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. This is a 20.4% increase year on communities now and for future generations. invest in infrastructure and increased availability year. Profit before tax was 17.1% up on 2015 at of housing, and the markets in which the Wates £35.5m. The Group’s gross cash increased by In 2016, we were awarded the Queen’s Award Group competes appear resilient. 49.5% to £190.4m. for Enterprise: Sustainable Development for the second time, in recognition of our work The Group’s commitment to excellence was Despite challenging market conditions, the supporting communities. reflected in our winning the Queen’s Award for consistency of the Group’s performance Enterprise in the Sustainable Development demonstrates its excellent capabilities and The Group has continued its partnership resilience in delivering for its clients. with The Prince’s Trust to help disadvantaged young people develop the skills and identify opportunities for employment. Our people

4 5 ANNUAL REVIEW 2016 INTRODUCTION

SOCIAL ENTERPRISE SPEND RESHAPING TOMORROW £2,130,613 COMMUNITIES ENVIRONMENT Skills in the built environment In addition, the increased awareness of the received, with the judges making particular Sustainability continued to acknowledged for a long time. Since the additional social value that can be generated note to our exemplary and innovative SITES USING setting of UN’s Sustainable Development continued to be at the front of through capital projects was realised by our performance in a number of areas of SOCIAL be at the forefront of business ENTERPRISES Goals for 2015 as well as the Paris Climate mind of all organisations in 2016. customers meaning social value became a education, engagement with social enterprises 74% in 2016 despite the changing Agreement, we are increasingly seeing core requirement for many of them. and our support to young people and long businesses aligning their strategies towards term unemployed. We also received our global political landscape. The Farmer Review of the construction Wates was proud to receive two prestigious these goals and putting climate risk and second consecutive Community Mark by industry – Modernise or Die – highlighted the awards during the year. The Queens Award the Business in the Community – the only The year was very much the advent opportunity at the heart of their approach continued need to challenge how we attract for Enterprise: Sustainable Development 40.04 nationally recognised accreditation for of doing business with purpose – the by setting science based emission reduction and retain the best talent in the industry. was the second consecutive award we AVERAGE community investment activities. recognition that wider stakeholders targets, renewable energy targets and CCS SCORE benefit from the work done by improving climate-risk disclosure. business – something Wates has MAKING CONSTRUCTION A CAREER GIVING CHANCES TO THOSE THAT NEED IT MOST OF CHOICE NOT CHANCE CCS 2016 saw the launch of #ThinkBuild – a DRIVING ENERGY AND CARBON ENGAGING OUR SUPPLIERS programme developed in partnership with AWARDS 42 STANDARDS Career Ready. The Wates-led programme Engaging our supply chain on our was created to inspire the next generation Significant work was undertaken in 2016 sustainability journey is fundamental if we into the built environment and provide a on collating and analysing our carbon are to deliver on our 2020 commitments. structure and sector-led approach to footprint. Following recent acquisitions, Our support to the Supply Chain school and college engagement that we finalised our new Group reporting complements the academic year and Sustainability School continued throughout ensures construction is a career of choice methodology and data to ensure all 2016, thanks to a grant from Wates Giving. not chance. The 15-month programme SUPPLIERS (>£500k) parts of the business are now captured. A series of supplier workshops were held works with students aged 16-18 on a range MEMBERS OF SUPPLY CHAIN The Carbon Trust completed independent with our supply chain to promote and raise of interventions including master classes SUSTAINABILITY SCHOOL assurance to this data and are supporting awareness of the school and its benefits. linked to a Skills for Success competency us in setting science based emission These were extremely well received and framework, work experience, work PROJECTS reduction targets. With the procurement following this we are proud to have 56% placements and mentoring. #ThinkBuild COMPLETED of electric vehicles within our of our suppliers who we spend over £500k was launched in three areas – Manchester, Success in our pre-employment programme was established with 54% of the delegates AND72 6,500 HOURS VOLUNTEERED DURING Maintenance Fleet, the appointment with as members of the school. Wates Birmingham and London with 90 students ‘Building Futures’ continued during 2016 with moving into employment or training. In 2016, WATES COMMUNITY WEEK of our single energy provider, new also achieved Gold Member Status. participating. Arcadis are corporate the 1000th person successfully completing the 11 programmes were delivered nationally with sustainability standards for our offices partners of the programme with a number programme. Our long term commitment to 129 people completing. Importantly 75% of of other companies offering pro bono the award-winning, two-week programme for delegates felt their employability skills were and a partnership with Carbon Footprint Ltd we are making significant steps support in the form of mentoring and unemployed adults ensures that we continue improved as a direct result of participating 11 BEING A CONSIDERATE COMPANY to tackle the growing skills crisis in our sector in Building Futures. Our partner Ixion BUILDING FUTURES forward towards our goal of being work experience. These include Carilliion, PROGRAMMES Kier, Bam, Wilmott Dixon, and Turner whilst providing opportunities for those that Holdings and Wates Giving continue to DELIVERED carbon neutral by 2020. The Considerate Constructors Scheme & Townsend. need it most. Over 90 programmes have been support the programme providing funding enables us to drive our standards and delivered nationally since the programme to ensure its sustainability. improve the image of the construction sector. Wates sites secured 42 awards in 1,029 2016 and our average CCS performance INVESTING IN LOCAL COMMUNITIES PEOPLE was 40.04 – exceeding that of CCS COMPLETING OUR Associate Members. sector by 2020. As ambassador to the built £1.77 of social value is created. In addition BUILDING FUTURES environment, we are influencing customers, our strategy also very much supports our PROGRAMME suppliers and peers and their spending ability inclusion agenda with 35% of Wates social through our innovative Seeing is Believing enterprises being led by women and 85% ACCESSING INNOVATION TO DRIVE SUSTAINABILITY STANDARDS Programmes where we visit social enterprises being led by Black and Ethnic Minorities. THOSE MOVING INTO in action. Through our continued EDUCATION, EMPLOYMENT Fantastic progress was made in 2016 on commitment, we have traded over £2m OR TRAINING our award- winning Wates Sustainable with social enterprises in 2016 and over £9m Technologies Programme – an initiative Supporting social enterprises continues to since establishing our programme, enabling the creation of many employment and 54% which identifies new sustainable be a key priority for Wates Group in creating £ technologies for our customers to improve sustainable communities and enabling training training opportunities. In 2016 we undertook energy, waste and water standards in of our Head Office in Leatherhead. Ensuring and employment for those furthest removed a social return on investment evaluation on £ from the labour market. We further cemented our work with social enterprises. The study buildings. A series of Customers’ ‘Dragons we commit to high sustainability standards our commitment with the launch of the in partnership with the New Economics BUSINESS IN Dens’ events were held to promote the for our own properties, we achieved SKA Buy Social Corporate Challenge in April 2016 Foundation, and funded by Wates Giving, THE COMMUNITY technologies which many customers are Silver on the Head Office refurbishment and of which Wates is a founder partner. Our looked at the additional social value created CORPORATE now installing to deliver real operational have incorporated technologies including through trading with social enterprises. The RESPONSIBILITY aim is to encourage more private sector £187,607 £331,304 % savings. Some of these technologies were Propellair Toilets, Waterblade and Savorex results found that for every pound invested 94 INDEX SCORE businesses to trade with social enterprises ‘BUSINESS AS USUAL’ SOCIAL ENTERPRISE (3.5 STARS) installed as part of the refurbishment hand dryers. and collectively invest over £1bn in the in Wates social enterprises, an additional SOCIAL VALUE SOCIAL VALUE 6 wates.co.uk 7 ANNUAL REVIEW 2016 INTRODUCTION

