Page 1

diversity is our stability

Shaylor Group plc Registered number 4513210 Directors’ Report and Financial Statements for the year ended 31 March 2011


One dedicated and professional team with shared values committed to developing a strong sustainable business and delivering the very best to our customers.


Contents Shaylor Group Introducing Shaylor Group Shaylor Group Chief Executive’s Review

02 04 06

Introduction Education Healthcare and Retirement Industrial and Commercial Leisure and Retail Justice and Custodial Transport Heritage

08 10 12 14 16 18 20 22

Our Expertise

Corporate Social Responsibility Introduction Health and Safety Our People Our Communities and Environment Our Customers and Suppliers

24 26 28 30 32

Business Management Managing Risk Key Performance Indicators, Financial Instruments

34 35

Directors’ Report Statement of Directors’ Responsibilities

36 37

Governance

Financial Statements Independent Auditor's Report to the Members of Shaylor Group plc Consolidated Profit and Loss Account Consolidated Balance Sheet Company Balance Sheet Consolidated Statement of Total Recognised Gains and Losses Note of Consolidated Historical Cost Profits and Losses Reconciliation of Movements in Shareholders’ Funds Notes to the Financial Statements

39 40 41 42 43 43 43 44

Shaylor Group plc Annual Report 2011 Contents

01


Introducing Shaylor Group

Our strategic approach identifies development programmes and platforms that enable us to deliver added value and build a sustainable future.

02

Shaylor Group plc Annual Report 2011 Introducing Shaylor Group


We remain committed to our strategy of developing a relationship based, customer focused business where price is not the main driver. We seek to operate in an environment where the qualitative aspects are a significant part of the selection criteria as this provides the best opportunity for us to demonstrate our credentials and deliver added value.

It is our investment in our people that enables us to meet this goal as it is their individual actions and performance that deliver projects for our clients, building and enhancing our reputation and developing long term relationships that stand the test of time.

Shaylor Group plc Annual Report 2011 Introducing Shaylor Group

03


Shaylor Group Structured delivery With our different business streams we are able to deliver a broad spectrum of services across a diverse market place.

Values that count... Living ‘Our Values’ is central to the way we operate and our people are incredibly committed to upholding the values inherent in the Shaylor brand.

04

Shaylor Group plc Annual Report 2011 Shaylor Group


Extensive market coverage Our strength comes from having in-depth experience and expertise across a wide range of market sectors and specialisms.

Education Healthcare and Retirement Industrial and Commercial Leisure and Retail Justice and Custodial Transport Heritage

Shaylor Group plc Annual Report 2011 Shaylor Group

05


Chief Executive’s Review

“Our strategy remains to build a relationship based customer focused business, where price is not the main driver.” Diversity strength and stability

We have made a very positive start to the year with an extremely strong order book of £45 million for the new financial year.

The construction industry has remained extremely challenging over the last twelve months, so we have continued our strategy of consolidation for the business. We have strengthened our client relationships, continued to operate in a diverse range of sectors and focused on long term profitable projects to secure a stable base for future growth.

Despite the gloomy forecasts that construction output will not grow until 2013, we are seeing pockets of improved activity. The success of our strategy to secure more long term partnerships and frameworks allows us to predict a significant growth in turnover for the next financial year of at least 20%.

Against the backdrop of a double dip recession in the industry and an adversarial commercial environment, we have remained selective in the work we undertake and been prudent in our accounting. This approach has resulted in lower turnover at £45 million and lower profitability, although we still believe this to be creditable given the fragile economy.

06

A review of the following pages, shows that we have a strong balance sheet, a reflection of our commitment not to undertake suicide bidding in order to buy turnover, which is prevalent in the current market. We have continued to see the demise of similar sized regional competitors and an increase in the number of national

Shaylor Group plc Annual Report 2011 Chief Executives Review

contractors seeking to secure work in the middle space (projects of £5 million-£10 million), traditionally occupied by SMEs like ourselves. We do not subscribe to a buying turnover mentality, as this leads to disappointment for all stakeholders to the project. Our strategy remains to build a relationship based customer focused business, where price is not the main driver.

Investment in the business We have continued to invest in the business throughout the year, with 33 new appointments since January, including one new director and the opening of a new London office for our rebranded interiors business, Shaylor Interiors.


£2.4m Skills and learning centre at the Centre of Refurbishment Excellence (CoRE) at Stoke on Trent

£7.1m King Edward’s School, Birmingham and sister school, King Edward VI High School for Girls

Shaylor Interiors is a rebranding of the existing JDI business, which has grown in importance to the business since the acquisition of John Davies Interiors by Shaylor in 2008. JD Interiors will remain focused on the Midlands market for smaller projects and Shaylor Interiors will focus on the London market, with new premises located in the West End. In the meantime, the appointment of Martin Chambers as framework director strengthens the group’s expertise in the area of long term relationship-based contracts. Martin has over 30 years experience in the construction industry and a wealth of experience in leading major construction and regeneration based programmes.

Significant contract wins Significant contract wins for Shaylor over the last few months include a £7.1 million contract for the building of a new Performing Arts Centre for leading independent schools, King Edward’s School, Birmingham and sister school, King Edward VI High School for Girls, on the existing Edgbaston campus, which is now on site. Our relationship has been strengthened with King Edwards by the award of a new £700,000 contract to provide a courtyard extension which will provide new classrooms and laboratories.

A £2.4 million skills and learning centre at the Centre of Refurbishment Excellence (CoRE) at Stoke-on-Trent is also well underway. CoRE will create a unique group of ‘living’ demonstration buildings, a skills and learning facility and visitor hub and is the only project of its kind in the country. Funding has come from the Department for Children, Schools and Families (DCSF) and Stoke-on-Trent City Council with further funding being sought from the European Regional Development Fund (ERDF). Shaylor Construction is working with Lend Lease to deliver refurbishment and new build projects at three primary schools across Birmingham at Summerfield, Regents Park and Greet, with a cumulative value of just under £6 million. Three new frameworks have been secured; a four year minor works agreement with the Ministry of Justice, a three year agreement with Northampton County Council for capital projects from £200,000 to £3.8 million and a four year agreement with Hertfordshire County Council for repairs, adaptations, refurbishment and extensions to buildings on projects up to £550,000.

regressive trend in the industry with our business wide commitment to sustainable and profitable growth, through our diverse service offering. There will be difficult times ahead for the industry but we have a healthy level of enquiries and a confirmed order book for over 75% of our target turnover for next year. The full impact of the spending cuts has not yet been felt in construction and it is the public sector where we are likely to see the largest dips. Our even split of work between private and public sector will help offset the negative effects of this. There will also be new opportunities created as public sector clients’ views on frameworks are changing. In many instances, clients are recognising that big does not always mean best value and are creating new opportunities for SMEs within framework agreements. In other instances consortia are being encouraged and we have established relationships to bid for several of these larger frameworks.

Future prospects We are well placed to weather the storm and adapt to the changing market place and have proved that we can buck this

Stephen Shaylor Chief Executive

Shaylor Group plc Annual Report 2011 Chief Executives Review

07


Our Expertise

Our aim is diversity across the whole business ensuring a quality mix that reduces exposure to any one market place.

08

Shaylor Group plc Annual Report 2011 Our Expertise


We work across a broad spectrum of sectors but always seek to deliver a quality service for a fair return. We are not over dependant on the public sector with around half of our work coming from the private sector. We do not have a typical project as they range from the smallest specialist repair project to complex constructions of new build and multi-million framework agreements across many sites.

