annual report  
and accounts  
2013
construction  
and regeneration morgan sindall group plc annual report and accounts 2013
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last visited page we lead the market  
in regenerating estates  
and communities
we build and refurbish 
education facilities
we deliver efficient 
energy solutions in 
generation transmission 
and distribution
the group aims to deliver positive and 
sustainable returns for its shareholders and 
demonstrable value for all its stakeholders 
through the delivery of complex construction 
and regeneration projects  we undertake aviation 
projects covering terminals 
air traffic control centres 
runways hangars and airport 
infrastructure
 strategic report 02–46 governance 47–76 financial statements 77–120
strategic report
all about morgan sindall group our  
strategy and how we create value
02 group at a glance
04 group highlights
08 chairman’s statement
12 markets and strategy
18 business model
24 chief executive’s review
34 finance review
36 risk review
42 sustainability review
governance
information about our board of directors  
and corporate governance
48 board of directors
50 group management team
52 corporate governance statement
58 directors’ remuneration report
73 directors’ report
76 directors’ responsibilities statement
financial statements
78 independent auditor’s report
group consolidated financial statements
the group’s consolidated financial statements  
for the year ended 31 december 201 3
81 consolidated income statement
81 consolidated statement of comprehensive income
82 consolidated balance sheet
83 consolidated cash flow statement
84 consolidated statement of changes in equity
85 significant accounting policies 
89 critical accounting judgments and estimates 
90 notes to the consolidated financial statements
company financial statements
the company’s financial statements for the year  
ended 31 december 201 3
110 company balance sheet
111 company combined statement of movements  
in reserves and shareholders’ funds
112 significant accounting policies
114 notes to the company financial statements
119 shareholder information
you can find further information  
on morgan sindall group here 
 
a pdf download of our 2013 annual report 
wwwcorporatemorgansindallcomannualreport2013
our corporate website 
wwwcorporatemorgansindallcom
sustainability 
wwwcorporatemorgansindallcomsustainability morgan sindall group plc annual report and accounts 2013
group at a glance strategic report 02
morgan sindall group is a leading uk construction and regeneration 
group employing circa 5700 people by focusing on delivery the 
group is able to offer innovative and cost effective solutions to clients 
construction is offered through a network of offices to deliver projects 
of all sizes with skills that provide clients with a complete design 
construction refurbishment and maintenance service for their property 
and infrastructure assets working in longterm trusted partnerships the 
group’s expertise in mixeduse and housingled regeneration is creating 
largescale economic and social renewal throughout the country
revenue
£2095m
2012 £2047m
operating profit – adjusted
£336m
2012 £48 1m
construction  
 infrastructure
offers national design construction and 
infrastructure services to private and public 
sector clients the division works on projects 
and in frameworks and strategic alliances  
of all sizes across a broad range of markets 
including commercial defence education 
energy healthcare industrial leisure retail 
transport and water
revenue
£1234m
2012 £1 168m
operating profit – adjusted
£127m
201 2 £197m
fit out
specialises in fit out and refurbishment projects 
in the commercial central and local government 
office further education and retail banking 
markets overbury operates as a national fit  
out company through multiple procurement 
routes and morgan lovell specialises in 
workplace consultancy and in the interior  
design and build of offices
revenue
£427m
2012 £437m
operating profit – adjusted
£109m
201 2 £113m
affordable  
housing
specialises in the design and build refurbishment 
and maintenance of homes and the regeneration 
of communities across the uk the division 
operates a full mixedtenure model creating 
homes for rent shared ownership and open 
market sale
revenue
£381m
2012 £386m
operating profit – adjusted
£86m
201 2 £115m
urban  
regeneration
works with landowners and public sector 
partners to unlock value from underdeveloped 
assets to bring about sustainable regeneration 
and urban renewal through the delivery  
of mixeduse and residentialled projects 
typically creates commercial retail  
residential leisure and public realm facilities
revenue
£62m
2012 £62m
operating profit – adjusted
£10m
201 2 £27m
 investments
realises the potential for underutilised property 
assets and promotes economic growth primarily 
through strategic partnerships with the public 
sector by providing flexible structuring and 
funding solutions and development expertise 
the division covers a wide range of markets 
including asset backed education health  
care and social care residential student 
accommodation leisure and infrastructure 
directors’  
portfolio valuation
£14m
2012 £32m
investments carrying value
£128m
2012 £182m
 before intangible amortisation and exceptional operating items
group at a glance
 strategic report 02–46 governance 47–76 financial statements 77–120 morgan sindall group plc annual report and accounts 2013
group at a glance
 strategic report 02–46 governance 47–76 financial statements 77–120
we help keep traffic 
flowing on the uk’s 
highways
we carry out 50 of 
projects in live working 
environments
we work in the education  
market by designing 
building and fitting out 
education facilities
we complete fit outs for 
half the ftse 100 including 
the nine largest companies 
we help maintain and 
improve the uk’s water 
networks
we won 36 considerate 
constructors awards  
in 2013
we revitalise derelict 
dockyards into vibrant 
waterside residential  
districts
we offer opportunities 
to circa 300 apprentices 
each year
we partner with local 
authorities to deliver 
positive change and 
economic growth
we relocate staff to 
new offices with minimal 
downtime
we complete over 
200000 home  
repairs every year
we fit out office 
environments for 18 of  
the top 20 uk law firms
we have delivered 37  
of all the ska gold and silver 
accreditations awarded
strategic report 03 morgan sindall group plc annual report and accounts 2013
group highlights
group highlights
the group has seen challenging conditions predominate across most of its markets with 
competitive pressures impacting on margins and profitability the group’s track record and 
integrated offer of design construction development and funding solutions has enabled it  
to win significant construction and regeneration projects and longterm frameworks this year  
revenue £m
 
£2095m    2 
11 2227
12 2047
13 2095
revenue increased 2 with 
limited recovery across the 
group’s markets
adjusted profit before tax £m
 
£313m    34 
11 453
12 471
13 313
adjusted profit before tax has 
fallen 34 with competitive 
pressure adversely impacting 
margins in construction  
infrastructure and affordable 
housing reported profit 
before tax was £139m 
201 2 £342m
dividend pence
27 0p    0 
11 420
12 270
13 27 0
the dividend has been held 
despite falling profit reflecting 
the board’s confidence in the 
group’s outlook
adjusted eps pence
 
609p    34 
11 802
12 920
13 609
adjusted eps has fallen 34 
in line with the fall in adjusted 
profit before tax basic eps 
was 354p 201 2 725p
committed order book £bn
 
£24bn    8 
11 23
12 22
13 24
increased order book 
supports the board’s view 
of the group’s prospects
regeneration and 
development pipeline £bn
 
£30bn    23 
11 21
12 25
13 30
the pipeline shows the 
group’s share of forward 
development values and 
demonstrates the growing 
contribution of the group’s 
regeneration activities
to read more about 
committed order book
see page 26
to read more about 
regeneration and development 
pipeline see page 26
to read more about our performan ce
see pages 34 and 35
 adjusted is defined as before intangible amortisation of £27m 201 2 £29m 201 1 £39m exceptional operating items of £147m 201 2 £100m 201 1 £14m and in the case  
of earnings per share deferred tax credit of £25m 201 2 £15m 201 1 £28m
 strategic report 02–46 governance 47–76 financial statements 77–120
strategic report 04  strategic report 02–46 governance 47–76 financial statements 77–120
pwc 
embankment place 
london
we set new standards  
in fit out
we enhanced 
the commercial 
property value 
delivering a new 
epc arated 
building
we installed  
a trigen unit 
providing combined 
heating cooling  
and power that 
utilises biofuel
we created a new 
dynamic workplace 
futurefit for 15 years
we broke breeam 
records with a 
9631 score
we fitted out a 
complex live working 
environment with 
minimal disruption  
to our client’s dayto
day business
we worked 24 hours a 
day seven days a week 
for 42 weeks
morgan sindall group plc annual report and accounts 2013
05 morgan sindall group plc annual report and accounts 2013
project 
embankment place london
client 
pwc
division 
fit out
the fit out division delivered the uk’s largest refurbishment 
inoccupation for pwc at embankment place in london 
which achieved a landmark building research establishment 
environmental assessment method breeam outstanding 
score this complex refurbishment has in fact surpassed all 
other buildings’ breeam achievements to date in both new 
build and existing structures
the ambitious refurbishment programme set out to revitalise 
the dated lightless and inefficient workspaces while around 
2000 staff remained in occupation the end product is a 
modern multi purpose intelligent flexible and collaborative 
workplace that reflects pwc’s market leading brand position 
by completely transforming the perception performance 
and reality of the 450000 sq ft building
uk’s 
largest
refurbishment in 
occupation
landmark 
breeam
outstanding score
06
 strategic report 02–46 governance 47–76 financial statements  morgan sindall group plc annual report and accounts 2013
group highlights
 strategic report 02–46 governance 47–76 financial statements 77–120
perfect delivery 
 
76
11 76
12 77
13 76
accident incident rate air 
 
385
11 472
12 399
13 385
number of graduates recruited
57
11 47
12 37
13 57
number of apprentices 
directly employed
 
89
11 133
12 130
13 89
carbon intensity
scopes 1 2 and 3
 
2191
11 2290
12 2346
13 2191
tonnes of waste produced
 
943958t
11 131 1800
12 131 1032
13 943958
the group’s philosophy of 
perfect delivery drives 
continuous improvement and 
higher standards of quality 
and service
the reduction in the group’s 
air reflects its commitment 
to a safe workplace
the group is committed to 
developing a strong pipeline 
of talent to future proof its 
capabilities
the group through its 
subcontractors offered 
opportunities to a further 
211 apprentices on its sites
the group continues to 
reduce its carbon emissions 
in line with its target of 
achieving a 26 reduction 
by 2020
the reduction in the tonnes 
of waste produced 
demonstrates the group’s 
commitment to minimising 
waste generated
the group’s commitment to sustainability is a key element of its strategy and good progress has 
been made in strengthening its status as a responsible and economically sustainable organisation
to read more about sustain ability
see pages 42 to 46
strategic report 07 morgan sindall group plc annual report and accounts 2013
chairman’s statement
chairman’s statement
we continue  
to develop our  
strengths
statement in summary
 
a drive on efficiency
 
ongoing investment to take advantage  
of more positive industry outlook
 
ukfocused strategy remains the same
 
building collaboration across our teams
“ more than ever our focus  
is now on providing an 
exciting and rewarding 
workplace culture to 
attract and retain the best”
 strategic report 02–46 governance 47–76 financial statements 77–120
strategic report 08 morgan sindall group plc annual report and accounts 2013
09
 strategic report 02–46 governance 47–76 financial statements 77–120
slough regeneration partnership 
slough borough council 
our divisions work 
together to deliver  
complex projects  
for clients
we build  
new homes
we build  
education  
facilities
we construct  
libraries
we create longterm 
community regeneration  project 
slough regeneration partnership
client 
slough borough council 
division 
investments
in 201 3 the group’s investments division signed a local 
asset based vehicle labv joint venture agreement with 
slough borough council the labv will deliver a series  
of developments up to a total value of £1 bn over a period 
of 1 5 years the partnership is managed by investments 
and benefits from the strength of the group’s integrated 
capability it will procure work from the affordable  
housing and construction  infrastructure divisions 
the first phase of development ‘the curve’ is now being 
built by the construction  infrastructure division it will 
house a new library education facilities for adults a café  
and a cultural centre other community developments  
in the pipeline are a newbuild secondary school and  
a newbuild leisure centre with ice rink 
the first tranche of residential developments will provide 
525 new homes ranging from two to four bedrooms 
across five sites with a gross development value of £105m 
£1bn
value over 15 years
£16m
the curve –  
first scheme signed
525
new homes to  
be delivered
 15year
joint venture
morgan sindall group plc annual report and accounts 2013
 strategic report 02–46 governance 47–76 financial statements 77–120
10 morgan sindall group plc annual report and accounts 2013
chairman’s statement
 strategic report 02–46 governance 47–76 financial statements 77–120
201 3 has been a year of transition for the group there have been a number of changes  
to the board and the group executive team has been strengthened we have focused  
on securing greater collaboration across the group to drive efficiency and improve our 
offering to clients
trading conditions remain tough for construction markets although there are clear signs of a return to growth 
competition remains fierce and upward pressure on supply chain costs is suppressing margin growth
our people remain at the heart of our business they have shown great resilience and dedication during the 
construction industry’s prolonged period of adverse conditions as we begin to emerge into a period of growth  
our employees will be critical to ensuring our success we need to remain an employer of choice and more than  
ever  our aim is to provide an exciting and rewarding workplace culture we have set this as a key challenge for  
the executive directors 
this is my first full year as chairman and it has been a year of significant change for the board with john morgan  
as chief executive a new finance director in steve crummett and a new nonexecutive director  liz peace 
at the end of the year  paul whitmore left the group after 1 3 years of service as commercial director  he has  
worked tirelessly and made an immense contribution i would like to take this opportunity to thank paul and to  
wish him well with his future plans
given the extent of changes to the board i was keen to take a fresh approach to enhancing its effectiveness  
to this end i commissioned an external board evaluation further details of which can be found in the corporate 
governance section 
the results for this year reflect the challenging market conditions turnover has been maintained but profits  
have been impacted by competitive pressures with exceptional operating items being charged in relation to four 
construction contracts held on the balance sheet despite this significant progress has been made in cash and  
working capital management and i commend the team for this achievement in demanding conditions 
the board proposes that the final dividend of 1 50p per share is held level with the prior year 201 2 1 50p  
resulting in a total dividend for the year of 27 0p 201 2 27 0p
our strategy remains unchanged and we continue to seek opportunities in uk construction and regeneration  
markets particularly those with high barriers to entry our focus is on investing in key skills and resources to ensure  
the group is well positioned to capitalise on recovery in our markets 
we now look ahead to a more optimistic industry forecast whilst not underestimating the challenges that lie  
ahead as at 31 december 201 3 both the group’s committed order book and the regeneration and development 
pipeline has increased since the previous year end by 8 and 23 respectively i believe that under the 
entrepreneurial leadership of john morgan and his team the group is now in the right shape to capitalise on the  
future growth and investment opportunities that will arise as markets improve
adrian martin
chairman 
18 february 201 4
strategic report 11 morgan sindall group plc annual report and accounts 2013
markets and strategy
markets and strategy
the group’s strategic focus is to enhance its market position across its construction activities and 
to use the cash generated to invest in and grow its regenerationrelated activities the group has 
increased its focus on the growing infrastructure markets and regeneration to secure medium  
to longterm opportunities and superior returns
the total value of construction industry output in the uk at 2005 prices was forecast to be approximately £99bn in 201 3 
an increase of 1 on the previous year  construction is split into three sectors public regulated and private within these 
sectors the group targets key markets valued at circa £59bn in 201 3 which are also slightly ahead of the previous year   
the size and forecast movements of these targeted key markets are as follows
construction market group revenue
targeted key markets 2005 prices
2012–13 
growth
2013 
market 
£bn
201417 
growth
 of 
2013 
revenue
construction 
  
infrastructure fit out
affordable 
housing
urban 
regeneration investments
social housing 38 13 
education 73 17
healthcare 30 1
community defence other 18 5
public 36
transport 57 16
energy 38 5
water 17 8
regulated 29
commercial 57 24
open market housing 147 5
retail 46 2
leisure 41 2
industrial pharmachem other 32 2
private 35
total 594 100
source ons construction products association winter 201314 edition – 2005 prices
strategic report 12
 strategic report 02–46 governance 47–76 financial statements 77–120 morgan sindall group plc annual report and accounts 2013
13
 strategic report 02–46 governance 47–76 financial statements 77–120
 ‘cast’ performance venue doncaster
we create dynamic 
intelligent spaces  
for clients
we create flexible 
performance and  
rehearsal spaces
we regenerate  
urban spaces project 
 ‘cast’ performance venue doncaster
partner 
doncaster metropolitan borough council
division 
urban regeneration
the urban regeneration division’s cast performance  
venue in doncaster has an innovative ‘toolbox’ design 
creating a range of performance and education spaces 
providing professionallevel experience in a cutting edge 
venue it includes two auditoria as well as dance and  
drama studios rehearsal spaces a foyer and cafébar 
the front elevation features a great glass wall with large  
door openings allowing the building’s flexible performance 
areas to spill out into sir nigel gresley square a major  
new piece of public realm also delivered by the division  
with extensive community programmes and full multi
media capabilities cast also provides a valuable teaching 
facility for doncaster college
 1020
total audience capacity
£300m
civic and cultural  
quarter scheme
91
considerate 
constructors monitor’s 
report score
morgan sindall group plc annual report and accounts 2013
14
 strategic report 02–46 governance 47–76 financial statements 77–120 morgan sindall group plc annual report and accounts 2013
markets and strategy
 strategic report 02–46 governance 47–76 financial statements 77–120
market conditions have remained tough over the past 1 2 months but are expected to improve modestly in 201 4  
the public sector  which accounts for onethird of total construction continues to be adversely affected by fiscal 
constraints continued market recovery is expected during 201 5 1 7  driven primarily by infrastructure and private  
sector construction growth
forecasts for the next three years show the group’s targeted key markets outperforming the construction market  
as a whole with growth in commercial and transport markets expected to be circa 30 over the period 201 4 1 7   
the group is well positioned to take full advantage of these opportunities thereby maintaining its ability to invest  
in regeneration where it has an increasing number of potential schemes local authorities and landowners continue  
to value both the group’s integrated expertise in mixedtenure affordable housing and mixeduse urban development 
and its ability to provide affordable financing solutions the group works in longterm partnerships with clients and 
partners utilising their land assets to achieve largescale social and economic renewal
the group’s strategy is focused on two distinct business activities construction and regeneration 
construction activities currently represent 92 of group revenue generated from the following divisions
 
construction  infrastructure 59 of revenue
 
fit out 20 of revenue
 
construction and services work within affordable housing 1 3 of revenue 
regeneration activities include the urban regeneration and investments divisions and mixedtenure development within 
affordable housing regeneration is currently 8 of group revenue
the group sets strategic priorities for each of the construction markets in which it operates and across its regeneration 
activities these priorities are reviewed regularly to assess the progress made and identify any additional actions required 
of the key markets that the group targets there are five that each contribute more than 5 of its annual revenue social 
housing education transport water and commercial
strategic report 15 morgan sindall group plc annual report and accounts 2013
markets and strategy
markets and strategy
targeted key markets value
social housing
increased consumer confidence in open market housing has seen more mixedtenure 
projects coming to the market however the social housing sector still presents 
challenges as funding grant rates have been reduced 
market size
£38bn
2012 £37bn
group revenue
£388m
201 2 £400m includes 
£1 1 2m open market sales 
2012 £72m
education
the outlook for the public sector education market improved significantly in 201 3  
with the launch of the priority schools building programme psbp £22bn the 
construction procurement north wales framework £400m framework and the 
education funding agency regional frameworks in addition to the more traditional 
procurement routes
market size
£7 3bn
201 2 £75bn
group revenue
£359m
201 2 £304m
transport
rail outputs continue to increase and this is supported through the rail freight 
operators’ association control period 5
consistent investment is anticipated in airports in particular heathrow  
although volumes may be less predictable as a result of the next fiveyear  
period procurement process 
spending in highways looks encouraging and the national infrastructure plan  
gives greater confidence of sustained investment
market size
£57bn
2012 £53bn
group revenue
£346m
201 2 £254m
water
it is expected that the transition from asset management programme amp 5  
to amp6 will result in relatively stable volumes in 201 3 thames water began the 
procurement process for thames tideway
market size
£17bn
201 2 £22bn
group revenue
£170m
2012 £166m
commercial
the commercial market recovery in late 201 3 exceeded analysts’ expectations  
with gdp at 17 a rate of growth not seen since 2007  it was largely driven  
by demand for office space in london and leading cities across the uk this trend  
is expected to continue through to 2016 with an increase in preletting opportunities 
coming to market
market size
£57bn
201 2 £57bn
group revenue
£491m
2012 £516m
regeneration
public sector funding and the institutional private rented sector have stimulated  
the residential market and growth is spreading from london and the south 
speculative office development continues to prevail in london only with regional 
markets dominated by prelets 
retail and leisure sectors dominated by larger property companies and specialist 
developers
industrial and distribution markets are beginning to experience an undersupply  
of product
group regeneration 
and development 
pipeline
£30bn
201 2 £25bn
strategic report 16
 strategic report 02–46 governance 47–76 financial statements 77–120 morgan sindall group plc annual report and accounts 2013
markets and strategy
 strategic report 02–46 governance 47–76 financial statements 77–120
progress against 201 3 strategic priorities 201 4 strategic priorities
  won major regeneration projects especially in the london region
  commenced on site in derby with the compendium living  
joint venture
  open market sales volumes increased by 36 supported  
by the government’s help to buy scheme
  entered a new market providing homes for mod families 
  expanded joint work with other group divisions including the 
towcester regeneration scheme
  won response maintenance contracts in london midlands and 
scotland which emphasised the national nature of affordable  
housing’s offer
  continued focus on larger longterm regeneration projects
  obtain land in partnership with public sector partners via 
joint ventures
  secure longterm repair and refurbishment contracts
  collaborate with other group divisions
  shortlisted for the first batch of the psbp pf2 programme 
hertfordshire luton and reading
  prequalified for the north west batch of the psbp pf2 programme
  maintained positions and renewed a number of frameworks
  grown market share 
  maintain strategic approach to key clients 
  focus on winning a number of the psbp pf2 batches 
  further exploit and sell the standard design model approach  
to schools 
  continue to find funding solutions to otherwise nonviable 
opportunities
  good progress made in 201 3 on a number of network rail  
and crossrail schemes
  successful delivery of runway resurfacing at heathrow
  completed a number of strategic contracts for the highways  
agency ahead of planned timescales new awards secured  
on further smart motorway schemes
  continue to expand scope of works and market share  
in rail
  secure a place at heathrow for the next fiveyear  
procurement period
  maintain position as a ‘partner of choice’ for both client  
and potential joint venture partners
  ongoing discussions with existing clients in relation to  
amp6 renewals
  prequalified for all three thames tideway sections
  good progress being made on the lee tunnel project  
for thames water
  build on existing client relationships to maintain market share  
in water
  secure at least one thames tideway package
  complete successful delivery of lee tunnel for thames water
  maintained market share of around 25 in fit out and refurbishment
  construction  infrastructure saw growth in london manchester 
leeds midlands and scotland
  completed the uk’s largest refurbishment in occupation for pwc  
in london achieving a landmark breeam outstanding rating
  morgan lovell successfully launched its workplace consultancy service
  utilise expertise and track record of fit out in this market  
to further develop the group’s construction offering
  target construction opportunities in larger conurbations
  increase collaboration across the group
  1 58 resid ential completions as well as 216 investment sales
  pipeline includes 33m sq ft of offices and 2900 residential units
  appointed developer on £100m schemes in aberdeen and  
south shields
  selected as partner on £140m scheme in lambeth
  over £250 m construction works currently on site
  new business
  expand into private rented sector
  recycle assets when appropriate
strategic report 17 to read more about our risk review
see pages 36 to 41
morgan sindall group plc annual report and accounts 2013
business model
business model 
the group is a leading construction and regeneration group operating within the uk it works  
with its clients and partners to deliver  renew and maintain their land property and infrastructure 
assets its specialist divisions provide design construction development and funding solutions to 
create value simplify procurement for clients and deliver the most complex largescale projects
the group’s business model comprises five components that demonstrate how the group aligns its thinking across  
its businesses collectively the components provide a framework for every division team and individual to create added  
value relevant and meaningful key performance indicators kpis are used to monitor progress where appropriate
protecting the group’s reputation is of vital importance to realise its strategy to create leading positions in all its chosen 
markets thorough risk management procedures are in place to ensure the highest standards of integrity and conduct 
towards all stakeholders are maintained from employees at all times 
the foundation supporting the group’s business model is its people – talented people who have the skills and creativity  
to successfully deliver the group’s strategy 
disciplined use of capital
winning in our markets
pursue innovation
maximise eciency
people
strategic report 18
 strategic report 02–46 governance 47–76 financial statements 77–120 morgan sindall group plc annual report and accounts 2013
19
 strategic report 02–46 governance 47–76 financial statements 77–120
we support young 
people by giving them 
the skills to secure a place 
on the career ladder
generation t alent
we seek to 
continually  
develop our staff
we encourage 
responsible 
empowerment
we offer work and 
study opportunities
we aim to be an 
inspiring company 
to work for project 
generation talent
division 
construction  infrastructure
construction  infrastructure has worked collaboratively 
with job centre plus to create and deliver an innovative 
training programme designed for young people aged  
1 8 2 4 who are not in education employment or training 
through job centre plus places were offered to those  
who demonstrated an interest in working in the rail 
sector  the division’s rail electrification team delivered the 
programme which not only enabled those who attended  
to secure qualifications but also led to over half being  
offered a contract with the division
strong
partnership with  
job centre plus
50
of unemployed young 
people who took part 
in our job centre plus 
programme in 2013 
secured employment  
as a direct result
morgan sindall group plc annual report and accounts 2013
20
 strategic report 02–46 governance 47–76 financial statements 77–120 morgan sindall group plc annual report and accounts 2013
business model
 strategic report 02–46 governance 47–76 financial statements 77–120
people winning in our markets
underpinning the success of the business is its people 
ensuring the group attracts develops and retains 
talented people from diverse backgrounds is 
fundamental to the successful implementation of its 
strategy and the ability to deliver industryleading 
performance leading the group’s talent agenda is  
a recently appointed director of people whose group
wide remit is to create the people strategy required  
to enable delivery of the group’s strategy
the people strategy involves significant emphasis on processes  
to identify high potential staff and develop them into the group’s 
future leaders building the group’s bench strength of talent 
planning the professional and personal development of people plays 
an important role in attracting and retaining talent and positioning 
the group as the employer of choice with the anticipated economic 
recovery in sight the group continues to focus on its graduate 
recruitment and apprentice schemes to ensure a strong pipeline  
of talent is maintained to futureproof the group’s capabilities and 
to offer clear competitive advantage if skill shortages develop as 
construction activity accelerates 
to read more about developin g talen t
see pages 19 and 20
creating a safe environment is a priority health and safety policies 
and procedures are in place across the group and employees  
are fully engaged to meet the highest of safety standards and 
performance targets these include effective risk management  
and engagement with all stakeholders including the communities 
within which the group operates
to read more about risk review people
see page 39
the group’s approach is shaped by its unrelenting 
commitment to clients and its drive to consistently 
deliver projects of all scales and levels of complexity  
it works closely with clients to develop an 
understanding of their needs and aligns its resources  
to provide the best skills to identify and deliver 
innovative and cost effective solutions 
the group understands the constraints within which its clients 
operate and is focused on identifying opportunities to reduce 
complexity and deliver greater value it has a breadth of specialist 
capabilities and is able to provide a single solution which maximises 
the benefits that it can offer clients through divisions working 
collaboratively this ability to respond to clients’ changing 
requirements overcomes barriers to success and enables the  
group to win some of the uk’s most ambitious construction  
and regeneration projects and longterm frameworks 
to read more about collaboration
see pages 9 and 10
the group targets key markets with barriers to entry that offer  
the best potential for growth and superior returns its rigorous 
approach to contract selectivity enables the group to identify 
opportunities that best suit its specialist skills and market 
knowledge
key performance indicators 
average training days per employee
 
23 days
11 15
12 18
13 23
number of graduates recruited 
 
57
11 47
12 37
13 57
 
committed order book £bn
 
£24bn    8
11 23
12 22
13 24
regeneration and development pipeline £bn
 
£30bn    23
11 21
12 25
13 30
to read more about the committed order book  
an d regen eration an d developmen t pipelin e
see page 26
strategic report 21 morgan sindall group plc annual report and accounts 2013
business model
maximise efficiency disciplined use of capital
market leading positions will only be achieved through 
delivering exceptional levels of service therefore client 
experience feedback is sought to identify strengths and 
areas that require improvement the group’s philosophy 
of perfect delivery drives continuous improvement  
and higher standards of quality and service
the group spends a high percentage of its cost of sales on goods 
and subcontractor services careful management of the supply 
chain is therefore essential to drive efficiency and suppliers are 
monitored to ensure maximum benefits are delivered to clients  
and the group longterm relationships are built with suppliers  
and subcontractors who share the group’s philosophy of perfect 
delivery and who can meet the group’s standards in quality and 
sustainability by working with fewer high performing and trusted 
subcontractors and suppliers disputes are minimised projects  
are delivered consistently and cost savings secured the group’s 
approach enables it to use its scale to procure as effectively  
as possible whilst retaining a level of flexibility to meet changing 
economic and client requirements
the group’s sustainability performance also impacts on efficiency  
a groupwide approach to safety reducing energy consumption 
waste and carbon emissions have directly translated into cost 
savings the principles of sustainability are also placed at the heart 
of the supply chain and across all projects the group delivers  
to ensure that economic social and environmental benefits are 
shared across a wide spectrum of stakeholders 
to read more about sustain ability
see pages 42 to 46
the group exercises a rigorous approach to cash 
management the disciplined use of capital is essential 
to ensure that the group has the available funds  
to realise its strategy of investing cash generated  
from its constructionrelated activities into profitable 
regeneration opportunities and to pay dividends  
to shareholders
the group’s cash position is closely monitored to ensure the  
group is generating the cash expected from its operations good 
relationships with banks and other financial institutions help ensure 
that sufficient and competitively priced debt facilities are available 
allocation of debt and equity in the group’s capital structure is 
regularly reviewed to ensure the right balance between maximising 
shareholder return and being able to respond appropriately to 
changes in the group’s operating environment
in construction activities working capital is tightly managed to 
ensure that minimal funds are invested in customer receivables 
the group’s performance is key to ensuring swift payment from 
clients its strategy of working in longterm joint ventures and 
strategic alliances reduces the need to draw on the group’s debt 
facilities and allows the group to mitigate risks that might be 
associated with complex largescale projects
the group develops schemes for major regeneration projects  
that minimise the use of its funds for example by working 
collaboratively with landowners avoiding the need to purchase  
land on the open market and using opportunities to forward sell 
schemes with leading financial institutions when favourable  
to do so the group’s track record enables it to secure funding 
revive schemes and kickstart regeneration programmes 
 key performance indicators 
gross margin 
 
82    90bps
11 97
12 91
13 82
overhead as a proportion of revenue 
 
7 1    40bps
11 77
12 75
13 71
 
working capital as a proportion of revenue 
 
32    20bps
11 63
12 30
13 32
operating cash flow as a percentage of operating profit 
 
44    129bps
1 1 11
85 12
13 44
strategic report 22
 strategic report 02–46 governance 47–76 financial statements 77–120 morgan sindall group plc annual report and accounts 2013
business model
 strategic report 02–46 governance 47–76 financial statements 77–120
project
bim
division
construction  infrastructure
a visualisation of the new station concourse at whitechapel station in 
london the division is providing the architecture and building services 
design within a fully integrated 3d bim environment as part of the 
£1 10m c51 2 whitechapel main station works crossrail project which 
the division is undertaking in joint venture
we use evolving technology  
to improve working processes
pursue innovation
providing added value through innovation is a strategic 
priority for the group to ensure the future growth of 
the business it brings a fresh approach to challenges 
through developing innovative practices that deliver 
more cost effective solutions create competitive 
advantage and drive efficiency across all divisions 
the group recognises the need to identify and develop new 
technologies and find smarter ways of working building 
information modelling bim is being progressively deployed  
across the group to achieve better outcomes for clients enhance 
sustainability and to improve whole life asset performance group 
investment in research and development to push the boundaries  
of bim has seen the construction  infrastructure division 
embark on a strategic fiveyear agreement with glasgow 
caledonian university to develop a safety dimension using bim 
models to map a three dimensional risk assessment of projects 
and help reduce accidents on sites 
through harnessing internal skill sets and its proven track  
record the group has an acknowledged reputation for identifying 
innovative commercial funding solutions that enable public sector 
clients and landowners to unlock stalled regeneration projects and 
allows the group to share in the financial social and economic 
success of projects 
knowledge transfer and sharing best practice with clients  
and across project teams are vital to drive group performance  
and improve its overall offering having been one of the first 
organisations to achieve bs1 1000 collaborative business 
relationships certification systems are in place to enable teams  
to apply best practice principles and achieve longterm benefits 
from collaborative working 
the group undertakes research and development activity in 
creating innovative construction techniques and designs integral  
to the delivery of its projects the spending incurred on research 
and development is generally contained within project work 
performed for clients and not therefore separately identifiable
strategic report 23 morgan sindall group plc annual report and accounts 2013
chief executive’s review
chief executive’s review
we continue to target 
opportunities in the 
uk construction and 
regeneration markets
statement in summary
 
significant progress achieved despite challenging 
conditions
 
further investment made in key skills and resources
 
senior management team strengthened to drive 
efficiency
 
tight financial discipline maintained
 
emerging signs of improving conditions
“ we remain confident that  
our robust order book  
and ongoing disciplined 
approach to contract 
selectivity will support  
the delivery of growth  
in this year and beyond”
24 strategic report
 strategic report 02–46 governance 47–76 financial statements 77–120 morgan sindall group plc annual report and accounts 2013
chief executive’s review
 strategic report 02–46 governance 47–76 financial statements 77–120
201 3 has seen challenging conditions predominate across most  
of our markets with competitive pressures impacting on margins and 
profitability notwithstanding this the positive operating cash flow 
generated by the business has allowed us to make further investment  
in strategic assets key skills and resources which positions the group 
well to benefit from future growth opportunities 
my priorities are to maintain the drive to improve margins and  
the group’s cash position i aim to achieve this through maximising 
efficiencies across all operations capitalising on the strength of the 
group’s integrated capability and identifying longterm opportunities  
that best suit our expertise and track record 
to help achieve our objectives i have strengthened the senior 
management team with the appointment of a managing director  
of investments and group strategy a director of people and a group 
commercial director all of whom sit on the group executive team  
in addition to this i have also introduced a group management team 
comprising the group executive team and the divisional managing 
directors to consider opportunities and challenges affecting the  
group as a whole
the group’s performance in 2013
revenue for the period was 2 up on the prior year at £2095m  
the adjusted gross margin reduced 90bps to 82 201 2 9 1 
impacted by competitive market pressures mainly across the 
construction  infrastructure and affordable housing divisions 
adjusted operating profit of £336m was 30 down on the prior year 
with adjusted operating margin of 16 201 2 23 this included 
profit from the sale of investments totalling £99m 201 2 £88m
exceptional operating items of £147m have been charged in the year 
representing an impairment to trade and other receivables in relation  
to four old construction contracts held on the balance sheet
at the half year an impairment of £1 30m was made in respect of  
these items which was based on an assessment of progress made  
at that time towards recovering these amounts and the expected time 
cost and associated risk of pursuing legal remedies to achieve recovery  
during the second half there has been commercial resolution achieved 
on one of these contracts whilst another has been impaired to reduce 
the carrying value to nil in relation to the remaining two contracts the 
board believes it is appropriate to provide against these balances to  
an amount it considers is a balanced estimate of overall likely resolution 
based upon its current assessment of progress made towards  
recovering these amounts and the expected time cost and associated 
risk of pursuing legal remedies to achieve recovery
the result is that after charging exceptional operating items the reported 
profit before tax for the year was £1 39m 201 2 £342m basic earnings 
per share was 354p 201 2 725p
the ongoing focus on cash and working capital management has 
continued to deliver positive progress operating cash flow of £149m 
was generated compared to an operating cash outflow of £427m  
in the prior year a key component of this is working capital where a 
working capital outflow of £84m in the year compared to an outflow  
of £769m in 201 2 
a focus on growth 
we remain committed to our strategy of targeting growth infrastructure 
markets where we can increase market share and investing in longterm 
major regeneration projects both markets command high barriers to 
entry we are encouraged by the government’s continuing investment  
in infrastructure allowing our construction  infrastructure division  
to capitalise on its proven track record of operating in highly regulated 
markets and providing high levels of quality and safety we have increased 
our investment in regeneration our development expertise and ability  
to identify innovative structuring and financing solutions remain in 
demand from local authorities committed to delivering urban and social 
renewal the 201 3 spending review reaffirmed the government’s 
commitment to release public land to stimulate local economies and 
promote job creation this approach allows us to play to our strengths 
local authorities and landowners can unlock land values without 
significant impact on the public purse and we can invest our capital 
effectively as land is often retained by our partners and we avoid the 
need to buy land on the open market 
competitive advantage
the challenging competitive environment is likely to continue in the short 
term so we have maintained our focus on areas where we can secure 
competitive advantage our philosophy of perfect delivery drives us to 
offer ever higher standards in quality and safety our integrated capability 
also provides competitive advantage allowing us to offer clients added 
value and reduced complexity we continue to experience an increased 
demand from clients and partners who recognise the benefits we  
can offer from two or more of our divisions working collaboratively 
sustainability performance
we have made good progress in our sustainability performance across 
the group our six total commitments focus on safety developing talent 
reducing energy consumption carbon emissions and waste improving 
sustainable procurement and creating local economic growth 
to read more about sustain ability
see pages 42 to 46
basis of preparation
 the term ‘adjusted’ excludes the impact of intangible amortisation exceptional operating items and the deferred tax credit arising due to the change in the uk corporation tax rate 
exceptional operating items are items of financial performance which the group believes should be separately identified on the face of the income statement to assist in the understanding 
of the financial performance of the group
strategic report 25 morgan sindall group plc annual report and accounts 2013
chief executive’s review
rigorous management
we have maintained tight financial discipline across the group through 
robust management of overheads cash and working capital to ensure  
we can invest cash from our construction activities into best quality 
regeneration opportunities rigorous credit checks are undertaken to 
scrutinise the financial health of clients to minimise bad debt risk and 
supply chain partners are also carefully assessed to ensure that together 
we provide superior safe and sustainable services
looking ahead to 2014 although there are signs of improving conditions 
in some of our markets it is anticipated that upward pressure on supply 
chain costs and skills availability will provide additional management 
challenges against this backdrop we remain confident that our robust 
order book and ongoing disciplined approach to contract selectivity will 
support the delivery of growth in this year and beyond 
business review
the following business review is given on an adjusted basis unless 
otherwise stated
committed order book and regeneration and development pipeline
the group’s committed order book at 31 december 201 3 was  
£24bn an increase of 8 from the previous year end the divisional  
split is shown below
 201 3 201 2  change 
committed order book £m £m 
construction  infrastructure 1499 1519  1 
fit out  142 1 70  16 
affordable housing 581 466  25 
urban regeneration 143 65  1 20 
investments 38 – na
group committed order book 2403 2220 8
 committed order book comprises the secured order book and framework order book  
the secured order book represents the group’s share of future revenue that will be derived 
from signed contracts or letters of intent the framework order book represents the group’s 
expected share of revenue from the frameworks on which the group has been appointed 
this excludes prospects where confirmation has been received as preferred bidder only  
with no formal contract or letter of intent in place
the group’s regeneration and development pipeline was £30bn  
an increase of 23 from the previous year end
 201 3 201 2  change 
regeneration and development pipeline £m £m 
affordable housing 71 5 354  102 
urban regeneration 1953 1941  1 
investments 368 179 106
group regeneration and  
  development pipeline 3 0 36 2 4 7 4  23
 regeneration and development pipeline represents the group’s share of the gross 
development value of secured schemes including the development value of open market 
housing schemes 
construction  infrastructure
revenue £m
 
