2018 FINAL RESULTS rpsgroup.com Investing to accelerate growth 21 February 2019
Agenda • Overview • Group financial results • S egmental performance • Significant progress • Group outlook 2 Agenda
Investing to accelerate growth Good financial performance • 4% growth in fee income (at constant currency) • PBTA of £50.2m • Strong cash-flow and reduced debt • Comfortable leverage maintained • Dividend held Significant progress against our five strategic priorities • People • Brand • Connectivity • Revitalising the Energy business • Organic growth and selective acquisition 3 Overview
About us Proportion of fees generated by segment FY 2018 fee income £574.2m North America Consulting – UK & Ireland John Norway Douglas Chief SEGMENTS Executive 5600 staff Australia Asia Pacific Energy Services - UK & Netherlands 4 Overview
The sectors we service and the services we provide FY 2018 fee income £574.2m Communication and Training Resources creative services Laboratories Transport Property Ocean and coastal Project and Health, safety and risk program management Exploration and development SECTORS SERVICES Defence and government Advisory and services management Design and consulting development Water (Less than 20%) Environment Planning and Energy Water services approvals Proportion of fee income generated by sector and service 1 Overview
Working safely RIDDOR* reportable injury frequency rate RIDDOR* reportable injury frequency rate 4 4 3.5 3.5 3 3 2.5 2.5 2 2 1.5 1.5 1 1 0.5 0.5 0 0 RPS Construction Manufacturing Professional, Scientific and Technical Activities Injury Frequency Rate Injury Frequency Rate (per 1,000,000 hours worked) * RIDDOR - Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 6 Overview
Agenda • Overview • Group financial results • S egmental performance • S ignificant progress • Group outlook 7 Agenda
Steady organic growth in fees, lower tax rate, dividend held FY 2017 cc 1 FY 2018 FY 2017 FY cc growth Revenue (£m) 637.4 630.6 619.9 3% Fees (£m) 574.2 562.3 552.6 4% Operating profit 2 (£m) 54.0 58.5 57.3 (6%) Operating profit margin 2 (%) 9.4% 10.4% 10.4% PBTA (£m) 50.2 53.9 52.8 (5%) Tax rate on PBTA (%) 26.8% 29.6% 29.6% Diluted eps 3 (p) 16.34 17.01 16.65 (2%) Dividend per share (p) 9.88 9.88 9.88 1 2017 results at 2018 currency rates 2 pre amortisation and impairment of acquired intangibles and transaction related costs 3 pre A and tax on A 8 Group financial results
Lower working capital leading to strong cash from operating activities again £m FY 2018 FY 2017 Operating profit 54.0 58.5 Depreciation 8.3 8.4 Share scheme costs 2.3 2.7 Other (0.5) - EBITDAS 64.2 69.6 Working capital (3.8) (6.1) Cash from operations 60.4 63.5 Conversion of profit into cash 94% 91% Interest (3.5) (4.8) Tax (12.3) (14.9) Net cash from operating activities 44.5 43.7 9 Group financial results
5 day improvement in lock up days drives higher cash conversion Period end lock up days Last twelve months' cash conversion 100 200% 90 180% LTM cash conversion 80 160% 70 140% Lock up days 60 120% 50 100% 40 80% 30 60% Period of Energy working 20 40% capital release 10 20% 0 0% Lock up days LTM cash conversion 10 Group financial results
Increased capex, reduced deferred consideration, dividends maintained, leading to strong cash in-flow £m FY 2018 FY 2017 Net cash from operating activities 44.5 43.7 Capex (11.7) (8.2) Free cash flow 32.8 35.5 Deferred consideration (1.6) (12.9) Dividends (22.1) (22.0) Other (0.2) 0.4 Cash in flow 8.9 1.0 11 Group financial results
Reduced total borrowings at year end £m FY 2018 FY 2017 Opening net bank borrowings (80.6) (83.4) Cash flow 8.9 1.0 FX and other (2.2) 1.7 Revolving credit facility £150m Closing net bank borrowings (73.9) (80.6) headroom at 31/12/18 £117m Opening deferred consideration (1.8) (15.0) Consideration payment 1.6 12.9 FX and other (0.1) 0.3 Closing deferred consideration (0.3) (1.8) Total closing borrowings (74.2) (82.4) 12 Group financial results
Leverage within desired operating range 3.0x Bank leverage limit 2.5x 2.0x Jun 18 1.4x 1.5x Dec 17 Dec 18 1.0x 1.3x 1.3x 0.5x 0.0x June 13 Dec 13 June 14 Dec 14 June 15 Dec 15 June 16 Dec 16 June 17 Dec 17 June 18 Dec 18 13 Group financial results
Agenda • Overview • Group financial results • S egmental performance • Significant progress • Group outlook 14 Agenda