2020 HEALTH AND SAFETY STRATEGY

WE’RE SAFER TOGETHER LEAD THE CHANGE OUR JOURNEY TO ZERO HARM In 2016 we set about equipping our leadership population with the skills and knowledge required to create Our mission is to achieve Zero Harm through a programme of continuous improvement that the right environment to achieve addresses behaviours and embeds best practice across the Wates Group. Zero Harm. Our programme is called Lead the Change! In 2016 we put 87 TRANSFORMING BEHAVIOURS AND MENTAL HEALTH IS AS IMPORTANT of our senior leaders through the LOST TIME EMBEDDING A CULTURE OF GOOD AS PHYSICAL HEALTH programme and over the next two INJURY RATE – 0.177 DECISION MAKING years we have committed to sending During 2016 we launched our Group wide 380 leaders from across the business We aim to create a culture where people are strategy on Occupational Health. The strategy on the course. 28% engaged and empowered to look out for one provides clear direction for the business on REDUCTION another by promoting and championing the ill health prevention and promotion of health right behaviours to keep people safe, and the awareness in the workplace and has been confidence to challenge when they are not. designed to deliver our corporate objective of “Zero new cases of long term harm to 2016 was a strong year for Wates’ Safety, Health health” by 2020. and Environment performance. We achieved an overall Accident Frequency Rate of 0.06, a 50% To achieve this objective we will focus on improvement on our 2015 performance. In total three key elements: we reduced all our Lost Time Injuries by 28%. These results rank Wates as one of the leading WORKPLACE Ensuring healthier tasks on Construction and Engineering businesses in our sites and in our offices. terms of Safety and Health performance. WORKER Safeguarding worker health On average 90% of our sites and offices are TO GET FROM WHERE WE ARE by preventing occupational incident and injury free. However, in 2016 our NOW TO WHERE WE WANT ACCIDENT FREQUENCY ill-health and managing Engineering Services Business Unit recorded an TO BE IN 2020, WILL TAKE A RATE – 0.060 existing conditions. “ industry leading Accident Frequency Rate of 0.04. FUNDAMENTAL SHIFT IN THE REDUCTION Our Residential Business Unit surpassed even WAY WE DO THINGS. WE FROM 2015 this, going a whole 12 months without reporting WELLBEING Promoting and sustaining CANNOT UNDERESTIMATE THE 50% any lost time or legally reportable injury. good health and wellbeing COMMITMENT AND EFFORT for our people and the IT WILL TAKE TO CREATE THIS workforce. ZERO HARM ENVIRONMENT. AND TO DO THIS WE HAVE TO HAVE THE RIGHT LEADERS IN 30% In 2016 we improved our analysis of cases PLACE TO LEAD THIS CHANGE. REDUCTION of workplace absence, identifying that IN MEMBER OF WE HAVE TO EQUIP OUR 20% of employee absence relates to PUBLIC INJURIES LEADERS WITH THE RIGHT musculoskeletal disorders and 19% mental TOOLS AND TECHNIQUES, health issues. Acting on these findings we A COMMON LANGUAGE AND In 2016 we introduced our new approach to launched new guidance on Manual Handling UNDERSTANDING OF HOW 41,000 Safety and Health observations and promoting & Material Distribution and provided quicker, TO LEAD THE CHANGE. HEALTH AND good practice and safety behaviour. Our more accessible DSE assessments and help John Dunne, employees and subcontractors recorded 41,000 for office-based employees. We set about SAFETY WORKER Wates Group, Health, Safety safety observations, including more than 13,000 campaigning to de-stigmatise, and raise OBSERVATIONS and Environment Director RECORDED positive observations and ideas to improve awareness of, mental health. In support of safety & health on site and in our offices. this issue, and as part of our ‘We’re Safer Together’ Zero Harm strategy, mental health 2020 HEALTH AND SAFETY will be an area of focus for us during 2017 STRATEGY DON’T LOSE YOUR JOB, BOB! and we have pledged to deliver our action plan in association with Time to Change, Wates family shareholders, 96.5% At Wates we recognise that drug and other the mental health campaign. the Board of Directors, and the substance misuse is everyone’s concern. Not Executive Committee have signed WASTE only does it damage the misuser’s health, but it up to a long-term strategy that can cost the business through absenteeism and aims to achieve a Zero Harm reduced productivity. It may also increase the risk culture across the Wates Group of accidents. In 2016 we carried out 653 drug and by 2020. In 2016 we continued to alcohol tests across our live projects, representing work on our Safety, Health and DIVERTED approximately 5% of our workforce. Of these Environment strategy. tests 92% proved Negative demonstrating FROM LANDFILL progress made via our awareness campaign. 8 wates.co.uk 9 NEW 980 EMPLOYEES 4 INCLUDING 350 TRANSFERRED UNDER ,000 THE BIRMINGHAM CITY COUNCIL TRAINING DAYS HOUSING MAINTENANCE CONTRACT HEADCOUNT 3,931 AT THE END OF 2016 ANNUAL REVIEW 2016 INTRODUCTION

OUR PEOPLE

As a family-owned business we know our people are at the core of our continuing success. It’s our people who make Wates successful, and only 132TRAINEES by recruiting the best people, providing an environment where diversity, (ON PROGRAMME) opinions, inclusivity and opportunity are encouraged, will we achieve our strategic business objectives.

COMMITMENT TO EQUALITY

Our respect for people and our commitment to equality is captured in our equality, diversity and inclusion policy. We are proud to be recognised as an excellent employer through our national accreditation with C2E (Committed to Equality) which we secured in DEVELOPING OUR PEOPLE AND TRAINING 2015, and was subject to re-accreditation in 2016. We have retained our ‘Gold’ status reflecting our We continue to invest heavily in the development commitment to attracting, recruiting and retaining of our people. We recognise the need to continually the best people regardless of their background. review and refresh our training and development APPRENTICES92 (ON PROGRAMME) Our commitment to equality is enshrined in our to remain competitive in the market. Reshaping Tomorrow programme which sets out In 2016 we maintained our investment of over £1m our approach to eliminating discrimination and in learning and development, delivering over 4,000 building inclusion, fairness and respect across training days. our business. Of particular note is the launch of a Behavioural Safety Leadership programme for all our leaders GROWING OUR BUSINESS IN LINE WITH to ensure that we remain on track in our ambition OUR ASPIRATIONS to deliver a ‘zero harm’ environment across all of our business areas. The Wates Group continues to pursue a prudent but ambitious sustainable growth agenda. Key to this We will continue to invest substantial sums in the is the recruitment and development of our people. development of our people, making increasing use of e-learning modules to enable wider access to In 2016, 630 new recruits joined Wates in addition £1m training for our people, irrespective of their to the transfer of over 350 new colleagues as part geographic location. of the Birmingham City Council contract win in our Living Space business. RECRUITMENT DRIVE AND FORWARD STRATEGY We successfully completed the integration of the SPENT ON acquired businesses of the Shepherd Group and as We continue to focus on attracting new talent LEARNING AND at the end of 2016 we now employ 3931 people to into Wates, particularly through our Early Careers support our business plans. strategy. Led by a dedicated Early Careers team, DEVELOPMENT we successfully recruited 54 new trainees during 2016, bringing the overall number of trainees engaged on current Wates trainee programmes to 132. In addition, we continued to support the recruitment and development of trade apprentices across the Group, with 92 currently in employment either directly or through our dedicated Wates Apprenticeship Training Agency (WATA). NEW As members of The 5% club, an alliance of 980 EMPLOYEES 4 INCLUDING 350 TRANSFERRED UNDER ,000 companies aiming to engage young people into THE BIRMINGHAM CITY COUNCIL TRAINING DAYS HOUSING MAINTENANCE CONTRACT the workforce, we are committed to ensuring that 5% of our workforce is on a formal apprenticeship, student, or graduate training programme. We are HEADCOUNT AT THE END OF 2016 on track for exceeding our commitment over the 3,931 next five years. 10 wates.co.uk 11

132TRAINEES (ON PROGRAMME)

APPRENTICES92 (ON PROGRAMME)

£1m

SPENT ON LEARNING AND DEVELOPMENT ANNUAL REVIEW 2016 INTRODUCTION

WATES GIVING

A FOCUS ON EDUCATION, EMPLOYMENT AND TRAINING

Wates Giving provides grants to support projects in the local communities where the Wates Group works and backs the charitable efforts of Wates employees. In 2016, £1.1m was spent on charitable activities to support 278 causes across the UK. All the recipients of the As well as supporting the fundraising activities grants were proposed and championed by of Wates employees, Wates Giving also backs OUR WATES GIVING FORMS A VITAL – Wates people or the Wates family. AND TANGIBLE – PART OF OUR volunteering efforts though the award of COMMITMENT TO BEING ENGAGED The Trust has six main themes: Employment and community grants. Wates people are generous BUSINESSES “ STEWARDS OF A COMPANY THAT Training, Education, Community Building, Social providers of their time and resources for the COMBINES GOOD BUSINESS WITH Enterprise, Sustainability and Thought Leadership. causes they believe in. Awards were granted SOCIAL RESPONSIBILITY. THROUGH During 2016, Wates Giving provided a large number to a number of employees who between them THE TRUST, SET UP BY THE FAMILY of awards focused particularly on the themes hold a wide range of volunteering roles including SHAREHOLDERS OF THE WATES of Education and Employment and Training. sports coaches, music teachers, school GROUP, WE CONTINUE TO INVEST governors, scoutmasters, trustees and even These helped to fund a broad range of projects IN CHARITABLE AND COMMUNITY a mountain rescue volunteer. INITIATIVES PROPOSED AND nationwide. Schemes included the development CHAMPIONED BY WATES PEOPLE. of a new skills hub to provide vocational training COMMUNITY WEEK I WAS DELIGHTED TO TAKE ON for young people not in education, employment or training at Kirkstall Forge in Leeds and support THE ROLE OF CHAIR OF THE WATES Wates Community Week is an annual event FAMILY ENTERPRISE TRUST GIVING for an innovative organisation called The House of that gives Wates people the opportunity to DURING 2016, ANOTHER YEAR IN St Barnabas in London. This Soho-based charity WHICH WE WERE ABLE TO SUPPORT is a not-for-profit private members club whose support a local cause. In 2016, over 1,000 people SOME REALLY INNOVATIVE PROJECTS mission is to support homeless people into work took part assisting 72 local projects across the THAT WILL BRING A LASTING BENEFIT by providing work experience, mentoring and UK. Many volunteers chose to help Wates TO SOCIETY. 2016 WAS A RECORD employment opportunities. Funding was also flagship community projects such as Julia’s YEAR FOR WATES GIVING FOR provided to The Mount School, York which runs House Hospice in Wiltshire for children with SUPPORTING THE PERSONAL CAUSES an annual ‘Hovercraft Day’ to create enthusiasm life limiting conditions and ‘Renew your OF WATES EMPLOYEES. ON BEHALF OF for science, maths and creative engineering Nottingham’, helping to regenerate the THE FAMILY OUR GRATEFUL THANKS amongst schoolgirls in the area. Silverdale Community Centre. In addition, GO TO BRIAN WHEELWRIGHT WHO Wates Giving awarded a total of £40,000 to RETIRED AS OUR DIRECTOR AFTER the charitable projects involved. 16 YEARS OF SERVICE AND RESHAPING TOMORROW ACHIEVEMENT IN JULY. Wates Giving helps to realise the projects and GIVE AS YOU EARN Andy Wates programmes at the core of the Wates Group’s Chairman, Wates Giving £1.1m sustainability strategy, Reshaping Tomorrow. Wates Giving also backs the charities that Wates FOR CHARITABLE people support through the Wates Give As You ACTIVITIES TO In 2016 this included the youth employability scheme, Building Futures; the school engagement Earn scheme. This boosts employees’ personal SUPPORT 278 giving if they choose to make regular donations CAUSES programme, Build Yourself and Seeing is Believing, an initiative that showcases and promotes the from their salary. Once again, the amount raised £1.1m by the scheme increased and in 2016, £17,000 FOR CHARITABLE growth of Social Enterprises. Wates Giving also ACTIVITIES£40,000 TO helps to supports the Group’s chosen Charity was given to a wide variety of employee- SUPPORTAWARDED 278 TO of the Year, The Prince’s Trust, contributing nominated charities throughout the UK. CAUSESLOCAL CHARITIES IN SUPPORT OF WATES almost £30,000 in the year. COMMUNITY WEEK MEASURING THE SOCIAL BENEFIT A RECORD YEAR SUPPORTING £40,000 In 2015, Wates Giving introduced Social Return AWARDED TO EMPLOYEE PROJECTS on Investment (SROI) analysis to measure the LOCAL£1 CHARITIES7,000 IN SUPPORTVIA OFGIVE WATES AS impact of its programmes. Conducted by the YOU EARN In total, 120 awards involving 197 individuals COMMUNITY WEEK were made and almost £177,000 was donated in New Economics Foundation, this analysis was total to the charities that employees support extended in 2016, this time focusing on the personally, through sponsored activities from impact of Social Enterprise initiatives in order £17,000 fun runs and “tough-mudders” to cake sales and to better understand the full range of social VIA GIVE AS and economic benefits they create. The results YOU EARN sky-dives. The Trust also saw an encouraging increase in the number of applications from were extremely positive and concluded that SES, as new colleagues became familiar with the programme generates £1.77 of social value our programmes. for every £1 invested. 12 wates.co.uk 13 ANNUAL REVIEW 2016 OUR BUSINESSES

