strategic report
overview
morgan sindall group plc annual report 2014
running heading 1
the construction  
regeneration group
annual report 201 4 user guide
this pdf allows you to find information and navigate 
around this document more easily
links in this pdf
words and numbers that are underlined are links — 
clicking on them will take you to further information 
within the document or to a web page opens in  a new 
window if they are a url eg wwwmorgansindallcom
preceding page next page
back to user guide
print options search this pdf
last visited page group at a glance
group
morgan sindall group is a leading construction and regeneration group 
operating via a network of offices around the uk through its construction 
activities the group provides clients with design new build refurbishment 
and maintenance services for their property and infrastructure assets 
working in longterm partnerships the group’s regeneration activities 
comprise mixeduse and housing developments which are creating economic 
and social value throughout the country the group’s five divisions operate 
in the public and private sectors across a wide range of markets
revenue
£2220m
201 3 £2095m
operating profit – 
adjusted
£289m
201 3 £336m
construction
construction  infrastructure
offers design construction and infrastructure services working on 
projects and in frameworks and strategic alliances of all sizes markets 
include commercial defence education energy healthcare industrial 
leisure retail transport and water 
the division’s professional services business offers multidisciplinary 
engineering and design consultancy services
revenue
£1172m
201 3 £1234m
operating profit – 
adjusted
£35m
201 3 £1 27m
fit out
specialises in fit out and refurbishment projects overbury operates 
through multiple procurement routes in the commercial central and  
local government office further education and retail banking markets 
morgan lovell specialises in workplace strategy and the interior  
design and build of offices
revenue
£507m
201 3 £427m
operating profit – 
adjusted
£150m
201 3 £109m
affordable housing
specialises in the delivery of complex regeneration schemes and in  
the design build refurbishment and maintenance of homes operates  
a full mixedtenure model creating homes for rent shared ownership 
and open market sale
the division’s response maintenance services include facilities 
management and planned and responsive repairs to social housing 
providers and public buildings
revenue
£423m
201 3 £381m
operating profit – 
adjusted
£60m
201 3 £86m
regeneration
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
£113m
201 3 £62m
operating profit – 
adjusted
£100m
201 3 £10m
investments
creates longterm strategic partnerships to realise the potential of 
underutilised assets promotes sustained economic growth through 
regeneration and drives cost efficiencies through innovative and 
integrated estate management solutions markets include asset  
backed education healthcare and social care residential student 
accommodation leisure and infrastructure
the division’s community solutions business provides management 
project development and funding through a onestop service  
allowing partners to invest in local communities
average capital  
employed
£173m
201 3 £227m
operating profit – 
adjusted
£09m
201 3 £6 1m
 before intangible amortisation 
 
financial statements 77–116 strategic report 02–46 governance 47–76 strategic report
morgan sindall group plc annual report 2014
group highlights 01
group highlights contents
2013 2095
revenue £m 
2014 2220
adjusted proﬁt before tax £m
2013 313
2014 252
operating proﬁt – reported £m
2013 162
2014 265
dividend pence 
2013 270
2014 27 0
adjusted eps pence 
2013 609
2014 467
committed order book £bn 
2013 24
2014 27
regeneration and development pipeline £bn 
2013 30
2014 32
 adjusted is deﬁned as before intangible amortisation of £24m 
 2013 £27m exceptional operating items of £nil 2013 £147m 
 and in the case of earnings per share deferred tax credit due to 
 a change in the statutory tax rate £nil 2013 £25m
strategic report
02 overview
04 chairman’s statement
06 business model
09 strategy and markets
18 chief executive’s review
28 finance review
31 risk review
44 sustainability review
governance
48 chairman’s statement
48 board of directors
50 group management team
52 corporate governance report
58 directors’ remuneration 
report
72 directors’ report
76 directors’ responsibilities 
statement
financial statements
78 independent auditor’s report
82 consolidated financial statements
86 significant accounting policies
91 notes to the consolidated financial statements
1 10 company financial statements
1 1 2 significant accounting policies
1 1 3 notes to the company financial statements
1 14 shareholder information
a pdf download of our 2014 annual report 
wwwcorporatemorgansindallcom
our corporate website 
wwwcorporatemorgansindallcom
sustainability 
wwwcorporatemorgansindallcomsustainability
cover image
lee tunnel project by mvb joint venture for thames water
 strategic report 02–46 governance 47–76 financial statements 77–116 strategic report
overview
our strategic priorities 
the group’s longterm strategy to 
enhance its marketleading position 
across its chosen markets and use the 
cash generated from its construction 
activities to invest in and grow its 
regeneration activities remains 
unchanged
our performance in 2014
confidence in the strategy has been 
reinforced by a strong performance  
from urban regeneration in 201 4
looking forward
the group will continue to be managed  
in line with its strategic priorities and  
to deploy its capital structure and 
management expertise to generate 
sustainable returns without taking  
undue risks 
target markets  
that offer the best  
potential for growth 
significant appointments have been secured 
in the group’s key markets of social housing 
education transport and commercial
further investment in regeneration 
opportunities supported by improvement in 
the group’s order book provides confidence 
that the group is well positioned to deliver 
future growth
maximise returns by  
focusing on relationships  
with key customers 
new work has been secured on existing 
longterm frameworks and appointments 
secured on significant new frameworks
the group is committed to developing 
longterm relationships creating strategic 
partnerships and securing positions on  
major frameworks
utilise the group’s  
complementary range  
of skills to provide  
an integrated offering
sister divisions have collaborated on 
longterm complex schemes around the 
uk involving investment development and 
construction for example the towcester 
regeneration scheme see page 21  
investments continues its strategy to unlock 
prime longterm construction opportunities 
for sister divisions
use the cash generated  
through construction  
activity to invest  
in regeneration 
urban regeneration has performed strongly 
with a significant increase in operating profit 
and 1 3 growth in its regeneration and 
development pipeline 
firm financial discipline will be applied  
to overheads cash and working capital  
to ensure the group has sufficient cash  
to invest from its construction activities  
into quality regeneration opportunities
to read more see pages 9 to 1 1 pages 9 to 1 1 and 18 to 27 
pages 9 to 1 1 and 18 to 27 
02
morgan sindall group plc annual report 2014
overview
 strategic report 02–46 governance 47–76 financial statements 77–116 strategic report
 strategic report 02–46 governance 47–76 financial statements 77–116
business model 
the group’s business model comprises  
five distinct but complementary drivers  
of growth that help the group to deliver  
its strategy
201 4 key performance  
indicators ‘kpis’
the group uses financial and nonfinancial 
kpis to measure its progress in delivering  
its strategy priorities
risk awareness 
the group has a long established culture  
of mature risk and control processes  
to manage both material and daytoday 
circumstances
people
• highest standards maintained in health  
and safety 
• morgan sindall group people promise 
‘people promise’ launched to position  
the group as employer of choice
accident incident rate
306
number of graduates recruited
67
average number of training  
days per employee 
22 days
the group’s performance and business 
conduct affects employees subcontractors 
and the public and in turn can affect its 
reputation and commercial performance
winning in our markets
• close collaboration with clients and partners
• driving continuous improvement through 
perfect delivery 
• targeting markets with highest 
opportunities for growth
regeneration and development pipeline
£32bn
perfect delivery
81 
committed order book
£27bn
the group undertakes several hundred 
contracts each year and needs to ensure  
that contractual terms relate to the risks 
arising from the nature and complexity  
of the works
maximising efficiency
• longterm relationships with trusted 
suppliers and subcontractors
• optimising business processes and  
support functions
• reducing energy consumption and  
carbon emissions
gross margin 
82
overhead as a proportion of revenue
7 2
carbon intensity scopes 1 2 and 3
1695
if employees are not properly engaged with 
the culture of the business clients are less 
likely to receive exceptional levels of service
disciplined use of capital
• rigorous cash management
• longterm joint ventures and  
strategic alliances
• forward selling schemes with leading 
financial institutions
working capital as a proportion  
of revenue
25
adjusted operating cash flow  
as a percentage of adjusted  
operating profit
8
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 operate as a going concern
pursuing innovation
• empowering employees to think differently
• identifying innovative routes to market
• pioneering commercial structuring and 
funding solutions
• creating new design and construction 
techniques
group revenue generated from 
investments funding solutions
£684m
if the group fails to encourage an innovative 
approach across its divisions it could lose  
its competitive edge and suffer reputational 
damage
pages 6 to 8 pages 6 to 8 pages 31 to 43
03
morgan sindall group plc annual report 2014
overview
overview continued strategic report
chairman’s statement
04
adrian martin
chairman
the group’s 201 4 result has been held back by the performance of a small number of construction contracts 
in construction  infrastructure however we were encouraged by a particularly strong performance from urban 
regeneration reinforcing the belief in our strategy of utilising the cash generated through construction to invest  
in regeneration activities
we have also seen further evidence of how the group’s broad range of capabilities adds extra resilience to the cyclical 
nature of individual markets fit out’s agility in swiftly responding to increasing industry upturn has resulted in the division’s 
results exceeding expectation
as i stated last year  the continued investment in our people is critical for future success we have launched the first phase 
of our people promise which has focused on implementing tools around succession planning and talent management 
across the group in addition the group management team has been significantly strengthened and strong foundations 
have been laid to realise our ambition to be the employer of choice in our industry 
we continue to work on a range of largescale projects across the uk which are anticipated to deliver strong returns  
in the years ahead with projects becoming increasingly complex clients recognise the value we can add when two  
or more of our divisions work in collaboration we continue to demonstrate across a number of largescale projects how 
our integrated offering can significantly reduce complexity 
health and safety remains a priority for the board everyone affected by our activities should benefit from an incident free 
environment we were saddened by the death of one of our subcontractors this year  the incident was thoroughly 
investigated and as a result no changes to our processes and procedures were needed however  our core safety policies 
remain under constant review
i am pleased that our resolve to identify and manage risks associated with climate change continues to be recognised  
for the third year running we are the highest scoring construction company in the cdp’s uk climate change report 201 4 
geraldine gallacher stepped down from the board on 31 december 201 4 after a sevenyear tenure and i would like  
to extend my thanks to geraldine for her significant contribution 
the board proposes that the final dividend of 1 50p per share is held level with the prior year 201 3 1 50p resulting  
in a total dividend for the year of 27 0p 201 3 27 0p 
our people have remained very positive in what has been a tough year for the group and i would like to thank them for 
their continued support as we enter 201 5 we will continue to face challenges but we firmly believe that the medium 
and longterm opportunities for the group remain very attractive and that we have the right people in place to take our 
strategy for growth forwards
adrian martin 
chairman 
1 9 february 201 5
morgan sindall group plc annual report 2014
chairman’s statement
 strategic report 02–46 governance 47–76 financial statements 77–116 governance 47–76 financial statements 77–116 strategic report 02–46
05
strategic report
morgan sindall group plc annual report 2014
developing talent
developing talent
terri seel
engineering degree sponsored 
through the institution of civil 
engineers ‘ice’ quest programme 
became graduate engineer for 
construction  infrastructure in 
201 2 promoted in 2014 to section 
engineer currently working on a 
railway underbridge on a dual 
carriageway construction project
lisa giglio
joined fit out in 201 3 site based 
project manager working on  
large turnkey fit out projects  
now working towards a masters  
in construction management 
 
samantha metcalfe
joined as a receptionist in 2008 
now proposals manager for all  
of the investment division’s bids 
studying for a degree in business 
and management
mike payton
started as a geologist in 1988 and 
became design and construction 
director for urban regeneration  
in 2010 appointed director  
of project management in 201 3
oliver watson 
joined fit out in 2004 as a 
management trainee obtained  
bsc hons in quantity surveying 
promoted to quantity surveyor  
then commercial manager  
and is now contracts manager  
on major projects
 the people promise is committed  
to enhancing career opportunities across  
the group
trevor haystead
joined the group as an apprentice 
bricklayer in 1982 now operations 
manager for affordable housing’s 
east anglia region strategic report
our business model
morgan sindall group plc annual report 2014
our business model
introduction
the group adds value through its
• philosophy of perfect delivery focused on continuous 
improvement in business processes and in service quality  
and delivery 
• integrated offering which enables the group to deliver complex 
construction projects by providing a single solution for clients 
• principles of maximising efficiency and a disciplined approach  
to capital management which assist in cash generated from 
construction activities being available to invest in regeneration
• decentralised approach which empowers people to think 
differently and to develop innovative ways of delivering projects
these values are encapsulated in the group’s business model as five  
distinct drivers of growth
pursuing 
innovation
maximising  
efficiency
winning in  
our markets
disciplined use of capital
people
a range of financial and nonfinancial kpis are used to monitor progress 
where appropriate the business model is supported by clear risk 
management procedures to ensure that the highest standards  
of integrity and ethical conduct are maintained consistently across  
the group see risk review on page 31 
people
at the heart of the group and supporting the entire business 
model are its people whose talent experience and diversity are 
essential to deliver ever higher standards in innovation quality  
and safety 
a significant milestone has been the launch of the people promise following 
detailed internal research this initiative represents a promise by the group  
to all its employees explaining what they can expect from the group and 
their team members and in turn what is expected from them programmes 
have been developed to further build the strength of the group’s talent pool 
support networks are being embedded across the group to enable all 
employees to forge exciting careers in an environment where achievement  
is recognised to ensure the values of the people promise are translated into 
meaningful actions metrics have been agreed to measure progress across  
all divisions
creating a safe environment for all its employees its supply chain and the 
communities within which it operates is one of the group’s underlying 
principles the highest standards in health and safety processes and 
procedures are rigorously applied across all operations training is provided  
to ensure that everyone understands their responsibilities to protect their 
own safety and that of others
06
accident incident rate 
2013 385
2014 306
number of graduates recruited
2013 57
2014 67
average training days per employee 
2013 23
2014 22
number of accidents per 100000 employees
 strategic report 02–46 governance 47–76 financial statements 77–116 financial statements 77–116 governance 47–76 strategic report 02–46
07
strategic report
morgan sindall group plc annual report 2014
our business model
maximising efficiency
maximising efficiency is a priority for the group to improve 
profitability and deliver positive sustainable returns to shareholders 
and wider stakeholders
the group spends a high percentage of its cost of sales on goods and 
subcontractor services 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 of 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 goods and services as effectively as possible whilst retaining  
a level of flexibility to meet changing economic and client requirements
a focused approach to optimise business processes and support  
functions has also been maintained with particular emphasis on identifying 
opportunities to standardise best practice products and processes to 
unlock greater efficiencies
the group’s sustainability performance also impacts on efficiency  
a groupwide approach to reducing energy consumption and carbon 
emissions has directly translated into cost savings the principle  
of sustainability is 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
 gross margin
2013 82
2014 82
 overhead as a proportion of revenue 
2013 71
2014 72
winning in our markets
the group’s ethos is defined by its unrelenting focus on clients 
and its drive to achieve operational excellence and consistent 
delivery on projects of all scales and levels of complexity this 
is demonstrated through working in close collaboration with 
clients and partners understanding their needs and leveraging 
skills across the group to identify innovative and costeffective 
solutions
the group’s philosophy of perfect delivery drives continuous improvement 
and higher standards of quality and service across all operations perfect 
delivery status is granted to projects that meet four criteria specified by  
each division client experience feedback is proactively sought to identify 
strengths and recognise areas that require improvement
the group targets key markets that best suit its skills and market knowledge 
the group has developed an indepth understanding of the challenges faced 
by its clients and has built up enduring relationships and a trusted reputation 
for delivering added value this enables the group to enjoy a high level  
of work on largescale regeneration programmes complex construction 
projects and longterm frameworks a rigorous approach to contract 
selectivity is maintained to identify opportunities that offer the best  
potential for growth and superior returns
£bn committed order book 
2013 24
2014 27
£bn regeneration and development pipeline 
2013 30
2014 32
 percentage of completed projects achieving perfect delivery 
2013 76
2014 81
our business model continued pursuing innovation
providing added value through innovation is a strategic priority for 
the group to ensure longterm growth it brings a fresh approach 
to challenges through developing innovative practices that deliver 
more costeffective solutions create competitive advantage  
and drive efficiency across all divisions creating the right culture 
to foster innovation is a priority for attracting and motivating the 
best talent and the group actively encourages and empowers  
its people to think differently
identifying innovative routes to market that overcome barriers to success  
are an acknowledged specialism of the group its expertise in creating 
pioneering commercial structuring and funding solutions enables its public 
sector partners and clients to unlock opportunities operate more efficiently 
and realise complex regeneration visions
the group’s investment in building information modelling ‘bim’ and bim’s 
successful deployment is achieving better outcomes for clients and is a clear 
business driver bim provides a platform for closer collaboration reduced 
costs and faster delivery alongside lower environmental impacts across the 
group an appetite for adopting new technology is evident with examples 
extending from the development of an app to drive residential sales through 
to the use of mobile technology on site
the group continues to invest in research and development activity  
it works with leading institutions to create innovative design and construction 
techniques that improve project delivery and enhance the group’s reputation 
the spending incurred on research and development is generally contained 
within project work performed for clients and is not separately identified
strategic report
our business model continued
group revenue generated from investments funding solutions £m 
2013 865
†
2014 684
†
only includes revenue generated for investments but not other divisions
 in 2014 investmentsonly revenue was £2494m
disciplined use of capital
the group exercises a rigorous approach to cash management 
ensuring returns from investment are maximised and the cash 
position is closely monitored the disciplined use of capital is 
essential to ensure that the group has the available funds to invest 
cash generated from its construction activities into profitable 
regeneration opportunities and to pay dividends to shareholders
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 tied up in customer receivables the group’s strategy  
of working in longterm joint ventures and strategic alliances reduces the 
need to draw on its 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 by working collaboratively with landowners it avoids the 
need to purchase land on the open market and uses opportunities to forward 
sell schemes with leading financial institutions when favourable to do so 
 working capital as a proportion of revenue
2013 32
2014 25
 adjusted operating cash flow as a percentage 
of adjusted operating profit 
2013 44
2014 8
 strategic report 02–46 governance 47–76 financial statements 77–116
08
morgan sindall group plc annual report 2014
our business model financial statements 77–116 governance 47–76 strategic report 02–46
09
strategic report
morgan sindall group plc annual report 2014
strategy and markets
strategic report
strategy and markets
the group’s strategy is focused on two distinct  
but complementary business activities 
construction which comprises the following operations and accounts  
for 39 of operating profit
• construction  infrastructure
• fit out
• affordable housing – construction and services work focused on  
new build house contracting and planned and response maintenance
regeneration which comprises the following operations and accounts  
for 61 of operating profit
• affordable housing – regeneration mixedtenure developments focused 
on building and developing homes for open market sale and for social  
or affordable rent
• urban regeneration
• investments
within these business activities the group’s strategic focus is to
• target markets that offer the best potential for growth allowing the  
group to build on its marketleading positions and providing medium  
to longterm opportunities with superior returns 
• maximise returns within these markets by focusing on relationships  
with key customers to secure higher quality work for example through 
repeat business frameworks and alliances
• utilise the group’s complementary range of skills to provide an integrated 
offering to customers
• use cash generated through its construction activities to invest in and 
grow its regeneration activities
the group’s strategy is underpinned by five business drivers that constitute 
its business model see pages 6 to 8
markets
the overall value of the construction market has increased by 5 on the 
previous year the market is split into three sectors public regulated and 
private within these sectors the group targets key markets which are  
ahead of the previous year by 7 the size and forecast movements  
of these targeted key markets are shown in the table below
market conditions have been mixed in 2014 levels of activity have  
increased across a number of markets in particular open market housing  
and commercial whilst public sector austerity has held back growth in other 
areas such as healthcare and defence the effect of increased activity in 
certain markets has also been evident in the supply chain with cost inflation 
impacting margins 
strategic priorities within key markets
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 four 
that each contribute more than 10 of its annual revenue social housing 
education transport and commercial
construction market group revenue
targeted key markets 2005 prices
2013–14 
growth
2014 
market 
£bn
2015–18 
growth
 of 
2014 
revenue
construction 
  
infrastructure fit out
affordable 
housing
urban 
regeneration investments
social housing 47 14 
education 81 14
healthcare 26 1
community defence other 18 7
public 36
transport 69 16
energy 51 4
water 19 6
regulated 26
commercial 69 22
open market housing 189 6
retail 41 2
leisure 48 1
industrial pharmachem other 36 7
private 38
total 695 100
source office for national statistics ‘ons’ construction products association autumn 2014 edition – 2005 prices strategic report
strategy and markets continued
2014 targeted key markets value 2014 strategic priorities
social housing
firsttime buyers have been an important driver of growth  
in the market supported in particular by the government’s help  
to buy scheme property prices in london and the south east 
increased significantly during the year but flattened towards the 
end of 2014 nationally the picture in respect of property prices  
has been more mixed
inflation in the supply chain remains a key challenge
market size
£47bn
201 3 £45bn
group revenue
£447m
201 3 £388m 
includes £1 37m  
open market sales  
201 3 £1 1 2m
• continued focus on larger longterm 
regeneration projects
• obtain land in partnership with public sector 
partners via joint ventures
• secure longterm repair and maintenance 
contracts
• collaborate with other group divisions
education
capital investment in education is expected to increase as projects 
procured through the priority schools building programme ‘psbp’ 
and other significant frameworks get underway
market size
£81bn
201 3 £7 6bn
group revenue
£308m
201 3 £359m
• maintain strategic approach to key clients
• focus on winning a number of pf2 psbp batches
• further exploit and sell the standard design 
model approach to schools
• continue to find funding solutions to otherwise 
nonviable opportunities
transport
rail output continues to increase activity is at its peak on crossrail 
and the government continues to progress its plan for a high speed 
rail connection from london to the midlands ‘hs2’
investment in airports is expected to remain largely unchanged  
on current levels
an additional £15bn of investment in 84 road projects was 
announced by the government in the autumn statement
market size
£69bn
201 3 £64bn
group revenue
£384m
201 3 £346m
• 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
commercial
growth in levels of commercial activity continued throughout  
2014 with strong demand from occupiers 
whilst this positive trend is expected to continue the market tends 
to move in line with wider macroeconomic trends and uncertainty  
in the economy could affect the rate of growth 
market size
£69bn
201 3 £63bn
group revenue
£495m
201 3 £491m
• 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
regeneration
residential volumes have increased with strong house price  
growth being maintained 
activity levels in the uk office market increased during 2014  
with supply levels being eroded outside of london
the uk industrial market has continued to thrive with strong 
occupier demand led by online retailers and supermarkets
group regeneration  
development pipeline
£32bn
201 3 £30bn
• expand into private rented sector
• recycle assets when appropriate
• secure new business
 
 strategic report 02–46 governance 47–76 financial statements 77–116
10
morgan sindall group plc annual report 2014
strategy and markets financial statements 77–116 governance 47–76 strategic report 02–46
strategic report
progress against 2014 strategic priorities 2015 strategic priorities
• contract signed for £50m mixeduse regeneration scheme for  
london borough of enfield 
• open market sales volumes increased by 22 supported by the  
help to buy scheme 
• capitalised on public sector land opportunities procured through the 
greater london authority ‘gla’ and the homes and communities 
agency ‘hca’ partner panel 
• over £59m of new building housing contracts secured in scotland
• first set of homes for the ministry of defence ‘mod’ at beacon 
barracks to be handed over spring 201 5 see page 14
• new management team with significant response maintenance 
experience
• grow regeneration pipeline
• maintain momentum across existing schemes
• secure more work through local authority partnerships longterm 
framework opportunities and panel positions with the hca and  
the gla 
• increase market share in areas where the group has specialist expertise 
such as environmental works
• secure longterm repair and maintenance contracts
• maintained positions on and renewed a number of frameworks  
including the £100m north lanarkshire schools 
• significant activity across primary secondary and higher education 
• appointed as selected bidder for psbp  north west batch
• £14m london borough of newham contract to upgrade six  
primary schools
• maintain strategic approach to key clients
• progress psbp  north west
• further exploit and sell standard design model approach to schools
• continue to find funding solutions to otherwise nonviable opportunities
• focus on securing places on local frameworks
• won a £1 1 3m position on the rail infrastructure edinburgh–glasgow 
improvement programme ‘egip’ alliance
• secured position on multi assets framework agreement for network  
rail in joint venture
• secured place on £15bn upgrade programme at heathrow 
• appointed to £35m barrier renewal works on the m1 motorway 
• significant work won on £5bn highways agency’s national major  
projects framework
• continue to expand scope of works and market share in rail
• maintain position as partner of choice for clients and potential joint 
venture partners
• maximise opportunities available from key framework positions  
secured during 2014
• fit out order book up 70 from the prior year end
• high profile appointments by kpmg and the canadian high commission
• high level of regional work secured including 590000 sq ft vox 
conference centre in birmingham and 2014’s largest letting in liverpool
• relaunch of response maintenance service as morgan sindall property 
services offering a property service solution to the rest of the group’s 
client base
• maintain market share in fit out and refurbishment
• capitalise on demand for space in london and increased occupier 
confidence in the regions
• increase work secured through public sector frameworks
• focus on optimising operational delivery and customer experience
• select the right opportunities with quality customers in an  
improving market
• good progress made in private rented sector
• sold investment in hull building schools for the future
• increased residential sales totalling 347 201 3 106 units
• new partnerfunded development agreement in southampton
• over £280m of construction works currently on site
• selected as partner on £1 35m scheme in lambeth
• secure new business to maintain and grow the portfolio
• extend relationships with key partners
• pursue strategic land opportunities
• recycle assets when appropriate
• collaboration with other group divisions
 
