2015504  27042011 proof 11 2015504  27042011 proof 11
severfieldrowen plc
severfield–rowen plc
dalton airfield industrial estate 
dalton thirsk north yorkshire yo7 3jn
tel 01845 577896  fax 01845 577411
wwwsfrplccom
growth buil t on success
annu al re po rt  account s
for the year ended 31 d ecember 2010
severfield–rowen plc  annual r eport 2010 2015504  27042011 proof 11 2015504  27042011 proof 11
severfield—rowen plc annual report 2010
sev erfiel d–rowen plc is th e largest specia l ist 
structu ral stee lwork g rou p in th e u k w ith 
a repu tation for performance and valu e
grou p streng ths
for more  
information visit
wwwsfrplccom
severfieldreeve structures ltd
dalton airfield industrial estate
dalton
thirsk
north yorkshire
yo7 3jn
tel 01845 577 896
fax 01845 577 411
fisher engineering ltd
ballinamallard
enniskillen
co fermanagh
northern ireland
bt94 2fy
tel 02866 388 521
fax 02866 388 706
rowen structures ltd
17 maisies w ay
the v illage
south normanton
derbyshire
de55 2ds
tel 01773 860 086
fax 01773 814 077
atlas w ard structures ltd
sherburn
malton
north yorkshire
yo17 8pz
tel 01944 710 421
fax 01944 710 387
severfieldreeve international ltd
po box 519
abu dhabi
united arab emirates
tel 971 2 644 2600
fax 971 2 644 2387
engineering construction t raining ltd
dalton airfield industrial estate
dalton
thirsk
north yorkshire
yo7 3jn
tel 01845 576 807
fax 01845 577 942
w atson steel structures ltd
lostock lane
lostock
bolton
lancashire
bl6 4bl
tel 01204 699 999
fax 01204 694 543
jsw severfield structures ltd
401 deluxe court
r v bambardekar road
station road
bandra w est 
mumbai
tel 91 22 6731 7000
fax 91 22 2651 2685
steelcraft erection services ltd
dalton airfield industrial estate
dalton
thirsk
north yorkshire
yo7 3jn
tel 01845 577 896
fax 01845 578 477
jsw severfield
structures
severfield–reeve
structures
atlas ward
structures
watson steel
structures
fisher 
engineering
steelcraft 
erection
services
engineering  
construction  
t raining
rowen
structures
severfield–reeve
international  
project office abu dhabi
severfield–rowen plc
dalton airfield industrial estate
dalton
thirsk
north yorkshire
yo7 3jn
tel 01845 577 896
fax 01845 577 411
 ope rati onal pe rfo rmance   
 cus tomer serv ice
 mul tis ecto r flexi b ility  earl y pr o ject de sign enhancement  
 pro grammin g and co sti n g
 product a nd ser v ice ra nge
 uk and ove rseas manu factu rin g and net wo rk  factor y a nd si te effici enci es
 peo ple and s ki ll s
 financ ial s tren gth
 sc ale and co st b ase
 heal th saf ety and s u stainab ility wwwsfrplccom
stratford london 01 our business 01
2015504  27042011 proof 10
our business
04 what we do
06 our operations
08 group at a glance
10 india joint venture
12 year at a glance
14 chairman’s statement
16 chief executive’s review
20 financial review
25 key performance indicators
our g overnance
28 directors and advisers
30 executive committee 
32 corporate objectives 
34 principal risks and uncertainties
36 directors’ report
41 corporate social responsibility
45 corporate governance
50 directors’ remuneration report
59 directors’ responsibilities 
statement
gr oup a cco unts
62 independent auditor’s report
63 consolidated income statement
64 consolidated statement of  
comprehensive income
65 consolidated balance sheet
66 consolidated statement of 
changes in equity
67 consolidated cash flow 
statement
68 notes to the consolidated 
financial statements
99 five year summary
99 financial calendar
co mpany a cco unts
102 independent auditor’s report
103 company balance sheet
104 notes to the company 
financial statements
 revenue decreased by £827m to £2667m  
2009 £3494m
 underlying operating margin at 61  
2009 148
 underlying profit before tax margin at 57  
2009 145
 underlying profit before tax decreased to £153m 
2009 £508m
 profit after tax reflecting nonunderlying items of 
£76m 2009 £313m
 basic earnings per share of 858p 2009 3534p
 recommended final dividend per share of 25p 
giving total dividend of 75p 2009 1500p
 year end net debt of £150m 2009 £115m net cash
 uk order book value of £226m at 22 march 2011
 jssl india order book value of £33m at 
22 march 2011
co ntents
financial hi ghli ghts
r evenue
£2667m
06 07 08 09 10
underlying p rofit  
before tax
£153m
06 07 08 09 10
underlying operating 
margin
61 
06 07 08 09 10
r etained profit 
before tax
£76m
06 07 08 09 10
 
dividend per share
750p
06 07 08 09 10
underlying basic 
earnings per share
1250p
06 07 08 09 10
 underlying is before
• the amortisation of acquired intangible assets — £27m 2009 £44m
•  share of preoperating losses of indian joint venture — £14m 2009 £10m reclassified  
for consistency 
• impairment in valuation of investment property — £21m 2009 nil
• movements in the valuation of derivative financial instruments — nil 2009 gain £34m
• release of provisions no longer required — £20m gain 2009 nil
•  the associated tax impact of the above and the effect of future corporation tax rate reductions — £07m 
gain 2009 £16m 02 severfield—r owen plc annual report 2010
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our business
 
co ntents
04 what we do
06 our operations
08 group at a glance
10 india joint venture
12 year at a glance
14 chairman’s statement
16 chief executive’s review
20 financial review
25 key performance indicators 03 our business 03
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commercial offices sect or
proj ect  
heron tower
l ocat ion   
london
proj ect  
cannon place
l ocat ion   
london
proj ect  
ropemaker place
l ocat ion   
london
proj ect  
30 crown place
l ocat ion   
london
proj ect the shard location london bridge 04 severfield—r owen plc annual report 2010
2015504  27042011 proof 10
 
 s u sta in a bil it y         s u sta in a bil it y        s u sta in a bil it y          s u sta in a bil it y   
 
 
  s u sta in a bil it y        
 
what we do
co mpetitive ad vanta ge 
the group’s competitive advantages derive from its scale client focus 
flexibility experience cost base productivity supply chain strengths and 
integrated approach from design to erection
erection 
the group’s inhouse erection companies steelcraft and fisher provide 
services for all of the other severfield–rowen group companies whilst 
only working within the group they are the largest structural steel erection 
businesses in the uk directly employing staff and owning plant
they are industry leaders in steel erection and construction methodology  
fa brication 
operational investment has been significant and continuous over the 
years with many innovative features being developed and incorporated 
modern stateofthe art processing equipment has been employed with full 
consideration for design supporting layout logistics integration and erection
design 
the design process offers clients alternative concepts and solutions by 
working closely with the consulting engineers at the concept of the project 
and with the assistance of the latest ‘stateoftheart’ computer software for 
2d and 3d analysis modelling and design at their disposal we are able to 
offer clients ‘value engineering’ for the most effective and efficient solutions  
advice on material choices fabrication fire protection surface treatment and 
erection techniques can often lead to significant project savings 05 our business 05
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hea l t h  sa fet y                 qu a l it y                  in n ovat ion               
             c ompet it iv e a dva n ta ge                 s c a l e 
 
 s u sta in a bil it y         s u sta in a bil it y        s u sta in a bil it y          s u sta in a bil it y   
 
 
  s u sta in a bil it y        
 
the group proactively seeks to continue its industry leading position in the 
areas of health safety and sustainability the group’s “steel futures” strategy 
promotes sustainable future safe future and zero carbon future 
                                                     
1
design
fa brication erection
 
            effec t iv e c on t r a c t ma n a gemen t      06 severfield—r owen plc annual report 2010
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sta diums 
leisure
the group has an unrivalled 
record in the design engineering 
and building of many of the uk’s 
best known stadiums and has 
provided timely and costeffective 
solutions for long spanning 
architecturally innovative 
structures group successes 
include arsenal’s emirates 
stadium wimbledon centre 
court wales millennium centre 
and riverside museum glasgow
our operations
market sectors
the group’s stateoftheart facilities provide clients with unrivalled 
services and value in the execution of their projects
power  ener gy 
power stations in the uk ireland 
and overseas have always been 
an important element for the 
group where its capability to 
deal with special construction 
and engineering requirements 
leads to its unrivalled success in 
this sector our experience and 
professionalism in delivering 
such projects enables the group 
to continue in its pivotal role in 
supply to this growing sector
education
group companies have extensive 
experience in the provision 
of structural steelwork for the 
education sector the company 
has undertaken numerous school 
and further education projects 
leeds metropolitan university 
was awarded a commendation for 
its structural steel design
heal th
many hospitals are specified  
with structural steel frames  
span length enhanced flexibility 
adaptability and speed of 
construction are key factors 
conferring advantages to the 
group in this sector example 
illustrated is victoria hospital in 
kirkcaldy 07 our business 07
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co mmercial
offices
performance benefits from fabsec 
and firebeam together with other 
initiatives have underpinned the 
group’s success in this sector 
example illustrated is watermark 
place london
city centre
 retail
project management and supply  
chain linkage are vital aspects 
in the provision of successful 
execution in these challenging 
city centre and out of town 
projects example illustrated is 
bristol broadmead shopping 
centre
transp ort bri dges
 car parks
the group has a strong reputation 
for successful delivery of major 
transportation related projects 
both in the uk and overseas 
including airports and has 
extensive experience for all types 
of bridgework group successes 
include heathrow’s terminal 5  
gatwick pier 6 passenger 
bridge the multi award winning 
gateshead millennium bridge 
midland mainline bridge and 
stratford city footbridge
distri buti on  
in dustrial
the group’s competitive 
strengths including design 
capability supply chain  
coordination and fabrication
erection speeds are key to their 
success in this sector group 
contracts include projects for 
tesco asda and morrisons the 
project illustrated is located at 
stokeontrent 08 severfield—r owen plc annual report 2010
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gr oup at a glance
the combined resources of our group of companies have the design engineering skills and experience to handle complex projects over a diverse 
range of market sectors 
 
we can facilitate the production of a wide range of steelwork packages including projects requiring high added value engineering content to 
basic structural work
fis h er
engineering
sever f ieldr eeve
stru ctures
sever f ieldreeve 
international 
abu dhabi p roject office
j sw sever f ield
stru ctures
watson stee l
stru ctures
atla s war d
stru ctures
s everf ieldreeve structures l td
located at dalton in north yorkshire this is the largest of the operating 
companies and is the hub of much of the group’s activity on its 55 
acre site it has 10 production lines where the manufacturing process is 
undertaken in a controlled environment
queen elizabeth hospital birmingham
wats on steel structures l td
this world famous business founded in 1933 is one of the larger 
uk structural steelwork companies in its own right it is internationally 
respected with a reputation for having specialist skills in relation to the 
design and engineering of high added value steelwork
wimbledon centre court roof london
engineering 
cons t ruct ion 
t ra ining
st eelcraft erect ion 
serv ices
rowen
stru ctures 09 our business 09
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fish er engineering l t d
located in northern ireland fisher engineering ltd is recognised to be 
one of europe’s leading constructional steel fabricators the company has 
a highly skilled workforce and is equipped with the latest stateoftheart 
manufacturing processes
national conference centre dublin
atlas w ard structures l td
located in sherburn nr scarborough north yorkshire atlas ward 
is the leading design and build steelwork contractor for distribution 
warehouses in the uk atlas ward designs fabricates and erects structural 
steelwork principally for the warehouse sector and has a business skill 
base and client profile which is complementary to the rest of the group
3 individual distribution centres prologis park wellingborough
js w severf ield structures l td
located adjacent to jsw steel’s plant at vidyanagar in the district of 
bellary karnataka india the plant consists of 2 fabrication lines and a 
plate line plant investment has been significant with many of severfield–
rowen’s innovative features being incorporated into the joint venture 
the company is involved in the design fabrication and erection of 
structural steelwork to principally service the indian markets
jsw ctl building bellary india 10 severfield—r owen plc annual report 2010
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ind ia joint venture
severfield–rowen’s new joint venture and operations 
in india are of significant importance in achieving our 
strategic growth ambitions
in november 2010 jsw severfield structures limited formally 
opened its new plant in vidyanagar bellary karnataka this was a 
milestone in the company’s history being the first manufacturing unit 
outside of the uk
jssl jswsfr provides a new service in india incorporating the 
benefits and efficiencies of the group’s experience in terms of design 
manufacture and erection
the plant’s location is shown below and it currently utilises 26000 m² 
of workspace and 52000 m² of logistics and storage area
the indian market is growing at some 810 per annum and is 
enjoying considerable infrastructureconstruction spends steel is 
already used significantly in the power and infrastructure sectors
the use of steel in construction is anticipated to become more 
widespread in the coming years as its overall value benefits are realised
ind ia
ne w plant
in vidyanagar bellary 
karnataka
the plant has been designed to optimise product range quality 
and productivity as befitting the demands of the construction 
industry in india
incorporating stateoftheart technology and processing 
equipment the plant is managed and operated by high quality 
experienced and dedicated people
bespoke plated products 
 
and 
 
are 
manufactured on site at bellary offering clients a range of 
benefits
key service offerings
 design guidance
 quality products
 efficient erection programmes
 customer solutions 11 our business 11
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first pr ojects
some of the first projects engaged by jsw severfield structures ltd 
demonstrate the value and speed benefits of our new service offering in india
overview
in dustrial 
co mmercial 
power  ener gy 
● ● 35000 tonnes capacity
● ● 2 fabrication lines
● ● 1          line
● ● 270 employees
● ● 2nd jv for floor metal decking line in bellary
greensol hospital
jsw ctl building bellary
prestige bangalore 12 severfield—r owen plc annual report 2010
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year at a glance
despite difficult trading conditions during 2010 the group illustrates some of  
its significant highlights through the year
quarter 1 quarter 2
jan feb mar apr may jun
ja nua ry
a ward of titanic signature 
building belfast contract
the titanic signature building is 
iconic in design and is located in the 
titanic quarter of east belfast the 
building housing a world class visitor 
attraction will be the subject of belfast’s 
shipbuilding and maritime heritage and 
will become northern ireland’s largest 
built attraction
febru a ry
completion of 2012 olympic stadium
following 72 weeks on site february saw the completion of 10800 tonnes 
20000 pieces of constructed steelwork for the 2012 olympic stadium 
mar ch
credit facility
the group agreed a new £40m revolving credit facility with rbs and 
yorkshire bank a member of the national australia bank  
apri l
completion of staythorpe p ower station
erection of approximately 5000 tonnes of structural steelwork was 
completed for staythorpe power station following an extensive 16 month 
programme
may
a ward of heathrow terminal 2 
contract
the group was awarded the contract 
for heathrow’s new terminal 2 which 
will consist of approximately 25000 
tonnes of fabricated steelwork
june
investor open day london 
the company organised an open day for its investors which included tours 
of heron tower and westfield stratford shopping centre 13 our business 13
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quarter 3 quarter 4
jul aug sep o ct nov dec
july
the group received structural steel design awards for dublin airport’s 
terminal 2 and the world’s largest audi centre in west london plus a 
certificate of merit for the riverside museum in glasgow
a ugus t
start of construction of temporary stand at 2012 olympic stadium
construction of the temporary tier housing 55000 seats commenced this 
month which will give the stadium a capacity of 80000 for the games  
sept ember
a ward of morrisons r egional 
distribution centre bridgwater
atlas ward was awarded this contract 
which consists of 2500 tonnes of 
structural steelwork  
oct ober 
completion of the v estas blade technology centre on isle of wight
steelcraft erection services the group’s inhouse construction company 
completed this project which covers 20000 sqm and utilises 2250 tonnes of 
structural steelwork
nov ember
js w severfield structures ltd 
opening ceremony
two years after signing the  
agreement with its partner jsw steel 
17 november saw the official opening 
ceremony of the fully commissioned 
plant
december
a ward of amazon r egional distribution centre dunfermline
atlas ward was awarded amazon’s new regional distribution centre the 
project will consist of approximately 3400 tonnes of structural steelwork 14 severfield—r owen plc annual report 2010
2015504  27042011 proof 10
chairman’s statement
t oby hay ward c hairman
in 2010 the company 
produced lower but 
creditable profits in an 
extremely harsh business 
environment for the 
structural steel sector in 
the uk the company 
continues to extend its 
leading position in the 
market reflected by its 
financial performance and 
market share gains
overview
in 2010 the company produced lower but 
creditable profits in an extremely harsh 
business environment for the structural steel 
sector in the uk the company continues 
to extend its leading position in the market 
reflected by its financial performance and 
market share gains
the company anticipates that trading 
conditions will only improve marginally 
towards the end of 2011 before a richer 
vein of project opportunities materialises in 
2012
r esul ts
the group made an underlying operating 
profit of £162 million 2009 £518 million 
on revenue of £2667 million 2009 
£3494 million group profit after tax is 
£76 million 2009 £313 million with 
basic earnings per share of 858p 2009 
3534p both reflecting the impact of 
nonunderlying items
divi den d
the company while optimistic for 2012 
and beyond feels that trading in the uk 
market in 2011 will remain very tough in 
remaining prudent against this outlook it 
will recommend a final dividend payment  
of 250p giving 750p for the full year 
2009 1500p
board chan ges
the board is pleased to announce that 
derek randall currently executive 
director with responsibility for business 
development and international including 
jsw severfield structures ltd in india 
joined the company’s main board in 
february 2011
the company is also pleased to welcome 
john dodds to its plc board as a non
executive director in october 2010 john 
retired from kier group last year after 
working for the company for 40 years 
john became ceo of kier group in 2003 
and with his wealth of experience in the 
construction industry will be a valuable 
asset to our board
people
our employees continue to be our 
key competitive advantage with their 
experience and commitment contributing to 
our relative success and development
outl ook
2011 will be a tough trading year the 
macroeconomic situation in the uk has 
been and remains difficult to interpret and 
predict clearer consensus is emerging that 
recovery will be apparent in gdp growth in 
2012 privately led investment in a few key 
sectors will provide improved prospects for 
us in 2012 the company expects that the 
remainder of 2011 will be notable for the 
absence of large major project starts with 
an improvement being seen in our pipeline 
for 2012
in our overseas target markets we are 
demonstrating that our experience 
methods and capability can be transferred 
successfully as we attempt to offset the 
impact of tough trading conditions in the 
uk progress in india is extremely good 
where exciting prospects are in the pipeline 
and growth potential is strong 15 our business 15
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th e portfo li o
proj ect 2012 olympic stadium   
l ocat ion stratford london 16 severfield—r owen plc annual report 2010
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ch ief executive’s review
t om hau ghey chief executive officer
in 2010 severfield–
rowen traded through 
some of the most difficult 
conditions seen by the 
uk industry in the 
last few decades
in 2010 severfield–rowen traded through 
some of the most difficult conditions seen by 
the uk industry in the last few decades
it faces the challenges of 2011 in a 
determined but pragmatic manner and is 
now more optimistic of a partial recovery in 
demand during 2012
business
the companies within the group have 
displayed their individual strengths which 
have collectively enabled the group to 
trade profitably and competitively in the 
last 12 months features such as close 
commercial interaction design capability 
cost base volume outputs experience and 
coordinated steel erection together with 
product range have been key in growing 
market share in such difficult circumstances
internationally the company is successfully 
establishing longterm positions in india and 
the middle east 
or der book
the order book for the uk based operations 
as at 22 march 2011 stood at a healthy 
£226m as it continues to secure business 
from all of the sectors making up uk 
demand
the pipeline of enquiries is more 
encouraging than six months ago however 
a large proportion of the work will be for 
commencement in 2012
co sts
the company specifically targeted cost 
reductions across all businesses at the end of 
2009 these improvements have provided 
for our resultant competitiveness throughout 
2010 further cost reduction initiatives 
remain under review and development 
including a procurement related initiative
prices an d mar gins
market prices bottomed in the first half of 
2010 and while remaining relatively low 
have moved in line with the steel material 
developments of the international market
margins have remained subdued with little 
improvement in the supplydemand balance 
of the uk market
ind ia
in november 2010 the joint venture 
jssl manufacturing facilities at bellary 
were officially opened and attended by 
approximately 200 guests from the indian 
construction industry
the business is now designing drawing 
fabricating and erecting quality structural 
steelwork for the growing indian market
four months after the opening the order 
book as at 22 march 2011 stands at 
£33m demonstrating the value of the new 
service on offer to clients in india
these developments underpin the 
company’s confidence that it can realise its 
financial and growth ambitions in india
pro jects
a significant number of major projects have 
been completed or undertaken during the 
past 12 months including
● ● 2012 olympic stadium
● ● 2012 olympic media centre 
● ● 2012 olympic handball arena
● ● 2012 olympic basketball arena
● ● 2012 velodrome
● ● arcelormittal orbit
● ● heathrow terminal 3
● ● sirius academy hull
● ● coop glasgow
● ● mann island development liverpool
● ● baker street commercial office london 17 our business 17
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● ● chivas bros warehouses mulben
● ● thameslink viaduct borough market 
london
● ● saica paper mill development 
partington
● ● winifred  holtby school 
development hull
● ● melior college development 
scunthorpe
● ● the shard of glass commercial office 
london
● ● vestas manufacturing facility isle of 
wight
● ● national indoor sports arena  
velodrome glasgow
● ● blackfriars bridge  thameslink station 
london
● ● heathrow terminal 2a
● ● portlaiose retail development ireland
● ● titanic quarter development belfast
● ● brighton fc stadium
● ● coop andover
● ● sackville street commercial office 
london
● ● bombardier aerospace development 
belfast
● ● gatwick north terminal
● ● cannon place commercial office 
london
● ● medical research council lmb 
cambridge
● ● bankside residential building london
business i nvestment
uk investment was at reduced levels 
compared to recent years but included 
stateoftheart milling capability at watson’s 
for high tolerance steelwork which is being 
used on the arcelormittal orbit structure at 
the 2012 olympic site
th e portfo li o
proj ect heathrow terminal 2a   l ocat ion london 18 severfield—r owen plc annual report 2010
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ch ief executive’s review continued
 
