Shaylor Group 2010 Annual Report by Shaylor Group

WE ARE SHAYLOR GROUP 2010

Shaylor Group plc Directorsâ&#x20AC;&#x2122; report and financial statements

Registered number 4513210 For the year ended 31 March 2010

GROUP

ANNUAL REPORT 2010 / CONTENTS

CONTENTS OUR GROUP

OUR VALUES

CHIEF EXECUTIVE’S REVIEW

OUR MARKETS

INTRODUCTION HEALTHCARE RESIDENTIAL CARE EDUCATION COMMUNITY CUSTODIAL AND POLICE COMMERCIAL RETAIL INDUSTRIAL HOTELS AND LEISURE HERITAGE REPAIR AND MAINTENANCE

12 13 16 20 22 26 28 34 38 42 46 48

CORPORATE SOCIAL RESPONSIBILITY

INTRODUCTION HEALTH AND SAFETY OUR PEOPLE OUR COMMUNITIES OUR ENVIRONMENT OUR CUSTOMERS OUR SUPPLIERS

52 53 54 56 58 60 62

BUSINESS MANAGEMENT

MANAGING RISK KEY PERFORMANCE INDICATORS FINANCIAL INSTRUMENTS

66 67 68

GOVERNANCE

DIRECTORS’ REPORT STATEMENT OF DIRECTORS’ RESPONSIBILITIES

72 73

FINANCIAL STATEMENTS

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF SHAYLOR GROUP PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT CONSOLIDATED BALANCE SHEET COMPANY BALANCE SHEET RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS NOTE OF CONSOLIDATED HISTORICAL COST PROFITS AND LOSSES CONSOLIDATED CASH FLOW STATEMENT NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT NOTES TO THE FINANCIAL STATEMENTS

77 78 79 80 81 81 82 83 84

ANNUAL REPORT 2010 / OUR GROUP

OUR GROUP

provides a deve lopment angle to our co nstruction businesses and th clients. It also m eir anages its’ portfolio of co mpleted properties.

siness rgest bu is the la the Group and n in stream rojects betwee n p o li s deliver on and £15mil li il £1.5m ew build and n of both ment in the h is b ctors. r fu re ivate se r p d n a public

flourish continues to portion of ro p h with a hig ess, even in n si u b repeat allenging these more ch ises al ci e times. It sp n-based in constructio to contracts up oth new b in n io ill £1.5m rbishment. fu build and re

Our Group has evolved into six business streams, with the ability to deliver all types of construction project across a wide marketplace with a focus on strategic and sustainable work. Having a quality and value-driven ethos, supported by a dedicated and professional team, Shaylor Group continues to out-perform its peers even in difficult times.

kills ecialist s offers sp lic and private b to the pu roviding a p , s to sector pproach d e r tailo a intenance a repair, m vement o r p and im mes. m a r prog

provides C ommercial, Retail and Office Interi or constructio n within the S services h This is provi aylor Group. ded on a national ba sis from offi in Birming ham and ces London.

is dedicated to carrying ou t long term repeat business under frameworks and partnering agreements. Its principal client is the Ministry of Justice with whom it has a framework covering both new build an d refurbishment works in the custodial sector.

OUR VALUES

e respaern

r ou

SU S TA IN

ITY IL AB

p be o s itiv e

pliers sup

our com m u ni

our environme nt 02

tak respons e ibi l

ONE TEAM

s tie

strive improvto

ople r pe ou

ES LU

ity

CORPOR PR ATE OF S hea OC I lth I

TY ILITY ILI NSIB O B P our custo TA RES y me t e f L rs A sa

We have worked on identifying what constitutes the inherent values of the Shaylor brand. All our people were involved in distilling their thoughts and aspirations into a succinct format. The end result is One Team.

ANNUAL REPORT 2010 / OUR VALUES

OUR MARKETS RESIDENTIAL CARE Care homes will become an increasingly more important market as the UK’s population ages.

EDUCATION

We performed work for many schools, universities and other colleges this year.

page 16

HEALTH This includes our work for local doctors, PCT’s and hospitals.

page 20

page 13

COMMUNITY

zzz

CUSTODIAL AND POLICE

INDUSTRIAL

Local authorities and religious groups were among our customers in 2010.

SALE

Our work for the Ministry of Justice continued, with other projects for the police and British Transport Police.

zzz22 page

SALE

page 26

page 38

HERITAGE

Many of our projects have an historic angle. In 2010 this included universities and schools.

RETAIL

zzz SALE

Activity this year included work for the Post Office amongst others.

HOTELS AND LEISURE COMMERCIAL SALE

Many schemes were undertaken for both private and public sector organisations in 2010.

page 28

zzz

page 46

page 34

zzz

Ongoing projects for a number of pension funds featured in 2010.

We had schemes for local authorities, the Royal Shakespeare Company and Birmingham Royal Ballet in this year. SALE

REPAIR AND MAINTENANCE zzz

We undertook many smaller projects for both existing and new customers.

SALE

page 48

page 42

We work across a broad spectrum of sectors and work types. These are broadly categorised in Our Markets, as shown above.

CHIEF EXECUTIVE’S REVIEW

ANNUAL REPORT 2010 / CHIEF EXECUTIVE’S REVIEW

86%

Average Customer Satisfaction Rating

36.5

Considerate Constructors scheme score on most recent projects

83%

Diversion from landfill

I am delighted to present our 2010 Annual Report. This was a year of consolidation for the business. We had hopes of growing, but the economy contracted and our revenues were down 7% to £56million for the year to 31 March 2010. This was a period when the recession impacted and the construction industry in particular went into significant reverse. For many of our clients, their optimism evaporated. However, with figures from the Office for National Statistics showing that output in the West Midlands fell by 23% last year, our performance was highly creditable.

The Year In View Despite the challenges faced this year, we delivered many notable construction projects, which are detailed in the “Our Markets” section of the Annual Report and we have elaborated on the detail of our ‘Case Study’ projects in response to comments received last year. I also wanted to provide the following highlights in my review.

Our Shaylor Construction business successfully delivered 100 Hagley Road for Calthorpe Estates, being 40,000sqft of BREEAM Excellent Grade A office space in Birmingham. This was at the forefront of the There were many progressive steps newly titled “Retrofit” activity, being taken by the business, facilitating our a refurbishment project with an continuous improvement programme. exceptional environmental output. These are summarised as pictorials This team also completed five (above and over), with more detail and Learning Hubs on time and on budget explanation within this years’ Annual for the Learning and Skills Council Report. in Northamptonshire, as well as the £10million new build Diabetes Centre 06

for Birmingham Heartlands & Solihull NHS Trust. Our Shaylor Special Projects business undertook the Crown Office Refurbishment Programme, being 105 Post Office branches for Royal Mail. This scheme was delivered four months early and this, combined with other innovations, contributed towards the employer achieving a 20% saving on their capital budget. This is a worthy example of what can be achieved when working closely with our customers and could be offered to public sector partners to reduce their deficit. In the custodial sector, we continue our longstanding relationship with the Ministry of Justice. The £11million M&E scheme at HMP Featherstone is now halfway through. Our Competitors We saw the continued demise of our

Cumulative value of projects awarded by the Ministry of Justice under their Framework

ANNUAL REPORT 2010 / CHIEF EXECUTIVE’S REVIEW

£42million

£8 million Balance sheet value

£5.4 million

Year end cash balances

similarly sized regional competitors and an increase in the number of national contractors seeking to secure work in the middle space (projects of £5million to £10million), traditionally occupied by independent SME’s like ourselves. This has manifested itself in further price deterioration. As a business, we recognise that current pricing levels are not sustainable beyond the short term and will lead to an increase in the level of contentious contracting throughout the supply chain. We remain committed to a philosophy of pursuing relationship-based, customer-focused business, where price is not the main driver. We do not subscribe to a buying turnover mentality, as this leads to disappointment for all stakeholders to project – customer, builder or supply chain. We go to market by many routes, but seek to operate in an arena where the qualitative aspects

are a significant part of the selection criteria. It is in this environment where we are really able to demonstrate our credentials and deliver the most added value.

to the next level. Indeed, with nearly fifteen years with the Group and a background in procurement, we are already seeing the benefit of Ken’s leadership.

Leadership At the beginning of the financial year Richie Shaylor took up the new role of Group Operations Director. This was an extremely turbulent time to be in this position and Richie has been kept very busy. Martin Baxter took on the task of leading our business development activity and has successfully accelerated our exposure to new areas of opportunity.

Our Repair and Maintain operation, launched last year, is now headed by David Harwood, who has been charged with building up this new entity. David is certainly no stranger to the business, having led Shaylor Special Projects since its inception in 2002.

We appointed Ray Williams as Managing Director of JDI, our interiors business. Ray joined us Our Shaylor Special Projects in the second half of the year after business is now led by Ken Rawe. spending the previous ten years with He has previously led a business one of the country’s leading interiors improvement initiative, embedding a businesses. During his initial tenure, collaborative and best practice culture Ray has restructured the operation across the Group. Ken’s attributes and strategically placed the business provide the traction, management and to move forward to meet our targets direction to take this business stream and aspirations. This is now having... 07

ANNUAL REPORT 2010 / CHIEF EXECUTIVE’S REVIEW

191 Staff employed

0.35

85%

AFR – another year on year improvement

Staff retention rate

a positive impact, stabilising the business to enable it to make a positive contribution next year. Corporate social responsibility Our teams have made excellent progress on a number of initiatives. Our delivery KPI’s have advanced significantly. This is evidenced by many of our projects scoring consistently in excess of 34 points as part of our association with the Considerate Constructors scheme. This places our projects in the top 10% of all the schemes measured in the UK. The business made a commitment to halve waste to landfill. We signed up to the Waste Resource Action Programme (WRAP) as part of the sustainable construction initiative 08

and our statistics show that we successfully diverted 83% of waste from landfill, with some projects closer to 100%! Our Values In 2009 our people worked together to identify the values inherent in the Shaylor brand – our DNA. Since that time, the business has embraced the “One Team” approach, such that it is now embedded in the way we do our business. The attributes of pulling together, communicating, delighting our customers and sharing in our success have always been relevant, and are even more desirable in the tighter economic conditions. Future Prospects We are really pleased that through the gloom of the recession we have

posted a set of outstanding results and delivered some great construction schemes. Our balance sheet is approaching £8million, and our cash reserves have increased. This gives financial security to all stakeholders in our business, not least in the eyes of our anxious customer base. The market place has changed and will continue to do so. Whilst we have decreased our exposure to the public sector, it still represents at least half our business. The new Coalition Government have announced some profound changes to future public sector spend, although most of the detail will not be known until after the Autumn Spending Review. However, it is likely that the most active area of expenditure will be projects below £5million, with a bias towards

Accident free sites

£1,200

ANNUAL REPORT 2010 / CHIEF EXECUTIVE’S REVIEW

97.1%

vestment in Annual per capita in velopment staff training and de

24%

Programme re duct in Post Office ro ion delivered ll out

O ne Sunday T to Wat ch imes Be st Emplo yer aw

ard

refurbishment projects. Our business model could well benefit from a change of approach away from frameworks, where often only the national contractors have the relevant credentials. In the private sector, each market has its own dynamics. General economic sentiment and confidence will be the main driver and positively we detect optimism about their future spending. Similarly, we can demonstrate our experience in delivering the environmentally friendly Retrofit product. We have good visibility for the year ahead, with a confirmed order book approaching £40m and work contributing through into the following year. We are at an advanced stage

on a number of other mandates and our development-led capability will undoubtedly bring more success in 2011. We now look forward with optimism as we continue with our strategy of planned and managed growth, underpinned by a stable, diverse and balanced portfolio. And Finally We thank all the stakeholders to our business, being clients, supply chain and our own people, for contributing to our enduring success. This is more profound in these more challenging times. I hope you will find our 2010 Annual Report of interest and look forward to working with you in the future.

