Total fees
Year ended
31 December 2020
0.2
Year ended
31 December 2019
0.1
145
0.7
0.9
0.1
1.0
–
1.0
0.7
0.8
0.1
0.9
–
0.9
Financial statementsReport and Accounts 2020
12. INCOME TAXES
Analysis of tax (credit)/expense in the consolidated income statement for the year:
£m
Current tax:
UK corporation tax
Overseas tax
Adjustments in respect of prior years
Deferred tax:
Origination and reversal of temporary differences
Effect of change in tax rate
Adjustments in respect of prior years
Total tax (credit)/charge for the year
Year ended
31 December 2020
Year ended
31 December 2019
0.1
6.2
(1.1)
5.2
(5.5)
0.6
(0.5)
(5.4)
(0.2)
1.8
6.0
(0.5)
7.3
(0.9)
–
(0.3)
(1.2)
6.1
In addition to the amount (credited)/charged to the consolidated income statement, the
following items related to tax have been recognised:
Deferred tax charge in other comprehensive income
–
–
The effective tax rate for the year on (loss)/profit before tax was 0.6% (2019: 125.4% ). The effective tax rate for the year on adjusted
profit before tax was 22.4% (2019: 25.4%) as shown in the table below:
£m
Total tax (credit)/expense in income statement
146146
Add back:
Tax on amortisation of acquired intangibles, transaction-related costs and
exceptional items
Adjusted tax charge on the profit for the year
Adjusted profit before tax
Adjusted effective tax rate
Tax rate impact of amortisation of acquired intangibles, transaction-related costs
and exceptional items
Statutory effective tax rate
Year ended
31 December 2020
(0.2)
Year ended
31 December 2019
6.1
3.2
3.0
13.4
22.4%
(21.8%)
0.6%
3.4
9.5
37.4
25.4%
100%
125.4%
The Group operates in and is subject to income tax in many jurisdictions. The weighted average tax rate is derived by weighting the
rates in those jurisdictions by the profits before tax earned there. It is sensitive to the statutory tax rates that apply in each jurisdiction
and the geographic mix of profits. The statutory tax rates in our main jurisdictions were UK 19.0% (2019: 19.0%) and Australia 30%
(2019: 30%) and the weighted average tax rate reduced to 16.8% in 2020 (2019: 21.3%).
The actual tax charge differs from the weighted average charge for the reasons set out in the following reconciliation:
£m
(Loss)/profit before tax
Tax at the weighted average rate of 16.8% (2019: 23.1%)
Effect of:
Irrecoverable witholding tax suffered
Impairment of goodwill
Effect of change in tax rates
Adjustments in respect of prior years
Other differences
Total tax expense for the year
Year ended
31 December 2020
(31.3)
Year ended
31 December 2019
4.9
(5.3)
0.8
5.7
(0.1)
(1.6)
0.3
(0.2)
1.0
1.2
4.2
–
(0.8)
0.5
6.1
Financial statementsReport and Accounts 2020 The Group operates, mainly through our oil and gas exposed businesses, in jurisdictions that impose withholding taxes on revenue
earned in those jurisdictions. This tax may be off-set against domestic corporation tax either in the current year or in the future within
certain time limits. To the extent that full recovery is not achieved in the current year or is not considered possible in future years
the withholding tax is charged to the income statement. Whilst the overall irrecoverable withholding tax decreased in the year, it
represented a larger proportion of the overall tax rate.
Enacted changes in the tax rate impact the carrying value of deferred tax balances, principally those related to the amortisation of
intangible assets. The impact in 2020 is a result of recognising UK balances at 19% rather than 17% as at the end of 2019.
Adjustments in respect of prior years arise when amounts of tax due calculated when tax returns are submitted differ from those
estimated at the year end. In 2020 the credit was mainly the result of losses being recognised in the US due to changes in the carry
back rules under the CARES Act.
Other differences include expenses not deductible for tax purposes such as entertaining, share scheme charges, depreciation of
property, plant and equipment which do not qualify for capital allowances and transaction-related costs. They also include items that
are deductible for tax purposes, such as goodwill and other asset amortisation, but are not included in the income statement.
In the Chancellor’s Budget on 3 March 2021, it was announced that the UK rate of corporation tax will increase from 19% to 25% on
1 April 2023. In addition, measures to increase losses that can be carried back to previous periods were announced. We will undertake
a detailed analysis of the impact of these changes on the Group’s UK tax position in due course but the changes would result in a
material increase in the liability recognised on goodwill offset by the increased carrying value of losses.
13. 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:
£m
Loss attributable to equity holders of the parent
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 loss per share (pence)
Diluted loss per share (pence)
Year ended
31 December 2020
(31.1)
Year ended
31 December 2019
(1.2)
240,155
2,162
242,317
(12.95)
(12.83)
223,958
2,264
226,222
(0.55)
(0.54)
147
The calculations of adjusted earnings per share (see note 3) were based on the number of shares as above and are shown in the
table below:
£m
Loss attributable to equity holders of the parent
Amortisation of acquired intangibles and transaction-related costs (note 6)
Exceptional items (note 7)
Tax on amortisation of acquired intangibles, transaction-related costs and exceptional
items (note 12)
Adjusted profit attributable to equity holders of the parent
Adjusted basic earnings per share (pence)
Adjusted diluted earnings per share (pence)
Year ended
31 December 2020
(31.1)
5.5
39.2
(3.2)
10.4
4.33
4.29
Year ended
31 December 2019
(1.2)
9.1
23.4
(3.4)
27.9
12.43
12.31
Financial statementsReport and Accounts 2020 14. INTANGIBLE ASSETS
Intellectual
property
rights
Customer
relationships
Order
backlog
Trade
names
Non
compete
Internally
generated
agreements Software
software Goodwill
Total
£m
Cost:
At 1 January 2020
Additions
Disposals
Exchange differences
At 31 December 2020
3.6
–
–
(0.1)
3.5
At 1 January 2020
Amortisation
Impairment
Exchange differences
At 31 December 2020
Net book value at
31 December 2020
3.6
–
–
(0.1)
3.5
–
Aggregate amortisation and impairment losses:
131.9
19.7
–
–
1.1
133.0
116.6
5.2
–
0.9
122.7
–
–
0.2
19.9
19.5
0.2
–
0.2
19.9
10.3
–
9.1
–
–
0.1
9.2
9.0
0.1
–
0.1
9.2
–
0.6
3.2
–
–
–
–
–
–
11.4
1.4
–
–
423.9
603.4
–
(1.0)
6.2
1.4
(1.0)
7.5
0.6
3.2
12.8
429.1
611.3
0.6
3.1
–
–
–
0.6
–
–
–
–
3.1
0.1
0.1
0.5
2.9
–
3.5
72.2
224.7
–
25.9
0.2
6.0
28.8
1.3
98.3
260.8
9.3
330.8
350.5
Intellectual
property
rights
Customer
relationships
Order
backlog
Trade
names
Non compete
Internally
generated
agreements Software
software Goodwill
Total
£m
Cost:
At 1 January 2019
3.7
131.6
19.3
0.6
3.3
418.5
586.3
148148
Additions
Acquisitions
Reclassification
Exchange differences
At 31 December 2019
–
–
–
(0.1)
3.6
–
4.1
–
(3.8)
131.9
Aggregate amortisation and impairment losses:
At 1 January 2019
Amortisation
Impairment
Exchange differences
At 31 December 2019
Net book value at
31 December 2019
3.7
–
–
(0.1)
3.6
112.2
7.5
–
(3.1)
116.6
9.3
–
0.1
–
(0.3)
9.1
9.2
0.1
–
(0.3)
9.0
–
1.0
–
(0.6)
19.7
19.2
0.8
–
(0.5)
19.5
–
9.2
–
2.2
–
–
14.8
–
(9.4)
9.2
20.0
2.2
(14.3)
603.4
11.4
423.9
–
0.1
–
–
0.1
52.7
200.6
–
19.8
(0.3)
72.2
8.7
19.8
(4.4)
224.7
–
–
–
(0.1)
3.2
3.0
0.2
–
(0.1)
3.1
–
–
–
–
0.6
0.6
–
–
–
0.6
–
–
15.3
0.2
0.1
0.1
11.3
351.7
378.7
Customer relationships relate to assets acquired in business combinations and have remaining useful lives of 1-9 years.
Goodwill
The Group tests annually for impairment or when there are any impairment triggers. Due to the impact of COVID-19 on the performance
of the Group in the first half of the year a full impairment review was performed as at 31 May 2020 as well as at the year end date.
The determination of whether or not goodwill is impaired requires an estimate to be made of the value in use of the CGU groups
to which goodwill has been allocated. Those value in use calculations include estimates about the future financial performance
of the CGUs based on budgets and forecasts, medium-term and long-term growth rates, discount rates and the markets in which
the business operates. A more cautious view has been taken in our short-term forecasts and assumptions due to the COVID-19
uncertainty and the resulting disruption in our markets and the wider economy. The cash flow projections in the four financial years
following the forecast year reflect management’s expectations of the medium-term operating performance of the CGU and the
growth prospects in the CGU’s market, including recovery from the impact of COVID-19. Thereafter a perpetuity is applied.
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.
Financial statementsReport and Accounts 2020 Discount rate applied
The discount rate applied to a CGU represents a pre-tax rate that reflects the market assessment of the time value of money at the end
of the reporting period and the risks specific to the CGU. The Group bases its estimate for the pre-tax discount rate on its weighted
average cost of capital (WACC). The inputs to this calculation are a combination of market, industry and company-specific data.
