Morgan Sindall Group plc
Annual Report 2024
Contents
Strategic report
03
2024 in numbers
04
The quick read
06
Chief executive’s statement
07
Our divisions
08
Business model
10
Purpose, values and strategy
11
Our stakeholders
14
Key performance indicators
16
Market conditions
17
Financial review
20
Capital allocation
22
Operating review
38
Responsible business strategy
and performance
52
Managing risk
63
Climate reporting
75
Section 172 statement
76
Non-financial and sustainability
information statement
78
Going concern and
viability statement
Governance
81
The UK Corporate
Governance Code
83
Chair’s statement
85
Board overview
86
Board of directors
88
Directors’ and corporate
governance report
111
Directors’ remuneration report
131
Other statutory information
Financial statements
136
Independent auditor’s report
147
Consolidated financial
statements
184
Company financial statements
195
Shareholder information
197
Appendix – Carbon emissions
background and terminology
1
MSCI is a provider of decision support
services for the global investment
community; its ESG ratings are used
by the majority of our major shareholders.
CDP is a charity that runs the global
disclosure system for investors, companies,
cities, states and regions to manage their
environmental impacts.
We are the partnerships,
fit out and construction
services group.
Our record full-year performance
in 2024 reflects the strength and
diversity of our operations and the
talent and commitment of our people.
We continue to prioritise delivering
social and environmental value,
achieving an A CDP Climate score and
an ESG rating of AAA from MSCI.
1
Materiality
Our annual report aims to provide our investors with the information they
need to make decisions, for example on whether to buy, hold or sell our
shares, how to vote on their shares and whether to engage with our Board
on any issue. We have included information we believe is material to these
decisions and presented it in a way that we believe is fair, balanced and
understandable. We recognise that this report will be read by a variety
of other stakeholders including employees, our supply chain, clients and
partners, funders and performance bond issuers, analysts and regulators.
Where we believe that a topic is material to many of them, based on our
latest materiality assessment (see page 39), we either include it in this
report or refer to other reports and information on our website. We believe
this approach meets the requirements of company law, the UK Corporate
Governance Code, the Companies Act 2006 and UK-adopted international
accounting and reporting standards, and that we go beyond these
requirements where we feel it is useful for the reader.
*
See note 28 to the consolidated financial statements for alternative
performance measure definitions and reconciliations.
1
The 2019 baseline for Scope 1 and 2 emissions was 20,903 tonnes CO
2
e.
This figure represents our UK and European operations. See Appendix
on pages 197 and 198 for emission scope definitions.
2
Includes number of apprentices, sponsored students and employees
undertaking national vocational and professional qualifications.
3
Number of lost time incidents x 100,000 divided by the number of hours
worked. Lost time incidents are those resulting in absence from work for
a minimum of one working day, excluding the day the incident occurred.
2024 in numbers
Strong operating
performance
Financial strength and
shareholder returns
Social and
environmental value
Revenue
£4,546.2m
(2023: £4,117.7m)
Operating profit (adjusted*)
£162.6m
(2023: £141.3m)
Operating profit
£162.0m
(2023: £140.6m)
Secured workload
£11,419.3m
(2023: £8,920.2m)
Profit before tax (adjusted*)
£172.5m
(2023: £144.6m)
Profit before tax
£171.9m
(2023: £143.9m)
Average daily net cash
£374.2m
(2023: £281.7m)
Total dividend per share
131.5p
(2023: 114.0p)
Reduction in Scope 1 and 2
carbon emissions since 2019
1
44%
(2023: 45%)
CDP Climate score
A
(2023: A)
Apprentices, sponsored students
and professional learning
2
1,087
(2023: 966)
Lost time incident rate
3
0.23
(2023: 0.24)
03
Strategic report
The quick read
Harnessing the energy of our people to achieve the improbable
1.
Our specialist
divisions
and construction services and work in
partnerships to deliver housing and
mixed-use regeneration.
Partnerships
n
Partnership Housing
n
Mixed Use Partnerships
Fit Out
n
Fit Out
Construction Services
n
Construction
n
Infrastructure
n
3.
Our
strategy
We pursue organic growth for the Group
through the exceptional performance of
our businesses.
Our priorities
n
Achieve quality of earnings
n
Excel in project delivery
n
Secure long-term workstreams
n
Keep innovating to deliver on our Total
Commitments to our stakeholders and
wider society
n
Maintain financial strength
2.
Our business
model
We generate cash from fit out and
construction services and invest in long-term
partnership schemes which in turn create
opportunities in construction.
Our capabilities match the UK’s growing
demand for affordable housing, regeneration
and investment in public, commercial and
social infrastructure.
4.
Core
Values
Our purpose, culture, strategy and performance
are driven by our Core Values. We encourage
our people to challenge the status quo and
exceed our stakeholders’ expectations.
The customer
comes first
Talented people are
key to our success
Consistent
achievement
requires challenging
the status quo
We act responsibly
to do the right thing
We have a
decentralised
philosophy
See page 8
See page 7
See page 10
See page 10
04
Morgan Sindall Group plc
Annual Report 2024
The quick read
continued
5.
A decentralised
approach
At the heart of our Core Values is our
decentralisation.
Our divisions are complementary but
different, and our decentralised approach
enables them to respond quickly to the
specific needs of their markets.
Our people are empowered to make
the right decisions for the business and
our stakeholders.
7.
Dedicated
to our stakeholders
Long-term relationships, based on dialogue,
transparency and collaboration, are key to
our success.
Our key stakeholders
n
Our people
n
Supply chain
n
Clients and partners
n
Local communities
n
Shareholders
n
Funders and performance bond issuers
6.
Being a responsible
business
We have made five Total Commitments
to our stakeholders and wider society.
8.
Our Total Commitments
are aligned with the United
Nations (UN) Sustainable
Development Goals
We believe we can have the biggest impact in
the following:
See page 38
See page 7
See page 11
Protecting
people
Developing
people
Improving the
environment
Working
together with
our supply chain
Enhancing
communities
Our Total
Commitments
Visit morgansindall.com
for more information
05
Strategic report
Chief executive’s statement
Another record year
for the Group
Construction services includes Construction, Infrastructure
(including the BakerHicks design business) and Property
Services. This is one area where we wish to grow the
businesses carefully, as margin has and will be a huge focus.
If we hit challenging times, we would rather let the revenue fall
and preserve margins. Like Fit Out, these businesses generate
a significant amount of free cash and are capital-light.
Partnerships, fit out and construction services represent
everything we do, now and in the foreseeable future.
Creating shared value
As the business grows, we must remain committed to
operating as a responsible business by creating value for
communities and decarbonising our activities. In 2024,
we published our first Transition Plan for meeting our
science-based carbon-reduction targets and identified new
opportunities to achieve emissions reductions across the
Group. We also took action to improve our data collection
and to help our suppliers and clients reduce their emissions.
During the year, we refreshed our health and safety objectives
and developed ways to track our positive safety interventions,
which we believe will help further strengthen our safety
performance. We have also expanded our ways of measuring
and increasing the social impact of our projects; for example,
in collaboration with HACT, the Housing Associations’
Charitable Trust, and Simetrica-Jacobs, we have replaced our
‘Social Value Bank’ with the ‘Built Environment Bank’, which will
better measure our contribution to social wellbeing. This year
we have reported our contribution as measured by the Social
Value Portal, which determined that our activities have
contributed £4.6bn in social value since October 2023.
Our outlook for 2025
While there is continued uncertainty in the wider
macroeconomy, we remain positive for the year ahead.
With our high-quality and growing order book spread across
a wide range of sectors, we are well positioned for the future
and on track to deliver an outcome for 2025 which is in line
with our current expectations. We remain focused on making
our business better and better, and better again.
Our performance reflects the quality of
our diverse operations and the talent and
commitment of our people.
2024 was another record year for the Group, delivering
significant double-digit growth for both adjusted profit before
tax and the full-year dividend, supported by our high-quality
order book. We have continued to make strategic and
operational progress and remain well positioned to support
the government’s affordable home and social infrastructure
plans over the medium term. As a result, we have upgraded
the medium-term targets for four of our six divisions. Our
strong balance sheet, supported by a substantial average daily
cash position, has allowed us to focus on making the right
decisions to drive long-term sustainable growth while also
supporting returns to shareholders.
Our strategy for long-term growth
At the half year, we announced a new way of describing
ourselves, as the ‘partnerships, fit out and construction
services group’. We believe this better reflects the way the
business has matured and our specialisms have increased.
While it describes what we do as a Group, our individual
businesses remain absolutely autonomous and their brand
identities, which are very important to us, remain intact.
All of our three specialisms have their own dynamics and
strategic priorities, and each is at a different level of maturity
while remaining critical to the Group.
Partnerships consists of our Partnership Housing and Mixed
Use Partnerships (previously ‘Urban Regeneration’) divisions.
These businesses have very strong brands, and everything
they do is in partnership. They need cash investment to grow
but will be a key driver towards profitable growth for the
Group in the medium to long term. Partnership Housing is
growing its long-term partnerships with the public sector,
while Mixed Use Partnerships has seen its order book grow
from £1,825.6m in 2023 to £4,084.9m in 2024 and signed
£2.36bn of development agreements during the year.
