Annual Review 2016
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ANNUAL REVIEW 2016 REVIEW AN INSIGHT INTO A YEAR OF SUCCESS Above all, it’s about people wates.co.uk ANNUAL REVIEW 2016 INTRODUCTION 2016 AT A GLANCE... The Wates Group, established in 1897, is one of the leading privately-owned, construction, development CONTENTS and property services companies in the UK. We employ around 4,000 people, working with a wide range of clients from across both the public and private sector. In 2016, we reported increased turnover and profits and were named Major Contractor of the Year. We were also awarded the Queen’s Award for Enterprise: Sustainable Development for the second time. INVESTORS IN PEOPLE 2016 at a glance 2 £2.13m GOLD AWARD Chairman’s Statement 4 SPENT WITH THE CCS SOCIAL ENTERPRISE 40 (CONSIDERATE SECTOR CONSTRUCTORS Chief Executive’s Review 5 % SCHEME) 28REDUCTION AVERAGE SCORE Reshaping Tomorrow 6 IN THE LOST TIME INJURY Zero Harm overview 8 RATE (LTIR) 5m Our People 10 NUMBER42 OF CONSIDERATE Wates Giving 12 CONSTRUCTORS’ 1,029 AWARDS PEOPLE Our Businesses £191.6m COMPLETING OUR GROUP CASH BUILDING FUTURES Wates Construction 14 50% PROGRAMME OFIT BEFORE TAX 17.1% REDUCTION IN £35. SES Engineering Services 16 % £1.1m 50.4 ACCIDENT FREQUENCY PROVIDED BY PR RATE (AFR) (2015-2016) Wates Residential Developments Group 18 Wates Living Space 20 Wates Smartspace 22 2,500HOMES % £172k TO SUPPORT 278 Needspace? 24 SITES74 USING RAISED TO DATE FOR GOOD CAUSES SOCIAL OUR CHARITY PARTNER ENTERPRISES THE PRINCE’S TRUST Corporate Governance Wates Group Board 26 PROJECTS COMPLETED SUPPLIERS GROUP Wates Executive Committee 28 >500,000 AND72 6,500 HOURS VOLUNTEERED (OVER £500k) HOMES MAINTAINED FOR DURING WATES COMMUNITY WEEK ARE MEMBERS OF TURNOVER HOUSING ASSOCIATIONS THE SUPPLY CHAIN Governance and Accounts AND LOCAL AUTHORITIES SUSTAINABILITY SCHOOL 2016 Corporate Governance 30 Profit and loss 32 APPRENTICES92 97.4% £1.53bn Balance sheet 33 £FORWARD3.6 ORDERbn BOOK WASTE Office addresses 34 DIVERTED Key clients 35 £1mINVESTMENT IN LEARNING FROM LANDFILL 20.4% AND DEVELOPMENT, DELIVERING OVER 4,000 TRAINING DAYS OPERATING PROFIT (EBITDA) £45.5m 980 NEW EMPLOYEES BUSINESS IN 23% (INCLUDING 350 TRANSFERRED THE COMMUNITY UNDER THE BIRMINGHAM 94% CITY COUNCIL HOUSING CORPORATE PEOPLE MAINTENANCE CONTRACT) RESPONSIBILITY (AS AT 31 DECEMBER 2016) INDEX SCORE 3,931 (3.5 STARS) 2 wates.co.uk 3 ANNUAL REVIEW 2016 INTRODUCTION CHAIRMAN’S STATEMENT CHIEF EXECUTIVE’S REVIEW 2016 represented another positive year for the Wates Group, not just in DELIVERING ON OUR STRATEGY INVESTING IN NEW HOMES raised £75,000, contributing to a total of £172,000 donated over a three year terms of strong financial performance but also in terms of our continued 2016 was another strong year in the Wates has a proud history as a home builder, partnership. Through its volunteering investment in our people and in our relationships with important development of the Wates Group. The and in 2016 we cemented our position in schemes and with the very welcome support stakeholders. These results are in keeping with our commitment to a business has experienced growth of 20% the residential sector, not only through the of Wates Giving, our people gave 6,500 from 2015, and now enters 2017 with 3,931 building of homes, but also through our long-term view of success. hours across 72 projects to support the people and a forward order book of £3.6bn. continuing work as one of the country’s communities in which we work. leading providers of housing maintenance. The Group has successfully integrated SES We maintained 500,000 affordable homes We exceeded our target for the year for (Engineering Services) Limited and the trade spending with Social Enterprises, with £2.13m We successfully integrated SES (Engineering category for the second time in a row. THE GROUP’S through our Property Services business (Wates and assets of a number of construction spent. Nearly 75% of our sites used a Social Services) Ltd and the trade and assets of a This was a great accomplishment of which COMMITMENT TO Living Space); Residential Developments projects from Shepherd Construction Limited Enterprise in 2016, and 646 of our supply chain number of construction projects from all employees should be proud, and hosting EXCELLENCE WAS delivered 721 homes with 1700 planned for “ which were acquired in 2015 and have attended the Supply Chain Sustainability Shepherd Construction Limited. the Princess Royal in our recently-renovated 2017; a further 1,198 residential units were in REFLECTED IN OUR established Wates as a major player in the Leatherhead offices for the presentation WINNING THE QUEEN’S progress by Construction and we established School during the year. We continued implementing our strategy industry, validated by the award of ‘Major ceremony was a highlight of the year. AWARD FOR ENTERPRISE our credentials as a specialist provider of of focusing on construction, property services Contractor of the Year’ at the 2016 Building The Group supports employment and IN THE SUSTAINABLE