Search Trigger

1. Underlying operating profit and margin1

Stakeholder linkage

Strategic pillar

Why this is important

This 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 calculate

Underlying 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.

Progress during the year

Underlying operating profit has increased by £6.2m (23.0 per cent) over the prior year, reflecting strong operational delivery. The consistent margin, at 6.7 per cent, reflects the dilutive effect of the increase in steel prices.

2. Underlying basic earnings per share (EPS)

EPS

Stakeholder linkage

Strategic pillar

Why this is important

EPS 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 calculate

EPS is calculated as underlying profit after tax divided by the weighted average number of shares in issue during the period.

Progress during the year

EPS has increase by 18 per cent, reflecting the increase in underlying profit.

3. Revenue growth2 (on a like-for-like basis)

Stakeholder linkage

Strategic pillar

Why this is important

This 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 calculate

This represents the year-on-year percentage change in revenue from Group operations as reported in the accounts.

Progress during the year

Revenue has increased by £88.2m (21.8 per cent) compared to last year, reflecting an increase in production activity and order flow.

2 This now includes all acquisitions (Prior year excluded DAM but has been restated for comparability)

4. Operating cash conversion

Stakeholder linkage

Strategic pillar

Why this is important

Cash 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 calculate

Operating 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).

Progress during the year

Operating cash conversion was +145 per cent, which is well ahead of our target conversion rate of +85 per cent. This reflects the unwind of the unusually high working capital position in the prior year and customer advances.

5. Return on capital employed

Stakeholder linkage

Strategic pillar

Why this is important

ROCE 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 calculate

ROCE 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.

Progress during the year

ROCE has increased by 2.3 percentage points to 15.8 per cent, reflecting increased profitability. This is above our benchmark of 10 per cent.

6. Order book

Stakeholder linkage

Strategic pillar

Why this is important

The 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 calculate

Our UK and Europe order book shows the total value of future revenue secured by contractual agreements.

Progress during the year

Our high-quality UK and Europe order book stands at £510m at the end of June 2023, representing a £24m increase from June 2022. The strong order book gives us good earnings visibility and leaves us well positioned to deliver our strategic objectives.

7. Injury frequency rate ('IFR')

Stakeholder linkage

Strategic pillar

1 The 2022 IFR has been adjusted to include DAM structures.

Why this is important

IFR 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.

How we calculate

IFR is the number of reportable injuries per 100,000 hours worked.

Progress during the year

Following significant improvements in previous years, our IFR has increased to 1.61 from 1.49. Although our safety statistics continue to be industry-leading, we remain committed to continually improving and focusing on leading indicators in our pursuit of 'no harm'.

Key to stakeholder linkage

 

Clients

 

Employees

 

Shareholders

 

Communities

 

Suppliers

Key to strategic
pillar

 

Growth

 

Clients

 

Operational excellenc

 

India

 

People

1See note 31 for APM definitions and reconciliation to IFRS measures