Consulting (UK and Ireland)
Services (UK)
Services (Netherlands)
Norway
North America
Australia Asia Pacific
Energy
31 December 2020 31 December 2019
10.7%
12.2%
13.1%
14.2%
12.2%
12.3%
14.7%
15.8%
11.2%
12.4%
10.8%
11.0%
12.9%
14.2%
Growth rates
The growth rates applied reflect management’s judgement regarding the potential future performance of the business. The medium
term comprises the years 2022 to 2025 and includes higher growth rates in the first couple of years as the economies and markets
in which we operate recover from the current COVID-19 related downturn. COVID-19 is expected to impact on all CGUs, to varying
degrees, in 2021 but have less of an impact on profit compared to the initial lockdown in 2020. Recovery to the level of profits seen
prior to the pandemic will be gradual.
The long-term growth rate applied to the perpetuity calculations was between -2.0% and 2.5% per annum and is unchanged from
the rates used in the 31 December 2019 goodwill impairment testing. These rates reflect the average long-term growth rates of the
economies in which the CGUs are based and our assessment of the longer term prospects of the businesses, including the impact that
climate change may have on the Energy CGU.
Long-term growth rates
Consulting (UK and Ireland)
Services (UK)
Services (Netherlands)
Norway
North America
Australia Asia Pacific
Energy
31 December 2020 31 December 2019
2.1% - 2.5%
2.1% - 2.5%
2.1%
2.0%
2.3%
2.3%
2.5%
(2.0%)
2.1%
2.0%
2.3%
2.3%
2.5%
(2.0%)
149
Summary of results
The Group recognised impairment charges of £17.4 million and £8.5 million against the goodwill allocated to the Consulting (UK &
Ireland) CGU and North America CGU groups respectively in the interim results for the six months ended 30 June 2020. The Board
had considered the prospects of and uncertainty in these two CGUs following the impact that COVID-19 was forecast to have on their
medium-term performance. All other CGUs were tested for impairment and no impairment charges were identified.
The impairment testing was updated at the year end, based on the latest budget and forecasts for medium-term growth and no
further impairments were identified.
The Group’s market capitalisation is below the net assets of the Group. The Directors are comfortable with this difference as they
consider the Group to be undervalued during these challenging times. The post year and share price performance has narrowed the
gap between value in use and market capitalisation.
Sensitivity of results to changes in estimates
The Group’s CGU groups all have headroom in the year end impairment review following the impairments made to the Consulting
(UK & Ireland) and North America CGUs at the half year as a result of better than forecast performance in the second half.
The valuation of goodwill allocated to CGU groups is most sensitive to the achievement of the 2021 budget, the medium-term growth
rates assumed for the following four years and the discount rate. Whilst we are able to manage staff costs, direct costs and overheads,
the revenue projections are inherently uncertain due to the short-term nature of our order books and the current impact COVID-19 is
having on market conditions in some of our sectors.
Consequently, further underperformance against the budget and medium-term growth rates is possible which could lead to an
additional reduction in the carrying value of the CGUs. It is also reasonably possible that the budget and growth rates are exceeded
if market conditions allow.
A 0.7% increase in the discount rate or a 7% reduction in the 2021 budgeted profit would lead to the recoverable amount of the
Services – UK CGU to equal its carrying amount of £50.1million. Furthermore, a 1% increase in the discount rate will lead to an
impairment charge of £1.8 million and a 15% decrease in the 2021 budgeted profit will lead to an impairment charge of £5.4 million
in the next 12 months. There are no other reasonable changes in estimates that would result in a material adjustment to the carrying
amounts of assets and liabilities as at 31 December 2020.
Financial statementsReport and Accounts 2020 14. INTANGIBLE ASSETS CONTINUED
Goodwill acquired in a business combination is allocated at acquisition to the Groups of CGUs that are expected to benefit from that
business combination. The carrying amount of goodwill has been allocated as follows:
£m
Consulting (UK and Ireland)
Services (UK)
Services (Netherlands)
Norway
North America
Australia Asia Pacific
Energy
As at
31 December 2020
96.6
As at
31 December 2019
112.2
50.1
10.1
31.0
31.6
75.4
36.0
330.8
50.1
9.8
31.2
40.5
70.9
37.0
351.7
150150
Financial statementsReport and Accounts 2020 15. PROPERTY, PLANT AND EQUIPMENT
£m
Cost:
At 1 January 2020
Additions
Disposals
Exchange differences
At 31 December 2020
Depreciation:
At 1 January 2020
Charge for the year
Disposals
Exchange differences
At 31 December 2020
Net book value at 31 December 2020
£m
Cost:
At 1 January 2019
Additions
Acquisitions
Disposals
Transfers
Reclassification to intangible assets
Exchange differences
At 31 December 2019
Depreciation:
At 1 January 2019
Charge for the year
Disposals
Exchange differences
At 31 December 2019
Net book value at 31 December 2019
Freehold
land and
buildings
Alterations
to leasehold
premises
Motor
vehicles
Fixtures,
fittings,
IT and
equipment
10.2
–
–
0.5
10.7
3.7
0.2
–
0.2
4.1
6.6
6.6
0.3
(0.2)
0.2
6.9
3.9
0.8
(0.2)
0.2
4.7
2.2
3.1
0.1
(0.2)
–
3.0
2.0
0.4
(0.2)
0.1
2.3
0.7
75.7
5.0
(2.9)
1.6
79.4
53.7
8.0
(2.3)
1.0
60.4
19.0
Freehold
land and
buildings
Alterations
to leasehold
premises
Motor
vehicles
Fixtures,
fittings,
IT and
equipment
10.8
–
–
–
–
–
(0.6)
10.2
3.6
0.2
–
(0.1)
3.7
6.5
6.4
0.6
–
(1.1)
1.0
–
(0.3)
6.6
4.3
0.9
(1.1)
(0.2)
3.9
2.7
3.5
0.4
–
(0.7)
–
–
(0.1)
3.1
2.3
0.5
(0.7)
(0.1)
2.0
1.1
78.5
12.1
0.1
(10.1)
(1.0)
(2.2)
(1.7)
75.7
57.0
7.7
(9.9)
(1.1)
53.7
22.0
Total
95.6
5.4
(3.3)
2.3
100.0
63.3
9.4
(2.7)
1.5
71.5
28.5
Total
99.2
13.1
0.1
(11.9)
–
(2.2)
(2.7)
95.6
67.2
9.3
(11.7)
(1.5)
63.3
32.3
151
Financial statementsReport and Accounts 2020
16. LEASES
£m
i. Right-of-use assets
At 1 January 2020
Additions
Depreciation
Impairment
Remeasurements
Derecognition
Exchange differences
At 31 December 2020
At 1 January 2019
Additions
Depreciation
Remeasurements
Derecognition
Exchange differences
At 31 December 2019
Properties
Vehicles
Office
equipment
40.8
7.8
(8.6)
(2.0)
1.0
(1.3)
0.8
38.5
40.7
8.1
(8.0)
1.1
(0.2)
(0.9)
40.8
3.8
1.5
(2.1)
–
0.1
–
0.1
3.4
4.0
1.8
(1.8)
–
(0.1)
(0.1)
3.8
0.2
0.2
(0.2)
–
–
–
–
0.2
0.2
0.2
(0.2)
–
–
–
0.2
Total
44.8
9.5
(10.9)
(2.0)
1.1
(1.3)
0.9
42.1
44.9
10.1
(10.0)
1.1
(0.3)
(1.0)
44.8
152152
£m
ii. Lease liabilities
The maturity profile of the Group’s lease liabilities based on contractual
undiscounted cash flows:
Less than one year
One to five years
More than five years
Total undiscounted lease liabilities
Lease liabilities included in the balance sheet:
Current
Non-current
Total
£m
iii. Amounts recognised in profit or loss
Depreciation on right-of-use assets
Impairment of right-of-use assets
Interest expense on lease liabilities
Expense relating to short-term leases
Expense relating to low value assets
£m
iv. Amounts recognised in statement of cash flows
Total cash outflow for leases
As at
31 December 2020
As at
31 December 2019
12.4
31.6
10.4
54.4
10.8
38.1
48.9
11.7
32.4
11.8
55.9
10.0
39.8
49.8
Year ended
31 December 2020
Year ended
31 December 2019
10.9
2.0
1.9
0.2
–
10.0
–
1.9
2.7
–
Year ended
31 December 2020
Year ended
31 December 2019
11.0
9.2
Financial statementsReport and Accounts 2020 17. SUBSIDIARIES
The Group consists of RPS Group Plc (the parent company incorporated in the UK) and its subsidiaries. A list of the Group’s
subsidiaries, including the name, country of incorporation and proportion of ownership interests is given in Note 6 to the Parent
Company’s financial statements.
18. TRADE AND OTHER RECEIVABLES
£m
Trade receivables
Contract assets
Prepayments
Other receivables
Trade receivables and contract assets net of loss allowance are shown below.
£m
Trade receivables
Loss allowance
Trade receivables net
£m
Contract assets
Loss allowance
Contract assets net
As at
31 December 2020
78.4
As at
31 December 2019
95.9
36.8
12.5
3.1
130.8
45.7
10.9
4.6
157.1
As at
31 December 2020
81.2
As at
31 December 2019
98.9
(2.8)
78.4
(3.0)
95.9
As at
31 December 2020
42.9
As at
31 December 2019
51.0
(6.1)
36.8
(5.3)
45.7
153
All amounts shown under trade and other receivables fall due within one year.
