Consolidated Profit and Loss Account

Transcription

1 Consolidated Profit and Loss Account for the year ending 31st December 2004 Note 000s 000s Turnover Continuing operations 2 165, ,549 Acquisitions 4, , ,549 Operating profit before goodwill amortisation Continuing operations 2 22,980 20,445 Acquisitions ,571 20,445 Goodwill amortisation 12 6,340 4,585 Operating profit Continuing operations 2 16,756 15,860 Acquisitions ,231 15,860 Net interest (payable)/receivable 5 (558) 607 Profit on ordinary activities before taxation 7 16,673 16,467 Taxation 8 4,717 4,636 Profit for the year attributable to shareholders of RPS Group Plc 9 11,956 11,831 Dividends 10 4,100 3,480 Retained profit for the year 21 7,856 8,351 Profit before goodwill amortisation and tax 23,013 21,052 Note Basic Diluted Basic Diluted Earnings per share (pence) 11 Before goodwill amortisation After goodwill amortisation All amounts related to continuing activities. The results as per the profit and loss account are not materially different from those on an unmodified historical cost basis. The notes on pages 64 to 89 form part of these statements. Accounts 59

2 Statement of Total Recognised Gains and Losses 000s 000s Retained profit for the financial year 7,856 8,351 Currency translation differences on foreign currency investments Total recognised gains and losses relating to the year 8,000 9,270 All amounts related to continuing activities. The results as per the profit and loss account are not materially different from those on an unmodified historical cost basis. The notes on pages 64 to 89 form part of these statements. 60 Accounts

3 Consolidated Balance Sheet as at 31st December 2004 Note 000s 000s 000s 000s Fixed assets Intangible assets ,729 87,911 Tangible assets 13 17,719 13, , ,638 Current assets Work in progress 13,955 9,456 Debtors 15 52,258 37,057 Cash at bank and in hand 4,982 21,678 71,195 68,191 Creditors: amounts falling due within one year 16 69,242 42,724 Net current assets 1,953 25,467 Total assets less current liabilities 149, ,105 Creditors: amounts falling due after more than one year 17 11,516 3,461 Provision for liabilities and charges 18 3,313 1,315 Net assets 134, ,329 Capital and reserves Called up share capital 20 5,933 5,803 Share premium account 21 87,308 82,201 Shares to be issued ,625 Revaluation reserve Employee trust shares 21 (1,867) (1,805) Share scheme reserve Profit and loss reserve 21 42,468 34,468 Equity shareholders funds 134, ,329 These financial statements were approved by the Board on 8th March The notes on pages 64 to 89 form part of these statements. Dr A S Hearne, Director G R Young, Director On behalf of the Board of RPS Group Plc. Accounts 61

4 Company Balance Sheet as at 31st December 2004 Note 000s 000s 000s 000s Fixed assets Intangible assets 12 1,174 1,240 Tangible assets 13 4,046 4,158 Investments , , , ,566 Current assets Debtors 15 16,553 10,077 Cash at bank and in hand 1 8,419 16,554 18,496 Creditors: amounts falling due within one year 16 38,205 29,101 Net current liabilities 21,651 10,605 Total assets less current liabilities 101,958 99,961 Creditors: amounts falling due after more than one year 17 1,123 3,461 Net assets 100,835 96,500 Capital and reserves Called up share capital 20 5,933 5,803 Share premium account 21 87,308 82,201 Shares to be issued ,625 Revaluation reserve Employee trust shares 21 (1,867) (1,805) Share scheme reserve Profit and loss reserve 21 8,731 8,644 Equity shareholders funds 100,835 96,500 These financial statements were approved by the Board on 8th March The notes on pages 64 to 89 form part of these statements. Dr A S Hearne, Director G R Young, Director On behalf of the Board of RPS Group Plc. 62 Accounts

5 Consolidated Cash Flow Statement for the year ending 31st December 2004 Note 000s 000s Net cash inflow from operating activities 24 15,863 20,630 Returns on investments and servicing of finance 25 (558) 607 Corporation tax paid (4,411) (5,110) Capital expenditure 25 (2,523) (2,138) Acquisitions and disposals 25 (41,459) (13,630) (33,088) 359 Equity dividends paid (3,780) (3,231) Cash outflow before financing (36,868) (2,872) Financing 25 20, Decrease in cash in year (16,607) (1,995) The notes on pages 64 to 89 form part of these accounts. Accounts 63