Segmental performance Energy Strong fee and profit growth, margins increased Consulting – UK & Ireland Steady fees, performance impacted by retention and recruitment challenges Services – UK & UK water performance strong. Organic investment in Netherlands and health, safety and risk reduced their contribution Netherlands Good underlying trading performance, final integration costs incurred Norway General economic conditions good but the business suffered retention and North America recruitment issues Australia Asia Pacific (AAP) Staff retention issues and investment in support functions impacted margin 15 Segmental performance
Dependent on Energy as we invest in other businesses £m FY 2018 FY 2017 FY 2017 cc cc growth Energy 8.9 8.0 7.9 12% Consulting (UK & Ireland) 15.4 16.6 16.7 (7%) Services (UK & Netherlands) 13.5 14.0 14.0 (3%) Norway 6.2 6.4 6.3 (1%) North America 5.1 7.3 7.0 (27%) Australia Asia Pacific (AAP) 13.3 14.8 14.0 (5%) Segment profit 62.4 67.0 65.8 (5%) Unallocated expenses (8.4) (8.5) (8.5) 2% Operating profit 2 54.0 58.5 57.3 (6%) Interest (3.9) (4.5) (4.5) 14% PBTA 50.2 53.9 52.8 (5%) 1 2017 results at 2018 currency rates 2 pre amortisation and impairment of acquired intangibles and transaction related costs 16 Segmental performance
Energy Proportion of fees by sector and service FY 2018 fee income £101.1m Health, safety and risk Laboratories Project and program Exploration and management development John Training Tompson CEO Energy SECTOR 350 staff, SERVICES 350 associates Advisory and management consulting Oceans and Energy coastal 17 Segmental performance
Energy Strong fee and profit growth, margins increased £m 2018 2017 2017 cc cc growth Fee income 101.1 93.0 91.7 10% Segment profit 8.9 8.0 7.9 12% Margin 8.8% 8.6% 8.7% Adjusted for bad debt provision reversals Segment profit 7.6 6.2 6.1 24% Margin 7.6% 6.6% 6.7% 2018 • Revitalised Energy business benefitted from improving oil price • All services performed well Prospects • Growth is anticipated in 2019. Further bad debt recoveries are unlikely • Demand for our services in renewables is increasing 18 Segmental performance
Consulting – UK & Ireland Proportion of fees by sector and service FY 2018 fee income £122.1m Advisory and Defence and government services Oceans and coastal management consulting Communication and Resources Water services creative services Water Project and John Design and program development management Chubb Transport CEO SERVICES SECTORS Health, safety Consulting and risk UK & IRE 1650 Staff Energy Environment Property Planning and approvals 19 Segmental performance
Consulting - UK & Ireland Steady fees, performance impacted by retention and recruitment challenges £m FY 2018 FY 2017 FY 2017 cc cc growth Fee income 122.1 120.8 121.1 1% Segment profit 15.4 16.6 16.7 (7%) Margin 12.6% 13.8% 13.8% 2018 • Good public infrastructure markets in Ireland and Northern Ireland • Retention and recruitment challenges in London and to a lesser extent Birmingham • Loss on troubled engineering design project £0.3m (2017: £2.1m) Prospects • Brexit risks limited to this segment, limited impact so far 20 Segmental performance
Services – UK & Netherlands Proportion of fees by sector and service FY 2018 fee income £110.6m Project and program management Resources Energy Environment Design and development Transport Paul Aitken Health, safety & risk CEO SECTORS SERVICES Services UK & NL 1850 Staff Property Laboratories Water Water services 21 Segmental performance
Services - UK & Netherlands UK Water performance strong. Organic investment in Netherlands and health, safety and risk reduced their contribution £m FY 2018 FY 2017 FY 2017 cc cc growth Fee income 110.6 95.7 96.1 15% Segment profit 13.5 14.0 14.0 (3%) Margin 12.2% 14.6% 14.6% 2018 4 th year of AMP regulatory cycle • • Good fee growth in UK Water business, with some new, initially lower, margin projects • Investment in Netherlands and UK health, safety and risk businesses (laboratories and bridge inspections) Prospects • Prospects for UK Water business typically subdued at this stage of the regulatory cycle • New AMP cycle commences early 2020 • Expect increased profits from investment in UK health, safety and risk businesses 22 Segmental performance
Norway Proportion of fees by sector and service FY 2018 fee income £69.0m Transport Training Advisory and Energy management consulting Halvard Kilde SERVICES SECTORS CEO Norway 240 Staff Defence and Property government services Project and program management 23 Segmental performance
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