Severfield Rowen Plc INTERIM REPORT

Transcription

1 Severfield Rowen Plc INTERIM REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2012

2 Severfield Rowen Plc Interim Report 2012 Directors and Advisers John Dodds Chairman Tom G Haughey BA Chief Executive Officer Peter A Emerson Chief Operating Officer Alan D Dunsmore BAcc CA Finance Director Derek Randall MBA, DBA Executive Director & International Business Development J Keith Elliott BSc MIChE Senior Non-Executive Director Toby Haywood Non-Executive Director Geoff H Wright TD DL PPCIOB Non-Executive Director Chris Holt Non-Executive Director Secretary and Registered Office Jonathan D Rhodes BA ACA Dalton Airfield Industrial Estate Dalton, Thirsk, North Yorkshire YO7 3JN Registered Number Registered in England Auditor Deloitte LLP Chartered Accountants 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 Stockbroker Jefferies Hoare Govett Vintners Place 68 Upper Thames Street London, EC4V 3BJ Registrars and Transfer Office Computershare Investor Services PLC PO Box 82 The Pavilions Bridgwater Road Bristol, BS99 7NP Public Relations Pelham Bell Pottinger 6th Floor, Holborn Gate 330 High Holborn London, WC1V 7QD 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

3 Financial Highlights Revenue 135.9m Underlying Group Operating Profit (before results of Associates) 2.4m Underlying* Group Operating Profit 2.3m Underlying Profit before Tax 1.5m Underlying Operating Margin (before results of Associates) 1.8% Retained Profit after Tax (including non-underlying items) 0.2m Underlying Basic Earnings Per Share 1.23p Dividend Per Share 1.50p * Underlying is before the amortisation of acquired intangible assets of 1.4m (: 1.4m), favourable movements in the valuation of derivatives of 0.1m (: nil) and the associated tax effect of these items XXUnderlying Profit before Tax of 1.5m (: 3.4m) in line with management s expectations of June 2012 XXShare of losses from Indian joint venture ( JSSL ) of 0.1m (: 1.6m) XXNet borrowings at period end of 28.3m (December : 31.3m) X X 5.3m working capital improvement in first six months XXSustained UK order book at 1 August: 218m (May 2012: 216m) XXProposed reorganisation of UK businesses XXJSSL now trading profitably with prospects pipeline growth from 80m to 147m XXJSSL India order book at 31m XXJSSL expansion approved to increase capacity by 50% XXBasic earnings per share of 0.18p (: 1.18p) XXInterim dividend of 1.50p per share (: 1.50p)

4 02 Severfield Rowen Plc Interim Report 2012 Interim Statement 2012 Introduction UK conditions have been increasingly challenging as demand softens further in some areas and confidence remains low, with the prospect of economic recovery some way off. The Group has enjoyed the success of the London Olympics and its own part in the construction of so many of its venues. The Group has also replenished its order books, notably from the Commercial Office, Industrial and Power sectors, such that the order book remains stable at 218m. Margins in the first half of 2012 reflect the lower demand levels, the increased intensity of the competitive environment and the need to improve some aspects of our operational performance. In response to these conditions, the Group is proposing to integrate three of its UK businesses, which operate with shared clients and generally in the same sub-sectors of the market. The proposed reorganisation of the UK businesses is to principally target improvements in efficiencies and performance, but the action will also have associated cost base benefits. In India, our joint venture operation is making very good progress, as expected, with strong sales, market penetration and production outputs. In the calendar year 2012, JSSL will contribute profitably to our results. We have agreed with JSW Steel, our joint venture partner, to invest in the expansion of JSSL, following this good progress. Financials The Group s financial performance in the first six months of the year reflects the continuing challenging trading environment in the UK, but a much improved performance from the Indian joint venture. Revenue of 135.9m (: 122.0m) reflects slightly higher volumes than the same period last year. Underlying Operating Profit before results of Associates, of 2.4m (: 5.7m), representing margins of 1.8% and 4.7% respectively, reflects the impact of the cost overruns on two complex projects identified in June, along with slightly less favourable contract phasing compared with the prior period. The share of results of Associates of a loss of 0.1m (: 1.6m loss) represents a significant improvement in the performance of the Indian joint venture. Production has continued to increase over the last six months and the business is now profitable. The Group Underlying Operating Profit after share of results of Associates is 2.3m (: 4.0m), a 42% reduction on the previous year. Underlying Profit before Tax for the period is 1.5m (: 3.4m). Underlying profit is before the amortisation of acquired intangible assets of 1.4m (: 1.4m) and favourable movements in the valuation of derivatives of 0.1m (: Nil). The underlying tax charge of 0.4m represents an effective tax rate of 25.9% on the applicable profit, which excludes the share of results of Associates (: 27.0%).

