Sustainability underpins our business model. It benefits our operational effectiveness and protects our reputation.

Smarter, Safer, more Sustainable

Smarter, Safer, more Sustainable, our business improvement programme, represents the consolidation of all of the Group's ongoing improvement projects, established to help us in achieving the Group's overall strategy. This programme illustrates how our commitment to sustainability underpins our business model and strategy. We believe that by investing in our projects, training and technology to empower our people to work Smarter, Safer and more Sustainably, this will assist us in securing our future as the market leader in structural steel.

We'll develop smarter ways of working that enable us to be more effective and focus on the things that matter. We'll continue to put safety at the forefront of everything we do, making it the core of every decision and process.

Our sustainability priorities include health and safety, reductions in environmental impacts, people development and engagement, innovation, supply chain governance including human rights and modern slavery, and supporting communities and charities.

Safety, health and environment

A principal aim of the board is to continue to ensure that, through example and encouragement, we behave ethically and responsibly, particularly in the fields of health, safety and environmental management. Our 'safety first' value remains at the core of all areas of the business as many of our activities continue to be potentially dangerous. All aspects of safety, health and environment remain a fundamental and integral aspect of the business.

It is encouraging to see that our health and safety performance has, for a second consecutive year, continued to improve with an accident frequency rate ('AFR') of 0.22, which includes an AFR of 0.40 for our UK operations. In order to further support our reduction and prevention of incidents programme, we have introduced further monitoring mechanisms of total incident frequency rate ('IFR') and high potential incident rate ('HiPo').

During the year, we have introduced new initiatives and schemes which include the introduction of bump caps into our factories following consultation and support from our employees, the establishment of a group of mental health first aiders and a safety calendar where the pictures were designed by children of our employees.

The next phase of the behavioural safety programme has been completed with sessions to be undertaken with all involved to establish a way forward to ensure continued progression and development into the future.

The strategic overview (as below) underpins our health and safety policy and establishes the areas that are essential to achieving our main goal, namely to ensure that all employees enjoy a safe working environment, with no exceptions.

Group AFR

0.22

(2017: 0.24)

UK operations AFR

0.40

(2017: 0.42)

Strategic goals

Severfield logo

Safety, Health and Environmental

Strategic Goals

1

A fair and safe way of working

Leadership; Communication; Engagement; Accreditation; Training

2

No incidents that harm people

Leadership; Training; Preventative actions; Life-saving rules; Behavioural

3

Industry-leading Occupational health

Leadership; Support; Health promotion; Mental health

4

Carbon footprint reduction

Leadership; Training; Communication; Reduce, reuse, recycle

The Foundations

Senior managers
Staff and contractor engagement

Supervisors/team leaders
Zero deviation plan

Key stakeholders
Consequence strategies

1

A fair and safe way of working

Leadership, communication and engagement, alongside a robust training programme, will ensure that the safety culture within the business continues to evolve and improve, positively impacting the working environment and reducing the harm to our people.

We have continually recognised good safety, health and environmental ('SHE') practices across the Group by acknowledgements and rewards alongside promotion of such within our internal newsletters.

The introduction of our six 'life saving rules' clearly communicates our expectations around particular high-risk areas of our day-to-day work to further prevent incidents.

These rules will also underpin our 'just and fair' culture within the behavioural safety programme:

1FundamentalsAlways wear appropriate personal protective equipment and do not carry out a task unless you are trained and authorised to do so. Make sure you assess the risks involved and guard against them.
2Working at heightWhen working at height, protect yourself and others against a fall and always use fall protection safety equipment.
3Control of lifting operationsEnsure all lifting operations are planned and executed safely. Make sure the lifting device is capable of lifting the load. Never allow anyone to be in the drop zone of the load.
4Machine safetyAlways make sure the machine is fit for purpose.
5Vehicle movementAlways follow the traffic rules, wear your seatbelt, keep within speed limits, and do not use handheld phones whilst driving. Pedestrians must always use designated walkways.
6Material stabilityEnsure all material is stable and adhere to the appropriate Red Tag risk assessment system in our factories.
2

No incidents that harm people

We continue to improve the facilities and working environment in all our factories in addition to engaging with our clients to improve site conditions and working areas.

Accident and investigation training remained a focus across the disciplines to ensure root causes are clearly identified and actioned to prevent further occurrences. The extension of investigations from accidents to near misses with a high potential for harm, which further highlight preventative measures, has been a success with clearer actions and prevention measures being put in place.

During the year, 188 directors' site tours were undertaken. This was considerably more than our target and 70 more than was achieved in the previous year. These have shown a clear commitment and drive for SHE policies across all areas of the business.