Shaylor Group plc Annual Report 2011 Our Expertise

09


Education Education remains a strong area for Shaylor with expertise across all different levels of education, primary, secondary, colleges and universities. Prospects for further growth are positive as despite cuts in the public sector the private sector remains active. We have continued to benefit from projects from many long standing clients from the higher education sector and have developed new relationships with a number of independent schools. A notable new project in this sector is the £7.1 million Performing Arts Centre for leading independent schools, King Edward’s School, Birmingham and sister school, King Edward VI High School for Girls, on the existing Edgbaston campus.

Birmingham and Warwick University. A new £760,000 engineering building at North Warwickshire & Hinckley College has also recently been completed. Our expertise spans from major new build to regular planned maintenance and Shaylor is working with Lend Lease to deliver a refurbishment and new build project at three primary schools across Birmingham at Summerfield, Regents Park and Greet. These schools are the first to be remodelled through the Primary Capital Programme.

A £2.4 million skills and learning centre at the Centre of Refurbishment Excellence (CoRE) at Stoke on Trent is on site. CoRE will create a unique group of ‘living’ demonstration buildings, a skills and learning facility and visitor hub. It is the only project of its kind in the country and will be built on a former pottery site in the heart of Longton. Funding has come from the Department for Children, Schools and Families (DCSF) and Stoke-on-Trent City Council with further funding being sought from the European Regional Development Fund (ERDF). Two major refurbishment projects have been completed providing 400 new bedrooms, bathrooms and kitchens for university students at Mansion Brook,

10

Shaylor Group plc Annual Report 2011 Education

“You do what you are asked to do and are very approachable.” Client comment Aston University


PROJECT PROFILE Performing Arts Centre for two independent schools in Birmingham Value: £7.1 million Duration: 70 weeks. Due to complete Spring 2012 Client: King Edward’s School, Birmingham and sister school, King Edward VI High School for Girls

A concrete framed, four storey structure to provide a 500 seat auditoria, a 140 seat studio theatre, a multi-use rehearsal room, several teaching suites, a feature foyer and associated landscaped grounds.

Project Achievements Assisted the client in reducing budget by over £1 million to achieve their target cost. Shaylor analysed the proposals, negotiated numerous value engineered options and successfully secured a way forward for the client and their team. A complete new team of design consultants appointed by Shaylor with considerable award winning expertise in auditoria and theatre design.

Shaylor Group plc Annual Report 2011 Education

11


Healthcare and Retirement Our experience spans across hospitals, medical centres, care homes and respite centres with new builds, extensions, refurbishments and repair and maintenance all being carried out during this period. This remains an active market as despite cuts in the private sector we are working with many private sector clients that have their own funding streams. For example we have completed the first healthcare facility in the region for new healthcare company, Camino at West Bromwich. This £820,000 care facility which is now open consists of one 8-bed unit and one 5-bed unit. The state of the art accommodation provides care and support for men and women with severe, enduring mental illness, experiencing a range of associated problems. We hope to be involved in other mental health units that Camino plans to develop in the West Midlands over the next few years.

Our five year framework with Bondcare continues with the £6 million Bromford Lane development in Birmingham successfully completed. The completion of the £6 million Royal Orthopaedic Hospital is a jewel in the crown for us. This new outpatients department and main entrance to the hospital was a model project in terms of client satisfaction and the award of a Bronze ‘Most Considerate Site runner up’ by the Considerate Constructors Scheme. Other significant projects that have been completed include the new Palliative Care Centre for Ashley House plc on behalf of the NHS Walsall LIFT Partnership and an extension to the facilities for war veterans at Audley Court, Shropshire for Combat Stress.

12

Shaylor Group plc Annual Report 2011 Healthcare and Retirement

The Rushall Medical Centre in Aldridge and the Walsall Child Development Centre have also been successfully completed. New projects recently started include the £828,000 refurbishment of The Old School House, Bromsgrove for Life after Stroke. The new centre will be the first of its kind in the UK and is due to open later this year.


Annual Report Front End sams - latest:Layout 1

27/10/11

17:12

Page 16

PROJECT PROFILE Royal Orthopaedic Hospital New Entrance and Outpatients Department Value: £6 million Duration: 54 weeks Client: Royal Orthopaedic Hospital NHS Trust

A new out patients department and main focal 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.

Project Achievements Construction was adjacent to the existing children’s ward and the hospital remained operational throughout. Close liaison was maintained to minimise any effects on the day to day activities of the hospital. Full risk management process to drive out design issues early, including development of value engineering solutions.

Project designed to achieve BREEAM Excellent rating. Sustainable measures include maximising insulation values for cladding and roofing, heating via solar panels and rainwater harvesting. Site liaison officer appointed to deal with day to day liaison with staff and public.

Fantastic community spirit, children painted murals on hoardings, Christmas gifts from site staff and regular fundraising activities. Awarded bronze as a 'Most Considerate Site runner up'. These prestigious awards are only presented to the top performing 7.5% of sites in the country, inspected by the Considerate Constructors Monitors.

Shaylor Group plc Annual Report 2011 Healthcare and Retirement

13


Industrial and Commercial We continue to work with a number of blue chip clients such as CBRE Investors, Calthorpe Estates, Aviva Investors, DTZ and Royal Mail Group, maintaining our strong long term relationships with them. Examples include the completion of the £11 million Minworth Industrial Estate which marks a four year relationship with CBRE. The exceedingly successful refurbishment at 100 Hagley Road for Calthorpe Estates was followed by a second project for Calthorpe at 35 Calthorpe Road. This £850,000 refurbishment of a Grade ll listed building provides a stunning example of how a traditional period property can be restored creating a state of the art environment for modern use. During the year we have seen our interiors business grow leading to the re-branding of our JD Interiors business into Shaylor Interiors. The fit-out market for commercial, retail and leisure has remained consistent and we anticipate further growth in these markets to be led from the South. Our new London office which launched in May 2011 is led by Ray Williams and has already secured a number of new wins in Bristol, London and Birmingham. One of these was a rapid three week refurbishment project for Nokia Siemens Networks, which was delivered on time with out of hours working to facilitate the live working environment.

Our special projects team has delivered a steady stream of refurbishment works on industrial and retail estates with clients such as, GKN, SCC and Selco, as owners continue to improve and upgrade their existing stock. Other projects completed during this period include the £290,000 conversion of offices into flats for Jephson Homes at Priory Chambers, in Dudley, the conversion of an industrial unit into offices for clothing manufacturer MW UK in Bristol and the refurbishment of the ground floor reception area at Colmore Gate in Birmingham.

“A fantastic example of the right sort of team behaviour.” Calthorpe Estates 100 Hagley Road

14

Shaylor Group plc Annual Report 2011 Industrial and Commercial


PROJECT PROFILE Reception and Offices for Highways Agency at The Cube Value: ÂŁ1.28 million Duration: 22 weeks Client: Highways Agency

The Cube is an iconic mixed use building in Birmingham city centre. The Highways Agency was the first tenant to move into this modern and contemporary office space. The project encompassed the fit out from shell and core to accommodate the relocation of 700 staff over 55,000 sq ft.

Project Achievements Project completed on time within a very tight programme. All defects completed within one week of Highways Agency occupation. Provided incoming occupants with support and assistance ensuring seamless transition from old location. Main reception was manufactured off site and installed complete to create an instant corporate signature.

