2019 HALF YEAR RESULTS rpsgroup.com rpsgroup.com STRONG PLATFORM FOR GROWTH 01 AUGUST 2019
Agenda • Overview • Group financial results • Segmental performance • Significant progress • Group outlook 2 Agenda
Managing volatility, significant progress, positive outlook Managing volatility Significant progress • People, Brand, Connectivity • 3% decline in fee income (at constant • Energy – particularly renewables currency) – headwinds in Australia offset growth elsewhere • Organic growth and selective acquisition - • Corview Capacity matched to markets while retaining capability • PBTA of £18.2m after rebranding costs Positive outlook of £1.0m • Strong competitive positions in long-term • Strong and improving cash cycle resulting growth markets in continued good cash conversion • Good thematics – resource scarcity and • Disciplined balance sheet management - urbanisation dividend rebased • Unsettled markets with positive signs 3 Overview
Dividend rebased – investing to drive organic growth Policy is to pay out 40% of PAT on a half yearly basis – sustainable, disciplined and progressive Long-term aspiration to maintain a pay-out ratio of 40% OR 2.5 times dividend cover Recent headwinds in Australia and political uncertainty in the UK Need for disciplined balance sheet management Committed to organic growth and very selective acquisition Yield remains healthy even with a rebased dividend 4 Overview
Well balanced Proportion of fees generated by segment Public / private sector exposure HY 2019 fee income £280.3m HY 2019 fee income £280.3m North America Consulting - UK Private & Ireland Norway SEGMENTS SECTORS Australia Services - UK & Public Asia Pacific Netherlands Energy 5 Overview
Well diversified HY 2019 fee income £280.3m Training Communications, Resources Defence and creative and digital Laboratories government services Planning and approvals Property Project and program management Health, safety and risk Transport Ocean and coastal Advisory and SECTORS SERVICES management consulting Design and development Exploration and (Less than 20%) development Water Energy Environment Water services Proportion of fee income generated by sector and service 6 Overview
Safe RIDDOR Reportable Injury Frequency Rate YTD RIDDOR Reportable Injury Frequency Rate (Injuries per 1,000,000 work-hours ) 3 4.5 4 2.5 3.5 2 3 2.5 1.5 2 1 1.5 1 0.5 0.5 0 0 RPS Construction Manufacturing Professional, Scientific and Technical Activities RIDDOR – reporting of Injuries Diseases and Dangerous Occurrence Regulations 7 Overview
Agenda • Overview • Group financial results • Segmental performance • Significant progress • Group outlook 8 Agenda
Results down in volatile markets H1 2019 H2 2018 H1 2018 H1 2018 cc growth cc 1 Revenue (£m) 309.7 316.3 321.1 321.0 -4% Fees (£m) 280.3 285.1 289.1 289.1 -3% Operating profit 2 (£m) 21.1 24.6 29.4 29.4 -28% Operating profit margin 2 (%) 7.5% 8.6% 10.2% 10.2% -3% PBTA (£m) 18.2 22.8 27.4 27.4 -34% Tax rate on PBTA (%) 24.6% 24.5% 28.7% 28.7% -4.1% Diluted eps 3 (p) 6.06 7.64 8.70 8.70 -30% Dividend per share (p) 2.42 5.08 4.80 4.80 -50% 1 2018 results at 2019 currency rates 2 pre amortisation and impairment of acquired intangibles and transaction related costs 3 pre amortisation and tax on amortisation 9 Group Financial Results
Strong cash conversion maintained £m H1 2019 H2 2018 H1 2018 Operating profit 21.1 24.6 29.4 Depreciation 8.9 4.2 4.1 Share scheme costs 1.3 1.3 1.1 Other (0.5) (0.2) (0.3) EBITDAS 30.8 29.9 34.3 Working capital (15.4) 14.1 (17.9) Cash from operations 15.4 44.0 16.3 Conversion of profit into cash 50% 147% 48% Interest (2.7) (1.7) (1.9) Last 12 months – 98% cash conversion Tax (6.0) (7.0) (5.4) Net cash from operating 6.8 35.4 9.1 activities 10 Group Financial Results
Disciplined investment £m H1 2019 H2 2018 H1 2018 Net cash from operating activities 6.8 35.4 9.1 Capex (9.8) (6.5) (5.1) Free cash flow (3.0) 28.9 4.0 Acquisitions (8.6) - (0.1) Deferred consideration (0.1) (0.4) (1.2) Dividends (11.4) (10.8) (11.4) Lease funding (4.0) - - Cash flow (27.0) 17.7 (8.7) 11 Group Financial Results