We have delivered over 2,800 SHE training courses during the year, with additional focus to ensure our internal courses are both bespoke and industry-leading. In 2018, the average number of SHE training days per employee was 2.0 (2017: 2.3).

A large number of employees across the Group have undertaken behavioural safety coaching training, which has empowered them to be an integral part of the culture change within the business. The success of the programme has been underlined by the fact that many employees have requested continued involvement in the programme in the future.

3

Industry-leading occupational health

We have continued to proactively assess our occupational health provision and management to mitigate risk to our people and our business. A support and prevention model has been put in place to support the business going forward.

We will continue to develop our occupational health risk management to ensure it is robust and effectively designed to reduce healthcare costs, increase productivity, reduce absenteeism, enhance employee morale, attract and retain high-quality employees and create a positive return on investment.

A health and well-being strategy will be developed and implemented in the next year to further enhance the occupational health provision, including positive mental health awareness and development aspects.

4

Carbon footprint reduction

Sustainability's triple bottom line

Steel is increasingly seen as the most sustainable of the major structural materials. It has various sustainability benefits, such as low waste, flexibility, off-site manufacture, speed, resource efficiency, adaptability, demountability, long-lasting appeal, safety, reusability and recyclability. These inherent characteristics result in many social, environmental and economic benefits to satisfy sustainability's 'triple bottom line'.

We remain committed to minimising the environmental impact of our business through sustainable practices and continuous improvement of our environmental performance. Significant progress continues to be made in areas such as renewable energy and the responsible sourcing of materials.

We continue to be accredited with the Gold Membership Standard of the Steel Construction Sustainability Charter.

Sustainability committee

In the year we have fully established the terms of reference for our sustainability committee with the agreed set of targets and objectives being:

  • Carbon reduction policy and strategy embedded in the SHE strategy.
  • Reduction in carbon intensity by 2021.
  • Waste reduction and diversion of waste from landfill.
  • Quarterly greenhouse gas ('GHG') reporting using shared database and validation of emissions.
  • Customer and supply chain engagement.
  • Staff engagement and internal performance reporting.
  • Sustainable procurement with accreditation to ISO 6001.

For 2019, further improvements and initiatives will be implemented to further reduce our environmental impact whilst also reducing costs to the business.

Climate disclosure project

The Group is committed to addressing climate risk and reducing the lifetime emissions of the assets it builds. In 2018, we achieved a C rating for the global evaluation standard, the Climate Disclosure Project ('CDP'), in line with the industry average rating of C.

The annual rating is based on CDP's evaluation of the Group's strategy, goals and actual emission reductions, as well as transparency and verification of reported data. It assesses the completeness and quality of the Group's measurement and management of carbon footprint, climate change strategy, risk management processes and outcomes. We have an action plan in place, which includes the external verification of certain reports, to enable us to achieve a B rating in 2019.

Environmental performance

The Group maintains its environmental management system accreditation to ISO 14001:2015. Information on our environmental impact is collated monthly and is reported to the board. All our work and project sites operate in accordance with our sustainability policies. We track our sustainability performance on a project-by-project basis and, where required, report information to our clients.

Greenhouse gas emissions reporting

We continued to report the Group's GHG emissions in accordance with UK regulations and the GHG Protocol Corporate Accounting and Reporting Standard methodology. Our reporting boundary remains all material Scope 1 and 2 emission sources within the boundaries of our consolidated financial statements. We have also monitored Scope 3 emissions associated with raw materials, waste, water, business travel and product transportation.

In 2018, our combined Scope 1 and 2 emissions have increased by three per cent from the previous year. This is largely due to a higher usage of heating oil across our Yorkshire factories, in what was a harsh winter for the region, leading to an overall increase in Scope 1 emissions by 19 per cent. We have again successfully reduced our absolute Scope 2 carbon emissions by 13 per cent from the previous year by continuing to focus on energy efficiency across the Group. Our intensity ratio per £m of revenue has decreased by two per cent from 40.5 to 39.8. We will continue to review our carbon emissions going forward and assess any reduction programmes which will further reduce our carbon footprint where possible.