Stephen Shaylor Chief Executive 10 September 2010

0 1

OUR MARKETS INTRODUCTION 12 HEALTH 13 RESIDENTIAL CARE 16 EDUCATION 20 COMMUNITY 22 CUSTODIAL AND POLICE 26 COMMERCIAL 28 RETAIL 34 INDUSTRIAL 38 HOTELS AND LEISURE 42 HERITAGE 46 REPAIR AND MAINTENANCE 48

ANNUAL REPORT 2010 / INTRODUCTION

INTRODUCTION Thanks to the diversity of our markets and the loyalty of our clients, we have managed our way through the problems which faced the UK construction industry in the year. We have remained a force in the private sector, retaining our existing clients and adding new ones. In the public sector, our continuing strong presence in Health, Education and Custodial work, together with a strongly developing presence in Residential Care and Repair and Maintenance has enabled us to consolidate our position. Our progress is reflected in this section of our Annual Report.

ANNUAL REPORT 2010 / HEALTH

Heartlands Hospital Diabetes Centre, Birmingham

HEALTH Three parts of the group have shared equally in the progress made this year in this market. Hospital new build and extensions, refurbishment of PCT premises and repair and maintenance have all figured largely in the period.

Our ability to master the more complex projects on difficult sites was at the forefront in our work for the Royal Orthopaedic Hospital, Birmingham. The £5.6 million Outpatients Department is nearing completion and achieving its BREEAM excellent design standards.

The year also saw the successful completion of the £10 million New Diabetes Centre for Birmingham Heartlands Hospital and the development of a stream of work from the Health Protection Agency.

The £3.3 million mixed use Abbotts Street Development for Walsall New Horizons includes the provision of major facilities for the local PCT. Our work for Prime, one of the leading developers of PCT and healthcare facilities, has drawn warm praise from their Chief Executive at both Hanley and Birmingham.

ANNUAL REPORT 2010 / HEALTH CASE STUDY

THE ABBOTTS STREET DEVELOPMENT BLOXWICH, WALSALL Description Demolition of existing Stan Ball Centre and construction of new single storey community centre and two storey PCT NHS offices. The new buildings comprise CFA piled foundations, steel framed structures clad with brickwork, cedar boarding and curtain walling and including full internal finishes and M&E services together with associated external works of access road, car parks and landscaping.

Value £3.3 million Duration 45 weeks Client New Deal: New Horizons, in partnership with Bloxwich Community Partnership

Achievements and points of interest • Considerate Constructors Scheme score of 33. • Very successful liaison with residents via an active Local Residents Committee. • Built in the middle of a busy housing estate. • Boundary conditions involve works to the adjacent canal and mooring for pleasure boats.

Abbotts Street Development 14

ANNUAL REPORT 2010 / HEALTH

STRATEGIC DIVERSE SUSTAINABLE

ANNUAL REPORT 2010 / RESIDENTIAL CARE CASE STUDY

BONDCARE BROMFORD LANE, BIRMINGHAM Description Design and construction of a 116 Bed three storey extra-care facility. The accommodation provides nine day rooms, kitchens, therapy areas together with staff and administration areas. The brick clad, timber framed structure employs offsite manufacturing to reduce programme, promote safe working and provide consistent high quality standards throughout. The scheme includes Full mechanical and electrical installations, including nursecall and entry systems. A full external works and landscaping layout was developed to complement the project and the surrounding area. The project is part of a continuing agreement with Bondcare to provide care facilities across the Midlands. Care Home, Bromford Lane, Birmingham

Achievements and points of interest • Early involvement in the framework enabled consideration of various working methods to provide best value in terms of cost, programme, buildability, quality, safety and environment. • Considerate Constructors Scheme score 34.5 in November 2009, placing the project in the top 10% of contracts in the UK. • Ten week programme saving by using timber frame technology and ensuite “podular “ bathrooms, manufactured offsite. • 99.9% of waste diverted from landfill.

Value £5.99 million Duration 43 weeks Client Bondcare

ANNUAL REPORT 2010 / RESIDENTIAL CARE

RESIDENTIAL CARE This is a growing market and our track record in successfully managing framework agreements in all sectors has seen us play a significant role in Bondcare’s plans to invest £200 million nationally. We are one of two construction partners and have also played our part through Shaylor Developments in sourcing land and adding value to the relationship.

Once again we are active in both the public and private sectors. The five year Bondcare framework continues our success in winning sustainable business and we are now on site at Bromford Lane Birmingham with the first development being a £6 million, 43 week project. In the pipeline we also have the next £4million scheme at Halesowen, on a site procured by Shaylor Developments.

The Ashley House PLC Palliative Care Unit on land provided by Walsall NHS LIFT Partnership is a £4.1 million, 54 week scheme, providing a range of inpatient and outpatient adult palliative care services. We are confident that we can penetrate this sector further in the year through both competitive tender and by the provision of package deals.

ANNUAL REPORT 2010 / RESIDENTIAL CARE

People Profile

JOHN PSZONKA

DESIGN & BUILD MANAGER John has been at Shaylor for five years as a Design & Build Manager. A member of the Chartered Institution of Civil Engineers and of the Chartered Institute of Management, John’s 35 years of experience in the industry is invaluable to the business in his primary role of working with the Bid Teams; maintaining quality and integrity of design whilst employing skills learnt over that time to analyse design options and their buildability.

“I like to think I bring a considered and level headed approach to the design and build projects I work on. We have very committed estimating and contract management teams and having worked with them over a number of years, we have developed a good rapport. This enables us to be competitive, whilst setting in train a clear understanding of the clients’requirements which makes subsequent delivery very effective. Early in my career I spent a number of years with consultants in the design office and with contractors in project management roles. The design office experience gave me a clear understanding of the difficulties faced by designers and has helped me enormously over the years.”” practical advice, inEqually, John’s colleagues respect his measured approach His . skills el sonn novation and inter-per ct places us in to issues and the understanding of a proje his colleagues, with re a strong position at interviews, whe know the who ts clien with e he helps to build confidenc ing and think our of re cent the at ain creativeness will rem that delivery will be seamless.

CASE STUDY

GOSCOTE PALLIATIVE CARE CENTRE BLOXWICH, WALSALL The construction includes: Traditional strip foundations with load bearing masonry walls and pre-cast concrete floors. External walls are clad in a mixture of facing brickwork, insulated render and cedar boarding. The roof is a built up, insulated, pitched metal The centre will incorporate roof along with areas of flat the following key services roof, internal block work or and features: plasterboard partitions, windows • Inpatient Palliative Care and doors, floor wall and ceiling services (twelve beds). finishes. The facility will be fully • Outpatient Therapies. fitted out including Mechanical • Other services including and Electrical installations with Lymphoedema, complimentary full Medi-Gas bed heads to the therapy, psychology and Palliative care wards. information services, along with bereavement counseling. Achievements and points • Fully fitted out and operational of interest kitchen, with cold storage • BREEAM Very Good rating. facilities. • Considerate Constructors • Sacred Space Area with Scheme score of 34.5. a coloured glass piece of artwork by a locally commissioned Artist. Description The project consists of a 2,500m2 new build single storey and part two storey Palliative Care Centre, providing a range of inpatient and outpatient adult palliative care services.

Value £4.1million Duration 54 weeks Client Ashley House plc on behalf of the NHS Walsall Lift Partnership

Construction of Goscote Palliative Care Centre 19

ANNUAL REPORT 2010 / EDUCATION CASE STUDY

FIVE VOCATIONAL LEARNING CENTRES NORTHAMPTON Achievements and points of interest • Dedicated supply chain to construct each building. • Registration with Considerate Constructors Scheme and The buildings comprise: close links with each college Single storey steel frames with and local communities composite sheet cladding and through regular meetings roofing, curtain walling and to ensure minimum impact windows and internal finishes of construction works on and services. In addition operation of the colleges. there are car parking facilities • Involvement with colleges adjacent to each building and and students in regular landscaping in the surroundings. contributions and photographs The programme for each and accompanied site tours location is 30 weeks with two as an aid to health and safety week staggered starts. and developing construction awareness. Description Construction of new specialist Vocational Learning Centres for sixteen to nineteen year olds at five separate college locations.

Entrance to one of the Five Vocational Learning Centres in Northampton 20

Value £5.37million Duration 40 weeks Client East Northampton County Council

ANNUAL REPORT 2010 / EDUCATION

Discussion room at the Vocational Learning Centre

EDUCATION The year has seen us consolidate our position in primary and secondary education in the public sector, in further education, and for the private sector at Truro, Shrewsbury and Warwick schools. We have also established strong links with PFI providers under the Building Schools for the Future programme.

We have continued to enjoy the support of our long standing Clients, University of Birmingham, Coventry University and Warwick University. Our work at Coventry University constructing the £3 million Simulation Hall to house the Virtual Learning Resource for ACT (UK) has drawn great interest from both within the industry and in the media. Our long standing relationship with University College Birmingham continued with a contract to refurbish five floors of the old College of Food building in Summer Row, the work having been carried out by JDI. The Learning and Skills Council funded the construction of five

Vocational Centres in conjunction with East Northamptonshire County Council. The £5.4 million contract with staggered starts was completed in 40 weeks. Shaylor Special Projects has led our drive into the private education sector with works completed at Truro and Shrewsbury Schools. We have a number of enquires from similar establishments which is encouraging for our aspirations for sector growth. Next year we will commence the new build contract of a £7 million Performing Arts Centre for King Edwards VI School, Edgbaston in Birmingham.

ANNUAL REPORT 2010 / COMMUNITY CASE STUDY

BIRMINGHAM CENTRAL MOSQUE BIRMINGHAM CITY CENTRE Description Extensive refurbishment and extensions to an existing occupied Mosque in a city centre location. Works include: • Addition of a new third floor and roof structures in steel over the existing Mosque. • New dome structure. • New three storey extension. • Two new steel framed, cedar clad stair towers. • Associated internal finishes and services.

Achievements and points of interest • The critical success factor was keeping the Mosque open for daily prayers throughout the project which we achieved by careful planning and management and regular coordination meetings with the Mosque Manager. • Construction of new gallery floors and roof over operational Mosque interior were high risk activities which we successfully controlled, without incidents, by method statements, risk assessments, detailed programmes and positive management. • Successful installation of the new dome was a key event on the project.

Value £719,000 Duration 30 weeks Client Birmingham Mosque Trust

The new dome being lowered into place at Birmingham Central Mosque December 2009 22

ANNUAL REPORT 2010 / COMMUNITY

Courtyard entrance at the University of Wales

COMMUNITY With the Birmingham Central Mosque, Churches in Sutton Coldfield and Sheldon, and works for the Salvation Army, Shaylor Special Projects have continued the successes of earlier years in this field. The year also saw us active under the Shropshire framework agreement with community centres in Ludlow and Craven Arms.

Birmingham Central Mosque was a challenging refurbishment in an occupied and fully operational centre of worship. The lifting of the prefabricated Dome and large elements of structural steelwork into a confined site was achieved using a 500 tonne mobile crane.

We have been competitive on many Community projects and enjoyed good feedback from our clients due in large part to the communication skills of our Shaylor Special Projects team who combine large company CSR with the personal touch. 2010 will see the completion of a ÂŁ1.8 million Goals Soccer Centre in Speke, Liverpool.

ANNUAL REPORT 2010 / COMMUNITY

People Profile

IAN KILVINGTON

BUSINESS DEVELOPMENT EXECUTIVE Ian joined the business in 2008 working in our Business Development team. Prior to joining Shaylor, Ian had a diverse career, working first as a paramedic and undertaking mountain rescue in Canada. It became immediately apparent that Ian’s skills in dealing with people, his rapid assimilation of the role, sheer dedication and hard work were going to be great assets to Shaylor.

