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Adam Semple

Chief Financial Officer

Our high-quality order book and strong balance sheet underpin our ambitions to deliver sustainable growth."

Trading performance

Revenue for the year of £491.8m represents an increase of £88.2m (22 per cent) compared with the previous year, predominantly reflecting an increase in order flow and production activity, together with an increase in steel prices.

Underlying operating profit (before JVs and associates) of £33.1m (2022: £26.9m), represents an increase of £6.2m (23 per cent) over the prior year. The increase in profit reflects the increase in production activity and highlights our ability to offset inflationary cost increases through a combination of operating efficiencies, higher selling prices and contractual protection as steel remains largely a pass-through cost for the Group. The 2023 operating margin of 6.7 per cent remains below our previously stated strategic margin range of 8 to 10 per cent, reflecting the dilutive impact of the increases in steel prices over recent years which we continue to successfully pass through to clients at zero margin (the revised margin range is 6 to 8 per cent with current high steel prices). This dilutive effect on margins would reverse if steel costs reduced to pre-2020 levels in the future.

The statutory operating profit, which includes the results of JVs and associates and the Group's non-underlying items, was £30.2m (2022: £22.8m).

Underlying profit before tax, which is management's primary measure of Group profitability, was £32.5m (2022: £27.1m), an increase of 20 per cent over the prior year. The statutory profit before tax, which includes the Group's non-underlying items, was £27.1m (2022: £21.0m), an increase of 29 per cent over the prior year.

Share of results of JVs and associates

The share of results from JSSL was a profit of £1.3m (2022: £0.8m), reflecting revenue growth and margin improvement. Within Modular Solutions, our specialist cold rolled steel business, CMF, contributed a share of profit of £0.6m (2022: £0.5m). The CMF business has expanded its production operations in Wales and has continued to develop its product range to drive organic revenue growth.

Acquisition of VSCH

On 3 April 2023, after the year-end date, the Group completed the acquisition of VSCH for a net cash consideration of €24m (£21.2m), on a cash free, debt free basis assuming a normalised level of working capital on completion. The total cash consideration was €29.5m (£26.1m) including VSCH's cash and cash equivalents of €5.5m (£4.9m), which was funded by a combination of Group cash reserves of £2.2m and a new term loan of £19.0m, repayable over a five-year period.

Non-underlying items

Non-underlying items have been separately identified by virtue of their magnitude or nature to enable a full understanding of the Group's financial performance and to make year-on-year comparisons. They are excluded by management for planning, budgeting and reporting purposes and for the internal assessment of operating performance across the Group and are normally excluded by investors, analysts and brokers when making investment and other decisions.

Non-underlying items for the year of £5.4m (2022: £6.1m) includes the amortisation of acquired intangible assets of £3.3m (2022: £5.2m) and net acquisition-related expenses of £2.0m (2022: £0.7m). The amortisation of acquired intangible assets represents the amortisation of customer relationships, order books and brand name, which were identified on the acquisitions of Harry Peers and DAM Structures. These assets are being amortised over a period of 12 months to five years. Acquisition-related expenses include acquisition and similar transaction costs associated with the VSCH acquisition and movements in the valuation of the contingent consideration for the DAM Structures acquisition which is payable over a five-year period.


The Group's underlying taxable profits of £30.6m (2022: £25.8m) resulted in an underlying tax charge of £6.2m (2022: £4.8m), which represents an effective tax rate of 20.4 per cent (2022: 18.6 per cent). The total tax charge of £5.5m (2022: £5.4m) also includes a non-underlying tax credit of £0.7m (2022: charge of £0.6m). This comprises a tax credit on non-underlying items of £0.6m (2022: £1.0m) and tax adjustments relating to prior years of £0.1m (2022: £0.2m). In the prior year, a non-underlying tax charge of £1.5m was recognised, relating to the increase in future tax rates from 19 per cent to 25 per cent which, in line with the Group's policy, was included in non-underlying items.