WATES CONSTRUCTION

Wates Construction continued to enjoy strong growth in 2016, Our focus on residential continues to increase following on from a successful 2015. With turnover across the as we added a number of specialist senior HEALTH SOCIAL living contracts with Audley and Signature; % ENTERPRISE Construction group up nearly 40% and new business secured further private residential developments & SAFETY 96 WASTE SPEND worth over £1.75bn, we are on track to deliver against the targets in London with Anthology in Hoxton and RIDDOR AFR 0.071, 40.79 A 58% DECREASE DIVERTED AVERAGE CCS within our strategic plan. Quintain in Wembley, plus a development 19 £691,371 at North West Cambridge to create a new FROM 2015 FROM LANDFILL CCS SCORE AWARDS student village including 269 apartments. ONE DAY PLUS 2016 was notable for a number of key at RAF Marham for the Defence AFR 0.246 - The year also saw us crowned Major projects including the on-going development Infrastructure Organisation (DIO), which 8% DECREASE Contractor of the Year at the 2016 Building at the Greenwich Peninsula with our third will house the new F-35B Lightning II Magazine Awards, a testament to our LTIR 0.246 - site; completion of the BREEAM outstanding aircraft; a trio of wins totalling £130m with 31% DECREASE 65% people, our projects and our values. Our THE SUPPLY CHAIN Central Square in Leeds and mixed-use office Select Property Group to increase their commitment to the communities in which SCHOOL MEMBERSHIP developments completed at Eastbourne provision of student housing in the north; we work continues to be key to the way NUMBER OF OF SUPPLIERS WITH Terrace and Hammersmith Grove in London. major renovation to the Grade II listed EMPLOYEES >£500k IN TRADING 47 in which we do business, and as a result of 1,060 TRAINEES Millbank House for The House of Lords, We have won significant contracts with new our successes in 2016, Construction spent and Life Safety Works at the Houses and existing clients including a £27m facility over £690k with social enterprises. of Parliament.

KEY ARNOLD HILL ACADEMY, CASE STUDY FACTS: NOTTINGHAM CASE STUDY

BREEAM Appointed as main contractor by the RATING: Outstanding. Education Funding Agency (EFA) for the condition-led construction of a new CCS SCORE: 41 three-storey academy for Arnold Hill, the STEEL: 1,600 tonnes of steel school remained operational throughout 6,500 individual pieces with 2,000 pupils and teachers on site. 46,750 bolts The £14.5m project saw the construction of 2 32,000m of primer super block extension for the upper school, and galvanising using our ADAPT schools solution model, FAÇADE: 9,500m2 of glass consisting of a three-storey steel framed 1,000m2 Corium brickwork building with a four-court indoor sports 500m2 of louvers hall and a 380-person capacity auditorium at it centre; plus refurbishment works to CONCRETE: 5,700m3 the lower school and 6th form college. Over 14,000 tonnes The result is a modern school building that blends original features with new-build extensions and associated landscaping. While 13 science labs were the EFA requirement, value engineering a different CENTRAL SQUARE, As the first speculative office scheme in and leisure offerings for tenants and the solution for science to be delivered through Leeds for over eight years, the Central general public, whilst the sky garden offers ‘dry labs’, utilising less space, enabled eight KEY FACTS: LEEDS Square development was a flagship project outstanding views across the city. With an labs provide sufficient space to meet the During the build, Wates complemented for Construction in the North East. outstanding BREEAM rating, the building school’s science requirements and enabled the curriculum for those pupils studying Completing the construction and fit-out integrates zero carbon technology and an extra 92m² to be released to make way B-Tech Construction at Arnold Hill Academy. SOCIAL ENTERPRISE: for Royhouse Properties the new building utilises BIM technologies, making it one of for a dance studio. Fifteen students were able Partnership with RBLI for all comprises 220,000 sq ft of flexible Grade A Leeds’ most technologically and ecologically to experience, first hand, the skills of wayfinder signage plastering, brick-laying, and roofing; gain office space plus retail and leisure provision, advanced buildings. The build has been also CCS SCORE: 43 accessible public thoroughfares and a central been hailed as a model of best practice an insight into how budgets are managed atrium and winter garden. The dramatic in commercial building following a site and test their knowledge on electrics. 98.5% waste diverted from landfill atrium space incorporates an impressive tour for the Forum for the Built The students also visited the live site to fully glazed winter garden providing retail Environment (FBE). see some of these skills in action. 5 apprentices on site (via the supply chain) 14 wates.co.uk 15 ANNUAL REVIEW 2016 OUR BUSINESSES NORTH EAST PRIORITY SCHOOLS KEY (COMPLETED 2016) FACTS: CASE STUDY In the spring of 2015, SES was awarded an EIGHTEEN MONTHS AGO THERE WERE SIX VALUE: £150m (18m M&E value). £18m contract by main contractor, Galliford EMPTY SITES AND NOW THE REGION BOASTS SES ENGINEERING SERVICES Try, to provide mechanical and electrical “ SIX NEW SECONDARY SCHOOLS, WHICH CLIENT: Galliford Try. (M&E) building services on schools in Alnwick, HAVE BENEFITTED NOT ONLY FROM A TRULY AWARDS WON: Bedlington, Longbenton, Seaham, Hetton- COLLABORATIVE APPROACH ADOPTED BY ALL PROJECT PARTNERS BUT ALSO FROM SES’ Constructing Excellence North East’s le-Hole and Guisborough, as part of a £150m 2016 has been a significant year for the integration of SES within the Wates Group. We have USE OF INNOVATION AND COMMITMENT TO BIM Project of the Year 2016. strengthened the management team, building on the foundation of sound engineering expertise contract awarded by the Education Funding VALUE ENGINEERING, TO ENSURE THAT ALL Agency (EFA), one of the Government’s THE BUILDINGS WOULD MEET WITH THE NO. APPRENTICES: 12. and seen significant project wins in our key strategic sectors including infrastructure, high tech privately financed batches in the Priority EFA’S REQUIREMENTS SET OUT IN THE BREEAM RATING: Very Good. and accommodation (both student accommodation and residential). School Building Programme (PSBP). SES’ early PRIORITY SCHOOL BUILDING PROGRAMME. involvement in the scheme, coupled with its SAFETY STATS/ZERO HARM: ‘build-before-we-build’ approach, was pivotal Michael Dickinson, In line with our strategy of maximising the SES won a number of national and regional North East Operations Manager, SES No working days were lost due to accidents. 1.6 MILLION benefits of BIM and prefabrication, 2016 was awards during 2016 including: in the team’s ability to successfully achieve HOURS WORKED also a busy year for our offsite manufacturing simultaneous delivery of the six major MAN HOURS SAVED: 170,000. SINCE LAST RIDDOR • Offsite Awards 2016 THE PRIORITY SCHOOL BUILDING facility, Prism. Delivering modules, plant rooms projects totalling 48,092 sqm. Through PROGRAMME HAS BEEN A NEW BUILD Best Use of MEP Prefabrication – and energy centres to our projects and ensuring hosting workshops with the client, project PROJECT WHICH HAS REPLACED A NUMBER 2016 AFR 0.04 5 & 6 Wellington Place partners and its supply chain, SES was able “ OF OUTDATED BUILDINGS, TRANSFORMING (BASED ON 1 RIDDOR quality, safety and minimising on-site hours. • RISE Awards 2016 to identify a host of commonalities proving AND ENHANCING SOME KEY EDUCATION REPORTABLE ACCIDENT) Our significant wins include a portfolio of Sustainable – Non Domestic – vital to the logistics of the build programme. FACILITIES ACROSS THE NORTH EAST. projects on the Canary Wharf and King’s Cross THANKS TO OUR EXTENSIVE EXPERIENCE OF The University of Leeds, Laidlaw Library developments in London. We continue to see Each two-storey facility, which has been THE EDUCATION SECTOR, COMBINED WITH WINNERS OF THE our average project size increase and have a • PFM Awards 2016 traditionally built using a steel framework and THAT OF OUR SUB-CONTRACTORS, SUCH BRITISH SAFETY COUNCIL brick, is shaped like an ‘E’ with a main dining hall INTERNATIONAL strong pipeline in all sectors. Partners in Expert Services – Single Site – AS SES, WE HAVE DELIVERED HIGH QUALITY SAFETY AWARD Queensferry Crossing with PTSG and sports hall facilities at the spine of the AND BEST VALUE LEARNING ENVIRONMENTS FOR 21ST During 2017 we will complete the landmark building, and classroom and technology blocks THAT SUPPORT IMPROVED EDUCATIONAL 2016 CONSECUTIVE Queensferry Crossing over the Firth of Forth SES works for main contractors, developers ACHIEVEMENT. THE PROJECT HAS YEAR extending at right angles off these common as well as our high-end residential schemes at and end users and differentiates through strong facilities. The one exception is Laurence Jackson DEMONSTRATED HOW COLLABORATIVE King’s Cross and Barts Square. in-house design, engineering, accredited BIM School, where the existing sports facilities have WORKING DELIVERS THE BEST RESULTS. expertise and, of course, our professional been fully refurbished to bring them up-to-date Jeremy Barnett, and skilled workforce. and in keeping with the new building. Operations Director, Galliford Try TRAINEES (STUDENTS – ENGINEERS & 36 SURVEYORS) LONDON GASHOLDERS KEY FOR CARILLION PLC AND KING’S CROSS CENTRAL LIMITED PARTNERSHIP FACTS: 4,890 CASE STUDY OBSERVATION Set in King’s Cross – one of the largest areas logistical and health and safety issues. In In excess of 12,500 hours off site. AND STOP/GO of central London to be developed in the past addition, SES is delivering all the main service CARDS COMPLETED 150 years – the circular Gasholders project is risers covering six riser shafts each extending The three Grade-II listed megastructures are known colloquially as the ‘Siamese a pioneering example of cutting-edge offsite up the three gasholders incorporating 1.7km of Triplets’ because their decorative frames UTILISING PRISM TOOK manufacturing and prefabrication. Housing finished and tested pipework, ductwork and and riveted lattice girders are connected 145 luxury apartments, the project is the sixth electrical containment. The project has been 190,000 MAN HOURS by a common spine. OFF-SITE Mechanical & Electrical (M&E) design and build set with high offsite manufacturing targets; as project for SES Engineering Services on the King’s well as the circular modules SES has delivered The King’s Cross development is set to Cross site. Working alongside main contractor the 3D BIM modelling for prefabricated M&E transform the heart of Central London Carillion, and developer King’s Cross Central service risers, full take-offs and cut lists for with the creation of 50 new buildings, Limited Partnership, SES is delivering full M&E the basement plant areas and corridors. 2,000 new sustainable homes, 20 new works on three ground-breaking circular streets and 10 new public squares. residential buildings which will sit within the EVERYONE INVOLVED WITH THIS PROJECT IS AWARDS WON: APPRENTICES37 original Grade II-listed, cast-iron gasholder DETERMINED TO DELIVER AN EXCEPTIONAL Will Newman, Operations Manager, 6EMPLOYEES77 guide frames. After the success of offsite BUILDING, WHICH IS A COMPLETE ONE-OFF: London and South East achieved a ‘Highly manufacturing on the nearby Plimsoll Building “ IT WILL BE SOMETHING TO BE HUGELY Commended’ at the Offsite Awards 2016 (P1) where offsite manufacturing techniques PROUD OF WHEN IT IS COMPLETE. PEOPLE, in the Offsite Professional of the Year were used to design and install 255 service MANAGEMENT, TIME, THESE ARE ALL BIG FACTORS, BUT USING OFFSITE TECHNOLOGY category for the King’s Cross projects. cupboard modules, containing all essential 98% AND PREFABRICATION IS WHAT MAKES OFFICE mechanical and electrical plant and equipment, SCHEMES LIKE THIS POSSIBLE. THE WHOLE NO. APPRENTICES: WASTE DIVERTED the same technologies are being applied to PROCESS IS BUILT ON MUTUAL TRUST. 14 throughout the project. FROM LANDFILL install more than 300 (due to services being split) HAVING SES AND CARILLION INVOLVED cupboard modules at the new Gasholders build. MEANT WE COULD COME TO AN AGREEMENT BREEAM RATING: Very Good. The project presents the additional challenge QUICKLY AND THEY COULD BEGIN TO SAFETY STATS/ZERO HARM: DIGITAL ENGINEERING TEAM of ensuring M&E solutions are designed for a INFORM THE EMERGING DESIGN WORK TO PRODUCED DESIGN AND BIM ON ENSURE THE SCHEME WAS DELIVERABLE. SES has completed over 191,000 man circular building. By creating the modules offsite, 9 MAJOR PROJECTS IN 2016 hours on the Gasholders project whilst WITH A COMBINED PROJECT SES avoided multiple trades on site working in Tom Goodall, VALUE OF £115m maintaining an Accident Frequency a congested area, along with the associated Senior Projects Director, Argent Rate (AFR) of 0.00. 16 wates.co.uk 17 ANNUAL REVIEW 2016 OUR BUSINESSES WATES DEVELOPMENTS CASE STUDIES