£1234m    6
12 1168
13 1234
operating profit – adjusted £m
£127m    36
12 197
13 127
operating margin – adjusted 
 
10    70bps
12 17
13 10
the construction  infrastructure division has experienced challenging 
market conditions through the year which has significantly impacted  
on overall profitability although divisional revenue of £1234m was  
up 6 on the prior year 201 2 £1 168m operating margin reduced  
to 10 impacted by competitive pressures and more latterly by cost 
inflation which resulted in operating profit of £1 27m 201 2 £197m 
the committed order book of £1499m has decreased by 1  
since the end of 201 2 and of this total 54 is committed in 2014 
in terms of markets served the largest market sector for the division  
is transport highways aviation and rail which accounted for 28  
of divisional revenue other significant markets served are education 
26 and water 14 by type of activity construction accounted  
for 56 of divisional revenue 201 2 57 and infrastructure accounted 
for 44 201 2 43 
within infrastructure the division has made strong progress in transport 
where continuing government investment has helped the division 
increase its profile in the highways sector this has included significant 
activity on highways agency smart motorway schemes such as the 
award in joint venture of the m1 upgrade between junctions 39 and 42 
the aviation sector particularly values the benefits of the division’s 
integrated design and build offering with work being undertaken  
on a range of projects covering terminals air traffic control centres 
runways hangars and airport infrastructure the division has furthered  
its expertise in safe and consistent delivery in these challenging 
environments with the completion of the rehabilitation of heathrow 
airport’s southern runway – activity on the northern runway is scheduled 
26 strategic report
 strategic report 02–46 governance 47–76 financial statements 77–120 morgan sindall group plc annual report and accounts 2013
chief executive’s review
 strategic report 02–46 governance 47–76 financial statements 77–120
for 2014 at stansted airport the division has secured a new framework 
agreement for the provision of design engineering planning and 
architectural services the division has positioned itself for further growth 
in rail by combining its rail electrification capabilities with its main rail 
offering and is now addressing the market with a more comprehensive 
range of services through a simplified structure in january 2014 the 
division was awarded alliancing contracts by network rail in relation  
to the £650m edinburghglasgow improvement programme egip  
the division has already successfully delivered the new £25m station  
at haymarket in edinburgh through egip  
the energy sector remains attractive as the division delivers efficient 
energy solutions in generation transmission and distribution through 
strategic alliances and frameworks the division continues to deliver 
projects on national grid’s electricity alliance central eac framework 
which provides major enhancements to the uk’s electrical transmission 
infrastructure as part of a fiveyear agreement which runs until march 
201 7  the eac has recently been awarded a £10m scheme at middleton 
substation near heysham lancashire and work will start on site in  
march 2014 the eac also continues to deliver the £1 10m project at 
connah’s quay which involves the construction of a new 400kv gas 
insulated switchgear substation both of these projects play a vital role  
in the reinforcement of the high voltage transmission infrastructure  
in northwest england in the nuclear sector work has commenced  
at sellafield following last year’s appointment as delivery partner in joint 
venture on the potential 1 5year £1 1bn contract and further levels  
of activity will be undertaken in 2014 
during 201 3 the division continued to help maintain and improve the 
uk’s water networks through positions on three frameworks it remains 
committed to growing its presence further in this market as the water 
industry starts procurement for its next asset management period 
severn trent water and yorkshire water have already confirmed the 
division’s position on their amp6 frameworks 
in addition its specialist tunnelling capability on largescale civil 
engineering schemes was demonstrated by further progress on  
crossrail projects and thames water’s lee tunnel further investment 
will be made in 2014 to secure in joint venture a contract within the 
thames tideway tunnel project following prequalification success 
the construction business has worked on projects alongside all other 
group divisions demonstrating how the group’s integrated approach  
can help reduce complexity for clients and overcome barriers to success 
it has continued to increase its foothold in the commercial sector not 
least in london where it was appointed by the crown estate in june  
to refurbish 1–3 regent street a grade ii listed building in st james’s  
it is well positioned as the sector’s recovery gains traction in education 
£264m awards were secured across the country during the year
project
rail electrification
division
construction  infrastructure
the construction  infrastructure division’s rail electrification team has 
provided overhead line electrification and isolation support on rail lines 
across the uk for 1 5 years the team carries out safety critical roles 
and upholds exemplary safety standards in addition to the division’s 
100 safe approach which underpins all that it does the team has also 
applied behavioural safety and behavioural vector analysis programmes 
to ensure the creation of high performing and safe teams
we help keep trains running
strategic report 27 morgan sindall group plc annual report and accounts 2013
chief executive’s review
importantly the division has secured a place on the defence 
infrastructure organisation design and build framework covering the  
east midlands and eastern england the framework estimated to  
be worth between £100m and £250m over an initial four year period 
and potentially for a further three years is the first of seven capital 
works frameworks procured under the next generation estates 
contracts programme for the delivery of construction projects on  
the defence estate
exceptional operating items of £147m have been charged in the year 
representing impairments to trade and other receivables in relation  
to four old construction contracts held on the balance sheet during  
the second half there has been commercial resolution achieved on one  
of these contracts whilst another has been impaired to reduce the 
carrying value to nil
looking ahead the division is focused on building its integrated offering 
to its key strategic sectors with a view to securing more complex  
and longterm projects that offer enhanced returns through strategic 
alliances frameworks and working collaboratively across the group  
at the same time ongoing investment in developing the division’s  
skill base and supply chain will further enhance its ability to deliver the 
highest operational standards to its customers 
although increasing market confidence in future construction output  
has become apparent in the latter part of the year as evidenced  
by increased activity and bidding levels this has been accompanied by 
upward pressure on supply chain costs and availability which will impact 
on full margin recovery against this backdrop continued stringent bid 
selection and rigorous management of working capital will underpin 
performance and will further position the division to benefit from 
future growth opportunities as they arise
fit out
revenue £m
£427m    2
12 437
13 427
operating profit – adjusted £m
 
£109m    4
12 113
13 109
operating margin – adjusted 
 
26    0
12 26
13 26
 
market conditions for fit out have remained broadly stable throughout 
the year with strong competition resulting in a price sensitive market  
in the final quarter of the year though early indications of growing 
confidence in market improvement were noted in london and across  
the regions 
although revenue was down 2 on the prior year the operating margin 
was held level at 26 201 2 26 resulting in an operating profit  
of £109m 201 2 £1 13m the committed order book of £142m was 
down 16 compared to the prior year end however the current level  
of expected orders and high quality prospects in the bid pipeline suggest 
an increasing level of overall sales activity going into 2014
the london office market which accounts for 7 4 of revenue  
has experienced improving occupier confidence with customers in 
professional services and the technology media and telecoms sectors  
all driving demand activity has been weighted towards refurbishment  
of offices whilst in occupation and the division’s flagship project the fit 
out of pwc’s 450000 sq ft headquarters at embankment place london 
has been successfully delivered this ambitious and highly technical 
refurbishment programme set out to revitalise dated and inefficient 
workspaces and was carried out with around 2000 staff in occupation 
the complex refurbishment of the building achieved an outstanding 
breeam score and the building now boasts some of the highest 
sustainability credentials in europe 
28 strategic report
 strategic report 02–46 governance 47–76 financial statements 77–120 morgan sindall group plc annual report and accounts 2013
chief executive’s review
 strategic report 02–46 governance 47–76 financial statements 77–120
in other regions 26 of revenue high profile completions include itv’s 
new high specification facilities at mediacityuk in salford whilst the 
integrated services of the fit out and construction  infrastructure 
divisions delivered a highly technical and strategic project for national grid
beside the commercial office market sector which accounts for 88  
of revenue higher education 8 of revenue and retail banking 1 of 
revenue remain other strategic growth sectors as major universities 
embark on significant capital spend programmes the division has 
increased its sector presence with noteworthy wins from five of london’s 
leading universities and three major regional universities within retail 
banking market opportunities are expected to increase as banks undergo 
consolidation and estate rationalisation
the year has also seen the successful launch of the division’s workplace 
consultancy service undertaking work within its first year of operation 
for prominent clients including nuffield health and sas other highlights 
include the division winning its first fit out project through referral from 
one of its international alliances 
looking ahead it is anticipated that the market will show a measured 
recovery in 2014 with renewed confidence leading to an increase in 
profitable opportunities across all core sectors the division is well placed 
to capitalise on the increasing number of larger corporates securing office 
space for 201 5 16 occupation and the expected significant surge in 
lease expiries expected in london over the next four years as occupiers 
seek new premises in a supplyconstrained market it is anticipated that 
this demand will lead to an improved profitable pipeline from which the 
division is wellpositioned to benefit 
affordable housing
revenue £m
£381m    1
12 386
13 381
operating profit – adjusted £m
 
£86m    25
12 115
13 86
operating margin – adjusted 
 
23    70bps
12 30
13 23
strategically the affordable housing divisional activities can be 
categorised into i regeneration mixedtenure schemes which include 
open market housing developments and ii construction  services 
being new build housing contracting and planned and response 
maintenance services
project
mill brook liverpool
division
affordable housing
this development of 71 new homes for rent shared ownership and 
purchase in south liverpool was named best affordable housing 
development in the labc north west building excellence awards  
the scheme was commended for achieving “high quality and 
sustainable buildings fit for the future”
the award was made to the mill brook development because the 
relationship between compendium living – a partnership between the 
group’s affordable housing division and housing association riverside 
group – and liverpool city council’s building control department led  
to cost savings and improved standards of construction
 
we save money  
and improve standards
29 strategic report morgan sindall group plc annual report and accounts 2013
chief executive’s review
total divisional revenue of £381m was slightly down by 1  
201 2 £386m whilst operating profit of £86m was down 25  
201 2 £1 15m although overall performance showed an improvement 
in the second half the reduction in margin in the year was driven primarily 
by competition and a lower margin contribution from the construction  
 services activities offset in part by positive revenue and margin 
growth from the regeneration activities
regeneration 28 of divisional revenue is the key strategic focus  
of the division through its mixedtenure activities the division 
experienced improved conditions mainly in the second half of the year 
driven by an uplift in open market house sales which were boosted  
by the government’s help to buy scheme this contributed to a 36 
increase in open market sales in the year with the average open market 
sales price increasing by 14 to £1 77 000 201 2 £1 55000 of the 
total number of sales 30 were through the help to buy scheme the 
full benefit of this increase however was diluted by some being sales 
from older lower return sites although such sales have returned capital 
to the business for reinvestment in newer higher margin opportunities 
in business development successful new awards in the year include the 
£269m woolwich estates regeneration scheme the £78m lymington 
fields dagenham scheme and the division’s preferred bidder status on 
the £30m ponders end scheme in enfield 
additionally working as a partner in the compendium living joint venture 
considerable progress has been made on the £100m castleward urban 
village regeneration scheme with the first tranche of 850 homes 
scheduled for completion in early 2014 compendium living has also 
been appointed lead developer for the east hull ings regeneration 
scheme transforming the area with 770 new quality homes
further growth opportunities in mixedtenure schemes are anticipated 
from appointments on the fouryear london development panel 
expected to procure up to £5bn of housingled mixeduse development 
on public land and also on all four lots of the homes and communities 
agency’s fouryear £4bn dpp2 delivery partner panel 2 housing 
framework 
collaborative schemes with other group divisions have continued to 
provide a strong growth platform for affordable housing with the 
division working with both the urban regeneration and construction  
infrastructure divisions and with investments also procuring work from 
the division on projects in slough and towcester 
the regeneration and development pipeline of £71 5m was an increase  
of 102 underpinning the future growth and profit potential of this part 
of the division
project
castleward urban village derby
division
affordable housing
castleward urban village under development by compendium living 
the joint venture between affordable housing and the riverside group 
is only the second development project in the uk to gain a ‘good’ 
certification under the breeam communities assessment this 
measures the sustainability of new largescale developments at the 
masterplanning stage with certification awarded to projects where 
economic social and environmental sustainability is being carefully 
considered so far in phase one 96 of the waste generated during  
the building process has been recycled well above the 90 target  
set for the project
we are committed  
to reducing waste
30 strategic report
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chief executive’s review
 strategic report 02–46 governance 47–76 financial statements 77–120
construction  services 72 of divisional revenue includes the  
new build housing contracting activities and planned and response 
maintenance services
the new build housing contracting activities accounted for 24 of 
divisional revenue and although focus has been on maintaining a selective 
approach to bidding for contracts that offer clear margins and securing 
work through longterm frameworks competitive pressure in the year 
has resulted in significantly lower revenue and margin additionally 
increasing material and subcontractor costs were evident through the 
second half of the year 
in recent business development following the year end in january 2014 
the division was appointed by the defence infrastructure organisation 
dio to redevelop beacon barracks in stafford the division will work 
with the dio under a £51m contract to deliver 346 high quality new 
homes for service personnel and families alongside infrastructure 
improvements on and offsite utility services and landscaping with 
completion expected in summer 201 5 other appointments won on 
major house building and development frameworks include the £1bn 
fouryear circle housing group framework 
the committed order book for the division’s new build housing 
construction activities increased by 25 to £581m compared to the 
prior year end 
the planned maintenance business 30 of divisional revenue has 
broadly maintained its overall revenue against the backdrop of a declining 
market as housing associations and local authorities reduce their decent 
homes programmes it is anticipated that this gap will be partially filled  
by the division’s expertise in energy efficiency that has led to securing 
several projects funded or partfunded by eco energy companies 
obligation although the opportunities from this are now expected  
to be lower than previously projected 
response maintenance 18 of divisional revenue has had a difficult 
year with contract expiries outweighing the impact of new business  
wins resulting in lower revenue margin has been squeezed as a result  
of the lower volumes and the investment required in overhead and 
infrastructure operational focus is on business development and on 
positioning the business to pursue the significant opportunities available 
in the market which are required to deliver sustained profitable growth
looking ahead the division will maintain its strategic focus on developing 
and winning opportunities on complex mixedtenure schemes and on 
capitalising on opportunities via longterm framework positions it is 
expected that 2014 will see an increase in working capital investment 
required to develop these newer and more profitable mixedtenure 
schemes although the profit benefit of these will not be seen until 201 5 
and beyond additional challenges in relation to increasing material and 
subcontractor costs together with skills availability will place further 
pressure on the overall divisional margin 
urban regeneration
capital employed £m
excluding goodwill and intangible assets
£76m    19
12 64
13 76
revenue £m
 
£62m    0
12 62
13 62
operating profit – adjusted £m
 
£10m    63
12 27
13 10
 
urban regeneration revenue has remained level with the prior year  
at £62m 201 2 £62m whilst the committed order book and the 
regeneration and development pipeline have both increased which  
is reflective of the positive progress made through the year in ensuring 
schemes are well placed to capitalise as the market recovers operating 
profit reduced to £10m which reflects the nature of the business  
where the timing of profit recognition depends on the mixture of 
schemes and stages of completion
strategic report 31 morgan sindall group plc annual report and accounts 2013
chief executive’s review
levels of activity across the division’s portfolio of 35 active projects  
have been and are currently significantly higher than in previous years 
with £250m of construction contracts placed during the year across  
a broad mix of residential commercial and leisure 
in looking to capitalise on the government’s commitment to support 
residential development £70m of government funding has been 
secured by the division helping to unlock stalled housing developments 
including the first phase of wapping wharf a 250000 sq ft mixeduse 
development in bristol as part of funding conditions a number  
of residential developments have been brought forward and 1200 
residential units are now under construction over 1 2 projects 
forward funding from british steel pension fund and canada life has 
enabled site starts on kpmg’s prelet regional headquarters in leeds and 
the first phase of the £100m grand central scheme in stockport and 
216 residential units have been forward sold in reading and manchester 
£200m of new development agreements have been secured on major 
regeneration schemes in aberdeen and south shields in addition the 
division was selected in november as lambeth council’s partner for  
a project across three sites in brixton town centre with a value of circa 
£140m elsewhere a prestigious letting for a combined john lewis  
at home and waitrose store was secured at basing view and a detailed 
planning application for the first phase of development submitted
planning consents have been secured on seven major projects with  
a total development value of £140m and construction has started on 
1 3 new sites new startups in the year include major developments in 
leeds salford reading and the second phase of the 1 25home stockton 
northshore vivo residential scheme under development in partnership 
with affordable housing and the homes and communities agency  
the division continues to add value to partnerships through the group’s 
integrated capability and has procured work from the construction  
infrastructure and affordable housing divisions on four major schemes 
looking ahead urban regeneration’s current pipeline of opportunities 
places the division in a good position to benefit from market 
improvements in 201 4 and beyond and to deliver significantly increased 
profits as schemes mature on the commercial side emerging occupier 
confidence high levels of lease expiries and a generally supplyconstrained 
market should enable the division to benefit whilst on the residential front 
the continuing demand for housing aligned with government support for 
homebuyers and the expected growth of the institutional private rented 
sector should allow urban regeneration to maximise the returns from  
its investments as these markets improve and more schemes become 
active further working capital investment will be required to support  
the increased activity
investments
directors’ portfolio valuation £m
£138m    57
12 320
13 138
investments carrying value £m
£1 28m    30
12 182
13 128
operating profit – adjusted 
£61m    18
12 74
13 61
 
the strategic rationale for the investments division remains the creation 
of investments which will provide prime longterm construction 
opportunities for other divisions within the group working with both  
the public and private sector the division is focused on helping partners 
realise the potential for underutilised property assets and promote 
economic growth predominantly through longterm strategic 
partnerships with the public sector it has developed a particular 
expertise in strategic property partnerships including local asset  
backed vehicle labvs joint ventures and land swaps through which  
the division identifies innovative structuring and financing solutions  
and provides development expertise 
during the year the continued strategy of recycling capital from mature 
investments has resulted in the disposals of interests in the wigan life 
centre scheme for £66m profit £15m the miles platting social 
housing pfi scheme for £84m profit of £44m and the tayside acute 
adult mental health scheme in scotland for £88m profit of £40m
32 strategic report
 strategic report 02–46 governance 47–76 financial statements 77–120 morgan sindall group plc annual report and accounts 2013
chief executive’s review
 strategic report 02–46 governance 47–76 financial statements 77–120
flagship regeneration schemes include the £500m 20year 
bournemouth town centre labv and the £1bn 1 5year slough borough 
council labv where both joint ventures have procured work from other 
group divisions affordable housing and construction  infrastructure 
in bournemouth three projects with a £39m gross development  
value are underway and in slough the £16m community development  
‘the curve’ is on site with further construction opportunities for group 
divisions scheduled within both project development programmes  
next year investments is also progressing the £38m mixeduse 
towcester regeneration and civic accommodation project as  
lead developer in partnership with both affordable housing and 
construction  infrastructure
in scotland the investments division is leading the wellspring partnership 
which is delivering £200m public sector health and education projects 
over the next nine years for the western territory hub programme 
board and the scottish futures trust construction  infrastructure  
will be delivering five projects valued at £483m for the wellspring 
partnership in 2014 
from a sector perspective the division continues to work with the 
affordable housing division in healthcare as founder members  
of the hb community solutions strategic joint venture alongside 
hb villages delivering a rolling programme of new build supported living 
accommodation to meet the burgeoning needs of local authorities 
health services and care providers across the country 
in education financial close has been reached on the final school to  
be delivered under hull city’s £400m building schools for the future 
programme as a member of the hull esteem consortium investments 
has played a critical role in delivering the majority of the schools within 
the programme and is now looking to capitalise on its significant  
pfi expertise within the government’s £2bn priority schools building 
programme 
looking ahead the main focus for the division in 2014 will be to advance 
projects throughout its existing portfolio and identify opportunities for 
new longterm strategic partnerships where it can leverage its expertise 
in project finance development and asset management alongside the 
strength of the group’s integrated delivery capability with a positive 
pipeline of opportunities it is expected that the division will continue to 
capitalise on the release of underutilised land assets to help its partners 
unlock land values and fulfil regeneration ambitions
project 
management training
division 
affordable housing
the group is committed to developing homegrown talent 
mark rimmer joined its affordable housing division in 2002 as 
an apprentice joiner twelve years later having been supported 
throughout his studies and put through the division’s management 
trainee programme mark is now a qualified quantity surveyor 
we develop talent 
strategic report 33 morgan sindall group plc annual report and accounts 2013
finance review
finance review
trading performance
revenue increased by 2 to £2095m 201 2 £2047m with 
committed order book increasing 8 to £24bn and the regeneration  
and development pipeline increasing 23 to £30bn
adjusted gross margin fell 90bps to 82 201 2 9 1 due mainly  
to competitive market pressures in construction  infrastructure and 
affordable housing
adjusted operating profit of £336m was down 30 with adjusted 
operating margin of 16 201 2 23 this included profit from the  
sale of investments totalling £99m 201 2 £88m
exceptional operating items
an exceptional charge of £147m was taken in the year as an impairment 
against trade and other receivables in 201 2 an exceptional charge of 
£100m was made against redundancy and property costs resulting from 
the reorganisation of the group’s offices
n et finance expense
net finance expense was £23m 201 2 £10m interest expense 
increased despite lower average net debt during the year due to reduced 
interest receivable from joint ventures discount unwind on deferred 
consideration and higher arrangement fees on increased facilities
tax 
the group’s adjusted tax rate excluding the deferred tax credit of  
£25m 201 2 £15m which has arisen as a result of a reduction in the 
uk statutory tax rate fell to 1 1 201 2 18 and is low due to there 
being no tax on profit on disposal of investments and joint venture profit 
which is reported after tax
earnings per share
adjusted earnings per share decreased by 34 from 920p to 609p 
basic earnings per share has fallen by 51 to 354p from 725p
dividends
the board recommends a final dividend of 1 50p payable on 23 may 
2014 to shareholders on the register at the close of business on  
2 may 2014 the exdividend date is 30 april 2014 this takes the  
total dividend to 27 0p 201 2 27 0p
n et working capital
net working capital is defined as ‘inventories plus trade and other 
receivables less trade and other payables adjusted to exclude deferred 
consideration payable and interest accruals’
net working capital of £67 0m was 10 lower than last year net 
working capitalrevenue ratio was 32 201 2 30 net working 
capital is stated after charging the £147m exceptional operating item 
prior to charging this net working capital was £523m an increase  
of £84m
revenue committed order 
book and regeneration  
and development pipeline  
all increased in the face  
of competitive market 
pressures
 2013  2012
revenue £2095m £2047m 
operating profit – adjusted £336m £481m 
profit before tax – adjusted £313m £471m 
earnings per share – adjusted  609p 920p 
year end net cash balance £697m £504m 
average net debt £190m £401m 
dividend per share 270p 270p 
operating profit £162m £352m 
profit before tax £139m £342m 
basic earnings per share 354p 725
  adjusted is defined as before intangible amortisation £27m exceptional operating  
items £147m and in the case of earnings per share deferred tax credit £25m  
201 2 intangible amortisation £29m exceptional operating items £100m and 
deferred tax credit £15m
34 strategic report
 strategic report 02–46 governance 47–76 financial statements 77–120 morgan sindall group plc annual report and accounts 2013
finance review
 strategic report 02–46 governance 47–76 financial statements 77–120
cash flow
the group generated an operating cash inflow of £149m compared  
to an outflow in 201 2 of £427m the improvement was principally  
a result of working capital outflow which fell from £769m in 201 2  
to £84m
free cash flow of £1 19m represented a further improvement with  
tax payments falling from £8 1m in 201 2 to £12m
n et cash
net cash increased by £193m to £697m at 31 december 201 3  
this reflected free cash flow of £1 19m and proceeds from the disposal 
of investments totalling £236m offset by dividends paid of £1 15m  
and other outflows the average daily net debt for the year was £19m 
an improvement on last year 201 2 net debt £40m
banking facilities committed until 2015
the group has £140m of committed banking facilities of which £1 10m 
will mature in september 201 5 and £30m will mature during 2016  
the banking facilities are subject to financial covenants all of which  
have been met throughout the year 
treasury policy and controls
the group has clear treasury policies which set out approved 
counterparties and determine the maximum period of borrowings  
and deposits the group has very limited exposure to foreign exchange 
risk because it is based almost entirely in the uk but significant 
committed foreign exchange exposures are hedged when they arise
in the normal course of its business the group arranges for financial 
institutions to provide client guarantees bonds to provide some financial 
protection in the event that a contractor fails to meet its commitments 
under the terms of a contract the group pays a fee and provides  
a counterindemnity to the financial institutions for issuing the bonds  
as at 31 december 201 3 contract bonds in issue under uncommitted 
facilities covered £1853m 201 2 £1865m of contract commitments 
of the group
further information on the group’s use of financial instruments  
is explained in note 28 to the consolidated financial statements
going concern
the group’s business activities together with the factors likely to  
affect its future development performance and position are set out  
in this strategic report the financial position of the group its capital 
management policy its cash flows liquidity position and borrowing 
facilities are also described above
as at 31 december 201 3 the group had net cash of £697m and 
undrawn committed banking facilities of £140m expiring september 
201 5 and beyond
the directors have reviewed the group’s forecasts and projections  
which show that the group will have a sufficient level of headroom  
within facility limits and covenants for the foreseeable future 
after making enquiries the directors have a reasonable expectation  
that the company and the group have adequate resources to  
continue in operational existence for the foreseeable future thus  
they continue to adopt the going concern basis in preparing the  
annual financial statements
free cash flow reconciliation  £m
operating profit – adjusted
noncash items
working capital
net capital expenditure
dividends and interest from joint ventures
other operating items
1
operating cash flow
tax paid
net interest paid excl joint ventures
free cash flow
336
44
84
48
17
28
149
12
18
119
1 other operating items includes property dilapidation provisions released to the income statement within the construction  infrastructure division
strategic report 35 morgan sindall group plc annual report and accounts 2013
risk review
risk review
key risks to the group 
achieving its strategic goals 
are meticulously managed
the group’s risk framework is designed and 
operated to identify control and mitigate threats 
to the group achieving its goals and is described 
below in principle
  each year the group and its divisions undertake a comprehensive 
business planning process to identify objectives and set strategies  
to achieve their goals
  the executive directors meet with the divisions each month 
throughout the year and with an established agenda and reporting 
format covering a range of matters that must be brought to their 
attention this allows the senior management team to ensure  
that it maintains oversight and control over the material aspects 
of strategic financial and operational issues
  the control environment is further underpinned by a clear set  
of delegated authorities that define processes and procedures  
for approving material decisions particularly with regard to project 
prequalifications tender pricing bid submissions and capital 
requirements this ensures that projects are approved at  
the appropriate level of management with the largest and most  
complex projects being approved at board level
  twice yearly each division carries out a detailed risk review which 
identifies mitigations or proposed actions for each significant risk  
risk registers document these together with any timescale by  
which actions are targeted for completion in conjunction with the 
divisional risk reviews the group executive team compiles its own 
assessment thus ensuring that a top down bottom up approach  
is undertaken when considering the groupwide environment
  an annual internal audit plan approved by the audit committee and 
covering both project and corporate level risks is developed based 
upon the key risks identified from the risk review process and feedback 
from current divisional performance following this the internal audit 
team reports regularly to the board and the audit committee on the 
status of risk and control following its assignments
  it is the role of the group’s audit committee to monitor and approve 
the work undertaken by the internal audit function and to ensure  
that the internal audit process remains efficient and effective  
this monitoring process has been strengthened by divisional audit 
committees established separately for construction  infrastructure 
and affordable housing which have larger and more complex 
operations than other divisions
the board has identified the following key risks to the group achieving  
its strategic goals aligned to the different elements of the group’s 
business model 
“ there is a clear and 
established risk framework in 
place across the organisation 
by which the group seeks 
to manage its risks”
 strategic report 02–46 governance 47–76 financial statements 77–120
strategic report 36 morgan sindall group plc annual report and accounts 2013
risk review
 strategic report 02–46 governance 47–76 financial statements 77–120
risk category trend description and impacts mitigation
markets
the markets in which the group 
operates are affected to varying 
degrees by general macro
economic conditions the group 
is particularly focused at present 
on managing the impact of the 
challenging economic conditions 
changes in government spending 
priorities together with the 
availability of private sector 
funding
n ew opportunities
increased levels of new opportunities are available 
to the group in a rising market however it needs 
to remain focused upon selecting those which 
provide the group with the ability to grow  
margins and repeatable business also there  
is still some uncertainty around the more 
optimistic but still fragile outlook including 
predicting future government spending priorities 
and the ability of the private sector to obtain 
sustainable levels of debt
a significant fall in construction activity could 
impact revenues profits and the ability to 
generate sufficient margins to cover overheads 
which could potentially result in a need to  
rescale the business and overheads
it could also result in less cash being generated 
which would affect the group’s ability to invest 
cash in regeneration and growth markets
 
market spread geographical capability and 
diversification offer measured protection against 
decline in individual markets
 
scale also gives increased resilience by enabling 
the group to compete and work in areas with 
higher barriers to entry
 
regular monitoring and reporting of financial 
performance work won prospects and pipeline 
of opportunities
 
market intelligence helps to detect potential 
shifts in spending and inform adaptions to the 
group’s approach
 
delegated authorities in place require approval  
from appropriate levels of management to bid  
for new work
overcapacity in market
this leads to price competition and more onerous 
terms and conditions being sought by clients  
this can also affect the bidding process where  
an increased number of preconditions may be 
put in place by clients through the bidding phase
increased price competition leads to downward 
pressure on margins and an increased risk profile  
if onerous terms and conditions are accepted 
ultimately overheads may not be covered by 
declining gross margins
 
delegated authorities in place require approval  
of tenders by appropriate levels of management 
covering both price and terms and conditions
 
delegated authorities stop the business 
knowingly taking on lossmaking contracts
 
through the development of effective client 
relationships the group seeks to differentiate 
itself through the quality of its service and 
consistency of delivery
 
greater value can be offered to clients when 
where appropriate different divisions work 
together
 
regular review of resource levels against 
anticipated workload
exposure to uk housing market
the uk housing market is influenced by consumer 
confidence and in particular employment levels 
and availability of mortgage finance
if unemployment were to increase or mortgage 
finance became more difficult to secure this could 
reduce the amount that people are willing to  
pay for houses reducing profitability from house 
sales and the value of assets such as land with 
residential planning permission and shared equity 
loan receivables
 
monitoring of statistics such as the uk 
unemployment rate and mortgage lending 
figures ensure that management can react 
appropriately to the latest market conditions
 
when possible forward purchased land is subject 
to economic viability tests meaning the price  
can be reduced or purchase cancelled should 
house prices fall sufficiently
 
if economically reasonable largescale residential 
schemes are forward sold to institutional or  
other investors
trend – signifies the board’s opinion of premitigation risk movement within the current business cycle
strategic report 37 risk category trend description and impacts mitigation
strategy
the group’s strategy needs  
to be clearly articulated and 
understood to ensure successful 
outcomes are achieved the 
group’s success is a product  
of both the strength of business 
management and its people
conflicted decision making
the group’s strategy is not clearly communicated 
to and understood by employees
employees may unintentionally make decisions 
that are not wholly aligned with the group’s 
strategic aims
 
strategic aims of the group individual divisions 
and business units are communicated as 
appropriate in business cascades or in annual 
employee reviews that seek to align personal  
and corporate objectives
 
delegated authorities ensure that material 
decisions are signed off at an appropriate  
level ensuring that the decisions made are  
in accordance with the group’s strategy
 
monthly divisional review meetings allow the 
board to assess progress against the agreed 
strategy
 
top down bottom up annual business planning 
and budgeting process involving key personnel 
 
 
 