For the year ended 31 March 2018, the Group's global GHG emissions were as follows:

Tonnes of CO2e
Emissions from:20182017
Scope 1 – combustion of fuel and operation of facilities6,2445,231
Scope 2 – electricity, heat, steam and cooling purchased for own use4,6675,390
Total CO2e emissions10,91110,621
Intensity measurement:20182017
Absolute tonnes equivalent CO2e per £m of revenue39.840.5

Innovation

Innovation plays an important role in winning work, building long-term relationships and creating additional value for our stakeholders. The challenge is to remove complex and repetitive activities from our projects by rethinking design, fabrication and construction. The Group's continued expertise in creating innovative solutions at a project level enables our clients to realise their architectural visions. Our unique capability to deliver complex design solutions, our capacity and speed of fabrication and our management of the integrated construction process is what counts to our customers. Joint value engineering, programme certainty, innovative engineering solutions and advanced construction management have long been part of what we do.

Our continued investment in technology and research will ensure the future growth of the business whilst continuing to drive efficiency and improvements in service, adding value for our customers. We have also established an engineering forum to identify new and innovative ways of working which can then be embedded across the Group to become business as usual.

Quality and accreditations

Quality assurance is a fundamental feature across all of our operations. The Group is committed to providing our clients with the best possible service and protecting our workforce wherever we operate. By gaining the necessary certification through recognised bodies, we provide the reassurance that we are properly trained and qualified to carry out our contractual and partnership obligations.

Quality systems (including welding quality systems) approved by the British Constructional Steelwork Association ('BCSA'), Steel Construction Certification Scheme ('SCCS') and The Welding Institute ('TWI'), operate to ensure customer requirements are recognised and delivered. Registration under the Qualified Steelwork Contractors Scheme provides extra confidence to our customers.

The CE mark is a claim that a particular construction product can be used within the European Union and is based on the principle that the product is 'fit for purpose'. All of the Group's manufacturing facilities are CE marking compliant and have been independently assessed to meet the requirements of Execution Class 4. Accordingly, our clients can be assured that their steelwork is in compliance with the latest European-wide legislation and is manufactured to a level of quality that is second to none.

The attraction of the best and brightest talent, their engagement, development, reward and recognition are critical to building a sustainable and profitable business.

People

Attract

We will attract the best and brightest talent

Our focus continues to be on attracting, recruiting and retaining the best and brightest talent. During the year, we recruited 221 people, strengthening a range of disciplines across the Group.

We are passionate about helping young people take their first step onto the construction career ladder, from school leavers experiencing the world of work for the first time, to graduates qualified in disciplines relevant to the construction sector. We believe that the recruitment and training of apprentices is fundamental to business development; another means of ensuring that we have all the desired skill bases available in the future. This has been underpinned by the recruitment of 66 apprentices and trainees in 2018 across the Group (2017: 39), continuing our trend of recruiting at least ten apprentices each year since our dedicated apprenticeship programme launched in 2010. We will continue to invest in apprenticeships during 2019 and beyond.

We provided opportunities for 42 existing employees to gain recognised qualifications whilst they worked through their apprenticeships, in disciplines such as project management and business improvement techniques, through our Lean programme for continuous improvement.

In 2018, we continued to recruit graduates and reiterated our commitment to providing opportunities for undergraduates via work placements across several functions including business support, quantity surveying, design engineering, site management and project management. We also provide support to individuals who are undertaking further and higher-level qualifications and working towards membership of professional bodies including the Institution of Civil Engineers ('ICE'), the Institution of Structural Engineers and The Royal Institution of Chartered Surveyors.

As well as ensuring that we attract and recruit the best and brightest talent, we must also retain that talent. In 2018, voluntary labour turnover was 8.6 per cent (2017: 7.9 per cent).

Equal opportunities and diversity

We are an equal opportunities employer and are committed to encouraging diversity and eliminating discrimination in both our role as an employer and as a provider of services. We aim to create a culture that respects and values each other's differences, that promotes dignity, equality and diversity and that encourages individuals to develop and maximise their true potential. We are committed, wherever practicable, to achieving and maintaining a workforce that broadly reflects the communities in which we operate.

Our policy is that recruitment, training, career development and promotion of people with a protected characteristic, should as far as possible, be identical to that of other applicants without the characteristic. In the event of an employee becoming disabled, every effort is made to ensure that their employment within the Group continues and that appropriate training is arranged where necessary.

In March 2018, we published our first Gender Pay Gap Report for two of our business units that are in scope of the Equality Act 2010.

Our median gender pay gap of 29 per cent provides a benchmark that enables us to drive improvement in inclusivity and diversity across the Group over the next couple of years. We are confident that our gender pay gap does not stem from paying men and women differently for the same or equivalent work. Rather our gender pay gap is a result of the fact that the structural steel and construction sectors (and in particular senior leadership roles within these sectors, which attract the higher levels of pay) are male-dominated.