Shaylor Group plc Annual Report 2011 Industrial and Commercial

15


Leisure and Retail Sports facilities have been a highlight in this sector with the successful completion of The Goals Soccer Centre in Liverpool, new sports pitches and changing facilities at HMP Featherstone, Wolverhampton for the Ministry of Justice and a sports pavilion at St Albans High School for Girls. A refurbishment of Warwick Boat Club has been completed as has the external redecoration of a Gala Bingo building in Brighton. New opportunities in the retail sector have been slow but we are delighted that we maintained a presence in this sector with new and existing clients. We remain a member of the Wilkinson stores framework and have now completed two stores with the ÂŁ1.3 million refurbishment at Harrow completed this year. We also have a continuing relationship with the One Stop Shopping Centre at Perry Barr in Birmingham.

16

Shaylor Group plc Annual Report 2011 Leisure and Retail


PROJECT PROFILE New Soccer Centre in Liverpool Value: ÂŁ1.8 million Duration: 20 weeks Client: Goals Soccer Centres PLC

The construction of eight five-a-side and two seven-a-side all weather floodlit football pitches in Liverpool. Associated amenities included a pavilion with changing rooms, showers and toilets, bar/lounge area, meeting room, staff office, kitchen, chilled cellar and plant room. All of the facilities are DDA compliant for disabled access and use. Access roads, footpaths, parking bays constructed to include cycle shelters and motor bike parking.

Project Achievements BREEAM rating of Very Good. Environmental features include solar panels on the roof to assist with the production of hot water, recycling of the rainwater for flushing toilets, improved thermal insulation to reduce heat loss from the building and PIR controlled lighting sensors. 100% recycled topsoil and sub-soil was collected by local contractors. Some local community groups were provided with topsoil for their community improvement schemes.

Shaylor Group plc Annual Report 2011 Leisure and Retail

17


Justice and Custodial We have substantial experience in this sector having worked across many government departments including the HM Prison Service with the Probation Service, Immigration at the Home Office and Her Majesty’s Court Service. We continue to work at HMP Featherstone Wolverhampton, an adult Category C closed training establishment under our framework agreement with the MoJ. This strategic alliance is now in its seventh year and has seen us complete works at HMP Ashwell, HMP Wellingborough, HMP Drake Hall and many more. The £11.2 million contract at HMP Featherstone to rewire and install a new primary heating system was completed this year. This project followed the new £3.4 million sports facilities on the same site that provided two new sports pitches with associated changing facilities.

In addition we have completed a roll out programme of disabled access works for the West Midlands magistrates court network. At the beginning of the year we secured a new small works framework agreement with the MoJ.

£3.4m Sports facilities at HMP Featherstone, Wolverhampton

18

Shaylor Group plc Annual Report 2011 Justice and Custodial

Our ongoing relationship with the West Midlands Police Authority continues with the completion of the £3 million high security custodial suite at Coventry for the West Midlands Counter Terrorism Unit. We have also recently completed a refurbishment of the police headquarters at Lloyd House in Birmingham for West Midlands Police Authority. Further contracts have been undertaken with British Transport Police in Wolverhampton, Nottingham and Cardiff.


PROJECT PROFILE HMP Featherstone, new sports facilities Value: £3.4 million Duration: 32 weeks Client: Ministry of Justice

This project was carried out under the long term MoJ framework agreement and incorporated the design and construction of new sports pitches outside the secure prison boundary, including demolition of existing buildings, relocation of existing prison boundary fence and provision of new changing facilities. The playing fields consisted of a seven-a-side floodlit all weather sports pitch and full size combined FA & RFU pitch. The project also included one year’s full maintenance.

Project Achievements Value engineering resulted in a 15% reduction in the original budget to meet the budget constraint of the client. Project completed on time despite severe adverse weather conditions. Zero Defects and Final Accounts settled within four weeks of Practical Completion. 87% achieved on KPI’s in customer satisfaction survey. 95% of demolition material recycled. 83% of construction phase waste was diverted from landfill.

Shaylor Group plc Annual Report 2011 Justice and Custodial

19


Transport We have experienced significant growth in this sector, especially with clients involved with rail. Rail facilities and infrastructure is one of the few sectors to benefit from continued investment with several major national projects providing the catalyst for further investment at a local level. Recent figures from the Construction Products Association (CPA) predict that rail construction is anticipated to double by 2015. Over the past 10 years, rail passenger numbers have risen by about 40% and the industry is expecting demand to double over the next few decades. The relationship we have developed with Network Rail remains strong with further contracts for upgrades and improvements at numerous stations. We are involved in the ÂŁ800 million Reading Area Redevelopment with Network Rail, on a ÂŁ1 million upgrade of the existing heritage building on Reading station and the provision of temporary offices during the course of the development.

At Paddington Station we have completed upgrading the on board catering facilities for Rail Gourmet. We are working with First Group as part of the National Station Improvement Scheme on a number of stations on the Great Western Line to upgrade the existing customer facilities which include waiting areas, new customer information rooms and purpose built waiting shelters at Ealing Broadway, Southall, Chippenham and Langley. Our involvement at the Birmingham Gateway at New Street Station continues through Mace.

20

Shaylor Group plc Annual Report 2011 Transport


PROJECT PROFILE Paddington Station, London Value: ÂŁ123,000 and ÂŁ420,000 Duration: Five weeks and eighteen weeks Client: First Great Western and Rail Gourmet

Two projects have been undertaken at Paddington Station. These include the refurbishment of the Rail Gourmet accommodation and the upgrading and extension of accommodation for First Great Western train crews. This will create a larger office space and provide an upgraded IT and data service. For Rail Gourmet the project driver was to create an open plan workspace and new modern catering and welfare facilities. The improved train crew accommodation for First Great Western provides a modern facility and the two phase project has achieved all the agreed project criteria.

Project Achievements Rail Gourmet The project was completed on programme and to budget. No disruption was caused to the main platform area and the general public were unaware of the works being undertaken.

Accommodation for First Great Western Data and communication upgrades were undertaken while maintaining full service as normal with no disruption to building users. The project was completed one week early with no impact to building occupants or station users.

Shaylor Group plc Annual Report 2011 Transport

21


Heritage Working with historic buildings is rewarding and satisfying but often complex and time consuming. We have many years of experience that has enabled us to develop the specialist skills required and build a network of craftsmen to enable us to offer a complete ‘one stop shop’ service for clients in this sector. Our range of clients is varied and includes schools, ecclesiastical bodies, universities, local authorities, the Ministry of Justice and Royal Mail Group. Projects this year have varied from repairing a garden wall in a Victorian walled garden in conjunction with the conservation office to the external cleaning and refurbishment of listed buildings. One of our flagship projects completed this year was the £850,000 refurbishment of the Grade ll listed building at 35 Calthorpe Road for Calthorpe Estates. Another notable project, which is currently on site, is the £1 million contract to repair and refurbish Derby Rail station for Osborne Rail which is in a conservation area. This year we have completed external façade repairs at Fountain Court in Birmingham and stonework repairs to the listed building, Broadway Plaza in Birmingham.

22

Shaylor Group plc Annual Report 2011 Heritage

An external refurbishment to the stonework at Royal Prior Shopping Centre, Leamington and conversion works at Cathedral School, Cardiff have also been completed. We have established a strong relationship with Shrewsbury School having carried out a contract that included repairs and new facilities within the headmaster’s house, which is a listed building, and have been mandated to build a new Boat House. Prospects for the coming year are good. New projects so far this year include ancient stonework repairs and roofing repairs at two churches and repairs to a listed boat house at Worcester for The University of Birmingham.