5 03 03 Underlying basic earnings per share is 1.23p (: 2.29p). This calculation is based on the underlying profit after tax of 1.1m and 89,251,076 shares, being the weighted average number of shares in issue during the period. Basic earnings per share, based on profit after tax after non-underlying items, is 0.18p (: 1.18p). There are no contingent shares outstanding under share-based payment schemes and accordingly there is no difference between basic and diluted earnings per share. Retained profit after tax of 0.2m (: 1.1m) has been transferred to reserves. During the first six months of the year capital expenditure amounted to 0.5m (: 0.6m). There was a net cash inflow from operating activities in the first six months of 7.4m (: outflow of 4.5m). This reflects the expected improvement in working capital of 5.3m, coming primarily from a reduction in receivables. Net debt of 28.3m represents an improvement of 3.0m on the year end position of 31.3m. This reflects the cash inflow from operating activities, along with capital expenditure, interest and dividend payments. Dividend An interim dividend of 1.50p per share is declared today and will be paid on 26 October 2012 to shareholders on the register on 3 October UK In response to falls in construction demand in the UK, the Group yesterday announced internally its proposal to merge and integrate its two largest businesses into a single trading entity later this year. A new company Severfield-Watson Structures Ltd will incorporate the assets and resources of Severfield-Rowen Structures, Watson Steel Structures and those of our site erection company, Steelcraft Erection Services. The single company will continue to manufacture at its two existing plants at Dalton in North Yorkshire and Bolton in Lancashire, which will deliver improved operational performance from 2013 and will yield incremental margin improvement. The operations at Fisher Engineering and Atlas Ward Structures will continue largely as at present. Severfield-Watson Structures Ltd will be the largest and most comprehensive structural steelwork company in Europe, providing a fully integrated design through fabrication and site erection service to clients. The Group has a revolving credit facility of 50.0m with RBS and National Australia Bank as joint lenders, maturing in November 2016.

6 04 Severfield Rowen Plc Interim Report 2012 Interim Statement 2012 continued India Progress in India is very good with target output volumes being consistently achieved in recent months and projected productivity milestones being reached. The financial outturn in the first half of 2012 has greatly improved as expected and JSSL will make a contribution to profits over the full year. Order levels are satisfactory at 31m and importantly, cover a range of sectors. Recent orders include work for Proctor and Gamble in India and a 30 storey commercial office in Bangalore, incorporating Indisec bespoke sections and as mentioned, there is a strong pipeline of opportunities which continues to develop; currently 147m (March 2012: 80m). We have agreed with JSW Steel to invest in the development of capacity of JSSL s existing plant by some 50%, rising from 35,000 tonnes per annum to 55,000 tonnes, which will also support the expansion of the product range. The investment of approximately 7m in total, funded equally by JSW Steel and Severfield- Rowen, will commence in October 2012 and the new facilities will be operational by the middle of Further investment in JSSL is being contemplated for 2013 at a second location in India. Operations Group Review The main business of the Group is the design, fabrication and erection of structural steelwork for construction projects of varying types, including warehouses, commercial offices, industrial buildings and power stations. UK All of the Group s UK plants are fully loaded throughout 2012 and we continue to see prospective opportunities in All of the Group companies have contributed positively to the results. During the first half of 2012 the companies were engaged in the successful supply of services to a large number of projects, including: XXBMW Manufacturing Facility, Oxford XXMorrison Retail Store, Eastbourne XXAsda Stores, Grangemouth & Rochdale XXJaguar Land Rover Industrial Buildings, Midlands XXGatwick Pier 5 XXCleveland Energy from Waste, Billingham XXLondon Cable Car XXHeathrow Terminals XXTate Modern, London XXLeadenhall Street Commercial Office, London XX60 Holborn Commercial Office, London XXLondon Bridge Place Commercial Office XXThermal Power Station, Runcorn XXArla Foods Processing Plant, Aylesbury XXLeeds Arena