The carrying value of trade and other receivables is considered a reasonable approximation of fair value due to their short-term
nature and the loss allowances recorded against them. The individually impaired balances mainly relate to items under discussion
with customers.
No interest is charged on overdue receivables. At the year end the Group’s debtor days were 41 (2019: 52).
The following table shows the movement in lifetime expected credit losses that have been recognised in accordance with the
simplified approach set out in IFRS 9:
£m
At 1 January 2020
Income statement impact of movement on loss allowance
Amounts written off
Exchange differences
As at 31 December 2020
At 1 January 2019
Income statement impact of movement on loss allowance
Amounts written off
Exchange differences
As at 31 December 2019
Trade receivables
3.0
Contract assets
5.3
Total
8.3
0.5
(0.8)
0.1
2.8
5.2
(0.9)
(1.3)
–
3.0
2.0
(1.4)
0.2
6.1
6.6
0.2
(1.4)
(0.1)
5.3
2.5
(2.2)
0.3
8.9
11.8
(0.7)
(2.7)
(0.1)
8.3
There have been no significant changes in the loss allowances during the year as the Group has focussed on working capital
management and collection of trade receivables throughout the COVID-19 pandemic.
Financial statementsReport and Accounts 2020
18. TRADE AND OTHER RECEIVABLES CONTINUED
The carrying amounts of the Group’s trade and other receivables are denominated as follows:
£m
UK Pound Sterling
US Dollar
Euro
Australian Dollar
Canadian Dollar
Norwegian Krone
Malaysian Ringitt
Other
As at
31 December 2020
54.2
As at
31 December 2019
62.6
24.8
20.0
19.8
2.1
7.7
1.6
0.6
32.2
26.9
21.1
1.9
8.4
3.3
0.7
130.8
157.1
The maximum exposure to credit risk at the reporting date is £127.7 million (2019: £152.4 million).
The concentration of credit risk is limited as the customer base is large and unrelated.
The impact on revenue of projects where work was undertaken in 2019 but related revenue recognised in 2020 was immaterial.
19. TRADE AND OTHER PAYABLES
£m
Trade payables
Accruals
Contract liabilities
Creditors for taxation and social security
154154
Other payables
As at
31 December 2020
30.4
As at
31 December 2019
26.4
43.5
25.7
27.5
2.1
129.2
37.0
21.1
15.8
4.6
104.9
All amounts shown under trade and other payables fall due for payment within one year. The carrying values of trade and other
payables are considered to be a reasonable approximation of fair value due to the short-term nature of these liabilities.
The revenue recognised in the year that was included in contract liabilities in the previous year was £21.1 million.
Financial statementsReport and Accounts 2020
20. BORROWINGS
£m
Bank loans
US loan notes
Bank overdraft
Total bank loan, notes and overdrafts
Arrangement fees
Net bank debt
Leases
Total borrowings
£m
The bank loan, notes and overdrafts are repayable as follows:
Amounts due for settlement within 12 months
Amount due between one and two years
In the third to fifth years inclusive
As at
31 December 2020
–
As at
31 December 2019
55.4
54.9
–
54.9
(0.9)
54.0
48.9
102.9
55.8
1.3
112.5
(0.7)
111.8
49.8
161.6
As at
31 December 2020
As at
31 December 2019
54.9
–
–
54.9
1.3
55.8
55.4
112.5
The principal features of the Group’s borrowings are as follows:
(i) An uncommitted £3.0 million bank overdraft facility, repayable on demand.
(ii) An uncommitted Australian Dollar denominated overdraft facility of AUD 1.5 million repayable on demand.
(iii) The Group has one principal bank facility: a multicurrency revolving credit facility of £100.0 million with Lloyds Bank plc, HSBC
Bank plc and NatWest Bank plc, expiring in 2022 (the ’A’ facility). Term loans drawn under this facility carry interest fixed for the
term of the loan equal to LIBOR (or the currency equivalent) plus a margin determined by reference to the leverage of the Group.
155
There were loans drawn totalling £nil at 31 December 2020 (2019: £55.4 million).
In April 2020 the Group agreed a further £60.0 million revolving credit facility for a period of 12 months with the existing lenders
(the ‘B’ facility). At the same time the Group also agreed new financial covenant tests for the RCF and US private placement notes
as at 31 December 2020, 31 March 2021 and 30 June 2021. In September 2020, the B facility was extended to July 2022 and
further changes were made to the covenant tests. The covenant tests will revert back to the original tests from December 2021.
The A and B facilities are guaranteed by the Company and certain subsidiaries but no security over the Group’s assets exists.
(iv) In September 2014 the Group issued seven year non-amortising US private placement notes of $34.1 million and £30.0 million
with fixed interest chargeable at 3.84% and 3.98% respectively, that are repayable in September 2021. Following the amendment
to the Group’s facilities in April 2020, the interest payable on the notes has increased by 75 bps for the duration of the B facility.
The notes are guaranteed by the Company and certain subsidiaries but no security over the Group’s assets exists. The Group is
currently investigating its options on refinancing these loans.
The carrying amounts of short-term borrowings approximate their fair values, as the impact of discounting is not significant.
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 (undiscounted):
£m
<1 year
1-2 years
>2 but <5 years
As at
31 December 2020
56.8
As at
31 December 2019
4.9
–
–
56.8
58.6
56.1
119.6
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.
Financial statementsReport and Accounts 2020
21. DEFERRED CONSIDERATION
£m
Amount due within one year
Amount due between one and two years
Amount due between two and five years
Amount due after five years
As at
31 December 2020
3.1
As at
31 December 2019
3.1
2.4
–
0.3
5.8
3.0
2.2
0.4
8.7
Deferred consideration relates to payments due to vendors of acquired companies which are due to be made on future anniversaries
of the acquisitions.
22. PROVISIONS
Long service leave
The provision is in respect of long service leave entitlement available to certain staff employed in Australia. The balance was previously
reported in other payables.
Onerous contracts
The provision for onerous contracts related to the running costs of vacant properties.
Warranty
This provision is in respect of contractual obligations and is expected to be utilised within one to two years.
Dilapidations
The dilapidations provision is in respect of reinstatement obligations related to leasehold properties and will be utilised within
ten years.
£m
As at 1 January 2020
Reclassification from other payables
Additional provision in the year
Utilised in year
Released
Exchange difference
As at 31 December 2020
Long service
leave
–
Onerous
contracts
–
Warranty
1.7
Dilapidations
2.1
4.0
1.1
(0.2)
(0.4)
0.3
4.8
–
0.9
(0.1)
–
–
0.8
–
0.9
(1.2)
–
0.1
1.5
–
1.3
(0.2)
(0.1)
–
3.1
Total
3.8
4.0
4.2
(1.7)
(0.5)
0.4
10.2
£m
Due as follows:
Within one year
After more than one year
As at
31 December 2020
As at
31 December 2019
5.7
4.5
10.2
0.9
2.9
3.8
The carrying value of the provisions disclosed above is a reasonable approximation of their fair value.
156156
Financial statementsReport and Accounts 2020 23. DEFERRED TAXATION
£m
At 1 January 2019
(Charge)/credit to income
relating to current year
Acquisitions
Exchange differences
At 31 December 2019
Disclosed within liabilities
Disclosed within assets
(Charge)/credit to income
relating to current year
(Charge)/credit to income
due to change in tax rates
Exchange differences
At 31 December 2020
Disclosed within liabilities
Disclosed within assets
Property,
plant and
equipment
timing
differences
0.7
Goodwill
and
intangible
assets
(6.1)
Employment
benefits
2.9
Share-
based
payments
(0.3)
Provisions
and other
timing
differences
0.2
Losses
–
Total
(2.6)
(0.9)
–
–
(0.2)
(0.5)
0.3
0.3
0.1
0.1
0.3
(0.3)
0.6
1.2
(1.4)
0.1
(6.2)
(5.4)
(0.8)
0.3
(0.7)
(0.1)
(6.7)
(7.8)
1.1
(0.3)
–
(0.2)
2.4
0.5
1.9
0.7
–
–
3.1
–
3.1
0.1
–
–
(0.2)
(0.2)
-
(0.1)
–
–
(0.3)
(0.3)
–
1.1
–
0.4
1.7
(0.7)
2.4
0.6
–
(0.1)
2.2
–
2.2
–
–
–
–
–
–
4.2
–
–
4.2
–
4.2
1.2
(1.4)
0.3
(2.5)
(6.3)
3.8
6.0
(0.6)
(0.1)
2.8
(8.4)
11.2
The deferred tax assets recognised on losses relate to the US and the UK. These losses are available for offset against future taxable
profits and can be carried forward indefinitely. The other deferred tax assets recognised are timing differences on deductions for tax
purposes and as such there is no restriction on recoverability.
No deferred tax liability is recognised on temporary differences of £3.4 million (2019: £3.4 million) related 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 amount of tax that would be payable on the unremitted earnings is £0.4 million
(2019: £0.4 million).
157
Deferred corporation tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income taxes relate to the same fiscal authority.