6 Notes to the Financial Statements 1. Accounting policies The financial statements have been prepared under the historical cost convention as modified by the revaluation of certain assets and are in accordance with applicable UK accounting standards.the following principal accounting policies have been applied: Basis of consolidation The Group s financial statements incorporate the financial statements of the holding Company and all its subsidiary undertakings. The results of subsidiaries acquired or disposed during the year are included from or up to the date of acquisition or disposal. On the acquisition of a subsidiary, fair values are attributed to the net assets acquired. Goodwill Goodwill arising on the acquisition of subsidiary undertakings and 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 written off on a straightline basis over its useful economic life, of up to 20 years. Goodwill arising on the acquisitions made prior to 1st January 1998, was written off against reserves in the year of acquisition in accordance with the accounting standard then in force. Should a subsequent disposal occur any related goodwill written off to reserves will be charged to the profit and loss account as part of the profit or loss on disposal. The Directors consider that amortisation of goodwill should be separately disclosed on the face of the profit and loss account in order to give a fair presentation of the Group s results. Valuation of investments Investments held as fixed assets are stated at cost, less any provision for impairment in value. Turnover Turnover represents sales of services provided to customers during the year at invoiced amounts less applicable taxes, with the exception of income billed in advance which is deferred until the Group has the right to that consideration. Tangible fixed assets Tangible fixed assets are stated at cost or valuation, net of depreciation and any provision for impairment. Depreciation is provided to write off the cost, less estimated residual values, of all tangible fixed assets, excluding freehold land, over their expected useful lives. It is calculated at the following rates: Fixtures, fittings, IT and equipment Motor vehicles Alterations to short leasehold premises Freehold buildings 12.5% 33% per annum on cost 25% per annum on cost Straight line over life of the lease 2% per annum on cost Revaluation of properties The Group has taken advantage of the transitional arrangements in FRS 15 Tangible Fixed Assets and retained the book values of certain freehold properties that were revalued prior to implementation of that standard. Where an asset that was previously revalued is disposed of, its book value is eliminated and an appropriate transfer made from the revaluation reserve to the profit and loss reserve. Leased assets and assets held under hire purchase contracts Where assets are financed by hire purchase or leasing agreements that give rights approximating to ownership (finance leases), the assets are treated as if they had been purchased outright.the amount capitalised is the present value of the minimum lease payments payable during the lease term.the corresponding leasing commitments are shown as amounts payable to the lessor. Depreciation on the relevant assets is charged to the profit and loss account. Lease payments are split between capital and interest using the actuarial method and the interest element is charged to the profit and loss account. All other leases are treated as operating leases.their annual rentals are charged to the profit and loss account on a straightline basis over the lease term. Foreign currency translation Profit and loss accounts of foreign subsidiary undertakings are translated into sterling at the average exchange rate during the year, with the balance sheet translated at the rate of exchange at the balance sheet date. Exchange differences which arise on translation of the opening net assets and the results of overseas operations for the year are reported in the statement of total recognised gains and losses. All other differences are taken to the profit and loss account. Foreign currency transactions of individual companies 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. Financial instruments Page 15 of the Operating and Financial Review provides an explanation of the role that financial instruments have 64 Accounts

7 had during the period in creating or changing the risks the Group faces in its activities.the numerical disclosures in notes 30 and 31 deal with the financial assets and financial liabilities as defined in FRS 13. Short-term debtors and creditors have been excluded from the disclosure, other than in the currency risk disclosure. 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.the cost of pensions in respect of the Group s defined benefit scheme is charged to the profit and loss account so as to spread the cost of pensions over the service lives of the employees. Actuarial surpluses and deficits are spread forward over the average remaining service life of the employees.the pension cost is assessed in accordance with the advice of qualified actuaries. Differences between contributions payable in the year and the amount actually paid are shown as either accruals or prepayments in the balance sheet. Share based employee remuneration When shares and share options are awarded to employees a charge is made to the profit and loss account based on the difference between the market value of the company s shares at the date of grant and the option exercise price in accordance with UITF Abstract 17 (Revised 2003) Employee Share Schemes. The charge is spread on a basis that reflects the services received and is spread over the period to which the employee s performance relates.the credit entry for this charge is taken to reserves and reported in the reconciliation of movements in shareholders funds. Work in progress Work in progress is valued at the lower of cost and net realisable value. Cost is calculated as cost of labour, together with attributable overheads based on the normal level of activity. Net realisable value is based on estimated selling price less further costs expected to be incurred to completion. Regular reviews are undertaken and any impairment is provided for. Taxation Current tax, including UK corporation tax and foreign 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 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 Group 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. A net deferred tax asset is regarded as recoverable and therefore recognised only when, 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 not recognised when fixed assets are sold and it is more likely than not that the taxable gain will be rolled over, being charged to tax only if and when the replacement assets are sold. Deferred tax is recognised in respect of the retained earnings of overseas subsidiaries and associates only to the extent that, at the balance sheet date, dividends have been accrued as receivable or a binding agreement to distribute past earnings in future has been entered into by the subsidiary or associate. Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing differences are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax is measured on a non-discounted basis. Employee Share Ownership Plan (ESOP) In accordance with UITF 32, the assets, income and expenditure of the ESOP Trust are incorporated into the Group and Company Financial Statements. Accounts 65

8 2. Continuing operations The consolidated financial statements disclose the acquired turnover and profits in relation to acquired entities still operating as separate companies.the other acquisitions made during the year have been partially or wholly absorbed into other group offices and companies and are included within continuing activities. In such cases it is not practicable to provide the results or an estimate of the results of the acquired entity. 3.Turnover, profits and net assets In the opinion of the Directors the disclosure of segmental information relating to the geographical origin of net assets and operating profit would be seriously prejudicial to the interests of the Group and has not therefore been presented.turnover by destination is not materially different to that by origin. Operating profit Net assets Turnover 000s 000s 000s 000s 000s 000s Analysis by class of business: Consultancy and related services 17,231 15, , , , ,549 Analysis by geographical market: UK 109,980 75,110 Ireland 42,719 39,104 Netherlands 9,188 9,158 Rest of World 8,037 1, Operating profit Continuing Acquisitions operations Total s 000s 000s 000s Turnover 4, , , ,549 Cost of sales 2, , ,808 76,420 Gross profit 1,591 60,525 62,116 48,129 Administrative expenses 1,116 43,769 44,885 32,269 Operating profit before goodwill amortisation ,980 23,571 20,445 Goodwill amortisation 116 6,224 6,340 4,585 Operating profit ,756 17,231 15, Accounts