“I made a dramatic career change from working in the Ambulance Service and Medical First Responder with the Whistler Mountain Professional Ski Patrol in British Columbia to business development at Shaylor! I already knew of the Shaylor business through a friend who worked for them for a number of years. He encouraged me to approach them when I became aware that a position existed in Business Development. I am grateful to Shaylor for seeing something in me which they were looking for and giving me the opportunity, which I have grasped with both hands. It has been a very difficult time for the construction industry over the last two years, but I have taken great satisfaction in helping to maintain the flow of opportunities which Shaylor have so competently executed. Thanks to the very intense training I have received, I find it difficult now to think of a time when I was not a part of the industry. I am now accepted naturally as part of a very successful Business Development Team and know that I can grow with this company that has always managed to maintain that family feel.”

Ian’s successful transition is one of many rewarding highlights of a very eventful two years and we look forward to him sharing with the Group further success as his career develops.

ANNUAL REPORT 2010 / COMMUNITY

BE POSITIVE

WORKING AS ONE TEAM HELPED US ACHIEVE SUCCESS IN 2010 25

ANNUAL REPORT 2010 / CUSTODIAL AND POLICE CASE STUDY

HMP FEATHERSTONE - REWIRE AND BOILER/HEATING MAINS REPLACEMENT WOLVERHAMPTON Description This Design and Build project includes: Rewiring the existing Prison, including replacing all existing Electrical Mains and Switchgear. Installing a new 1000 KVA Standby Generator c/w fuel tank and fuel line. Replacing three existing boilers with four new Dual Fuel Boilers, c/w fuel tank and fuel line. Installing a new CHP Unit to convert surplus heat into electricity which is sold back to the National Grid. Replace all existing underground and above ground heating mains with a new highly insulated pipe work system, install new control panels and cabling to link to existing BMS. Removal of all Asbestos materials throughout the Prison.

Achievements and points Staff, Offenders and Visitors. Value of interest £11.2 • Sympathetic Constructors million • Shaylor have set up and Scheme, set up by MoJ for operate a Buffered/Lean Custodial Projects. Duration Programme, with a Weekly • This Project will provide the 108 weeks Reporting Process which Establishment with a new monitors the progress highly efficient, energy saving Client against the Programme. and Co2 reducing Heating, Ministry of • Shaylor have co-ordinated Hot Water and Power Justice the Design Development System. The New CHP Unit Process with our Design will convert any surplus heat Team and Principle M&E into electricity, which can Subcontractors to ensure full be sold back to the Central compliance with the Client’s Network Grid. Design Brief and the required • Providing good traffic NOMS Standards. management system • Zero defects at handover and adequate parking achieved on first five without compromising the Beneficial/ Sectional Establishments own access Handovers and egress, or the Staff and Visitors parking. • Ensuring minimum disruption to the regular operational processes of the Prison, the

Artificial games pitch and fencing at HMP Featherstone 26

ANNUAL REPORT 2010 / CUSTODIAL AND POLICE

Police Station, Digbeth, Birmingham

CUSTODIAL AND POLICE Another very active year under the Ministry of Justice framework agreement saw the award of our largest contract in this sector at HMP Featherstone, and completion of works at HMP Ashwell, HMP Wellingborough and the enabling works for the current ÂŁ11.2 million Featherstone Mechanical and Electrical contract.

It was particularly pleasing to build on our positive experiences under the MoJ framework to move into further police and custodial work for Cheshire Police, three contracts including a Tactical Training Centre for West Midlands Police, the completion of Digbeth Police Station refurbishment and further contracts for British Transport Police in Kent, Peterborough, Birmingham and Manchester.

We are well positioned to take advantage of the increase in demand for custodial suites by the Prison Service and Police Forces, as well as the facilities which are required by PFI providers in both sectors. This includes the award of a ÂŁ2.7million Custody Suite for West Midlands Police next year.

ANNUAL REPORT 2010 / COMMERCIAL CASE STUDY

COLMORE GATE BIRMINGHAM CITY CENTRE Description Design and Build project to refurbish the main reception and lift lobby of a city centre office block, including external cladding and glazing. Works are being carried out in two phases to maintain access to lifts for office occupants. • Reception finishes and services, including new reception desk. • New lift frontages. • Replacement of existing marble cladding with rain screen cladding. • New full height structural glazing and entrance doors. • Removal of existing canopies and making good marble cladding.

Colmore Gate Central Birmingham 28

Achievements and points of interest •C lose coordination and issue of monthly Project Newsletter to enable Client Project Manager to communicate construction activities to office and retail tenants. •N ight working on external elevations to avoid disruption to shops and bus stops on busy footpaths. • I nstallation and maintenance of temporary entrance door, screens and ramps to create access to offices whilst the reception is refurbished.

Value £1 million Duration 27 weeks Client CIP Property (AIPT) Ltd, represented by Aviva Investors

ANNUAL REPORT 2010 / COMMERCIAL

Reception area at Wembley Point in London

COMMERCIAL We have to say as a business and an industry we entered this financial year expecting to struggle to maintain historic levels of turnover and market penetration in the Commercial sector. However, we achieved in excess of 20% of Group turnover with a pleasingly diverse spread of clients, which places us in an unexpectedly strong position to take advantage of the increased enquiry levels we are experiencing from both existing and new clients.

Calthorpe Estates are perhaps one of the oldest and most respected landlords and developers in Birmingham. Shaylor Construction have taken great pride therefore in receiving their praise for the major structural alterations and re modelling of 100 Hagley Road under a £6.4 million contract.

Work in progress includes the £1 million phased refurbishment of the main reception and lift lobby at Colmore Gate in Birmingham city centre, with the building in occupation, for the client represented by Aviva Investors and fitting out at the Mailbox for occupation in May by the Highways Agency. A wide portfolio of further contracts in London, Birmingham and Bristol bodes well for continued progress in the current year.

We are pleased to have built upon the modest beginning last year with Network Rail and have now completed six contracts for them in Birmingham, Bristol, London and Reading, the work in Birmingham SSP have continued the long through Mace on the New Street standing relationship with Royal Gateway enabling works. Mail Group and have won a portfolio of planned maintenance With JDI our office fit-out business contracts up to £1 million in value now fully integrated into the Group, as well as adding other commercial it has had some success in its’ work for new Clients including core market. This year saw the the SCC Data Centre for Holborn completion of the £2.4million Can Projects at Cole Valley Birmingham. Mezzanine project in the City of London and the Centro office fit-out in occupied premises in Birmingham.

ANNUAL REPORT 2010 / COMMERCIAL CASE STUDY

NETWORK RAIL NATIONWIDE Description Shaylor Group has been actively working alongside Network Rail on a number of projects over the last twelve months. Shaylor Special Projects and JDI have carried out works to the value of £1.3m. The projects comprised: 1.Temple Point, Bristol £265,000 contract over eight weeks. Third floor fit-out including modifications to M & E services. A new access floor was created along with a suspended ceiling, new solid and glazed partitions. New purpose made joinery, decorations and floor finishes were installed. 2.Tournament House, Paddington Station £165,000 contract over six weeks. A refurbishment and reconfiguration of five floors for commercial offices. Works included testing and upgrading M & E systems, the creation of new conference rooms with new polar single glazed partitioning, and the provision of break-out areas. A new

storage area was created along with the provision of post room facilities. Full re-decoration of the interior was carried out and blinds fitted throughout. 3.New Crew facilities £218,000 contract over eight weeks. New locker rooms are being installed for the train crews at Birmingham New Street Station as part of the prestigious Birmingham Gateway Project. This fast track project involves a strip-out of existing areas and a complete refit, including M & E and structural alterations. 4.Project Offices at 80 Caversham Road, Reading £325,000 contract over ten weeks. Network Rail needed offices to accommodate staff in the newly acquired neighboring Royal Mail Sorting Office building, while the mainline redevelopment was being carried out. JDI has dealt with the refurbishment of these offices. 5.The Sorting Shed at 80 Caversham Road, Reading £240,000 contract over eight weeks. Network Rail also acquired a redundant sorting depot which

Network Rail Reception, Mailbox, Birmingham 30

is attached to the old sorting office by a walkway bridge. JDI refurbished the building to create work-shops, offices and work storage areas. Workshops will be used by sub-contractors working on the main re-development project, to base themselves. 6.Mailbox Reception £52,000 contract over two weeks. The refurbishment of Network Rail reception to create a vibrant entrance area complete with 10 metre high digital wallpaper, designer lighting and door heaters, complete redecoration and works to alarms and PA system. Achievements We have achieved minimal disruption to fully operational offices by out of hours working, careful sequencing and temporary works. By close co-ordination with the client’s specialist contractors, projects have been completed on time.

Value Six projects totalling £1.3m Duration Various short term periods as above Client Network Rail

ANNUAL REPORT 2010 / HEALTH

ANNUAL REPORT 2010 / COMMERCIAL

People Profile

RAY WILLIAMS

MANAGING DIRECTOR, JDI Ray joined the Shaylor Group in the autumn of 2009 as Managing Director of JDI. This was a year or so after their acquisition by Shaylor Group, and followed the departure of the founding directors. Ray’s brief was very straight forward – to grow the old John Davies Interiors (JDI) regional fit-out business to a national player in the commercial and retail sectors with a £30m turnover in three years!! Perhaps this might have been regarded by a lesser individual as ambitious, but Ray’s track record in the fit-out arena is such that we know he would be disappointed not to achieve it.

“While the industry is suffering its biggest downturn in 60 years there still exists a requirement in the marketplace for a first class interiors delivery service. Both JDI and Shaylor have exceptional reputations in the Midlands area and this was undoubtedly a key factor in my deciding to take on the role of MD. The challenge of expanding the JDI business on to a national platform is made easier with the support and resources of the Shaylor Group and the next few years will be some of the busiest and most exciting of my career to date.”

ld a Ray has already begun to bui including ally ion nat ad rklo wo e abl sustain alth He work for Network Rail, the Agency, Protection Agency, Highways PLC and e Prim , lice Po ort British Transp . don ing The London Borough of Hill

ANNUAL REPORT 2010 / HEALTH

STRIVE TO IMPROVE

WORKING AS ONE TEAM ENSURES WE DELIVER GREAT PROJECTS 33

ANNUAL REPORT 2010 / RETAIL CASE STUDY

ROYAL MAIL CROWN OFFICE REFURBISHMENT PROGRAMME GREATER LONDON Description The refurbishment of 105 Post Office branches in London and the South East to provide ‘new look and feel’ facilities in a modern banking style. Works were performed outside normal working hours with branches fully operational during normal trading hours. Awarded on a framework agreement, Shaylor Special Projects assembled a dedicated project team and supply chain to deliver the projects and drive continuous improvement. The team integrated with Royal Mail specialist suppliers to overcome the challenges associated with fasttrack refurbishment, establishing an offsite logistics warehouse to stock long delivery items. Due to the high level of risk attached to working alongside live environments in use by both Royal Mail staff and the public, visual displays were used extensively to advise works in progress, updated daily, and full liaison was maintained each day with Post Office Managers.

Works comprised: Strip out, minor mechanical and electrical installations, counter upgrades, new financial services fittings, flooring, signage and point of sale equipment.

Value £5.8 million Duration Nine months

Client Achievements and points Royal Mail of interest Group Property full complaints procedure was •A established, but it was a credit to the entire team that only one complaint was recorded across all 105 branches, which was closed out within one hour of notification. •1 00% of projects handed over on time and on budget. •2 4% reduction in programme periods across the framework, through adoption of lean principles. •N o reportable accidents across the entire framework. •1 5% average reduction in project costs. •W inner of Forum for Constructing Excellence Supply Chain Award 2009. •K PI performance improved across the roll out.

ANNUAL REPORT 2010 / RETAIL

Wilkinson Store Eastham London

RETAIL The very successful completion of the Crown Office Refurbishment Programme (CORP) in Post Office branches is unquestionably the highlight in this sector. The £5.8 million, 105 branch rollout throughout the South East of England including 50 branches in London itself was achieved in twelve months.

The pleasing volume and the universally complementary tone of the many commendations received from the client and branches was a source of great pride to our CORP team. Always at the top or near the top in the framework KPI’s we consistently demonstrated our knowledge and grasp of the “business as usual” and “out of hours” high street retail refurbishment culture.