EAST MOLESEY, SURREY

Adjacent to Green Belt and an inlet of the Thames, Wates Developments secured WATES RESIDENTIAL a significant change of use consent in 2016, releasing protected commercial land to create 95 homes. This followed four years of planning promotion and gained excellent local support. The land was openly marketed and sold to CALA Homes DEVELOPMENTS GROUP for £28.0m, with CALA due to commence development shortly.

The business delivered a record year in land, contracting and residential development with exceptional returns from our activities. Our ambition to invest and grow our business in residential markets throughout the UK continued, with our focus on customers and partners BASINGSTOKE

in opportunities on both public and private sector land. We have a wide range of development joint homes in Basingstoke, demonstrated ventures across the South with partners such the demand for quality housing schemes, NEW STRUCTURE, CAPTURING SYNERGIES CONTRACTING AND DEVELOPMENT as Barratt, Linden and Miller Homes. Our new post-EU Referendum, quickly becoming joint venture with Linden to provide 310 new our fastest-selling development. 2016 witnessed the first year of a new structure We experienced strong growth across both our for residential activity in Wates, bringing our contracting and development activities throughout 39.4 Residential and Developments businesses together the year, including the Cardiff Living development within the newly formed Wates Residential partnership (with City of Cardiff Council). This Developments Group (WRDG). The businesses will deliver 1,500 homes across 40 sites over a remain independent but share a joint Board to 10 year period in the city, all on public sector capture synergies. As we grow with a broadened brownfield land. Planning consent has already AVERAGE spectrum of activity, our capability in contracting, been secured for 353 homes across five sites, and development with home sales is now aligned with the team set to commence construction CCS SCORE with our land promotion, planning and land of all five developments by summer 2017. trading experience. Key wins for 2016 included a contracting and development agency project with Rotherham CCS THE CHALLENGE OF BREXIT Metropolitan Borough Council to deliver almost AWARD 200 homes and a £52.8m contracting scheme with Understandably, the outcome of the 2016 EU London Borough of Camden Council. Further GOLD referendum presented an additional challenge highlights included the start on site of a 62 home AT ERITH PARK as land and housing markets reacted nervously joint venture scheme with Trafford Housing Trust during the periods before and following the and excellent progress on the second phase of PHASE 2 vote. However, the clear focus of our teams, the Erith Park regeneration programme. combined with the quality of our schemes Our business views the public land and ensured a strong recovery towards the end of development sector as a huge growth opportunity the year, delivering record returns in excess of WATES RESIDENTIAL CASE STUDIES that is fully aligned to the Government’s 22% return on capital employed (ROCE). objective of boosting the UK’s housing supply. SOCIAL ENTERPRISE BUTLER’S CRESCENT, DUDLEY NEW HOMES SPEND Wates Residential commenced the redevelopment In Wates Developments we have seen consistent IN 2016: of the former Dudley Guest Hospital site in and exceptional profit performance, up 22.3% on £226,000 November 2015, having acquired the site from 2015, whilst growing the scale of controlled land the Homes and Communities Agency. In total and sites in planning. The portfolio now has the 1000+ 2,000 157 new homes including 30 refurbished properties potential to deliver over 11,000 homes over the ✔NEW HOMES IN will provide a new lease of life for the historic site, next 10 years, two thirds of which are allocated in HOMES JOINT VENTURES alongside the full restoration of the locally listed emerging Local Plans. 2016 also saw a record year BUILT AND GROWING porter’s lodge. Wates Residential will sell 118 of in private house sales from our joint venture these homes on the open market, with the partnerships with leading housebuilders, up 26% on remaining 39 available for rent through Dudley 2015 and at an average price just under £530,000. EXCELLENT HULL EXTRA CARE PFI Metropolitan Borough Council. HEALTH & SAFETY APPRENTICES75 Construction of 316 Extra Care FROM RESIDENTIAL CONTRACTOR TO NATIONAL DEVELOPER PERFORMANCE apartments across three sites in Hull ZERO ACCIDENTS saw Wates Residential deliver this With a new corporate identity and proposition for 0.00 – LTIR scheme in partnership with Riverside 2016, Wates Residential completed 646 new homes 0.00 – AFR and Hull City Council. The £69.0m for seven local authority and housing association programme, due for completion in 2017, partners in the year. The business continues its will provide residents with a balance transition from residential contractor to national PEAK CAPITAL of independence and privacy, with the developer, with housing association joint ventures, INVESTED knowledge that care is available as development partnerships and open market sales 211 and when required. schemes complementing a strong base of high £110m EMPLOYEES profile contracting projects. 18 wates.co.uk 19 ANNUAL REVIEW 2016 OUR BUSINESSES