9 5. Net interest 000s 000s Interest receivable Deposit interest receivable Interest payable Interest on loans and overdraft (745) (5) Deferred consideration (18) (36) Hire purchase (18) (24) (781) (65) Net interest (payable)/receivable (558) Employees The average monthly number of employees during the year was 2,525 (2003: 2083). Please refer to page 7 for employment statistics. Details of the Directors remuneration are shown on page s 000s Staff costs (including Directors emoluments) consist of: Wages and salaries 67,674 55,233 Social security costs 7,024 5,446 Pension costs 2,349 1,953 77,047 62, Profit on ordinary activities before taxation The remuneration of the auditors for the statutory audit of the Company was 40,000 (2003: 38,000). 000s 000s Profit on ordinary activities before taxation is stated after charging or crediting: Depreciation of tangible fixed assets 3,665 2,976 Amortisation of intangible assets Amortisation of goodwill 6,340 4,585 (Profit)/loss on sale of fixed assets (13) 1 Auditors remuneration to principal auditors for statutory audit to principal auditors for audit-related regulatory reporting to principal auditors for non-audit services 49 to other auditors for audit services to other auditors for non-audit services 2 8 Operating leases land and buildings 3,388 1,888 equipment and motor vehicles 2,751 1,979 Accounts 67

10 8.Taxation Note 000s 000s Current tax UK Corporation tax at 30% (2003: 30%) 4,227 3,379 Adjustment in respect of prior years (756) (74) Overseas taxation 1,152 1,390 Adjustment in respect of prior years (222) 29 Total current tax 4,401 4,724 Deferred tax Timing differences (88) Total deferred tax 316 (88) Total tax on profit on ordinary activities 4,717 4,636 The current tax charge can be reconciled to the United Kingdom effective tax rate as follows: 000s 000s Profit on ordinary activities before tax 16,673 16,467 Tax at UK effective rate of 30% (2003: 30%) 5,002 4,940 Expenses not deductible for tax purposes 1,552 1,113 Depreciation in excess of capital allowances Income tax suffered 75 (32) Overseas tax rates (1,194) (1,386) Utilisation of tax losses (245) (14) Movements on short-term timing differences 12 (27) Prior year adjustment (978) (45) Total current tax charge for year 4,401 4, Profit attributable to shareholders No profit and loss account is provided for the parent company as allowed by Section 230 of the Companies Act s 000s Profit for the year attributable to the shareholders of the parent company, dealt with in the accounts of the parent company 4,187 4, Accounts

11 10. Dividends 000s 000s Dividends paid and proposed are as follows: Interim paid: 1.01p per share (2003: 0.88p) 1,966 1,679 Final proposed: 1.08p per share (2003: 0.94p) 2,134 1,801 4,100 3, Earnings per share The calculation of earnings per share is based on profit after tax and the weighted average number of ordinary shares in issue during the year. An adjusted earnings per share figure has been calculated in addition to the earnings per share required by FRS 14, Earnings Per Share and is based on profit excluding the effect of goodwill amortisation. It has been disclosed to allow shareholders to gain a clearer understanding of the trading performance of the Group. 000s 000s Earnings after goodwill amortisation Profit attributable to shareholders 11,956 11,831 Earnings before goodwill amortisation Profit attributable to shareholders 11,956 11,831 Goodwill amortisation 6,340 4,585 18,296 16,416 Basic Diluted Basic Diluted Earnings per share (pence) After goodwill amortisation Effect of goodwill amortisation Before goodwill amortisation Number Number Reconciliation of weighted average number of shares Basic 194,491, ,367,000 Dilutive effect of options 595, ,000 Dilutive effects of Performance Share Plan 927,000 - Dilutive effect of shares to be issued for consideration 408,000 1,102,000 Diluted number of shares 196,421, ,186,000 Accounts 69

12 12. Intangible Assets Group Company Intellectual Property Rights Goodwill Total Goodwill Note 000s 000s 000s 000s Cost At 1st January , ,118 2,134 Additions 28 47,180 47,180 Disposal (173) (173) Adjustments to prior year estimates 1,014 1,014 At 31st December , ,139 2,134 Amortisation As at 1st January ,180 12, Charge for the year 36 6,340 6, Disposal (173) (173) At 31st December ,347 18, Net book value at 31st December , ,729 1,174 Net book value at 31st December ,737 87,911 1, Accounts