During the year we also completed City South Retail Park phase two in Leeds for the BBC Pension Trust. We remain a member of the Wilkinson Stores Framework and confidently expect a number of store refurbishments in the coming year.

ANNUAL REPORT 2010 / RETAIL

People Profile

JOHN WAREHAM CONTRACTS MANAGER

John, who is a Contracts Manager within the business, specialises in frameworks and their delivery. He has experience in both the commercial and retail sectors and when we were shortlisted to bid for the Royal Mail Crown Office Refurbishment Programme (“CORP”), John was a natural choice as Operations Manager. This was a £5.8m fast track roll-out. All of Shaylors’ 105 Post Office branch refurbishments were carried out in the South East of England including many in London.

“Every once in a while a pr oject comes along which gives you a chance to use all of the skills developed over 32 years in the industry and which despite the challenges, an d time away from home gives great satisfac tion. For me this was the Crown Office Refurbish ment Programme. I was involved in every aspe ct from the bid stage to handover. I was able to assemble a dedicated team which like me unders tood roll outs, working in occupied premises and ou t of hours delivery. As a team we were alwa ys at the top of the KPI league monitored by our cl ients.”

At Shaylor we are no strangers to making construction frameworks successful and we are delighted to add the CORP to the list of successes. This includes the Ministry of Justice, Coventry, Warwick and Birmingham Universities and a number of others nationally are at an advanced stage of negotiation. It is good to know that when a real challenge comes along we have people like John who Clients can rely upon to give their all.

ANNUAL REPORT 2010 / RETAIL

EARN RESPECT

WORKING AS ONE TEAM GAVE US AN INCREASE IN OUR CUSTOMER SATISFACTION RATING 37

ANNUAL REPORT 2010 / INDUSTRIAL CASE STUDY

MINWORTH INDUSTRIAL PARK WEST MIDLANDS Description Phased refurbishment of industrial and commercial units within Retail Park comprising:.

disrupting the business operations of the Retail Park tenants. •S uccessful management of programme and resources to meet phased handover of the The removal of existing cladding units to the Client Team. back to structural steel frame; lient satisfaction demonstrated recladding with adjustments to steel • C by the award of additional works. frame as necessary together with • P rotective measures and internal fitting out, construction of management of large diameter new main entrances and external multi fuel siphonic pipe line to car parking, concrete hardstandings ensure no risk of damage and and landscaping. avoid disruption to businesses and construction operations. Achievements • Successful working on a live •C onsiderate Constructor Scheme trading estate, carrying out score of 35. construction works without

Minworth industrial Park 38

Value £12 million Duration 120 weeks Client GSK Pension through CBRE Investments

ANNUAL REPORT 2010 / INDUSTRIAL

Selco, Walsall Road

INDUSTRIAL We are pleased to have the trust and support of CBRE Investors on behalf of GSK Pension Fund and have now been awarded a further three phases at Minworth Industrial Park bringing the awards to date to nearly ÂŁ12 million.

New build industrial opportunities have been slow to materialise this year but Shaylor Special Projects has been busy on smaller refurbishments for existing and new blue chip clients and we are confident that we are well placed to take advantage of an upturn in this sector.

ANNUAL REPORT 2010 / INDUSTRIAL

People Profile

KEN RAWE

BUSINESS LEADER, SSP Ken leads Shaylor Special Projects. He has been with the Group for fourteen years, and has held a number of senior positions. Previously Ken was the Group Business Improvement Manager, and was at the centre of our strategic activities, enhancing the Shaylor brand as a leading contractor regionally with a growing national presence.

“The last few years have been th e most enjoyable and significant of my 30 years in the industry. Through my previo us role as Business Improvement Manager, I have been in a unique position to work in all parts of the business. Of particular impor tance to me were the roles I played working with the teams to establish the GSK pensi on scheme project at Minworth Industrial Park, and the securing and delivery of the Roya l Mail Crown Office Refurbishment Programme. I also feel I have added real value whilst I led the PQQ Bid team. Each has had their own challenges, but have been successes measured by repeat business, awards or increased busin ess opportunity. I now look forward to using the ideas and skills gained in my new role as Leader of Special Projects.”

recognised The efforts of Ken and his team on CORP were Supply 2009 by FORCE, with Shaylor being awarded the Chain Management Award. elf on a non Prior to taking up his role Ken, who prides hims Bid Team. our adversarial approach to problem solving, led Ken nt, rtme depa With the help of the people within that which in er mann the to nts veme brought about great impro d our pione cham also He s. PQQ our it we prepare and subm the ding inclu Corporate Social Responsibility programme, menCSR The rt. Repo composition of the first CSR Annual re. tality is now embedded within the Shaylor cultu

ANNUAL REPORT 2010 / INDUSTRIAL

TAKE RESPONSIBILITY

WORKING AS ONE TEAM WILL HELP US ACHIEVE A LOWER CARBON FOOTPRINT 41

ANNUAL REPORT 2010 / INDUSTRIAL CASE STUDY

ROYAL SHAKESPEARE THEATRE STRATFORD-UPON-AVON Description Multi-trade management package as part of £112 million main contract to reconstruct the Royal Shakespeare Theatre in Stratfordupon-Avon. Works Include: Builders work in connection with services, fire stopping, brickwork repairs, formation of door openings, floor screeds, acoustic flooring, ground water management pumping system, together with external generator housing, switch room and plant rooms and associated architectural ironwork.

Achievements and points of interest •E stablished an excellent working relationship and flexible approach with the project managers, MACE and all package contractors in order to facilitate the progress of all trades to deliver the project programme. •A chievement of programme whilst incorporating additional works within the same timescale. •T otal communications and information flow via BIW intranet portal system

Royal Shakespeare Theatre, Stratford-upon-Avon 42

Value £1.3million Duration 58 weeks Client MACE Ltd on behalf of the Royal Shakespeare Company.

ANNUAL REPORT 2010 / HOTELS AND LEISURE

The entrance hall to Birmingham Royal Ballet

HOTELS AND LEISURE Our involvement on the new Royal Shakespeare Theatre, Stratford– upon–Avon through Mace was particularly pleasing as we have worked directly for the Royal Shakespeare Company on three other projects recently in Stratford-upon-Avon and London.

We carried out the main Builders Work package on the Theatre and enjoyed a good working relation with Mace, which hopefully will see us further the relationship on the New Street Gateway Project for Network Rail.

renovation of the existing stonework façade of the listed Mansion House.

JDI tendered successfully for the first of a serial tender for four Libraries for the London Borough of Hillingdon. The libraries at Yiewsley, Oaklands, Kingshill and Ickenham Our relationship with Royal Mail Group were refurbished to a high standard in commercial, industrial and retail including extensions and extensive also saw us carry out further works at new joinery works. the Coton House conference facility at Rugby, where we carried out a careful

ANNUAL REPORT 2010 / HOTELS AND LEISURE CASE STUDY

HILLINGDON LIBRARIES LONDON Description Library refurbishments at Yiewsley, Oaklands Gate, Kings Hill and Ickenham as the first part of a rollout programme over the next two years. The buildings are typically, single storey community libraries on housing estates in need of updating and refurbishment, works include: Joinery refit, re-decoration, the creation of new ceilings and floors and associated mechanical and electrical works.

The children’s area at Ickenham Library 44

Achievements and points of interest •A ll projects delivered within contract periods •G ood working relationship with the Client established and maintained throughout •V arious elements added to scope of works on all projects, without affecting phased completion dates

Value £919,000 Duration Four projects over 52 weeks Client London Borough of Hillingdon

ANNUAL REPORT 2010 / HOTELS AND LEISURE

There were many progressive steps taken by the business, facilitating our continuous improvement programme.

ANNUAL REPORT 2010 / HERITAGE 46

We remain committed to a philosophy of pursuing relationship-based, customer-focused business.

ANNUAL REPORT 2010 / HERITAGE

University Of Wales entrance

HERITAGE Our maxims are “Strategic and Sustainable work” and very high on the list is the opportunity to execute this type of work for clients. It makes you realise that we still have the skills and commitment to achieve some remarkable results.

Our range of clients for this demanding and fulfilling work includes the Ministry of Justice, Local Authorities, NHS Trusts, Private Schools, Royal Mail Group and Ecclesiastical Bodies. We receive many enquiries from existing clients who appreciate our skills in this field. They find that in addition to the wide range of all construction work we execute, this gives them the particular sympathetic approach needed and a “One Stop Shop” to cope with the ancillary extensions and new build often associated with the exacting work on listed buildings.

It was this realisation that led us to establish a team within Shaylor Special Projects, encompassing the necessary skills. We are pleased to say these people are always busy. The range of work executed encompasses façade retention and repair, restoration to internal, external and landscape features, structural work and re-roofing. The buildings in the portfolio include Hospitals, Mansions, Schools, Residential and Railway.

ANNUAL REPORT 2010 / REPAIR AND MAINTENANCE

People Profile

PARMY TAK

MARKETING & BID ASSISTANT So much of what is required in the construction industry currently is the ability, through the pre-qualification process (”PQQ”), to show the business in the best light. The business needs to demonstrate capabilities generally and those specific to the project in hand. Parmy joined us in 2008, and latterly worked under Ken Rawe’s guidance. Her skills have helped enormously to improve the quality and consistency of our PQQ’s.

“I joined Shaylor Group with previous experience in this area and have really enjoyed the last 18 months. Although a very challenging role due to the ever increasing requirement to make the cut in order to bid for projects, I have seen the content and standard of our presentations move on a pace and our success rate has grown steadily. There is great satisfaction in knowing that I am part of a team which is successful and in some very difficult times has helped maintain the flow of tenders to our estimating teams. The challenge is now to stay ahead of the competition and continue to accurately interpret our Clients needs.” Parmy also now plays a part in both the internal and external marketing of the Group, which sits closely with the work of the Bid Team. Here, through the qualities of dedication and hard work, she has brought improvements to the manner in which we present ourselves to the outside world.

ANNUAL REPORT 2010 / REPAIR AND MAINTENANCE

Repair and Maintain worker fixing a light fitting

REPAIR AND MAINTENANCE Shaylor Repair & Maintain was established this year in order that we demonstrated a dedicated resource and extension of scope of our offer to clients. This was in response to the many enquiries we were receiving and also to seek sustainable new sources of work in this category.

We executed nearly ÂŁ1 million of work in the second half of the year and are currently well placed to pick up a number of framework agreements in the Education, Commercial, and Industrial sectors.

CORPORATE SOCIAL RESPONSIBILITY INTRODUCTION HEALTH AND SAFETY OUR PEOPLE OUR COMMUNITIES OUR ENVIRONMENT OUR CUSTOMERS OUR SUPPLIERS

52 53 54 56 58 60 62

ANNUAL REPORT 2010 / INTRODUCTION

INTRODUCTION The Construction industry has a huge positive impact on our society. It delivers new, exciting, functional buildings to ever improving standards of performance. There are, however, negative impacts associated with construction activity, and the sector often suffers from a poor image.

SU S

ITY IL AB

respe

VAL earn U

po be s i tiv e

our environ m e nt 52

TA IN ou r c o mm u ni

At Shaylor Group, our desire is to ensure the work we do leaves all stakeholders in the construction process delighted with our performance and our consideration for them. All of these activities are captured by the term Corporate Social Responsibility (CSR).

s tie

ONE TEAM

y lit

strive improvto

ople r pe ou

take resp o n s ibi

pliers p u rs ou

CORPOR PR ATE OF S hea OC I lth I

Y LIT ONSIBILITY I B P our custo TA RES y me t e f L rs a A s

Our CSR activities are embedded in the culture of Shaylor Group. Last year, our staff developed a framework that was encapsulated within Our Values. Over the last twelve months, we have issued a CSR Report, which is available to all our stakeholders, and set out a formal policy document. The following section sets out our activities this year.

