RSK began life as a firm of consulting engineers with a focus on water and environmental markets. Fuelled by venture capital borrowing, it has been on the acquisition trail to build turnover, to the point that it now has more than 200 diverse business units, ranging from asbestos removal to public relations to generator hire. The only apparent thread is that the all “deliver sustainable solutions”.
Accounts for the year to 2nd April 2023 show turnover of £1,220m, up from £796m in FY2022, thanks largely to acquisitions. It made 34 last year and 29 the year before.
As recently as 2017, RSK’s turnover was £112m. It has grown tenfold in six years.
It has reported pre-tax losses for each of those years.
The 2023 accounts show an operating loss of £7.7m and a pre-tax loss of £80.6m (2022: £38.1m).
The 2023 pre-tax loss was bigger than the total losses of the previous three years all added together. Over the past four years RSK has lost a total of £153m before tax.
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RSK directors say that is not the point.
Earnings before interest, tax, depreciation and amortisation (Ebitda), excluding £12.6m of exceptional non-recurring costs were £83.4m (2022 £59.4m). Cash generated from operations increased to £75.4m (2022: £31.9m).
In April 2023 RSK agreed a £250m ‘upsize’ in its £1bn debt facility with Ares Capital.
Founder-director Alan Ryder explains: “We have chosen to finance this growth through debt (borrowing funds) as this ensures our employees retain control of the business. Having taken the decision to fund our growth with debt, the key metrics for success as measured by our board of directors are the covenants agreed with our lenders.
“The primary covenant with our lenders requires our directors to maintain leverage (the relationship between Ebitda and debt) at an acceptable level and with satisfactory headroom form the point at which our covenant would have an impact. Leverage at the end of the reporting period was 6.49x which the directors are satisfied with as it leaves the business with a good level of headroom against our covenants.”
The money lenders are doing alright. Over those same four years that RSK has lost £153m it has paid out more than £155m to its lenders, including £74m last year.
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