Sustainability Report 2006/07

FRC Group SustainabilityReport 2006/07

Acknowledgments

We would like to thank the following for all their hard work in contributing to the production of this report:

All the people who make FRC Group a truly great place to work: our staff, trainees,volunteers and work placements.

All the people who matter to us and who gave us feedback on our performance - ourcustomers, our suppliers and our Board ofTrustees.

All the employees at FRC Group who helpedwith the collection and analysis of data.

Adam Richards, PhD student, Centre forManagement Studies, Liverpool John MooresUniversity who collated all the feedback from our stakeholders’ questionnaires andcalculated our social return on investment.

Adrian Henriques, Just Assurance, for hisadvice and due diligence in auditing this report.His statement can be found on page 56.

The Report Panel who gave up their time to be part of our independent audit panel, theywere:

�� Penny Street, independentsustainability consultant

�� Peter Tyson, Financial Skills Worker,Citizens Advice Bureau, Liverpool

�� Paul Arista, Partnership Manager,Learning Skills Council, Merseyside

�� Paul Sanderson, Director ofEnvironmental Services, St HelensCouncil

�� Sally Bonnie, Social Enterprise UnitManager, Oldham Borough Council

�� Diane Kelly, Business Manager,Furnished Accommodation, Helena Housing, St Helens

Alison Ball and Verity Timmins of the FRCGroup compiled these accounts inSeptember 2007.

1

Contents Page

1.0 Introduction

2.0 Our Businesses

2.1

2.2

2.3

2.4

3.0 Our people

3.1

3.2

3.3

3.4

4.0

5.0 Update 2006/2007

6.0 Auditors Statement

Our training programme 35

AppendicesOur values 39

l Company map Furniture Resource Centre 16

ll Our Stakeholders and how we engaged them

Our health and safety 42

Bulky Bob’s 20

lll Environmental reportingmethodology

Revive 25 Our Environmental Impact 45

The Cat’s Pyjamas and FRC Solutions 29 lV Triple Bottom Line Accounts

V Bulky Bob’s EnvironmentalImpacts

Our employees 30

2

1.0 Introduction Our social, environmental and economic impact 2006/07 Welcome to our third Sustainability Report detailing FRC Group’s triple bottom line - the social, environmental and economic impacts of our business activities from the 1st April 2006 until the 31st March 2007.

We have a long history of social andsustainability reporting, we produced our first social report in 1999 and our first sustainabilityreport in 2005. Through our reporting we aim to prove the added value of the Group’s socialbusiness activities. This report details ourbusiness performance and reveals importantfeedback from our stakeholders - the peopleand organisations that really matter to us.

We report on where we have both over and underachieved on the performance targets that we set for ourselves in 2006/07 and set out our targets for improvements in 2007/08.

For us reporting is a discipline of integrity and, if a business claims to deliver added value, then it needs to be able to robustly prove it. Our ever improving practice of accounting and reporting gives us systems, key performanceindicators and the data to measure and makeimprovements on the increasingly stretching targets that we set for the FRC Group. Enjoy reading about our business as we are

immensely proud of what we have bothachieved and learnt this year and as ever are excited about our future. Overview of the year

Group IncomeThis year £3,321,548, last year£3,449,274 This year has been one of winning key contracts, delivering more social andenvironmental impact than ever before,winning national awards and discussions with leading politicians.

Our first female logisticstrainee won the Edge Upstart’sTrainee of the Year 2006.

Our Sustainability Report 2005/06 was short listed inACCA’s SustainabilityReporting 2006 Awards.

Adding to our celebrations we also met leadingUK politicians – Tony Blair, David Cameron,Margaret Hodge and David Miliband who were all keen to learn more about the realities of running a social business.

We worked hard to review and improvebusiness performance across the Groupworking with our managers to introduce a new set of performance indicators. To ensureincreased efficiencies and maximum returns onour financial, social and environmentalperformance we set stretching targets in all areas of our business.

We were once again delighted tohave been ranked in the FinancialTimes’s Top 50 Best Place to WorkUK index (we were ranked 26th in2005 and in 2007 no individualranking was published).

Our Bulky Bob’s business continued to grow in size and operational scope – we launched a Bulky Bob’s collection service in Oldham, a bulky household waste recycling operation in Sefton, a Cathode Ray Tube recycling projectin Liverpool, expanded our collection service in Warrington and launched a Bulky Bob’s operation in St Helens. We also collected,reused and recycled more items of furniture

We were awarded Employer of the Year 2006 by the Daily Post and Echo.

We were also a winner in theEnterprising Solutions SocialEnterprise of the Year 2006awards.

3

and white goods than ever before - all in all a very busy year!

Furniture Resource Centre, our one-stopfurnishing service for registered sociallandlords (RSLs), getting quality furniture to those most in need, remained at the heart of our business winning key contracts withnational organisations such as Procurementfor Housing.(www.procurementforhousing.co.uk). Revive, our high street furniture store in Liverpool and Widnes, continued to get ourspecial mix of both new and pre-loved furnitureout to low-income households. This year we had to take the difficult decision to close our Widnes Revive after three years of tradingthere.

We provided less advice through our FRC Solutions consultancy business than we have previously and once again we left the runningof our Cat’s Pyjamas business in the hands of our joint venture partner.

Our programme to give long term unemployedindividuals a job and training continued to get an impressive number of trainees into workafter they graduated. We were challenged by very stretching targets for recruiting individualsfrom the black and minority ethnic communitiesin both Liverpool and Oldham.

We remained committed to improving theenvironmental impact of our business

activities, reducing the Group’s overall carbondioxide emissions throughout the year.

Our Group financial performance

For the second year running we calculated the social return on investment (SROI) for ourBulky Bob’s training programme in Liverpool and the social impacts of our Revive store.SROI enabled us to measure and monetise the social environmental and economic valuegained compared with the level of investment we deployed in these aspects of our business.

Through Bulky Bob’s and Furniture ResourceCentre we continued to engage with thegrowing public sector procurement agenda.Social businesses are increasingly recognisedby national and local government as a way of delivering effective services and bringing both efficiencies and added value to local authorities and public sector agencies.

For the first time ever we worked with a fundraising consultant to prepare a fundraisingstrategy for the Group – we believe that it is an

Year Income % incomefrom grants

% incomefrom sales

Employeesaverage

Unrestricted fundsProfit/(loss)£

2001/02 7,490,451 10 90 104 431,2992002/03 5,045,661 4.0 96 74 28,2652003/04 4,758,731 7.0 93 78 (11,124)2004/05 4,085,568 7.0 93 83 (149,267)2005/06 3,449,274 4.6 95.4 71 (205,024)2006/07 3,324,402 4.2 95.8 71 (320,599)

important part of our business development to explore developing good relationships withfunding agencies who are willing to fund our innovations that bring about social and environmental change.

Whilst FRC’s financial trading results over the last few years have been poor the Group has been able to sustain its losses as it enteredthis phase with a healthy level of reserves and still retains circa £1 million as ay 31st March2007.

In addition, throughout 2006/07 we continuedto deliver increased positive social andenvironmental impacts as well as implementinggrowth plan which is coming to fruition in 2007/08 with sales already exceeding 2006/07performance and therefore reducing the levelof losses that we have recently seen. We expect this positive trend to continue at an increased rate in 2008/09 which will see us

4

posting a positive financial result and enablingus to continue to deliver increased social and environmental change.

Our business continued to be run by a triumvirate of directors who are ultimatelyanswerable to a Board of Trustees. Wereceived great feedback from our employeesabout working for FRC Group, our staff are highly committed and proud to work here, our values culture remains at the heart of all that we do and how we do it and we believe that we remain a great place to work.

Once again it was a challenging, rewardingand above all exciting year at FRC Group! The Leadership Team Alison Ball Director of People andLearning

September 2007

Shaun DoranCommercialDirector

Phil TotteyFinanceDirector

5

Who we are and what we do

FRC Group We do good things,running businesses that promote equality and create livelihoods for

people who really need them. We seek to achieve social, environmental and financialbenefits by operating commercially viablesocial businesses in a range of markets.

We are a values led company trying to live and work creatively, passionately, bravely and professionally. We will be as open, honest and accountable as we can with all the people who matter to us. We want always to learn and to help others learn from us.

Furniture Resource CentreAt the heart of our Group,is Furniture Resource

Centre, a registered charity. Founded in 1988and based in Liverpool, we provide a one stop furnishing service to registered social landlordsthroughout England and Wales enabling them to offer furnished accommodation to tenantswho are most in need.

amovingexperienceAn expansion of the Furniture ResourceCentre’s services to registered social landlords, amovingexperience offersregistered social landlords a people-centredremovals service for their tenants. We movepeople, not just furniture.

Bulky Bob’sIn 2000, we launchedBulky Bob's, a recyclingcompany that collects

bulky household waste on contract to LiverpoolCity Council and, Oldham and WarringtonBorough Councils. Bulky Bob’s reuses,refurbishes and recycles furniture, white goodsand Waste Electrical and Electronic Equipment(WEEE).

Revive StoresRevive, our high streetstore in the centre of Liverpool, opened in

1998 and in June 2004, in Widnes. OurRevive brand sells “pre-loved” and newfurniture direct to the public and offers discounts to people on low-incomes.

The Cat’s PyjamasThe Cat’s Pyjamas, our joint venture companywith Urban Strategy Associates(www.urbanstrategy.co.uk), provides learningexperiences in the realities of running a socialbusiness. We run a range of bespoke eventsfor customers in a range of sectors. For a company map showing our tradingsubsidiaries, see appendix I.

6

Our stakeholders Our stakeholders are the people who matter to us, our direct customers, such as localauthorities and registered social landlords(RSLs) and indirect customers, such as thetenants of RSLs and other housing providers,also our employees, our trainees, our Board of Trustees and the environment. A list of ourstakeholders can be found in appendix II.

Our aspirations and Group objectives Our objectives are:

�� To be great to do business with �� To be a great place to work �� To be great for people�� To be great for the planet

And of course to be profitable in all of our business endeavours.

We aim to deliver on our triple bottom line of financial, social and environmentalperformance everyday of every year. Ourobjectives enable us to articulate how we do this: Being great to do business with - we act oncustomers’ and suppliers’ feedback to continually improve the quality of the goodsand services we supply.

Being a great place to work - we takeseriously what our employees say about working at FRC Group and act on their suggestions and ideas to improve our workingenvironment.

Being great for people - we offer training and job opportunities for long term unemployedindividuals in our business. We also get high quality furniture to low-income householdsthrough our furniture supply contracts withregistered social landlords and through ourhigh street store, Revive.

Being great for the planet – measuring,accounting for and improving the environmental impacts of our businessoperations and the goods and services that we sell. This is a key commitment for us.

And, we can never forget, that we must alwaysensure that we are commercially minded and always deliver on our financial bottom line.

Our values: beliefs in action

Our values are fundamental to everything that we do; they are our beliefs in action. To remain relevant and successful in business, we may change our business strategy, but our valuesremain consistent about the way in whicheveryone at the FRC Group works. They keep us on the straight and narrow, we work hard to encourage all of our employees to championthem. We recognise, reward and celebratethose who work in ways that demonstratethem.

We strive for Bravery, Creativity, Passion and Professionalism in all that we do. We havedevoted a full section to reporting on the ways we have worked on our values in 2006/07.This can be found on page 39 of this report.

Our methodology

After another year of challenges and changesat FRC Group we have worked hard to includeany new impacts of our activities in our accounting systems and include them in this report.

7

Data was captured on a monthly basis as an integral part of our business practices and in our triple bottom line accounts, which can be found in appendix IV.

We approached 15 different stakeholder groups of people who matter to us and asked them throughout the year for feedback on our performance. We asked them how well we performed against our objectives? Were our objectives and the issues we work on the right ones in the first place? And what had been the impacts of our work upon them as stakeholders?

Feedback was obtained using a number of different methods, by a variety of our Group’s employees. Examples include postal questionnaires, telephone interviews and face-to-face interviews. Questionnaire analysis was carried out by a PhD student from the School of Management at Liverpool John Moores University.

This year we did not have the time and resources to gather feedback from every one of our stakeholder groups. We plan to address this in 2007/08.

We measured the wider economic impact of the FRC Group’s activities on the Merseyside area and our contribution both to the local and national economies using the New Economics Foundation’s Local Multiplier 2 (LM2) and social return on investment (SROI) tools. SROI was calculated for the training programme in

Liverpool and Revive, Liverpool. We also began a project with a major housing association customers to establish the SROI of providing furnished accommodation for tenants.

This year we entered the Financial Times’ Best Place to Work Index and were obliged to use the format that they provided to survey our staff. In addition we supplemented their questionnaire with questions about the impact of our values culture.

In the tables on the following pages, we have reported how well we have done on the priorities and targets we set the Group for 2006/07. We have used ‘smilies’ to indicate where we have achieved or missed the mark on our targets:

� - We met or surpassed the target

� - We made some progress but still aim for more � - We missed the mark

Throughout the report where we show performance data we have also, where possible, shown comparative performance figures for previous years.

8

Category Indicator Targets and Priorities 2006/07 We achieved Target 2007/08

Financialperformance

Increase the sales and profitability of the Furniture Resource Centre

�Turnover fell by

11% in 2006/07

compared with2005/06

Increase the sales and profitability ofFurniture Resource Centre.