Fit Out is our most mature area. The business is the market
leader, generating a significant amount of free cash and
having almost no capital requirements. Our challenge here
is to maintain this position.
John Morgan
Chief Executive
06
Morgan Sindall Group plc
Annual Report 2024
Our divisions
Offering expertise that meets the
specific needs of our markets
Energy, nuclear, rail,
highways, water and
defence markets.
morgansindallinfrastructure.com
Construction
Infrastructure
Partnership
Housing
Revenue
£1,044.1m
Revenue
£1,047.0m
Revenue
£861.2m
Revenue
£1,300.3m
Revenue
£90.5m
Revenue
£223.2m
Fit Out
Mixed Use
Partnerships
Property
Services
Education, healthcare,
commercial,
industrial, leisure
and retail markets.
morgansindallconstruction.com
Partnerships with
local authorities and
housing associations.
Mixed-tenure
developments,
building/developing
homes for open
market sale and for
social/affordable rent,
design and build
house contracting,
and planned
maintenance and
refurbishment.
lovell.co.uk
Transforming the
urban landscape
through partnership
working and the
development of
multi-phase sites
and mixed-use
placemaking.
museplaces.com
Response and planned
maintenance services
for social housing and
the wider public
sector.
morgansindallpropertyservices.com
Infrastructure
includes the
BakerHicks design
activities based out
of the UK and
Switzerland.
bakerhicks.com
Office interior design
and build services
direct to occupiers.
morganlovell.co.uk
Fit out and
refurbishment in
commercial, central
and local government
offices, as well as
further education.
overbury.com
Partnerships
Fit Out
Construction Services
07
Strategic report
Business model
A diverse business creating long-term
value in the built environment
Talented people
A positive health, safety
and wellbeing culture
Long-term client relationships
National network of
supply chain partners
Capability and experience
in delivering environmental
and social value
Technology for innovation,
efficiency and safety
Strong balance sheet and a
significant net cash balance
1. Our valued resources
Our capabilities are aligned with sectors of the UK
economy which support the current and future
demand for affordable housing, urban placemaking
and investment in public, commercial and
social infrastructure.
Our decentralised approach allows our specialist
divisions to respond quickly to the needs of their
markets and achieve the best outcomes for our
stakeholders. See page 7 for detail on our divisions’
services and markets and pages 22 to 37 for an
update on their respective business environments.
We use cash from our fit out and construction
activities to invest in long-term housing and
mixed-use schemes delivered through partnerships,
which in turn provide opportunities for construction.
More detail on investment in our partnership activities
can be found on page 21.
For information on how we manage and sustain our
resources, see pages 11 to 13 (our stakeholders); 38 to
51 (responsible business strategy and performance);
17 to 19 (financial review); 22 to 37 (operating review);
and 52 to 62 (managing risk).
08
Morgan Sindall Group plc
Annual Report 2024
Invests cash for long-term
value and provides
construction opportunities
Generates cash
Generates cash
Business model
continued
2. How we operate
3. Value we create
Transforming the built environment:
New housing, schools and colleges, commercial and critical services infrastructure, mixed-use
urban places, and property services for social housing.
High-quality
projects:
91%
Perfect Delivery
Social value:
£4.6bn
as determined by the Social Value
Portal (see page 50 for detail)
Helping our
people succeed:
662
promoted internally
Environmental value:
44%
reduction in Scope 1 and 2 carbon
emissions since 2019
Supporting our
supply chain:
98%
invoices paid
within 60 days
Shareholder returns:
131.5p
total dividend
per share
09
Strategic report
Purpose, values and strategy
Focused on exceeding our stakeholders’ expectations
Purpose
Harnessing the energy of our people
to achieve the improbable.
We are a group of complementary but very different
businesses and every project is unique.
Through our highly decentralised philosophy, our people
have the responsibility and authority to make the right
decisions at pace.
We encourage our people to think differently and find
better ways of doing things. This way we can keep
exceeding our stakeholders’ expectations, even as those
expectations increase.
Values
Our Core Values define our culture and
drive our purpose and strategy.
The energy of our talented teams, together with
our deeply held Core Values, enables us to exceed
our stakeholders’ expectations.
Strategy
Organic growth for the Group through the
exceptional performance of our businesses.
Achieve quality of earnings
by selecting the
right projects aligned to our core strengths
Excel in project delivery
for our customers
and end users
Secure long-term workstreams,
underpinned by our teams’ strong and
lasting client and partner relationships
Keep innovating to find new and
better ways of delivering on our
Total Commitments:
n
Protecting people
n
Developing people
n
Improving the environment
n
Working together with our supply chain
n
Enhancing communities
Maintain financial strength, especially
in adverse economic conditions,
with
a strong balance sheet, significant levels
of cash, attractive dividend policy, and
by investing in partnership activities
and growth
The customer
comes first
Talented people are
key to our success
Consistent
achievement
requires challenging
the status quo
We act responsibly
to do the right thing
We have a
decentralised
philosophy
See page 92 for how the Board monitors our culture and ensures
it aligns with our purpose, values and strategy
See pages 14 and 15 for our performance against our strategic
priorities and pages 53 to 61 for our principal risks
10
Morgan Sindall Group plc
Annual Report 2024
Our stakeholders
The quick read...
The Board engages directly with our people,
shareholders, analysts and funders; our divisions
manage their relationships with their people, supply
chain, clients, partners and local communities
The executive directors are kept informed of the
divisions’ stakeholder engagement via regular
divisional board meetings and update the Board
as appropriate
Understanding our
stakeholders’ priorities
We develop long-term relationships through close working
and communication.
Our people
The passion and expertise of more than 8,000
employees enable us to achieve the improbable
for our stakeholders. Thirty-six percent of our
people have been with the Group for six or
more years.
How the Group engaged
Our divisions engage with their people through surveys to
hear their views, conferences and other channels to keep
them updated on business performance, forums for gathering
ideas and innovations, initiatives to clarify career paths and
improve conversations between employees and their line
managers, and efforts to improve people’s wellbeing and
increase social interaction between colleagues.
Examples of actions taken during the year in direct response
to feedback include the following:
To enhance processes for career planning and
opportunities, Infrastructure launched ‘Development
Conversations’ and partnered with Cargyll leadership
development consultants and Ashton Business School to
launch a ‘Reach Higher’ programme. Partnership Housing
advertised all vacancies internally and 69 employees
were promoted.
To address concerns around workload and work–life
balance, Mixed Use Partnerships communicated its
resource planning as part of regional roadshows on its
strategic plan. BakerHicks strengthened its recruitment
team, enhanced parental leave payments and introduced
the opportunity for people to take a career break of up to
one year while their role remains open.
Property Services held a series of ‘Town Hall’ meetings
where points raised included questions about the future
financial performance of the business. The division held
its first senior managers’ conference in 2024 where it
presented a five-year growth plan, and provided its leaders
with content on its growth strategy to cascade to colleagues
throughout their respective business areas.
In response to comments related to safety, Fit Out has
recruited health and safety business partners for each of
its business units to provide proactive preventative health
and safety planning and to provide its supply chain with one
point of contact for incident reporting and investigation,
while Property Services is trialling a personal safety device
for operatives working alone.
How the Board engaged
All non-executive directors engage with employees as part of
our annual strategy review, visiting project sites and meeting a
broad range of employees, individually or in groups, sometimes
without senior managers present. Non-executives also meet
colleagues at divisional employee conferences and our annual
senior management conference. Divisional managing directors
and other internal experts present at Board and responsible
business committee meetings, and each year the Board meets
informally with representatives from two divisions.
No issues arose from discussions with employees in 2024
that impacted the Board’s principal decisions. At its December
meeting, the Board conducted its annual review of the
divisions’ engagement with their employees and noted that
people were open, positive, engaged and willing to speak up,
which aligns with the Group’s culture. The Board also
considered the effectiveness of its process for engaging
with employees, and concluded that it remains effective,
as it enables all non-executives to hear the perspectives
of a wide range of employees.
See pages 40 to 43 for more information on our engagement with our
people during the year
Supply chain
Our national network of selected suppliers
and subcontractors are aligned to our values, and
we regard them as strategic, long-term partners.
Our strong relationships with our supply chain
help us achieve superior project delivery and
can give us a competitive advantage.
How the Group engaged
We engage through site inductions and toolbox talks
conveying our culture, values and standards, discussions
on topics such as safety, wellbeing and modern slavery,
and data platforms providing online resources. Group
and divisional networking events provide information on
upcoming projects, procurement prospects, health and safety
training opportunities, new technologies and site standards.
11
Strategic report
Our stakeholders
continued
We offer our supply chain constructive feedback and, where
needed, guidance on performance against set criteria.
Having launched our Supplier Code of Conduct in 2023,
which shared details of our whistleblowing arrangements and
encouraged our supply chain to let us know of any concerns
they have, we noted during 2024 a higher number of
calls made by members of our supply chain to our ‘Raising
Concerns’ helpline, indicating an increased level of engagement.