7 05 05 India JSSL has undertaken work in airports, power, commercial, industrial and retail sectors throughout India, these include: XXPrestige Shantiniketan Commercial Office, Bangalore XXSiemens (Unosugen) CC Power Plant, Surat XXSiemens (Dgen) CC Power Plant, Surat XXJSW Cold Rolling Mill, Bellary XXIndiabulls Commercial Office Tower, Mumbai XXSamak Shoot Resorts Hotel, Gurgaon XXAir Traffic Control Tower, Mumbai International Airport XXEssar Coal Handling Plant, Jharkhand grow the business at home and in India, despite the economic backdrop, and are confident that our strategy leaves the Group well positioned to take advantage of opportunities both in India and in the UK. Tom Haughey Chief Executive Officer 20 August 2012 Outlook Despite the poor economic environment, the Group has continued to strengthen its market leading position in the UK, which will be further enhanced following the reorganisation proposed for its UK companies. Prospects in India for this year and beyond remain very positive as we seek a small share of a market full of opportunity. Whilst we are pleased by the stability in the order book and our market position, with uncertain demand levels and a difficult pricing environment in the UK having an impact on our margins, we envisage a challenging six months ahead and are taking actions in response to this. Looking further out, we remain determined to

8 06 Severfield Rowen Plc Interim Report 2012 Condensed Consolidated Income Statement Six months 2012 (unaudited) Before other items Other items 1 Total Revenue 135, ,941 Cost of sales (130,976) (130,976) Gross profit 4,965 4,965 Other operating income Distribution costs (968) (968) Administrative expenses (1,889) (1,374) (3,263) Movements in the valuation of derivative financial instruments Operating profit before share of results of associates 2,436 (1,270) 1,166 Share of results of associates (122) (122) Operating profit after share of results of associates 2,314 (1,270) 1,044 Investment income 5 5 Finance charges (797) (797) Profit before tax 1,522 (1,270) 252 Tax (425) 330 (95) Profit for the period 1,097 (940) 157 Earnings per share: Basic 1.23p (1.05p) 0.18p Diluted 1.23p (1.05p) 0.18p 1 Other items relate to the amortisation of acquired intangibles and movements in the valuation of derivative financial instruments and the associated tax effect of these items.

9 07 07 Before other items Six months (unaudited) Other items 1 Total Year 31 December (audited) Before other items Other items 1 Total 122, , , ,778 (114,094) (114,094) (246,889) (590) (247,479) 7,947 7,947 20,889 (590) 20, (978) (978) (2,756) (2,756) (1,479) (1,374) (2,853) (4,448) (2,749) (7,197) ,654 (1,356) 4,298 14,193 (3,335) 10,858 (1,632) (1,632) (2,522) (2,522) 4,022 (1,356) 2,666 11,671 (3,335) 8, (656) (656) (1,581) (1,581) 3,408 (1,356) 2,052 10,117 (3,335) 6,782 (1,361) 366 (995) (2,929) 1,969 (960) 2,047 (990) 1,057 7,188 (1,366) 5, p (1.11p) 1.18p 8.05p (1.53p) 6.52p 2.29p (1.11p) 1.18p 8.05p (1.53p) 6.52p