BusinessDevelopment

Increase activity on amovingexperience by 100% on 2005/06 �

Activitydecreased by

53%

Introduce quarterly feedback process for customersby September 2006 � Introduce a formal quarterly feedback process

with major customers from October 2007.CustomerCare

Set up a focus group with a major customer and Customer Service Team by October 2006 to explorecustomer service issues

� 100% rate of customer satisfaction.

FurnitureResourceCentre

Social Impact Devise a robust measure to prove the impactfurnished accommodation has in creatingsustainable tenancies by February 2007

� Try to identify the SROI of providing furnishedtenancies.Research CO2 savings brought about by our stock management service.

99

Category Indicator Targets and Priorities 2006/07 We achieved Target 2007/08

Warrington BB’s 100% of white goods �Rate of 100%

achieved

Meet reuse and recycling rates of 10% onfurniture collected in Warrington Maintain 100% recycling of white goods in Warrington

Reuse and recycling rates of more than 70% on operations where we use deconstruction �

54.5% achieved

Start deconstruction in LiverpoolSend 100 pre-loved items to revive each week Achieve recycling/reuse rates of 42% (75% with deconstruction) by weight

Reuse andRecycling rate

Reuse and recycling rate for Oldham - 25% �Rate achieved

was 21%

Achieve a reuse and recycling rate of 25% by weightStart deconstruction in Oldham

Continue to investigate business opportunities for Bulky Bob’s with the corporate sector �Business

development

One Local Authority signed up and 3 ready to sign by March 31st 2007 �

Oldham and Sefton

Deconstructionoperationsstarted in 2006/07

Win contracts to begin 4 new deconstructionservices

Win contracts to begin 2 new Bulky Bob’s services

Prove the Social Return On Investment for Bulky Bob's activities on two contracts �Economic impact

Use LM2 on all Bulky Bob’s contracts �Customer Care Ensure we get direct feedback from householders on

all of our Bulky Bob’s contracts � Engage with local authority and households to receive stakeholder feedback

Bulky Bob’s

Environmentalimpact

Find the most environmentally friendly options andbusiness opportunities for the reuse and recycling of residual household waste 2007.

�

1010

Category Indicator Targets and Priorities 2006/07 We achieved Target 2007/08

At least 84% of customers in Liverpool are from low income households �

79% of customers in

Liverpool were from low-income

households

To achieve at least 84% of Revive customers from low income households

Maintain level of low-income household customersat 91% at Revive Halton (Widnes) �

92% of customers in Widnes were

from low-income

households

N/A

The store closed in February 2007

Revive Stores Social impact

Establish the SROI of Revive stores � To calculate the SROI of our Revive store

Category Indicator Targets And Priorities 2006/07 We achieved Targets 2007/08

Cat’s Pyjamas BusinessDevelopment

PriorityFRC Group is to leave the running of Cat’s Pyjamas to our joint venture partner for 2006/07 and review progress later in 2006/07 �

No target set

1111

12

Category Indicator Priorities 2006/07 We achieved Target 2007/08

Great place to work

100% employees agree HIG is a fair way to discusstheir progress at work. �

95% agreed HiG is a fair

way to discusstheir progress

at work

100% employees agree HIG is a fair way to discuss their progress at work.

Publish Group’s diversity policy by August 2006. � Publish Group’s diversity policy by August 2007

Introduce diversity monitoring by September 2006 � Introduce diversity monitoring by October 2007

Employees

Diversity

Write a Group diversity action plan by October 2006 � Write a Group diversity action plan by December2007

Category Indicator Targets and Priorities 2006/07 We achieved Targets 2007/08 TargetEarly leavers rate 13% or below �

25% were early leavers

75% into jobs or further education �73% went into jobs or further

education33% of trainees coming from BME communities �

31% of trainees were

from BME communities

Trainees Social return

Track leavers for up to 18 months �

Achieve a rate of 75% of trainees into further training or employment

50% of all trainees to be taken on as Driver/Loaders

Trainees to achieve a 60% first time LGV II pass rate

Trainees to achieve a 60% first time car pass rate

5% of ILM trainees to be women

33% of ILM trainees to be from a Black andMinority Ethnic Group

PriorityRe-negotiate and evaluate all training costsand providers by April 2008. 12

Category Indicator Target 2006/07 We achieved Target 2007/08

Reduce RIDDOR reportable accident rate in Liverpoolby 20% on 2005/06 figures �

30% reduction achieved

All logistics and warehouse staff to attend 2 refresher courses �

All non logistics staff to attend one refresher course �

Health & Safety Accident rate

PriorityMove to calculating rate of lost time per employee and report on it for separate operations

�

Reduce the number of personal injuries reported across FRC Group by 10%

Reduce the number of RIDDOR reportableaccidents across FRC Group by 10%

Achieve a lost time due to accidents of 0.29% per employee across FRC Group

Report on and reduce the number of vehicle accidents across FRC Group by 30%

Ensure all logistics and warehouse employeesunder go at least two health and safety refreshercourses throughout the year

Change the way we calculate our accident rate – move to reporting on performance by different operational areas.

Category Indicator Priorities 2006/07 We achieved Targets 2007/08

TargetIncrease the number of creativity and bravery awardsgiven out to (Liverpool based) staff by 100% on 2005/06 performance

Creativity:

�100% increase

Bravery:

�7% increase

100% increase in the number of bravery and creativity awards given out to employees.

Values Valuesculture

PriorityEnsure we embed our values culture in new satellite businesses

� PriorityEnsure our Oldham operation develops the mature values culture that we have onMerseyside.

1313

14

Category Indicator Targets and Priorities 2006/07 We achieved Targets 2007/08

Reduce CO2 emissions from electricity use at Head Office by 5% on 2005/06 figures. �

emissions roseby 12%

Reduce Co2 emissions from our logistics fleet on Merseyside by 5% �

13.6%reductionachieved

To reduce fuel usage after SAFED trainingby:15% for Furniture Resource Centre 15% for Revive5% for Bulky Bob’s Liverpool 10% for Bulky Bob’s Warrington

The Driver / Mentor / Assessor at Bulky Bob’s Oldham to have been trained as a SAFED instructor by the end of October2007.

Bulky Bob’s Oldham Driver / Mentor / Assessor to deliver SAFED training to otherlogistics staff by end December 2007

Bulky Bob’s Oldham to achieve a 5% reduction in fuel usage following Driver /Mentor / Assessor receiving SAFED training

Introduce bio diesel fuel in our logistics fleet as soon as local supplies become available � To further investigate the sustainability of

biofuel and make an informed decision aboutif and how we use biofuel in our fleet by end of 2007/08

Carbon dioxideemissions

Off set the CO2 emissions generated through theCat’s Pyjamas air miles through a carbon off set programme

� PriorityTo develop a methodology which quantifiesthe CO2 savings from Bulky Bob’s reuse and recycling activities which divert waste awayfrom landfill sites, which will enable us to articulate the carbon footprint of all of ouroperations

Reduce gas usage at FRC Group Head Office by 5% on 2005/06 levels �

Gas usagereduced by

49%

Environment

Energy use

Reduce gas levels at Revive by 10% on 2005/06levels. Reduce to 29,127kWh �

Gas usagereduced by

11%14

Category Indicator Targets and Priorities 2006/07 We achieved Targets 2007/08

Water use Maintain at 2005/06 levels of 3.1m3 per person �increased to

5.12 m3

Run at least one environmental awareness trainingevent for all staff � Deliver at least one session of environmental

awareness training to every member of staff by the end of 2007/08

Staff training

Run at least one driving efficiency course for all logistics staff �PriorityCarry out cradle to grave impacts for the products we sell �Talk to three major customers about theenvironmental credentials of the products we supply �

Commit to identify and promote the environmentalimpacts of the products we offer on our furniture resource centre service

�

Commission DTI fuel champ advice �

Benchmark our logistics performance against othercompanies in the waste and logistics industry �

Environmental Impact

Introduce an incentivised fuel efficiency programmefor logistics staff �

Begin implementation of BS8555 with the aim of accreditation in early 2007/08

1515

2.0 Our businesses

2.1 Furniture Resource Centre

This year’s turnover £1,780,737, last year’s £2,006,400

The Furniture Resource Centre aims to providefurniture solutions for low-income families so that those in greatest need could have accessto furniture. To do this we run a ‘one stop’furnishing service for registered sociallandlords (RSLs) and other housing providers.

This business-to-business service delivers andinstalls bespoke packages of brand newdomestic furniture, white goods, carpets and curtains. We do this so that our customers canoffer furnished rented accommodation to their tenants. We also offer related services such asfurniture rental, stock management and amovingexperience which is our homeremovals service.

In 2006/07, we made 3,131 deliveries, an increase of 5.3% on last year (2,974, 2005/06)but turnover fell by 11%. Our longer-termcustomers now have established furnishedtenancies schemes and no longer need large volumes of new furniture. Others are underincreasing financial constraints and are unableto offer tenants the comprehensive packagesof furniture that they once did.

We are now in the business of persuadingthose RSLs who have never run a furnishedaccommodation scheme of the benefits ofdoing so, arguing as we have always done,that offering furnished accommodation is a worthwhile strategy to create sustainabletenancies for people who would otherwise not have the financial resources to secure decentfurniture for themselves.

We continue to increase our work withspecialist agencies such as hostels,accommodation for older people and asylumseeker agencies. This year we saw smallerand more one-off requests to furnish specialised accommodation for specific needssuch as foyers, domestic violence refuges and supported housing schemes.

In June 2006, Furniture Resource Centre wasselected to be Procurement for Housing’s1

(PfH) supplier of furniture and white goods. PfH is a national purchasing agency and an initiative of the Housing Corporation and the Chartered Institute of Housing. It aims toensure that its membership of registered sociallandlords get the best procurement deals.

PfH’s procurement process was the mostrigorous and professional that FRC has everbeen subjected to. Julie Craig, PFH’s Directortold us that we had passed “with flying colours”and are “a remarkable organisation”.

The PfH contract has given us direct access to a greater number of social landlords acrossEngland and Wales and has helped us reach a greater diversity of vulnerable tenants who now have furniture supplied by us.This year we were able to increase FurnitureResource Centre’s spend with one of our mostvaluable suppliers, Dove Designs. They are a neighbouring social enterprise, manufacturingupholstered furniture which we include in thefurniture packages supplied to our RSL customers. Dove Designs brings invaluableadded social value to our supply chain - theyprovide job and training opportunities to individuals on Merseyside with mental healthproblems.

1 www.procurementforhousing.co.uk

Achievement 2006/07

Increase the sales and profitability of

Furniture Resource Centre �Sales fell by 11% in 2006/07 compared with 2005/06

16

Achievement 2006/07

Set up a focus group with one of ourcustomers and their tenants so that ourCustomer Service Team can explore customer service issues by October 2006

�

This year we persuaded them to make more of their manufacturing capacity and expand their product range to supply us with a range of wooden bedroom furniture. Our spend since2005/06 has risen by 2%.

Amovingexperience

Amovingexperience our removals service,working for the RSL market, carried out 60moves for 4 RSLs. The service was describedby a private resident being moved underLiverpool City Council’s Housing Market Removals Initiative as “Excellent”. Instead of introducing a quarterly feedbackprocess between August 2006 and February2007 we followed up every delivery with a

telephone call to customers and 95% them said they were “very happy” with our service.

“All went well- great. We’ll continue using you.”

Bradford Community Housing

“Very helpful drivers, need to wait half an hour, very friendly.”

Framework Housing, Nottingham “Happy. Very good quality furniture. Goodcommunication throughout the ordering and delivery process. Consultations anddemonstrations with residents were excellent,you left fabric and pictures of chairs andbetween us we designed our own chairs. We received exactly what we wanted. FRC storedchairs and held off delivery until our loungehad been painted which really helped.”

Phil Campbell, Warden, Arena Housing, Roger Arden Court, Bootle.

Whilst our customers gave us great feedbackabout our service they also fed back that they saw no point in us following up every delivery.We addressed this by reducing the frequencyof delivery follow up calls and plan to introducea formal quarterly feedback process fromOctober 2007 for all customers.

We approached our major North Westcustomers to set up a focus group to explore customer service issues. They all declined,preferring instead, to attend meetings of theNorth West RSL Bench Marking Group forproviders of furnished tenancies. As suppliers we are not invited to attend, but we haveencouraged all of our customers in the North West to join this group, which discusses best practice including the provision of furnishedtenancies.

Achievement 2006/07 Increase amovingexperience’s number of

moves by 100% on 2005/06’s activity�Activity decreased by 53%

Achievement 2006/07

Establish a robust measurement tool to prove the impact furnished accommodation has in

creating tenancies by February 2007�

Achievement 2006/07

Introduce a quarterly feedback processwith all of our customers by September

2006 �

In March 2007 we launched a project with one major customer to measure the social return on investment from providing furnishedtenancies. Comprehensive tenant feedbackwas gathered in May 2007 to establish what it means to a tenant to have a furnished tenancy.The results of this project will be reported in our 2007/08 Sustainability Report.