How the Board engaged
The Board regularly reviews the divisions’ payment practices,
health and safety statistics, and strategies and actions to
prevent modern slavery. The executive directors are updated
on supply chain relationships at their monthly divisional board
meetings and refer any significant issues to the Board.
During the year, the Board received regular reports on how
the divisions were supporting their supply chains to help
mitigate the risk of insolvency, for example by improving
payment terms for suppliers facing difficulties or by directly
procuring materials.
See pages 48 and 49 for more information on our engagement with our
suppliers during 2024
Clients and partners
Our clients come from the public, commercial and
regulated sectors and our partners include local
authorities, landowners and housing associations.
We also consider the needs and interests of the
end users of the spaces and infrastructure we
create. Securing work through partnerships,
frameworks and repeat business is key to our
organic growth strategy.
How the Group engaged
Regular dialogue with our clients and partners before and
during our projects is essential so that we can understand and
deliver their objectives. Our decentralised approach means
we can tailor our services and respond quickly to clients from
different sectors, with different needs.
In response to feedback at a client engagement day held
during the year, Partnership Housing, as part of a ‘one team’
approach on a new joint development, will be selling both
open market homes and its partner’s shared ownership
homes. Using just one show home and marketing suite,
for example, rather than two will be a more cost-effective
use of resources for the partnership.
Customer satisfaction and experience is a priority for us,
and we use post-completion surveys and interviews,
and metrics such as Perfect Delivery to drive ongoing
improvements. Fit Out learned from a framework client
that post-project reviews were not so suitable when dealing
with a succession of fast-track, change-and-churn projects.
The division therefore developed an alternative approach
whereby it would conduct one session every six months to
gain higher-level feedback on what was going well, what could
be improved, and how the division could support the client’s
needs going forward. The first feedback session was trialled
and well received.
Fit Out’s framework client asked for advice relating to
managing the increasing complexity of their projects and for
support in helping them maintain their compliance with the
Disability Discrimination Act 1995. Other divisions’ clients have
also asked for support with regulatory compliance, such as
engineering standards, the Building Safety Act and laws
relating to damp and mould.
How the Board engaged
Executive directors are kept informed of client and partner
relationships at their monthly divisional board meetings and
update the Board on matters such as key contracts or new
relationships.
Local communities
We aim to create social and economic value for
those who live or work near our projects. Local
residents are a potential source of recruits and
local suppliers provide valuable local knowledge.
How the Group engaged
Dedicated community liaison teams engage with local
residents before and during projects. We have set up social
enterprises and other schemes that offer training,
employability skills and work opportunities and partner with
schools to promote construction as a career option. We also
support local charities and take part in local charitable events.
In 2024, Mixed Use Partnerships engaged with local people on
each key stage of the design process to transform Prestwich in
Greater Manchester. Two ‘community conversations’ included
drop-in events, community and school workshops, liaison
groups, bespoke social media channels, online Q&A and
questionnaires, of which 1,259 were completed and returned.
In response to what it heard from residents, Mixed Use
Partnerships altered its plans to include live event spaces and
a market hall, additional retail space, more green areas, a
direct, walkable route to the Metrolink, and more parking for
people with mobility challenges. The division also changed the
height and location of key buildings, such as a community hub,
and ensured that the designs embraced the town’s character.
How the Board engaged
The executive directors are kept informed of community
initiatives at their monthly divisional board meetings and
update the Board on any matters of interest.
See pages 50 and 51 for more information on our engagement with
local communities during the year
12
Morgan Sindall Group plc
Annual Report 2024
Our stakeholders
continued
Shareholders
Our shareholders provide funds for investment
in long-term growth. We value the stewardship
of our institutional investors and the views of all
shareholders and analysts.
How the Board engaged
The executive directors deliver live full- and half-year results
presentations, with a video link to enable those unable to
attend to take part in a live Q&A. We encourage shareholders
to attend our AGM and vote, and to submit questions to the
directors in advance if they are unable to attend. The Board
receives copies of reports from Institutional Shareholder
Services, the Investment Association, and Pensions &
Investment Research Consultants ahead of our AGM each
year. In advance of our 2024 AGM, we received questions
relating to investor engagement and our Eden building project
in Salford, and we published the questions and our responses
on our website.
Our chair, senior independent director and committee
chairs are available to meet with shareholders at any time.
Our executive directors held 77 meetings during the year
with major shareholders, including 30 to discuss our 2023
performance and strategy, and 33 following our 2024 half-year
results. They shared feedback from their discussions with the
rest of the Board.
The half-year results roadshows elicited good conversations
around our cash and balance sheet, and shareholders were
supportive of the Group continuing to maximise investment
in organic partnership activities.
The chair’s statement on page 84 and the remuneration
committee report on page 111 describe the non-executive
directors’ engagement with shareholders during the year.
Funders and performance
bond issuers
Our funders and performance bond issuers
provide us with access to competitively priced
banking, bonding and debt facilities. Performance
bonds, often known as surety bonds, are issued
by a financial institution to guarantee completion
of a contract.
How the Group engaged
Our chief financial officer and director of tax and treasury
meet regularly with our banks and performance bond issuers,
including following the full- and half-year results, to update
them on the Group’s performance and discuss any
expectations they may have.
In 2024, we secured the extension of our committed loan
facilities (totalling £180m) from 2026 to 2027 (see page 18 for
further detail).
How the Board engaged
The Board receives reports from our chief financial officer
on any updates relating to the Group’s funding arrangements.
The Board also receives a monthly update on our bonding
facilities.
13
Strategic report
Key performance indicators
Continuing to make strategic progress
Construction operating margin
3
Medium-term target
2.5%–3.0%
Medium-term target
£1bn
Medium-term target
8%
Medium-term target
£1bn
Medium-term target
£50m–£70m
Medium-term target
Up towards
25%
Medium-term target
3.5%–4.0%
Medium-term target
£7.5m
Medium-term target
Up towards
20%
Infrastructure revenue
Partnership Housing
operating margin
Construction revenue
Fit Out operating profit
Partnership Housing
return on average capital
employed
1,2
(last 12 months)
Infrastructure operating margin
Property Services operating (loss)
4
Mixed Use Partnerships
three-year rolling average
return on capital employed
2
3.0%
2.7%
2.8%
22
23
24
£1,044m
£966.6m
£819.9m
22
23
24
3.7%
4.3%
3.8%
22
23
24
£1,047m
£886.7m
£767.7m
22
23
24
£99.0m
£71.8m
£52.2m
22
23
24
£(17.8)m
£(16.8)m
£4.3m
22
23
24
4.2%
3.6%
5.4%
22
23
24
11%
12%
19%
22
23
24
12%
16%
13%
23
22
24
Achieve quality of earnings
Targets shown are those in place during 2024. See pages 22 to 37 for commentary on performance and targets going forward
1
Before exceptional building safety charge of £2.7m (2023: £nil).
2
Return on average capital employed = (adjusted operating profit plus
interest from joint ventures) divided by average capital employed.
3
Before exceptional building safety credit of £0.1m (2023: charge
of £11.5m).
4
Before intangible amortisation of £0.5m (2023: £2.9m).
14
Morgan Sindall Group plc
Annual Report 2024
Key performance indicators
continued
5
Perfect Delivery status is granted to Fit Out, Construction and
Infrastructure projects that meet all four client service criteria
specified by the division.
6
Carbon emissions data represents our UK and European operations.
See Appendix on pages 197 and 198 for emission scope definitions.
7
We have chosen to disclose our Scope 3 emissions across all
relevant categories for the first time to align with our net zero targets
(this applies to both the 2023 and 2024 data). We previously reported
‘operational’ Scope 3 only (categories 3, 5 and 6). The baseline was
recalculated in 2024 to apply new methodologies and assumptions.
8
Number of lost time incidents x 100,000 divided by number of
hours worked. Lost time incidents result in absence from work for
minimum one working day, excluding the day the incident occurred.
9
Within the last six months of the year.
10 A training day is a minimum of six hours’ training.
Note: We are reviewing our metrics and targets for social value and
have therefore not reported a KPI for our ‘enhancing communities’
Total Commitment this year.
Lost time incident rate
8,9
2030 target
0.18
2030 target
6 days
2030 target
80%
2030 target
60%
2030 target
42%
Number of training days
9,10
per year per employee
Percentage of invoices
paid within 30 days
9
Reduction in Scope 1 and 2
carbon emissions
6
from 2019
baseline of 20,903 tonnes CO
2
e
Reduction in Scope 3
carbon emissions
6
from 2020
baseline of 1,300,271 tonnes CO
2
e
7
Delivering on our Total Commitments
See pages 38 to 51 for commentary on performance against our Total Commitments
0.23
0.24
0.22
22
23
24
3.2 days
3.2 days
3.2 days
22
23
24
61.5%
68.8%
66.6%
22
23
24
44%
45%
45%
22
23
24
1% increase
5%
23
24
The divisions are responsible for driving
Perfect Delivery on their projects. Results are
regularly monitored, reported and reviewed
at divisional board level.