 
 
 
morgan sindall group plc annual report and accounts 2013
risk review
risk review
38 strategic report
 strategic report 02–46 governance 47–76 financial statements 77–120 morgan sindall group plc annual report and accounts 2013
risk review
 strategic report 02–46 governance 47–76 financial statements 77–120
risk category trend description and impacts mitigation
people
the group’s health safety  
and environmental hse 
performance and business 
conduct affects employees 
subcontractors and the public 
and in turn can affect its 
reputation and commercial 
performance
in a rising economic 
environment it can become 
increasingly difficult to retain 
key employees especially  
those targeted by competitors 
environmental or safety incident
an accident or incident causes harm  
to a community or to an individual leading  
to the potential for legal proceedings  
financial penalties reputational damage  
and project delays
consequently the group fails to prequalify  
for contracts due to a poor health safety  
and environmental track record
 
key executives with specific responsibility  
for hse are identified in each division and  
on the board
 
hse policy frameworks are communicated  
and senior managers appointed to manage  
them in each division and at project level  
where appropriate
 
established safety systems site visits monitoring 
and reporting including near miss and potential 
hazard reporting are in place across the group
 
investigation and root cause analysis of accidents 
or incidents and near misses
 
regular hse training and updates including 
behavioural training
 
major incident management plans and business 
continuity plans are in place and are periodically 
reviewed and tested 
failing to attract talented people
risk that the group fails to grow by not 
ensuring that the best people are employed  
to create the most capable teams possible
the group does not benefit from new ideas 
and experience and is unable to grow the 
business and achieve its longterm strategy
  progression planning in place in each division  
to ensure immediate and future replacements 
are identified and developed accordingly
  investment made in graduate trainee and 
apprenticeship schemes to secure an annual 
inflow of new talent
  monitoring of future skills and capability 
requirements 
  identification of future talent
  director of people to develop and drive  
the talent agenda
n ot developing or retaining capable teams
in a rising market there is an increasing risk  
that the business will not be able to keep hold 
of employees or improve the performance  
of the teams that they work within
without capable teams it becomes very 
difficult to maintain the high levels of customer 
service that the group strives for when 
employee turnover increases it can adversely 
affect morale within the rest of the team
  annual employee appraisal process in place 
providing twoway feedback on performance
  training and development plans seek to 
maximise relevant skills and experience
  remuneration packages are benchmarked 
where possible
poor project delivery
the quality of workmanship or poor commercial 
and operational delivery of a contract whether 
by the group or a joint venture partner does 
not meet expectations of clients
interim cash payments may be withheld 
impacting working capital and issues may also 
impact contract profitability and corporate 
reputation
  strategic trading arrangements in place  
with key suppliers and subcontractors  
to help ensure consistent quality
  collation and review of client feedback
  lessons learned exercises carried out  
on projects
  employees incentivised on basis of contract 
performance
  internal peer reviews
  regular monitoring of project performance 
including management of the work 
programme margin contract changes  
and cash
39 strategic report morgan sindall group plc annual report and accounts 2013
risk review
risk review
risk category trend description and impacts mitigation
winning in our markets
the group undertakes several 
hundred contracts each  
year and it is important that 
contractual terms reflect risks 
arising from the nature and 
complexity of the works and  
the duration of the contract
misprice contract
when pricing a contract the planned works  
are not costed correctly increased commodity 
prices are not factored in or risk is not properly 
evaluated leading to a contract being mispriced
leads to loss of profitability on a contract and 
reduces overall gross margin
 
system of delegated authorities governs tenders 
and the acceptance of work
 
a contract tender is reviewed at three key stages 
prequalification pretender and final tender 
submission
 
contract tender approved by the appropriate 
level of management via tender review boards
managing changes to contracts and  
contract disputes
as contracts progress there are inevitably  
changes to the works being delivered and a risk 
exists that the group does not get properly 
reimbursed for the cost of the changes  
as a result of disagreement poor commercial  
controls or disputes
leads to costs being incurred that are not 
recovered and loss of profitability on a contract 
ultimately the group may need to resort to legal 
action to resolve disputes which can prove costly 
and the outcomes can be uncertain
 
work carried out under standard terms  
wherever possible
 
well established systems of measuring and 
reporting project progress and estimated 
outturns including any contract variations
 
contract terms reviewed at tender stage  
and any variations approved by the appropriate 
level of management
 
reviews in place to ensure rigour is applied in core 
processes to provide effective early warning
 
decision to take legal action based on appropriate 
legal advice
 
suitable provision made for legal costs
poor contract selection
risk that the group accepts a contract outside  
of its core competencies or for which it has 
insufficient resources this can become a greater 
risk in a rising market when there are more 
opportunities though these may vary in  
quality and there may be restricted availability  
of quality resources
this may lead to poor understanding of project 
risks poor project delivery and ultimately result  
in contract losses and reputational damage 
 
business planning identifies markets and  
clients that the group will target
 
system of delegated authorities governs  
tenders and the acceptance of work
 
plans for specific types of work and contract  
size agreed by individual business
 
staff resources planning
 
initiatives to select supply chain partners  
to match the group’s expectations in terms  
of quality and sustainability
maximise efficiency
the group has a unique and 
differentiating approach  
if employees are not properly 
engaged with the culture  
of the business clients are less 
likely to receive exceptional 
levels of service
perfect delivery
the group does not fully adopt the philosophy  
of perfect delivery
project failures are likely to incur additional costs 
that erode profit margins it is also likely that client 
experiences will fall short of the standards set  
by the group potentially leading to a reduction  
in repeat business or in referrals from client 
recommendations
 
continuing engagement with employees  
clients and supply chain
 
internal resources dedicated to the further 
development of perfect delivery ensuring 
maximum engagement
 
perfect delivery culture is led from the top
 
teams targeted and measured on achieving  
high levels of customer satisfaction
business conduct
failure by employees to observe the appropriate 
standards of integrity and conduct in dealing with 
clients suppliers and other stakeholders this is  
an increased risk in times of economic uncertainty 
and hardship
could expose the group to significant potential 
liability and reputational damage that results  
in it failing to prequalify for contracts
 
independent raising concerns phone line 
available for all employees
 
audit committee reviews incidents log from  
the raising concerns phone line which includes 
the outcome of investigations into such incidents 
and any follow up actions
 
ethics policy communicated to all employees
 
training in place to ensure awareness of and 
compliance with both competition law and  
the bribery act
 
regular reviews undertaken to ensure procedures 
in place are adequate followed and up to date
40 strategic report
 strategic report 02–46 governance 47–76 financial statements 77–120 morgan sindall group plc annual report and accounts 2013
risk review
 strategic report 02–46 governance 47–76 financial statements 77–120
risk category trend description and impacts mitigation
disciplined use of capital
in a rising market there is an 
increased risk that the terms on 
which the group trades with 
counterparties affect its 
liquidity without sufficient 
liquidity the group’s ability to 
meet its liabilities as they fall due 
would be compromised which 
could ultimately lead to its failure 
to continue as a going concern 
insolvency of key client subcontractor  
or supplier
risk that insufficient credit checks and due 
diligence is not undertaken and that a key client 
subcontractor or supplier becomes insolvent 
there is also a risk that given the wider macro
economic climate historical credit checks  
are relied upon that have subsequently been 
overtaken by events
insolvency of a client may result in significant 
financial loss due to a bad debt insolvency of a 
subcontractor or supplier may disrupt a contract’s 
programme of work and lead to increased costs  
in finding replacements for their services
 
work only carried out for financially sound  
clients established through credit checks
 
specific commercial terms including payment 
terms with escrow accounts used as appropriate
 
seek and obtain financial security where required
 
work with approved suppliers wherever possible
 
contracts with clients subcontractors or 
suppliers only entered into after review at the 
appropriate level of delegated authority
 
regular meetings with key supply chain members 
to give and receive feedback and maintain the 
quality of the relationship
management of working capital
risk that poor management of working capital 
leads to inadequate liquidity and funding problems
the lack of liquidity impacts the group’s ability  
to continue to trade or restricts its ability to invest 
in regeneration schemes or growth markets
 
daily monitoring of cash levels and regular 
forecasting of future cash balances
 
regular stress testing of longterm cash 
forecasts
 
regular assessment of the level of banking 
facilities available to the group
 
working capital monitored and managed as 
appropriate with acute focus on any overdue 
work in progress debtors or retentions
 
for very significant purchases on large projects 
forward orders can be placed on a longer 
timescale
 
group delegated authorities in place to ensure 
that prior approval is sought for any significant 
projectrelated capital requirements
management of overheads
the group fails to responsibly shape the  
business and becomes uncompetitive
if the cost base is too high the group may  
be hindered in winning new work and profit 
margins will be eroded
 
overheads are reviewed on a monthly basis
 
business planning identifies future overhead 
requirements
 
internal and external benchmarking is carried  
out to ensure overhead levels are appropriate
pursue innovation
the group is committed to 
offering clients innovative and 
cost effective solutions if it  
fails to encourage an innovative 
approach across the group  
it will become less effective
innovation
failure to adopt appropriate innovations in new 
products or techniques
the group becomes less effective than its 
competitors and not able to secure best value  
for or offer the best solutions to its clients  
new technologies and innovations are not 
promoted within the business environment 
reducing the attraction of the group to new  
and existing talent
 
reviews undertaken to promote elimination  
of waste of both resources and process  
adopting lean methodology where appropriate
 
building information modelling strategy 
developed to provide more efficient asset 
management across the whole life cycle
 
maintaining knowledge base of new products 
and thinking
 
innovation on the it agenda encouraging the 
promotion of new ideas into the business
41 strategic report morgan sindall group plc annual report and accounts 2013
sustainability review
sustainability review
the group’s commitment to sustainability  
is a key element of its strategy and essential  
to delivering value for all stakeholders 
the group recognises the need for a robust crossbusiness  
sustainability plan to drive sustainable practice throughout the  
business three years ago the group launched its roadmap for 
sustainability the roadmap focuses on six specific and prioritised  
areas known as total commitment based on the three widely
recognised pillars of sustainability of people planet and profit  
total commitment encompasses improving safety developing  
talent reducing energy consumption carbon emissions and waste 
improving sustainable procurement and supporting local economic 
growth it encourages the group as a whole to be forwardlooking  
and enhances its ability to identify emerging risks and opportunities  
and assess their potential impact since the roadmap’s launch in 201 1  
the group has been focused on delivering measurable improvement 
across all six of its total commitments 
progress in 201 3
the group has made significant strides in implementing best practice 
during the year 
the group has set itself a new benchmark by reporting its 201 3 
performance through the global reporting initiative’s gri sustainability 
reporting framework and has opted to become one of the early 
adopters of the gri’s fourth generation of reporting guidelines g4  
the gri framework provides companies with a reporting structure that 
includes disclosures on governance ethics and integrity supply chain 
anticorruption and greenhouse gas emissions amongst others g4 
places a greater emphasis on materiality and the process of identifying 
and prioritising the most important challenges and opportunities that 
impact on the business and its stakeholders 
in line with this desire to report more comprehensively on material  
issues the group undertook a detailed stakeholder engagement survey 
in late 201 3 724 customers supply chain partners and staff actively 
participated in the survey analysis of the feedback endorsed the group’s 
existing six total commitments and also identified an additional eight 
relevant issues that have been incorporated in this year’s standalone 
sustainability report engaging with stakeholders has allowed the  
group to evolve its sustainability strategy to ensure it is addressing  
the real risks and opportunities impacting on the business 
a key milestone this year has been the group’s ranking as the topscoring 
construction company in the cdp’s uk climate change report 201 3 
this year the group achieved a higher score of 91 b from its 201 2 score 
of 86b in 201 2 the group became the first non ftse 350 company  
to be listed in the carbon disclosure leadership index cdli it repeated 
this achievement in 201 3 reflecting the hard work and effort made by 
teams and projects across the business to identify and manage the risks 
associated with climate change and management of emissions
recognising that fully integrated and aligned supply chains are critical  
to deliver successful sustainability strategies the group was a founder 
partner of the supply chain sustainability school it continues to invest  
in the school to help construction suppliers and subcontractors develop 
their sustainability knowledge and competence in recognition of the  
level of collaboration achieved among more than 1000 suppliers the 
school was awarded the ‘best contribution to corporate responsibility’  
and also the ‘best overall entry’ at the chartered institute of purchasing 
 supply’s supply management awards 201 3 
further strengthening the group’s reputation the construction  
infrastructure division maintained its gold ranking in business in the 
community’s annual benchmark of responsible business management 
with a 4 uplift on the previous year’s score this ranking provides 
further evidence of how sustainability performance is improving
measured performance
the six total commitments underpinning the roadmap are detailed  
below with key performance indicators more detailed information  
on the group’s performance and its standalone report can be seen  
at wwwcorporatemorgansindallcomsustainability 
total commitment to a safe work environment 
 
total number of riddor accidents
12 77
11 96
13 67
the reporting of injuries diseases and dangerous occurrences regulations 1995 riddor
42 strategic report
 strategic report 02–46 governance 47–76 financial statements 77–120 morgan sindall group plc annual report and accounts 2013
 strategic report 02–46 governance 47–76 financial statements 77–120
oxgangs edinburgh 
dunedin canmore housing association
we are committed  
to providing a safe  
work environment
we build  
sustainable  
homes
we prevent  
accidents on site 
by adhering to 
a strict health and 
safety code
16 consecutive  
years of gold  
rospa awards
43 project 
oxgangs edinburgh
partner 
dunedin canmore housing association
division 
affordable housing
safety is the bedrock of the affordable housing division  
the recent award of a rospa gold medal for its sites in 
scotland recognises the continuing commitment to health 
and safety across its scottish sites and offices and is just one 
of the many national safety awards that the division received 
throughout the year  the scheme at oxgangs used timber 
framed construction and innovative sustainable features to 
deliver 2 44 new residential units and commercial premises
£24m
regeneration  
programme
244
new homes  
designed and built
5
apprentices taken  
on from the local area
morgan sindall group plc annual report and accounts 2013
44
 strategic report 02–46 governance 47–76 financial statements 77–120 strategic report 45
morgan sindall group plc annual report and accounts 2013
sustainability review
 strategic report 02–46 governance 47–76 financial statements 77–120
total commitment to developing talented employees
average number of training days per employee
12 18
11 15
13 23
23
total commitment to reducing energy consumption  
and carbon emission
total carbon emissions co2e 
12 48019
11 50997
13 45901
45901
total commitment to reducing waste
total waste produced tonnes  
12 131 1032
11 131 1800
13 943958
total waste diverted from landfill tonnes 
12 1206874
11 1127035
13 855935
943958
855935
total commitment to improving sustainable procurement
percentage of total spend that is 
covered by groupwide agreements  
12 65
11 85
13 71
71
total commitment to supporting local economic growth
the group aims to positively contribute to local economies through 
engaging with local supply chain partners employees apprentices 
charities and non governmental organisations
the group is fully committed to treating all of its employees fairly and 
equally its policies and practices emphasise the importance of treating 
individuals in a non discriminatory manner across the full employment life 
cycle including recruitment of all new employees and the management  
of existing personnel the group recognises that a diverse workforce  
will provide it with an insight into different markets and help it anticipate 
and provide what its clients need a breakdown by gender of the  
number of persons who were directors of the company senior managers 
and other employees as at 31 december 201 3 is set out below 
directors of the company
male 5
female 2
senior managers group executive team 
male 3
female 3
other employees total workforce 
male 4556
female 1054 
in line with the group’s decision to adopt the g4 sustainability reporting 
framework and the need to address emerging issues as industry activity 
picks up the group recognises it needs to be lean and flexible to adapt  
to changing economic conditions and respond to clients’ evolving needs 
to fully engage with its supply chain partners and to address natural and 
human resource criticality 
as part of its mandate the steering group is developing a series of 
stakeholder panels made up of supply chain partners clients divisional 
representatives and graduates employed by the group these panels will 
support the steering group through challenge and by providing guidance 
advice and intelligence the group’s second sustainability conference will 
take place in june 2014 providing an excellent opportunity to increase 
awareness of its strategy and maintain engagement with supply chain 
partners and employees the group’s existing sustainability risk and 
opportunity register is currently under review supplementing it with a 
wider range of issues to provide a tool to manage more closely risk and 
opportunity associated with the sustainability agenda  morgan sindall group plc annual report and accounts 2013
sustainability review
maintaining a momentum
significant improvements continue to be made particularly with regard 
to energy efficiency and waste minimisation whilst still not fully 
optimised these areas are well monitored managed and measured 
across the group with a direct impact on profitability there is still much 
work to do across the industry to conserve natural resources and the 
group is working hard to influence its supply chain to provide materials 
that are sustainable and responsibly sourced 
there are undoubtedly challenges ahead relating to people the industry 
is facing a skills crisis and attracting and retaining talented employees  
will be crucial encouraging diversity enhanced training opportunities  
and understanding community needs will all play a part in positioning  
the group as a preferred employer to help the business meet these 
challenges a new group director of people has been appointed 
the group believes that addressing sustainability provides it with greater 
resilience sustainability plays a critical role in positioning the business  
to deliver the group strategy and further strengthens its status as a 
responsible and economically sustainable organisation 
greenhouse gas emissions
this year the group’s greenhouse gas emissions ghg recorded as 
tonnes of carbon dioxide equivalent co
2 e are reported as separate 
indicators under the companies act 2006 strategic and directors’ 
report regulations 201 3
the group’s ghg emissions have been calculated based on the iso 
14064 12006 standards emissions reported correspond with the 
group’s financial year and include all areas for which the group has 
operational control in the uk excluding joint ventures the materiality 
threshold has been set at a group level of 5 with all operations 
estimated to contribute more than 1 of the total emissions included 
no material emissions have been omitted from this report
emissions have been calculated using data gathered for the group’s 
annual audit of its energy data by achilles under its certified emissions 
measurement and reduction scheme cemars emission factors are 
from the department for environment food  rural affairs defra 
conversion factor guidance current for the year reported prior year’s 
data has been rebased using defra’s 201 3 factors all data has been 
verified by achilles
emissions are predominantly from bulk fuel use on sites from the  
group’s vehicle fleet and electricity the group’s target is to reduce  
its absolute emissions by 26 by 2020 from a baseline of the data as  
at 31 december 2010 the group’s head of sustainability is responsible 
for the delivery of this target
tonnes of co 2 equivalent 2013
total 45901
 
scope 2 10570
scope 3 2453
scope 1 32878
scope 1 tonnes co 2e
direct emissions resulting from fuel combustion bulk fuels 
natural gas and vehicle fleet emissions
scope 2 tonnes co 2e
indirect emissions resulting from electricity purchased by the group 
including landlord supplied
 
scope 3 tonnes co 2e
indirect emissions from related activities such as water consumption 
and disposal waste disposal electricity transmission losses and
employee travel
intensity measurement scope 1 2 and 3 tonnes co 2e£m revenue
an intensity measure of tonnes of co 2e per £m revenue has been
selected as this is a metric already in use and as verified by achilles
11 36701
10 baseline 33357
12 34663
13 32878
11 11467
10 baseline 25288
12 10277
13 10570
11 2829
10 baseline 5097
12 3079
13 2453
11 2290
10 baseline 3032
12 2346
13 2191
the group consumed 18889 mwh not including electricity provided as part of serviced
oce rental
approval of the strategic report
this strategic report was approved by the board of directors and signed on its behalf by
john morgan
chief executive 
18 february 2014
46 strategic report
 strategic report 02–46 governance 47–76 financial statements 77–120 governance
information about our board of directors  
and corporate governance
48 board of directors
50 group management team
52 corporate governance statement
58 directors’ remuneration report
73 directors’ report
76 directors’ responsibilities statement
morgan sindall group plc annual report and accounts 2013
governance 47
 strategic report 02–46 governance 47–76 financial statements 77–120 morgan sindall group plc annual report and accounts 2013
board of directors
board of directors
chairman’s statement
i am pleased to introduce the directors’ report on our corporate 
governance arrangements in order to emphasise the importance  
we attach to maintaining a high standard of corporate governance  
in our management of the group’s affairs and our dealings with all its 
stakeholders at morgan sindall group good governance involves 
establishing appropriate policies procedures and guidelines to ensure  
that the company’s core values and standards are embedded within the 
group whilst allowing each division to operate within a decentralised 
empowering environment the board’s stewardship of these matters  
and its role in providing guidance to the executive team is critical  
equally important is the board’s work in formulating the risk management 
strategy of the group and monitoring its effectiveness
this has been my first full year as chairman of the board following  
john morgan’s return to the chief executive role and a move to the more 
traditional structure of a nonexecutive chairman and chief executive 
considered to be better aligned to corporate governance best practice 
earlier in the year i commissioned with the assistance of the general 
counsel and company secretary an externally facilitated review of the 
effectiveness of the board its committees and individual directors  
a description of the process and its findings is set out in the corporate 
governance statement but i would just say that the commissioning of  
the company’s first external board evaluation highlights my commitment 
to ensuring that we have a highly effective team with the right balance  
of skills and experience and the ability to provide the constructive 
challenge necessary to create accountability and drive performance  
whilst recognising management’s responsibility for running the business
in addition to adjusting to the new board structure some of the key areas 
of focus for the directors have been succession planning developing the 
group’s longer term strategy and strengthening the management team  
to ensure that the business is resourced to meet the group’s needs as 
growth returns to its markets
in particular the chief executive has strengthened the central 
management team with several new appointments to the group 
executive team he also brought the group executive team together  
with the divisional managing directors to form the group management 
team as part of the focus on ensuring that our five divisions are working 
efficiently and collaborating effectively further details of these new  
teams are set out in the corporate governance statement
the company is committed to managing its affairs in compliance with  
the principles and provisions of the code whilst subject to the provisions 
of the uk corporate governance code applicable to smaller companies 
the company seeks where appropriate to follow those applicable to  
ftse 350 companies the changes to the code introduced in september 
201 2 with effect from 1 january 201 3 have resulted in certain additional 
disclosure and compliance recommendations which we have sought to 
reflect in this report 
i am pleased to report that with one exception explained in the corporate 
governance statement we have complied in full with the code
adrian martin
chairman
adrian martin
position chairman 
appointed december 2008
in november 2012 adrian was 
appointed nonexecutive chairman 
having previously held the role of 
senior independent director adrian 
holds a number of nonexecutive 
directorships including hr owen 
plc mc saatchi plc and safestore 
holdings plc his career includes 30 
years’ audit and corporate finance 
experience with bdo stoy hayward 
the last eight years as managing 
partner before becoming chief 
executive and then consultant at 
reynolds porter chamberlain llp  
until 2009 
john morgan
position chief executive 
appointed october 1994
john was appointed as chief 
executive in november 2012 he has 
overall responsibility for proposing 
and developing the strategy and 
daytoday management of the 
operational activities of the group 
he cofounded morgan lovell in 
1977 which then reversed into 
william sindall plc in 1994 to form 
morgan sindall group plc he was 
formerly chief executive from 1994 
to 2000 and executive chairman 
from 2000 to 2012
steve crummett
position finance director 
appointed february 2013 
steve was previously finance director 
of filtrona plc now essentra plc 
from 2008 to september 2012  
prior to that he held senior finance 
roles with a number of listed 
companies including exel plc 
mckechnie plc and logica plc steve 
qualified as a chartered accountant 
with arthur andersen and has been  
a nonexecutive director and chair  
of the audit committee of consort 
medical plc since june 2012
governance 48
 strategic report 02–46 governance 47–76 financial statements 77–120  strategic report 02–46 governance 47–76 financial statements 77–120
patrick de smedt
position senior independent director 
appointed december 2009
patrick assumed the role of senior 
independent director in november 
2012 patrick’s career includes  
23 years with microsoft culminating 
in the role of chairman for europe 
middle east and africa from 2003 
since leaving microsoft in 2006 he 
has served on the boards of a number 
of european public and private 
companies he is currently senior 
independent director of anite plc  
a nonexecutive director of  
victrex plc where he also chairs  
the remuneration committee and 
easynet gmbh he is an investor  
in several european technology 
companies
geraldine gallacher
position nonexecutive director 
appointed august 2007
geraldine is managing director of  
the executive coaching consultancy 
which she founded in 1994 to provide 
specialist coaching to executives and 
boards previously she was head of 
group management development for 
the burton group plc now arcadia 
plc and with the ford motor 
company
liz peace cbe
position nonexecutive director 
appointed november 2012
liz has been chief executive officer  
of the british property federation 
since 2002 following a career in  
the ministry of defence including  
as director of corporate affairs from 
1990 to 2002 at qinetiq group plc 
formerly the defence evaluation  
and research agency liz is also  
a member of the board of peabody  
a trustee of property charity  
landaid a trustee of the churches 
conservation trust and a non
executive director of turley 
associates
simon gulliford
position nonexecutive director 
appointed march 2010
simon is chief executive officer of 
gulliford consulting the marketing 
consultancy which he founded in 
1992 and which is now part of chime 
communications plc simon is also a 
nonexecutive director of scottish 
equitable plc and also a number  
of private companies before setting  
up his own consultancy he was head 
of the marketing faculty at ashridge 
college and he has previously  
held marketing roles at companies 
including sears plc emap plc 
barclays plc and standard life 
board composition
executive 2 male 5 
nonexecutive 5  female 2
morgan sindall group plc annual report and accounts 2013
board of directors governance 49 morgan sindall group plc annual report and accounts 2013
group management team
group management team
andy saul
position  group commercial director
andy joined the group in january 
2014 andy was previously managing 
director of bullock construction 
limited from 2010 to 2013 prior to 
that his career included 20 years with 
kier plc culminating in the role of 
director at kier construction where 
he had overall responsibility for  
the commercial and procurement 
functions of the division 
john morgan
position chief executive
see page 48 for biog
camilla aitchison
position director of people
camila joined the group in december 
2013 after three years at inchcape 
shipping services where she was 
chief human resources officer and  
was responsible for creating the  
hr function previously she was  
head of business relations at hsbc 
bank plc where she developed the  
hr strategy needed to deliver the 
business objectives camilla began 
her career as an officer in the army
mary nettleship
position  general counsel  
and company secretary
mary has been with the group since 
2005 prior to joining the group mary 
was general counsel and company 
secretary at mayflower corporation 
she is a qualified solicitor with eight 
years’ experience as a corporate 
lawyer in private practice at nabarro
steve crummett
position finance director
see page 48 for biog
lisa scenna
position  managing director 
investments and group 
strategy director
lisa joined the group in june 2013  
in her last position before joining the 
group lisa was managing director 
explore investments at laing 
o’rourke prior to that she was the 
joint managing director at stockland 
uk and held senior financial roles 
within both stockland and westfield 
in australia lisa is a qualified 
chartered accountant 
governance 50
 strategic report 02–46 governance 47–76 financial statements 77–120 morgan sindall group plc annual report and accounts 2013
group management team
 strategic report 02–46 governance 47–76 financial statements 77–120
matthew crompton
position  joint managing director 
urban regeneration
matt joined the group via the 
acquisition of amec developments  
in july 2007 where he started  
in 1990 as a senior development 
surveyor matt is responsible for the 
division’s activities in the northern 
region he is also on the board  
of english cities fund ecf  
a £100m mixeduse regeneration 
vehicle owned by muse legal  
 general and the homes and 
communities agency his earlier 
career included development 
positions at both london  
metropolitan and chestergate 
seddon
chris booth
position  managing director  
fit out
chris booth is managing director  
of the fit out division he has  
overall responsibility for both the 
overbury and morgan lovell brands 
chris joined overbury in 1994  
he progressed through divisional 
management 1998–2003 to 
become managing director of 
overbury in 2003 he was appointed 
to the fit out divisional board as  
chief operating officer in 2010 and 
managing director in 2013
graham shennan
position  managing director 
construction  
infrastructure
a chartered civil engineer  
graham joined the group in 2002  
as managing director of the 
construction business and was 
appointed managing director  
of the construction  infrastructure 
division in 2010 prior to this  
he was managing director of kier 
national ltd 
stewart davenport
position  managing director  
affordable housing
stewart joined lovell in 1995  
as commercial director and was 
promoted to managing director in 
1997 in 1999 the affordable 
housing division was acquired by the 
group prior to joining lovell stewart 
worked for contract housing the 
social housing division of tarmac 
construction commencing in 1973  
as a trainee quantity surveyor 
progressing to commercial director
group management team composition
male 7 
female 3 
member of the group executive team
governance 51 morgan sindall group plc annual report and accounts 2013
corporate governance statement
corporate governance statement
statement of compliance
the september 201 2 edition of the uk corporate governance code the 
code a copy of which is available from the financial reporting council’s 
website wwwfrcorguk applied to the company throughout the year 
ended 31 december 201 3
the board has carried out a detailed review of the provisions of the code 
having regard to the need to comply not just with the principles but also  
with the spirit of the code and also keeping in mind guidance issued by the 
frc such as the frc guidance to audit committees a summary of how  
the company has applied the main principles of the code is set out below
save as referred to below the board has complied with the provisions  
of the code throughout the year ended 31 december 201 3 and up to the 
date of this report
the board did not comply in full with code provision c3 1 because from  
1 january 201 3 until the end of the agm on 9 may 201 3 adrian martin 
retained the chair of the audit committee as well as his new role as 
nonexecutive chairman of the company as explained last year the board 
considered that the benefit to the audit committee of adrian’s experience 
outweighed the risk that his continued membership might bring to the 
independence of the committee liz peace who had joined the audit 
committee on 10 january 201 3 took over as chair following the agm 
restoring compliance with this provision
leadership
structure of the board 
in 201 3 the board comprised a nonexecutive chairman three executive 
directors and four nonexecutive directors paul whitmore resigned at the 
end of 201 3 leaving the board with just two executive directors and the 
board intends to retain this structure for the time being the board therefore 
comprises a nonexecutive chairman two executive directors and four 
nonexecutive directors meeting the requirements of the code
roles of the chairman chief executive and senior independent director 
the division of responsibility between the chairman and the chief executive 
was changed at the end of 201 2 when a nonexecutive chairman was 
appointed and the changes are reflected in a revised written schedule agreed 
by the board the principal change is that the responsibility for proposing and 
developing the overall strategy of the group lies with john morgan as chief 
executive whilst adrian martin as nonexecutive chairman is responsible  
for ensuring that the board as a whole is involved in refining and determining 
group strategy the chairman remains responsible for ensuring that the 
board functions effectively he sets the agenda for board meetings and 
ensures that adequate time is devoted to discussion of all agenda items 
facilitating the effective contribution of all directors the chief executive’s 
principal responsibility is for the daytoday management of the operational 
activities of the group in accordance with the strategy and policies 
determined by the board
patrick de smedt as the senior independent director is available to 
shareholders if they have concerns which have not been resolved through 
the chairman or chief executive or for which contact through those channels 
is not appropriate he also has specific responsibility for evaluating the 
performance of the chairman he meets with the other nonexecutive 
directors at least once a year to review the chairman’s performance
independence 
all of the nonexecutive directors are considered by the board to be 
independent in character and judgment and no cross directorships exist 
between any of the directors
the directors are aware of their duties under the provisions of the companies 
act 2006 relating to the management of conflicts of interest the 
company’s articles of association the articles give the board a general 
power to authorise potential conflicts of interest in addition to the directors’ 
duty to seek board approval for any new potentially conflicting situations or 
changes to existing interests the register of potential conflicts is circulated 
for review by the board on an annual basis this process was carried out 
satisfactorily during the year
directors to stand for election
all of the directors retire at each agm and may offer themselves for 
reelection by shareholders all of the existing directors will therefore be 
standing for election at the 2014 agm and their biographies are set out on 
pages 48 and 49 the board is satisfied that the performance of all of the 
remaining nonexecutive directors continues to be effective and that they 
continue to show commitment to their respective roles
operation of the board
group
executive team
group
management team
audit
committee
nominations
committee
chief executive
remuneration
committee
board
description of board activities
the role of the board is to set the strategic direction of the group to review 
all significant aspects of the group’s activities to oversee the executive 
management and to review the overall system of internal control and risk 
management there is a formal schedule of matters that are specifically 
reserved to the board which includes the approval of the group’s strategic 
plans the annual budget significant capital expenditure and investment 
proposals major projects acquisitions and disposals internal control 
arrangements and the annual and half year results other specific 
responsibilities are delegated to the board committees described below  
and under the group’s delegated authorities 
daytoday management responsibility rests with the chief executive  
who is supported by the group executive team whose members are listed 
on page 50 in addition the group management team consisting of the 
group executive team and the managing directors of each of the group’s 
divisions meets regularly to consider operational matters affecting the  
group as a whole
a formal agenda for each scheduled meeting of the board is agreed by the 
chairman and is circulated in advance of the meeting to allow time for  
proper consideration together with relevant papers including key strategic 
operational and financial information
governance 52
 strategic report 02–46 governance 47–76 financial statements 77–120 morgan sindall group plc annual report and accounts 2013
corporate governance statement
attendance of individual directors during 201 3 at scheduled board meetings 
and meetings of the remuneration audit and nominations committees is set 
out below
  percentage remuneration audit nominations 
 board attendances committee committee committee
total number of meetings 11  5 3 2
adrian martin
1
 11 100 3 2 2 
john morgan 11 100 na na 2 
steve crummett
2
 9 100 na na na 
patrick de smedt 1 1 100 5 3 2 
geraldine gallacher 11 100 5 2 2 
simon gulliford
3
 10 91 na 3 2 
liz peace
4
 10 91 3 3 2 
paul whitmore 11 100 na na na 
david mulligan
5
 2 100 na na na
1  adrian martin attended all the remuneration committee meetings whilst a member  
of the committee his nonattendance at one audit committee meeting was due  
to a conflicting commitment
2  steve crummett joined the board on 25 february 2013
3  simon gulliford’s nonattendance at one board meeting was due to illness
4  liz peace attended all the remuneration committee meetings after her appointment  
to the committee her nonattendance at one board meeting was due to a commitment 
existing before she agreed to join the board
5  david mulligan ceased to be a director on 25 february 2013
in addition to the formal meetings the board met on several occasions to 
consider and debate specific strategic issues affecting the group and the 
industry with input where relevant from senior management 
the chairman whilst he held the senior independent director position and 
then in his current role met formally with the nonexecutive directors 
without the executive directors present on two occasions during the year
effectiveness
board evaluation
the board recognises the importance and benefits of a rigorous and regular 
evaluation of its effectiveness and that of its committees and individual 
directors in previous years an internal evaluation process has been adopted 
and this has been valued by the board however early in 201 3 following a 
number of changes to the composition and structure of the board and the 
committees the board decided to instigate an external process this was 
carried out by an external consultant vessey hopper mcveigh vhm an 
experienced firm of leadership consultants specialising in the analysis and 
coaching of both individual and team performance vhm has no other 
connection with the group the process involved interviews with each of  
the directors and the general counsel and company secretary as well as with 
other senior executives for a rounded assessment followed by individual 
feedback and a presentation and discussion of the findings with the board 
the process focused on the board’s governance processes as well as its 
balance of skills and experience its diversity and the dynamics of its debate 
and decision making it concluded that the board and the committees were 
operating effectively in terms of corporate governance compliance and as  
a dynamic and open team and that each director continued to demonstrate  
a valuable contribution to the board a number of recommendations were 
however made with a view to enhancing the contribution to be made by the 
board to the governance of the company and to the quality of debate and 
decision making at board meetings and the board has sought to act on these 
recommendations during the year 
training development and advice is provided
newly appointed directors receive a full induction including a detailed 
information pack including information about sustainability and governance 
matters relevant to the group visits to the group’s operations and meetings 
with senior divisional management training on the role and responsibilities  
of directors is offered on appointment and subsequently as necessary steve 
crummett was the only new director to join the board during the year he 
received the induction outlined above and as a former finance director and  
a current nonexecutive director he was already familiar with his duties and 
responsibilities as a director of a listed company other training needs for  
the directors are kept under review during the year with briefings on new 
legislation and guidance affecting them provided by the general counsel and 
company secretary the nonexecutive directors update their knowledge  
of and familiarity with the group by regular visits to its operations there  
are agreed procedures by which directors are able to take independent 
professional advice at the expense of the company on matters relating  
to their duties the directors also have access to the advice and services  
of the general counsel and company secretary who attends all board and 
committee meetings
dialogue with shareholders 
the executive directors undertake a programme of regular communication 
with institutional shareholders and with analysts covering the company’s 
activities its performance and strategy in particular presentations are made 
to institutional investors and analysts following the announcements of the 
preliminary and half year results written feedback from these meetings  
and presentations is distributed to all members of the board the chairman 
met several of the company’s major shareholders during the year and the 
nonexecutive directors are also available to meet with them to listen to  
their views although no such meetings were requested
the company encourages all shareholders to use the agm as an opportunity 
for effective communication with the company all of the directors attended 
the agm held in 201 3 details of proxy votes submitted for each resolution 
at the 201 3 agm including proxy directions to withhold votes are published 
on the company’s website
board committees
the board has established three committees the audit remuneration and 
nominations committees each committee has terms of reference approved 
by the board setting out its authorities and responsibilities copies of the 
terms of reference are available on the company’s website
audit committee 
members
liz peace from 10 january 201 3 chair from 9 may 201 3 
adrian martin chair until 9 may 201 3 
patrick de smedt  
simon gulliford  
geraldine gallacher from 10 january 201 3
all committee members during the year and up to the date of this report  
are or were independent nonexecutive directors in accordance with the 
code save that adrian martin whilst independent on appointment became 
chairman of the board on 5 november 201 2 but agreed to remain on the 
committee to provide continuity through the 201 3 audit he will step down 
from the committee after the 2014 agm biographical details of each 
member of the committee are set out on pages 48 and 49 in particular liz 
peace has during her career with the ministry of defence and in subsequent 
roles gained considerable experience in the management and accounting  
for major projects and has served on several public sector audit committees 
and is considered to have recent and relevant financial experience for the 
audit committee of a company in the construction and regeneration sector 
 strategic report 02–46 governance 47–76 financial statements 77–120
governance 53 morgan sindall group plc annual report and accounts 2013
corporate governance statement
the activities of the committee during the year are set out in the separate 
audit committee report on pages 56 and 57 
remuneration committee 
members
patrick de smedt chair 
geraldine gallacher 
adrian martin until 201 3 agm 
liz peace from 1 february 201 3
all members are independent and adrian was independent on appointment 
as chairman of the board 
responsibilities 
 
to set all elements of remuneration and any compensation payments for 
executive directors and the general counsel and company secretary
 
to monitor the structure and level of remuneration for divisional managing 
directors
 
to ensure that the requirements for disclosure of directors’ remuneration 
are fulfilled
 
to select remuneration consultants to advise the committee
the activities of the committee during the year are set out in the separate 
directors’ remuneration report on pages 58 to 72
nominations committee 
members
adrian martin chair 
john morgan 
patrick de smedt 
geraldine gallacher  
simon gulliford 
liz peace
responsibilities
 
to review the structure size and composition of the board
 
to make recommendations to the board for any changes considered 
necessary
 
to approve the description of the role and capabilities required for a 
particular appointment
 
to ensure suitable candidates are identified having due regard for the 
benefits of diversity on the board including gender and recommended  
for appointment to the board 
activities
the nominations committee met on a number of occasions during the year 
to review the structure size and composition of the board and in connection 
with various changes to the board in particular the committee
 
led the instruction and briefing of odgers bernsdton to recruit a new 
finance director and having considered several candidates recommended 
the appointment of steve crummett to the board
 
considered the overall structure and balance of the board following  
paul whitmore’s resignation including whether a new executive director 
appointment was necessary and determining that a smaller board with  
the two remaining executive directors would be an efficient structure 
 
considered succession planning generally for the board
the board recognises the importance of diversity in general at board level 
and this was an area explored as part of the external evaluation conducted 
during the year including the benefits of a range of skills industry experience 
gender race disability age nationality and other attributes which can 
enhance the contribution of the board 
in relation to gender diversity the board believes in the benefits of a greater 
female presence on the board the company has had two women on the 
board almost continuously since 2007 and the female representation on  
the board during 201 3 is now approximately 29 over the 25 minimum 
representation level to be achieved by 201 5 as recommended by the  
davies review whilst the committee will aspire to maintain the strong 
female representation on the board its priority on future recruitment will 
remain the selection of the right talent and skills irrespective of gender  
and not resorting to quotas 
the board recognises however that gender diversity below board level 
remains an issue particularly in management and technical roles within 
certain types of industry including construction and civil engineering  
further information relating to actions being taken in this area are explained 
on pages 42 to 46 
accountability
risk management and internal controls 
the board has reserved for itself specific responsibility for the formulation  
of the risk management strategy of the group a formal process is in place 
which identifies the significant risks attached to the group’s strategy and 
objectives and the root cause for each risk it confirms the internal controls  
in place to mitigate the risk and any further actions required this process 
includes the identification and assessment of the key sustainability risks 
facing the business which include environmental social and governance  
risks internal control and risk management systems are embedded in the 
operations of the divisions a consolidated report of each of the divisional  
risk reviews together with risks identified at group level are compiled in a 
group risk register which is updated and reviewed by the board twice yearly 
this process seeks to ensure that adequate information in relation to risk 
management matters including environmental social and governance 
matters is available to the board and the board is fully aware of the 
significance of these matters to the business of the group the principal risks 
identified as facing the group are highlighted in the risk review on pages 36 
to 41 in addition to the standing risk register review process the board 
devotes time during some of the scheduled board meetings to considering 
specific commercial issues which at the time represent the greatest risks  
to the achievement of the group’s objectives and the mitigating actions in 
place to address these risks
the board acknowledges that it has overall responsibility for the group’s 
system of internal control and for reviewing its effectiveness the internal 
control system is designed to manage rather than eliminate the risk of failure 
to achieve certain business objectives due to circumstances which may 
reasonably be foreseen it can only provide reasonable but not absolute 
assurance against material misstatement or loss the system of internal 
control which includes financial operational and compliance controls is based 
on a process of identifying evaluating and managing risks it accords with  
the guidance in the turnbull report and was in place for the year under 
review and up to the date of approval of this report
corporate governance statement
governance 54
 strategic report 02–46 governance 47–76 financial statements 77–120 morgan sindall group plc annual report and accounts 2013
corporate governance statement
the key features of the group’s system of internal control are as follows
group structure
the group’s operating structure comprises five divisions each with its own 
management board which is given authority and responsibility for managing 
its division within a framework of overarching group policies reporting 
lines and detailed delegated authorities which ensure that decisions and 
approvals are made at the appropriate level whilst responsibility for 
managing each division is delegated to the individual divisional management 
board as far as practicable responsibility for certain of the group’s key 
functions including treasury internal audit pensions and insurance  
is retained at the company level 
robust financial reporting system
the board recognises that an essential part of the responsibility for running  
a business is the effective safeguarding of assets the proper recognition  
of liabilities and the accurate reporting of profits the company has in place 
internal control and risk management systems in relation to the company’s 
financial reporting process and the group’s process for preparation of 
consolidated accounts the group has a comprehensive budgeting and 
forecasting system which is regularly reviewed and updated together with  
a management reporting system established in each division for monthly 
reporting to the board in addition the internal audit plan for the year will 
include specific financial reviews to validate the integrity of the divisions’ 
management accounts
scrutiny of investment and capital expenditure 
there are detailed procedures and defined levels of authority in relation to 
corporate transactions investment capital expenditure significant cost 
commitments and asset disposals with approvals required from the board 
the executive directors or divisional boards depending on the value andor 
nature of the investment or contract 
detailed review of tenders and project selection
individual tenders or projects are subject to detailed review with approvals 
required at relevant levels and at various stages from commencement  
of the bidding process through to contract award as part of this process  
the financial standing of both clients and key subcontractors is assessed
robust contract controls
robust procedures exist to manage the ongoing risks associated with 
contracts with monthly reviews at an appropriate level of each contract’s 
performance covering both financial and operational issues
continual monitoring of working capital 
the group continually monitors current and forecast cash and working 
capital balances through a regime of daily and monthly reporting
health safety and environmental issues
the group has well established safety systems designed to minimise the  
risks of health safety and environmental incidents occurring in relation  
to the group’s activities including site visits and regular training and updates 
monthly monitoring and reporting to the board includes a report from the 
commercial director on the group’s performance in relation to health and 
safety matters and environmental compliance further details are included in 
the risk review on page 39 and in the sustainability review on pages 42 to 46
whistleblowing arrangements
the internal control process is supported by the operation of an external  
call line for raising concerns which enables the company’s employees and 
other workers on its sites to report concerns anonymously and in confidence 
the existence of the raising concerns line is covered with all employees on 
induction and is publicised on the group’s intranets and on construction site 
notice boards reports of such whistleblowing are presented to the audit 
committee at each audit committee meeting together with the results of 
investigations into such calls and any follow up actions any significant matter 
arising from a call would be brought to the attention of the committee 
without delay although no such matters arose during the year
internal audit 
the group head of audit and assurance is responsible for managing the 
internal audit function overseeing the divisional heads of internal audit  
and assisting with risk management practices an audit plan for each year  
is drawn up following review of the divisional and group risk registers and 
discussion with management and the audit committee and is approved in 
advance by the audit committee internal audit and assurance work carried 
out during the year included operational project and financial reviews across 
the group the results of these reviews were recorded in audit reports and 
presented to the audit committee the status of agreed management 
actions to address identified operational weaknesses is actively tracked  
until implementation 
the group head of audit and assurance reports to the board monthly on a 
range of performance metrics including the current status of agreed audit 
actions and progress against the annual audit plan he also meets separately 
with the chair of the audit committee at least twice a year
the internal audit process is supplemented by a rolling programme of peer 
group reviews within the two largest divisions which assist in the professional 
development of the individual staff concerned whilst at the same time 
providing a mechanism for the crossfertilisation of ideas and best practice 
throughout each division these reviews are overseen by the divisional heads 
of internal audit and tracking of agreed management actions is included 
within the overall internal audit process 
board review of effectiveness of internal controls
the board has conducted a review of the effectiveness of the system of 
internal controls for the year ended 31 december 201 3 and for the period  
to the date of this report the process included a formal review conducted  
by the board of the group risk register referred to under risk management 
and internal controls above as well as a review of the results of internal audit 
work and the overall effectiveness of the process
 strategic report 02–46 governance 47–76 financial statements 77–120
governance 55 morgan sindall group plc annual report and accounts 2013
corporate governance statement
audit committee report
 