13 13.Tangible Assets At 31 December 2004 the Group had motor vehicles and office equipment held under hire purchase contracts with net book values of 40,745 and 3,862 respectively. Fixtures, Freehold Alterations fittings land and to leasehold Motor IT and buildings premises vehicles equipment Total 000s 000s 000s 000s 000s Group Cost or valuation At 1st January ,548 1, ,566 29,472 Transfers 238 (238) 23 (23) Additions through acquisition ,859 7,251 Additions ,539 2,636 Disposals (25) (166) (1,494) (1,685) Foreign exchange differences At 31st December , ,497 37,822 Depreciation At 1st January ,322 15,745 Transfers 13 (13) 22 (22) Provided for on acquired assets ,974 2,237 Provided for the year ,252 3,665 Disposals (22) (107) (1,457) (1,586) Foreign exchange differences At 31st December ,108 20,103 Net book value at 31st December , ,389 17,719 Net book at 31st December , ,244 13,727 Fixtures, Freehold Alterations fittings land and to leasehold IT and buildings premises equipment Total 000s 000s 000s 000s Company Cost or valuation At 1st January , ,523 5,615 Transfers (19) (19) Additions Disposals (543) (543) At 31st December , ,235 5,330 Depreciation At 1st January ,457 Transfers 5 (5) (5) (5) Provided for the year Disposals (543) (543) At 31st December ,284 Net book value at 31st December , ,046 Net book value at 31st December , ,158 Accounts 71

14 14. Fixed asset investments Shares are held directly by RPS Group Plc except where marked by an asterisk where they are held by a subsidiary undertaking. All trading subsidiaries provide environmental consultancy services. Subsidiary undertakings Note 000s Company Cost At 1st January ,006 Additions 28 13,475 Disposals (254) At 31st December ,227 Provisions At 1st January At 31st December Net book value at 31st December ,389 Net book value at 31st December ,168 Subsidiary undertakings The following were the principal operating subsidiaries during the year: Country of Proportion of registration and operation ordinary capital held The Environmental Consultancy Limited England 100% RPS Water Services Limited England 100% RPS Ireland Limited Northern Ireland 100% Hydrosearch Associates Limited England 100% Troy-Ikoda Limited England 100%* Cambrian Consultants Limited England 100%* RPS Groep Nederland BV Netherlands 100% RPS BAK Consultants BV Netherlands 100%* European Laboratory Services BV Netherlands 100%* Ingenieursbureau BCC BV Netherlands 100%* Ingenieursbureau BCC Gis BV Netherlands 100%* Theisens Onroerend Goed BV Netherlands 100%* RPS Group Limited Ireland 100% RPS Environmental Engineering Limited Ireland 100%* RPS McHugh Planning & Environment Limited Ireland 100%* RPS MCOS Limited Ireland 100%* EDR Hydrosearch Limited Australia 100%* RPS Bowman Bishaw Gorham Pty Limited Australia 100%* Troy-Ikoda Australia Pty Australia 100%* Cambrian Consultants (CC) America Inc USA 100% 72 Accounts

15 15. Debtors Group Company Note 000s 000s 000s 000s Trade debtors 45,999 31, Amounts due from subsidiary undertakings 12,039 8,595 Other debtors 1,538 2, Corporation tax 2,054 Deferred tax Prepayments and accrued income 4,025 2,363 2,179 1,289 52,258 37,057 16,553 10,077 All amounts shown under debtors fall due for payment within one year. 16. Creditors: amounts falling due within one year Group Company Note 000s 000s 000s 000s Bank loans (unsecured) 20,558 20,500 Bank overdrafts Trade creditors 10,097 9,245 2,141 1,557 Amounts due to subsidiary undertakings 6,978 14,013 Corporation tax 3,950 2, Foreign taxation 1,585 Creditors for taxation and social security 7,421 5,353 Deferred consideration 9,697 10,199 5,611 10,199 Other creditors 1, Hire purchase creditor Proposed dividend 2,161 1,841 2,161 1,841 Accruals 13,897 11, ,242 42,724 38,205 29,101 Accounts 73

16 17. Creditors: amounts falling due after more than one year The liability in respect of deferred consideration is due to the vendors of acquired businesses and is contingent upon them meeting continuing employment obligations contained in service agreements they enter upon acquisition and other contractual obligations. Group Company 000s 000s 000s 000s Deferred consideration 11,205 3,461 1,123 3,461 Other creditors ,516 3,461 1,123 3,461 Due as follows After one year within two years 6,025 3,391 1,040 3,391 After two years within five years 5, After five years 82 11,516 3,461 1,123 3, Provisions for liabilities and charges Unfunded pension liability The provision for unfunded pension liability is in respect of the defined benefit pension scheme.the balance at 31st December 2004 is being released to profit and loss account over the remaining service lives of the scheme members. Group Company Staff Unfunded bonuses pension liability Property Warranty Total Total 000s 000s 000s 000s 000s 000s As at 1st January , ,315 Acquisition related 1,500 1,520 3,020 Utilised in year (125) (768) (127) (126) (1,146) Profit and loss charge At 31st December ,547 1,394 3,313 Property The provision for property costs relates to operating lease rentals and related costs on vacated property and will be utilised within 10 years. Warranty This provision is in respect of the pre-acquisition contractual obligations of acquired entities and will be utilised within 12 years. 74 Accounts

