(Alliance News) - RPS Group PLC on Wednesday said it has made a number of changes to its accounting policy, including the introduction of a new revenue category and an end to recharged expense reporting.
The professional services firm has changed the definition of fee income to exclude revenue from recharging the cost of subcontractors, creating a new pass through costs category for this recharging revenue.
However, profit from recharging sub-contractor costs as well as other incidental costs are to be reported in fee revenue. Recharged expenses will no longer be reported. These are all non-IFRS revenue measures.
The new revised fee revenue definition, as well as the definition of pass through costs, now reads: "Fee revenue is revenue from activity where RPS adds value. Specifically, this is the revenue from the group's resource pool, that consists of its employees and associates, equipment and software, plus profit on pass through costs. Pass though costs is a category of revenue representing costs incurred when delivering projects that are not directly related to the group's resource pool. Such costs are recovered from clients and examples include the cost of subcontractors, travel, accommodation and subsistence."
RPS said the changing definitions "reduce judgement when deciding what is fee revenue" and "provide a better reflection of the underlying growth in revenue that adds value". The changes also better reflect productivity and profitability of RPS's own resources and provide "improved information on resource requirements and the size and nature of the resource pool".
The definition change will require RPS to restate is results for the three months ended March 2019, as well as the half-year ended June 2019, the three moths to September 2019, and its 2019 annual results.
PRS clarified that: "These changes take effect from 1 January 2020. There is no impact on profit or cash flow as a result of these changes in any reporting period. The decision to make these changes in accounting policy has been taken in line with the group's plan to improve its financial framework in conjunction with the previously announced ERP programme and is not related to any actions initiated by RPS due to the Covid-19 pandemic."
Shares in RPS were up 0.1% at 36.28 pence in London on Wednesday morning.
By Anna Farley; annafarley@alliancenews.com
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