PROJECT PROFILE Restoration and refurbishment of 35 Calthorpe Road Value: £850,000 Duration: 23 weeks Client: Calthorpe Estates

Situated in a prime position on the Calthorpe Estate, 35 Calthorpe Road is a landmark Georgian building which dates back to the 1820’s. The 4,750 sq ft Grade II listed building has been completely refurbished, creating bespoke high quality office premises. Works included a full re-work of the existing accommodation to provide a modern open plan space and a new build two storey extension to the rear of the building with car parking and landscaping. Shaylor and the project team worked very closely with Birmingham City Council’s Conservation Officer and English Heritage in order to agree detailed solutions to ensure the historical integrity of the building was not compromised.

Project Achievements Specialist rendering work was carried out that incorporated traditional lime and horsehair plaster works and specialist paints. Existing structure was painstakingly protected from damage whilst new structural steelwork was incorporated into the building. All existing 180 year old timber floor boards have been repaired, renovated and reinforced to comply with new regulations. The existing 1825 staircase with iron balustrade has been restored, along with the mahogany hand rail.

Shaylor Group plc Annual Report 2011 Heritage

23


Corporate Social Responsibility

Term relationships and framework agreements are a focus as they deliver repeat business and longer term visibility.

24

Shaylor Group plc Annual Report 2011 Corporate Social Responsibility


We have delivered repeat orders and established long term relationships that prove our credentials in the market place. Delivering added value to clients such as The Ministry of Justice, Royal Mail and Network Rail says a lot about our business.

Client’s expectations are changing and they are increasingly looking for more from less. We are well placed to respond to this change by offering open, honest relationships and a partnership approach that is the hallmark of the Shaylor service.

Shaylor Group plc Annual Report 2011 Corporate Social Responsibility

25


Health and Safety Shaylor is committed to providing the highest level of health and safety at all sites and offices. Our approach to reduce accidents and improve safety on site is by having a dedicated health and safety team within the business to advise, implement and improve performance. Our HSEQ management system is based on OHSAS18001 which integrates with our ISO9001 and ISO14001 systems. Shaylor’s risk analysis systems seek to eliminate or mitigate risk and are carried out as part of the design development and assessment process and as a specific health & safety risk assessment process.

98% of our sites are RIDDOR reportable accident and incident free

Health and safety at Shaylor Group has enjoyed another impressive year. 98% of our sites are RIDDOR reportable accident and incident free. Our Accident Frequency Rate (AFR) remains low at 0.29 and our Total Reportable Incident Rate (TRIR) has dropped by 25%. We regularly undertake initiatives to reduce accidents in what are perceived to be high risk areas. One such initiative to cut accidents relating to ‘being struck by an object’ led to a 67% drop in such incidents. The external accreditations and awards we receive reflect the importance and emphasis we place on health and safety.

26

This year we were awarded The British Safety Council’s International Safety Award for the third year running. During the year we also achieved the Achilles Building Confidence Accreditation which is recognised as the standard for supplier excellence within the industry. This accreditation illustrates our commitment to driving up standards and performance whilst helping us measure our own performance and share it with others.

Shaylor Group plc Annual Report 2011 Health and Safety

A new initiative with the HSE enabled us to take advantage of a unique opportunity to undertake a consultation process with an inspector to review our health and safety procedures across a selection of sites. We received very positive feedback from the HSE about the way we organise and manage our sites and this provided assurance that we are achieving excellent site safety management standards.


Annual Report Front End sams - latest:Layout 1

27/10/11

17:07

Page 30

PEOPLE PROFILE Why I joined Shaylor

Parvinder Singh Contracts Manager – Shaylor Special Projects

“I was aware through construction journals and talking to people who have worked with Shaylor, that it is highly regarded as a great company. I knew when it was time to make a move, that it would be in Shaylor’s direction.

Parvinder has extensive experience in project management, having spent five years as project manager and then head of construction at the £715 million Queen Elizabeth Hospital redevelopment in Birmingham. He joined Shaylor just three months ago, but is already putting his wealth of knowledge, experience and expertise to good use in his current role of Contracts Manager.

They have a good reputation for quality, customer and people focus and are driven to expand in the current market.”

The role is hugely rewarding and there’s a massive pool of talent to draw upon here. Everyone has bags of enthusiasm and drive.

Why I joined Shaylor

Martin Chambers Framework Director

Martin was the Chartered Institute of Building's President in 2007/8. He has a wealth of experience in leading major construction and regeneration based programs and joined Shaylor in January from Lend Lease. He is a visiting professor in Construction Project Management at the University of Westminster and also a governor of the University of Wolverhampton.

“To me Shaylor represents the best that can be found within the UK’s construction industry and that is what is important to me.

The business is dynamic, innovative, family friendly and certainly punches well above its weight as can be seen from its recent achievements.”

Martin also has a significant international reputation that has in recent times seen him speaking at numerous overseas

conferences on the subjects of smart procurement, integrated team working and sustainability.

Shaylor remains committed to its values and as framework director I am responsible for developing sustainable business via long term relationships, frameworks, partnerships, and exploiting strategic opportunities.

Shaylor Group plc Annual Report 2011 People Profile

27


Our People

We realise that it is the individual contributions of our people that maintains our reputation as a friendly, family run business that delivers quality every time. Recruiting and retaining talented and committed staff is therefore crucial. We have recruited twenty new staff and six apprentices since the beginning of the year. Everyone is encouraged to actively engage in the direction and development of the business and we aim to encourage diversity in the workforce and provide opportunities for all.

Women in construction Women are currently under-represented in the industry, accounting for fewer than ten percent of the workforce. We aim to encourage women to join the business and

28

offer career development systems and working environments that remove barriers for women. Work experience and gap year placements have been undertaken by a number of girls from schools we have been working with.

Staff engagement Staff at all levels of the business are encouraged to participate in contributing to the development of the business. We hold SiteLink forums twice a year. These include workshops and focus groups to enable participation and feedback and provide an opportunity for staff to be updated on

Shaylor Group plc Annual Report 2011 Our People

progress and future plans for the business. A Visioning day is held annually that brings all senior management together to debate strategic issues and to set and appreciate the direction for the future of the business. Our annual ladies’ site visit takes office based administration staff out for the day to visit a number of live construction projects. These keep everyone in touch with what is going on and provide employees with a sense of involvement and a better understanding of what the business has achieved.


PEOPLE PROFILE Sadie Humphreys Trainee Estimator

As one of its newer employees, Sadie joined eight months ago after taking time out of the job market to spend time with her new baby. Sadie works with the estimating team, assisting with tenders, pricing up quotes, dealing with enquiries and communicating with sub-contractors. She’s currently supported by Shaylor on her day-release to university, where she has two more years of construction management to complete. Her aim then is to qualify as an estimator.

Darren leads a team of ten people across two sites and is responsible for the full delivery of projects – from initial client meetings through to the tender, completion and the twelve month defect period.

“It’s a male-dominated environment but everyone is very helpful and genuinely keen to see me progress. The opportunities are definitely there if you express an interest. I couldn’t ask for a more encouraging company to work for.”

It was hard returning to work after the baby, but the company made the transition easier for me.

I’m still at grass roots level, but the work has given me an appreciation that the small jobs need to be done efficiently, to ensure the bigger stuff can happen as a result.

Why I joined Shaylor

Darren Green Senior Project Manager

Darren began his career in construction as a labourer, working for his father who was a site manager. A ladder of progression then followed, including nine years of day-release, culminating in a university degree in Construction Management.