We monitor our secured workload for
the current year and beyond as well as
the pipeline of projects for which we are
‘preferred bidder’ (where we have been
verbally awarded the project but there is
no formal contract or letter of intent in place).
Maintaining significant levels of cash gives us
a real competitive advantage. Our cash levels
are monitored on a daily basis.
Projects achieving
Perfect Delivery
5
Workload secured for
the next three years
Average daily net cash
Excel in
project delivery
Secure long-term
workstreams
Maintain financial
strength
91%
92%
88%
22
23
24
£11,419.3m
£8,920.2m
£8,458.9m
22
23
24
£374.2m
£281.7m
£256.3m
22
23
24
15
Strategic report
Market conditions
In Mixed Use Partnerships, the combination of elevated
build cost inflation and high interest rates continued to
present short-term challenges on the timing of some of
its development schemes prior to their commencement,
although not significantly material to the overall portfolio
of schemes and their future financial performance over the
medium to long term. Similar to Partnership Housing, this
division is currently exposed to a challenging planning
environment.
The market for Fit Out’s services has continued to be very
strong, with a number of positive structural changes in the
market; however, some normalisation seems likely following
the recent period of exceptional performance. Looking ahead,
the main drivers continue to be business or market changes
impacting the tenant, lease-related events, the requirement
for greater energy efficiency from offices, the move towards
more flexible and collaborative workspaces, the use of office
space as a tool for enhancing staff retention and brand image,
and office relocations to the regions with clients requiring
increasingly complex projects.
Construction’s and Infrastructure’s market environment
remains stable due to the diversification of the segments in
which these divisions operate. Where projects are currently
underway, most include appropriate inflationary protection
within the overall contract pricing, and this is not seen as a
significant risk. Where projects are being priced for future
delivery, funding constraints, and inflation to a lesser degree
in some areas, continue to place some project budgets under
pressure, which in turn has led to some delays in decision-
making and project commencement. However, the impact of
this has not been material and, in the majority of cases, any
client budget constraints are being addressed by adjustments
to project scopes, thereby allowing projects to proceed.
In Property Services, local authority and housing association
clients are increasingly focused on housing maintenance and
on the general state of repair of their housing stocks. In the
delivery of reactive maintenance services, while cost inflation
and particularly labour inflation severely impacted the
profitability for some contracts in 2023 and 2024, contract
pricing and exit renegotiations were concluded during the
year for several contracts, limiting the exposure for the
remaining unexpired term for those contracts.
While market conditions have been relatively stable over the
past year, we are cognisant of the uncertainty in the current
macroeconomic environment and the effect that it may have
on the broader markets we operate in. Cost increases have
been more manageable and we hope to mitigate the impact
of the employer National Insurance increases announced in
the Autumn Budget over 2025.
UK construction and regeneration programmes continue to
benefit from sustained government investment commitments.
This supports our market sectors which remain structurally
secure, particularly housing, mixed-use schemes, construction
and infrastructure (primary areas in the UK targeted for
growth). Liquidity issues across the supply chain remain a
common theme requiring additional vigilance during both
the preconstruction and delivery phases of projects, with the
ongoing stability of the supply chain under constant review.
Our exposure to this risk is largely mitigated by the diligence
taken before project commencement, and the fact that no
division is overly reliant on any one supplier.
The pace of recovery in the UK housing market remained
subdued in 2024, tempered by affordability constraints
impacted by high mortgage rates. In Partnership Housing,
the partnership model, focusing on long-term partnerships
with the public sector, has continued to provide some level
of resilience and cushion against the impact of the softness
in housing for sale activity. While the demand for contracting
remained strong throughout the year, the sales rates of
private homes on the division’s mixed-tenure sites showed
gradual recovery. We remain positive that the government has
set out its ambitions for affordable home targets together with
its broad framework for delivery, which we believe will bring
about some positive momentum over the medium term,
together with its intentions around planning reforms, which
currently remain challenging.
Conditions have been
relatively stable, but we are
aware of uncertainty in the
macroeconomic environment
The quick read...
Supply chain liquidity issues remain, although we
have strong mitigations in place
While the pace of recovery in the housing market
has been subdued, the effects are cushioned by our
long-term public sector partnerships
Our partnership activities are exposed to a
challenging planning environment
The fit out market has remained strong
Some delays in decision-making in construction and
infrastructure, but impacts not material
16
Morgan Sindall Group plc
Annual Report 2024
Financial review
Financial performance
Revenue for the year increased 10% to £4,546.2m (2023:
£4,117.7m), with adjusted* operating profit increasing 15%
to £162.6m (2023: £141.3m). This resulted in an adjusted*
operating margin of 3.6%, an increase of 20 basis points (bps)
compared to the prior year (2023: 3.4%). Reported operating
profit was up 15% to £162.0m (2023: £140.6m). Details on
performance by division are shown on pages 22 to 37.
The net finance income increased to £9.9m (2023: £3.3m),
primarily due to increased interest income on deposits
benefiting from higher interest rates during the year.
Profit before tax was £171.9m, up 19% (2023: £143.9m),
while adjusted* profit before tax was £172.5m, up 19%
(2023: £144.6m). This resulted in an adjusted* profit before
tax margin of 3.8%, an increase of 30bps compared to the
prior year (2023: 3.5%).
The Group delivered a record
performance in 2024, reflecting
the high quality, strength and
depth of our operations.
Kelly Gangotra
Chief Financial Officer
The quick read...
Record revenue and adjusted* operating profit levels
as market conditions eased
Adjusted* profit before tax up 19%
Strong balance sheet supported by significant daily
cash and committed bank loan facilities
High-quality order book up 28% to £11.4bn
Total dividend up 15%
2024
2023
Revenue
£4,546.2m
£4,117.7m
Operating profit – reported
£162.0m
£140.6m
Operating profit – adjusted*
£162.6m
£141.3m
Profit before tax – reported
£171.9m
£143.9m
Profit before tax – adjusted*
£172.5m
£144.6m
Basic earnings per share – reported
281.4p
254.2p
Earnings per share – adjusted*
278.8p
247.7p
Year-end net cash*
£492.4m
£460.7m
Average daily net cash
£374.2m
£281.7m
Total dividend per share
131.5p
114.0p
*
See note 28 to the consolidated financial statements for alternative performance measure definitions and reconciliations.
17
Strategic report
The tax charge for the year is £40.2m (2023: £26.2m), which
equated to an effective tax rate of 23.4% and was lower than
the UK statutory rate of 25% (2023: 23.5%) due primarily to
amounts relating to prior-year items. The adjusted tax charge
is £42.0m (2023: £29.9m), which equated to an effective
adjusted tax rate of 24.3%. Almost all of the Group’s
operations and profits are in the UK, and we maintain an
open and constructive working relationship with HMRC.
Reported basic earnings per share was 281.4p (2023: 254.2p).
The adjusted* earnings per share increased 13% to 278.8p
(2023: 247.7p). The total dividend for the year increased 15%
to 131.5p per share (2023: 114.0p).
Financing facilities
During 2024, the Group maintained a total of £180m of
available bank facilities, of which £165m mature in October
2027 and £15m in June 2027. No drawings on the facilities
were made during the year. The banking facilities are subject
to financial covenants, all of which were met throughout
the year.
In the normal course of our business, we arrange for financial
institutions to provide client guarantees (performance bonds)
to provide additional assurance to the clients that the
contracted works will be carried out. We pay a fee and provide
a counter-indemnity to the financial institutions for issuing the
bonds. As at 31 December 2024, contract bonds in issue under
uncommitted facilities covered £194.9m (2023: £174.7m) of
our contract commitments.
Further information on the Group’s capital management
strategy and use of financial instruments is given in note 26
to the consolidated financial statements.
Tax strategy
The Group’s tax strategy, which is approved by the Board,
is published on our website.
Net cash
Operating cash flow* in the year was an inflow of £134.8m
(2023: £189.0m), after net decreases in working capital of
£33.8m (2023: £59.7m net increases). The net cash inflow
for the year was £31.7m, resulting in closing net cash of
£492.4m (2023: £460.7m).
The average daily net cash* for the year was £374.2m
(2023: £281.7m). Our strong cash position continues
to provide significant balance sheet strength and
competitive advantage.
Operating cash flow*
(£m)
0
50
100
150
200
250
Operating
profit
1
Non-cash
2
Net capex
and finance
leases
3
Movement
in working
capital
4
Other
5
Operating
cash flow
33.9
(42.1)
(33.8)
14.2
134.8
162.6
1
Adjusted – before intangible amortisation of £0.5m and exceptional building safety charge of £0.1m.
2
Includes depreciation £33.1m and share option expense £10.5m; less reversal of impairment of joint ventures £5.1m and
share of underlying net profits of joint ventures £4.6m.
3
Includes repayment of lease liabilities £25.8m, purchases of property, plant and equipment £18.2m; less proceeds on disposal
of property, plant and equipment £1.9m.
4
Adjusted – before exceptional building safety debtors increases of £9.3m.
5
Increase in provisions £8.7m, increase in building safety debtors £9.3m and dividend received from joint ventures £4.2m;
less exceptional building safety provision decrease £7.3m and gain on disposal of property, plant and equipment £0.7m.