17 19. Deferred taxation Group Company Note 000s 000s 000s 000s Movement on deferred taxation: Net asset at beginning of year Transferred to profit and loss account (with respect to current year) (316) Other movements 2 65 Amounts arising on acquisition Net asset at year end Deferred taxation balances comprise Group Company Note 000s 000s 000s 000s Short-term timing differences Depreciation in excess of capital allowances Deferred tax asset Share capital During the year 3,452,025 ordinary 3p shares were issued in consideration for acquisitions in the year and 87,178 ordinary 3p shares were issued under the Executive Share Option Scheme.The aggregate nominal value of these shares was 106,176 and the total consideration received net of costs was 4,217,813. A further 808,025 ordinary 3p shares were issued with a nominal value of 24,241 in respect of deferred consideration of 1,019,602 related to acquisitions in prior years. Authorised Allotted and fully paid Value Value Number 000s Number 000s Ordinary shares of 3p each At 1st January ,000,000 7, ,385,234 5,803 At 31st December ,000,000 7, ,732,462 5,933 Accounts 75

18 20. Share capital continued The table on the right shows options outstanding at 31 December The Group has an investment in 1,083,000 of its own shares, in respect of the ESOP Trust. During the year the Company acquired 43,669 ordinary shares relating to the Share Incentive Scheme.There are options over 244,584 of these shares outstanding that are included in the table.these are exercisable between 2005 and 2011 at an exercisable price range of 153p to 171p. Period exercisable Number Exercise price (p) , , , , ,026, ,172, , , ,021, Reconciliation of movements in shareholders' funds Share Employee Share scheme Share Shares to Revaluation Profit and capital trust shares reserve premium be issued reserve loss reserve Total Note 000s 000s 000s 000s 000s 000s 000s 000s Group At 1st January ,803 (1,805) 82,201 1, , ,329 Exchange movement (7) Issue of new shares ,107 (1,020) 4,217 Purchase of own shares (62) (62) Disposal of subsidiary (5) (5) Transfer from profit & loss Retained profit for the year 7,856 7,856 At 31st December ,933 (1,867) , , ,572 Company At 1st January ,803 (1,805) 82,201 1, ,644 96,500 Exchange movement (7) (7) Issue of new shares ,107 (1,020) 4,217 Purchase of own shares (62) (62) Transfer from profit & loss Retained profit for the year At 31st December ,933 (1,867) , , ,835 Goodwill previously written off against reserves amounts cumulatively to 6,314,000 (2003: 6,314,000). Employee trust shares comprise 1,083,000 shares of RPS Group Plc relating to the ESOP and 43,669 shares of RPS Group Plc relating to the Share Incentive Plan.The market price of these shares at 31st December 2004 was p per share. Details of outstanding options are included in note Accounts

19 22. Commitments under operating leases At 31st December 2004 the Group had annual commitments under non-cancellable operating leases as set out right: Land and buildings Other 000s 000s 000s 000s Operating leases which expire: Within one year In two to five years ,435 1,053 After five years 2,736 1,538 3,912 2,611 1,686 1, Directors interests in transactions There were no transactions within the year in which the Directors had any interest 24. Reconciliation of operating profit to net cash inflow from operating activities 000s 000s Operating profit 17,231 15,860 Depreciation and goodwill amortisation 10,040 7,588 Increase in work in progress (270) (275) Increase in debtors (9,693) (2,086) Decrease in creditors (1,432) (458) (Profit)/Loss on sale of fixed assets (13) 1 Net cash inflow from operating activities 15,863 20, Notes to the cash flow statement 000s 000s Analysis of cash flows Returns on investments and servicing of finance Interest (paid)/received (558) 607 Capital expenditure Payments to acquire tangible assets (2,636) (2,354) Receipts from sale of tangible fixed assets Net cash outflow (2,523) (2,138) Acquisitions and disposals Net cash acquired with subsidiary 815 3,593 Deferred consideration paid (10,554) (7,862) Purchase of subsidiary undertakings and associates (31,720) (9,361) Net cash outflow (41,459) (13,630) Financing Increase in bank loans 20,500 Issue of ordinary share capital Hire purchase repayments (100) (19) Bank loan repayments (28) Purchase of own shares (176) Net cash inflow 20, Accounts 77

20 26. Reconciliation of net cash flow to movement in net debt Other non-cash Exchange 1 Jan 2004 Acquisitions Cash flow changes movement 31 Dec s 000s 000s 000s 000s 000s Cash in hand, at bank (16,326) (370) 4,982 Overdrafts (281) (281) Bank loan due after one year (238) 10 (83) (311) Bank loan due within one year (36) (20,482) (40) (20,558) Hire purchase creditor within one year (217) (59) (51) 21,461 (333) (36,979) 0 (368) (16,219) 000s 000s Decrease in cash in the year (16,607) (1,995) Cash inflow from increase in debt (20,472) Cash outflow from hire purchase creditor repayments Change in net debt resulting from cash flows (36,979) (1,976) Loans and hire purchase creditor acquired with subsidiary (333) (10) Translation difference (368) 627 Movement in net (debt)/cash in year (37,680) (1,359) Net cash at 1 January 21,461 22,820 Net (debt)/cash at 31 December (16,219) 21, Major non-cash transactions Part of the consideration for the purchase of the subsidiary undertakings that occurred during the year comprised the issue of shares. Further details of the acquisitions are set out in note Accounts

