1Underlying* operating profit and margin
(before JVs and associates)

 

Strategic pillar




Why this is important

This is the principal measure used to assess the success of the Group's strategy.

We are focussed 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.

Our performance

Underlying operating profit (before JVs and associates) has increased by 16 per cent, exceeding our 2020 strategic profit target of doubling underlying profit before tax to £26m.

Stakeholder linkage

  • Shareholders
  • Employees
2Underlying* basic earnings per share (‘EPS’)

 

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.

Our performance

EPS has increased by 15 per cent, reflecting the increased underlying profit before tax in the year.

Stakeholder linkage

  • Shareholders
  • Employees
3Revenue growth
(on a like-for-like basis)

 

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.

In the current year, the acquisition of Harry Peers contributed revenue of £14.4m for the six months since its date of acquisition. Accordingly, this KPI is adjusted to reflect the Group's like-for-like revenue growth. There were no such adjustments in the prior year.

Our performance

Like-for-like revenue has increased by 14 per cent, reflecting an increase in order flow and higher production activity, particularly in the second half of the year.

Stakeholder linkage

  • Shareholders
  • Employees
  • Clients
  • Suppliers
  • Communities
4Operating cash conversion

 

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) (see note 26).

Our performance

Operating cash conversion was 81 per cent, in line with our target conversion rate of 85 per cent.

Stakeholder linkage

  • Shareholders
  • Employees
  • Suppliers
5Return on capital employed
('ROCE')

 

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 (see note 22).

Our performance

ROCE has increased by 1.5 per cent, continuing to exceed the Group's target of 10 per cent.

Stakeholder linkage

  • Shareholders
  • Employees
6Order book

 

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.

Our performance

The UK and Europe order book stands at £271m at 1 June 2020, representing an 8 per cent decrease since 1 June 2019. This reduction mainly reflects the higher revenue recorded in the second half of the 2020 financial year.

Stakeholder linkage

  • Shareholders
  • Employees
  • Suppliers
  • Communities
7Accident frequency rate ('AFR')
Injury frequency rate ('IFR')

 

Strategic pillar

Why this is important

AFR and IFR are industry-standard measures of the safe operation of our business and are among a number of health and safety measures the Group uses to monitor its activities.

During the last year, we have shifted our focus to the Group's injury frequency rate. IFR focusses 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 calculate

AFR is equivalent to one reportable lost-time incident per 100,000 hours worked, which equates to approximately one working lifetime.

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

Our performance

Once again, we have achieved our safety targets for the year, reporting an AFR, which includes our Indian joint venture, of 0.15, and continuing to outperform the industry average. The slight increase from the prior year was not wholly unexpected given both the significant improvement in the AFR in 2019 and the increased Group activity levels in 2020.

Stakeholder linkage

  • Employees
Strategic pillar key


Growth


Clients


India


Operational excellence


People