2019 FINAL RESULTS - Investor Relations | RPS Group Plc · 2019 FINAL RESULTS rpsgroup.com...

rpsgroup.com

2019 FINAL RESULTS

rpsgroup.com

Investing in a sustainable future19 FEBRUARY 2020

2

Agenda

• People changes

• Overview

• Group financial results

• Segmental overview

• A sustainable business with significant upside

• Progress against objectives

• Group outlook

Agenda

3

Group Finance Director succession

• Not standing for

re-election at AGM

on 30 April 2020

• Will remain available

to the business to

support the transition

• 20 years as Group

Finance Director

• Part of building RPS from a business of

400 to a Group of 5,000

• Thank you for support and counsel over

the last 2.5 years

• Signalled Judith Cottrell as a potential

successor

Five years at RPS

• CFO Europe

• Acting CEO Europe

• CEO, Consulting UK &

Ireland

• Group Strategy Director

• Held senior finance roles at AEA Plc and

Ricardo Plc

• Qualified as an accountant with KPMG

• Joining the Board on 30 April 2020

People changes

Gary Young Judith Cottrell

4

Strong Group Leadership Team – with ongoing renewal

People changes

Halvard

Kilde

CEO

Norway

Ross

Thompson

CEO

Australia

Asia Pacific

John

Chubb

CEO

Consulting

UK & IRE

Paul

Aitken

CEO

Services

UK & NL

*Doug

Matthys

CEO

North

America

Chantalle

Meijer

Group

Marketing

Director

Kelly

Olsen

Chief

Information

Officer

John

Tompson

CEO

Energy

Gary

Young

Group

Finance

Director

John

Douglas

Liza

Kane

Group

People

Director

CEO

*Peter Fearn retired

January 2020

Judith

Cottrell

Group

Strategy

Director

5

Agenda

• People changes

• Overview





• Group outlook

Agenda

6

Positive outlook in unsettled timesA sustainable business with significant upside

Ongoing progress against strategic priorities

Investing in a sustainable future

• Fee income £556.5m

• Adjusted PBTA £37.3m

• Strong cash conversion at 90%

• Exceptional items - £23.4m including Australia Asia

Pacific goodwill impairment - £19.8m

• People

• Brand

• Connectivity

• Energy

• Organic growth and selective acquisition

• Strong competitive positions

• A well managed business

• A rapidly changing world

Overview

• Tighter, better integrated group with acquisition risk

dealt with

• Investment made – yielding results with more

benefit to come

• Well balanced, well diversified

• Great thematics – sustainability, urbanisation,

natural resources

Financials in line with expectations

7

Agenda

• People changes

• Overview





• Group outlook

Agenda

8

In line with expectations

FY 2019 FY 2018 FY 2018

cc1

cc growth Organic

growth

Revenue (£m) 612.6 637.4 634.3 (3%) (5%)

Fees (£m) 556.5 574.2 571.4 (3%) (4%)

Operating profit2 (£m) 43.4 54.0 53.8 (19%) (21%)

Operating profit margin2 7.8% 9.4% 9.4%

PBTA3 (£m) 37.3 50.2 49.9 (25%) (27%)

Tax rate on PBTA 25.4% 26.8% 26.8%

Diluted eps3 (p) 12.31 16.34 16.24 (24%)

Dividend per share4 (p) 4.42 9.88 9.881 2018 results at 2019 currency rates2 pre amortisation of acquired intangibles, transaction related costs and exceptional items3 pre amortisation of acquired intangibles, transaction related costs and exceptional items and tax thereon4 In the Half Year Results, the Group announced the rebase of the dividend to 40% of adjusted earnings (being profit after tax and before amortisation of intangibles

and transaction-related costs and tax thereon

Group financial results

9

Exceptional items


Rebranding costs £1.0m New brand delivered – no further cost

ERP implementation £1.2m

Data migration and change management costs

association with implementation of Microsoft

Dynamics 365 in the Netherlands and part of

AAP.

Further costs will be incurred in FY2020

Legal fees £1.4m

Investigation of potential issues regarding

administration of government contracts in USA.

Contingent liability originally disclosed HY 2019.

