Abigail Draper, FD of environmental consultancy RSK International, gives his views on the year ahead
What have been the biggest challenges for your business over the past year, and what role did finance play in addressing them?
We’ve just completed the acquisition of ADAS, the UK’s largest independent provider of agricultural and environmental consultancy, in a deal which sees 300 employees located at more than 15 sites across the UK transferring to RSK.
The acquisition financing wasn’t straightforward because ADAS had gone into administration following a deficit in its defined benefit pension scheme, and we were purchasing certain assets of the ADAS business from the administrator. Securing the financing for acquiring a company out of administration can be challenging; some financiers don’t have the appetite for a turnaround scenario because of the risk element.
My role was to demonstrate that this was a good acquisition with a very clear path to profitability and to get people to buy into it. The ADAS business has great experience in areas where we’re not working and there are great synergies between us; we’re now able to offer much more breadth and depth in all the disciplines comprising environmental science.
So for me it was a no-brainer as it is fits so well with our group, we’re a natural home for it. Ultimately, the Business Growth Fund provided £10m in funding to RSK to support this and other future acquisitions. We completed the deal in an extremely short period. From the BGF agreeing to invest to completion was a period of six weeks.
Everyone involved worked very hard, with late nights, to achieve this deal. There was a mountain of work to do on due diligence and legal documents. In a pre-pack scenario the time pressure becomes very intense towards the end.
What are the key political and economic risks/opportunities you face in the year ahead?
We do a lot of work for the oil majors, so oil prices influence our finances quite bit. We’ll be waiting to see what happens with oil prices in 2017, and if they rise again that will be of benefit to us, though we’re not relying on this.
The government policy of increased investment in infrastructure projects is a huge opportunity for us as we are focused on many of the planning and development stages of infrastructure projects. The business that we have just acquired, ADAS, is an agricultural consultancy, so we’ll be closely watching for changes in agricultural policy and regulations, both at an EU and UK level.
We see this primarily as an opportunity to provide advice. Any changes to environmental regulations are also extremely pertinent to our business, and there will potentially be work in relation to changes in environmental regulation following on from Brexit.
Which capex projects will you be focusing on in 2017, and how will these be financed?
We’re investing in a new fleet of vans, financed through Lombard. We previously tended to hire vans, so this acquisition of 120 vehicles and benefits is our first central fleet. They’ll be branded, which brings benefits for marketing and also staff morale.
How do you expect the balance of your role to change in the coming year; between compliance and forward-looking/strategic? And why?
I’m not expecting it to change, as I’ve always been more focused on strategic rather than compliance work. I have a great team who deal with compliance, I oversee that area but it doesn’t take a significant amount of my time.
I need to remain focused on my strategic role because RSK is such an entrepreneurial company, we’re always looking for the next big deal or project.
Advice for other FDs for the coming year?
It is amazing what can be achieved if you just focus and set your mind on it. Obstacles or timescales that seem insurmountable can be achieved with some determination and focus.
If you want to do something but think it is too hard, look at ways to make it more achievable and make sure you have a good team around you, both of your own staff but also of great advisers who aren’t afraid of a challenge.
We just completed a finance raise and significant acquisition in six weeks including financial due diligence on both ourselves and the target and full sets of legals. At the start that seemed almost impossible but having everyone working hard towards the goal meant we achieved it.