10 08 Severfield Rowen Plc Interim Report 2012 Condensed Consolidated Statement of Comprehensive Income Six months 2012 (unaudited) Six months (unaudited) Year 31 December (audited) Actuarial loss on defined benefit pension scheme (1,369) Tax relating to components of other comprehensive income 172 Other comprehensive income for the period (1,197) Profit for the period from continuing operations 157 1,057 5,822 Total comprehensive income for the period attributable to equity shareholders 157 1,057 4,625

11 09 09 Condensed Consolidated Statement of Changes in Equity Share capital Share premium Other reserves Retained earnings Total equity At 1 January ,231 46, , ,298 Profit for the period (attributable to equity holders of the parent) Dividends paid (3,124) (3,124) Equity-settled share-based payments 7 7 At 2012 (unaudited) 2,231 46, , ,338 Share capital Share premium Other reserves Retained earnings Total equity At 1 January 2,231 46, , ,943 Profit for the period (attributable to equity holders of the parent) 5,822 5,822 Dividends paid (3,570) (3,570) Share-based payments Actuarial loss on defined benefit pension scheme (1,369) (1,369) Deferred income taxes on defined pension benefit scheme At 31 December (audited) 2,231 46, , ,298 Share capital Share premium Other reserves Retained earnings Total equity At 1 January 2,231 46, , ,943 Profit for the period (attributable to equity holders of the parent) 1,057 1,057 Dividends paid (2,231) (2,231) Equity-settled share-based payments At (unaudited) 2,231 46, , ,956

12 10 Severfield Rowen Plc Interim Report 2012 Condensed Consolidated Balance Sheet At 2012 (unaudited) At (unaudited) At 31 December (audited) Assets Non-current assets Goodwill 54,712 54,712 54,712 Other intangible assets 16,915 19,121 18,227 Property, plant and equipment 78,196 81,403 79,594 Investment property 3,940 3,980 3,960 Interests in associates 392 1, , , ,940 Current assets Inventories 9,073 11,202 9,085 Trade and other receivables 84,542 68,773 89,161 Cash and cash equivalents 3,781 10,136 2,264 97,396 90, ,510 Total assets 251, , ,450 Liabilities Current liabilities Trade and other payables (67,320) (62,984) (66,322) Financial liabilities borrowings (31,520) (32,894) (33,159) Financial liabilities finance leases (192) (101) (101) Financial liabilities derivative financial instruments (90) (104) Tax liabilities (2,056) (2,258) (3,883) (101,088) (98,327) (103,569) Non-current liabilities Retirement benefit obligations (9,552) (8,532) (9,552) Financial liabilities finance leases (351) (304) (254) Deferred tax liabilities (10,847) (12,833) (11,177) Provisions (375) (600) (600) (21,125) (22,269) (21,583) Total liabilities (122,213) (120,596) (125,152) Net assets 129, , ,298 Equity Share capital 2,231 2,231 2,231 Share premium 46,152 46,152 46,152 Other reserves Retained earnings 80,479 81,217 83,446 Total equity 129, , ,298

13 11 11 Condensed Consolidated Cash Flow Statement Six months 2012 (unaudited) Six months (unaudited) Year 31 December (audited) Net cash from operating activities 7,362 (4,521) (8,968) Investing activities Interest received Proceeds on disposal of property, plant and equipment Purchases of property, plant and equipment (555) (632) (1,658) Purchase of intangible fixed assets (62) (481) Purchases of shares of associates (66) (113) Net cash (used in) investing activities (545) (364) (1,600) Financing activities Interest paid (648) (551) (2,072) Dividends paid (3,124) (2,231) (3,570) Repayment of obligations under finance leases (87) (51) (102) Borrowings taken out 14,265 14,530 Borrowings repaid (1,716) Finance leases taken out Net cash (used in)/from financing activities (5,300) 11,432 9,243 Net increase/(decrease) in cash and cash equivalents 1,517 6,547 (1,325) Cash and cash equivalents at beginning of period 2,264 3,589 3,589 Cash and cash equivalents at end of period 3,781 10,136 2,264