co rpo rate so cial 
r esp onsi bility
the company is proactively seeking to take 
a leadership position in the areas of health 
safety and sustainability and is implementing 
a strategy of continuous improvement in 
these key areas of our business
there are three branded strands to our 
“steel futures” strategy
sustainable future
● ● community and stakeholder 
engagement 
● ● leadership and people development 
● ● cost reconciliation and profitable growth
● ● market leading innovation
● ● performance management and 
development
● ● supply chain partnering
safe future
● ● safety leadership
● ● behavioural safety
● ● safety ‘golden rules’
● ● health and wellbeing
● ● safety in design
● ● communications
zero carb o n future
● ● carbon management and reduction
● ● transport policy and strategy
● ● waste and recycling
● ● renewable energy
● ● responsible sourcing of materials
● ● water management
a challenging plan supporting this vision has 
been implemented and we look forward to 
reporting good progress in 2011
risk mana gement
the company has a proactive and formal 
approach to risk management during 
the year another comprehensive review 
of its risk profile and risk management 
process was undertaken in conjunction 
with willis the emphasis changed from 
previous reviews to reflect the more 
challenging environment within which it is 
now operating and the greater international 
dimension to its business a more complete 
review of the principal risks which the 
business faces is set out on pages 34 to 35
s ummary 
the company remains pleased with 
its relative performance in the very 
challenging uk market place the uk based 
operations have shown their strengths 
and competitiveness to produce an overall 
successful performance in the last 12 
months we commence this year with a 
good order book but recognise that uk 
demand in 2011 remains weak
in india we now have a very strong order 
book and will continue our drive for growth 
in those markets
we see a partial improvement in uk 
demand and mix emerging in 2012 
which while not a comprehensive recovery 
will present the company with good 
opportunities 19 our business 19
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th e portfo li o
proj ect west burton power station   
l ocat ion retford 20 severfield—r owen plc annual report 2010
2015504  27042011 proof 10
financial review
alan d unsm ore finance director
the group’s results for 
2010 reflect the impact 
of the continuing difficult 
trading conditions in the 
uk market capacity was 
reduced by 20 at the 
end of 2009 and the 
group was able to operate 
at this new capacity 
throughout the year 
increase its market share 
and maintain a relatively 
strong order book in these 
difficult conditions
overview
the group’s results for 2010 reflect the 
impact of the continuing difficult trading 
conditions in the uk market capacity 
was reduced by 20 at the end of 2009 
and the group was able to operate at 
this new capacity throughout the year 
increase its market share and maintain a 
relatively strong order book in these difficult 
conditions
during the year the company’s indian joint 
venture business commenced trading on 
schedule and good progress is being made 
as this business moves towards its initial full 
operating capacity
revenue an d operatin g pr ofit
revenue fell by 24 to £2667m 2009 
£3494m this reflects the reduction in 
production capacity and lower contract 
pricing compared with the previous year 
pricing reached its nadir in the first half of 
the year but a combination of increasing 
steel prices and continuing capacity 
reductions by our competitors led to 
more stable pricing towards the year end 
although still at very tight margins
the operating profit before nonunderlying 
items of £162m was 69 down on the 
previous year 2009 £518m operating 
profit margins reduced from 148 to 61 
in the year reflecting the reduced capacity 
and lower margins highlighted above 
although the worst pricing impacts were to 
some extent compensated by the successful 
conclusion of more profitable contracts 
which commenced in the previous years
share of lo sses of ass ociate 
co mpanies
operating profit includes the group’s 
50 share of the results of its indian joint 
venture there is both an underlying and 
a nonunderlying element to these results 
the underlying loss of £04m 2009 
nil represents the initial losses after the 
commencement of commercial production 
towards the end of 2010 the non
underlying loss of £14m 2009 £10m 
represents the group’s share of the joint 
venture’s preoperating costs throughout the 
year the group’s share of losses from the 
joint venture for 2009 which also related to 
preoperating costs have been reclassified 
as nonunderlying for consistency
finance co sts
net finance costs for the group amounted 
to £09m 2009 £10m the reduction 
reflects a lower level of average net debt 
levels throughout the year compared with 
the previous year
 2010  2009
 £000  £000
revenue 2667 3494
operating profit before nonunderlying items 162 518
profit before tax and nonunderlying items 153 508
profit before tax 111 441
profit after tax 76 313
year end debtcash 150 115 21 our business 21
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th e portfo li o
proj ect cannon place  
l ocat ion london
no nun derl yin g items
nonunderlying items reduced the profit 
before tax for the year by £42m 2009 
£67m and include the following 
● ● amortisation of acquired intangibles — 
£27m 2009 £44m 
● ● share of preoperating losses of indian 
joint venture — £14m 2009 £10m 
● ● impairment in valuation of investment 
property — £21m 2009 nil the 
group has an investment property 
purchased in 2007 which was 
previously held at its fair value of 
£61m the directors have reviewed 
both the resale and rental prospects for 
this property in light of the continuing 
market weakness for commercial 
property and have concluded that its 
fair value is £40m consequently an 
impairment charge of £21m has been 
taken in the year 
● ● movements in the valuation of 
derivative financial instruments — nil 
2009 gain £34m 
● ● release of provisions no longer required 
— £20m gain 2009 nil during 
the year good progress was made 
in reducing the group’s exposure to 
potential liabilities under legal claims 
consequently the directors’ best 
estimate of known legal claims in 
process has reduced from £26m 
to £06m 22 severfield—r owen plc annual report 2010
2015504  27042011 proof 10
taxation
the underlying tax charge of £42m 
represents an effective rate of 266 on 
applicable profit which excludes results 
of associates compared with 283 in 
the previous year this was aided by the 
satisfactory conclusion of some outstanding 
matters relating to previous years 
the total tax charge for the year was £35m 
which represents an effective tax rate of 
270 the impairment of the investment 
property does not attract tax relief and the 
negative impact of this is partially offset by 
the deferred tax benefit from the reduction 
of the uk corporation tax rate to 270 as 
the impact of both of these points is non
underlying it is reflected in other items
earnin gs per share
underlying basic earnings per share was 
at 1250p a decrease of 70 over the 
previous year this calculation is based on 
the underlying profit after tax of £111m 
and 88973821 shares being the weighted 
average number of shares in issue during 
the year
basic earnings per share based on profit 
after tax after nonunderlying items is 858p 
2009 3534p
for 2010 there is no difference between 
basic and diluted earnings per share 2009 
underlying 4091p total 3516p
divi den d
the board recommends a final dividend 
of 250p payable on 16 june 2011 to 
shareholders on the register at the close of 
business on 20 may 2011 this will give a 
total dividend for the year of 750p 
balance sh eet
shareholders’ funds decreased slightly during 
the year from £1325m to £1309m  this 
equates to a total equity value per share at 
31 december 2010 of 1467p compared 
with 1495p at the end of 2009 this 
decrease reflects the dividend paid during the 
year being higher than the profit after tax
goodwill on the balance sheet is valued 
at £547m 2009 £547m and is subject 
to an annual impairment review under 
ifrs 3 no impairment existed at either 
31 december 2010 or 2009
other intangible assets on the balance sheet 
are valued at £205m 2009 £232m 
and represent the net book value of the 
intangible assets identified on the acquisition 
of fisher engineering in 2007 each class 
of asset identified is being amortised on a 
straight line basis over varying periods the 
amortisation charged in the year was £27m 
2009 £44m giving a total amortised at 
the yearend of £185m 2009 £158m
the group now has property plant and 
equipment and investment property totalling 
£869m 2009 £910m depreciation 
charged in the year amounted to £45m 
2009 £52m and the investment property 
was impaired by £21m 2009 nil capital 
expenditure in the year was £30m 2009 
£48m this included some replacement of 
older equipment across the group and also 
some safety equipment for protection of site 
workers on highrise buildings
during the year the group invested £29m 
2009 £24m as equity into the joint 
venture company in india
the group’s capital expenditure in 2011 in 
the uk is not expected to be more than £3m
unlike the rest of the group atlas ward has 
a defined benefit pension scheme which 
although closed to new members had an 
ias 19 deficit of £84m as at 31 december 
2009 at 31 december 2010 the deficit 
increased to £85m and is shown as a 
liability in the group balance sheet the 
increase in the deficit is as a result of the 
changes in the assumptions made including 
a reduction in corporate bond yields and an 
increase in mortality rates offset by slightly 
lower inflation expectations
c as h fl ow 
there was an expected outflow of cash 
during the year to leave year end net debt 
at £150m 2009 net cash £115m  this 
movement reflects an outflow from operating 
activities of £112m and also includes 
dividends of £89m and investment in capital 
expenditure and the indian joint venture of 
£30m and £29m respectively  the outflow 
from operating activities reflects the reversal 
of the particularly favourable contract working 
capital position at 31 december 2009 but 
also reflects the impact of higher steel prices 
on working capital and an overall extension 
of customer payment cycles as weak market 
conditions persist  management continues 
to monitor customer credit risk very closely 
and credit insurance remains a key factor in 
mitigating this risk  the outflow also includes 
corporation tax payments of £54m 
the group continues to operate within the 
parameters of its £40m revolving credit 
facility renewed during the year with rbs 
and yorkshire bank a member of national 
australia bank group 
treasury
group treasury activities are managed 
and controlled centrally risks to assets 
and potential liabilities to customers 
employees and the public continue to be 
insured the group maintains its low risk 
financial management policy by insuring all 
significant trade debtors
the treasury function seeks to reduce 
the group’s exposure to any interest rate 
foreign exchange and other financial 
risks to ensure that adequate secure and 
cost effective funding arrangements are 
maintained to finance current and planned 
future activities and to invest cash assets 
safely and profitably
the group continues to have some 
exposure to exchange rate fluctuations 
currently between sterling the euro and the 
us dollar in order to maintain the projected 
level of profit budgeted on contracts foreign 
exchange contracts are taken out to convert 
into sterling at the expected date of receipt 
going concern
in determining whether the group’s annual 
consolidated financial statements can be 
prepared on a 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 key 
areas of uncertainty considered by the 
directors were as follows
● ● the uk order book which currently 
stands at £226m the pipeline of 
potential orders including the relative 
attractiveness of the market sectors 
which are feeding that pipeline and the 
anticipated conversion of this pipeline
financial review continued  23 our business 23
2015504  27042011 proof 10
● ● the implications of the continuing 
challenging economic environment 
on the group’s revenues and profits 
the group undertakes forecasts and 
projections of trading and cash flows on 
a regular basis whilst this is essential for 
targeting performance and identifying 
areas of focus for management to 
improve performance and mitigate 
the possible adverse impact of a 
deteriorating economic outlook they 
also provide projections of working 
capital requirements 
● ● the impact of the very competitive 
environment within which the group 
operates including pressures on 
margins and counterparty risks this 
included an assessment of the current 
stage of the economic cycle of the 
construction industry the prospects for 
any recovery in the short to medium 
term and the potential development of 
the competitive environment 
● ● the impact on our business of key 
suppliers being unable to meet their 
obligations to the group including the 
ability of the group to find alternative 
suppliers who could also enable 
the business to continue trading 
satisfactorily 
● ● the potential mitigating actions that 
could be taken in the event that 
revenues are worse than expected to 
ensure that operating profit and cash 
flows are protected 
● ● the committed finance facilities to the 
group including both the level of the 
facilities and the banking covenants 
attached to them the group has 
access to a £40m revolving credit 
facility to meet day to day working 
capital requirements which is 
available until march 2013 this facility 
provides the group with sufficient 
headroom both on the facility itself and 
on the bank covenants in place this 
position is forecast to continue for the 
foreseeable future
th e portfo li o
proj ect the shard   
l ocat ion london bridge 24 severfield—r owen plc annual report 2010
2015504  27042011 proof 10
having considered all the factors impacting 
the group’s business including downside 
sensitivities the directors are satisfied that 
the group will be able to operate within the 
terms and conditions of the group financing 
facilities for the foreseeable future
the directors have a reasonable expectation 
that the company and the group have 
adequate resources to continue in 
operational existence for the foreseeable 
future accordingly they continue to adopt 
the going concern basis in preparing the 
2010 annual report
s ummary
the group continues to perform profitably 
and in line with expectations despite the 
existing poor market conditions in 2010 
overall margins were under sustained 
pressure but remained positive while 
overall net debt has increased during 
the year it remains at levels with which 
management is comfortable all aspects of 
the business will continue to be managed 
tightly in order that it emerges stronger 
and fitter when growth in its key sectors is 
anticipated to return in 2012
c auti onary statement
the chairman’s statement chief executive’s 
review and financial review on pages 14 
to 24 have been prepared solely to provide 
additional information to shareholders to 
assess the company’s strategies and the 
potential for those strategies to succeed 
they should not be relied on by any other 
party or for any other purpose
they contain certain forwardlooking 
statements which are made by the directors 
in good faith based on the information 
available to them up to the time of their 
approval of this report and such statements 
should be treated with caution due to 
the inherent uncertainties including 
both economic and business risk factors 
underlying any such forwardlooking 
information
financial review continued
 
th e portfo li o
proj ect bankside   
l ocat ion london 25 our business 25
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key performance indicators
 
th e gr oup measures success th r ou gh key 
perfo rmance in dicat ors kpis s hown b el ow 
th ese s hould b e revie wed in th e co ntext of 
market co n diti ons an d th e in dustry sect or in 
whic h th e gr oup o perates
underlying profit  
before tax margin
the margin is the principal measure used by 
the group to assess the success of its strategy 
it is the profit before nonunderlying items such 
as the amortisation of intangible fixed assets 
expressed as a percentage of revenue
a reduction in 2010 to 61 2009 148 
the reduction has been the result of reduced 
group production capacity and lower contract 
pricing as a result of overcapacity in the market 
capacity reductions across the industry led 
to a more stable pricing environment in the 
latter part of the year albeit still at very tight 
margins 
underlying basic 
earnings  
per share
underlying basic earnings per share is taken as 
an overall indicator of performance it is basic 
eps before nonunderlying items
underlying basic earnings per share decreased 
by 2861p to 1250p 2009 4111p in 
the challenging market conditions a resilient 
performance
net debt
cash is critical for providing the financial 
resources to develop the group’s business and 
to provide adequate working capital to operate 
smoothly the group has a robust and detailed 
cash forecasting procedure that considers the 
group’s position on a contract by contract basis
net debt as at 31 december 2010 was £150 
million 2009 £115 million net cash the 
movement primarily reflects an outflow of 
cash from operating activities which has been 
driven by higher working capital levels due to 
the impact of higher steel prices and an overall 
extension in customer payment cycles as weak 
market conditions persist 
order book
the order book provides visibility on future 
activity and allows the group to plan production 
and adapt accordingly it only includes future 
revenue from legally committed contracts 
comprising both ongoing and newly won work
whilst only the revenue within the order book 
is reported externally a key forward indicator of 
future profitability that is tracked internally is the 
margin inherent within the forward order book
the order book as at 22 march 2011 for the 
group excluding the india joint venture is £226 
million although this is lower than the levels attained 
in 20082009 it nonetheless represents a strong 
position at a time of weak market conditions it also 
provides a good loading for the majority of the 
group’ s production facilities for the remainder  
of 2011
accident frequency 
ratio afr
the afr is a key 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 the afr is the number of riddor 
accidents to manhours worked multiplied by 
100000
the afr rate for 2010 reduced significantly to 
043 2009 085 reflecting another substantial 
improvement in the group’s safety record 
 
kpi commen t perf orman c e in 2010
 underlying profit has been defined on page 1 26 severfield—r owen plc annual report 2010
2015504  27042011 proof 10
our go vernance
 
co ntents
28 directors and advisers
30 executive committee 
32 corporate objectives 
34 principal risks and uncertainties
36 directors’ report
41 corporate social responsibility
45 corporate governance
50 directors’ remuneration report
59 directors’ responsibilities 
statement 27 27
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our go v erna nce
power  ener gy sect or
proj ect staythorpe power station locat ion newark
proj ect spalding power station  
locat ion spalding
proj ect jersey waste to energy  
locat ion jersey
proj ect west burton power station  
locat ion retford
proj ect lakeside waste to energy  
locat ion slough 28 severfield—r owen plc annual report 2010
2015504  27042011 proof 10
meet the board
a uditor
deloitte llp
chartered accountants 
and statutory auditor
1 city square
leeds ls1 2al
solicitors
ashurst llp
broadwalk house 
5 appold street
london ec2a 2ha
irwin mitchell
21 queen street  
leeds ls1 2tw
stockbrokers
rbs hoare govett ltd
250 bishopsgate 
london ec2m 4aa
r egistrars and  
t ransfer office
computershare investor 
services plc
po box 82 
the pavilions
bridgwater road
bristol bs99 7np
public r elations
pelham bell pottinger
12 arthur street
london ec4r 9ab
bankers
national australia bank ltd
yorkshire bank
94 albion street  
leeds ls1 6ag
the royal bank of scotland plc
3rd floor
2 whitehall quay leeds  
ls1 4hr
bank of scotland
lisbon house
116 wellington street leeds 
ls1 4lt
northern bank ltd
main street
irvinestown co fermanagh  
bt94 1gj
secretary and  
r egistered office
peter j davison ba fca
dalton airfield industrial estate 
dalton thirsk
north yorkshire 
yo7 3jn
r egistered number
1721262
registered in england
a dvisers
4
3
6
7
1
2
8
9
5 29 29
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our go v erna nce
4 alan d dunsmore
finance director
alan dunsmore joined the company in 
march 2010 from smiths group plc alan 
joined smiths group medical division in 
1995 holding various positions throughout 
the business and from 2004 was director of 
finance for smiths detection prior to joining 
smiths he was with coopers and lybrand in 
glasgow where he qualified as a chartered 
accountant in 1992
2 tom g haughey
chief executive officer
tom haughey joined the company as group 
commercial director in february 2002 he 
graduated from strathclyde university in 1978 
and his career until joining the group was 
within corus formerly british steel where his 
last position was commercial director of corus 
construction and industrial in november 
2005 tom was appointed joint group 
managing director and in july 2007 was 
appointed chief executive officer
tom has board responsibility for the group’s 
health and safety and hr strategy
3 peter a emerson
chief operating officer
peter emerson has worked in the specialist 
contracting industry since 1974 initially in the 
concrete contracting sector he joined rowen 
structures in 1984 as a quantity surveyor 
rising to deputy managing director in 1996 
peter was appointed group commercial 
director in april 1998 and in december 2001 
was appointed to the key role of managing 
director of watson steel structures ltd and 
also to chief operating officer in july 2007
peter has board responsibility for the group’s 
corporate and social responsibility strategy
1 toby j l hayward  
chairman
toby hayward was appointed nonexecutive 
chairman in june 2008 he qualified as a 
chartered accountant with deloitte in 1984 
and became an investment banker he was a 
director of corporate finance at singer  
 friedlander ltd and henry ansbacher  
co ltd before working in the equity capital 
markets team at canaccord capital ltd he 
joined jefferies international ltd as managing 
director in 2005 with responsibility for uk 
corporate broking and left jefferies in june 
2008 to concentrate on consultancy and  
nonexecutive work
7 david p ridley
nonexecutive director
david ridley was appointed a nonexecutive 
director of the company in june 2002 he 
previously held the chairmanship of faithful 
and gould the quantity surveyor and cost 
management consultants which forms part of 
the w s atkins group of companies he has 
a wealth of experience and contacts within 
a number of strategic sectors for the group 
including infrastructure and transportation
8 geoff h wright 
nonexecutive director
geoff wright was appointed as a nonexecutive 
director of the company in september 2006 
he retired from hammerson plc where he 
was director of project management and 
construction having worked there for  
37 years he is well known in the property 
and construction industries and was previously 
president of the chartered institute of building 
he is a nonexecutive director of waterman 
plc and several private companies
9 john dodds
nonexecutive director
john dodds joined the company as a  
nonexecutive director in october 2010 he 
retired in march 2010 from kier group plc 
the construction and property services group 
after serving for seven years as group chief 
executive he worked for kier both in the uk 
and overseas for nearly 40 years and held a 
main board position through the employee 
buyout process in 1992 and the subsequent 
flotation of the group on the london stock 
exchange in 1996
john is a nonexecutive director of newbury 
racecourse plc and lagan construction 
holdings limited
5 derek randall
executive director 
derek randall was appointed executive 
director business development in may 2008 
he is a master of business administration 
warwick business school doctor of business 
administration nottingham business school 
and the visiting professor of international 
management and development at 
birmingham city university’s business school 
before joining the group most of his career 
was with corus group latterly as commercial 
director of long products division derek has 
served on the executive council of the steel 
construction institute
6   j k eith elliott 
senior nonexecutive director
keith elliott joined the company as a non
executive director in october 1998 he retired 
in july that year from bechtel the international 
engineering and construction group where 
he was a partner in bechtel corporation 
and senior vice president responsible for its 
petroleum and chemical business he is a 
graduate chemical engineer and serves as non
executive chairman of keltbray group 30 severfield—r owen plc annual report 2010
2015504  27042011 proof 10
executive committee
3
1 2 8
6 4
7 5 9 31 31
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our go v erna nce
1 tom g haughey ba
chief executive officer
2 peter a emerson
chief operating officer and
managing director 
watson steel structures
3 alan d dunsmore bacc ca
finance director
4 derek randall mba dba
executive director 
5 nigel p ickard
managing director
a tlas ward structures
nigel pickard joined the group in 2005 
following the acquisition of atlas ward 
structures he has 30 years’ experience in the 
structural steel industry working both in the 
uk and overseas markets in 2000 nigel was 
appointed operations director of atlas ward 
where he took full responsibility for production 
appointed as managing director in october 
2002 nigel transformed atlas ward’s business 
turning its substantial losses to profit and laid 
the foundations for further development in  
the future 
7 paul thompson
executive director
severfieldreeve structures
paul thompson joined the group as 
production director of watson steel in 
2002 and has 33 years of experience in the 
structural steel industry in 2005 paul was 
appointed deputy managing director of 
watson steel and in january 2010 became 
executive director group business operations  
in 2011 paul was appointed executive director 
responsible for operations at severfieldreeve 
structures whilst also retaining his group 
position  
9 david larter
group director
business sustainability
david larter joined the group in 2010 as 
group director – business sustainability david 
has worked in the construction industry for 28 
years and has held senior management and 
corporate strategic positions in international 
contracting and design consultancy businesses 
he brings a wealth of experience in design 
buildability and construction techniques on 
international major projects across a diverse 
range of sectors 
6 ian r s cochrane
managing director
fisher engineering
ian cochrane joined the group in 2007 
following the acquisition of fisher engineering 
ian has worked at fisher engineering for 
23 years starting in the drawing office and 
progressing to project management in january 
2004 he was appointed project director and 
in october 2007 managing director ian has 
a comprehensive understanding of all aspects 
of the business and has been involved in 
many major projects in the uk and ireland 
representing a range of market sectors
8 mike a shton
managing director
steelcraft erection services
mike ashton has worked in the steel 
construction industry since 1977 and joined 
steelcraft erection services in 1994 mike 
was appointed erection director in 1998 and 
managing director in 2010 mike has a wealth 
of experience in steel construction and site 
management 32 severfield—r owen plc annual report 2010
2015504  27042011 proof 10
co rpo rate o bjectives
 
gr owt h buil t on success
since becoming a public company in 1988 
severfield–rowen has grown to become 
market leader in the design fabrication 
and erection of structural steel our leading 
position provides competitive advantage 
through production capacity quality 
delivery the assumption of complexity and 
project management we will leverage this 
advantage through continuing investment in 
human and capital resources the application 
of emerging technologies and the constant 
refinement of our design production and 
erection processes — the cornerstones of our 
success 
geograp hic diversi fication
these process improvements will be applied 
at our production facilities and construction 
sites at home and overseas we will continue 
to seek out international opportunities which 
enhance growth and value for the group 
such investments will frequently be made 
in partnership with premier local companies 
who can provide value enhancement and 
established routes into our core markets 
around the world
co ntri buti on t o co mmunity  
envir onment
in all of our production centres and work 
sites we will operate within an overriding 
sense of commitment to our surroundings 
we will focus on training local people 
we will set new standards for health and 
safety our environmental policies will aim 
to surpass local requirements and we will 
introduce leading edge technologies to the 
regions in which we operate
en hanced sharehol der value
through these strategies we aim to 
grow in size and market value and 
continue to provide attractive returns to 
our shareholders as a unique player in 
the engineering sector and as a british 
manufacturing business we will offer a 
valuable diversification to many of our 
shareholders’ portfolios
th e portfo li o
proj ect nisa  velodrome    l ocat ion glasgow 33 33
2015504  27042011 proof 10
our go v erna nce
th e portfo li o
proj ect brighton and hove albion stadium   
l ocat ion brighton 34 severfield—r owen plc annual report 2010
2015504  27042011 proof 10
princip al 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
peopleskills
steel price 
movements
the group has established a 
market leading position over 
many years due in large part 
to the experience and skills of 
its key people
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
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
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
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 
● ● 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
● ● 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
● ● 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
explanation impact mitigationcomment 35 35
2015504  27042011 proof 10
our go v erna nce
risk
health  
safety
indian joint 
venture
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
the group has invested in a 
joint venture in india where 
the growth prospects are 
believed to be substantial
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
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
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 
● ● 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
● ● 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
explanation impact mitigationcomment
● ● 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 subcontract 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
financial risks and uncertainties are separately described in the financial review on pages 22 to 24 and within note 21 of the consolidated financial 
statements 36 severfield—r owen plc annual report 2010
2015504  27042011 proof 10
direct ors’ report
 