17

Stock Management Two major customers continued to use ourstock management service. We collect, clean, repair and store items of furniture from vacanttenancies until customers required them againfor use in another furnished tenancy. Thisservice removes the customer’s headache ofstoring unwanted furniture and extends the lifeof items that would have otherwise gone tolandfill. This year 173 items were stored andreused in this way.

We know that reuse of furniture has a positiveenvironmental impact but are currently not ableto quantify this. We plan to look at this in 2007

Fresh Start In June 2006 we launched the Fresh Startproject with Liverpool Housing Trust’s FieldLane Hostel. The hostel offers temporaryaccommodation to homeless men. Whenresidents secure a permanent tenancyelsewhere often they either cannot move out of the hostel and into the tenancy, or they leavethe tenancy within a short time because they do not have the finances to acquire basic and essential furniture.

To buy this essential furniture, they usuallyapply for a Community Care Grant, which can take can take several weeks to process. If they do not move into the tenancy then they cannot

claim Housing Benefit and they then build up rent arrears.

The choice is to either live in a property without any essential furniture or accrue rent arrears for a property that they are not living in.

The objective of Fresh Start is to provide men leaving the hostel with low cost furniture on credit. If they have this essential furniture they can take up their unfurnished tenancies, begin to claim housing benefit immediately andultimately increase the likelihood of remainingin the tenancy.

They have a choice of new or pre-lovedfurniture from our Revive furniture store and pay for it once they have received their Community Care Grant.

This year we provided furniture to the value of £2,750 to 10 individuals at a cost of £2000 to the Furniture Resource Centre. In February2007 whilst all 10 recipients had not yet paidus back they all still had their tenancies. Some were struggling to find the finances to pay us because they had received reducedCommunity Care Grants.

We asked John Metcalf, Field Lane Hostel’smanager, what proportion of residents wouldhave successfully progressed into privateaccommodation without the scheme’sintervention?

18

“It’s more about the sustainability of the tenancies. Often people would move out of the accommodation quickly (often in the first few days), if they arrive with no furniture andaccrued arrears.”

John Metcalf, February 2007.

We attempted to calculate the social return on investment of Fresh Start but were only able to get feedback about the difference that theproject had made to one recipient’s life. He said the following about what the scheme had given him:

“Peace of mind – when at Field Lane Hostel it was on my mind about how I would furnish myflat. I went to Revive a couple of times to lookat furniture. Everything purchased wasspotless”

Fresh Start recipient, February 2007

He also admitted he felt more confident inhimself and that his next step is to find a job and that he is “getting his life back on track”.

When asked what would have happenedwithout Fresh Start he explained he would not have had any furniture and would have only have been able to purchase one item of furniture a month. It would have taken himbetween 6-12 months to furnish his home. He said finally he would “ stick it out regardless,but the scheme has made things much easier.”

We plan to carry on running the project with Field Lane Hostel but are unable to say how many residents we will be able to help as the number of men leaving the hostel is dependanton how many of them are offered securedtenancies. Single men are not seen as a high priority by registered social landlords.

Furniture Resource Centre Targets 2007/08

�� Introduce a formal quarterly feedbackprocess with major customers fromOctober 2007.

�� Increase the sales and profitability of Furniture Resource Centre.

�� Achieve 100% rate of customersatisfaction on deliveries andinstallation.

“Peace of mind- when at Field Lane Hostel it was on my mindhow I would furnish my flat. I went to Revive a couple of times to look at furniture. Everything purchased was spotless.”

Fresh Start recipient

�� Identify the Social Return on Investment of providing furnishedtenancies.

�� Establish the CO2 savings broughtabout by our stock managementservice.

19

2.2 Bulky Bob’s

Turnover this year £998,359, last year £809,817 Bulky Bob’s continues to offer local authoritiesan innovative collection service for bulkyhousehold waste and maximises the reuse andrecycling of the furniture and white goodscollected.

This year we started three new contracts with local authority customers, a bulky householdwaste collection and recycling service forOldham Metropolitan Borough Council, addedfurniture items to our Warrington Council collection service and launched a furnituredeconstruction project with Sefton MetropolitanCouncil.

We have performed well on our recyclingtargets and reused more goods than everbefore. Throughout 2006/07 a total of 39,565 items were collected through our Liverpool,Warrington, Oldham and St Helens collectionservices.

We collected 4,766 tonnes of furniture andwhite goods, reusing and recycling a total of 1,677 tonnes.

Liverpool City Council We achieved a 36% recycling rate (by tonnage) in Liverpool, (37.6%, 2005/06). Thedecrease can be attributed to the fact that in April 2006, due to increased rents, we ceasedtrading at the city’s Heritage Market. This had been a useful outlet for lower quality furnitureitems collected by Bulky Bob’s increasing the tonnage of furniture we diverted from landfill.

We reused and recycled a total of 26,249 items (28,936, 2005/06) sending 3,265 items to Revive for reuse and 19,576 white goods to CREATE2. CREATE is a social business inSpeke, south Liverpool, which refurbisheswhite goods for reuse. High quality whitegoods are then sold with a 12-monthguarantee. Reusable parts are salvaged from low quality items and all remaining materialsare recycled through approved reprocessors.

Bulky Bob' Reuse and Recycling Rates* refers to white goods only collected,

therefore 100% target achieved

020406080

100

00/'01 01/02 02/03 03/04 04/05 05/06 06/07

Perc

enta

ge o

f W

aste

Div

erte

d

Liverpool Halton Warrington * Oldham

2 www.create.org.uk

20

Warrington Borough Council

We achieved a 100% recycling on ourWarrington white goods collection service – atotal of 6,051 items were sent to CREATE.

All the white goods collected by in Liverpool and Warrington were taken to CREATE

Oldham Metropolitan Borough Council In June 2006, we launched our Bulky Bob'sservice in Oldham. Throughout the year wecompleted 19,000 collections and recycled21% of the 1,409 tonnes collected.

We are disappointed not to have met the 25% target set; however for the first 9 months of a brand new service this performance is extremely encouraging. This has to be compared to Liverpool Bulky Bob’s, which only achieved a diversion rate of 13% in its first year of operation in 2000/01.

A disappointingly low number of 406 furnitureitems were reused a result of Oldham BoroughCouncil specifying that all the items must be collected from outside a householder’sproperty. In Liverpool an average of 75% of the items collected are either stored inside the property or covered to protect them from the elements meaning we can reuse more of what is collected.

It has taken many years to educatehouseholders that if items are protected from the weather that they can be reused andrecycled. We are working with OldhamCouncil and their contact centre to ensure that when a customer books a bulky householdwaste collection this fact is explained to them. We believe this will eventually improve reuserates. Discussions with Oldham MBC about thepossibility of collecting from inside properties are ongoing.

The 406 items sorted for reuse were passedonto either other furniture charities or housingassociations. We worked closely with a homeless centre to provide furniture to families in desperate need basic of furniture.

Achievement 2006/07 100% reuse and recycling of white goods on the Warrington Borough Council contract

�Rate of 100% achieved

During 2006/07 no suitable bulky householdwaste collection tenders were put out to the market. Subsequently we did not achieve our target of having 3 more local authorities readyto sign up for a Bulky Bob’s service.

We continued to market our service and buildnetworks and relationships with local authorities, predominantly in the North West.There are five authorities which may let a suitable tender in 2007/08 and we are wellplaced and ambitious to win them.

Customer FeedbackAchievement 2006/07

Reuse and Recycling rate for Oldham 25%�Rate achieved 21%

Achievement 2006/07 Ensure we get direct feedback from householders on all of our Bulky Bob's

contract �

In February 2007, we conducted a telephonesurvey with 100 householders in Liverpool who had recently had a collection from Bulky Bob’s. 88% (93%, 2005/06) of householders said that overall the service was “excellent” or “verygood”.

Achievement 2006/07 Get 1 local authority signed up and 3 more

ready to sign up by March 2007 �Oldham and Sefton operations started in 2006/07

21

65% said that our crews were “very polite” or “polite” (83%, 2005/06). (n.b. 28% of customers were not at home when Bulky Bob’s called.)

Householders made the following commentsabout the service:

“Great service to have around and keeps the city tidy.”

“Excellent, apart from delay of a couple of weeks.”

“Staff were very pleasant and done a greatjob.”

“Always excellent, used the service a numerous amount of times and will continue to do so.”

Due to lack of resources we were not able to survey householders in Warrington or Oldham.This will be a priority in 2007/08.

We also got great feedback from our localauthority customers:

“Bulky Bob’s has made a huge impact on the Council’s bulky waste service. Waiting timeshave reduced and so have complaints, to the level of them being non-existent. Bulky Bob’sis training 7 long-term unemployed Oldham

trainees per year and providing furniture tolocal residents who really need it”. Oldham Metropolitan Borough Council

St Helens Chamber of Commerce We carried out work for a small number of corporate clients in the leisure industry and academic institutions. We also ran a BusinessResource Efficiency and Waste (BREW)funded service in conjunction with St HelensChamber of Commerce, providing a commercial bulky waste collection andrecycling service for their members. However,there was a lack of interest in the service in St Helen’s commercial sector. Despite this we were able to reuse 96% of the 9.69 tonnes we collected.

Deconstruction

In January 2007 we launched a furnituredeconstruction project at the South Sefton civic amenity site, north Merseyside. Sefton Borough Council continued to collect the borough’s bulky household waste but brought

it to the site where we sorted items for reuseand recycling. Furniture was taken apart to separate glass, wood, metal and plastic forrecycling.

During February and March 2007 the projecttook in 127.4 tonnes of furniture and whitegoods and reused and recycled 54.5%.

Achievement 2006/07 Find the most environmentally friendly options and business opportunities for the reuse and recycling of residual household

waste �

Throughout 2006/07 we continued to refine our deconstruction methodology ensuring that we maximised reuse and recycling possibilities. In an effort to reduce carbon dioxide emissionsfrom transporting recyclate and residual wastewe used local companies where we could.

Cathode Ray Tube Recycling

Achievement 2006/07 Reuse and Recycling rates more than 70% on

operations where we run deconstruction�Achieved 54.5%

The transposition of the EU’s WEEE regulations into UK law in July 2007outlawedthe land filling of all electrical goods. Thislegislation presented an opportunity for Bulky Bob’s to widen the scope of our recycling work in 2006/07.

22

Within the spectrum of electrical goods thatneed to be recycled we identified that goods containing Cathode Ray Tubes (CRTs) presentthe most viable business opportunity for us. The CRT extraction process requires a lowlevel of capital investment and yields a valuable recyclate.

In February 2007 we started an actionresearch project to recycle (CRTs) from TVsand computer monitors collected by Bulky Bob’s. We identified the most appropriatemethods to extract the CRTs for recycling and the best markets for the recyclates. We arenow ready to bid for WEEE disassemblycontracts when they are advertised.

Social Return OnInvestment

We undertook Social Return On Investmentstudies (SROI ) for Bulky Bob's Liverpool and our Revive store. SROI is a useful tool for us to show the social impact of our work in monetaryterms. For information on the SROI achievedthrough Revive see page 25.

For the second year we calculated the SROI for our Liverpool Bulky Bob’s logistics training

programme. The New Economic’sFoundation’s1 SROI tool has enabled us tomeasure and monetise the socialenvironmental and economic value gainedcompared with the level of investment we deployed by running the training programme.Based on standard accounting principles and investment appraisal techniques SROI hasallowed us to put a monetary value on things traditionally hard to quantify, in this case the benefits to the public purse as a result ofincreased taxation and reduced benefitpayments.

We found that for every £1 invested throughthe provision of salaries, training and overheadcosts there was a social return of £2.22. We also recalculated the SROI of this programmefor 2005/06 – the results were a return of £2.20 for each £1 invested. We are very pleased with these findings and plan to continue using SROI as an important tool to prove the economicimpact of our business.

Once again we also investigated the impactthat our activities have on the local economy.

1 www.nef.org.uk

We used the New Economics Foundation’sLocal Multiplier 2 tool (LM2) to do this.

74% of Bulky Bob’s income earned in through our Merseyside base (Liverpool, Warrington,Sefton, St Helens) was redistributed into the local economy through payments to suppliersand staff wages. In Oldham, 71% of theincome earned was spent in the local economy.

Achievement 2006/07 Continue to investigate business opportunities

for Bulky Bob’s with the corporate sector�Achieved work with a commercial customer in St Helens

We are excited about the future of Bulky Bob’s and our planned national growth. We seemany opportunities for us to expand the scopeand scale of the recycling, to increaserecycling rates and continue to offer more training and job opportunities to these from socially excluded backgrounds, while continuing to measure the economic impact of what we do.

Achievement 2006/07 Prove the Social Return On Investment for Bulky

Bob's activities on two contracts �Achievement 2006/07

Use LM2 on all Bulky Bob’s contracts �

23

Bulky Bob’s Targets 2007/08

�� Win contracts to begin 2 new Bulky Bob's services

�� Win contracts to begin 4 newdeconstruction services

�� Engage with local authority and households to receive stakeholderfeedback on the quality and impact of our furniture

�� Achieve waste diversion rates of more than 70% on operations where we run the full deconstruction operation

Bulky Bob’s Liverpool �� Start deconstruction in Liverpool

�� Send 100 pre-loved items to Revive each week

�� Achieve recycling / reuse rates of 42% (75% with deconstruction)

Bulky Bob’s Oldham �� Achieve a reuse and recycling rate of

25%

�� Start deconstruction in Oldham

Bulky Bob’s Warrington �� Meet reuse and recycling rates of 10%

on furniture collected in Warrington

�� Maintain 100% reuse and recycling of white goods in Warrington

24

2.3 Revive Stores

Turnover this year £138,719, last year £218,837 Our Revive shops are our presence on the high street in Liverpool and Widnes where we sell quality pre-loved and low-price ex-catalogue furniture at discount prices to low-income households.