Our gender pay gap also reflects wider issues. In the UK, only 25 per cent of graduates in science, technology, engineering and mathematics ('STEM') are women and only 14 per cent are graduates of engineering and technology. We are committed to addressing this by promoting STEM subjects to all young people, aiming to increase the number of women in trainee STEM roles and by changing the perception of STEM careers. By doing this, we aim to encourage more young women to follow a career in our industry to create a diverse talent pipeline.

Diversity will continue to be an area of focus in the year ahead, reflecting its importance to our business and to our clients.

Engage and perform

We will engage and manage our people to give their best every day

We have continued to review all internal communications across the Group. This included introducing further feedback opportunities for our employees, as well as creating and implementing new, more informative internal communication channels suitable for all our internal audience groups. During the year, we have successfully launched our internal newsletter, Steel Reel, and quarterly employee magazine, Skyline, both of which have provided the Group with an important platform in which to recognise and reward our employees' achievements.

Internal communication and employee engagement will continue to be a focus for the next year, with the development of a company intranet currently underway. We will continue to encourage our employees to use our newly developed internal communication channels to share their stories and celebrate Group successes.

We continued to encourage our people to become shareholders and launched our second save as you earn scheme ('SAYE') in June 2017. Over 64 per cent of our employees are now shareholders via our Share Incentive Plans ('SIP') and SAYE schemes. We were delighted at this level of participation and recognise this as a clear sign of our people being engaged with our business. We plan to launch our third SAYE scheme following the maturity of our first scheme in June 2018.

In 2019, we will continue to look for ways to improve employee engagement and participation.

Reward and recognise

We will reward and recognise people who demonstrate our values and contribute to the achievement of our goals

Each of our businesses offer a competitive reward package and review salaries annually in line with market rates. Our focus is on cash and variable pay rather than fixed benefits and each division's reward package includes an annual Group profit and safety-related bonus which encourages the achievement of our strategic objectives.

All our employees are eligible to participate in the Severfield plc pension scheme (defined contribution). Employees also have the option to make their own contributions through salary sacrifice. We continue to facilitate flexible benefits that enable our people to access programmes and savings that would not be available to them on an individual basis without additional cost. This includes cycle to work, childcare vouchers and discount schemes.

Severfield is committed to be a living wage employer. All direct employees in the UK are paid above the UK living wage and all our London-based employees are paid more than the London living wage.

We recognise and reward the loyalty of our people and in 2018, nine staff celebrated 25 years' service, bringing our 25-year club to 115 members.

Develop, grow and lead

We will support our people to achieve excellent performance and continually develop their skills. We will continue to develop strong leaders and managers

In 2018, we encouraged our employees to take an active role in identifying their own learning needs and to take responsibility for their own development through our personal development review ('PDR') process. This process provides a focus on behaviours in line with our values as well as assessment of performance and identification of development needs. In the coming year, we plan to work with our leaders and managers to continue developing the PDR process.

We have invested over 1.3 per cent of our payroll costs in learning and development activities. The main areas of focus were:

Management development

We have published an internal brochure to communicate the availability of learning and development opportunities amongst all our employees. Additional training modules now include coaching skills, team-building, giving and receiving feedback and tackling difficult conversations.

Graduate programme

We continued our ICE-accredited graduate programme which provides graduates from engineering and technical disciplines with the opportunity to work across all areas of our business and on external secondments (where appropriate), enabling them to gain a broad understanding of the various disciplines and acquiring the skill sets required for chartered membership of the ICE.

Leadership development

Leadership development is vital for our business and as part of this programme, we have continued to roll out the 360-degree feedback process throughout our director population.

Participants in the process were assessed against our defined leadership characteristics and behaviours aligned with our values by their superiors, team members, customers and peers. This feedback has enabled directors to put together individually tailored development plans for action. We will continue to measure the impact of changes in leadership style by repeating the process at an appropriate point.

We have also introduced executive coaching as a trial for a small number of executives within the business and will evaluate this on an individual, team and business performance level.

Succession and talent management

To protect the long-term success of our business we want to ensure that we understand our talent pipeline and support development so that our people reach their full potential. We have conducted a full review of key roles within the business and identified possible medium-term successors for the majority of roles. Action plans are in place to address gaps in knowledge and experience to meet our priority business needs and ensure there is a pipeline of talent for internal progression.

In April 2017, we launched the first Severfield development programme to fast track the development of 16 talented managers. This programme focused on the development of personal impact and leadership skills, strategic and commercial awareness and provided the opportunity to work across different business units by working on Group-wide business improvement projects identified by the board. The programme has delivered clear business benefits, achieved its objective of fast tracking the development of its participants and been well received by participants. In 2019, the business intends to identify the next group of participants for a second cohort.