role
the primary role of the audit committee is to assist the board in fulfilling its 
oversight responsibilities in particular by reviewing the company’s financial 
reports and other financial information before publication as well as reviewing 
the accounting and financial reporting processes and the effectiveness  
of both the internal and external auditors
responsibilities 
the terms of reference of the committee set out its duties which are 
 
to monitor the integrity of the financial statements and related information 
of the company and where practicable any formal announcements 
relating to the company’s financial performance reviewing significant 
financial reporting judgments contained in them
 
where requested by the board to advise the board on whether taken as a 
whole the annual report and accounts is fair balanced and understandable 
and provides the information necessary for shareholders to assess the 
company’s performance business model and strategy
 
to review the company’s internal financial controls
 
to approve the appointment and replacement of the group head of  
audit and assurance and to monitor and review the effectiveness of the 
company’s internal audit function
 
to make recommendations to the board regarding the appointment 
reappointment and removal of the external auditor including consideration 
of putting the external audit out to tender and to approve their 
remuneration and terms of engagement
 
to review and monitor the external auditor’s independence and objectivity 
and the effectiveness of the audit process
 
to apply the board’s policy on the engagement of the external auditor to 
supply non audit services with the objective of ensuring that the provision 
of such services does not impair its independence or objectivity
 
to review the company’s procedures for detecting fraud and the adequacy 
of its systems and controls for the prevention of bribery
 
to review the company’s procedures for raising concerns
activities
the committee held three scheduled meetings during the year senior 
representatives from the external auditor the finance director and the group 
head of audit and assurance attended each of these meetings and part of 
each meeting was reserved for a private discussion with the external auditor 
without management present 
the main activities of the committee during the year have included
 
review of the half and full year results
 
review of the significant management judgments reflected in the results
 
discussion with the external auditor over its audit plans and reports
 
assessment of the company’s internal financial controls
 
review of internal audit reports and of the effectiveness of the internal 
audit function
 
consideration of the external audit effectiveness independence and 
reappointment
 
review of fraud and bribery prevention measures and matters arising  
from the raising concerns line
 
reporting to the board on its proceedings and findings
internal audit
the committee has oversight of the internal audit function and reviews and 
approves the annual audit plan the group head of audit and assurance 
attends all the scheduled audit committee meetings at which he presents 
the results of reviews carried out by the internal audit management’s 
response to the reports any key trends emerging during the year and any 
other matters he wishes to bring to the attention of the committee he 
meets separately with the chair of the committee at least twice a year and 
has direct access whenever required further details of the internal audit 
function are set out under internal controls on page 55
financial reporting and significant financial issues
in carrying out its duties the committee is required to assess whether 
suitable accounting policies have been adopted and to challenge the 
robustness of significant management judgments reflected in the financial 
results this process involves reviewing relevant papers prepared by 
management in support of the policies adopted and judgments made
these papers are discussed with management the external auditor and 
where appropriate the group head of audit and assurance in addition  
the committee reviews the year end report to the audit committee from  
the external auditor based upon its work performed and findings from the 
annual audit 
the significant accounting issues considered by the committee during the 
year were areas where management are required to use significant judgment 
these issues are listed below
 
recoverability of contract receivables and recognition of  
contract payables 
the recognition of revenue and margin on longterm contracts in the 
financial statements and the associated contract receivables and payables 
requires management to exercise considerable judgment in addition  
to updates on the key contract issues at monthly board meetings at which 
management identify any significant differences in contract valuations 
that exist with either client or supplier the committee has reviewed the 
status of these key contract issues at each audit committee meeting
 
the treatment of exceptional operating items and their presentation  
in the consolidated financial statements  
exceptional operating items have been separately disclosed within the 
group’s consolidated financial statements the committee has reviewed 
papers prepared by management showing how these costs have been 
identified and calculated it has challenged both the quantum of the charge 
and its presentation in the consolidated income statement and is satisfied 
that these costs have been treated appropriately
corporate governance statement
governance 56
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corporate governance statement
 
the impairment of goodwill 
the value of goodwill is supported by a value in use model prepared  
by management this is based on cash flows extracted from the  
group’s budget and strategic plan which have both been approved  
by the board the committee has reviewed the model and assessed  
the assumptions used by management in discussion with management 
and the external auditor
 
the carrying value of land and work in progress 
the group is required to value land and work in progress at the  
lower of cost and net realisable value the committee has reviewed 
management’s paper analysing key sites and the outlook for each
 
the valuation of shared equity debtors 
the valuation of shared equity debtors is reliant upon the assumptions 
made by management and the accompanying valuation model  
key assumptions include the discount rate redemption rates and house 
price inflation the committee has reviewed the papers supporting  
the assumptions
the committee has additionally discussed each issue with the external auditor 
and sought its opinion based upon the work they have performed during the 
audit based upon its review and discussions with both management and the 
group’s external and internal auditors the committee is satisfied that after 
raising appropriate challenge the judgments outlined above are reasonable 
and that the appropriate disclosures have been included in the group’s 
consolidated financial statements
external auditor
monitoring the independence and objectivity of the external auditor
to fulfil its obligations the committee reviewed the external auditor’s 
presentation of its policies and safeguards to ensure its continued 
independence within the meaning of all regulatory and professional 
requirements and to ensure that the objectivity of the audit engagement 
partner and audit staff had not been impaired this included details  
of changes in external audit partners in the audit plan in accordance with  
the external auditor’s policy on rotating audit executives in particular  
the appointment of a new lead audit engagement partner for 201 2  
those policies and safeguards together with the company’s own policy  
on engaging the external auditor for non audit work enabled the  
committee to confirm that it was satisfied with deloitte llp’s continued 
independence and objectivity 
assessing the effectiveness of the external audit process
as part of its responsibility for assessing the effectiveness of the external 
audit the committee discussed the external audit plan at the audit 
committee meeting held in july and reviewed progress with the audit plan at 
the meeting held in november noting at that time the significant issues being 
addressed by the external auditor at the meeting prior to the announcement 
of the preliminary results it reviewed the external auditor’s fulfilment of the 
agreed audit plan and the major issues highlighted as part of the external 
audit in addition the committee commissioned an internal evaluation on the 
external audit process through a questionnaire compiled with the assistance 
of the group head of audit and assurance and completed by senior members 
of the company’s and the divisions’ finance teams the feedback from the 
questionnaire which covered matters including the quality of the process the 
sufficiency of resources employed by the external auditor its communication 
skills and its objectivity and independence was then reviewed by the 
committee as part of its assessment of the external auditor’s effectiveness
reviewing the use of the external auditor for non audit work 
the company’s policy on the engagement of the external auditor for non 
audit related services is designed to ensure that the provision of such services 
does not impair the external auditor’s independence or objectivity certain 
categories of services are excluded entirely from the external auditor in 
particular those which would be subject to direct review by the audit firm  
as part of the statutory audit or which could involve the external auditor in 
managerial decisions or judgments other categories such as auditrelated 
services or work which because of the auditor’s existing knowledge of the 
group’s business could be more effectively carried out by it may if not on 
the list of prohibited services be carried out by the external auditor subject 
to the advance approval of the finance director or if the fees for such 
services exceed an absolute limit or a specified proportion of the audit fee 
the advance approval of the audit committee no non audit services to  
the company provided by deloitte llp in 201 3 required the approval  
of the committee the fees for non audit services during the year are set  
out in note 3 to the consolidated financial statements on page 92 these 
represented approximately 1 25 of the audit fee and comprised primarily 
property and planning advice on a development project where deloitte  
real estate’s skills experience and local knowledge made them the most 
suitable supplier and a small amount on other assurance work the 
committee has reviewed the nature of the work and level of fees for these 
services and concluded that this has not affected deloitte llp’s objectivity  
or independence
reappointment of external auditor
deloitte has been the company’s auditor since the group was established 
from the reverse takeover of william sindall plc in 1994 and the audit  
has not been put out for tender since that time there are no contractual 
obligations which restrict the committee’s choice of external auditor  
the committee has noted the changes to the code for ftse 350 companies 
the recent findings of the competition commission and the frc’s guidance 
for audit committees relating to the tendering of the external audit contract 
every ten years whilst not subject to the provisions of the code relating  
to ftse 350 companies the committee will keep under consideration the 
timing of a formal tender having regard to the regulatory requirements 
including the draft european union audit legislation and to the timing of  
the rotation of the current audit engagement partner having regard to the 
considerations referred to above the committee has satisfied itself that 
deloitte llp  the external auditor remains independent and effective the 
committee has recommended to the board that deloitte llp be reappointed 
 strategic report 02–46 governance 47–76 financial statements 77–120
governance 57 morgan sindall group plc annual report and accounts 2013
directors’ remuneration report
annual statement
dear shareholder
i am pleased to introduce our directors’ remuneration report for the year ended 31 december 201 3
review of remuneration for 2013
conditions have continued to be challenging throughout 201 3 across most of our markets with margins restrained by competitive pressures and upward 
pressure on supply chain costs these factors have been reflected in the profits for the year which fell short of the threshold pbta target in respect of the 
financial element of the executive directors’ annual bonus for the first time the 201 3 annual bonus also included non financial strategic and personal targets 
and although good progress was made against these targets the executives decided to waive their entitlement to any bonus as they considered a bonus 
would be inappropriate in context of the profit performance in the year further the long term incentive awards granted in 201 1 under the morgan sindall 
executive remuneration plan 2005 erp failed to vest with earnings per share for the year ended 31 december 201 3 falling below the threshold targets
remuneration policy for 2014
the remuneration committee continually reviews the senior executive remuneration policy to ensure that it remains appropriate and consistent with the 
committee’s general principles set out at the start of the remuneration report one of the challenges faced by the committee has been to ensure that  
its policies and the executive remuneration structure remain appropriate for driving and incentivising the executive team to create longterm value for  
our shareholders the committee’s most recent conclusions are that the existing executive directors’ remuneration policy remains appropriate and should 
continue to operate for 2014 specifically the committee concluded that
 
current fixed pay levels should remain unchanged other than for modest increases in line with the average increase awarded across the group salary levels 
were therefore increased by 25 from 1 january 2014
 
the structure and quantum of the annual bonus for 2014 should be similar to that operated for 201 3 albeit that for 2014 all of the bonus will be measured 
against the profit targets
 
the longterm incentive grant policy whereby share awards are made annually with a three year vesting period based on earnings per share and relative 
total shareholder return tsr performance conditions continues to provide a strong alignment between the senior executive team and shareholders 
however with the outlook for the uk construction market improving the earnings per share condition will revert to one based on growth above rpi rather 
than the absolute eps targets adopted over the last few years
 
shareholding guidelines and clawback provisions in respect of annual bonus and longterm incentives should continue to apply
as the company’s existing executive remuneration plan will shortly reach the end of its 10 year life and in order to coincide with the new three year policy 
being approved at the forthcoming agm we are proposing to replace the erp with two new longterm plans the 2014 long term incentive plan and  
the 2014 share option plan with the latter intended to currently be used for below board employees only separate plans are being proposed as these are 
considered to be significantly simpler for the company to administer operate and communicate when compared to the erp which is a combined ‘umbrella’ 
style plan
board changes
as per the announcement released in december 201 3 the committee has recently agreed the termination arrangements in relation to paul whitmore 
commercial director who resigned and left the company on 31 december 201 3 as previously disclosed david mulligan also left the group last year  
full details of these arrangements are set out in the annual report on remuneration 
the new disclosure regime
last year we took some steps towards disclosing additional information intended to improve the transparency of this report this year we have embraced  
the new disclosure requirements under the uk government’s reforms on directors’ pay and trust that our report demonstrates transparency and clarity  
in our disclosures our report has two main sections
 
the directors’ remuneration policy setting out the forward looking remuneration policy for the company’s directors which will become formally effective 
from the date of the agm 8 may 2014 and 
 
the annual report on remuneration providing details of how the policy will be operated for 2014 and of the remuneration earned by the company’s 
directors in relation to the year ended 31 december 201 3
at the forthcoming agm on 8 may 2014 the directors’ remuneration policy will be subject to a binding shareholder vote and the annual report on 
remuneration will be subject to an advisory shareholder vote in future years the directors’ remuneration policy will be subject to a binding vote every three 
years sooner if changes are made to the policy and the annual report on remuneration will be subject to an annual advisory vote
alignment and dialogue with shareholders
we are mindful of our shareholders’ concerns considering all feedback received and consulting with investors and representative bodies where appropriate 
and are keen to ensure a demonstrable link between reward and value creation we are therefore delighted that last year’s remuneration report received the 
support of over 98 of voting shareholders we hope that we will continue to receive your support at the forthcoming agm
patrick de smedt
chair of the remuneration committee 
18 february 2014
directors’ remuneration report
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directors’ remuneration report
remuneration policy report
this part of the report sets out the remuneration policy for the company and has been prepared in accordance with the large and mediumsized companies 
and groups accounts and reports amendment regulations 201 3 the policy has been developed taking into account the principles of the uk corporate 
governance code 201 2 and the views of our major shareholders and describes the policy to be applied from 2014 onwards the policy report will be put to  
a binding shareholder vote at the 2014 agm and the policy will take formal effect from that date 
policy overview 
in setting the remuneration policy for the executive directors the committee takes into account the following general principles
 
the need to attract retain and motivate the best possible person for each position without paying more than is necessary
 
to ensure that the remuneration packages are simple and fair in design so that they are valued by participants
 
to ensure that the fixed element of remuneration salary pension and other benefits is determined in line with market rates taking account of individual 
performance and experience and that a significant proportion of the total remuneration package is determined by performance
 
to recognise the importance of rewarding exceptional performance but not underperformance in both the short and long term
 
to balance performance pay between the achievement of financial performance objectives and delivering sustainable stock market outperformance 
financial performance creating a clear line of sight for individuals between performance and reward and providing a focus on sustained improvements  
in profitability tsr compared with that of our competitors providing a more direct alignment between the interests of executives and shareholders 
 
to calibrate carefully all financial and tsr performance metrics and associated sliding scale ranges to ensure that performance is incrementally rewarded 
and that executives are not inadvertently incentivised to take inappropriate business risks including environmental social and governance risks 
 
to provide a significant proportion of performance linked pay in shares allowing executives to build significant shareholdings in the business therefore 
aligning the executive’s interests with those of the company’s shareholders
components of directors’ remuneration 
the key elements of the remuneration package for each director are set out in the table below 
element
purpose and  
link to strategy operation maximum opportunity performance targets
base salary set to attract retain and 
motivate talented individuals
reviewed annually by the 
committee or if appropriate in the 
event of a change in an individual’s 
position or responsibilities
salary levels are set by reference  
to market rates taking into 
account individual performance 
experience company performance 
and the pay and conditions of other 
senior management in the group 
and of the workforce generally 
the committee may on occasion 
recognise an increase in 
circumstances such as assumed 
additional responsibility or an 
increase in the scale or scope  
of the role
there is no prescribed 
maximum annual increase
current salary levels are 
presented on page 65
na 
benefits to provide a market
competitive level of benefits 
current benefits include travel 
allowance private medical 
insurance income protection 
insurance and life assurance  
other benefits may be provided 
where appropriate
travel allowance of £20000 
the value of other benefits  
is based on the cost to the 
company and is not 
predetermined
na
 strategic report 02–46 governance 47–76 financial statements 77–120
governance 59 morgan sindall group plc annual report and accounts 2013
directors’ remuneration report
element
purpose and  
link to strategy operation maximum opportunity performance targets
pension to provide a pension 
arrangement to contribute 
towards retirement planning
the company will contribute to  
the defined contribution pension 
scheme the morgan sindall 
retirement benefits plan the 
retirement plan or to personal 
pension arrangements at the 
request of the individual
the company may also consider  
a cash alternative eg where a 
director has reached the hmrc’s 
lifetime or annual allowance limit
employer contributions are 
10 of base salary
directors who are members  
of the retirement plan may 
elect to exchange part of their 
salary or bonus award in return 
for pension contributions 
where the company will 
enhance the additional 
contributions by half of the 
saved employer’s national 
insurance contribution nic
na
annual bonus rewards the achievement  
of demanding annual 
performance metrics
normally payable in cash
performance targets are reviewed 
annually by the committee
the committee has discretion to  
i override the formulaic outturn 
of the bonus to determine the 
appropriate level of bonus payable 
where it believes the outcome is 
not truly reflective of performance 
and to ensure fairness to both 
shareholders and participants  
andor ii require some or all  
of the annual bonus to be deferred 
into shares
clawback provisions apply for 
overpayments due to material 
misstatement or error
maximum opportunity  
of 100 of base salary
all or a majority of the 
bonus will be based on 
profit before tax and 
amortisation pbta set 
relative to the group’s 
budget
a minority of the bonus 
may be based on non 
financial strategic andor 
personal objectives to 
provide a rounded 
assessment of group  
and management’s 
performance
the pbta targets 
incorporate an appropriate 
sliding scale range around 
a challenging target 
2014  
long term 
incentive plan 
the plan
to balance performance pay 
between the achievement  
of financial performance 
objectives and delivering 
sustainable stock market 
outperformance
to encourage share 
ownership and provide 
further alignment with 
shareholders
the committee intends to make 
longterm incentive awards  
under the plan which will be put  
to shareholders for approval at the 
2014 agm the plan will replace 
the erp which is due to expire  
in 201 5
annual awards of conditional 
shares or nil or nominal cost 
options with vesting dependent on 
the achievement of performance 
conditions over a three year period
performance targets are reviewed 
annually by the committee for  
each new award
dividends that accrue during  
the vesting period may at the 
committee’s discretion be paid  
in cash or shares at the time of 
vesting the calculation of the 
dividend equivalent may assume 
the reinvestment of dividends
clawback provisions apply for 
overpayments due to material 
misstatement or error
normally the maximum  
grant is 100 of base salary  
up to 1 50 of base salary  
in exceptional circumstances 
such as on recruitment or 
retention
the awards are subject  
to performance conditions 
based on the company’s 
eps and on relative tsr 
compared to a group  
of uk listed peers
for both the eps and  
tsr conditions 25  
of the awards will vest  
for achieving threshold 
performance increasing  
on a sliding scale in the  
case of eps and on a 
stepped scale in the case  
of tsr to 100 vesting  
for achievement of 
stretching performance 
targets
directors’ remuneration report
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directors’ remuneration report
element
purpose and  
link to strategy operation maximum opportunity performance targets
all employee 
sharesave 
plan
to encourage share 
ownership and provide 
further alignment with 
shareholders 
hmrc approved plan under  
which regular monthly savings  
are made over a period of three 
years and can be used to fund the 
exercise of an option to purchase 
shares at a discount of up to  
20 of the market price at grant
as per prevailing hmrc limits na
non
executive 
directors’ 
fees
set to attract retain and 
motivate talented individuals 
fees are paid in cash
additional fees may be paid  
to the chairs of the committees 
and the senior independent 
director to reflect their additional 
responsibilities
the committee is guided by fee 
levels in the nonexecutive director 
market and may recognise an 
increase in certain circumstances 
such as assumed additional 
responsibility or an increase  
in the scale or scope of the role
normally reviewed on an  
annual basis
as for the executive directors 
there is no prescribed 
maximum annual increase 
na
1  a description of how the company intends to implement the above policy for 2014 is set out in the annual report on remuneration
2  the annual bonus performance measures are all or predominantly focused on pbta as this is the key measure of how successful the group is in managing its operations any element 
based on non financial targets would be determined on how well the executive directors perform against annual non financial strategic andor personal targets set to ensure that  
they are linked to the strategic objectives of the group 
3  the long term incentive performance measures eps and tsr reward longterm financial growth and significant longterm returns to shareholders targets take account of internal 
strategic planning and external market expectations for the group and are set appropriate to the economic outlook and risk factors prevailing at the time ensuring that such targets 
remain challenging in the circumstances whilst remaining realistic enough to motivate and incentivise management 
  the tsr performance condition is monitored on the committee’s behalf by new bridge street whilst eps is derived from the group’s audited financial statements
4  employees across the group below board level may be eligible to participate in an annual bonus arrangement longterm incentive awards andor discretionary share options may  
be awarded to certain other senior executives for which the maximum opportunity and the performance conditions may vary by organisational level all employees are eligible to 
participate in the morgan sindall savings related share option scheme
5  the committee will operate the incentive plans in accordance with their respective rules and the listing rules and hmrc rules where relevant the committee consistent with market 
practice retains discretion over a number of areas relating to the operation and administration of certain plan rules these include but are not limited to the following
 
 wh o p a r t i c i p at e s
 
the timing of the grant of award andor payment
 
the size of an award up to planpolicy limits andor a payment
 
the result indicated by the relative tsr performance condition may be scaled back potentially to zero in the event that the committee considers that financial performance  
has been unsatisfactory andor the outcome has been distorted due to the tsr for the company or any comparator company being considered abnormal
 
discretion relating to the measurement of performance in the event of a change of control or reconstruction
 
determination of a good leaver in addition to any specified categories for incentive plan purposes
 
discretion to pay or award shares to the value of dividends accrued during the vesting period
 
adjustments required in certain circumstances eg rights issues corporate restructuring and special dividends
 
the ability to adjust existing performance conditions for exceptional events so that they can still fulfil their original purpose
6  for the avoidance of doubt in approving this directors’ remuneration policy report authority is given to the company to honour any commitments entered into with current or former 
directors such as the payment of a pension or the vesting or exercise of past share awards
 
 strategic report 02–46 governance 47–76 financial statements 77–120
governance 61 morgan sindall group plc annual report and accounts 2013
directors’ remuneration report
directors’ remuneration report
the committee considers pay and employment conditions of employees elsewhere in the group when determining executive directors’ 
remuneration
 the committee takes account of remuneration levels offered to other senior executives within the group as well as pay awards affecting group employees 
generally when considering policy in relation to executive directors when considering the executive directors’ remuneration structure and levels for 2014  
the committee reviewed the salaries and proposed incentive arrangements for the senior executives in the divisions to ensure that there was a coherent 
approach the committee does not formally consult with employees in respect of the design of the company’s executive directors’ remuneration policy 
although the committee will keep this under review 
the committee considers shareholder views when determining executive directors’ remuneration
the company is committed to maintaining good communications with investors the committee considers the agm to be an opportunity to meet and 
communicate with investors and considers shareholder feedback received in relation to the agm each year this feedback together with any additional 
feedback received from time to time is considered as part of the company’s annual review of remuneration policy the committee will also seek to engage 
directly with major shareholders and representative bodies should any material changes be made to the directors’ remuneration policy major shareholders 
and representative bodies were consulted at the beginning of 201 3 in connection with certain aspects of the executives’ remuneration and again at the  
end of 201 3 in respect of the replacement share plans details of the votes cast for and against the resolution to approve last year’s remuneration report  
are set out in the annual report on remuneration
remuneration scenarios for the executive directors
the charts below show an estimate of the potential future remuneration payable for the executive directors under the policy set for 2014 at different levels 
of performance the charts highlight that the performancerelated elements of the package comprise a significant portion of the executive directors’ total 
remuneration at ontarget and maximum performance 
chief executive £000
long term incentive plan annual bonus total fixed pay
minimum
100
ontarget
maximum
£515845
£964795
£1413745
5423 23
3632 32
£1000 £1500 £500 £750 £1250 £250 £0
finance director £000
long term incentive plan annual bonus total fixed pay
£0
minimum
100
ontarget
maximum
£390075
£728325
£1066575
£500 £250 £750 £1000 £1250
54 2323
32 32 36
1 base salary levels applying on 1 january 2014
2 the value of benefits has been estimated based on 2013 actuals
3 the value of pension receivable is the equivalent of 10 of base salary
4  minimum performance assumes no award is earned under the annual bonus plan and no vesting is achieved under the plan ontarget performance assumes 50 is earned under  
the annual bonus plan and 50 is achieved under the plan whereas maximum performance assumes full vesting under both plans 
5  share price movement and dividend accrual have been excluded from the above analysis
directors’ recruitment and promotions
the committee takes into account the need to attract retain and motivate the best person for each position without paying more than is necessary
for external appointments the committee would seek to align the remuneration package with the remuneration policy as approved by shareholders including 
the maximum limit for the annual bonus of 100 of salary in exceptional circumstances there is flexibility to grant an award under the plan equivalent to up 
to 1 50 of base salary the committee may also make awards or payments in respect of deferred remuneration arrangements forfeited on leaving a previous 
employer the committee will look to replicate the arrangements being forfeited as closely as possible in doing so the committee will take account of relevant 
factors including the value of deferred remuneration the currency ie cash or shares performance conditions and the time over which they would have 
vested or been paid
for an internal appointment any incentive amount awarded in respect of a prior role may be allowed to vest on its original terms or adjusted as relevant  
to take into account the appointment any other ongoing remuneration obligations existing prior to appointment may continue
the initial notice period for a service contract may be longer than the policy of a 1 2 month notice period provided it reduces to 1 2 months within a short 
space of time
governance 62
 strategic report 02–46 governance 47–76 financial statements 77–120 morgan sindall group plc annual report and accounts 2013
directors’ remuneration report
the committee may also agree that the company will meet certain relocation andor incidental expenses as appropriate
for the appointment of a new nonexecutive director the fee arrangement would be set in accordance with the approved remuneration policy at that time
directors’ service contracts and payments for loss of office 
all executive directors’ service agreements are terminable on 1 2 months’ notice in circumstances of termination on notice the committee will determine  
an equitable compensation package having regard to the particular circumstances of the case the committee has discretion to require notice to be worked 
or to make payment in lieu of notice or to place the director on garden leave for the notice period 
in case of payment in lieu or garden leave base salary employer pension contributions and employee benefits will be paid for the period of notice served  
on garden leave or paid in lieu the remuneration committee will endeavour to make payments in phased instalments and to apply mitigation in the case  
of offsetting payments against earnings elsewhere 
the annual bonus may be payable in respect of the period of the bonus scheme year worked by the director there is no provision for an amount in lieu  
of bonus to be payable for any part of the notice period not worked the bonus would be payable at the normal date
longterm incentives granted under the plan will be determined by the plan rules which contain discretionary good leaver provisions for designated  
reasons ie participants who leave early on account of injury disability death a sale of their employer or business in which they were employed statutory 
redundancy retirement or any other reason at the discretion of the committee in these circumstances a participant’s awards will not be forfeited on 
cessation of employment and instead will vest on the normal vesting date in exceptional circumstances the committee may decide that the participant’s 
awards will vest early on the date of cessation of employment in either case the extent to which the awards will vest depends on the extent to which the 
performance conditions have been satisfied and a pro rata reduction of the awards will be applied by reference to the time of cessation although the 
committee has discretion to disapply time pro rating if the circumstances warrant it
in respect of legacy awards outstanding under the erp  the awards will be determined by the erp rules which contain discretionary good leaver provisions  
for designated reasons ie participants who leave early on account of injury disability a sale of their employer or business in which they were employed 
statutory redundancy retirement or any other reason at the discretion of the committee in these circumstances a participant’s awards will not be forfeited 
on cessation of employment and instead will vest either on the normal vesting date or on cessation of employment at the discretion of the committee 
subject to the performance conditions the awards will unless the committee in its discretion decides otherwise be scaled back pro rata to reflect the 
reduced period in the case of death of the participant the award will vest at that time and the performance conditions will be deemed to be satisfied  
the award will not be time pro rated 
the service agreements do not contain specific provisions for enhanced payments in the event of a change of control of the company
the dates of the executive directors’ contracts who served during the year are
john morgan 20 february 201 2 
steve crummett 25 februa ry 201 3 
paul whitmore
1
  21 march 20 00 
david mulligan
2
 20 february 201 2
1 paul whitmore stepped down from the board and ceased employment on 31 december 2013
2 david mulligan stepped down from the board on 25 february 2013 and ceased employment on 10 april 2013
service contracts are available for inspection at the company’s registered office 
n onexecutive directors’ terms of engagement
all nonexecutive directors have specific terms of engagement being an initial period of three years which thereafter may be extended by mutual consent 
subject to the requirements for reelection and the listing rules of the financial conduct authority fca and the relevant schedules of the companies act 
2006 the act 
 appointment month initial three year  
 letter date term was extended
patrick de smedt  26 november 2009 november 201 2 
adrian martin 28 november 2008 november 201 1 
simon gulliford 24 february 2010 february 201 3 
liz peace 5 november 201 2 – 
geraldine gallacher 16 august 2 007 august 2010
all of the above nonexecutive directors are subject to annual reelection by shareholders
 strategic report 02–46 governance 47–76 financial statements 77–120
governance 63 morgan sindall group plc annual report and accounts 2013
directors’ remuneration report
directors’ remuneration report
annual report on remuneration 
 
the information provided in this part of the directors’ remuneration report is subject to audit
responsibilities of the committee
the committee is responsible for determining and agreeing with the board the broad policy for the remuneration of the executive directors and it sets their 
salaries and remuneration packages in addition the committee monitors the structure and level of remuneration for other senior executives in the group  
and is aware of pay and conditions in the workforce generally
members and activities of the committee
the members of the committee during 201 3 were patrick de smedt chair geraldine gallacher liz peace joined the committee with effect from 
1 february 201 3 and adrian martin member until 9 may 201 3 all members during the year were independent nonexecutive directors save  
adrian martin who was nonexecutive chairman
the committee met on five occasions during the year and attendance at meetings is disclosed in the corporate governance statement on page 53 two of  
the meetings were convened specifically to approve termination arrangements for executive directors leaving the company the other meetings covered the 
normal business of confirming performance related pay for the year ended 31 december 201 3 setting bonus and longterm incentive targets for 201 3 and 
considering the executive remuneration policy for the three years commencing in 2014 additional consultation between committee members and between 
the chair of the committee and the chief executive took place outside of formal meetings 
external advice received
during the year the committee received independent advice from new bridge street nbs part of aon plc in relation to its consideration of the structure  
of the executive directors’ remuneration for 201 3 and 2014 and other matters considered by the committee during the year the committee also consulted 
the chief executive but not in relation to his own remuneration nbs also provided advice to the company on accounting for share awards and the operation 
of the company’s share option schemes but provided no other material services to the company or the group although another part of the aon plc group 
has provided some limited broking services to associated companies in the group the committee is comfortable that these services do not prejudice nbs’s 
position as an independent adviser to the committee
the fees paid by the company to nbs during the financial year for advice to the committee were £40500 of which £6500 related to the advice to the 
company referred to above
nbs is a signatory to the remuneration consultants’ code of conduct which requires its advice to be objective and impartial
shareholder voting at agm
at last year’s agm held on 9 may 201 3 the directors’ remuneration report received the following votes from shareholders
 total number  of  
 of votes votes cast
for 32266803 9831 
against 553537 169 
total votes cast for and against 32820 340 100 
votes withheld
1
 573423 – 
total votes cast including withheld votes 33393 763 –
1 a vote withheld is not a vote in law and is not counted in the calculation of the proportion of votes cast ‘for’ and ‘against’ a resolution
governance 64
 strategic report 02–46 governance 47–76 financial statements 77–120 implementation of the remuneration policy for 201 4
 
base salaries
in setting the 2014 base salaries the committee considered the budgeted level of increases in base salary for senior executives below board level and the 
workforce generally which averaged 25 and determined that the executive directors should receive the same increase accordingly annual base salaries  
for the executive directors for 2014 will be as follows
 2014 2013 increase 
 £ £ 
john morgan 448950 438000 25 
steve crummett 338250 330000
1
  25
1 from 25 february 2013
pension arrangements
the company will contribute the equivalent of 10 of base salary in the case of steve crummett to the morgan sindall retirement benefits plan the 
retirement plan and in the case of john morgan to his individual personal pension plan 
steve crummett participates in the company’s salary exchange process which allows all employees who are members of the retirement plan the flexibility  
to exchange part of their gross salary and bonus awards in return for pension contributions where additional pension contributions are made through the 
salary exchange process the company enhances the contributions by half of the saved employer’s national insurance contributions nic 
annual bonus
the maximum annual bonus potential for 2014 will remain at 100 of base salary to ensure that management is focused on the financial performance  
of the company in 2014 100 of the bonus will be based on a pbta target range set in relation to the group’s budget 
the committee has chosen not to disclose the targets in advance for the forthcoming year as these are set in relation to the group’s budget which  
is considered commercially sensitive retrospective disclosure of the targets and performance against them will be disclosed in next year’s annual 
remuneration report
the annual bonus will be subject to clawback provisions 
longterm incentives
the committee intends to make awards to the executive directors under the 2014 long term incentive plan the plan which will be introduced subject  
to shareholder approval at the 2014 agm the plan will replace the company’s current longterm incentive arrangement for senior executives the erp  
which expires in 201 5 
the awards in 2014 will be made at 100 of base salary
consistent with past awards 50 of the awards to be granted in 2014 will be based on an eps performance condition and the remaining 50 will  
be based on a condition measuring the company’s tsr compared with eight of its uk listed peers over a three year period 
eps performance condition
in recent years the committee has set targets based on absolute eps performance in the final financial year of the performance period reflecting the 
challenging and uncertain market conditions then existing although the committee expects market conditions to remain challenging in the short term  
it has determined that it is now appropriate to revert to a condition based on the group’s eps performance against the retail price index rpi over the  
three year period to 31 december 2016
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
directors’ remuneration report governance 65 morgan sindall group plc annual report and accounts 2013
directors’ remuneration report
directors’ remuneration report
this vesting range for the targets is shown graphically below 
0 2 4 6 8 12 10
2016 eps  rpi  pa
no vesting below
rpi 4 pa
25 vesting at
rpi 4 pa
100 vesting above rpi 10 pa
percentage of eps half of award vesting
0
25
50
75
100
tsr performance condition
the tsr comparator group comprises balfour beatty plc carillion plc costain group plc galliford try plc interior services group plc interserve plc  
keller group plc and kier group plc
the target range for the tsr performance condition is shown graphically below 
median 2nd
morgan sindall group’s tsr position relative to the comparator group
for this purpose median of the tsr comparator group is defined as the tsr value half way between the comparator companies ranked fourth and fifth
no vesting below median
25 vesting at median
percentage of tsr half of award vesting
0
20
40
60
80
100
40 vesting if tsr equals 4th position
70 vesting if tsr equals 3rd position
100 vesting if tsr equals 2nd position or better 
in addition to the vesting being determined by the stepped scale of tsr performance shown above there are two additional conditions governing the  
level of vesting specifically the result indicated by the tsr performance condition may be scaled back potentially to zero in the event that the committee 
considers that
 