*
See note 28 to the consolidated financial statements for alternative performance measure definitions and reconciliations.
Financial review
continued
18
Morgan Sindall Group plc
Annual Report 2024
Net working capital
Net working capital is defined as ‘inventories plus trade
and other receivables (including contract assets), less trade
and other payables (including contract liabilities) adjusted’.
The Group’s negative net working capital (excluding non-cash
movements
3
) has reduced by £35.9m to £(116.6)m as
shown below:
2024
£m
2023
£m
Change
£m
Inventories
476.0
344.7
+131.3
Trade and other receivables
1
664.2
713.5
–49.3
Trade and other
payables
2,3
(1,256.8)
(1,210.7)
–46.1
Net working capital
(116.6)
(152.5)
+35.9
1
Adjusted to exclude capitalised arrangement fees and accrued interest
receivable of £2.3m (2023: £2.2m).
2
Adjusted to exclude accrued interest of £0.5m (2023: £0.3m).
3
Movements in trade and other payables also include the non-cash
movements relating to the unwinding of discounting on land creditors
(£1.3m) and other smaller non-cash movements.
Movements in net working capital mainly relate to increased
investment in the Group’s partnership activities, particularly
the Partnership Housing division.
Paying promptly
Paying our supply chain on time is essential and makes us
attractive to work for, and we aim to pay our suppliers as
promptly as possible. We do not use any supplier finance
arrangements. Our divisions have reported the following data
under the payment practices regulations for the six months to
31 December 2024:
Invoices paid within 60 days
2024
%
2023
%
Partnership Housing
96
97
Mixed Use Partnerships
97
95
Fit Out
98
97
Construction and Infrastructure
1
98
99
Property Services
99
98
1
The Construction and Infrastructure divisions form a single legal entity
for which this data is reported.
Provisions
Group provisions have increased by £9.4m to £105.5m,
of which £56.8m relates to the building safety provisions
(excluding provisions relating to joint ventures).
Secured workload
The Group’s secured workload
1
at 31 December 2024 was
£11,419.3m, an increase of 28% on the prior year end
(2023: £8,920.2m). The divisional split is shown below.
2024
£m
2023
£m
Change
%
Partnership Housing
2,174.0
2,034.1
+7
Mixed Use Partnerships
4,084.9
1,825.6
+124
Fit Out
1,438.9
1,098.0
+31
Construction
951.8
796.4
+20
Infrastructure
1,883.1
1,689.4
+11
Property Services
887.1
1,477.6
–40
Inter-divisional orders
(0.5)
(0.9)
–
Total
11,419.3
8,920.2
+28
1
The secured workload is the sum of the committed order book,
the framework order book and (for the partnership divisions only)
the Group’s share of the gross development value of secured schemes
(including the development value of open market housing schemes).
The committed order book represents the Group’s share of future
revenue that will be derived from signed contracts or binding letters
of intent. The framework order book represents the Group’s expected
share of revenue from the frameworks on which we have been
appointed. This excludes prospects where confirmation has been
received as preferred bidder only, with no formal contract or binding
letter of intent in place.
Kelly Gangotra
Chief Financial Officer
Financial review
continued
19
Strategic report
Capital allocation
Our capital allocation hierarchy is set out below.
A
/
Maintaining a strong
balance sheet
(i) to enhance our competitive
advantage and win future work
Fundamental to our organic growth strategy is engaging in
long-term partnerships with our public and private sector
clients, whether through joint ventures or other arrangements
in our partnership activities, or through frameworks in
construction activities.
When assessing the suitability of long-term partners, potential
clients are increasingly looking for security and assurance of
long-term solvency and the availability of cash resources to
ensure their partners can fulfil their long-term contractual
obligations. We consider a strong balance sheet and
significant levels of net cash as a key market differentiator
and a competitive advantage when bidding for and winning
work to support the future growth of the business.
(ii) to ensure downside protection
– maintaining a ‘buffer’ in the
event of a macro downturn
Maintaining significant levels of net cash is considered as key
to offsetting any potential consequence of a future downturn
in the economy and reduction in revenue in the activities of
Construction, Infrastructure and Fit Out.
These activities operate with a negative working capital model,
which in turn can lead to cash outflows in the event of declines
in revenue. Maintaining a net cash ‘buffer’ therefore allows us
to continue with our strategy of disciplined contract selectivity
and prudent approach to risk management throughout the
whole economic cycle.
The quick read...
Our capital allocation framework is based on a
hierarchy of priorities
A strong balance sheet enhances our competitive
advantage and provides a buffer against any
economic downturn
Investment in our partnership activities is a
strategic priority
Our dividend cover is expected to be 2.0x–2.5x
Bolt-on acquisitions, primarily in Partnership
Housing, will be considered if they complement
our existing growth strategy
The Board’s single, overarching principle governing capital
allocation is a commitment to maintain a strong balance
sheet and to hold significant net cash balances at all times.
This will provide a stable and firm foundation for the Group
to make sound decisions for our long-term development,
thereby enhancing our competitive advantage and future
work winning.
As stated in the finance review on pages 17 and 18, our net
cash at 31 December 2024 was £492m (2023: £461m) and the
average daily net cash for the year was £374m (2023: £282m).
The year-end cash position included £49m held in jointly
controlled operations or held for future payment to
designated suppliers.
Across 2024, the lowest net cash balance on any one day
in the year was £293m (2023: £195m). Of this, £54m was held
in jointly controlled operations or held for future payment to
designated suppliers. The Board uses this net cash balance
on the lowest day of the year as the initial reference point
from which it then considers its application of its capital
allocation hierarchy. This allows it to balance the needs
of all stakeholders while enhancing the Group’s market
competitiveness and capabilities and maintaining our
financial strength.
We are committed to
maintaining a strong balance
sheet and holding significant
cash balances at all times
20
Morgan Sindall Group plc
Annual Report 2024
Capital allocation
continued
B
/
Maximising investment in our
partnership activities to drive
sustainable growth
Significant opportunities are expected to arise through the
medium and long term to invest in the existing business to
support and accelerate the organic growth of these activities.
Specifically, investment in the partnership activities of
Partnership Housing and Mixed Use Partnerships is a
strategic priority:
For Partnership Housing, the growth potential remains
substantial despite the short-term market headwinds.
The medium-term target is for an operating margin of
8% and for return on capital to be up towards 25% on
an annual basis. The capital employed has increased
significantly over the last five years, up from an average
of £152m in 2019 to an average of £338m in 2024.
The scalability of the partnership housing model provides
the potential to further increase the capital employed
significantly above current levels over the medium to
long term.
In Mixed Used Partnerships, development activities across
multi-phase sites and placemaking are targeted to generate
return on capital of up towards 25% on an annual basis
over the medium term. The capital employed has reduced
over the past five years, down from an average of £102m
in 2019 to an average of £87m in 2024. Notwithstanding
this reduction, based on the investment profile of schemes
already secured, the sizeable new schemes at preferred
bidder stage as well as the identified pipeline of future
opportunities, the capital employed in the division will
increase over the medium term, albeit modestly.
C
/
Ordinary returns to shareholders
Ordinary dividends are considered by the Board to be an
important component of shareholder returns. The Board
has previously formally adopted a dividend policy such that
dividend cover is expected to be in the range of 2.0x–2.5x
on an annual basis.
D
/
Investment by acquisition to
accelerate sustainable growth
Any acquisition activity will likely be targeted towards
our partnership activities, primarily Partnership Housing.
The focus would be on opportunities to complement our
existing organic growth strategy by acquiring pre-existing
partnership development schemes, land options, positions in
existing schemes from third parties or businesses which can
complement or reinforce the division’s position in the
partnerships sector.
Other potential acquisition opportunities across our
construction and fit out activities would only be considered
where they would accelerate growth through the existing
divisional structure and capabilities.
E
/
Special returns to shareholders
The Board will continue to assess the needs of the business
and the optimum balance sheet structure within the context
of our overarching principle governing capital allocation and
the hierarchy A–D as described above. Any capital then
deemed surplus to these requirements may be returned
to shareholders.
Such returns would be in the form of either share buybacks
or special dividends, with the method of distribution to be
determined by the Board at the time based on prevailing
conditions.
21
Strategic report
Partnership
Housing
We have delivered a strong performance
in a slowly recovering housing market
while continuing to grow our long-term
partnerships with the public sector.
Steve Coleby
Managing Director
Operating review
Key highlights and performance against KPIs
Revenue (£m)
+3%
861.2
837.5
696.2
22
23
24
Average capital
employed
1,2
(last
12 months) (£m)
+£83.3m
337.8
254.5
197.3
22
23
24
Operating profit
1
(£m)
+18.0%
36.1
30.5
37.4
22
23
24
Capital employed
1,2
at year end (£m)
+£84.3m
318.7
234.4
189.3
22
23
24
Operating margin (%)
+60bps
4.2
3.6
5.4
22
23
24
Medium-term target
8%
Return on capital
employed
1,3
(last
12 months)
(%)
11
12
19
22
23
24
Medium-term target
up towards 25%
1
Before exceptional building safety charge of £2.7m (2023: £nil). See note 2 of the consolidated financial statements.