11
morgan sindall group plc annual report 2014
strategy and markets
strategy and markets continued strategic report
partnering with key stakeholders  
in the nuclear sector
project
albion square whitehaven
partners
copeland borough council 
nuclear decommissioning 
authority sellafield ltd nuclear 
management partners britain’s 
energy coast 
division
construction  infrastructure 
albion square was a key project for copeland’s drive to regenerate 
whitehaven town centre and for britain’s energy coast’s programme 
of development in west cumbria the new £18m office block 
was commissioned by the nuclear decommissioning authority to 
accommodate around 1000 workers being transferred from sellafield 
to whitehaven the objectives were to free up space for decommissioning 
reduce traffic to the nuclear site and boost the economy of whitehaven’s 
town centre 50 of the subcontracted companies working on the  
project came from west cumbria
albion square comprises two fourstorey office buildings totalling  
100000 sq ft constructed at two adjacent sites the iconic glassfronted 
development was designed as the centrepiece of a series of nuclear
funded projects set to transform the centre of whitehaven 
 strategic report 02–46 governance 47–76 financial statements 77–116
12
morgan sindall group plc annual report 2014
strategy and markets financial statements 77–116 governance 47–76 strategic report 02–46
strategic report
delivering a hightech awardwinning 
broadcasting centre
project
new broadcasting house 
portland place london
client
bbc 
division
fit out 
this project has delivered a creative hub for the bbc in london bringing 
together the teams from live news radio and world service broadcasting 
into one integrated stateoftheart media centre 
the new workplace pioneers digital technologies that encourage a flexible 
way of working to enhance collaboration knowledge sharing and creativity 
across the bbc departments technical innovations incorporated into 
the building have involved challenges in acoustics vibration visual and 
space planning the new hub has preserved the brand’s heritage allowing 
unprecedented access to the general public and for visitors to get a sense  
of what the bbc is all about
the project won the 2014 british council for offices ‘bco’ london and 
south east award for corporate workplace and was nominated for the  
bco innovation award
photograph provided by the bbc
13
morgan sindall group plc annual report 2014
strategy and markets strategic report
building 346 new homes for service 
personnel and their families
project
ministry of defence stafford
client
defence infrastructure 
organisation 
division
affordable housing 
in january 2014 the division was awarded a £51m contract to build  
346 new homes for soldiers and their families who are to be based  
at beacon barracks the development will accommodate troops from  
16 signal regiment and 1 armoured division signal regiment
the homes will be completed by september 2015 in time for the soldiers’ 
return from germany as part of the army’s rebasing programme punctual 
completion is crucial and the division will complete at an unprecedented 
rate of 15 units per week once handovers start in spring 2015  
the development will establish stafford as one of the army’s seven  
major sites and provide the town with an economic boost 
 strategic report 02–46 governance 47–76 financial statements 77–116
14
morgan sindall group plc annual report 2014
strategy and markets financial statements 77–116 governance 47–76 strategic report 02–46
strategic report
revitalising britain’s waterways  
with sustainable communities
project
brentford lock west
partner
canal  river trust
division
urban regeneration 
brentford lock west is being delivered by isis waterside regeneration  
a joint venture with the canal  river trust this new waterside 
neighbourhood which promotes sustainable living includes apartments  
and town houses as well as a commercial hub with a pedestrian bridge  
over the canal and a new community facility for brentford fc community 
sports trust it is set within pedestrianfriendly neighbourhood streets 
adjoining the town centre
the first apartments and town houses were completed in 2014 the 
overall scheme designed to maximise the benefit of the water frontage  
of the 1 1acre site is sensitively landscaped to incorporate 520 homes  
and 75000 sq ft of commercial development 
15
morgan sindall group plc annual report 2014
strategy and markets strategic report
creating opportunities for other divisions
project
bournemouth local asset 
backed vehicle
partner
bournemouth borough council 
division
investments 
this 5050 joint venture partnership with bournemouth borough  
council was set up to deliver the town centre regeneration vision for 
bournemouth the 20year scheme includes construction of the citrus 
building a 64apartment residential development on the site of an old 
car park at leyton mount as well as a 382space car park and a 378bed 
student accommodation block both situated on madeira road
the car park and student accommodation were handed over in 2014  
the car park is owned and operated by the council and the student 
accommodation has been leased to the arts university of bournemouth  
the construction was carried out by the construction  infrastructure 
division 
investments will be reviewing options and development appraisals  
on a number of other sites in bournemouth in 2015
 strategic report 02–46 governance 47–76 financial statements 77–116
16
morgan sindall group plc annual report 2014
strategy and markets financial statements 77–116 governance 47–76 strategic report 02–46
strategic report
designing a multipurpose space  
for disruptive thinking
project
wardour street london
client
thoughtworks 
division
fit out 
technology innovation consultancy thoughtworks prides itself  
on its ambitious missions and disruptive thinking and its london office  
was designed to reflect this
an agile and multifunctional space was created that would accommodate 
teams rotating on a projectbyproject basis the bold and bright back 
ofhouse space features a variety of work settings and quiet rooms 
standingheight tables enable healthy working there are closed two  
and threeperson meeting rooms with coloured windows and a central  
hub area doubles as seminar space the office also features a games room 
and dedicated art wall with a variety of modern prints as well as space  
for thoughtworks people to create their own works of art 
17
morgan sindall group plc annual report 2014
strategy and markets strategic report
chief executive’s review
the continued positive momentum expected 
within fit out affordable housing and  
urban regeneration together with further 
investment programmes in regeneration 
opportunities and supported by the 
improvement in the quality of our order  
book provides confidence that the group  
is well positioned to deliver overall growth  
in 201 5 and beyond
john morgan 
chief executive
 strategic report 02–46 governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
chief executive’s review 18 financial statements 77–116 governance 47–76 strategic report 02–46
strategic report
morgan sindall group plc annual report 2014
chief executive’s review 19
group revenue for the year was 6 up on the prior year at £222bn with  
all divisions delivering revenue growth with the exception of construction  
 infrastructure growth was driven by fit out up 19 affordable  
housing up 1 1 and urban regeneration up 83 whilst construction  
 infrastructure revenue was down 5
group profitability was adversely impacted by a small number of 
construction contracts in construction  infrastructure which was 
announced in october and which offset strong performances from fit out 
and urban regeneration this resulted in adjusted operating profit of 
£289m down 14 on the prior year with adjusted operating margin of 
13 201 3 16 operating profit included a significantly lower profit from 
the sale of investments of £19m compared to the prior year 201 3 £99m 
2014 has seen a significant shift in the balance of our profits with the 
anticipated increase in contribution from urban regeneration reinforcing  
our confidence in the group’s longterm strategy of investment in both 
construction and regeneration activities urban regeneration’s performance 
has been recognised by winning the coveted estates gazette’s national 
property company of the year 2014 award
the group’s committed order book as at 31 december 2014 was £27bn 
an increase of 1 1 since the previous year end driven by growth in the order 
books of fit out up 70 affordable housing up 16 urban regeneration 
up 38 and construction  infrastructure up 3 our regeneration and 
development pipeline has grown by 6 to £32bn 201 3 £30bn with our 
urban regeneration division delivering a strong set of results and affordable 
housing now well positioned to increase its contributions from regeneration 
in 2016 and beyond
the general operating environment for construction has undoubtedly 
remained challenging this year despite the more positive market conditions 
margins have remained under pressure from cost inflation and skills 
shortages and this has been most acute in london and the south east 
however as a result of the upturn in activity the quality of our order book 
has improved as the tendering process returns to higher levels of negotiated 
twostage tenders rather than fixed price contracts our fit out division has 
traded strongly performing above expectation through its ability to react 
quickly to increased occupier confidence and capitalising on its reputation  
as a leading specialist in fit out and refurbishment projects across the  
group the divisions have been successful in securing major contracts 
winning positions on new frameworks and delivering a high level of work 
through longterm frameworks
within the construction  infrastructure division a flatter management 
structure has been introduced to create a more efficient company for 
growth we have welcomed pat boyle to the business with overall 
responsibility for the division’s construction and design business and nick 
fletcher has taken on responsibility for the division’s infrastructure activities 
both are highly respected and experienced professionals who report  
directly to me and they are working closely together to deliver complex 
integrated construction and infrastructure projects for our clients
more than ever collaboration is a vital component in the uk construction 
industry today we continue to work closely with clients and partners to  
gain a real understanding of the challenges they face and to build longterm 
relationships our divisions are identifying opportunities to work together  
to secure competitive advantage and demonstrate how our integrated 
capability can add value we continue to develop stronger relationships 
with our supply chain to ensure that together we can deliver ever higher 
standards in quality and safety though our philosophy of perfect delivery
we remain committed to sustainability as one of the uk’s leading 
construction groups we take our responsibilities seriously within our sphere 
of influence and strive to minimise any adverse impact of our operations on 
the communities within which we operate and on the wider environment 
successful sustainable business practice creates value by enabling growth 
delivering cost savings and enhancing our risk management processes  
it also provides a key differentiator for the group as we continue our focus  
on attracting and retaining the best talent in the industry
looking ahead to 201 5 lower returns in construction  infrastructure are 
expected to remain for at least the first half of the year as lower margin 
construction contracts tendered in 201 2–201 3 are worked through to 
completion however the continued positive momentum expected within  
fit out affordable housing and urban regeneration together with further 
investment programmes in regeneration opportunities and supported by  
the improvement in the quality of our order book provides confidence that 
the group is well positioned to deliver overall growth in 201 5 and beyond
business review
the following business review is given on an adjusted basis unless otherwise 
stated
order book and regeneration and development pipeline
the divisional split of the group’s committed order book as at 31 december 
2014 is shown below
 fy 2014 fy 201 3  change 
order book £m £m 
construction  infrastructure 1537 1499 3 
fit out  241 142 70 
affordable housing  
 – construction and services 673 581 16 
urban regeneration 197 143 38 
investments 19 38 50 
interdivisional eliminations 9 – 
group committed order book 2658 2403  1 1
 ‘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
in addition the group’s regeneration and development pipeline
†
 was £32bn 
an increase of 6 from the previous year end
 fy 2014 fy 201 3  change 
regeneration and development pipeline £m £m 
affordable housing – mixed tenure 770 715 8 
urban regeneration 2215 1953 13 
investments 242 368 34
group regeneration and  
 development pipeline 3227 3036 6
 
†
‘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 
basis of preparation 
the term ‘adjusted’ excludes the impact of intangible amortisation of £24m 2013 intangible amortisation £27m exceptional operating 
items £147m and the deferred tax credit arising due to the change in the uk corporation tax £25m 
chief executive’s review continued strategic report
chief executive’s review continued
construction  infrastructure
5
72
70bps
revenue £m 
2013 1234
2014 1172
operating profit – adjusted £m
2013 127
2014 35
operating margin – adjusted 
2013 10
2014 03
the construction  infrastructure result for the year was down significantly 
on the prior year being severely impacted by the performance of the 
construction activities in the second half
divisional revenue of £1 1 72m was down 5 on the prior year 201 3 
£1234m primarily driven by lower activity in construction arising from 
ongoing contract selectivity and a focus on the operational delivery of active 
projects split by type of activity construction accounted for 55 of 
divisional revenue at £639m which was down 1 1 compared to prior year 
whilst infrastructure was 45 of divisional revenue at £533m up 3
whilst the infrastructure business performed reasonably well across the year 
delivery pressures in london and the south’s construction activities during 
the second half resulted in an escalation of costs and increased forecast costs 
to complete thereby adversely impacting profitability and margin these 
delivery pressures related mainly to a small number of construction contracts 
which are all due to complete within the first half of 201 5 and which all 
experienced programme slippage and increases in costs to complete as a 
result of inflation and additional unforecast resource requirements the full 
impact was mitigated in part by further overhead cost savings and provision 
movements including property dilapidation provisions no longer required
consequently divisional operating margin reduced to 03 201 3 10 
giving an operating profit of £35m 201 3 £1 27m
in order to address these operational issues and to support the platform  
for future profitable growth management teams have been changed and 
strengthened at both local and divisional levels during the year in enhancing 
the skills and experience in the division this has reinforced the necessary 
systems and disciplines within bid selection winning work and procurement 
to support future margin improvement
the committed order book at the year end was £1537m up 3 since the 
start of the year importantly the quality of the order book has improved 
significantly with only 1 5 of the order book by value being won through 
competitive singlestage procurement processes with the remaining 85 
being derived through negotiatedframeworktwostage bidding 
procurement processes at the same time last year the proportion of work 
derived through negotiatedframeworktwostage bidding procurement 
processes was only 62 by value and this positive shift in the balance of 
orders by procurement type supports the opportunity for future margin 
improvement
in terms of market sectors served the largest market was transport 
highways aviation and rail at 33 of divisional revenue with education 
remaining a significant 23 and water contributing 1 1
within highways significant work has been won through the highways 
agency’s national major projects framework awards have included the 
appointment in joint venture and as one of four delivery partners to a 
£184m contract to upgrade 1 7 miles of the m60 and m62 to a smart 
motorway and also in joint venture a £35m barrier renewal works package 
between junctions 19 and 16 of the m1 to facilitate a future smart 
motorway scheme building on this success the division has been appointed 
in joint venture by the highways agency to the largest ever framework for 
the improvement of england’s motorways and major a roads the fouryear 
framework with an option to extend by a further two years is estimated to 
be worth up to £1 50m per annum to the joint venture within aviation the 
division has been selected as one of four partners at heathrow airport to 
deliver a £15bn programme of upgrades and improvements over the next 
five years following the completion of the rehabilitation of the northern  
and southern runways
an integrated approach to community regeneration
investment
• slough borough council
• investments
construction
• construction  infrastructure
• affordable housing
joint venture partnership delivering 
housing and social infrastructure to 
slough over a 1 5year period
in rail operating centres in manchester and rugby worth £197m and £1 7m 
respectively have been handed over and a £1 1 3m position on the £250m 
egip alliance has been awarded by network rail this twoyear project will 
deliver a critical rail infrastructure upgrade and forms part of the £7 42m 
scottish governmentfunded investment to transform transport in the 
country work has also been secured through the multiasset framework 
agreement including a £20m contract in joint venture to refurbish roof 
spans at paddington station
in water the division continues to work within three frameworks all of which 
have been extended into amp6 the 201 5–2020 asset management period
highlights within energy have included new framework agreements and 
awards within existing longterm frameworks western power distribution 
has awarded the division a threeyear framework agreement with two 
oneyear extension options at an estimated annual value of over £30m to 
deliver the excavation cable laying and reinstatement works within its west 
midlands region a fiveyear agreement in joint venture has been signed  
 strategic report 02–46 governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
chief executive’s review 20 financial statements 77–116 governance 47–76 strategic report 02–46
strategic report
for electricity transmission overhead line work with scottish hydro electric 
transmission plc and a position on national grid’s national onshore 
underground cabling framework has been secured in the nuclear sector the 
division along with the s m stoller corp and newport news nuclear both 
subsidiary companies of huntington ingalls industries has signed a longterm 
agreement to work together to offer a combined delivery capability to  
the uk nuclear market given the uk government investment in the nuclear 
industry the collaboration enables the division to provide an enhanced  
range of new build and decommissioning services at sellafield the division 
continues to provide a range of essential infrastructure asset services 
through its joint venture infrastructure strategic alliance contract secured  
in 201 2 the contract has a potential value of £1 1bn over a possible 
maximum duration of 1 5 years
an integrated approach to modernising a historic market town
investment
• south northamptonshire council
• investments
construction
• affordable housing 
• construction  infrastructure
regeneration and preservation  
of the moat lane area in towcester 
with a new civic building and high 
quality retail commercial and 
residential developments
within other parts of infrastructure the division has continued to target 
growth sectors with high barriers to entry it is currently working on some  
of the uk’s most complex civil infrastructure projects including providing  
its industryleading expertise in tunnelling in joint venture on thames  
water’s £635m lee tunnel and on the c510 whitechapel and liverpool 
street station tunnels contract for crossrail
the value of the division’s integrated construction and infrastructure 
capabilities was recognised in the award of alongside two other contractors 
a position on a major £300m eightyear redevelopment programme for  
bae systems which will transform its submarine building capabilities the 
programme will include a mix of new build projects and the refurbishment  
of existing facilities in what is the most significant redevelopment of the 
barrowinfurness site since the 1980s 
within education the division will play a significant role within the pf2 psbp  
north west batch following the appointment of the investments division  
and equitix limited by the education funding agency as the selected bidder 
to deliver five secondary and seven primary schools across the region  
also within education the london borough of newham has awarded the 
division a circa £14m contract to upgrade six primary schools
overall the division’s operating environment has improved over the year  
as the market recovery has gained traction despite the challenges presented 
by cost inflation driven by labour and material demands looking ahead to 
201 5 continued lower returns are expected through the first half at least  
as the construction contracts in london and the south are completed  
and other lower margin construction contracts procured during the more  
difficult pricing environment of 201 2–201 3 are worked through to  
delivery and completion thereafter the division is expected to generate 
increasing margins and returns from the higher quality order book
fit out
19
38
40bps
revenue £m 
2013 427
2014 507
operating profit – adjusted £m
2013 109
2014 150
operating margin – adjusted 
2013 26
2014 30
fit out has delivered a strong performance in the year driven by improved 
market conditions and the division’s ongoing focus on operational delivery 
revenue of £507m 201 3 £427m was up 19 with operating margin 
increasing to 30 resulting in operating profit of £1 50m 201 3 £109m 
up 38
 
creating a workspace that stimulates innovation
project
walbrook building  
london
client
xchanging
division
fit out
global technology company xchanging’s 
strapline is ‘inspiring innovation’ and their  
new offices were designed and built to  
do just that
the 50000 sq ft office in the walbrook 
building was designed for activity 
based working with spaces for private 
conversations quiet work phone  
booths and client areas hotdesking was 
introduced with each person allocated  
a locker rather than a desk hightech 
demonstration rooms provided places  
to showcase xchanging’s innovative 
solutions 
the new office reflects xchanging’s core 
values and provides a more engaging 
environment for their employees 
and clients
chief executive’s review continued
morgan sindall group plc annual report 2014
chief executive’s review 21 strategic report
chief executive’s review continued
the division has successfully balanced the significant upturn in activity  
and the consequent demands placed on the supply chain with improved 
operational performance which has supported the margin improvement 
in the year the second half of the year particularly has seen a significant 
increase in activity in line with the improving market conditions with 62  
of annual revenue being generated during that period additionally the  
upturn in bidding activity and number of contract wins in the year has led  
to the committed order book at the year end being £241m up a strong  
70 from the prior year end and includes a higher level of contracts  
on less onerous terms and conditions
the london region accounted for 67 of revenue 201 3 7 4 with other 
regions at 33 201 3 26 all showing strong revenue and profit growth  
in the year split by type of work 79 of revenue was traditional fit out  
work compared to 21 ‘design and build’ whilst 7 4 of revenue related  
to fitting out of existing space 31 refurbishment ‘in occupation’  
compared to 26 which was new office fit out
a number of notable appointments in the year have emphasised the division’s 
expertise in refurbishment of offices whilst in occupation kpmg appointed 
the division to fit out 21 5000 sq ft of office space in canary wharf along 
with client and executive areas at its w1 premises with a combined value  
of over £40m and the division won the canadian high commission’s £30m 
renovation and refurbishment project of canada house and an adjacent 
property
additionally the division’s guardian news  media project in london received 
a national accolade when presented with the british council for office’s 2014 
‘test of time’ award the division successfully fitted out the 142000 sq ft 
purposebuilt kings place that provides a setting fit for the world’s oldest 
independent newspaper whilst providing the technological and environmental 
requirements demanded by a global media brand
outside london a high level of work has been secured through public sector 
construction frameworks working alongside construction  infrastructure 
these include major projects for reading borough council through the iese 
framework for bristol city council through the construction framework 
south west and also for luton borough council under the smarte east 
framework in birmingham fit out is underway on the vox conference 
centre an integral part of the new circa 590000 sq ft resorts world 
complex on the nec campus
split by end market sector key markets served are commercial offices 7 4 
of revenue higher education 8 of revenue together with retail banking 
government and local authority work and work for charitable organisations
the commercial office sector remains the division’s core market which  
has driven growth throughout the year through continuing positive market 
sentiment the predicted spike in lease expiries combined with a shortage  
of premium grade a office space and ongoing pressure on central and local 
government to consolidate property portfolios
higher education has presented some positive opportunities for the division 
as competition amongst universities to attract students remains strong  
in london the division is working for eight leading universities including  
a major contract for university college london and new wins for london 
school of economics and kingston university retail banking continues  
to offer opportunities as banks continue to consolidate and rationalise  
their estates
looking ahead it is anticipated that fit out will build on the current positive 
momentum through 201 5 and beyond and with its commitment to 
operational improvement and customer focus the division is well placed  
to deliver further margin and profit growth
affordable housing
total divisional revenue of £423m was up 1 1 201 3 £381m whilst 
operating profit of £60m was down 30 on the prior year 201 3 £86m 
impacted by an expected loss of £35m in the response maintenance 
activities
affordable housing’s activities are divided into two main categories 
regeneration 27 of revenue which refers to the division’s mixedtenure 
regeneration housing schemes and construction  services 73 of 
revenue which includes new build housing contracting and planned and 
response maintenance services together the division delivers a full range  
of housing solutions for its partners and customers
in regeneration revenue was up 6 to £1 1 5m 201 3 £108m with 
operating profit of £107m of this 69 of revenue related to open market 
sales at an average sales price of £167 000 whilst 31 of revenue related  
to approximately 300 units through the social housing contracting element 
of the mixedtenure schemes
capital employed in the regeneration activities at the year end was £1 23m 
up by 27 over the year of this £75m is capital invested in returning  
active mixedtenure schemes £30m relates to historic shared equity  
loans and rental properties and £18m relates to land not currently being 
actively developed
the 8 increase in its regeneration and development pipeline at the year  
end to £770m 201 3 £71 5m has reinforced the market position and profit 
potential of this area of the business confidence in the housing market 
supported by the government’s help to buy initiative has resulted in new 
opportunities in mixedtenure projects developed in partnership with housing 
associations and local authorities and increased sales activity across all 
regions
during the year the division has capitalised on public sector land 
opportunities procured through the gla and the hca partner panels the 
division has positions on the fouryear london development panel which is 
expected to procure up to £5bn of housingled mixeduse developments  
on public land and on all four regional lots on the hca’s fouryear delivery 
partner panel 2 £4bn housing framework new awards this year include  
the london borough of enfield’s major £50m ponders end electric quarter 
development the appointment as preferred partner for the delivery  
of 600 homes working in partnership with the borough council of king’s  
lynn and west norfolk and the commencement of the fouryear £40m 
mixedtenure homes scheme in cockermouth west cumbria
11
30
90bps
revenue £m 
2013 381
2014 423
operating profit – adjusted £m
2013 86
2014 60
operating margin – adjusted 
2013 23
2014 14
 strategic report 02–46 governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
chief executive’s review 22 financial statements 77–116 governance 47–76 strategic report 02–46
strategic report
positive momentum has also been maintained across all the division’s existing 
landmark regeneration programmes further underpinning the division’s 
expertise in delivering complex longterm schemes in london work has 
started on site on the london borough of barking and dagenham sixyear 
£838m lymington mews housing development and demolition is underway 
on the £270m woolwich regeneration programme where 1500 mixed
tenure homes are being created in partnership with royal borough of 
greenwich and asra housing group both these schemes will require working 
capital investment through 201 5 with the resultant profits being generated 
in 2016 and beyond
working as a partner in the compendium living joint venture with riverside 
housing the circa 10year £108m castleward urban village project is 
moving forward as the division progresses the first phase creating 164 
mixedtenure homes and 1 2 commercial units
collaboration with other group divisions has provided additional growth 
opportunities with the division delivering quality affordable housing within 
largescale mixeduse regeneration programmes alongside investments 
urban regeneration and construction  infrastructure
in construction  services new build housing contracting revenue of £1 39m 
201 3 £92m equates to approximately 1 1 50 units completed and has 
increased by 51 with the business maintaining its rigorous selection process 
although margins have been impacted by materials and skills shortages as 
well as inflationary pressures and continued competitive tendering scotland 
has proved to be one of the most successful regions with over £59m of 
contracts secured increased levels of local authority work have been won  
as councils are granted new powers to borrow to fund the construction of 
new council homes at mod stafford the division is on schedule to complete 
a £51m contract and hand over 346 new homes for army families returning 
to the uk
in planned maintenance revenue of £108m 201 3 £1 1 3m represented  
a 4 decline on last year the market continues to provide a steady flow  
of work as local authorities and housing associations invest in improving 
housing stock the division has capitalised on its proven track record  
in external environment improvements further extending its specialist 
expertise in working on highrise tower blocks through its appointments  
to deliver circa £1 1m of highrise improvement programmes in aberdeen 
and glasgow the division is currently working for sandwell metropolitan 
borough council on the refurbishment of highrise buildings and the 
relationship has been further extended through the appointment to  
a framework that will undertake a £50m package of repairs and 
improvements to 6000 council homes
response maintenance revenue of £61m 201 3 £68m has declined by 
10 with an operating loss as expected of £35m 201 3 loss £12m  
as part of the repositioning and turnaround of the business a new and 
sectorexperienced management team has been recruited during the year 
and investment made in business systems to improve operational efficiencies 
and enhance productivity and delivery additionally the recent rebranding 
and relaunch of the business as morgan sindall property services paves  
the way to offer a broader property service solution to a client base across 
the rest of the group with a plan to achieve a minimum of breakeven  
by 2016
a key challenge for response maintenance remains winning work on 
acceptable terms and progress has been made in this respect during the 
year a number of contracts have been won including the provision of  
facilities management services within a 28year £328m north tyneside 
council sheltered housing pfi and a fiveyear £22m agreement with  
estuary housing association to provide repairs services to its stock  
of over 3900 homes
overall the committed order book for construction  services was 
£673m 201 3 £581m an increase of 16 of this response maintenance 
accounted for £355m 201 3 £257m
looking ahead affordable housing will continue with its strategy of growing 
its regeneration pipeline increasing development across all its existing 
schemes and winning new opportunities to unlock land and deliver complex 
mixedtenure schemes through local authority partnerships and collaborative 
working with group divisions due to the timing of current developments and 
new opportunities an increase in working capital is expected in 201 5 with 
significant profit benefit anticipated in 2016 and beyond notwithstanding 
this 201 5 is expected to show margin and profit growth through  
a combination of its existing mixedtenure schemes a more positive 
contracting environment and an improved performance from response 
maintenance
 