We target our bargains at people who are most in need of furniture. Our pricing policy is to give a 10% discount to customers in receipt ofbenefit and a 20% discount to customers who come to us through a referral agency e.g.Citizen’s Advice Bureau. We also give referralagency customers a free delivery service.

It is through Revive that we are able to sell the good quality furniture that is collected by Bulky Bob’s. We sell ex-catalogue stock to meetcustomer demand and believe that people on low income, who are the majority or our

customers, should have as much choice as possible.This year we were disappointed to close our outlet at Liverpool’s Heritage Market, a discount Sunday Market at a dockside venue. Rising rents forced us to leave the HeritageMarket in April 2006. Our decision to do thismeant we lost an outlet for very low cost and low quality items that we may not have been able to sell through Revive. We are still committed to finding the time and resources to publicise Revive to referral agencies in treaty because we are determinedto get our furniture out to the people who need it most.

Revive Customers

This year 3,833 customers shopped in ourstores (3,475, 2005/06). They bought 3,265(3,448, 2005/06) items that had been sourcedthrough Bulky Bob’s, equating to 79% (77.5%,2005/06) of sales. Ex-catalogue stock equatedto the remaining 21% (22.5%, 2005/06) ofsales.

The majority of our customers 3,395 (2,938, 2005/06) shopped in Revive, Liverpool and438 (537, 2005/06) in Widnes. 85% and 79% of customers were from low-incomehouseholds in Liverpool and Widnes.

In Liverpool 82% (85%, 2005/06) of customerswere low income households and were inreceipt of benefit, students or pensioners and a further 3% (4%, 2005/06) came throughreferral agencies.

Customer profile – Revive Liverpool 2004-2007

Revive customers by type

0102030405060

2006-07 2005-06 2004-05

Year

% c

usto

mer

type Referred

WorkingUnemployedStudentOther

25

The remaining 15% of customers received no discount. It should be noted that whilst the percentage of customers who were from low-income households and referral agencies fell from 89% in 2005/06 to 85% this year, the total number of customers rose by 15%. Also, 82% of sales in financial terms were to low-incomehouseholds, compared to last year’s figure of 85%.

We surveyed 50 customers, of these, 76% saidthey would take up to 1-12 months longer to buy furniture from an alternative store if it were not for Revive. We believe that this is becausethey would not be able to find items of the quality and price that we offer elsewhere. A further 16% said they had no alternative but to buy from Revive.

We are attracting people to our Revive storesfor two principal reasons. In our customersurvey in February 2007, 40% of customerssaid they were shopping in Revive becausethey were in great need of furniture, whileanother 40% were opportunistic browsers‘having a look around’. That people come to Revive for these two distinct reasonsdemonstrates the wide appeal of the store.

Why have you come to Revive today?

0.0010.0020.0030.0040.0050.00

Great need offurniture

Price of the products Range of thets

Have a look around Other

Prop

ortio

n

produc

Does coming to Revive give you?

0.0010.0020.0030.0040.0050.0060.00

More choices about whereto buy my furniture

Make your money gofurther

Enable you to furnish yourhouse more quickly

Purchase items that youwouldn't have otherwise

done

Prop

ortio

n

The main benefit customers highlighted ofshopping at Revive was that it ‘makes yourmoney go further’. 49% of customers chosevalue for money over factors such as choice,quality and range and being able to purchase furniture quickly.

Achievement 2006/07 At least 84% of customers in Liverpool are from

low-income households �79% achieved

We also asked customers where they would look for furniture if Revive did not exist. 18% said they would buy furniture from a catalogue,33% from second hand shops 11% said there was no alternative and 39% other.

26

If it wasn't for Revive how much time would it take to buy a piece of furniture from an alternat

0.00

10.00

20.00

30.00

40.00

Same lengthof time

Up to 1 monthlonger

1 - 3 monthslonger

3- 6 monthsl ger

6 - 12 monthslonger

12 + monthslonger

No alternativeoption

Prop

ortio

n

ive shop?

on

Only 8.5% of customers said that they would be able to find suitable furniture from analternative source within the same length of time. Most customers (37%) said that it would take them up to one month to find furniture from an alternative shop and 15% said they have no further option but to shop at Revive.

Widnes

This year 91% of sales at Revive Halton in Widnes were to low-income households.Unfortunately, the percentage of customersfrom low-income households fell to 79% (91%, 2005/06). Of these customers, 13% were from referral agencies.

In February 2007, we took the decision to close Revive Widnes, as the premises were due for redevelopment and we stopped ourBulky Bob’s collections in the borough inMarch 2006, when we lost our collectioncontract with Halton Borough Council. We were struggling to supply the shop with decentfurniture and had no other option.

Social Return onInvestmentWe used the SROI tool to find a monetaryvalue to the added value produced by ourRevive Liverpool store.

We found that every £1 spent in Revive produced a social return of £2.12 by providinghigh quality pre-loved furniture to people whoneed it most. This social return is produced as a result of the pricing structure which gives discounts to low-income households and the alternative that Revive offers to people whowould otherwise use catalogue and creditoptions to purchase items.

Revive remains a great way for FRC Group to achieve our social objective to get furniture to people on low incomes. Furthermore, it helps to achieve a key environmental objective for Bulky Bob’s: it is a way to reuse as muchfurniture as possible. We believe that reuse isa better environmental option than recycling,extending the life of an existing item of furniture. We remain committed to offering the best product choice and price that we can for our customers.

Achievement 2006/07 Maintain level of low-income household customers at 91% at Revive Halton, Widnes

�92% achieved Achievements 2006/07

Calculate the Social Return on Investment of

our Revive store�

27

Revive Targets 2007/08�� To achieve at least 84% of Revive

customers from low incomehouseholds

�� To calculate the Social return on Investment of Revive Stores

28

2.4 The Cat’s Pyjamas

Cat’s Pyjamas organises innovative events for individuals and organisations to learn how to set up and run successful social enterprises.This year we continued to run bespoke eventsfor clients – a two day course introducingsocial enterprise to the West YorkshireEnterprise Partnership and a project with St Helens Chamber to develop a businesscompetition for start up businesses creatingsocial value. We also ran a training programmefor Government Office North West and carriedout research in South Africa for a possibleproject with Motorola.

Business development continues to be managed by our partners Urban StrategyAssociates and for the foreseeable future FRC Group’s involvement will remain at a strategic level.

2.5 FRC Solutions FRC Solutions the brand name of FRC TradingLtd. offers a bespoke consultancy service to organisations that want to learn from ourhands on experiences of running socialbusinesses.

This year we once again worked with a rangeof organisations across the UK including socialbusinesses, charities, local authorities andother consultancies. They were interested in a range of aspects of our business from how we win contracts and work with local authorities, to how we developed our environmentalmanagement system and how we built andmaintain our values culture. We carried out 3.4 days of paid consultancy work and hostedseveral visits for social enterprises and non-governmental organisations for which we did not charge.

Achievements 2006/07 Review the Cat’s Pyjamas progress later in

2006/07�FRC Solutions is essentially reactive, andshould not be at the expense of our other,more income generating businesses.

29

3.0 Our People Reasons for leaving FRC Group – exit interview

3.1 Our Employees FRC Group is a great place to work and we areproud to win awards for our approach. We aim to create a fair and empowering culture for all our staff.

On 1st April 2006, we had 73 people on thepayroll and we ended the year with 71 andeight volunteers. Throughout the year weemployed a total of 110 people (113, 2005/06).We had 22 (11, 2005/06) new permanentstarters, 20 new trainees and 41 leavers. We also took on 8 short-term work placements.Our employee turnover excluding trainees was 39% (22%, 2005/06).

41 people (39, 2005/06) left throughout the year, 17 of these were trainees who came to the end of the 12-month contracts and 22 were permanent employees. Of the 22 who left; 6 had their contracts terminated, 1 left to go back to education, 2 resigned, 10 left for new jobsand 3 were made redundant.

Understanding why staff leave us is importantto us. Our exit interviews give staff the chanceto feedback about what they have found both positive and negative in their employment at FRC Group. We want feedback to continuallyimprove how we treat our current employees.We carried out exit interviews with nine of our voluntary leavers.

Here’s what they said about the good things at FRC Group:

“Recognition for the things you do”“Directors are close to people and approachable”“I enjoyed learning about social business”“Values culture”“Everything”“Training both informal and formal”

And what they said about the not so goodthings:

“Redundancies”“The attitude of some people”

0

1

2

3

4

5

6

7

Better job Want a change Unhappy New career More prospects University

In all business it is inevitable that employeeswill move on and, it is clear from our feedback,that some of our leavers are ambitious to progress their careers. We were happy to see leavers moving on to better jobs with moreprospects and using the experience andtraining at FRC Group to do this. While we try to realise everyone’s potential, because of our current scope and size we cannot give everyone the professional development thatwe would like to.

Employee Feedback In May 2007, we were once again ranked in the Financial Times’ Best Place to Work Index. Entry requires that over 70% of staff give feedback. Of our 73, employees 60 responded

30

resulting in an 82% response rate. (80% November 2004). We were delighted to beplaced in the Index’s top 50 (ranked 26th in April 2005).

The index measures employee’s perception of the quality of their workplace relationships with management, their jobs and with other employees. We were heartened to seesignificant increases in our response scores.The index uses the Great Place to Work® Model© and scores the dimensions credibility,respect, fairness, pride and camaraderie.

The scores shown are the average percentageof employees who responded positively to all statements relating to each of the five dimensions.

Overall there were specific notable increasedscores in most of the following areas:-Figures in brackets denote November 2004scores.

�� 78% - management has a clear view of where the organisation is going andhow to get there (71%)

�� 72% - management delivers on its promises (45%)

�� 86% - management is honest and ethical in its business practises (77%)

Credibility:�� 85%- management keeps me

informed about important issues and changes (73%)

�� 72% - management makes its expectations clear (66%)

Respect:�� 83% - management shows

appreciation for good work and extra effort (75%)

�� 73% - management genuinely seeksand responds to suggestions andideas (69%)

FRC Group average scores by Trust Index Dimension

0%10%20%30%40%50%60%70%80%90%

100%

Credibility Respect Fairness Pride Camaraderie

2004/052006/07

�� 80% - management involves people in the decisions that affect their jobs orwork environment (62%)

�� 80% - people are encouraged to balance their work life and personal life (59%)

Fairness:�� 83% - everyone has an opportunity to

get special recognition (73%) �� 92% - I am treated as a full member

here regardless of my position (78%)�� 68% - managers avoid favouritism

(48%)�� 72% - people avoid politics and

backstabbing as ways to get things done (63%)

31

Pride:

�� 91% - people here are willing to giveextra to get the job done (77%)

�� 80% - I want to work here a long time(35%)

�� 73% - people look forward to comingto work here (63%)

�� 88% - I feel good about the ways wecontribute to the community (85%)

Camaraderie:�� 92% - I can be myself around here

(78%)�� 88% - people celebrate special events

around here (94%) �� 88% - people care about each other

here (76%)�� 83% - we’re all in this together (65%)

We also surveyed staff to establish how FRC Group’s work is regarded above pay andconditions and how proud they are to talk about their work.

University for the People We believe that to progress at work, your past should not determine your future. It should,instead be your efforts in the here and now. To do this, worthwhile training and personaldevelopment opportunities are crucial and we develop our employees through corporateUniversity for the People.

Our university provides professional andpersonal development opportunities throughthe day and hobby, health and cultural activities after work. We want employees to develop their interests outside of work anddevelop a better work life balance.

It's important to me that my work is useful to other people as it makes coming into workworthwhile, I'm not only interested in pay/conditions

0%

20%

40%

60%

80%

100%

12003/04 2004/05 2005/06 2006/07

Percentage of staff who would speak highly of FRC Group to people outside the company

0%

20%

40%

60%

80%

100%

2004/05 2005/06 2006/07

32

This year our university delivered: �� 467 (366, 2005/06) courses in total,

2206 (1682, hours 2005/06)�� 400 (275, 2005/06) were work related

and 67 (89, 2005/06) were hobbyrelated

�� 162 of the work related courses were for trainees

The number of training hours significantlyincreased this year due to a decision to deliver more in-house training on health and safetyand the safe loading of vehicles for ourlogistics team.

How’s it Going It is vital that every staff member has anopportunity to give and receive feedback abouttheir performance at work. Our approach to staff appraisals is an innovative one. Each year we run ‘How’s it Going’ (HiG) sessions for teams and individuals. These structuredconversations are an opportunity for teams and individual staff members to discuss theirperformance, their personal development and their view of FRC Group as an employer. This year 95% of staff surveyed agreed that How’sIt Going was a fair way to discuss progress at work. ( The other 5% did not have a HiG this year).