the directors present their annual report 
and the audited financial statements for the 
year ended 31 december 2010
principal a ctivity an d 
business r evie w
the principal activity of the group continues 
to be the design fabrication and erection of 
structural steelwork specialist claddings and 
ancillary products
the subsidiary and associated undertakings 
principally affecting the profits or net assets 
of the group in the year are listed in notes 
13 and 14 to the financial statements
a review of the group’s progress during the 
year and of its future prospects is contained 
in the chairman’s statement on page 14 
the chief executive’s review on pages 16 to 
18 and the financial review on pages 
20 to 24
the key performance indicators of the 
group are presented and discussed on 
page 25
explanation of the group’s approach to 
financial risk management is given in the 
treasury section on page 22 and in note 21
a review of the group’s performance 
in the area of health and safety and 
its consideration of environmental and 
employment policies is given in the 
corporate social responsibility section on 
pages 41 to 44
resul ts an d divi den ds
the profit of the group for the year after 
taxation amounted to £7633000 2009 
£31313000 details of which are set out 
in the consolidated income statement on 
page 63
an interim dividend of 500p net per share 
2009 1000p was paid on 22 october 
2010 the directors recommend a final 
dividend for the year of 250p net per share 
2009 £nil payable on 16 june 2011 to 
shareholders on the register on 20 may 2011
for the year ended 31 december 2009 no 
final dividend was paid but was replaced by 
a second interim dividend of 500p net per 
share which was paid on 29 march 2010 
fixe d assets
details of changes in the group’s fixed 
assets are given in notes 10 11 and 12 
to the consolidated financial statements
empl oyees
the group’s principal employee policies are 
set out on page 42 within the corporate 
social responsibility section
branch es
the branches of the group are set out on 
pages 8 and 9
direct ors
the present membership of the board is 
stated on page 29 a d dunsmore j dodds 
and d randall were appointed as directors 
on 1 march 2010 1 october 2010 and 
28 february 2011 respectively p davison 
resigned on 3 june 2010 all of the other 
directors served throughout the year
the directors’ interests in the share capital of 
the company are set out on page 56 in the 
directors’ remuneration report
t g haughey j k elliott j dodds and  
d randall will retire at the annual general 
meeting in accordance with the articles of 
association and will offer themselves for 
reelection
t j l hayward chairman believes that  
j k elliott continues to be committed to the 
role of nonexecutive director and to show 
effective performance and consequently 
supports his nomination
direct ors an d officers 
liab ility
directors and officers liability insurance has 
been purchased during the year
ag reements with e mpl oyees 
an d signi ficant agreements
there are no agreements between the 
group and its directors or employees 
providing for compensation for loss of office 
or employment that occurs because of a 
takeover bid
the group’s banking arrangements which 
expire in march 2013 can be terminated 
upon a change of control of the group
signi ficant sh arehol dings
as at 18 april 2011 the company had been notified of the following voting rights to the company’s shares in accordance with the 
disclosure rules and transparency rules of the uk listing authority
 25p ordinary shares 
m  g investment management 11305473 1267
rathbone investment management 5511370 618
j o hambro capital management 4911574 550
blackrock 4601924 516
threadneedle asset management 4512830 506
aviva 4494699 504
legal  general investment management 4002115 448
montanaro fund managers 3806145 426 37 37
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our go v erna nce
th e severf ield–rowen p lc 2010 
share i ncentive plan sip
following approval at the 2010 annual 
general meeting of the new hmrc 
approved share incentive plan the company 
issued 202384 new ordinary shares of 
25p during the year to 973 qualifying 
employees
share c apital
the company has a single class of share 
capital which is divided into ordinary shares 
of 25p each
three resolutions are to be proposed at 
the forthcoming annual general meeting 
relating to or concerning share capital
i  the directors are requesting that their 
authority to allot shares be renewed 
the maximum amount of relevant 
securities that may be allotted pursuant 
to the authority is £743015 in nominal 
value 29720608 shares representing 
approximately 333 of the company’s 
total share capital in issue as at  
18 april 2011 being the latest practical 
date prior to the date of the notice of 
meeting the board has no present 
intention of exercising this authority 
which will expire at the end of the 2012 
annual general meeting or on 30 june 
2012 whichever is the earlier
ii  the directors’ power to allot equity 
securities conferred by the special 
resolution of the company passed on 
3 june 2010 will expire at the 
conclusion of the annual general 
meeting to be held on 8 june 2011 
unless otherwise varied revoked or 
renewed your directors consider it 
desirable that this power being a limited 
disapplication of preemption rights 
should be renewed at the forthcoming 
annual general meeting such authority 
to expire at the end of the 2012 annual 
general meeting or on 30 june 2012 
whichever is the earlier apart from 
rights issues open offers and other pre
emptive issues the aggregate nominal 
value of new shares for which power is 
being sought is not to exceed £111564 
4462554 shares representing 5 
of the company’s issued share capital 
other than the shares which may be 
issued under the sip described above 
the directors have no present intention 
of exercising this power but should 
any further exercise be contemplated 
in the future they will have regard to 
the investor protection committee 
guidelines
iii  the directors are requesting that at the 
forthcoming annual general meeting 
they are given the authority to buy by 
way of market purchases up to 10 of 
the issued share capital of the company 
representing a maximum of 8925108 
shares the price to be paid will be 
no lower than 25p per share and no 
more than 5 above the average of the 
middle market quotations as derived 
from the london stock exchange daily 
official list for the five business days 
preceding the day on which the shares 
are purchased purchases would not 
be made in the close period preceding 
the announcement of the company’s 
interim or final results this proposal 
does not indicate that the company will 
purchase shares at any particular time or 
price or imply any opinion on the part 
of the directors as to the market or other 
value of the company’s shares this 
authority will expire at the end of the 
2012 annual general meeting or on 
30 june 2012 whichever is the earlier 
it is the present intention of the directors 
to seek a similar authority annually the 
directors have no present intention of 
exercising this authority and will only do 
so at price levels which they consider to 
be in the interests of shareholders after 
taking account of the group’s overall 
financial position and which would lead 
to a beneficial impact on the earnings 
per share of the company
ri ghts a ttac hin g t o shares
the rights attaching to the ordinary shares 
are defined in the company’s articles of 
association the articles of association 
may be changed with the agreement of 
shareholders a shareholder whose name 
appears on the company’s register of 
members can choose whether his shares 
are evidenced by share certificates ie in 
certificated form or held in electronic ie 
uncertificated form in crest the electronic 
settlement system in the uk
subject to any restrictions below 
shareholders may attend any general 
meeting of the company and on a 
show of hands every shareholder or his 
representative who is present at a general 
meeting has one vote on each resolution 
and on a poll every shareholder or his 
representative who is present has one vote 
on each resolution for every ordinary
share of which they are the registered 
shareholder a resolution put to the vote of 
a general meeting is decided on a show of 
hands unless before or on the declaration 
of the result of a vote on a show of hands 
a poll is demanded by the chairman of the 
meeting or by at least two shareholders 
or their representatives present in person 
and having the right to vote or by any 
shareholders or their representatives 
present in person having at least 10 of the 
total voting rights of all shareholders or by 
any shareholders or their representatives 
present in person holding ordinary shares in 
which an aggregate sum has been paid up 
of at least onetenth of the total sum paid up 
on all ordinary shares
shareholders can declare final dividends 
by passing an ordinary resolution but the 
amount of the dividends cannot exceed the 
amount recommended by the board the 
board can pay interim dividends on any 
class of shares of the amounts and on the 
dates and for the periods they decide the 
distributable profits of the company justify 
such payment 38 severfield—r owen plc annual report 2010
2015504  27042011 proof 10
any dividend which has not been claimed 
for twelve years after it became due for 
payment will be forfeited and will then 
belong to the company unless the 
directors decide otherwise
if the company is wound up the liquidator 
can with the sanction of an extraordinary 
resolution passed by the shareholders 
divide among the shareholders all or any 
part of the assets of the company and 
he can value any assets and determine 
how the division shall be carried out as 
between the members or different classes 
of members the liquidator can also 
transfer the whole or any part of the assets 
to trustees upon any trusts for the benefit 
of the members no shareholders can be 
compelled to accept any asset which would 
give them a liability
details of sharebased payment schemes 
are set out in note 22
vo ting at general m eetings
any form of proxy sent by the company 
to shareholders in relation to any general 
meeting must be delivered to the 
company whether in written form or in 
electronic form not less than 48 hours 
before the time appointed for holding the 
meeting or adjourned meeting at which the 
person named in the appointment proposes 
to vote
no shareholder is unless the board decides 
otherwise entitled to attend or vote either 
personally or by proxy at a general meeting 
or to exercise any other right conferred by 
being a shareholder if he or any person 
with an interest in shares has been sent a 
notice under section 793 of the companies 
act 2006 which confers upon public 
companies the power to require information 
with respect to interests in their voting 
shares and he or any interested person 
failed to supply the company with the 
information requested within 14 days after 
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delivery of that notice the board may also 
decide that no dividend is payable in respect 
of those default shares and that no transfer 
of any default shares shall be registered
these restrictions end seven days after 
receipt by the company of a notice of an 
approved transfer of the shares or all the 
information required by the relevant section 
793 notice whichever is the earlier
t ransfer of shares
the board may refuse to register a transfer 
of a certificated share which is not fully 
paid provided that the refusal does not 
prevent dealings in shares in the company 
from taking place on an open and proper 
basis the board may also refuse to register 
a transfer of a certificated share unless i 
the instrument of transfer is lodged duly 
stamped if stampable at the registered 
office of the company or any other place 
decided by the board accompanied by 
a certificate for the share which it relates 
and such other evidence as the board may 
reasonably require to show the right of 
the transferor to make the transfer ii is in 
respect of only one class of shares and iii is 
in favour of not more than four transferees
transfer of uncertificated shares must be 
carried out using crest and the board 
can refuse to register a transfer of an 
uncertificated share in accordance with 
the regulations governing the operation of 
crest the board may decide to suspend 
the registration of transfers for up to 30 
days a year by closing the register of 
shareholders the board cannot
suspend the registration of transfers of 
any uncertificated shares without gaining 
consent from crest
there are no other limitations on the 
holding of ordinary shares in the company
variati on of ri ghts
if at any time the capital of the company is 
divided into different classes of shares the 
special rights attaching to any class may be 
varied or revoked either
i  with the written consent of the holders 
of at least 75 in nominal value of the 
issued shares of the class or
ii  with the sanction of an extraordinary 
resolution passed at a separate general 
meeting of the holders of the shares of 
the class
the company can issue new shares and 
attach any rights to them if there is no 
restriction by special rights attaching to 
existing shares rights attaching to new 
shares can take priority over the rights of 
existing shares or the new shares and the 
existing shares are deemed to be varied 
unless the rights expressly allow it by a 
reduction of paid up capital or if another 
share of that same class is issued and ranks 
in priority for payment of dividend or in 
respect of capital or more favourable voting 
rights
general m eetings
a resolution is to be proposed at the 
forthcoming annual general meeting that 
a general meeting of the company other 
than an annual general meeting can be 
called on not less than 14 clear days notice
crest
the company’s ordinary shares are in 
crest the settlement system for stocks and 
shares
c re dit or p ayment po licy
the group’s current policy concerning the 
payment of its trade creditors is to agree 
terms and conditions for its transactions 
with suppliers and to abide by those terms 
subject to those terms and conditions being 
met by the supplier at 31 december 2010 
trade creditors of the group represented 43 
days of purchases 2009 reanalysed  
29 days
charitab le an d political 
co ntri buti ons
during the year the group made charitable 
donations of £118000 2009 £81000 
principally to local charities serving the 
communities in which the group operates 
no contributions were made to any political 
parties during the current or preceding year
going concern
after making enquiries the directors 
have formed a judgement at the time of 
approving the financial statements that 
there is a reasonable expectation that the 
group has adequate resources to continue 
in operational existence for the foreseeable 
future for this reason the directors continue 
to adopt a going concern basis in preparing 
the financial statements
the key factors considered by the directors 
in making the statement are set out in the 
financial review on pages 22 to 24 40 severfield—r owen plc annual report 2010
2015504  27042011 proof 10
a u dit or
each director at the date of approval of this 
annual report confirms that
● ● so far as the director is aware there is 
no relevant audit information of which 
the company’s auditor is unaware and
● ● the director has taken all the steps that 
he ought to have taken as a director 
in order to make himself aware of 
any relevant audit information and to 
establish that the company’s auditor is 
aware of that information
this confirmation is given and should 
be interpreted in accordance with the 
provisions of s418 of the companies  
act 2006
deloitte llp has expressed its willingness 
to continue in office as auditor and a 
resolution to reappoint it will be proposed 
at the forthcoming annual general 
meeting
annual general m eetin g
the notice concerning the annual 
general meeting to be held at solberge 
hall hotel newby wiske northallerton 
north yorkshire dl7 9er at noon on 
wednesday 8 june 2011 together with 
explanatory notes on the resolutions to be 
proposed and full details of the deadlines 
for exercising voting rights is contained in 
a circular to be sent to shareholders with 
this report
approved by the board of directors and 
signed on behalf of the board
p j davison
company secretary
27 april 2011
dalton airfield industrial estate
dalton thirsk north yorkshire yo7 3jn
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direct ors’ report continued
  41 41
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our go v erna nce
co rpo rate social responsibility
 
steel futures
the group has embarked upon a continuous improvement plan through the introduction of its ‘steel futures’ programme this will 
underpin the strategic aspirations and further develop a market leading position for the businesses
there are three strands to the group’s steel futures approach in 2011 
intr oduction
the severfield–rowen board along with 
the executive committee and employees 
are committed to demonstrating leadership 
in its corporate social responsibility 
activities
the group has made significant investment 
to develop a clear differentiated position 
for its business which includes
● ● the achievement of bes 6001 global 
standard for responsible sourcing of 
materials
● ● groupwide local community 
engagement activities to support 
development and interaction
● ● working towards a sustainability 
agenda by rolling out a progressive 
company vehicle policy including 
hybrid cars
● ● achievement of the bcsa gold award 
for its sustainability performance for 
three consecutive years 
● ● investment in training for its people 
promoting leadership and developing 
the skills necessary for the future 
success of our business
● ● safety leadership
● ● behavioural safety
● ● safety ‘golden rules’
● ● health  wellbeing
● ● supporting client safety
● ● safety in design
● ● safety  risk communication
● ● community  stakeholder engagement
● ● leadership  people development
● ● cost reconciliation  profitable growth
● ● market leading innovation
● ● performance management
● ● supply chain partnering
● ● carbon management  reduction
● ● transport policy  strategy
● ● waste management
● ● recycling
● ● renewable energy
● ● responsible sourcing of materials
● ● water management
over the coming year the group expects to demonstrate and report progress in these key areas 42 severfield—r owen plc annual report 2010
2015504  27042011 proof 10
heal th an d saf ety
the group is committed to high standards 
of health and safety for all employees and 
is promoting safety excellence through all 
its operations the group has developed a 
continuous improvement strategy to drive 
and challenge current practices with the 
intention of placing the business as a market 
leader in the implementation of health and 
safety
at the start of 2011 the group established 
a network of safety leadership teams at 
each of its operating companies each team 
is headed by the managing director and 
consists of senior directors managers 
shopfloor and union representation the 
slts will support the excellent work carried 
out by the group’s inhouse safety teams 
and worker safety committees and by 
working with key clients will assist in setting 
strategies and the introduction of new 
technologies to improve health and safety 
standards across the industry
the group’s fully functional health and 
safety department supports the operational 
directors in developing and maintaining 
a positive health and safety culture for all 
aspects of our operations each operating 
subsidiary has a worker health and safety 
committee with direct access to the main 
board via monthly health and safety 
meetings
the group operates in some challenging 
working environments and the board is 
proud of its good safety record despite this 
the board will continue to improve both 
health and safety awareness and the safety 
record throughout the group
the group has successfully maintained 
accreditation for its safety health and 
environmental system and has achieved 
certification to ohsas 18001 and bs en 
iso 14001
in 2011 the focus is on the the 
development of leadership skills and the 
provision of behavioural safety training of 
employees and our subcontractors to help 
achieve our improvement strategy
empl oyees
severfield–rowen recently launched an 
employee share incentive scheme offering 
shares in the business to reward employees 
for their hard work in positioning the 
business as market leader
employees are regularly informed of matters 
concerning the performance and future 
developments of the group
the group’s policy is to provide equal 
opportunities to all existing and prospective 
employees the group’s reputation is 
dependent on the quality effectiveness and 
skill base of its employees and is committed 
to the fair and equitable treatment of all 
its employees and specifically to prohibit 
discrimination on the grounds of race 
religion sex sexual orientation age 
nationality or ethnic origin
the group has also continued with its 
established policy of employing disabled 
persons where practicable and endeavours 
to ensure that they benefit from training 
and career opportunities in common with 
all employees in the event that employees 
become disabled every effort is made to 
ensure that their employment within the 
group continues with appropriate training 
and support
hse accreditation
performance development reviews
co rpo rate social responsibility continued
  43 43
2015504  27042011 proof 10
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18000
16000
14000
12000
10000
8000
6000
4000
2000
0
fel aw wssl srs group
man hours
■●2008 ■ 2009 ■ 2010
staff training
envir onment
the group is committed to minimising 
the impact of its business and its processes 
on the natural environment and the 
community at large by going beyond basic 
compliance with applicable laws directives 
and regulations pertaining to its field of 
operations
the businesses work with local authorities 
to ensure they comply with all permits 
and authorisations required to carry out 
operations
all operational companies within the group 
have now been awarded gold standard in 
the steel construction sustainability charter 
this is a milestone achievement and further 
demonstrates the group’s ambition to 
generate an efficient sustainable business 
model
bes 6001  gl obal s tan dard 
for r esp onsi ble sourcing of 
materials
the group is proud to be recognised as 
the first steel fabrication contractor in the 
industry to achieve the global standard of 
bes 6001 to demonstrate the responsible 
sourcing of materials for products fabricated 
for clients 
this accreditation gives the group a 
leadership position in the market place 
enabling clients architects and other 
designers to specify severfieldrowen steel 
products and attract additional breeam 
points 
the achievement to the level of ‘very 
good’ attained by the group attracts the 
maximum breeam points attainable
t rainin g
the inhouse training company ectl 
is manned by experienced training 
professionals whose primary purpose is to 
provide training to all employees and to 
update them with the necessary skills and 
professional development the business 
recognises that as an organisation its 
employees must achieve the necessary 
competences and health and safety 
understanding to successfully manage any 
risks associated with the work undertaken by 
the business
the team within ectl provides approved 
training and accreditation to industry 
recognised standards across a significant 
range of management supervisory office 
and frontline roles they are supplemented 
by external resource from many awarding 
bodies such as ipaf city  guilds and 
learning skills council to ensure that the 
group’s workforce is effectively trained 
qualified and experienced to perform their 
roles safely and in compliance with statutory 
and recommended practices
during 2010 the group committed 
significant financial and time resource to 
delivering training programmes for its direct 
employees and subcontractors training 
was delivered from senior executive level to 
shop floor and onsite employees
the executive committee recently 
undertook the institute of occupational 
safety and health directing safely 
training course as part of the leadership 
development programme rollout across the 
business
c ar bon agen da
the group is continuing to pursue a carbon 
agenda which will help to provide a clear 
business differentiator in the market place
in 2010 the business took the decision 
to actively reduce the transport carbon 
footprint for the business company cars 
were 
a first step and by investing in a significant 
number of hybrid vehicles a total of 17 
toyota prius hybrid cars were added to 
the group fleet
a corporate strategy of progressively 
moving towards low carbon vehicles with 
co2 emissions of below 140kgs has been 
proactively implemented the company is 
benefiting in terms of cost reduction and its 
overall carbon footprint
 
2008   24 of company cars under 
140kgsco2     
2008  0 hybrid vehicles
 
2009   28 of company cars under 
140kgsco2     
2009  0 hybrid vehicles
 
2010   73 of company cars under 
140kgsco2     
2010  17 hybrid vehicles 44 severfield—r owen plc annual report 2010
2015504  27042011 proof 10
the business also invests in 9 minibuses at 
the dalton works to reduce the number of 
vehicles on the road and limit the number 
of cars impacting the local community each 
day with less journeys by employees
workfo rce an d u ni on 
eng a gement
the group has worked hard to promote 
an inclusive culture with effective two 
way communications with employees and 
union representatives to support the overall 
performance of the business 
regular scheduled meetings help to create 
a meaningful and robust method of dealing 
with concerns and management issues 
across all aspects of the business 
community eng a gement
severfield–rowen plc recognises the 
importance of community involvement and 
proactively engages with organisations both 
locally and nationally group companies 
also recognise their duty as successful local 
employers and are involved directly with 
the local communities and residents many 
of which are directly employed by the 
businesses
direct time and resource are involved to 
ensure the group is properly engaged in 
these activities during 2010 severfield–
rowen plc actively supported and donated 
to the following local organisations 
butterwick hospice saint michael’s hospice 
bolton hospice and saint catherine’s 
hospice
the group companies also support and 
donate to other charities
● ● macmillan cancer support
● ● the prince’s trust
● ● world scout jamboree 2011
● ● philip green memorial trust
● ● the christie charity
● ● dalton village support
● ● dales school
● ● british heart foundation northern
● ● downs syndrome  ireland
● ● rotary club
● ● anthony nolan trust
● ● barnados and ronald mcdonald 
charities
● ● lighthouse club
● ● cancer research
● ● muscular dystrophy
● ● samaritans
● ● firefighters charity
● ● mencap
severfield–rowen plc also supports the 
prince’s trust and the provision of training 
placements within the organisation
in partnership with tesco our atlas 
ward business implements an effective 
apprenticeship training programme the 
group plans to recruit further apprentices 
in 2011
waste mana gement
the group has introduced significant 
measures for recycling and diverting waste 
from landfill these measures are externally 
audited and verified through our group 
certification 
the business will continue to develop 
innovative processes to manage the 
recycling of steel products and mitigate the 
impact of its general waste
toyota prius hybrid vehicles
100
90
80
70
60
50
40
30
20
10
0
fel aw wssl srs group
■●landfill ■ recycled 
waste  diverted from landfill
co rpo rate social responsibility continued
 
vehicles above 140kgsco2
vehicles below 140kgsco2
total hybrid vehicles
100
75
50
25
0
76
72
73
24
28
27
17
0 0
2008 2009 2010
a progressive carbon agenda 45 45
2015504  27042011 proof 10
our go v erna nce
the board is committed to high standards 
of corporate governance it is accountable 
to the company’s shareholders for good 
corporate governance
this statement together with the directors’ 
remuneration report on pages 50 to 
58 describe how the principles of good 
governance as set out in section 1 of the 
combined code on corporate governance 
published in june 2008 by the financial 
reporting council “the code” are applied 
to the company and the company’s 
compliance with the code provisions the 
principles of good governance are split into 
the following areas directors directors’ 
remuneration accountability and audit and 
relations with shareholders
direct ors
th e board
the company is controlled through 
the board of directors which currently 
comprises four executive and five non
executive directors all of which are 
considered as independent
p j davison resigned on 3 june 2010
j dodds was appointed as an additional non
executive director from 1 october 2010
d randall was appointed as a main board 
director with effect from 28 february 2011 
increasing the number of executive directors 
to four
t j l hayward is the nonexecutive 
chairman and was appointed on  
1 june 2008
the board has a separate chairman and 
chief executive in line with the code 
the chairman is mainly responsible for 
the running of the board evaluating its 
performance and ensuring that all directors 
receive sufficient relevant information on 
financial business and corporate issues 
prior to meetings the chief executive’s 
responsibilities focus on coordinating the 
company’s business and assessing and 
implementing group strategy
j k elliott is the senior independent non
executive director and leads the performance 
review of the chairman taking into account 
the views of the executive directors
all directors are able to take independent 
professional advice in furtherance of their 
duties if necessary
the board considers that the balance of 
relevant experience amongst the various 
board members enables the board to 
exercise effective leadership and control of 
the group it also ensures that the decision 
making process cannot be dominated by 
any individual or small group of individuals
an executive committee consisting of 
the members indicated on page 31 was 
established in 2008 this committee assists 
the main board by focusing on strategic and 
operational performance matters relating 
to the business and meets formally on a 
monthly basis 
boar d effectiveness
the board has a formal schedule of 
matters reserved for it it is responsible 
for overall group strategy acquisition and 
divestment policy approval of major capital 
expenditure projects and consideration of 
significant financing matters it monitors the 
exposure to key business risks including 
environmental and health and safety 
issues it reviews the strategic direction 
of individual trading subsidiaries codes 
of conduct annual budgets progress 
towards achievement of those budgets and 
significant capital expenditure programmes
the board also considers employee issues 
and key appointments it also ensures that 
all directors receive appropriate training 
on appointment and then subsequently as 
appropriate other specific responsibilities 
are delegated to the board committees 
described below all directors in accordance 
with the code will submit themselves for 
reelection at least once every three years 
the performance of individual directors is 
evaluated annually in conjunction with the 
remuneration review
the board generally meets monthly and 
during the year met ten times a formal 
agenda for each meeting is agreed 
with the chairman and is circulated in 
advance of the meeting to allow time 
for proper consideration together with 
relevant papers including key strategic 
operational and financial information 
attendance of individual directors during 
2010 at scheduled board meetings and at 
meetings of the remuneration audit and 
nominations committees is set out below
co rpo rate governance
 
