Acquisition of Flow Control Water Conservation Ltd (“Flow Control”)

RPS, Europe’s leading environmental consultancy, announces the acquisition of Flow Control, a major consultancy to the UK water resource management industry.

Over the last decade RPS’s strategy has been to enhance our market position by developing our product range, employing highly skilled staff and making acquisitions of quality businesses in order to extend our expertise and geographical presence. Successful implementation of this strategy has enabled us to build a market leading position in our sector, provide the highest quality advice to our clients and rewarding careers to our staff, whilst also growing profits.

Group results for the first five months of 2004 were in line with the Board’s expectations. The acquisition of Flow Control provides further evidence that the Group’s strategy should continue to deliver growth. We anticipate further acquisitions in the second half.

Flow Control (www.waterconservation.co.uk)

Established in 1978, Flow Control provides a broad range of services related to water resource management for industry and the water utilities in the United Kingdom. It has a staff of approximately 300 and is currently based in offices in Liverpool. Flow Control’s current clients include most of the major water companies in England & Wales and has contracts with a number of these stretching into 2005 and beyond.

Flow Control will, upon acquisition, be operated as part of RPS Water Services and integrated by relocating from Liverpool to RPS’s existing premises in Warrington. Employment contracts have been agreed with the two vendors, who act as the Managing and Operational Directors of the business, for their employment with RPS, for a minimum of three years.

In the year ended 31 March 2004 Flow Control (excluding the non-core product distribution business, which is not being acquired) had turnover of £9.5 million and profits before tax, adjusted for non-recurring bonuses, of £1.2 million. Net assets at that time were £1.5 million, with negligible debt.

The maximum total consideration payable for Flow Control is £4.9 million. At completion the vendors received £4.2 million in cash. Assuming certain operational conditions are met, a further £0.7 million in cash will be payable over the next three years.

Commenting on these transactions, Brook Land (RPS Chairman), said:

“RPS Water Services is at the forefront of water network and waste management consultancy. This acquisition further strengthens our position in this market. Flow Control benefits from excellent levels of market penetration; this positions us well for the upturn in activity anticipated once the current OFWAT review is complete.”

30th June 2004

ENQUIRIES

RPS Group Plc
Dr Alan Hearne, Chief Executive
Gary Young, Finance Director
Tel: 01235 863206

College Hill
Matthew Smallwood
Justine Warren
Tel: 020 7457 2020