Since RSK last made a pre-tax profit, back in 2016/17, its turnover has grown from £112m to £796m thanks to dozens of acquisitions.
So long as the money keeps coming in to repay the lenders, the board is happy.
In the year to 3rd April 2022 RSK made a pre-tax loss of £38.1m on turnover of £796m (2021: £18.9 loss on £350.5m turnover).
In the same year RSK paid out £39.9m in interest payments (2021: £22.8m).
Over the past three years RSK has lost a total of £72.7m before tax after paying out a total of £81.5m in interest repayments.
Founder and chief executive Alan Ryder writes in the annual report: “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.
“The primary covenant with our lenders requires our directors to maintain leverage at an acceptable level and with satisfactory headroom from the point at which our covenant would have an impact. For reasons of prudence, the directors aim to maintain leverage in the order of 5x to 6x; however, even at leverage levels above 7x there is a good level of headroom against covenants. Leverage at the end of the reporting period was 6.01x, which the directors are satisfied with.”
Even with the recent increase in interest rates, the directors believe that the business is “well placed to weather the impact of any recessions”.
Nor is RSK likely to consider making a profit a priority any time soon.
“The directors have reviewed our existing business strategy and believe it remains the best course of action into the future,” he writes in the annual report. “We have an ambitious plan to grow RSK significantly over the coming years with a strategy of bolt-on acquisitions and investment into our existing businesses. This strategy allows us to grasp the market opportunities that exist with the growing global demand for sustainable solutions.”
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