  remuneration audit nominations
 board committee committee committee
total number of 
meetings held 10 7 2 3
t j l hayward  10 7 2 3
t g haughey 10 — — —
a d dunsmore
1
 9 — — —
p a emerson 10 — — —
p j davison
2
 5 — — —
j k elliott 10 7 2 3
d p ridley 10 7 2 3
g h wright 8 7 2 3
j dodds
1
 3 2 1 1
1
 full attendance at board and relevant committee meetings following appointment
2
 full attendance at board meetings prior to resignation 46 severfield—r owen plc annual report 2010
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nonattendance by directors at meetings 
was due to either conflicting commitments 
previously agreed or illness the majority 
of the board meetings are held at the 
group’s head office in dalton north 
yorkshire however during the year three 
of the meetings were held at the offices of 
the group’s other operating subsidiaries 
providing nonexecutive directors the 
opportunity to increase their knowledge and 
understanding of the group’s operations
this included one meeting held in india
board co mmittees
the board has established four standing 
committees all of which operate within 
defined terms of reference
the committees established are the audit 
committee the remuneration committee 
the nomination committee and the health 
and safety committee trading companies 
are managed by separate boards of directors 
any matters of a material nature concerning 
the trading companies are reported to the 
group board of directors on a monthly basis
with the change in the executive 
management and chairmanship in 2008 
plus the attendant board restructuring 
the new board considered it important to 
retain a level of continuity in the boardroom 
and asked j k elliott to continue in his 
role as senior nonexecutive director for 
the immediate future notwithstanding 
that 2008 was his 10th year as a serving 
director he therefore continues with his 
chairmanship of the audit committee and 
the remuneration committee the board 
acknowledges that he could be considered 
non independent due to tenure but believes 
that he continues to act independently and 
recognises his high level of commitment 
and effective contribution to the board’s 
decision making process
a u dit co mmittee
the audit committee comprises the 
nonexecutive directors and is chaired by 
j k elliott t j l hayward is a chartered 
accountant and is considered by the board 
to have the relevant financial experience 
to serve on the audit committee the 
committee has written terms of reference 
which will be available for inspection at the 
annual general meeting meetings are 
held at least twice a year and additional 
meetings may be requested by the auditors
the responsibility of the audit committee 
principally falls into the following areas
● ● to monitor the integrity of the financial 
statements formal announcements and 
to review significant financial reporting 
judgements
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● ● to review the company’s internal 
financial controls
● ● to make recommendations to the board 
in relation to the appointment and 
removal of the external auditor and to 
approve their remuneration and their 
terms of engagement 
● ● to review the nature of nonaudit 
services supplied and nonaudit fees 
relative to the audit fee
● ● to provide independent oversight over 
the external audit process through 
agreeing the suitability of the scope 
and approach of the external auditor’s 
work assessing their objectivity in 
undertaking their work and monitoring 
their independence taking into account 
relevant uk professional regulatory 
requirements and the auditor’s period in 
office and compensation
● ● to oversee the effectiveness of the 
external audit process particularly 
with regard to the quality and cost
effectiveness of the auditor’s work
● ● to consider the need for an internal 
audit function the committee agrees 
with the directors’ opinion that the 
group is not of sufficient size and 
complexity to require the need for an 
internal audit function 
consistent with exercising these responsibilities 
the committee has considered in detail 
both the final and interim results for 2010 
specifically reviewing the appropriateness 
of significant accounting policies financial 
reporting issues and judgements and relevant 
reports from both management and the 
external auditor throughout the year the 
committee has continued to assist the 
board in achieving its obligations under the 
combined code in areas of risk management 
and internal control focussing particularly on 
areas of compliance with legal requirements 
accounting standards and the listing rules 
and ensuring that an effective system of 
internal financial and nonfinancial controls is 
maintained
the committee recognises that given their 
knowledge of the business there are often 
advantages in using the auditor to provide 
certain nonaudit services the committee 
is satisfied that the independence of the 
auditor has not been impaired by providing 
these services nonaudit services provided 
by the auditor during the year ended  
31 december 2010 included corporation 
tax compliance advice and advice in 
connection with the establishment of 
jsw severfield structures limited the 
committee has a policy of limiting fees to 
the auditor for nonaudit services to 100 
of the audit fee and requiring competitive 
tender for all work with a fee over £30000 
there are no specific types of nonaudit 
work from which the auditor is specifically 
excluded but the committee may reserve 
the right to insist that the auditor be 
excluded from tendering for work that 
may present a potential conflict of interest 
the auditor complies with the accounting 
practices board apb ethical standards 
applying to nonaudit services
details of the auditor’s fees are shown in 
note 4 on page 75
on invitation the finance director other 
executive directors executive committee 
members and the auditor attend meetings 
to assist the committee to fulfil its duties 
the committee can access independent 
professional advice if it considers it 
necessary
the committee met on two occasions in 
2010 with full attendance
r emuneration committee
the remuneration committee operates 
under written terms of reference these terms 
of reference are available for inspection at the 
annual general meeting and are published 
on the company’s website the committee 
comprises the nonexecutive directors and is 
chaired by j k elliott the committee’s report 
is set out on pages 50 to 58
nominations committee
the nomination committee comprises the 
nonexecutive directors and is chaired by g h 
wright the principal task of the committee 
is to deal with key appointments to the board 
and related employment matters
the committee is responsible for proposing 
candidates for appointment to the board 
having regard to the balance and structure 
of the board and will meet as and when 
required
the committee met on three occasions 
during 2010 with full attendance to 
discuss finance director succession and 
the appointment of a new nonexecutive 
director the terms of reference for the 
nomination committee will be available for 
inspection at the annual general meeting
all directors are required to seek reelection 
by the members at the annual general 
meeting following their appointment non
executive directors are not appointed for a 
fixed term
the terms and conditions of appointment of 
nonexecutive directors will be available for 
inspection at the annual general meeting
direct ors’ r emuneration
the directors’ remuneration report is 
set out on pages 50 to 58 of the financial 
statements
a cco untab ility an d a u dit
financial repo rtin g
the performance and financial position of 
the company are provided in the chief 
executive’s review on pages 16 to 18 and the 
financial review on pages 20 to 24 together 
with the chairman’s statement on page 14 
and the directors’ report on pages 36 to 40
these enable the board to present a 
balanced and understandable assessment 
of the company’s position and prospects 
the directors’ responsibilities for the financial 
statements are described in the directors’ 
responsibilities statement on page 59
internal co ntr ol
an ongoing process has been established 
for identifying evaluating and managing the 
significant risks faced by the group which 
involves working closely with independent 
risk management consultants this process 
has been in place for the full financial 
year and up to the date of the approval of 
these financial statements and is regularly 
reviewed by the board this process is in 
accordance with the guidance provided by 
the turnbull report
the board has formally acknowledged 
its overall responsibility for reviewing the 
effectiveness of internal control it believes 
that senior management within the group’s 
operating businesses should also contribute 
in a substantial way and this has been built 
into the process 48 severfield—r owen plc annual report 2010
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there are inherent limitations in any system 
of internal control and accordingly even 
the most effective system can provide only 
reasonable and not absolute assurance 
with respect to the preparation of financial 
information and the safeguarding of assets 
the system is designed to manage rather 
than eliminate the risk of failure to achieve 
business objectives
in carrying out its review of the effectiveness 
of internal control in the group the board 
has taken into consideration the following 
key features of the risk management 
process and system of internal control
● ● senior management from all key 
disciplines and subsidiary companies 
within the group are involved in the 
process of risk assessment in order to 
identify and assess group objectives 
key issues and controls a further 
review has been performed to identify 
those risks relevant to the group as a 
whole this assessment encompassed 
all aspects of risk including operational 
compliance financial and strategic a 
risk register is in place and is updated 
on an ongoing basis and a control 
strategy has been determined for each 
of the significant risks
● ● the risk management committee 
chaired by t g haughey has the 
primary responsibility to identify 
monitor and control the significant 
risks to an acceptable level throughout 
the group the committee receives 
information on relevant risk matters 
from line management and other 
sources on a regular basis
● ● the group operates a comprehensive 
budgeting and financial reporting 
system which as a matter of routine 
compares actual results with budgets 
management accounts are prepared 
for each subsidiary company and the 
group on a monthly basis material 
variances from budget are thoroughly 
investigated in addition a more detailed 
profitability forecast based on actual 
contracts secured is regularly prepared 
to monitor the performance of the main 
operating company of the group as 
the year progresses risks are identified 
and appraised throughout the annual 
process of preparing budgets the board 
approves the group’s annual budget
● ● a credit insurance committee comprising 
t g haughey p a emerson and a d 
dunsmore has been established to 
review matters when adequate credit 
insurance on the group’s customers 
cannot be purchased in the present 
economic climate
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cash flow forecasts are regularly prepared 
to ensure that the group has adequate 
funds and resources for the foreseeable 
future
standard financial control procedures 
operate throughout the group to ensure the 
integrity of the group’s financial statements
the group operates a comprehensive 
“whistleblowing” policy which is available 
on the group’s website accordingly staff 
may in confidence raise concerns about 
possible improprieties in matters of financial 
reporting or other matters the audit 
committee reviews adherence with this 
policy on an ongoing basis
subsidiary company meetings consider and 
report on risk on a monthly basis as part 
of the monthly business review process 
this process is followed to ensure that as 
far as possible the controls and safeguards 
are being operated in line with established 
procedures and standards 
safety health and environmental risks are 
continually monitored at all sites and are 
reviewed on a monthly basis by senior 
management and on a quarterly basis by 
the health and safety committee
steps have been taken to embed internal 
control and risk management into the 
operations of the business and to deal 
with areas of improvement which come to 
management’s and the board’s attention 
this process is continuing to increase risk 
awareness throughout the group
relati ons with share hold ers
the company encourages twoway 
communication with both its institutional 
and private investors and attempts to 
respond quickly to all queries received 
verbally or in writing
t j l hayward t g haughey p a 
emerson and a d dunsmore  attended 
several meetings with analysts institutional 
shareholders and retail investors in the 
year ended 31 december 2010 either 
at the time of the announcements of the 
company’s interim or final results or during 
visits to the company’s offices in north 
yorkshire
feedback from these meetings is reported 
to the board
direct discussions took place during the year 
between shareholders’ representatives and 
j k elliott with particular reference to the 
directors’ remuneration report
the board has sought to use the annual 
general meeting to communicate with 
private investors and encourages their 
participation
co mpliance s tatement
the board has complied with the provisions 
of section 1 of the code throughout the 
year ended 31 december 2010 and up to 
the date of this report
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direct ors’ remuneration report
 
intr oduction
my tenure as chairman of the 
remuneration committee during the 
second part of the last decade saw 
significant fluctuations in the company’s 
results in line with changing market 
dynamics while at the same time investors 
realised generally steady increases in 
shareholder value attendant changes in the 
executive management of the business were 
implemented seamlessly and progressively 
during this time
at the end of 2008 the uk construction 
industry experienced the commencement 
of the biggest and deepest retrenchment in 
modern history you have heard from our 
ceo that expectations for market recovery 
in 2011 are now anticipated in 2012 this 
severe curtailment of the markets has seen 
an attendant rationalisation and shrinkage 
in the uk’s steel fabrication and erection 
industry across the industry management 
have been downsizing operations losses 
have been widely acknowledged and some 
notable closures reported
and yet severfield–rowen enters 2011 
with a strong order book and a successful 
diversification strategy in hand revenue and 
profits have followed the downward spiral of 
the market but the company has increased 
market share successfully diversified 
internationally and is well positioned for the 
recovery it has retained and enhanced its 
uk market leader position
the remuneration committee met many 
times throughout the past year both 
formally and informally seeking to develop 
remuneration policy consistent with 
management performance company results 
and market conditions and outlook
the report presents both our conclusions 
and our forward planning
r eporting r egulations  
this report approved by the board has 
been prepared in accordance with the 
companies act 2006 schedule 8 of the 
large and medium sized companies and 
groups accounts and reports regulations 
2008 schedule 8 and the listing rules 
of the financial services authority it also 
describes how the board has applied the 
principles of good governance relating 
to directors’ remuneration under the 
uk corporate governance code the 
remuneration committee has also taken 
into consideration guidelines published by 
institutional investor advisory bodies such 
as the abi and rrev as required by the 
legal regulations a resolution to approve 
this report will be proposed at the annual 
general meeting of the company at 
which time the financial statements will be 
approved 
the regulations require the auditor to 
report to the company’s members on 
the “auditable part” of the directors 
remuneration report and to state whether 
in their opinion that part of the report has 
been properly prepared in accordance 
with the companies act 2006 the report 
has therefore been divided into separate 
sections for audited and unaudited 
information
unau dite d in formati on
r emuneration committee
the company has an established 
remuneration committee which is 
constituted in accordance with the 
recommendations of the combined code 
the committee comprises five non
executive directors j k elliott t hayward 
g h wright d p ridley and j dodds and 
is chaired by j k elliott the committee 
met on seven occasions during the year 
with full attendance john dodds joined the 
board on 1 october 2010 and attended all 
meetings subsequent to his appointment 
the company considers all members of the 
committee to be independent no executive 
directors attended remuneration committee 
meetings or otherwise play a part in any 
discussion about their own remuneration
the statements made herein regarding 
remuneration policy apply equally to the 
five divisional directors who served on the 
executive committee and to the three 
executive directors who sat on the board of 
severfield–rowen plc during 2010 in 2011 
there will be four main board directors and 
four divisional directors below main board 
on the executive committee
throughout 2010 hewitt new bridge street 
a trading name of aon corporation 
served as an independent adviser to the 
remuneration committee neither hewitt 
new bridge street nor any other part of 
aon corporation proved other services to 
the company during the year
the terms of reference for the 
remuneration committee are available from 
the company secretary and are published 
on the company’s website 51 51
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our go v erna nce
r emuneration policy
in previous years in this report we have 
reiterated our policy of designing executive 
remuneration to attract executive directors 
of the highest calibre this cornerstone of 
our policy remains unchanged but there are 
today other parameters of equal bearing 
reward for performance motivation and 
retention are major drivers moreover 
alignment with corporate strategy and goals 
and alignment with compensation in the 
broader workforce are both fundamental 
drivers and underlying constraints 
delivering the policy fundamentals requires 
careful consideration to achieve the correct 
balance between the various facets of our 
policy
r ecent hist ory
prior to 2004 executive pay was decided 
by the remuneration committee on a 
subjective basis taking into account the 
company’s results and our assessment 
of individual contribution a number of 
share option schemes had been adopted 
progressively a more structured cash bonus 
scheme tied to financial performance 
was introduced and share options were 
superseded by a share matching plan tied 
to longer term performance which was later 
replaced by the current performance share 
plan psp also tied to threeyear targets 
base salaries were set and reset year on 
year using traditional market benchmarking 
methods and taking account of individual 
experience and performance
in 2007 executive salaries were reset mid
year when our current ceo assumed the 
role in july these base salaries remained 
essentially unchanged other than for a 3 
inflationary adjustment on 1 january 2008 
until the start of 2010 
in august 2009 the company made a 
statement accompanying the interim results 
warning of extremely challenging market 
conditions and advising that a consultation 
process was in hand with management 
and the workforce to implement salary 
reductions and other cost savings in the 
same announcement we advised that the 
board and the executive committee had 
agreed to a reduction of 20 in base 
salaries effective 1 january 2010 
consequently current executive base 
salaries are significantly below 2007 levels
in addition we announced in 2009 our 
intention to replace the current singletier 
approach to annual cash bonuses tied 
to financial performance to a broader 
based twotier approach incorporating 
the measurement of success against 
non financial criteria as well as financial 
metrics thereby providing a more rounded 
assessment of management and company 
performance 
th e status qu o
recent benchmarking confirms that current 
base salaries of the executive directors are 
now significantly below market levels this 
is entirely predictable as the salaries have 
been significantly reduced over a period of 
four years
the benchmarking also indicated that 
the upper thresholds or caps of variable 
performance related pay both short and 
long term were competitive or in some 
cases above market however earnings or 
vesting under these schemes will be limited 
by the market driven downturn for at least 
three years 
the benchmarking has been used for 
information and has not formed the basis 
for specific adjustments
to tal direct ors’ remunerati on
it is important to view overall directors’ 
remuneration against the backdrop of 
market movement and results looking 
at the group of eight directors within the 
purview of the remuneration committee 
the payroll cost from 2009 to 2010 reduced 
by 25 bonus payments declined by 61 
total remuneration is down by 42 in 
aggregate a reduction of £15 million
th e future
future executive remuneration policy will 
incorporate our established principles and 
strive for consistency with best practice 
guidelines whilst creating a platform for 
a broader based policy incorporating the 
following precepts
1 alignment of total executive 
remuneration with shareholder return
2 fair reward for past achievement
3 motivation for future achievement
4 ensuring the package is sufficiently 
retentive mitigating the replacement 
risk
5 realisation of non financial performance 
targets aligned with corporate strategy
6 establishment of an appropriate balance 
between fixed and performance related 
remuneration
7 avoidance of policies that incentivise 
executives to assume undue risk for the 
business
the remuneration committee will seek to 
balance these objectives in all aspects of 
future remuneration  52 severfield—r owen plc annual report 2010
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our go v erna nce
2010 remunerati on
the major elements of the remuneration 
package for the executive directors are
● ● basic annual salary and benefits
● ● annual bonus payments
● ● performance share plan psp
● ● pension
base salaries
the remuneration committee supported the 
board’s decision to reduce all base salaries 
by 20 at the start of 2010 in response to 
the retrenchment in our markets and severe 
pressure on margins the decision has also 
been taken to make no change again in 
2011 leaving them significantly below 2007 
levels there are two components of our 
stated policy driving this decision alignment 
with shareholder returns and alignment with 
our corporate strategy of controlling direct 
payroll cost in the business
the remuneration committee will revisit 
base salary levels again at the start of 2012
a nnual bonuses 
our twotier approach adopted for 2010 
for bonus assessment carried forward the 
established pbt versus budget criteria used 
in previous years for 60 of the bonus and 
created a group of qualitative performance 
criteria against specific corporate objectives 
for the remaining 40
the pbt 60 part was based on a simple 
formulaic approach used in previous years 
as shown below
with changes in the composition of the 
board in 2011 we plan to revisit the 
percentages in this table during the coming 
year it is anticipated that we will implement 
four separate upper thresholds incorporating 
the existing ceo numbers unchanged 
setting a coo upper threshold of 125 
an upper threshold of 100 for other plc 
board directors and 75 for divisional 
directors bonus award thresholds are 
interpolated linearly between the thresholds
the maximum bonus thresholds in the 
table above were applied consistently in 
calculating awards for both the financial and 
nonfinancial targets albeit no awards were 
earned in 2010 for the pbt performance 
against budget one exception was made 
in that the threshold change for the coo 
position planned in 2011 was applied 
in calculating 2010 bonus entitlement 
on the grounds that the realignment of 
directors’ responsibilities occurred early 
in 2010 with the appointment of a new 
finance director on 1 march 2010 this 
entailed a substantial increase to the 
scope and complexity of the role of coo 
incorporating a focus on the company’s 
overseas operations
setting of bonuses within the allowable 
ranges is at the discretion of the 
remuneration committee taking into 
account our assessment of contribution to 
financial results prevailing market conditions 
budget performance in difficult market 
conditions being better rewarded than in 
a seller’s market and both individual and 
collective contribution to the implementation 
of strategic initiatives which we anticipate will 
deliver profits in future years  
pbt targets were not achieved in 2010 in 
the context of the shrinking market and 
tightening margins hence bonus awards 
were evaluated using the nonfinancial 
performance objectives applied to 40 of 
the maximum allowable bonus
for the qualitative part 40 assessment of 
performance against non financial corporate 
objectives the committee selected three 
subsets
a health and safety statistics improvement 
goals – 10
b customer performance feedback – 
15
c indian subsidiary goals – 15
the remuneration committee’s evaluation 
against the hs objective we used afr 
improvement 2010 vs 2009 and the indian 
venture milestones which were specific 
targets such as completion on schedule and 
completion on budget were mostly non
judgemental in the sense that the target was 
either achieved or not afr improvement 
target was achieved four out of five of the 
indian subtargets were met the fifth was 
narrowly missed and we awarded a 75 
score against that subtarget 
pbt element of annual bo nus
 bonus allowable –  base salary
performance pretax profit vs budget ceo  coo other directors
95 or below  0 0 0
100 or better 50 to 100 20 to 50 10 to 40
120 or better 100 to 150 50 to 100 40 to 75 54 severfield—r owen plc annual report 2010
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the customer feedback required judgement 
on behalf of both the customer and the 
remuneration committee five major 
customers were selected all of whom had 
active projects performed by severfield–
rowen in 2010 the clients were given 
six categories of performance assessment 
including hs quality cost schedule and 
responsiveness each client designated a 
senior executive who was interviewed by 
a remuneration committee member after 
yearend and asked for assessments the 
scores were consolidated and evaluated by 
the remuneration committee overall the 
assessment was excellent with high scores 
from all clients in all categories and only 
very isolated negative comments all five 
customers strongly affirmed their intention 
to work with severfield–rowen again in the 
future the net result was an a scorecard 
evaluation by the remuneration committee
in setting final bonuses the remuneration 
committee used the 2009 salaries as the 
reference point having taken the view that 
it not been foreseen or planned to apply the 
percentages against reduced salaries 
details of the bonuses paid for 2010 are set 
out in the table of directors’ emoluments 
on page 57 the bonus payments are not 
pensionable
no ne xecutive direct ors
the remuneration of nonexecutive directors 
is considered by the executive directors and 
reflects the time that they commit to the 
company nonexecutive directors cannot 
participate in any of the annual bonus long 
term incentive or the company’s pension 
scheme
the executive board has elected to reinstate 
the nonexecutives’ fees to precut 2009 
levels on 1 january 2011 recognising the 
generally held view that such fees are not 
intrinsically performance related realising 
no benefit from profit improvement or 
shareholder returns
perfo rmance share plan
under the psp rules shares are awarded at 
the start of a threeyear period which can 
vest in whole or in part at the end of the 
three year term subject to the achievement 
of a performance goal the performance 
condition pc participation is limited to the 
eight executive directors comprising four 
main board directors and four divisional 
directors the normal maximum limit for 
the value of shares comprising an award is 
150 of salary in any year  
th e perfo rmance co n diti ons 
the pc is based on earnings per share 
“eps” assessed at the end of a threeyear 
performance period the eps targets range 
for each award is set by the remuneration 
committee prior to grant with a threeyear 
look ahead 
vestin g reco rd  outl ook
2007–2009
the first awards under the psp were 
made in 2007 to vest at the end of 2009 
subject to achievement of the performance 
condition
the performance condition target eps 
at the end of 2009 fractionally exceeded 
that required to allow full vesting of the 
2007 awards these awards vested in 
2010 the value of awards vesting in 2010 
was relatively low at today’s share price as 
the number of shares awarded is factored 
against base salary at the time of the award 
and the prevailing share price at the time of 
award the 2007 awards were made at a 
share price slightly above £5
2008–2010
the 2008 awards will not vest in 2011 by 
reference to performance at the end of 
2010 the pc was set at the start of 2008 
when confidence was still good and a record 
year was ahead of us the market turnover 
and profit have all since declined in line with 
the market 
2009–2011
based on the performance in 2010 the 
2009 awards would not vest by reference 
to performance at the end of 2011  at 
the time of setting the pc a 2011 recovery 
was expected and a target range was set 
requiring 2011 eps of between 25p and 
40p the ceo has announced previously 
that this recovery has now slipped into 
2012 meaning that the eps range is 
currently well ahead of current analysts’ 
forecasts for 2011 
2010–2012
at the start of 2010 the lower threshold 
pc for the threeyear period was carried 
forward unchanged from the last one 
at an eps of 25p the upper threshold 
was reduced from 40 to 35p an eps of 
25p represents a pbt of approximately 
£30m currently well ahead of analysts’ 
expectations for 2012
2011–2013
following three years of no vesting or 
at best low vesting we have elected this 
threeyear cycle 2011–2013 to set a 
lower bottom threshold but an unchanged 
upper threshold an eps range 125p pbt 
of approximately £15m to 250p pbt of 
approximately £30m the remuneration 
committee is aiming to provide a 
meaningful incentive for the executives 
accordingly the lower threshold is set 
taking into account company and analysts’ 
forecasts and the upper thresholds at 
significantly more challenging levels
psp aw ard levels
attendant with setting the three year pc 
as discussed in the previous paragraph 
psp awards will be granted at the start 
of 2011 the remuneration committee 
has elected to make awards in the range 
of 100 to 145 of base salary versus 
150 maximum allowable in the psp 
rules two main board directors will be 
granted 145 of base salary two 125 
and the four divisional directors will each 
receive 100 awards each award will only 
vest on achievement of the three year pc 
the grant levels take account of the fact 
that these will be referenced off depressed 
base salary levels and are consistent with 
the philosophy expressed in the previous 
paragraph regarding incentives and director 
shareholdings
direct ors’ remuneration report continued 55 55
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our go v erna nce
sharehol ding gui deline
a policy was introduced in 2004 whereby 
executive directors will be required to retain 
shares acquired under long term incentive 
schemes until such time they have built up 
a holding equivalent in market value at 
the date of vesting to the executive’s base 
salary thereafter the executive directors will 
be under a continuing obligation to maintain 
at least such a holding the requirement 
underscores the committee’s policy to 
align executive director remuneration and 
shareholder interests
pensions
the group contributes to each executive 
director’s money purchase pension fund 
contribution rates for each director are 
£50000 pa plus 7 of base salary 
resulting in contribution levels in the range 
of 15–36 of base salary due to the 
widely publicised pension law changes the 
7 contribution in future years will be 
expressed as base salary in lieu of pension 
contribution 
s ervice co ntracts
the service contracts of executive directors 
run on a rolling basis and are no longer 
than 12 months duration notice periods of 
12 months are required to be given by all 
parties
full details of the contracts of each director 
including the date unexpired term and any 
payment obligations on early termination are 
available from the company secretary and 
will be available for inspection at the annual 
general meeting  
the 2009 annual report and accounts 
confirmed the appointment of alan 
dunsmore as finance director on 1 march 
2010 succeeding peter davison peter 
davison stepped down as a director and 
employee at the annual general meeting on 
3 june 2010 following 22 years of service
the discussions on finance director 
succession planning had begun in mid 
2009 the board believed that the growth 
and diversification of the business warranted 
replacement planning with particular regard 
to international experience hence the 
board encouraged peter davison’s decision 
to accept early retirement in this context the 
remuneration committee agreed to award 
peter davison an amount equivalent to  
12 months’ salary and pension contributions 
in lieu of contractual notice on his departure
in july 2010 peter davison was reemployed 
as company secretary on a parttime 
basis as an interim measure until such time 
as a new company secretary could be 
appointed that appointment will be the 
subject of a separate announcement  56 severfield—r owen plc annual report 2010
2015504  27042011 proof 10
perfo rmance graph 
the following graph shows the company’s performance measured by total shareholder return compared with the performance of the ftse 
small cap index it is based on the change in the value of a £100 investment made on 31 december 2005 over the fiveyear period ended 
31 december 2010
this index was selected as it represents a broad equity market index and an appropriate comparator group of companies over the period
direct ors’ i nterests
the directors and their families had the following beneficial interests in the share capital of the company
 31 december 31 december
 2010 2009
 25p ordinary 25p ordinary
 shares shares
t j l hayward 30000 30000
t g haughey 246611 135667
p a emerson 160312 71556
a d dunsmore 10000 —
j k elliott 200000 200000
d p ridley 74000 74000
g h wright 4000 4000
j dodds — —
 or date of appointment
there have been no changes in the directors’ interests between the year end and 18 april 2011
direct ors’ remuneration report continued
change in value of a £100 investment over 5 years
0
50
100
150
200
250
0
50
100
150
200
250
31 dec 2005 31 dec 2006 31 dec 2007 31 dec 2008 31 dec 2009 31 dec 2010
severﬁeldrowen
ftse small cap index 57 57
2015504  27042011 proof 10
our go v erna nce
au dite d in formati on
aggreg ate direct ors’ r emuneration
the total amounts for directors’ remuneration were as follows
 2010 2009
 £000 £000
emoluments — salaries bonus and taxable benefits 1389 1989
 — fees 197 228
 — compensation for loss of office 287 —
money purchase pension contributions 219 215
 2092 2432
direct ors’ emoluments 
details of the directors’ emoluments are as follows
    compensation 
 basic   for loss taxable 2010 2009
 salary fees bonus of office benefits total total
 £000 £000 £000 £000 £000 £000 £000
executive
t g haughey 309 — 232 — 27 568 961
p a emerson 247 — 150 — 24 421 626
a d dunsmore from 1310 184 — 65 — 62 311 —
p j davison until 3610 74 — — 287 15 376 402
nonexecutive
t j l hayward  68 — — — 68 85
j k elliott  48 — — — 48 60
d p ridley  30 — — — 30 38
g h wright  36 — — — 36 45
j dodds from 11010  15 — — — 15 —
a ggregate emoluments 814 197 447 287 128 1873 2217
taxable benefits include the provision of company cars fuel for company cars and private medical insurance additionally in 2010 amounts 
include £45000 in relation to relocation payments to a d dunsmore
following his retirement as finance director p j davison was paid £25000 in his role as company secretary 58 severfield—r owen plc annual report 2010
2015504  27042011 proof 10
direct ors’ pensi on e ntitlements
the executive directors are members of the group’s money purchase pension schemes contributions paid by the company in respect of 
these schemes in the year are as follows
 2010 2009
 £000 £000
t g haughey 72 77
p a emerson 67 72
a d dunsmore from 1310 54 —
p j davison until 3610 26 66
a ggregate entitlements 219 215
direct ors’ share opti ons
there are no share options outstanding at 31 december 2010 2009 none
the market price of the shares at 31 december 2010 was 308p and the range during the year was 1772p to 3132p
a nnual deferred bonus sh are sch eme
under the terms of the severfield–rowen plc 1999 annual deferred bonus share scheme no deferred share awards as defined in the 
scheme rules were made in 2010
there were no bonus shares outstanding at 31 december 2010
perfo rmance share plan
under the company’s performance share plan the following awards over shares in issue at 31 december 2010 will vest with the directors 
subject to achievement of the performance criteria described on pages 54 and 55
 