WATES LIVING SPACE BIRMINGHAM CITY COUNCIL CASE STUDY As one of the UK’s leading providers of planned and responsive maintenance services in the Birmingham City Council appointed Wates full time employment, engaging eight work social housing sector, Wates Living Space maintained over 500,000 homes across the UK in 2016. Living Space in November 2015 to deliver its experience students and supporting over flagship housing repairs, maintenance and 300 local students through careers workshops REREPPAAIRSIRS investment programme across two areas and education activities. EEAACHCH Y YEEAARR As a result, the business is synonymous Bedfordshire Pilgrims and Guinness Housing. 90,00090,000 covering approximately half of the city’s with consistently delivering excellent service We were also very pleased to retain all of The team has also committed to supporting council housing stock, valued at £45m. and improving the communities in which our key contracts including Clarion (formerly the wider community through the delivery Mobilised in April 2016, this is one of the we operate. Circle 33 and Circle Mercian). These contracts of a Wates Building Futures employability largest social housing maintenance demonstrate that the strategy of growing a skills programme for 12 local, long-term One of the major highlights of the year contracts in Europe. long term sustainable business is very much unemployed candidates, providing DIY was the successful mobilisation of one of being delivered, and with the on-going During the contract period, over 190 vans workshops to residents about to receive Europe’s largest Housing Maintenance £80,000£80,000 1,1475,475EMPLEMPLOYEESOYEES investment in people and systems Living will operate across the city and over 260 the keys to their new homes as part of INVESTEDINVESTED IN IN 1,475 contracts with Birmingham City Council. INVESTED IN Space has the infrastructure to continue maintenance operatives will carry out housing the council’s House-2-Home project. LOCALLOCAL CHARITIES CHARITIES On 1 April 2016 we successfully TUPE’d across ANDAND GOOD GOOD CAUSES CAUSES our growth. improvements and gas services at over 31,000 AND GOOD CAUSES 365 staff and seamlessly commenced the To reduce our environmental impact on the properties in west central and east Birmingham. day to day, gas, and planned maintenance In 2017 the focus continues to be on city, Wates Living Space also trialled electric for 34,000 properties. To date we have delivering excellent contracts to all of our As part of its presence in the city, Wates vehicles on this contract in 2016, with the aim delivered over 100,000 repairs to the customers, and creating long term social value Living Space has also pledged to ensure that of moving towards a carbon neutral fleet in 33 Birmingham properties, with high levels of in the communities in which our residents its work brings with it a host of training and 2017. The team also recycled 98% of site 2,3002,300 CCSCCS A AWWAARRDSDS customer satisfaction. This is an excellent live. A key pillar of this is the annual employment opportunities for local people. waste and worked with 44 local companies VVAACANTCANT PROPERTIES PROPERTIES example of Living Space’s capability to commitment we make to invest in social In 2016 this included supporting 12 apprentices, within a 20 mile radius, bringing an economic RETURNEDRETURNED TO TO USE USE deliver large scale maintenance contracts. enterprises. In 2017 Living Space will spend four of whom have since progressed into boost to Birmingham’s SMEs. a minimum of £1m with social enterprises SOCIALSOCIAL In addition to Birmingham, a number of PROVIDING SOCIAL VALUE AND SOCIAL demonstrating our credential as a long ENTERPRISEENTERPRISE other new contracts commenced in 2016 CREATING EMPLOYMENT, SKILLS SPEND term force for good. SPENDSPEND including Network Housing, Family Mosaic, AND TRAINING OPPORTUNITIES “ FOR LOCAL COMMUNITIES WAS AN IMPORTANT ELEMENT OF £878,793£878,793 THE PROCUREMENT FOR THESE CONTRACTS. IT IS THEREFORE VERY ENCOURAGING TO SEE WHAT HAS BEEN ACHIEVED BY WATES HEALTHHEALTH LIVING SPACE IN ONLY THE FIRST && SAFETY SAFETY 8080 YEAR OF THE CONTRACT. RIDDORRIDDOR AFR AFR 0.046 0.046 BUILDINGBUILDING John Jamieson, IN 2016 COMPARED Head of Asset Management, APPRENTICESAPPRENTICES37 ININ 2016 2016 COM COMPAREDPARED FUTURESFUTURES 3737 Birmingham City Council WITHWITH 0.056 0.056 IN IN 2015 2015 PARTICIPANTSPARTICIPANTS Wates Living Space Business Director, Stewart Reid with Martin Tolley, Birmingham City Council.

HACKNEY COUNCIL The team operates from a co-located I WANTED TO EXPRESS MY project office with Hackney’s contract THANKS AND SINCERE GRATITUDE CASE STUDY team, helping to cement its strong working “ TO WATES FOR THE RENOVATION relationship with the client and ensuring OF MY KITCHEN AND BATHROOM. %OFOF PROPERTIES PROPERTIES 9797HANDED%% OVER DEFECT-FREE the immediate resolution of any issues that THE JOB WAS DONE ON TIME HANDEDHANDED OVER OVER DEFECT-FREE DEFECT-FREE Wates Living Space was appointed by arise. As a result, Wates Living Space has AND TO A HIGH STANDARD, YOUR Hackney Council in October 2015, alongside exceeded client expectations, with customer OPERATIVES WERE COURTEOUS, three other contractors, to provide planned satisfaction levels in 2016 recorded at 90% and POLITE AND ALWAYS ON TIME and responsive maintenance programmes 97% of properties handed over defect free. AND SPARED NO EFFORT TO across 31,400 properties in East London PLEASE. AS A RESULT OUR HOME 31,40031,400 under a four year framework agreement. Wates Living Space is committed to leaving HAS BEEN TRANSFORMED. THANK PROPERTIESPROPERTIES a lasting legacy in the communities where MAINTAINEDMAINTAINED Works include kitchen and bathroom YOU FOR A JOB WELL DONE. we work and is set to achieve a social value replacements, interior refurbishment works, return on investment in Hackney of £6.6m. Resident of Kingsdown House, window replacements, re-roofing works, This includes initiatives such Building Futures Hackney EWI installation, electrical rewiring, asbestos courses for long-term unemployed adults surveys and removal, boiler replacements 90%% in Hackney, working with local schools and Hackney Community College and Bootstrap 90CUSTOMER and heating system repairs. CUSTOMERCUSTOMER colleges to provide apprenticeships and work Company, a social enterprise providing SATISFACTIONSATISFACTION placements and donating unused materials to workspace for local small businesses. 20 wates.co.uk 21 ANNUAL REVIEW 2016 OUR BUSINESSES

WATES SMARTSPACE

Wates Smartspace delivered a strong performance in 2016, 39 AVERAGE enjoying continued growth, with an 18% increase in turnover. CCS SCORE