financial performance has been unsatisfactory andor 
 
the outcome has been distorted due to the tsr for the company or any comparator company being considered abnormal
the plan awards will be subject to clawback provisions 
governance 66
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fees for the nonexecutive directors
all nonexecutive directors remuneration is determined by the board within the limits set by the articles and is based on market data together with external 
advice as appropriate the last increase in the base fee for the nonexecutive directors was in 201 1 and the board has determined that the base fee should 
be increased by 25 for 2014 in line with the increase for the executive directors the chairman’s fee which was set at the end of 201 2 and the additional 
fees for committee chairs will remain unchanged 
accordingly the annual fees are as follows 
    2014 2013 increase 
    £ £ 
chairman    135000 135000 nil 
base fee    42230 41200 25 
additional fees 
 audit committee chair    7 500 7 500 nil 
 remuneration committee chair    6000 6000 nil
adrian martin remained as chair of the audit committee until 9 may 201 3 without taking the additional fee shown above
nonexecutive directors receive no other benefits and do not participate in shortterm or longterm incentive schemes
fees receivable by the executive directors serving on other boards
at the discretion of the board executive directors are allowed to act as nonexecutive directors of other companies and retain any fees relating to those 
posts steve crummett is a nonexecutive director and chair of the audit committee at consort medical plc for which he receives a fee of £46000 per 
annum none of the other executive directors are currently receiving fees for nonexecutive positions with other companies
dilution and share usage under employee share plans
shares required for the 2007 employee share option plan the 2007 scheme are satisfied by shares purchased in the market via the company’s employee 
benefit trust and shares for the company’s other share plans may be satisfied using either new issue shares or market purchased shares although the 
company’s present intention is to use market purchase shares to satisfy these awards however it retains the ability to use new issue shares instead and  
may decide to do so up to the dilution limits recommended by the association of british insurers 10 of issued ordinary share capital for all employee share 
plans over a 10 year period and within this limit no more than 5 of issued ordinary share capital for executive or discretionary share plans the outstanding 
level of dilution against these limits equates to 4 1 3 of the current issued ordinary share capital under all employee share plans of which 0 14 relates to 
discretionary share plans 
separately the employee benefit trust currently holds 575397 shares which may be used to satisfy awards 
morgan sindall group plc annual report and accounts 2013
directors’ remuneration report governance 67 morgan sindall group plc annual report and accounts 2013
directors’ remuneration report
directors’ remuneration report
directors’ remuneration
 fees   annual value of employment 
 basic   pension cash longterm termination total 
 salary benefits
1
 contributions
2
 bonuses
3
 incentives
4
 payments
5
 remuneration 
 £000 £000 £000 £000 £000 £000  £000
executive directors
john morgan  2013 438 22 47 – – – 507 
2012 438 22 43 131 – – 634
steve crummett
6
  2013 280 18 28 – – – 326 
2012 – – – – – – –
paul whitmore  2013 319 20 34 – – 373 746 
resigned 31 december 201 3 201 2 31 1 20 30 93 1 1 5 – 569
david mulligan 2013 88 6 10 – – 315 419 
resigned 10 april 201 3  201 2 31 5 20 34 95 63 – 526
n onexecutive directors
adrian martin
7
  2013 135 – – – – – 135 
2012 65 – – – – – 65
patrick de smedt  2013 47 – – – – – 47 
2012 45 – – – – – 45
geraldine gallacher  2013 41 – – – – – 41 
2012 41 – – – – – 41
simon gulliford  2013 41 – – – – – 41 
2012 41 – – – – – 41
liz peace
8
  2013 46 – – – – – 46 
2012 7 – – – – – 7
former directors 
paul smith 201 2 51 5 22 48 1 32 97 501 131 5 
gill barr 2012 16 – – – – – 16
1 benefits for the executive directors comprise a travel allowance private medical insurance income protection insurance and life assurance 
2 the pension contributions for john morgan and paul whitmore were not increased in line with the increases to their base salaries in 201 1 and 201 2 respectively as the company was 
contractually obliged to do so the resultant adjustment £3000 for john morgan and £2000 for paul whitmore respectively has been accounted for during 2013 and is the reason  
for the pension contributions for 2013 appearing to be higher than 10 of base salary 
3 no annual bonus payments were made to executive directors during the year 
the table below shows performance against pbta targets for 2013 representing 75 of the bonus potential 
  threshold  50 maximum actual percentage 
  target  target target performance of salary 
  £m £m £m £m  
adjusted group pbta at 31 december 2013  329 350 392 313 nil
the remaining 25 of the annual bonus potential for 2013 was based on non financial strategic and personal objectives performance against these objectives which related to strategic 
and organisational development of the group succession planning development and strengthening of the management team john morgan and improvement of financial reporting 
processes and cash allocation evaluation throughout the group steve crummett was assessed at the year end and although the committee considered that good progress had  
been made by the executive directors against these targets the executive directors elected to waive their rights to receive any bonus under these targets paul whitmore resigned  
on 31 december 2013 and as part of his termination arrangements no annual bonus was payable 
4 2013
 based on awards granted in 201 1 under the erp  which were due to vest on 30 march 2014 subject to eps performance for the year ended 31 december 2013 as set out in the table 
below the company’s eps performance did not meet the threshold targets resulting in nil vesting
  threshold  50 maximum actual  
performance condition  target  target target performance vesting
adjusted eps  
performance shares  695p 817p 1022p 609p nil 
share options  776p 817p 1022p 609p nil
total vesting      nil
2012
the performance share awards and share options included in 201 2 remuneration above were granted on 17 march 2010 and vested on 17 march 2013 the value shown for these 
above is based on the market price of a share on the date of vesting of £5505
5 details of the employment termination payments are included below in the paragraph headed payments for loss of office 
6 steve crummett joined the company on 25 february 2013
7 adrian martin was appointed as nonexecutive chairman on 5 november 201 2
8 liz peace was appointed as a director on 5 november 201 2 and took over as chair of the audit committee from the agm on 9 may 2013
governance 68
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share awards granted during the year
    number   of face 
   share of shares  value that vesting 
  basis price at over which face value would vest determined by 
 type of  of award date of award was of award at threshold performance 
 award granted grant granted £ performance over
john morgan performance shares  100 of £5395 81 186 £437 99847 50 on eps – 0 
 under the erp salary    50 on tsr – 25  
steve crummett performance shares 1 50 of £5395 91751 £49499665 50 on eps – 0 
 under the erp salary    50 on tsr – 25  
paul whitmore  performance shares 100 of £5395 59 1 28 £31899 556 50 on eps – 0 
resigned  under the erp salary    50 on tsr – 25   
31 decemb er 201 3       
three financial 
years to  
31 december 
2015
 
directors’ interests in shares 
through participation in performance linked sharebased plans there is strong encouragement for senior executives to build and maintain a significant 
shareholding in the business
the committee has adopted a formal policy requiring the executive directors to build and maintain a shareholding in the company equivalent to 100  
of base salary until such time as this threshold is achieved there is a requirement for executives to retain no less than 50 of the net of tax value of vested 
incentive awards john morgan’s holding is well in excess of this requirement steve crummett who joined the board in february 201 3 has not currently 
achieved this guideline 
the interests of the directors all of which are beneficial in the shares of the company are given below there have been no changes in the interests of the 
directors between 31 december 201 3 and 18 february 2014 
     31 decemb er 31 decemb er 
     2013  2012 
     n o of shares no of shares
adrian martin     12000 2000 
john morgan     3997508 4497508 
steve crummett     – – 
patrick de smedt     2000 2000 
geraldine gallacher     7772 7772 
simon gulliford     3350 – 
liz peace     – – 
paul whitmore resigned 31 december 201 3     72851 62840 
david mulligan resigned 10 april 201 3     30013 24544
morgan sindall group plc annual report and accounts 2013
directors’ remuneration report governance 69 morgan sindall group plc annual report and accounts 2013
directors’ remuneration report
directors’ remuneration report
directors’ outstanding share incentives under the erp 
details of the executive directors’ interests in longterm incentive awards under the erp as at 31 december 201 3 and movements during the year are  
as follows 
performance shares 
    no of 
  no of awards  dividend   no of awards 
  outstanding as no of equivalent no of no of outstanding as end of date 
 date of  at 1 januar y shares shares shares shares at 31 decem ber performance awards 
 award 2013 awarded awarded vested lapsed 2013 period vest
john morgan 2152012 68224 – – – – 68224 31122014 2152015 
 2622013 – 81186 – – – 81186 31122015 2622016
total  68224 81186 – – – 149410  
steve crummett 2622013 – 91751 – – – 91751 31122 015 2622016
paul whitmore  1 7 320 10 36486 – 3052 20857  18681  – 31 1 22 01 2 1 7 320 1 3 
resigned 31 december 201 3 3032011 34247 – – – 2854 31393 31122013 3032014 
 2152012 48442 – – – 18839 29603 31122014 2152015 
 2622013 – 59128 – – 42704 16424 31122015 2622016
total  119175 59128 3052 20857 83078 77420
david mulligan  1 7 320 10 19932 – 1667 11394 10205 – 311220 12 173201 3 
resigned 10 april 201 3 303201 1 34703 – – – 11568 23135 311220 13 3032014 
 2152012 49065 – – – 35436 13629 311220 14 2152015
total  103700 – 1667 11394 57209 36764
1  the rules of the erp provide that if the committee so determines executives are entitled to receive the value of dividends paid on performance shares during the three year  
performance period in respect of the performance shares which vested on 17 march 2013 this was satisfied by the transfer of additional shares to the executives
2  in respect of the performance shares awarded on 17 march 2010 the company achieved eps for the year ended 31 december 201 2 adjusted for amortisation the non recurring 
reorganisation costs £10m and the profit on the disposal of the group’s medical properties investment £7m of 807p as a result 488 of the performance shares vested on the  
17 march 2013 and the remaining performance shares lapsed
3 the threshold performance condition in respect of the performance shares awarded on 30 march 201 1 was not met and the awards will lapse
4  the awards of performance shares made in 201 2 are subject to an absolute adjusted eps performance target and a tsr performance condition with full vesting of 50 of the awards  
for achieving adjusted eps of 106p or more for the year ending 31 december 2014 reducing on a sliding scale to 50 vesting for achieving 919p and reducing on a sliding scale to 0 
vesting for achieving 80p or less the other 50 of the award is subject to a condition measuring the company’s tsr compared with eight of the company’s uk listed peers over a three 
year period with full vesting at 2nd position or higher 25 vesting at median and 0 at less than median
5  the awards of performance shares made in 2013 are subject to an absolute adjusted eps performance target and a tsr performance condition with full vesting of 50 of the awards  
for achieving adjusted eps of 90p or more for the year ending 31 december 2015 reducing on a sliding scale to 50 vesting for achieving 751p and reducing on a sliding scale to 0 
vesting for achieving 675p or less the other 50 of the award is subject to the same tsr condition described above
6  as described below paul whitmore’s shares are subject to a pro rata reduction based on the number of complete months from the date of grant to the date of termination of his 
employment relative to 36 months in the number of shares in the awards
7  as described below david mulligan’s shares are subject to a pro rata reduction based on the number of complete months from the date of grant to the date of termination of his 
employment relative to 36 months in the number of shares in the awards
share options 
  no of options   no of options 
  outstanding as no of no of outstanding as end of  date from 
 date of  at 1 januar y options options at 31 decem ber performance exercise which 
 grant 2013 exercised lapsed 2013 period price exercisable
john morgan 2052005 107736 – – 107736 31122007 £724 2052008 
 542006 81016 – – 81016 311220 08 £1259 542009 
 1732010 229728 – 123364 106364 311220 12 £555 173201 3 
 3032011 200000 – – 200000 31122 013 £657 3032014
total  618480 – 123364 495116
david mulligan  205200 5 35220 – 35220 – 311220 07 £724 2052008 
resigned 10 april 201 3 54200 6 28594 – 28594 – 311220 08 £1259 542009 
 1732010 79730 36914 42816 – 31122 012 £555 1732013
total  143544 36914 106630 –   
1  no options were granted during the year 
2 the maximum performance condition for the options granted in 2005 and 2006 was satisfied and the options are therefore fully exercisable
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3  in respect of the options granted on 17 march 2010 the company achieved adjusted eps of 807p as explained under performance shares above as a result 463 of the options 
became exercisable on the 17 march 2013 and the remaining options lapsed 
4  the threshold performance condition in respect of the options granted on 30 march 201 1 was not met and the award will lapse
5  the outstanding options detailed above will if not lapsed or exercised earlier lapse ten years from the date of grant 
the midmarket price of a share on 31 december 201 3 was £7 55 and the range during the year was £5 16 to £840 
the morgan sindall savings related share option scheme the saye scheme 
the executive directors hold the following options granted under the saye scheme further details of which are given in notes 25 and 26 on pages 103 and 104 
  outstanding as  outstanding as  option dates 
 date of  at 1 januar y lapsed during at 31 decem ber exercise within which 
 grant 2013 the year 2013 price exercisable
john morgan 2792011 1814 – 1814 £496 1112014–152015 
paul whitmore resigned 31 december 201 3 27 920 1 1 1814 1814 – £496 na 
david mulligan resigned 10 april 201 3 27 920 1 1 1814 1814 – £496 na
no options were granted or exercised during the year 
payments for loss of office
paul whitmore’s employment with the company ceased on 31 december 201 3 the company agreed to pay him £373040 as a payment in lieu of notice 
comprising 1 2 months’ salary £319000 pension contributions £31900 and other benefits £22 140 in addition his membership of the group’s private 
medical insurance cover will continue on existing terms to 31 may 2014 worth £636 no 201 3 annual bonus was payable in respect of his outstanding 
longterm share awards the committee determined that in accordance with the rules of the erp  the awards would remain capable of vesting on their normal 
vesting dates subject to satisfaction of the performance conditions and time prorating his entitlement to sharesave awards ceased on 31 december 201 3
as disclosed last year david mulligan’s employment with the company ceased on 10 april 201 3 the company agreed to pay him £31 5 1 26 for payment  
in lieu of notice comprising nine months’ salary £236250 pension contributions £23625 and other benefits £25251  plus a £30000 settlement in 
respect of his contractual right to an annual bonus in respect of his outstanding longterm incentive awards under the erp  the committee determined that 
in accordance with the rules of the erp  the awards would remain capable of vesting on their normal vesting dates subject to satisfaction of performance 
conditions and time prorating
as disclosed last year paul smith’s employment with the company ceased on 31 december 201 2 the company agreed to pay him £500936 in cash  
for payment in lieu of notice representing approximately 10 months’ salary pension contributions and other benefits approximately one half was paid  
on 2 january 201 3 the other half was paid on 1 june 201 3 he was paid a pro rata annual bonus in respect of the period from 1 january 201 2 to  
5 november 201 2 on the same basis as other executives in the bonus plan in respect of his outstanding longterm incentive awards under the erp  the 
committee determined that in accordance with the rules of the erp  the awards would remain capable of vesting on their normal vesting dates subject  
to satisfaction of the performance conditions and time prorating 
payments to former directors 
save for the payments in lieu of notice disclosed under payments for loss of office above no payments were made to past executive directors during the  
year ended 31 december 201 3 in addition as also referred to above paul smith and david mulligan received shares in respect of the performance share 
awards and options granted under the erp in march 2010 to the extent that these vested in march 201 3 and the value of these is shown in the directors’ 
remuneration table for 201 2 
percentage change in remuneration levels 
the table below shows the movement in salary benefits and annual bonus for the chief executive between the 201 2 and 201 3 financial years compared  
to that for the average of all employees of the group 
       change
chief executive  
 salary      nil 
 benefits       nil 
 bonus      100 
average employee  
 salary       2 
 benefits      nil 
 bonus      25
morgan sindall group plc annual report and accounts 2013
directors’ remuneration report governance 71 morgan sindall group plc annual report and accounts 2013
directors’ remuneration report
directors’ remuneration report
relative importance of spend on pay 
the following table sets out the percentage change in profit dividends and overall spend on pay in 201 3 compared to 201 2
    2013 2012  change
adjusted eps pence    609p 920p 34 
dividends paid during the year £m    115 178 35 
employee remuneration costs £m    3156 3417 8
five year performance graph and table 
the graph below shows the tsr for the company’s shares over the last five financial years it shows the value to 31 december 201 3 of £100 invested in 
morgan sindall group plc on 1 january 2009 compared with the value of £100 invested in the ftse all share index excluding investment trusts and the 
ftse all share index construction and materials sector the other points plotted are the values at intervening financial year ends
31 december
2008
31 december
2009
31 december
2010
31 december
2011
31 december
2012
31 december
2013
ftse all share index excluding investment trusts
ftse all share index construction and materials sector
morgan sindall group plc
source thomson reuters
value £
0
50
1 00
150
200
250
total shareholder return
the total remuneration figures for the chief executive during each of the last five financial years are shown in the table below consistent with the calculation 
methodology for the single figure for total remuneration the total remuneration figure includes the total annual bonus award based on that year’s 
performance and the longterm incentive award based on the three year performance period ending in the relevant year the annual bonus payout and 
longterm incentive award vesting level as a percentage of the maximum opportunity are also shown for each of these years 
 2013 2012 2012 2011 2010 2009
chief executive john morgan john morgan
1
 paul smith
2
 paul smith paul smith paul smith
total remuneration £000 507
1
 634 1315 1025 1096 796
annual bonus  –
3
 30 26 85 100 27 
ltip share awards vesting  – – 488 – – 25 
ltip share options vesting  – 463 463 – – –
1 john morgan was appointed chief executive on 5 november 201 2 having previously been executive chairman 
2 paul smith resigned on 5 november 201 2 and ceased employment on 31 december 201 2
3 john morgan waived his bonus entitlement for 2013
this report was approved by the board and signed on its behalf by
patrick de smedt
chair of the remuneration committee 
18 february 2014
governance 72
 strategic report 02–46 governance 47–76 financial statements 77–120 morgan sindall group plc annual report and accounts 2013
directors’ report
introduction
the directors present their annual report on the affairs of the group 
together with the financial statements and auditor’s report for the year 
ended 31 december 201 3 the companies act 2006 requires the directors 
to present a fair review of the business during the year to 31 december 
201 3 and of the position of the company at the end of the financial year 
along with a description of the principal risks and uncertainties the strategic 
report can be found on pages 2 to 46 the disclosure and transparency 
rules require certain information to be included in a corporate governance 
statement which can be found on pages 52 to 57  
details of significant events since the balance sheet date are contained  
in note 29 to the financial statements an indication of likely future 
developments in the business of the group and details of research and 
development activities are included in the strategic report information  
about the use of financial instruments by the company and its subsidiaries  
is given in note 28 to the financial statements
pages 2 to 76 together with the sections of the annual report incorporated 
by reference form part of the directors’ report which is presented in 
accordance with and with reliance upon applicable english company law  
the liabilities of the directors in connection with this report shall be limited  
as provided by english law
dividends
an interim dividend of 1 20p 201 2 1 20p per share amounting to £5 1m 
201 2 £5 1m was paid on 24 october 201 3 the directors recommend  
a final dividend for the year of 1 50p 201 2 1 50p per share amounting  
to £64m 201 2 £64m payable on 23 may 2014 to shareholders on the 
register at close of business on 2 may 2014 together with the interim 
dividend this makes a total dividend of 27 0p 201 2 27 0p for the year 
capital structure
details of the company’s issued share capital together with details of the 
movements in the company’s issued share capital during the year are shown 
in note 25 of the consolidated financial statements the company’s issued 
share capital comprises a single class of ordinary shares of 5p each 008  
of shares were issued in 201 3 to settle share option exercises under the 
group’s saye scheme 201 2 002 201 1 0
at each agm the board seeks authorisation from its shareholders to allot 
shares the directors were granted authority at the agm on 9 may 2014  
to allot relevant securities up to a nominal amount of £108 148 that 
authority will apply until the conclusion of this year’s agm and a resolution  
to renew the authority will be proposed at the forthcoming agm as 
explained further in the circular to shareholders accompanying this report
a special resolution will also be proposed to renew the directors’ power  
to make non pre emptive issues for cash as explained in the circular 
accompanying this report
rights and obligations attaching to shares
subject to applicable statutes shares may be issued with such rights and 
restrictions as the company may by ordinary resolution decide or if there  
is no such resolution or so far as it does not make specific provision as the 
board as defined in the company’s articles of association the articles  
may decide subject to the articles the act and other shareholders’ rights 
unissued shares are at the disposal of the board
subject to the act rights attached to any class of shares may be varied  
with the written consent of the holders of not less than 75 in nominal  
value of the issued shares of that class calculated excluding any shares  
held as treasury shares or with the sanction of a special resolution passed  
at a separate general meeting of the holders of those shares 
the rights conferred upon the holders of any shares shall not unless 
otherwise expressly provided in the rights attaching to those shares be 
deemed to be varied by the creation or issue of further shares ranking  
pari passu with them
voting
subject to any other provisions of the articles every member present  
in person or by proxy at a general meeting has upon a show of hands one  
vote and upon a poll one vote for every share held by him or her in the case 
of joint holders of a share the vote of the senior holder who tenders a vote 
whether in person or by proxy shall be accepted to the exclusion of the votes 
of the other joint holders and for this purpose seniority shall be determined 
by the order in which the names stand in the register in respect of the joint 
holding the firstnamed being the most senior
no member shall be entitled to vote at any general meeting in respect of  
any share held by him or her if any call or other sum then payable by him or 
her in respect of that share remains unpaid or if a member has been served 
with a restriction notice as defined in the articles after failure to provide  
the company with information concerning interests in those shares required 
to be provided under the act
no person has any special rights of control over the company’s share  
capital and the directors are not aware of any agreements between holders 
of shares which may result in restrictions on voting rights
transfer of shares
there are no restrictions on the transfer of securities in the company except
 
that certain restrictions may from timetotime be imposed by laws and 
regulations for example insider trading laws
 
pursuant to the listing rules of the financial conduct authority whereby 
certain employees of the company require its approval to deal in the 
company’s shares
the company is not aware of any agreements between holders of securities 
that may result in restrictions on the transfer of securities
purchase of own shares
at the agm on 9 may 201 3 a resolution was passed giving the directors 
authority to make market purchases of its shares up to 4322864 shares at 
a maximum price based on the market price of a share at the relevant time 
as set out in the resolution no purchases of shares were made during the 
year pursuant to this authority the authority expires on 9 august 2014 and 
a resolution to renew the authority will be proposed at the forthcoming agm 
as explained further in the circular to shareholders accompanying this report
directors’ report
 strategic report 02–46 governance 47–76 financial statements 77–120
governance 73 morgan sindall group plc annual report and accounts 2013
directors’ report
dividends and distributions
the company may by ordinary resolution from timetotime declare 
dividends not exceeding the amount recommended by the board subject  
to the act the board may pay interim dividends and also any fixed rate 
dividend whenever the financial position of the company in the opinion  
of the board justifies its payment
the board may withhold payment of all or any part of any dividends or other 
monies payable in respect of the company’s shares from a person with a 
025 interest as defined in the articles if such a person has been served 
with a restriction notice as defined in the articles after failure to provide the 
company with information concerning interests in those shares required to 
be provided under the act
rights under employee share schemes
the legis trust limited as trustee of the morgan sindall employee benefit 
trust the trust held 13 of the issued share capital of the company as  
at 31 december 201 3 on trust for the benefit of the employees and former 
employees of the group and their dependants the voting rights in relation  
to these shares are exercised by the trustee and there are no restrictions  
on the exercise of the voting of or the acceptance of any offer relating to  
the shares further details of the shares held by the trust may be found  
in note 25 to the consolidated financial statements on page 103
appointment and replacement of directors
the directors shall be not less than two and not more than 1 2 in number  
the company may by ordinary resolution vary the minimum andor 
maximum number of directors directors may be appointed by the company 
by ordinary resolution or by the board a director appointed by the board 
holds office only until the next agm of the company and is then eligible  
for reappointment 
at every agm of the company any director who has been appointed  
by the board since the last agm or who held office at the time of the two 
preceding agms and who did not retire at either of them shall retire from 
office and may offer himherself for reappointment by the members  
the company may by special resolution remove any director before the 
expiration of hisher period of office the office of a director shall be vacated 
if i heshe resigns or offers to resign and the board resolves to accept such 
offer ii hisher resignation is requested by all of the other directors and all  
of the other directors are not less than three in number iii heshe is or has 
been suffering from mental ill health and the board resolves that hisher 
office be vacated iv heshe is absent without the permission of the board 
from meetings of the board whether or not an alternate director appointed 
by himher attends for six consecutive months and the board resolves that 
hisher office is vacated v heshe becomes bankrupt or compounds with 
hisher creditors generally vi heshe is prohibited by law from being a 
director vii heshe ceases to be a director by virtue of the act or viii  
heshe is removed from office pursuant to the articles 
however at the forthcoming agm of the company to be held on 8 may 
2014 notwithstanding the provisions of the articles each of the directors 
will offer themselves for election in accordance with the uk corporate 
governance code
powers of directors
subject to the articles the act and any directions given by the company  
by special resolution the business of the company will be managed by the 
board who may exercise all the powers of the company whether relating to 
the management of the business or not in particular the board may exercise 
all the powers of the company to borrow money to mortgage or charge  
any of its undertaking property assets present and future and uncalled 
capital and to issue debentures and other securities and to give security for 
any debt liability or obligation of the company or of any third party
directors
the directors who served throughout the year except as noted were  
as follows
adrian martin nonexecutive chairman 
john morgan chief executive 
steve crummett finance director – appointed on 25 february 201 3 
paul whitmore commercial director 
patrick de smedt senior independent director 
geraldine gallacher 
simon gulliford 
liz peace 
paul whitmore resigned on 31 december 201 3 and david mulligan resigned 
on 25 february 201 3
biographical details of the directors of the company who are seeking 
reelection are set out on pages 48 and 49
details of directors’ interests including interests in the company’s shares  
are disclosed in the directors’ remuneration report on pages 65 to 71
directors’ indemnities
the articles entitle the directors of the company to be indemnified to the 
extent permitted by the act and any other applicable legislation out of  
the assets of the company in the event that they suffer any loss or incur  
any liability in connection with the execution of their duties as directors
in addition and in common with many other companies the company  
had during the year and continues to have in place directors’ and officers’ 
insurance in favour of its directors and other officers in respect of certain 
losses or liability to which they may be exposed due to their office the 
company also had and continues to have in place a pension trustees liability 
insurance policy in favour of the trustees of the morgan sindall retirement 
benefits plan in respect of certain losses or liabilities to which they may be 
exposed due to their office
amendment of articles of association
any amendments to the articles may be made in accordance with the 
provisions of the act by way of special resolution
directors’ report
governance 74
 strategic report 02–46 governance 47–76 financial statements 77–120 morgan sindall group plc annual report and accounts 2013
directors’ report
substantial shareholdings 
as at 18 february 2014 the company had been notified of the following 
interests in voting rights attaching to the company’s shares in accordance 
with chapter 5 of the disclosure and transparency rules
name of holder no of shares  of total
franklin templeton institutional llc 6495381 1 502 
john morgan 3997 508 924 
jo hambro capital management group ltd 223956 5 518 
ameriprise financial inc 223280 8 516 
jp morgan chase  co 212328 7 491 
standard life investments ltd 202505 3 468 
john james clifford lovell 201 527 3 466  
aberdeen asset managers ltd 2010042 465 
norges bank 137485 0 318 
barclays global investors 130386 1 301
change of control
the group’s banking facilities which are described in the finance review on 
page 35 require repayment in the event of a change in control the group’s 
facilities for surety bonding require provision of cash collateral for outstanding 
bonds upon a change of control in addition the company’s employee share 
incentive schemes contain provisions whereby upon a change of control 
outstanding options and awards would vest and become exercisable subject 
to the rules of the relevant schemes
there are no agreements between the company and its directors or 
employees providing for compensation for loss of office or employment 
occurring because of a takeover bid 
environmental social and governance esg disclosures
details of the group’s approach to diversity and esg disclosures can be found 
in the sustainability review on pages 42 to 46 the risk review on page 39 and 
in the corporate governance statement on page 54
disabled employees
applications for employment by disabled people are always fully considered 
bearing in mind the aptitudes of the applicant concerned in the event  
of members of staff becoming disabled every effort is made to ensure that 
their employment with the group continues and that appropriate training  
is arranged it is the policy of the group that the training career development 
and promotion of disabled people should as far as possible be identical  
to that of other employees
employee consultation
the group places considerable value on the involvement of its employees 
and ensures that all significant events economic factors and financial updates 
and the impact of these on the performance of the group are communicated 
to employees through email alerts and regular newsletters in addition  
the divisions use a variety of methods to encourage employee involvement  
in the group’s performance and communicate key business goals and  
issues to employees the divisions also consult and involve their employees 
through local publications briefing groups consultative meetings training 
programmes employee surveys and working groups to assist the process  
of continuous improvement in the way the business is conducted 
details of the company’s saye scheme which is open to all employees  
are set out in notes 25 and 26 of the consolidated financial statements  
on pages 103 and 104
greenhouse gas emissions
all disclosures on the group’s greenhouse gas emissions as required  
to be disclosed under the companies act 2006 strategic report and  
directors’ report regulations 201 3 are contained in the sustainability  
review on page 46
political contributions
no contributions were made to any political parties during the current  
or preceding year 
disclosure of information to the external auditor
the directors who held office at the date of approval of this directors’  
report confirm that so far as they are each aware there is no relevant audit 
information of which the company’s auditor is unaware and each director  
has taken all the steps that he or she ought to have taken as a director  
in order to make himself or herself aware of any relevant audit information  
and to establish that the company’s auditor is aware of that information  
this confirmation is given and should be interpreted in accordance with the 
provisions of section 418 of the act
external auditor 
deloitte llp has expressed its willingness to continue in office as  
external auditor and a resolution to reappoint it will be proposed at the 
forthcoming agm 
annual general meeting
the agm of the company will be held at the offices of jefferies hoare 
govett vintners place 68 upper thames street london ec4v 3bj  
on 8 may 2014 at 1 200 noon the formal notice convening the agm 
together with explanatory notes can be found in the separate circular 
accompanying this document and is available on the company’s website  
at wwwcorporatemorgansindallcom shareholders will also find enclosed 
with this document a form of proxy for use in connection with the meeting 
the directors’ report from pages 2 to 76 inclusive was approved  
by the board and signed on its behalf by
mary n ettleship
company secretary 
18 february 2014
 strategic report 02–46 governance 47–76 financial statements 77–120
governance 75 morgan sindall group plc annual report and accounts 2013
directors’ responsibilities statement governance 76
the directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations
company law requires the directors to prepare financial statements for each financial year under that law the directors are required to prepare the  
group financial statements in accordance with international financial reporting standards ifrss as adopted by the european union and article 4 of the  
ias regulation and have elected to prepare the parent company financial statements in accordance with united kingdom generally accepted accounting 
practice united kingdom accounting standards and applicable law under company law the directors must not approve the financial statements unless  
they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period 
in preparing the parent company financial statements the directors are required to
 
select suitable accounting policies and then apply them consistently
 
make judgments and accounting estimates that are reasonable and prudent
 
state whether applicable united kingdom accounting standards have been followed subject to any material departures disclosed and explained  
in the financial statements
 
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business
in preparing the group financial statements international accounting standard 1 requires that directors
 
properly select and apply accounting policies
 
present information including accounting policies in a manner that provides relevant reliable comparable and understandable information
 
provide additional disclosures when compliance with the specific requirements in ifrss are insufficient to enable users to understand the impact  
of particular transactions other events and conditions on the entity’s financial position and financial performance
 
make an assessment of the company’s ability to continue as a going concern
the directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with 
reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the companies 
act 2006 they are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection  
of fraud and other irregularities
the directors are responsible for the maintenance and integrity of the corporate and financial information included on the company’s website legislation  
in the united kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions
responsibility statement 
we confirm that to the best of our knowledge
 
the financial statements prepared in accordance with the relevant financial reporting framework give a true and fair view of the assets liabilities financial 
position and profit or loss of the company and the undertakings included in the consolidation taken as a whole the strategic report which is incorporated 
into the directors’ report includes a fair review of the development and performance of the business and the position of the company and the 
undertakings included in the consolidation taken as a whole together with a description of the principal risks and uncertainties that they face and
 
the annual report and financial statements taken as a whole are fair balanced and understandable and provide the information necessary for shareholders 
to assess the company’s performance business model and strategy
for and on behalf of the board
john morgan steve crummett
chief executive finance director 
18 february 2014 18 februa ry 2014
directors’ responsibilities statement
 strategic report 02–46 governance 47–76 financial statements 77–120 financial statements 77
morgan sindall group plc annual report and accounts 2013
financial statements
78 independent auditor’s report
group consolidated financial statements
the group’s consolidated financial statements  
for the year ended 31 december 201 3
81 consolidated income statement
81 consolidated statement of comprehensive income
82 consolidated balance sheet
83 consolidated cash flow statement
84 consolidated statement of changes in equity
85 significant accounting policies 
89 critical accounting judgments and estimates 
90 notes to the consolidated financial statements
 strategic report 02–46 governance 47–76 financial statements 77–120 financial statements 78
morgan sindall group plc annual report and accounts 2013
independent auditor’s report
opinion on financial statements of morgan sindall group plc
in our opinion
 
the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 december 201 3 and  
of the group’s profit for the year then ended
 
the group financial statements have been properly prepared in accordance with international financial reporting standards ifrss as adopted  
by the european union
 
the parent company financial statements have been properly prepared in accordance with united kingdom generally accepted accounting practice  
uk gaap and
 
the financial statements have been prepared in accordance with the requirements of the companies act 2006 and as regards the group financial 
statements article 4 of the ias regulation
the financial statements comprise the consolidated income statement the consolidated statement of comprehensive income the consolidated  
balance sheet the consolidated cash flow statement the consolidated statement of changes in equity the significant accounting policies the critical 
accounting judgments and estimates the related group notes 1 to 29 the company balance sheet the company combined statement of movements  
in reserves and shareholders’ funds and the related company notes 1 to 1 2 the financial reporting framework that has been applied in the preparation  
of the group financial statements is applicable law and ifrss as adopted by the european union the financial reporting framework that has been  
applied in the preparation of the parent company financial statements is applicable law and united kingdom accounting standards uk gaap
going concern
as required by the listing rules we have reviewed the directors’ statement contained within the finance review on page 35 that the group is a going  
concern we confirm that
 
we have not identified material uncertainties related to events or conditions that may cast significant doubt on the group’s ability to continue  
as a going concern which we believe would need to be disclosed in accordance with ifrss as adopted by the european union and
 
we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate
however because not all future events or conditions can be predicted this statement is not a guarantee as to the group’s ability to continue as a going 
concern
our assessment of risks of material misstatement
the assessed risks of material misstatement described below are those that had the greatest effect on our audit strategy the allocation of resources  
in the audit and directing the efforts of the engagement team
risk how the scope of our audit responded to the risk
recognition of contract revenue 
margin and related receivables  
and liabilities for construction  
and services companies there is 
considerable judgment in assessing  
the appropriate contract revenue  
and margin to recognise which 
involves the consideration of the 
valuation of work performed current 
and future contract operational 
performance and in turn the evaluation 
of the related receivables and liabilities 
at each reporting date
we carried out testing of controls over revenue recognition amounts due from construction contract 
customers and contract receivables 
for a sample of contracts we assessed the forecast costs to complete that drive the accounting under the 
percentage of completion method including a review of the contract terms and conditions management’s 
assessments of the forecasts and the existence and valuation of claims and variations both within contract 
revenue and contract costs 
we tested the recoverability of amounts due from construction contract customers and the related  
receivables on a sample basis
we assessed the completeness and validity of allowances recorded by management based upon the liabilities 
that may arise from disputes with customers or rectification works required through interviewing contract 
managers commercial directors and a review of correspondence with customers and solicitors
impairment of goodwill goodwill 
must be tested annually and requires  
a comparison between the carrying 
value of the asset and the recoverable 
amount
we challenged management’s assumptions used in the impairment model for goodwill described in note 9  
to the financial statements which calculates the recoverable amount our challenge focused on assessing  
the appropriateness of the cash flow projections relative to previous performance and external evidence  
on construction growth rates benchmarking and recalculating discount rates and perpetuity rates used and 
the related sensitivity analysis which was performed
independent auditor’s report
to the members of morgan sindall group plc
 strategic report 02–46 governance 47–76 financial statements 77–120 financial statements 79
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
independent auditor’s report
risk how the scope of our audit responded to the risk
carrying value of land and work  
in progress the determination  
of net realisable value is a key area  
of judgment due to the assumptions 
made by management on future 
expected sales values and 
development opportunities 
we have challenged the assumptions made on land and development appraisals such as market values local 
demand and planning applications which underpin management’s assessment by scrutinising them against 
recent sales information and external market data on house prices we have agreed the future development 
cost assumptions to detailed site appraisals and agreed these to contractual documentation we have 
reviewed the site appraisals for reasonableness against externally available data to benchmark the inherent 
assumptions against wider market forecasts of cost increases likely sales rates and planning developments
valuation of shared equity loan 
receivables the determination  
of the fair value of the shared equity 
schemes in the affordable housing 
division requires management 
judgment in relation to the discount 
rate rate of expected default and 
forecast house price growth
we have reviewed and challenged management’s assumptions in accounting for shared equity schemes and 
assessed the model methodology the assumptions have been benchmarked against similar products in the 
market place current market data on house price growth redemption rates and performance of the shared 
equity scheme to date 
management’s assessment of these and other key sources of judgment is included on page 89 
the audit committee’s consideration of these and other risks is set out on pages 56 and 57 
our audit procedures relating to these matters were designed in the context of our audit of the financial statements as a whole and not to express  
an opinion on individual accounts or disclosures our opinion on the financial statements is not modified with respect to any of the risks described above  
and we do not express an opinion on these individual matters
our application of materiality
we define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably 
knowledgeable person would be changed or influenced we use materiality both in planning the scope of our audit work and in evaluating the results  
of our work
we determined materiality for the group to be £3 1m which is 7 5 of the fiveyear average pre tax profit before exceptional items and approximately 
1 of net assets we use pre tax profit before exceptional items as it represents a key performance measure for the group and we use a fiveyear average  
to mitigate the effect of fluctuations in the measure from yeartoyear
we agreed to report to the audit committee all audit differences in excess of £0 1m as well as differences below that threshold that in our view warranted 
reporting on qualitative grounds we also report to the audit committee on disclosure matters that we identified when assessing the overall presentation  
of the financial statements 
an overview of the scope of our audit
our group audit was scoped by obtaining an understanding of the group and its environment including groupwide controls and assessing the risks  
of material misstatement at the group level 
based on that assessment our group audit scope focussed primarily on the audit work at the most significant components where full audit procedures  
were carried out based on our assessment of the identified risks of material misstatement identified above the most significant components represent  
the principal business units within the group’s reportable segments and account for 98 of the group’s revenue 95 of the group’s adjusted profit before 
tax and 87 of the group’s net assets
the remaining components were subject to an audit of specified account balances where the extent of our testing was based on our assessment of the  
risks of material misstatement and of the materiality of the group’s operations in those components 
at the parent entity level we also tested the consolidation process and carried out analytical procedures to confirm our conclusion that there were no 
significant risks of material misstatement of the aggregated financial information of the remaining components not subject to audit or audit of specified 
account balances
the group audit team continued to follow a programme of planned visits that has been designed so that either the senior statutory auditor or another 
senior member of the group audit team visits each of the group’s principal business units at least once a year the senior statutory auditor or another  
senior member of the group audit team participated in all of the close meetings of the group’s principal business units
opinion on other matters prescribed by the companies act 2006
in our opinion
 
the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the companies act 2006 and
 
the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is consistent 
with the financial statements financial statements 80
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
independent auditor’s report
matters on which we are required to report by exception
adequacy of explanations received and accounting records
under the companies act 2006 we are required to report to you if in our opinion
 
we have not received all the information and explanations we require for our audit or
 
adequate accounting records have not been kept by the parent company or returns adequate for our audit have not been received from branches  
not visited by us or
 
the parent company financial statements are not in agreement with the accounting records and returns
we have nothing to report in respect of these matters
directors’ remuneration
under the companies act 2006 we are also required to report if in our opinion certain disclosures of directors’ remuneration have not been made or the  
part of the directors’ remuneration report to be audited is not in agreement with the accounting records and returns under the listing rules we are required 
to review certain elements of the directors’ remuneration report we have nothing to report arising from these matters or our review
corporate governance statement
under the listing rules we are also required to review the part of the corporate governance statement relating to the company’s compliance with nine 
provisions of the uk corporate governance code we have nothing to report arising from our review
our duty to read other information in the annual report 
under international standards on auditing uk and ireland we are required to report to you if in our opinion information in the annual report is
 
materially inconsistent with the information in the audited financial statements or
 
apparently materially incorrect based on or materially inconsistent with our knowledge of the group acquired in the course of performing our audit or
 
otherwise misleading
in particular we are required to consider whether we have identified any inconsistencies between our knowledge acquired during the audit and the  
directors’ statement that they consider the annual report is fair balanced and understandable and whether the annual report appropriately discloses those 
matters that we communicated to the audit committee which we consider should have been disclosed we confirm that we have not identified any such 
inconsistencies or misleading statements
respective responsibilities of directors and auditor
as explained more fully in the directors’ responsibilities statement the directors are responsible for the preparation of the financial statements and for  
being satisfied that they give a true and fair view our responsibility is to audit and express an opinion on the financial statements in accordance with 
applicable law and international standards on auditing uk and ireland those standards require us to comply with the auditing practices board’s ethical 
standards for auditors
this report is made solely to the company’s members as a body in accordance with chapter 3 of part 16 of the companies act 2006 our audit work  
has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no 
other purpose to the fullest extent permitted by law we do not accept or assume responsibility to anyone other than the company and the company’s 
members as a body for our audit work for this report or for the opinions we have formed
scope of the audit of the financial statements
an audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial 
statements are free from material misstatement whether caused by fraud or error this includes an assessment of whether the accounting policies are 
appropriate to the group’s and the parent company’s circumstances and have been consistently applied and adequately disclosed the reasonableness  
of significant accounting estimates made by the directors and the overall presentation of the financial statements in addition we read all the financial and 
non financial information in the annual report to identify material inconsistencies with the audited financial statements and to identify any information  
that is apparently materially incorrect based on or materially inconsistent with the knowledge acquired by us in the course of performing the audit if we 
become aware of any apparent material misstatements or inconsistencies we consider the implications for our report
mark beddy fca 
senior statutory auditor 
for and on behalf of deloitte llp 
chartered accountants and statutory auditor 
london uk 
18 february 2014
independent auditor’s report
to the members of morgan sindall group plc financial statements 81
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
consolidated income statement and consolidated statement of comprehensive income
consolidated income statement
for the year ended 31 december 201 3
 2013 2012
 
