2019 FINAL RESULTS rpsgroup.com rpsgroup.com Investing in a sustainable future 19 FEBRUARY 2020
Agenda • People changes • Overview • Group financial results • Segmental overview • A sustainable business with significant upside • Progress against objectives • Group outlook 2 Agenda
Group Finance Director succession • Not standing for re-election at AGM Five years at RPS on 30 April 2020 • CFO Europe • Acting CEO Europe • Will remain available • CEO, Consulting UK & to the business to Ireland support the transition Judith Cottrell Gary Young • Group Strategy Director • 20 years as Group Finance Director • Held senior finance roles at AEA Plc and Ricardo Plc • Part of building RPS from a business of 400 to a Group of 5,000 • Qualified as an accountant with KPMG • Thank you for support and counsel over • Joining the Board on 30 April 2020 the last 2.5 years • Signalled Judith Cottrell as a potential successor 3 People changes
Strong Group Leadership Team – with ongoing renewal John Douglas CEO John Paul Ross John Halvard *Doug Chubb Aitken Thompson Tompson Kilde Matthys CEO CEO CEO CEO CEO CEO Consulting Australia Services Energy Norway North UK & IRE Asia Pacific UK & NL America *Peter Fearn retired January 2020 Chantalle Gary Judith Liza Kelly Young Cottrell Kane Meijer Olsen Group Chief Group Group Group Finance Strategy People Marketing Information Director Director Director Director Officer 4 People changes
Agenda • People changes • Overview • Group financial results • Segmental overview • A sustainable business with significant upside • Progress against objectives • Group outlook 5 Agenda
Investing in a sustainable future Financials in line with expectations Ongoing progress against strategic priorities • Fee income £556.5m • People • Adjusted PBTA £37.3m • Brand • • Connectivity Strong cash conversion at 90% • Energy • Exceptional items - £23.4m including Australia Asia • Organic growth and selective acquisition Pacific goodwill impairment - £19.8m A sustainable business with significant upside Positive outlook in unsettled times • • Strong competitive positions Tighter, better integrated group with acquisition risk • dealt with A well managed business • A rapidly changing world • Investment made – yielding results with more benefit to come • Well balanced, well diversified • Great thematics – sustainability, urbanisation, natural resources 6 Overview
Agenda • People changes • Overview • Group financial results • Segmental overview • A sustainable business with significant upside • Progress against objectives • Group outlook 7 Agenda
In line with expectations FY 2019 FY 2018 FY 2018 cc growth Organic cc 1 growth Revenue (£m) 612.6 637.4 634.3 (3%) (5%) Fees (£m) 556.5 574.2 571.4 (3%) (4%) Operating profit 2 (£m) 43.4 54.0 53.8 (19%) (21%) Operating profit margin 2 7.8% 9.4% 9.4% PBTA 3 (£m) 37.3 50.2 49.9 (25%) (27%) Tax rate on PBTA 25.4% 26.8% 26.8% Diluted eps 3 (p) 12.31 16.34 16.24 (24%) Dividend per share 4 (p) 4.42 9.88 9.88 1 2018 results at 2019 currency rates 2 pre amortisation of acquired intangibles, transaction related costs and exceptional items 3 pre amortisation of acquired intangibles, transaction related costs and exceptional items and tax thereon 4 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 8 Group financial results
Exceptional items Non-cash charge in respect of Australia Asia Goodwill impairment £19.8m Pacific New brand delivered – no further cost Rebranding costs £1.0m Data migration and change management costs association with implementation of Microsoft ERP implementation £1.2m Dynamics 365 in the Netherlands and part of AAP. Further costs will be incurred in FY2020 Investigation of potential issues regarding administration of government contracts in USA. Contingent liability originally disclosed HY 2019. Legal fees £1.4m Further legal costs will be incurred in FY2020 A legacy issue – business de-risked through greater operational control Total £23.4m 9 Group financial results
Strong cash conversion – ERP impacted year-end collections £m FY 2019 FY 2018 Operating profit 1 43.4 54.0 Exceptional items (3.6) - Depreciation in 2019 includes Depreciation and amortisation 19.3 8.3 IFRS16 adjustment £10.0m 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 37.6 44.5 activities 1 before amortisation and impairment of acquired intangibles, transaction-related costs and exceptional items 10 Group financial results
Improved cash cycle Average lock up days down by two days despite ERP pilot impact Historical lock up trends 80 80 78 78 1 Jan 18 Jun 18 76 76 70 days 73 days 74 74 72 72 Lock up days Dec 19 70 70 69 days 68 68 66 66 Jun 19 Average: Dec 18 64 64 2018 – 71 1 Jan 19 67 days 65 days 62 62 65 days 2019 - 69 60 60 58 58 31/12/19 December January February March April May June July August September October November December 2018 2019 11 Group financial results
Cash outflow as we invest £m FY 2019 FY 2018 Net cash from operating 37.6 44.5 activities ERP Capex (20.7) (11.7) 2019 - £7.6m 2018 - £2.1m Lease funding (9.2) - IFRS16 accounting change 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 12 Group financial results
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) 13 Group financial results
Well inside leverage limit Bank definition used that excludes the impact of IFRS16 3.0x Bank leverage limit 2.5x Jun 19 2.0x 2.0x Jun 18 1.4x Dec 19 1.5x 2.0x 1.0x Dec 17 Dec 18 1.3x 1.3x 0.5x 0.0x 14 Group financial results
Revolving credit facility refinanced with extended maturity £ 220m £ 200m £ 150m UNCOMMITTED £60M ACCORDION FACILITY £ 100m £ 50m Jan Sept Jul Jul 2021 2022 2023 2024 2025 2020 2021 2024 2022 15 Group financial results
Agenda • People changes • Overview • Group financial results • Segmental overview • A sustainable business with significant upside • Progress against objectives • Group outlook 16 Agenda
Segmental performance Segment Headline Strong growth - reflecting expansion in renewables and ongoing Energy recovery in gas and oil markets Consulting (UK & 4/6 divisions grew fees with particularly strong growth in Ireland Ireland) Services (UK & Netherlands grew. Water down, as anticipated, with the AMP Netherlands) regulatory cycle H1 growth following integration. Competitive pressures impacted Norway margins in H2 A difficult year in a good market. Strong Oceans and Coastal North America business. New leadership reviewing the business Australia Asia Pacific Very challenging market in 2019 but improving trajectory for 2020 17 Segmental overview
Fee income – small overall reduction driven by Australia, AMP cycle and North America £m H1 H2 FY FY FY cc 2019 2019 2019 2018 2018 growth cc 1 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 18 Segmental overview
Profit - Energy performs in an otherwise tough year £m H1 H2 FY FY FY 2018 cc cc 1 2019 2019 2019 2018 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 profit 2 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 19 Segmental overview
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