This growth was supported by our position on a 24 hours a day, seven days a week, across all number of key frameworks. As a result, 80% of corners of the UK. This outstanding performance projects in 2016 were procured either through was recognised at the Wates Group’s Chairman’s CCS PROJECT DOVE this route or through existing contracts with long Awards in 2016, where our people received AWARDS CASE STUDY term clients. Notable framework appointments awards under the categories of Safety, Health 11 With its expertise in delivering high quality image of construction. This included regular in the year included Gatwick, HSBC and the and Environment and Creating Value. North West Construction Hub. We also secured fit-out works in live environments, Wates communication with both building users At the CCS National Site Awards for 2016 we additional projects with key partners including Smartspace was the perfect fit to deliver the and local residents, working with two local received the Most Considerate Site Award SOCIAL Wates Group’s head office refurbishment social enterprises on site and hosting two Co-op, Marks and Spencer, GSK and Royal Mail. ENTERPRISE (£500k+) for M&S, Dulwich. SPEND in November 2016. school visits for local students from Therfield The facilities management side of the business, We are constantly looking at ways that we can Secondary School. Wates Smartspace FM, also enjoyed a successful Our flagship headquarters building in support our customers and, in 2016, Smartspace 2016 and has now become a core offer since its £105,908 Leatherhead, Surrey houses over 300 As part of our commitment to the launched Wates Sustainable Technology acquisition in 2015. New contracts secured in 2016 construction experts and had a visit planned environment, the team installed electric car Services. This enables the business to act as an included prestigious brands such as the Discovery by HRH Princess Anne for 22 November to charging points, created green travel and innovation broker by showcasing new energy Channel, Mott MacDonald, the Canadian High % present the Group with the Queen’s Award waste plans and re-used over 60% of office saving technologies to its customers through a 97.5 finishes, the installation of new workstations, Commission and Twycross Zoo, in addition to WASTE DIVERTED for Enterprise: Sustainable Development. furniture in the new building – meaning series of ‘Dragons’ Den’ style pitches. We were the refurbishment of bathrooms and the contract extensions with all existing FM clients. FROM LANDFILL This provided a critical end date for all works. 100% of construction waste was diverted delighted to be recognised for this industry- realisation of a floor to ceiling glazed façade from landfill. This solid performance across the Smartspace leading initiative in 2016 with a London The 32-week programme included the at the centre of the building, which now business is underpinned by our high performing Construction Award for Build Excellence. complete re-modelling of existing building houses a welcoming new reception area. The building will now be managed by a teams who deliver safe, high quality programmes 52% services, building-wide refurbishment of all A marketplace-style restaurant was created, dedicated team from Wates Smartspace FM. SUPPLY CHAIN providing an inviting space for building users SCHOOL MEMBERSHIP OF SUPPLIERS WITH to eat and network with colleagues. CASE STUDY THE CO-OP >£1m IN TRADING At the peak of work, over 50 operatives were based on site, working to transform the Wates Smartspace has delivered over 700 HEALTH building into a modern, spacious working store investment projects for the Co-op & SAFETY environment across 11 phases, within a busy, since it started working with this customer LTIR IS 0.120 (2016) live environment. FROM 0.215 (2015). in July 2014. Now a trusted partner, we have a Wates Smartspace received a Considerate 30-strong team of construction professionals Constructors Scheme Gold Award, who work alongside the client within recognising our efforts to improve the co-located space at the Co-op’s head office in Manchester. In July 2015, Wates Smartspace was appointed to deliver the Co-op’s Capital Investment Programme, A UNIFIED APPROACH TO FM WAS designed to help it keep pace with statutory 415 EMPLOYEES FUNDAMENTAL IN OUR STRATEGY requirements and enhance the customer’s in-store CASE STUDY DLA PIPER OF DELIVERING A QUALITY, CONSISTENT experience. This includes compliance works, “ SERVICE. THE RELATIONSHIP IS additional store investment and back-of-house OTHER KEY STATS Wates Smartspace FM is a longstanding unique dynamics of this demanding arena. DEVELOPING VERY WELL. expansion projects to support in-store partner of global law firm, DLA Piper, as its For DLA Piper, facilities down-time is not an merchandising requirements, at locations Paul Johnson, facilities management delivery partner option our team ensures that every building spanning the length of the country, from Devon Head of UK Facilities at DLA Piper LLP since 2012. is fully functional 24 hours a day, seven days to Lerwick. In 2016 Wates Smartspace delivered a week so that our client can rise to the 369 complex and challenging projects through CUSTOMERS This £10.5m contract sees Wates Smartspace 71 challenge anywhere in the world, day or night. the Co-op’s Capital Investment Programme. FM deliver mechanical & electrical (M&E) An important element of the support that To support this ambitious programme, the team works, fabric building services, reactive and The Smartspace FM team is measured we provide to DLA Piper is a dedicated developed an innovative delivery partner model project works through a hybrid model of against a robust service level agreement, Legal Sector Account Director to oversee which enables them to work as an extension of resident on-site engineers and mobile accessible by the client in real time though exceptional standards of engineering, safety the Co-op’s construction department to undertake 1,961 SITES operatives across 10 of DLA Piper’s UK sites, our Concept Evolution system. In 2016 alone, and service management so that we can feasibility studies, identify priority sites and spanning from London and the Midlands 4,862 reactive jobs were recorded through provide tangible value to the client’s estates formulate a programme of works for each store. to the North West and Scotland. this system, demonstrating the flexible team. As a result, there have been zero This has resulted in the continued on-time approach of our engineers in ensuring that accidents or security breaches during With a wealth of experience in the legal sector, delivery of the Co-op’s substantial store operational priorities are met at short notice. Smartspace FM’s tenure. Wates Smartspace FM is sensitive to the investment programme. % FRAMEWORKS / 80LONG-TERM CONTRACTS 22 wates.co.uk 23 ANNUAL REVIEW 2016 OUR BUSINESSES

NEEDSPACE?

Needspace? focuses on providing entrepreneurial communities for the growing number of SMEs across London and the South East. It owns and operates six business centres providing a range of offices, workshops and studios on flexible terms.

NEEDSPACE? IS PROUD Despite the concerns on how Brexit might first full year of trading and ended the year at OF THE FACT THAT WE impact SMEs and occupier demand in London 98% occupancy. Our portfolio outside London “ NOW PROVIDE MANAGED and the South East there continued to be strong also performed well with occupancy increasing SPACE TO OVER 160 demand for our quality spaces which we price at both Horsham and Crawley. Total portfolio SMALL BUSINESSES competitively. This led to a record performance occupancy rose 4% to 85%. CORPORATE ACROSS A BROAD RANGE from the Needspace? business in 2016. Turnover Needspace? is proud of the fact that we OF SECTORS WHICH IN increased by nearly 20% to £2.75m, meanwhile now provide managed space to over 160 small GOVERNANCE TURN EMPLOY OVER profit before valuation rose 43% of £961k. 850 PEOPLE. businesses across a broad range of sectors The strong performance was mainly as a result which in turn employ over 850 people. of sustained high levels of occupancy at Clapham The business continues to search for new North Art Centre which has been full for over properties, with a particular focus on London 18 months and continued growth at St. Marks and in 2017 will occupy a new property Studios in Islington which benefited from its in Clerkenwell.

NICKO TOYS AND ASHDOWN HOME STORES... CASE BALANCING THE NEEDS OF TWO BURGEONING BUSINESSES STUDY Needspace? was delighted in December to welcome entrepreneur Simon Nickols to NEEDSPACE? COULDN’T HAVE a four workstation office in Crawley Business Centre, from which he will be running BEEN MORE HELPFUL; THE MOVE his home fixtures and fittings retailer, Ashdown Home Stores, and Nicko Toys. “ WASN’T AT ALL STRESSFUL AND This follows a move from his own local premises as the businesses expand. WE’VE SETTLED IN QUICKLY. IT’S REALLY HANDY FOR THE “Nicko Toys imports a range of children’s STATION AND THERE’S PARKING, wooden balance bikes and trikes, perfect BOTH OF WHICH WILL HELP for teaching young children the basics WITH OUR NEXT STEP, WHEN I’LL of balancing without stabilsers so when BE LOOKING TO RECRUIT A NEW it’s time to upgrade to a real bike, it’s easy PART TIME MEMBER OF STAFF and fun – not to mention less stressful AS WE CONTINUE TO GROW. for parents! We receive containers of Simon Nickols 3,000 bikes a time, and the business Managing Director, Nicko Toys has now grown to the point where it’s beyond what I can practicably manage myself so I took the decision to Simon has also located his other outsource the warehousing and order business at Crawley, Ashdown Home processing to a fulfilment house. Store, a specialist online retailer of a range of home fixtures and fittings “My own premises are very local, but with including kitchen and bathroom no current need for the warehouse now, taps, showers, light switches and I needed to let my office together with plug sockets. it. I was able to find a tenant very quickly, but I needed to find a new office for myself equally fast! Fortunately, Crawley More information: nickotoys.co.uk Business Centre is really close and it was or ashdownhomestore.co.uk the first and only one I needed to see; I was sold immediately. It’s nice and smart, and having the receptionist was a real draw as it means I’m not tied to the office for deliveries and collections.

24 wates.co.uk 25 ANNUAL REVIEW 2016 CORPORATE GOVERNANCE

WATES GROUP BOARD

JAMES WATES CBE | Chairman ANDREW WATES | Director ANDREW DAVIES | Chief Executive DAVID BARCLAY | Independent Non-Executive Director