providing a 24hour reactive repairs  
service for 3300 homes
project
response and planned  
maintenance services – 
essex greater london 
and suffolk
client
estuary housing 
association
division
affordable housing
estuary housing association appointed the 
division to provide repairs services to over 
3300 homes residents are provided with  
a 24hour 365 dayayear reactive repairs 
service the fiveyear £22m contract also 
includes planned maintenance programmes 
and work carried out to refurbish empty 
properties to return them to rentable 
condition 
sharing estuary’s commitment to 
communities the division expects to create 
eight apprenticeships over the life of the 
contract as well as a significant number of 
work placements and training programmes
chief executive’s review continued
morgan sindall group plc annual report 2014
chief executive’s review 23 strategic report
chief executive’s review continued
an integrated approach to new and improved schools
investment
• equitix limited and education 
funding agency
• investments
construction
• construction  infrastructure
priority schools building programme 
north west batch – five new 
secondary and seven primary 
schools that will benefit 8 1 50 pupils 
and also create 1 24 nursery places
urban regeneration
urban regeneration has delivered a strong performance with a significant 
increase in operating profit to £100m 201 3 £10m generated from its 
development portfolio as scheme phases reach completion working with 
landowners and public sector partners to unlock value from underdeveloped 
assets and bring about urban renewal the division has also increased its 
regeneration and development pipeline by 1 3 to £22bn
capital employed
1
 at the year end was £494m this is calculated after 
deducting nonrecourse debt of £1 7m and deferred consideration on the 
purchase of interests in the isis waterside regeneration joint venture  
of £14m average capital employed
1
 was £499m with the overall return  
on average capital employed
2
 of 17
major contributors to the increase in profit include completions of the  
sixth phase of the smithfield northern quarter regeneration scheme in 
manchester kpmg’s prelet regional headquarters in leeds and a multi
storey car park in stockport
additionally good progress has been made with developments through its 
two strategic joint ventures the governmentbacked english cities fund 
‘ecf’ and isis waterside regeneration the success of ecf a partnership 
with the hca and legal  general property has resulted in completions of 
the hotel and car park elements of the salford central regeneration scheme 
plus completions at canning town and plymouth through isis waterside 
regeneration a partnership with the canal  river trust profits have been 
generated from completions at brentford and islington wharf manchester
83
average capital employed
1
 last 12 months £m 
2013 535
2014 499
2013 514
2014 494
capital employed
1
 at year end £m
revenue £m
900 operating profit – adjusted 
2013 62
2014 113
2013 10
2014 100
 
building 41 3 new mixedtenure  
energyefficient homes
project
lymington fields 
dagenham
partners
greater london 
authority and  
home group
division
affordable housing
lymington fields was one of the first sites  
to be released by the mayor of london  
as part of his drive to unlock development 
on public sectorowned land in east london 
this brownfield site regeneration project 
started in january 2014 and will deliver  
41 3 new homes by 2019 of these  
252 homes will be for private sale by  
the affordable housing division and  
161 affordable homes for home group for  
rent and shared ownership all homes will 
incorporate energyefficient features 
including photovoltaic solar panels and  
high efficiency boilers
the £838m development is part of 
affordable housing’s strategy to deliver 
largescale mixedtenure regeneration 
projects across england scotland  
and wales 
 strategic report 02–46 governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
chief executive’s review 24 financial statements 77–116 governance 47–76 strategic report 02–46
strategic report
across all its developments improved residential sales totalling 347 units 
201 3 1 58 have underpinned the performance with schemes prioritising 
their residential content to meet national demand good progress has  
also been made in the growing institutional private rented sector ‘prs’  
with investors forward buying over 200 units within schemes located 
in manchester bristol and lewisham
four new development agreements valued at £300m have been secured 
during the year including the warrington town centre development and  
an agreement with lambeth council to deliver a £1 35m regeneration 
scheme in brixton
within the currently active schemes planning consents have been granted 
on 10 major projects with a total development value of £500m most 
notable was the full approval of the planning application for the £107m 
marischal square development fully funded by aviva investors and set  
to transform a key location in aberdeen city centre other projects which  
are currently being advanced are the first phase of the south shields 365 
regeneration project phase three of the £180m rathbone market scheme 
in canning town through ecf creating 216 homes and logic leeds where 
work has commenced on the division’s 1 10acre manufacturing and 
distribution development in the leeds city regional enterprise zone
major milestones include the commencement of construction on the first 
phase of the £200m lewisham gateway development in south east london 
a total of £280m of ongoing construction activity is currently underway 
across 18 sites with other major site starts including the john lewis at  
home and waitrose stores in basingstoke new office buildings in chester 
and salford and a new stateoftheart innovation centre at the £100m 
northshore regeneration scheme in stocktonontees additionally  
the division continues to add value to partnerships and create valuable 
opportunities for sister divisions providing work for construction  
infrastructure and affordable housing on four major schemes affordable 
housing is also a joint venture partner on two major regeneration schemes  
in scotland and at northshore in stocktonontees
looking forward urban regeneration is expected to continue to deliver 
strong profits as schemes within its forward development programme 
mature providing a consistent annual double digit return on average capital 
employed
2
 with over 750 residential units scheduled for completion  
in 201 5 the division is well placed to help meet the demand for quality 
homes in sustainable regeneration locations as it continues to bring  
forward residential elements and increase its footprint across regeneration 
areas as a result further working capital will be invested through 201 5  
and 2016 to support the division’s ongoing developments and overall 
regeneration strategy
1  capital employed is calculated as total assets excluding goodwill intangibles and cash  
less total liabilities excluding corporation tax deferred tax and intercompany financing 
at year end nonrecourse debt was £170m 2013 £81m and deferred consideration 
was £136m 2013 £178m average nonrecourse debt was £162m 2013 £39m 
and average deferred consideration was £157m 2013 £183m
2  return on average capital employed  adjusted operating profit less interest on 
nonrecourse debt less unwind of discount on deferred consideration divided by  
average capital employed interest on nonrecourse debt was £12m 2013 £02m  
and the unwind of discount on deferred consideration was £05m 2013 £06m
 
transforming derelict land into a vibrant  
mixeduse community
project
millbay plymouth 
partners
legal  general  
and the homes and 
communities agency 
division
urban regeneration
as development partner in english cities  
fund urban regeneration is transforming  
the derelict 15acre brunel docks area  
into an exciting new harbourside community 
the scheme will deliver a mix of residential  
and commercial space including bars 
restaurants and shops
the first and second phases of predominantly 
residential development are complete and  
102 homes at quadrant quay are due for 
completion in early 2015
in addition to its own investment the division 
has leveraged other investment into the area 
the total investment in millbay to date is in 
excess of £90m
chief executive’s review continued
morgan sindall group plc annual report 2014
chief executive’s review 25 strategic report
chief executive’s review continued
investments
the strategic rationale for investments is to unlock prime longterm 
construction and regeneration opportunities for other divisions and create 
value from investments for the group the division creates longterm 
strategic partnerships with public and private sector organisations to realise 
the potential of underutilised assets to promote sustained economic  
growth through regeneration and to drive cost efficiencies through 
innovative and integrated estate management solutions
during the year the division has disposed of its interests in the hull building 
schools for the future programme for £59m resulting in a profit of £17m 
and its shares in pff lancashire ltd for £03m resulting in a profit of £02m 
the divisional result also reflected the impact of a noncash impairment 
charge of £1m which is nonrecurring by its nature against the carrying 
value of one of its remaining investments
in regeneration the division has an acknowledged track record in local  
asset backed vehicle ‘labv’ joint ventures and land swaps providing 
commercial structuring financing solutions and development expertise 
steady momentum has been maintained across its major programmes the 
£1bn 1 5year slough borough council labv and the £350m 20year 
bournemouth town centre labv with work procured for construction  
 infrastructure and affordable housing in bournemouth two major 
projects have been handed over with a private rental sector residential 
project scheduled to commence in 2016 and two further residential 
schemes to begin in 201 5 in slough the £16m community development 
‘the curve’ is scheduled for completion in 201 5 and detailed planning for  
73 homes has been granted the £38m towcester mixeduse regeneration 
and civic accommodation project is also underway in partnership with 
construction  infrastructure and affordable housing
85
average capital employed
1
 last 12 months £m 
2013 227
2014 17 3
capital employed
1
 at year end £m
2013 187
2014 202
operating profit – adjusted 
2013 61
2014 09
 
regenerating town centre with 1 1m sq ft  
mixeduse development
project
talbot gateway 
blackpool
partner
blackpool borough 
council
division
urban regeneration
talbot gateway is a major mixeduse 
scheme delivered in partnership with 
blackpool borough council which is 
regenerating the area around blackpool 
north railway station and talbot road  
it will provide a new central business  
district and civic quarter with 1 1m sq ft  
of development including grade a offices 
a hotel a refurbished multistorey car  
park a supermarket retail units cafés  
and restaurants
the first phase of development comprising  
a new council office building sainsbury’s 
supermarket and a refurbished 650space 
multistorey car park was completed in 
2014 the second phase will deliver a new 
town centre hotel on the site of an existing 
surface car park
an integrated approach to sustainable housing
development
• doncaster metropolitan  
district council
• urban regeneration
construction
• affordable housing
‘the gables’ – 54 modern high 
quality homes in doncaster with  
low running costs and maintenance 
needs
 strategic report 02–46 governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
chief executive’s review 26 financial statements 77–116 governance 47–76 strategic report 02–46
strategic report
the division has developed significant pfi expertise within the education 
sector and has been appointed with equitix limited by the education  
funding agency as its selected bidder for the pf2 psbp  north west batch 
with a capital value of between £80m and £1 20m the programme will 
provide five secondary and seven primary schools that will benefit from 
construction  infrastructure’s experience in school design and construction
an integrated approach to new health centres in scotland
investment
• western territory hub 
programmes board
• investments
construction
• construction  infrastructure
part of the hub west scotland joint 
venture a 10year programme  
to deliver £200m of public sector 
infrastructure projects across west 
scotland including a primary school 
community centre and five 
healthcare centres
the division has also secured increased workloads through the wellspring 
partnership which it leads in scotland and which is delivering £200m public 
sector healthcare and education projects for the western territory hub 
programme board and the scottish futures trust £30m of schemes have 
been delivered this year through the group’s integrated capability with 
design and construction services provided by construction  infrastructure 
through its community solutions business the division has continued to 
contribute revenue and profit through a growing number of management 
and service agreements across a portfolio of health and local authority 
buildings with an asset value of around £750m with its services in  
increasing demand from nhs trusts and local authorities seeking greater 
efficiencies investments anticipates future opportunities to work with  
new public sector partners
in looking to widen the scope of business opportunities for investments  
the division is focusing on transferring knowledge and specialist expertise 
developed across its strategic alliances to new areas of its core sectors 
healthcare and education by positioning itself as development partner  
with private operators the division is looking to capitalise on the increasing 
number of foundation trusts seeking to open private patient units  
whilst also supporting health services local authorities and care providers 
across the country as it delivers a rolling programme of supported living 
accommodation and services through its strategic joint venture hb 
community solutions
looking forward delivering projects within its longterm regeneration 
programmes will remain the key strategic focus for 201 5 at the same  
time the division will maintain its drive to identify opportunities to work  
with new partners and clients creating innovative capitalefficient 
partnerships and leveraging its expertise in project finance development  
and asset management and the group’s integrated delivery capability
1  capital employed  total assets excluding goodwill intangibles corporation tax  
credit and cash less total liabilities
note  
directors’ valuation of investments can only be made in circumstances where future  
cash flows are near certain the investments division holds a number of interests in 
developments arrangements and schemes which are also included in ‘capital employed’ 
where directors’ valuation is appropriate current valuation is £30m relating to two  
2013 four investments with carrying value of £30m
 
innovating to minimise passenger disruption
project
haymarket station 
edinburgh
client
network rail
division
construction  
infrastructure
scotland’s fourth busiest railway station was 
redeveloped to increase capacity the grade 
a listed station now has a larger modern 
concourse with ticket office and retail space 
improved platforms new bridging structure 
and redeveloped entrance
as a key stop on the edinburghglasgow 
route continued operation was crucial and  
the team worked closely with network rail 
scotrail and station staff on a daily basis  
to minimise passenger disruption an 
innovative prefabrication system was  
devised to install the bridge by assembling  
two 100 tonnemodules away from the 
tracks and lifting them into position with  
a 1000 tonne crane the method was  
tested using a 4d building information  
model ‘bim’
the £25m project won a number of 2014 
awards including rail supplier of the year  
at the scottish transport awards and  
the community engagement category  
at the network rail partnership awards
chief executive’s review continued
morgan sindall group plc annual report 2014
chief executive’s review 27 group profitability was adversely impacted  
by a small number of construction contracts  
in construction  infrastructure which  
offset strong performances from fit out  
and urban regeneration
steve crummett 
finance director
strategic report
finance review
 strategic report 02–46 governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
finance review 28 financial statements 77–116 governance 47–76 strategic report 02–46
strategic report
relationship with hmrc in 201 3 the group’s effective tax rate was much 
lower due to a revaluation of deferred tax balances to reflect a reduction  
in the uk statutory tax rate and having recognised a number of gains 
on the disposals of joint ventures which did not give rise to tax liabilities
earnings per share
adjusted earnings per share decreased by 23 from 609p to 467p  
basic earnings per share has increased by 19 to 423p from 354p as there 
were no exceptional operating items in the current year 201 3 £147m
dividends
the board recommends a final dividend of 1 50p payable on 29 may 201 5 
to shareholders on the register at the close of business on 1 may 201 5  
the exdividend date is 30 april 201 5 this takes the total dividend to 27 0p 
201 3 27 0p level with the previous year
net 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 capitalised arrangement fees and interest accruals’
net working capital of £552m has increased principally due to investment 
in regeneration activities in affordable housing and urban regeneration  
net working capitalrevenue ratio was 25 201 3 32
free cash flow reconciliation £m
operating profit – adjusted
1
noncash adjustments
2
net capital expenditure and finance leases
working capital
other
3
operating cash flow
net interest excluding joint ventures
tax
free cash flow
289
37
68
118
42
24
47
44
67
0
1 before intangible amortisation £24m
2  adjustments include depreciation share option charge shared equity valuation movements elimination of joint venture profits investment impairment and net noncash  
provision movements
3  ‘other’ includes joint venture dividends and interest income joint venture gains on disposal cash provisions utilised sale of investment properties shared equity redemptions  
and additional pension contributions
trading performance
revenue increased by 6 to £2220m 201 3 £2095m with committed 
order book increasing 1 1 to £27bn and the regeneration and development 
pipeline increasing 6 to £32bn
adjusted gross margin was unchanged at 82 201 3 82 with strong 
margin improvements in fit out and urban regeneration diluted by 
underperformance in construction  infrastructure
adjusted operating profit of £289m was down 14 with adjusted 
operating margin of 13 201 3 16 this included profit from the sale  
of investments totalling £19m 201 3 £99m and property provision 
releases of £48m 201 3 £28m
net finance expense
net finance expense increased to £37m 201 3 £23m impacted primarily 
by higher amortisation of bank fees and nonutilisation charges together 
with higher net interest on net debt and lower interest received from  
joint ventures 
tax
the group’s adjusted tax rate increased to 21 close to the uk statutory 
corporation tax rate of 215 almost all the group’s operations and profits 
are in the uk and the group maintains an open and constructive working 
2014 2013
revenue £2220m £2095m
operating profit – adjusted £289m £336m
profit before tax – adjusted £252m £313m
earnings per share – adjusted 467p 609p
year end net cash balance £557m £697m
average net debt £88m £190m
dividend per share 270p 270p
operating profit – reported £265m £162m
profit before tax – reported £228m £139m
basic earnings per share 423p 354p
 adjusted is defined as before intangible amortisation £24m exceptional operating items nil and in the case of earnings per share deferred tax credit due to changes in the statutory  
tax rate nil 2013 intangible amortisation £27m exceptional operating items £147m and deferred tax credit due to changes in the statutory tax rate £25m
finance review continued
morgan sindall group plc annual report 2014
finance review 29 strategic report
finance review continued
cash flow
the group generated an adjusted operating cash inflow of £24m compared 
to an inflow in 201 3 of £149m this is due to increased investment  
in inventory of £412m and higher receivables due to increased trading 
volumes after corporation tax payments and finance costs there was  
a free cash outflow of £67m
net cash
net cash decreased by £140m to £557m at 31 december 2014 this 
reflected a free cash outflow of £67m dividends paid of £1 15m offset  
by proceeds from the disposal of investments totalling £62m and proceeds 
from the issue of new shares of £40m the average daily net debt for the 
year was £90m an improvement on last year 201 3 net debt £190m
banking facilities committed until 2018
in july 2014 the group signed a new £140m committed revolving loan 
facility with four banks which will mature in september 2018 together  
with £30m of facilities signed in 201 3 which mature in 2016 this leaves  
the group appropriately financed for its anticipated funding requirements 
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 any 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 2014 contract bonds in issue under uncommitted 
facilities covered £208 1m 201 3 £1853m of contract commitments  
of the group
further information on the group’s use of financial instruments is explained  
in note 27 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 2014 the group had net cash of £557m and undrawn 
committed banking facilities of £1 75m of which £1 55m are in place for 
greater than one year 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
 strategic report 02–46 governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
finance review 30 strategic report
morgan sindall group plc annual report 2014
risk review 31
the board recognises the importance of risk in running 
the business and that risks need to remain under regular 
review owing to the nature of its activities risk is at 
the heart of everything the group does but careful 
risk management is also perceived as an opportunity 
accordingly the group has a long established culture 
of mature risk and control processes to manage both 
material and daytoday circumstances 
the group’s risk and governance model is designed so that the board 
maintains overall responsibility for risk while each division independently  
works to identify control and mitigate threats within their operations to the 
group achieving its goals the reporting structure ensures that risk appetite is 
determined and risks managed within tolerance levels acceptable to the board 
the processes for the given business period are described in principle below 
• each year the divisional boards undertake a comprehensive business planning 
process to identify objectives and set strategies to achieve their goals
• the executive directors meet with the divisions monthly throughout the 
year using an established agenda and reporting format covering a range of 
matters that must be brought to their attention this allows the executive 
directors to ensure that the board maintains oversight and control over  
the material aspects of strategic financial operational and risk issues
• the risk environment is further underpinned by a clear set of group and 
divisional delegated authorities that define processes and procedures for 
approving material decisions particularly with regard to project selectivity 
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 executive directors with other key corporate functions compile their 
own assessment thus ensuring that a topdown bottomup approach  
is undertaken when considering the groupwide environment these risks 
are then routinely considered at the board meetings to ensure that they 
remain under continuous review 
• an annual internal audit plan approved by the audit committee and 
covering both project and corporate level risks is developed by focusing 
upon the principal 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 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 group’s overall view of risk can be summarised as follows
general there is an underlying decrease in the overall risk perceived by  
the group due partly to the completion of a small number of contracts in 
construction  infrastructure which had experienced timetable slippages 
and increased costs other factors reducing risk are the increase in more 
favourable project tendering terms into 201 5 and the continued recovery  
of the uk housing market although there are signs of the housing market 
cooling this is discussed in more detail in the following risk report but is 
substantially a result of the improving market conditions currently prevailing 
in the uk economy although there remains some uncertainty ahead of the 
general election in 201 5 and the effect this may have on market confidence
construction contracts terms procurement routes and entry margins  
are all more favourable recessionary projects that were secured with less 
favourable terms are drawing to a close and should be substantially traded 
out by the half year which added to improvements in project controls means 
the group anticipates a more favourable risk and opportunity profile than in 
recent years
development the group’s schemes are subject to economic viability  
are nonspeculative and have robust risk and capital controls allowing  
the group to take advantage of the current prevailing uk economy but  
at the same time limiting any possible negative fluctuations in the market
capital and cash the group’s banking facilities were substantively renewed 
this year and will mature in september 2018 which together with its  
robust cash and capital controls allow the group to confidently manage its 
investment portfolio into the foreseeable future
resource the people promise initiated in 2014 is gathering momentum 
people boards have been developed in each division to implement tools 
focused on succession planning and talent management 201 5 will see 
this investment begin to secure and develop the talent required to enable  
the group’s longerterm growth plans 
the board has identified principal risks to the group achieving its  
strategic goals aligned to different elements of the group’s business  
model see pages 6 to 8 the group’s risk management process ensures 
that principal risks are appropriately mitigated allowing the group to  
deliver value to all stakeholders the principal risks and mitigations are  
shown in the table overleaf
risk review
morgan sindall group board
corporate functions
company secretariat  general counsel  tax  treasury  health safety and environment 
finance  commercial  it  people  supply chain
group delegated authorities
work winning  commercial  financial  statutory  people  corporate
divisional boards
strategy plans  board reporting  business support  delegated authorities  risk identification and mitigation 
policy and process  financialoperational controls and reporting  project controls and reporting
audit remuneration and nominations committees
internal audit
external audit
reporting
financial statements 77–116 governance 47–76 strategic report 02–46
group risk and governance model strategic report
risk review continued
 
principal risks
macro
trend
subcategory –
description and impacts
markets
the markets in which the group operates are affected to varying  
degrees by general macroeconomic conditions the group is therefore 
focused on capitalising on the improving economic conditions and  
shaping the business to take account of future growth indicators  
however there is a risk that business opportunities within the group’s 
strategy may be delayed
there is still some sensitivity in predicting the longerterm outlook  
there remains uncertainty surrounding the uk’s general election  
in 201 5 and its potential effects on market confidence and  
government investment programmes that could impact on the  
group’s longterm strategy 
macroeconomic – new opportunities 
the group has identified the markets and sectors in which it 
anticipates future growth within those areas it remains focused 
on selecting opportunities that will provide sustainable margins 
and repeat business the group must seek to anticipate  
and appropriately respond to changes in the macroeconomic 
environment that may negatively impact on these chosen 
markets and sectors
failure to anticipate and respond to macroeconomic changes 
could result in inappropriate allocation of resources and capital 
this could affect the group’s profitability and cash generation 
market capacity 
positive market conditions have resulted in a risk of potential 
overtrading the group and its supply chain are facing upward 
pressure on cost and skills availability
increased activity levels require rigorous reviews of resource 
levels against anticipated workloads cost inflation in the supply 
chain could impact on the group’s margins
exposure to uk housing market
the uk housing sector is strongly influenced by government 
stimulus and consumer confidence 
if mortgage availability and affordability become untenable  
this could make existing schemes difficult to sell and future 
developments unviable reducing profitability and tying  
up capital
morgan sindall group plc annual report 2014
risk review 32
 strategic report 02–46 governance 47–76 financial statements 77–116 financial statements 77–116 governance 47–76 strategic report 02–46
strategic report
risk review continued
 
mitigation
key monitors 
instruments for subcategory
 
risk change in 2014
• strategic focus on market spread geographical 
capability and diversification offer measured 
protection against the cyclical effect of individual 
markets
• business planning process focuses on future 
markets and opportunities that fit the group’s  
risk appetite
• scale adds resilience by enabling the group  
to compete and work in areas with higher 
barriers to entry 
• added value can be offered to clients when  
group divisions work together
• regular monitoring and reporting of financial 
performance work won prospects and pipeline  
of opportunities 
• market intelligence helps detect potential shifts  
in spending and allows the group to adapt its 
strategy if necessary 
• annual business planning process
• ongoing group and division delegated 
authorities reporting and approval 
process ‘delaps’
• monthly board reporting
• weekly pipeline and order book reporting
• weekly sales and marketing report
decrease
• the group is enjoying greater levels of 
opportunity in its construction and regeneration 
markets and increased development scheme 
volumes
• this is partially tempered by levels of competition 
in the construction market albeit procurement 
routes margins and terms are more favourable 
• development schemes are sensitive to  
market and consumer confidence the group’s 
strategy is geared to commit only if schemes 
prove economically viable this means the 
impact of any negative market fluctuations  
can be minimised
• construction  infrastructure has been 
restructured to take advantage of the current 
economic climate to minimise its risk exposure 
and to maximise opportunities to secure growth
• the group’s delaps has been redesigned to 
align with its future strategic aims risk appetite 
and capital allocation
• rigorous delaps requires teams at bid stage  
to verify that appropriate levels of qualified 
resource are available
• regular review of the group’s operational 
resource levels against anticipated workload 
• supply chain utilisation monitoring and  
reporting and continued focus on initiatives 
within each division
• the group seeks to differentiate itself by being 
the customer of choice to its partners through 
the development and management of effective 
supply chain relationships
• the appointment of a supply chain leadership 
team is planned for the construction  
infrastructure division
• ongoing delaps
• weekly resource planning reviews
• ongoing supply chain feedback reporting
• ongoing tender review boards
increase
• the industry continues to experience skills  
and cost inflation pressures that the group  
is managing through disciplined bid and  
project selection processes
• people promise initiative to help secure and 
develop talent
• monitoring of key uk statistics including 
unemployment lending and affordability
• the board carefully controls commitments  
to development schemes via its rigorous 
threestage development approval process
• development structures limit speculative 
development to minimise the impact  
of negative market fluctuations
• where possible the forward purchase  
of land is subject to economic viability prior  
to commitment
• when feasible sections of largescale  
residential schemes are forward sold  
to institutional investors
• annual business planning process
• monthly board reporting
• monthly sales and marketing report
• monthly development forecasting
no change
• sales volumes pace and inflation have all 
increased in both the investor and private 
markets however macroeconomic influences 
are difficult to predict and could affect future 
confidence
morgan sindall group plc annual report 2014
risk review 33 strategic report
risk review continued
 
principal risks
macro
trend
subcategory –
description and impacts
people
the group’s performance and business conduct affects employees 
subcontractors and the public and in turn can affect its reputation  
and commercial performance the group prides itself on its industry 
leading practices and works in some high profile and technically  
challenging environments 
as markets emerge from recession employee turnover has increased  
if the group does not succeed in attracting and retaining the right  
talent for its future needs it will not be able to develop the business  
as anticipated 
environmental or safety incident 
with upward pressure on the supply chain there is an increased 
risk of an accident or incident occurring causing harm to an 
individual or a community 
this could result in legal proceedings financial penalties 
insurance claims reputational damage and project delays 
consequently the group fails to prequalify in its markets  
due to a poor health safety and environmental ‘hse’  
record and ultimately fails to deliver its targets
failing to attract and retain talented people 
in the current rising economic environment it may become 
increasingly difficult to attract and retain the best people  
this could impact on the group’s ability to create the most 
talented teams possible 
without talent it becomes very difficult to maintain the highest 
levels of customer service and technical excellence that the 
group strives for 
 