Financial statementsReport and Accounts 2020 24. SHARE CAPITAL
Issued and fully paid
Number
2020
£m
Share
capital
£m
Share
premium
Number
2019
£m
Share
capital
£m
Share
premium
Ordinary shares of 3p each:
At 1 January
Issues in respect of placing
Issued under the Share Incentive Plan
Issued in respect of the Performance Share Plan
Issued in respect of the Bonus Plan
Issued in respect of the ELTIP
Admission fees
At 31 December
227,139,412
45,881,365
3,522,152
298,440
–
61,663
–
6.8
1.4
0.1
–
–
–
–
121.9
226,105,296
6.8
120.4
0.5
2.0
0.7
–
0.2
–
–
685,990
320,439
27,687
–
–
–
–
–
–
–
–
–
0.9
0.5
–
–
0.1
121.9
276,903,032
8.3
125.3
227,139,412
6.8
On 3 September 2020, 44,625,417 new ordinary shares of 3 pence each were issued at 44 pence each, a premium of 41 pence per
share. The premium on issue, after the deduction of transaction costs, was credited to the merger reserve. The placing was structured
so that merger relief was applicable on the issue of the shares.
On the same day, 1,255,948 new ordinary shares of 3 pence each were subscribed by certain directors of the Company at an issue
price of 44 pence per share.
The total consideration was £20.2 million and £19.4 million after the deduction of transaction costs.
Number
Ordinary shares held by the ESOP Trust
Ordinary shares held by the SIP Trust
158158
As at
31 December 2020
6,239,325
As at
31 December 2019
3,645,018
8,121,148
5,302,292
The total number of issued and fully paid shares is inclusive of the shares held in the ESOP and SIP Trusts. These shares are deducted
from equity through the EBT reserve. The ESOP Trust has elected to waive any dividend on the unallocated ordinary shares held.
25. DIVIDENDS
£m
Amounts recognised as distributions to equity holders during the year:
Final dividend for the year ended 31 December 2019 of nil (2018: 5.08p) per share
Interim dividend for the year ended 31 December 2020 of nil (2019: 2.42p) per share
Proposed final dividend for the year ended 31 December 2020 of nil (2019: 2.00p)
per share
The proposed final dividend for the year ended 31 December 2019 was cancelled.
Year ended
31 December 2020
Year ended
31 December 2019
–
–
–
–
11.4
5.5
16.9
4.5
Financial statementsReport and Accounts 2020
26. CONTINGENCIES
From time to time the Group receives claims from clients and suppliers. Some of these result in payments to the claimants by the
Group and its insurers. The Board reviews all significant claims at each Board meeting and more regularly if required. The Board is
satisfied that the Group has sufficient provisions at the balance sheet date to meet all likely uninsured liabilities.
As previously announced, RPS has notified the US government of potential issues regarding its administration of government
contracts and/or projects. We are continuing to identify the implications, if any, of the conduct under review. The impact, if any,
is unknown. During the year a further £1.8 million of legal fees were incurred investigating this matter and were presented within
exceptional items (note 7).
27. RELATED PARTY TRANSACTIONS
Related parties, following the definitions within IAS 24, are the subsidiary companies, members of the Board, key management
personnel and their families. Transactions between the Company and its subsidiaries are on an arms length basis and have been
eliminated on consolidation and are not disclosed in this note. The Group considers the Directors to be the key management
personnel. The Remuneration Committee Report contains details of Board emoluments.
On 3 September 2020, the following Directors subscribed for new ordinary shares of 3 pence each in the Company at a price of 44
pence per share (note 24):
Director
Ken Lever
John Douglas
Judith Cottrell
Liz Peace
Catherine Glickman
Allison Bainbridge
Total
Number of shares
56,818
1,136,363
13,636
11,363
34,090
3,678
1,255,948
Consideration £
25,000
500,000
6,000
5,000
15,000
1,618
552,618
159
Financial statementsReport and Accounts 2020
28. NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
£m
Operating (loss)/profit
Adjustments for:
Depreciation of owned assets
Depreciation of right-of-use assets
Impairment of right-of-use assets
Amortisation of internally generated software
Amortisation of acquired intangible assets
Impairment of goodwill
Impairment of internally generated software
Non-cash movement on provisions
Share-based payment expense
Loss on sale of business
(Profit)/loss on sale of assets
EBITDAS
Decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Cash generated from operations
Interest paid
Interest received
Income taxes paid
Net cash from operating activities
Year ended
31 December 2020
(24.2)
Year ended
31 December 2019
10.9
9.4
10.9
2.0
0.5
5.5
25.9
2.9
2.3
3.4
0.4
–
39.0
29.0
25.4
93.4
(6.0)
0.1
(3.5)
84.0
9.2
10.0
–
0.1
8.6
19.8
–
–
2.7
–
(0.1)
61.2
6.4
(12.7)
54.9
(5.9)
0.2
(11.6)
37.6
160160
The table below provides an analysis of liabilities arising from financing which comprises net bank borrowings, comprising cash and
cash equivalents, interest bearing loans and finance leases, during the year ended 31 December 2020.
£m
Cash at bank
Overdrafts
Cash and cash equivalents
Bank loans and notes
Net bank borrowings
Less: cash and cash equivalents
Leases
Liabilities arising from financing
At
31 December
2019
17.7
(1.3)
16.4
(110.5)
(94.1)
(16.4)
(49.8)
(160.3)
Non-cash changes
Financing
cash flows
25.0
Prepaid
arrangement
fees
–
Lease
accounting
adjustments¹
–
Foreign
exchange
0.5
At
31 December
2020
43.2
1.3
26.3
56.4
82.7
(26.3)
11.0
67.4
–
–
(0.7)
(0.7)
–
–
(0.7)
–
–
–
–
–
(9.2)
(9.2)
–
0.5
0.8
1.3
(0.5)
(0.9)
(0.1)
–
43.2
(54.0)
(10.8)
(43.2)
(48.9)
(102.9)
£m
Cash at bank
Overdrafts
Cash and cash equivalents
Bank loans and notes
Net bank borrowings
Less: cash and cash
equivalents
Leases
Liabilities arising from
financing
At
31 December
2018
18.0
Financing
cash flows Acquisitions
1.2
0.9
(2.6)
15.4
(89.3)
(73.9)
(15.4)
(49.2)
1.3
2.2
(22.8)
(20.6)
(2.2)
9.2
(138.5)
(13.6)
–
1.2
–
1.2
(1.2)
–
–
¹ Includes lease additions, remeasurements and disposals
Non-cash changes
Prepaid
arrangement
fees
Lease
accounting
adjustments¹
–
–
–
(0.3)
(0.3)
–
–
(0.3)
–
–
–
–
–
–
(10.8)
(10.8)
At
31 December
2019
Foreign
exchange
(2.4)
–
(2.4)
1.9
(0.5)
2.4
1.0
2.9
17.7
(1.3)
16.4
(110.5)
(94.1)
(16.4)
(49.8)
(160.3)
The cash balance at 31 December 2020 includes £1.4 million (2019: £1.3 million) that is restricted in use, either as security or client deposits.
Financial statementsReport and Accounts 2020 29. DEFINED BENEFIT PENSION SCHEMES
The Group has one (2019: two) defined benefit pension schemes, arising from the acquisition in 2013 of the OEC Group. The scheme
is closed to new entrants. The second scheme was terminated during the year.
The scheme is administered by a fund that is legally separated from the company. The trustees of the pension fund are required by
law to act in the interest of the fund and of all relevant stakeholders in the scheme. The trustees are responsible for the investment
policy with regard to the assets of the fund.
Under the plans, the employees are entitled to post-retirement yearly instalments amounting to 66% of pensionable salary on
attainment of a retirement age of 67. The pensionable salary is the difference between the current salary of the employee and the
state retirement benefit.
The scheme exposes the Group to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.
The most recent full actuarial valuation of the plan assets and present value of the defined benefit liability was carried out in
December 2020 by a qualified actuary.
The principal assumptions used for the purposes of actuarial valuation were as follows:
Discount rate
Expected rate of salary increase
Inflation
As at
31 December 2020
As at
31 December 2019
1.50%
2.00%
1.75%
1.80%
2.25%
2.00%
With the exception of the rates of pension increase all principal assumptions are the same for both schemes. The assumed rates of
pension increase were 2.0% and 0.0% (2019: 2.5% and 0.0%).
The assumed life expectations on retirement at age 67 (2019: age 65) are:
Years
Retiring today:
Males
Females
As at
31 December 2020
As at
31 December 2019
19.9
23.1
21.8
25.0
161
This is based on Norway’s standard mortality table with modifications to reflect expected changes in mortality.
Amounts recognised in income in respect of these defined benefit schemes are as follows:
£m
Current service cost (including tax)
Net interest (income)/expense
Components of defined benefit costs recognised in profit or loss
Year ended
31 December 2020
Year ended
31 December 2019
0.1
–
0.1
0.2
–
0.2
The service charge for the year has been included in the income statement in administrative expenses. The net interest (income)/
expense has been included within net finance costs.