ANNUAL REPORT 2010 / HEALTH AND SAFETY

Asbestos clearance at Minworth Industrial Park

HEALTH AND SAFETY Shaylor are proud of our Health and Safety record, and our reputation in this area. This applies to all potential stakeholders to the business and the projects it undertakes. This covers our construction sites, whatever the size, our offices, and our staff, supply chain, visitors and neighbours. Health and Safety is high on the agenda of any internal or Client meeting and records of performance enable us to understand areas where additional guidance may be required. Live data is collected and submitted to our Health and Safety Team, where any trends are analysed for action. In 2010, we were pleased that over 97% of our sites remained RIDDOR reportable accident free. We utilise a number of KPI’s to monitor our Health and Safety performance. The key measure is the Accident Frequency

Rate (“AFR”), which this year saw a further reduction from 0.43 to 0.35. On a more detailed level, we regularly undertake initiatives to reduce accidents in what are perceived to be high risk areas. For example, a campaign this year to reduce Slips, Trips and Falls prompted a 45% decrease in these incidents.

individuals, based on a combination of minimum standards and their Annual Appraisal, ensuring staff are suitably qualified to fulfil requirements on any project. We place great emphasis on communication of the Health and Safety message across the business. An integrated approach to ensuring consistent and high quality communication is achieved by using a combination of methods including Site Link forums, formal training and Toolbox Talks.

We are committed to training and developing our workforce and have undertaken a significant training programme for our safety critical staff. In 2010, 89% of our Site Management teams had completed five or more We are rightly proud of our progress Safety Training Courses, and 100% and recognise that a continuous had completed four or more. improvement culture is always required. We devote considerable A minimum requirement for all resource to understanding best operational staff is the relevant practice in the construction industry, CSCS card. However, full training attending IOSHH events on a regular programmes are set out for these basis. 53

ANNUAL REPORT 2010 / OUR PEOPLE

People Profile

PAUL DORRELL SURVEYOR

Paul joined Shaylor as a Trainee Quantity Surveyor in 2003. He undertook a day release HNC course, which he successfully completed and went on to get a BSc (Hons) in Quantity Surveying.

od reputation “I knew that Shaylor had a go tor and in the industry from my OND tu tematic that my training would be sys disappointed and thorough. I have not been equence my and my knowledge and as a cons years. In the confidence, has grown over the s of the QS early days I shadowed member responsibility team, gradually assumed more rly on. I now and was given my head very ea duties. carry out the full remit of QS e to work and Shaylor is a very friendly plac and help from I have enjoyed great support gues. all of my professional collea supportive Shaylor have always been very was good to of my TA tours of duty and it e heat of know that whilst baking in th lly warm an Afghan summer that an equa work! I am now welcome awaited me back at cial fit-out working on a number of commer en pleased contracts at JDI and I have be ily feel “ to see that the Shaylor “fam nt Group has spread quickly to this rece acquisition.”

Paul is an example of Shaylor’s commitment to training within the industry. It always gives true professionals great pleasure to see another generation developing in the industry and we are confident that a we can meet Paul’s aspirations as and y pan com ing grow progressive and ber num a for us with be will that he ted of years to come. We also suppor orm perf to cal bati Paul’s year long sab itorial an active tour of duty with the Terr 9. 200 in n ista han Afg in Army

ANNUAL REPORT 2010 / OUR PEOPLE

Discussing company plans at Site Link

OUR PEOPLE We have come through a difficult period for the UK economy, with the construction sector being one of the hardest hit. This has led to a general tightening of the belt, including for example a general pay freeze. However, good people are key to a successful business, whatever the economic circumstances. Recruiting and retaining talented and committed staff is critical to our continuing development and bringing about a reputation of an educated and professional approach.

Shaylor recognises the long-term value of trade apprenticeships and are proud to support this through an appropriate NVQ. It is also beneficial to bring young professionals through a formal training programme, generating our senior managers of the future. These too lead to the award of a recognised qualification. The Academy Programme sets out to equip our senior managers with softer skills to help them face the challenges of a modern construction environment.

Training and development Training and continuous learning are embedded into our organisation. To achieve this we have continued to commit heavily to training and development, maintaining an average spend of £1,200 per person last year. This is delivered through a number of initiatives.

All of this is acknowledged by our continuing accreditation to Investors In People.

These include: • Trade apprenticeships • Management and Professional Trainee Programmes • Staff Development Programme • Senior Management Academy Programme

Staff engagement Our people are actively involved in the direction of the business, and we hold management Visioning Days to set the direction for the future of the business and involve all staff in our Site Link forums through the year. We believe that this high level of engagement ensures that our culture and values are maintained and cascaded through the organisation.

Times Best Companies (we achieved “One to Watch” status in 2009) and enjoyed positive feedback which we are able to benchmark against all UK businesses and our peers in the industry. We support school children with valuable work experience and recognise the importance of providing school children with the necessary skills to begin a career in their chosen field. We regularly provide this opportunity to local schools in Walsall and the surrounding areas and maintain Board representation with Walsall Education Business Partnership. Our employees are encouraged to contribute to the local community and participate regularly in charity events.

We obtain feedback on our performance as an employer through external surveys such as Sunday 55

ANNUAL REPORT 2010 / OUR COMMUNITIES CASE STUDY

NEW OUT PATIENTS DEPARTMENT, ROYAL ORTHOPAEDIC HOSPITAL BIRMINGHAM Description The project involves the construction of a new Out Patients Department and main entrance to the existing Hospital. The two storey structure comprises: A steel frame with full height curtain walling and a feature atrium. Internally it is fully fitted out with finishes and services. Also included are associated external works, and construction of a conservatory and new substation adjacent to the existing Children’s Ward. Achievements and points of interest • Active measures have been taken to ensure close liaison with the Hospital authorities and to minimize any effects of

construction activities on the operation of the hospital. •C onstruction adjacent to existing Children’s Ward being carried out carefully with sympathetic respect for healthcare activities. •P roject designed to achieve BREEAM Excellent rating and assessment process in progress. Sustainable measures include maximising insulation values for cladding and roofing, heating via solar panels, rainwater harvesting and building layout and foundations altered to suit existing mature tree locations. •E ducational opportunities being actively pursued: children painting murals on hoardings and staff making regular site visits to witness progress of the works •C onsiderate Constructors Scheme score of 36.5.

Consruction of New Out Patients Department, Royal Orthopaedic Hospital 56

Value £5.55million Duration 54 weeks Client The Royal Orthopaedic Hospital NHS Trust

ANNUAL REPORT 2010 / OUR COMMUNITIES

OUR COMMUNITIES As a regional contractor we are committed to support and work with local communities on projects. Our involvement with communities ranges from education liaison support through to charity fundraising.

day, Race for Life, Children In Need, the Birmingham Half Marathon and charity football matches.

We engage with our supply chains to deliver local employment opportunities. We select partners for our projects and frameworks based on locality, experience, performance and their specialism.

Considerate Constructors Scheme We are committed to building long lasting relationships with our clients and community and ensure that all projects are registered with the Considerate Constructors Scheme. We have seen our ratings increase over the last year, with an average of 33, and a highest score of 36.5. Moving forward, our ambition is to achieve this as an average across our sites. We recently achieved Associate Member status in recognition of our demanding standards.

Charities Shaylor has always supported charitable organisations and last year put all of our efforts into assisting Birmingham Focus for the Blind. We also indirectly supported staff in charity fundraising events, such as Dress Down Days, Jeans for Genes

Our adopted charity for the new financial year is Marie Curie.

Working with schools The Group places great emphasis on working with schools, to explain what we do, and encourage children to follow a career in the construction industry. Each year we receive a number of work placements from local schools, where a young person will shadow a member of staff. We also run workshops, hold mock interviews, and deliver educational input at secondary and further education establishments. We sit on the Board of the Walsall Education Business Partnership, which as the title suggests, enables us to understand current issues for the education environment, as well as getting over our concerns as an employer.

ANNUAL REPORT 2010 / OUR ENVIRONMENT CASE STUDY

100 HAGLEY ROAD BIRMINGHAM Description A Design & Build project to rebuild and remodel an existing five storey concrete framed office building to high standards of finish. The works entailed: • Removal of top storey and roof and addition of a new two storey steel framed structure with curved steel roof; • Removal of existing external cladding back to concrete frame and recladding building with energy efficient seamless curtain walling and Sto render bands. • Remodeling of reception, stairs, toilets and kitchen areas. • Internal finishes including suspended ceilings and raised access floors. • Full M&E services and new lifts.

100 Hagley Road 58

Achievements •E xcellent Client relationships. Worked closely with Client to amend scope of construction and programme to maintain time and budget. •E xcellent Customer Satisfaction Survey achieving 91% average with particular commendation for Quality of Product & Service, project cost and H&S performance. •E xcellent site establishment and professional image. Achieved Considerate Constructors inspection score of 34. •B REEAM Assessment achieved Very Good Rating. •O ur project manager has been nominated for the CIOB Construction Manager of the Year award.

Value £7 million Duration 57 weeks Client Calthorpe Estates

ANNUAL REPORT 2010 / OUR ENVIRONMENT

Zeeman Building, Warwick University

OUR ENVIRONMENT Shaylor works to reduce the negative impacts of construction works on the environment by managing waste, inputs and outputs in a considerate manner. All operational staff and the majority of office staff have received, or are programmed to receive, training in environmental management, and operate our systems which:

Our current waste partners ensure that the percentage of waste diverted from landfill by skip exceeds 83%. We have recently signed up to WRAP (Waste Resources Action Plan). Through a targeted programme of activities, and under an audited measurement regime, we will halve waste to landfill by 2012.

• Analyse and rank risk to assist in developing action plans • Use Site Waste Management Plans to develop strategies and solutions to reduce impacts • Consider early options in sourcing to promote FSC Timber, low carbon equipment, minimal packaging waste, etc

Targets are set both as a percentage and by tonnes per cost of sales to ensure that real gains are being achieved. Environmental management is also critical to many of our projects where BREEAM assessment is required.

Sites measure water usage, energy usage and carbon used by workers and visitors to the site, supplier deliveries and meeting attendance. The use of local labour impacts heavily on performance in this area and we encourage this as part of our selection procedures. We continue to seek improvements in our offices and source recycled and fair trade products, and include improvements in office energy usage within our long term environmental targets and objectives as part of our ISO14001 activities.

ANNUAL REPORT 2010 / OUR CUSTOMERS CASE STUDY

TRURO SENIOR SCHOOL CORNWALL Achievements and points of interest ustomer satisfaction score of •C 92.7%. •E xcellent working relationships with both the School and Architect. •E xcellent coordination with the • The first phase requiring relocation school resulting in minimum of the electrical switch room disruption to school activities. and supply cables together with • Regular liaison meetings to controlled demolition of existing coordinate school and buildings including the formation construction activities and of buttresses to support existing agree traffic management and retained structures. pedestrian access protocols. • The complex new structure • I nstigated educational initiatives - a combination of reinforced which included an H&S concrete, structural steel and competition and participation in a glulam beams was successfully Careers Day including involvement constructed to a high standard of of RICS and CIOB. quality. Description The project entailed construction of a new dining room, viewing gallery and access corridor within the central courtyard in the heart of a busy and operational school and comprised:

Truro Senior School 60

Value £771,000 Duration 28 weeks Client Truro Senior School

ANNUAL REPORT 2010 / OUR CUSTOMERS

OUR CUSTOMERS We enjoy long term client relationships with many top clients, including the Ministry of Justice, Royal Mail Group, University of Birmingham and Coventry University, and with many local and national offices of professional practices. We understand that our business will only continue with such an esteemed list if clients are delivered buildings that meet and exceed their expectations. We also understand that Customer Service before, during and after construction is vital to ensuring a top quality experience for all parties.

