Annual review 2010-2011 Back to home page
Cashflow and working capital

Strong cash generation has continued through the financial year. Free cashflow of £11.6m (2010: £19.8m) and cash conversion, defined as operating cashflow as a percentage of EBITDA, of 62 percent (2010: 115 percent) reflect the good cash management principles that continue to operate throughout our business. The comparison with the prior year reflects the low capital expenditure in 2010 and the working capital investment required to support geographic expansion.

Trade debtors continued to be collected in line with historic levels. Debtor days at the year end were 59 (2010: 51), with UK debtor days at 49 (2010: 42). For the seventh year running our year average debtor days were less than 60, with an average of 59 (2010: 58).


Funding

Cash, net of overdrafts and bank loans, was £23.9m at the year end (2010: £24.8m). Net funds, including £12.7m of mostly non-interest bearing long-dated loans from shareholders, were £5.4m at 30 April 2011 (2010: £8.2m).

Turner & Townsend has committed undrawn facilities to finance future operational cash requirements and selective acquisitions in line with our strategic aims.

 

Pensions

Turner & Townsend operates numerous defined contribution schemes across our global business. Additionally, the business maintains one closed defined benefit scheme arising from the UK business. This scheme was closed to new members in 1992 and to future accrual in 2006. At 30 April 2011 the IAS 19 deficit was £4.8m (2010: £6.3m).

 

Treasury

The treasury risks faced by Turner & Townsend include interest rate risk, foreign exchange risk, credit risk and liquidity risk. Instruments such as interest rate swaps have not been entered into to mitigate risk, as these risks are considered to be low. A two percent increase to the cost of external finance would not materially affect profit before tax. Contracts are mostly undertaken in the currency of local subsidiaries, and therefore foreign currency revenue streams are matched by the currency of the relevant cost base.

Jeremy Lathom-Sharp

 

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