 
 
 
  before exceptional  before exceptional 
  exceptional operating  exceptional operating  
  items items total items items total 
 notes  £m £m £m £m £m £m
revenue 1 2 20949  –  20949  2047 1  –  2047 1  
cost of sales   19236 147 19383 18604  –  18604 
gross profit   1713  147 1566  1867  –  1867  
 
administrative expenses   1485 –  1485 1537 100 1637 
share of net profit of joint ventures 1 2 09  –  09  57  –  57  
other gains and losses 1 2 99  –  99  94  –  94 
operating profit before amortisation of intangible assets   336  147 189  481  100 381 
amortisation of intangible assets 9 27 –  27 29 –  29
operating profit 2 309  147 162  452  100 352  
finance income 5 12  –  12  23  –  23  
finance expense 5 35 –  35 33 –  33
profit before tax 3  286  147 139  442  100 342  
tax 6 23 34  1 1  59 24  35
profit for the year  263  1 13 150  383  7 6 307 
attributable to               
owners of the company   264  1 13 15 1  384  7 6 308  
noncontrolling interests   0 1 –  0 1 0 1 –  0 1
profit for the year   263  1 13 150  383  7 6 307 
earnings per share                
basic 8     354p     725p 
diluted 8     349p     720p
there were no discontinued operations in either the current or comparative years
consolidated statement of comprehensive income
for the year ended 31 december 201 3
     2013 2012 
    notes £m £m
profit for the year      150  307  
 
items that will not be reclassified subsequently to profit or loss       
actuarial gainloss arising on retirement benefit obligation    20 09  08 
deferred tax on retirement benefit obligation    21 –  01 
      09  07 
items that may be reclassified subsequently to profit or loss       
movement on cash flow hedges in joint ventures    1 2 02  04 
losses on cash flow hedges transferred to the income statement on disposal of joint ventures   1 2 14  21  
foreign exchange movement on translation of overseas operations      04 –  
other movement on cash flow hedges      01  – 
      13  17 
other comprehensive income      22  10
total comprehensive income      172  317 
 
attributable to       
 owners of the company      173  318  
 noncontrolling interests      01 01
total comprehensive income      172  317  financial statements 82
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
consolidated balance sheet
consolidated balance sheet
at 31 december 201 3
     2013  2012  
    notes £m £m
assets           
goodwill and other intangible assets     9 2205  2232  
property plant and equipment     10 183  201  
investment property     1 1 100  113  
investments in joint ventures     2 1 2 540  622  
investments       04  04  
shared equity loan receivables     1 3 197  192 
n oncurrent assets       3229  3364  
inventories     14 1610  1 594  
trade and other receivables     1 5 3855  4049  
cash and cash equivalents     28 928  504  
asset held for sale     1 7 31  – 
current assets       6424  6147 
total assets     2 9653  9511 
liabilities           
trade and other payables     18 6135 6195 
current tax liabilities       53 52 
finance lease liabilities     19 15 12 
provisions     22 22 30
current liabilities       6225 6289
n et current assetsliabilities       199  142 
trade and other payables     18 206 229 
finance lease liabilities     19 39 50 
borrowings     28 231 –  
retirement benefit obligation     20 –  15 
deferred tax liabilities     21 160 190 
provisions     22 222 245
n oncurrent liabilities       858 729
total liabilities       7083 7018
n et assets       2570  2493 
equity           
share capital     25 22  22  
share premium account       269  267  
other reserves       04 17 
retained earnings       2288  2225 
equity attributable to owners of the company       2575  2497  
noncontrolling interests       05 04
total equity       2570  2493 
the consolidated financial statements of morgan sindall group plc were approved by the board on 18 february 2014 and signed on its behalf by
john morgan   steve crummett
chief executive   finance director financial statements 83
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
consolidated cash flow statement
consolidated cash flow statement
for the year ended 31 december 201 3
     2013  2012  
    notes £m £m
operating activities         
operating profit      162  352  
adjusted for         
 amortisation of intangible assets    9 27  29  
 share of net profit of equity accounted joint ventures    1 2 09 57 
 depreciation    10 52  65  
 share option expense    26 12  02  
 profit on disposal of interests in joint ventures    1 2 99 88 
 lossgain on disposal of property plant and equipment     02  06 
 revaluation of investment properties    1 1 –  05  
 movement in fair value of shared equity loan receivables    1 3 02 02 
 noncash exceptional operating items    3 147  32  
additional pension contributions    20 07 06 
net disposals ofadditions to investment properties    1 1 13  07 
net additions to shared equity loan receivables    1 3 03 14 
decrease in provisions    22 31 23
operating cash flows before movements in working capital      264  282  
increase in inventories      16 109 
decrease in receivables      38  108  
decrease in payables      106 768
movements in working capital      84 769
cash inflowoutflow from operating activities      180  487 
income taxes paid      12 81
n et cash inflowoutflow from operating activities      168  568
investing activities          
interest received      15  22  
dividends from joint ventures    1 2 04  13  
proceeds on disposal of property plant and equipment      03  16  
purchases of property plant and equipment      39 40 
net payments to acquire or increase interests in joint ventures      49 70 
proceeds on disposal of interests in joint ventures      236  262  
payments for the acquisition of subsidiaries and other businesses      –  01
n et cash inflow from investing activities      170  202 
financing activities          
interest paid      20 30 
dividends paid    7 115 178 
repayments of obligations under finance leases      12 11 
proceeds from longterm borrowings    28 231  –  
proceeds from issue of share capital    25 02  – 
n et cash inflowoutflow from financing activities      86  219
net increasedecrease in cash and cash equivalents      424  585 
cash and cash equivalents at 1 january      504  1089 
cash and cash equivalents at 31 december    28 928  504  financial statements 84
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
consolidated statement of changes in equity
consolidated statement of changes in equity
for the year ended 31 december 201 3
  share 
  share  premium other retained  noncontrolling total 
 capital account reserves earnings total interests equity 
 £m £m £m £m £m £m £m
1 january 201 2 22  267  34 2104  2359  03 2356  
total comprehensive income –  –  17  30 1  318  0 1  317  
share option expense –  –  –  02  02  –  02  
tax relating to share option expense  –  –  –  04 04 –  04 
dividends paid  –  –  –  1 7 8 1 7 8 –  1 7 8
1 ja nuary 2013 22  267  17 2225  2497  04 2493  
total comprehensive income –  –  13  160  1 7 3  0 1  1 7 2  
share option expense –  –  –  12  12  –  12  
issue of shares at a premium –  02  –  –  02  –  02  
exercise of share options and vesting of share awards  –  –  –  04  04  –  04  
tax relating to share option expense  –  –  –  02  02  –  02  
dividends paid –  –  –  1 15 1 15 –  1 15
31 d ecember 2013 22  269  04 2288  257 5  05 257 0 
other reserves
other reserves include
 
capital redemption reserve of £06m 201 2 £06m which was created on the redemption of preference shares in 2003
 
hedging reserve of £06m 201 2 £23m arising under cash flow hedge accounting movements on the effective portion of hedges are recognised 
through the hedging reserve whilst any ineffectiveness is taken to the income statement cumulative movements recognised through the hedging  
reserve are recycled through the income statement on disposal of the associated joint ventures
 
translation reserve of £04m 201 2 £nil arising on the translation of overseas operations into the group’s functional currency
retained earnings
retained earnings include shares that are held as ‘treasury shares’ and represent the cost to morgan sindall group plc of shares purchased in the market  
and held by the morgan sindall employee benefit trust the trust to satisfy options under the group’s share incentive schemes the number of shares  
held by the trust at 31 december 201 3 was 575397 201 2 723970 with a cost of £43m 201 2 £56m financial statements 85
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
significant accounting policies
reporting entity
morgan sindall group plc the company is domiciled and incorporated  
in the united kingdom the nature of the group’s operations and its principal 
activities are set out in note 2 and in the strategic report on pages 2 to 46
basis of preparation 
a statement of compliance
the consolidated financial statements have been prepared on the  
going concern basis as discussed in the finance review on page 35 and  
in accordance with international financial reporting standards ifrs  
adopted by the european union and therefore comply with article 4  
of the eu ias regulation
b basis of accounting
the consolidated financial statements have been prepared under the 
historical cost convention except where otherwise indicated 
c functional and presentation currency
these consolidated financial statements are presented in pounds sterling 
which is the group’s functional currency all financial information unless 
otherwise stated has been rounded to the nearest £0 1m
d adoption of new and revised standards
i new and revised accounting standards adopted by the group
during the year the group has adopted the following new and revised 
standards and interpretations their adoption has not had any significant 
impact on the amounts or disclosures reported in these financial statements
 
amendment to ias 1 ‘presentation of items of other comprehensive 
income’ this amendment requires that items presented in the statement 
of comprehensive income and the tax thereon should be presented 
based upon whether they are potentially reclassifiable to profit or loss 
subsequently 
 
amendment to ias 19 ‘employee benefits’ this amendment removes  
the ‘corridor approach’ permitted by existing ias 19 modifies  
the accounting for termination benefits and clarifies various other 
miscellaneous issues the corridor approach was not part of the  
group’s existing accounting policy
 
ifrs 1 3 ‘fa ir value measurement’ this standard provides a single source of 
guidance on how fair values should be measured and disclosed where the 
use of fair value measurement is required by other accounting standards 
 
amendment to ifrs 1 2 ‘deferred tax recovery of underlying assets’  
this amendment requires a presumption that the carrying amount of 
investment property carried at fair value will normally be recovered 
through sale 
 
ias 36 amended ‘recoverable amount disclosures for nonfinancial 
assets’ this amendment reduces the circumstances in which the 
recoverable amount of assets or cashgenerating units is required to be 
disclosed clarifies the disclosures required and introduces an explicit 
requirement to disclose the discount rate used in determining impairment 
or reversals where recoverable amount based on fair value less costs  
of disposal is determined using a present value technique
ii new and revised accounting standards and interpretations which  
were in issue but were not yet effective and have not been adopted  
early by the group
at the date of publishing these financial statements the following new and 
revised standards and interpretations were in issue but were not yet effective 
and in some cases had not yet been adopted by the eu none of these  
new and revised standards and interpretations have been adopted early  
by the group
 
annual improvements to ifrss 2010201 2 cycle and 201 1201 3 cycle
 
ifrs 9 ‘financial instruments’
 
ifrs 10 ‘ consolidated financial statements’
 
ifrs 1 1 ‘jo int arrangements’
 
ifrs 1 2 ‘di sclosures of interests in other entities’
 
ias 19 ame nded ‘defined benefit plans employee contributions’
 
ias 27 revised ‘separate financial statements’
 
ias 28 revised ‘investments in associates and joint ventures’
 
ias 32 amended ‘offsetting financial assets and liabilities’
 
ias 39 amended ‘novation of derivatives and continuation of hedge 
accounting’
the directors do not expect that the adoption of the standards listed above 
will have a material impact on the financial statements of the group in future 
periods except as follows
 
ifrs 1 1 wil l impact both the measurement and disclosure of joint 
arrangements
 
ifrs 1 2 wil l impact the disclosure of the interests the group has  
in other entities
the accounting policies as set out below have been applied consistently  
to all periods presented in these consolidated financial statements
basis of consolidation
the consolidated financial statements incorporate the financial statements  
of the company and the entities controlled by the company together with 
the group’s share of the results of joint ventures made up to 31 december 
each year
business combinations are accounted for using the acquisition method  
the consideration transferred for the acquisition of a subsidiary is the fair 
value of the assets transferred the liabilities incurred and equity interests 
issued by the group in exchange for control of the acquiree consideration 
transferred also includes the fair value of any asset or liability resulting  
from a contingent consideration arrangement acquisition related costs  
are expensed in administrative expenses as incurred all identifiable  
assets and liabilities acquired and contingent liabilities assumed are initially 
measured at their fair values at the acquisition date
the excess of the consideration transferred the amount of any non
controlling interest and the acquisition date fair value of any previously held 
equity interest in the acquiree as compared with the group’s share of the 
identifiable net assets are recognised as goodwill where the group’s  
share of identifiable net assets acquired exceeds the total consideration 
transferred a gain from a bargain purchase is recognised immediately  
in the income statement after the fair values initially determined have  
been reassessed
a subsidiaries
subsidiaries are entities that are controlled by the group control is exerted 
where the group has the power to govern directly or indirectly the financial 
and operating policies of the entity so as to obtain economic benefits 
from its activities typically a shareholding of more than 50 of the voting  
rights is indicative of control however the impact of potential voting rights 
currently exercisable is taken into consideration
the financial statements of subsidiaries are included in the consolidated 
financial statements of the group from the date that control is obtained  
to the date that control ceases the accounting policies of new subsidiaries 
are changed where necessary to align them with those of the group
significant accounting policies
for the year ended 31 december 201 3 financial statements 86
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
significant accounting policies
noncontrolling interests in the net assets of consolidated subsidiaries  
are identified separately from the group’s equity therein they are initially 
measured at the noncontrolling interests’ share of the net fair value  
of the assets and liabilities recognised or at fair value as determined on  
an acquisitionbyacquisition basis subsequent to acquisition noncontrolling 
interests consist of the amount of those interests at the date of the  
original business combination and the noncontrolling interest’s share  
of the changes in equity since the date of the combination
b joint ventures
a joint venture is a contractual arrangement whereby two or more parties 
undertake an economic activity that is subject to joint control which  
requires unanimous consent for strategic financial and operating decisions
i jointly controlled entities
a jointly controlled entity is a joint venture that involves the establishment  
of a corporation partnership or other entity in which each venturer has  
an interest the results assets and liabilities of jointly controlled entities  
are incorporated in the financial statements using the equity method  
of accounting
goodwill relating to a joint venture which is acquired directly is included in the 
carrying amount of the investment and is not amortised after application  
of the equity method the group’s investments in joint ventures are reviewed 
to determine whether any additional impairment loss in relation to the  
net investment in the joint venture is required when there is a change 
recognised directly in the equity of the joint venture the group recognises  
its share of any change and discloses this where applicable in the statement 
of comprehensive income
where the group’s share of losses exceeds its equity accounted investment 
in a joint venture the carrying amount of the equity interest is reduced to  
nil and the recognition of further losses is discontinued except to the extent 
that the group has incurred legal or constructive obligations appropriate 
adjustment is made to the results of joint ventures where material differences 
exist between a joint venture’s accounting policies and those of the group
dividend income from investments is recognised when the shareholders’ 
rights to receive payment have been established
ii jointly controlled operations
construction contracts carried out in joint venture without the establishment 
of a legal entity are jointly controlled operations the group’s share of the 
results and net assets of these jointly controlled operations are included 
under each relevant heading in the income statement and the balance sheet
c transactions eliminated on consolidation
intragroup balances and transactions and any unrealised income and 
expense arising from intragroup transactions are eliminated in preparing the 
consolidated financial statements unrealised gains arising from transactions 
with equity accounted investments are eliminated to the extent of the 
group’s interest in that investment unrealised losses are eliminated in the 
same way as unrealised gains but only to the extent that there is no evidence 
of impairment
revenue and margin recognition
revenue and margin are recognised as follows
a construction contracts
revenue comprises the fair value of construction carried out in the year 
based on an internal assessment of work carried out once the outcome  
of a construction contract can be estimated reliably margin is recognised in 
the income statement on a stage of contract completion basis by reference 
to costs incurred to date and total forecast costs on the contract as a whole 
losses expected in bringing a contract to completion are recognised 
immediately in the income statement as soon as they are forecast where 
the outcome of variations is uncertain the group only recognises revenue 
and associated margin where it is probable that the client will approve the 
variation where the outcome of claims is uncertain the group only 
recognises revenue when negotiations have reached an advanced stage  
such that it is probable that the customer will accept the claim
where houses for open market sale are included in a construction contract  
as part of a mixedtenure development revenue on open market sales is 
recognised at fair value on sale completion at a margin that is consistent  
with the construction contract element of the development
b service contracts
revenue is measured through an internal assessment of work carried out 
based on time incurred and materials utilised or percentage of completion 
depending upon the nature of the service
c sale of development properties
revenue from the sale of development properties is measured at the fair 
value of the consideration received or receivable revenue is recognised 
when the significant risks and rewards of ownership have been transferred  
to the buyer there is no continuing management involvement with the 
properties and the amount of revenue can be estimated reliably
the transfer of risks and rewards vary depending on the individual terms  
of the contract of sale for properties transfer usually occurs when the 
ownership has been legally transferred to the purchaser revenue from  
the sale of properties taken in part exchange is not included in revenue
d sale of properties under the shared equity scheme
revenue resulting from the sale of properties under the shared equity 
scheme is recognised at the fair value of the consideration received or 
receivable
e precontract costs
costs incurred prior to the award of a contract are expensed until the point 
where it becomes probable that the contract will be obtained only after it is 
probable that the contract is forecast to be profitable costs that are directly 
related to obtaining the contract and which are separately identifiable and 
can be measured reliably are recognised as contract assets precontract 
costs are expensed in the income statement over the period of the contract
where precontract costs are reimbursable the amount received is applied 
against amounts expensed with any surplus over this amount being applied 
to costs which have been recognised as contract assets
f mobilisation costs
mobilisation costs are those costs specifically incurred to enable performance 
of obligations in a contract after its award and form an integral part of the 
overall costs of a contract such costs are amortised over the period of the 
contract except where the contract becomes loss making in which case the 
balance is immediately expensed
g government grants
funding received in respect of developer grants where funding is awarded  
to encourage the building and renovation of affordable housing is recognised 
as revenue on a stage of completion basis over the life of the project to which 
the funding relates
funding received to support the construction of housing where current 
market prices would otherwise make a scheme financially unviable is 
recognised as revenue on a legal completion basis when the properties  
to which it relates are sold
government grants are initially recognised as deferred income at fair value 
when there is reasonable assurance that the group will comply with the 
conditions attached and the grants will be received
significant accounting policies financial statements 87
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
significant accounting policies
leases
the group as lessee
a finance leases
leases in which the group assumes substantially all the risks and rewards 
incidental to ownership are classified as finance leases finance lease assets 
are recognised as assets of the group at an amount equal to the lower  
of their fair value and the present value of the minimum lease payments 
each determined at the inception of the lease subsequent to recognition 
finance lease assets are measured at cost less accumulated depreciation  
and impairment losses
the lease liability is included in the balance sheet as a finance lease liability 
lease payments are apportioned between finance charges and the  
reduction of lease liabilities so as to achieve a constant rate of interest  
on the remaining balance of the liability finance charges are charged  
directly to the income statement
b operating leases
rentals payable under operating leases are charged to the income statement 
on a straightline basis over the term of the relevant lease
finance income and expense
finance income and expense is recognised using the effective interest 
method
income tax
the income tax expense represents the current and deferred tax charges 
income tax is recognised in the income statement except to the extent that  
it relates to items recognised directly in equity
current tax is the group’s expected tax liability on taxable profit for the  
year using tax rates enacted or substantively enacted at the reporting date 
and any adjustments to tax payable in respect of previous years
taxable profit differs from that reported in the income statement  
because it is adjusted for items of income or expense that are assessable  
or deductible in other years and is adjusted for items that are never 
assessable or deductible
deferred tax is recognised using the balance sheet method providing for 
temporary differences between the carrying amount of assets and liabilities 
for financial reporting purposes and the corresponding tax bases used in 
tax computations deferred tax is not recognised for the initial recognition  
of assets or liabilities in a transaction that is not a business combination  
and affects neither accounting nor taxable profit or differences relating  
to investments in subsidiaries and joint ventures to the extent that it 
is probable that they will not reverse in the foreseeable future deferred  
tax is not recognised for taxable temporary differences arising on the  
initial recognition of goodwill
deferred tax is recognised on temporary differences which result in an 
obligation at the balance sheet date to pay more tax or a right to pay less tax 
at a future date at the tax rates expected to apply when they reverse based 
on the laws that have been enacted or substantively enacted at the reporting 
date deferred tax assets are recognised to the extent that it is regarded  
as more likely than not that they will be recovered deferred tax assets and 
liabilities are not discounted and are only offset where there is a legally 
enforceable right to offset current tax assets and liabilities
intangible assets
a goodwill 
i initial recognition
goodwill arises on business combinations and represents the excess of the 
cost of an acquisition over the group’s share of the identifiable net assets  
of the acquiree at the acquisition date where the cost is less than the 
group’s share of the identifiable net assets the difference is immediately 
recognised in the income statement as a gain from a bargain purchase
goodwill arising on acquisitions before the date of transition to ifrs has been 
retained at the previous uk gaap amounts subject to being tested for 
impairment at that date
ii subsequent measurement
goodwill is measured at cost less accumulated impairment losses in respect 
of equity accounted investments goodwill acquired directly is included in the 
carrying amount of the investment
iii impairment
goodwill is allocated to cashgenerating units for the purpose of impairment 
testing the cashgenerating units to which the goodwill has been allocated 
is the smallest identifiable group of assets that generates cash inflows that 
are largely independent of the cash inflows from other assets or group  
of assets the largest group to which goodwill is allocated for impairment 
testing purposes is the operating segment level
if the recoverable amount of the cashgenerating unit is lower than the 
carrying amount of the unit then the impairment loss is first applied to the 
goodwill allocated to the cashgenerating unit and then to the other assets 
of the unit on a prorata basis based on the carrying amount of each asset  
in the unit any such impairment loss is recognised immediately in the income 
statement and is not subsequently reversed
b other intangible assets
other intangible assets such as those identified on acquisition by the group 
that have finite useful lives are recognised at fair value and measured at cost 
less accumulated amortisation and impairment losses the estimated useful 
lives for the group’s finite life intangible assets are between 1 and 1 2 years
property plant and equipment
freehold and leasehold property plant machinery and equipment are stated 
at cost less accumulated depreciation and any recognised impairment loss 
depreciation is charged so as to write off the cost of the assets other than 
land over their estimated useful lives using the straightline method on the 
following basis
 
plant machinery and equipment   between 83 and 
33 per annum
 
freehold property 2 per annum
 
leasehold property  over the period  
of the lease
assets held under finance leases are depreciated over their expected  
useful lives on the same basis as owned assets or where shorter over the 
term of the relevant lease residual values of property plant and equipment  
are reviewed and updated annually assets under construction are not 
depreciated until they become available for productive use
gains and losses on disposal are determined by comparing the proceeds  
from disposal against the carrying amount and are recognised in the  
income statement
investment property
investment property which is property held to earn rentals andor capital 
appreciation is stated at its fair value at the balance sheet date gains  
or losses arising from changes in the fair value of investment property  
are included in the income statement for the period in which they arise
shared equity loan receivables
the group has granted loans under shared equity home ownership schemes 
allowing qualifying home buyers to defer payment of part of the agreed sales 
price up to a maximum of 25 until the earlier of the loan term 10 or 25 
years depending upon the scheme remortgage or resale of the property on 
occurrence of one of these events the group will receive a repayment based 
on its contributed equity percentage and the applicable market value of the 
property as determined by a member of the royal institution of chartered  financial statements 88
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
significant accounting policies
surveyors early or part repayment is allowable under the scheme  
and amounts are secured by way of a second charge over the property  
the loans are noninterest bearing
the shared equity loans receivable are designated at fair value through  
profit or loss fair value movements are recognised in profit from operations 
and the resulting financial asset is presented as a noncurrent receivable  
fair value movements include accreted interest
inventories
inventories are stated at the lower of cost and net realisable value the cost 
of work in progress comprises raw materials direct labour other direct costs 
and related overheads net realisable value is the estimated selling price less 
applicable costs
trade receivables
trade receivables are initially recognised at fair value and are subsequently 
measured at amortised cost using the effective interest rate method with  
an appropriate allowance for estimated irrecoverable amounts recognised  
in the income statement when there is objective evidence that the asset  
is impaired
trade payables 
trade payables are recognised initially at fair value and are subsequently 
measured at amortised cost using the effective interest rate method
retirement benefit schemes
a defined contribution plan
a defined contribution plan is a postretirement benefit plan under which  
the group pays fixed contributions to a separate entity and has no legal  
or constructive obligation to pay further amounts the group recognises 
payments to defined contribution pension plans as staff costs in the income 
statement as and when they fall due prepaid contributions are recognised  
as an asset to the extent that a cash refund or reduction on future payments 
is available
b defined benefit plan
a defined benefit plan is a postretirement plan other than a defined 
contribution plan the group’s net liability is recognised in the balance sheet 
and is calculated by estimating the amount of future benefit that employees 
have earned in return for their service in the current and prior periods and 
discounting this to its present value any unrecognised past service costs  
and the fair value of the plan’s assets are deducted
the calculation of the net liability is performed by a qualified actuary on  
an annual basis using the projected unit credit method the cost of the plan  
is charged to the income statement based on actuarial assumptions at the 
beginning of the financial year where the calculation results in a benefit to 
the group the asset recognised is limited to the net of the total unrecognised 
past service costs and the present value of any future refunds from the plan 
or reductions in future contributions to the plan
when the benefits of the plan are improved the portion of increased benefit 
relating to past service by employees is recognised in the income statement 
on a straightline basis over the average period until the benefits become 
vested where the benefits vest immediately the expense is recognised in 
the income statement immediately
actuarial gains and losses are recognised in full in the statement of 
comprehensive income in the period in which they occur net pension 
obligations are included in the balance sheet at the present value of the  
plan liabilities less the fair value of the plan assets
provisions
provisions are recognised when the group has a present legal or constructive 
obligation as a result of a past event it is probable that an outflow of 
resources will be required to settle the obligation and the amount of the 
obligation can be estimated reliably
impairment of financial assets
financial assets other than shared equity loan receivables are assessed  
for indicators of impairment at each balance sheet date financial assets are 
impaired where there is objective evidence that as a result of one or more 
events that occurred after the initial recognition of the financial asset the 
estimated future cash flows of the investment have been reduced for loans 
and receivables the amount of the impairment is the difference between  
the asset’s carrying amount and the present value of estimated future cash 
flows discounted at the original effective interest rate
the carrying amount of financial assets is reduced by the impairment loss 
directly for all financial assets with the exception of trade receivables where 
the carrying amount is reduced through the use of a provision for impairment 
losses when a trade receivable is uncollectable it is written off against  
the provision subsequent recoveries of amounts previously written off  
are credited against the provision changes in the carrying amount of the 
allowance are recognised in the income statement
if in a subsequent period the amount of the impairment loss previously 
recognised decreases and this decrease can be objectively related to an 
event that occurred after the impairment was recognised the previously 
recognised impairment loss is reversed through the income statement
share based payments
the group issues equitysettled share based payments share awards or 
share options to certain employees equitysettled share based payments 
are measured at fair value at the date of grant and are recognised as an 
employee expense with a corresponding increase in equity over the period 
from the date of grant to the date on which the employees become 
unconditionally entitled to the awards or options
derivative financial instruments and hedge accounting
derivative financial instruments are used in joint ventures to hedge longterm 
floating interest rate and retail prices index rpi exposures and in group 
companies to manage their exposure to foreign exchange rate risk
interest rate swaps rpi swaps and foreign exchange forward contracts  
are stated in the balance sheet at fair value at the inception of the hedge 
relationship the entity documents the relationship between the hedging 
instrument and the hedged item along with its risk management objectives 
and its strategy for undertaking various hedge transactions furthermore  
at the inception of the hedge and on an ongoing basis the group documents 
whether the hedging instruments that are used in hedging transactions  
are highly effective in offsetting changes in fair values or cash flows of 
hedged items
where financial instruments are designated as cash flow hedges and are 
deemed to be effective gains and losses on remeasurement relating to  
the effective portion are recognised in equity and gains and losses on the 
ineffective portion are recognised in the income statement both to the 
extent of the group’s equity accounted investment
dividends
dividends to the company’s shareholders are recognised as a liability  
in the consolidated financial statements in the period in which the dividends 
are approved by the company’s shareholders
significant accounting policies financial statements 89
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
critical accounting judgments and estimates
critical accounting judgments and estimates
for the year ended 31 december 201 3
the preparation of financial statements under ifrs requires management  
to make judgments assumptions and estimates that affect the application  
of accounting policies and the reported amounts of assets liabilities income 
and expense actual results may differ from these estimates assumptions 
and estimates are reviewed on an ongoing basis and any revisions to them 
are recognised in the period in which they are revised
the following items are those that management consider to be critical due  
to the level of judgment and estimation required 
 
accounting for construction and service contracts 
recognition of revenue and profit is based on judgments made in respect 
of the ultimate profitability of a contract such judgments are arrived  
at through the use of estimates in relation to the costs and value of  
work performed to date and to be performed in bringing contracts to 
completion including satisfaction of maintenance responsibilities these 
estimates are made by reference to recovery of precontract costs 
surveys of progress against the construction programme changes in work 
scope the contractual terms under which the work is being performed 
including the recoverability of any unagreed income from variations and 
the likely outcome of discussions on claims costs incurred and external 
certification of the work performed the group has appropriate control 
procedures to ensure all estimates are determined on a consistent basis 
and subject to appropriate review and authorisation
 
impairment of work in progress 
in assessing whether work in progress is impaired estimates are made  
of future sales revenue timing and build costs the group has controls 
in place to ensure that estimates of sales revenue are consistent and 
external valuations are used where appropriate
 
goodwill and intangible assets  
ifrs 3 requires the identification of acquired intangible assets as part  
of a business combination the methods used to value such intangible 
assets require the use of estimates future results are impacted by  
the amortisation periods adopted and changes to the estimated useful 
lives would result in different effects on the income statement and  
balance sheet
  goodwill is not amortised but is tested at least annually for impairment 
along with the finite life intangible assets and other assets of the group’s 
cashgenerating units tests for impairment are based on discounted  
cash flows and assumptions including discount rates timing and growth 
prospects which are inherently subjective the group performs various 
sensitivity analyses in respect of the tests for impairment as detailed  
in note 9
  the useful lives of the group’s finite life intangible assets are reviewed 
following the tests for impairment annually
 
recognition and measurement of the fair value of shared equity loans 
the group’s balance sheet includes loans that arise on the sale of 
properties under shared equity home ownership schemes which are 
recognised and measured at fair value through profit or loss the group 
makes estimates of fair value of the loans on a portfolio basis key 
assumptions used by management in making these estimates include 
market value growth the discount rate the anticipated loan duration  
and the expected rate of debtor default assumptions made in relation  
to these inputs are set out in note 1 3 and have a material impact on  
the carrying value of the loan portfolio recognised on the balance sheet 
and the fair value movement recognised in the income statement
 
provisions 
in valuing the provision for the group’s retained insurance risks 
assumptions are made on the rate of occurrence and severity of events 
for which the group will bear liability and external valuations are used 
where appropriate when valuing provisions for known legal claims 
assessment of the likely success and value of any claim is based on internal 
and external advice
 
disclosure of exceptional operating items 
the group has presented certain items of a oneoff and material nature  
as exceptional operating items in the income statement and notes to  
the consolidated financial statements these items have been disclosed 
because the directors view their presentation as relevant to the 
understanding of the group’s underlying financial performance judgment 
is required to determine which items are disclosed as exceptional  
inclusion within this category is restrictive and is applied consistently financial statements 90
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
notes to the consolidated financial statements
notes to the consolidated financial statements
1 revenue
an analysis of the group’s revenue is as follows
     2013  2012 
      £m £m
revenue from construction contracts     20632  20215  
other     317  256 
total revenue     20949  2047 1 
other largely relates to professional services finance income of £12m 201 2 £23m is excluded from the table above
2 business segments
for management purposes the group is organised into five operating divisions construction  infrastructure fit out affordable housing urban 
regeneration and investments the divisions’ activities are as follows
 
construction  infrastructure offers national design construction and infrastructure services to private and public sector clients the division works  
on projects and in frameworks and strategic alliances of all sizes across a broad range of markets including commercial defence education energy 
healthcare industrial leisure retail transport and water
 
fit out specialises in fit out and refurbishment projects in the commercial central and local government office further education and retail banking 
markets overbury operates as a national fit out company through multiple procurement routes and morgan lovell specialises in workspace consultancy 
and in the interior design and build of offices
 
affordable housing specialises in the design and build refurbishment and maintenance of homes and the regeneration of communities across the uk  
the division operates a full mixedtenure model creating homes for rent shared ownership and open market sale
 
urban regeneration works with landowners and public sector partners to unlock value from underdeveloped assets to bring about sustainable 
regeneration and urban renewal through the delivery of mixeduse and residentialled projects typically creates commercial retail residential leisure  
and public realm facilities
 