Further legal costs will be incurred in FY2020

A legacy issue – business de-risked through

greater operational control

Goodwill impairment £19.8m Non-cash charge in respect of Australia Asia

Pacific

Total £23.4m

10

Strong cash conversion – ERP impacted year-end collections

£m FY 2019 FY 2018

Operating profit1 43.4 54.0

Exceptional items (3.6) -

Depreciation and amortisation 19.3 8.3

Share scheme costs 2.7 2.3

Other (0.5) (0.5)

EBITDAS 61.3 64.2

Working capital (6.4) (3.8)

Cash from operations 54.9 60.4

Conversion of profit into cash 90% 94%

Interest (5.7) (3.5)

Tax (11.6) (12.3)

Net cash from operating

activities37.6 44.5

1 before amortisation and impairment of acquired intangibles, transaction-related costs and

exceptional items

Depreciation in 2019 includes

IFRS16 adjustment £10.0m


11

Improved cash cycleAverage lock up days down by two days despite ERP pilot impact

58

60

62

64

66

68

70

72

74

76

78

80

December January February March April May June July August September October November December

Historical lock up trends

2018 2019

Jun 18

73 days

Dec 18

65 days

Jun 19

67 days

1 Jan 18

70 days

1 Jan 19

65 days

Lo

ck u

p d

ays

80

78

76

74

72

70

68

66

64

62

60

58

31/12/19

Dec 19

69 days

Average:

2018 – 71

2019 - 69


12

Cash outflow as we invest

£m FY 2019 FY 2018

Net cash from operating

activities37.6 44.5

Capex (20.7) (11.7)

Lease funding (9.2) -

Free cash flow 7.7 32.8

Acquisitions (10.1) -

Deferred consideration (0.1) (1.6)

Dividends (16.9) (22.1)

Other - (0.2)

Cash flow (19.4) 8.9

IFRS16 accounting change


ERP

2019 - £7.6m 2018 - £2.1m

13

Borrowings up following investment

£m FY 2019 FY 2018

Opening net bank borrowings (73.9) (80.6)

Cash flow (19.4) 8.9

FX and other (0.8) (2.2)

Closing net bank borrowings (94.1) (73.9)

Opening deferred consideration (0.3) (1.8)

Consideration payment 0.1 1.6

FX and other 0.3 (0.1)

Acquisitions (8.8) -

Closing deferred consideration (8.7) (0.3)

Total closing borrowings (102.8) (74.2)


14

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x

Well inside leverage limit

Bank leverage limit

Dec 17

1.3x

Jun 18

1.4x

Dec 18

1.3x

Jun 19

2.0x

Dec 19

2.0x

Bank definition used that excludes the impact of IFRS16


15

Revolving credit facility refinanced with extended maturity

£ 50m

£ 100m

£ 150m

£ 200m

Jan

20202021 2022 2023 2024

Sept

2021Jul

20222025

Jul

2024

£ 220m

UNCOMMITTED

£60M ACCORDION

FACILITY


16

Agenda

• People changes

• Overview





• Group outlook

Agenda

17

Segmental performance

Segment Headline

EnergyStrong growth - reflecting expansion in renewables and ongoing

recovery in gas and oil markets

Consulting (UK &

Ireland)4/6 divisions grew fees with particularly strong growth in Ireland

Services (UK &

Netherlands)

Netherlands grew. Water down, as anticipated, with the AMP

regulatory cycle

NorwayH1 growth following integration. Competitive pressures impacted

margins in H2

North AmericaA difficult year in a good market. Strong Oceans and Coastal

business. New leadership reviewing the business

Australia Asia Pacific Very challenging market in 2019 but improving trajectory for 2020

Segmental overview

18

£m H1

2019

H2

2019

FY

2019

FY

2018

FY

2018

cc1

cc

growth

Energy 50.5 60.1 110.6 101.1 102.1 8%

Consulting (UK & Ireland) 63.4 64.2 127.6 122.1 121.8 5%

Services (UK & Netherlands) 53.3 48.1 101.4 110.6 110.2 (8%)

Norway 36.2 28.6 64.7 69.0 66.4 (2%)