2
Capital employed is calculated as total assets (excluding goodwill, intangibles and cash) less total liabilities (excluding exceptional building safety
provisions, corporation tax, deferred tax, inter-company financing and overdrafts).
3
Return on average capital employed = (adjusted operating profit plus interest from joint ventures) divided by average capital employed.
The quick read...
Strong public sector demand for contracting has
shielded the impact of a gradual recovery of open
market sales
Stronger margins achieved in both mixed-tenure and
contracting activities
Continued investment is reflected in higher average
capital employed
High-quality secured order book
Solid profit growth expected in 2025
22
Morgan Sindall Group plc
Annual Report 2024
Operating review
continued
Partnership Housing
Partnership Housing continued to grow its long-term
partnerships with the public sector. Throughout the year,
while we have seen a modest improvement in the housing
market, demand for contracting with the public sector has
remained strong, shielding the impact of a gradual recovery
of open market sales within the mixed-tenure activities.
The division continued to optimise construction of the
contracted affordable homes on mixed-tenure sites to
maintain activity.
Reflecting the above, revenue was up 3% to £861.2m
(2023: £837.5m), driven by contracting which was up 19% to
£564.5m (66% of divisional total) compared to the prior year.
Mixed-tenure revenue declined by 19% to £296.7m (34% of
divisional total) compared to the prior year.
Notwithstanding the composition of the division’s revenue,
both contracting and mixed-tenure activities achieved
stronger margins over the year, led by contract type, mix
of schemes and other income delivered (see note 12 to the
consolidated financial statements), resulting in operating
profit increasing by 18% to £36.1m (2023: £30.5m) with an
operating margin of 4.2% (2023: 3.6%).
Despite the challenging macroeconomic environment, the
longer-term development of the business and its partnerships
with local authorities and housing associations has continued
with planned momentum. Reflective of this ongoing activity
and investment in future growth, the average capital
employed for the last 12-month period increased by £83.3m
to £337.8m (2023: £254.5m). The capital employed at the end
of the year was £318.7m, an increase of £84.3m on the prior
year (2023: £234.4m). As a result of continued investment in
partnership activities and higher average capital employed,
the overall return on capital employed for the last 12-month
period reduced slightly to 11% (2023: 12%).
The division continues to maintain a high-quality secured
order book through ongoing successful client engagement
leading to work being awarded via frameworks or direct
negotiation. The secured order book at the year end was
£2,174m, 7% higher than the prior year end (2023: £2,034m)
and with 58% of its total value for 2026 and beyond providing
long-term visibility of workload.
Our strategy in action
Delivering much-needed
affordable homes
Partnership Housing was appointed by Notting Hill Genesis
housing association to deliver 238 new homes at Gallions 3B,
part of a mixed-use riverside development at Royal Albert Wharf,
London.
The project, due to complete in spring 2025, consists of five
apartment blocks ranging from three to 12 storeys, with three
quarters of the homes providing a form of social tenure.
Some key site challenges requiring coordination with other
stakeholders included the presence of a Port of London Authority
radar mast, safeguarding a nearby Thames Gateway site for future
infrastructure, and height restrictions due to close proximity to
London City Airport.
In line with the Building Safety Act, the division maintained a
‘golden thread’ of digital information about the buildings to
evidence compliance with building regulations.
23
Strategic report
Operating review
continued
Partnership Housing
Mixed tenure
Good progress was made with the strategy of increasing the
number and size of mixed-tenure sites. At the year end, the
division had 66 active mixed-tenure sites at various stages
of construction and sales, up from 61 at the prior year end,
with an average of 166 open market units per site (up from
163 at the prior year end). Average site duration is 47 months,
providing long-term visibility of activity.
During the year, 1,808 units were completed across open
market sales and social housing (including through joint
ventures) compared to 1,923 units in 2023, noting that the
number of open market sales within this increased by 5%
to 874. The average sales price was £237k, which was broadly
in line with the prior-year average of £239k.
Of the total divisional order book, the amount relating
to mixed-tenure activities increased by 12% to £1,310m
(2023: £1,167m). In addition, the amount of mixed-tenure
business in preferred bidder status, or already under
development agreement but where land has not been
drawn down, was £1,200m at the year end (2023: £821m).
Work won in the year included: 727 units as the division
moved into phases 2 and 3 at South Thamesmead, in
joint venture with Peabody; the 500-unit Grahame Park
development in north London in partnership with the London
Borough of Barnet; a 350-unit development in Williton,
Somerset with Aster Group; a 309-unit development in
Balderton, Newark; a 290-unit scheme at the Elm Grove Estate
in partnership with Sutton Council; 176 units in Winchburgh,
West Lothian; a 115-unit scheme in Haverfordwest,
Pembrokeshire with Pobl Group; 112 units on phase 4 of the
Castleward development in Derby with Riverside; and 82 units
in Primrose Hill in partnership with Birmingham City Council.
Elsewhere, good progress continued to be made on other
mixed-tenure schemes, in partnerships with Riverside,
Clarion Housing, L&Q, Together Housing Group, Repton
Property Developments (owned by Norfolk County Council),
the Borough Council of King’s Lynn & West Norfolk, Flagship
Group, Pobl Group, West Sussex County Council, Suffolk
County Council and Homes England.
Contracting
Partnership Housing continued to experience robust levels
of demand with clients awarding work either through
frameworks or direct negotiation.
The total number of equivalent units built increased by 15%
to 3,299, up from 2,865 in the prior year. Of the total divisional
order book, the contracting secured order book remained on
a par with the prior year end at £863m (2023: £867m), of
which c.40% is for 2026 and beyond.
Key contracting schemes awarded in the year included: an
£80m, 321-unit project at Leaside Lock in east London for
The Guinness Partnership; a £14m, 70-unit development in
Castle Gresley for East Midlands Homes; an £11m, 38-unit
scheme at Saffron Lane for Leicester City Council; a £10m,
45-unit development in Isleham, Cambridgeshire for Havebury
Housing Partnership; a £10m, 56-unit scheme in Baginton,
Warwickshire for Platform Housing Group; a £9m, 55-unit
scheme at Crick Road, Portskewett for Candleston Homes;
a £40m, 87-unit scheme at Carlton Dene for Westminster City
Council; and a number of retrofit and refurbishment projects
for local authorities and housing associations.
Divisional outlook
Partnership Housing’s medium-term targets are to generate
a return on average capital employed up towards 25% and
to deliver an operating margin of 8%.
Looking ahead to 2025, while we expect another year of
modest recovery in the housing market due to the uncertainty
over the timing of future interest rate changes, solid profit
growth is still expected, while the return on average capital
employed is expected to be in line with 2024 levels as we
continue to invest. We remain confident over the medium-
term fundamentals of the sector and well positioned to
support the government’s affordable home plans across the
country over the forthcoming years.
The average capital employed is expected to increase up
towards c.£380m to £400m, reflecting the increased scale
of the business and stage of its developments.
24
Morgan Sindall Group plc
Annual Report 2024
Operating review
continued
Mixed Use
Partnerships
Key highlights and performance against KPIs
Revenue (£m)
–51%
90.5
185.3
244.0
22
23
24
Capital employed
2
(at year end) (£m)
+£14.7m
94.4
79.7
100.4
22
23
24
Operating profit
1
(£m)
–89.9%
1.5
14.8
18.9
22
23
24
Return on capital
employed
3
(last
12 months) (%)
2
15
20
22
23
24
Average capital
employed
2
(last
12 months) (£m)
–£11.7m
86.9
98.6
96.5
22
23
24
Return on capital
employed
3
(average
last three years) (%)
12
16
13
22
23
24
Medium-term target
up towards 20%
1
Before exceptional building safety credit of £5.9m (2023: credit of £13.7m). See note 2 of the consolidated financial statements.
2
Capital employed is calculated as total assets (excluding goodwill, intangibles and cash) less total liabilities (excluding exceptional building safety
provisions, corporation tax, deferred tax, inter-company financing and overdrafts).
3
Return on average capital employed = (adjusted operating profit plus interest from joint ventures) divided by average capital employed.
While trading remained subdued due to the
phasing of project completions, we have made
excellent progress in securing new long-term
agreements for future projects.
Phil Mayall
Managing Director
The quick read...
Operating profit impacted by timing and lower level
of completions
Successful conversion of sizeable preferred bidder
schemes into partnership agreements
Exceptional growth of 124% in secured order book
Named by Manchester City Council as partner for
long-term regeneration of Wythenshawe Civic
Medium-term target for return on capital upgraded
to 25% from 2025
25
Strategic report
Mixed Use Partnership’s profits were significantly lower than
previous years due to fewer project completions occurring
in the year, resulting in an operating profit of £1.5m (2023:
£14.8m). However, excellent progress was made in securing
new long-term agreements for future projects. The return on
capital employed for the last 12 months was 2%, significantly
down on the prior year, based on average capital employed
of £86.9m as a result of project completion phasing.
