Our results

Sustainable growth

Jeremy Lathom-Sharp Finance Director
The financial performance in the year to 30 April 2018 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 £501.1m (2017: £445.6m), representing 12.5 percent growth over the prior year. Our turnover (which includes subcontract revenue) was £548.7m (2017: £491.5m). The growth in revenue was strong in real estate (11.5 percent) and infrastructure (15.4 percent), giving combined growth of 13.0 percent. After 3 years of revenue decline in extremely challenging market conditions, revenue in natural resources reported annual growth of 8.2 percent.

Net revenue in the UK achieved growth of 12.4 percent over prior year, and revenue from outside the UK by 12.5 percent. Revenue growth was also particularly strong in Africa the Americas and Australia, with growth of 27.3 percent, 20.4 percent and 15.4 percent, respectively. Non-UK revenue represents 52.3 percent of consolidated revenue.

EBITA of £55.5m compares with £47.0m for the prior year, and EBITA margin was 11.1 percent (2017: 10.6 percent).

One acquisition has been completed during the financial year, being that of MML, a Kenya-based project management consultancy business which was acquired in February 2018.

Taxation

The taxation charge for the financial year was £12.1m (2017: £10.3m), representing an effective rate of 22.1 percent (2017: 22.2 percent). The effective rate reflects the global nature of our business and the impact of varying tax rates across different jurisdictions.

Cash flow and working capital

Cash generation has continued at a strong level through the financial year, reflecting good working capital management by the business. This resulted in free cash flow of £38.5m (2017: £39.4m), and cash generation – defined as operating cash flow as a percentage of EBITDA – of 90 percent (2017: 104 percent). Cash conversion over the last five financial years is 96%. Debtor days at the year-end were 55 (2017: 58), and our average debtor days across the financial year was 60 (2017: 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 £62.4m at 30 April 2018 (2017: £48.3m). Net funds, including long-dated loans to former shareholders, were £53.8m at the year-end date (2017: £38.1m).

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 2018 the IAS19 deficit had decreased to £4.1m (2017: £5.7m), reflecting company contributions to the scheme.

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.

Financial highlights

 

Year ended 30 April 2018
£000
2017
£000
Continuing operations
Turnover 548,667 491,487
Sub-contract costs (47,606) (45,923)
Net revenue 501,061 445,564
 
Staff costs (357,180) (317,669)
Other direct expenses (26,475) (25,844)
Depreciation (5,956) (5,537)
Other operating charges (56,584) (50,059)
Operating profit 54,866 46,455
 
Analysed as:
Operating profit before amortisation 55,514 47,015
Amortisation (648) (560)
Operating profit 54,866 46,455
 
Finance income 142 349
Finance expense  (487) (549)
Net finance expense (345) (200)
 
Share of profit of joint ventures, net of tax 151 265
 
Profit before taxation 54,672 46,520
Corporation tax expense (12,082) (10,312)
Retained profit for the financial year 42,590 36,208
 
Profit attributable to:
Owners of the Company 54,672 36,188
Non-controlling interests (16) 20
Retained profit for the financial year 42,590 36,208

 


This content is part of the Annual review 2017/2018

Go to the main Annual review 2017/2018 page