They also commented:

“It should be a procedure to formally review at 6 months to ensure targets are going to be metand no training needs have become apparent”

“It let’s me know how I am progressing in myparticular job”

Staff who think HIG is a fair opportunity to discuss their progress at work

0%10%20%30%40%50%60%70%80%90%

100%

12002/03 2003/04 2005/

Equal Opportunities and Diversity FRC Group strives to be an equal opportunitiesemployer and encourage diversity. On 31st

March 2007 our female:male ratio was 1:2.6 anincrease on last year’s ratio of 1:3.4. Amongstthe 13 people with managerial responsibilitiesthe female:male ratio increased to 1:1.1 from last year’s 1:1.6 as there are now more womenwith management and supervisoryresponsibility.

We asked employees to give feedback on the Group’s approach to diversity by asking them did they agree with the statement ‘I believe I have not been discriminated against on the basis of age, ethnic origin, gender, disability.” This year across the Group 9% of the staff we employed were from ethnic minority groups. Of this 7% (9%, 2005/06) of our Liverpool staff

06 2006/07

Achievement 2006/07

100% of employees agree HiG is a fair way

to discuss their progress at work �95% of employees agree that HiG is a fair way todiscuss their progress at work

33

and 17% of our Oldham staff were fromminority groups. In Liverpool and Oldham 9% and 14% of citizens are from ethnic minoritybackgrounds respectively.

0%

20%

40%

60%

80%

100%

Age Ethnic Origin Gender Disability

2004/05

2005/06

2006/07

In total 31% of all trainees recruited in Liverpool and Oldham were from the area’s

Black and Minority Ethnic (BME) communities - 22% in Liverpool and 36% in Oldham. There remains a challenge for us to encourageindividuals from ethnic minorities to join FRCGroup. We believe we have done well butthere is room for improvement and we willcontinue to make it a priority for 2007/08.

As well as a commitment to our BME targets,we continued to concentrate our efforts in recruiting more women on to our logisticstraining programme.

This year, although we interviewed threewomen for training places, we were unable to recruit any at all (1, 2005/06) on to the programme.

.

Achievement 2006/07

Introduce diversity monitoring by September

2006� Achievement 2006/07

33% of trainees recruited in Liverpool and

Oldham from BME community �Achieved 31% of trainees from BME community

Achievement 2006/07

Write a Group diversity action plan by

October 2006�

While our results show the efforts we havemade on our BME recruitment targets we did not, as planned, formalise our approach to the Group’s diversity agenda. This is somethingwhich must be high priority in 2007/08.

Percentage of staff who agree or strongly agree that everyone in the work place is treated fairly regardless of:

Employee Targets 2007/08

�� 100% of employees agree HiG is a fairway to discuss their progress at work

�� Publish Group’s diversity policy by August 2007

�� Introduce diversity monitoring by October 2007

�� Write a Group diversity action plan by December 2007

�� 33% of trainees to be recruited from BME communities on Merseyside andOldham

34

3.2 Our Training Programme FRC Group offers salaried trainingopportunities to socially excluded people. We employ individuals for 12 months and givethem a job and a structured training programme so they gain professional skills and qualifications. Through this intermediate labourmarket (ILM) programme we recruit individualsfrom long-term unemployment and give them a job in our logistics team working in our Bulky Bob’s and our Furniture Resource Centrebusiness, collecting and delivering furniture.

Our trainees work at the forefront of the business and are given opportunities to become part of an established team doing a real job, gaining real work experience andgiven a real chance to carve out a better future for themselves.

In doing this we raise individuals’ skill levels, motivation and confidence and embed a workethic. They then have a better chance to compete more effectively for employmentopportunities and start a career in logistics - an industry where qualifications are oftenexpensive and beyond the reach of beginners.We call our training programme DrivingChange, and offer for example; LGVII , ADRand HIAB training.

We remained committed to recruiting traineesfrom socially excluded groups. This meansindividuals who were unemployed for morethan 12 months and, in particular, individualsfrom the black and minority ethnic (BME)community and women, both groups are undervery represented in the logistics industry.Throughout the year 31 individuals took part in the training programme and worked either in our Liverpool or Oldham Bulky Bob’s businesses.

We continued to use a mixture of grants andtraining contracts plus our own financialcontribution to run our training programme.European Social Funding (ESF) and Neighbourhood Renewal Funds (NRF)contributed towards the salary and trainingcosts of trainees on our (ILM) programmes in Liverpool and Oldham. We secured a total of £253,703 funding for the year. Due to ESF funding reductions in early 2007 we were forced to reduce the number of traineesrecruited this year by four.

We ran 6 open days for applicant trainees both in Merseyside and Oldham, and received 292 applications for 20 positions, we alsointerviewed 81 applicants including threewomen. We selected individuals whodemonstrated a commitment to a career in logistics. Disappointingly no women traineeswere appointed.

Over the course of 2006/07 we employed a total of 31 (35, 2005/06) individuals in Merseyside and Oldham. Of the 20 trainees werecruited 1 had been unemployed for 7-12months, 16 had been unemployed for 12 to 24 months, (8 in 2005/06) and three for over 2 years In 2006/07 Merseyside’s unemployed rate at 6.6% still remained 1.3% higher than thenational average of 5.3%4.

4 Office of National Statistics

35

In June 2006, we launched our first satelliteBulky Bob’s operation in Oldham, GreaterManchester. We replicated our ILM programme and offered 8 long-termunemployed individuals job and trainingpositions.

The (2006/07) unemployment rate in Oldhamwas 4.2%. In the wards with the highestminority residence unemployment figures are up to three times this rate5.

This year we redesigned our trainingprogramme introducing a ‘Driving ChangeLogbook’. Owned by individual trainees itenables them and their assignedDriver/Mentor/Assessor (DMA) to record, monitor and identify areas for improvement in their driving.

Our DMAs are the senior experienced drivers who mentor trainees on the job and preparethem for their logistics examinations. This year they delivered new training such as Safe Loading and Vehicle checks, enhancing the professional development of our trainees.

Not only has the new log book and this additional training introduced a more structured approach into the on-the job drivingpractice and tuition, we now feel confident to

5 Oldham Borough Council Strategic Plan2006-2009

set clear targets for first time LGV class II passrates for 2007/2008.

In 2007/08 we want 50% of all our trainees to qualify as drivers with LGV II. We hope these defined targets will lead to higher levels ofmotivation and determination.

Qualifications Gained We want our trainees to receive the best, most relevant and transferable training whilst theyare here. As well as offering LGV Class II we offer a range of qualifications to enhance their chances of gaining sustainable employmentwhen they leave. This includes training in first aid, health and safety and tachograph training.

Throughout the year 31 (Liverpool and Oldhamtotal) trainees gained a total of 162 qualifications between them (207, 2005/2006),an average of 5.2 qualifications (5.5, 2005/06).

This year we built relationships with employerssuch as Bibby’s, Thomas Hardy Commercials,Parcel Force, Road Haulage Association. They confirmed that the training we offer is the training they want potential employees to have.

A big achievement this year was that our first female trainee won the Edge Upstarts ‘Social Enterprise Trainee of the Year Award 2006’.We were delighted and all very proud of her.

"For as long as I can remember I've wanted to drive. I hated being on Income Support. It's not a nice feeling not being able to give yourchildren what they want. And I found it isolating. Mentally and physically it is rough becoming a lone parent but I definitely wantedto be at home for a while to bring up myyoungest boy. Then when he reached schoolage - that was it, I wanted to go back to work. The training was daunting initially: It was nerve racking at first - very - but , looking back, it was a lot easier than being on IncomeSupport!”

Trainee progress is reviewed every six weeks.This year we invited trainees’ DMAs to join the reviews making the sessions more job focused. DMAs have first hand experience of

4

The only womanamong 40 truckdrivers at FRC Group, Carol saysthe job hasbrought her out of herself: "Mycolleagues all just welcomed me. I just get stuck in.And I give the lads a run for theirmoney!"Carol Hughes,driver, FRC Group logistics.

36

working with the trainees in their day-to-day jobs.

In reviews our trainees said:

“This is a good company with good people,and good people to work with.”

“ It’s great to be in a working environment and to be part of a team.”

“I’ve put on weight. I’m eating better becausewhen I was on the dole I didn’t really eat as I had no routine. I feel healthier!”

Early Leavers

In Liverpool, 4 (26%) trainees left before completing the programme, all had to be dismissed for poor attendance. With limitedresources we are tough on attendance. We also believe that one of the most importantthings we do at FRC Group is to try to instil a work ethic into our trainees. We would befailing if we allowed them to think that high

incidences of absence were acceptable to us or any subsequent employer.

Two (25%) Oldham trainees left during theyear, one was dismissed for losing his driving licence and was unable to complete his LGVclass II training. The other resigned citingpersonal reasons.

Leavers Of the 15 Merseyside trainees that completedtheir training, our graduates, 73% obtainedjobs. (71%, 2005/2006).

Tracking Leavers

We are committed to track graduates for up to 18 months after they leave us. We get in touch

with them 6,12 and 18 months after they leave us to get feedback on where they are workingand how useful they found our programme.

This year we introduced a new incentive to encouragethem to keep in touch. For those who return our questionnaire we offer them the chanceto win £50 in a draw.

We then let all of our current trainees andrecent graduates know who the lucky winner isand share the collective feedback with them all. We believe that this simple solution is the reason for the increase in the return rate of completed questionnaires from 23% in 2005/2006 to this year’s 44%.

Achievement 2006/07 Get 75% of all leavers into jobs or further

education�We achieved 65% of all leavers into jobs

Achievement 2006/07 Maintain our early leavers rate at 13 % or

below�Early leavers rate 25%

This year we got the best quality of feedback ever. Of the 26 respondents 81% were still in employment (80%, 2005/2006). 100% felt that they can work better in a team compared to last year, can communicate better and 90%said that they feel more motivated and that their self-esteem is higher. 100% of past trainees said that their quality of life is also better. Our graduate trainees said:

Achievement 2006/07

Track our leavers for up to 18 months�

“My training made me more confident”

“Working at FRC got me back into a workingroutine”

37

“FRC opened up new doors for me and gave me better prospects for the future” “ FRC gave me motivation to get a job, improved my communication skills and teamworking skills.”

Work Placements Over the course of the year we offered workplacements to 8 unemployed individuals who came via a range of organisations includingGroundwork and TNG. Offering placements to long term unemployed people fits in well with our social inclusion agenda and enablesindividuals with low skills and confidence to gain skills, while providing a taster of workingin a business and gain the confidence to move in to long term training or employment.

Placements were short term, between 2 and 12 weeks with some working in the office and some in the warehouse. We encouraged all the work placements to apply for a place on our ILM trainee programme.

This year we worked with Liverpool’sgroundbreaking Community Justice Centre.6 A unique initiative, which brings justice into the heart of the community, tackling crimes andanti-social behaviour that affect the quality of life for people living in the local authority wardsof Anfield, County, Everton and Kirkdale, in North Liverpool.

We were able to offer one placement to a client on Community Referral Order and are keen to support the CJC’s work and the individuals they work with.

Our ILM programmes are an integral part of how we achieve our aim of being great forpeople. Through offering training contracts we give people the opportunity and support to make real changes to their lives and theirfamilies’. Increasingly, offering work placements to people with low skills and from offending or at risk backgrounds increases the impact we can make. We will continue toprovide these opportunities and maximise the efficacy of the training and mentoring we give.

6 www.communityjustice.gov.uk

Training Targets 2007/08

�� Achieve a rate of 75% of trainees into further training or employment

�� 50% of all trainees to be taken on as Driver/Loaders

�� Trainees to achieve a 60% first time LGV II pass rate

�� Trainees to achieve a 60% first time car pass rate

�� 5% of ILM trainees to be women

�� 33% of ILM trainees to be from a Black and Minority Ethnic Group

�� Re-negotiate and evaluate all training contacts and providers by April 2008.

38

3.3 Our Values Our values show how we want to run ourbusiness with passion, creativity,professionalism and bravery. They help us define FRC Group and our people - our beliefs in action. They give us a system to recognise,reward and celebrate our employee’soutstanding work and improve their performance.

During 2006/07, we continued to recogniseoutstanding individual’s work with valuesawards given out by team leaders andmanagers on an ad hoc basis and at monthlystaff meetings. Each month we celebratedEmployee of the Month and in July 2006 heldour annual Employee of the Year celebrations.

Recruitment We are committed to attracting and recruitingthe right people to maintain the shared culture of the Group. We continued to run values days during recruitment for certain jobs and stillbelieve that this approach helps us seeapplicants’ beliefs and passions of applicants.In this way we can identify the people that will contribute most positively to our culture. This is vital for certain posts such as managers and team leaders who must not only agree with our values but also lead by example to embedbehaviours within their teams.

Employees’ values awardsValues Awards 2003-2007

153

76

159

133

74

81

105

90

22

11

13

32

29

45

32

41

0 50 100 150 200

2003/04

2004/05

2005/06

2006/07

Bravery

Creativity

Passion

Professional

Throughout the year team leaders rewardedtheir teams by giving out a total of 296 valuesawards (309, 2005/06). Of these, 41 were for Bravery (38, 2005/06), 32 for Creativity (16,2005/06), 90 for Passion (101, 2005/06) and 149 for Professionalism (133, 2005/06).