Amounts recognised in the statement of comprehensive income are as follows:
£m
Actuarial gains/(losses) arising from:
Changes in financial assumptions
Movements in payroll tax
Derecognition of surplus
Remeasurement of the net defined benefit liability
Year ended
31 December 2020
Year ended
31 December 2019
0.2
–
(0.1)
0.1
–
–
0.1
0.1
Financial statementsReport and Accounts 2020 29. DEFINED BENEFIT PENSION SCHEMES CONTINUED
The amount included in the balance sheet arising from the Group’s obligations in respect of its defined benefit retirement benefit
schemes is as follows:
£m
Present value of defined benefit obligations
Fair value of plan assets
Asset not recognised
Net asset/liability arising from defined benefit obligations
Movements in the present value of defined benefit obligations in the year were as follows:
£m
Defined benefit obligation at 1 January
Current service cost
Interest cost
Remeasurement (gains)/losses:
Actuarial gains arising from changes in financial assumptions
Exchange differences
Benefits paid
Defined benefit obligation at 31 December
Movements in the fair value of plan assets in the year were as follows:
£m
162162
Plan assets at 1 January
Remeasurement (gains)/losses:
The return on plan assets (excluding amounts included in net interest expense)
Actuarial gains arising from changes in financial assumptions
Exchange differences
Contributions from the employer
Benefits paid
Administration costs
Plan assets at 31 December
As at
31 December 2020
As at
31 December 2019
(2.6)
2.6
–
–
–
(2.7)
2.8
0.1
(0.1)
–
Year ended
31 December 2020
Year ended
31 December 2019
2.7
0.1
–
(0.1)
–
(0.1)
2.6
4.0
0.2
0.1
(1.3)
(0.2)
(0.1)
2.7
Year ended
31 December 2020
Year ended
31 December 2019
2.8
–
(0.3)
–
0.2
(0.1)
–
2.6
4.0
0.1
(1.3)
(0.2)
0.3
(0.1)
–
2.8
The major categories and fair values of scheme assets at the end of the reporting period were:
Shares
Other investments
Short term bonds
Term bonds
Property
Total
As at
31 December 2020
As at
31 December 2019
9.1%
0.7%
13.8%
62.3%
14.1%
100.0%
9.7%
1.9%
12.4%
62.6%
13.4%
100%
Reasonably possible changes at the reporting date to one of the actuarial assumptions, holding all other assumptions constants would
have affected the defined benefit obligation as follows:
£m
Discount rate (1% movement)
Future salary growth (1% movement)
Future pension growth (1% movement)
Mortality rates (1 year movement)
As at 31 December 2020
Increase
Decrease
(0.3)
0.1
0.4
(0.1)
0.4
(0.1)
–
0.1
Financial statementsReport and Accounts 2020 30. FINANCIAL RISK MANAGEMENT
(a) Capital management
The capital of the Group consists of debt (which includes the borrowings and facilities disclosed in note 20) 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). The Group manages its capital to support its strategy. The Group’s policy is to pay an appropriate portion
of adjusted earnings for the year as dividends. However, dividends have been suspended during the COVID-19 pandemic to support
the Group’s financial position.
The Group’s borrowings are managed centrally and funds are onward lent to operating subsidiaries as required. At the start of the year
the Group had a committed £100 million multi currency revolving credit facility. There were two financial covenants related to this
facility; interest cover must be no less than 4.0x and the leverage ratio of Group net borrowings (including deferred consideration) to
EBITDAS adjusted to include the annualised contribution of acquisitions in the year should be no greater than 3.0x.
In response to the challenges that arose from the COVID-19 pandemic, the Group agreed a further £60 million revolving credit facility
( the ‘B’ facility) in April 2020 for a period of 12 months and agreed new financial covenant tests for the RCF and US private placement
notes. As a consequence of this, no covenant test was required at June 2020.
In September 2020, to provide further flexibility to the Group’s capital management the Group undertook a share placing resulting
in net cash consideration of £19.4 million, after transaction costs (note 24), extended the B facility to July 2022 and amended the
financial covenant tests. The revised covenant tests for December 2020 and March 2021 require leverage to be no greater than 3.75x
and interest cover to be no less than 2.5x, calculated using the previous 12 months profitability. In the June 2021 tests, the leverage
limit reduces to 3.25x and the interest cover limit increases to 3.0x . The covenant tests will revert back to the original tests detailed
above at the end of this period. These covenants were not breached during the year and have not been since the year end.
Seven year non-amortising notes with principal of £30.0 million and $34.1 million were issued in September 2014 bearing fixed
interest at 3.98% and 3.84% per annum, respectively. In April 2020, the interest rates increased by 0.75% to 4.73% and 4.59% for the
duration of the B facility. There are two financial covenants associated with these notes that are the same as for the revolving credit
facility above including the amendments that were made during the year. These loan notes represent the Group’s core debt.
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 speculative trading in financial instruments shall be undertaken.
163
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.
£m
Cash
Trade and other receivables
Financial assets
Borrowings
Lease liabilities
Deferred consideration
Trade and other payables
Financial liabilities
As at
31 December 2020
43.2
Restated*
As at
31 December 2019
17.7
118.3
161.5
54.9
48.9
5.8
32.7
142.3
146.2
163.9
112.5
49.8
8.7
28.5
199.5
* Trade and other payables have been restated net of accruals and 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 20. The Board reviews and agrees policies for managing each of these risks and
they are summarised below.
(c) Interest rate risk
When additional funds are required, the Group draws down term loans, typically between one and three months, against its revolving
credit facility 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 become 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.
Financial statementsReport and Accounts 2020 30. FINANCIAL RISK MANAGEMENT CONTINUED
Interest rate risk and profile of financial liabilities
The interest rate risk profile of the Group’s financial liabilities (undiscounted) at 31 December was as follows:
Floating rate
Fixed rate
Non interest bearing
£m
Sterling
Euro
Australian Dollar
Canadian Dollar
US Dollar
Norwegian Krone
Other
Total
2020
–
2019
56.7
2020
51.2
5.2
16.9
1.1
31.3
3.8
0.1
2019
50.1
5.5
19.6
1.6
32.5
4.9
0.1
2020
14.2
2019
12.2
3.1
6.2
1.3
3.1
4.7
0.1
3.0
5.7
0.2
2.5
4.7
0.2
2020
65.4
8.3
23.1
2.4
34.4
8.5
0.2
–
–
–
–
–
–
–
–
–
–
–
–
–
56.7
109.6
114.3
32.7
28.5
142.3
199.5
Total
2019
119.0
8.5
25.3
1.8
35.0
9.6
0.3
The maturity profile of financial liabilities at 31 December was as follows:
Floating rate
Fixed rate
Non interest bearing
£m
Within one year
In one to two years
In two to five years
Over five years
Total
2020
–
–
–
–
–
2019
1.3
–
55.4
–
56.7
2020
68.9
11.7
18.9
10.1
109.6
2019
13.1
67.9
21.8
11.5
114.3
2020
32.5
0.2
–
–
32.7
2019
28.3
0.1
0.1
–
28.5
2020
101.4
11.9
18.9
10.1
142.3
Total
2019
42.7
68.0
77.3
11.5
199.5
The weighted average interest rate and term for interest bearing financial liabilities is shown below:
164164
Sterling
Australian Dollar
US Dollar
Norwegian Krone
Euro
Canadian Dollar
Other
Cash balances at year end:
£m
Sterling
Euro
US Dollar
Australian Dollar
Canadian Dollar
Norwegian Krone
Malaysian Ringgit
Singapore Dollar
Other
Fixed and floating rate
financial liabilities
Fixed rate
financial liabilities
Weighted average interest rate %
Weighted average period for
which rate is fixed – months
2020
4.3
3.9
4.4
4.0
2.6
4.6
4.4
4.1
2019
3.2
3.9
3.9
4.0
2.5
4.6
4.4
3.4
2020
38
55
18
56
58
26
54
36
2019
44
59
28
65
59
38
66
43
As at
31 December 2020
16.2
As at
31 December 2019
2.0
4.2
3.9
10.0
0.7
7.3
0.4
0.1
0.4
43.2
2.2
2.4
3.9
0.4
5.7
0.5
0.1
0.5
17.7
The fair value of the forward foreign exchange contracts held at year end was not material.
Financial statementsReport and Accounts 2020 (d) Foreign currency sensitivity
Since the Group hedges the majority of its transactional foreign currency exposures, the sensitivity of the results to transactional
foreign currency risk is not material.
(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. It is Group policy, implemented locally, that receivables are only written off when there is
no reasonable expectation of recovery. This may occur if there is objective evidence of a client’s financial difficulty, or if enforcement
activity has been unsuccessful. See note 18 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 has a broad range of clients,
the largest being government agencies and departments, national water companies, multi-national oil companies or substantial utility
companies. Infrequently (and generally for administrative reasons) there may be a build up of unpaid invoices. The Group does not
have significant credit risk exposure to any single counterparty or Group of counterparties having similar characteristics.
The credit risk in cash and derivatives is limited because the counterparties are banks with high credit ratings assigned by international
credit ratings.
31. SHARE-BASED PAYMENTS
Share scheme costs
£m
Share Incentive Plan (‘SIP’)
Performance Share Plan (‘PSP’)
Executive Long Term Incentive Plan (‘ELTIP’)
Short Term Annual Bonus Plan (‘STABP’)
Total share scheme costs
A description of each plan is given in accounting policy note 2(f)iii.
