Delivering
strong results
Annual review 2021-2022
The financial performance in the year to 30 April 2022 has once again been very strong with the consolidated trading results showing both revenue and profit improvement with revenue growth in all seven regions.
Jeremy Lathom-Sharp Finance Director
Basis of preparation
The 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.
The Board has prepared a working capital forecast using assumptions as to future trading. These forecasts include the best estimate of future trading. Given the uncertainty within forecasts, various sensitivity analyses have been performed to assess the impact to future trading. The analyses show that the Group continues to have positive cash balance and meets the performance covenants within the borrowing facility. Based upon these projections and its cash balances, the directors have concluded that the Group has adequate working capital and therefore it is appropriate to use the going concern basis of preparation.
Revenue and profit
Our primary measure of revenue, net revenue, was £779.1m (2021: £664.5m), representing a 17.2 percent increase over the prior year. Our turnover (which includes subcontract revenue) was £884.0m (2021: £727.4m). At the regional level, overall growth was achieved in all seven regions, with particularly strong growth in Asia and Europe. The strong performance delivered across global markets is a result of us investing in the right things: our people, the community and the services we deliver for clients. In real estate and infrastructure, our ability to manage complex portfolios and to enhance the performance of major programmes remains robust.
EBITA of £120.9m compares with £114.3m for the prior year, and margin was 15.5 percent (2021: 17.2 percent).
Taxation
The taxation charge for the financial year was £26.6m (2021: £24.9m), representing an effective rate of 22.3 percent (2021: 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 £65.6m (2021: £109.3m), and cash generation – defined as operating cash flow as a percentage of EBITDA – of 84 percent (2021: 119 percent). Cash conversion over the last five financial years is 99 percent. Debtor days at the year-end were 56 (2021: 51), and our average debtor days across the financial year was 59 (2021: 59).
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, was £85.3m at 30 April 2022 (2021: £155.1m). Funds, net of bank loans, excluding IFRS 16 lease liabilities, were £65.3m at the year-end date (2021: £152.2m).
Bank facilities were renewed during the financial year and now provide Turner & Townsend with committed facilities of £120.0m until March 2027 (2021: £80.0m until May 2022) to finance future operational cash requirements and selective acquisitions in line with our strategic aims. Turner & Townsend had £20.0m borrowings against this facility as at 30 April 2022.
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 2022 the IAS19 deficit was £nil (2021: £ nil).
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. 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
© 2022 Turner & Townsend