Earnings per share

Underlying basic earnings per share increased by 18 per cent to 8.5p (2022: 7.2p) based on the underlying profit after tax of £26.2m (2022: £22.3m) and the weighted average number of shares in issue of 309.5m (2022: 308.8m). Basic earnings per share, which is based on the statutory profit after tax, was 7.0p (2022: 5.1p), reflecting the increased underlying profit after tax offset by a slight decrease in non-underlying costs. Diluted earnings per share, which includes the effect of the Group's performance share plan, was 6.9p (2022: 5.0p).

Dividend and capital structure

The Group has a progressive dividend policy. Funding flexibility is maintained to ensure there are sufficient cash resources to fund the Group's requirements. In this context, the board has established the following clear priorities for the use of cash:

  • To support the Group's ongoing operational requirements, and to fund profitable organic growth opportunities where these meet the Group's investment criteria,

  • To support steady growth in the core dividend as the Group's profits increase,

  • To finance strategic opportunities that meet the Group's investment criteria, and

  • To return excess cash to shareholders in the most appropriate way, whilst maintaining a good underlying cash position.

The board considers the dividend to be an important component of shareholder returns and we have either increased or maintained dividends every year since they were reintroduced in 2015, reflecting the strong cash generative nature of the Group. Accordingly, based on the outlook for the year ahead and our strong financial position, the board is recommending a final dividend of 2.1p per share (2022: 1.9p), payable on 13 October to shareholders on the register at the close of business on 8 September. This together with the interim dividend of 1.3p per share (2022: 1.2p), will result in a total dividend of 3.4p per share (2022: 3.1p). Looking ahead, as in previous years, the board expects the interim dividend to be approximately one third of the prior year's full dividend.

Goodwill and intangible assets

Goodwill was £82.2m at 25 March 2023 (2022: £82.2m). In accordance with IFRS, an annual impairment review has been performed. No impairment was required either during the year ended 25 March 2023 or the year ended 26 March 2022. Other intangible assets of £7.1m (2022: £10.3m), largely represents the net book value of the intangible assets (customer relationships, order books and brand name) identified on the acquisitions of Harry Peers and DAM Structures.

Property, plant and equipment

The Group had property, plant and equipment of £92.1m (2022: £91.4m) at 25 March 2023. Capital expenditure of £6.3m (2022: £7.4m) represents the continuation of the Group's capital investment programme. This predominantly consisted of new and upgraded equipment for our fabrication lines, the purchase of construction site equipment and general improvements to the Group's offices and facilities. Depreciation in the year was £7.2m (2022: £6.9m), of which £1.8m (2022: £1.7m) relates to right-of-use assets under IFRS 16.

Joint ventures

The carrying value of our investment in joint ventures and associates was £31.8m (2022: £30.1m), which consists of investments in India of £19.5m (2022: £18.4m) and in CMF of £12.3m (2022: £11.7m).


The Group's defined benefit pension liability at 25 March 2023 was £12.9m (scheme liabilities of £33.9m offset by scheme assets of £21.0m), a decrease of £1.5m from the 2022 position of £14.4m. The deficit has reduced due to a higher discount rate, reflecting the significant increase in bond yields, and employer deficit contributions over the year. This has been offset to a lesser extent by lower-than-expected returns on the scheme's assets and the recent short-term increase in inflation, which has increased the scheme liabilities. All other pension arrangements in the Group are of a defined contribution nature.

Return on capital employed

The Group adopts ROCE as a KPI to help ensure that its strategy and associated investment decisions recognise the underlying cost of capital of the business. The Group's ROCE is defined in the APMs section (see note 31 to the financial statements). For 2023, ROCE was 15.8 per cent (2022: 13.5 per cent), which exceeds the Group's minimum threshold of 10 per cent through the economic cycle.

Cash flow

Operating cash flow (before working capital movements)40.132.6
Cash generated from / (used in) operations53.8(1.9)
Operating cash conversion145%(25%)
Cash balances11.3(4.0)
Net funds / (debt) (pre-IFRS-16 basis)12.7(18.4)
Net funds / (debt)(10.7)(30.1)

1 The Group excludes IFRS 16 lease liabilities from its measure of net funds / debt as they are excluded from the definition of net debt as set out in the Group's borrowing facilities. A reconciliation of the Group's underlying results to its statutory results is provided in the APMs section (see note 31 to the financial statements).