We also took the opportunity to highlight emerging talent across the business to ensure consistency and visibility of talent and career opportunity. Our agility in deploying talent and experience to maximise opportunities through sharing knowledge across the Group is a key differentiator and one which we will continue to develop.

Well-being

We will promote health and well-being to our people

In 2018, we provided all employees with the opportunity to access health check appointments, not just those employees that require health surveillance to ensure fitness for safety-critical roles.

Building on our involvement with Mates in Mind, we have commenced the first stages of a mental health awareness programme with the training and development of nine personnel as mental health first aiders. In the coming year, we will continue to develop our well-being strategy with a focus on raising awareness through a calendar of events throughout the year.

We recognise that employees' financial worries can be a major cause of mental ill health and that failing to save for retirement can result in employees working beyond their desired retirement date which can lead to reduced performance. Consequently, in 2018, in conjunction with our pension scheme administrators, we ran a programme of saving for retirement awareness sessions to educate our employees and encourage them to contribute more into their pension. In the coming year, we will widen our focus to include general financial awareness and living within a budget.

Business integrity

Human rights

We are committed to protecting and respecting the human rights of our employees and those who work in our supply chain. As a company operating within the UK, the key human rights issue we face is equality, which we address with training for employees and by promoting a culture of inclusion.

The Modern Slavery Act places a duty on companies to make a public statement on the steps they have taken to minimise the possibility of slavery or human trafficking happening in their own business or in their supply chain. We believe that this risk can be effectively managed, and we continue to make a number of phased improvements to our supply chain pre-qualification and audit processes to make them as robust as possible. Further details of the Company's approach to modern slavery and its updated Modern Slavery Act transparency statement for 2018 can be accessed at www.severfield.com.

General Data Protection Regulation ('GDPR')

GDPR replaces the Data Protection Act 1998 in the UK and has been designed to harmonise data privacy laws across Europe, to protect all EU citizens' data privacy and to reshape the way organisations across the region approach data privacy. We take GDPR seriously and are working with the business and its supply chain to ensure individuals' personal information is handled in compliance with the legislation.

Communities

At Severfield we pride ourselves on our commitment to supporting local charitable initiatives as well as engaging with the communities close to our sites. Throughout 2018, the Group has continued to take part in many activities across the country, promoting career and apprenticeship opportunities for young people within the business.

We also have a number of employees from across the Group that are STEM ambassadors. Their aim is to encourage students to take on, and enjoy, STEM subjects during their time at school and college. Throughout the last 12 months the Group has supported a number of STEM events, including hosting a visit from a number of engineering apprentices from Stadt Regensburg in Germany, as part of the Erasmus Programme. Furthermore, we welcomed students from Manchester University into our Lostock production facility to see first-hand the type of engineering work carried out in our factories. Severfield has also supported 'STEM days' at local schools, encouraging young people to consider careers in engineering.

The Group also provides sponsorship to local clubs and groups, supporting local communities near to each of our sites, as well as encouraging thought leadership amongst our employees, customers, suppliers and potential employees via various initiatives such as industry exhibitions, seminars, project site visits and other events. Our internal communications team shares good news stories and updates on charity events amongst all our employees, as well as encouraging them to get involved themselves.

Severfield employees have also been committed to raising funds for a number of local and national charities, including Prostate Cancer UK, Bolton Hospice, St. Catherine's (Scarborough), Breast Cancer Now, the Yorkshire Air Ambulance, Cancer Connect NI, Fermanagh Stroke Associations, Jengana, and SANDS.

The Severfield Foundation

The Severfield Foundation ('the Foundation'), our registered charitable incorporated organisation, continues to be successful in raising funds and awareness for charitable bodies throughout the UK. The Foundation is run by its trustees, who are all employees of the Group, and since its incorporation in 2016, the Foundation has raised over £100,000 for both national and regional charities.

The Foundation supports one main 'partner' charity as well as several local charities chosen by each Group company (decided by our employees at each location). In 2018, our partnership with Prostate Cancer UK carried on for a second year and has continued to provide our employees with the opportunity to take part in major sporting events such as the London and Berlin marathons, the Great North Run and RideLondon Surrey 100. With the Severfield workforce being predominantly male, Prostate Cancer UK is very relevant to our Company.

Employees are also encouraged to take part in their own fundraising events for charities close to their hearts, and the Foundation supports such activities where possible.

Pictured: The Ordsall Chord project team awarded the 'large community and heritage project' winner at the 2018 annual ICE North West civil engineering awards