Increased borrowings following investment £m H1 2019 H2 2018 H1 2018 Opening net bank borrowings (73.9) (90.5) (80.6) Cash flow (27.0) 17.7 (8.7) FX and other (0.3) (1.1) (1.1) Closing net bank borrowings (101.2) (73.9) (90.5) Opening deferred consideration (0.3) (0.7) (1.8) Cash flow 0.1 0.4 1.2 Acquisitions (7.5) - (0.1) Closing deferred consideration (7.8) (0.3) (0.7) Total closing borrowings (109.0) (74.2) (91.2) 12 Group Financial Results
Improved cash cycle 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 70 70 68 68 Dec 18 65 days 66 66 Jun 19 64 64 1 Jan 19 67 days 62 62 65 days 60 60 58 58 December 31/12 January February March April May June July August September October November December 2018 2019 13 Group Financial Results
Improved cash cycle and dividend rebase will reduce leverage 3.0x Bank leverage limit 2.5x Jun 19 2.0x 2.0x Jun 18 1.4x 1.5x Dec 17 Dec 18 1.0x 1.3x 1.3x 0.5x 0.0x 14 Group Financial Results
IFRS16 changes have no impact on leverage calculations Balance sheet effect to 30 June 2019 Income statement impact in H1 2019 Right of use asset +£41.7m Depreciation -£4.4m Lease liability -£46.6m Operating lease expense +£5.0m Other net assets +£3.4m Operating profit +£0.6m Reserves -£1.5m Interest -£0.9m PBTA -£0.3m Cash flow impact in H1 2019 Cash from operations +£4.9m Interest paid -£0.9m Bank leverage calculations based on pre IFRS16 lease accounting Lease funding -£4.0m 15 Group Financial Results
RCF refinanced with extended maturity £ 160m £ 140m £ 120m £ 100m £ 80m £ 60m £ 40m £ 20m July 2019 2020 2021 2022 2023 2024 16 Group Financial Results
Agenda • Overview • Group financial results • Segmental performance • Significant progress • Group outlook 17 Agenda
Segmental performance Segment Headline Energy Good profit growth, successful expansion into offshore wind Consulting (UK & Ireland) Encouraging growth in spite of Brexit uncertainty affecting higher margin business units Services (UK & Netherlands) Netherlands growing on previous investment, Water moving down with the AMP cycle Norway Growth following integration North America Improved Q2 performance, favourable markets, recruitment/retention challenges remain Australia Asia Pacific (AAP) Three elections and a property downturn have significantly impacted H1 performance 18 Segmental performance
Fee income – small downturn driven by AAP £m H1 H2 H1 H1 cc 2019 2018 2018 2018 growth cc 1 Energy 50.5 52.5 48.6 49.3 2% Consulting (UK & Ireland) 63.4 61.1 61.0 60.8 4% Services (UK & Netherlands) 53.3 56.1 54.4 54.3 -2% Norway 36.2 34.0 35.0 34.2 6% North America 29.8 28.9 29.8 31.5 -5% Australia Asia Pacific (AAP) 49.3 54.8 62.1 60.7 -19% Segment fees 282.5 287.4 290.9 290.8 -3% Eliminations (2.2) (2.3) (1.8) (1.7) 29% Group fees 280.3 285.1 289.1 289.1 -3% 1 2018 results at 2019 currency rates 19 Segmental performance
Profits down on AAP, North America – investing for growth H1 2018 cc 1 £m H1 2019 H2 2018 H1 2018 cc growth Energy 4.5 4.2 4.7 4.8 -6% Consulting (UK & Ireland) 7.1 7.3 8.1 8.1 -12% Adjusted for bad debt provision – Services (UK & Netherlands) 6.1 6.7 6.8 6.8 -11% cc growth 16% Norway 3.7 2.9 3.3 3.2 15% North America 2.0 1.7 3.4 3.7 -46% Australia Asia Pacific (AAP) 2.6 6.1 7.1 7.0 -63% Segment profit 25.9 28.9 33.5 33.5 -23% Unallocated expenses (3.9) (4.3) (4.1) (4.1) 4% Rebrand costs (1.0) - - - -100% Operating profit 2 21.1 24.6 29.4 29.4 -28% Interest (2.9) (1.9) (2.0) (2.0) -44% PBTA 18.2 22.8 27.4 27.4 -34% 1 2018 results at 2019 currency rates 2 pre amortisation and impairment of acquired intangibles and transaction related costs 20 Segmental performance
Capacity matched to markets while retaining capability - reductions in Services (AMP cycle) and AAP Segment H1 H2 H1 2019 2018 2018 Energy 390 350 400 Consulting (UK & Ireland) 1,660 1,650 1,650 Services (UK & Netherlands) 1,470 1,850 1,850 Norway 250 240 240 North America 350 420 400 Australia Asia Pacific (AAP) 910 1,000 1,000 Central services (inc. Group IT) 95 90 80 Group 5,125 5,600 5,620 21 Segmental performance
Australia Asia Pacific (AAP) Proportion of fees by sector and service H1 2019 fee income £49.3m Communications, creative Resources and digital Defence and Water services Water Project and Energy government Planning and program services approvals Private management Environment SECTORS SERVICES SECTORS Property Advisory and management consulting Public Design and Transport development 22 Segmental performance
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