21 28. Acquisitions The Group completed the acquisition of a number of entities each accounted for as an acquisition during the year as follows: In March the Company acquired the entire issued share capital of Troy-Ikoda Limited. In April, an operating subsidiary registered in England and Wales,The Environmental Consultancy Limited, acquired the business and certain assets and liabilities of the Mason Richards Partnership. In April, a newly created Australian subsidiary, RPS Bowman Bishaw Gorham Pty Ltd, acquired the business, assets and certain liabilities from individuals trading under the name Bowman Bishaw Gorham. In May, an operating subsidiary in the Netherlands, RPS Groep Nederland BV, acquired the entire issued share capital of European Safety & Health Consultants BV. In June the Company acquired the entire issued share capital of Flow Control (Water Conservation) Limited. In July the Company acquired the entire issued share capital of Cambrian Consultants Limited. In October, an operating subsidiary, RPS Ireland Limited, registered in Northern Ireland acquired the business, assets and certain liabilities of the partnership Kirk McClure Morton. In October, an operating subsidiary registered in the Netherlands, RPS Groep Nederland BV, acquired the entire issued share capital of Ingenieursbureau BCC BV. In December, an operating subsidiary registered in Ireland, RPS Group Ltd, acquired the entire issued share capital of Coundon O Sullivan Properties Limited. Acquisitions considered to be material to the results of the Group are Mason Richards Partnership, Flow Control (Water Conservation) Limited and Kirk McClure Morton. As reported in note 2 certain acquisitions have been absorbed into existing Group companies. It is therefore not practical to provide separately the cash flows of acquisitions made in the year. A summary of all the undertakings acquired showing book values and provisional fair value adjustments is as follows: Accounting Recognition policy of deferred Fair value Book value Revaluation Provisions alignment tax to group 000s 000s 000s 000s 000s 000s Fixed assets Tangible 5,359 (86) (208) 5,065 Current assets WIP 4,959 (321) 4,638 Debtors 5,754 (144) 373 5,983 Cash 1,462 1,462 Total assets 17,534 (86) (673) ,148 Creditors Bank loans and overdrafts (893) (893) Trade creditors (2,702) (55) (2,757) Other creditors (1,487) (11) (1,498) Accruals (2,200) (282) (2,483) Provisions Tax (677) (44) 151 (570) Other (3,020) (3,020) Total liabilities (7,959) (3,020) (392) 151 (11,220) Net assets 9,575 (86) (3,020) (1,065) 524 5, s Cost of acquisition Initial consideration - shares allotted 4,153 Initial consideration - cash 29,896 Deferred consideration - cash 17,710 Expenses of acquisition 1,349 Total cost of acquisition 53,108 Goodwill arising 47,180 Accounts 79

22 28. Purchase of undertakings continued a Mason Richards Partnership Details of the acquisition of Mason Richards Partnership and the provisional fair values of the assets and liabilities acquired are as follows: Recognition of deferred Fair value Book value Provisions tax to group 000s 000s 000s 000s Fixed assets Tangible 1,111 1,111 Current assets WIP Debtors Total assets 2, ,546 Creditors Other creditors (56) (56) Accruals (829) ( 829) Provisions Property and warranty (2,600) (2,600) Total liabilities (885) (2,600) (3,485) Net assets 1,511 (2,600) 150 (939) Cost of acquisition 000s Initial consideration - shares allotted 2,630 Initial consideration - cash 13,150 Deferred consideration - cash 9,384 Expenses of acquisition 192 Total cost of acquisition 25,356 Goodwill arising 26,295 During the four month period to the date of acquisition an estimate of the profit and loss account of the Mason Richards Partnership adjusted for the remuneration packages of the partners as if they were employees of RPS and the accounting policies applied by RPS is set out right: 000s Turnover 6,807 Operating profit 855 Interest receivable 5 Profit before tax 860 For the year ended 31st December 2003 the partnership profits adjusted as above is estimated to result in a profit before tax of 3,979, Accounts

23 28. Purchase of undertakings continued b Flow Control (Water Conservation) Ltd During the 3 month period to the effective date of acquisition of 29th June 2004 the loss after tax of Flow Control (Water Conservation) Ltd was 493,000. In the previous financial year to 31st March 2004 the profit after taxation was 739,000. Details of the acquisition of Flow Control (Water Conservation) Ltd and the provisional fair values of the assets and liabilities acquired are as follows: Accounting Recognition policy of deferred Fair value Book value alignment tax to group 000s 000s 000s 000s Fixed assets Tangible 446 (113) 333 Current assets WIP 490 (65) 425 Debtors 1,139 (28) 139 1,250 Cash Total assets 2,577 (206) 139 2,510 Creditors Trade creditors (174) (174) Other creditors (317) (317) Accruals (659) (659) Provisions Tax (328) (328) Total liabilities (1,478) (1,478) Net assets 1,099 (206) 139 1,032 Cost of acquisition 000s Initial consideration - shares allotted Initial consideration - cash 4,205 Deferred consideration - cash 720 Expenses of acquisition 133 Total cost of acquisition 5,058 Goodwill arising 4,026 Accounts 81