Why I joined Shaylor

“I’ve been with Shaylor for two years, and they’re a very supportive company to work for. I really enjoy leading a team through to the final delivery. Nothing gives me greater satisfaction than handing over a successful build.”

The work is tremendously varied. Every day is different and requires a good mix of practical and social skills, dealing with both staff and clients.

At the moment we’re working on a private school and railway station refurbishment but contracts cover everything from retail to commercial, health and more.

Shaylor Group plc Annual Report 2011 People Profile

29


Our Communities and Environment Our Communities Community relations are important on all of our projects. We are committed to long term beneficial interaction and seek to make a positive difference through all of our activities. Our Associate Membership of the Considerate Constructors Scheme is an essential part of our company ethos as we realise the impact we can have on a community through building projects. We have performed exceptionally well over the last twelve months with an average score of 34 out of 40 and a recent high score of 37.

The group has provided support for the The Midland’s Girls’ Lawn Tennis Association annual competition, with its 100th anniversary being hosted at the school. The boy’s first XI hockey team has also received financial support for a new home and away strip and both schools have been offered work placements and work experience opportunities. At the Royal Orthopaedic Hospital, the children’s ward was raided by coldhearted thieves who stole computer games and consoles. Shaylor site staff and their suppliers rallied round and provided a whole host of gifts for the children. Other activities at this site have included supporting the Children in Need day, quiz evenings and five-a-side football.

We place great emphasis on working with schools and supporting charitable organisations and we often undertake these activities with our clients and suppliers when working on particular sites. At King Edward’s School Birmingham and sister school, King Edward VI High School for Girls we are involved in several initiatives. We took part in a Science and Engineering Forum at the Girl’s school to help them understand more about the opportunities available in these sectors.

30

Shaylor Group plc Annual Report 2011 Our Communications and Environment

An initiative with Lend Lease at Greet Primary School involved children as young as four learning about the building process and the importance of staying safe on construction sites. We have raised nearly £10,000 for Marie Curie, our adopted charity for 2010-2011. This included taking part in the Birmingham Brain Game charity event, a fundraising dinner and celebrity backed quiz, which in itself raised £124,000 for them. A team also completed the Marie Curie Walk Ten event, a 10K walk that was held within the Shugborough Estate, Staffordshire. Our adopted charity for 2011-2012 is The Birmingham Children’s Hospital.


Our Environment Around 52% of the UK's carbon dioxide emissions come from creating or using buildings so at Shaylor we put sustainability at the heart of what we do.

88% So far in 2011 we achieved 88% diversion rate from landfill We provide our clients with a construction package that has sustainability built in. From design to completion we focus on cutting edge technology and techniques that reduce not only the environmental burden of the construction process but also the impact of the completed building. We review material specifications, building cladding design and M&E services utilising ‘The Green Guide to Specification’ to guide our construction material selection. We have a green purchasing plan and environmental plan for each project which is tailored to each specific scheme. We have completed a number of BREEAM ‘excellent’ projects which provides recognition of our sustainability credentials. Shaylor is accredited to ISO14001 which shapes and guides the way in which we undertake the construction process. Our construction teams are empowered to provide sustainable construction solutions for each and every project. Our commitment to halving waste to landfill is impressive. So far in 2011 we achieved an 88% diversion rate from landfill. At Shaylor Group we are proud of our environmental credentials.

Shaylor Group plc Annual Report 2011 Our Communications and Environment

31


Our Customers and Suppliers Our Customers

It is our aim to meet and exceed our customers’ expectations. This is at the core of our business strategy as maintaining repeat business and long term relationships comes from ensuring our customers are satisfied. Our framework agreement with the Ministry of Justice has been operational since 2004 and this year we have secured another new four year framework agreement for small works. We monitor customer satisfaction on every project. Data is gathered and analysed by the project teams and fed back into the business. We take on board all comments

32

so that we can seek to understand areas which need improvement as well as know the areas in which we have performed well. Our highest average monthly Customer Satisfaction Rating for 2011 was 91% and we achieved our highest single rating this year when the team at The Holland Centre Haverhill, Suffolk scored 97.9%.

Shaylor Group plc Annual Report 2011 Our Customers and Suppliers

97.9% We achieved our highest single rating this year when the team at The Holland Centre Haverhill, Suffolk scored 97.9%


Our Suppliers We maintain a supply chain database and have long term relationships with many of our top suppliers and sub-contactors. All suppliers must meet our strict criteria to join and maintain our high standards in order to remain on the database. Their performance is monitored as part of our Customer Satisfaction Survey and we take action to address any issues raised by our customers about performance levels. To join our team suppliers must demonstrate adherence to our CSR values and competence in all areas of their

business in line with our ISO9001 Quality System. This encompasses health and safety, environmental systems and local employment initiatives where applicable.

ISO9001

We operate to the Office of Government Commerce Fair Payment guidelines and work in an honest and open culture, which brings benefits to the project in terms of problem solving and flexibility.

Suppliers must demonstrate adherence to our CSR values and competence in all areas of their business in line with our ISO9001 Quality System

Shaylor Group plc Annual Report 2011 Our Customers and Suppliers

33


Business Management Managing Risk We are 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 strategic risks to take into account when viewing our risk assessment policies:

34

Economic risk – The UK economy has only recently emerged from recession but construction sector output has continued to decline. We believe that the space in which we operate is indicative of the type and size of project that will be prevalent in the medium term. Our expansive expertise and a strategy to maintain a broadly-based client portfolio, across public and private sectors also spreads our risk. We are committed to enhancing the amount of our activity underpinned by long-term partnering type arrangements and have had some success such that they will form a greater proportion of our output; Project Management risk – Poor contract management can lead to significant damage to our financial situation and our reputation. Good project management is vital to deliver the best

Shaylor Group plc Annual Report 2011 Business Management

service to every client. To achieve this our support systems monitor our bid and contract management processes to deliver a quality but risk-averse service; Staff Retention – Our business depends on attracting and retaining exceptional people regardless of the prevailing position of the construction industry. We expect that retention will once again become a higher priority as the economy picks up pace with a consequent risk of a highly mobile workforce having a detrimental impact on our performance. The welfare of our people is a high priority and our aim is for our offering to be best in class.


Key Performance Indicators Our performance is 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. We also 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 KPIs to measure profitability and levels of activity, combined with continual client feedback which will support our growth and development.

KPI

2011

2010

Definition and method of calculation

Operating margin

1.3%

2.1%

The ratio of operating profit before goodwill amortisation to sales, expressed as a percentage.

Employee retention

73.0%

84.7%

The proportion of permanent staff retained in the business during the year.

Customer satisfaction

87%

86%

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

Accident Frequency Rate

0.29

0.35

RIDDOR reportable accidents per 100,000 hours worked.

Financial Instruments The Group uses financial instruments including cash, borrowings and hire purchase contracts, the main purpose being to raise finance for the Group’s activities. It is the Group’s policy not to enter into trading of a speculative nature in respect of financial instruments. Price risk – The Group is exposed to price risk on its raw material purchases. This is mitigated by pre-ordering materials at the same time a customer commits to a construction contract; 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 all customers requiring credit, using information supplied by independent rating agencies where available. At the balance sheet date there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet; Cash flow and liquidity risk – 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.

Shaylor Group plc Annual Report 2011 Business Management

35


Governance Directors’ Report The directors present their Annual Report and audited financial statements for the year ended 31 March 2011.