investments realises the potential for underutilised property assets and promotes economic growth primarily through strategic partnerships with  
the public sector by providing flexible structuring and funding solutions and development expertise the division covers a wide range of markets including 
asset backed education health and social care residential student accommodation leisure and infrastructure
group activities represents costs and income arising from corporate activities which cannot be meaningfully allocated to the operating segments  
these include costs such as treasury management corporate tax coordination insurance management and company secretarial services the divisions  
are the basis on which the group reports its segmental information as presented below
2013 
  construction   affordable urban  group 
 infrastructure fit out housing regeneration investments activities eliminations total 
 £m £m £m £m £m £m £m £m
external revenue 12344  4105  3797  616  87  –  –  20949  
intersegment revenue –  168  13  –  –  –  18 1 – 
total revenue 12344  427 3  3810  616  87  –  18 1 20949 
operating profitloss before amortisation  
 of intangible assets and exceptional  
 operating items 127  109  86  10  6 1  57 –  336 
amortisation of intangible assets –  –  07 20 –  –  –  27 
exceptional operating items 147 –  –  –  –  –  –  147
operating profitloss 20 109  7 9  10 6 1  57 –  162  financial statements 91
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
notes to the consolidated financial statements
2 business segments continued
2012
 construction   affordable urban  group   
 infrastructure fit out housing regeneration investments activities eliminations total 
 £m £m £m £m £m £m £m £m
external revenue 1 168 1  4268  3858  623  4 1  –  –  2047  1  
intersegment revenue 0 1  100  –  –  –  –  10 1  – 
total revenue 1 1682  4368  3858  623  4 1  –  10 1  2047  1 
operating profitloss before amortisation 
 of intangible assets and exceptional 
 operating items 197  1 13  1 15  27  7 4  45 –  48 1 
amortisation of intangible assets –  –  08 2 1  –  –  –  29 
exceptional operating items 68 –  25 –  02 05 –  100
operating profitloss 1 29  1 13  82  06  7 2  50 –  352 
during the year ended 31 december 201 3 and the year ended 31 december 201 2 intersegment sales were charged at prevailing market prices and 
significantly all of the group’s operations were carried out in the uk
2013 
 construction   affordable urban  group 
 infrastructure fit o ut housing regeneration investments activities total 
 £m £m £m £m £m £m £m
goodwill and other intangible assets 151 1  –  489  205  –  –  2205  
investments in joint ventures –  –  –  412  128  –  540  
other assets 377 8  1 148  2127  78 1  7 5  100 1 6908 
total assets 5289  1 148  2616  1398  203  100 1 9653  
total liabilities 4202 866 166 1 543 60 249  7083 
other information 
share of net profitloss of joint ventures –  –  0 1 –  10  –  09  
depreciation 34  04  06  0 1  0 1  06  52  
property plant and equipment additions 23  04  04  –  –  08  39  
average number of employees 3438  579  1567  53  91  24  5752 
2012 
 construction   affordable urban  group 
 infrastructure fit out housing regeneration investments activities total 
 £m £m £m £m £m £m £m
goodwill and other intangible assets 1 51 1  –  496  225  –  –  2232  
investments in joint ventures –  –  03  415  204  –  622  
other assets 382 1  1 232  2002  503  25  926 6657 
total assets 5332  1 232  250 1  1 143  229  926 951 1  
total liabilities 4038 1018 1 258 517 1 7 8 09 7018 
other information             
share of net profitloss of joint ventures –  –  03 03  57  –  57  
depreciation 43  07  07  0 1  –  07  65  
property plant and equipment additions 38  05  02  –  0 1  13  59  
average number of employees 3661  605  1975  52  68  23  6384  financial statements 92
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
notes to the consolidated financial statements
notes to the consolidated financial statements
3 profit for the year
profit before tax for the year is stated after charging exceptional operating items
     2013  2012  
      £m £m
impairment of trade and other receivables      147  –  
reorganisation costs – onerous lease and property dilapidation provisions     –  32 
total noncash exceptional operating items     147  32
reorganisation – redundancy costs paid     – 68
total cash exceptional items     – 68
total exceptional operating items     147  100 
an exceptional charge has been taken in the year as an impairment against trade and other receivables in relation to four older construction contracts  
during the second half of the year commercial resolution has been achieved on one of these contracts whilst another has been impaired to reduce the 
carrying value to nil in relation to the remaining two contracts the board believes it is appropriate to provide against these balances to an amount it considers 
is a balanced estimate of overall likely resolution based upon its current assessment of progress made towards recovering these amounts and the expected 
time cost and associated risk of pursuing legal remedies to achieve recovery 
the exceptional operating item in 201 2 related to the cost of the group reorganising its network of offices and comprised redundancy and property  
related costs 
auditor’s remuneration 
     2013  2012  
      £m £m
audit of the company’s annual report and accounts      01  01  
audit of the company’s subsidiaries and joint ventures     07  06 
total audit fees     08  07 
other services     01  01 
total non audit fees     01  01 
total fees     09  08 
4 staff costs
       2013  2012  
        £m £m
wages and salaries       2762  3016  
social security costs       310  313  
other pension costs note 20       84  88 
       3156  3417  financial statements 93
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
notes to the consolidated financial statements
5 finance income and expense
       2013  2012  
        £m £m
interest income on bank deposits       02  05  
interest receivable from joint ventures       10  15  
other interest income       –  03 
finance income       12  23 
interest payable on bank overdrafts and borrowings       13 23 
interest payable on finance leases       03 03 
loan arrangement and commitment fees       12 07 
other interest payable       07 – 
finance expense       35 33
n et finance expense       23 10
in november 201 2 the group increased its investment in isis waterside regeneration partnership with consideration of £205m payable in instalments 
between 201 3 and 201 7  this deferred consideration was discounted to £185m in the financial statements to reflect the present value of the liability  
to the group at the date of acquisition the discount was £20m which will be charged or unwound through finance expense between 201 2 and 201 7  
included within other interest payable in 201 3 is discount unwind of £06m
6 tax 
       2013  2012  
        £m £m
current tax expensecredit  
uk corporation tax      10  54  
adjustment in respect of prior years as set out below      03  08
      13  46 
deferred tax creditexpense  
current year      23 13 
adjustment in respect of prior years as set out below      01 02 
      24 11
income tax creditexpense for the year      11 35 
corporation tax is calculated at 2325 201 2 245 of the estimated assessable profit for the year
in 201 3 a net tax credit of £1 1m has arisen comprising a current tax charge of £13m and a deferred tax credit of £24m 201 2 net tax charge £35m  
the deferred tax credit has arisen due to forthcoming changes in the uk statutory tax rate from 23 to 20 which reduced the net deferred tax liability  
by £25m the current tax liability on profits was at a low effective rate because no tax liabilities are expected upon gains on disposals of investments as set 
out in the table below without these two factors the tax charge for the year would be approximately equal to tax at the uk statutory corporation tax rate 
       2013  2012  
        £m £m
current tax expense 
profit before tax      139  342  
less post tax share of profits from joint ventures      09 57
      130  285  
uk corporation tax rate      2325 245 
income tax expense at uk corporation tax rate      30  70  
 
tax effect of  
gain on disposal of joint ventures not giving rise to a tax liability      23 22 
expenses that are not deductible in determining taxable profits      02  09  
adjustments in respect of prior years      02  06 
effect of expected forthcoming change in tax rates upon deferred tax balance      25 15 
other      03  01
income tax creditexpense for the year      11 35  financial statements 94
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
notes to the consolidated financial statements
notes to the consolidated financial statements
7 dividends
amounts recognised as distributions to equity holders in the year 
      2013  2012  
       £m £m
final dividend for the year ended 31 december 201 2 of 1 50p per share      64  –  
final dividend for the year ended 31 december 201 1 of 300p per share      –  127  
interim dividend for the year ended 31 december 201 3 of 1 20p per share      51  –  
interim dividend for the year ended 31 december 201 2 of 1 20p per share      –  51 
      115  1 78 
the proposed final dividend for the year ended 31 december 201 3 of 1 50p per share is subject to approval by shareholders at the annual general meeting 
and has not been included as a liability in these financial statements 
8 earnings per share
      2013  2012  
     notes £m £m
profit attributable to the owners of the company      151  308  
adjustments         
 exceptional operating items net of tax      113  76  
 intangible amortisation net of tax      21  22  
 deferred tax credit arising due to change in uk corporation tax rates    6 25 15
adjusted earnings      260  391 
basic weighted average number of ordinary shares m      427  425  
dilutive effect of share options and conditional shares not vested m      06  03 
diluted weighted average number of ordinary shares m      433  428 
basic earnings per share      354p 725p 
diluted earnings per share      349p 720p
adjusted earnings per share       609p 920p 
diluted adjusted earnings per share       600p 914p
the average market value of the company’s shares for the purpose of calculating the dilutive effect of share options and longterm incentive plan shares  
was based on quoted market prices for the year that the options were outstanding the weighted average share price for the year was £646 201 2 £641 
a total of 698089 share options that could potentially dilute earnings per share in the future were excluded from the above calculations because they were 
antidilutive at 31 december 201 3 201 2 1030688
9 goodwill and other intangible assets
     other 
     intangible 
    goodwill assets total 
     £m £m £m
cost or valuation         
1 january 2 01 2    214 1  308  2449  
disposals    02 09 11
1 jan uary 2013 and 31 december 2013    2139  299  2438 
accumulated amortisation         
1 january 2 01 2    –  183 183 
amortisation    –  29 29 
disposals    –  06  06 
1 janua ry 2013    –  206 206 
amortisation    –  27 27
31 de cember 2013    –  233 233
n et book value at 31 december 2013    2139  66  2205  
net book value at 31 december 201 2    21 39  93  2232 
other intangible assets represent contracts and related relationships where there is a historical experience of a relationship and the real prospective 
opportunity of repeat work other intangible assets will be fully amortised by 2019 financial statements 95
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
notes to the consolidated financial statements
9 goodwill and other intangible assets continued
goodwill represents the value of people track record and expertise acquired within acquisitions that are not capable of being individually identified  
and separately recognised goodwill is allocated at acquisition to the cashgenerating units that are expected to benefit from the business combination  
each of the operating segments disclosed in note 2 represents a single cashgenerating unit
the group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired in testing goodwill and  
other intangible assets for impairment the recoverable amount of each cashgenerating unit has been determined from value in use calculations the key 
assumptions for the value in use calculations are those regarding the forecast revenue and margin discount rates and longterm growth rates by market 
sector forecast revenue and margin are based on past performance secured workload and workload likely to be achievable in the short to mediumterm 
given trends in the relevant market sector as well as macroeconomic factors 
cash flow forecasts have been determined by using board approved budgets and strategic plans for the next five years cash flows beyond five years  
have been extrapolated using an estimated nominal growth rate of 24 201 2 24 this growth rate does not exceed the longterm average for the 
relevant markets
discount rates are pre tax and reflect the current market assessment of the time value of money and the risks specific to the cashgenerating units  
the riskadjusted nominal rates used are 1 15 201 2 1 20 for construction  infrastructure 1 20 201 2 1 30 for affordable housing and 1 30 
201 2 1 50 for urban regeneration 
in carrying out this exercise no impairment of goodwill or other intangible assets has been identified
the group performed various sensitivity analyses which involved reducing future cash flows from 201 5 to 2018 in use by 25 reducing terminal growth 
rates to nil or increasing pre tax discount rates by 100 bps the results of these analyses showed that the value in use of the cashgenerating units continued  
to exceed their carrying value
10 property plant and equipment
   freehold  plant 
   property and leased machinery and 
   land property equipment total 
   £m £m £m £m
cost            
1 january 2 01 2    24  100  46 1  585  
additions    –  1 1  48  59  
disposals    –  3 1  1 10 14 1 
1 ja nuary 2013    24  80  399  503  
additions    –  1 1  28  39  
disposals    –  08 15 23
31 de cember 2013    24  83  412  519 
accumulated depreciation            
1 january 2 01 2    –  64 305 369 
depreciation charge    –  12 53 65
disposals during the year    –  26  106  1 32 
1 jan uary 2013    –  50 252 302 
depreciation charge    –  07 45 52 
disposals    –  08  10  18 
31 dece mber 2013    –  49 287 336
n et book value at 31 december 2013    24  34  125  183  
net book value at 31 december 201 2    24  30  147  20 1 
the group’s obligations under finance leases are secured by the lessor’s title to the leased assets the carrying value of plant machinery and equipment  
which is subject to finance leases is £43m 201 2 £7 2m no other assets have been pledged to secure borrowings financial statements 96
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
notes to the consolidated financial statements
notes to the consolidated financial statements
1 1 investment property
       2013  2012  
       £m £m
valuation  
1 january       113  11 1  
additions       –  08  
revaluation       –  05 
disposals       13 01
31 de cember       100  113 
investment properties comprise certain residential properties constructed by the group as part of larger mixedtenure projects for rental to social or private 
residential clients
the property rental income earned by the group from its investment property which is leased out under operating leases with terms of between six  
months and two years amounted to £05m 201 2 £06m direct operating expenses arising on properties generating rent and vacant properties in the  
year amounted to £02m 201 2 £0 1m 
all operating lease contracts contain market review clauses in the event that the lessee exercises its option to renew the lessee does not have an option  
to purchase the property at the expiry of the lease period
the group does not have any contractual obligations for the repairs or maintenance of its investment properties
the fair value of the group’s investment property at 31 december 201 3 is based on a valuation carried out at that date by the directors the valuation  
which conforms to international valuation standards was determined based on the market comparable approach that reflects recent transaction prices  
for similar properties the fair value measurement is classified as level 3 as defined by ifrs 7 ‘financial instruments disclosures’
12 investments in joint ventures
the group has the following interests in significant joint ventures
ashton moss developments limited 50 share
ashton moss developments limited is a joint venture with stayley developments and has developed a mixeduse site in manchester
bromley park limited 50 share
bromley park limited is a joint venture with taylor wimpey and has developed a site for housing in kent acquired from the ministry of defence
claymore roads holdings limited 50 share
claymore roads holdings limited is a joint venture with infrastructure investments roads limited and is responsible for the upgrade and operation  
of the a92 between dundee and arbroath in scotland
english cities fund 125 equity participation
english cities fund is a limited partnership with the homes and communities agency and legal  general to develop mixeduse regeneration schemes  
in assisted areas joint control is exercised through the board of the general partner at which each partner is represented by two directors and no decision  
can be taken without the agreement of a director representing each partner
hb community solutions living limited 50 joint control
hb community solutions living limited is a joint venture with the founders of hb villages limited and is developing supported independent living 
accommodation for adults with learning and physical disabilities across the united kingdom joint control is exercised through the board of directors which 
includes three members appointed by the holders of each class of shares
hub west scotland limited 54 share
hub west scotland limited is a joint venture between wellspring partnership limited a subsidiary of morgan sindall investments limited scottish futures 
trust investments limited east dunbartonshire council east renfrewshire council west dunbartonshire council glasgow city council greater glasgow 
health board the board of strathclyde fire and rescue strathclyde joint police board and clydebank property company limited the joint venture is 
delivering a pipeline of public sector health education and community projects in the glasgow area
hull esteem consortium psp limited 33⅓ share
hull esteem consortium psp limited the private sector investor in the hull bsf scheme currently has fifteen buildings in operation two buildings under 
construction and a pipeline of one further building the other investors in this company are robertson capital projects investments limited and sewell 
education hull bsf limited
isis waterside regeneration 50 equity participation
isis waterside regeneration is a joint venture with british waterways to undertake regeneration of waterside sites  financial statements 97
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
notes to the consolidated financial statements
12 investments in joint ventures continued
lingley mere business park development company limited 50 share
lingley mere business park development company limited is a joint venture with united utilities and is developing new office space and ancillary facilities at 
warrington in cheshire
morganvinci limited 50 share
morganvinci limited is a joint venture with vinci newport dbfo ltd and is responsible for the construction and operation of the newport southern 
distributor road
slough regeneration partnership llp 50 share
the slough regeneration partnership llp is a partnership with slough borough council to operate a local asset backed vehicle labv developing a series of 
sites in slough over an initial term of 1 5 years extendable by 10 years
st andrews brae developments limited 50 share
st andrews brae developments limited is a joint venture with miller homes which is developing residential housing and apartments in bearsden glasgow
the bournemouth development company llp 50 share
the bournemouth development company llp is a partnership with bournemouth borough council to operate a labv developing a series of sites in 
bournemouth over a 20year period
the compendium group limited 50 share
the compendium group limited is a joint venture with the riverside group limited and is a company formed to carry out strategic development and 
regeneration projects of a primarily residential nature
wapping wharf alpha llp 50 partner
wapping wharf alpha llp is a joint venture with umberslade which is developing the first phase of residential apartments within the harbourside 
regeneration area of bristol
investments in equity accounted joint ventures are as follows
       2013  2012  
        £m £m
1 january       622  498  
equity accounted share of net profits       09  57  
increase in investment       40  287  
investment repayment       04 29 
disposals see below       125 169
dividends received       04 18 
movement on cash flow hedges       02  04
31 de cember       540  622 
disposals
the disposals of investments in joint ventures principally relate to the three following transactions
i on 28 march 201 3 the group sold its 50 interest in access for wigan holdings limited a ppp scheme for developing the wigan life centre  
for total cash consideration of £66m the gain on disposal was £15m comprising a gain of £17m in respect of the investments and a loss of £02m  
in respect of the hedging reserve which was recycled to the income statement
ii on 27 june 201 3 the group sold its 333 interest in renaissance miles platting limited a pfi social housing scheme for total consideration of £84m  
of which £82m was received in cash the gain on disposal was £44m comprising a gain of £56m in respect of the investments and a loss of £12m  
in respect of the hedging reserve which was recycled to the income statement
iii on 27 september 201 3 the group sold its 50 interest in taycare health holdings limited a project to develop two mental health hospitals  
for total cash consideration of £88m the gain on disposal was £40m 
the disposals are in line with the group’s strategy of realising investments as they mature in order to redeploy capital into new projects
the group’s share of the results of all of these joint ventures up to the dates of their disposal is included within the investments operating segment  
as the criteria to be included as discontinued operations were not met
of the dividends received in the year £04m 201 2 £13m were paid in cash and £nil 201 2 £05m were dividends in specie financial statements 98
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
notes to the consolidated financial statements
notes to the consolidated financial statements
12 investments in joint ventures continued
financial information related to equity accounted joint ventures
      2013  2012 
       £m £m
noncurrent assets 100      3814  4865  
current assets 100      2255  2288  
current liabilities 100      953 818 
noncurrent liabilities 100      3979 5196
n et assets reported by equity accounted joint ventures 100      1137  1139 
revenue 100      1028  1980  
expenses 100      1027 1850
n et profit 100      01  130 
results of equity accounted joint ventures
     2013  2012  
      £m £m
group share of profit before tax     12  69  
group share of tax     03 12
group share of profit after tax     09  57 
the group has committed to provide further equity and subordinated debt to pfippp joint ventures of £nil 201 2 £23m
13 shared equity loan receivables
     2013  2012  
      £m £m
1 january       192  176  
additions arising from the sale of properties       08  15  
net change in fair value recognised in the income statement       02  02  
repayments       05 01
31 de cember       197  192 
during the year there were repayments of shared equity loan receivables of £05m 201 2 £0 1m all repayments were at values at or above the values  
held in the accounts 
the group’s maximum credit exposure is limited to the carrying value of the shared equity loan receivables granted the group’s credit risk is partially 
mitigated as the shared equity loan receivables are secured by way of a second charge over the property the change in the fair value attributable to  
a change in the credit risk during the year was £02m 201 2 £02m there were no defaults during the year 201 2 one default 
basis of valuation and assumptions made
there is no directly observable fair value for individual loans arising from the sale of specific properties under the scheme and therefore the group has 
developed a model for determining the fair value of the portfolio of loans based on national property prices expected property price increases expected  
loan defaults and a discount factor which reflects the interest rate expected on an instrument of similar risk and duration in the market details of the  
key assumptions made in this valuation are as follows
      2013  2012 
assumption          
period over which shared equity loan receivables are discounted 
 first buy and home buy schemes      20 years  25 years  
 other schemes      8 years  7 years  
nominal discount rate      70  64  
weighted average nominal annual property price increase       22  25  
forecast default rate      20  10  
number of properties sold under the shared equity scheme for which a loan was outstanding at the year end    749  730  
weighted average shared equity loan contribution being the group’s weighted average loan as  
 a proportion of the selling price of a property      24  24 
the fair value measurement for shared equity loan receivables is classified as level 3 as defined by ifrs 7 ‘financial instruments disclosures’ financial statements 99
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
notes to the consolidated financial statements
13 shared equity loan receivables continued
sensitivity analysis
at 31 december 201 3 if the nominal discount rate had been 100bps higher at 80 and all other variables were held constant the fair value of the shared 
equity loan receivables would decrease £10m with a corresponding reduction in both the result for the year and equity excluding the effects of tax
at 31 december 201 3 if the period over which the shared equity loan receivables excluding those relating to the first buy and home buy schemes are 
discounted had been 10 years and all other variables were held constant the fair value of the shared equity loan receivables would decrease by £17m with  
a corresponding reduction in both the result for the year and equity excluding the effects of tax
14 inventories
       2013  2012  
       £m £m
work in progress       1610  1 594 
work in progress comprises land and housing commercial and mixeduse developments in the course of construction 
15 trade and other receivables
       2013  2012  
       £m £m
amounts due from construction contract customers note 16       2097  2173  
trade receivables note 28       1492  1700  
amounts owed by joint ventures note 27       82  55  
prepayments       58  55  
other receivables       126  66 
       3855  4049 
the directors consider that the carrying amount of trade and other receivables approximates to their fair value
trade receivables are stated after provisions for impairment losses of £86m 201 2 £35m £6 1m 201 2 £nil of the losses have been charged  
as exceptional operating items
16 construction contracts
       2013  2012  
        £m £m
amounts due from construction contract customers       2097  21 73  
amounts due to construction contract customers       544 474
carrying amount at the end of the year       1553  1699  
contract costs incurred plus recognised profits less recognised losses to date       67385  91558  
less progress billings       65832 89859
       1553  1699 
contract costs incurred plus recognised profits less recognised losses to date and progress billings include contract activity which the group has not 
recognised in the income statement as it occurred prior to historical acquisitions
amounts recoverable on construction contracts are stated at cost plus the profit attributable to that contract less any impairment losses progress payments 
for construction contracts are deducted from amounts recoverable amounts due to construction contract customers represent amounts received in excess 
of revenue recognised on construction contracts
17 assets held for sale
at 31 december 201 3 the construction  infrastructure division held a property that it occupies with book value of £3 1m which it was actively looking  
to sell the sale was completed on 6 february 2014 financial statements 100
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
notes to the consolidated financial statements
notes to the consolidated financial statements
18 trade and other payables
       2013  2012 
        £m £m
trade payables       1687  1702 
amounts due to construction contract customers note 16       544  474  
amounts owed to joint ventures note 27       07  07  
other tax and social security       252  140  
accrued expenses       3392  3567  
deferred income       51  73  
other payables       202  232 
       6135  6195 
the directors consider that the carrying amount of trade payables approximates to their fair value no interest was incurred on outstanding balances
current and noncurrent other payables include £47m and £1 3 1m respectively 201 2 £13m and £1 7 2m related to the discounted deferred consideration 
due on the acquisition of an additional interest in isis waterside regeneration partnership
19 finance lease liabilities
 minimum lease capital element  
 payments of lease payments
 
 
 
 
   2013  2012 2013  2012  
   £m £m £m £m
amounts payable under finance leases         
 within one year   18  16  15  12  
 in the second to fifth years inclusive   42  52  39  47  
 after more than five years   –  03  –  03 
   60  7 1  54  62  
less future finance charges   06 09 na  na 
present value of lease obligations   54  62  54  62 
         
current lease liability       15  12  
noncurrent lease liability       39  50 
       54  62 
it is the group’s policy to lease certain of its property plant and equipment under finance leases the average lease term is six years 201 2 six years  
for the year ended 31 december 201 3 the average effective borrowing rate was 6 201 2 5 interest rates are fixed at the contract date all leases  
are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments
all lease obligations are denominated in sterling the fair value of the group’s lease obligations approximates to their carrying amount
20 retirement benefit schemes
defined contribution plan
the morgan sindall retirement benefits plan the retirement plan was established on 31 may 1995 and currently operates on defined contribution 
principles for employees of the group the assets of the retirement plan are held separately from those of the group in funds under the control of the 
trustees of the retirement plan the total cost charged to the income statement of £84m 201 2 £88m represents contributions payable to the defined 
contribution section of the retirement plan by the group
as at 31 december 201 3 contributions of £12m 201 2 £10m were due in respect of december’s contribution not paid over to the retirement plan  
the company with the consent of the trustees can decide how to use monies held in a defined contribution general account
defined benefit plan
the retirement plan includes a defined benefit section comprising liabilities and transfers of funds representing the accrued benefit rights of active and 
deferred members and pensioners of pension plans of companies which are now part of the group these include salary related benefits for members  
in respect of benefits accrued before 31 may 1995 and benefits transferred in from the snape group limited retirement benefits scheme include  
accruals up to 1 august 1997 no further defined benefit membership rights can accrue after those dates
the last triennial valuation of the retirement plan was undertaken on 5 april 2010 the ongoing liabilities of the retirement plan were assessed using the 
projected unit credit method and the assets were taken at realisable market value the actuarial valuation also showed that the defined benefit liabilities were 
partly funded and the value of the assets of £59m represented 64 of the value of these liabilities on an ongoing funding basis a triennial valuation as at  
5 april 201 3 is currently underway and the funding position is being reappraised financial statements 101
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
notes to the consolidated financial statements
20 retirement benefit schemes continued 
the present value of the defined benefit liabilities were measured using the projected unit credit method the following table shows the key assumptions used
       2013  2012  
        
discount rate       44  41  
expected return on retirement plan assets       40  35  
expected rate of salary increases       45  40  
rate of inflation       25  23  
rate of future pension increases
1
       30–35  30–35  
average life expectancy for pensioner retiring now at age 65 years       874  884  
average life expectancy for pensioner retiring in 20 years at age 65 years       892  913 
1 depending on their date of joining members receive pension increases of 30 or 35
the charge for the year has been included in finance expense actuarial gains and losses have been reported in the statement of comprehensive income
movements in the value of the retirement plan assets and in the present value of the retirement plan liabilities were as follows
 2013 2012
 
 
 
 
 assets liabilities total assets liabilities total 
 £m £m £m £m £m £m
1 january 89  104 15 8 1  94 13 
finance incomeexpense 03  04 0 1 03  04 0 1  
actuarial gainslosses 04 13  09  02  10 08 
contributions from sponsoring company 07  –  07  07  –  07  
benefits paid 02 02  –  04 04  – 
31 decemb er 93  93 –  89  104 15
the effect on the defined benefit liabilities of changing the key financial assumptions is set out below
         increase in  
      liabilities 
          £m
decrease in discount rate of 100bps         14  
increase in inflation rate of 100bps         05  
increase in average life expectancy of one year         03 
the amounts recognised in the statement of comprehensive income were as follows
     2013  2012  
      £m £m
actuarial gainloss recognised during the year     09  08 
cumulative actuarial loss recognised     29  38 
the retirement plan assets comprise 55 corporate bonds 201 2 51 44 gilts 201 2 46 and 1 cash 201 2 3 
the expected return on the retirement plan assets is determined by considering the expected returns available on the assets underlying the current 
investment policy expected yields on fixed interest investments are based on gross redemption yields as at the balance sheet date
the history of the retirement plan assets liabilities and deficit is as follows
  2013  2012  201 1  2010  2009 
   £m £m £m £m £m
present value of the retirement plan liabilities  93 104 94 85 89 
fair value of the retirement plan assets  93  89  8 1  66  57 
deficit in the retirement plan  –  15 13 19 32
the amount of contributions expected to be paid to the retirement plan during 2014 is £07m 201 3 £07m financial statements 102
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
notes to the consolidated financial statements
notes to the consolidated financial statements
21 deferred tax
  asset shortterm   
  amortisation timing retirement 
  and differences benefit share based 
  depreciation and tax losses obligation payments total 
   £m £m £m £m £m
1 january 201 2  204 04 03  07  198 
charge to income statement  02 0 1  0 1  –  04 
creditcharge to equity  –  –  0 1  04 03 
effect of change in tax rate            
 income statement  15  –  –  –  15 
1 janu ary 2013  19 1 05 03  03  190 
reclassification  –  04  –  –  04  
credit to income statement  0 1  –  03 0 1  0 1  
credit to equity  –  –  –  02  02  
effect of change in tax rate            
 income statement  25  –  –  –  25 
31 dece mber 2013  165 0 1 –  06  160
certain deferred tax assets and liabilities as shown above have been offset as the group has a legally enforceable right to do so 
at 31 december 201 3 the group had unused tax losses of £30m 201 2 £10m available for offset against future profits a deferred tax asset of £02m 
has been recognised in respect of £08m of these losses no deferred tax asset has been recognised in respect of the remaining £22m of losses due to the 
unpredictability of future profit streams against which these losses may be utilised losses may be carried forward indefinitely
the uk corporation tax rate is set to reduce to 20 in 201 5 all closing deferred tax balances have been calculated using a rate of 20 as they will not 
materially reverse before the tax rate change is effective the effect of the change in tax rate has been disclosed separately above
22 provisions
current liabilities   
     contract  employee 
    provisions provisions total 
      £m £m £m
1 january 201 2     12  34  46  
additions     –  05  05  
utilised     12 09 21
1 jan uary 2013     –  30  30  
utilised     –  03 03 
released     –  05 05
31 de cember 2013     –  22  22 
the contract provisions were established on acquisition to reflect the fair value of novated contracts employee provisions relate to redundancy and other 
costs associated with contracts that did not novate
n oncurrent liabilities          
   employee  insurance 
   provisions provisions other total 
    £m £m £m £m
1 january 201 2   07  1 22  9 1  220  
utilised   –  25 09 34 
additions   –  32  38  7 0  
released   03 08 –  1 1 
1 jan uary 2013   04  12 1  120  245  
utilised   –  19 13 32 
additions   –  40  07  47  
released   –  10 28 38
31 de cember 2013   04  132  86  222 
employee provisions comprise obligations to former employees other than retirement or post retirement obligations 
insurance provisions comprise the group’s self insurance of certain risks and include £23m 201 2 £14m held in the group’s captive insurance company 
newman insurance company limited
other provisions include onerous lease commitments property dilapidations and legal claims the amount released during the year relates to property 
dilapidation provisions within the construction  infrastructure division
the majority of the noncurrent provisions are expected to be utilised within five years financial statements 103
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
notes to the consolidated financial statements
23 operating lease commitments
at 31 dece mber the group had the following future minimum lease payments under non cancellable operating leases
 2013 2012
 
 
 
 
 land and   land and 
 buildings other total buildings other total 
 £m £m £m £m £m £m
within one year 7 7  57  134  68  4 1  109  
within two to five years 15 1  69  220  149  7  1  220  
after more than five years 14  –  14  34  –  34 
31 decem ber 242  126  368  25 1  1 12  363 
the operating lease expense in the year was £148m 201 2 £1 24m
operating lease payments represent rentals payable by the group for certain properties and other items
leases are negotiated for an average term of three years 201 2 four years and rentals are fixed for an average of three years 201 2 four years
24 contingent liabilities
group banking facilities and surety bond facilities are supported by cross guarantees given by the company and participating companies in the group  
there are contingent liabilities in respect of surety bond facilities guarantees and claims under contracting and other arrangements including joint 
arrangements and joint ventures entered into in the normal course of business
as at 31 december 201 3 contract bonds in issue under uncommitted facilities covered £1853m 201 2 £1865m of contract commitments of the group
25 share capital
 2013 2012
 
 
 
 
   number £m number £m
issued and fully paid ordinary shares of 5p each         
 1 january   43225 488  22  4321 5 339  22  
 exercise of share options   33876  –  10149  – 
31 decemb er   43259 364  22  432254 88  22 
all issued ordinary shares are fully paid ordinary shares are entitled to dividends when declared and each share carries the right to one vote at a meeting  
of the company
shares
33876 shares were issued during 201 3 in respect of options exercised under the morgan sindall savings related share option scheme saye  
for a total consideration of £02m 201 2 10 149 shares were issued for a total consideration of £0 1m no other shares were issued during the year
own shares
own shares at cost represent 575397 201 2 723970 shares in the company held in the morgan sindall employee benefit trust the trust in connection 
with the morgan sindall employee share option plan 2007 esop 2007 and the morgan sindall executive remuneration plan 2005 2005 plan  
the trustees of the trust purchase the company’s shares in the open market with financing provided by the company on the basis of regular reviews of the 
share liabilities of the relevant schemes all of the shares held by the trust were unallocated at the year end and dividends on these shares have been waived 
based on the company’s share price at 31 december 201 3 of £7 55 201 2 £5 1 5 the market value of the shares was £43m 201 2 £37m financial statements 104
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
notes to the consolidated financial statements
notes to the consolidated financial statements
26 share based payments
the group recognised a share option expense of £12m 201 2 £02m related to equitysettled share based payment transactions the group has three 
share option schemes the esop 2007  the 2005 plan and the saye details of the vesting conditions and other information of these schemes are set out  
in the directors’ remuneration report on pages 65 to 71
details of the share awards and options granted during the year and the valuation methodology are as follows
 share awards under 2005 plan
   awards  awards awards 
   with tsr with eps with roce saye 
   condition condition condition scheme
grant date    262201 3 262201 3 262201 3 254201 3 
number of optionsshares granted    207 455  207 455  1 34 104  609 109  
fair value at date of grant per share    £169 £523 £523 £083 
share price at date of grant    £523 £523 £523 £578 
valuation model    stochastic black  black  black 
    scholes scholes scholes 
expected term from date of grant    30 years 30 years 30 years 3 1 years 
expected volatility
1
   285 na na 277 
expected dividend yield
2
   00 00 00 47 
risk free rate    04 04 04 04
1  for the share awards granted under the 2005 plan with a tsr condition and the options granted under the saye scheme volatility has been calculated over the period of time 
commensurate with the expected award term immediately prior to the date of grant  
2  under the 2005 plan award holders may receive the value of any dividends paid during the vesting period in respect of their vested shares at the end of the vesting period consequently  
the fair value is not discounted for value lost in respect of dividends under the saye scheme the dividend yield is assumed to be equal to the historical dividend yield over the past 1 2 months
the following table provides a summary of the options granted under the group’s employee share option schemes during the current and comparative year
 2013 2012
 
 
 
 
     weighted  weighted 
   n umber average number  average 
   of share exercise of share exercise 
   options price in £ options price in £
outstanding at 1 january   3763414  649  5477 063  643  
granted during the year   609 109  437  40000  677  
lapsed during the year   885624 691  16633 95 638  
exercised during the year   269123 573  90254 5 1 5 
outstanding at 31 december   3217 7 76  604  3763414  649 
exercisable at 31 december   710782  836  862 1 71  951  
weighted average remaining contractual life   37 years   49 years
the weighted average share price at the date of exercise for share options exercised during the year was £647 201 2 £663
the options outstanding at 31 december 201 3 had exercise prices ranging from £437 to £1676
  financial statements 105
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
notes to the consolidated financial statements
27 related party transactions
transactions between the company and its subsidiaries which are related parties have been eliminated on consolidation and are not disclosed in this note 
transactions between the group and its joint ventures are disclosed below
trading transactions
during the year group companies entered into transactions to provide construction and property development services with related parties all of which 
were joint ventures not members of the group transactions and amounts owed at the year end in relation to joint ventures are as follows
 provision of goods amounts owed byto 
 and services related parties
 
 
 
 
   2013  2012 2013 2012  
   £m £m £m £m
joint venture 
access for wigan holdings limited
1
   –  –  –  01  
ashton moss developments limited    –  –  01 01 
bromley park limited    –  –  06 06 
community solutions investment partners limited
2
   –  17  –  –  
ecf general partner limited    13  14  –  –  
hb community solutions holdings limited    –  –  05  –  
hb community solutions limited    01  –  –  –  
hb community solutions living limited    –  –  08  –  
hull esteem consortium psp limited    223  441  01  19  
leyton mount development llp    02  –  –  –  
renaissance miles platting limited
1
   –  01  –  –  
slough regeneration partnership community projects llp    02  –  03  –  
st andrews brae developments limited    –  –  04  01  
taycare health holdings limited
1
   01  02  –  01  
the bournemouth development company llp    137  01  25  13  
the compendium group limited    35  45  29  20  
wapping wharf alpha llp    –  –  01  –  
wellspring partnership limited    01  –  06  – 
    415  521  75  48 
1 during 2013 the group disposed of its interests in access for wigan holdings limited renaissance miles platting limited and taycare health holdings limited note 1 2
2 during 201 2 the group disposed of its interests in community solutions investment partners limited
  amounts owed byto 
  related parties
  