We monitor our success in this area by way of Customer Satisfaction Surveys. This is a process that the business has undertaken for over ten years and the data gathered has assisted in understanding how to best fulfil the requirements of our clients. Our Average Customer Satisfaction Rating for 2009 is 88%, another year on year improvement. During projects we are keen to engage with clients in improvement activities and have led joint training workshops and forums to improve performance. This equally applies to single projects and framework

agreements. Our schemes at Minworth Industrial Park, ACT (UK) Coventry and Heartlands Hospital have benefited from Construction Lean Improvement Programmes and client input has been crucial in obtaining benefits. This focus on our customers has led to continued success in both our formal and informal partnering. Indeed, over two thirds of our projects last year were awarded by repeat clients.

ANNUAL REPORT 2010 / OUR SUPPLIERS 62

We operate to the Office Of Government Commerce Fair Payment guidelines, and work in an honest and open culture.

ANNUAL REPORT 2010 / OUR SUPPLIERS

OUR SUPPLIERS Shaylor is committed to developing and working with the supply chain in a way that is mutually beneficial. This requires the use of open and transparent processes and a culture of fairness.

We have had long term working relationships with many of our top suppliers and subcontractors and their businesses have grown with us.

demonstrate adherence to our CSR values and competence in all areas of their business activity in line with our ISO9001 Quality System. This encompasses Health and Safety and environmental systems and local employment initiatives, where applicable.

We operate to the Office of Government Commerce Fair Our commitment to supply chain Payment guidelines and work in an is demonstrated by Shaylor Group open honest culture, which brings being the recipient of the Forum for reciprocal benefits to projects in terms On a broader basis, the development of long term relationships has Construction Excellence Supply Chain of problem solving and flexibility. enabled us to deliver many of Award 2009, linked to a successful We aim to be an attractive the achievements set out in this framework arrangement with Royal proposition to our supply chain, but document. Over 70% of our suppliers Mail. demand high standards. To join our have worked successfully with the Shaylor Group on previous projects. approved database, suppliers must

BUSINESS MANAGEMENT MANAGING RISK 66 KEY PERFORMANCE INDICATORS 67 FINANCIAL INSTRUMENTS 68

ANNUAL REPORT 2010 / MANAGING RISK

Wembley Point in London

MANAGING RISK We are always prudent in the way we manage risk. Our business processes seek to identify, mitigate and manage a variety of risks. The Board takes ultimate responsibility for risk management across the Group. We review strategic risks and those associated with a specific project or line of business and assess the ethical, social and environmental impact of each decision. Our assessment criterion applies to every aspect of the business, from choosing the type of contract we bid for, to selecting the markets in which we want to work. We also consider the competency and capacity of our workforce and our supply chain in these risk assessment decisions. We view the following areas as the key elements we take into account when putting together our risk assessment policies:

conomic risk E The UK economy has been in recession for over twelve months and the construction sector has been affected more than other areas. The resultant current account deficit and National Debt reduce the confidence of both the public and private sector. Our strategy is to maintain a broadlybased client portfolio, across public and private sectors, involving different markets and work types. We are committed to enhancing the amount of activity that is underpinned by long-term partnering arrangements, and this forms a larger part of our workload. Project Management risk Poor contract management can lead to significant damage to both our financial situation and our reputation. Good project management is a vital element in delivering the best

service to every client. To achieve this we have support systems in place to ensure our bid and contract management processes deliver a quality but risk-averse service. Staff Retention In the current economic turmoil, staff retention has not been an immediate threat. However, our business still depends on attracting and retaining exceptional people, and indeed retention will again be important as the economy emerges from the recession. Hence, the welfare of our staff remains a top priority and the HR systems we have in place are designed to reflect this. We are acutely aware that a more buoyant construction industry with a highly mobile workforce could quickly have a detrimental impact on activity, performance and results.

ANNUAL REPORT 2010 / KEY PERFORMANCE INDICATORS

Relaxation area at the JDI Offices in Birmingham, which was a British Council for Offices finalist in 2009

KEY PERFORMANCE INDICATORS Our performance is also sustained by establishing Key Performance Indicators (KPIs) for the Shaylor Group. These correspond with some of the principal areas of uncertainty for the business summarised above, which we also believe demonstrate the development, performance and position of our business. KPI

2010

2009

Definition and method of calculation

Operating margin

2.0%

4.1%

Employee retention

84.7%

89.8%

The ratio of operating profit to sales, expressed as a percentage. The proportion of permanent staff retained in the business during the year.

Customer satisfaction rating

86%

85%

The average score obtained from clients in respect of projects completed during the year, utilising the DTI measurement framework.

Accident Frequency Rate

0.35%

0.43%

RIDDOR reportable accidents per 100,000 hours worked.

We have operational KPIs around minimum levels of contract profitability measured by gross margins together with maintaining future periodic levels of activity, which are measured by reference to the order book. We believe it is the mix of sensible risk assessment, the use of key performance indicators to measure profitability and levels of activity, combined with the continual evaluation of client opinion, which supports our growth and development.

ANNUAL REPORT 2010 / FINANCIAL INSTRUMENTS

Discussing plans at Colmore Gate

FINANCIAL INSTRUMENTS Credit risk Credit risk refers to the risk that a customer will default on its contractual obligations resulting in financial loss to the business. Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on Price risk all customers requiring credit, using The Group is exposed to price risk information supplied by independent on its raw material purchases. This is rating agencies where available. At mitigated by pre-ordering materials at the balance sheet date there were no the same time a customer commits to significant concentrations of credit a construction contract. risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet. The Group uses financial instruments including cash, borrowings and hire purchase contracts, the main purpose being to raise finance for the Groupâ&#x20AC;&#x2122;s activities. It is the Groupâ&#x20AC;&#x2122;s policy not to enter into trading of a speculative nature in respect of financial instruments.

ash flow and liquidity risk C Liquidity risk is the risk that the company may not be able to meet its financial obligations as they fall due. The Group ensures that there are sufficient levels of committed facilities, cash and cash equivalents to ensure that the business is at all times able to meet its financial commitments. Liquidity risk is managed by continuous monitoring of forecast and actual cash flows and matching the maturity profile of financial assets and liabilities. The Group has no interest bearing assets and consequently its income and cash flows are largely independent of changes in market interest rates. All significant interest bearing borrowings are at a fixed or capped interest rate, so minimising the risk to the business.

ANNUAL REPORT 2010 / FINANCIAL INSTRUMENTS

We do not subscribe to a buying turnover mentality, as this leads to disappointment for all stakeholders to a project.

GOVERNANCE DIRECTORS’ REPORT 72 STATEMENT OF DIRECTORS’ RESPONSIBILITIES 73

ANNUAL REPORT 2010 / DIRECTORS’ REPORT

DIRECTORS’ REPORT The directors present their Annual Report and audited financial statements for the year ended 31 March 2010. Principal activities and business review The Group offers a comprehensive service offering. It delivers construction, fit-out, refurbishment and restoration, and repair and maintenance services, with experience across many markets. Our Business Review is included above which sets out our performance and development during the year, the position at the end of the year, the principal risks and uncertainties facing the business, and a review of financial and non-financial key performance indicators. Results and dividends The financial statements reflect a profit before tax for the financial year of £1.2million, generating net assets of £7.8million. The results include the settlement of an Office of Fair Trading enquiry amounting to £319,000.

During the year the company did not pay a dividend (2009: £1million). The directors do not recommend the payment of a final dividend (2009: £nil). Charitable and political donations Donations to UK charities amounted to £2,000 (2009: £8,000). No political donations were made (2009: £nil). Directors The directors of the company during the year were as follows: Fred Shaylor – Chairman Stephen Shaylor – Chief Executive Richie Shaylor – Operations Director Gary Turley – Finance Director David Harwood – Director of Special Projects Martin Baxter – Business Development Director Chris Madden – Group Commercial Director Disclosure of information to auditors The directors who held office at the date of approval of this Directors’ report confirm that, so far as they are each aware, there is no relevant audit information of which the Company’s auditors are unaware, and each

director has taken all the steps that he ought to have taken as a director to make himself aware of any relevant audit information and to establish that the company’s auditors are aware of that information. Auditors In accordance with Section 487 of the Companies Act 2006, the auditors will be deemed to be reappointed and KPMG LLP will therefore continue in office. By order of the board

Gary Turley Company Secretary Frederick James House 52 Wharf Approach Anchor Brook Business Park Aldridge WS9 8BX 10 September 2010

ANNUAL REPORT 2010 / STATEMENT OF DIRECTORS’ RESPONSIBILITIES

STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE DIRECTORS’ REPORT AND THE FINANCIAL STATEMENTS The directors are responsible for the directors are required to: preparing the directors’ report and the financial statements in accordance • s elect suitable accounting policies with applicable law and regulations. and then apply them consistently; Company law requires the directors to prepare financial statements for each financial year. Under that law they have elected to prepare the group and parent company financial statements in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and parent company and of their profit or loss for that period. In preparing each of the group and parent company financial statements,

•m ake judgments and estimates that are reasonable and prudent; • s tate whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; •p repare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the parent company will continue in business.

accuracy at any time the financial position of the parent company and enable them to ensure that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the group and to prevent and detect 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 UK governing the presentation and dissemination of financial statements may differ from legislation in other jurisdictions.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent company’s transactions and disclose with reasonable 73

FINANCIAL STATEMENTS INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF SHAYLOR GROUP PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT CONSOLIDATED BALANCE SHEET COMPANY BALANCE SHEET

77 78 79 80

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS

NOTE OF CONSOLIDATED HISTORICAL COST PROFITS AND LOSSES

CONSOLIDATED CASH FLOW STATEMENT

82 83

NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT NOTES TO THE FINANCIAL STATEMENTS

ANNUAL REPORT 2010 / FINANCIAL STATEMENTS

Waiting area at the Heartlands Hospital Diabetes Centre 76

We have audited the financial statements of Shaylor Group plc for the year ended 31 March 2010 set out on pages 78 to 96. The financial reporting framework that has been applied in their preparation is applicable law and UK Accounting Standards (UK 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 auditors’ 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 auditors As explained more fully in the Directors’ Responsibilities Statement set out on page 73, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the

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 (APB’s) Ethical Standards for Auditors. Scope of the audit of the financial statements A description of the scope of an audit of financial statements is provided on the APB’s web-site at www.frc.org.uk/apb/scope/UKNP Opinion on financial statements In our opinion the financial statements: • give a true and fair view of the state of the group’s and the parent company’s affairs as at 31 March 2010 and of the group’s profit for the year then ended; • have been properly prepared in accordance with UK Generally Accepted Accounting Practice; and • have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter 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 financial statements.

ANNUAL REPORT 2010 / FINANCIAL STATEMENTS

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF SHAYLOR GROUP PLC

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 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.

M Froom (Senior Statutory Auditor) For and on behalf of KPMG LLP Statutory Auditor Chartered Accountants One Snowhill Snow Hill Queensway Birmingham B4 6GH 10 September 2010

ANNUAL REPORT 2010 / FINANCIAL STATEMENTS

CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2010 Notes

2010 £000

£000

56,078

60,528

Cost of sales

(47,504

(50,782

Gross profit

8,574

9,746

(7,448

(7,244

1,126

2,502

Turnover

2009

Administrative expenses (including exceptional costs of £319,000 - see note 2) Operating Profit

Profit on sale of tangible fixed assets Interest receivable

113

101

Interest payable

(37

(65

1,215

2,547

(461

(726

754

1,821

Profit on ordinary activities before tax Tax on profit on ordinary activities Profit for the financial year

The results for the current and preceding year relate to continuing activities. There are no gains or losses other than those shown above and therefore no separate Statement of Total Recognised Gains and Losses has been presented. The notes on pages 84 to 96 form part of these financial statements.