The total number of values awards given out remains consistent with last year and we were pleased to reward more creativity where staff are expected to “suggest new ways of doingthings, have ideas and make them happen and take an interest in how other companies do things”.

We were disappointed that we failed to significantly increase the number of awardsgiven out for bravery – where staff are rewarded for “ speaking up and raising issues,volunteering to help colleagues out and admitting when you need help”

Achievement 2006/07 Increase number of creativity and bravery awards given out to employees by 100% on our 2005/06 performancesAchieved

Creativity� 100% increase

Bravery� 7% increase

39

We are determined to improve on the bravery of our employees and the number ofsubsequent values awards given out in 2007/08.

This year we launched a Bulky Bob’s in Oldham, our first satellite Bulky Bob’s depot.Before operations began the team spentseveral weeks in Liverpool to take on boardthe Group’s culture - they received trainingabout the Group’s values and took part in employee meetings to ensure they knew the value behaviours we expect and how torecognise, reward and celebrate them.

There are 6 staff and 7 trainees in Oldham and throughout the year they were awardedBravery 3, Creativity 0, Passion 8 andProfessionalism 15. Two members of staffwere also awarded the Group’s Employee of the Month accolade. Work is still needed to ensure a balance of behaviours and subsequent values awards given out.

Employee of the Month Each month we asked team leaders to nominate an employee who they believe had

demonstrated all four of FRC Group valuesthroughout the month. The Group’s Directors then decide on a winner who is announced to all staff at our monthly Employee of the Month meeting. Here is why one winner was nominated by his team leader:

He always provides good customer serviceand shows great passion in caring about the job he does. A great all rounder”

Helen Halpin, Transport and WarehouseTeam Leader, on Bob Davey, FRC GroupEmployee of the Month, November 2006

Annual values awards In June 2006, our employees nominated the colleagues who they thought had been the

most brave, creative, passionate andprofessional consistently throughout the year.A panel of judges drawn from departmentsacross the Group considered every nominationand voted anonymously for the four winnersand Employee of the Year who had received at least one nomination for three or four annualvalues awards. Here’s what two of our winners said about their awards:

Achievement 2006/07 Ensure we embed values culture in new

satellite businesses � “Bob took on the bravenew challengedelivering training to the whole LogisticsTeam. He is veryprofessional and has a wealth of knowledgewhich he passes on to the whole team and he showed creativity withgood ideas about howwe can improve ourservice.

“I was honoured to be voted for by peoplewho I work with every day, although it’s great to get praise frommanagement, this award was reallyspecial because it came from mycolleagues.”

Mick Hart, Warehouse Team Leader,Employee of the Year 2006.

“Felt proud andhonoured.”

Gary Myddelton,Driver Mentor, ProfessionalismAward winner 2006.

40

Employee feedbackFor us to monitor the success of our culture it is vital that we get feedback from ouremployees. The following results show thepercentage of staff who agree with the following statements.

“The people here are passionate and really believe in helping low-income families and unemployed people.” 82% (82%, 2005/06).

“As a company we are creative, we come up with good new ideas and find clever ways of dealing with problems.” 86% (86%, 2005/06).

“We are professional, the quality of what we do is consistently high and we are always trying to improve.” 86% (82%, 2005/06).

“We are brave, we face up to problems, we’renot afraid to take risks and admit when we are wrong.” 84% (84%, 2005/06).

These percentages are pleasingly consistentwith last year’s feedback and evidence the fact that our values are shared and understood by the majority of our staff. This is also borne out in the way our employees felt after receiving a values award 89% (88%, 2005/06) of them said that they had received at least one valuesaward during the year and made the followingcomments about this:

“Work well, people feel appreciated andrewarded.”

“Should encourage peers to give out to peer group.”

“The wrong people get them.”

“Just that this is a good place to work and it opens a lot of other doors for your future.”

“They’re great, they make you feel like you’veachieved something.”

“I am proud of myself.”

“I think it’s a good idea to be made to feel special.”

“Not always given to the right people.”

“Quite often seems to be the people who shout the loudest about what they do.”

“They’re a boost to the staff because you knowyou are recognised for the work you aredoing.”

Once again the facts and figures on our valuesperformance show the extent to which we have embedded this culture in our business. The challenge for us in 2007/08 is to be better at encouraging, recognising and rewarding thebravery of our staff. We must also ensure that we develop our values culture in our Oldham

operation to the level of the mature culture we have on Merseyside.

Values Target 2007/08 �� 100% increase in the number of

bravery and creativity awards given out to employees.

�� Ensure our Oldham operationdevelops the mature values culturethat we have on Merseyside.

41

3.4 Health and Safety Attention to health and safety makes goodbusiness sense and our performance in this area is regarded as important as any otherbusiness objective.

This year, through our induction process we continued to train all new staff on health and safety matters and ran two refresher coursesattended by all logistics and warehouseemployees.

Unfortunately, due to time and resourceconstraints we did not manage to ensure that

all of our office based staff had a health and safety refresher course this year.

We expanded the remit of the Group’s Healthand Safety Committee to health, safety and environment as there was nowhere in ourbusiness where we regularly discussed staff feedback and ideas on the Group’senvironmental performance.

We also changed the membership of theGroup to better reflect all of our businessactivities, inviting the manager of our OldhamBulky Bob’s operation and one of Bulky Bob’s Liverpool’s Driver/Mentors to attend.

We continued to report our health, safety and environmental performance on a regular basisto all employees through team briefings and the monthly staff newsletter. GroundworkWirral remained our professional health andsafety advisors.

For funding purposes we monitored the time that the 10 members of the Health, Safety and Environment Committee spent on health and safety matters between April 2006 and March2007 – a total of 319 hours (100 hours2005/06). This reflects the increased amountof time spent on professional development and training for our Logistics Team and our newlyappointed Group Health and Safety Officer.

In August 2006 we appointed a Group Healthand Safety Officer to oversee health and safety matters across FRC Group. We also increased

the number of Fire Marshals from 1 to 3 and the number of qualified First Aiders on all sites across the Group from 1 to 4.

As a result of the new operations, Bulky Bob’sOldham and Sefton’s Deconstruction Project,and an increase in the number of job placements, we reviewed the health and safety induction training ensuring that all Groupwarehouse and logistics staff consistentlyreceive the same basic level of health andsafety training.

Throughout the year our Liverpool’s BulkyBob’s collections and warehouse operationswere subject to three in-depth health andsafety checks by Liverpool City Council. After the June and November 2006 observationalchecks, we were awarded the highest scorespossible. Liverpool City Council also said:

Achievement 2006/07

Ensure all logistics and warehouseemployees attend at least two health andsafety refresher courses throughout the year

�“Once again, I was impressed by the company’s clear commitment to healthand safety, your comprehensivedocumentation and clearly defined safeAchievement 2006/07

Ensure all non-logistics employees undergoat least one health and safety refresher

course in 2006/07�

working system.”Carl HopeLiverpool City Council, November 2006

The total number of accidents reported for the year was 26 (41, 2005/06) -12 in Liverpool and 14 in Oldham. This 26% decrease is a result of our increased focus on professional development and training for members of the committee, a consistent focus on health and safety in all inductions and the

42

active part managers and team leaders play in promoting health and safety.

As Oldham was a brand new operation we not so surprised by its higher accident rate. All accidents were investigated and improvingOldham’s performance is a priority for 2007/08.We actively encouraged our staff to reportaccidents and investigated all Reporting of Injuries, Diseases and DangerousOccurrences Regulations (RIDDOR) reportableaccidents and any that could have resulted in a more serious injury. Of this year’s 26 (41, 2005/06) accidents, we were obliged to report 7 (10, 2005/06) of them to the Health and Safety Executive underRIDDOR. All were investigated. In 2006/07there were ten vehicle accidents (2005/06, 10 vehicle accidents). Analysing this type ofaccidents has become an area of focus for theHealth & Safety Officer and the LogisticsTeams in Liverpool and Oldham this year. The accidents in 2006/07 were more serious,resulting in vehicles being off the road for

Accident rate per employee 2002-2007

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

2002/03 2003/04 2004/05 2005/06 2006/07

Accident rate per employee

longer and incurred greater insurance andrepair expenses than the 10 accidents in2005/06. To address this, two Driver / Mentors were trained to deliver Safe and Fuel Efficient Driving Training (SAFED) in February 2007.They then began tutoring the Logistics Team in Liverpool in safer driving techniques and fuel efficient driving.

When we asked employees if they believe that their place of work is “ clean, healthy and safe”86% of them agreed with this statement. (88%, 2005/06: 85%, 2004/05).

Achievement 2006/07 Reduce the number of RIDDOR reportableaccidents on the Liverpool logistics base by

20%�30% reduction achieved

Operating businesses on different sites has forced us to become increasingly systems led and has influenced our approach to health and safety. This year managers and team leaderswere tasked with taking more responsibility for their staff with health and safety matters. Managers had a greater involvement in training, carrying out risk assessments andinvestigating accidents. This in turn improvedtheir understanding of health and safety law and our approach to health and safety, as well as the ramifications of their failure to keephealth and safety high on our agenda. Achievement 2006/07

Change the way we calculate our accidentrates – move to a rate of lost time per employee and report on this for separate

FRC Group operations�

43

The overall rate of accidents per employeecontinues to fall. In 2006/07 there were 0.34 (0.58, 2005/06) accidents per employee.We have reviewed the way we calculate the amount of time that is lost due to accidents.For 2006/07 we have reported on the percentage of potential working days lost due to accidents, monthly and annually. We lost 0.6% of our working time due to accidents.

We have not reported on a rate of lost time per employee for different business operations.This is a priority for 2007/08 as it will provide a greater degree of detail about accidents and allow us to relevantly benchmark the Group’sperformance. In 2007/08 we will also establisha baseline accident rate for each operationwithin the Group.

We believe our messages and training effortsresulted in the decrease in the number of accidents reported. However, as we failed to ensure that all non-logistics and warehousestaff took part in refresher training, this must be a priority for 2007/08.

We must continue to keep a close eye on our targets throughout the year and endeavour to reduce the number of accidents further byfostering more awareness through training,communication of accident rates and constantreview of our operating procedures. We willensure that health and safety remains a high priority in all areas of our business.

Health and Safety Targets 2007/08

�� Reduce the number of personalinjuries reported across FRC Group by10%

�� Reduce the number of RIDDORreportable accidents across FRC Group by 10%

�� Achieve a lost time due to accidents of0.29% per employee across FRC Group

�� Change the way we calculate ouraccident rate – move to reporting onhealth and safety performance indifferent operational areas.

�� Report on and reduce the number ofvehicle accidents across FRC Groupby 30% on 2006/07 rate.

�� Ensure all logistics and warehouse

employees under go at least twohealth and safety refresher coursesthroughout the year

�� Carry out an internal audit of healthand safety procedures across all sitesby 31st March 2008.

44

4.0 Our Environmental PerformanceRegardless of an organisation's shape, size and business sector, all organisations face anever-increasing number of challenges relating to their environmental performance. Moreenvironmental legislation and regulation,higher energy and waste disposal costs,increased pressure from business partners andother stakeholders; the drivers for companiesto actively engage in positive environmentalmanagement have never been greater. This has certainly been the case at FRC Group this year.

The headlines on our performance are encouraging and mixed.This year has seen increases in the percentages of wastecollected, reused and recycled through Bulky Bob’s so that we have reused and recycledmore materials than ever before. This year we introduced new recycling initiatives in our Bulky Bob’s operations to expand the type and volumes of materials for reuse and recycling.Our Bulky Bob’s performance details can be found on page 20.

The Environmental Impacts of Our ProductsEach year through our Furniture ResourceCentre business we supply thousands of items of furniture, white goods and householdutensils to the tenants of our RSL customers.We rescue hundreds of items of furniture and white goods from the bulky household waste stream and we sell these items to the publicthrough our high street store Revive.

This year we won a contract to be the RSL sector’s preferred supplier of furniture throughProcurement for Housing1. To win the contractin the procurement process we had to be very open about the environmental credentialsabout the goods that we source and supplythrough our Furniture Resource Centreservice. We then went on to launch a researchproject with PfH to determine the commitmentof PfH’s membership (many were alreadyFurniture Resource Centre customers) to

1 www.procurementforhousing.co.uk

sustainable procurement. We hope that the results will give us important market insights.

Achievement 2006/07 Commit to identify and promote the environmental impacts of the products we

supply�

Achievement 2006/07 Carry out cradle to grave impacts for the

products that we sell�

Achievement 2006/07 Talk to three major customers about the environmental credentials of the products

that we supply�

We had hoped to be able to find resourceneeded to carry out this work as we do nothave the in house expertise that this researchrequires. We were very disappointed not to have done this but remain committed to findingthe resources funding or help in kind to identifythe cradle to grave impacts of the goods that the Furniture Resource Centre suppliers its customers.

Carbon Dioxide Emissions and Energy Use FRC Group creates carbon dioxide emissions(CO2) in two ways: through the use of electricity and gas to heat and light our buildings and by using petrol and diesel in our vehicles.