 number of number of number of total
 shares vesting shares vesting shares vesting  number
 in 2011 in 2012 in 2013 of shares
t g haughey 182912 252451 189338 624701
p a emerson 146330 201961 151471 499762
a d dunsmore — — 125613 125613
d randall — 117810 70686 188496
total 329242 572222 537108 1438572
under the company’s performance share plan the following shares vested during 2010
 number of shares
t g haughey 110944
p a emerson 88756
total 199700
appr oval
this report was approved by the board of directors and signed on behalf of the board
j k elliott
chairman of remuneration committee
27 april 2011
direct ors’ remuneration report continued 59 59
2015504  27042011 proof 10
our go v erna nce
direct ors’ 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
● ● select suitable accounting policies and 
then apply them consistently
● ● make judgements and accounting 
estimates that are reasonable and 
prudent
● ● state whether applicable uk accounting 
standards have been followed subject 
to any material departures disclosed and 
explained in the financial statements 
and
● ● 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
● ● properly select and apply accounting 
policies
● ● present information including 
accounting policies in a manner that 
provides relevant reliable comparable 
and understandable information 
● ● 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
● ● 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
r esp onsi bility statement
we confirm that to the best of our 
knowledge
● ● 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
● ● 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  2015504  27042011 proof 11
60 severfield—rowen plc annual report 2010
group accounts 
contents
62 independent auditor’s report
63 consolidated income statement
64 consolidated statement of comprehensive income
65 consolidated balance sheet
66 consolidated statement of changes in equity
67 consolidated cash flow statement
68 notes to the consolidated financial statements
99 five year summary
99 financial calendar 61
2015504  27042011 proof 11
group accounts 61
di stribution  ind ustrial sectors
proje ct news international l ocation broxbourne
proje ct british gypsum  
locat ion east leake
proje ct  bombardier manufacturing  
assembly facility
locat ion belfast
proje ct coop  locat ion andover 2015504  27042011 proof 11
62 severfield—rowen plc annual report 2010
indepen dent auditor’s report 
to the members of severfield–rowen plc
we have audited the group financial 
statements of severfield–rowen plc for 
the year ended 31 december 2010 
which comprise the consolidated income 
statement the consolidated statement of 
comprehensive income the consolidated 
balance sheet the consolidated cash flow 
statement the consolidated statement of 
changes in equity and the related notes  
1 to 32 the financial reporting framework 
that has been applied in their preparation 
is applicable law and international financial 
reporting standards ifrss as adopted by 
the european union
this report is made solely to the company’s 
members as a body in accordance with 
chapter 3 of part 16 of the companies act 
2006 our audit work has been undertaken 
so that we might state to the company’s 
members those matters we are required 
to state to them in an auditor’s report and 
for no other purpose to the fullest extent 
permitted by law we do not accept or 
assume responsibility to anyone other than 
the company and the company’s members 
as a body for our audit work for this report 
or for the opinions we have formed
respective respons ibiliti es of 
d irectors and au ditor
as explained more fully in the directors’ 
responsibilities statement the directors 
are responsible for the preparation of the 
group financial statements and for being 
satisfied that they give a true and fair view 
our responsibility is to audit and express an 
opinion on the group financial statements 
in accordance with applicable law and 
international standards on auditing uk 
and ireland those standards require us to 
comply with the auditing practices board’s 
ethical standards for auditors
scope of th e audit o f th e 
fi nancial state ments
an audit involves obtaining evidence about 
the amounts and disclosures in the financial 
statements sufficient to give reasonable 
assurance that the financial statements are 
free from material misstatement whether 
caused by fraud or error this includes an 
assessment of whether the accounting 
policies are appropriate to the group’s 
circumstances and have been consistently 
applied and adequately disclosed the 
reasonableness of significant accounting 
estimates made by the directors and 
the overall presentation of the financial 
statements
in addition we read all the financial and 
nonfinancial information in the annual 
report to identify material inconsistencies 
with the audited financial statements if we 
become aware of any apparent material 
misstatements or inconsistencies we consider 
the implications for our report
opinion on fi nancial 
statements
in our opinion the group financial statements
● ● give a true and fair view of the state of 
the group’s affairs as at 31 december 
2010 and of its profit for the year then 
ended
● ● have been properly prepared in 
accordance with ifrss as adopted by 
the european union and
● ● have been prepared in accordance with 
the requirements of the companies 
act 2006 and article 4 of the ias 
regulation
opinion on oth er matter 
prescribed by th e companies 
act 2006
in our opinion
● ● the part of the directors’ remuneration 
report to be audited has been properly 
prepared in accordance with the 
companies act 2006 and
● ● the information given in the directors’ 
report for the financial year for which 
the financial statements are prepared 
is consistent with the group financial 
statements
matters on whi ch we are 
req uired to report by 
exception
we have nothing to report in respect of the 
following
under the companies act 2006 we are 
required to report to you if in our opinion
● ● certain disclosures of directors’ 
remuneration specified by law are not 
made or
● ● we have not received all the information 
and explanations we require for our 
audit
under the listing rules we are required to 
review
● ● the directors’ statement contained 
within the directors’ report in relation to 
going concern
● ● the part of the corporate governance 
statement relating to the company’s 
compliance with the nine provisions 
of the june 2008 combined code 
specified for our review and
● ● certain elements of the report to 
shareholders by the board on directors’ 
remuneration
oth er matter
we have reported separately on the parent 
company financial statements of severfield–
rowen plc for the year ended 31 december 
2010
simon manning 
senior statutory auditor
for and on behalf of deloitte llp
chartered accountants and statutory 
auditor 
leeds united kingdom
28 april 2011 63
2015504  27042011 proof 11
group accounts 63
consolid ated income statement
year ended 31 december 2010
  before   before
  other other  other other
  items items total items items total
  2010 2010 2010 2009 2009 2009
 note £000 £000 £000 £000 £000 £000
continuing operations
revenue 3 266692 — 266692 349417 — 349417
cost of sales  242568 2000 240568 288658 2283 290941
gross profit  24124 2000 26124 60759 2283 58476
other operating income  510 — 510 568 — 568
distribution costs  1937 — 1937 2123 — 2123
administrative expenses  6127 4821 10948 7425 6889 14314
movements in the valuation of
derivative financial instruments  — 39 39 — 3440 3440
operating profit before share of
results of associates  16570 2782 13788 51779 5732 46047
share of results of associates  366 1394 1760 49 991 942
operating profit 4 16204 4176 12028 51828 6723 45105
investment revenue 6 55 — 55 131 — 131
finance costs 6 976 — 976 1145 — 1145
profit before tax  15283 4176 11107 50814 6723 44091
tax 7 4160 686 3474 14383 1605 12778
profit for the period attributable to
the equity holders of the parent  11123 3490 7633 36431 5118 31313
earnings per share 9
basic  1250p 392p 858p 4111p 577p 3534p
diluted  1250p 392p 858p 4091p 575p 3516p
other items relate to preoperating losses of the group’s indian joint venture the amortisation of acquired intangibles movements in the 
valuation of derivative financial instruments the impairment of investment property a partial release of a legal provision and the associated 
tax impact of these items together with the impact of corporation tax rate reductions on the group’s deferred tax liability in 2009 other 
items also included the oneoff impairment of capitalised development costs and restructuring costs the 2009 other items total has been 
reanalysed from the 2009 financial statements to present preoperating loss for the indian jv as a nonoperating item consistent with 2010 
these items have been disclosed separately in order to give an indication of the underlying earnings of the group 2015504  27042011 proof 11
64 severfield—rowen plc annual report 2010
consolid ated statement of comprehensive income
year ended 31 december 2010
  2010 2009
 note £000 £000
total profit for the period attributable to equity holders of the parent  7633 31313
actuarial loss on defined benefit pension scheme 30 440 2091
tax relating to components of other comprehensive income 20 123 586
total comprehensive income for the year attributable to equity
holders of the parent  7316 29808 65
2015504  27042011 proof 11
group accounts 65
consolid ated balance sheet
31 december 2010
    2010 2009
 note £000 £000
assets
noncurrent assets
goodwill 10 54712 54712
other intangible assets 11 20495 23244
property plant and equipment 12 82949 84907
investment property 12 4000 6135
interests in associates 14  2857 1733
   165013 170731
current assets
inventories 15  12633 9810
trade and other receivables 17  71861 54655
cash and cash equivalents   3589 11548
   88083 76013
total assets   253096 246744
liabilities
current liabilities
trade and other payables 18  75868 82565
financial liabilities — borrowings 21  18629 —
financial liabilities — derivative financial instruments 21 108 147
tax liabilities   5217 6034
   99822 88746
noncurrent liabilities
retirement benefit obligations 30  8532 8407
deferred tax liabilities 20  13199 14516
provisions 19 600 2600
   22331 25523
total liabilities   122153 114269
net assets   130943 132475
equity
share capital 23  2231 2215
share premium   46152 46152
other reserves 24  169 1065
retained earnings   82391 83043
total equity   130943 132475
the financial statements were approved by the board of directors on 27 april 2011 and signed on its behalf by
t g haughey a d dunsmore
director director 2015504  27042011 proof 11
66 severfield—rowen plc annual report 2010
consolid ated statement of changes in equity
year ended 31 december 2010
 share share other retained total
 capital premium reserves earnings equity
 £000 £000 £000 £000 £000
at 1 january 2009 2215 46152 439 70957 119763
profit for the period attributable
to equity holders of the parent — — — 31313 31313
actuarial loss on defined
benefit pension scheme — — — 2091 2091
deferred income taxes on
defined benefit pension scheme — — — 586 586
dividends paid — — — 17722 17722
sharebased payments — — 626 — 626
at 31 december 2009 2215 46152 1065 83043 132475
 share share other retained total
 capital premium reserves earnings equity
 £000 £000 £000 £000 £000
at 1 january 2010  2215  46152  1065  83043  132475
profit for the period attributable
to equity holders of the parent — — — 7633 7633
actuarial loss on defined
benefit pension scheme — — — 440 440
deferred income taxes on
defined benefit pension scheme — — — 123 123
dividends paid — — — 8883 8883
sharebased payments 16 — 896 915 35
at 31 december 2010  2231  46152 169  82391  130943 67
2015504  27042011 proof 11
group accounts 67
    2010 2009
 note £000 £000
net cash from operating activities 25  11203 52134
cash flows from investing activities
proceeds from sale of property plant and equipment   225 1260
purchases of property plant and equipment   3025 4847
interest received   61 144
purchases of shares of associates   2884 2443
net cash used in investing activities   5623 5886
cash flows from financing activities
interest paid  879 1223
repayment of borrowings  — 27673
borrowings taken out  18629 —
dividends paid   8883 17722
net cash used in financing activities   8867 46618
net decrease in cash and cash equivalents   7959 370
cash and cash equivalents at beginning of period   11548 11918
cash and cash equivalents at end of period   3589 11548
consolid ated cash flow statement
year ended 31 december 2010 2015504  27042011 proof 11
68 severfield—rowen plc annual report 2010
1 significant accounting policies
basis of accounting
the financial statements have 
been prepared in accordance with 
international financial reporting 
standards ifrs the financial 
statements have also been prepared in 
accordance with ifrs adopted for use 
in the european union and therefore 
comply with article 4 of the eu ias 
regulation
 
the financial statements have been 
prepared on the historical cost basis 
except for the revaluation of financial 
instruments the principal accounting 
policies adopted are set out below
the group has applied ifrs 3 ‟business 
combinations” — revision effective for 
accounting periods beginning on or 
after 1 july 2009 in the year ifrs 3 
will impact upon the treatment of any 
acquisitionrelated costs for instance 
finder’s fees advisory legal accounting 
valuation and other professional 
or consulting fees incurred on the 
acquisition of new businesses with such 
costs being expensed in the period 
ifrs 3 also impacts upon the treatment 
of contingent consideration associated 
with acquisitions there has been no 
impact of the application of this standard 
in the current year the impact on the 
group’s accounts in future periods 
will depend upon the number and 
significance of any acquisitions arising
in addition to the standard detailed 
above the following standards have 
been adopted in the current period 
which have had no material impact on 
the accounts
● ● ias 24 revised “related party 
disclosures”
● ● ias 27 “consolidated and separate 
financial statements — cost of an 
investment in a subsidiary jointly 
controlled entity or associate” — 
revised effective for accounting 
periods beginning on or after 1 july 
2009 and
● ● ias 39 “financial instruments 
recognition and measurement 
— eligible hedged items” 
revision applies retrospectively for 
accounting periods beginning on or 
after 1 july 2009
 
going concern
after making enquiries the directors 
have formed a judgement at the time 
of approving the financial statements 
that there is a reasonable expectation 
that the group has adequate resources 
to continue in operational existence for 
the foreseeable future for this reason 
the directors continue to adopt a going 
concern basis in preparing the financial 
statements the key factors considered 
by the directors in making the statement 
are set out within the financial review 
on pages 22 to 24
basis of consolidation
the consolidated financial statements 
incorporate the financial statements of 
the company and all subsidiaries for 
the financial year ended 31 december 
2010
the results of subsidiaries acquired or 
disposed of during the year are included 
in the consolidated income statement 
from the effective date of acquisition or 
up to the effective date of disposal as 
appropriate
where necessary adjustments are made 
to the financial statements of subsidiaries 
to bring the accounting policies used 
into line with those used by the group
all intragroup transactions balances 
income and expenses are eliminated on 
consolidation
consolidated income statement 
disclosure
in order to give an indication of the 
underlying earnings of the group 
certain items are presented in the 
middle column of the consolidated 
income statement entitled “other 
items” in 2010 these comprise
● ● preoperating losses of the group’s 
indian joint venture 
● ● amortisation of acquired intangibles
● ● movements in the valuation of 
derivative financial instruments
● ● impairment of investment property 
● ● partial release of a legal provision 
and
● ● the associated tax impact of the 
above items together with the 
impact of future reductions in 
corporation tax rates on the group’s 
deferred tax liability
business combinations 
the acquisition of subsidiaries is 
accounted for using the acquisition 
method the cost of the acquisition 
is measured at the aggregate of the 
fair values at the date of exchange 
of assets given liabilities incurred or 
assumed and equity instruments 
issued by the group in exchange for 
control of the acquiree plus any costs 
directly attributable to the business 
combination the acquiree’s identifiable 
assets liabilities and contingent liabilities 
that meet the conditions for recognition 
under ifrs 3 are recognised at their fair 
value at the acquisition date 
notes to the consolidated financial statements
year ended 31 december 2010 69
2015504  27042011 proof 11
group accounts 69
investments in associates
an associate is an entity over which 
the group is in a position to exercise 
significant influence but not control 
through participation in the financial 
and operating policy decisions of the 
investee significant influence is the 
power to participate in the financial 
and operating policy decisions of the 
investee but is not control over those 
policies
the results and assets and liabilities 
of associates are incorporated in 
these financial statements using the 
equity method of accounting unless 
it meets the exceptions described in 
ias 28 investments in associates are 
carried in the balance sheet at cost as 
adjusted by postacquisition changes 
in the group’s share of the net assets 
of the associate less any impairment 
in the value of individual investments 
losses of the associates in excess of 
the group’s interest in those associates 
are not recognised unless and only to 
the extent that the group has incurred 
legal or constructive obligations on 
behalf of the associates
any excess of the cost of acquisition 
over the group’s share of the fair values 
of the identifiable net assets of the 
associate at the date of acquisition is 
recognised as goodwill any deficiency 
of the cost of acquisition below the 
group’s share of the fair values of the 
identifiable net assets of the associate 
at the date of acquisition ie discount 
on acquisition is credited in the 
consolidated income statement in the 
period of acquisition
the consolidated income statement 
includes the group’s share of associates’ 
profit less losses while the group’s 
share of the net assets of the associates 
is shown in the consolidated balance 
sheet
goodwill
goodwill which is recognised as an 
asset is reviewed for impairment at least 
annually any impairment is recognised 
immediately as a loss and is not 
subsequently reversed
for the purpose of impairment testing 
goodwill is allocated to each of the 
group’s cashgenerating units expected 
to benefit from the synergies of the 
combination cashgenerating units to 
which goodwill has been allocated are 
tested for impairment annually or more 
frequently when there is an indication 
that the unit may be impaired if 
the recoverable amount of the cash
generating unit is less than the carrying 
amount of the unit the impairment loss 
is allocated first to reduce the carrying 
amount of any goodwill allocated to the 
unit and then to the other assets of the 
unit pro rata on the basis of the carrying 
amount of each asset in the unit an 
impairment loss recognised for goodwill 
is not reversed in a subsequent period
on disposal of a subsidiary associate or 
jointly controlled entity the attributable 
amount of goodwill is included in the 
determination of the profit or loss on 
disposal
goodwill arising on acquisitions before 
the date of transition to ifrs has been 
retained at the previous uk gaap 
amounts subject to being tested for 
impairment at that date goodwill arising 
prior to 1 january 1998 of £1122000 
was taken directly to reserves in the year 
in which it arose such goodwill has not 
been reinstated on the balance sheet
negative goodwill arising on acquisition 
is recognised immediately in the 
consolidated income statement
revenue recognition
revenue from construction contracts 
is recognised in accordance with 
the group’s accounting policy on 
construction contracts see below
interest income is accrued on a time 
basis by reference to the principal 
outstanding and at the effective interest 
rate applicable
dividend income from investments 
is recognised when the shareholders’ 
rights to receive payment have been 
established
construction contracts
profit is recognised on contracts if the 
final outcome can be assessed reliably 
by including in the income statement 
revenue and related cost as contract 
activity progresses revenue is calculated 
as the proportion of total contract value 
which corresponds to the proportion of 
costs incurred to date to total expected 
costs for that contract variations in 
contract work claims and incentive 
payments are included in revenue to 
the extent that there is appropriate 
certainty that they will be accepted by 
the customer and can be measured 
reliably
where the outcome of a construction 
contract cannot be estimated reliably 
contract revenue is recognised to 
the extent contract costs have been 
incurred and it is probable they will 
be recoverable contract costs are 
recognised as expenses in the period in 
which they are incurred
when it is probable that total contract 
costs will exceed total contract revenue 
the expected loss is recognised as an 
expense immediately 2015504  27042011 proof 11
70 severfield—rowen plc annual report 2010
leases
leases are classified as finance leases 
whenever the terms of the lease transfer 
substantially all the risks and rewards of 
ownership to the lessee all other leases 
are classified as operating leases
amounts payable under operating 
leases are charged to the income 
statement on a straightline basis over 
the lease term
property plant and equipment acquired 
under finance leases are capitalised 
in the balance sheet at fair value and 
depreciated in accordance with the 
group’s accounting policy the capital 
element of the leasing commitment 
is included as obligations under 
finance leases the rentals payable are 
apportioned between interest which is 
charged to the income statement and 
capital which reduces the outstanding 
obligation
operating profit
operating profit is stated after charging 
any restructuring costs impairment and 
amortisation charges gains or losses 
arising on the fair value of foreign 
exchange derivative contracts and 
after the share of results of associates 
and the impact of any movements in 
legal provisions but before investment 
income and finance costs
additionally in 2010 we present an 
additional nonstatutory heading 
“operating profit before results of 
associates” to assist in isolating the 
impact of the group’s indian joint 
venture this also excludes the results of 
two other nonmaterial associates
retirement benefit costs
the group operates two defined 
contribution pension schemes and costs 
of these schemes are charged to the 
income statement in the period in which 
they are incurred
in addition atlas ward acquired on 
31 march 2005 has a defined benefit 
scheme which is now closed the liability 
in respect of this scheme is the present 
value of the defined benefit obligation 
at the balance sheet date less the fair 
value of the plan assets together with 
adjustments for actuarial gainslosses
the finance cost of liabilities and 
expected return of assets are included 
within administrative expenses in the 
consolidated income statement
the actuarial gainloss is charged 
through the consolidated statement of 
comprehensive income and is made up 
of the difference between the expected 
return on assets and those actually 
achieved the difference between the 
actuarial assumptions for liabilities and 
actual experience in the period and any 
changes in the assumptions used in the 
valuations
the pension scheme deficit is 
recognised in full and presented on the 
face of the consolidated balance sheet 
the associated deferred tax asset is 
recognised within the net deferred tax 
liability within noncurrent liabilities in 
the consolidated balance sheet
taxation
the tax expense represents the sum 
of the tax currently payable and 
deferred tax
the tax currently payable is based on 
taxable profit for the year taxable profit 
differs from net profit as reported in the 
income statement because it excludes 
items of income or expense that are 
taxable or deductible in other years and 
it further excludes items that are never 
taxable or deductible the group’s 
liability for current tax is calculated 
using tax rates that have been enacted 
or substantively enacted by the balance 
sheet date
 
