FY24 saw ERM successfully grow net revenue by 9% and trading EBITDA by 6%, while use this momentum to make investments in our business to set us up for further growth in future years.
We continued to see growing demand for ERM’s services during FY24 and ongoing opportunities to elevate our influence on the global sustainability agenda. Our business is highly diversified and balanced across industries, geographies, and service lines. Our highest growth industry sectors in FY24 were Power, Diversified Energy, and Mining, buoyed by the ongoing Low-carbon Economy Transition (“LCET”) and high activity in the Mining sector. Geographically, we saw strong double digit top- and bottom-line growth in three of our five regions. Growth across our service lines was relatively balanced, with Capital Project Delivery seeing the largest growth compared with the prior year, strengthening its position as our largest service line. We continue to make investments across our business, including potential long-term growth areas like Climate Markets, Nature & Water, and Human & Social Rights. Our Digital Services business also had a strong year as we continue to evolve and shape our digital strategy.
FY24 was also a year where multiple market headwinds came to the fore. These headwinds were triggered by factors including rising cost of capital, rising energy costs (particularly in Europe), and increasing regulatory uncertainty given upcoming election cycles. As a result, our Financial sector and M&A service line softened, some large capital programs were delayed or phased (e.g., renewables, offshore wind) and energy-intensive sectors in Europe saw decreasing activity levels. Despite these headwinds, we are still bullish on long term prospects for our industry: M&A markets are already starting to come back; interest rates will slowly move towards historical levels; regulatory uncertainty will wane as we move past the election cycle; and many of the large capital projects that have been delayed will likely proceed forward. This bullishness is supported by the record sales we saw in the last quarter of FY24 as we ended the year with our largest backlog of sold work ever.
The average number of full-time equivalent (“FTE”) employees increased from 7,002 in FY23 to 7,463 in FY24.
Partners: Partners in ERM are our senior management level leaders. We hired 77 Partners during FY24 which provides us with a strong platform to grow the business over the medium-term. We also promoted 71 Partners from our Path to Partnership programme and brought in two Partners through an acquisition.
Sustainability: We continue to play a leading role in the global sustainability agenda.
Acquisitions: On 1 March 2024, ERM completed the acquisition of The Big Middle and The Big Zero (“The Big Group”), Australian enterprise system specialists who are experts in Salesforce, Oracle, and WalkMe technologies. Combined with ERM’s consultancy services and its partnership with Salesforce, The Big Zero’s expertise in Environmental, Social and Governance (“ESG”) accounting systems will support clients in establishing a unified source of environmental data. The Big Middle will continue as one of Australia’s leading technology service providers focused on systems integration of enterprise solutions, including onboarding and training of customers in Australia and New Zealand.
Future developments
We believe that, despite current economic uncertainty, ERM has an extraordinary growth opportunity, and commensurate challenge, ahead of us in the next financial year and beyond.
Client demand is buoyed by LCET and ESG market drivers that we believe will provide lasting tailwinds for continued market growth. We will leverage our exposure to a large growth industry with a strong focus on the ESG theme and proliferation of 'sustainability' and 'social responsibility' trends driving visible non-discretionary revenue streams.
We will continue with our strategy, which is to grow and build our presence in major markets, through organic growth and targeting specific acquisitions where appropriate to broaden our geographic and service offerings. Our global expansion focuses on building deep and lasting relationships with our clients and servicing their needs in more regions and across more service areas.
In order to achieve our growth aspiration, our future investment activities will include:
- Expanding investment in our commercial excellence agenda to include a focus on growing our client relationship programme;
- Expanding our key service offerings so that we are positioned to gain from the proliferation of Sustainability, Climate Change, LCET and ESG super-trends;
- Continued focus on inorganic growth from acquisitions;
- Expanding the role of technology and data in our service offerings and in our operational delivery; and
- Development of key areas such as cyber, risk, DE&I and brand to align with the Group’s growth ambitions
Summary
FY24 saw us successfully grow net revenue and use this momentum to make investments in our business to set us up for further growth in future years. We are optimistic about the future given the increased awareness of sustainability and growth in the market. Diversification has created a more balanced portfolio with reduced concentration risk in sectors, service lines, geography and customers. Demand for ERM’s services is evolving in a dynamic market environment and this demand is to some extent decoupled from levels of underlying economic growth where these services are now seen as mission critical and strategic for our customers. We remain excited by the opportunities ahead for us and we are maintaining investment and growing client relationships. We are well structured and financed and have strong current liquidity to ensure our business continues to thrive.