morgan sindall group plc annual report 2014
risk review 34
 strategic report 02–46 governance 47–76 financial statements 77–116 financial statements 77–116 governance 47–76 strategic report 02–46
 
mitigation
key monitors 
instruments for subcategory
 
risk change in 2014
• key executives with specific responsibility  
for hse are identified in each division and  
on the board
• hse policy frameworks are widely 
communicated and senior managers  
appointed to manage them in each division  
and at project level 
• groupwide hse forum operates to share 
learning best practice and emerging risks
• established safety systems site visits monitoring 
and reporting procedures including nearmiss 
and potential hazard reporting are in place 
across the group
• investigation and root cause analysis of 
accidents incidents and near misses are 
undertaken 
• regular hse training including behavioural 
training and update courses are provided
• major incident management plans and business 
continuity plans are in place and periodically 
reviewed and tested
• monthly hse board report
• quarterly group hse forum
• ongoing hse project audit and training 
schedules and ratios
• ongoing hse incident investigation 
report
no change
• the group monitors comparable industry leading 
statistics a significant level of work is carried out 
in highly complex and very public environments 
which requires strict observation of the highest 
levels of health and safety executive standards 
• launch of the people promise which aims  
to build the group’s talent pool identify people  
with high potential for future leadership offer 
exciting careers and recognise achievement
• further investment made in graduate trainee 
and apprenticeship schemes to secure an  
annual inflow of new talent
• monitoring of future skills and capability 
requirements 
• 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
• monthly hr board reporting
• weekly employee joiners and leavers 
report
• annual appraisal process
• regular divisional people boards 
to review talent
decrease
• although the industry is suffering from a lack  
of skilled talent and this will remain an issue for 
the foreseeable future the group’s investment  
in the people promise and associated initiatives 
will help position it to meet its growth strategy
morgan sindall group plc annual report 2014
risk review 35
strategic report
risk review continued  
principal risks
macro
trend
subcategory –
description and impacts
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 contracts and  
that these risks are effectively managed 
mispricing contracts 
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 that reduces overall 
gross margin may also lead to damaged client and project team 
relationships
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 and delayed cash ultimately the group 
may need to resort to legal action to resolve disputes which can 
prove costly with uncertain outcomes and can adversely affect 
the group’s client relationships
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 but of varying quality coupled with a limit on the 
availability of the appropriate skills and resources
this may lead to poor understanding of project risks and poor 
project delivery and may ultimately result in contract losses and 
reputational damage 
morgan sindall group plc annual report 2014
risk review 36
strategic report
risk review continued
 strategic report 02–46 governance 47–76 financial statements 77–116 financial statements 77–116 governance 47–76 strategic report 02–46
 
mitigation
key monitors 
instruments for subcategory
 
risk change in 2014
• robust delaps governs the selection of all bids 
and the acceptance of work at key stages
• well established and experienced bidding teams 
and tender process
• robust preselection due diligence and risk 
assessment of individual bids
• contract tender reviews at three key stages 
prequalification pretender and final tender 
submission – each stage approved by 
appropriate level of senior management via 
tender review boards
• ongoing delaps
• ongoing tender review boards
• monthly board reporting
decrease
• improving contract procurement routes and 
terms 
• recessionary contracts with less favourable 
terms substantially traded out by 2014 year end
• work carried out under standard terms 
wherever possible 
• contract terms reviewed at tender stage and 
any variations approved by the appropriate level 
of management 
• well established systems of measuring and 
reporting project progress and estimated 
outturns including contract variations 
• enhanced project management systems with 
lead indicators that assist in the early 
identification of potential issues
• increasing bim adoption helping to overcome 
potential design and constructability issues 
before they become too costly or time 
consuming
• regularised project review process including 
peer reviews to ensure rigour is applied in core 
processes to facilitate early warning and 
subsequent mitigation strategies
• decision to take legal action based on 
appropriate legal advice and suitable provision 
made for legal costs 
• ongoing project financial performance
• ongoing project operational performance
• ongoing electronic project management 
tool dashboard
decrease
• improving contract procurement routes and 
terms with an increasing twostage and 
negotiated approach
• enhanced contract early warning techniques
• business planning identifies markets sectors  
and clients that the group will target
• plans for specific types of work and contract  
size agreed by each division 
• system of delegated authorities governs  
bid selectivity and the acceptance of work 
• staff planning to ensure appropriate levels  
and calibre of resource
• initiatives to select supply chain partners that 
match the group’s expectations in terms  
of quality sustainability and availability
• weekly pipeline and order book reporting
• ongoing tender review boards
• ongoing delaps
• monthly board reporting
• ongoing sales and marketing reporting
• ongoing supply chain feedback reporting
decrease
• majority of material projects are secured with 
repeat clients with strong relationships
• current market allows the division to be more 
selective in respect of which contracts to bid for
morgan sindall group plc annual report 2014
risk review 37
strategic report
risk review continued morgan sindall group plc annual report 2014
risk review 38
strategic report
risk review continued
 
principal risks
macro
trend
subcategory –
description and impacts
winning in our markets continued
poor project delivery 
the quality of workmanship or poor commercial and  
operational delivery of a contract whether by the group  
a joint venture partner or a subcontractor does not meet 
expectations of clients 
interim cash receipts may be withheld impacting on working 
capital project issues may also affect contract profitability 
corporate reputation and the group’s ability to win repeat 
business
 
maximising efficiency
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 and its people do not fully adopt the philosophy  
and culture of perfect delivery 
project failures that will likely 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 client referrals 
 strategic report 02–46 governance 47–76 financial statements 77–116 financial statements 77–116 governance 47–76 strategic report 02–46
 
mitigation
key monitors 
instruments for subcategory
 
risk change in 2014
• regular project review process to facilitate early 
warning and subsequent mitigation strategies
• development of electronic project management 
workbooks to enhance functionality efficiency 
and ability for ‘live’ reporting of key project 
metrics such as programme margin change  
and cash
• escalation process to ensure senior management 
intervention at early stage
• formal internal peer reviews to highlight areas  
of improvement andor riskbest practice
• collation and review of client feedback via 
customer satisfaction questionnaires ‘csqs’ 
and perfect delivery process
• lessonslearned exercises carried out on 
projects 
• employees incentivised on basis of qualitative 
contract performance
• strategic supply chain trading arrangements  
in place to help ensure consistent quality
• ongoing electronic project management 
tool
• ongoing project financial performance
• ongoing project operational performance
• monthly csq and perfect delivery 
performance monitoring
decrease
• the improving market and terms under which 
the group contracts alongside its drive to 
achieve operational excellence and consistent 
delivery reduce the probability of disputes 
however the upward pressure on skills and 
commodities needs close management
• continuing engagement with employees  
clients and supply chain on perfect delivery 
• dedicated internal perfect delivery teams  
to maximise engagement and embed culture
• perfect delivery led from the board
• teams incentivised on perfect delivery 
outcomes to achieve high levels of customer 
satisfaction
• monthly perfect delivery performance 
monitoring
• monthly csq reporting
• ongoing project operational 
performance
decrease
• perfect delivery differentiates the group’s 
offering and is being embedded in each division
• the group’s recent investment in its talent 
strategy and initiatives will position the group  
to meet its longterm growth
morgan sindall group plc annual report 2014
risk review 39
strategic report
risk review continued strategic report
risk review continued
 
principal risks
macro
trend
subcategory –
description and impacts
disciplined use of capital 
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 
in a rising market there is an increased risk that the group’s counterparties 
overtrade which could affect their liquidity
insolvency of key client subcontractor or supplier 
risk that insufficient credit checks and due diligence are not 
undertaken and that a key client subcontractor or supplier 
becomes insolvent there is also a risk that given the wider 
macroeconomic 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 
treasury and funding
risk that the group fails to ensure that sufficient funding is  
in place to accommodate the strategic plans of the business
the lack of liquidity may impact the group’s ability to continue  
to trade or restrict its ability to invest in regeneration schemes  
or growth markets 
management of working capital 
risk that poor management of working capital leads  
to inadequate liquidity and funding problems 
morgan sindall group plc annual report 2014
risk review 40
 strategic report 02–46 governance 47–76 financial statements 77–116 financial statements 77–116 governance 47–76 strategic report 02–46
 
mitigation
key monitors 
instruments for subcategory
 
risk change in 2014
• work only carried out for financially sound 
clients established through rigorous due 
diligence and credit checks 
• seek and obtain financial security where required 
including specific commercial terms such as 
payment terms with escrow accounts used  
as appropriate 
• contracts with clients subcontractors or 
suppliers only entered into after review at the 
appropriate level of delegated authority 
• work with approved suppliers wherever possible 
• regular meetings with key supply chain 
members to give and receive feedback and 
maintain the quality of the relationship 
• business strategy largely focused on public and 
commercial clients based in sound market 
sectors reducing the risk of failure
• weekly pipeline and order book reporting
• ongoing tender review boards
• daily work in progressdebtretention 
monitoring
• ongoing supply chain feedback reporting
• ongoing supply chain prequalification 
no change
• need to remain vigilant as clients and supply 
chain emerge from recessionary into accelerating 
market which may overstress their finances
• recent banking facility renewal securing £140m 
maturing in september 2018 enabling the 
group to fund its planned investment portfolio
• enhanced threestage requirement for 
development and investmentrelated schemes 
to give an early indication of potential longterm 
balance sheet commitments
• group disciplined capital allocation including for 
significant projectrelated capital and monitoring 
versus consideration of future requirements  
and return on investment
• daily monitoring of cash levels and regular 
forecasting of future cash balances and facility 
headroom
• regular stress testing of longterm cash 
forecasts 
• group delegated authorities ensure prior 
approval is sought for significant project 
related capital
• monthly management accounts
• daily monitoring of cash levels
• weekly cash forecast report
decrease
• the group has recently refinanced a substantial 
part of its facilities to september 2018
• debt availability and terms improving for the 
group its clients and supply chain
• working capital monitored and managed as 
appropriate with acute focus on any overdue 
work in progress debtors or retentions 
• ongoing cash management focus continues  
to improve business remains vigilant and keeps 
driving a positive cash culture
• daily monitoring of cash levels
• weekly cash forecast report
no change
• working capital is expected to improve  
as recessionary projects unwind and general 
market terms improve
• increased cash optimisation focus and controls
morgan sindall group plc annual report 2014
risk review 41
strategic report
risk review continued strategic report
risk review continued
 
principal risks
macro
trend
subcategory –
description and impacts
pursuing innovation
the group is committed to offering customers innovative and  
costeffective solutions if it fails to encourage an innovative approach 
across the group it will lose its competitive edge and suffer reputational 
damage
this is coupled with the risk that the group’s systems will not provide 
appropriate security levels or resilience needed to ensure reliable levels  
of business continuity
innovation
failure to adopt appropriate innovations in new products  
or techniques
the group becomes less effective than its competitors and  
is not able to secure best value for or offer the best solutions  
to its clients new technologies and innovation are not  
promoted into the business environment making it a less 
attractive proposition to new and existing talent
information technology
that the group does not manage and optimise its it 
infrastructure environment to avoid business interruptions 
maximise efficiencies keep pace with emerging technology 
together with the prevalence of security and data threats
if the group fails to manage and invest in its it environment  
it will ultimately not meet the future needs of the business  
in terms of expected growth security and future innovation 
requirements ultimately meaning that it will fail to maintain  
a sustainable business
morgan sindall group plc annual report 2014
risk review 42
 strategic report 02–46 governance 47–76 financial statements 77–116 financial statements 77–116 governance 47–76 strategic report 02–46
 
mitigation
key monitors 
instruments for subcategory
 
risk change in 2014
• bim strategy developed to provide more 
efficient asset management across the  
whole lifecycle
• a culture of innovation is encouraged and 
relevant ideas sourced via employees supply 
chain customers and external sources are 
promoted into the business environment
• reviews undertaken to promote elimination  
of waste of both resources and process 
adopting lean methodology where appropriate
• it forum structure in place to review sponsor 
and promote new innovations into the business
• significant innovation and it capital expenditure 
is subject to delegated authority signoff by 
senior management
• monthly work winning process
• ongoing project operational  
performance reviews
• ongoing it change and programme 
reporting
• annual budgets 
decrease
• the industry is slow in adopting new 
technologies that if not reversed will stifle talent 
efficiency and sustainability
• recent innovations include the roll out of lync 
bim enhanced project management tools and 
smartphone facilitation
• groupwide it strategy remodelled to 
encompass an optimised shared services 
approach direction and investment
• coordinated services approach driving 
efficiency and performance across the whole 
technology environment
• groupwide it forum structure in place  
ensuring focused strategic development and 
daytoday running of the group’s technology 
environment
• progressive it investment now yielding real 
infrastructure application and service delivery 
improvements
• groupwide risk and security strategies  
enacted creating awareness providing threat 
alerts and addressing risk and vulnerability 
prioritisation and response
• monthly group and divisional it forums
• ongoing it monitoring and performance 
reporting
no change
• the everevolving technology environment  
and cyber security threat will remain a threat  
for the foreseeable future
• the group’s progressive investment in its it 
strategy and programme is maturing
morgan sindall group plc annual report 2014
risk review 43
strategic report
risk review continued strategic report
sustainability review
the group recognises that being a responsible  
and sustainable business is fundamental to its future 
success its commitment to sustainability extends  
across its social environmental and economic 
obligations and the group is steadfast in its efforts  
to minimise any adverse impacts from its activities 
a committed approach to sustainability delivers widespread benefits  
it enables the group to maximise efficiencies strengthens its ability  
to win work and enhances its reputation as a leading construction and 
regeneration group it also plays a key role in positioning the group as  
a preferred employer 
sustainability is an important element in the group’s procedures to mitigate 
risk and create opportunities as it influences the group’s ability to deliver  
its strategy in recognition of this material issues related to sustainability  
are identified through extensive stakeholder engagement and are  
mapped updated and regularly reviewed within a sustainability risk and 
opportunity register 
today the construction industry faces multifaceted sustainabilityrelated 
challenges ranging from climate change dwindling natural resources  
and population growth through to complex regulation rapidly advancing 
technology and changing societal expectations as one of the uk’s principal 
contractors the group fully embraces its responsibilities to lead by example 
and to influence how the industry operates today to contribute towards  
a healthy and sustainable future 
the group’s total commitments
people • providing a safe work environment
• developing talented employees
planet • reducing energy consumption  
and carbon emissions
• reducing waste
profit • improving sustainable procurement
•  supporting local economic growth
the total commitments comprise the group’s sustainability strategy  
and are coordinated at group level to ensure consistency and to share  
best practice across all divisions continuous improvement is driven  
through measurement reporting transparency and comprehensive 
stakeholder engagement 
for the second year running the group has reported its performance using 
the global reporting initiative’s ‘gri’ sustainability reporting framework 
the gri’s g4 reporting guidelines place a greater emphasis on materiality  
and the process of identifying and prioritising the most important challenges 
and opportunities that impact on the group and its stakeholders more 
information including the group’s 2014 sustainability report can be found  
at wwwcorporatemorgansindallcomsustainability 
milestones in 2014
to inform the development of its sustainability strategy and activities  
the group has formed three stakeholder panels whose insight helps raise  
the group’s awareness of potential threats and emerging opportunities 
client panel for the group to gain a deeper 
understanding of its clients’ 
sustainability ambitions and how  
better to work collaboratively with 
clients to help drive sustainability 
standards across the industry
supply chain panel to achieve a fully aligned supply  
chain that understands the group’s 
sustainability strategy and approach  
in turn the panel enables the group  
to understand the challenges faced  
by its suppliers and subcontractors in 
meeting its sustainability requirements
2025 next generation panel to capture the opinions of younger 
employees on sustainability and the 
group’s approach towards it
talented people are the cornerstone of the group’s success a key focus  
for the group is to become an employer of choice within the industry and  
to maintain a balance between retaining a diverse and experienced workforce 
and attracting new talent this combined with the people promise is critical 
to delivering growth for the group
number of apprentices directly employed
2013 89
2014 94
as cofounder of the supply chain sustainability school the group has 
continued to invest in the school to promote the importance of aligned 
supply chains across the industry and to help construction suppliers and 
subcontractors develop their own knowledge and competence across the 
sustainability landscape since the launch of the school in 201 2 over 1700 
members of the group’s supply chain have undertaken training improving 
their own sustainability credentials and strengthening their ability to meet  
the group’s expectations
 strategic report 02–46 governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
sustainability review 44 financial statements 77–116 governance 47–76 strategic report 02–46
strategic report
morgan sindall group plc annual report 2014
sustainability review 45
for the third year running the group has been rated the highestscoring 
construction company in the carbon disclosure project’s uk climate change 
report 2014 continuing its yearonyear score improvement by achieving  
a 97 b 201 3 91 b this is a considerable achievement that reflects the 
investment and effort made across the group to identify and manage  
risks associated with climate change and to improve the management  
of emissions
in recognition of the group’s continuing efforts to ensure the construction 
industry is highly regarded both on and off site construction  infrastructure 
secured an industryleading number of accolades at the 2014 considerate 
construction scheme ‘ccs’ national site awards thirtyeight awards were 
secured which demonstrate the division’s commitment to the community 
the environment and the workforce on its sites the group as a whole 
achieved 48 awards with the balance awarded to the affordable housing  
and fit out divisions 
the group aims to create social and economic value within its local 
communities in order to contribute towards a local positive legacy which 
endures long after a project is completed to measure and demonstrate 
added value from its activities the group has invested in the local multiplier 
3 ‘lm3’ tool that is being rolled out across all divisions lm3 is recognised  
in the uk as best practice in measuring local economic contribution from 
construction spend promoting sustainable development and it will also allow 
the group to identify best practice and replicate successful approaches 
across other projects 
measured performance
performance against the group’s total commitment kpis is set out below 
unfortunately performance against a number of kpis has deteriorated  
in 2014 in particular the group’s commitment to reducing waste has been 
impacted by the nature of work undertaken in 2014 and by a project in 
scotland towards the end of last year where there was no alternative other 
than to landfill a significant quantity of material whilst it is disappointing that 
the group’s riddor has increased by one incident in 2014 over the prior 
year the accident incident rate for the group as shown on page 6 actually fell 
by 21 during the year a significant reduction reflecting the hours worked 
total commitment to a safe work environment
total commitment to developing talented employees
average number of training days per employee
2013 23
2014 22
total commitment to reducing energy consumption  
and carbon emission
total carbon emissions co2e
2013 45901
2014 37 627
total commitment to reducing waste
total waste produced tonnes 
2013 943958
2014 1326247
total waste diverted from landfill tonnes
2013 855935
2014 1140306
waste diverted from landfill 
2013 91
2014 86
total commitment to improving sustainable procurement
percentage of total spend that is covered 
by groupwide agreements  
2013 71
2014 72
total commitment to supporting local economic growth
na
measurement of local multiplier eect 
on applicable projects £ 
2013
2014 1 4
diversity
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 nondiscriminatory 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
total number of riddor incidents 
2013 67
2014 68
 the reporting of injuries diseases and dangerous occurrences regulations 2013 
riddor
sustainability review continued strategic report
a breakdown by gender of the number of persons who were directors of the 
company senior managers and other employees as at 31 december 2014  
is set out below
the group fully supports the principles set out in the un universal 
declaration of human rights and the un global compact in particular  
with regard to equal opportunity freedom from discrimination freedom  
of association and collective bargaining
2015 priorities
the group’s health and safety forum is implementing a focused ‘close  
the gap’ plan in 201 5 that will address previous underperformance and 
emerging challenges the industry is facing as markets improve as part of  
the people promise the group’s management development programme  
has been redesigned and will be launched in the second half of 201 5  
each division is tailoring the people promise to their particular business  
needs for attracting and retaining the right talent 
greenhouse gas emissions
the group’s greenhouse gas 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 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
scope 2
scope 1
scope 3
 9168
 25244
 3214
tonnes of co 2 equivalent 2014 
total 37626
scope 1 tonnes co 2e
direct emissions resulting from fuel combustion bulk fuels natural gas 
and vehicle ﬂeet emissions
2010 baseline 33357
2013 32878
2014 25244
scope 2 tonnes co 2e
indirect emissions resulting from electricity purchased by the group 
including landlord supplied the group consumed 153066mwh 
not including electricity provided as part of serviced oce rental
2010 baseline 25288
2013 10570
2014 9168
scope 3 tonnes co 2e
indirect emissions from related activities such as water consumption and 
disposal waste disposal electricity transmission losses and employee travel
2010 baseline 5097
2013 2453
2014 3214
intensity measurement scope 1 2 and 3
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
2010 baseline 3032
2013 2191
2014 1695
approval of the strategic report
this strategic report was approved by the board and signed on its behalf by
john morgan
chief executive 
19 february 201 5
directors of the company
5 male 71
2 female 29
3 male 50
3 female 50
9 male 69
4 female 31
4464 male 80
1108 female 20
senior managers group team
senior managers group management team
other employees total workforce
geraldine gallacher stepped down from the board on 31 december 2014
 strategic report 02–46 governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
sustainability review 46
sustainability review continued  
governance
47
corporate governance report
morgan sindall group plc annual report 2014
governance
governance
governance
48 chairman’s statement
48 board of directors
50 group management team
52 corporate governance report
58 directors’ remuneration 
report
72 directors’ report
76 directors’ responsibilities 
statement
strategic report 02–46 governance 47–76 financial statements 77–116 board of directors
governance
morgan sindall group plc annual report 2014
board of directors
chairman’s statement
as a board of directors we are committed to maintaining the highest 
standards of corporate governance as we believe this helps to 
facilitate the success of the company our corporate governance 
report is set out on pages 52 to 57 and explains how we manage 
the group and comply with the provisions of the uk corporate 
governance code 201 2 the ‘code’ 
for the company good governance involves establishing 
appropriate policies procedures and guidelines to underpin  
our ability to deliver our strategy it involves ensuring 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 
and scrutiny of these matters and its role in providing constructive 
challenge 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
key areas that we have focused on this year include board 
effectiveness succession planning and further strengthening  
our management team to drive forward delivery of our strategy  
we continued our work with the external team h cubed limited 
who undertook our board evaluation last year as i felt it was 
important for consistency to review the progress of the board  
in playing to its strengths and addressing areas for improvement 
and the consequent impact on the organisation the outcome  
of the review is given in more detail on page 53 and i am pleased  
to report that no material weaknesses were identified over the 
next six months we will be seeking to recruit a new nonexecutive 
director to replace geraldine gallacher who stepped down from  
the board on 31 december 2014 further details can be found  
on page 55
i am committed to ensuring that the company manages its affairs  
in compliance with the principles and provisions of the code  
whilst subject to the provisions of the code applicable to smaller 
companies the company seeks where appropriate to follow those 
applicable to ftse 350 companies i am pleased to report that  
we have complied in full with the code requirements throughout  
the accounting period
over the last couple of years we have focused on ensuring that  
the views presented in our annual report are fair balanced and 
understandable and provide the information necessary for 
shareholders to assess the company’s performance business  
model and strategy in order to comply with this requirement those 
individuals with overall responsibility for each section of the annual 
report were given a set of criteria by which to assess whether 
their respective sections were fair balanced and understandable 
the audit committee was then asked to assess the document as  
a whole against the same criteria comments were incorporated 
into the final version of the document which was submitted for 
approval by the board 
i hope that the following report provides you with a meaningful 
insight into how we operate and the matters on which we have 
focused during the year
adrian martin
chairman 
19 february 201 5
 a copy of the code can be found on the financial reporting council’s website at 
httpswwwfrcorgukourworkcodesstandardscorporategovernance
ukcorporategovernancecodeaspx 
adrian martin
chairman
appointed december 2008
in november 201 2 adrian was 
appointed nonexecutive chairman 
of the board having previously  
held the role of senior independent 
director adrian has previously 
served on the board of a number  
of plcs and is currently a non
executive director of mc saatchi 
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
skills competencies  
and experience
adrian has over 30 years’ audit  
and corporate finance experience 
having held senior board positions 
at leading companies in non
executive capacities he brings 
substantial leadership experience
committees
adrian is chair of the nominations 
committee
john morgan 
chief executive
appointed october 1994
john was appointed as chief 
executive in november 201 2  
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 201 2
skills competencies  
and experience
john has indepth knowledge  
of the construction and 
regeneration markets he has 
significant executive leadership  
skills and experience
committees
john is a member of the 
nominations committee
strategic report 02–46 governance 47–76 financial statements 77–116
48 strategic report 02–46 governance 47–76 financial statements 77–116
governance
steve crummett
finance director
appointed february 201 3 
steve was previously finance 
director of filtrona plc now 
essentra plc 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 chair of the audit 
committee and a nonexecutive 
director of consort medical plc 
since june 201 2
skills competencies  
and experience
steve brings wideranging financial 
and significant listed company 
experience
committees
steve attends the meetings of the 
audit committee at the invitation  
of the committee chair 
patrick de smedt
senior independent director
appointed december 2009
patrick assumed the role of senior 
independent director in november 
201 2 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 easynet 
gmbh and kodak alaris holdings 
limited he is an investor in several 
european technology companies
skills competencies  
and experience
patrick having held board  
positions including as chair of  
the remuneration committee  
and senior independent director  
at other public companies  
brings considerable experience  
to the board
committees
patrick is chair of the remuneration 
committee and is a member of the 
audit and nominations committees
simon gulliford
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 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 plc 
skills competencies  
and experience
simon has substantial executive 
management and strategic 
marketing experience through the 
various positions that he has held
committees
simon is a member of the audit 
nominations and remuneration 
committees
liz peace cbe
nonexecutive director 
appointed november 201 2
in 2014 liz was appointed as a 
nonexecutive director of redrow 
plc she is a member of the board  
of peabody a trustee of property 
charity landaid a trustee of the 
churches conservation trust and  
a nonexecutive director of turley 
associates liz spent 1 2 years as 
chief executive officer of the british 
property federation between 2002 
and 2014 this followed 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 
skills competencies  
and experience
liz has considerable experience  
in the property sector but also 
brings experience of management 
of a wide range of businesses  
liz has relevant financial experience 
gained from the various positions 
that she has held
committees
liz is chair of the audit committee 
and is a member of the 
remuneration and nominations 
committees
board composition
executive 2 male 5 
nonexecutive 4  female 1
morgan sindall group plc annual report 2014
board of directors 49
board of directors continued governance
morgan sindall group plc annual report 2014
group management team 50
group management team
andy saul 
group commercial director
andy joined the group in january 
2014 andy was previously 
managing director of bullock 
construction from 2010 to 201 3 
prior to that his career included  
20 years with kier group plc 
culminating in the role of director  
at kier’s construction division where 
he had overall responsibility for  
the commercial and procurement 
functions of the division 
 