Despite the modest profit contribution, key contributors to
performance during the year were profit from development
fees generated from activity in Salford Central, Talbot Gateway
in Blackpool, Stroudley Walk, Lewisham Gateway and Forge
Island in Rotherham, and profit from a land sale in Hucknall,
East Midlands.
At the end of the year, the division’s order book amounted
to £4,085m, substantially ahead of the prior year end
(2023: £1,825m), reflecting the success the division has had
in converting a number of sizeable, preferred bidder schemes
into new and secured long-term partnership agreements.
These include:
a 30-year partnership with land-owning consortium
Arden Cross Limited, to deliver development at the HS2
Interchange Station in Solihull. This nationally strategic
and regionally significant site will deliver commercial
space expected to employ c.27,000 people alongside an
Innovation District, anchored by a HealthTech campus, and
up to 3,000 new homes;
a development agreement with Solihull Council to
regenerate Mell Square, an iconic shopping hub in the
heart of Solihull town centre, with a mix of uses including
an improved retail offer, new public spaces, leisure facilities
and homes; and
a new partnership with Homes England and Pension
Insurance Corporation to deliver over 3,000 low-carbon,
low-energy homes nationally for rent, with a focus on
affordable homes.
In addition, Mixed Use Partnerships was named by
Manchester City Council as delivery and investment partner
for the long-term regeneration of Wythenshawe Civic, with
plans to deliver a new public square, shops, workspace,
community and cultural space and more than 1,750 new
homes, including significant affordable housing.
Through ECF, the division’s strategic partnership with Homes
England and Legal & General, the following agreements and
partnerships were entered into during the year:
a development agreement with Wolverhampton City
Council to create a new city centre neighbourhood with
1,000 new homes (including affordable), enhanced market
square with green spaces, and new shops, cafes and
restaurants;
a development agreement with Bradford Council to create a
new sustainable city centre neighbourhood with 1,000 new
homes alongside shops, workspace, community parks and
public space. ECF secured £29m of funding to commence
the scheme;
a partnership with West Northamptonshire Council to
explore the regeneration of Greyfriars in Northampton
town centre. The 25-acre site will provide homes, retail
and leisure, and the reimagining of the Corn Exchange,
a heritage asset at the heart of the town centre; and
an agreement with Stevenage Borough Council to explore
the regeneration of up to 30 acres of land around Stevenage
railway station that will focus on addressing the long-term
needs of the local community, delivering new, high-quality
homes and employment space, amenity and green space,
a new railway station and a new theatre.
The division secured planning permission for: the final phases
of Stockport Exchange, which will create new workspace,
shops and a public square in the town centre; a new heart for
Prestwich Village in Bury including new homes, a community
hub and public space; the market-led revival and Town Hall
refurbishment in Earlestown, St Helens; 90 affordable homes
designed to Passivhaus standards at Oldfield Basin, Salford
Central; and at Weston M6 in Basford East, hybrid consent was
secured for a new state-of-the-art commercial and business
park totalling 1.2 million sq ft of space and wellbeing-led green
space. In addition, ECF secured planning permission for the
Crescent Innovation Zone, which is part of the Crescent
Salford programme and includes 933 new homes, 1.7 million
sq ft of new commercial innovation, academic and research
floorspace, active ground-floor space and a new movement
hub, along with significant improvements to public spaces.
Operating review
continued
Mixed Use Partnerships
26
Morgan Sindall Group plc
Annual Report 2024
Operating review
continued
Mixed Use Partnerships
During the year, good progress was made at Stroudley Walk
in Bromley-by-Bow to create 274 homes, with 50% available
for London Affordable Rent or shared ownership, and a
215,000 sq ft Civil Service Hub at Talbot Gateway, Blackpool,
which will accommodate more than 3,000 civil servants.
Completions in the year included 256 mixed-tenure homes
at Hale Wharf, Tottenham Hale through the Waterside Places
partnership with the Canal & River Trust; the final phase of
Lewisham Gateway, delivering 649 homes for rent, retail
space, food and beverage space, workspace and a multiplex
cinema; Forge Island in Rotherham, a leisure destination
including a new cinema, restaurants and public space;
113 affordable homes at Northshore in Stockton-on-Tees;
a 144-bed Holiday Inn at Talbot Gateway, Blackpool; and a
new bridge connecting communities at Brentford Lock West.
The ECF partnership also made good progress on existing
schemes. Work completed at Eden, a 115,000 sq ft workplace,
designed to be ‘net zero carbon in operation’ with space let to
accountancy firm BDO and law firm TLT, and a collection of 96
affordable Passivhaus homes at Greenhaus, both in Salford.
At Manor Road Quarter in Canning Town, the first phase of
355 homes was completed, including 140 affordable homes
handed over to Metropolitan Thames Valley Housing.
Construction commenced on Willohaus, a collection of 100
affordable Passivhaus homes, and major infrastructure
project Salford Rise, as part of the 240-acre mixed-use
regeneration of Salford Crescent, as well as 196 build-to-rent
homes at New Bailey, Salford Central.
Divisional outlook
The increased medium-term target for Mixed Use Partnerships
is to generate a return on capital up towards 25%.
While the division has experienced a substantial increase
to its development order book for a number of sizeable
long-term schemes, profits (and the resulting return on capital
employed) in 2025 will continue to be moderate, albeit higher
than 2024 levels. The average capital employed for the year
is expected to be between c.£105m and £115m.
Our strategy in action
Lewisham – 20 years
of placemaking
Lewisham Gateway, the £500m mixed-use regeneration of central
Lewisham, completed in 2024 with its final phase delivering 649
new homes. Over the past 20 years, a congested traffic island has
been transformed into a thriving new neighbourhood with over
1,000 homes, new shops, cafes and restaurants, workspace, gym
and cinema. Complex works have included moving a roundabout,
re-routing and uncovering the Quaggy and Ravensbourne rivers,
and creating a new park where the rivers meet.
Lewisham Gateway has also reconnected its railway station,
Docklands Light Railway and bus station with the high street,
helping to drive thousands of passengers towards the city centre
and promote economic growth for the community.
Mixed Use Partnerships’ delivery partners on the scheme were
Lewisham Council, the Mayor of London, Transport for London
and Homes England.
27
Strategic report
Fit Out
The market for fit out remains strong, and
we have had another excellent year with
significant growth in both revenue and
operating profit.
Chris Booth
Managing Director
Key highlights and performance
against KPIs
Revenue (£m)
+18%
1,300.3
1,105.2
967.5
22
23
24
Operating profit (£m)
+37.9%
99.0
71.8
52.2
22
23
24
Medium-term target
£50m–£70m
Operating margin (%)
+110bps
7.6
6.5
5.4
22
23
24
The quick read...
Continued focus on consistent operational delivery
and enhanced customer experience
Significant growth in revenue and operating profit
High-quality workload through disciplined bidding
Secured order book 31% higher than prior year
Medium-term target for operating profit increased
to £60m–£85m from 2025
Fit Out delivered another market-leading performance in
the year, enjoying significant growth for both revenue and
operating profit. With revenue increasing by 18% to £1,300m
(2023: £1,105m), operating profit was up 38% to £99.0m
(2023: £71.8m) resulting in strong margin expansion to 7.6%
(2023: 6.5%), strongly influenced by the exceptional volumes
and operational leverage. The division’s focus on consistent
operational delivery and enhanced customer experience
continues to underpin its excellent performance,
complemented by a high-quality workload through disciplined
and focused bidding, which in turn supports its strong brand
reputation and market position.
The overall balance of the business has been reasonably
consistent over recent years, with any movements in
geography, type of work and sectors served not indicative
of any longer-term trends.
The London region continued to generate a strong proportion
of the division’s revenue, accounting for 72% of revenue
(2023: 64%), while other key geographies served out of offices
in the Thames Valley, Birmingham, Manchester, Leeds and
Glasgow covered the remaining 28% of revenue (2023: 36%).
There was no significant change to the market sectors served.
The commercial office market remained the largest,
contributing 86% of revenue (2023: 80%), with higher
education amounting to 6% of revenue (2023: 10%),
government/local authority representing 6% (2023: 8%),
and retail banking and other sectors covering the remaining
2% of revenue (2023: 2%).
In terms of type of work delivered in the year, 86% related
to traditional fit out work (2023: 85%), while 14% related to
‘design and build’ (2023: 15%). The proportion of revenue
generated from the fit out of existing office space remained
relatively constant at 82% (2023: 79%), with the remainder
attributable to the fit out of new office space. Of the fit out
of existing office space, 46% of the work was refurbishment
‘in occupation’ compared to 54% where work was performed
in non-occupied space.
Operating review
continued
28
Morgan Sindall Group plc
Annual Report 2024
Operating review
continued
Fit Out
The market for fit out remains strong, with a number of
different factors driving demand: lease events and significant
project requirements in the London commercial office market;
upcoming public and private sector schemes outside of
London; carbon-driven planning restrictions for new buildings
and energy efficiency of existing office space; and the
continuation of repurposing of office space to accommodate
new ways of working.
At the year end, the secured order book was £1,439m, an
increase of 31% from the previous year end (2023: £1,098m).
