Acquisition of Kirk McClure Morton (“KMM”)

RPS, Europe's leading environmental consultancy, announces the acquisition of KMM, a leading consultancy in the engineering and environmental sectors in Northern Ireland, for a maximum consideration of £8.4 million.

Over the last decade RPS’ strategy has been to enhance our market position by developing and broadening 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 market leading positions in our chosen areas, and provide the highest quality advice to our clients and rewarding careers to our staff, whilst also growing profits.

KMM (www.kmm.co.uk)

Established over 50 years ago as a partnership, KMM has evolved into a multi-disciplinary practice, that provides a range of management, environmental and engineering services in the built and natural environments. KMM acts on behalf of a large number of public and private sector clients in both Northern Ireland and Ireland. It has a core staff of approximately 140 based mainly in Belfast. KMM will be integrated into our existing market-leading business in Ireland.

Recent KMM projects include the design of the flood defence scheme for the Burren River on behalf of the Department of Agriculture and Rural Development; project management responsibility of the Killybegs fishery harbour development for the Department of Communications, Marine and Natural Resources; the Irish Coastal Strategy Review for Ireland working with the Department of Communications, Marine & Natural Resources; and project management of the Odyssey Millennium Scheme.

In the year ended 31 December 2003 KMM had turnover of £6.9 million. Employment contracts have been agreed with all 8 partners for their employment with RPS. Adjusting the partnership profits by the total employment costs for the partners within RPS gives rise to a pro forma profit before tax for the year ended 31 December 2003 in the order of £1.1 million. At completion the net assets acquired totalled £1.0 million.

The maximum total consideration payable for the business, assets and certain liabilities of KMM is £8.412 million. The consideration will be met out of existing resources. At completion the partners received £3.785 million in cash and 945,000 new RPS shares priced at 134 pence and valued at £1.262 million. Assuming certain operational conditions are met, a further £1.157 million in cash will be payable on the first anniversary of the transaction, £1.157 million in cash will be payable on the second anniversary of the transaction and a final sum of £1.051 million of cash will be payable on the third anniversary of the transaction.

Commenting on this transaction, Brook Land (RPS Chairman), said:

“We are delighted to acquire Kirk McClure Morton which is a highly respected consultancy that significantly strengthens our presence in Northern Ireland. The integration of KMM into our existing operations in Ireland reinforces our position as the largest all-Ireland environmental and engineering practice and provides further support for the Board’s growth expectations in 2005 and beyond. ”

1st October 2004

RPS is an international consultancy providing advice upon the development of natural resources, land and property, the management of the environment and the health and safety of people. We trade in the UK, Ireland, the Netherlands, North America and Australia and undertake projects in many other parts of the world.

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