john morgan 
chief executive
see page 48 for biography
clare sheridan
company secretary
clare has been with the company 
for 1 7 years and was appointed 
company secretary in june 2014 
having previously been deputy 
company secretary prior to this 
she was general manager of a 
theatre production company 
producing musicals and 
pantomimes across the uk clare  
is a qualified chartered secretary
helen mason
general counsel
helen joined the group in july 2014 
from london law firm fieldfisher 
helen is a construction lawyer  
with 1 5 years’ experience gained 
inhouse and in private practice  
in the uk and in australia helen  
is responsible for looking after the 
group’s relationships with external 
law firms helen is also at the  
heart of the group’s approach  
to compliance with its statutory 
responsibilities
steve crummett
finance director
see page 49 for biography
camilla aitchison
director of people
camilla joined the group in 
december 201 3 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 
pat boyle
managing director  
construction and design
pat holds overall responsibility for 
construction  infrastructure’s 
construction and design business  
a member of the chartered 
institute of building he joined the 
group in 2014 from lend lease 
where he was most recently head 
of their public sector construction 
division prior to this pat held 
various wideranging senior  
level roles within laing and laing 
o’rourke including regional 
director group hr director and 
managing director of select  
plant hire 
nick fletcher
managing director 
infrastructure
nick is a chartered civil engineer 
with over 25 years’ uk and 
international experience a fellow  
of the institution of civil engineers 
nick holds overall responsibility  
for construction  infrastructure’s 
infrastructure business which 
includes transport tunnelling and 
utility services in addition to board 
responsibilities for aviation and 
magnor plant hire nick joined  
the group in 2014 from laing 
o’rourke where he was most 
recently operations director  
of its infrastructure division  
prior to this he was managing 
director of laing o’rourke ireland
strategic report 02–46 governance 47–76 financial statements 77–116 strategic report 02–46 governance 47–76 financial statements 77–116
stewart davenport
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 and progressing  
to commercial director
gary lester
managing director 
morgan sindall property services
gary has a history of leading 
successful repairs and maintenance 
businesses including national 
businesses of gas servicing 
maintenance facilities management 
and energy solutions gary joined 
the group in august 2014 and 
brings a wealth of operational 
experience gained from 1 7 years  
in the housing sector and a further  
14 years in the building industry  
an electrician by trade he has  
been directly involved in the building 
and maintenance industry from 
leaving school rising to the position  
of managing director and assuming 
that role at morgan sindall  
property services
matt crompton
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  
a £100m mixeduse regeneration 
vehicle owned by muse 
developments legal  general  
and the homes and communities 
agency his earlier career  
included development positions  
at both london  metropolitan  
and chestergate seddon
 
chris booth
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 progressing 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 201 3
lisa scenna
managing director 
investments 
lisa joined the group in june 201 3 
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 
 member of the group team
group management team 
composition
male 9 
female 4
group team composition
male 3 
female 3
morgan sindall group plc annual report 2014
group management team 51
group management team continued
governance governance
morgan sindall group plc annual report 2014
corporate governance report 52
corporate governance report
leadership
role of the board 
the board is responsible for creating and delivering sustainable shareholder value this includes setting the strategic direction of the group reviewing all 
significant aspects of the group’s activities overseeing the executive management and reviewing the overall internal control and risk management systems 
individually the directors act in a way they consider will promote the longterm success of the group for the benefit of and with regard to the interests  
of its various stakeholders
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 
risk management strategy significant capital expenditure and investment proposals funding decisions including loans and charges over the company’s assets 
major projects acquisitions and disposals internal control arrangements and the annual and halfyear results other specific responsibilities are delegated  
to the board committees described below and under the group’s delegated authorities
board
chairman
two executive directors
three independent nonexecutive directors
creating and delivering sustainable shareholder value
board committees
audit committee
see page 56 and 57
remuneration committee
see page 64 and 65
nominations committee
see page 55
three independent nonexecutive directors three independent nonexecutive directors chairman chief executive and three 
independent nonexecutive directors
monitors the integrity of the group’s financial 
statements reviews the relationship with the 
auditor and the role and effectiveness of the 
internal control function
determines the reward strategy for the 
executive directors to align their interests with 
those of shareholders
ensures the board and the senior management 
team have the appropriate skills knowledge  
and experience to operate effectively and  
deliver the strategy
management teams
members of the management teams are listed on page 50 and 51 
group team group management team
two executive directors
four senior managers
two executive directors
four senior managers
seven divisional managing directors
assist the executive directors with the development of group  
strategy the management of the business and the discharge  
of responsibilities delegated by the board
assist the executive directors to manage the operations of the group to 
approve matters below board level and to ensure the strategy is delivered
the chairs of the three principal committees provide detailed reports to the board on the matters discussed at the committee meetings thereby ensuring 
that all directors have visibility and the opportunity to discuss such matters
roles of the chairman chief executive and senior independent director 
the board has agreed a clear division of responsibility between the chairman and chief executive john morgan as chief executive has principal responsibility 
for proposing and developing the overall strategy and the daytoday management of the operational activities of the group in accordance with the  
strategy and policies determined by the board adrian martin as chairman is 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 
and ensuring that the board as a whole is involved in refining and determining group strategy 
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 
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 ‘the act’ 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
strategic report 02–46 governance 47–76 financial statements 77–116 strategic report 02–46 governance 47–76 financial statements 77–116
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 to the company 
by ordinary resolution or by the board 
the board has agreed that notwithstanding the requirements of the articles 
all directors will retire at each agm and may offer themselves for reelection 
by shareholders all of the existing directors will therefore be standing for 
reelection at the 201 5 agm and their biographies are set out on pages  
48 and 49 the board is satisfied that the performance of all of the 
nonexecutive directors and the chairman continues to be effective and  
that they continue to show commitment to their respective roles
during the year no director had any interests in any shares of the company’s 
subsidiaries or any material interests in any contract with the company  
or subsidiary being a contract of significance in relation to the company’s 
business 
operation of the board
board meetings and board attendance
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
attendance of individual directors during 2014 at scheduled board meetings 
and meetings of the remuneration audit and nominations committees  
is set out below sufficient time is given at the end of each meeting for  
the chairman to meet privately with the senior independent director and 
nonexecutive directors to discuss any matters the chairman met formally 
with the nonexecutive directors without the executive directors present  
on one occasion during the year following the strategy review
board
percentage 
attendances
remuneration 
committee
audit 
committee
nominations 
committee
total number of meetings 11  5 3 1
adrian martin
1
john morgan
steve crummett
patrick de smedt
2
simon gulliford
3
liz peace
geraldine gallacher
4
11
11
11
10
10
11
9
100
100
100
91
91
100
82
 
 
 
5
1
5
4
1
3
3
3
3
1
1
1
1
1
1
1  adrian martin stepped down from the audit committee on 8 may 2014 due to a 
conflicting commitment he attended all meetings prior to his resignation from the 
committee
2  patrick de smedt was unable to attend one meeting of the board due to a conflicting 
commitment
3  simon gulliford was unable to attend one meeting of the board due to illness 
simon was appointed to the remuneration committee on 1 december 2014 and 
attended all meetings following his appointment
4  geraldine gallacher stood down as a nonexecutive director on 31 december 2014 
geraldine was unable to attend two meetings of the board and one remuneration 
committee meeting due to conflicting commitments that had previously been agreed 
with the chairman
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 a summary of key board activity in the year is set out below
strategy leadership and employees shareholder engagement governance
• annual strategy review to 
consider and approve the group’s 
fiveyear strategic plan and 
divisional operating plans
• annual review to consider  
and approve the group’s  
201 5 budget 
• discussion of the composition 
and succession of the board  
and the committees 
• held an analysts’ session with 
the executive directors and 
divisional managing directors
• shareholder consultation on 
proposed remuneration policy 
changes see page 62
• review of risks identified  
and mitigation plans including  
a detailed consideration  
of principal risks see pages  
31 to 43 for more detailed 
information
whilst the board did not make any site visits as a group during the year all of the nonexecutive directors did have the opportunity to visit the divisions to 
meet with the divisional teams to gain a better understanding of the group’s operations as part of the group’s strategy review the chief executive chairman 
and a nonexecutive director met with the managing directors of the divisions to discuss their divisional strategic plans in detail prior to the review in october 
each nonexecutive director provided a summary to the board of their findings during the strategy review
effectiveness
board evaluation
the 201 3 evaluation had identified a number of recommendations with a view to enhancing the board’s contribution to the governance of the company  
and to the quality of debate and decisionmaking at board meetings the board has sought to act on these recommendations during the year 
the 2014 evaluation undertaken by h cubed in july and august reviewed the progress of the board over the year and was based on an online questionnaire 
followed by a 30minute telephone call with each director and the company secretary to clarify any matters raised in the questionnaires the process focused 
on the board’s
• governance processes 
• balance of skills and experience 
• diversity 
• dynamic in respect of debate and decision making
the review found that the board and the committees were operating effectively and that good progress had been made against some of the areas identified 
for improvement in the 201 3 evaluation although it was agreed that further development was needed in the areas of transparency and clarity of strategic 
direction the level of challenge and scrutiny in board meetings and the focus on talent and succession for key individuals and leaders
morgan sindall group plc annual report 2014
corporate governance report 53
governance
corporate governance report continued governance
corporate governance report continued
training development and advice
newly appointed directors receive a full induction including a detailed 
information pack containing 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  
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 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 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 halfyear results written feedback from these meetings  
and presentations is distributed to all members of the board the executive 
directors held a meeting with analysts and the divisional managing directors 
in november 2014 to enable the analysts to meet members of the senior 
management team and to gain a greater understanding of the group’s 
operations 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 towards the end of 2014 the chair of the remuneration 
committee consulted with major shareholders regarding proposed  
changes to the group’s remuneration policy see page 62
the company encourages all shareholders to use the agm as an opportunity 
for effective communication with the company all of the directors  
except geraldine gallacher attended the agm held in 2014 geraldine  
had previously agreed with the chairman that she could miss the agm  
to attend an overseas charity event details of proxy votes submitted  
for each resolution at the 2014 agm including proxy directions to withhold 
votes are published on the company’s website
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 principal risks attached to the group’s strategy and 
objectives and root cause for each risk it confirms the internal controls  
in place to mitigate the risk and any further actions required the board 
combines a topdown risk review with a complementary bottomup 
approach to ensure that risks are fully considered 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 processes 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 reviewed by the board at least twice yearly further details 
of the group’s approach to risk including the roles of the board and the  
audit committee and the principal risks identified as facing the group are 
highlighted in the risk review on pages 31 to 43 in addition 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 them
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 
controls which includes financial operational and compliance controls are 
based on a process of identifying evaluating and managing risks it accords 
with the guidance in the financial reporting council’s ‘frc’ internal control 
revised guidance for directors ‘the guidance’ and was in place for the  
year under review and up to the date of approval of this report
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 
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
investment and capital expenditure 
there are detailed procedures and defined levels of authority depending  
on the value andor nature of the investment or contract in relation to 
corporate transactions investment capital expenditure significant cost 
commitments and asset disposals 
tender project selection and contract controls
individual tenders 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 in addition 
robust procedures exist to manage the ongoing risks associated with 
contracts with monthly reviews of each contract’s performance
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 pages 34 and 35 and in the sustainability review on pages 44 to 46
strategic report 02–46 governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
corporate governance report 54 strategic report 02–46 governance 47–76 financial statements 77–116
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 external call 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 
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 2014 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 as well as a review of the results  
of internal audit work and the overall effectiveness of the process
nominations committee report
members
adrian martin chair
john morgan
patrick de smedt 
simon gulliford
liz peace
geraldine gallacher until 31 december 2014
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 are recommended 
for appointment to the board
the terms of reference of the committee are available on the company’s 
website wwwmorgansindallcom and on request from the company 
secretary at the company’s registered office
activities
the nominations committee met on 6 november 2014 to review the 
structure size and composition of the board following geraldine gallacher’s 
decision to step down from the board on 31 december 2014 in particular 
the committee
• considered the overall structure and balance of the board including 
the experience required for a new independent nonexecutive director 
appointment 
• agreed that the committee would issue a brief and commence the process 
for the selection of a new director in 201 5
• 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 2014 was 29 over the 25 minimum representation level  
to be achieved by 201 5 as recommended by the davies review following 
geraldine gallacher’s resignation from the board as at 31 december 2014 
the female representation on the board has dropped to 1 7 whilst the 
committee will aspire to maintain a 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 without resort to quotas 
the group’s equality and diversity policy is discussed further in the 
sustainability review on pages 45 and 46
board tenure and diversity
tenure
1
 
11 years plus 14
7–10 years 14
3–6 years 43
0–2 years 29
malefemale
2
 
male 71
female 29
executivenonexecutive
3
 
executive 29
nonexecutive 71
1 as of 1 january 2015 the tenure of the board is 33 50 0 and 17 respectively
2 as of 1 january 2015 the split between males and females is 83 and 17 respectively
3 as of 1 january 2015 the split between executives and nonexecutives is 33 and 
 67 respectively
morgan sindall group plc annual report 2014
corporate governance report 55
governance
corporate governance report continued governance
corporate governance report continued
audit committee report
members
liz peace chair
patrick de smedt 
simon gulliford 
geraldine gallacher until 31 december 2014 
adrian martin until 8 may 2014 
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 biographical details of each member of the committee are set out  
on page 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 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 
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 available on the company’s 
website at wwwmorgansindallcom sets 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 view presented in the annual report 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 or removal of the external auditor including consideration 
of putting the external audit out to tender and to approve the external 
auditor’s 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 nonaudit 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 chair of the audit committee met with 
the finance director and the external audit partner individually during the 
year the committee’s authorities and calendar of work remain in line with  
the requirements of the code and the guidance
the main activities of the committee during the year have included
• review of the half and fullyear results
• review of the significant management judgments reflected in the results 
including the contracts in construction  infrastructure that were affected 
by timetable slippages and increased costs
• 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
• review of the group’s risk register and principal risks at both the july and 
december audit committee meetings
• 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 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 on page 55
significant 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 
strategic report 02–46 governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
corporate governance report 56 strategic report 02–46 governance 47–76 financial statements 77–116
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 
contract receivables and 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 
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
segmental analysis
the group has reorganised parts of its business and introduced new 
reporting lines directly to the chief executive the committee has reviewed 
management’s assessment of the impact of these changes on the group’s 
reportable segments
valuation of shared equity receivables
the valuation of shared equity receivables 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
going concern
the committee reviewed papers supporting the going concern assessment 
which was compiled based on the latest management forecasts in addition  
a number of sensitivities were considered to determine the effect on 
headroom against the group’s committed facilities the review covers an 
18month period from the 31 december 2014 balance sheet date
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
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 those policies and safeguards 
together with the company’s own policy on engaging the external auditor  
for nonaudit work enabled the committee to confirm that it was  
satisfied with deloitte llp’s continued independence and objectivity
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 december noting at that time the significant 
issues being addressed by the external auditor at the meeting prior to the 
announcement of the preliminary results the committee 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 selected 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
policy on the auditor providing nonaudit services 
the company’s policy on the engagement of the external auditor for 
nonaudit 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 nonaudit services  
to the company provided by deloitte llp in 2014 required the approval  
of the committee the fees for nonaudit services during the year are set  
out in note 3 to the consolidated financial statements on page 92 these 
represented 7 of the audit fee and comprised primarily other assurance 
services the committee has reviewed the nature of the work and level  
of fees for these services and concluded that they have not affected  
deloitte llp’s objectivity or independence
reappointment of external auditor
deloitte llp 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 is keeping  
under consideration the timing of a formal tender having regard to the 
regulatory requirements including the 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
morgan sindall group plc annual report 2014
corporate governance report 57
governance
corporate governance report continued governance
morgan sindall group plc annual report 2014
directors’ remuneration report 58
directors’ remuneration report
annual statement
dear shareholder
i am pleased to introduce our directors’ remuneration report for the year ended 31 december 201 4 the report is split into three sections namely i this 
annual statement ii the remuneration policy which sets out the shareholder approved directors’ remuneration policy including a number of changes we are 
planning to make as explained below and iii the annual report on remuneration explaining payments made in the year under review and how the policy will 
be operated for 201 5 at the forthcoming agm on 7 may 201 5 the remuneration policy report will be subject to a binding vote and the annual remuneration 
report will be subject to an advisory vote by shareholders
review of remuneration for 2014
conditions have remained challenging throughout 201 4 across most of our markets with margins restrained by competitive pressures and upward pressure on 
supply chain costs in addition the group’s results have been adversely impacted by a small number of construction contracts in construction  infrastructure 
which was announced in october as a result the profit for the year fell short of the threshold profit before tax and amortisation ‘pbta’ target in respect of the 
financial element of the executive directors’ annual bonus resulting in no bonus award for 201 4 further the longterm incentive awards granted in 201 2 based 
on a threeyear performance period ending 31 december 201 4 failed to vest with performance against earnings per share and relative total shareholder return 
targets falling below the threshold targets
remuneration arrangements for 2015
following a review of the group’s longterm strategy which aims to deliver a significant increase in profit over the next five years by a step change in driving 
efficiencies to improve net margin improved project management and a significant investment in people to ensure the group has the right talent the 
remuneration committee has reviewed the remuneration policy to ensure it remains fit for purpose
following this review the committee was satisfied with respect to the structure and quantum of fixed and shortterm incentive pay therefore consistent  
with the general workforce increase the base salary increases for john morgan and steve crummett were limited to 3 no changes were made to benefit  
or pension provision and the quantum and structure of the annual bonus for 201 5 which is 100 based on challenging financial targets is broadly similar  
to that operated for 201 4
however the committee has decided to make a change to the long term incentive plan ‘ltip’ policy for 201 5 onwards when we sought shareholder 
approval for the ltip last year we set the maximum individual limit in the plan rules at 1 50 of base salary with no exceptional award limit albeit we decided  
to limit the initial 201 4 award to 100 of salary only using the 1 50 of base salary in exceptional circumstances and review the policy towards the end  
of 201 4 following this review and after discussions with major shareholders the committee has decided to increase the normal annual award level to 1 50  
of base salary from 201 5 onwards with no exceptional award limit rather than the current 50 eps 50 relative tsr performance targets the committee 
wishes to incentivise the additional 50 of base salary based on challenging eps growth targets over and above the normal award these ‘stretch eps targets’ 
will be significantly above forecast eps for 201 7  in addition the ‘core eps targets’ will be made more challenging and the percentage of salary available for 
achieving the top end of the core eps targets will be reduced the tsr performance condition will be unchanged requiring our tsr performance to be between 
median and second place of a peer based comparator group of eight companies in addition to amending the ltip normal grant limit the committee will
• increase the shareholding guideline from 100 to 200 of base salary for executive directors from the 201 5 agm onwards as per emerging best 
practice and
• expand the clawback triggers and extend the period over which amounts may be clawed back from 201 5 onwards consistent with best practice  
the clawback triggers will be extended to include misstatement calculation errors and where an employee has or would have been dismissed for gross 
misconduct in addition the clawback period will be extended from one to three years
no other changes have been made to the remuneration policy as approved by shareholders at the 2014 agm
alignment and dialogue with shareholders
while the committee was delighted with the support received from shareholders in respect of last year’s remuneration report and remuneration policy the 
committee remains mindful of our shareholders’ views and concerns as such we consulted with our major shareholders and representative bodies at the end 
of 2014early 201 5 in respect of the proposed revised ltip policy and the response was encouraging we hope to continue to receive your support at the 
forthcoming agm
patrick de smedt
chair of the remuneration committee 
19 february 201 5
strategic report 02–46 governance 47–76 financial statements 77–116 strategic report 02–46 governance 47–76 financial statements 77–116
remuneration policy report 
the key aim of the remuneration policy is to align the interests of the executive directors with those of shareholders by supporting delivery of the group’s 
strategy in setting the remuneration policy the committee takes into consideration amongst other matters investor guidelines and the maximum amount  
of remuneration that each executive director could receive should all targets be met each of the key elements of the remuneration package is designed  
to drive the creation of longterm shareholder value without encouraging the executive directors to take inappropriate risks the policy report will be put  
to a binding shareholder vote at the 201 5 agm and the policy will subject to approval take formal effect from that date
remuneration policy table
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 pre
determined 
na
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 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
morgan sindall group plc annual report 2014
directors’ remuneration report 59
governance
directors’ remuneration report continued governance
directors’ remuneration report continued
element
purpose and  
link to strategy operation maximum opportunity performance targets
annual bonus rewarding 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 error or gross 
misconduct the period over  
which amounts may be clawed 
back is three years
maximum opportunity  
of 100 of base salary
all or a majority of  
the bonus will be based  
on pbta set relative  
to the group’s budget
a minority of the bonus 
may be based on 
nonfinancial 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 ltip 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 the 
interests of shareholders 
annual awards of conditional 
shares or nil or nominal cost 
options with vesting dependent  
on the achievement of 
performance conditions over  
a threeyear 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 error or gross 
misconduct the period over  
which amounts may be clawed 
back is three years
1 50 of base salary the awards are subject  
to performance conditions 
based on the company’s 
eps and on relative tsr 
compared to a group  
of uklisted peers 
for both the eps and  
tsr conditions no more 
than 25 of the awards 
will vest for achieving 
threshold performance 
increasing to 100 
vesting for achievement 
of stretching 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
strategic report 02–46 governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
directors’ remuneration report 60 strategic report 02–46 governance 47–76 financial statements 77–116
element
purpose and  
link to strategy operation maximum opportunity performance targets
nonexecutive 
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
a description of how the company intends to implement the above policy for 201 5 is set out in the annual report on remuneration
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 nonfinancial targets would be determined on how well the executive directors perform against annual nonfinancial 
strategic andor personal targets set to ensure that they are linked to the strategic objectives of the group 
the longterm 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
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 ‘the saye scheme’
the committee will operate the incentive plans in accordance with their respective rules the listing rules of the financial conduct authority ‘fca’  
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
• who participates
• 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
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
morgan sindall group plc annual report 2014
directors’ remuneration report 61
governance
directors’ remuneration report continued 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 201 5  
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 end of 201 3 in respect of the replacement share plans and again at the end of 2014beginning of 201 5  
in respect of the revised ltip policy 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 for illustrative purposes only an estimate of the potential future remuneration payable for the executive directors under the policy  
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
£530661
£993080
£1686708
5423 23
3128 41
£1000 £2000 £500 £750 £1250 £1500 £1750 £250 £0
finance director £000
long term incentive plan annual bonus total fixed pay
£0
minimum
100
ontarget
maximum
£402238
£750636
£1273233
£500 £250 £750 £1000 £1250 £1500 £1750 £2000
54 2323
41 28 31
chief executive £000
long term incentive plan annual bonus total fixed pay
minimum
100
ontarget
maximum
£530661
£993080
£1686708
5423 23
3128 41
£1000 £2000 £500 £750 £1250 £1500 £1750 £250 £0
finance director £000
long term incentive plan annual bonus total fixed pay
£0
minimum
100
ontarget
maximum
£402238
£750636
£1273233
£500 £250 £750 £1000 £1250 £1500 £1750 £2000
54 2323
41 28 31
• base salary levels applying on 1 january 201 5
• the value of benefits has been estimated
• the value of pension receivable is the equivalent of 10 of base salary 
•  minimum performance assumes no award is earned under the annual bonus plan and no vesting is achieved under the ltip  ontarget performance 
assumes for simplicity 50 is earned under the annual bonus plan and 50 is achieved under the ltip whereas maximum performance assumes  
full vesting under both plans 100 of salary under the annual bonus plan and 1 50 of base salary under the ltip
• 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 and a maximum ltip award of 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 2month notice period provided it reduces to 1 2 months within a short 
space of time
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
strategic report 02–46 governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
directors’ remuneration report 62
governance
directors’ remuneration report continued strategic report 02–46 governance 47–76 financial statements 77–116
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 cases 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 ltip will be determined by the ltip 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 morgan sindall executive remuneration plan 2005 ‘erp 2005’ the awards will be determined by the 
erp 2005 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 february 201 3
service contracts are available for inspection at the company’s registered office 
nonexecutive 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 fca and the relevant schedules of the act 
 appointment month initial threeyear  
 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
1
 1 6 august 2007 august 2010
1 geraldine gallacher stepped down from the board on 31 december 2014
all of the above nonexecutive directors except geraldine gallacher are subject to annual reelection by shareholders
morgan sindall group plc annual report 2014
directors’ remuneration report 63
governance
directors’ remuneration report continued governance
directors’ remuneration report continued
annual report on remuneration 
the information provided in this part of the directors’ remuneration report which is subject to audit has been highlighted
remuneration committee
members
patrick de smedt chair
liz peace 
simon gulliford from 1 december 2014
geraldine gallacher until 31 december 2014
all members are independent 
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 the terms of reference of the committee are available on the company’s website 
wwwmorgansindallcom
activities of the committee
the committee met on five occasions during the year and attendance at meetings is disclosed in the corporate governance report on page 53 the meetings 
covered the normal business of confirming performancerelated pay for the year ended 31 december 2014 and setting bonus and longterm incentive 
targets for 2014 and the proposed revisions to the remuneration policy 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 part of aon plc in relation to its consideration of the structure of the 
executive directors’ remuneration for 2014 and 201 5 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 new bridge street 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 
new bridge street’s position as an independent adviser to the committee
the fees paid by the company to new bridge street during the financial year for advice to the committee were £7531 5 of which £34900 related to the 
advice to the company referred to above 
new bridge street 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 8 may 2014 the directors’ remuneration policy and the directors’ remuneration report excluding the remuneration policy  
for the year ended 31 december 201 3 received the following votes from shareholders
  annual statement and approval of 2014 approval of the 2014 
 directors’ remuneration policy annual report on remuneration ltip share option plan
 