deferred tax is the tax expected to be 
payable or recoverable on differences 
between the carrying amounts of assets 
and liabilities in the financial statements 
and the corresponding tax bases used 
in the computation of taxable profit 
and is accounted for using the balance 
sheet liability method deferred tax 
liabilities are generally recognised for 
all taxable temporary differences and 
deferred tax assets are recognised to 
the extent that it is probable that taxable 
profits will be available against which 
deductible temporary differences can be 
utilised such assets and liabilities are not 
recognised if the temporary difference 
arises from the initial recognition of 
goodwill or from the initial recognition 
other than in a business combination 
of other assets and liabilities in a 
transaction that affects neither the tax 
profit nor the accounting profit
the carrying amount of deferred tax 
assets is reviewed at each balance sheet 
date and reduced to the extent that 
it is no longer probable that sufficient 
taxable profits will be available to allow 
all or part of the asset to be recovered
deferred tax is calculated at the tax 
rates that are expected to apply in the 
period when the liability is settled or the 
asset is realised these are determined 
based on future changes in tax rates 
that have been enacted rather than 
simply future changes that have been 
proposed but not enacted deferred tax 
is charged or credited in the income 
statement except when it relates to 
items charged or credited directly to 
equity in which case the deferred tax is 
also dealt with in equity
deferred tax assets and liabilities are 
offset when there is a legally enforceable 
right to set off current tax assets against 
current tax liabilities and when they 
relate to income taxes levied by the 
same taxation authority and the group 
intends to settle its current tax assets 
and liabilities on a net basis
dividends
dividends are recorded in the group’s 
financial statements in the period in 
which they are declared appropriately 
authorised and no longer at the 
discretion of the company
notes to the consolidated financial statements continued
year ended 31 december 2010 71
2015504  27042011 proof 11
group accounts 71
property plant and equipment
land and buildings held for use in 
the production or supply of goods or 
services or for administrative purposes 
and plant and machinery are currently 
stated at cost in the balance sheet 
depreciation on buildings is charged to 
income
depreciation is provided on other 
property plant and equipment to 
write off the cost of each asset over its 
estimated useful life at the following 
rates
freehold buildings 1 straightline 
investment properties
plant and machinery 10 straightline
fixtures fittings  10 written down
and office  value
equipment
computer  20 straightline
equipment 
motor vehicles 25 written 
down  value
site safety  20 straightline
equipment
assets held under finance leases are 
depreciated over their expected useful 
lives on the same basis as owned assets 
or where shorter over the term of the 
relevant lease
the gain or loss arising on the disposal 
or retirement of an asset is determined 
as the difference between the sales 
proceeds and the carrying amount of 
the asset and is recognised in income
investment property
investment property which is property 
held to earn rentals andor for capital 
appreciation is stated at the lower of 
cost or directors’ valuation depreciation 
will be charged annually based on 
the group’s stated depreciation policy 
together with an annual impairment 
review where properties have been 
impaired below cost and are being held 
at directors’ valuation the directors have 
taken appropriate external guidance on 
the likely current value of properties no 
investment properties have been subject 
to formal external valuation
intangibles
the group recognises intangible assets 
at cost less accumulated amortisation 
and impairment losses acquired 
intangible assets arise as a result of 
applying ifrs 3 which requires the 
separate recognition of intangible 
assets from goodwill on all business 
combinations from 1 january 2004
intangible assets are amortised on a 
straightline over their useful economic 
lives as follows
amortisation 
period
customer relationships 10 years
brands 25 years
knowhow 10 years
order book  18 months
now fully amortised
impairment of tangible  
and intangible assets  
excluding goodwill
at each balance sheet date the 
group reviews the carrying amounts 
of its tangible and intangible assets 
to determine whether there is any 
indication that those assets have 
suffered an impairment loss if any 
such indication exists the recoverable 
amount of the asset is estimated in 
order to determine the extent of the 
impairment loss if any where the 
asset does not generate cash flows that 
are independent from other assets 
the group estimates the recoverable 
amount of the cashgenerating unit to 
which the asset belongs an intangible 
asset with an indefinite useful life is 
tested for impairment annually and 
whenever there is an indication that the 
asset may be impaired
recoverable amount is the higher of fair 
value less costs to sell and value in use 
in assessing value in use the estimated 
future cash flows are discounted to 
their present value using a pretax 
discount rate that reflects current market 
assessments of the time value of money 
and the risks specific to the asset for 
which the estimates of future cash flows 
have not been adjusted
if the recoverable amount of an asset 
or cashgenerating unit is estimated 
to be less than its carrying amount 
the carrying amount of the asset or 
cashgenerating unit is reduced to its 
recoverable amount an impairment 
loss is recognised as an expense 
immediately unless the relevant asset is 
carried at a revalued amount in which 
case the impairment loss is treated as a 
revaluation decrease
where an impairment loss subsequently 
reverses the carrying amount of 
the asset or cashgenerating unit is 
increased to the revised estimate of 
its recoverable amount but so that 
the increased carrying amount does 
not exceed the carrying amount that 
would have been determined had no 
impairment loss been recognised for the 
asset or cashgenerating unit in prior 
years a reversal of an impairment loss 
is recognised as income immediately 
unless the relevant asset is carried at 
a revalued amount in which case the 
reversal of the impairment loss is treated 
as a revaluation increase
inventories
inventories are stated at the lower 
of cost and net realisable value cost 
comprises direct materials and where 
applicable direct labour costs and those 
overheads that have been incurred 
in bringing the inventories to their 
present location and condition net 
realisable value represents the estimated 
selling price less all estimated costs of 
completion and costs to be incurred in 
marketing selling and distribution 2015504  27042011 proof 11
72 severfield—rowen plc annual report 2010
financial instruments
financial assets and financial liabilities 
are recognised on the group’s balance 
sheet when the group becomes a 
party to the contractual provisions of the 
instrument
trade receivables
trade receivables are classified as loans 
and receivables and therefore measured 
at amortised cost using the effective 
interest method
cash and cash equivalents
cash and cash equivalents comprise 
cash in hand and demand deposits 
and other shortterm highly liquid 
investments that are readily convertible 
to a known amount of cash and are 
subject to an insignificant risk of 
changes in value
bank borrowings
interestbearing bank loans and 
overdrafts are recorded at the proceeds 
received net of direct issue costs 
finance charges including premiums 
payable on settlement or redemption 
and direct issue costs are accounted 
for in the income statement using 
the effective interest method and are 
added to the carrying amount of the 
instrument to the extent that they are 
not settled in the period in which they 
arise the effective interest method is a 
method of calculating the amortised cost 
of a financial liability and of allocating 
interest over the relevant period
trade payables
trade payables are initially measured 
at fair value and are subsequently 
measured at amortised cost
equity instruments
equity instruments issued by the 
company are recorded at the proceeds 
received net of direct issue costs
sharebased payment transactions
the group issues equitysettled share
based payments these sharebased 
payments are measured at fair value at 
the date of grant based on the group’s 
estimate of shares that will eventually 
vest the fair value determined is then 
expensed in the consolidated income 
statement on a straightline basis over 
the vesting period with a corresponding 
increase in equity details regarding the 
determination of the fair value of equity
settled sharebased transactions are set 
out in note 22
provisions
provisions are recognised when the 
group has a present obligation as a 
result of a past event and it is probable 
that the group will be required to settle 
that obligation provisions are measured 
at the directors’ best estimate of the 
expenditure required to settle the 
obligation at the balance sheet date and 
are discounted to present value where 
the effect is material
derivative financial instruments
the group enters into certain foreign 
exchange forward contracts to manage 
its exposure to currency movements 
further details of derivative financial 
instruments are disclosed in note 21 to 
the financial statements
derivatives are initially recognised at fair 
value at the date a derivative contract 
is entered into and are subsequently 
remeasured to their fair value at each 
balance sheet date the resulting gain or 
loss is recognised in profit or loss
2 critical accounting judgements 
and key sources of estimation 
uncertainty
key sources of estimation 
uncertainty
the key assumptions concerning 
the future and other key sources of 
estimation uncertainty at the balance 
sheet date that have a significant risk 
of causing a material adjustment to the 
carrying amounts of assets and liabilities 
within the next financial year are also 
discussed below
revenue and margin recognition
the group’s revenue recognition and 
margin recognition are central to the 
way the group values the work it has 
carried out in each financial year these 
policies require forecasts to be made of 
the outcomes of longterm construction 
contracts which require assessments 
and judgements to be made on 
recovery of precontract costs changes 
in work scopes contract programmes 
and maintenance liabilities
the group applies rigorous internal 
control procedures over the 
determination of each of the above 
variables to ensure that profit take as at 
the balance sheet date and the extent of 
future costs to contract completion are 
reasonably and consistently determined
notes to the consolidated financial statements continued
year ended 31 december 2010 73
2015504  27042011 proof 11
group accounts 73
retirement benefit obligations
details of the group’s defined pension 
scheme are set out in note 30 the 
scheme has been valued in accordance 
with ias 19 “employee benefits” at 
31 december 2010 the defined benefit 
obligation recognised on the group’s 
balance sheet was £8532000 the 
benefit obligation is calculated using 
a number of assumptions including 
increases in pension benefits mortality 
rates and inflation and the future 
investment returns from the scheme’s 
assets the present value of the benefit 
obligations is calculated by discounting 
the benefit obligation using market rates 
on relevant aa corporate bonds at the 
balance sheet date
the scheme’s assets are valued at 
market rates at the balance sheet date 
effects of changes in the actuarial 
assumptions underlying the benefit 
obligation discount rates and the 
difference between expected and actual 
returns on the scheme’s assets are 
classified as actuarial gains and losses
critical judgements in applying the 
group’s accounting policies
in the process of applying the group’s 
accounting policies which are described 
in note 1 management has made the 
following judgements that have the 
most significant effect on the amounts 
recognised in the financial statements 
those judgements involving estimations 
are dealt with below
impairment of goodwill and intangible 
assets arising from acquisitions
determining whether goodwill or 
associated intangible assets are impaired 
requires an estimation of the value in 
use of the cashgenerating units to 
which these assets have been allocated 
the value in use calculation requires 
the entity to estimate the future cash 
flows expected to arise from the cash
generating unit and a suitable discount 
rate in order to calculate present value 
the carrying amount of goodwill at the 
balance sheet date was £54712000 
and of intangible assets arising from 
acquisitions was £20495000 no 
impairment adjustment has been made 
for the year ended 31 december 2010
impairment of investment property
in the absence of formal valuation 
determining the carrying value of the 
group’s investment property requires 
an assessment of fair value the key 
factors considered by the directors in 
determining fair value are the possible 
open market valuation and rental yields 
on the property the written down value 
of the group’s investment property as at 
the balance sheet date was £4000000 
following an impairment charge of 
£2073000 made in the year 2015504  27042011 proof 11
74 severfield—rowen plc annual report 2010
notes to the consolidated financial statements continued
year ended 31 december 2010
3 revenue and segmental analysis
revenue
an analysis of the group’s revenue is as follows
 2010 2009
 £000 £000
revenue from construction contracts 266692 349417
total revenue 266692 349417
other operating income 510 568
interest received 55 131
total income 267257 350116
segmental results
following adoption of ifrs 8 the group has identified its operating segments as those upon which the executive committee regularly 
assesses performance
the group has deemed it appropriate to aggregate its operating segments into one reported segment the constituent operating 
segments have been aggregated as they have businesses that have similar products and services production processes types of 
customer methods of distribution regulatory environments and economic characteristics
revenue which relates wholly to construction contracts and related activities in both years originated from the united kingdom
revenues by product group
all revenue is derived from construction contracts and related assets
geographical information
the group’s revenue from external customers are detailed below
 2010 2009
 £000 £000
revenue by destination
united kingdom 260528 325403
republic of ireland and mainland europe 3632 23227
other countries 2532 787
 266692 349417
all revenue originated from the united kingdom and all noncurrent assets of the group are located in the united kingdom
information about major customers
included in revenues is approximately £931 million 2009 £1763 million in relation to sales from three 2009 four customers who 
individually contribute over 10 to combined group revenue 75
2015504  27042011 proof 11
group accounts 75
4 operating profit
 2010 2009
operating profit for the year has been arrived at after crediting £000 £000
rent receivable 487 550
unrealised gains on derivative financial instruments 39 3440
and after charging
amortisation of intangible assets note 11  2749 4408
impairment of capitalised development costs note 11 — 2481
depreciation on owned assets note 12  4503 5173
depreciation and impairment of investment properties note 12  2135 62
loss on sale of property plant and equipment  165 220
auditor’s remuneration — audit  167 136
                                 — other services   103 136
rentals under operating leases
— hire of plant and machinery   2542 3137
— other operating leases   2068 2407
staff costs note 5   52166 64009
restructuring costs   — 2283
the restructuring costs in 2009 were the redundancy costs in association with the reduction in capacity across the group of 
approximately 20 which included a reduction of 15 in the number of employees 
the analysis of auditor’s remuneration is as follows
 2010 2009
 £000 £000
fees payable to the company’s auditor for the audit of the company’s 
annual accounts 16 16
fees payable to the company’s auditor and their associates for other  
services to the group
— the audit of the company’s subsidiaries pursuant to legislation 151 120
total audit fees 167 136
tax services
— advisory and compliance services 103 136
total nonaudit fees 103 136 2015504  27042011 proof 11
76 severfield—rowen plc annual report 2010
notes to the consolidated financial statements continued
year ended 31 december 2010
5 directors and employees
details of directors’ remuneration for the year are provided in the audited part of the directors’ remuneration report on pages  
57 and 58
the average number of persons employed by the group including executive directors during the year was
 2010 2009
 number number
production 927 1068
site 204 208
sales and administration 48 54
 1179 1330
the aggregate payroll costs of these persons were as follows
 2010 2009
 £000 £000
wages and salaries 44973 54626
social security costs 5199 6487
other pension costs 1994 2896
 52166 64009
6 investment revenue and finance costs
 2010 2009
 £000 £000
interest receivable 55 131
interest on bank borrowings 976 1145
net interest payable 921 1014 77
2015504  27042011 proof 11
group accounts 77
7 tax
a the tax charge comprises
 2010 2009
 £000 £000
current tax
uk corporation tax charge at 280 2009 280 based on profits for the year  5161 13661
adjustments to prior years’ tax provision  586 367
total current tax  4575 13294
deferred tax
current year credit note 20  1234 542
adjustments to prior years’ provision  133 26
total deferred tax  1101 516
total tax on profit on ordinary activities 3474 12778
b tax reconciliation
the charge for the year can be reconciled to the profit per the income statement as follows
 2010 2009
 £000 £000
profit before tax  11107 44091
tax on group profit on ordinary activities at standard
uk corporation tax rate of 280 2009 280  3110 12346
expenses not deductible for tax purposes  708 764
nonqualifying profit on disposal  — 11
unprovided deferred tax movement 2 2
impairment of fixed assets 599 —
adjustments to prior years’ provisions  453 341
rate differences  488 —
income tax expense for the year  3474 12778
rate differences arise through the enacted reduction as at 31 december 2010 in corporation tax rates from 280 to 270 effective 
april 2011 reducing the level of the group’s deferred tax liabilities this item is treated as nonunderlying
8 dividends
 2010 2009
 £000 £000
amounts recognised as distributions to equity holders in the period
second interim dividend for the year ended 31 december 2009 of 500p 2008 nil per share 4430 —
final dividend for the year ended 31 december 2009 of nil 2008 1000p per share  — 8861
interim dividend for the year ended 31 december 2010 of 500p 2009 1000p per share  4453 8861
  8883 17722
proposed final dividend for the year ended 31 december 2010 of 250p 2009 nil per share 2231 — 2015504  27042011 proof 11
78 severfield—rowen plc annual report 2010
notes to the consolidated financial statements continued
year ended 31 december 2010
9 earnings per share
the calculation of the basic and diluted earnings per share is based on the following data
earnings
 2010 2009
 £000 £000
earnings for the purposes of basic earnings per share being net profit attributable 
to equity holders of the parent company 7633 31313
earnings for the purposes of underlying basic earnings per share being underlying 
net profit attributable to equity holders of the parent company 11123 36431
 number number
number of shares
weighted average number of ordinary shares for the purposes of basic earnings per share 88973821 88607876
effect of dilutive potential ordinary shares
sharebased payments scheme — 440816
weighted average number of ordinary shares for the purposes of diluted earnings per share 88973821 89048692
basic earnings per share 858p 3534p
underlying basic earnings per share 1250p 4111p
diluted earnings per share 858p 3516p
underlying diluted earnings per share 1250p 4091p
reconciliation of earnings
 2010 2009
 £000 £000
net profit attributable to equity holders of the parent company 7633 31313
other items 3490 5118
underlying net profit attributable to equity holders of the parent company 11123 36431
further details of others items are given in the consolidated income statement 79
2015504  27042011 proof 11
group accounts 79
10 goodwill
 £000
cost
at 1 january 2009 and 31 december 2010 54740
accumulated impairment losses
at 1 january 2009 28
impairment losses for the year —
at 1 january 2010 28
impairment losses for the year —
at 31 december 2010 28
carrying amount
at 31 december 2009 and 31 december 2010 54712
the carrying value of goodwill is allocated to cash generating units cgus as follows
 £000
on the fisher engineering acquisition in 2007 47980
on the atlas ward acquisition in 2005 6571
on the watson steel structures acquisition in 2001 161
 54712
the group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired
the recoverable amounts of goodwill are determined from value in use calculations the key assumptions for the value in use  
calculations are those regarding the discount rates growth rates and expected changes to selling prices and direct costs during the 
period the directors estimate discount rates using pretax rates that reflect current market assessments of the time value of money and 
the risks specific to the cgus changes in selling prices and direct costs are based on past practices and expectations on future changes 
in the market it is anticipated that sales volumes in the uk will not increase materially over the next three years
the group prepares forecast cash flows based on the following years operating budget approved by the directors together with cash 
flows based on budgets for the following two years which are derived from the directors’ views on revenue prospects to the end of 2013 
this equates to a compound annual growth rate from 2010 levels of 4  after this period the growth rate applied to the cash flow 
forecasts is the projected economic growth rate for the industry the cash flow forecasts have been discounted using a pretax discount 
rate of 9 2009 11
the group has conducted a sensitivity analysis on the impairment test for the fisher engineering goodwill a reduction in growth rates 
to 1 in 2012–13 and flat thereafter would result in the recoverable amount of goodwill being reduced to its carrying value of 
£480 million  2015504  27042011 proof 11
80 severfield—rowen plc annual report 2010
11 other intangible assets
 intangible assets
 acquired on development
 acquisition costs total
 £000 £000 £000
cost
at 1 january 2009 39000 2756 41756
additions — — —
at 1 january 2010 39000 2756 41756
additions — — —
at 31 december 2010 39000 2756 41756
amortisation
at 1 january 2009 11348 275 11623
charge for the year 4408 — 4408
impairment loss — 2481 2481
at 1 january 2010 15756 2756 18512
charge for the year 2749 — 2749
at 31 december 2010 18505 2756 21261
carrying amount 
at 31 december 2010 20495 — 20495
at 31 december 2009 23244 — 23244
the intangible assets acquired on acquisition arise as a result of applying ifrs 3 which requires the separate recognition of acquired 
intangibles from goodwill during 2007 the acquisition of fisher engineering limited resulted in intangible assets as follows
 