North America 29.8 28.5 58.3 58.7 61.3 (5%)

Australia Asia Pacific (AAP) 49.3 49.0 98.3 116.8 113.8 (14%)

Segment fees 282.5 278.4 560.9 578.2 575.3 (3%)

Eliminations (2.2) (2.2) (4.4) (4.1) (4.0) 11%

Group fees 280.3 276.3 556.5 574.2 571.4 (3%)

1 2018 results at 2019 currency rates

Fee income – small overall reduction driven by Australia, AMP cycle and North America

Segmental overview

19

£m H1

2019

H2

2019

FY

2019

FY

2018

FY 2018

cc1

cc

growth

Energy 4.5 6.6 11.1 8.9 9.1 22%

Consulting (UK & Ireland) 7.1 8.0 15.1 15.4 15.4 (2%)

Services (UK & Netherlands) 6.1 4.7 10.8 13.5 13.5 (20%)

Norway 3.7 2.3 6.0 6.2 5.9 1%

North America 2.0 1.4 3.4 5.1 5.4 (38%)

Australia Asia Pacific (AAP) 2.6 3.8 6.4 13.3 12.9 (51%)

Segment profit 25.9 26.7 52.7 62.4 62.2 (15%)

Unallocated expenses (3.9) (5.4) (9.3) (8.4) (8.4) 11%

Operating profit2 22.0 21.3 43.4 54.0 53.8 (19%)

Interest (2.9) (3.1) (6.1) (3.9) (3.9) (54%)

PBTA 19.1 18.2 37.3 50.2 49.9 (25%)1 2018 results at 2019 currency rates 2 pre amortisation of acquired intangibles, transaction related costs and exceptional items

Profit - Energy performs in an otherwise tough year

Segmental overview

20

People - capacity matched to markets while retaining capability

Segment H1

2019

FY

2019

FY

2018

Energy 390 400 350

Consulting (UK & Ireland) 1,660 1,600 1,650

Services (UK & Netherlands) 1,470 1,450 1,850

Norway 250 230 240

North America 350 340 420

Australia Asia Pacific (AAP) 910 930 1,000

Central services (inc. Group Technology) 95 100 90

Group 5,125 5,050 5,600

Segmental overview

21

Agenda

• People changes

• Overview





• Group outlook

Agenda

22

42 40.8

17.8

7.4 8 8.9 11.1

0

10

20

30

40

50

60

70

2013 2014 2015 2016 2017 2018 2019

Group PBTA

Reduced dependence on oilEnergy business reshaped

A sustainable business

Other

businesses

Reshaped

Energy

£M

Oil and

Gas

Excl. £40m Energy impairment

23

63.0

21.9

3.0

34.0

53.9

0

10

20

30

40

50

60

70

2013 PBTA Energy decline Acquisitions Other 2017 PBTA

2013-2017 – rapid acquisitions replaced Energy profits

Group PBTA

£M


24

53.9

c.3.7

c.9.5

c.11.7 0.9

37.3

0

10

20

30

40

50

60

2017 PBTA End of acquisitionlock in periods

Investment Energy recovery Other 2019 PBTA

2017-2019 – end of acquisitions lock-in period, investment, Energy recovery

£M

Group PBTA


Investment in

People, Brand

and Connectivity

25

End of acquisition lock-in impact

Acquisition company Acquisition

Date

Profit at

acquisition £m

Lock in expiry

Whelans Corporation Pty Ltd Feb-14 0 Feb-16

Clear Environmental Consultants Limited Apr-14 1.8 May-17

GaiaTech Holdings Inc USA May-14 2.9 Nov-15

CgMs Holdings Limited Aug-14 2.1 Aug-16

Delphi AS Aug-14 0 Aug-16

Point Project Management Pty Ltd 1 Sep-14 3.5 Sep-16

Klotz Feb-15 2.4 Feb-17

Metier Apr-15 3.0 Apr-17

Iris Oct-15 1.5 Oct-17

Everything Infrastructure Group Oct-15 2.7 Oct-17

DBK Apr-16 2.0 Apr-18

Total 21.9

Corview Feb-19 2.8 Feb-22

Reservoir Imaging Limited (RIL) Sep-19 0.6 Sep-21


26

2019 acquisition performance - rapid integration of CorviewSenior staff locked in, strong order book in 2020

