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01
Stakeholder linkage
Strategic pillar
Why this is importantThis is the principal measure used to assess the success of the Group's strategy. We are focused on driving growth in operating profit in order to drive higher and sustainable returns for our investors.
How we calculateUnderlying operating profit is defined as operating profit before non-underlying items and the results of JVs and associates. Underlying operating margin is calculated as underlying operating profit expressed as a percentage of revenue.
Our performanceUnderlying operating profit before JVs and associates has increased by 5 per cent against a comparator, which included a one-off profit of £1.5m on a bespoke paint package on the large industrial project in the Republic of Ireland. This performance demonstrates the resilience of the Group in challenging market conditions.
02
Why this is importantEPS is one of the key metrics in measuring shareholder value and a performance condition of the Group’s performance share plan (‘PSP’). The measure reflects all aspects of the income statement, including the performance of India and the management of the Group’s tax rate.
How we calculateEPS is calculated as underlying profit after tax divided by the weighted average number of shares in issue during the period.
Our performanceEPS has increased 13 per cent, reflecting the increased underlying profit before tax in the year.
03
Why this is importantThis is a key measure for the business to track our overall success in specific contract activity, our progress in increasing our market share and our ability to maintain appropriate pricing levels.
How we calculateThis represents the year-on-year percentage change in revenue from Group operations as reported in the accounts. Like-for-like revenue excludes the revenue generated from the recent acquisitions of DAM Structures.
Our performanceLike-for-like revenue has increased by 9 per cent, reflecting an increase in activity and an increase in steel prices.
04
Why this is importantCash is critical for providing the financial resources to develop the Group’s business and to provide adequate working capital to operate smoothly This measures how successful we are in converting profit to cash through management of working capital and capital expenditure.
How we calculateOperating cash conversion is defined as cash generated from operations after net capital expenditure (before interest and tax) expressed as a percentage of underlying operating profit (before JVs and associates).
Our performanceOperating cash conversion was -25 per cent, below our target conversion rate of 85 per cent, however, we expect to exceed our target once again in 2023. Our net working capital has increased by £34.5m during the year, reflecting the expected unwinding of the low working capital position at the start of the year, together with the impact of steel price rises and higher steel purchasing to meet our 2023 production requirements.
05
Why this is importantROCE measures the return generated on the capital we have invested in the business and reflects our ability to add shareholder value over the long term. We have an asset-intensive business model and ROCE reflects how productively we deploy those capital resources.
How we calculateROCE is calculated as underlying operating profit divided by the average of opening and closing capital employed. Capital employed is defined as shareholders’ equity excluding retirement benefit obligations (net of tax), acquired intangible assets and net funds.
Our performanceDespite the Group’s ROCE decreasing slightly in the year, the Group continues to exceed our benchmark of 10 per cent and has achieved an average ROCE of 15 per cent over the last five years.
06
Why this is importantThe order book is a key part of our focus on building long-term recurring revenue. It is an important measure of our success in winning new work. Whilst the revenue within the order book is reported externally, the margin inherent within the order book is monitored internally to provide visibility of future earnings.
How we calculateOur record UK and Europe order book shows the total value of future revenue secured by contractual agreements.
Our performanceOur record UK and Europe order book stands at £486m at 1 June 2022, representing a 61 per cent increase since 1 June 2021. This solid order book position leaves the Group well positioned to deliver on its strategic objectives.
* See note 32 for APM definitions.
07
Why this is importantIFR is an industry-standard measure of the safe operation of our business and is one of a number of health and safety measures the Group uses to monitor its activities. In recent years, we have shifted our focus to the Group’s injury frequency rate. IFR focuses on a variety of incidents, ranging from minor to potentially more serious. The Group’s IFR has reduced over the course of the year, with targeted reductions in almost all areas of the business.
How we calculateIFR is the number of reportable injuries per 100,000 hours worked. The 2022 result excludes DAM Structures, which will be included in the reported IFR statistics in 2023 now that we have established a baseline performance in the year following its acquisition.
Our performanceDespite wider industry trends moving in the opposite direction as working practices return to normal post-pandemic, we have seen a further reduction in injury rates, resulting in an IFR (including JSSL) of 1.32, compared to 1.48 in 2021.
Key to stakeholder linkage
Key to strategic pillar