Charitable and political donations

Principal activities and business review

Donations to UK charities amounted to £4,000 (2010: £2,000). No political donations were made (2010: £nil).

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.

Directors

On 31 March 2011 the trade, assets and liabilities of Shaylor Special Projects Limited and John Davies Interiors Limited were transferred to Shaylor Group plc at net book value. The cost of investment in John Davies Interiors Limited was transferred to the immediate parent company Shaylor Holdings Limited on the same date. This transfer created a capital contribution representing a waiver of the inter-company account held by Shaylor Holdings Limited.

Martin Baxter – Business Development Director

Results and dividends The financial statements reflect a profit before tax for the financial year of £598,000. During the year the company did not pay a dividend (2010: £nil). The directors do not recommend the payment of a final dividend (2010: £nil).

36

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

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 Chris Madden – Group Commercial Director Martin Chambers – Framework Director (appointed 2 February 2011)

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.

Shaylor Group plc Annual Report 2011 Governance

Gary Turley Company Secretary Frederick James House 52 Wharf Approach Anchor Brook Business Park Aldridge WS9 8BX 29 September 2011


Statement of directors’ responsibilities in respect of the Directors’ Report and the financial statements The directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law 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, the directors are required to: Select suitable accounting policies and then apply them consistently; Make judgments and estimates that are reasonable and prudent; State whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; Prepare 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. 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 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.

Shaylor Group plc Annual Report 2011 Governance

37


Financial Statements Independent auditor’s report to the members of Shaylor Group plc We have audited the financial statements of Shaylor Group plc for the year ended 31 March 2011 set out on pages 40 to 56. 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 37, 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 and express an opinion on 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/private.cfm 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 2011 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.

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.

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.

M Froom (Senior Statutory Auditor) For and on behalf of KPMG LLP, Statutory Auditor 30 September 2011 Chartered Accountants One Snowhill Snow Hill Queensway Birmingham B4 6GH

Shaylor Group plc Annual Report 2011 Financial Statements

39


Financial Statements Consolidated profit and loss account for the year ended 31 March 2011

Turnover

2011

2010

Notes

ÂŁ000

ÂŁ000

1

44,680

56,078

(38,067)

(47,504)

Cost of sales Gross profit

6,613

8,574

Administrative expenses

(6,093)

(7,448)

520

1,126

22

13

Operating profit

2

Profit on sale of tangible fixed assets Interest receivable

5

111

113

Interest payable

6

(55)

(37)

598

1,215

7

(105)

(461)

18

493

754

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 44 to 56 form part of these financial statements.

40

Shaylor Group plc Annual Report 2011 Financial Statements


Consolidated balance sheet at 31 March 2011 2011 Notes

£000

2010 £000

£000

£000

Fixed assets Intangible assets Tangible assets

9

-

1,101

10

1,684

1,947

1,684

3,048

Current assets Work in progress

12

1,459

1,847

Debtors

13

18,013

13,299

4,358

5,365

23,830

20,511

(14,774)

(15,196)

Cash at bank Creditors: Amounts falling due within one year

14

Net current assets Total assets less current liabilities

9,056

5,315

10,740

8,363

Creditors: Amounts falling due after one year

15

(785)

(547)

Provision for liabilities and charges

16

(20)

(20)

9,935

7,796

Net assets Capital and reserves Called up share capital

17

105

105

Revaluation reserve

18

470

448

Capital contribution reserve

18

1,614

-

Profit and loss account

18

7,746

7,243

9,935

7,796

Shareholders’ funds

These financial statements were approved by the board of directors on 29 September 2011 and were signed on its behalf by:

Gary Turley Finance Director

Stephen Shaylor Chief Executive

Shaylor Group plc Annual Report 2011 Financial Statements

41


Financial Statements Company balance sheet at 31 March 2011 2011 Notes

£000

2010 £000

£000

£000

Fixed assets Tangible assets

10

Investments

11

1,684

1,538

200

2,860

1,884

4,398

Current assets Work in progress

12

28

-

Debtors

13

12,647

3,929

3,197

2,286

15,872

6,215

(12,265)

(8,361)

Cash at bank Creditors: Amounts falling due within one year

14

Net current liabilities

3,607

(2,146)

Total assets less current liabilities

5,491

2,252

Creditors: Amounts falling due after one year

15

(412)

(21)

Provision for liabilities and charges

16

(20)

(20)

5,059

2,211

Net assets Capital and reserves Called up share capital

17

105

105

Revaluation reserve

18

32

-

Profit and loss account

18

Shareholders’ funds

4,922

2,106

5,059

2,211

These financial statements were approved by the board of directors on 29 September 2011 and were signed on its behalf by:

Gary Turley Finance Director

42

Stephen Shaylor Chief Executive

Shaylor Group plc Annual Report 2011 Financial Statements


Consolidated statement of total recognised gains and losses for the year ended 31 March 2011

Profit for the financial year Unrealised surplus on revaluation of property Total recognised gains and losses for the year

2011

2010

£000

£000

493

754

32

-

525

754

Note of consolidated historical cost profits and losses for the year ended 31 March 2011 2011

2010

£000

£000

598

1,215

10

10

Historical cost profit on ordinary activities before tax

608

1,225

Historical cost profit for the year retained after tax and dividends

503

764

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

Reconciliation of movements in shareholders’ funds for the year ended 31 March 2011

Group

Profit for the financial year Other recognised gains and losses relating to the year

Company

2011

2010

2011

2010

£000

£000

£000

£000

493

754

2,816

167

32

-

32

-

Capital contribution received

1,614

-

-

-

Net increase in shareholders’ funds

2,139

754

2,848

167

Opening shareholders’ funds

7,796

7,042

2,211

2,044

Closing shareholders’ funds

9,935

7,796

5,059

2,211

Shaylor Group plc Annual Report 2011 Financial Statements

43


Financial Statements Notes to the financial statements 1 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. Under FRS 1 the Company is exempt from the requirement to prepare a cash flow statement on the grounds that the parent undertaking Shaylor Holdings Limited includes the Company in its own published consolidated financial statements. Basis of consolidation The consolidated financial statements include the financial statements of the Company and its subsidiary undertakings made up to 31 March 2011. 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 33. 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. The Group has considerable financial resources and benefits from a broadly based portfolio, across public and private sectors, involving different markets and work types. As a consequence, the directors believe that the Group is well placed to manage its' business risks successfully despite the current uncertain economic outlook.

44

The directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. In addition the business has re-negotiated their banking facilities subsequent to the year end. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements. Tangible fixed assets and depreciation With the exception of land, which is not depreciated, depreciation is provided to write off the cost or valuation, less the estimated residual value of tangible fixed assets over their estimated useful economic lives as follows: Buildings Leasehold improvements Motor vehicles Fixtures and fittings

- 2% on valuation - over the life of the lease - 25% straight line - 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 which enables

Shaylor Group plc Annual Report 2011 Financial Statements

an assessment to be made of the final outturn on each contract. Profit is then recognised when the outcome of the contract can be foreseen with reasonable certainty and is attributed in line with the degree of completion of each contract. In the nature of the Group's business the results include any adjustments to the outcome of contracts completed in previous periods. The adjustments arise from: Claims by customers and third parties in respect of work carried out. Provision is made for the estimated liability in the year in which the company becomes aware that a claim may arise; and Claims on customers and third parties for variation to the original contract which are not taken to profit until the outcome is known with reasonable certainty. 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. Work in progress and stocks The value of contract work in progress is included within turnover, and, in accordance with SSAP 9 (Revised), the excess of book value over payments receivable is included in debtors as "Amounts recoverable on contracts". Payments receivable in excess of book value are included in creditors under "Contract payments on account", on an individual contract basis. In compliance with UITF 34, all pre-contract costs are recognised as expenses as incurred. If costs are incurred where it is certain a contract will be awarded, and this will result in positive cash flows, then these will be included as an asset. Stock and property work in progress are included at the lower of cost and net realisable value.