Corview

Feb 2019

RIL

Sep 2019

Annualised profit at acquisition (£m) 2.8 0.6

Number of months of ownership 11 3

Pro rata profit for 2019 (£m) 2.6 0.1

Integration costs (£m) (1.0) -

Expected operating profit 2019 1.6 0.1

Actual profit 20191 0.8 0.1

1 Corview integrated into the business hence 2019 actual profit is estimated


27

Functional investments at industry norms –significant upside still to come

Spend as % of fee 2017 20192020

budget

Industry

‘norms’

People 0.6% 0.9% 1.1% 0.8 - 1%

Finance 2.3% 2.5% 2.5% 1.5 – 2.0%

Marketing and sales 3.5% 4.2% 4.2% 4.0 – 4.5%

Technology 2.5% 3.8% 4.1% 3.2 - 3.7%

Total 8.9% 11.4% 11.9% 9.5 - 11. 2%


28

Proportion of fees generated by segmentFY 2019 fee income £556.5m

Consulting -

UK & Ireland

Australia Asia

Pacific

Services -

UK & Netherlands

Energy

North America

Norway

SEGMENTS

Public / private sector exposureFY 2019 fee income £556.5m

SECTORS

Private

Public

Well balanced


29

Well diversified – plays to our key thematics: sustainability, urbanisation and natural resources

Proportion of fee income generated by sector and service

SECTORS

FY 2019 fee income £556.5m

Resources

Transport

Energy

Property

Water

Defence and

government services

Planning and

approvals

Oceans and coastal

Design and

development

Environment

Advisory and

management

consulting

Project and program

management

Training

Laboratories

Exploration and

developmentWater services

Health, safety

and risk

SERVICES

Communications,

creative and digital


30

A sustainable business with significant upside

1Tighter, better

integrated group

with acquisition risk

dealt with 2Investment made –

yielding results with

more benefit to come

3Well balanced,

well diversified 4Great thematics –

sustainability, urbanisation

and natural resources


31

Agenda

• People changes

• Overview





• Group outlook

Agenda

32

Ongoing progress against five strategic priorities

Progress against objectives

1 People

2 Brand

3 Connectivity

4 Energy

5 Organic growth and selective acquisition

33

People – a deliberate plan


HR leadership

• Global HR leadership team – the

right mix of internal promotion and

external hires

Listen to our people

• Global and local employee survey

actions implemented (sabbatical /

family friendly / global mobility

policies)

Performance

• Implemented Progress@ RPS – a

new performance and development

framework

• Launched global behaviours aligned

to the new framework

Clarity around reward

• Total Reward Statements delivered to employees

globally

• New discretionary bonus plans targeted with clear

line of sight to performance

Learning & Development

• Work on global online framework commenced

Talent

• Attraction strategy upgraded to leverage social

media and professionalise onboarding

• New Senior Leadership Group talent and

succession planning framework

34

People - showing results

2017

50%

2018

80%

2019

>95%

% global workforce receiving

a quality performance and

development conversation

with their manager

Quality conversations Managing under-performance

20% exited through

performance management

Solid, improving trend –

voluntary turnover

Excludes Services Water

Operations leavers driven by

the AMP regulatory cycle

15%12%

2019 Industry


35

A bold, client driven brand, delivered effectively


36Progress against objectives

A new website

Since 14 January 2019

70 new features:

• 2-3 clicks to reach an expert

• Fully responsive

• Designed for mobile-first

• Targeted geolocation functionality

• Scalable

53%

2 million 3000

increase in sites visits

compared to H1 18

page views web service enquiries

Measurable impact

37

North America and Consulting UK & Ireland

Connectivity – selling digital capability across segmentsExpansion of Houston’s I- 10 Highway