 
 
 
 
 
 
 
 total  total  total  total  
 number of votes number of votes number of votes number of votes 
 of votes cast of votes cast  of votes cast of votes cast
for 32042366 9993 32686427 9995 31731857 985 32189558 9992
against 2231 5 007 1 6 1 14 005 483597 1 5 25896  008
total votes cast 
for and against 32064681 100 32702541 100 32215454 100 32215454  100
votes withheld¹ 717459  79600  566687  566687 
total votes cast 
including withheld votes 32782140  32782141  32782141  32782141 
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
strategic report 02–46 governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
directors’ remuneration report 64 strategic report 02–46 governance 47–76 financial statements 77–116
implementation of the remuneration policy for 201 5
base salaries
in setting the 201 5 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 3 and determined that the executive directors should receive the same increase accordingly annual base salaries  
for the executive directors for 201 5 will be as follows
    from 1 january from 1 january  
    2015 2014 
    £ £  increase
john morgan    462419 448950 3 
steve crummett    348398 338250 3
pension arrangements
the company will contribute the equivalent of 10 of base salary in the case of steve crummett to the retirement plan and in the case of john morgan  
to his individual personal pension plan andor as a cash supplement
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 nic 
annual bonus
the maximum annual bonus potential for 201 5 will remain at 100 of base salary to ensure that management is focused on the financial performance  
of the company in 201 5 100 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 ltip 
as detailed above and following an extensive investor consultation exercise the awards to be granted in 201 5 will be set at 1 50 of base salary to enable 
awards to be made at the same time as other employees being granted share awards under the 2014 ltip and share options under the morgan sindall  
2014 share option plan ‘2014 sop’ the exceptional limit of 1 50 of salary will be relied upon for the 201 5 awards in advance of shareholders being  
asked to approve the revised remuneration policy at the agm on 7 may 201 5 if shareholder approval is not obtained at the 201 5 agm the additional  
50 of salary award will fall away two thirds of awards 100 of salary will be based on an eps performance target and the remaining one third of awards  
50 of salary will consistent with prior years be based on a condition measuring the company’s tsr compared with eight of its uklisted peers over  
a threeyear period
morgan sindall group plc annual report 2014
directors’ remuneration report 65
governance
directors’ remuneration report continued governance
directors’ remuneration report continued
eps performance condition
the vesting range for the eps targets is shown graphically below 
2017 eps  rpi  pa
0 1 2 3 4 5 6 7 8 9 1011 1213 1415 1617 1819 20
percentage of eps element of award vesting
100 of salary
0
25
50
75
100
40 vesting at rpi 1 2 pa
100 vesting above rpi 18 pa
125 vesting at rpi 4 pa
tsr performance condition one third of the awards
the tsr comparator group comprises balfour beatty plc carillion plc costain group plc galliford try plc isg 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 plc’s tsr position relative to the comparator group
no vesting below median
25 vesting at median
percentage of tsr element of award vesting
50 of salary
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 
for this purpose median of the tsr comparator group is defined as the tsr value halfway between the comparator companies ranked fourth and fifth 
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 ltip awards will be subject to clawback provisions
strategic report 02–46 governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
directors’ remuneration report 66 strategic report 02–46 governance 47–76 financial statements 77–116
fees for the nonexecutive directors
the chairman’s fee is determined by the committee while the nonexecutive directors’ remuneration is determined by the board excluding nonexecutive 
directors within the limits set by the articles and is based on market data together with external advice as appropriate fees were increased by 3 for 201 5 
the additional fees for committee chairs remain unchanged accordingly the annual fees are as follows 
 2015 2014  
 £ £ increase
chairman    13 9050 135000 3 
base fee    43497 42230 3 
additional fees    
 audit committee chair    7500 7500 – 
 remuneration committee chair    6000 6000 –
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 
dilution and share usage under employee share plans
shares required for the morgan sindall employee share option plan 2007 ‘esop 2007’ are satisfied by shares purchased in the market via the morgan 
sindall employee benefit trust ‘the 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 investment association 10 of issued ordinary share  
capital for all employee share plans over a 10year 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 358 of the current issued ordinary share capital under all employee share  
plans of which 0 relates to discretionary share plans 
separately the trust currently holds 545767 shares which may be used to satisfy awards
morgan sindall group plc annual report 2014
directors’ remuneration report 67
governance
directors’ remuneration report continued governance
directors’ remuneration report continued
directors’ remuneration audited
 fees   annual value of employment 
 basic   pension cash longterm termination total 
 salary benefits
1
 contributions bonuses
2
 incentives
3
 payments remuneration 
 £000 £000 £000 £000 £000 £000  £000
executive directors
john morgan 2014 449 22 45 – – – 516 
  2013 438 22 47 – – – 507
steve crummett 2014 338 19 34 – – – 391 
appointed 25 february 201 3 201 3 280 1 8 28 – – – 326
nonexecutive directors
adrian martin 2014 135 – – – – – 135 
  2013 135 – – – – – 135
patrick de smedt 2014 48 – – – – – 48 
  2013 47 – – – – – 47
simon gulliford 2014 42 – – – – – 42 
  2013 41 – – – – – 41
liz peace 2014 50 – – – – – 50 
  2013 46 – – – – – 46
geraldine gallacher
4
 2014 42 – – – – – 42 
  2013 41 – – – – – 41
former directors
david mulligan 2014 – – – – – – – 
resigned 10 april 201 3 201 3 88 6 1 0 – – 31 5 419 
paul whitmore 2014 – – – – – – – 
resigned 31 december 201 3 201 3 319 20 34 – – 373 746
1 benefits for the executive directors comprise a travel allowance private medical insurance income protection insurance and life assurance 
2 no annual bonus payments were made to executive directors during the year 
the table below shows performance against pbta targets for 2014 representing 100 of the bonus potential 
  threshold  50 maximum actual percentage 
  target  target target performance of salary 
performance condition  £m £m £m £m  
adjusted group pbta for the year ended 31 december 2014  320 340 381 252 0
3  based on awards granted in 201 2 under the erp 2005 which were due to vest on 21 may 2015 subject to eps and relative tsr performance for the year ended 31 december 2014  
as set out in the table below the company did not meet the threshold targets resulting in no share awards vesting
  threshold  50 maximum actual  
performance condition  target  target target performance vesting
adjusted eps  800p 919p 1 060p 474p nil 
relative tsr  median na 2nd position below median nil
total vesting      nil
4 geraldine gallacher stepped down from the board on 31 december 2014
strategic report 02–46 governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
directors’ remuneration report 68 strategic report 02–46 governance 47–76 financial statements 77–116
share awards granted during the year audited
     number   
    share of shares    
   basis price at over which face value   
 type of  date of of award date of award was of award vesting at performance 
 award grant granted grant granted £ threshold period
john morgan ltip 1 9 may 1 00 of £7 95 55687 £44271 2 25 
  2014 salary     
steve crummett  ltip 1 9 may 1 00 of £7 95 41956 £333550 25 
  2014 salary     
three financial 
years to  
31 december 
2016
 
 based on the closing share price at 19 may 2014
directors’ interests in shares audited
through participation in performancelinked 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 200  
of base salary increased in line with best practice from 100 of salary from the 201 5 agm 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 
    31 december 31 december 
    2014 2013 
    no of shares no of shares
adrian martin    12000 12000 
john morgan    3999322 3997508 
steve crummett    12 200 – 
patrick de smedt    2000 2000 
simon gulliford    3350 3350 
liz peace    – – 
geraldine gallacher    7772 7772
 geraldine gallacher stepped down from the board on 31 december 2014
there have been no changes in the interests of the directors between 31 december 2014 and 19 february 201 5
directors’ outstanding share incentives 
details of the executive directors’ interests in longterm incentive awards as at 31 december 2014 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 january shares shares shares shares at 31 december performance awards 
 award 2014 awarded awarded vested lapsed 2014 period vest
john morgan 2152012 68224 – – – – 68224 31122014 2152015 
 2622013 81186 – – – – 81186 31122015 2622016 
 1952014 – 55687 – – – 55687 31122016 1952017
total  149410 55687 – – – 205097  
steve crummett 2622013 91751 – – – – 91751 31122015 2622016 
 1952014 – 41956 – – – 41956 31122016 1952017
total  91751 41956 – – – 133707  
• the awards granted in 201 2 under the erp 2005 failed to vest with earnings per share for the year ended 31 december 2014 falling below the threshold targets 
•  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 
•  the awards of performance shares made in 2014 are subject to adjusted eps growth targets and a tsr performance condition with full vesting of 50 of the awards for achieving  
adjusted eps growth of rpi 10 pa reducing on a sliding scale to 1 25 vesting for achieving eps growth of rpi4 pa there is no vesting for this part of an award for eps growth less 
than rpi4 pa the other 50 of the award is subject to the same tsr condition described above
morgan sindall group plc annual report 2014
directors’ remuneration report 69
governance
directors’ remuneration report continued governance
directors’ remuneration report continued
share options 
  no of options   no of options 
  outstanding as no of no of outstanding as end of  date from 
 date of  at 1 january options options at 31 december performance exercise which 
 grant 2014 exercised lapsed 2014 period price exercisable
john morgan 2052005 1 07 736 – – 1 07736 31122007 £724 2052008 
 542006 81016 – – 81016 31122008 £1259 542009 
 1732010 106364 – – 10 6364 31122012 £555 1732013 
 3032011 200000 – 200000 – 31122013 £657 3032014
total  495116 – 200000 295116   
•  no options were granted during the year 
• the outstanding options granted in 2005 2006 and 2010 have satisfied their performance condition and are exercisable
• the threshold performance condition in respect of the options granted on 30 march 201 1 was not met and the awards lapsed
•  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 2014 was £620 and the range during the year was £5865 to £8705
the morgan sindall savings related share option scheme ‘the saye scheme’ audited
john morgan held the following options granted under the saye scheme which vested on 1 november 2014 
  outstanding as exercised outstanding as  option dates 
 date of  at 1 january during at 31 december exercise within which 
 grant 2014 the year 2014 price exercisable
john morgan 27 9201 1 1 814 1 814 – £496 1112014– 152015
john morgan exercised 1814 share options on 3 november 2014 the closing share price on 3 november 2014 was £657 
payments for loss of office audited
there were no payments made in respect of a loss of office during the year under review 
payments to former directors audited
the threshold performance condition in respect of the share awards granted on 30 march 201 1 to paul smith david mulligan and paul whitmore was not 
met and the awards lapsed on 30 march 2014 no other payments were made to former directors during the year
percentage change in remuneration levels 
the table below shows the movement in salary benefits and annual bonus for the chief executive between the 201 3 and 2014 financial years compared  
to that for the average of all employees of the group 
       change
chief executive  
 salary      3 
 benefits       – 
 bonus      – 
average employee  
 salary       32 
 benefits      99 
 bonus      255
relative importance of spend on pay 
the following table sets out the percentage change in profit dividends and overall spend on pay in 2014 compared to 201 3
    2014  2013  change
adjusted eps pence    467 609 23 
dividends paid during the year £m    115 115 – 
employee remuneration costs £m    3258 3156 32
strategic report 02–46 governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
directors’ remuneration report 70 strategic report 02–46 governance 47–76 financial statements 77–116
sixyear performance graph and table 
the graph below shows the tsr for the company’s shares over the last six financial years it shows the value to 31 december 2014 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
31 december
2014
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 six 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 threeyear 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 
 2014 2013 2012 2012 2011 2010 2009
chief executive john morgan
1
 john morgan
1 
john morgan
1
 paul smith
2
 paul smith
2
 paul smith
2
 paul smith
2
total remuneration £000 51 6 507
3
 634 1315 1025 1096 796 
annual bonus  – –
3
 30 26 85 100 27 
ltip share awards vesting  – – – 488 – – 250 
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 
19 february 201 5
morgan sindall group plc annual report 2014
directors’ remuneration report 71
governance
directors’ remuneration report continued governance
morgan sindall group plc annual report 2014
directors’ report 72
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 2014 the act requires the directors to present a fair review of the business during the year to 31 december 2014 and of the position  
of the company at the end of the financial year along with a description of the principal risks and uncertainties which the group faces 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 report which  
can be found on pages 52 to 57 
there were no significant events since the balance sheet date 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 27 to the consolidated 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
the table below sets out where key information can be found across the annual report
subject page reference
dividends see page 94 of the consolidated financial statements
capital structure details  
of the issued share capital
see page 103 of the consolidated financial statements
appointment and  
replacement of directors
see page 53 of the corporate governance report
directors • see page 68 of the remuneration report detailing the directors who served during the year
• 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 69 and 70
the morgan sindall employee 
benefit trust ‘the trust’
details of the shares held by the trust may be found in the consolidated financial statements on page 103
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 44 to 46 the risk review on pages 34 and 35 and in the corporate governance report on  
pages 52 to 57 
morgan sindall group plc  
long term incentive plan
details of the group’s ltip is set out in note 25 of the consolidated financial statements on page 104
greenhouse gas emissions all disclosures on the group’s greenhouse gas emissions as required to be disclosed under schedule 7  
of the large and mediumsized companies and groups accounts and reports regulations 2008  
pursuant to the act strategic report and directors’ report regulations 201 3 are contained in the  
sustainability review on page 46
capital structure
at each agm the board seeks authorisation from its shareholders to allot shares the directors were granted authority at the agm on 8 may 2014 to  
allot relevant securities up to a nominal amount of £108 160 that authority will apply until the conclusion of this year’s agm and a resolution to renew  
the authority will be proposed at this year’s agm as explained further in the notice to shareholders accompanying this report
a special resolution will also be proposed to renew the directors’ power to make nonpreemptive issues for cash as explained in the notice accompanying 
this report the board confirms that the company has not used this authority in the last three years and there are no immediate plans to make use of  
this provision
directors’ report
strategic report 02–46 governance 47–76 financial statements 77–116 strategic report 02–46 governance 47–76 financial statements 77–116
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 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 of members 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 time to time be imposed by laws and regulations for example insider trading laws
• pursuant to the listing rules of the fca 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 or voting rights
purchase of own shares
at the agm on 8 may 2014 a resolution was passed giving the directors authority to make market purchases of company shares up to 4326408 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 8 august 201 5 and a resolution to renew this authority will be proposed at this year’s agm as explained 
further in the notice to shareholders accompanying this report
dividends and distributions
the company may by ordinary resolution from time to time 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 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 trust held 124 of the issued share capital of the company as at 31 december 2014 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 those shares the trust agreed to waive its right to both the  
final and interim dividends payable in 2014 which equated to 128 of the total dividend paid
morgan sindall group plc annual report 2014
directors’ report 73
governance
directors’ report continued governance
directors’ report continued
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’ 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 neither the indemnity 
nor the insurance cover provides cover in the event that a director or officer or company secretary as the case may be is proved to have acted fraudulently 
or dishonestly
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 retirement plan in respect of certain losses  
or liabilities to which they may be exposed due to their office
the indemnity is categorised as a ‘qualifying thirdparty indemnity’ for the purposes of the act and will continue in force for the purposes of the act and  
for the benefit of directors or officers or company secretary as the case may be on an ongoing basis 
amendment of articles of association
the company’s constitution known as the articles of association is essentially a contract between the company and its shareholders governing many 
aspects of the management of the company the articles may be amended by special resolution of the company’s shareholders and are available on the 
company’s website at wwwmorgansindallcom 
substantial shareholdings 
as at 31 december 2014 the company had been notified of the following interests of 3 or more total voting rights attaching to the company’s shares  
in accordance with chapter 5 of the disclosure and transparency rules of the fca 
name of holder  no of shares  holding directindirect holdings
franklin templeton institutional llc 6490859 1 472 indirect 
john morgan 3999322 907 direct 
old mutual plc
1
 2835270 655 indirect 
jo hambro capital management group ltd 2239565 508 direct 
ameriprise financial inc 2232808 506 99 indirect 
   1 direct 
jp morgan chase  co 2 1 23287 481 indirect 
standard life 2025053 459 99 indirect 
   1 direct 
aberdeen asset managers ltd 2010042 456 indirect 
john james clifford lovell 1 71 5273 389 direct 
1 old mutual plc notified the company on 9 february 2015 that it had increased its indirect shareholding in the company to 3218478 730
all related party transactions have been reviewed and approved by the board and disclosure transactions that are significant whether by virtue of their 
significance to the business the individuals involved or the perception of potential conflict
change of control
the group’s banking facilities which are described in the finance review on page 30 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 
disabled employees
applications for employment by disabled people are always fully and fairly 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
strategic report 02–46 governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
directors’ report 74 strategic report 02–46 governance 47–76 financial statements 77–116
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 
the group also introduced two new longterm incentive plans in 201 4 with the intention to better incentivise the interests of the employees with the longterm 
success of the company the 2014 ltip will provide incentives for the executive directors and certain other senior employees and the 2014 sop will provide 
share option awards for certain senior and business critical employees below board level across the group
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 reasonable 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 7 may 201 5  
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
clare sheridan
company secretary 
19 february 201 5
 
morgan sindall group plc annual report 2014
directors’ report 75
governance
directors’ report continued governance
morgan sindall group plc annual report 2014
directors’ responsibilities statement 76
directors’ responsibilities statement
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 financial reporting standard 101 reduced disclosure 
framework under company law the directors must not approve the accounts 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 financial reporting standard 101 reduced disclosure framework has been followed subject to any material departures disclosed  
and explained in the financial statements and 
• 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 ias 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 and
• 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 act 
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 uk 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 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
this responsibilities statement was approved by the board of directors on 19 february 201 5 and is signed on its behalf by
john morgan  steve crummett
chief executive  finance director 
19 february 201 5  1 9 february 201 5
strategic report 02–46 governance 47–76 financial statements 77–116 financial statements
strategic report 02–46
morgan sindall group plc annual report 2014
consolidated financial statements 77
governance 47–76 financial statements 77–116
financial statements
consolidated financial 
statements
78 independent auditor’s report
82 consolidated financial 
statements
86 significant accounting policies
90 critical accounting judgments 
and estimates
91 notes to the consolidated 
financial statements 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 2014 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 ‘ifrs’s as adopted by the 
european union
• the parent company financial statements have been properly prepared in accordance with financial reporting standard 101 reduced disclosure 
framework 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 28 the company balance sheet the company statement of changes in equity significant accounting policies  
and the related company only notes 1 to 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 financial reporting standard 101 reduced disclosure framework
going concern
as required by the listing rules we have reviewed the directors’ statement contained within the finance review on page 30 that the group is a going concern 
we confirm that
• we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate and
• we have not identified any material uncertainties that may cast significant doubt on the group’s ability to continue as a going concern
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
revenue from construction contracts 
at 31 december 201 4 was £1867 5m 
201 3 £181 7 2m as set out in note 1 
amounts due from construction 
contract customers was £2415m 
201 3 £2097m as set out in note 16 
trade receivables were £1 767m 
201 3 £1 492m as set out in note 1 5
we evaluated the design and implementation of controls over revenue recognition amounts due from 
construction contract customers and contract receivables 
we selected a sample of contracts to allow us to assess and challenge the most significant and more complex 
contract positions and the accounting thereon under the percentage of completion methodology the sample 
selected was based on both quantitative and qualitative factors 
for this sample of contracts we critically assessed the forecast costs to complete variations within contract 
revenue and contract costs the recoverability of amounts due from customers and the completeness and 
validity of provisions arising from customer disputes
this assessment included agreeing contract valuation positions to third party certificates reviewing contract 
terms and conditions interviewing and challenging contract managers and commercial directors and reviewing 
correspondence with customers and solicitors
for the sample of contracts selected we tested the recoverability of amounts due from construction contract 
customers and the related receivables by agreeing to certifications and cash receipt
we assessed the completeness and validity of allowances recorded based upon the liabilities that may arise 
from disputes with customers or rectification works required through interviewing and challenging contract 
managers commercial directors and a review of correspondence with customers and solicitors
independent auditor’s report
to the members of morgan sindall group plc
financial statements
strategic report 02–46 governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
independent auditor’s report 78 risk how the scope of our audit responded to the risk
impairment of goodwill goodwill 
must be tested annually and requires  
a comparison between the carrying 
value of the asset and the recoverable 
amount determination of the 
recoverable amount is based upon 
management estimates of future cash 
flows and application of appropriate 
discount rates
carrying value of goodwill at  
31 december 2014 was £21 39m 
2013 £2139m
we challenged the 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 cashgenerating units identified and goodwill allocation during the period the cash flow projections relative  
to previous performance and office for national statistics ‘ons’ guidance on construction growth rate 
benchmarking against the wider peer group and recalculating the discount rates and perpetuity rates used  
we challenged management’s sensitivity analysis on the cash flow projections and the discount rate and  
utilised our internal valuation experts to assist in the assessment of the appropriateness of the discount rate 
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 
carrying value of inventory at  
31 december 2014 was £2022m 
201 3 £1610m as set out in note 14 
we have evaluated the assumptions made on a sample of land and development appraisals such as market 
values local demand and planning applications which underpin the assessments by scrutinising them against 
recent sales information and external market data on house prices we have tested the future development 
cost assumptions against detailed site appraisals and to contractual documentation we have reviewed and 
challenged 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 affordable housing 
requires judgment in relation to the 
discount rate rate of expected default 
and forecast house price growth 
carrying value of shared equity loan 
receivables at 31 december 2014 
was £204m 201 3 £197m 
we have reviewed challenged and sensitised the assumptions in accounting for shared equity schemes and 
assessed the model methodology as disclosed in note 1 3 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 has set out their key accounting judgments and estimates in relation to each of the risks above on page 90 
the description of risks above should be read in conjunction with the significant issues considered by the audit committee discussed on page 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 £27m 201 3 £3 1m which is 7 5 201 3 7 5 of the fiveyear average pretax profit before exceptional 
items and approximately 1 201 3 approximately 1 of net equity we use pretax profit before exceptional items as it represents a key performance 
measure for the group pretax profit before exceptional items can vary significantly year on year dependent on factors like key contract performance  
while the overall nature and scale of the group’s activities remains broadly unchanged to reflect this dynamic in determining an appropriate materiality level 
we use a fiveyear average pretax profit before exceptionals as a benchmark
we agreed to report to the audit committee all audit differences in excess of £0 1m 201 3 £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 
independent auditor’s report  
to the members of morgan sindall group plc continued
financial statements
strategic report 02–46 governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
independent auditor’s report 79 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 this assessment our group audit scope focused primarily on the audit work at the significant components which were selected based on our 
assessment of the identified risks of material misstatement identified above these represent the principal business units within the group’s reportable 
segments we have performed full audit procedures for the significant components which account for 97 201 3 98 of the group’s revenue 78  
201 3 95 of the group’s adjusted profit before tax and 93 201 3 87 of the group’s net assets the coverage of group profit before tax has fallen  
in the year due to the relative performance of the components within the group 
our audit work on the remaining components was determined based on our assessment of the risks of material misstatement and of the materiality of the 
group’s operations in those components the components which had individual materially significant balances were subject to an audit of specified account 
balances those that were qualitatively material were subject to analytical review procedures with no further audit procedures performed on the remaining 
components 
our audit work on all components was executed to a lower level of materiality ranging from 50 –70 of group materiality 201 3 55 –70
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
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 we have nothing to report arising from 
these matters
corporate governance report
under the listing rules we are also required to review the part of the corporate governance report relating to the company’s compliance with ten 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 
independent auditor’s report  
to the members of morgan sindall group plc continued
financial statements
strategic report 02–46 governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
independent auditor’s report 80 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 we also comply with international standard on quality control 1 uk and ireland our audit methodology and tools aim to ensure that our quality 
control procedures are effective understood and applied our quality controls and systems include our dedicated professional standards review team and 
independent partner reviews
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 nonfinancial 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 
19 february 201 5
independent auditor’s report  
to the members of morgan sindall group plc continued
strategic report 02–46
morgan sindall group plc annual report 2014
independent auditor’s report 81
governance 47–76 financial statements 77–116
financial statements  2014 2013
     before exceptional 
     exceptional operating  
    total items items total 
   notes  £m £m £m £m
revenue   1 22198  20949  – 20949  
cost of sales     20388 19236 147 19383
gross profit     18 10  1 713  147 1 566 
administrative expenses    1603 1485 –  1485 
share of net profit of joint ventures  1 2 63  09  –  09  
other gains and losses  1 2 1 9  99  – 99 
operating profit before amortisation of intangible assets    289  336  147 1 89
amortisation of intangible assets  9 24 27 – 27
operating profit   265  309  147 1 62  
finance income  5 1 0  1 2  – 1 2  
finance expense  5 47 35 – 35
profit before tax  3 22 8  286  147 1 39  
tax  6 48 23 34  1  1 
profit for the year    18 0  263  1 13 1 50 
attributable to           
owners of the company    1 81  264  1 13 1 5 1  
noncontrolling interests    01 01 – 01
profit for the year    18 0  263  1 13 1 50 
earnings per share            
basic  8 423p     354p 
diluted  8 41 6p     349p
there were no discontinued operations in either the current or comparative years
consolidated statement of comprehensive income
for the year ended 31 december 2014
     2014 2013  
    notes £m £m
profit for the year      18 0  150  
 