The Group's business model has been established to generate surplus cash flows and we have always placed a high priority on cash generation and the active management of working capital. The Group ended the year with net funds (on a pre-IFRS 16 basis) of £2.7m (2022: net debt £18.4m). Net funds at 25 March 2023 included cash balances of £11.3m (2022: overdraft of £4.0m) offset by the outstanding term loans of £8.9m for acquisitions (2022: £14.9m).

Operating cash flow before working capital movements was £40.1m (2022: £32.6m). Net working capital has decreased by £13.8m during the year mainly reflecting the start of the unwind of the unusually high working capital position (10 per cent of revenue) at the beginning of the year (£3.8m) and new advance payments in H2 (£10.0m). The high 2022 working capital position reflected the impact of steel and other input price rises in the prior year, and higher contract-specific steel purchases at the previous year-end.

Year-end working capital represented approximately 5 per cent of revenue (2022: 10 per cent), back within our well-established target range of 4 to 6 per cent. Operating cash conversion (defined in note 25 of the financial statements) for 2023 was 145 percent (2022: minus 25 per cent), significantly above our KPI target of 85 per cent.

Payment Practices Reporting

The Group's relationships with its supply chain partners are of major strategic importance and the prompt payment of its suppliers remains a key component of this. Strong supply chain relationships can provide a competitive advantage and support superior operational delivery. However, the business operates in a sector where supply chains and contractual terms are complex, and prompt payment is often materially impacted by resolution of disputes and alignment to agreed contractual terms. For the formal Payment Practices Reporting period of 1 October 2022 to 25 March 2023, all the Group's businesses that are signatories of the Prompt Payment Code, reported that between 86 and 92 per cent of invoices were paid within 60 days.

Bank facilities committed until 2026

In March 2023, the Group increased its existing £50m revolving credit facility ('RCF'), which matures in December 2026, to £60m. The increased facility provides the Group with enhanced liquidity, following the acquisition of VSCH, and additional long-term financing to help support its growth strategy. The RCF remains subject to three financial covenants, namely interest cover, net debt to EBITDA and debt service (cash flow) cover. The Group operated well within these covenant limits throughout the year ended 25 March 2023.

In April 2023, as part of the VSCH acquisition, a new term loan of £19m, repayable over a five-year period, was established as an amendment to the existing facility agreement. This is also subject to refinancing in December 2026.

Going concern

In determining whether the Group's annual consolidated financial statements can be prepared on the going concern basis, the directors considered all factors likely to affect its future development, performance and its financial position, including cash flows, liquidity position and borrowing facilities and the risks and uncertainties relating to its business activities.

The following factors were considered as relevant:

  • The current market conditions and the impact of these (including the potential future impact of the current inflationary market conditions and similar other significant downside risks linked to our principal risks) on the Group's profits and cash flows,

  • The UK and Europe order book and the pipeline of potential future orders, and

  • The Group's cash position and its bank finance facilities, which are committed until December 2026, including both the level of those facilities and the three financial covenants (see above) attached to them.

The directors have reviewed the Group's forecasts and projections for 2024 and for at least 12 months from the date of approval of the financial statements, including sensitivity analysis to assess the Group's resilience to potential adverse outcomes including a highly pessimistic 'severe but plausible' scenario. This 'severe but plausible' scenario is based on the combined impact of securing only 25 per cent of budgeted uncontracted orders for the next 12 months, one-off contract losses, a deterioration of market conditions and other downside factors. Given the strong previous performance of the Group, this scenario is only being modelled to stress test our strong financial position and demonstrates the existence of considerable headroom in the Group's covenants and borrowing facilities in this 'severe but plausible' scenario.

Having also made appropriate enquiries, the directors consider it reasonable to assume that the Group has adequate resources to be able to operate within the terms and conditions of its financing facilities for at least 12 months from the approval of the financial statements. For this reason, the directors continue to adopt the going concern basis in preparing the financial statements.

Adam Semple

Chief Financial Officer

14 June 2023