24 28. Purchase of undertakings continued c Kirk McClure Morton During the 9 month period to the date of acquisition an estimate of the profit and loss account of Kirk McClure Morton, a partnership, adjusted for the remuneration packages of the partners as if they were employees of RPS is 147,000. For the year ended 31st December 2003 the partnership profits adjusted as above is estimated to result in a profit before tax of 1,089,000. Details of the acquisition of Kirk McClure Morton and the provisional fair values of the assets and liabilities acquired are as follows: Recognition of deferred Fair value Book value Revaluation Provisions tax to group 000s 000s 000s 000s 000s Fixed assets Tangible 254 (86) 168 Current assets WIP 1,214 1,214 Debtors 1, ,964 Total assets 3,347 (86) 85 3,346 Creditors Overdraft (436) (436) Trade creditors (1,388) (1,388) Other creditors (564) (564) Provisions Warranty (420) (420) Total liabilities (2,388) (420) (2,808) Net assets 959 (86) (420) Cost of acquisition 000s Initial consideration - shares allotted 1,262 Initial consideration - cash 3,785 Deferred consideration - cash 3,365 Expenses of acquisition 343 Total cost of acquisition 8,755 Goodwill arising 8, Accounts

25 29. Derivatives and other financial instruments Set out below are the narrative disclosures relating to financial instruments.the numerical disclosures are set out in notes 30 and 31.The Group has taken advantage of the exemption available under FRS 13 Derivatives and other financial instruments not to provide numerical disclosures in relation to short-term debtors and creditors, other than currency risk disclosures. Financial instruments The Group does not use complex derivative financial instruments.the Group s financial instruments comprise cash and various items such as trade debtors and trade creditors that arise directly from its operations.the Group occasionally uses forward foreign currency contracts to manage transactional currency risks arising from the Group s operations. It is, and has been throughout the period under review, the Group s policy that no trading in financial instruments shall be undertaken. Foreign currency risk and interest rate 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.the Board reviews and agrees policies for managing each of these risks and they are summarised below. Group s balance sheet can be affected by movement in the exchange rate between sterling and the functional currencies of overseas operations.the most important exchange rate as far as RPS is concerned is the pound/euro rate. Currency exposures are reviewed regularly and all significant foreign exchange transactions are approved by the Group. The Group does not hedge balance sheet and profit and loss translation exposures. Interest rate risk The Group has short-term financial liabilities drawn down against its revolving credit facility principally in sterling at fixed rates of interest.the Group s overdraft bears interest at floating rates. Surplus funds are placed on short-term deposit or held within accounts bearing interest related to bank base rate. Liquidity risk The Group has strong cash flow and the funds generated by operating companies are managed on a country basis. Foreign currency risk The Group, which is based in the UK and reports in sterling, has investments in overseas operations in the Netherlands, Ireland, USA and Australia that have functional currencies other than sterling. As a result the Accounts 83

26 30. Foreign currency risk The table opposite shows the extent to which Group companies have monetary assets and liabilities in currencies other than their own functional currency. Foreign exchange differences arising on the translation of these assets and liabilities were taken to the profit and loss account of the Group companies and the Group during the year. Net foreign currency monetary assets/(liabilities) at 31st December 2004 US Australian Norwegian Sterling Euro Dollar Dollar Krona Total 000s 000s 000s 000s 000s 000s Functional currency of Group operation Sterling 1, ,194 Euro (20) (27) (47) Australian Dollar At 31st December 2004 (20) 1, ,718 Net foreign currency monetary assets/(liabilities) at 31st December 2003 Sterling Euro US Dollar Total 000s 000s 000s 000s Functional currency of Group operation Sterling 178 1,892 2,070 Euro 54 (32) 22 Australian Dollar At 31st December ,734 2, Accounts

27 31. Interest rate risk Interest rate risk and profile of financial liabilities The interest rate risk profile of the Group s financial liabilities which at 31st December 2004 comprises deferred consideration, hire purchase obligations and bank loans. Floating rate Fixed rate Financial liabilities on financial liabilities financial liabilities which no interest is paid Total Currency 000s 000s 000s 000s 000s 000s 000s 000s Sterling 281 1,954 20, ,944 11,706 39,196 13,738 Euro ,278 1, Australian Dollar 1,249 1,249 At 31st December 281 1,954 21, ,471 11,706 42,103 13,915 The floating rate liabilities comprise overdrafts and bank loans that bear interest at rates based on the appropriate LIBOR and base rates. Financial liabilities Financial liabilities on which no Fixed rate financial liabilities interest is paid Weighted Weighted Weighted Weighted average average Weighted Weighted average average period for period for average average interest interest which rate which rate period until period until rate rate is fixed is fixed maturity maturity % % years years years years Currency Sterling Euro Australian Dollar Interest rate risk and profile of financial assets The financial assets comprise cash and short-term deposits at short-term money market rates applicable to the currency. Currency 000s 000s Sterling ,171 Euro 3,953 8,839 US Dollar 408 1,405 Australian Dollar Hong Kong Dollar 45 Norwegian Krona 35 Malaysian Ringgit 7 At 31st December 4,982 21,678 Floating rate 4,982 21,678 Fixed rate 4,982 21,678 Accounts 85