homes for senior living; 100 apartments were and residential developments, with the goal The Queen’s Award recognised that our Magazine Awards. This award reflected the training especially for those facing significant DEVELOPMENT completed in 2016 with this number set to of becoming the most trusted partner in the commitment to long-term sustainability, improvement in fortunes in our Construction barriers to employment. In 2016 the Group CATEGORY FOR THE increase to 870 in 2017. business, particularly in London, which has delivered the Building Futures programme for built environment. implemented through the Reshaping Tomorrow SECOND TIME IN A ROW. programme, is truly integrated into our business resulted in an average project value of over 115 people with funding from Wates Giving, The strong financial results reflected in this and is a vital ingredient of our success. James Wates CBE £22m in 2016, compared to around £15.8m THE JOURNEY TO ZERO-HARM with 2016 seeing the 1000th person completing report are testament to the quality and Chairman per project the previous year. the programme. The Group also aims to commitment of our people, the strength of In 2016 we bid farewell to Graeme McFaull, Keeping people safe from harm and creating engage with over 10,000 young people and our relationships with clients and partners, and who retired from the Board after many years of Wates in 2016 now has a more geographically a healthy and safe environment wherever promote the built environment through our robust financial management. The excellence service. On behalf of the shareholders, I would balanced construction business, with a the Group operates remains Wates’ number activities, which include World of Work of our management team was also reflected in like to thank Graeme, the Group’s Board of specialist mechanical and electrical engineering one priority. Since the introduction of a Tours, Careers Events and Open Doors. Building Magazine’s recognition of the Wates Directors and all employees for their hard work capability, and a non-domestic property Group-wide zero harm campaign in 2016, we Group as Major Contractor of the Year, and and continued commitment to our values of services offering growing in both reputation have seen a marked reduction in incidents: 2017 AND BEYOND Andrew Davies as CEO of the Year. integrity, intelligence, performance, and capability. in 2016 the Group‘s RIDDOR AFR was down teamwork and respect. All this took place within an evolving political Our priorities for 2017 and beyond stay true 47% from 2015 at 0.062; we achieved a 73% With a forward order book of £3.6bn, a climate during 2016, dominated by the UK’s to our long term strategic goals, putting the reduction in Dangerous Occurrences, and a strong and stable financial position and a decision to exit from the EU. The impact on the right systems, processes and people in place to 28% reduction in our lost time injury rate. clear strategy for growth, the Group is construction sector is uncertain, although we are secure our long-term growth strategy on a positioned well for the future. looking ahead, and remain focused on engaging sustainable basis. This is particularly pertinent BUILDING COMMUNITIES in a renewed effort to ensure the availability of to our Construction business, where we are James Wates CBE a stronger domestic pool of skilled labour across introducing a balanced portfolio across both The Group’s sustainability agenda, Chairman the built environment trades and professions. public and private sector clients, which we Reshaping Tomorrow, and its Delivering believe will provide greater stability in the face the Promise programme, underpinned by Even before the referendum result, it was clear Andrew Davies of expected headwinds in our sector over the its Operating Framework, ensure that it that the sector needed to change – in particular Chief Executive next two years. The recent appointment of performs consistently for its client to the by investing more in skills and modern methods Wates on to the Scape National Construction highest standards of quality and safety, of construction – and this was confirmed in the framework for the delivery of public sector while ensuring the actions we take today release of a government-commissioned report by projects, reflects this emphasis, and will be impact positively on tomorrow. Mark Farmer in October 2016. Notwithstanding reported on in our 2017 accounts and reports. the report’s stark message, “Modernise or Die”, The Group has a deep commitment to the it provided clear avenues for progress which will communities in which it works. Its financial guide the sector going forward. STRONG PERFORMANCE stability, family ownership and long-term commitment to the construction industry The government responded to uncertainty Group turnover, including the Group’s share enable it to make a tangible and positive created by the EU referendum decision with a of joint ventures’ and associates’ turnover, difference to the environment and to welcomed confirmation of its commitment to was £1.53bn.