The following tables set out details of material share schemes activity:
Year ended
31 December 2020
1.6
Year ended
31 December 2019
1.4
0.8
0.8
0.2
3.4
0.7
0.4
0.2
2.7
165
SIP
Year of grant
2017
2018
2019
2020
Year of grant
2016
2017
2018
2019
Number
outstanding
31 December
2019
437,317
695,355
1,095,468
–
2,228,140
Number
outstanding
31 December
2018
612,608
506,496
801,336
–
1,920,440
New grants
–
–
–
3,307,530
3,307,530
Releases
(416,533)
(24,790)
(35,658)
(53,296)
Forfeits
(20,784)
(54,519)
(87,778)
(86,177)
(530,277)
(249,258)
New grants
–
–
–
1,146,438
1,146,438
Releases
(572,513)
(23,263)
(30,154)
(11,406)
Forfeits
(40,095)
(45,916)
(75,827)
(39,564)
(637,336)
(201,402)
Number
outstanding
31 December
2020
–
616,046
972,032
3,168,057
4,756,135
Number
outstanding
31 December
2019
–
437,317
695,355
1,095,468
2,228,140
Vesting
conditions
3 years
3 years
3 years
3 years
Vesting
conditions
3 years
3 years
3 years
3 years
Financial statementsReport and Accounts 2020
31. SHARE BASED PAYMENTS CONTINUED
PSP
Year of grant
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Year of grant
2009
2011
2012
2013
2014
2015
2016
2017
2018
2019
Number
outstanding
31 December
2019
19,899
26,767
33,295
37,615
63,919
67,234
257,338
406,266
558,895
–
1,471,228
Number
outstanding
31 December
2018
18,292
20,659
27,617
34,697
38,647
76,326
421,302
305,495
429,393
–
1,372,428
166166
Number
outstanding
31 December
2020
19,899
15,415
28,447
29,515
46,538
53,227
47,623
344,122
511,922
780,733
Lapses
–
–
–
–
–
–
(7,999)
(30,747)
(37,334)
–
Vesting
conditions
3 years
3 years
3 years
3 years
3 years
3 years
3 years
3 years
3 years
3 years
Releases
–
(11,352)
(4,848)
(8,100)
(17,381)
(14,007)
(201,716)
(31,397)
(9,639)
–
(298,440)
(76,080)
1,877,441
New grants
–
–
–
–
–
–
–
–
–
780,733
780,733
New grants
–
Releases
(16,482)
–
–
–
–
–
–
–
–
561,660
561,660
–
–
–
–
(9,071)
(285,315)
(8,381)
(1,190)
–
Number
outstanding
31 December
2019
-
19,899
26,767
33,295
37,615
63,919
67,234
257,338
406,266
558,895
Vesting
conditions
3 years
3 years
3 years
3 years
3 years
1, 2 or 3 years
3 years
3 years
3 years
3 years
Lapses
(1,810)
(760)
(850)
(1,402)
(1,032)
(3,336)
(68,753)
(39,776)
(21,937)
(2,765)
(320,439)
(142,421)
1,471,228
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
34.75p - 274.0p
98.56p
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(f)iii).
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
Weighted average exercise price
Holding period
Expected dividend yield
PSP awards
50.5p - 318.65p
159.07p
44.23p
3 years
2.02% - 5.55%
Financial statementsReport and Accounts 2020
PARENT COMPANY
BALANCE SHEET
£m
Fixed assets:
Intangible assets
Tangible assets
Investments
Current assets:
Debtors:
- due within one year
Cash at bank and in hand
Creditors: amounts falling due within one year:
Net current (liabilities)/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 account
Merger reserve
Employee trust shares
Other reserve
Total shareholders’ equity
As at
31 December 2020
As at
31 December 2019
Notes
4
5
6
7
8
9
10
12
12
12
12
12
12
9.3
1.1
331.2
341.6
64.2
17.0
81.2
(146.9)
(65.7)
275.9
–
0.2
275.7
8.3
125.3
81.6
38.7
(11.5)
33.3
275.7
11.3
1.4
341.2
353.9
48.6
0.1
48.7
(42.8)
5.9
359.8
110.5
0.2
249.1
6.8
121.9
66.0
21.2
(10.1)
43.3
249.1
167
The profit for the year attributable to the shareholders of the Parent Company and recorded through the accounts of the Parent
Company was £3.8 million (2019 loss: £7.4 million).
These financial statements were approved and authorised for issue by the Board on 8 March 2021.
The notes on pages 169 to 177 form part of these financial statements.
John Douglas, Director
Judith Cottrell, Director
On behalf of the Board of RPS Group Plc (company number: 2087786).
Financial statementsReport and Accounts 2020
PARENT COMPANY
STATEMENT OF
CHANGES IN EQUITY
Share
capital
6.8
Share
premium
120.4
Merger
reserve
21.2
Employee
trust
shares
(9.8)
Profit and
loss
account
76.7
Other
reserve
55.4
£m
At 1 January 2019
Issue of new shares
Share-based payment expense
Transfer on release of shares
Loss and total comprehensive expense
Reserves transfer on impairment loss (note 6)
Dividend paid (note 13)
At 31 December 2019
–
–
–
–
–
–
1.5
–
–
–
–
–
–
–
–
–
–
–
(1.0)
–
0.7
–
–
–
6.8
121.9
21.2
(10.1)
(0.5)
2.7
(0.7)
(7.4)
12.1
(16.9)
66.0
(0.9)
3.4
(0.7)
3.8
10.0
81.6
–
–
–
–
(12.1)
–
43.3
–
–
–
–
(10.0)
33.3
Total
270.7
–
2.7
–
(7.4)
–
(16.9)
249.1
19.4
3.4
–
3.8
–
275.7
Issue of new shares
Share-based payment expense
Transfer on release of shares
Profit and total comprehensive income
Reserves transfer on impairment loss (note 6)
1.5
3.4
17.5
(2.1)
–
–
–
–
–
–
–
–
–
–
–
–
–
0.7
–
–
At 31 December 2020
8.3
125.3
38.7
(11.5)
168168
The notes on pages 169 to 177 form part of these financial statements.
Financial statementsReport and Accounts 2020 NOTES TO THE
PARENT COMPANY
FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
RPS Group Plc (the “Company”) is a
company domiciled in England under
the Companies Act. The address of the
registered office is given on page 133.
The nature of the Company’s operations
and its principal activities are set out in
the strategic report on pages 7 to 62.
The individual Company financial
statements have been prepared under
the historical cost convention, modified
to include certain items at fair value, and
in accordance with Financial Reporting
Standard 102 (FRS 102) issued by the
Financial Reporting Council.
The functional and presentational
currency of RPS Group Plc is considered
to be pounds sterling.
RPS Group Plc meets the definition of
a qualifying entity under FRS 102 and
has therefore taken advantage of the
disclosure exemptions available to it
in respect of its financial statements.
Exemptions have been taken in
relation to share-based payments,
financial instruments, presentation
of a cash flow statement, intra-group
transactions and remuneration of
key management personnel.
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 and is written off on a straight-
line basis over its useful economic life of
up to 20 years. Provision is made for
any impairment.
Other intangible assets
Other intangible assets are stated at
cost less accumulated amortisation and
impairment losses.
Amortisation is charged to the income
statement on a straight-line basis over
their estimated useful lives as follows:
Software 10 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,
net of depreciation and any provision
for impairment.
Depreciation is provided on all tangible
fixed assets at rates calculated to write
off the cost, less estimated residual value
of each asset on a straight-line basis over
their expected useful lives as follows:
Alterations to leasehold premises:
Life of lease
Fixtures, fittings, IT and equipment:
3 to 8 years
All tangible fixed assets are expected to
have nil residual value.
Operating leases
Rentals under operating leases are
charged on a straight-line basis over the
lease term, even if the payments are not
made on such a basis. Benefits received
and receivable as an incentive to sign an
operating lease are similarly spread 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’s and Group’s employees
may benefit from a Group operated share-
based payment arrangement for shares
in RPS Group Plc. Further information
on these arrangements is in other
accounting policies to the consolidated
financial statements (2(f)(iii)).The fair value
of equity-settled awards for the Group
share-based payments is determined at
grant and expensed straight-line over the
period from grant to the date of earliest
unconditional exercise. A recharge is
made for the expense to those
169
subsidiaries where employees partake in
the scheme.
The Group calculates the fair market
value of options using a binomial model
and for whole share awards the fair value
is 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
are granted.
Those fair values are charged to the
income statement over the relevant
vesting period adjusted to reflect actual
and expected vesting levels.
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 all 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.
Unrelieved tax losses and other deferred
tax assets are recognised only to the
extent that, 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 measured using the tax
rates and laws that have been enacted
or substantively enacted by the balance
sheet date that are expected to apply to
the reversal of the timing difference.
Where items recognised in other
comprehensive income or equity
Financial statementsReport and Accounts 2020 are chargeable to or deductible for
tax purposes, the resulting current
or deferred tax expense or income is
presented in the same component of
comprehensive income or equity as the
transaction or other event that resulted in
the tax expense or income.
Employee Share Trusts
The assets, income and expenditure
of the SIP and Employee Benefit Trust
are incorporated into the Company’s
financial statements.
The Trusts are used to issue shares under
the Group’s share schemes, as described
on page 136. Cash is loaned to the Trust
and then used to subscribe for shares
in the Company.
i Financial assets
Trade debtors, other debtors and
amounts due from subsidiary
undertakings 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.
ii Financial liabilities
Trade creditors and other creditors
including bank loans are financial
liabilities that are recognised at fair
value on inception and are subsequently
carried at amortised cost.
Financial instruments
Disclosures on financial instruments
have not been included in the
Company’s financial statements as
its consolidated financial statements
include appropriate disclosures.
170170
2. CRITICAL ACCOUNTING JUDGEMENTS AND
KEY SOURCES OF ESTIMATION UNCERTAINTY
In the course of preparing the financial
statements, no significant judgements
have been made in the process of
applying the Company’s accounting
policies, other than those involving
estimations, that have had a significant
effect on the amounts recognised in the
financial statements.
The Company performs an annual
impairment review on the valuation of the
investments. The recoverable amounts of
each investment have been determined
from value in use calculations and these
calculations include estimates about the
future financial performance based on
budgets and forecasts, medium term
growth rates and discount rates.
