Our results

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Delivering strong results

Jeremy Lathom-Sharp 
Finance director, Turner & Townsend

The financial performance in the year to 30 April 2017 has been very strong with the results reporting significant revenue growth, excellent cash generation, and robust margins.

Basis of Preparation

The financial results set out are extracted from financial statements prepared under International Financial Reporting Standards. Prudent accounting policies continue to be applied on a basis consistent with prior years.

Revenue and Profit

Our primary measure of revenue, net revenue, was £445.6m (2016: £378.2m), representing 18 percent growth over the prior year. Our turnover (which includes subcontract revenue) was £491.5m (2016: £409.5m). The growth in revenue was strong in real estate (21 percent) and Infrastructure (26 percent), giving combined growth of 23 percent. This was offset by decline in natural resources (9 percent), reflecting the extremely challenging market conditions in that market sector.

Net revenue in the UK achieved growth of 18 percent over prior year, and revenue from outside the UK by 17 percent. Revenue growth was, again, particularly strong in the Middle East (42 percent). Non-UK revenue represents 52 percent of consolidated revenue.

EBITA of £47.0m compares with £39.1m for the prior year, and EBITA margin was 10.6 percent (2016: 10.3 percent).

Three acquisitions have been completed during the year. Trestle LLC, a San Francisco-based project management company, was acquired in May 2016, Suiko Limited, a UK-based consultancy company, was acquired in June 2016, and AMCL, an asset management consultancy, was acquired in February 2017. Together, these acquisitions add approximately £5.7m revenue to the group in the 2016/17 financial year.

Taxation

The taxation charge for the financial year was £10.3m (2016: £9.1m), representing an effective rate of 22.2 percent (2016: 23.6 percent). The effective rate reflects the global nature of our business and the impact of varying tax rates across different jurisdictions. The reduction in the effective rate over 2015-16 reflects the decreasing UK corporation tax rates and different tax rates across the jurisdictions in which our businesses operate.

Cash flow and Working Capital

Cash generation has once again been maintained at a strong level through the financial year, reflecting the level of attention placed on working capital management by the business. This resulted in free cash flow of £39.4m (2016: £30.0m), and cash generation – defined as operating cash flow as a percentage of EBITDA – of 104 percent (2016: 104 percent). Debtor days at the year-end were 58 (2016: 58), and our average debtor days across the 12 accounting periods was 60 (2016: 60).

Working capital management continues to be a key discipline across our business. As our geographic reach has extended, significant attention continues to be placed on establishing appropriate working capital management behaviour in all territories, and this has been key to maintaining our strong cash flow performance.

Funding

Cash, net of overdrafts and bank loans, was £48.3m at 30 April 2017 (2016: £26.2m). Net funds, including long-dated loans to former shareholders, were £38.1m at the year-end date (2016: £13.4m).

Bank facilities established in November 2015 provide Turner & Townsend with five-year committed facilities of £80m to finance future operational cash requirements and selective acquisitions in line with our strategic aims. The facilities remain largely undrawn.

Pensions

Turner & Townsend operates a number of pension schemes across the 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 2017 the IAS19 deficit had increased slightly to £5.7m (2016: £5.4m), arising from movements in the liability discount rate.

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 have a material impact to 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.