 customer relationships brands order book knowhow total
 £000 £000 £000 £000 £000
cost 
at 1 january 2009 and 
31 december 2010 25800 3200 9600 400 39000
amortisation
at 1 january 2009 3200 158 7940 50 11348
charge for the year 2580 128 1660 40 4408
at 31 december 2009 5780 286 9600 90 15756
charge for the year 2581 128 — 40 2749
at 31 december 2010 8361 414 9600 130 18505
net book value
at 31 december 2010 17439 2786 — 270 20495
at 31 december 2009 20020 2914 — 310 23244
amortisation of acquired intangibles is included in the consolidated income statement as part of administrative expenses and is classified 
within the middle column entitled “other items”
the amortisation period for each category of intangible asset is disclosed in the statement of significant accounting policies on page 71
notes to the consolidated financial statements continued
year ended 31 december 2010 81
2015504  27042011 proof 11
group accounts 81
12 property plant and equipment investment property
  freehold and  fixtures 
  long leasehold  fittings
 investment land and plant and and office motor
 property buildings machinery equipment vehicles total
 £000 £000 £000 £000 £000 £000
cost 
at 1 january 2009 6197 62166 37789 1680 3245 111077
additions — 3698 667 117 365 4847
disposals — 253 1794 — 810 2857
at 1 january 2010 6197 65611 36662 1797 2800 113067
additions — 9 2414 222 288 2933
disposals — — 857 — 785 1642
at 31 december 2010 6197 65620 38219 2019 2303 114358
accumulated depreciation 
depreciation 
at 1 january 2009 — 981 14997 987 1202 18167
charge for the year 62 434 3997 214 528 5235
disposals — — 896 — 481 1377
at 1 january 2010 62 1415 18098 1201 1249 22025
charge for the year 62 468 3522 174 339 4565
impairment loss 2073 — — — — 2073
disposals — — 764 — 490 1254
at 31 december 2010 2197 1883 20856 1375 1098 27409
carrying amount
at 31 december 2010 4000 63737 17363 644 1205 86949
at 31 december 2009 6135 64196 18564 596 1551 91042 2015504  27042011 proof 11
82 severfield—rowen plc annual report 2010
12 property plant and equipment investment property continued
the group operates a system of regular valuations of freehold and long leasehold land and buildings across its portfolio which have 
included using fpd savills and rushton international chartered surveyors who are independent valuers not connected to the group 
this operates on a rotational basis with one of the four main properties reviewed each year the four properties are the severfield–
reeve structures ltd site at dalton airfield industrial estate the watson steel structures ltd site at lostock lane bolton the atlas ward 
structures ltd site at sherburn and the fisher engineering ltd steel storage site at enniskillen in northern ireland
to date no material surplus or deficit over net book value has been identified and accordingly no adjustment to revalue freehold and 
long leasehold land and buildings has been considered necessary
the net book value of the group’s plant and machinery includes £nil 2009 £nil in respect of assets held under finance leases
the investment property represents land and buildings held in leeds the group is receiving rental income on this property until the 
end of 2012 at a current rate of £378000 per annum this has been subject to an annual depreciation charge at 1 as required under 
the group’s depreciation policy as at 1 january 2010 the fair value of the property was £6135000 the directors have reviewed this 
carrying value as at 31 december 2010 and in view of the continued poor state of the property market and approaching end of the 
current lease consider an impairment charge to be appropriate following soundings over future divestment and leasehold potential a 
revised valuation of £4000000 is now considered appropriate no independent valuation by an appropriately qualified surveyor has 
been obtained
13 subsidiaries
the company has investments in the following significant subsidiary undertakings all of the companies listed are registered in england
severfield–reeve structures ltd — steel fabrication
watson steel structures ltd — steel fabrication
atlas ward structures ltd — steel fabrication
fisher engineering ltd — steel fabrication
rowen structures ltd — project contracting
steelcraft erection services ltd — steel erection
severfield–reeve international ltd — overseas contracts
the company owns the whole of the issued share capital of the subsidiaries noted above
14 interests in associates
the company has an interest in two associated companies and a joint venture as follows
associated companies holding  class of capital
kennedy watts partnership ltd — cadcam steelwork design 251 preferred ordinary
fabsec ltd — development of fire beam 250 ordinary
joint venture
jsw severfield structures ltd — structural steelwork serving the indian market 500 ordinary
on 17 november 2008 a formal agreement was signed in india with jsw building systems ltd a subsidiary of jsw steel ltd of india 
to form a 5050 joint venture jsw severfield structures limited to create a structural steelwork business in bellary and mumbai india 
serving primarily the indian market as set out in pages 10 to 11 the joint venture is now established and now undertaking its first 
contracts serving the indian market
notes to the consolidated financial statements continued
year ended 31 december 2010 83
2015504  27042011 proof 11
group accounts 83
14 interests in associates continued
jsw severfield structures limited is registered in india and during the year the group invested a further £2884000  
2009 £2443000 in the joint venture
  share of net loans to
  assets associate
 goodwill liabilities undertaking total
group £000 £000 £000 £000
at 1 january 2009 362 201 71 232
losses retained — 942 — 942
net assets acquired 208 2235 — 2443
at 1 january 2010 570 1092 71 1733
net assets acquired 319 3203 — 2884
losses retained — 1760 — 1760
at 31 december 2010 251 2535 71 2857
the group’s share of the retained profitloss for the year of the associates is made up as follows
 kennedy watts
 partnership fabsec jsw severfield 
 ltd ltd structures ltd total
 £000 £000 £000 £000
share of results 12 10 1758 1760
summarised financial information in respect of the group’s associates is as follows
 2010 2009
 £000 £000
total assets 34125 6125
total liabilities 29423 4242
net assets 4702 1883
group’s share of associates’ net assets 2535 1092
revenue 1313 2150
lossprofit after tax 3582 1669
group’s share of associates’ lossprofit after tax for the period 1760 942
during the year ended 31 december 2005 the board reviewed the investment of longterm loans outstanding from fabsec ltd of 
£614000 and concluded that there was an element of doubt over the collection of this loan in the short to medium term consequently 
after considering the net liabilities of fabsec ltd a provision of £543000 was made against the debt this provision remains in place at 
31 december 2010
additionally on 3 february 2006 severfield–reeve structures ltd entered into a 5050 joint venture agreement with murray metals 
group ltd to form steel uk ltd a company involved in steel buying activities to date both parties have continued to purchase steel 
through the individual companies and no trade has passed through steel uk ltd the share capital invested by the group is a nominal 
sum of £50 steel uk ltd is registered in england
15 inventories
 2010 2009
 £000 £000
raw materials and consumables 3518 3345
workinprogress 9115 6465
 12633 9810 2015504  27042011 proof 11
84 severfield—rowen plc annual report 2010
notes to the consolidated financial statements continued
year ended 31 december 2010
16 construction contracts
  as reanalysed
 2010 2009
 £000 £000
contracts in progress at balance sheet date
amounts due from construction contract customers 
included in trade and other receivables 65488 46845
amounts due to construction contract customers 
included in trade and other payables 1545 11958
 63943 34887
contract costs incurred plus recognised profits less 
recognised losses to date 699742 1122464
less progress billings 635799 1087577
 63943 34887
at 31 december 2010 retentions held by customers for contract work amounted to £12966000 2009 £14789000
at 31 december 2010 amounts of £2685000 2009 £4916000 included in trade and other receivables and arising from 
construction contracts are due for settlement after more than 12 months 
17 trade and other receivables 
 2010 2009
 £000 £000
amounts due from construction contract customers note 16 65488 46845
other receivables 3028 5201
prepayments and accrued income 2620 1836
amounts due from associates 725 773
 71861 54655
within other receivables there is deferred expenditure of £nil 2009 £nil due after more than one year
the average credit period taken on revenue calculated on a countback basis to make appropriate allowance for monthly revenue 
phasing is 70 days 2009 as reanalysed 61 days no interest is charged on receivables
the directors consider that the carrying amount of trade and other receivables approximates their fair value
before accepting any new customer the group uses an external credit rating to assess the potential customer’s credit quality and defines 
credit limits by customer it is group policy that adequate credit insurance is taken out on all customers to manage the exposure that 
may arise as the contractual work proceeds accordingly no bad debt provisions are held or expenses incurred however a credit 
insurance committee has now been established to review situations where adequate credit insurance on the group’s customers cannot 
be purchased in the present economic climate
due to the nature of the business involving applications for payment contractually overdue amounts within trade and other receivables 
are limited to retentions the group has rigorous procedures in place for monitoring and obtaining settlement of retentions in a prompt 
manner amounts overdue at 31 december 2010 in respect of retentions were £227000 2009 £148000 85
2015504  27042011 proof 11
group accounts 85
18 trade and other payables
  as reanalysed
 2010 2009
 £000 £000
trade creditors 31314 18172
other taxation and social security 3795 6283
other creditors and accruals 39039 45991
payments in advance note 16 1545 11958
amounts owed to associates and joint venture 175 161
 75868 82565
the directors consider that the carrying amount of trade payables approximates their fair value
the average credit period taken for trade purchases calculated on a countback basis to make appropriate allowance for monthly 
phasing is 43 days 2009 as reanalysed 29 days
the 2009 comparative figure has been reanalysed to better reflect the nature of the underlying balance this also impacts the 
comparative payments in advance position in note 16
19 provisions
 2010 2009
 £000 £000
contract legal provisions 600 2600
contract legal provisions relate to provisions on contracts including fault and warranty provisions and are expected to be utilised within 
three years provision is made for the directors’ best estimate of known legal claims in progress
20 deferred tax liabilities
the following are the major deferred tax liabilities and assets recognised by the group and movements thereon during the current and 
prior reporting period
 2010 2009
 £000 £000
deferred tax liabilities 15969 17299
deferred tax assets 2770 2783
net deferred tax liability 13199 14516
the net deferred tax liability is made up as follows
 2010 2009
 £000 £000
excess capital allowances 10312 10703
other timing differences 314 300
intangible assets on acquisition of subsidiary 5534 6508
forward exchange contracts 29 41
on retirement benefit obligations 2304 2354
net deferred tax liability 13199 14516 2015504  27042011 proof 11
86 severfield—rowen plc annual report 2010
notes to the consolidated financial statements continued
year ended 31 december 2010
20 deferred tax liabilities continued
the movement during the year in net deferred tax liability is as follows
 2010 2009
 £000 £000
at 1 january 14516 15618
current year credit 1234 542
adjustment in respect of prior years 40 26
deferred tax in relation to pension scheme losses 123 586
at 31 december 13199 14516
the deferred tax assets reducing the deferred tax liability relate to 27 2009 28 of the group’s deficit on its defined benefit 
retirement scheme of £8532000 the valuation of financial instruments and other timing differences
unprovided deferred tax amounted to £71000 2009 nil
the government announced in june 2010 that it intended to reduce the rate of corporation tax from 28 to 24 over four years and 
the finance act 2010 which was substantively enacted in july 2010 includes provisions to reduce the rate of corporation tax to 27 
with effect from 1 april 2011 accordingly deferred tax balances have been revalued to the lower rate of 27 in these accounts which 
has resulted in a credit to the consolidated income statement of £488000
on 23 march 2011 the government announced that it intends to further reduce the rate of corporation tax to 26 with effect from 
1 april 2011 and then by 1 per annum to 23 by 1 april 2014 as this legislation was not substantively enacted by 31 december 
2010 the impact of the anticipated rate change is not reflected in the tax provisions reported in these accounts if the deferred tax assets 
and liabilities of the group were all to reverse after 1 april 2014 the effect of the changes from 27 to 23 would be to reduce the net 
deferred tax liability by approximately £1900000 to the extent that the deferred tax reverses more quickly than this the impact on the 
net deferred tax liability will be reduced
21 financial instruments
capital risk management
the group manages its capital to ensure that entities in the group will be able to continue as going concerns while maximising the 
return to stakeholders 
the capital structure of the group consists of debt which includes borrowings cash and cash equivalents and equity attributable to 
equity holders of the parent comprising issued capital reserves and retained earnings
gearing ratio
the board of directors reviews the capital structure of the group on a semiannual basis as part of this review it considers the cost of 
capital and the risks associated with each class of capital
the gearing ratio at the year end is as follows
 2010 2009
 £000 £000
borrowings 18629 —
cash and cash equivalents 3589 11548
net debtfunds 15040 11548
equity 130943 132475
net debt to equity ratio 115 nil
equity includes all capital and reserves of the group attributable to equity holders of the parent there are no externally imposed capital 
requirements
significant accounting policies
details of the significant accounting policies and methods adopted including the criteria for recognition the basis of measurement and 
the basis on which income and expenses are recognised in respect of each class of financial asset financial liability and equity instrument 
are disclosed in note 1 to the financial statements 87
2015504  27042011 proof 11
group accounts 87
21 financial instruments continued
categories of financial instruments
 carrying value
 2010 2009
 £000 £000
financial assets
cash and cash equivalents 3589 11548
amounts due from construction contract customers 65488 46845
financial liabilities
trade creditors 31314 18172
other payables 44379 64232
borrowings 18629 —
derivative financial instruments 108 147
the group is required to analyse financial instruments that are measured subsequent to initial recognition at fair value grouped into 
levels 1 to 3 based on the degree to which the fair value is observable
● ● level 1 fair value measurements are those derived from quoted prices unadjusted in active markets for identical assets or liabilities
● ● level 2 fair value measurements are those derived from inputs other than quoted prices included within level 1 that are observable 
for the asset or liability either directly ie as prices or indirectly ie derived from prices and
● ● level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not 
based on observable market data unobservable inputs
derivative financial instruments are the only instruments valued at fair value through profit or loss and are valued as such on initial 
recognition these relate to foreign currency forward contracts measured using quoted forward exchange rates and yield curves 
matching the maturities of the contracts these derivative financial instruments are categorised as level 2 financial instruments except 
for derivative financial instruments the carrying amounts of financial assets and financial liabilities are recorded at amortised cost in the 
financial statements and are considered to approximate their fair value
cash and cash equivalents
this comprises cash held by the group and shortterm deposits with an original maturity of three months or less the carrying amount of 
these assets approximates their fair value
general risk management principles
the board has overall responsibility for the establishment and oversight of the group’s risk management framework a formal risk 
assessment and management framework for assessing monitoring and managing the strategic operational and financial risks of the 
group is in place to ensure appropriate risk management of its operations internal control and risk management systems are embedded 
in the operations of the divisions 2015504  27042011 proof 11
88 severfield—rowen plc annual report 2010
21 financial instruments continued
financial risks and management
the group has exposure to a variety of financial risks through the conduct of its operations risk management is governed by the 
group’s operational policies which are subject to periodic review by the board of directors
credit risk
the group’s primary exposure to credit risk arises from the potential for nonpayment or default from construction contract debtors 
the degree to which the group is exposed to this credit risk depends on the individual characteristics of the contract counterparty 
and the nature of the project the group’s credit risk is also influenced by the general macroeconomic conditions the group does 
not have significant concentration of risk in respect of amounts due from construction contract customers at the reporting date with 
them being spread across a wide range of customers due to the nature of the group’s operations it is normal practice for customers 
to hold retentions in respect of contracts completed retentions held by customers at 31 december 2010 were £12966000 2009 
£14789000
the group manages its exposure to credit risk through the application of its credit risk management policies which specify the minimum 
requirements in respect of the credit worthiness of potential customers assessed through reports from credit agencies and the timing 
and extent of progress payments in respect of contracts in addition before accepting any new customer adequate credit insurance 
is taken out as reported in note 17 where credit insurance is difficult to acquire the credit insurance committee comprising t g 
haughey p a emerson and a d dunsmore convenes to determine the appropriate exposure for the group to take with a customer
the group manages the collection of retentions through its postcompletion project monitoring procedures and ongoing contact with 
customers so as to ensure that potential issues that could lead to the nonpayment of retentions are addressed as soon as they are 
identified
amounts outstanding from construction contract customers are due with reference to the payment terms for each particular contract but 
the majority would be receivable within four months from the end of the reporting period amounts due for settlement after 12 months 
are disclosed in note 16
liquidity risk
liquidity risk is the risk that the group will not be able to meet its financial obligations as and when they fall due the ultimate 
responsibility for liquidity risk rests with the board
the group generates cash through its operations and aims to manage liquidity by ensuring that it will always have sufficient liquidity to 
meet its liabilities when due under both normal and stress conditions without incurring unacceptable losses or risking damage to the 
group’s reputation forecast and actual cash flow is continuously monitored
borrowings represent the group’s revolving credit facility from the royal bank of scotland and clydesdale bank plc a member of 
national australia bank group jointly which provides credit support of up to £40 million at an interest rate of 225 or 275 above 
libor subject to the ratio of group net debt to ebitda this facility was renewed in march 2010 and is available for three years 
ending march 2013
as at december 2010 £30 million was drawn down on this facility with £10 million of further facility not drawn but available
notes to the consolidated financial statements continued
year ended 31 december 2010 89
2015504  27042011 proof 11
group accounts 89
21 financial instruments continued
liquidity risk continued
borrowings outstanding net of associated issue costs at 31 december 2010 amounted to £18629000 2009 £nil
ifrs 7 requires disclosure of the maturity of the group’s remaining contractual financial liabilities the tables below detail the group’s 
remaining contractual maturity for its financial liabilities and assets
2010 analysis
 maturity analysis
 balance sheet less than 3 months 1–2 2–5
 value 3 months to 1 year years years total
 £000 £000 £000 £000 £000 £000
current liabilities
trade and other payables 75693 52023 21468 1942 260 75693
financial liabilities — borrowings
1
 18629 — — 18629 — 18629
financial liabilities — derivative
financial instruments
2
 108 72 36 — — 108
total 94430 52095 21504 20571 260 94430
current assets
cash and cash equivalents
3
 3589 3589 — — — 3589
total 3589 3589 — — — 3589
grand total 90841 48506 21504 20571 260 90841
2009 analysis
current liabilities
trade and other payables 82404 62766 18580 1058 — 82404
financial liabilities — borrowings
1
 — — — — — —
financial liabilities — derivative
financial instruments
2
 147 119 28 — — 147
total 82551 62885 18608 1058 — 82551
current assets
cash and cash equivalents
3
 11548 11548 — — — 11548
total 11548 11548 — — — 11548
grand total 71003 51337 18608 1058 — 71003
1
 details of the conditions applying to these borrowings are given above
2
  the group has no gross settled derivative financial instruments and therefore solely the pay leg has been disclosed within liabilities
3
 cash and cash equivalents have also been disclosed in order to present a full analysis of the group’s financial assets 2015504  27042011 proof 11
90 severfield—rowen plc annual report 2010
notes to the consolidated financial statements continued
year ended 31 december 2010
21 financial instruments continued
market risk
the group’s activities expose it primarily to the financial risks of changes in credit risks described above in foreign currency exchange rates 
and interest rates the group has entered into a variety of derivative financial instruments to manage its exposure to foreign currency risk
market risk exposures are monitored and are supplemented by sensitivity analysis there has been no change to the group’s exposure to 
market risks or the manner in which it manages and measures the risk
f oreign currency risk management
the group undertakes certain transactions denominated in foreign currencies hence exposures to exchange rate fluctuations arise 
exchange rate exposures are managed within approved policy parameters utilising forward foreign exchange contracts
the group seeks to minimise the effects of currency risks by using derivative financial instruments when appropriate to hedge these 
risk exposures against contracted sales the use of financial derivatives is governed by the group’s policies approved by the board 
of directors the group does not enter into or trade financial instruments including derivative financial instruments for speculative 
purposes
the carrying value of the group’s foreign currency denominated monetary assets and monetary liabilities at the reporting date are as follows
 liabilities assets
 2010 2009 2010 2009
 £000 £000 £000 £000
euro 97 356 2065 3575
us dollar — — 1348 11
 97 356 3413 3586
f oreign currency sensitivity analysis
the group is only significantly exposed to the euro and us dollar
the following table details the group’s sensitivity to a 10 increase and decrease in sterling against the relevant foreign currencies 
10 is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents 
management’s assessment of the reasonably possible change in foreign exchange rates the sensitivity analysis includes only outstanding 
foreign currency denominated monetary items and derivative financial instruments and adjusts their translation at the period end for 
a 10 change in foreign currency rates a positive number below indicates an increase in profit and other equity where the sterling 
strengthens 10 against the relevant currency for a 10 weakening of the sterling against the relevant currency there would be an 
equal and opposite impact on the profit and other equity and the balances below would be negative
 us dollar currency impact euro currency impact
 2010 2009 2010 2009
 £000 £000 £000 £000
profit or loss and equity 414 293 91 399
the group’s sensitivity to euros has decreased in 2010 due to the reduced amount of work in the republic of ireland
at present the group’s translation exposure to the indian rupee via its indian joint venture is not significant going forward as the 
business grows this exposure is expected to become more significant
f orward foreign exchange contracts
it is the policy of the group to enter into forward foreign exchange contracts to cover future euro and us dollar currency receipts on 
relevant contracts
at 31 december 2010 the group had forward exchange contracts held for the sale of 120 million euros 2009 678 million euros
and 849 million us dollars 2009 640 million us dollars at an average exchange rate of 11657 euros 2009 11504 euros and
15720 us dollars 2009 16045 us dollars to the pound and maturing within 12 months of the year end 91
2015504  27042011 proof 11
group accounts 91
21 financial instruments continued
interest rate risk management
the group is exposed to interest rate risk as described under the borrowings paragraph earlier in this note the group does not 
currently hedge any of its interest rate exposure
interest rate sensitivity analysis
the sensitivity analysis below has been determined based on the exposure to interest rates at the balance sheet date for floating rate 
liabilities the analysis is prepared assuming the gross amount of liability outstanding at balance sheet date was outstanding for the whole 
year a 05 increase or decrease is used when reporting interest rate risk internally to key management personnel and represents 
management’s assessment of the reasonably possible change in interest rates
if interest rates had been 05 higher and all other variables were held constant the group’s profit for the year ended 31 december 
2010 and the group’s equity at that date would decrease by £150000 2009 £25000 this is attributable to the group’s exposure to 
interest rates on its variable rate borrowings if the £40 million facility is fully utilised the exposure increases to £200000
the group’s sensitivity to interest rates has increased during the current period due to the increase in the level of borrowings in the year 
current indications are that the level of group borrowings will increase further during 2011 but remain within current facility limits
22 sharebased payments
the group operates a sharebased incentive scheme open to all employees of the group although the current intention is that 
only the company’s executive directors being both main board directors and certain members of the executive committee and 
selected senior employees will participate in the scheme further details are given in the directors’ remuneration report on pages 50 to 
58 the group recognised a total charge of £nil in the year 2009 charge of £626000 with a corresponding entry to reserves
performance share plan
the vesting of awards is subject to performance conditions set by the remuneration committee four awards had been granted to 
31 december 2010
● ● during 2007 the remuneration committee granted 65827 ordinary shares of 10p each at nil value to the executive directors 
following the 41 share split in october 2007 these converted to 263308 ordinary shares of 25p each these shares vested 
during 2010
● ● during 2008 the remuneration committee granted a further 34112 ordinary shares of 25p each at nil value to the executive 
directors these awards will not vest in 2011 by reference to the eps performance over the performance period
company’s eps performance over the performance period  of award vesting
equal to less than rpi  18 0
equal to rpi  18 25
equal to rpi  50 or better 100
between rpi  18 and rpi 50 pro rata between 25 and 100
the black–scholes pricing model has been used to measure the fair value of the shares granted the assumptions used in the model are as follows
share price on date of grant £31675
exercise price nil
expected volatility using historic performance 50
riskfree rate 5
dividend 200p
expected percentage options exercised versus granted nil
actual life three years
 granted on 30 april 2008
the black–scholes model produced using the above assumptions an annual charge of £nil 2015504  27042011 proof 11
92 severfield—rowen plc annual report 2010
22 sharebased payments continued
● ● during 2009 the remuneration committee granted a further 599151 ordinary shares of 25p each at nil value to the executive 
directors the vesting of these awards will be dependent on the company’s earnings per share performance over the three year 
period from 1 january 2009 to 31 december 2011 with the following vesting schedule to apply
company’s eps performance for year ending 31 december 2011  of award vesting
equal to less than 250p 0
equal to 300p 25
equal to 400p or better 100
between 250p and 300p pro rata between 0 and 25
between 300p and 400p pro rata between 25 and 100
the black–scholes pricing model has been used to measure the fair value of the shares granted the assumptions used in the model are 
as follows
share price on date of grant £153
exercise price nil
expected volatility using historic performance 50
riskfree rate 5
dividend 150p
expected percentage options exercised versus granted nil
actual life three years
 granted on 4 february 2009
the black–scholes model produced using the above assumptions an annual charge of £nil
● ● during 2010 the remuneration committee granted a further 793072 ordinary shares of 25p each at nil value to the executive 
directors the vesting of these awards will be dependent on the company’s earnings per share performance over the three year 
period from 1 january 2010 to 31 december 2012 with the following vesting vesting schedule to apply
company’s eps performance for year ending 31 december 2012  of award vesting
equal to less than 250p 0
equal to 350p or better 100
between 250p and 350p pro rata between 0 and 100
the black–scholes pricing model has been used to measure the fair value of the shares granted the assumptions used in the model are 
as follows
share price on date of grant £204
exercise price nil
expected volatility using historic performance 50
riskfree rate 5
dividend 100p
expected percentage options exercised versus granted nil
actual life three years
 granted on 5 march 2010
the black–scholes model produced using the above assumptions an annual charge of £nil
 share incentive plan
during 2010 the group implemented a share incentive plan for group employees as part of the scheme 202384 new ordinary shares 
of 25p were issued which are being held in trust for a three year period on behalf of 973 group employees the vesting of these 
awards will be subject to continued employment for each of the relevant employees options are forfeited if the employee leaves the 
group before the options vest the share price on the date of issue of the shares 29 october 2010 was £241 and the fair value was 
measured based on the market price of the shares at the date of grant the aggregate of the estimated values of the awards granted in 
2010 is £488000 a charge of £35000 was recognised in the current year in relation to the share incentive plan
notes to the consolidated financial statements continued
year ended 31 december 2010 93
2015504  27042011 proof 11
group accounts 93
23 share capital
 2010 2009
 £000 £000
authorised
108000000 ordinary shares of 25p each 2700 2700
issued and fully paid
89251076 ordinary shares of 25p each 2009 88607876 2231 2215
there are no share options outstanding as at 31 december 2010 2009 nil
on 29 march 2010 440816 ordinary shares of 25p each were issued in relation to the vesting of shares under the company’s 
performance share plan on 29 october 2010 202384 ordinary shares of 25p each were issued in relation to the group employee 
share incentive plan
24 other reserves
 sharebased other
 payment reserve reserves total
 £000 £000 £000
balance at 1 january 2009 300 139 439
sharebased payments in year 626 — 626
balance at 1 january 2010 926 139 1065
sharebased payments in year 896 — 896
balance at 31 december 2010 30 139 169
the movement in the sharebased payment reserve comprises the following components
     2010 2009
 £000 £000
shares issued under share incentive plan    5 —
sharebased payments    35 626
vesting of shares under share performance plan    926 —
total    896 626
25 notes to the cash flow statement
 2010 2009
 £000 £000
operating profit from continuing operations 12028 45105
adjustments for
provision release 2000 —
share of results of associated companies 1760 942
depreciation of property plant and equipment  4503 5173
depreciationimpairment of investment property 2135 62
pension movements  317 335
loss on disposal of property plant and equipment  165 220
sharebased payments  35 626
amortisation of intangibles  2749 4408
impairment of capitalised development costs  — 2481
movement in valuation of derivative financial instruments  39 3440
operating cash flows before movements in working capital  21019 55242
increase in inventories  2823 1483
increasedecrease in receivables  17212 6290
decreaseincrease in payables  6794 5320
cash generated by operations  5810 65369
tax paid 5393 13235
net cash flow after tax from operating activities 11203 52134 2015504  27042011 proof 11
94 severfield—rowen plc annual report 2010
notes to the consolidated financial statements continued
year ended 31 december 2010
26 analysis of net fundsdebt
 at   at 31
 1 january cash  december
 2010 flow borrowings 2010
 £000 £000 £000 £000
cash at bank and in hand 11548 7959 — 3589
borrowings — — 18629 18629
net fundsdebt 11548 7959 18629 15040
27 capital commitments
 2010 2009
 £000 £000
contracted for but not provided in the financial statements 361 —
28 contingent liabilities
the company and its subsidiaries have provided unlimited multilateral guarantees to secure any bank overdrafts and loans of all 
other group companies at 31 december 2010 these amounted to £30000000 2009 £294720000 the group has also given 
performance bonds in the normal course of trade
29 operating lease arrangements
the group as lessee
the group leases a number of its premises under operating leases which expire between 2010 and 2032
the total future minimum lease rentals are as follows
 2010 2009
 £000 £000
minimum lease rentals due
— within one year 1297 —
— after one year and within five years 5436 18
— after five years 11484 19338
 18217 19356
the group also leases certain items of plant and machinery and vehicles whose total future minimum lease rentals are as follows
 2010 2009
 £000 £000
minimum lease rentals due
— within one year 1923 344
— after one year and within five years 1142 3620
— after five years 133 998
 3198 4962
the group as lessor
property rental income earned on owned properties during the year was £399000 2009 £444000 the properties are expected 
to generate rental yields of 65 on an ongoing basis the properties held have committed tenants for the next two to nine years all 
operating lease contracts contain market review clauses in the event that the lessees exercise the options to renew the lessees do not 
have an option to purchase the property at the expiry of the lease period 95
2015504  27042011 proof 11
group accounts 95
29 operating lease arrangements continued
as at the balance sheet date the group had contracted with tenants for the following future minimum lease payments
 2010 2009
 £000 £000
— within one year 407 437
— after one year and within five years 492 1072
— after five years 21 157
 920 1666
30 retirement benefit schemes
defined contribution schemes
the group operates two defined contribution retirement benefit schemes the assets of the schemes are held separately from those of 
the group in funds under the control of trustees
the total cost charged to income of £1458000 2009 £2124000 represents contributions payable to these schemes by the group 
at rates specified in the rules of the plans as at 31 december 2010 contributions of £118000 2009 £294000 due in respect of the 
current reporting period had not been paid over to the schemes
defined benefit schemes
atlas ward has a defined benefit scheme which is now closed to new members 
the most recent actuarial valuations of plan assets and the present value of the defined benefit obligation were carried out at 5 april 
2008 by mr christopher hunter fellow of the institute of actuaries the present value of the defined benefit obligation the related 
current service cost and past service cost were measured using the projected unit credit method
 2010 2009
  
key assumptions used
discount rate 550 580
expected return on scheme assets 510 530
expected rate of salary increases — —
future pension increases 340 330
when considering mortality assumptions a male life expectancy to 84 at age 65 has been used in 2010 2009 83
impact on scheme liabilities of changes to key assumptions
assumption change in assumption impact on scheme liabilities
discount rate increasedecrease by 05 decreaseincrease by 89
rate of mortality increase by 1 year increase by 24
amounts recognised in income in respect of these defined benefit schemes are as follows
 2010 2009
 £000 £000
interest cost 1343 1158
expected return on scheme assets 807 721
 536 437
the charge for the year has been included in administrative expenses actuarial gains and losses have been reported in the statement of 
comprehensive income the cumulative actuarial gains and losses recognised amount to a loss of £4227000 2009 £3910000
the actual return on scheme assets was a gain of £773000 2009 £1098000 2015504  27042011 proof 11
96 severfield—rowen plc annual report 2010
notes to the consolidated financial statements continued
year ended 31 december 2010
notes to the consolidated financial statements continued
year ended 31 december 2010
30 retirement benefit schemes continued
the amount included in the balance sheet arising from the group’s obligations in respect of the atlas ward defined benefit retirement 
scheme is as follows
 2010 2009 2008
 £000 £000 £000
present value of defined benefit obligations 24610 23459 20438
fair value of scheme assets 16078 15052 13787
deficit in scheme 8532 8407 6651
liability recognised in the balance sheet 8532 8407 6651
the major categories of scheme assets as a percentage of the total scheme assets are as follows
 2010 2009
  