James joined Wates Construction in 1983 Andy joined the Wates Group in 1995 Andrew joined Wates in January 2014 as David was appointed Non-Executive and the Wates Construction Board as having spent six years gaining experience Chief Executive, following a long and Director of Wates Group in December Marketing Director in 1994. He was of the construction industry with Costain successful career at BAE Systems, where he 2012 and is the Group’s Senior appointed to the Wates Group Board in Construction and John Shreeves & held a variety of senior management positions. Independent Director. He is Chairman 1997 and became Chairman in 2013. He is Partners. Formerly the Managing Director A graduate of Sheffield University, Andrew of the Remuneration Committee and a also Chairman of the Nominations of Wates Interiors, Andy was appointed joined British Aerospace in 1985, where he member of the Audit and Nomination Committee. to the Wates Group Board in May 2011 worked in management positions in the Committees. He also holds Non- and is a member of the Nominations company’s commercial aircraft business. executive positions with Wessex Water Outside the Group James is involved Committee and of the Remuneration After leaving British Aerospace for an overseas and The British Library, where he is with several industry bodies, reflecting his Committee. He chairs the Wates Family position in Abu Dhabi, Andrew returned to Deputy Chairman and Chairman of the dedication to promoting the construction Enterprise Trust. In 2014 Andy was aviation in BAE, where he occupied roles in Remuneration Committee. He was sector as well as ensuring access to appointed Chairman of Construction BAE’s Commercial Aircraft Division, was appointed to the Board of YTL Land & employment opportunities for all. He is Youth Trust, as well as a member of the Managing Director of the company’s Land Property (UK) Limited on 13 March 2017. Chairman of the Construction Industry IFB Policy Committee. In the following Systems Division, and Group Strategy Director, He is former Non-Executive Deputy Training Board, Chairman of the BRE Trust, year Andy was appointed Chair of Wates sitting on BAE’s Executive Committee. He Chairman of the John Lewis Partnership Co-Chairman of Build UK, Past President Foundation and Chair of IFB South East was most recently Managing Director of and Vice Chairman of Dresdner of the Chartered Institute of Building, a Region, along with becoming a Board BAE Systems’ £2.2bn Maritime business. Kleinwort, the investment bank. Earlier Member of the CBI, a Trustee of The member of the European Family in his career, he spent ten years in the University College of Estate Management, At Wates, Andrew chairs the Executive Businesses. He also holds an MBA from UK civil service, including two years as a Member of the government’s Committee and the Sustainability and Roffey Park Business School. private secretary to the then Prime Apprenticeship Delivery Board, and a Corporate Responsibility (CR) Committee Minister, Margaret Thatcher. Non-Executive Board Director of with overall board level responsibility for Argent Services LLP. CHARLES WATES | Director our approach to sustainability and CR. In 2016 he was named ‘CEO of the Year’ by Building James is also Chairman of the think tank DEENA MATTAR | Independent Non-Executive Director Charlie is a chartered surveyor with Magazine and was shortlisted as CEO of the Tomorrow’s Company, Chairman of The over fifteen years’ experience in the Year at the 2016 National Business Awards. Deena was appointed Non-Executive Prince’s Trust Corporate Advisory Group commercial property sector. He is Andrew was appointed Non-Executive Director of Wates Group in February (2017), Vice Chairman of the Queen founder and joint Managing Director of Director of Chemring PLC in May 2016. 2013 and is Chairman of the Audit Elizabeth’s Foundation for Disabled People, Needspace?, the Wates Group managed Committee and a member of the a Governor of the Emanuel School and workspace division which now comprises Remuneration Committee. She is also the University of Westminster, and a a portfolio of six properties across DAVID ALLEN | Chief Financial Officer and Company Secretary an independent non-executive of the Patron of the Wates Family Enterprise London and the South East. Charlie joined Grant Thornton UK LLP Partnership Trust. In January 2012 James was awarded David joined Wates as Chief Financial Officer the Wates Group Board in May 2011 and Oversight Board. Until its 2014 sale to the CBE for services to construction and and Company Secretary in January 2016. He is a member of the Property Investment Schneider Electric Deena was a the charitable sector. is responsible for the financial affairs of the Committee. In addition, he is a member Non-Executive Director of the global Group and also has board level responsibility of the British Council of Offices, the technology company Invensys and for Information Technology and for the British Property Federation and a director Chairman of its Audit Committee. TIMOTHY WATES | Director Needspace? managed workspace business. of the British Centre Association. Charlie She is a Non-Executive Director and Tim started his career at Cazenove & Co. is on the Board of Management, Estates Before arriving at Wates, David was Chairman of the Audit Committee for in the City, prior to joining the Wates Committee and Finance Committee of Crossrail’s Finance Director and one of the information and communication Group. He is a member of the Audit the Royal Alexandra & Albert School the three Executive members of the £15bn technology company RM, which Committee and the Nominations in Reigate. project’s board. He had joined Crossrail in provides IT products and services to Committee. He is Chairman of the Wates March 2009 from Laing O’Rourke, where educational institutions. Deena started Family Council – the Family Shareholder he was Finance Director for its European her career with KPMG in their property forum – and leads on housing issues JONATHAN WATES | Director Construction business. and construction division, later joining for the family. Tim is a UKTI Business Kier Group and becoming the Group Having started his career at Grand Prior to entering the construction industry in Ambassador, Chairman of the Coast to Finance Director. Metropolitan (now Diageo), Jonny joined 2004, David worked in Accenture’s Strategy Capital Local Enterprise Partnership and Wates Developments in 1995 and later Consulting practice and HSBC Investment a Non-Executive Director of Tampopo held the position of Group Marketing Bank’s Corporate Finance & Advisory Division. and Pedder Property. Tim is a Trustee Director until 2006. He was appointed to of various Wates Family charities and a David began his career with Arthur the Wates Group Board in 2008. Jonny is Trustee Director of the Clink Charity. Andersen’s Tax Practice, is a Chartered a Trustee of the Wates Family Enterprise He is on the Advisory Board for the Accountant and holds a degree in Modern Trust and the William Wates Memorial Judge Business School, University of History from St. Peter’s College Oxford. Trust and has an MBA from Cranfield Cambridge and is a Deputy Lieutenant University. He has a particular interest for Surrey (2017). in sustainability and is currently studying for a Masters in Sustainability Leadership at Wolfson College, Cambridge. 26 wates.co.uk 27 ANNUAL REVIEW 2016 CORPORATE GOVERNANCE

WATES EXECUTIVE COMMITTEE

The Executive Committee consists of ten individuals responsible for the strategic business units and key functions. Together they are responsible for the day to day management of the Group’s business affairs under the leadership of the Chief Executive. This includes formulating strategy proposals for Board approval and ensuring that the agreed strategy is implemented in a timely and effective manner. GOVERNANCE AND ACCOUNTS

ANDREW DAVIES DAVID ALLEN STEPHEN BEECHEY DAVID BROCKLEBANK Chief Executive Chief Financial Officer Group Strategy Director Managing Director, and Company Secretary and Managing Director, Wates Residential Government Affairs Developments Group

HELEN BUNCH PAUL CHANDLER JOHN DUNNE DAVID MORGAN Managing Director, (FROM 2017) (FROM 2017) Managing Director, Wates Smartspace Group Managing Director, Group Safety, Health, Wates Living Space Wates Construction Group Environment and Quality Director

PAUL ROWAN STUART TOGWELL Group HR Director Group Commercial Director

28 wates.co.uk 29 ANNUAL REVIEW 2016 GOVERNANCE AND ACCOUNTS For the full 2016 Corporate Governance Report contact Deborah Hawkes, Company Secretariat at [email protected]

2016 CORPORATE GOVERNANCE

UK CORPORATE GOVERNANCE CODE A formal schedule of matters reserved for BOARD OF DIRECTORS operational matters, market conditions, COMMITTEES Nominations Committee Board approval is maintained, including sustainability, competitor environment and The Board operates a Nomination As a private family-owned company the determination of the Group’s strategy and The Board comprises Chairman, Chief corporate responsibility. The Directors have Audit Committee Committee to ensure that the Board Group is not required to comply with the long-term direction, approval of budgets, Executive, Chief Financial Officer, two equal voting rights when making decisions, The Board delegates a number of specific remains balanced and effective, that UK Corporate Governance Code 2016. capital expenditure, organisation changes, Independent Non-Executive Directors except the Chairman, who has a casting duties to the Audit Committee, in order succession plans are in place, and that its However, it has included certain additional including new business ventures, the and four family Directors. vote. All Directors have access to the advice disclosures regarding corporate governance to assist in the discharge of its duties and structure, composition and skills remain acquisition or disposal of assets, and Huw Davies stepped down from the Board and services of the Company Secretary and over and above those it is required to to bring independent oversight to the aligned to the Group’s strategic objectives. changes in key policies. The Board also on 4th January 2016 and was replaced by may, if they wish, take professional advice provide, where it is believed these Group’s activities. The Committee’s primary monitors the Group’s systems of internal David Allen as Chief Financial Officer. at the Group’s expense. Executive Committee disclosures would be helpful to readers concerns are the integrity of the Group’s control, governance and risk management. Jonathan Wates re-joined the Board on of the Annual Accounts and Reports. From time to time, matters arise which financial statements; the effectiveness of The Executive Committee consists of 20th June 2016. Graeme McFaull stepped The Board delegates authority for all require urgent approval prior to the next internal controls; the performance of the individuals responsible for the strategic The Board believes that good business down from the Board on 30 September day-to-day management of the Group’s scheduled Board meeting and in such internal audit function; performance and business units and key functions. Together and sustained performance stems from 2016 and David Smith on 17 October 2016. affairs to the Executive Committee. In instances approval of all Directors may be independence of the external auditors; they are responsible for the day to day good corporate governance, and remains addition, certain governance responsibilities Directors update their skills, knowledge and sought via a telephone conference call. and compliance with legal and regulatory management of the Group’s business affairs firmly committed to achieving the highest are delegated to Board committees, familiarity with the Company by attending requirements. under the leadership of the Chief Executive. standards in the interest of all stakeholders. which support the Board in carrying out appropriate external seminars and training This includes formulating strategy proposals Governance supports open and honest BOARD DIVERSITY External Auditors its duties. These committees are made up courses, meeting with senior management for Board approval and ensuring that the business, ensures that the Group has the of Independent Non-Executive Directors, and visiting regional and divisional The Group is an equal opportunities PricewaterhouseCoopers LLP was agreed strategy is implemented in a timely right safeguards in place and makes certain together with Non-Executive Directors operating offices. The Group has an employer and promotes an environment re-appointed external auditors at the and effective manner. that every decision it takes is underpinned from the Wates family, and provide the induction programme for all new Directors, free from discrimination. The Group’s policy Group’s AGM in April 2016. The Committee by the right considerations. Board with independent oversight. which is tailored to specific experience and on diversification extends to the Board. assesses the effectiveness of their Group Risk Committee This approach enables the Company knowledge, and which provides access to New Board appointments are based on a performance every year after completion The Group operates a Risk Committee to to protect the integrity of its business, THE ROLE OF THE CHAIRMAN all parts of the business, including access balance of skills and experience and will of the annual audit plan. ensure that inherent and emerging risks in meet strategic objectives, create value to shareholders. always be objective, free from bias and the Business are identified and managed in Internal Audit for shareholders and build a long-term The Chairman plays a pivotal role by based solely upon relevant experience, a timely manner and at an appropriate level. sustainable business. The Board is clear that creating the conditions for overall Board knowledge and individual merit. A copy INDEPENDENT DIRECTORS Reporting to the Audit Committee The Committee reviews the organisation’s by doing the right things in the right way and individual director effectiveness. The of the Group’s Equality, Diversity and Internal Audit is an independent response to specific areas of risk, and the Group can protect its brand, reputation Chairman is responsible for appraising the The Board is satisfied that the number and Inclusion Policy can be found at the objective assurance and advisory function approves standards and processes where and relationships with shareholders, Board of all matters affecting the Group calibre of its Independent Non-Executive Group’s website www.wates.co.uk established by the Board to provide control weaknesses are considered to exist. customers, employees, supply chain and and its performance. He is responsible Directors, together with their diverse assurance on controls and operations. for effective operation and chairing of Reshaping Tomorrow Committee the local communities in which it works. backgrounds and experiences, ensures BOARD EFFECTIVENESS Its primary task is to assist the operating the Board, ensuring the efficient use of that the principles of the UK Corporate businesses accomplish their objectives The Reshaping Tomorrow Committee is the Board’s time, that the agenda is forward THE ROLE OF THE BOARD Governance Code are met. The Board The Board last undertook a formal by bringing a systematic disciplined a delegated authority of the Executive looking and concentrates on strategy. believes that the Independent Non- effectiveness review facilitated by an approach to the evaluation and Committee, with the primary purpose of The Chairman ensures that sufficient The Board’s primary responsibility is to Executive Directors are wholly independent independent external advisor in 2015 and improvement of controls, risk providing strategic leadership direction and time is allocated to discuss complex or promote the long-term success of the in that they have no material business or has scheduled the next independent review management and asses protection. oversight and setting the Group’s policy on contentious issues, so that decisions are Company by creating and delivering relationships with the Group that might for 2018, in accordance with the three corporate responsibility. Its scope covers reached in a consensual and timely Remuneration Committee sustainable shareholder value. The Board influence their independence or year cycle set out in the UK Corporate environment issues, community investment, manner, arranging pre-board preparation seeks to achieve this by setting out judgement. Governance Code. Improvement actions The Committee’s primary objective is diversity and inclusion. as necessary, to avoid unrealistic deadlines its strategy, monitoring performance emanating from the last assessment to to set remuneration at a level that will for decision making. The Chairman also against strategic objectives and reviewing further strengthen and enhance the Board’s enhance the Group’s resources by attracting, has responsibility to ensure effective BOARD MEETINGS INTERNAL CONTROLS implementation of the strategy by the performance have been implemented on retaining and motivating quality senior Executive Committee. communication with shareholders and an on-going basis. The Board plans to The Board has a programme of nine management who can deliver the Group’s The Board takes ultimate responsibility for that all Board members are aware of the undertake an informal assessment of its principal meetings every year, plus 2 strategic ambitions within a framework the Group’s systems of risk management views of shareholders. effectiveness during 2017 to determine additional days for the annual strategy aligned with shareholder interests. and internal control, and for reviewing successful execution of the actions plans, conference with the Executive Committee. their effectiveness. The Board receives regular and timely particularly around individual development information on the financial performance of Board members and the organisation and of the business, together with reports on timing of matters reserved to the Board.