45

FR C G roup C O 2 em issions

050000

100000150000200000250000300000350000

2004/05 2005/06 2006/07

CO

2 em

issi

ons

(kg)

LogisticsU tilities

The total CO2 emissions from the logisticsoperations and utilities used in our premisesdecreased by 0.9% from 294,385kg (2005/06)to 291,765 kg. This achievement is even more significant when considering that in 2006/07we opened Bulky Bob’s Oldham which addedan additional premises and a logistics team.

FRC Group operations contribution to CO2emissions by percentage

This pie chart shows how different parts of FRC Group operations contribute to our overallCO2 emissions in 2006/07. Forty nine percent of the overall CO2 emissions were produced bythe logistics operations serving the Merseyside area.

Logistics Furniture Resource Centre Logistics Bulky Bob's LiverpoolElectricity FRC Group Head Office Logistics Bulky Bob's OldhamElectricity Revive Liverpool Logistics Bulky Bob's WarringtonLogistics Revive Gas FRC Group Head OfficeElectricity Revive Halton Gas Revive LiverpoolLogistics Bulky Bob's Sefton Electricity OldhamGas Oldham

We are aware that the reuse and recyclingactivities carried out by Bulky Bob’s, whichdivert over 1600 tonnes of waste away from landfill each year, results in savings in CO2.

Furniture Resource Centre and Bulky Bob’sLiverpool. The third most significant contributorto the CO2 emissions was the use of electricityat FRC Group Head Office, Atlantic Way, Liverpool. In 2007/08 we will work to define a robustmethodology that takes these CO2 savings intoaccount and enables to account for the positive impacts on CO2 that Bulky Bob’s reuse and recycling activities have. See Appendix V process diagram showing thereuse and recycling activities and the CO2emissions produced by Bulky Bob’s services.

46

Energy in Our Buildings

At our FRC Group head office, Revive stores in Liverpool and Widnes and Bulky Bob’s Oldham site, we use electricity and gas to provide heat, light and power for all our operations. Our overall CO2 emissions from utilities decreased by 3.23% to 85,531kg (88,388kg in 2005/06).

Significantly, the carbon dioxide emissions persquare metre from our use of utilities shows a decrease of 4kg/m2. In 2005/06, use of gasand electricity in our Liverpool and Widnespremises produced 88,388kg CO2 at a rate of 26.9kg/ m2. In 2006/07 this reduced to 22.9kg/ m2 from the use of gas and electricity in our Liverpool, Widnes and Oldham premises.

CO 2 emissions from electricity use at FRC Group Headquarters

0

10000

20000

30000

40000

2004/05 2 /06 2006/07

CO

2 em

issi

ons

(kg)

005

This year CO2 emissions from the use ofelectricity at FRC Group head office rose by 14%. Electricity consumption was 84,972kWhthis year (72,793 kWh last year). This equatedto 36,538 kg of CO2 compared with last year’s figure of 31,301kg.

We believe that this increase in CO2 from electricity use is mainly due to the increaseduse of air conditioning throughout the summerof 2006/07 to keep not only the offices but also the ICT system servers adequately cool during one of the hottest summers on record.

Achievement 2006/07 Reduce gas usage at FRC Group Head

Office by 5% on 2005/06 levels -�gas usage reduced by 49%

Achievement 2006/07

Reduce emissions from electricity use at FRC

Group Head Office by 5% -�emissions rose by 12%

* The wording of this target has been changedsince the publication of the 2005/06 Sustainability Report. See appendix III for more information.

Achievement 2006/07

Reduce gas usage levels at Revive by 10%

on 2005/06 levels -�gas usage reduced by 11%

CO2 emissions from gas usage decreased. At FRC Group head office and at Revive Liverpool we exceeded our targets for reducingthe amount of gas used.

47

G a s u s e d a t F R C G r o u p H e a d q u a t e r s a n d R e v i v e L i v e r p o o l

0

2 0 0 0 0

4 0 0 0 0

6 0 0 0 0

8 0 0 0 0

1 0 0 0 0 0

1 2 0 0 0 0

2 0 0 4 / 0 5 2 0 0 5 / 0 6 0 6 / 0 7

kWh

2 0

R e v iv e L i v e r p o o lF R C G r o u p H e a d q u a r t e r s

At FRC Group headquarters we used 49% less gas – 53,807 kWh in 2006/07 compared with104,022 kWh in 2005/06. This is due to the installation in November 2006 of 2 ‘A’ graded energy efficient boilers.

Gas use at Revive Liverpool decreased by 11.6% from 32,364 kWh in 2005/06 to 28,603kWh in 2006/07. This can be explained by a decrease in the use of heating.

In June 2006 Bulky Bob’s Oldham beganoperating and throughout the year used 7,131kWh of gas and 5,257 kWh of electricity from June 2006 to March 2007. The CO2 emissionswere 3,616kg, 1,355kg from gas usage and 2,261 kg from electricity.

We did not set any targets for savings on CO2in Oldham for 2006/07 but will address this for 2007/08.

B u lk y B o b 's O ld h a m C O 2 e m is s io n s f r o m G a s a n d E le c t r ic i t y

0

5 0 0

1 0 0 0

1 5 0 0

2 0 0 0

2 5 0 0

G a s E le c tr ic i ty

CO

2 em

issi

ons

(kg)

Overall, the CO2 emissions from using gas andelectricity in our buildings decreased by 3.2%from 88,388 kg in 2005/06 to 85,531 kg in2006/07. We are very pleased to have reducedour CO2 emissions at the same time as opening an additional premises (Oldham). In 2006/07 the CO2 emissions from gas andelectricity in our premises were 4kg/ m2 less than in 2005/06.

As well as continuing to improve our energyefficiency, we are committed to switching to renewable sources. We are aware that the renewable energy market is changing andoffers more and more options for businesscustomers to choose from. We will continue to investigate renewable energy suppliers and seek capital investment to support the bestenergy saving options we can afford.

48

Our Logistics Fleet In 2006/07 our Logistics team based at FRC Group head office provided transport for BulkyBob’s Liverpool and Warrington, Revive Liverpool and Halton and was the base for the nationwide Furniture Resource Centre furnituresupply business. In 2006/07 our Logistics team grew. The Bulky Bob’s Oldham team wasadded, plus we purchased a skip truck which was used in Sefton between January and March 2007.

Our overall CO2 emissions from all logistics operations increased by 0.1% to 206,236kg(205,997kg in 2005/06).

Across the FRC Group, fuel efficiencyimproved by 7.9% from 0.544 kg/km (kg CO2emitted per km travelled) in 2005/06 to 0.501 kg/km in 2006/07. The amount of CO2 emitted by FRC Group logistics operations increasedby 0.1% to 206,236kg (205,997kg 2005/06).

C O 2 e m i s s i o n s e f f i c i e n c y

0 . 0 0 0

0 . 1 0 0

0 . 2 0 0

0 . 3 0 0

0 . 4 0 0

0 . 5 0 0

0 . 6 0 0

0 . 7 0 0

2 0 0 4 / 0 5 2 0 0 5 / 0 6 2 0 0 6 / 0 7

CO

2kg/k

m tr

avel

led

M e r s e y s id eO ld h a mO v e r a l l

C O 2 E m i s s i o n s f r o m l o g i s t i c s f l e e t s

0

5 0 0 0 0

1 0 0 0 0 0

1 5 0 0 0 0

2 0 0 0 0 0

2 5 0 0 0 0

2 0 0 4 / 0 5 2 0 0 5 / 0 6 2 0 0 6 / 0 7

CO

2 (kg) M e r s e y s id e

O ld h a mT o t a l

There was a 10.8% improvement in fuel efficiency for the Merseyside logistics team based at FRC Group head office. CO2emissions per km travelled were reduced from 0.544kg to 0.485kg. The amount of CO2

Achievement 2006/07 Reduce CO2 emissions from our logistics fleet on

Merseyside by 5% �13.6% reduction achieved*(See Appendix 3 for methodology information relating to this target)

emitted by the Merseyside based logisticsoperations was reduced by 13.6% to 177,989kg (205,997kg 2005/06).

The reduction in the emissions from our Merseyside operations was due to ourLogistics Team Leader and Customer Service

49

Team Leader continuing to work closely toimprove the fuel efficiencies produced bydelivery scheduling and route planning.Furthermore, in previous years we hadreceived a 10% discount from a supplier to the Furniture Resource Centre if we collectedstock from their premises in St Helens. In2006/07 we stopped using this supplier,switching to a supplier who is also ourneighbour here in Liverpool. This has had a positive impact on our CO2 emissions and CO2emissions efficiency.

Bulky Bob’s Oldham was our first logisticsoperation based outside of Merseyside. From June 2006 to March 2007, Bulky Bob’s Oldham produced 28,247kg CO2, at a rate of 0.630 kg/km. In 2006 we commissioned advice from theDTI’s Fuel Champ scheme and we implemented a number of improvements. In particular, rethinking Furniture ResourceCentre’s scheduling, improving fuel efficiency, making financial savings and reducing CO2emissions.

As a result of the DTI’s Fuel Champ advice two senior drivers were appointed as “Fuel Champions”. They were trained as instructorsto deliver Safe and Fuel Efficient Driving”(SAFED) training to all 20 drivers in the Merseyside Logistics Team. SAFED training gives recipients fuel efficient and defensivedriving techniques to reduce fuel consumptionand reduce accidents.

Drivers in the Oldham Logistics Team did not receive SAFED training in 2006/07. This will be a priority for 2007/08.

We explored ways to introduce an incentivisedfuel efficiency programme for logistics staff.We have not found a fair and efficient way to do this as drivers use a variety of vehicles in a week or month and because the types of driving between Bulky Bob’s and FurnitureResource Centre are not comparable.Furniture Resource Centre vehicles travelnationwide making a small number of deliveries daily whilst Bulky Bob’s servicesmake up to 40 collections per vehicle per day all based in one neighbourhood.

We will continue to work on this with a view to putting a team-based scheme into place in 2007/08.

Achievement 2006/07 Introduce the use of Bio diesel fuel in our fleetas soon as local fuel supplies are available -

�

In September 2006 we tried to pilot usingbiofuel in 5 of our Bulky Bob’s wagons.Unfortunately the trial was unsuccessful. Our biofuel supply was of poor quality, unreliableand resulted in 3 wagons being out of use for one day due to technical difficulties with the fuel pump filters. Therefore the trial wassuspended while we reviewed our approach.

Achievement 2006/07 Introduce an incentivised fuel efficiency

programme for logistics staff -�

Following the unsuccessful trial in September, we investigated two other potential biofuelsuppliers. In March we began another trial,using biofuel from one supplier in two of our wagons.Achievement 2006/07

Commission DTI Fuel Champ advice -� Meanwhile, we have been researching the best long-term option on an environmental,technical and financial basis. We have madeapplications for funding for the technicalconversion that our vehicles would need to cope with biofuel from one possible supplier.

Through this we met Regenatec, a possiblelocal supplier of a biofuel produced from wastecooking oils.

Achievement 2006/07 Run at least one driver efficiency course for

all logistics staff -�

We are aware that there are a number ofissues with the sustainability of biofuel production and we will consider these issues

50

very carefully before we decide to mainstreambiofuel use by our fleet. During 2006/07, we benchmarked the efficiency of fuel usage against othercompanies in the waste and logistics industry.We used this Information to set targets for the Logistics Team for 2007/08.

In 2007/08 we will continue to strive for CO2emission efficiencies through the scheduling of our logistics work, training and encouragingdrivers to develop efficient driving techniquesand maximising our use of biofuel.

Cat’s Pyjamas We calculated that 2.9 tonnes CO2 weregenerated through Cat’s Pyjama’s air miles and offset this. The scheme we chose was with Climate Care an off-setting organisationsupported by Forum for the Future. Climate

Care sources 80% of its off-sets from energyefficiency and sustainable energy projects.

We have reported on the CO2 emissions from our use of gas, electricity and diesel in 2006/07. We will continue to develop andimprove our approach, to enable us to articulate the carbon footprint of all of our operations.

Water

W a t e r u s e a t F R C G r o u p H e a d q u a r t e r s

02468

1 01 21 41 6

2 0 0 4 / 0 5 2 0 0 5 / 0 6 2 0 0 6 / 0 7M

3 per

per

son

Our water usage is mostly from washing ourfleet of wagons and in employee’s toilets.

Our water use increased by 65% from 3.1m³/per person (2005/06) to 5.12m³/perperson. We cannot explain thisincrease. There have not been a significantnumber of additional employees at FRC Group head office. Our fleet of vehicles based at head office has not increased.

Achievement 2006/07 Benchmark our logistics performance againstother companies in the waste and logisticsindustry�

Achievement 2006/07 Off-set the CO2 emissions generatedthrough the Cat’s Pyjamas air miles

through a carbon off-set programme�

We have benchmarked this against the Environment Agency’s water use benchmarkfor Offices (www.environment-agency.gov.uk)and found that our use is below the bestpractice benchmark. The best practicebenchmark for Offices is 6.4m3 per employeeand typical water use 9.3m3 per employee.