The solution – make complex easy

Use virtual reality to allow stakeholders to fully

understand how the proposed infrastructure will be

developed within the existing landscape and

address concerns

Team from Consulting Ireland provided

sophisticated 3D visualisation expertise to create an

immersive virtual reality experience, allowing the

North America client team to provide comprehensive

planning, design and environmental permitting

services

RPS source of expertise – Consulting, UK &

Ireland

RPS leveraging expertise – North America

Value – US$12.6m

The complexity

Houston’s major interstate highway

is one of the most congested in the

US. To provide greater connectivity

to high-speed rail, light rail transit,

rapid bus transit and improve

freight mobility, I- 10 needs to

be expanded


Goal

• Better connect key areas of Houston

• Provide multi-modal solutions to improve mobility

• Develop sustainable solutions to address the need

for additional capacity

The requirement

Engage stakeholders on the key elements of the project

and options available to get buy-in

38

Consulting – UK & Ireland

Connectivity – selling within segmentsTransforming Haulbowline Island’s East Tip, Ireland

Client: Cork County Council

Original RPS appointment:

Outline remediation design,

environmental impact

assessment, landscape design,

waste licence and planning


Creating shared value:

Local community benefits -

environmental/health risk removed, increased

house prices, connectivity and safer spaces

for island residents

Steelworks waste transformed into 22 hectare

recreational park with landscaping, sports

pitches, paths for cycling and walking and

electric vehicle parking points

Template model for efficient delivery of public

infrastructure spend for Cork County Council

and public sector clients

Delivered comfortably under budget –

construction out turn cost for project 50%

of original estimate

Expanded to: detailed design, procurement and

construction supervision services for the East Tip

and other related projects

Efficiencies: Solution delivered for 50% of the

original client estimate

Recognition: Won Engineers Ireland Engineering

Project of the Year and Local Authority Engineering

Initiative Award – November 2019

39

ObjectiveSingle,

modernised,

robust in-country

platforms

TransferredNorth America -

Deltek

Norway - Agresso

A single common

platform

£14m investment to

connect our global

segments and

business systems

with a new ERP

Phase 1 –

live with lumpsGlobal design

delivered on budget

Global construction

completed

Pilots in parts of

Australia and the

Netherlands

Invoices out but too

slowly

Suppliers paid

Books closed

Employee

experience sub-

optimal

Phase 2 –

planningImproved

employee

experience

Drive greater

efficiencies

Australia stage 2

scheduled for H2

Assess timeline

for UK and Ireland

migration

UK and Ireland go

live

All UK, Australia,

Ireland and the

Netherlands on one

common system,

North America on

modern platform

Norway on modern

platform

ERP –a pragmatic plan to modernise while controlling risk

Connectivity – linking people through improved systems

>20

systems

2016


40

Energy sector is growing

£0

£20,000,000

£40,000,000

£60,000,000

£80,000,000

£100,000,000

£120,000,000

£140,000,000

£160,000,000

2016 2017 2018 2019

Fee revenue

Renewables Gas Oil Oil + gas Other (mainly Nuclear)


Fee revenue – generated across all six RPS segments

Gas + Oil

41

Establishing a presence in Asia

Offshore wind – seizing the opportunity

Overlap between gas and oil and

offshore wind technical capability gives us competitive advantage

c£10bnAsia Pacific

annual

investment

(Source: IEA)

• Ongoing work with

TenneT in both

Netherlands and

Germany with Master

Service Agreements

signed for UXO services

related to offshore

renewable projects

(five years)• Leveraging existing service capabilities

• Experience in Europe and North America

globally applicable especially in new,

emerging markets

• Following our clients to emerging markets

• Want to grow our presence in emerging

markets in Asia

• Connecting services across segments to win

work

Deep expertise in offshore wind and marine environments Following existing clients into new and

emerging markets

• Taken traditional LiDAR technology and

integrated it into a buoy with power, data,

storage and satellite communication

capabilities. Deployed by Equinor in

offshore New York as part of a renewable

wind energy project


42

£m FY 2019

Fees

FY 2019

Profit

Consulting (ROI) 19% 26%

Energy* 8% 21%

Services (Netherlands) 5% 13%

Consulting (UK) 0% (8%)

Norway (2%) 1%

Services (UK) (14%) (31%)

North America (5%) (38%)

