Financial year 2017 ('FY17') was another successful year for the sustainable, future growth of the ERM business, with strong overall performance despite the more difficult market conditions.
FY17 was a challenging year, against a backdrop of significant economic and political uncertainty, as well as an oil price which started the year in April 2016 at $36/bbl and remained somewhat volatile. The low oil price meant that many of our Upstream Oil & Gas clients decreased capex spend, which resulted in a decrease in our sales during the financial year in this sector. In December 2016, OPEC reached an output reduction agreement and our Upstream clients have begun to work on selected new projects leading to some recent growth in our Upstream sales. We also saw some caution in client expenditure in the Mining and Manufacturing sectors, which was offset by our strategy of sector diversification – notably, Chemical sector sales grew at a double-digit rate and the Power, Technology and Transport sectors all performed well.
At constant exchange rates, our net consulting revenue decreased by 4% in FY17. During the year we cut some costs (unfortunately including staff numbers – particularly in the first half of the financial year) in some areas where appropriate, particularly those geographies exposed most significantly to a continued slowdown in Oil & Gas activity. We did this in order to maintain significant expenditure on investment for medium-term growth in other areas, including growth sectors like Chemical, Power and Technology, and for the development of our client-focussed service offerings. As a result of the continued investment in the business our trading profit decreased by 7% and our trading profit margin of 15% decreased slightly. We generated strong operating cash flow, leading to a $37m increase in cash, and we held $138m of cash at 31 March 2017. Our strategy of sector diversification and continued investment enabled us to start to rebuild staff numbers during the second half of the financial year.
Our trading results represent a strong overall performance given the difficult market conditions. We also achieved a number of notable successes during FY17 in terms of positioning the business for medium-term sustainable growth:
Equity investors: We worked closely with our external equity investors, the private equity arms of OMERS Administration Corporation (“OMERS”) and Alberta Investment Management Corporation (“AIMCo”), during FY17 (their first full financial year of investment) to set the business up for strong, sustainable medium-term growth.
Partners: Partners in ERM are our senior management level leaders. We hired a further 30 Partners during FY17 and also promoted 11 Partners from our internal Partner-in-Training programme. This provides us with a strong platform to grow the business over the medium-term.
Acquisitions: We also finalised the integration of the acquisitions of rePlan in Canada and JSC in the UK, which were both made during FY16. Due to a variety of factors, we did not make any additional acquisitions during FY17. However, in the first quarter of financial year 2018, we have made a further new acquisition, this time in Australia with the acquisition of the 80-person Pacific Environment Consulting ("PEC") business of EnviroSuite Limited in June 2017.
Our marketplace continues to grow and offer the Group considerable opportunities. Our strategy is to continue to grow and build our presence in major markets, through organic growth and targeting specific acquisitions where appropriate to broaden our geographic and service offerings. Our global expansion focuses on building expanded relationships with our clients and servicing their needs in more regions and across more service areas.
In summary, FY17 was another successful year for the sustainable, future growth of the ERM business.