Turnover Turnover comprises the invoiced value of goods supplied and services rendered except for: Amounts recoverable on contracts, which reflect the value of work executed during the period; and Development projects when turnover 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. 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 timing differences which have arisen but not reversed at the balance sheet date.

Pensions 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 assets of these schemes are held separately from those of the group in independently administered funds. The amount charged against profits represents the contributions payable to the schemes in respect of the accounting period. Cash and liquid resources Cash, for the purpose of the cash flow statement, comprises cash in hand and deposits repayable 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 entails taking substantially all the risks and rewards of ownership of an asset, the lease is treated as a "finance lease". The asset is recorded in the balance sheet as a tangible fixed asset and is depreciated over its estimated useful life or the term of the lease, whichever is shorter. Future instalments under finance leases and hire purchase contracts, net of finance charges, are included in creditors. Rentals payable are apportioned between the finance element, which is charged to the profit and loss account and the capital element, which reduces the outstanding obligation for future instalments. All other leases are accounted for as "operating leases" and the rental charges are charged to the profit and loss account on a straight-line basis over the life of the lease.

Shaylor Group plc Annual Report 2011 Financial Statements

45


Financial Statements Notes to the financial statements 2 Operating profit 2011

2010

£000

£000

(89)

(24)

(3)

(9)

319

299

29

37

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 Assets held under finance leases and hire purchase contracts Amortisation of goodwill

63

63

567

534

-

319

24

24

9

6

Audit of the financial statements of subsidiaries pursuant to legislation

32

47

Other services relating to taxation

17

12

2011

2010

£000

£000

454

501

Hire of plant and machinery Office of Fair Trading penalty Rentals under operating leases: Land and buildings Auditors remuneration: Audit of these financial statements Amounts receivable by auditors and their associates in respect of:

3 Directors’ remuneration

Directors’ emoluments: Remuneration as executives Pension contributions

63

71

517

572

The aggregate emoluments of the highest paid director were £93,000 (2010: £105,000) and company pension contributions of £8,000 (2010: £12,000) were made to money purchase schemes on his behalf. Number of directors 2011

2010

6

6

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

46

Shaylor Group plc Annual Report 2011 Financial Statements


Notes to the financial statements 4 Staff numbers and costs The average number of people employed by the Group during the year was: Number of employees Managerial, administrative and support Site based

2011

2010

67

79

92

112

159

191

£000

£000

The employment costs were: 5,369

6,936

Social security costs

Wages and salaries

551

695

Other pension costs

193

250

6,113

7,881

2011

2010

£000

£000

111

113

2011

2010

£000

£000

8

15

5 Interest receivable

Interest receivable

6 Interest payable

Finance charges payable in respect of finance leases and hire purchase contracts On bank loans and overdrafts

47

22

55

37

Shaylor Group plc Annual Report 2011 Financial Statements

47


Financial Statements Notes to the financial statements 7 Tax on profit on ordinary activities 2011

2010

£000

£000

Corporation tax on profit on ordinary activities

205

488

Adjustments for earlier years

(100)

(27)

105

461

Current tax

The current tax charge for the year is lower (2010: higher) than the standard rate of corporation tax in the UK of 28% (2010: 28%). The differences are explained below: 2011

2010

£000

£000

Profit on ordinary activities before taxation

598

1,215

Current tax at 28% (2010: 28%)

167

340

Current tax reconciliation

Effects of: Depreciation on ineligibles

16

18

Expenses not deductible for tax purposes

22

130

Adjustments to tax charge in respect of earlier years

(100)

(27)

Total current tax charge (as above)

105

461

Factors that may affect future tax charges The 2011 Budget on 23 March 2011 announced that the UK corporation tax rate will reduce to 23% 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 a further reduction to 26% in the rate applicable from 1 April 2011. This will reduce the group’s future current tax charge accordingly and reduce the deferred tax liability at the balance sheet date which has been calculated based on the rate of 26% substantively enacted at that date. It has not yet been possible to quantify the full anticipated effect of the announced 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 26% of £124,000 (2010: £125,000 at 28%). This will only be provided when there is a binding obligation in place to dispose of the property.

48

Shaylor Group plc Annual Report 2011 Financial Statements


Notes to the financial statements 8 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 £2,816,000 (2010: £167,000).

9 Fixed assets – intangible assets Group

Goodwill £000

Cost At beginning of year

1,252

Transfer

(1,252)

At end of year

-

Amortisation At beginning of year Charge for year Transfer At end of year

151 63 (214) -

Net book value At 31 March 2011 At 31 March 2010

1,101

The goodwill arising on the acquisition of John Davies Interiors Limited is being amortised over its useful life of 20 years. The investment in John Davies Interiors Limited has been transferred to Shaylor Holdings Limited, the parent undertaking.

Shaylor Group plc Annual Report 2011 Financial Statements

49


Financial Statements Notes to the financial statements 10 Fixed assets - tangible assets Group

Long leasehold land and buildings

Leasehold improvements

Motor vehicles

Fixtures and fittings

Total

£000

£000

£000

£000

£000

1,103

255

930

572

2,860

Additions

-

-

24

40

64

Disposals

-

-

(82)

(36)

(118)

(67)

-

-

-

(67)

-

255

872

576

1,703

At revaluation

1,036

-

-

-

1,036

Total

1,036

255

872

576

2,739

At beginning of year

79

41

495

298

913

Charge for year

20

68

191

69

348

Cost or valuation At beginning of year

Revaluation At end of year At cost

Accumulated depreciation

Disposals

-

-

(72)

(35)

(107)

(99)

-

-

-

(99)

-

109

614

332

1,055

At 31 March 2011

1,036

146

258

244

1,684

At 31 March 2010

1,024

214

435

274

1,947

Revaluation At end of year Net book value

Included in the total net book value of motor vehicles and fixtures and fittings is £nil and £6,000 respectively (2010: £40,000 and £17,000) in respect of assets held under finance leases and similar hire purchase contracts. Depreciation for the year on these assets was £17,000 and £12,000 respectively (2010: £25,000 and £12,000).

50

Shaylor Group plc Annual Report 2011 Financial Statements


Notes to the financial statements 10 Fixed assets - tangible assets continued Company

Long leasehold land and buildings

Leasehold improvements

Motor vehicles

Fixtures and fittings

Total

£000

£000

£000

£000

£000

1,103

-

690

482

2,275

Transfer from subsidiary undertaking

-

255

240

90

585

Additions

-

-

24

40

64

Cost or valuation At beginning of year

Disposals Revaluation

-

-

(82)

(36)

(118)

(67)

-

-

-

(67)

-

255

872

576

1,703

At end of year At cost At revaluation

1,036

-

-

-

1,036

Total

1,036

255

872

576

2,739

79

-

382

276

737

Accumulated depreciation At beginning of year Transfer from subsidiary undertaking

-

41

113

22

176

20

68

191

69

348

-

-

(72)

(35)

(107)

(99)

-

-

-

(99)

-

109

614

332

1,055

At 31 March 2011

1,036

146

258

244

1,684

At 31 March 2010

1,024

-

308

206

1,538

Charge for year Disposals Revaluation At end of year Net book value

Included in the total net book value of fixtures and fittings is £6,000 (2010: £17,000) 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 2011, at £1,170,000. 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: “The property was valued at 31 March 2011 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 Existing Use Value, which refers to the 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 31 March 2011 (the “Valuation Report”). This is the first time that Jeremy Payne has been signatory of valuation reports provided to the Company for the same purpose as the Valuation Report DTZ Debenham Tie Leung has previously valued the property for the same purpose as the Valuation Report in 2006. DTZ Debenham Tie Leung has had a long association with the Company and has undertaken various instructions on its behalf from time to time. DTZ Debenham Tie Leung is a wholly owned subsidiary of DTZ Holdings plc (the “Group”). In the Group’s financial year to 30 April 2010, the proportion of fees payable by the Company to the total fee income of the Group was less than 5%.” All other tangible fixed assets are stated at cost.