14 12 Severfield Rowen Plc Interim Report 2012 Notes 1. General information The information for the year 31 December does not constitute statutory accounts as defined in section 434 of the Companies Act 2006, but is derived from the statutory accounts for that financial year. The auditors reported on those accounts: their report was unqualified, did not draw attention to any matters by the way of emphasis and did not contain a statement under section 498(2) or (3) of the Companies Act A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The interim results to were neither audited nor reviewed. The interim results to 2012 have been subject to an Interim Review by the Company s Auditor. 2. Basis of preparation The condensed interim financial information has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted for use in the European Union and in accordance with the accounting policies included in the Company s Annual Report for the year 31 December which have been applied consistently throughout the current and preceding period. Adoption of new and revised accounting standards In, a number of new standards and interpretations became effective as noted in the Annual Report and Accounts (page 68). The adoption of these standards and interpretations has not had a material impact on the condensed interim financial statements of the Group. Since the Annual Report and Accounts was published no significant new standards and interpretations have been issued, or become effective. 3. Going concern The Group has access to a 50m revolving credit facility to meet day-to-day working capital requirements. As at 2012 the Group had sufficient headroom on this facility and was compliant with the financial covenants and this position is forecast to continue for the foreseeable future. The bank facility is available to November Through its various business activities the Group is exposed to a number of risks and uncertainties (see Note 4), which could affect the Group s ability to meet these forecasts and hence its ability to meet its banking covenants. As part of the review of forecasts noted above the Directors have considered its order book, the challenging economic environment, the commercial environment, and its supplier and customer base, together with the potential mitigating actions that can be taken to protect operating profits and cash flows. The Directors believe the Group is well placed to manage these business risks despite the current uncertain economic environment.

15 Going concern continued Accordingly after making enquiries, the Directors have formed a judgement that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future, a period of not less than 12 months from the date of this report. For this reason, the going concern basis has been adopted in preparing this Interim Report. 4. Risks and uncertainties The principal risks and uncertainties which could have a material impact upon the Group s performance over the remaining six months of the 2012 financial year have not changed significantly from those noted or referenced on pages of the Directors Report and pages of the Financial Review included in the Annual Report. These risks and uncertainties include, but are not limited to: XXThe commercial and market environment within which the Group operates XXPossible steel price movements XXReliance on key skills and personnel within our workforce XXHealth and safety XXCredit, interest rate and foreign exchange risks 5. Segmental analysis Revenue, profit before tax, and net assets all relate to the design, fabrication, and erection of structural steelwork and related activities. All of the Group s subsidiary businesses 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 assets in both years originated from the United Kingdom. There has been no change in the basis of segmentation or in the basis of measurement of segment profit or loss in the period. 6. Seasonality There are no particular seasonal variations which impact the split of turnover between the first and second half of the financial year. Underlying movements in contract timing and phasing, which are an ongoing feature of the business, will continue to drive moderate fluctuations in half yearly revenues. 7. Taxation The income tax expense reflects the estimated effective rate on profit before taxation for the Group for the year ending 31 December 2012.

16 14 Severfield Rowen Plc Interim Report 2012 Notes continued 8. Dividends payable to equity shareholders Six months 2012 Six months Year 31 December Ordinary dividend paid 3,124 2,231 3, Earnings per share Earnings per share is calculated as follows: Six months 2012 Six months Year 31 December Earnings for the purposes of basic earnings per share being net profit attributable to equity holders of the parent company 157 1,057 5,822 Earnings for the purposes of underlying basic earnings per share being underlying net profit attributable to equity holders of the parent company 1,097 2,047 7,188 Number of shares Number Number Number Weighted average number of ordinary shares for the purposes of basic earnings per share 89,251,076 89,251,076 89,251,076 Effect of dilutive potential ordinary shares and under share plans Weighted average number of ordinary shares for the purposes of diluted earnings per share 89,251,076 89,251,076 89,251,076 Basic earnings per share 0.18p 1.18p 6.52p Underlying basic earnings per share 1.23p 2.29p 8.05p Diluted earnings per share 0.18p 1.18p 6.52p Underlying diluted earnings per share 1.23p 2.29p 8.05p

