Annual Report and Notice of Annual General Meeting

RNS Number : 6470F

Severfield-Rowen PLC

28 April 2011

Severfield-Rowen Plc

Annual Report and Notice of 2011 Annual General Meeting

Severfield-Rowen Plc (the "Company") announces that it has today published its Annual Report and Accounts 2010 and Notice of Annual General Meeting 2011. Additionally as required under DTR 6.3.5, at the end of this notice full disclosure is made of the Group's Principal Risks and Uncertainties and the Directors' Responsibilities Statement. Together with the Group's Preliminary Results Announcement these comprise the full requirements of DTR 6.3.5.

The information contained in this announcement and in the Preliminary Announcement does not constitute the Group's statutory accounts, but is derived from those statutory accounts. The statutory accounts for the year ended 31 December 2010 have been approved by the Board and will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The report of the auditors on the financial statements was unqualified, did not draw attention to any matters by way of emphasis without qualifying their report, and did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006 or equivalent preceding legislation.

The documents listed below have been submitted to the UK Listing Authority for publication through the National Storage Mechanism where they will shortly be available for inspection at www.hemscott.com/nsm.do.

Documents:

Annual Report and Accounts for the financial year ended 31 December 2010

Notice of Annual General Meeting 2011

The documents are also available by clicking on the following links:

http://www.rns-pdf.londonstockexchange.com/rns/6470F_-2011-4-28.pdf

http://www.rns-pdf.londonstockexchange.com/rns/6470F_1-2011-4-28.pdf

Copies of the Annual Report and Accounts 2010 and Notice of Annual General Meeting 2011 along with related documents are also available on the Company's website at www.sfrplc.com. They will also be posted to shareholders.

The Company's 2011 Annual General Meeting will be held at Solberge Hall Hotel, Newby Wiske, Northallerton, North Yorkshire, DL7 9ER on 8 June 2011 at 12 noon.

Principal Risks and Uncertainties

The Group's ongoing operations and growth plans are subject to a number of different risks and uncertainties. Risk management processes are put in place to assess, manage and control these on an ongoing basis. The principal ones facing the business are set out below, and are listed in no particular order.

Risk

Explanation

Impact

Mitigation/Comment

Commercial

and market

environment

The UK construction market, within which the Group operates, is currently at the bottom of the economic cycle, placing significant pressure on all parts of the supply chain, from end customers through to material and subcontract suppliers.

Weak demand is resulting in increased competition, tighter margins and the transfer of commercial, technical and financial risk down the supply chain, through more demanding contract terms and longer payment cycles.

Increased senior management review of technical and commercial risks within each contract before acceptance.

Strengthening of commercial functions to manage contract progress and variations.

Close engagement with both customers and suppliers and monitoring of payment cycles.

Continuing use of credit insurance to minimise impact of customer failure.

Steel price

movements

Steel is the key material

used within the business

and the largest single cost within a contract. Steel prices have varied by >50% both positively and negatively over the past two years.

Such movements have

the potential to impact

the profitability of both

individual contracts and the whole business significantly, particularly given the long duration of many of its contracts.

Supply and pricing agreements with steel suppliers are negotiated to minimise individual contract risk.

Customer bids are structured to reflect the prevailing conditions within the market for raw steel.

People/skills

The Group has established a market leading position over many years due in large part to the experience and skills of its key people.

Loss of key people could

adversely impact the Group's existing market position. Insufficient growth and development of its people and skillsets could restrict its growth ambitions both in the UK and overseas.

Talent reviews undertaken regularly.

Development opportunities identified for staff to broaden their range of skills and experience.

A staff appraisal process continues to align the short and long term needs and goals of the business with those of key staff.

Remuneration policy is regularly reviewed to ensure that it is competitive and strikes the appropriate balance between short and long term rewards and incentives.

Skills gaps are continually identified and actions put in place to bridge these by either training, development or external recruitment.

Interruption

to fabrication

facilities

The Group's production

facilities are at the core of

its business and the Group relies on smooth continued operation of them.

Interruption could impact

both the Group's performance on existing contracts and its ability to bid for future contracts, thereby impacting its financial performance.

The Group has four main production

facilities so interruption at one facility could to some extent be absorbed by increasing capacity at a sister facility.

A wide network of sub-contract fabricators is used on a recurring basis, both for short term peak capacity requirements and for

more specialised fabrication. This network could also be used to mitigate disruption to the Group's own fabrication facilities.

Appropriate levels of Business Interruption insurance cover are maintained and reviewed regularly with the assistance of independent advisors and brokers.

Indian joint

venture

The Group has invested in a joint venture in India, where the growth prospects are believed to be substantial.

The growth, management and performance of this business will be a key element of the Group's development for the

foreseeable future. Effective management of the joint venture is therefore key to the Group's continuing success.

Robust joint venture agreement.

Two members of Group Board of Directors are members of joint venture Board.

Strong governance in place at joint venture.

Regular formal and informal meetings held with both joint venture management and joint venture partners.

Key positions within joint venture

management structure are occupied with Group employees seconded to the joint venture.

Health &

Safety

The Construction Industry sets very high standards of Health and Safety which the Group aims to exceed to maintain the health and wellbeing of its employees.

Construction activities can result in injury or death to employees, with subsequent financial loss to the business, potential loss of reputation, where at fault, and ultimately exclusion from future business.

Drive market leading standards for all employees at all times.

Director led safety leadership teams established to bring innovative solutions and to engage with all stakeholders to deliver continuous improvement in standards across the business and wider industry.

Regular Board review of performance.

Achievement of challenging Health and Safety performance targets is a key element of management remuneration.

Financial risks and uncertainties are separately described on pages 22 to 24 of the Financial Review and within note 21 to the Group Accounts.

Directors' Responsibilities Statement

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors are required to prepare the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and Article 4 of the IAS Regulation and have elected to prepare the parent company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the accounts unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

In preparing the parent company financial statements, the directors are required to:

l select suitable accounting policies and then apply them consistently;

l make judgements and accounting estimates that are reasonable and prudent;

l state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

l prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

In preparing the Group financial statements, International Accounting Standard 1 requires that directors:

l properly select and apply accounting policies;

l present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

l provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and

l make an assessment of the Company's ability to continue as a going concern.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and

dissemination of financial statements may differ from legislation in other jurisdictions.

RESPONSIBILITY STATEMENT

We confirm that to the best of our knowledge:

l the financial statements, prepared in accordance with the relevant financial reporting framework, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

l the management report, which is incorporated into the Directors' Report, includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

By order of the Board

T G Haughey A D Dunsmore

Chief Executive Finance Director

27 April 2011

For further information, please contact:

Severfield-Rowen Plc Toby Hayward 01845 577896

Chairman

Tom Haughey 01845 577896

Chief Executive Officer

Alan Dunsmore 01845 577896

Finance Director

RBS Hoare Govett Ltd John MacGowan 020 7678 8000