Our vision is to be recognised as world-class leaders in structural steel, known for our ability to deliver any project to the highest possible standards. We will deliver this vision through the Group's strategy, the core of which revolves around continuing to build a solid platform for growth, and is supported by a focus on five key elements.

In 2015, the progress that we have made in delivering our strategy, together with how this strategy has been further developed, is set out below:

Strategic elementPrioritiesAchievements in 2015Objectives for 2016

Growth

In the short to medium term, our aim is to capitalise on growth opportunities both in the UK and in overseas markets.

Increase UK market share – growing market share in areas where the business already operates.

Enter new UK market sectors – looking for new market areas where the business has not operated in the past, taking advantage of our existing capacity and capabilities.

Building from existing European opportunities – driving more opportunities from European contractors with whom we have strong relationships in the UK.

We have focused on larger projects within our target markets, playing to our strengths of capability and capacity (including Anfield Stadium, Principal Place, Angel Court, Ordsall Chord and Telehouse).

We have undertaken significant research work to gain greater knowledge of current markets and target markets outside of our traditional areas.

This has led us to expand our bridge capability through the recruitment of the legacy Mabey Bridge infrastructure team, providing us with additional resources and expertise to capitalise on the growth potential within the bridge and infrastructure markets.

Grow Group revenues (and the order book) in FY16, taking advantage of the improving market position.

Increase market share in areas where the Group already has specialist expertise.

Infrastructure and bridge markets – coupled with developing the legacy Mabey Bridge operations, we have a targeted approach with key UK infrastructure project owners to exploit identified growth opportunities.

Continue to review growth opportunities in the UK, Europe (which was deferred in FY15 by the European downturn) and the rest of the world.

Operational excellence

Our emphasis is on delivering high quality products and reducing costs by driving excellence through our core business processes.

Drive operational improvements and efficiencies – the objective of our comprehensive operational improvement programme is to improve the Group's risk assessment, operational and contract management processes.

The improvement in operating margin during the year highlights the benefits of our short-term focus on margin recovery rather than top line growth. The increased margin reflects the ongoing improvements in risk management and operational processes, together with a more selective approach when tendering for work.

The operational improvements were also evidenced in the Group's positive operating cash flow for FY15 which has enabled the directors to recommend a final dividend.

Our aim remains to restore underlying operating margins to 5 to 6 per cent by the end of 2016 reflecting the continued improvement in contract execution coupled with better commercial and project management procedures and the underlying margins on individual contracts secured in the order book. This, in accordance with the Group's business model, will continue to generate surplus cash flows and support dividends.

Invest in market-leading technology – we will make this investment in the short and medium term in order to support the Group's ongoing requirements and for growth.

Capital expenditure of £6.6m represents a significant increase in the Group's investment programme. This enabled the upgrade of some of the Group's core fabrication equipment and also an increase in the Group's fleet of mobile plant and equipment used on its construction sites. This has generated operational efficiencies during the year, which are reflected in the improved operating margin, and will continue to benefit the Group in following years.

We have disposed of our non-core investment property to release cash for investment in new technologies.

We will continue to upgrade and replace existing equipment where appropriate, with new state-of-the-art technology to help drive production efficiencies, and to expand the capital equipment base where there is a strong return on investment case.

Clients

By understanding, anticipating and responding to client needs we aim to build secure, sustainable and mutually valuable relationships and create lasting client satisfaction.

Quality of service – our industry experience allows us to better understand our customers' own strategic objectives and enables us to design, fabricate and construct structural steelwork solutions to support these objectives.

Following the rebranding exercise during the year, the Group is now operating under the single Severfield brand. We believe that this provides improved clarity for our customers, supporting an increased level of business and market development activity in both existing and adjacent markets.

We have continued to develop our relationships with key clients during the year, the benefit of which is evidenced in the improved order book position.

Client retention is vital to our organic growth plans and we will continue to ensure that the customer is at the centre of everything we do.

We will seek to engage at an early stage with our clients and ultimate project owners to enhance our understanding of their requirements and to provide value-added solutions throughout the project life cycle.

People

Our people are at the heart of our business and are vital to the success of our vision and the achievement of our strategic goals.

Develop our people – our aim is to attract and recruit the right person at every level and to keep them engaged so that we can deliver our goals and customer commitments whilst maintaining a safe working environment.

During the year, the following key appointments were made:

  • Gary Wintersgill, managing director (Severfield UK);
  • Martin Kelly, Group strategic business development director;
  • Lee Mills, Group SHE director;
  • Three new non-executive directors;
  • Group communications manager;
  • 20 apprentices/trainees

We conducted our first Group-wide employee engagement survey. This has enabled us to identify areas in need of improvement and create a benchmark against which we can measure progress.

We launched a save as you earn share scheme to provide our employees with an improved choice in the way that they participate.

We have strengthened our dedicated health and safety team during the year which has assisted in reducing the Group's AFR.

We will continue to prioritise investment in our people to ensure a healthy pipeline of talent to achieve our strategic goals.

We will conduct a Group-wide review of emerging talent to ensure consistency and visibility of talent, succession planning and career opportunity.

We plan to extend our performance share plan to our wider operating company director population. This will support buy-in to the long-term success of the business and assist in management retention.

We are committed to a target of zero injuries and we will continue to apply the highest standards in health and safety across all operations in order to further improve the Group AFR. Further initiatives around behavioural safety are also being planned.

India

We continue to believe that the Indian market presents great opportunities for steel fabrication.

Sustainability of India – our aim is to ensure that the business develops a sustainable position whilst the market continues its conversion to steel.

We have significantly reduced joint venture losses during the year. This reflects improved levels of production output in the factory together with the benefits of the overhead reduction programme and the operational improvement plan being implemented by the new management team.

We have reviewed our strategy for India in light of the improved performance in 2015, resulting in a new strategic priority, 'building value in India'. Our aim is to ensure that the business continues to grow and to generate value for our shareholders.

We will continue to embed the operational improvements implemented in 2015, consolidate the management team and build relationships with key clients.

We aim to strike the right balance between commercial and industrial projects to ensure that production remains at satisfactory levels whilst we continue to improve the operating margin.

To further strengthen the India operations, we also consider geographically proximate export opportunities to support the existing order book and pipeline.