Achievement 2006/07 Maintain water use levels at FRC Group head office at 2005/06 levels – 3.1m3 per person

�increased to 5.12 m3

51

FRC Group Head Office As part of our environmental approach weencourage our staff to minimise the amount of paper they use, by reducing the level of printing, printing on both sides of paper andreusing scrap paper. We measure the efficiency of our paper use.

P a p e r u s e 20 0 5 - 20 0 7

300

350

400

200 5/0 6 2006 /0 7

Num

ber

of

ream

sof

pap

erbou

ght

0 .0

2 .0

4 .0

6 .0

8 .0

used

per

pers

on

Ream

sof

pap

er

N u m b e r o f re a m s

b o u g h t

P a p e r u se p e r

p e rso n

The amount of paper we have used hasincreased by 16% from 328 reams in 2005/06to 380 reams. At the same time our paper use per person has increased by 28% to 6.7 reamsper person (4.8 reams per person in 2005/06).

The way we have calculated this has changed.In 2005/06 we calculated the paper use perperson rate using the total number of employees. From 2006/07 onwards we are using the total number of staff and traineesbased at the head office. This change inmethodology accounts for part of the increasein the paper use per person.

We have not delivered any environmentaltraining for employees in 2006/07. We believethis also helps explain the increase in paperuse.

As part of the environmental approach in our head office, we also recycle paper,newspapers, cans and glass. In 2006/07 we recycled 105 bags office paper, 3 bagsnewspapers, 13 bags of cans and 1 bag ofglass. Our recycling service provider has not provided us with data on the weights we have recycled.

We did not set any targets for office recycling.

52

Month Total 2006/07Office paper (bags) 105Newspaper (bags) 3Cans (bags) 13Glass (bags) 1

Employee Training We did not deliver any environmentalawareness training for employees in 2006/07.This is the second year that we have notdelivered any formal training in this area. We believe that our performance on water usage,paper usage and office recycling will be improved by staff environmental awarenesstraining. This must be a target for us in 2007/08.

Our in-house environmental managementsystem (EMS) provides a framework for identifying, measuring, monitoring andimproving our environmental impacts andperformance. To provide assurance for ourstakeholders, we aim to gain an accreditationfor our EMS.

BS85558 is a standard for environmentalmanagement systems. It is suited to small and medium enterprises. As such, it is essentialthat we obtain this kite mark of good practice for our environmental management system in 2007/08.

Our environmental performance is becomingincreasingly important for us and there are key areas to address in 2007/08. Priorities are:training our staff; reducing our carbon footprint and keeping up with and acting on bestpractice thinking. We are determined to improve our performance in all these areas in 2007/08.

8 www.bsi-global.com

Environmentalperformance Targets 2007/08

�� Calculate carbon emissions of FRC Group activities in 2007/08

�� Devise action plan to reduce CO2emissions across FRC Group

Achievement 2006/07 Run at least one environmental awareness

event for all employees -�

�� Maintain performance on use of electricity and gas in 2007/08 at 2006/07 levels

�� To reduce fuel usage after SAFED training by: �� 15% for Furniture Resource

Centre�� 15% for Revive�� 5% for Bulky Bob’s Liverpool�� 10% for Bulky Bob’s Warrington

�� The Driver / Mentor / Assessor at

Bulky Bob’s Oldham to have been trained as a SAFED instructor by the end of November 2007.

�� Bulky Bob’s Oldham Driver / Mentor / Assessor to deliver SAFED training to other logistics staff by end December2007

53

�� Bulky Bob’s Oldham to achieve a 5% reduction in fuel usage followinglogistics staff receiving SAFEDtraining.

�� To further investigate the sustainabilityof biofuel and make an informeddecision about if and how we usebiofuel in our fleet by end of 2007/08

�� Deliver at least one session of environmental awareness training to every member of staff by the end of 2007/08.

Priorities�� To develop a methodology which

quantifies the CO2 savings from BulkyBob’s reuse and recycling activities, which divert waste away from landfill sites which will enable us to articulatethe carbon footprint of all our operations.

�� Begin implementation of BS8555 with

the aim of accreditation in early2008/09.

54

FRC Group update April – November 2007

Given the lateness in publishing our sustainability report for 2006/07, this is a business overview April-November 2007.

Over the last two years we have invested a lot of effort consolidating our two core businessesand this is now beginning to pay off. SinceApril ’07 Furniture Resource Centre Ltd has seen increasing sales growth and more local authorities than ever before want to discuss possible Bulky Bob’s contracts with us.

This year Furniture Resource Centre’s turnoveris already up by 5.9% on April-November last year and has been awarded three majorframework contracts with nationalorganisations. Our project with a majorcustomer to establish the social return oninvestment (SROI) in furnished tenancyprovision continues. Our approach to gatheringcustomer feedback has been enhanced andregular customers are now approached on a bi-monthly basis.

In May we celebrated Bulky Bob’s 300,000th

completed collection and achieved our highestrecycling rates ever. Both Liverpool andOldham Bulky Bob’s launched furnituredeconstruction operations and in Septemberreached recycling rates of 58% and 25%respectively.

In September, after operating for 9 months we were disappointed to have to close our Seftonpilot deconstruction project. The project couldnot, as we had hoped, form part of a bigger Bulky Bob’s collection service for Sefton Borough Council and proved not to be financially viable as a stand alone operation.On a more positive note discussions continuewith 15 North West local authorities about the possibility of launching Bulky Bob’s services.

We have 18 trainees on our ILM logisticstraining programme and in June weredelighted to have recruited our first femaletrainee at Bulky Bob’s, Oldham. In May we were very proud to have one of Oldham’strainees highly commended in the EdgeUpstarts Social Enterprise Trainee of the Year Award 2007.

Our employees remain key to our businesssuccess and we will continue to use our triedand tested values culture and reward systemto celebrate preferred behaviours. To date, we have awarded 143 values awards. In June at our annual staff awards ceremony we celebrated our Employee of the Year and our most brave, creative, professional andpassionate employees.

In May and June we redesigned our TripleBottom Line accounts to reflect the changingscope of our activities and reviewed our keyperformance indicators to ensure they fully reflect business activities and the added valuewe bring in our approach to business.

The environmental impact of our businessremains highly important. SAFED training for all logistics staff continued and 100% of our logistics staff have, to date, taken part.Environmental training for all staff is scheduledthroughout January 2008 and research hasbegun on calculating the carbon footprint of furniture reuse and recycling.

As always plenty to challenge us and as ever we are relishing it!

8th November 2007

FRC Group Leadership Team

55

Auditors Assurance Statement

Justassurance is a social enterprise dedicatedto working with stakeholders, or ‘people whomatter’ in FRC Group’s (FRC’s) language, to provide assurance of social and sustainabilityreports. Justassurance was paid £4,125 to provide assurance in connection with the FRC Sustainability Report.

Justassurance has sought to act impartiallywith respect to FRC’s various stakeholders.Statements of independence, impartiality and conflict of interest, together with the competencies of the auditors, are detailed at www.justassurance.org. The audit panel wasconvened in November 2007 to bring a further,stakeholder-orientated perspective to bear on the report.

The directors of FRC are responsible for thecontent of the FRC Sustainability Report.

Justassurance has used the AA1000 Assurance Standard. This requires us to review the completeness, materiality andresponsiveness of the report. To meet AA1000 we:

•� Identified claims in the report

•� Reviewed the consistency between the Report claims and the underlyingrecords on a simple basis

•� Traced certain key claims through the accounts and back to source data

•� Interviewed members of theLeadership Team and of FRCmanagement

•� Discussed the report, accounts andour statement with FRC and with the audit panel

Opinion

On the basis of the work we have done, webelieve this report adequately represents FRC’s economic, social and environmentalimpacts on its stakeholders and its responses to their concerns. Our reviewagainst the AA1000 Assurance Standard is set out below.

Completeness

FRC has remained committed to sustainabilityaccounting despite financial pressures.However, despite a reasonably mature accounting process in place a lack of resources has meant that some accountingsystems have not been fully maintained. This has affected both environmental and socialaccounting data. Nevertheless in line with our

recommendations from previous years, FRC continues to develop additional techniques to measure its social such as SROI, has maintained its triple bottom line accounting and has extended the period for which trainees are contacted after leaving.

A top priority for the future must be to ensurethat FRC social and environmental accountingand data collection systems are fully maintained.

Materiality

In its principle activities FRC is squarelyaddressing its mission and working with key stakeholder or environmental needs. Howeverit is important from time to time to refresh eachstakeholders mandate through engagementand consultation. We look forward to the start of this process over the coming year, especially for the housing part of the business.

It is pleasing to see some additional reportingof some of the more innovative projects which FRC has undertaken.

Responsiveness

FRC appears to have successfully endowedthe new Oldham site with FRC cultures and values.

We believe that the targets which FRC has set itself are appropriate.

56

Overall, FRC’s continuing commitment todetailed reporting is commendable.

Adrian Henriques, Auditor, justassurance;October 2007

57

Appendix I The Furniture Resource Centre Ltd is a registered charity and company limited by guarantee, which has created and wholly owns 3 trading subsidiaries and half owns the Cat’s Pyjamas.

Company Structure and Brands May 2007 Organisational Structure May 2007

The Furniture Resource Centre Ltd Finance

& IT

Logistics

Sales & CustomerService

People & learning

Retail

Leadership Team

Board of Trustees

FRC Trading Ltd FRC Solutions

58

Appendix II

Our stakeholders and how we engaged them 2006/07

Stakeholder No Response number and % rate CompleteStaff 72 November 2006Trainees 31 All asked via 6 weekly reviews May 2006

On going Ex trainees(18 month year tracking)

38 38 postal questionnaires 3 times a year

FRC Board of Trustees

6 Not asked this year

RSL customers Totalnumber is confidential

53 issued 21 returned

40% response

28th February 2006

RSL tenants 3,131 Not asked this year FRC Ltd Suppliers 9 Postal survey and face to face visits as part of student

survey on sustainable supply chain March 2007

Revive Liverpoolcustomers

3,305 50 asked – face to face interviews on the shop floor

CompletedOctober 2006

Revive Haltoncustomers

438 Not asked – store closed in February 2007

59

Bulky Bob’s Liverpool City Householder

Confidential 100 householders - telephone survey CompletedFebruary 2007

Bulky Bob’sOldham Borough Council - Householders

Confidential Not asked this year

Bulky Bob’s Warrington Borough Council

Confidential Not asked this year

BB Liverpool City Council feedback

1 Face to face interview February 2007

BB Oldham Borough CouncilFeedback

1 Face to face interview January 2007

Amovingexperience 13 7 called for telephone survey 5 responses

May 2006

60

Appendix III

Alterations to our environmental reporting methodology

In preparing the environmental performance chapter of this report we have made a number of alterations to the way we measure orreport on our environmental performance.

CO2 Emissions efficiency in our logistics fleet

In preparing this report we discovered that a last year a mistake was made in the way we calculated the CO2 2005/06 emissions from our logistics fleet and when we set the improvement target for 2006/07.

We made the mistake by calculating the amount of CO2 (kg) emitted per km travelled for different business operations and then added the results together to give a rate of 25.5kg CO2/ km travelled. We should have instead have calculated the overall rate bydividing the total amount of CO2 emitted by the Logistics team by the total amount of km travelled. This would have given a CO2kg/km rate of 0.544kg/km.

Using this new calculation, a 5% reduction in the amount of CO2 emitted by our Logistics operations per km travelled in 2005/06would have given a target of 0.517 kg/km.

Paper use

The way we have calculated this has changed. In 2005/06 we calculated the paper use per person rate using the total number of employees. As all of our operations were based from one main office site, this was an appropriate way to measure the paper use generated by our business activities.

61

For 2006/07 onwards we are reporting on the total number of staff and trainees based at the head office. In 2006/07 Oldham premises opened and subsequently much of the Oldham operation is administered from this site (human resources and finance functions are still carried out at the Liverpool head office).

Accounting for use in this way will help us to monitor and effect change in paper use at different sites.

62

Appendix IV

FRC GROUP

Jun-06 Jul-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07Jun-06 Jul-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07Jun-06 Jul-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07

63

64

65

66

EXPLANATION OF BENCHMARKS, GOOD PRACTICE AND TARGETS

Water use per person best practice measure taken from www.environment-agency.gov.uk All targets shown are taken from the FRC Group social and environmental accounts for 2006/07 *The nos of full and part time staff are the total employed during the month, whereas the

numbers of staff and trainees on the payroll are taken as a snapshot in time. The two sets of figures will therefore not always give the same total.

** Staff turnover is calculated by dividing the total number of leavers during the last 12 month period by the average number of staff during the same period. This excludes trainees but includes all other staff members.

*** In 2006/07 the methodology for calculating the lost time due to illness and accidents was changed. These figures are based on the 2005/06 methodology.

67

Bulky Bob’s Environmental ImpactsKey

Every time a vehicle makes a journey it emits CO2

householder

Local Authority call centres

Vehicle makes collection

Items that cannot be reused or recycled go to landfill

Vehicle makes delivery to householder from Revive

Pre-loved furniture gets delivered to Revive

Brings it back to the warehouse

Appendix V

68

Atlantic Way, Brunswick Business Park, Liverpool L3 4BE.

Tel: 0151 702 0550 Fax: 0151 709 4081 Email: orders@frcgroup.co.uk

www.frcgroup.co.uk69