Financial year 2021 (FY21) proved a successful year for RSK, despite the challenges presented by the Covid-19 pandemic. The group reported its highest ever turnover and EBITDA, with increases of 28% and 54%, respectively, from the previous year.
RSK continues to deliver its ambitious growth strategy, expanding the group both organically and through acquisition to support the global transition to a more sustainable future. FY21 was a year unlike most others, characterised primarily by the ongoing Covid-19 pandemic and the far-reaching impacts that come with it. Despite these challenges, RSK’s business model, which is rooted in diversity, proved resilient and allowed the group to recover rapidly to finish the year in its strongest-ever position with turnover and EBITDA surpassing £350.5m and £40.9m, respectively.
RSK remained focused on its overarching aim of supporting the global transition to a more sustainable future by providing services to clients that assist them in meeting the Sustainable Development Goals set by the United Nations. To help achieve this, RSK has been actively expanding its service provision through strategic hires, the creation of new businesses and bolt-on acquisition. During FY21, RSK launched four new businesses and welcomed 15 acquisitions into the group.
In addition to widening our service offering, acquisitions provide our existing businesses new opportunities for organic growth through cross-selling and the ability to build multi-disciplinary teams to solve client problems. The breadth of services across RSK is unique and is at the heart of our strategic plan: our acquisitions are intended to add diversity to the group, adding skills, customers and extending our geographic reach. The pandemic tested this strategic plan, proving that the diversity of the business makes it more resilient to factors outside of our control.
RSK was refinanced in August 2021, with Ares Management Limited (Ares) providing a £1 billion sustainability-linked finance package and NatWest Bank providing a £40 million Revolving Credit Facility. The new facilities were used to refinance our existing credit facilities and will allow us to invest in our existing businesses, form new businesses and fuel our acquisition pipeline so we can continue to strengthen our offering.
Sustainability in all that we do
RSK is a rapidly growing organisation wholly committed to achieving sustainability in all that we do. Although RSK has recognised and championed the importance of sustainability for over 30 years, both in our own internal practices and that of our clients, the business significantly ramped up internal efforts during FY21.
Notably, RSK formally linked sustainability to its bottom line when it agreed the largest ever sustainability-linked private credit financing package with Ares. The £1 billion facilities include an annual margin review based on the achievement of sustainability targets, which are broadly focused on carbon intensity, health and safety management and ethics. These targets are aligned to RSK’s Corporate Responsibility and Sustainability Route Map, which forms the basis of RSK’s sustainability strategy, based on five sustainability pillars and the United Nations Sustainable Development Goals.
Additionally, RSK joined the Science Based Targets initiative (SBTi), committing to set Science Based Targets for all global operations and signed the Pledge to Net Zero, an initiative that commits organisations from the environmental sector to a leadership role in the transition towards a net-zero-carbon economy. It supports the UK Government’s ambition to bring all greenhouse gas emissions to net zero by 2050.
Despite the challenges presented by the pandemic, turnover in FY21 was £350.5 million, an increase of 28% compared to FY20. This growth reflects strategic acquisition and strong trading performances in some sectors. Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) and before exceptional, non-recurring costs were £40.9 million, up 54% from the previous year. The table below shows the growth in the group over the last five years.
Exceptional non-recurring costs were £8.6 million in the period (2020: £3.0m). Total Net Debt, as defined in our finance facilities, at the end of the year was £271.1 million (2020: £187.6m) and leverage was 4.97 times (2020: 5.79 times).
These results show the impact of acquisitions at the time they joined the group and therefore do not tell the whole story as the full year effect of these acquisitions has yet to be formally reported. To that end, proforma figures for the Group at the end of FY21 show a group of companies delivering:
- Annual revenue of £537.1 million
- Adjusted EBITDA (as defined in our finance facilities) of £54.6 million
RSK is proud to be a global employee-owned business. The group recognises the global need for the expertise and services we can provide and has set out an ambitious growth plan to ensure that we play an active role in achieving a more sustainable future. RSK has made a conscious decision to finance the growth of business through debt (borrowing funds) rather than equity (selling shares) to ensure our employees retain control of the business.
Having taken the decision to fund our growth with debt, rather than equity, the key metrics for success as measured by our board of directors are cash flow and compliance with the covenants agreed with our lenders, primarily to maintain leverage (the relationship between EBITDA and Debt) at an acceptable level. Provided that leverage is maintained below 7x, the directors are comfortable that there is plenty of headroom. Based on our performance against these key metrics, RSK and the directors are very pleased with financial results for the year and believe that the group has never been in a stronger position.
Impact of the Covid-19 pandemic
2020 and 2021 will likely always be remembered for Covid-19. The pandemic resulted in lockdowns and/or restrictions in virtually every country around the world and inevitably impacted most parts of RSK. During FY21, a high percentage of our operations had an unexpected period of full or partial shutdown which adversely affected trading. RSK acted very fast to protect the business from direct and indirect Covid-19 impacts, introducing measures to ensure the safety of our employees, clients and the community while helping to mitigate the financial impacts on the group.
RSK’s diversity in terms of skills, market sectors and geography helped to combat the challenges brought by the pandemic and ultimately showcased the resilience of the group. This coupled with a swift response to the pandemic allowed trading to return to and, in some cases, surpass pre-covid levels during the reporting period.
Outlook for FY22 and beyond
RSK continues to deliver its ambitious growth plans through bolt-on acquisitions and investment into our existing businesses. Already in FY22, the group has welcomed 22 acquisitions and created five new businesses.
Today RSK stands as a hugely diverse group of over 120 businesses employing over 8,000 people. Our very broad service offering of environmental, engineering and sustainability consultancy, coupled with the provision of related technical services allows us to make a tangible difference in the world; working together, across our businesses and with our clients, to make the Sustainable Development Goals a reality.
The group has the vision and finance facilities needed to support continued and significant growth. Strong forecasts across the group alongside the FY22 acquisitions made to date, show a current (as of January 2022) proforma LTM turnover of £860m. Further growth through the rest of FY22 and beyond is planned.