28 31. Interest rate risk continued Borrowing facilities The Group has the following undrawn committed borrowing facilities available in respect of which all conditions precedent had been met. The undrawn borrowing facilities comprise overdrafts that expire within one year that carry floating rate interest and revolving credit facilities that expire between two and five years where interest costs are fixed at the time drawings are made. 000s 000s Expiring within one year 2,056 1,000 Expiring in more than two years but not more than five years 17,607 Fair values The fair value of the financial assets and liabilities of the Group are considered to be materially equivalent to their book value. On the 8th March 2004 the Company completed the acquisition of Troy-Ikoda Limited for a maximum consideration of 1.2 million, all cash, of which 512,000 was paid at completion. In the year ended 31st December 2003 Troy-Ikoda Limited had turnover of 2,862,000, reported loss before tax of 32,000, adjusted profit before tax of 171,000 after adjustments to a going forward basis and adding back exceptionals, and net assets of 1,045, Accounts

29 32. Pensions The Group operates a number of pension schemes of the defined contribution type in the UK and overseas under which contributions are paid by Group undertakings and employees.the pension cost charge of these schemes amounted to 2,349,000 for the year ended 31st December 2004 (2003: 1,953,000). A defined benefit scheme is in operation within RPS MCOS Ltd, which was acquired in Entry to this scheme has since ceased and employees who become entitled to pension benefits are offered entry to an alternative defined contribution scheme instead. The M C O Sullivan & Co Pension and Life Assurance Plan is a defined benefit funded scheme.this is valued by an independent qualified actuary every three years.the most recent valuation of the scheme was at 1st April 2003 using the age attained method. The principle assumptions adopted in the valuation were that the long-term rate of return would be 7% per annum and the average annual increase to pensionable salaries would be 4.5%. An interest rate of 5% per annum was used to capitalise the value of pensions at retirement. The market value of the assets at the valuation date was 2,571,000 and this represented 80% of past service liabilities using salaries projected to retirement date.the deficit is being amortised over the future working lifetime of the current active membership. The current service cost for the year was 332,000 and the employer contribution rate is 14.8% of pensionable salaries. Future service rate 18.4% Amortisation of deficit 1.4% 19.8% Less: member contributions (5.0)% Net employer contribution rate 14.8% The premiums in respect of insured death in service benefits and the expenses associated with administering the plan are payable in addition. Accounts 87

30 32. Pensions continued FRS 17 disclosures The transitional disclosure requirements of FRS 17 Retirement Benefits are given below.the Group operates one defined benefit scheme. A full actuarial valuation of the scheme was carried out at April 2003 and updated to 31st December 2004 by a qualified actuary. The major assumptions used by the actuary were as follows: 31st Dec 31st Dec % % Rate of increase in pensionable salaries Rate of increase in pensions in payment Discount rate Inflation assumption The assets in the scheme and the expected rate of return (net of administrative expenses) were: 31st Dec 31st Dec 31st Dec 31st Dec 31st Dec 31st Dec % 000s % 000s % 000s Equities , , ,632 Bonds Properties Other Total market value of assets 2,564 3,313 2,630 Actuarial value of liability 4,297 4,022 2,962 Deficit in the scheme (1,733) (709) (332) Related deferred tax asset Net pension liability (1,517) (620) (232) If the above amounts had been recognised in the financial statements, the Group s net assets and profit and loss reserve at 31st December 2004 would be as follows: 000s 000s Net assets 134, ,329 Unfunded pension provision net of tax Net assets excluding pension provision 134, ,327 Pension liability (1,517) (620) Net assets including pension liability 133, ,707 Profit and loss reserve 42,468 34,468 Unfunded pension provision net of tax Profit and loss reserve excluding pension provision 42,726 35,466 Pension liability (1,517) (620) Profit and loss reserve after pension liability 41,209 34, Accounts

31 32. Pensions continued The following amounts would have been recognised in the performance statements in the year to 31st December 2004 under the requirements of FRS s 000s Operating profit Current service cost Past service cost Total operating charge Other finance income Expected return on pension scheme assets Interest on pension scheme liabilities (196) (182) Net return Statement of total recognised gains and losses (STRGL) Actual return less expected return on pension scheme assets Experience gains and losses arising on the scheme liabilities (109) (42) Changes in the assumptions underlying the present value of the scheme liabilities (1,036) (347) Actuarial (loss) recognised in the STRGL (1,085) (314) Movement in deficit during the year (Deficit)/Surplus in the scheme at the beginning of the year (709) (332) Movement in the year: Foreign exchange movements (36) (28) Current service costs (296) (275) Contributions Net interest income Actuarial loss (1,085) (314) Deficit in the scheme at the end of the year (1,733) (709) Details of experience gains and losses for the year Difference between the expected and actual return on scheme assets: Amount Percentage of scheme assets 2% 2% Experience gains and losses on scheme liabilities: Amount (109) (42) Percentage of the present value of the scheme liabilities (3%) (1%) Changes in assumptions Amount (1,036) (347) Percentage of the present value of the scheme liabilities (25%) 9% Total amount recognised in the statement of total recognised gains and losses: Amount (1,085) (314) Percentage of the present value of the scheme liabilities (18%) (8%) 33. Contingent liabilities As at 31st December 2004 the parent company had contingent liabilities in respect of bank and contractual performance guarantees and other matters arising in the ordinary course of business entered into for or on behalf of certain Group undertakings. It is not expected that any material liability will arise in respect thereof. Accounts 89