17 Property, plant and equipment During the period fixed asset additions totalled 555,000. The Group also disposed of certain fixed assets with carrying amounts of 126,000 for proceeds of 133, Net debt The Group s net debt is as follows: Six months 2012 Six months Year 31 December Cash and cash equivalents 3,781 10,136 2,264 Financial liabilities borrowings (31,520) (32,894) (33,159) Financial liabilities finance leases (543) (405) (355) Net debt (28,282) (23,163) (31,250)

18 16 Severfield Rowen Plc Interim Report 2012 Notes continued 12. Reconciliation of Group profit from operations to cash generated from operations Six months 2012 (unaudited) Six months (unaudited) Year 31 December (audited) Operating profit for the period 1,044 2,666 8,336 Adjustments for: Provision utilisation (225) Share of results of associates 122 1,632 2,522 Depreciation of property, plant and equipment 2,046 2,245 4,504 Amortisation of intangible assets 1,409 1,374 2,749 (Gain)/loss on disposal of property, plant and equipment (7) (24) (20) Share-based payment expense Movements in pension scheme (349) Unrealised gains on derivative financial instruments (104) (18) (4) Operating cash flows before movement in working capital 4,292 8,062 18,038 Movements in working capital (Increase)/decrease in inventories 12 1,431 3,548 (Increase)/decrease in receivables 4,390 2,200 (17,301) Increase/(decrease) in payables 921 (12,780) (9,592) Cash generated from operations 9,615 (1,087) (5,307) Tax paid (2,253) (3,434) (3,661) Net cash from operating activities 7,362 (4,521) (8,968) Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at bank and other short-term highly liquid investments with a maturity of three months or less.

19 Related party transactions Certain Related Party Transactions, as described in note 31 on page 97 of the Annual Report, continued in the current period. None of these transactions materially affected the financial position or performance of the Group during the period. 14. Cautionary statement The Interim Management Report ( IMR ) has been prepared solely to provide additional information to shareholders to assess the Group s strategies and the potential for those strategies to succeed. The IMR should not be relied on by any other party or for any other purpose. The IMR contains certain forward-looking statements. These statements 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 but such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information. 15. Responsibility statement We confirm that to the best of our knowledge: (a) the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting ; (b) the Interim Management Report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and (c) the Interim Management Report includes a fair review of the information required by DTR 4.2.8R (disclosure of the related party transactions and changes therein). By order of the Board Tom Haughey Director 20 August 2012 Alan Dunsmore Director 20 August 2012

20 18 Severfield Rowen Plc Interim Report 2012 Independent Review Report to Severfield-Rowen Plc We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months 2012 which comprises the Condensed Consolidated Income Statement, the Condensed Consolidated Statement of Comprehensive Income, the Condensed Consolidated Balance Sheet, the Condensed Consolidated Statement of Changes in Equity, the Condensed Consolidated Cash Flow Statement and related notes 1 to 15. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review 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, for our review work, for this report, or for the conclusions we have formed. Directors responsibilities The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom s Financial Services Authority. As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting, as adopted by the European Union. Our responsibility Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. Scope of review We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

21 19 19 Conclusion Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months 2012 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom s Financial Services Authority. Deloitte LLP Chartered Accountants and Statutory Auditor Leeds, UK 20 August 2012

22 20 Severfield Rowen Plc Interim Report 2012

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24 The Group s Olympic Legacy Severfield Rowen Plc Dalton Airfield Industrial Estate, Dalton, Thirsk, North Yorkshire, YO7 3JN Tel: (01845) Fax: (01845)