30 wates.co.uk 31 ANNUAL REVIEW 2016 GOVERNANCE AND ACCOUNTS

CONSOLIDATED PROFIT CONSOLIDATED AND LOSS ACCOUNT BALANCE SHEET FOR THE YEAR ENDED 31 DECEMBER 2016 AT 31 DECEMBER 2016

2016 2015 2016 2015 £000s £000s £000s £000s

Turnover: Fixed assets Group and share of joint ventures and associates 1,531,910 1,272,497 Intangible assets – goodwill 59,237 62,953 Less share of turnover of joint ventures and associates (90,301) (65,627) Tangible assets 39,509 34,968 Investments in joint ventures 75,688 70,389 Group turnover 1,441,609 1,206,870 Other investments 2,953 3,371 Cost of sales (1,296,844) (1,087,147) 177,387 171,681 Gross profit 144,765 119,723 Administrative expenses (125,447) (104,801) Current assets Net surplus on revaluation of investment properties 5 2,299 Stocks 19,222 8,184 Profit on sale of investment in joint venture – 1,253 Debtors – due within one year 281,724 285,732 Group operating profit 19,323 18,474 – due after one year 40,585 26,499 Share of post-tax profit from joint ventures and associates 11,589 6,781 322,309 312,231 Total operating profit: Group and share of joint ventures and associates 30,912 25,255 Cash at bank and in hand 191,630 127,445

Analysed between: 533,161 447,860 Total operating profit before interest and tax 37,301 31,481 Creditors: amounts falling due within one year (520,637) (450,865) Net interest payable – joint ventures and associates (3,782) (4,012) Taxation – joint ventures and associates (2,607) (2,214) Net current assets/(liabilities) 12,524 (3,005)

Net interest receivable 1,952 2,832 Total assets less current liabilities 189,911 168,676 Creditors: amounts falling due after more than one year (37,769) (27,301) Profit before taxation 32,864 28,087 Provisions for liabilities (81,455) (48,089)

Analysed between: Net assets 70,687 93,286 Profit before taxation and before taxation of joint ventures and associates 35,471 30,301 Taxation – joint ventures and associates (2,607) (2,214) Capital and reserves Called up share capital 14,777 14,777 Taxation on profit (5,664) (5,222) Share premium account 956 956 Capital redemption reserve 17,447 17,447 Profit for the financial year 27,200 22,865 Cash flow hedge reserve (603) – Profit and loss account 38,110 60,106

Shareholders’ funds 70,687 93,286

The above results have been derived from continuing operations. Approved by the Board of Directors on 13 March 2017 and signed on its behalf by: The financial information set out in pages 32 to 33 of this Annual Review does not constitute the Company’s statutory accounts for the years ended 31 December 2016 or 2015, but is derived from those accounts. Statutory accounts for 2015 and 2016 have been delivered to the Registrar of Companies. The auditors have reported on those accounts: their reports were unqualified, did not draw attention to any matters by way of emphasis and did not contain statements under section 498(2) or (3) of the Companies Act 2006.

James G. M. Wates CBE D. O. Allen Chairman Chief Financial Officer

32 wates.co.uk 33 ANNUAL REVIEW 2016

Wates works with a wide variety of clients and partners from across both the public and private OFFICE SOME OF sectors. The following is a selection of those ADDRESSES OUR CLIENTS... with whom we worked during 2016.

Bristol Darlington Luton HEAD OFFICE SES ENGINEERING 190 Aztec West Maple House Mulberry House SERVICES Park Avenue Tillage Green Parkland Square Wates House Bristol BS32 4TP West Park Village 750 Capability Green Station Approach Tel: 01454 615561 Darlington DL2 2GL Luton LU1 3LU York Leatherhead Tel: 01325 394100 Tel: 01582 400171 Mill Mount Surrey KT22 7SW Cambridge York YO24 1GH Tel: 01372 861000 Derby Manchester Tel: 01904 629151 [email protected] Wates Construction Ltd Suite 7225, Building 7200 Pavilion 5 4th Floor Cambridge Research Park Garden Court The Royals Birmingham Beach Drive Lockington Hall 353 Altrincham Road The Podium Waterbeach Derby DE74 2RH Sharston Bank House REGIONAL OFFICES Cambridge CB25 9TL Tel: 0150 967 8963 Manchester M22 4BJ Cherry Street Tel: 01223 815666 Tel: 0161 946 8800 Birmingham B2 5AL Basingstoke Enfield Tel: 0121 6164350 Basingstoke Park Cardiff 23 Crown Road Wakefield 4th Floor Network House Llanmaes Enfield EN1 1FE Unit 8, Bristol Basing View Michaelston Road Tel: 020 8804 7777 Calder Park 190 Aztec West Basingstoke St Fagans Wakefield WF4 3BA Park Avenue Hampshire RG21 4HG Cardiff CF5 6DU Glasgow Tel: 01924 240190 Bristol BS32 4TP Tel: 0125 630 1750 Tel: 02920 675200 Suite 214/215 Tel: 01454 627150 Wright Business Centre Warrington Birmingham Castle Vale 1 Lonmay Road Building 1 Glasgow Wates House Unit D1 Glasgow G33 4EL Clearwater Cadell House (Building 5) 11 Ridgeway Castle Vale Enterprise Park Tel: 0141 773 6202 Lingley Mere Business Park 27 Waterloo Street Quinton Business Park Park Lane Warrington Glasgow G2 6BZ Quinton Birmingham B35 6LJ Hull Cheshire WA5 3UZ Tel: 0141 221 8800 Birmingham B32 1AF Tel: 0121 7472742 Tel: 01925 791100 Tel: 0121 423 2323 Wates Living Space 3 Iridium Court London Conwy Owen Avenue Wellingborough 14th Floor Birmingham Unit 1 Eagles Estate Priory Park West Unit 1 Saxon Court One Euston Square 1st Floor Eagle Farm Road Hessle Bradfield Close London NW1 2FD Bank House Mochdre Business Park Hull HU13 9PF Finedon Road Tel: 020 7380 1800 Cherry Street Mochdre Tel: 01482 755151 Industrial Estate Birmingham B2 5AL Colwyn Bay LL28 5HF Wellingborough Manchester Tel: 0121 665 6448 Tel: 01492 548624 Leeds NN8 4RQ Southmoor House Darwin House Tel: 01933 222540 Bloxwich Southmoor Road Cossington Leeds Valley Park Manchester M23 9GH Unit 8 Wates Living Space Leeds LS10 1AB York Tel: 0161 945 5589 Reaymer Close Unit 5 Tel: 0113 205 9200 Frederick House Bloxwich Charnwood Edge Fulford Road North Shields West Midlands Business Park London York YO10 4EA Centre for WS2 7QZ Cossington Tel: 01904 634431 Tel: 01922 407111 14th Floor Advanced Industry Leicestershire LE7 4UZ One Euston Square Coble Dene Tel: 01162 605058 London NW1 2FD Royal Quays Tel: 0207 380 1800 North Shields NE29 6DE Tel: 0191 258 6627

York (SES PRISM) Unit 2 New Lane Huntington York YO32 9PT Tel: 01904 673272 34 wates.co.uk 35 Head Office Wates House Station Approach Leatherhead Surrey KT22 7SW Tel: 01372 861000 wates.co.uk Registered company number: 01824828