AT 31 MARCH 2010 2010 Notes

£000

2009 £000

£000

Fixed assets Intangible assets

1,101

1,164

Tangible assets

1,947

1,757

3,048

2,921

ANNUAL REPORT 2010 / FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEET

Current assets Work in progress

1,847

2,012

Debtors

13,299

12,454

5,365

5,257

20,511

19,723

(15,196

(15,538

Cash at bank Creditors: Amounts falling due within one year

Net current assets

5,315

4,185

Total assets less current liabilities

8,363

7,106

Creditors: Amounts falling due after one year

(547

(44

Provision for liabilities and charges

(20

7,796

7,042

Net assets Capital and reserves Called up share capital

105

Revaluation reserve

448

458

Profit and loss account

7,243

6,479

7,796

7,042

Shareholders’ funds

These financial statements were approved by the board of directors 10 September 2010 and were signed on its behalf by:

Gary Turley Finance Director

Steve Shaylor Chief Executive

Company number: 4513210 79

ANNUAL REPORT 2010 / FINANCIAL STATEMENTS

COMPANY BALANCE SHEET AT 31 MARCH 2010 2010 Notes

£000

2009

£000

Fixed assets Tangible assets

1,538

1,636

Investments

2,860

4,398

4,496

Current assets 14

Debtors Cash at bank Creditors: Amounts falling due within one year

3,929

4,842

2,286

1,465

6,215

6,307

(8,361

(8,711

Net current liabilities

(2,146

(2,404

Total assets less current liabilities

2,252

2,092

Creditors: Amounts falling due after one year

(21

Provision for liabilities and charges

(20

2,211

2,044

Net assets

(28

Capital and reserves Called up share capital

105

Profit and loss account

2,106

1,939

2,211

2,044

Shareholders’ Funds

These financial statements were approved by the board of directors on 10 September 2010 and were signed on its behalf by:

Gary Turley Finance Director

Company number: 4513210 80

Steve Shaylor Chief Executive

FOR THE YEAR ENDED 31 MARCH 2010 Group

Company

2010

2009

2010

2009

£000

754

1,821

167

1,129

(1,000

754

821

167

129

754

821

167

129

Opening shareholders’ funds

7,042

6,221

2,044

1,915

Closing shareholders’ funds

7,796

7,042

2,211

2,044

Profit for the financial year Dividends on shares classified in shareholders’ funds Retained profit and net increase in shareholders’ funds

ANNUAL REPORT 2010 / FINANCIAL STATEMENTS

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS

NOTE OF CONSOLIDATED HISTORICAL COST PROFITS AND LOSSES FOR THE YEAR ENDED 31 MARCH 2010

Reported profit on ordinary activities before tax Difference between a historical cost depreciation charge and the actual depreciation charge for the year calculated on the revalued amount Historical cost profit on ordinary activities before tax Historical cost profit for the year retained after tax and dividends

2010

2009

£000

1,215

2,547

1,225

2,557

764

1,831

ANNUAL REPORT 2010 / FINANCIAL STATEMENTS

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2010 2010

2009

£000

Reconciliation of operating profit to net cash flow from operating activities Operating profit

1,126

2,502

Depreciation and amortisation charges

399

386

Decrease in work in progress

165

1,761

(Increase)/Decrease in debtors

(845

Increase/(Decrease) in creditors

394

(27

1,239

4,684

1,239

4,684

Net cash inflow from operating activities Cash flow statement Cash flow from operating activities

Corporation tax paid

Returns on investments and servicing of finance

(525

(666

Capital expenditure

(513

(230

Business acquisitions and disposals

(126

(507

(1,000

Financing

(43

(135

Increase in cash in the year

108

2,182

108

2,182

135

151

2,317

(35

151

2,282

Net funds at the start of the year

4,782

2,500

Net funds at the end of the year

4,933

4,782

Dividends paid on shares classified as shareholders’ funds

Reconciliation of net cash flow to movement in net funds Movement in net funds in the year Cash outflow from decrease in debt and lease financing Change in net funds resulting from cash flows New finance leases Movement in net debt in the year

GROSS CASH FLOWS

Returns on investments and servicing of finance

2010

2009

£000

Interest received

113

101

Interest paid

(37

(65

Net cash outflow on returns on investment and servicing of finance

2010

2009

Capital expenditure

£000

Purchase of tangible fixed assets

(526

(306

Net cash outflow from capital expenditure

(513

(230

2010

2009

Business acquisitions and disposals

£000

Deferred consideration

(126

(507

2010

2009

£000

(43

(135

New finance leases Sale of tangible fixed assets

Financing Capital element of repayments under finance leases

ANNUAL REPORT 2010 / FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT

ANALYSIS OF NET FUNDS

Cash at bank Obligations under finance leases and hire purchase contracts Bank loans and overdrafts

At beginning of year £000

Cash flow £000

At end of year £000

5,257

108

5,365

(85

(42

(390

4,782

151

4,933

ANNUAL REPORT 2010 / FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS 01

ACCOUNTING POLICIES The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the company’s financial statements. Basis of preparation The financial statements have been prepared under the historical cost convention, modified to include the revaluation of certain land and buildings, and in accordance with applicable Accounting Standards. Basis of consolidation The consolidated financial statements include the financial statements of the Company and its subsidiary undertakings made up to 31 March 2010. Unless otherwise stated the acquisition method of accounting has been adopted. Under this method, the results of subsidiary undertakings acquired or disposed of in the year are included in the consolidated profit and loss account from the date of acquisition or up to the date of disposal. Going concern The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in the Business Review on pages 6 to 64. This also includes information about the Group’s risk management objectives, and details of its financial instruments and exposures to credit risk and liquidity risk.

- 2% on valuation Buildings Leasehold - Over the life of the Improvements lease Motor vehicles - 25% straight line Fixtures and fittings - between 5% and 33% straight line In accordance with FRS 15, revalued land and buildings will be subject to a new full valuation every five years, and an interim valuation every three years. An interim valuation will also be carried out in any of years one, two or four, if the directors believe there has been a material change in value. An appropriately qualified valuer will perform all valuations. Goodwill and intangible assets Goodwill arising on the acquisition of a subsidiary is amortised over its estimated useful life on a straight line basis. Fixed asset investments Shares in subsidiary undertakings are stated at cost.

Profit recognition and estimation techniques Profit on long term contracts is calculated in accordance with applicable accounting standards. In determining the attributable profit on contracts to a particular accounting period, the company utilises estimation techniques. The principal estimation technique used is the preparation of detailed forecasts on a contract by contract basis The Group has considerable financial which enables an assessment to be made resources and benefits from a broadly based of the final outturn on each contract. Profit portfolio, across public and private sectors, is then recognised when the outcome of the involving different markets and work types. contract can be foreseen with reasonable As a consequence, the directors believe certainty and is attributed in line with the that the Group is well placed to manage its’ business risks successfully despite the current degree of completion of each contract. uncertain economic outlook. In the nature of the Group’s business the results include any adjustments to the The directors have a reasonable expectation outcome of contracts completed in previous that the Group has adequate resources to periods. The adjustments arise from: continue in operational existence for the foreseeable future. Thus they continue to • Claims by customers and third parties in adopt the going concern basis of accounting respect of work carried out. Provision is in preparing the annual financial statements. made for the estimated liability in the year in which the company becomes aware that a Tangible fixed assets and depreciation claim may arise; and With the exception of land, which is not depreciated, depreciation is provided to write • Claims on customers and third parties for off the cost or valuation, less the estimated variation to the original contract which residual value of tangible fixed assets over are not taken to profit until the outcome is their estimated useful economic lives as known with reasonable certainty. follows:

Where it is reasonably foreseeable that a loss will arise on the completion of a contract, full provision for this loss is included in the financial statements.

timing differences which have arisen but not reversed at the balance sheet date.

evelopment projects when turnover •D is recognised on the unconditional completion of sales contracts in respect of individual properties, rental income from the development properties not yet sold or administration charges to property management companies.

Cash and liquid resources Cash, for the purpose of the cash flow statement, comprises cash in hand and deposits repayable on demand, less overdrafts payable on demand. Liquid resources are current asset investments which are disposable without curtailing or disrupting the business and are either readily convertible into known amounts of cash at or close to their carrying values or traded in an active market.

Leases Where the group enters into a lease, which Work in progress and stocks entails taking substantially all the risks and The value of contract work in progress is rewards of ownership of an asset, the lease included within turnover, and, in accordance is treated as a “finance lease”. The asset is with SSAP 9 (Revised), the excess of book recorded in the balance sheet as a tangible value over payments receivable is included fixed asset and is depreciated over its in debtors as “Amounts recoverable on estimated useful life or the term of the lease, contracts”. Payments receivable in excess whichever is shorter. Future instalments under of book value are included in creditors under finance leases and hire purchase contracts, “Contract payments on account”, on an net of finance charges, are included in individual contract basis. creditors. Rentals payable are apportioned between the finance element, which is In compliance with UITF 34, all pre-contract charged to the profit and loss account and costs are recognised as expenses as incurred. the capital element, which reduces the If costs are incurred where it is certain a outstanding obligation for future instalments. contract will be awarded, and this will result in positive cash flows, then these will be included All other leases are accounted for as as an asset. “operating leases” and the rental charges are charged to the profit and loss account on a Stock and property work in progress are straight-line basis over the life of the lease. included at the lower of cost and net realisable value. Pensions The group contributes to a number of defined Turnover contribution pension schemes (some of which Turnover comprises the invoiced value of are company schemes) in respect of various goods supplied and services rendered except employees of the group. The assets of these for: schemes are held separately from those of the group in independently administered funds. • Amounts recoverable on contracts, which The amount charged against profits represents reflect the value of work executed during the the contributions payable to the schemes in period; and respect of the accounting period.

All activity was within the United Kingdom and excludes value added tax. Taxation The charge for taxation is based on the profit for the year and takes into account taxation deferred because of timing differences between the treatment of certain items for taxation and accounting purposes. Except where otherwise required by FRS 19, full provision is made, without discounting, for all

ANNUAL REPORT 2010 / FINANCIAL STATEMENTS

...

ANNUAL REPORT 2010 / FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS 02

OPERATING PROFIT 2010

2009

£000

(24

(10

299

206

Assets held under finance leases and hire purchase contracts

Amortisation of goodwill

Hire of plant and machinery

534

977

Exceptional operating item - Office of Fair Trading penalty

319

Audit of the financial statements of subsidiaries pursuant to legislation

Other services relating to taxation

2010

2009

£000

501

606

572

671

Operating profit is stated after charging/(crediting): Rent receivable from development properties not yet sold Management charges to property management companies Depreciation of tangible fixed assets: Owned assets

Rentals under operating leases: Land and buildings Plant and equipment Auditors remuneration: Audit of these financial statements Amounts receivable by auditors and their associates in respect of:

DIRECTORS’ REMUNERATION

Directors’ emoluments: Remuneration as executives Pension contributions

The aggregate emoluments of the highest paid director were £105,000 (2009: £127,000) and company pension contributions of £12,000 (2009: £12,000) were made to money purchase schemes on his behalf. Number of directors 2010

2009

Retirement benefits are accruing for the following number of directors under: Money purchase schemes

The average number of people employed by the Group during the year was:

Number of Employees 2010

2009

112

115

191

183

The employment costs were:

£000

Wages and salaries

6,936

7,084

Social security costs

695

689

Other pension costs

250

226

7,881

7,999

Managerial, administrative and support Site based

INTEREST RECEIVABLE

Interest receivable

ANNUAL REPORT 2010 / FINANCIAL STATEMENTS

STAFF NUMBERS AND COSTS

2010

2009

£000

113

101

INTEREST PAYABLE 2010

2009

£000

and hire purchase contracts

On bank loans and overdrafts

Finance charges payable in respect of finance leases

ANNUAL REPORT 2010 / FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS 07

TAX ON PROFIT ON ORDINARY ACTIVITIES 2010

2009

£000

Corporation tax on profit on ordinary activities

488

797

Adjustments for earlier years

(27

(71

461

726

461

726

Current tax

Deferred tax (note 17) Tax on profit on ordinary activities

The current tax charge for the year is higher (2009: higher) than the standard rate of corporation tax in the UK of 28% (2009: 28%). The differences are explained below: 2010

2009

£000

1,215

2,547

340

713

Expenses not deductible for tax purposes

130

Adjustments to tax charge in respect of earlier years

(27

(71

Total current tax charge (as above)

461

726

Current tax reconciliation Profit on ordinary activities before taxation Current tax at 28% (2009: 28%) Effects of: Depreciation on ineligibles

Factors that may affect future tax charges The Emergency Budget on 22 June 2010 announced that the UK corporation tax rate will reduce from 28% to 24% over a period of four years from 2011. The first reduction in the UK corporation tax rate from 28% to 27% was substantively enacted on 20 July 2010 and will be effective from 1 April 2011. This will reduce the company’s future current tax charge accordingly. It has not yet been possible to quantify the full anticipated effect of the further 3% rate reduction, although this will reduce the group’s future current tax charge and reduce its deferred tax liabilities accordingly. A sale of the freehold land and buildings could give rise to a capital gains tax liability at 28% of £125,000 (2009: £127,000 at 28%). This will only be provided when there is a binding obligation in place to dispose of the property.