Potential indicators of impairment include
the market capitalisation of the Company
dropping below the net assets, the
ongoing economic uncertainty from
the COVID-19 pandemic and the impact
Brexit may have on the investment values
in the UK.
Sources of estimation uncertainty
In applying the Company’s accounting
policies various transactions and balances
are valued using estimates or assumptions.
Should these estimates or assumptions
prove incorrect, there may be an impact
on the following year’s financial
statements. The only source of estimation
uncertainty at the end of 2020, that has a
significant risk of resulting in a material
adjustment to the carrying amounts of
assets and liabilities during 2021, relates
to the testing for impairment of the
Company’s investments.
Financial statementsReport and Accounts 2020
3. 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.
The remuneration of the auditors for the statutory audit of the Company was £0.1 million (2019: £0.1 million).
The average number of employees of the Company during the year, including Directors, was 196 (2019: 160).
4. INTANGIBLE ASSETS
£m
Cost
At 1 January 2020
Additions
At 31 December 2020
Amortisation
At 1 January 2020
Charge for the year
Impairment
At 31 December 2020
Net book value at 31 December 2020
Net book value at 31 December 2019
5. TANGIBLE ASSETS
£m
Cost or valuation
At 1 January 2020
Additions
At 31 December 2020
Depreciation
At 1 January 2020
Charge for the year
At 31 December 2020
Net book value at 31 December 2020
Net book value at 31 December 2019
Goodwill
Software
Total
2.1
–
2.1
1.9
0.1
–
2.0
0.1
0.2
11.1
1.5
12.6
–
0.5
2.9
3.4
9.2
11.1
13.2
1.5
14.7
1.9
0.6
2.9
5.4
9.3
11.3
Alterations
to leasehold
premises
Fixtures,
fittings,
IT and
equipment
Total
171
0.7
–
0.7
0.6
–
0.6
0.1
0.1
8.5
0.3
8.8
7.2
0.6
7.8
1.0
1.3
9.2
0.3
9.5
7.8
0.6
8.4
1.1
1.4
Financial statementsReport and Accounts 2020 6. INVESTMENTS
£m
Subsidiary undertakings
Cost
At beginning and end of year
Provisions
At beginning of year
Impairment
At end of year
Net book value at end of year
2020
2019
455.6
455.6
114.4
10.0
124.4
331.2
102.3
12.1
114.4
341.2
The Company performs an annual impairment review on the carrying value of investments or when there are any impairment triggers.
The determination of whether or not investments are impaired requires an estimate to be made of the value in use of the
investments. Those value in use calculations include estimates about the future financial performance based on budgets and
forecasts, medium-term and long-term growth rates, discount rates and the markets in which the business operates. A more cautious
view has been taken in our short-term forecasts and assumptions due to the COVID-19 uncertainty and the resulting disruption in our
markets and the wider economy. The cash flow projections in the four financial years following the forecast year reflect management’s
expectations of the medium-term operating performance of the CGU and the growth prospects in the CGU’s market, including
recovery from the impact of COVID-19. Thereafter a perpetuity is applied.
The key assumptions in the value in use calculations are the discount rates applied, the growth rates and margins assumed over the
forecast period and these are detailed in note 14 to the consolidated financial statements.
The Company’s investment in its US business was impaired by £10.0 million (2019: £12.1 million) and this was recorded through the
profit and loss account. The impact on the profit and loss reserve is offset by a transfer of the same amount from the other reserve.
The other reserve represents profits previously recognised in a group reorganisation involving the US business. No impairment
charges were identified on any other investments.
172172
There are no reasonable changes in estimates that would result in a material adjustment to the carrying value of investments as at
31 December 2020.
The Company’s market capitalisation is below the net assets of the Company. The Directors are comfortable with this difference as
they consider the Company to be undervalued during these challenging times.
Subsidiary undertakings
The principal activity of the majority of our trading subsidiaries is the provision of consulting services.
The following were the subsidiaries during the year. All subsidiaries are held 100% by RPS Group Plc with the exception of Delphi Group
Asia PTE Limited where 85% of the ordinary share capital is held.