equities 227 270
bonds 85 176
cash 656 459
property — 95
other 32 —
 1000 1000
when investments are held in bonds and cash the expected longterm rate of return is taken to be the yields generally prevailing on 
such assets at the balance sheet date a higher rate of return is expected on equity investments which is based more on realistic future 
expectations than on the returns that have been available historically the overall expected longterm rate of return on assets is then the 
average of these rates taking into account the underlying asset portfolio of the pension plan 
movements in the present value of defined benefit obligations were as follows
 2010 2009
 £000 £000
at 1 january 23459 20438
interest cost 1343 1158
actuarial gains and losses 406 2468
benefits paid 598 605
at 31 december 24610 23459
movements in the fair value of scheme assets were as follows
 2010 2009
 £000 £000
at 1 january 15052 13787
expected return on scheme assets 807 721
actuarial gains and losses 34 377
contributions from the sponsoring companies 851 772
benefits paid 598 605
at 31 december 16078 15052
none of the scheme’s assets were invested in atlas ward or property occupied by atlas ward
the group expects to contribute £69000 per month to its defined benefit pension scheme in the year to 31 december 2011 97
2015504  27042011 proof 11
group accounts 97
30 retirement benefit schemes continued
history of experience of gains and losses
 2010 2009 2008 2007 2006
experience gains and losses on scheme assets £000 34 377 1674 105 418
percentage of scheme assets 02 25 121 07 30
experience gains and losses on scheme liabilities £000 1013 223 198 373 57
percentage of the present value of scheme liabilities 41 10 10 18 03
total amount recognised in the consolidated  
statement of comprehensive income £000 440 2091 190 285 1169
percentage of the present value of scheme liabilities 18 89 09 13 56
31 related party transactions
the remuneration of the directors who are the key management personnel of the group is provided in the audited part of the directors’ 
remuneration report on pages 57 and 58
in addition to the company’s executive directors members of the executive committee are also considered as key management personnel 
of the group information about the remuneration of the additional directors who belong to the executive committee is as follows
 2010 2009
 £000 £000
shortterm employee benefits 1419 1740
contributions into pension schemes 199 318
 1618 2058
shortterm employee benefits include salary bonus the provision of company cars fuel for company cars and private medical insurance
the charge in relation to sharebased payments is provided in note 22 and relates to executive directors and members of the executive 
committee
transactions between the company and its subsidiaries which are related parties have been eliminated on consolidation and are not 
disclosed in this note transactions between the group and its associated undertakings are disclosed below
during the year the group purchased services in the ordinary course of business from kennedy watts partnership ltd at a cost of 
£751000 2009 £873000 the amount outstanding at 31 december 2010 was £179000 2009 £161000
loans outstanding from fabsec ltd at 31 december 2010 amounted to £594000 2009 £614000 the directors continue to have 
doubts regarding the collectability of these loans and consequently a provision of £543000 which was made in 2005 is still in place 
leaving a balance at 31 december 2010 of £51000 2009 £71000 during the year the group purchased services in the ordinary 
course of business from fabsec ltd at a cost of £132000 2009 £256000 the amount outstanding at 31 december 2010 was 
£47000 2009 £19000
during the year the group incurred additional operating costs in relation to the setting up and establishment of the joint venture in india 
of £1004000 2009 £773000 those costs were recharged to the joint venture company during the year and £725000 remained 
outstanding at 31 december 2009 2015504  27042011 proof 11
98 severfield—rowen plc annual report 2010
32 general information
severfield–rowen plc is a company incorporated in the united kingdom under the companies act 2006 the address of the registered office 
is given on page 28 the nature of the group’s operations and its principal activities are set out on pages 4 to 9 these financial statements 
are presented in pounds sterling because that is the currency of the primary economic environment in which the group operates
at the date of authorisation of these accounts there are a number of new standards and interpretations issued but not yet effective some of 
which are pending endorsement by the european union which the group has not applied in these accounts these principally include
● ● ifrs 7 amendment “financial instruments disclosures on derecognition” — effective for accounting periods beginning on or after  
1 july 2011
● ● ias 12 amendment “deferred tax recovery of underlying assets” — effective for accounting periods beginning on or after 1 january 2012 
● ● ias 32 amendment “financial instruments presentation on classification of rights issues” — effective for accounting periods 
beginning on or after 1 february 2010
● ● ifric 14 “prepayments of a minimum funding requirement” — effective for accounting periods beginning on or after 1 january 2011
● ● ifric 19 “extinguishing financial liabilities with equity instruments” — effective for accounting periods beginning on or after 1 july 2010
● ● ifrs 1 amendment “severe hyperinflation and removal of fixed dates for first time adopters” — effective for accounting periods 
beginning on or after 1 july 2011
● ● ifrs 9 “financial instruments” — revision effective for accounting periods beginning on or after 1 july 2013 and
● ● improvements to ifrs 2010 — effective for accounting periods beginning on or after 1 january 2011 with certain aspects on or after 
1 july 2010
the adoption of these standards in future periods is not expected to have a material impact on the financial results of the group
notes to the consolidated financial statements continued
year ended 31 december 2010 99
2015504  27042011 proof 11
group accounts 99
 ifrs
 2010 2009 2008 2007 2006
 £000 £000 £000 £000 £000
results
revenue 266692 349417 394325 300656 295084
underlying operating profit 16204 51828 55107 42684 29118
underlying profit before tax 15283 50814 52479 42950 30286
nonunderlying items 3490 5118 9885 4590 —
profit attributable to equity holders
of severfield–rowen plc 7633 31313 23976 26434 20921
assets employed
noncurrent assets 165013 170731 177987 173279 51988
net current liabilitiesassets 11739 12732 33355 35615 25266
noncurrent liabilities 22331 25524 24869 20835 11029
net assets 130943 132475 119763 116829 66225
key statistics
earnings per share
basic — underlying 1250p 4000p 4220p 3574p 2564p
basic 858p 3534p 2706p 3177p 2564p
diluted — underlying 1250p 3980p 4215p 3570p 2564p
diluted 858p 3516p 2702p 3173p 2564p
dividends per share 750p 1500p 2000p 2000p 1425p
dividend cover times — underlying basis 13 27 21 18 18
share price — high 31320p 24300p 46000p 62000p 41200p
 — low 17720p 11950p 13125p 34475p 24150p
key statistics for prior years have been restated to reflect the 41 share capital in october 2007
  the basis of stating results on an underlying basis is set out on page 1
preliminary announcement of full year results 22 march 2011
publication of annual report 28 april 2011
annual general meeting 8 june 2011
payment of final dividend 16 june 2011
announcement of interim results provisional 23 august 2011
five year summary
 
f inancial calendar
   2015504  27042011 proof 11
severfield—rowen plc annual report 2010 100
company accounts 
contents
102 independent auditor’s report
103 company balance sheet
104 notes to the company financial statements 101
2015504  27042011 proof 11
company accounts 101
transport brid ges  car parks sectors
proje ct heathrow terminal 2a l ocation london
proje ct blackfriars bridge deck 
replacement locat ion london
proje ct thameslink borough viaduct 
bridges   locat ion london
proje ct st pancras station  
locat ion london
proje ct link bridge  
locat ion stratford city london 2015504  27042011 proof 11
severfield—rowen plc annual report 2010 102
we have audited the parent company 
financial statements of severfield–rowen 
plc for the year ended 31 december 2010 
which comprise the company balance sheet 
and the related notes 1 to 15 the financial 
reporting framework that has been applied 
in their preparation is applicable law and 
united kingdom accounting standards 
united kingdom generally accepted 
accounting practice
this report is made solely to the company’s 
members as a body in accordance with 
chapter 3 of part 16 of the companies act 
2006 our audit work has been undertaken 
so that we might state to the company’s 
members those matters we are required 
to state to them in an auditor’s report and 
for no other purpose to the fullest extent 
permitted by law we do not accept or 
assume responsibility to anyone other than 
the company and the company’s members 
as a body for our audit work for this report 
or for the opinions we have formed
respective responsibilities of directors 
and auditor
as explained more fully in the directors’ 
responsibilities statement the directors are 
responsible for the preparation of the parent 
company financial statements and for being 
satisfied that they give a true and fair view 
our responsibility is to audit and express 
an opinion on the parent company financial 
statements in accordance with applicable law 
and international standards on auditing uk 
and ireland those standards require us to 
comply with the auditing practices board’s 
ethical standards for auditors
scope of the audit of the financial 
statements
an audit involves obtaining evidence about 
the amounts and disclosures in the financial 
statements sufficient to give reasonable 
assurance that the financial statements 
are free from material misstatement 
whether caused by fraud or error this 
includes an assessment of whether the 
accounting policies are appropriate to the 
parent company’s circumstances and have 
been consistently applied and adequately 
disclosed the reasonableness of significant 
accounting estimates made by the directors 
and the overall presentation of the financial 
statements
in addition we read all the financial and 
nonfinancial information in the annual 
report to identify material inconsistencies 
with the audited financial statements if we 
become aware of any apparent material 
misstatements or inconsistencies we consider 
the implications for our report
opinion on financial statements
in our opinion the parent company financial 
statements
● ● give a true and fair view of the state of 
the parent company’s affairs as at 
31 december 2010
● ● have been properly prepared in 
accordance with united kingdom 
generally accepted accounting practice 
and
● ● have been prepared in accordance with 
the requirements of the companies act 
2006
opinion on other matters prescribed 
by the companies act 2006
in our opinion the information given in the 
directors’ report for the financial year for 
which the financial statements are prepared 
is consistent with the parent company 
financial statements
matters on which we are required to 
report by exception
we have nothing to report in respect of the 
following matters where the companies act 
2006 requires us to report to you if in our 
opinion
● ● adequate accounting records have not 
been kept by the parent company or 
returns adequate for our audit have not 
been received from branches not visited 
by us or
● ● the parent company financial 
statements and the part of the directors’ 
remuneration report to be audited are 
not in agreement with the accounting 
records and returns or
● ● certain disclosures of directors’ 
remuneration specified by law are not 
made or
● ● we have not received all the information 
and explanations we require for our 
audit
other matter
we have reported separately on the group 
financial statements of severfield–rowen 
plc for the year ended 31 december 2010 
and on the information in the directors’ 
remuneration report that is described as 
having been audited
simon manning  
senior statutory auditor
for and on behalf of deloitte llp
chartered accountants and statutory 
auditor 
28 april 2011
indepen dent auditor’s report 
to the members of severfield–rowen plc 103
2015504  27042011 proof 11
company accounts 103
company balance sheet
31 december 2010
  2010 2009
 note £000 £000
fixed assets
tangible assets 4 62064 62339
investments 5 106117 110532
  168181 172871
current assets
debtors 6 49426 39649
cash at bank and in hand  41 —
  49467 39649
creditors — amounts falling due within one year 7 160523 147932
net current liabilities  111056 108283
total assets less current liabilities  57125 64588
capital and reserves
calledup share capital 9 2231 2215
share premium account 10 46152 46152
other reserves 11 55 951
profit and loss account 12 8687 15270
equity and total shareholders’ funds  57125 64588
the financial statements were approved by the board of directors on 27 april 2011 and signed on its behalf by
t g haughey a d dunsmore
director director
severfield–rowen plc
registered in england no 1721262 2015504  27042011 proof 11
severfield—rowen plc annual report 2010 104
1 significant accounting policies
basis of accounting
the separate financial statements 
of the company are presented as 
required by the companies act 2006 
they have been prepared under the 
historical cost convention as modified 
by the revaluation of freehold and long 
leasehold properties and in accordance 
with applicable uk accounting standards 
uk gaap
 
going concern
after making enquiries the directors 
have formed a judgement at the time 
of approving the financial statements 
that there is a reasonable expectation 
that the group has adequate resources 
to continue in operational existence for 
the foreseeable future for this reason 
the directors continue to adopt a going 
concern basis in preparing the financial 
statements the key factors considered 
by the directors in making the statement 
are set out within the financial review 
on pages 22 to 24
profit and loss account
in accordance with the exemption 
allowed by section 408 of the 
companies act 2006 the company has 
not presented its own profit and loss 
account
cash flow
the company is exempt from the 
requirements of financial reporting 
standard no 1 revised “cash flow 
statements”
tangible fixed assets
freehold and long leasehold land is held 
at cost and not depreciated
depreciation is provided on other fixed 
assets to write off the cost of each asset 
over its estimated useful life at the 
following rates 
freehold buildings 1 straightline
investments
fixed asset investments are shown at 
cost less provision for impairment
taxation
current tax including uk corporation 
tax and foreign tax is provided 
at amounts expected to be paid or 
recovered using the tax rates and laws 
that have been enacted or substantially 
enacted by the balance sheet date
deferred tax is provided in full on 
timing differences which result in an 
obligation at the balance sheet date 
to pay more tax or a right to pay less 
tax at a future date at rates expected 
to apply when they crystallise based 
on current tax rates and law timing 
differences arise from the inclusion 
of items of income and expenditure 
in taxation computations in periods 
different from those which they are 
included in financial statements
deferred tax is not provided on timing 
differences arising from the revaluation 
of fixed assets where there is no 
commitment to sell the asset or on 
unremitted earnings of subsidiaries 
and associates where there is no 
commitment to remit these earnings 
deferred tax assets are recognised 
to the extent that it is regarded as 
more likely than not that they will be 
recovered deferred tax assets and 
liabilities are not discounted
sharebased payments
sharebased payments are accounted 
for as described in the group 
accounting policies on page 72
related party transactions
the company has taken advantage of 
the exemption granted by paragraph 
3b of frs 8 related party disclosures 
not to disclose transactions with other 
group companies
notes to the company financial statements
year ended 31 december 2010 105
2015504  27042011 proof 11
company accounts 105
2 operating profit
the auditor’s remuneration for audit services to the company was £16000 2009 £16000
the company has no employees other than the directors whose remuneration was borne by subsidiary undertakings
3 profit of the company
the company has taken advantage of section 408 of the companies act 2006 and consequently its profit and loss account is 
not presented as part of these accounts the profit of the company for the financial year amounted to £1385000 2009 profit 
£18287000 dividends paid and proposed are disclosed in note 8 to the consolidated financial statements
4 tangible assets
 freehold and
 long leasehold
 land and
 buildings
 £000
cost
at 1 january 2010 63889
additions 341
disposals 42
at 31 december 2010 64188
depreciation
at 1 january 2010 1550
provided in year 598
disposals 24
at 31 december 2010 2124
net book value
at 31 december 2010 62064
at 31 december 2009 62339
the company’s freehold and long leasehold land and buildings includes those which are occupied and used by some of the company’s 
subsidiary undertakings
the company operates a system of regular valuations of freehold and long leasehold land and buildings across its portfolio which have 
included using fpd savills and rushton international chartered surveyors this operates on a rotational basis with one of the three main 
properties reviewed each year the three properties are the severfield–reeve structures ltd site at dalton airfield industrial estate the 
watson steel structures ltd site at lostock lane bolton and the atlas ward structures ltd site at sherburn 
to date no material surplus or deficit over net book value has been identified and accordingly no adjustment to revalue freehold and 
long leasehold land and buildings has been considered necessary
5 investments
 2010 2009
 £000 £000
investment in subsidiaries 100254 107554
investment in associates 535 535
investment in joint ventures 5328 2443
 106117 110532 2015504  27042011 proof 11
severfield—rowen plc annual report 2010 106
notes to the company financial statements continued
year ended 31 december 2010
5 investments continued
investment in subsidiaries
the company has investments in the following significant subsidiary undertakings all of the companies listed are registered in england
severfield–reeve structures ltd — steel fabrication
watson steel structures ltd — steel fabrication
atlas ward structures ltd — steel fabrication
fisher engineering ltd — steel fabrication
rowen structures ltd — project contracting
steelcraft erection services ltd — steel erection
severfield–reeve international ltd — overseas contracts
the company owns the whole of the issued share capital of the subsidiaries noted above
following the annual testing for impairment the carrying value of the company’s investment in action merchants limited the holding 
company for fisher engineering limited was impaired by £7300000 reducing the carrying value accordingly
 £000
cost
at 1 january 2010 and 31 december 2010 107554
provision for impairment
at 1 january 2010 —
amount written off 7300
at 31 december 2010 7300
net book value
at 31 december 2010 100254
at 31 december 2009 107554
investment in associates
the company has an interest in associated companies as follows
  holding  class of capital
kennedy watts partnership ltd — cadcam steelwork design 251 preferred ordinary
fabsec ltd — development of fire beam 250 ordinary
 £000
cost
at 31 december 2009 and 31 december 2010 535
investment in joint ventures
on 17 november 2008 a formal agreement was signed in india with jsw building systems ltd a subsidiary of jsw steel ltd of india 
to form a 5050 joint venture jsw severfield structures limited to create a structural steelwork business in bellary and mumbai india 
serving primarily the indian market
jsw severfield structures limited is registered in india and during the year the group invested £2884000 2009 £2443000 in the 
joint venture
 £000
cost
at 1 january 2009 2443
invested in year 2884
at 31 december 2009 5327 107
2015504  27042011 proof 11
company accounts 107
6 debtors
 2010 2009
 £000 £000
other debtors 659 —
amounts owed by subsidiary undertakings 47872 39450
deferred tax asset note 8 115 199
corporation tax recoverable 780 —
 49426 39649
7 creditors — amounts falling due within one year
 2010 2009
 £000 £000
bank borrowings 29704 29472
other creditors and accruals 2425 21
corporation tax — 125
amounts owed to subsidiary undertakings 128394 118314
 160523 147932
borrowings represent the group’s revolving credit facility from the royal bank of scotland and national australia bank jointly as disclosed 
in note 21 to the consolidated financial statements the facility is available until march 2013
8 deferred tax
 amount provided amount unprovided
 2010 2009 2010 2009
 £000 £000 £000 £000
excess capital allowances 115 199 — —
deferred taxation — movement for the year
 £000
at 1 january 2010 note 6 199
current year charge 84
at 31 december 2010 note 6 115
9 share capital
 2010 2009
 £000 £000
authorised
108000000 ordinary shares of 25p each 2700 2700
issued and fully paid
89251076 ordinary shares of 25p each 2009 88607876 2231 2215
there are no share options outstanding as at 31 december 2010 2009 nil
on 29 march 2010 440816 ordinary shares of 25p each were issued in relation to the vesting of shares under the company’s 
performance share plan on 29 october 2010 202384 ordinary shares of 25p each were issued in relation to the group employee 
share incentive plan 2015504  27042011 proof 11
severfield—rowen plc annual report 2010 108
10 share premium account
 2010 2009
 £000 £000
balance at 1 january and 31 december 46152 46152
11 other reserves
 2010 2009
 £000 £000
balance at 1 january 951 325
sharebased payment movements in year 896 626
balance at 31 december 55 951
the movement in the sharebased payment reserve comprises the following components
     2010 2009
 £000 £000
shares issued under share incentive plan    5 —
sharebased payments    35 626
vesting of shares under share performance plan    926 —
    896 626
12 profit and loss account
 2010 2009
 £000 £000
balance at 1 january 15270 14705
dividends paid 8883 17722
net profit for the year 1385 18287
sharebased payments 915 —
balance at 31 december 8687 15270
13 movement in shareholders’ funds
 2010 2009
 £000 £000
balance at 1 january 64588 63397
dividends paid 8883 17722
net profit for the year 1385 18287
sharebased payments 915 —
increase in share capital 16 —
movement in sharebased payment reserve 896 626
balance at 31 december 57125 64588
14 capital commitments
 2010 2009
 £000 £000
contracted for but not provided in the financial statements 265 —
15 contingent liabilities
the company has provided an unlimited guarantee to secure any bank overdrafts and loans of all other group companies at 
31 december 2010 these amounted to £nil 2009 £nil
notes to the company financial statements continued
year ended 31 december 2010 2015504  27042011 proof 11 2015504  27042011 proof 11
severfield—rowen plc annual report 2010
sev erfiel d–rowen plc is th e largest specia l ist 
structu ral stee lwork g rou p in th e u k w ith 
a repu tation for performance and valu e
grou p streng ths
for more  
information visit
wwwsfrplccom
severfieldreeve structures ltd
dalton airfield industrial estate
dalton
thirsk
north yorkshire
yo7 3jn
tel 01845 577 896
fax 01845 577 411
fisher engineering ltd
ballinamallard
enniskillen
co fermanagh
northern ireland
bt94 2fy
tel 02866 388 521
fax 02866 388 706
rowen structures ltd
17 maisies w ay
the v illage
south normanton
derbyshire
de55 2ds
tel 01773 860 086
fax 01773 814 077
atlas w ard structures ltd
sherburn
malton
north yorkshire
yo17 8pz
tel 01944 710 421
fax 01944 710 387
severfieldreeve international ltd
po box 519
abu dhabi
united arab emirates
tel 971 2 644 2600
fax 971 2 644 2387
engineering construction t raining ltd
dalton airfield industrial estate
dalton
thirsk
north yorkshire
yo7 3jn
tel 01845 576 807
fax 01845 577 942
w atson steel structures ltd
lostock lane
lostock
bolton
lancashire
bl6 4bl
tel 01204 699 999
fax 01204 694 543
jsw severfield structures ltd
401 deluxe court
r v bambardekar road
station road
bandra w est 
mumbai
tel 91 22 6731 7000
fax 91 22 2651 2685
steelcraft erection services ltd
dalton airfield industrial estate
dalton
thirsk
north yorkshire
yo7 3jn
tel 01845 577 896
fax 01845 578 477
jsw severfield
structures
severfield–reeve
structures
atlas ward
structures
watson steel
structures
fisher 
engineering
steelcraft 
erection
services
engineering  
construction  
t raining
rowen
structures
severfield–reeve
international  
project office abu dhabi
severfield–rowen plc
dalton airfield industrial estate
dalton
thirsk
north yorkshire
yo7 3jn
tel 01845 577 896
fax 01845 577 411
 ope rati onal pe rfo rmance   
 cus tomer serv ice
 mul tis ecto r flexi b ility  earl y pr o ject de sign enhancement  
 pro grammin g and co sti n g
 product a nd ser v ice ra nge
 uk and ove rseas manu factu rin g and net wo rk  factor y a nd si te effici enci es
 peo ple and s ki ll s
 financ ial s tren gth
 sc ale and co st b ase
 heal th saf ety and s u stainab ility wwwsfrplccom
stratford london 2015504  27042011 proof 11 2015504  27042011 proof 11
severfieldrowen plc
severfield–rowen plc
dalton airfield industrial estate 
dalton thirsk north yorkshire yo7 3jn
tel 01845 577896  fax 01845 577411
wwwsfrplccom
growth buil t on success
annu al re po rt  account s
for the year ended 31 d ecember 2010
severfield–rowen plc  annual r eport 2010


Summary:
 16 severfield—r owen plc annual report 2010
2015504  27042011 proof 10
ch ief executive’s review
t om hau ghey chief executive officer
in 2010 severfield–
rowen traded through 
some of the most difficult 
conditions seen by the 
uk industry in the 
last few decades
in 2010 severfield–rowen traded through 
some of the most difficult conditions seen by 
the uk industry in the last few decades
it faces the challenges of 2011 in a 
determined but pragmatic manner and is 
now more optimistic of a partial recovery in 
demand during 2012
business
the companies within the group have 
displayed their individual strengths which 
have collectively enabled the group to 
trade profitably and competitively in the 
last 12 months features such as close 
commercial interaction design capability 
cost base volume outputs experience and 
coordinated steel erection together with 
product range have been key in growing 
market share in such difficult circumstances
internationally the company is successfully 
establishing longterm positions in india and 
the middle east 
or der book
the order book for the uk based operations 
as at 22 march 2011 stood at a healthy 
£226m as it continues to secure business 
from all of the sectors making up uk 
demand
the pipeline of enquiries is more 
encouraging than six months ago however 
a large proportion of the work will be for 
commencement in 2012
co sts
the company specifically targeted cost 
reductions across all businesses at the end of 
2009 these improvements have provided 
for our resultant competitiveness throughout 
2010 further cost reduction initiatives 
remain under review and development 
including a procurement related initiative
prices an d mar gins
market prices bottomed in the first half of 
2010 and while remaining relatively low 
have moved in line with the steel material 
developments of the international market
margins have remained subdued with little 
improvement in the supplydemand balance 
of the uk market
ind ia
in november 2010 the joint venture 
jssl manufacturing facilities at bellary 
were officially opened and attended by 
approximately 200 guests from the indian 
construction industry
the business is now designing drawing 
fabricating and erecting quality structural 
steelwork for the growing indian market
four months after the opening the order 
book as at 22 march 2011 stands at 
£33m demonstrating the value of the new 
service on offer to clients in india
these developments underpin the 
company’s confidence that it can realise its 
financial and growth ambitions in india
pro jects
a significant number of major projects have 
been completed or undertaken during the 
past 12 months including
● ● 2012 olympic stadium
● ● 2012 olympic media centre 
● ● 2012 olympic handball arena
● ● 2012 olympic basketball arena
● ● 2012 velodrome
● ● arcelormittal orbit
● ● heathrow terminal 3
● ● sirius academy hull
● ● coop glasgow
● ● mann island development liverpool
● ● baker street commercial office london 17 our business 17
2015504  27042011 proof 10
● ● chivas bros warehouses mulben
● ● thameslink viaduct borough market 
london
● ● saica paper mill development 
partington
● ● winifred  holtby school 
development hull
● ● melior college development 
scunthorpe
● ● the shard of glass commercial office 
london
● ● vestas manufacturing facility isle of 
wight
● ● national indoor sports arena  
velodrome glasgow
● ● blackfriars bridge  thameslink station 
london
● ● heathrow terminal 2a
● ● portlaiose retail development ireland
● ● titanic quarter development belfast
● ● brighton fc stadium
● ● coop andover
● ● sackville street commercial office 
london
● ● bombardier aerospace development 
belfast
● ● gatwick north terminal
● ● cannon place commercial office 
london
● ● medical research council lmb 
cambridge
● ● bankside residential building london
business i nvestment
uk investment was at reduced levels 
compared to recent years but included 
stateoftheart milling capability at watson’s 
for high tolerance steelwork which is being 
used on the arcelormittal orbit structure at 
the 2012 olympic site
th e portfo li o
proj ect heathrow terminal 2a   l ocat ion london 18 severfield—r owen plc annual report 2010
2015504  27042011 proof 10
ch ief executive’s review continued
 
co rpo rate so cial 
r esp onsi bility
the company is proactively seeking to take 
a leadership position in the areas of health 
safety and sustainability and is implementing 
a strategy of continuous improvement in 
these key areas of our business
there are three branded strands to our 
“steel futures” strategy
sustainable future
● ● community and stakeholder 
engagement 
● ● leadership and people development 
● ● cost reconciliation and profitable growth
● ● market leading innovation
● ● performance management and 
development
● ● supply chain partnering
safe future
● ● safety leadership
● ● behavioural safety
● ● safety ‘golden rules’
● ● health and wellbeing
● ● safety in design
● ● communications
zero carb o n future
● ● carbon management and reduction
● ● transport policy and strategy
● ● waste and recycling
● ● renewable energy
● ● responsible sourcing of materials
● ● water management
a challenging plan supporting this vision has 
been implemented and we look forward to 
reporting good progress in 2011
risk mana gement
the company has a proactive and formal 
approach to risk management during 
the year another comprehensive review 
of its risk profile and risk management 
process was undertaken in conjunction 
with willis the emphasis changed from 
previous reviews to reflect the more 
challenging environment within which it is 
now operating and the greater international 
dimension to its business a more complete 
review of the principal risks which the 
business faces is set out on pages 34 to 35
s ummary 
the company remains pleased with 
its relative performance in the very 
challenging uk market place the uk based 
operations have shown their strengths 
and competitiveness to produce an overall 
successful performance in the last 12 
months we commence this year with a 
good order book but recognise that uk 
demand in 2011 remains weak
in india we now have a very strong order 
book and will continue our drive for growth 
in those markets
we see a partial improvement in uk 
demand and mix emerging in 2012 
which while not a comprehensive recovery 
will present the company with good 
opportunities 19 our business 19
2015504  27042011 proof 10
th e portfo li o
proj ect west burton power station   
l ocat ion retford