Sustainable growth

The financial performance in the year to 30 April 2019 has once again been very strong with the results showing significant revenue growth, margin improvement and excellent cash generation.

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 £580.2m (2018: £501.1m), representing 15.8 percent growth over the prior year. Our turnover (which includes sub- contract revenue) was £639.9m (2018: £548.7m). Revenue growth was strong across all segments – real estate (14.8 percent), infrastructure (20.7 percent) and natural resources (8.0 percent).

Revenue growth was particularly strong in Europe (33.3 percent), the Americas (28.9 percent), and Asia (20.8 percent). Non-UK revenue represents 55.3 percent of consolidated revenue. EBITA of £67.9m compares with £55.5m for the prior year, and EBITA margin was 11.7 percent (2018: 11.1 percent).

Taxation

The taxation charge for the financial year was £14.3m (2018: £12.1m), representing an effective rate of 21.2 percent (2018: 22.1 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

Strong cash generation has continued through the financial year, reflecting the good cash management principles adopted throughout our business. This resulted in free cash flow of £49.5m (2018: £38.5m), and cash generation – defined as operating cash flow as a percentage of EBITDA – of 97 percent (2018: 90 percent). Cash conversion over the last five financial years is 95 percent. Debtor days at the year-end were 56 (2018: 55), and our average debtor days across the financial year was 60 (2018: 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 £69.7m at 30 April 2019 (2018: £62.4m). Net funds, including long-dated loans due to former shareholders, were £63.2m at the year-end (2018: £53.8m).

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 2019 the IAS19 deficit had decreased to £3.9m (2018: £4.1m), due primarily to contributions paid into the scheme.

Treasury

The treasury risks faced by Turner & Townsend include interest rate, foreign exchange, credit 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 taxation. 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

Consolidated income statement

Year ended 30 April 2019
£000
2018
£000
Continuing operations
Turnover 639,910 548,667
Sub-contract costs (59,712) (47,606)
Net revenue 580,198 501,061
 
Staff costs (414,773) (357,180)
Other direct expenses (33,368) (26,475)
Depreciation (6,159) (5,956)
Other operating charges (58,468) (56,584)
Operating profit 67,430 54,866
 
Analysed as:
Operating profit before amortisation 67,915 55,514
Amortisation (485) (648)
Operating profit 67,430 54,866
 
Finance income 254 142
Finance expense  (457) (487)
Net finance expense (203) (345)
 
Share of profit of joint ventures, net of tax 207 151
 
Profit before taxation 67,434 54,672
Corporation tax expense (14,309) (12,082)
Retained profit for the financial year 53,125 42,590
 
Profit attributable to:
Owners of the Company 52,977 42,606
Non-controlling interests 148 (16)
Retained profit for the financial year 53,125 42,590

 

Annual review 2018-2019