d
e
r
e
t
s
i
g
e
R
e
c
i
f
f
O
Country of registration and operation
Australia
1 ECL DM Pty Ltd
1 ECL Drilling Management Pty Limited
1 ECL Pty Ltd
1 Everything Infrastructure Consulting Pty Ltd
1 Everything Infrastructure Group Pty Ltd
1 Intelligent Infrastructure Pty Ltd
1 RPS APASA Pty Ltd
1 RPS Advisory Services Pty Ltd
1 RPS Aquaterra Pty Ltd
1 RPS Australia East Pty Ltd
1 RPS Australia West Pty Ltd
1 RPS Consultants Pty Ltd
1 RPS ECOS Pty Ltd
1 RPS Energy Pty Ltd
1 RPS Energy Services Pty Ltd
1 RPS Environment and Planning Pty Ltd
1 RPS Harper Somers O’Sullivan Pty Ltd
1 RPS Manidis Roberts Pty Ltd
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
d
e
r
e
t
s
i
g
e
R
e
c
i
f
f
O
Country of registration and operation
1 RPS AAP Consulting Pty Ltd
1 Rudall Blanchard Associates Pty Limited
1 Troy Ikoda Australasia Pty Ltd
1 Whelans Corporation Pty Limited
1 Whelans Insites Pty Limited
Brazil
2 RPS Consultores do Brasil Ltda
Canada
3 Petroleum Institute for Continuing Education Ltd
3 Boyd Exploration Consultants Ltd
3 Maverick Land Consultants 2012 Ltd
3 RPS Canada Ltd
3 RPS Energy Canada Ltd
4 Canadian GaiaTech, B.C. ULC
England
5 Aquaterra International Ltd
5 Aquaterra UK Limited
5 Basicshare Limited
*
*
*
*
*
*
*
*
*
*
*
*
*
*
Financial statementsReport and Accounts 2020
d
e
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e
t
s
i
g
e
R
e
c
i
f
f
O
Country of registration and operation
5 Burks Green & Partners Limited
5 Cambrian Consultants America Limited
5 Cambrian Consultants Limited
5 CgMs Holdings Limited
5 CgMs Limited
5 Clear Environmental Consultants Limited
5 DBK Partners Limited
5 ECL Group Limited
5 ECL Resources Management Limited
5 ECL Technology Limited
5 Emulous Group Limited
5 Emulous Ltd
5 Energy Innovations Limited
5 Exploration Consultants Limited
5 Flow Control (Water Conservation) Limited
5 Geocon Group Services Limited
5 Geophysical Consultants Limited
5 Geophysical Safety Resources Limited
5 Hydrosearch Associates Limited
5 Isochrone Holdings Limited
5 Knowledge Reservoir (UK) Ltd
5 Martindale Holdings Limited
5 Nautilus (SEAA) Limited
5 Nautilus Limited
5 Net Admin Limited
5 Nigel Moor Associates plc
5 Oil Experience Limited
5 Paras Consulting Limited
5 Paras Limited
5 Probablistic Risk Assessments Limited
5 Quad Engineering Limited
5 Reservoir Imaging Limited
5 R W Gregory Limited
5 RPS Business Healthcare Limited
5 RPS Chapman Warren Limited
5 RPS Consultants Ltd
5 RPS Consulting Services Limited
5 RPS Design Ltd
5 RPS Ecoscope Limited
5 RPS Energy Consultants Limited
5 RPS Energy Global Limited
5 RPS Energy Limited
5 RPS Energy Services Limited
5 RPS Environmental Management Limited
5 RPS Finance AAP Limited
5 RPS Group US Holdings Limited
5 RPS Occupational Health Limited
5 RPS Laboratories Limited
5 RPS Mountainheath Limited
5 RPS Planning & Development Limited
5 RPS Timetrax Limited
5 RPS Trustees Limited
5 RPS US Holdings Limited
5 RPS Utilities Limited
5 Rudall Blanchard Associates Group Limited
5 Rudall Blanchard Associates Limited
5 Safety and Reliability Consultants Limited
5 Scott Pickford Limited
5 Sherwood House Properties Limited
5 SRC (Consultants) Limited
d
e
r
e
t
s
i
g
e
R
e
c
i
f
f
O
Country of registration and operation
5 Town Planning Consultancy Limited
5 TPK Consulting Limited
5 Troy Ikoda Limited
5 Troy-Ikoda Management Limited
5 Utility Technical Services Limited
5 WTW & Associates Limited
5 X-IPEC Limited
Germany
6 Metier Academy GmbH
Gibraltar
7 Geocon Asia Limited
Ireland
8 RPS Consulting Engineers Limited
8 RPS Engineering Services Limited
8 RPS Environmental Consultancy Limited
8 RPS Group Limited
8 RPS MMA Limited
8 RPS Planning & Environment Limited
8 RPS Properties Limited
*
*
*
*
*
*
*
*
*
*
*
Malaysia
9 Cambrian Consultants Asia Sdn. Bhd
*
10 Knowledge Reservoir Geoscience & Engineering Sdn. Bhd *
*
11 RPS Consultants Sdn Bhd
Mexico
12 Cambrian Consultants CC America, Inc S.de R.L. de C.V.
Mongolia
13 Aquaterra East Asia LLC
Netherlands
14 RPS advies-en ingenieursbureau BV
15 RPS Analyse BV
14 RPS BV
14 RPS Detachering BV
New Zealand
16 RPS Consultants NZ Limited
Northern Ireland
17 RPS Ireland Limited
Norway
18 Delphi AS
9 Knowledge Reservoir AS
9 Knowledge Reservoir Holding AS
19 Metier OEC AS
20 RPS Norway AS
20 RPS Group AS
Oman
21 Knowledge Reservoir LLC (Oman)
Papua New Guinea
22 Point Project Management (PNG) Ltd
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
173
Financial statementsReport and Accounts 2020
6. INVESTMENTS CONTINUED
d
e
r
e
t
s
i
g
e
R
e
c
i
f
f
O
Country of registration and operation
Scotland
23 OceanFix International Limited
24 RPS Health in Business Limited
Singapore
25 Delphi Group Asia PTE Limited
Sweden
26 Metier AB
26 Metier Academy AB
Registered Offices
d
e
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e
t
s
i
g
e
R
e
c
i
f
f
O
Country of registration and operation
USA
27 APA USA, Inc
27 Espey Consultants, Inc.
27 GaiaTech Holdings, Inc
27 GaiaTech Canada, Inc
27 Houston Geoscan Inc
27 Hydrosearch USA Inc
28 RPS Infrastructure Inc
27 Knowledge Reservoir Group Inc
27 RPS America Group Inc
27 RPS Americas Inc
27 RPS Group, Inc.
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
174174
1 520 Wickham Street, Fortitude Valley, Queensland 4006, Australia
14 Elektronicaweg 2, 2628 XG Delft, The Netherlands
2 Av. Almirante Barroso 91, Rio de Janeiro, Rio De Janeiro 20031--005,
15 Minervum 7002, 4817, ZL Breda, The Netherlands
Brazil
16 50 Customhouse Quay, Wellington Central, Wellington, 6011,
3 1200, 700 - 2nd Street SW, Calgary, Alberta, TP2 4V5, Canada
New Zealand
4 1300-777 ST Dunsmuir Vancouver, British Columbia V7Y1K2 Canada
17 Elmwood House, 74 Boucher Road, Belfast, BT12 6RZ
5 20 Western Avenue, Milton Park, Abingdon, Oxfordshire OX14 4SH
18 Engelsminnegata, 24, 4008 Stavanger, Norway
6 Gashaftsanschrift, Marketstrasse 4460388 Frankfurt am Main,
19 Hoffsveien 70C, 0377 Oslo, Norway
Germany
7 Line Group Limited, 57/63 Line Wall Road, Gilbraltar
20 Hovfaret 10, 0275 Oslo, Norway
21 Al-Kulieah Street, Al-Khuwair 17/2, Building No.741,
8 West Pier Business Campus, Old Dunleary Road, Dunlaoghaire,
Way No. 4508 Muscat, Oman
Co Dublin, Republic of Ireland
22 2nd Floor, Brian Bell Plaza, Turumu Street, Boroko, NCD,
9 Level 11-2 Faber Imperial Court, Jalan Sultan Ismail 50250, Kuala
Papua New Guinea
Lumpur, Malaysia
10 Welhavens Road 5, 4319 Sandines, Sandines, Norway
11 Suite 11-13A, Level 11, Wisma UOA II, Jalan Pinang,
50450 Kuala Lumpur. Malaysia
12 Avenida Paseo de la Reforma No. 404, Pisa 6 - Despacho 602,
CoL Juarez, Mexico City, Mexico, FED DISTR. 06600
23 9 Queens Road, Aberdeen, AB15 4YL
24 Unit 1, Ratho Park, Station Road, Edinburgh, EH28 8QQ
25 Paya Lebar Road 60, 40 Singapore - Hougang, Singapore - Singapore
26 Drottninggatan 71, C, 111 36, Stockholm, Sweden
27 20405 Tomball Parkway, Suite 200, Houston, Texas 77070, USA
13 701 San Business Centre, 8th Khoroo, Sukhbaatar, Ulaanbaatar,
28 575 North Dairy Ashford, Suite 700, Houston, Texas 77079, USA
Mongolia
Financial statementsReport and Accounts 2020
Shares are held directly by RPS Group Plc except where marked by an asterisk where they are held by a subsidiary undertaking.
7. DEBTORS
£m
Amounts falling due within one year:
Amounts due from subsidiary undertakings
Corporation tax receivable
Other debtors
Prepayments
As at
31 December 2020
As at
31 December 2019
50.9
1.1
5.5
6.7
64.2
36.5
4.0
3.3
4.8
48.6
Amounts due from subsidiary undertakings include short-term loans of £50.5 million (2019: £33.9 million) that incur interest at rates
of between 1.68% and 1.83% (2019: 1.33% and 4.67%). All other amounts are unsecured, interest free and repayable on demand.
8. CREDITORS – AMOUNTS FALLING DUE WITHIN ONE YEAR
£m
Borrowings
Trade creditors
Amounts due to subsidiary undertakings
Other creditors
Accruals
As at
31 December 2020
54.0
As at
31 December 2019
1.3
5.3
83.1
0.5
4.0
146.9
2.5
34.4
0.6
4.0
42.8
Amounts due to subsidiary undertakings include short-term loans of £70.4 million (2019: £27.6 million) that incur interest at rates of
between 0.8% and 1.7% (2019: 1.13% and 4.47%). All other amounts are unsecured, interest free and repayable on demand.
175
Details of borrowings are disclosed in note 20 to the consolidated financial statements.
9. CREDITORS – AMOUNTS DUE AFTER MORE THAN ONE YEAR
£m
Borrowings:
Bank loans
US loan notes
Arrangement fees
Due as follows:
Amount due between one and two years
In the third to fifth years inclusive
Arrangement fee previously settled
Details of borrowings are disclosed in note 20 to the consolidated financial statements.
As at
31 December 2020
As at
31 December 2019
–
–
–
–
–
–
–
–
55.4
55.8
(0.7)
110.5
55.8
55.4
(0.7)
110.5
Financial statementsReport and Accounts 2020
10. PROVISION FOR LIABILITIES
£m
As at 1 January 2020
Additional provision in the year
Utilised in the year
As at 31 December 2020
The provisions relate to property and dilapidations provisions.
The total provision is expected to be utilised as follows:
£m
Within one year
After more than one year
11. DEFERRED TAXATION
The movement on deferred taxation in the year was as follows:
£m
Net asset at beginning of year
Credit to income for the year
Net asset at year end
176176
The deferred taxation balances comprise:
£m
Short-term timing differences
Depreciation in excess of capital allowances
Losses
Deferred tax asset
Deferred tax is included within other debtors in the balance sheet.
Total
0.2
–
–
0.2
As at
31 December 2020
–
As at
31 December 2019
–
0.2
0.2
0.2
0.2
As at
31 December 2020
0.3
As at
31 December 2019
0.2
2.6
2.9
0.1
0.3
As at
31 December 2020
–
As at
31 December 2019
0.2
0.3
2.6
2.9
0.1
–
0.3
Financial statementsReport and Accounts 2020
12. SHARE CAPITAL AND RESERVES
Ordinary shares of 3p each
At 1 January 2020
At 31 December 2020
Allotted and fully paid
Number
227,139,412
276,903,032
Value
£m
6.8
8.3
Full details of the share capital of the Company are disclosed in note 24 to the consolidated financial statements.
The Company’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.
Profit and loss account
Cumulative net gains and losses recognised in the profit and loss account and statement of changes
in equity.
Merger reserve
Premium on shares issued in respect of acquisitions when merger relief is taken.
Employee trust shares
Own shares held by the SIP and Employee Benefit trusts.
Other reserves
Non-distributable profit generated on Group reconstruction.
13. DIVIDENDS
Details of dividends paid by the Company are disclosed in note 25 of the consolidated financial statements.
14. COMMITMENTS UNDER OPERATING LEASES
Total future minimum lease payments under non-cancellable operating leases are as follows:
177
£m
Within one year
Between one and five years
Other - motor vehicles
31 December 2020 31 December 2019
0.6
0.5
0.5
1.0
0.7
1.3
15. DIRECTORS’ INTERESTS IN TRANSACTIONS
Details of transactions during the year in which the Directors had an interest are disclosed in note 27 to the consolidated
financial statements.
Financial statementsReport and Accounts 2020 FIVE YEAR SUMMARY
£m
Revenue
Fee revenue (2018 and earlier: Fee income)*
Adjusted profit before tax
Net bank debt
Net assets
Cash generated from operations
Average number of employees
Dividend per share
Adjusted basic EPS
Adjusted diluted EPS
2020
542.1
457.3
13.4
(10.8)
349.0
93.4
5,055
–
4.33p
4.29p
2019
612.6
528.2
37.4
(94.1)
348.5
54.9
5,099
2.42p
12.43p
12.31p
2018
637.4
574.2
50.2
(73.9)
377.6
60.4
5,556
9.88p
16.47p
16.34p
2017
630.6
562.3
53.9
(80.6)
369.8
63.5
5,340
9.88p
17.13p
17.01p
2016
594.5
534.3
50.7
(83.4)
411.3
78.3
5,099
9.74p
16.6p
16.51p
The Five Year Summary does not form part of the audited financial statements.
* See note 3 to the consolidated financial statements for change in definition of fee revenue.
178178
Financial statementsReport and Accounts 2020 This page has been left blank intentionally
Contact:
RPS Group Plc
20 Western Avenue, Milton Park
Abingdon, Oxon OX14 4SH
T +44 (0)1235 863206
Registered in England No. 2087786
rpsgroup.com