Shaylor Group plc Annual Report 2011 Financial Statements

51


Financial section - latest:Layout 1

28/10/11

10:18

Page 15

Financial Statements Notes to the financial statements 10 Fixed assets – tangible assets continued Details of revalued assets are as follows: Land and buildings £000 Assets at valuation At 2006 open market valuation at beginning of year

1,067

Prior year additions at cost

36

Revaluation

(67)

At 2011 open market valuation and end of year

1,036

Accumulated depreciation At beginning of year

79

Charge for year

20

Revaluation

(99)

At end of year

-

Net book value At 31 March 2011 At 31 March 2010

1,036 988

Historical cost of revalued assets At beginning of year Prior year additions at cost At end of year

611 36 647

Accumulated depreciation At beginning of year

71

Charge for year

10

At end of year

81

Net book value

52

At 31 March 2011

566

At 31 March 2010

540

Shaylor Group plc Annual Report 2011 Financial Statements


Financial section - latest:Layout 1

27/10/11

17:01

Page 16

Notes to the financial statements 11 Fixed asset investments Company

Shares in group undertakings £000

Cost and net book value At beginning of year

2,860

Transfer to Shaylor Holdings Limited

(2,660)

At end of year

200

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 %

Subsidiary undertakings Shaylor Construction Limited

Construction services

100

Shaylor Special Projects Limited

Construction services, dormant from 1 April 2011

100

Shaylor Developments Limited

Commercial Development

100

Shaylor Homes Limited

Dormant

100

Shaylor Repair & Maintain Limited

Dormant

100

Shaylor Interiors Limited

Dormant

100

F.J.Shaylor (Builders) Limited

Dormant

100

Castlegate 501 Limited

Dormant

100

All holdings are ordinary shares.

12 Work in progress Group

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

Company

2011

2010

2011

2010

£000

£000

£000

£000

1,818

1,847

28

-

(359)

-

-

-

1,459

1,847

28

-

2011

2010

2011

2010

£000

£000

£000

£000

Amounts owed by Group undertakings

8,221

3,700

8,094

3,571

Trade debtors

5,032

6,745

2,882

29

Amounts recoverable on contracts

4,335

2,522

1,208

-

Other debtors

84

29

173

237

Prepayments

341

303

290

92

18,013

13,299

12,647

3,929

13 Debtors Group

Company

Shaylor Group plc Annual Report 2011 Financial Statements

53


Financial Statements Notes to the financial statements 14 Creditors: Amounts falling due within one year Group

Bank loans and overdrafts (secured – see note 15) Other loans (see note 15)

Company

2011 £000

2010 £000

2011 £000

2010 £000

41

41

-

-

1,100

-

1,100

-

Obligations under finance leases and hire purchase contracts (secured – see note 15)

7

21

7

5

Amounts owed to Group undertakings

-

-

6,039

7,270

Contract payments on account Trade creditors Tax and social security

-

-

-

-

12,708

13,381

4,575

158

198

614

179

569

Corporation tax

99

318

-

-

Other creditors

240

400

134

289

Accruals

381

421

231

70

14,774

15,196

12,265

8,361

15 Creditors: Amounts falling due after one year Group

Company

2011 £000

2010 £000

2011 £000

2010 £000

Bank loans and overdrafts (secured)

302

349

-

-

Other loans

400

-

400

-

12

21

12

21

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

71

177

-

-

785

547

412

21

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 £90,000 (2010: £131,000). Other loans represent amounts advanced by FJ Shaylor a director of the company. Obligations under finance leases and hire purchase contracts are secured on the assets to which they relate.

16 Provision for liabilities and charges Deferred tax

Group and Company £000

At beginning and end of year

20 2011

2010

£000

£000

23

23

(3)

(3)

20

20

The elements of deferred tax are as follows: Accelerated capital allowances Other timing differences

54

Shaylor Group plc Annual Report 2011 Financial Statements


Notes to the financial statements 17 Share capital Group and company

2011 £000

2010 £000

1,000

1,000

105

105

Profit and loss account

£000

Capital contribution reserve £000

448

-

7,243

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

18 Reserves Group

At beginning of year Profit for the year Unrealised surplus on revaluation of properties Capital contribution received

Revaluation reserve

£000

-

-

493

32

-

-

-

1,614

-

(10)

-

10

470

1,614

7,746

Revaluation reserve £000

Profit and loss account £000

At beginning of year

-

2,106

Profit for the year

-

2,816

Excess depreciation on revalued tangible fixed asset

Company

Unrealised surplus on revaluation of properties

32

-

32

4,922

The capital contribution received represents the waiver of the inter-company current account held by Shaylor Holdings Limited, the immediate parent company of Shaylor Group plc.

19 Acquisitions On 31 March 2011, the trade, net assets and liabilities of fellow group companies Shaylor Special Projects Limited and John Davies Interiors Limited were acquired for a consideration of £100,000 and £10,000 respectively. A summary of the assets acquired is as follows: Book and fair value at acquisition Group

Work in progress Debtors Cash at bank Creditors Bank loans and overdrafts Net assets

Shaylor Special Projects Limited £000

John Davies Interiors Limited £000

-

28

2,585

1,669

663

-

(3,148)

(1,672)

-

(15)

100

10

The balances remain as intercompany debtors due from Shaylor Group plc. Shaylor Group plc Annual Report 2011 Financial Statements

55


Financial Statements Notes to the financial statements 20 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 £193,000 (2010: £250,000). At 31 March 2011, there were outstanding contributions of ££21,000 (2010: £21,000).

21 Commitments Leasing commitments The Company and the Group have commitments for payments under operating leases relating to buildings as follows:

Leases expiring in two to five years

2011

2010

£000

£000

24

24

Capital commitments At 31 March 2011, neither the Group nor the Company had any capital commitments (2010: £nil). Other commitments The Company had liabilities under contractual performance bonds, entered into in the normal course of business, amounting to £193,000 (2010: £nil). The Group had liabilities under contractual performance bonds, entered into in the normal course of business, amounting to £562,000 (2010: £1,613,000). 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 £343,000 (2010: £390,000). 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 2011 this liability amounted to £3,304,000 (2010: £3,810,000). The Company’s liability in respect of this guarantee was £2,143,000 (2010: £734,000). In addition, there is a legal charge over the land and buildings owned by the Company in respect of Group borrowings.

22 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 2011. 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.

56

Shaylor Group plc Annual Report 2011 Financial Statements


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

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.

2011 Shaylor Group Report and Accounts  

2011 Shaylor Group Report and Accounts