items that will not be reclassified subsequently to profit or loss       
actuarial gain arising on retirement benefit obligation    1 9 0 1  09  
deferred tax on retirement benefit obligation    20 02 – 
      01 09  
items that may be reclassified subsequently to profit or loss       
movement on cash flow hedges in joint ventures    1 2 02 02  
losses on cash flow hedges transferred to the income statement on disposal of joint ventures    –  14  
foreign exchange movement on translation of overseas operations      02 04 
other movement on cash flow hedges      –  01 
      04 13 
other comprehensive expenseincome      05 22 
total comprehensive income      175  172 
attributable to       
 owners of the company      176  173  
 noncontrolling interests      01 01
total comprehensive income      175  172
consolidated income statement
for the year ended 31 december 2014
financial statements
strategic report 02–46 governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
consolidated financial statements 82 consolidated balance sheet
at 31 december 2014
     2014  2013  
    notes £m £m
assets           
goodwill and other intangible assets     9 2181  2205  
property plant and equipment     1 0 19 2  18 3  
investment property     1 1 95  100  
investments in joint ventures     1 2 550  540  
investments       03  04  
shared equity loan receivables     1 3 204  197  
retirement benefit asset     1 9 08  – 
noncurrent assets       3233  3229  
inventories     1 4 2022  1610  
trade and other receivables     1 5 4424  3855  
cash and cash equivalents     27 876  928  
asset held for sale       –  31 
current assets       7322  6424 
total assets      10555  9653 
liabilities         
trade and other payables     1 7 6901 6135 
current tax liabilities       52 53 
finance lease liabilities     1 8 1 6 15 
provisions     21 1 2 22
current liabilities       6981 6225
net current assets       341  199  
trade and other payables     1 7 220 206 
finance lease liabilities     1 8 25 39 
borrowings     27 319 231 
deferred tax liabilities     20 1 65 160 
provisions     21 1 66 222
noncurrent liabilities       895 858
total liabilities       7876 7083
net assets       2679  2570 
equity         
share capital     24 22  22  
share premium account       309  269  
other reserves       08 04 
retained earnings       2362  2288 
equity attributable to owners of the company       2685  2575  
noncontrolling interests       06 05
total equity       2679  2570 
the consolidated financial statements of morgan sindall group plc were approved by the board on 19 february 201 5 and signed on its behalf by
john morgan   steve crummett
chief executive   finance director
strategic report 02–46
financial statements
governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
consolidated financial statements 83      2014  2013  
    notes £m £m
operating activities         
operating profit      265  162  
adjusted for       
 amortisation of intangible assets    9 24  27  
 share of net profit of equity accounted joint ventures    1 2 63 09 
 depreciation    10 48  52  
 share option expense    25 07  12  
 profit on disposal of interests in joint ventures    1 2 19 99 
 gainloss on disposal of property plant and equipment      02 02  
 noncash impairment of investments      1 0  –  
 movement in fair value of shared equity loan receivables    1 3 18 02 
 noncash exceptional operating items    3 –  147  
additional pension contributions    1 9 07 07 
net disposals of investment properties    1 1 05  13  
net disposals ofadditions to shared equity loan receivables    1 3 1 1  03 
decrease in provisions    21 66 31
operating cash flows before movements in working capital      19 5  264  
increase in inventories      412 16 
increasedecrease in receivables      557 38  
increasedecrease in payables      851  106
movements in working capital      118 84
cash inflow from operating activities      77  180  
income taxes paid      44 12
net cash inflow from operating activities      33  168 
investing activities       
interest received      09  15  
dividends from joint ventures    1 2 08  04  
proceeds on disposal of property plant and equipment      04  03  
purchases of property plant and equipment      57 39 
net payments to acquire or increase interests in joint ventures      60 49 
proceeds on disposal of interests in joint ventures      59  236  
proceeds on disposal of other investment      03  – 
net cash outflowinflow from investing activities      34 170 
financing activities       
interest paid      49 20 
dividends paid    7 115 115 
repayments of obligations under finance leases      1 5 12 
proceeds from longterm borrowings    27 88  231  
proceeds from issue of share capital    24 40  02 
net cash outflowinflow from financing activities      51 86 
net decreaseincrease in cash and cash equivalents      52 424  
cash and cash equivalents at 1 january      928  504 
cash and cash equivalents at 31 december    27 876  928 
consolidated cash flow statement
for the year ended 31 december 2014
financial statements
strategic report 02–46 governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
consolidated financial statements 84 consolidated statement of changes in equity
for the year ended 31 december 2014
  share 
  share  premium other retained  noncontrolling total 
 capital account reserves earnings total interests equity 
 £m £m £m £m £m £m £m
1 january 201 3 22  267  17 2225  2497  04 2493  
total comprehensive income – – 1 3  1 60  1 7 3  0 1  1 7 2  
share option expense – – – 1 2  1 2  – 1 2  
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
1 january 2014 22  269  04 2288  257 5  05 257 0  
total comprehensive income – – 04 1 80  1 7 6  0 1  1 7 5  
share option expense – – – 07  07  – 07  
issue of shares at a premium – 40  – – 40  – 40  
tax relating to share option expense  – – – 02  02  – 02  
dividends paid – – – 115 115 – 115
31 december 2014 22  309  08 2362  2685  06 267 9 
other reserves
other reserves include
• capital redemption reserve of £06m 201 3 £06m which was created on the redemption of preference shares in 2003
• hedging reserve of £08m 201 3 £06m 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 £06m 201 3 £04m 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 2014 was 545767 201 3 575397 with a cost of £4 1m 201 3 £43m
strategic report 02–46
financial statements
morgan sindall group plc annual report 2014
consolidated financial statements 85
governance 47–76 financial statements 77–116 reporting entity
morgan sindall group plc the ‘group’ or ‘company’ is domiciled and 
incorporated in the uk 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 30 and in accordance 
with 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
• ias 27 revised ‘separate financial statements’ introduces new disclosure 
requirements to investment entities
• ias 28 revised ‘investments in associates and joint ventures 201 1 ’  
this standard was issued and supersedes ias 28 2003 and prescribes 
the accounting for investments in associates and sets out the requirements 
for the application of the equity method when accounting for investments 
in associates and joint ventures
• ias 32 amended ‘financial instruments presentation’ this amendment 
clarifies existing application issues relating to the offsetting financial assets 
and financial liabilities
• ias 36 amended ‘impairment of assets’ the amendments remove  
the requirement to disclose the recoverable amount of a cash generating 
unit or group of cash generating units to which a significant amount of 
goodwill or intangible assets with indefinite useful lives has been allocated 
in periods when no impairment or reversal has been recognised and 
introduce additional disclosure requirements in respect of assets for which 
an impairment has been recognised or reversed and for which the 
recoverable amount is determined using fair value less costs of disposal
• ias 39 amended ‘financial instruments recognition and measurement’ 
the amendments allow the continuation of hedge accounting when  
a derivative is novated to a clearing house counterparty and certain 
conditions are met
• ifrs 2 amended ‘sharebased payment’ as part of the 2010201 2 
cycle of the annual improvements project the definitions of ‘vesting 
condition’ and ‘market condition’ were amended and definitions added  
of ‘performance condition’ and ‘service condition’ to clarify how such 
conditions are reflected in the recognition and measurement of share
based payment expenses
• ifrs 3 amended ‘business combinations’ as part of the 2010201 2 
cycle of the annual improvements project this standard was amended  
to clarify that all contingent consideration classified as an asset or liability 
should be measured at fair value at each reporting date
• ifrs 10 ‘consolidated financial statements’ this standard establishes 
principles for the presentation and preparation of consolidated financial 
statements when an entity controls one or more other entities
• ifrs 1 1 ‘joint arrangements’ this standard establishes the principles for 
financial reporting by entities that have an interest in arrangements that 
are controlled jointly
• ifrs 1 2 ‘disclosure of interests in other entities’ this standard requires an 
entity to disclose information that enables users of its financial statements 
to evaluate the nature of and risks associated with its interests in other 
entities and the effects of those interests on its financial position financial 
performance and cash flows
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 2010–201 2 cycle
• annual improvements 201 1–201 3 cycle
• annual improvements 201 2–2014 cycle
• ias 16 amended ‘property plant and equipment’
• ias 19 amended ‘employee benefits’
• ias 27 amended ‘separate financial statements’
• ias 28 amended ‘investments in associates and joint ventures’
• ias 38 amended ‘intangible assets’
• ifrs 9 ‘financial instruments’
• ifrs 10 amended ‘consolidated financial statements sale or contribution 
of assets between an investor and its associate or joint venture’
• ifrs 1 1 amended ‘joint arrangements accounting for acquisitions  
of interests in joint operations’
• ifrs 14 ‘regulatory deferral accounts’
• ifrs 1 5 ‘revenue from contracts with customers’
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
• the directors are in the process of assessing the potential impact of ifrs 
1 5 on both revenue recognition and disclosure requirements
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
significant accounting policies
for the year ended 31 december 2014
financial statements
strategic report 02–46 governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
significant accounting policies 86 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
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 arrangements
a joint arrangement 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 joint ventures
a joint venture generally involves the establishment of a corporation 
partnership or other entity in which each venturer has an interest and joint 
control over strategic financial and operating decisions 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 and if so it is written  
off in the period in which those circumstances are identified 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 joint operations
construction contracts carried out as a joint arrangement without the 
establishment of a legal entity are joint operations the group’s share  
of the results and net assets of these joint 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 the margin recognised 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 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
e 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
significant accounting policies continued
strategic report 02–46
financial statements
governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
significant accounting policies 87 f 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
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
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 one 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
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
significant accounting policies continued
financial statements
strategic report 02–46 governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
significant accounting policies 88 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 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 operating profit 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 retirement benefit obligation is recognised  
in the balance sheet and represents the deficit or surplus in the group’s 
defined benefit scheme the calculation is performed by a qualified actuary 
on an annual basis using the projected unit credit method any surplus 
resulting from this calculation is limited to the present value of any economic 
benefits available in the form of the unconditional right to refunds from the 
scheme or reductions in future contributions to the scheme the retirement 
benefit obligation 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 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
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 uncollectible 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
sharebased payments
the group issues equitysettled sharebased payments share awards or 
share options to certain employees equitysettled sharebased 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 continued
strategic report 02–46
financial statements
governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
significant accounting policies 89 the preparation of financial statements under ifrs requires the company’s 
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
critical accounting judgments and estimates
for the year ended 31 december 2014
financial statements
strategic report 02–46 governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
critical accounting judgments and estimates 90 notes to the consolidated financial statements
1 revenue
an analysis of the group’s revenue is as follows
     2014  2013 
      £m £m
revenue from construction contracts     1 8675  1 81 72  
other services     993  992
construction revenue     1 9668  1 9164
regeneration revenue     2530  17 85
total revenue     22198  20949 
finance income of £10m 201 3 £12m is excluded from the table above
2 business segments
for management purposes the group is organised into five operating divisions and this is the basis on which financial information is presented to the chief 
operating decision maker the divisions’ activities are as follows
• construction  infrastructure offers design construction and infrastructure services working on projects and in frameworks and strategic alliances of all 
sizes markets include commercial defence education energy healthcare industrial leisure retail transport and water the division’s professional services 
business offers multidisciplinary engineering and design consultancy services
• fit out specialises in fit out and refurbishment projects overbury operates through multiple procurement routes in the commercial central and local 
government office further education and retail banking markets morgan lovell specialises in workplace strategy and the interior design and build of offices
• affordable housing specialises in the delivery of complex regeneration schemes and in the design build refurbishment and maintenance of homes 
operates a full mixedtenure model creating homes for rent shared ownership and open market sale the division’s response maintenance services include 
facilities management and planned and responsive repairs to social housing providers and public buildings
• 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 creates longterm strategic partnerships to realise the potential of underutilised assets promotes sustained economic growth through 
regeneration and drives cost efficiencies through innovative and integrated estate management solutions markets include asset backed education 
healthcare and social care residential student accommodation leisure and infrastructure the division’s community solutions business provides 
management project development and funding through a onestop service allowing partners to invest in local communities
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 analysis  
below includes the measures reported to the chief operating decision maker the comparative data has been restated on a comparable basis
2014 
  construction   affordable urban  group 
 infrastructure fit out housing regeneration investments activities eliminations total 
 £m £m £m £m £m £m £m £m
external revenue 1  1590  5036  4196  1127  249  – –  22198  
intersegment revenue 1 27  33  30  – – – 190 – 
total revenue 1  1717  5069  4226  1127  249  – 190 22198 
operating profitloss before 
 amortisation of intangible assets 
 and exceptional operating items 35 150 60 100 09 65 – 289 
amortisation of intangible assets – – 06 18 – – – 24 
exceptional operating items – –  –  –  –  –  –  –
operating profitloss 35 150 54 82 09 65 – 265
 
other information 
average number of employees 3507 592 1478 55 89 29 – 5750 
total assets 5141 1930 2476 1355 149 4026 4522 10555
strategic report 02–46
financial statements
governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
notes to the consolidated financial statements 91 2 business segments continued
2013
 construction   affordable urban  group   
 infrastructure fit out housing regeneration investments activities eliminations total 
 £m £m £m £m £m £m £m £m
external revenue 1 2344  4105  3797  616  87  – – 20949  
intersegment revenue – 1 68  1 3  – – – 18 1  – 
total revenue 1 2344  427 3  3810  616  87  – 18 1  20949 
operating profitloss before 
 amortisation of intangible assets  
 and exceptional operating items 1 27 1 09 86 1 0 6 1 57 – 336 
amortisation of intangible assets –  –  07 20 –  –  –  27 
exceptional operating items 147 –  – –  – – –  147
operating profitloss 20  1 09  7 9  10 6 1  57 –  1 62
 
other information 
average number of employees 3438 579 1 567 53 91 24 – 5752 
total assets 547  1 1 338 21 30 998 1 55 3638 407 7 9653 
during the year ended 31 december 2014 and the year ended 31 december 201 3 intersegment sales were charged at prevailing market prices and 
significantly all of the group’s operations were carried out in the uk
3 profit for the year
profit before tax for the year is stated after chargingcrediting
     2014  2013  
      £m £m
exceptional operating items – impairment of trade and other receivables in relation to four older construction contracts  – 147 
government grants     31 07 
auditor’s remuneration 
     2014  2013  
      £m £m
audit of the company’s annual report      01  01  
audit of the company’s subsidiaries and joint ventures     06  07 
total audit fees     07  08 
other services     01  01 
total nonaudit fees     01  01 
total fees     08  09 
4 staff costs
       2014  2013  
        £m £m
wages and salaries       2852  2762  
social security costs       31 7  310  
other pension costs note 19       89  84 
       3258  31 56 
notes to the consolidated financial statements continued
financial statements
strategic report 02–46 governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
notes to the consolidated financial statements 92 5 finance income and expense
       2014  2013  
        £m £m
interest receivable from joint ventures       08  10  
other interest income       02  02 
finance income       10  1 2 
interest payable on bank overdrafts and borrowings       16 13 
interest payable on finance leases       03 03 
loan arrangement and commitment fees       19 12 
other interest payable       09 07
finance expense       47 35
net finance expense       37 23
included within other interest payable in 2014 is discount unwind of £05m 201 3 £06m in relation to deferred consideration on the acquisition of an 
increased investment in a joint venture and £04m 201 3 £nil discount unwind on deferred land payments
6 tax 
       2014  2013  
        £m £m
current tax expense       
uk corporation tax      34  10  
adjustment in respect of prior years      09  03 
      43  13 
deferred tax creditexpense        
current year      08  23 
adjustment in respect of prior years      03 01
      05  24
income tax expensecredit for the year      48  11
corporation tax is calculated at 2150 201 3 2325 of the estimated assessable profit for the year
in 2014 a net tax charge of £48m has arisen comprising a current tax charge of £43m and a deferred tax charge of £05m 201 3 net tax credit £1 1m  
the table below reconciles the tax charge for the year to tax at the uk statutory rate
       2014  2013  
        £m £m
current tax expense       
profit before tax      22 8  13 9  
less post tax share of profits from joint ventures      63 09
      1 65  130  
uk corporation tax rate      2150 2325 
income tax expense at uk corporation tax rate      35  30  
 
tax effect of        
gain on disposal of joint ventures not giving rise to a tax liability      04 23 
nontaxable income and expenses      02 02  
tax liability upon joint venture profits
1
      1 1  –  
adjustments in respect of prior years      06  02  
expected forthcoming change in tax rates upon deferred tax balance      – 25 
other      02  03 
income tax creditexpense for the year      48 11 
1 certain of the group’s joint ventures are partnerships for which profits are taxed within the group rather than within the joint venture 
notes to the consolidated financial statements continued
strategic report 02–46
financial statements
governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
notes to the consolidated financial statements 93 7 dividends
amounts recognised as distributions to equity holders in the year 
      2014  2013  
       £m £m
final dividend for the year ended 31 december 201 3 of 1 50p per share      64  –  
final dividend for the year ended 31 december 201 2 of 1 50p per share      –  64  
interim dividend for the year ended 31 december 2014 of 1 20p per share      51  –  
interim dividend for the year ended 31 december 201 3 of 1 20p per share      –  51 
      115  11 5 
the proposed final dividend for the year ended 31 december 2014 of 1 50p per share is subject to approval by shareholders at the agm and has not been 
included as a liability in these financial statements 
8 earnings per share
      2014  2013  
     notes £m £m
profit attributable to the owners of the company      1 81  1 51  
adjustments         
 exceptional operating items net of tax      –  11 3  
 intangible amortisation net of tax      1 9  21  
 deferred tax credit arising due to change in uk corporation tax rates    6 – 25
adjusted earnings      200  260 
basic weighted average number of ordinary shares m      42 8  42 7  
dilutive effect of share options and conditional shares not vested m      07  06 
diluted weighted average number of ordinary shares m      435  433 
basic earnings per share      42 3p 354p 
diluted earnings per share      41 6p 349p
adjusted earnings per share       467p 609p 
diluted adjusted earnings per share       460p 600p
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 £7 70 201 3 £646
a total of 268056 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 2014 201 3 698089
9 goodwill and other intangible assets
     other 
     intangible 
    goodwill assets total 
     £m £m £m
cost or valuation         
1 j anuary 201 3    21 39  308  2447  
disposals    – 09 09
1 january 2014 and 31 december 2014    21 39  299  2438 
accumulated amortisation       
1 j anuary 201 3    – 206 206 
amortisation    – 27 27
1 january 2014    – 233 233 
amortisation    – 24 24
31 december 2014    – 257 257
net book value at 31 december 2014    21 39  42  21 8 1  
net book value at 31 december 201 3    21 39  66  2205 
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
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 the allocation is as 
follows construction  infrastructure £1 51 1m 201 3 £1 51 1m affordable housing excluding response maintenance £468m 201 3 £468m and urban 
regeneration £160m 201 3 £160m
notes to the consolidated financial statements continued
financial statements
strategic report 02–46 governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
notes to the consolidated financial statements 94 9 goodwill and other intangible assets continued
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 medium term 
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 22 201 3 24 this growth rate does not exceed the longterm average for the 
relevant markets
discount rates are pretax 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 for the cashgenerating units with goodwill balances are 1 15 201 3 1 15 for construction  infrastructure  
1 20 201 3 1 20 for affordable housing excluding response maintenance and 1 30 201 3 1 30 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 pretax 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 j anuary 201 3    24  80  399  503  
additions    – 1  1  28  39  
disposals    – 08 15 23
1 january 2014    24  83  412  519  
additions    24  08  27  59  
disposals    – 02 08 10
31 december 2014    48  89  43 1  568 
accumulated depreciation           
1 j anuary 201 3    – 50 252 302 
depreciation charge    – 07 45 52 
disposals during the year    – 08  1 0  1 8 
1 january 2014    – 49 287 336 
depreciation charge    – 1 1  37 48 
disposals    – 02  06  08 
31 december 2014    – 58 318 376
net book value at 31 december 2014    48  3 1  113  1 92  
net book value at 31 december 201 3    24  34  1 25  1 83 
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 £32m 201 3 £43m no other assets have been pledged to secure borrowings
notes to the consolidated financial statements continued
strategic report 02–46
financial statements
governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
notes to the consolidated financial statements 95 1 1 investment property
       2014  2013  
       £m £m
valuation  
1 january       10 0  11 3  
disposals       05 13
31 december       95 100 
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 3 £05m direct operating expenses arising on properties generating rent and vacant properties in the year 
amounted to £02m 201 3 £02m 
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 2014 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 holdings limited 50 share
bromley park holdings 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 limited partnership 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 share
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 uk joint control is exercised through the board of directors which includes three 
members appointed by the holders of each class of ordinary shares
hub west scotland limited 54 share
hub west scotland limited is a joint venture with 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
isis waterside regeneration limited partnership 50 equity participation
isis waterside regeneration is a joint venture with british waterways to undertake regeneration of waterside sites
leyton mount development llp 50 share
leyton mount development llp is a special purpose vehicle of the bournemouth development company llp which is developing a residential block of flats 
and commercial space within bournemouth
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
notes to the consolidated financial statements continued
financial statements
strategic report 02–46 governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
notes to the consolidated financial statements 96 12 investments in joint ventures continued
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
       2014  2013  
        £m £m
1 january       540  622  
equity accounted share of net profits       63  09  
increase in investment       13 2  40  
investment repayment       123 04 
noncash impairment       1 0 –  
disposals see below       42 125 
dividends received       08 04 
movement on cash flow hedges       02 02 
31 december       550  540 
all of the dividends received in the current and prior year were paid in cash
disposals
on 26 june 2014 the group sold its 333 interest in hull esteem consortium psp limited a private sector investor in the hull building schools for the future 
programme for cash consideration of £59m the gain on disposal was £17m the disposal was 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 the joint venture up to the date of disposal is included within 
the investments operating segment as the criteria to be included as discontinued operations were not met
summarised financial information related to equity accounted joint ventures is set out below other includes joint ventures that are not individually material
 isis waterside regeneration lp other
 
 
 
 
   2014 2013 2014 2013 
   £m £m £m £m
noncurrent assets 100   – – 12 58 3814    
current assets 100   673 706 19 60 1549 
current liabilities 100   191 183 645 770 
noncurrent liabilities 100   – – 1919 3979
net assets reported by equity accounting joint ventures 100   482 523 654 614
proportion of the group’s ownership interest 50      241 262  
other adjustments     01 05 
carrying amount of the group’s interest in the joint venture   240 257
revenue 100   31 2 100 1180 928 
expenses 100   244 92 1109 935
net profitloss 100   68 08 71 07
at 31 december 2014 isis waterside regeneration lp had current loans of £149m 201 3 £1 54m and incurred £04m of finance expense for the year 
2013 £03m
notes to the consolidated financial statements continued
strategic report 02–46
financial statements
governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
notes to the consolidated financial statements 97 12 investments in joint ventures continued
results of equity accounted joint ventures
     2014  2013  
      £m £m
group share of profit before tax     63  1 2  
group share of tax     – 03
group share of profit after tax     63 09 
13 shared equity loan receivables
     2014  2013  
      £m £m
1 january       19 7  192  
additions arising from the sale of properties       –  08  
net change in fair value recognised in the income statement       1 8  02  
repayments       11 05
31 december       204  19 7 
during the year there were repayments of shared equity loan receivables of £1 1m 201 3 £05m 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 £nil 201 3 £02m there was one default during the year 201 3 no defaults
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
      2014  2013 
assumption          
period over which shared equity loan receivables are discounted  
 – first buy and home buy schemes      20 years  20 years  
 – other schemes      9 years 8 years 
nominal discount rate       67  70  
weighted average nominal annual property price increase       32  22  
forecast default rate      20  20  
number of properties sold under the shared equity scheme for which a loan was outstanding at the year end    709  749  
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’
sensitivity analysis
at 31 december 2014 if the nominal discount rate had been 100bps higher at 7 7 and all other variables were held constant the fair value of the shared 
equity loan receivables would decrease by £09m with a corresponding reduction in both the result for the year and equity excluding the effects of tax
at 31 december 2014 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 £07m with  
a corresponding reduction in both the result for the year and equity excluding the effects of tax
14 inventories
       2014  2013  
       £m £m
work in progress       2022  16 10 
work in progress comprises land and housing commercial and mixeduse developments in the course of construction 
notes to the consolidated financial statements continued
financial statements
strategic report 02–46 governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
notes to the consolidated financial statements 98 15 trade and other receivables
       2014  2013  
       £m £m
amounts due from construction contract customers note 16       2415  2097  
trade receivables note 27       17 67  1492  
amounts owed by joint ventures note 26       33  82  
prepayments       119  58  
other receivables       90  126 
       4424 3855 
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 £83m 201 3 £86m none of the losses have been charged as exceptional operating 
items 201 3 £6 1m
16 construction contracts
       2014  2013  
        £m £m
amounts due from construction contract customers       2415  2097  
amounts due to construction contract customers       489 544
carrying amount at the end of the year       19 26  1553  
 
contract costs incurred plus recognised profits less recognised losses to date       67321  67385  
less progress billings       65395 65832
       19 26  1553 
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 trade and other payables
       2014  2013 
        £m £m
trade payables       1677  16 87  
amounts due to construction contract customers note 16       489  544  
amounts owed to joint ventures note 26       02  07  
other tax and social security       170  252  
accrued expenses       4292  3392  
deferred income       86  51  
other payables       185  202 
       6901  6135 
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 £nil and £1 36m respectively 201 3 £47m and £1 3 1m related to the discounted deferred consideration 
due on the acquisition of an additional interest in isis waterside regeneration partnership
notes to the consolidated financial statements continued
strategic report 02–46
financial statements
governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
notes to the consolidated financial statements 99 18 finance lease liabilities
 minimum lease capital element  
 payments of lease payments
 
 
 
 
   2014  2013 2014  2013  
   £m £m £m £m
amounts payable under finance leases         
within one year   18  1 8  1 6  15  
in the second to fifth years inclusive   26  42  25  39 
   44  60  41  54 
less future finance charges   03 06 na  na 
present value of lease obligations   41  54  41  54 
 
current lease liability       1 6  15 
noncurrent lease liability       25  39 
       41  54 
it is the group’s policy to lease certain of its property plant and equipment under finance leases the average lease term is seven years 201 3 six years  
for the year ended 31 december 2014 the average effective borrowing rate was 5 201 3 6 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
19 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 £89m 201 3 £83m represents contributions payable to the defined 
contribution section of the retirement plan by the group
as at 31 december 2014 contributions of £1 1m 201 3 £12m 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 salaryrelated benefits for members  
in respect of benefits accrued before 31 may 1995 and benefits transferred in from the snape group limited retirement benefits scheme accrued up  
to 1 august 1997 no further defined benefit membership rights can accrue after those dates the scheme duration is an indicator of the weightedaverage 
time until benefit payments are made for the scheme as a whole the duration is around 1 5 years
the last triennial valuation of the retirement plan was undertaken on 5 april 201 3 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 £92m represented 77 of the value of these liabilities on an ongoing funding basis the next triennial valuation  
is due to be undertaken as at 5 april 2016
the present value of the defined benefit liabilities were measured using the projected unit credit method the following table shows the key assumptions used
       2014  2013  
        
key assumptions used 
discount rate       34  44  
expected return on retirement plan assets       29  40  
expected rate of salary increases       41  45  
rate of inflation       21  25  
rate of future pension increases
1
      30–35  30–35  
average life expectancy for pensioner retiring now at age 65 years       874  874  
average life expectancy for pensioner retiring in 20 years at age 65 years       894  892 
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
notes to the consolidated financial statements continued
financial statements
strategic report 02–46 governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
notes to the consolidated financial statements 100 19 retirement benefit schemes continued
movements in the value of the retirement plan assets and in the present value of the retirement plan liabilities were as follows
 2014 2013
 