Australia Asia Pacific* (19%) (57%)

Group (4%) (21%)

Improving organic growth remains a key focus

*Organic growth excludes the impact of Corview and Reservoir Imaging Ltd. Including Corview

and Reservoir Imaging Ltd, constant currency fee decline for the Group is 3%Progress against

objectives

43

Acquisitions will remain VERY selective as we invest and manage the balance sheet

Value creating

Congruent with our brand and culture

Add data and expertise

Add density, not greater diversity


44

2019 five strategic Priorities

CONNECTIVITYExploit revenue synergies

where they

exist but not where they don’t

BRANDTell our story

better

PEOPLEInvest in people and

reduce staff

turnover

ENERGYRevitalise the

Energy

business

ORGANIC GROWTH

AND SELECTIVE

ACQUISITIONDensity not diversity

2020 three strategic priorities

Evolving priorities for 2020 – growing Energy and a focus on organic growth a given

PEOPLE CLIENTS CONNECTIVITY

Make RPS a great place

to do great work

Grow our business by

delivering great work for our

clients

Make it easy to work together

Safety and well-being

Performance and

development conversations

Fair reward

Learning and development

Build on existing competitive

advantage

Invest in sales and project

management capability

Cross-sell services

Continue roll-out of ERP

Leverage power of our data


45

Agenda

• People changes

• Overview





• Group outlook

Agenda

46

Strong competitive positions

Segment Competitive

position

Outlook

Energy StrongContinue push into renewables. Some global energy price

uncertainty. Expect overall growth

Consulting (UK &

Ireland)Strong

Consulting well placed to take advantage of political certainty in

2020

Services (UK &

Netherlands)Strong

Opportunities with AMP7 in 2020

Continued organic growth expected in the Netherlands

Improvement in Laboratories anticipated

Norway Strong Will continue to defend our leading position

North America Underweight

Robust market fundamentals and strong demand for services

Improved order book expected to strengthen margin performance

Strategy review underway

Australia Asia

Pacific

Strong -

improving

State government committed to ongoing infrastructure spend

Defence procurement expected to continue to pick up

Property sector uncertain but some signs of recovery

Group outlook

47

Managing volatility

We stay close to our clients to understand our future work

We match capacity to markets while holding capability

We manage cash tightly – with a clear focus on reducing lock-up days

We maintain a disciplined balance sheet – with target leverage of 1.0 to 2.0

We talk to markets at least four times a year – because things change in three months

Many of our specialist businesses have a three-month order book -

provides opportunities as well as challenges

Group outlook

48

A rapidly changing world

Group outlook

FX

£ $US $AUD NOK

The Board remains confident in the medium term outlook for the Group

and anticipates that the year ahead will be broadly in line with 2019 with

growth accelerating in 2021.

49

Positive outlook in unsettled timesA sustainable business with significant upside

Ongoing progress against strategic priorities

Investing in a sustainable future

• Fee income £556.5m

• Adjusted PBTA £37.3m

• Strong cash conversion at 90%

• Exceptional items - £23.4m including Australia Asia

Pacific goodwill impairment - £19.8m

• People

• Brand

• Connectivity

• Energy

• Organic growth and selective acquisition

• Strong competitive positions

• A well managed business

• A rapidly changing world

Overview

• Tighter, better integrated group with acquisition risk

dealt with

• Investment made – yielding results with more

benefit to come

• Well balanced, well diversified

• Great thematics – sustainability, urbanisation,

natural resources

Financials in line with expectations

51

Appendix

SafetyDetailed segmental performanceIFRS16 impactBoard

Appendix

52

Safe

* RIDDOR – reporting of Injuries Diseases and

Dangerous Occurrence Regulations

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

RIDDOR* Reportable Injury Frequency Rate (IFR ) (Injuries per 1,000,000 work-hours)

0

0.5

1

1.5

2

2.5

3

RPS Construction Manufacturing Professional,Scientific and

TechnicalActivities

RIDDOR Reportable Injury Frequency Rate (IFR)