 
      2013 2012  
     £m £m
amounts owed by related parties note 1 5       82  55  
amounts owed to related parties note 18       07 07
       75  48 
in addition during 201 2 consultancy services were provided to the company by a wholly owned subsidiary of chime communications plc of which simon 
gulliford is a director for an amount of £0 1m there were no amounts outstanding at the balance sheet date
all transactions with related parties were made on an arm’s length basis
the amounts outstanding are unsecured and will be settled in cash other than construction related performance guarantees given in the ordinary course  
of business no guarantees have been given to or received from related parties no provisions have been made for doubtful debts in respect of amounts owed 
by related parties all amounts owed to or owing by related parties are non interest bearing financial statements 106
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
notes to the consolidated financial statements
notes to the consolidated financial statements
27 related party transactions continued
remuneration of key management personnel
the group considers key management personnel to be the members of the group management team and sets out below in aggregate remuneration for 
each of the categories specified in ias 24 ‘related party disclosures’ in previous years the key management personnel of the group was considered to be 
the directors the prior year comparative has been restated to be on a comparable basis
      2013  2012  
      as restated 
      £m £m
shortterm employee benefits      42  51  
post employment benefits      03  03  
termination benefits      07  05  
share option expensecredit      06  03
      58  56 
directors’ transactions
there have been no related party transactions with any director in the year or in the subsequent period to 18 february 2014
directors’ material interests in contracts with the company
no director held any material interest in any contract with the company or any group company in the year or in the subsequent period to 18 february 2014
28 financial instruments
n et cash 
cash and cash equivalents comprise cash in hand demand deposits and other shortterm highly liquid investments that are readily convertible to a known 
amount of cash and are subject to an insignificant risk of changes in value the carrying amount of these assets approximates to their fair value net cash is 
defined as cash and cash equivalents less borrowings and non recourse project financing as shown below 
       2013  2012  
        £m £m
cash and cash equivalents       928  504  
borrowings due between two and five years       150 –  
non recourse project financing due after one year       81 – 
n et cash       697  504 
included within cash and cash equivalents is £247m 201 2 £294m which is the group’s share of cash held within jointly controlled operations
the group has committed bank loan facilities totalling £1400m of which £1 100m will mature in september 201 5 and £300m will mature during 2016 
£1 50m of these facilities were drawn on 31 december 201 3 201 2 nil additional project finance borrowings of £8 1m 201 2 nil were drawn from 
separate facilities to fund specific projects these project finance borrowings are without recourse to the remainder of the group’s assets 
average daily net debt during 201 3 was £190m 201 2 net debt £40 1m
financial risks and management
the group has exposure to a variety of financial risks through the conduct of its operations risk management is governed by the group’s operational policies 
which are subject to periodic review by the group’s internal audit team and twice yearly review by management the policies include written principles for the 
group’s risk management as well as specific policies guidelines and authorisation procedures in respect of specific risk mitigation techniques such as the use 
of derivative financial instruments the group does not enter into derivative financial instruments for speculative purposes
the following represent the key financial risks resulting from the group’s use of financial instruments 
 
credit risk
 
liquidity risk
 
market risk
a credit risk
credit risk is the risk of financial loss to the group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and results 
primarily from the group’s trade receivables and amounts due from construction contract customers
the group’s primary exposure to credit risk arises from the potential for non payment or default from construction contract debtors and trade receivables 
the degree to which the group is exposed to this credit risk depends on the individual characteristics of the contract counterparty and the nature of the 
project the group’s credit risk is also influenced by general macroeconomic conditions the group does not have any significant concentration risk in respect 
of amounts due from construction contract customers or trade receivable balances at the reporting date with receivables spread across a wide range of 
customers due to the nature of the group’s operations it is normal practice for customers to hold retentions in respect of contracts completed retentions 
held by customers at 31 december 201 3 were £587m 201 2 £537m financial statements 107
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
notes to the consolidated financial statements
28 financial instruments continued
the group manages its exposure to credit risk through the application of its credit risk management policies which specify the minimum requirements  
in respect of the creditworthiness of potential customers assessed through reports from credit agencies and the timing and extent of progress payments  
in respect of contracts
the risk management policies of the group also specify procedures in respect of obtaining parent company guarantees or in certain circumstances use  
of escrow accounts which in the event of default mean that the group may have a secure claim the group does not require collateral in respect of amounts 
due from construction contract customers or trade receivables
the group manages the collection of retentions through its post completion project monitoring procedures and ongoing contact with customers to ensure 
that potential issues that could lead to the non payment of retentions are identified and addressed promptly the group assesses amounts due from 
construction contract customers and trade receivable balances for impairment and establishes a provision for impairment losses that represents its estimate 
of incurred losses
the ageing of trade receivables at the reporting date was as follows
 2013 2012
 
 
 
 
    provision for  provision for 
   gross trade impairment gross trade impairment 
   receivables  losses  receivables  losses 
   £m £m £m £m
not past due   1052  –  1140  –  
past due 1 t o 30 days   165  –  207  –  
past due 31 to 1 20 days   62  0 1  92  04  
past due 1 21 to 365 days   91  –  52  09  
past due greater than one year   208  85  244  22 
   157 8  86  1 735  35 
the movement in the provision for impairment losses on trade receivables during the year was as follows
      2013  2012  
       £m £m
1 january      35  09  
amounts recovered during the year      10 –  
exceptional impairment losses recognised      61  –  
other impairment losses recognised      –  26 
31 dece mber      86  35 
the average credit period on revenue is 26 days 201 2 30 days no interest is charged on the trade receivables outstanding balance trade receivables 
overdue are provided for based on estimated irrecoverable amounts
included in the group’s trade receivable balance are debtors with a carrying amount of £233m 201 2 £560m which are past due at the reporting date for 
which the group has not provided as there has not been a significant change in credit quality and the group considers that the amounts are still recoverable 
the average age of these receivables is 1 79 days 201 2 1 78 days
in determining the recoverability of trade receivables the group considers any change in the credit quality of the trade receivable from the date credit  
was initially granted up to the reporting date the concentration of credit risk is limited due to the customer base being large and spread across the group’s 
operating segments accordingly the directors believe that there is no further credit provision required in excess of the provision for impairment losses  
no collateral is held by the group as security
at the reporting date there were no trade and other receivables which have had renegotiated terms that would otherwise have been past due
b liquidity risk
liquidity risk is the risk that the group will not be able to meet its financial obligations as and when they fall due the ultimate responsibility for liquidity risk 
rests with the board
the group aims to manage liquidity by ensuring that it will always have sufficient liquidity to meet its liabilities when due under both normal and stress 
conditions without incurring unacceptable losses or risking damage to the group’s reputation 
liquidity is provided through cash balances and committed bank loan facilities additional project finance borrowings were drawn during the year to fund 
specific projects these project finance borrowings are without recourse to the remainder of the group’s assets  financial statements 108
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morgan sindall group plc annual report and accounts 2013
notes to the consolidated financial statements
notes to the consolidated financial statements
28 financial instruments continued
the group reports cash balances daily and invests surplus cash to maximise income whilst preserving credit quality the group prepares weekly shortterm 
and monthly longterm cash forecasts which are used to assess the group’s expected cash performance and compare with the facilities available to the 
group and the group’s covenants
key risks to liquidity and cash balances are a downturn in contracting volumes a decrease in the value of open market sales deterioration in credit terms 
obtainable in the market from suppliers and subcontractors a downturn in the profitability of work delayed receipt of cash from customers and the risk  
that major clients or suppliers suffer financial distress leading to non payment of debts or costly and time consuming reallocation and rescheduling of work 
certain measures and kpis are continually monitored throughout the group and used to quickly identify issues as they arise enabling the group to address 
them promptly
key amongst these are continual monitoring of the committed order book and the regeneration and development pipeline including the status of orders  
and likely timescales for realisation so that contracting volumes are well understood monitoring of overhead levels to ensure they remain appropriate to 
contracting volumes weekly monitoring of open market house sales volumes and prices continual monitoring of working capital exceptions overdue debts 
and conversion of work performed into certificates and invoices continual review of levels of current and forecast profitability on contracts review of client 
and supplier credit references and approval of credit terms with clients and suppliers to ensure they are appropriate
the group does not have any material derivative or non derivative financial liabilities with the exception of trade and other payables current tax liabilities 
finance lease liabilities and retirement benefit obligations trade and other payables and current tax liabilities are generally non interest bearing and therefore 
have no weighted average effective interest rates retirement benefit obligations are measured at the net of the present value of retirement benefit 
obligations and the fair value of the retirement plan assets finance lease liabilities are carried at the present value of the minimum lease payments trade and 
other payables are due to be settled in the group’s normal operating cycle an analysis of the maturity profile for finance lease liabilities is contained in note 19
c market risk
market risk is the risk that changes in market prices such as foreign exchange rates interest rates or equity prices will affect the group’s income or the 
carrying amount of its holdings of financial instruments the objective of market risk management is to achieve a level of market risk that is within acceptable 
parameters as set out in the group risk management framework
interest rate risk
the group is not exposed to significant interest rate risk as it does not have significant interest bearing liabilities and its only interest bearing asset is cash 
invested on a shortterm basis
certain of the group’s equity accounted joint ventures enter into interest rate swaps to manage their exposure to interest rate risk arising on floating rate 
bank borrowings
the group’s share of joint ventures’ interest rate swap contract with nominal value of £149m 201 2 interest rate and retail prices index swap contracts 
£962m have fixed interest payments at an average rate of 507 201 2 479 for periods up until 2033
the group’s share of the fair value of swaps entered into at 31 december 201 3 by joint ventures is estimated at a £06m liability 201 2 £23m liability 
these amounts are based on market values of equivalent instruments at the balance sheet date all interest rate swaps are designated as hedging 
instruments and are effective as cash flow hedges the fair value thereof has been taken to the hedging reserve
currency risk
the majority of the group’s operations are carried out in the uk and the group has an insignificant level of exposure to currency risk on sales and purchases 
the group’s policy is to hedge foreign currency transactions where they are material at which point derivative financial instruments are entered into so as  
to hedge forecast or actual foreign currency exposures
capital management
the board aims to maintain a strong capital base so as to maintain investor creditor and market confidence and to sustain the future development of the 
business and its approach to capital management is explained fully in the finance review on pages 34 and 35
the capital structure of the group consists of cash and cash equivalents and equity attributable to equity holders of the company comprising issued capital 
reserves and retained earnings as disclosed in the consolidated statement of changes in equity the cash and cash equivalents are supplemented by the 
£1400m of committed bank facilities 
there were no changes in the group’s approach to capital management during the year and the group is not subject to any capital requirements imposed  
by regulatory authorities
29 subsequent events
other than the disposal of the asset held for sale referred to in note 1 7  there were no significant subsequent events financial statements 109
morgan sindall group plc annual report and accounts 2013
 strategic report 02–46 governance 47–76 financial statements 77–120
financial statements
company financial statements
the company’s financial statements for the year  
ended 31 december 201 3
110 company balance sheet
111 company combined statement of movements  
in reserves and shareholders’ funds
112 significant accounting policies
114 notes to the company financial statements
119 shareholder information financial statements 110
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
company balance sheet
       2013  2012  
    notes £m £m
fixed assets          
tangible assets    2  15  12  
investments    3  3746  3741 
      3761  3753 
current assets          
trade debtors      –  01  
amounts owed by subsidiary undertakings          
 – due within one year      453  524  
 – due after one year      590  190  
corporation tax receivable      11  –  
other debtors      53  03  
prepayments and accrued income      09  11  
deferred tax asset    4  09  06  
cash at bank and in hand      502  01 
      1627  736 
creditors amounts falling due within one year          
bank overdraft      1587 1003 
finance lease obligations      01 –  
trade creditors      38 10 
amounts owed to subsidiary undertakings      2691 2278 
corporation tax payable      –  22 
other tax and social security      08 01 
other creditors      06 12 
accruals      20 25
      4351 3351
n et current liabilities      2724 2615
total assets less current liabilities      1037  1138 
creditors amounts falling due after more than one year          
bank loans      150 –  
finance lease obligations      02 03 
provision for liabilities    8  114 112
n et assets excluding retirement benefit obligation      771  1023  
retirement benefit obligation    5  –  12
n et assets including retirement benefit obligation      771  1011 
shareholders’ funds          
share capital    6  22  22  
share premium account      269  267  
capital redemption reserve      06  06  
own shares      43 56 
special reserve      137  137  
profit and loss account      380  635 
shareholders’ funds      771  1011 
the financial statements of the company company number 00521970 were approved by the board and authorised for issue on 18 february 2014 and 
signed on its behalf by
john morgan steve crummett
chief executive finance director
company balance sheet
at 31 december 201 3 financial statements 111
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
company combined statement of movements in reserves and shareholders’ funds
company combined statement of movements in  
reserves and shareholders’ funds
for the year ended 31 december 201 3
   share capital  profit 
 share premium redemption special and loss shareholders’ 
 capital account reserve reserve account funds 
  £m £m £m £m £m £m
1 january 2013 22  267  06  137  57 9  101 1  
loss for the year –  –  –  –  1 54 1 54 
share option expense –  –  –  –  12  12  
dividends –  –  –  –  1 15 1 15 
exercise of share options –  02  –  –  04  06  
deferred tax charge arising on recognition of share based payments –  –  –  –  02  02  
actuarial gain on retirement benefit obligation –  –  –  –  09  09 
31 dece mber 2013  22  269  06  137  337  77  1  financial statements 11 2
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
significant accounting policies
basis of accounting
the separate financial statements of the company are presented as required 
by the companies act 2006 these financial statements have been prepared 
on the going concern basis as discussed in the finance review on page 35 
under the historical cost convention in accordance with the applicable united 
kingdom accounting standards the financial statements are presented in 
pounds sterling which is the company’s functional currency and unless 
otherwise stated have been rounded to the nearest £0 1m
under financial reporting standard frs 1 revised 1996 ‘cash flow 
statements’ the company is exempt from the requirement to prepare a cash 
flow statement on the basis that its consolidated financial statements which 
include the company and present a consolidated cash flow statement are 
publicly available
under frs 8 ‘related party disclosures’ the company is exempt from the 
requirement to disclose related party transactions with entities within the 
group where the company’s interest is 100
the company’s accounting policies have been applied on a consistent  
basis throughout the year
fixed asset investments
investments held as fixed assets are stated at cost less provision for any 
impairment in value investments are reviewed for impairment at the  
earlier of the company’s reporting date or where an indicator of impairment 
is identified
tangible fixed assets and depreciation
no depreciation is provided on freehold land on other assets depreciation  
is provided at rates calculated to write off the cost of fixed assets over their 
estimated useful lives as follows
freehold property 2 per annum
plant machinery and equipment between 1 0 and 33 per annum
assets held under finance leases are depreciated over their useful economic 
lives on the same basis as owned assets or where shorter over the term  
of the relevant lease
taxation
the tax expense represents the current tax and deferred tax charges  
tax is recognised in the profit and loss account except to the extent that  
it relates to items recognised directly in shareholders’ funds
a current tax
current tax is the company’s expected tax liability on taxable profit for the 
year using tax rates enacted or substantively enacted at the reporting date 
and any adjustments to tax payable in respect of previous years taxable 
profit differs from that reported in the profit and loss account because it is 
adjusted for items of income or expense that are assessable or deductible in 
other years and is adjusted for items that are never assessable or deductible
b deferred tax
deferred tax is provided in full on timing differences which result in an 
obligation at the balance sheet date to pay more tax or a right to pay less  
tax at a future date at rates expected to apply when they crystallise based 
on tax rates and laws that have been enacted or substantively enacted by the 
balance sheet date timing differences arise from the inclusion of items of 
income and expenditure in tax computations in periods different from those 
in which they are included in the financial statements deferred tax assets are 
recognised to the extent that it is regarded as more likely than not that there 
will be future taxable profits against which to recover carried forward future 
tax losses and from which the reversal of underlying timing differences can 
be deducted deferred tax assets and liabilities are not discounted
retirement benefit schemes
the company has two retirement benefit plans
a defined contribution plan
a defined contribution plan is a postretirement benefit plan under which  
the company pays fixed contributions to a separate entity and has no legal  
or constructive obligation to pay further amounts the company recognises 
payments to defined contribution pension plans as an employee expense  
in the profit and loss account as and when they are due 
b defined benefit plan
a defined benefit plan is a postretirement plan other than a defined 
contribution plan the company’s net liability is recognised in the balance 
sheet and is calculated by estimating the amount of future benefit that 
employees have earned in return for their service in the current and prior 
periods and discounting this to its present value any unrecognised past 
service costs and the fair value of the plan’s assets are deducted
the calculation is performed by a qualified actuary on an annual basis using 
the projected unit credit method the cost of the plan is charged to the profit 
and loss account based on actuarial assumptions at the beginning of the 
financial year where the calculation results in a benefit to the company the 
asset recognised is limited to the net of the total unrecognised past service 
costs and the present value of any future refunds from the plan or reductions 
in future contributions to the plan
when the benefits of the plan are improved the portion of increased benefit 
relating to past service by employees is recognised in the profit and loss 
account on a straightline basis over the average period until the benefits  
are vested where the benefits vest immediately the expense is recognised 
in the profit and loss account immediately
actuarial gains and losses are recognised in full in the combined statement  
of movements in reserves and shareholders’ funds in the period in which  
they occur net pension obligations are included in the balance sheet at the 
present value of the plan liabilities less the fair value of the plan assets and 
any related deferred tax asset
significant accounting policies
for the year ended 31 december 201 3 financial statements 11 3
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
significant accounting policies
provisions
share based payments 
provisions are recognised when the company has a present legal or 
constructure obligation as a result of a past event it is probable that  
an outflow of resources will be required to settle the obligation and the 
amount of the obligation can be estimated reliably
the company grants equitysettled share based payments share awards  
or share options to certain employees equitysettled share based payments 
are measured at fair value at the date of grant and are recognised as an 
employee expense with a corresponding increase in shareholders’ funds  
over the period from date of grant to the date on which the employees 
become unconditionally entitled to the awards or options
related national insurance contributions are accrued on the basis of the 
intrinsic value of outstanding share based payments and are remeasured  
at each reporting date
leases
assets held under finance leases which confer rights and obligations similar 
to those attached to owned assets are capitalised as tangible fixed assets 
and are depreciated over the shorter of the lease term and their useful lives 
the capital elements of future lease obligations are recorded as liabilities 
whilst the interest elements are charged to the profit and loss account over 
the period of the leases to produce a constant rate of charge on the balance 
of capital repayments outstanding 
rentals payable under operating leases are charged to the profit and loss 
account on a straightline basis over the term of the relevant lease benefits 
received and receivable as an incentive to sign an operating lease are similarly 
spread on a straightline basis over the lease term except where the period 
to the review date on which the rent is first expected to be adjusted to the 
prevailing market rate is shorter than the full lease term in which case the 
shorter period is used
finance income and expense
finance income comprises bank and other interest interest income is 
recognised in the profit and loss account using the effective interest rate 
method finance expense comprises interest on bank overdrafts 
amortisation of prepaid bank facility arrangement fees and commitment  
fees charged by lenders on the undrawn portion of available bank facilities
borrowing costs are recognised in the profit and loss account on an effective 
interest method in the period in which they are incurred
financial guarantees
the company provides certain guarantees in respect of the indebtedness  
of its subsidiary undertakings and in respect of bonds and claims under 
contracting and other arrangements which include joint arrangements  
and joint ventures entered into in the ordinary course of business
the company considers such agreements to be indemnity arrangements 
and as such accounts for them as contingent liabilities unless it becomes 
probable that the company will be required to make a payment under  
the guarantee
dividends
the company has adopted frs 21 ‘events after the balance sheet date’  
and accordingly only recognises a liability once there is an obligation  
to pay as a result a dividend will only be recognised once the shareholders 
approve it financial statements 11 4
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
notes to the company financial statements
notes to the company financial statements
1 loss of the parent company
the company has taken advantage of section 408 of the companies act 2006 and consequently the profit and loss account of the parent company 
is not presented as part of these accounts the loss of the parent company for the financial year amounted to £1 54m 201 2 loss of £50m
2 tangible assets
     plant  
    freehold machinery and  
    property equipment total 
    £m £m £m
cost           
1 january 2 013     0 1  33  34  
additions     –  09  09 
31 dece mber 2013     0 1  42  43 
accumulated depreciation           
1 january 2 013     –  22 22 
depreciation charge     –  06 06
31 de cember 2013     –  28 28
n et book value at 31 december 2013     0 1  14  15  
net book value at 31 december 201 2     0 1  1 1  12 
the company’s obligations under finance leases are secured by the lessor’s title to the leased assets which have a carrying amount of £02m 201 2 £03m 
no other assets have been pledged to secure borrowings
3 investments
    subsidiary other 
    undertakings investments total 
    £m £m £m
cost          
1 january 2 013    3773  03  3776 
additions    05  –  05 
31 dece mber 2013    377 8  03  378 1 
provisions          
1 january 2 013 and 31 december 2013    35 –  35
n et book value at 31 december 2013    37 43  03  37 46  
net book value at 31 december 201 2    3738  03  374 1 
4 deferred tax
   accelerated    
   allowances    
   and other    
   shortterm retirement share   
   timing benefit based  
   differences obligation payments total 
   £m £m £m £m
1 january 2013   02  03  04  09  
chargecredit to income   –  05 0 1  04 
credit to equity   –  02  02  04 
31 dece mber 2013   02  –  07  09  financial statements 11 5
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
notes to the company financial statements
4 deferred tax continued
certain deferred tax assets and liabilities have been offset the following is the analysis of the deferred tax balances after offset for financial  
reporting purposes
       2013  2012  
        £m £m
deferred tax within current assets       09  06  
deferred tax within retirement benefit obligation       –  03 
       09  09 
at 31 dec ember 201 3 the company had unused tax losses of £nil 201 2 £03m available for offset against future profits no deferred tax asset has been 
recognised in respect of such losses due to the unpredictability of future profit streams against which these losses may be utilised losses may be carried 
forward indefinitely
5 retirement benefit schemes
defined contribution plan
the morgan sindall retirement benefits plan the retirement plan was established on 31 may 1995 and currently operates on defined contribution 
principles for employees of the group the assets of the retirement plan are held separately from those of the company in funds under the control of the 
trustees of the retirement plan the total cost charged to the profit and loss account of £04m 201 2 £04m represents contributions payable to the 
defined contribution section of the retirement plan by the company
as at 31 december 201 3 contributions of £0 1m 201 2 £0 1m were due in respect of december’s contribution not paid over to the retirement plan  
the company with the consent of the trustees can decide how to use monies held in a defined contribution general account
defined benefit plan
the retirement plan includes a defined benefit section comprising liabilities and transfers of funds representing the accrued benefit rights of active and 
deferred members and pensioners of pension plans of companies which are now part of the group these include salary related benefits for members in 
respect of benefits accrued before 31 may 1995 and benefits transferred in from the snape group limited retirement benefits scheme include accruals  
up to 1 august 1997 no further defined benefit membership rights can accrue after those dates
the last triennial valuation of the retirement plan was undertaken as at 5 april 2010 the ongoing liabilities of the plan were assessed using the projected  
unit credit method and the assets were taken at realisable market value the actuarial valuation also showed that the defined benefit liabilities were  
partly funded and the value of the assets of £59m represented 64 of the value of these liabilities on an ongoing funding basis a triennial valuation  
as at 5 april 201 3 is currently underway and the funding position is being reappraised
the present value of the defined benefit liabilities were measured using the projected unit credit method the following table shows the key assumptions used 
      2013  2012  
        
key assumptions used 
discount rate      44  41  
expected rate of salary increases      45  40  
expected return on retirement plan assets      40  35  
rate of inflation      35  30  
rate of future pension increases
1
     30–35  30–35  
average life expectancy for pensioner retiring now at age 65 years      874  884  
average life expectancy for pensioner retiring in 20 years at age 65 years      892  913 
1 depending on their date of joining members receive fixed pension increases of 30 or 35   
the expected return on retirement plan assets is determined by considering the expected returns available on the assets underlying the current investment 
policy expected yields on fixed interest investments are based on gross redemption yields as at the balance sheet date
the retirement plan does not hold any financial instruments issued by the company and does not hold any property or other assets used by the group financial statements 116
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
notes to the company financial statements
notes to the company financial statements
5 retirement benefit schemes continued
the amount included in the balance sheet in respect of the retirement plan is as follows
 2013 2012
 
 
 
 
  assets  liabilities  total  assets  liabilities  total  
  £m £m £m £m £m £m
at 1 january 89  104 15 8 1  94 13 
finance incomeexpense 03  04 0 1 03  04 0 1  
actuarial gainlosses 04 13  09  02  10 08 
benefits paid 02 02  –  04 04  –  
contributions from sponsoring company
1
  07  –  07  07  –  07 
at 31 dec ember 93  93 –  89  104 15
related deferred taxation     –      03 
deficit recognised in the balance sheet     –      12
1 the minimum amount of contributions the company expects to be paid to the defined benefit section of the plan in 2013 is £07m
actuarial gainslosses recognised in the combined statement of movements in reserves and shareholders’ funds
     2013  2012  2011  
      £m  £m  £m 
actuarial gainslosses recognised during the year     09  08 –  
cumulative actuarial losses recognised     29 38 30
6 share capital
 2013 2012
 
 
 
 
   number £m number £m
issued and fully paid ordinary shares of 5p each         
1 january   43225 488  22  4321 5 339  22  
exercise of share options   33876  –  10149  – 
31 decemb er   43259 364  22  432254 88  22 
all issued ordinary shares are fully paid ordinary shares are entitled to dividends when declared and each share carries the right to one vote at a meeting  
of the company
shares
33876 shares were issued during 201 3 in respect of options exercised under the company’s saye scheme for a total consideration of £02m 201 2 10 149 
shares were issued for a total consideration of £0 1m no other shares were issued during the year
own shares
own shares at cost represent 575397 201 2 723970 shares in the company held in the morgan sindall employee benefit trust the trust in connection 
with the esop 2007 and the 2005 plan the trustees of the trust purchase the company’s shares in the open market with financing provided by the 
company on the basis of regular reviews of the share liabilities of the relevant schemes all of the shares held by the trust were unallocated at the year end 
and dividends on these shares have been waived based on the company’s share price at 31 december 201 3 of £7 55 201 2 £5 1 5 the market value  
of the shares was £43m 201 2 £37m
7 dividends
for details of dividends paid during the year and proposed but not approved by shareholders at the balance sheet date refer to note 7 of the consolidated 
financial statements financial statements 11 7
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
notes to the company financial statements
8 provisions
    employee insurance 
    provisions provisions total 
     £m £m £m
1 january 201 3    04  108  1 12  
additions    –  28  28  
utilised    –  16 16 
released    –  10 10
31 de cember 2013    04  1 10  1 14 
the company has provisions for self insurance in respect of claims incurred but not yet received and employee provisions which comprise obligations  
to former employees that are not related to retirement or postretirement obligations the majority of the provisions are expected to be utilised within  
five years
9 lease commitments
the company has an operating lease commitment in respect of land and buildings expiring in two to five years for £02m 201 2 £02m expiring in less  
than one year lease payments recognised as an expense in the year amounted to £02m 201 2 £02m
10 contingent liabilities
group banking facilities and surety bond facilities are supported by cross guarantees given by the company and participating companies in the group  
there are contingent liabilities in respect of surety bond facilities guarantees and claims under contracting and other arrangements including joint 
arrangements and joint ventures entered into in the normal course of business
1 1 subsequent events
there were no subsequent events that affected the financial statements of the company financial statements 118
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
notes to the company financial statements
notes to the company financial statements
12 additional information on subsidiary undertakings and joint ventures
the company acts as a holding company for the group and has the following principal subsidiary undertakings and significant interests in joint ventures which 
affected the group’s results or net assets
subsidiary undertakings activity
lovell partnerships limited affordable housing 
magnor plant hire limited construction plant hire 
morgan lovell plc specialist in office design and build 
morgan sindall plc construction and infrastructure 
morgan sindall investments limited project investments 
morgan sindall professional services ltd design services 
morgan sindall underground professional services ltd infrastructure design services 
muse developments limited urban regeneration 
newman insurance company limited insurance 
overbury plc fitting out and refurbishment specialists 
  
joint ventures   
ashton moss developments limited 50 inner city regeneration 
bromley park limited 50 residential development 
claymore roads holdings limited 50 infrastructure services 
english cities fund 1 25 inner city regeneration  
hb community solutions living limited 50 development of supported living facilities 
hub west scotland limited 33⅓ delivering public sector health and education projects in the glasgow area 
hull esteem consortium psp limited 33⅓ investment in the development of education facilities 
isis waterside regeneration 50 waterside regeneration 
lingley mere business park development company limited 50 new commercial office space development 
morganvinci limited 50 infrastructure services 
slough regeneration partnership llp 50 mixedtenure development 
st andrews brae developments limited 50 residential development 
the bournemouth development company llp 50 mixedtenure development 
the compendium group limited 50 investment in affordable housing 
all subsidiary undertakings are whollyowned unless shown otherwise and with the exception of companies marked  all shareholdings are in the name  
of morgan sindall group plc the proportion of ownership interest is the same as the proportion of voting power held except for english cities fund details  
of which are shown in the consolidated financial statements note 1 2 with the exception of newman insurance company limited registered and operating  
in guernsey all undertakings are registered in england and wales and the principal place of business is the uk newman insurance company limited has  
a year end of 30 november coterminous with the renewal date for the insurance arrangements in which it participates financial statements 119
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
shareholder information
financial calendar 2014
financial year end 31 december 201 3 
preliminary results announcement 18 february 2014 
annual general meeting 8 may 2014 
interim management statement 8 may 2014 
final dividend 
 exdividend date 30 april 2014 
 record date 2 may 2014 
 payment date 23 may 2014 
half year results announcement august 2014 
interim dividend payable october 2014 
interim management statement november 2014
registrar
all administrative enquiries relating to shareholdings such as lost certificates 
changes of address change of ownership or dividend payments and requests 
to receive corporate documents by email should in the first instance be 
directed to the company’s registrar and clearly state the shareholder’s 
registered address and if available the full shareholder reference number
by post computershare investor services plc the pavilions  
bridgwater road bristol bs99 6zz
by telephone 44 0 870 707 1695 lines are open from 830am to 
530pm uk time monday to friday
by email webcorrescomputersharecom
online wwwinvestorcentrecoukcontactus
registering on the registrar’s website enables you to view your shareholding 
in morgan sindall group plc including an indicative share price and valuation 
check your holding balance and transactions change your address or bank 
details and view or request outstanding payments if you wish to view your 
shareholding please log on to wwwinvestorcentrecouk and select sign  
in if you already have an investor centre user id or click register if you are  
a new user then follow the instructions
dividend mandates
shareholders who do not currently have their dividends paid directly to  
a uk bank or building society account and wish to do so should complete  
a mandate instruction available from the registrar on request or at  
wwwinvestorcentrecouk within the downloadable forms section
website and electronic communications
the 201 3 annual report and other information about the company are 
available on its website wwwcorporatemorgansindallcom the company 
operates a service whereby you can register to receive notice by email  
of all announcements released by the company
the company’s share price 1 5 minutes delay is displayed on the  
company’s website
shareholder documents are now following changes in company law and 
shareholder approval primarily made available via the company’s website  
at wwwcorporatemorgansindallcominvestors unless a shareholder has 
requested to continue to receive hard copies of such documents if a shareholder  
has registered their uptodate email address an email will be sent to that 
address when such documents are available on the website if shareholders 
have not provided an uptodate email address and have not elected to 
receive documents in hard copy a letter will be posted to their address on  
the register notifying them that the documents are available on the website 
shareholders can continue to receive hard copies of shareholder documents 
by contacting the registrar
if you have not already registered your current email address you can do  
so at wwwinvestorcentrecouk
investors who hold their shares via an intermediary should contact the 
intermediary regarding the receipt of shareholder documents from the 
company
multiple accounts
shareholders who receive more than one copy of communications from the 
company may have more than one account in their name on the company’s 
register of members any shareholder wishing to amalgamate such holdings 
should write to the registrar giving details of the accounts concerned and 
instructions on how they should be amalgamated
shareholder alerts
unsolicited mail investment advice and fraud
the company is obliged by law to make its share register publicly available 
and as a consequence some shareholders may receive unsolicited mail in 
addition many companies have become aware that their shareholders have 
received unsolicited phone calls or correspondence typically from overseas 
‘brokers’ concerning investment matters 
these callers can be very persistent and extremely persuasive and their 
activities have resulted in considerable losses for some investors it is not just 
the novice investor that has been deceived in this way many of the victims 
have been successfully investing for several years shareholders are advised 
to be very wary of any unsolicited advice offers to buy shares at a discount 
or offers of free company reports
please keep in mind that firms authorised by the fca are unlikely to contact 
you out of the blue with an offer to buy or sell shares
if you receive any unsolicited mail or investment advice
 
make sure you get the correct name of the person and organisation
 
check the financial services register at wwwfcaorguk
 
use the details on the financial services register to contact the firm
 
call the fca consumer helpline on 0800 1 1 1 6788 if there are  
no contact details on the register or you are told they are out of date
 
beware of fraudsters claiming to be from an authorised firm copying  
its website or giving you false contact details
 
use the firm’s contact details listed on the register if you want to call  
it back
 
search the list of unauthorised firms and individuals to avoid doing business 
with at wwwfcaorgukscams
shareholder information financial statements 120
 strategic report 02–46 governance 47–76 financial statements 77–120
morgan sindall group plc annual report and accounts 2013
shareholder information
 
report a share scam by telling the fca using the share fraud reporting 
form at wwwfcaorgukscams
 
if the unsolicited phone calls persist hang up 
 
if you wish to limit the amount of unsolicited mail you receive  
contact the mailing preference service freepost 29 lon20771  
london w1e 0zt or visit the website at wwwmpsonlineorguk
if you deal with an unauthorised firm you will not be eligible to receive 
payment under the financial services compensation scheme if you have 
already paid money to share fraudsters you should contact action fraud  
on 0300 1 23 2040
share dealing services
you can buy shares through any authorised stockbroker or bank that offers  
a share dealing service in the uk or in your country of residence if outside  
the uk 
a telephone dealing service has also been arranged with stocktrade which 
provides a simple way for buying or selling morgan sindall group plc shares 
basic commission is 05 up to £10000 reducing to 02 thereafter 
subject to a minimum commission of £1 5 sales are carried out on a 10day 
settlement basis with purchases on a fiveday basis when purchasing shares 
payment must be made by debit card at the time of dealing for further 
information please call 0845 601 0995 and quote reference low co140
analysis of shareholdings at 31 december 2013
 number of  of total  number of  of total 
 accounts accounts shares shares
holding of shares     
up to 1000 779 5228 379008 088 
1001 to 5000 437 2933 1035318 239 
5001 to 100000 81 544 610693 141 
100001 to 1000000 186 1 248 2281 5590 5274 
over 1000000 7 047 18418721 4258
 1490 10000 43259330 10000
shareholder communication
email enquiriesmorgansindallcom 
telephone 020 7307 9200
registered office
kent house 14– 1 7 market place london w1w 8aj  
registered in england and wales no 00521970
advisers
brokers
jefferies hoare govett 
numis securities limited
solicitors 
slaughter and may 
registrars
computershare investor services plc
independent auditor
deloitte llp 
london
shareholder information forward looking statements
this document may include certain forward looking statements beliefs 
or opinions that are based on current expectations or beliefs as well as 
assumptions about future events these forward looking statements 
can be identified by the fact that they do not relate only to historical  
or current facts forward looking statements often use words such as 
anticipate target expect estimate intend plan goal believe will may 
should would could or other words of similar meaning undue reliance 
should not be placed on any such statements because by their very 
nature they are subject to known and unknown risks and uncertainties 
and can be affected by other factors that could cause actual results 
and the group’s plans and objectives to differ materially from those 
expressed or implied in the forward looking statements
there are several factors that could cause actual results to differ 
materially from those expressed or implied in forward looking 
statements among the factors that could cause actual results to 
differ materially from those described in forward looking statements 
are changes in the global political economic business competitive 
market and regulatory forces future exchange and interest rates 
changes in tax rates and future business combinations or dispositions
the group undertakes no obligation to revise or update any forward 
looking statement contained within this document regardless of 
whether those statements are affected as a result of new information 
future events or otherwise morgan sindall group plc
kent house 
 14– 1 7 market place 
london w1w 8aj 
company number 00521970
twitter morgansindall 
wwwcorporatemorgansindallcom


Summary:
 morgan sindall group plc annual report and accounts 2013
group at a glance strategic report 02
morgan sindall group is a leading uk construction and regeneration 
group employing circa 5700 people by focusing on delivery the 
group is able to offer innovative and cost effective solutions to clients 
construction is offered through a network of offices to deliver projects 
of all sizes with skills that provide clients with a complete design 
construction refurbishment and maintenance service for their property 
and infrastructure assets working in longterm trusted partnerships the 
group’s expertise in mixeduse and housingled regeneration is creating 
largescale economic and social renewal throughout the country
revenue
£2095m
2012 £2047m
operating profit – adjusted
£336m
2012 £48 1m
construction  
 infrastructure
offers national design construction and 
infrastructure services to private and public 
sector clients the division works on projects 
and in frameworks and strategic alliances  
of all sizes across a broad range of markets 
including commercial defence education 
energy healthcare industrial leisure retail 
transport and water
revenue
£1234m
2012 £1 168m
operating profit – adjusted
£127m
201 2 £197m
fit out
specialises in fit out and refurbishment projects 
in the commercial central and local government 
office further education and retail banking 
markets overbury operates as a national fit  
out company through multiple procurement 
routes and morgan lovell specialises in 
workplace consultancy and in the interior  
design and build of offices
revenue
£427m
2012 £437m
operating profit – adjusted
£109m
201 2 £113m
affordable  
housing
specialises in the design and build refurbishment 
and maintenance of homes and the regeneration 
of communities across the uk the division 
operates a full mixedtenure model creating 
homes for rent shared ownership and open 
market sale
revenue
£381m
2012 £386m
operating profit – adjusted
£86m
201 2 £115m
urban  
regeneration
works with landowners and public sector 
partners to unlock value from underdeveloped 
assets to bring about sustainable regeneration 
and urban renewal through the delivery  
of mixeduse and residentialled projects 
typically creates commercial retail  
residential leisure and public realm facilities
revenue
£62m
2012 £62m
operating profit – adjusted
£10m
201 2 £27m
 investments
realises the potential for underutilised property 
assets and promotes economic growth primarily 
through strategic partnerships with the public 
sector by providing flexible structuring and 
funding solutions and development expertise 
the division covers a wide range of markets 
including asset backed education health  
care and social care residential student 
accommodation leisure and infrastructure 
directors’  
portfolio valuation
£14m
2012 £32m
investments carrying value
£128m
2012 £182m
 before intangible amortisation and exceptional operating items
group at a glance
 strategic report 02–46 governance 47–76 financial statements 77–120 morgan sindall group plc annual report and accounts 2013
group at a glance
 strategic report 02–46 governance 47–76 financial statements 77–120
we help keep traffic 
flowing on the uk’s 
highways
we carry out 50 of 
projects in live working 
environments
we work in the education  
market by designing 
building and fitting out 
education facilities
we complete fit outs for 
half the ftse 100 including 
the nine largest companies 
we help maintain and 
improve the uk’s water 
networks
we won 36 considerate 
constructors awards  
in 2013
we revitalise derelict 
dockyards into vibrant 
waterside residential  
districts
we offer opportunities 
to circa 300 apprentices 
each year
we partner with local 
authorities to deliver 
positive change and 
economic growth
we relocate staff to 
new offices with minimal 
downtime
we complete over 
200000 home  
repairs every year
we fit out office 
environments for 18 of  
the top 20 uk law firms
we have delivered 37  
of all the ska gold and silver 
accreditations awarded
strategic report 03