Interim of £nil per share (2009: £9.50)

2010

2009

£000

1,000

ANNUAL REPORT 2010 / FINANCIAL STATEMENTS

DIVIDENDS

PARENT COMPANY PROFIT AND LOSS ACCOUNT The parent company has taken advantage of Section 408 of The Companies Act 2006 and has not included its own profit and loss account in these financial statements. The parent company’s retained profit for the year was £167,000 (2009: £129,000).

FIXED ASSETS - INTANGIBLE ASSETS Group

Goodwill £000

Cost At beginning and end of year

1,252

Amortisation At beginning of year

Charge for year

At end of year

151

Net book value At 31 March 2010

1,101

At 31 March 2009

1,164

The goodwill arising on the acquisition of John Davies Interiors Limited is being amortised over its useful life of 20 years.

ANNUAL REPORT 2010 / FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS 11

FIXED ASSETS - TANGIBLE ASSETS Group

Long Leasehold leasehold improvements land and buildings £000 £000

Motor vehicles

Fixtures and fittings

Total

£000

Cost or valuation At beginning of year

1,103

837

481

2,421

Additions

248

176

102

526

Disposals

(83

(87

Transfer

255

930

572

1,793

At revaluation

1,067

Total

1,103

255

930

572

2,860

At beginning of year

376

229

664

Charge for year

202

336

(83

(87

495

298

913

At 31 March 2010

1,024

214

435

274

1,947

At 31 March 2009

1,044

461

252

1,757

At end of year At cost

Accumulated depreciation

Disposals At end of year Net book value

Included in the total net book value of motor vehicles and fixtures and fittings is £40,000 and £17,000 respectively (2009: £99,000 and £29,000) in respect of assets held under finance leases and similar hire purchase contracts. Depreciation for the year on these assets was £25,000 and £12,000 respectively (2009: £86,000 and £6,000). Company

Long leasehold land and buildings £000

Motor vehicles

Total

£000

Fixtures and fittings £000

£000

Cost or valuation At beginning of year

1,103

671

460

2,234

Additions

100

122

Disposals

(81

690

482

1,208

At revaluation

1,067

Total

1,103

690

482

2,275

At beginning of year

316

223

598

Charge for year

147

220

(81

382

276

737

At 31 March 2010

1,024

308

206

1,538

At 31 March 2009

1,044

355

237

1,636

At end of year At cost

Accumulated depreciation

Disposals At end of year Net book value

Included in the total net book value of fixtures and fittings is £17,000 (2009: £29,000) in respect of assets held under finance leases. Valuation Details The land and buildings at Anchor Brook Business Park, are held on a 999 year lease from 12 October 2001. This property was revalued with effect from 31 March 2006, at £1,230,000. This includes various items of plant, which are incorporated at net book value within “fixtures and fittings” above. A statement from the valuers is set out below:

ANNUAL REPORT 2010 / FINANCIAL STATEMENTS

...

“The property was valued by qualified professional valuers working for the company of DTZ Debenham Tie Leung, Chartered Surveyors, acting in the capacity of External Valuers. All such valuers are Chartered Surveyors, being members of the Royal Institution of Chartered Surveyors (“RICS”). The property was valued on the basis of Market Value. Our opinion of the Market Value of the property was primarily derived using recent comparable recent market transactions on arm’s length terms. All valuations were carried out in accordance with the RICS Appraisal and Valuation Standards. Our valuation report is dated 10 April 2006. RD Gough FRICS has been the signatory of valuation reports provided to the Company for the same purpose as the Valuation Report since December 2002. DTZ Debenham Tie Leung has been carrying out valuations for the Company for the same purpose as the Valuation Report for the same period. DTZ Debenham Tie Leung is a wholly owned subsidiary of DTZ Holdings plc (the “Group”). In the Group’s financial year to 30 April 2006, the proportion of fees payable by the Company to the total fee income of the Group was less than 5%.” An interim valuation was performed as at 31 March 2009 by an appropriately qualified member of staff. The directors are not aware of any material change in value and therefore the valuation set out above has not been updated. All other tangible fixed assets are stated at cost.

Details of revalued assets are as follows:

Long leasehold land and buildings £000

Assets at valuation At 2006 open market value at beginning and end of year

1,067

Accumulated depreciation At beginning of year

Charge for year

At end of year

Net Book value At 31 March 2010 At 31 March 2009

988 1,008

Historical cost of revalued assets At beginning and end of year

611

Accumulated depreciation At beginning of year

Charge for year

At end of year

Net Book value At 31 March 2010

540

At 31 March 2009

550

ANNUAL REPORT 2010 / FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS 12

FIXED ASSET INVESTMENTS Company

Shares in group undertakings £000

Cost and net book value 2,860

At beginning and end of year The undertakings in which the Group’s interest at the year end is more than 20% are as follows (all subsidiary undertakings are incorporated in Great Britain): Name

Nature of business

Company holding %

Shaylor Construction Limited

Construction services

100

Shaylor Special Projects Limited

Construction services

100

Interior fit out and refurbishment

100

Commercial Development

100

Dormant

100

Dormant (incorporated 31 October

100

Subsidiary undertakings

John Davies Interiors Limited Shaylor Developments Limited Shaylor Homes Limited Shaylor Repair & Maintain Limited

2009) Shaylor Interiors Limited

Dormant (incorporated 31 October

100

2009) F.J.Shaylor (Builders) Limited

Dormant

100

Castlegate 501 Limited

Dormant

100

All holdings are ordinary shares.

WORK IN PROGRESS Group

Construction and development costs incurred to date Payments on account received and receivable not matched with turnover

2010

2009

£000

1,847

2,048

(36

1,847

2,012

There is no work in progress held in the company.

DEBTORS Group

Company

2010

2009

2010

2009

£000

Amounts owed by Group undertakings

3,700

2,696

3,571

4,361

Trade debtors

6,745

5,935

Amounts recoverable on contracts

2,522

3,196

Other debtors

237

376

Prepayments

303

539

103

13,299

12,454

3,929

4,842

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR Group

Company

2010

2009

2010

2009

£000

390

Amounts owed to Group undertakings

7,270

7,428

Contract payments on account

212

13,381

12,820

158

117

Tax and social security

614

822

569

674

Corporation tax

318

382

Other creditors

400

523

289

433

Accruals

421

348

15,196

15,538

8,361

8,711

Bank loans and overdrafts (secured - see

ANNUAL REPORT 2010 / FINANCIAL STATEMENTS

ANNUAL REPORT 2009 FINANCIAL STATEMENTS

note 16) Obligations under finance leases and hire purchase contracts (secured - see note 16)

Trade creditors

CREDITORS: AMOUNTS FALLING DUE AFTER ONE YEAR Group

Bank loans and overdrafts (secured) Obligations under finance leases and hire purchase contracts falling due in two to five years (secured) Other creditors

Company

2010

2009

2010

2009

£000

349

177

547

Bank loans and overdrafts are secured by fixed and floating charges over the assets of the Group. Interest is charged at 2.5% above bank base rate. Included within Group bank loans are amounts repayable in five years or more of £248,000 (2009: £nil). Obligations under finance leases and hire purchase contracts are secured on the assets to which they relate.

ANNUAL REPORT 2010 / FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS 17

PROVISION FOR LIABILITIES AND CHARGES Deferred tax

Group and Company £000 20

At beginning and end of year 2010

2009

£000

Accelerated capital allowances

Other timing differences

2010

2009

£000

1,000

105

The elements of deferred tax are as follows:

SHARE CAPITAL Group and Company Authorised: 1,000,000 ordinary shares of £1 each Allotted called up and fully paid: 105,263 ordinary shares of £1 each

Group

Revaluation reserve £000

Profit and loss account £000

458

6,479

754

Excess depreciation on revalued tangible fixed asset

(10

At end of year

448

7,243

At beginning of year Profit for the year

Company

At beginning of year Profit for the year At end of year

ANNUAL REPORT 2010 / FINANCIAL STATEMENTS

RESERVES

Profit and loss account £000 1,939 167 2,106

PENSION AND SIMILAR OBLIGATIONS

The group contributes to a number of defined contribution pension schemes (some of which are company schemes) in respect of various employees of the Group. The pension charge for the year represents contributions payable by the Group to these funds and amounted to £250,000 (2009: £226,000). At 31 March 2010, there were outstanding contributions of £21,000 (2009: £25,000).

ANNUAL REPORT 2010 / FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS 21

COMMITMENTS Leasing commitments 2010 The Group has commitments for payments under operating leases as follows:

Buildings

Leases expiring in less than one year Leases expiring in two to five years

2009 Buildings

£000

Plant & Equipment £000

£000

Plant & Equipment £000

Capital commitments At 31 March 2010, neither the Group nor the Company had any capital commitments (2009: £nil). Contingencies The Group had liabilities under contractual performance bonds, entered into in the normal course of business, amounting to £1,613,000 (2009: £1,829,000). The Company has provided a cross-company guarantee to certain of the bankers of other Group companies. The total amount outstanding in respect of these loans and overdraft were £394,000 (2009: £394,000). The Group has given a guarantee to certain of the Group’s bankers in respect of net amounts due to the bank. At 31 March 2010 this liability amounted to £3,810,000 (2009: £4,033,000). The Company’s liability in respect of this guarantee was £734,000 (2009: £261,000). In addition, there is a legal charge over the land and buildings owned by the Company in respect of Group borrowings.

ULTIMATE CONTROLLING PARTY The company’s immediate and ultimate parent undertaking is Shaylor Holdings Limited, which is registered in Great Britain. The results of the company have been consolidated into the Group headed by Shaylor Holdings Limited for the year ended 31 March 2010. The consolidated financial statements of Shaylor Holdings Limited are available to the public and may be obtained from Companies House, Crown Way, Cardiff, CF14 3UZ. Stephen Shaylor, a director of Shaylor Holdings Limited, is the ultimate controlling party.

ANNUAL REPORT 2010 / FINANCIAL STATEMENTS

We thank all the stakeholders to our business, being clients, supply chain and our own people, for contributing to our enduring success.

RECYCLED ACID FREE FRIENDLY & GREEN

Credits Designed and produced by www.ricemedia.co.uk Images courtesy of Painter Creative and Visionary Language ÂŠ Shaylor Group PLC 2010 Environmental statement: This annual report is printed on soporset sheet & core paper which is sourced from well managed forests and other controlled sources certified and in accordance with the fsc (forest stewardship council). The originating mill is 14001 certified. All inks are vegetable based and printing was performed using a direct digital to plate repro system eliminating the need for film developer & acid fixers.

Product group from well-managed forests and other controlled sources www.fsc.org Cert no. CU-COC-807950 ÂŠ 1996 Forest Stewardship Council

Shaylor Group plc Frederick James House 52 Wharf Approach Anchor Brook Business Park Aldridge West Midlands WS9 8BX T: +44 (0) 1922 741570 F: +44 (0) 1922 745604 enquiries@shaylorgroup.com www.shaylorgroup.com