 
 
 
 assets liabilities total assets liabilities total 
 £m £m £m £m £m £m
1 january 93  93 – 89  1 04 1 5 
finance incomeexpense 04  04 – 03  04 0 1  
actuarial gainslosses 1 3  12 0 1  04 1 3  09  
contributions from sponsoring company 07  – 07  07  – 07  
benefits paid 04 04  – 02 02  – 
31 december 113  105 08  93  93 – 
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         1 6  
increase in inflation rate of 100bps         05  
increase in average life expectancy of one year         04 
the amounts recognised in the statement of comprehensive income were as follows
     2014  2013  
      £m £m
actuarial gain recognised during the year     01  09 
cumulative actuarial loss recognised     28  29 
the retirement plan assets comprise 56 corporate bonds 201 3 55 43 gilts 201 3 44 and 1 cash 201 3 1
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
  2014  2013  2012  2011  2010 
   £m £m £m £m £m
present value of the retirement plan liabilities  105 93 104 94 85 
fair value of the retirement plan assets  113  93  89  8 1  66 
surplusdeficit in the retirement plan  08  – 15 13 19 
the amount of contributions expected to be paid to the retirement plan during 201 5 is £07m 2014 £07m
notes to the consolidated financial statements continued
strategic report 02–46
financial statements
governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
notes to the consolidated financial statements 101 20 deferred tax
  asset shortterm   
  amortisation timing retirement 
  and differences benefit sharebased 
  depreciation and tax losses obligation payments total 
   £m £m £m £m £m
1 january 201 3  19 1  05 03  03  190 
reclassification  – 04  – – 04  
creditcharge 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 
1 january 2014  165 0 1 – 06  160 
creditcharge to income statement  – 03 – 02 05 
creditcharge to equity  – – 02 02  –
31 december 2014  165 04 02 06  165
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 2014 the group had unused tax losses of £35m 201 3 £30m available for offset against future profits no deferred tax asset has been 
recognised in respect of these losses due to the unpredictability of future profit streams against which the losses may be utilised losses may be carried 
forward indefinitely in 201 3 a deferred tax asset of £02m was recognised in respect of £08m of losses which were significantly all utilised during 2014
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
21 provisions
current liabilities 
      employee 
     provisions total 
       £m £m
1 january 201 3       30  30  
utilised       03 03 
released       05 05
1 january 2014       22  22  
utilised       10 10
31 december 2014       1 2  1 2 
employee provisions relate to redundancy and other costs associated with contracts that did not novate to the group on the acquisition of certain trade 
and assets
noncurrent liabilities          
   employee  insurance 
   provisions provisions other total 
    £m £m £m £m
1 january 201 3   04  1 2 1  1 20  245  
utilised   – 19 13 32 
additions   –  40  07  47  
released   –  10 28 38
1 january 2014   04  1 32  86  222  
utilised   – 25 10 35 
additions   –  32  02  34  
released   –  – 55 55
31 december 2014   04  1 39  23  1 66 
employee provisions comprise obligations to former employees other than retirement or postretirement obligations
insurance provisions comprise the group’s selfinsurance of certain risks and include £24m 201 3 £23m 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 and onerous lease provisions within construction  infrastructure which were no longer required
the majority of the noncurrent provisions are expected to be utilised within five years
notes to the consolidated financial statements continued
financial statements
strategic report 02–46 governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
notes to the consolidated financial statements 102 22 operating lease commitments
at 31 december the group had the following future minimum lease payments under noncancellable operating leases
 2014 2013
 
 
 
 
 land and   land and 
 buildings other total buildings other total 
 £m £m £m £m £m £m
within one year 64  5 1  115  7 7  57  1 34  
within two to five years 114  55  1 69  1 5 1  69  220  
after more than five years 47  –  47  1 4  – 1 4 
31 december 225  1 06  33 1  242  1 26  368 
the operating lease expense in the year was £1 13m 201 3 £148m
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 3 three years and rentals are fixed for an average of three years 201 3 three years
23 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 2014 contract bonds in issue under uncommitted facilities covered £208 1m 201 3 £1853m of contract commitments of the group
24 share capital
 2014 2013
 
 
 
 
   number £m number £m
issued and fully paid ordinary shares of 5p each         
1 j anuary   43259364  22  43225488  22  
exercise of share options   820201  –  33 876  – 
31 december   44079565  22  43259364  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
820201 shares were issued during 2014 in respect of options exercised under the morgan sindall savings related share option scheme ‘the saye scheme’ 
for a total consideration of £40m 201 3 33876 shares were issued for a total consideration of £02m no other shares were issued during the year
own shares
own shares at cost represent 545767 201 3 575397 shares in the company held in the trust in connection with the morgan sindall employee share 
option plan 2007 ‘esop 2007’ the morgan sindall executive remuneration plan 2005 ‘erp 2005’ the morgan sindall 2014 long term incentive plan 
‘2014 ltip’ and the morgan sindall 2014 share option plan ‘2014 sop’ 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 2014 of £620 
201 3 £7 55 the market value of the shares was £34m 201 3 £43m
notes to the consolidated financial statements continued
strategic report 02–46
financial statements
governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
notes to the consolidated financial statements 103 25 sharebased payments
the group recognised a share option expense of £07m 201 3 £12m related to equitysettled sharebased payment transactions the group has five share 
option schemes 2014 ltip  2014 sop  esop 2007  erp 2005 and saye details of the vesting conditions and other information of these schemes are set out 
in the directors’ remuneration report on pages 58 to 71
details of the share awards and options granted during the year and the valuation methodology are as follows
 share awards under 2014 ltip
    awards  awards share 
    with tsr with eps options under 
    condition condition esop 2007
number of sharesoptions granted     1 73323  1 73323  40000  
weighted average fair value at date of grant per share     £159 £7 96 £128 
weighted average share price at date of grant     £7 96 £7 96 £654 
weighted average exercise price     na na £640 
valuation model     stochastic black black 
     scholes  scholes 
expected term from date of grant     3 years 3 years 3 years 
expected volatility
1
    285 na na 
expected dividend yield
2
    00 00 00 
risk free rate     04 04 04
1  for the share awards with a tsr condition 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 2014 ltip  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
the following table provides a summary of the options granted under the group’s employee share option schemes during the current and comparative year
 2014 2013
 
 
 
 
     weighted  weighted 
   number average number  average 
   of share exercise of share exercise 
   options price £ options price £
outstanding at 1 january   3217776  604  3763414  649  
granted during the year   40000  640  609 109  437  
lapsed during the year   704962 623  885624 691  
exercised during the year   919201 513  269123 573 
outstanding at 31 december   1 633613  648  321 7 776  604 
exercisable at 31 december   1 066016  993  710782  836  
weighted average remaining contractual life   29 years   37 years  
the weighted average share price at the date of exercise for share options exercised during the year was £686 201 3 £647
the options outstanding at 31 december 2014 had exercise prices ranging from £437 to £1 581
 
notes to the consolidated financial statements continued
financial statements
strategic report 02–46 governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
notes to the consolidated financial statements 104 26 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 all were on an arm’s length basis
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
 
 
 
 
   2014  2013 2014 2013  
   £m £m £m £m
joint venture 
ashton moss developments limited    – – 01 01 
bromley park holdings limited    – – – 06 
claymore roads holdings limited    01 – 0 1  – 
ecf general partner limited    24  1 3  – – 
hb community solutions holdings limited    – – – 05  
hb community solutions limited    1 9  01  – – 
hb community solutions living limited    – – –  08  
hb villages development limited    02  – 02  – 
hb villages limited    03  – 03  – 
hb villages tranche 2 limited    02 – 02  – 
hub west scotland project co 1 limited    0 1  – – – 
hull esteem consortium psp limited
1
   41  22 3  – 01  
leyton mount development llp    12 5  02  1 9  – 
slough regeneration partnership community projects llp    66  02  0 1  03  
st andrews brae developments limited    – – 0 1  04  
taycare health holdings limited
2
   – 01  – – 
the bournemouth development company llp    04  13 7  0 1  25  
the compendium group limited    70  35  – 29  
wapping wharf alpha llp    02  – 0 1  01  
wellspring partnership limited    09  01  0 1  06 
    369  41 5  31  75 
1 during 2014 the group disposed of its interests in hull esteem consortium psp limited note 1 2
2 during 2013 the group disposed of its interests in taycare health holdings limited
  amounts owed byto 
  related parties
  
 
      2014 2013  
     £m £m
amounts owed by related parties note 1 5       33 82 
amounts owed to related parties note 1 7       02 07
       31 75 
all transactions with related parties were made on an arm’s length basis
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’
      2014  2013  
      £m £m
shortterm employee benefits      46 42  
postemployment benefits      04 03  
termination benefits      05 07  
share option expense      04 06
      59 58 
directors’ transactions
there have been no related party transactions with any director in the year or in the subsequent period to 19 february 201 5
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 19 february 201 5
notes to the consolidated financial statements continued
strategic report 02–46
financial statements
governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
notes to the consolidated financial statements 105 27 financial instruments
net 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 nonrecourse project financing as shown below
       2014  2013  
        £m £m
cash and cash equivalents       876  928  
borrowings due between two and five years       150 150 
nonrecourse project financing due after more than one year       169 81
net cash       557  697 
included within cash and cash equivalents is £338m 201 3 £247m which is the group’s share of cash held within jointly controlled operations
during july 2014 the group signed a new fouryear £140m committed revolving loan facility with four banks which will mature in september 2018 
additionally the group still retains £30m of committed facilities maturing in 2016 £1 50m of these facilities were drawn at 31 december 2014 201 3 
£1 50m additional project finance borrowings of £169m 201 3 £8 1m 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 2014 was £88m 201 3 net debt £190m
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 twiceyearly 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 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 2014 were £604m 201 3 £587m
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 nonpayment 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
notes to the consolidated financial statements continued
financial statements
strategic report 02–46 governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
notes to the consolidated financial statements 106 27 financial instruments continued
the ageing of trade receivables at the reporting date was as follows
 2014 2013
 
 
 
 
    provision for  provision for 
   gross trade impairment gross trade impairment 
   receivables  losses  receivables  losses 
   £m £m £m £m
not past due   12 22  – 10 52  –  
past due 1 to 30 days   248  –  16 5  –  
past due 31 to 1 20 days   7  1  –  62  01  
past due 1 21 to 365 days   83  07  91  –  
past due greater than one year   226  7 6  208  85 
   1 850  83  1 57 8  86 
the movement in the provision for impairment losses on trade receivables during the year was as follows
      2014  2013  
       £m £m
1 january      86  35  
amounts recovered during the year      03 10  
other impairment losses recognised      – 61
31 december      83  86 
the average credit period on revenue is 29 days 201 3 26 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 £545m 201 3 £440m 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 161 days 201 3 1 79 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 
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 nonpayment of debts or costly and time consuming reallocation and rescheduling of work 
certain measures and key performance indicators 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
notes to the consolidated financial statements continued
strategic report 02–46
financial statements
governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
notes to the consolidated financial statements 107 27 financial instruments continued
the group does not have any material derivative or nonderivative 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 noninterest 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 18
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 3 interest rate swap contracts £149m have fixed  
interest payments at an average rate of 5 1 201 3 5 1 for periods up until 2033
the group’s share of the fair value of swaps entered into at 31 december 2014 by joint ventures is estimated at a £08m liability 201 3 £06m 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 29 and 30
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 
£1 70m of committed bank facilities expiring in 2016 and beyond
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
28 subsequent events
there were no significant subsequent events that affected the financial statements of the group
notes to the consolidated financial statements continued
financial statements
morgan sindall group plc annual report 2014
notes to the consolidated financial statements 108
strategic report 02–46 governance 47–76 financial statements 77–116 financial statements
company financial 
statements
1 10 company financial 
statements
1 1 2 significant accounting policies
1 1 3 notes to the company 
financial statements
1 14 shareholder information
financial statements
strategic report 02–46
morgan sindall group plc annual report 2014
company financial statements 109
governance 47–76 financial statements 77–116        2014  2013  
    notes £m £m
assets          
tangible assets      09  1 5  
investments    1  3746  3746  
retirement benefit asset      08  –
fixed assets      3763  3761  
amounts owed by subsidiary undertakings       
 – due within one year      526  453  
 – due after one year      590  590  
corporation tax receivable      –  1 1  
deferred tax asset      07  09  
other debtors      05  53  
prepayments and accrued income      22  09  
cash at bank and in hand      372  502 
current assets      15 22  1627  
bank overdraft      1103 1587 
finance lease obligations      02 01 
trade payables      06 38 
amounts owed to subsidiary undertakings      3087 2691 
corporation tax payable      09 –  
other tax and social security      02 08 
other payables      06 06 
accrued expenses      24 20
creditors amounts falling due within one year      4239 4351
net current liabilities      2717 2724
total assets less current liabilities      10 46  1037 
bank loans      150 150 
finance lease obligations      01 02 
provision for liabilities     2 119 114
creditors amounts falling due after more than one year      270 266
net assets      776  771 
shareholders’ funds       
share capital      22  22  
share premium account      309  269  
capital redemption reserve      06  06  
special reserve      13 7  137  
profit and loss account      302  337 
shareholders’ funds      776  771 
the financial statements of the company company number 00521970 were approved by the board and authorised for issue on 19 february 201 5 and 
signed on its behalf by
john morgan steve crummett
chief executive finance director
company balance sheet
at 31 december 2014
financial statements
morgan sindall group plc annual report 2014
company financial statements 110
strategic report 02–46 governance 47–76 financial statements 77–116    share capital  profit 
 share premium redemption special and loss shareholders’ 
 capital account reserve reserve account funds 
  £m £m £m £m £m £m
balance at 1 january 201 3 22  267  06  1 37  57 9  1 01 1  
loss for the year         1 54 1 54 
other comprehensive income             
actuarial gain arising on defined benefit asset         09  09 
total comprehensive income         145 145 
share option expense         1 2  1 2  
issue of shares at a premium   02        02  
exercise of share options and vesting of share awards         04  04  
tax relating to share option expense         02  02  
dividends paid         1 15 1 15
balance at 1 january 2014 22  269  06  1 37  337  77  1  
profit for the year         7 2  7 2  
other comprehensive income             
actuarial gain arising on defined benefit asset         0 1  0 1  
tax arising on actuarial gain on retirement benefit asset         02 02
total comprehensive income         7  1  7  1  
share option expense         07  07  
issue of shares at a premium   40        40  
exercise of share options and vesting of share awards         02  02  
dividends paid         1 15 1 15
balance at 31 december 2014  22  309  06  1 37  302  77 6 
company statement of changes in equity
for the year ended 31 december 2014
strategic report 02–46
financial statements
morgan sindall group plc annual report 2014
company financial statements 111
governance 47–76 financial statements 77–116 basis of accounting
the separate financial statements of the company are presented as required by the companies act 2006 ‘the act’ the company meets the definition of  
a qualifying entity under frs 100 financial reporting standard 100 issued by the financial reporting council accordingly in the year ended 31 december 
2014 the company has undergone transition from reporting under uk gaap to frs 101 as issued by the financial reporting council
on adoption of frs 101 no significant changes in accounting policies have been noted and no transition adjustments were required on the prior year financial 
statements therefore the opening balance sheet on transition has not been presented 
the company’s accounting policies are consistent with those described in the consolidated accounts of morgan sindall group plc except that as permitted  
by frs 101 the company has taken advantage of the disclosure exemptions available under that standard in relation to sharebased payments financial 
instruments capital management presentation of a cash flow statement and related party transactions where required equivalent disclosures are given  
in the consolidated accounts in addition disclosures in relation to retirement benefit schemes note 19 share capital note 24 and dividends note 7  
have not been repeated here as there are no differences to those provided in the consolidated accounts
consolidated accounts have not been prepared for the company and its subsidiaries under the exemption granted by section 400 of the act accordingly 
these financial statements present information about the company and not about its group
these financial statements have been prepared on the going concern basis as discussed in the finance review on page 30 and under the historical cost 
convention 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
profit of the parent company
the company has taken advantage of section 408 of the act and consequently the statement of comprehensive income including the profit and loss 
account of the parent company is not presented as part of these accounts the profit of the parent company for the financial year amounted to £7 2m 
201 3 loss of £1 54m
significant accounting policies
for the year ended 31 december 2014
financial statements
morgan sindall group plc annual report 2014
significant accounting policies 112
strategic report 02–46 governance 47–76 financial statements 77–116 notes to the company financial statements
1 investments
    subsidiary other 
    undertakings investments total 
    £m £m £m
cost          
1 j anuary 2014    377 8  03  378 1 
31 december 2014    377 8  03  378 1 
provisions          
1 j anuary 2014 and 31 december 2014    35 –  35
net book value at 31 december 2014    37 43  03  37 46  
net book value at 31 december 201 3    37 43  03  37 46 
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 ag design services 
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 urban regeneration 
bromley park holdings limited 50 residential development 
claymore roads holdings limited 50 infrastructure services 
english cities fund limited partnership 1 25 urban regeneration  
hb community solutions living limited 50 development of supported living facilities 
hub west scotland limited 333 delivering public sector health and education projects in the glasgow area 
isis waterside regeneration limited 50 urban waterside regeneration 
lingley mere business park development company limited 50 commercial office 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 and morgan sindall professional services ag registered and operating in switzerland 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
2 provisions
    employee insurance 
    provisions provisions total 
     £m £m £m
1 january 2014    04  110  114  
additions    –  22  22  
utilised    –  17 17
31 december 2014    04  115  119 
the company has provisions for selfinsurance 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
strategic report 02–46
financial statements
morgan sindall group plc annual report 2014
notes to the company financial statements 113
governance 47–76 financial statements 77–116 shareholder information
financial calendar 2014
financial year end 31 december 2014 
preliminary results announcement 1 9 february 201 5 
annual general meeting 7 may 201 5 
trading update 7 may 201 5 
final dividend 
 exdividend date 30 april 201 5 
 record date 1 m ay 201 5 
 payment date 29 may 201 5 
half year results announcement august 201 5 
interim dividend payable october 201 5 
trading update november 201 5
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 2014 annual report and other information about the company are 
available on its website wwwmorgansindallcom 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 wwwmorgansindallcominvestors 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 that  
is recorded on the register of members 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
the group has a wide range of information that is available on its  
website wwwmorgansindallcom including
• finance information – annual and interim reports financial news  
and events
• share price information
• shareholder services information
• press releases both current and historical
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 6768 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
• 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 wwwmpsonlinecouk 
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
financial statements
strategic report 02–46 governance 47–76 financial statements 77–116
morgan sindall group plc annual report 2014
shareholder information 114 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 of 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
annual general meeting ‘agm’
the agm of the company will be held at 1 200pm on thursday 7 may 201 5 
at the offices of jefferies hoare govett vintners place 68 upper thames 
street london ec4v 3bj uk the notice of meeting and form of proxy are 
enclosed with this annual report the notice of annual general meeting can 
be found in the investors section on the morgan sindall group plc website 
wwwmorgansindallcom
electronic voting
shareholders can submit proxies for the 201 5 agm electronically by logging 
on to wwwinvestorcentrecoukeproxy electronic proxy appointments  
must be received by the company’s registrar no later than 1 200pm  
on tuesday 5 may 201 5 or not less than 48 hours before the time fixed  
for any adjourned meeting 
analysis of shareholdings at 31 december 2014
 number of  of total  number of  of total 
 accounts accounts shares shares
holding of shares     
up to 1000 892 5138 434450 098 
1001 to 5000 591 3404 1 237  1 51 281 
5001 to 100000 1 90 1 095 4350053 987 
100001 to 1000000 54 3 1 1 1 6757 873 3802 
over 1000000 9 052 21299540 4832
 1736 10000 44079067 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 
registrar
computershare investor services plc
independent auditor
deloitte llp
shareholder information continued
strategic report 02–46
financial statements
morgan sindall group plc annual report 2014
shareholder information 115
governance 47–76 financial statements 77–116 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 annual report 2014
116
strategic report 02–46 governance 47–76 financial statements 77–116


Summary:
 strategic report
morgan sindall group plc annual report 2014
group highlights 01
group highlights contents
2013 2095
revenue £m 
2014 2220
adjusted proﬁt before tax £m
2013 313
2014 252
operating proﬁt – reported £m
2013 162
2014 265
dividend pence 
2013 270
2014 27 0
adjusted eps pence 
2013 609
2014 467
committed order book £bn 
2013 24
2014 27
regeneration and development pipeline £bn 
2013 30
2014 32
 adjusted is deﬁned as before intangible amortisation of £24m 
 2013 £27m exceptional operating items of £nil 2013 £147m 
 and in the case of earnings per share deferred tax credit due to 
 a change in the statutory tax rate £nil 2013 £25m
strategic report
02 overview
04 chairman’s statement
06 business model
09 strategy and markets
18 chief executive’s review
28 finance review
31 risk review
44 sustainability review
governance
48 chairman’s statement
48 board of directors
50 group management team
52 corporate governance report
58 directors’ remuneration 
report
72 directors’ report
76 directors’ responsibilities 
statement
financial statements
78 independent auditor’s report
82 consolidated financial statements
86 significant accounting policies
91 notes to the consolidated financial statements
1 10 company financial statements
1 1 2 significant accounting policies
1 1 3 notes to the company financial statements
1 14 shareholder information
a pdf download of our 2014 annual report 
wwwcorporatemorgansindallcom
our corporate website 
wwwcorporatemorgansindallcom
sustainability 
wwwcorporatemorgansindallcomsustainability
cover image
lee tunnel project by mvb joint venture for thames water
 strategic report 02–46 governance 47–76 financial statements 77–116 strategic report
overview
our strategic priorities 
the group’s longterm strategy to 
enhance its marketleading position 
across its chosen markets and use the 
cash generated from its construction 
activities to invest in and grow its 
regeneration activities remains 
unchanged
our performance in 2014
confidence in the strategy has been 
reinforced by a strong performance  
from urban regeneration in 201 4
looking forward
the group will continue to be managed  
in line with its strategic priorities and  
to deploy its capital structure and 
management expertise to generate 
sustainable returns without taking  
undue risks 
target markets  
that offer the best  
potential for growth 
significant appointments have been secured 
in the group’s key markets of social housing 
education transport and commercial
further investment in regeneration 
opportunities supported by improvement in 
the group’s order book provides confidence 
that the group is well positioned to deliver 
future growth
maximise returns by  
focusing on relationships  
with key customers 
new work has been secured on existing 
longterm frameworks and appointments 
secured on significant new frameworks
the group is committed to developing 
longterm relationships creating strategic 
partnerships and securing positions on  
major frameworks
utilise the group’s  
complementary range  
of skills to provide  
an integrated offering
sister divisions have collaborated on 
longterm complex schemes around the 
uk involving investment development and 
construction for example the towcester 
regeneration scheme see page 21  
investments continues its strategy to unlock 
prime longterm construction opportunities 
for sister divisions
use the cash generated  
through construction  
activity to invest  
in regeneration 
urban regeneration has performed strongly 
with a significant increase in operating profit 
and 1 3 growth in its regeneration and 
development pipeline 
firm financial discipline will be applied  
to overheads cash and working capital  
to ensure the group has sufficient cash  
to invest from its construction activities  
into quality regeneration opportunities
to read more see pages 9 to 1 1 pages 9 to 1 1 and 18 to 27 
pages 9 to 1 1 and 18 to 27 
02
morgan sindall group plc annual report 2014
overview
 strategic report 02–46 governance 47–76 financial statements 77–116 strategic report
 strategic report 02–46 governance 47–76 financial statements 77–116
business model 
the group’s business model comprises  
five distinct but complementary drivers  
of growth that help the group to deliver  
its strategy
201 4 key performance  
indicators ‘kpis’
the group uses financial and nonfinancial 
kpis to measure its progress in delivering  
its strategy priorities
risk awareness 
the group has a long established culture  
of mature risk and control processes  
to manage both material and daytoday 
circumstances
people
• highest standards maintained in health  
and safety 
• morgan sindall group people promise 
‘people promise’ launched to position  
the group as employer of choice
accident incident rate
306
number of graduates recruited
67
average number of training  
days per employee 
22 days
the group’s performance and business 
conduct affects employees subcontractors 
and the public and in turn can affect its 
reputation and commercial performance
winning in our markets
• close collaboration with clients and partners
• driving continuous improvement through 
perfect delivery 
• targeting markets with highest 
opportunities for growth
regeneration and development pipeline
£32bn
perfect delivery
81 
committed order book
£27bn
the group undertakes several hundred 
contracts each year and needs to ensure  
that contractual terms relate to the risks 
arising from the nature and complexity  
of the works
maximising efficiency
• longterm relationships with trusted 
suppliers and subcontractors
• optimising business processes and  
support functions
• reducing energy consumption and  
carbon emissions
gross margin 
82
overhead as a proportion of revenue
7 2
carbon intensity scopes 1 2 and 3
1695
if employees are not properly engaged with 
the culture of the business clients are less 
likely to receive exceptional levels of service
disciplined use of capital
• rigorous cash management
• longterm joint ventures and  
strategic alliances
• forward selling schemes with leading 
financial institutions
working capital as a proportion  
of revenue
25
adjusted operating cash flow  
as a percentage of adjusted  
operating profit
8
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 operate as a going concern
pursuing innovation
• empowering employees to think differently
• identifying innovative routes to market
• pioneering commercial structuring and 
funding solutions
• creating new design and construction 
techniques
group revenue generated from 
investments funding solutions
£684m
if the group fails to encourage an innovative 
approach across its divisions it could lose  
its competitive edge and suffer reputational 
damage
pages 6 to 8 pages 6 to 8 pages 31 to 43
03
morgan sindall group plc annual report 2014
overview
overview continued