Appendix

53

Energy

Proportion of fees by sector and serviceFY 2019 fee income £110.6m

Energy

Resources

SECTOR

Private

Public

SECTOR

Exploration and

development

Advisory and

management

consulting

Laboratories

Training

Environment

Oceans and coastal

Health, safety and risk

SERVICES

Appendix

54

Energy

FY 2019• Strong demand for Marine Exploration and Development, Oceans Coastal and Training Services

• Relative underperformance in Consultancy business

• Continued expansion of renewables service offerings

• Acquisition of Reservoir Imaging Ltd, providing new technology in the changing seismic acquisition market

Outlook• Oil price subject of several geopolitical effects which may introduce some instability

• Pursuing various SE Asia renewables opportunities

• Expectation is that sector should achieve moderate growth in 2019

Strong growth - reflecting expansion in renewables and ongoing recovery in gas and oil

markets

£m H1

2019

H2

2019

FY 2019 FY 2018 FY 2018

cc

cc

growth

Organic

growth

Fee income 50.5 60.1 110.6 101.1 102.1 8% 8%

Segment profit 4.5 6.6 11.1 8.9 9.1 22% 21%

Margin 8.9% 10.9% 10.0% 8.8% 8.9%

Adjusted for bad debt provision reversals

Segment profit 10.7 7.6 7.8 37% 35%

Margin 9.7% 7.6% 7.6%

Appendix

55

Consulting – UK & Ireland

Water services

Design and

development

Project and

program

management

Oceans and coastal

Health, safety

and risk

Environment

Planning and approvals

Advisory and

management consulting

SERVICES


Proportion of fees by sector and service

Defence and

government services

Property

Energy

SECTORS

Resources

Transport

Water

Private

Public

SECTORS

Communication and

creative services

Appendix

56

Consulting - UK & Ireland

FY 2019• Excellent 5% organic growth in a tough market affected by political uncertainty

• Demand for services in Republic of Ireland and Northern Ireland strong

• Traction on staff engagement initiatives led to improved retention

Outlook• Well placed to take advantage of greater political certainty in 2020

• Capable of fee growth - growth investment may temper profit performance in FY20

£m H1

2019

H2 2019 FY 2019 FY 2018 FY 2018

cc

cc

growth

Fee income 63.4 64.2 127.6 122.1 121.8 5%

Segment profit 7.1 8.0 15.1 15.4 15.4 (2%)

Margin 11.2% 12.4% 11.8% 12.6% 12.7%

4/6 divisions grew fees with particularly strong growth in Ireland

Appendix

57

Services – UK & Netherlands

Water

services

Health,

safety & risk

Project and

program management

Design and

development

Laboratories

Environment

SERVICES



Property

Resources

Water

Transport

SECTORS

Energy

Defence and

government services

Private

Public

SECTORS

Appendix

58

FY 2019 • Anticipated H2 decline in demand as industry prepares for new AMP regulatory cycle in 2020

• Netherlands saw a return on the organic investment made in 2018

• Disappointing year for our smallest business - Health & Safety

Outlook• Prospects are encouraging

• Well positioned to take advantage of anticipated cyclical upturn in UK water sector

• Diversified business in the Netherlands and operating in satisfactory markets

• Expect improvement in our Health & Safety business

Services - UK & Netherlands

Netherlands grew. Water down, as anticipated, with the AMP regulatory cycle

£m H1

2019

H2

2019

FY 2019 FY 2018 FY 2018

cc

cc

growth

Fee income 53.3 48.1 101.4 110.6 110.2 (8%)

Segment profit 6.1 4.7 10.8 13.5 13.5 (20%)

Margin 11.4% 9.8% 10.6% 12.2% 12.2%

Appendix

59

Norway



Project and

program

management

Training

Advisory and

management

consulting

SERVICES

Transport

Defence and

government

services

SECTORS

Property

Energy

Public

Private

SECTORS

Appendix

60

Norway

FY 2019• Remain a leading project and program management services provider

• Integration complete – teams benefitting from working collaboratively

• Loss of senior staff following sustained competitive pressure

Outlook• Attractive and stable economy – market conditions to remain stable

• Strong market position

• Fighting back hard to competitive pressure

£m H1

2019

H2

2019

FY 2019 FY 2018 FY 2018

cc

cc

growth

Fee income 36.2 28.6 64.7 69.0 66.4 (2%)

Segment profit 3.7 2.3 6.0 6.2 5.9 1%

Margin 10.2% 8.0% 9.2% 9.0% 8.9%

H1 growth following integration. Competitive pressures impacted margins in H2

Appendix

61

North America



Energy

Property

Transport

Water

Defence and

government

services

SECTORS

Design and

development

Oceans

and coastal

Advisory and

management

consulting

Environment

SERVICES

Private

Public

SECTORS

Communication

and creative

services

Appendix

62

North America

FY 2019• Oceans and coastal business had a consistently good year

• Recruitment / retention challenges made it difficult to capitalise on strong markets

• H2 felt impact of loss of small environmental risk team

• Management changes – Peter Fearn, former CEO, retirement

Outlook• Major strategy review / new leadership with Doug Matthys appointed CEO

• Improved order book – especially in Oceans and coastal business

A difficult year in a good market. Strong Oceans and coastal business. New leadership

reviewing the business.

£m H1

2019

H2

2019

FY 2019 FY 2018 FY 2018

cc

cc

growth

Fee income 29.8 28.5 58.3 58.7 61.3 (5%)

Segment profit 2.0 1.4 3.4 5.1 5.4 (38%)

Margin 6.6% 5.0% 5.8% 8.7% 8.9%

Appendix

63

Transport

Defence and

government services

SECTORS

Water

Resources

Environment

Water services Project and

program

managementCommunications,

creative

and digital

Design and

development

Advisory and

management

consulting

Planning and

approvals

SERVICES

Australia Asia Pacific



Energy

Private

Public

SECTORS

Property

Appendix

64

Australia Asia Pacific

FY 2019• Government transport spend constrained by state elections

• Project management business impact by delays in major defence contracts due to Federal election –

started to pick up in H2

• Residential property sector decline substantially impacting property planning and development

operations

Outlook

• Federal defence coming back - recent wins signal an improved overall performance in 2020

• Transport and infrastructure markets more active post state elections

• Property sector remain subdued

• Uncertain of impact of bushfires and coronavirus (COVID19)

£m H1

2019

H2

2019

FY 2019 FY 2018 FY 2018

cc

cc

growth

Organic

growth

Fee income 49.3 49.0 98.3 116.8 113.8 (14%) (19%)

Segment profit 2.6 3.8 6.4 13.3 12.9 (51%) (57%)

Margin 5.3% 7.7% 6.5% 11.4% 11.3%

Very challenging market in 2019 but improving trajectory for 2020

Appendix

65

Cash flow impact in FY 2019

Cash from operations 11.1

Interest paid (1.9)

Lease funding (9.2)

IFRS16 changes have no impact on leverage calculations

Balance sheet effect at 31 December

2019

Right of use asset 44.8

Lease liability (49.8)

Other net assets 3.2

Reserves (1.8)

Income statement impact in FY 2019

Depreciation (10.0)

Operating lease expense 11.3

Operating profit 1.3

Interest (1.9)

PBTA (0.6)

Bank leverage calculations based on

pre IFRS16 lease accounting

Appendix

66

Renewed Board –good mix of background, skill, geography and gender

Allison

BainbridgeAudit Chair

Appointed 2017

Michael

McKelvyIndependent

Non-Executive

Appointed

2018

Catherine

GlickmanRemuneration

Chair

Appointed

2018

David

GormleyCompany

Secretary

Appointed

2018

John

DouglasChief

Executive

Appointed

2017

Ken

LeverNon-Executive

Chairman

Appointed

2016

Gary

YoungFinance

DirectorAppointed

2000

Liz

PeaceSenior

Independent

Non-Executive

Appointed

2017

Appendix

Judith CottrellFinance Director

succession -Appointment April 2020

2019 FINAL RESULTS - Investor Relations | RPS Group Plc · 2019 FINAL RESULTS rpsgroup.com...

Documents

Transcript of 2019 FINAL RESULTS - Investor Relations | RPS Group Plc · 2019 FINAL RESULTS rpsgroup.com...