Of this total, £1,187m (83%) relates to 2025, 45% higher than
it was at the same time last year for the 12-month look ahead,
which continues to underpin the visibility and confidence for
the forthcoming year.
Commercial
Commercial fit out projects won in London during the period
included 380,000 sq ft for PwC at More London; 355,000 sq ft
for A&O Shearman at 2 Broadgate in London; 277,000 sq ft
for Latham & Watkins on Leadenhall Street; 156,000 sq ft
for Unilever in Kingston-upon-Thames; 158,000 sq ft for
Travers Smith; 129,000 sq ft for JLL at 1 Broadgate in London;
101,000 sq ft fit out for Investec on Gresham Street; 83,000 sq ft
for Wise in Worship Square, London; 56,000 sq ft for Standard
Chartered Bank; 48,000 sq ft for Rabobank London on
London Wall; 37,000 sq ft for OMERS and Oxford Properties;
26,000 sq ft for Motability Operations at 22 Bishopsgate;
24,000 sq ft for Johnson Matthey at Gresham Street; and
8,500 sq ft for AstraZeneca at Pancras Square.
Our strategy in action
One of the world’s
healthiest workplaces
GSK’s new global headquarters in London’s Knowledge Quarter
aspires to be one of the world’s healthiest workplaces. Its 13 floors
support hybrid working for employees, with bright spaces, green
terraces, best-in-class technology, a dedicated wellness floor and
public restaurant called The Orangery.
The project was ‘Perfectly Delivered’, exceeding the client’s
cornerstone to “deliver at least 10 world-leading innovations
that support human health and align with GSK culture”. Fit Out
delivered 13 such innovations, including a 53/50 Considerate
Contractor Score; the permanent installation of a vertical farm
whose produce equates to 1.5 acres of farming; and upskilling
two social enterprises to become fit out contractors.
Designed by PENSON and delivered in partnership with tp bennett,
the GSK fit out is on track to achieve BREEAM Outstanding, WELL
Platinum and WELL Equity certifications.
Regional project wins in the period included 185,000 sq ft for
a UK consumer, corporate and wealth and private banking
franchise in Northampton; 152,500 sq ft for Lloyds Banking
Group in Birmingham; 43,000 sq ft for Bruntwood Estates in
Manchester; 32,000 sq ft for an electric vehicle design and
manufacturing company in Bicester; 27,000 sq ft for Evelyn
Partners in Bristol; 20,000 sq ft across two floors for Vodafone
in Newbury; and 12,700 sq ft across two projects for VISA
in Basingstoke.
Commercial fit out projects on site or completed in London
during the year included 1.2 million sq ft for Citi in Canary
Wharf; 110,000 sq ft for a professional services firm in London;
109,000 sq ft for Aviva at 80 Fenchurch Street; 114,000 sq ft for
law firm Reed Smith near Spitalfields; two projects totalling
99,500 sq ft for Deloitte at New Street Square; 51,500 sq ft for
Berkeley Estate Asset Management in Mayfair; 40,000 sq ft
for British Land on Bishopsgate; 17,000 sq ft for Boston
Consulting Group on Charlotte Street; and an 11,000 sq ft
fit out for Burges Salmon at New Street Square.
Regional projects on site or completed during the year
included 160,000 sq ft for Lloyds Banking Group in Leeds;
144,000 sq ft for Wirral Borough Council; 50,000 sq ft for Dojo
in Bristol; 44,000 sq ft for Samsung in Cambridge; 27,000 sq ft
for Arup in Bristol; and 20,000 sq ft for Sky in Leeds.
29
Strategic report
Operating review
continued
Fit Out
Science and research and higher education
Projects won in the year included 310,000 sq ft for British Land
at 1 Triton Square in London; 64,000 sq ft for King’s College
London; 29,000 sq ft at Newcastle University; a 29,000 sq ft
library refurbishment at the University of Wolverhampton; and
two projects totalling 25,000 sq ft at Anglia Ruskin University.
Projects on site or completed during the year included a
150,000 sq ft HQ for GSK in London’s Life Sciences Hub, known
as the Knowledge Quarter; 100,000 sq ft at Durham University
School of Business; five projects totalling 45,000 sq ft for
Queen Mary University; upgrade works at the Francis Crick
Institute as their project partner; 27,500 sq ft for Aston
University; and a 12,500 sq ft fit out of Keele University’s
Clinical Skills department.
Design and build
Projects won and continuing on site during the year included
120,000 sq ft for Wood Group at Green Park in Reading;
50,000 sq ft for Mapletree at Green Park in Reading; 23,000 sq ft
for Ultra Maritime in High Wycombe; and 6,000 sq ft for
Molton Brown in Bishop’s Stortford in Essex.
Projects won and completed during the year included
50,000 sq ft for Accrue Capital in Maidenhead; 30,000 sq ft of
fully fitted labs and office space for Stanhope at MediaWorks
in White City Place; 38,000 sq ft for Aurora Energy Research
in Oxford; 21,000 sq ft for Kajima Properties (Europe);
24,000 sq ft for Greystar on Finsbury Square; 18,000 sq ft
for Sage UK in Winnersh Triangle, Reading; 15,000 sq ft
for Wavestone at Exchange Square in London; 13,500 sq ft
for Smiths Group plc; 8,600 sq ft for Centiva; 8,000 sq ft
for Spin Master Toys in Marlow; 8,000 sq ft for AEW UK
Investment Management; 7,000 sq ft for Trinity Life Sciences
in the Scalpel in London; and 7,000 sq ft for Just Climate
(by generation) in London.
Frameworks
Projects won under frameworks and corporate partnerships
included £30.0m of works for the Mayor’s Office for Policing
and Crime, with a future order book of £30.3m; £21.4m of
works through Procure Partnerships, with a future order book
of £9.6m; £11.2m of works through Pagabo, with a future
order book of £3.5m; £7m of works through the Southern
Construction Framework; £3.2m of works through
Construction West Midlands Framework; and two projects
through Scape to the value of £3.6m.
Divisional outlook
The increased medium-term target for Fit Out is to deliver
an average annual operating profit of £60m–£85m.
Based on the timing of projects in the order book and the
current visibility the division has of future workload for the
forthcoming year, the division is expected to have another
strong year in 2025, with profit towards the top end of this
revised target range.
30
Morgan Sindall Group plc
Annual Report 2024
Construction
We delivered a strong performance,
achieving an operating margin at the top
end of our target range and a secured order
book 20% ahead of the prior year.
Pat Boyle
Managing Director
The quick read...
Maintained prudent risk management in order book
Strong year of winning new work, with secured order
book seeing a 20% increase
Further work available in the market, much through
negotiated or existing frameworks
Medium-term target for operating margin increased
to 3.0%–3.5% from 2025
Construction’s revenue increased by 8% to £1,044.1m
(2023: £966.6m), while operating profit increased by 19% to
£30.9m (2023: £25.9m), resulting in an operating margin of
3.0% (2023: 2.7%); this was at the top end of its targeted range
for its operating margin of 2.5%–3.0%. The strong profit
performance was driven by improving the overall quality
of earnings through disciplined contract selectivity and
operational delivery together with prudent risk management
within its order book.
The division had a strong year of winning new work, with the
secured order book at £952m, 20% ahead of the prior year
(2023: £796m). Of the total, £771m (81% by value) is secured
for 2025; this compares to £652m (82% by value) of work
which was secured for the year ahead at the start of last year.
In addition to the total order book, there continues to be a
significant amount of suitable work available in the market,
much of which is being generated through negotiated or
existing frameworks. At the end of the year, the division
had £1,179m of work at preferred bidder stage, providing
confidence of a sizeable ongoing workload (2023: £1,284m)
for the forthcoming period.
Education
Project wins included a £51m new-build 930-place secondary
school in Dumfries, Scotland; the £50m Nine Elms two-form
entry and special educational needs (SEN) primary school in
Battersea; the £50m, 900-place Willows High School and SEN
facility in Cardiff; a £34m secondary academy at Callerton in
Newcastle upon Tyne for the Department for Education (DfE);
Key highlights and performance
against KPIs
Revenue (£m)
+8%
1,044.1
966.6
819.9
22
23
24
Medium-term target
£1bn
Operating profit
1
(£m)
+19.3%
30.9
25.9
22.6
22
23
24
Operating margin
1
(%)
+30bps
3.0
2.7
2.8
22
23
24
Medium-term target
2.5%–3.0%
1
Before exceptional building safety credit of £0.1m (2023: charge
of £11.5m). See note 2 of the consolidated financial statements.
Operating review
continued
31
Strategic report
Operating review
continued
Construction
During the year, work progressed at the £24m Alder Hey
Hospital surgical neonatal intensive care unit, the first
specialist facility of its kind in the UK; a new £14m community
diagnostic centre at St Margaret’s Hospital, Epping for The
Princess Alexandra Hospital NHS Trust; and multiple upgrades
for Mid and South Essex Foundation Trust’s Broomfield
Hospital in Chelmsford. Elsewhere, work completed on the
Norfolk and Norwich University Hospital’s £25m community
diagnostic and assessment centre.
Other sectors
Project wins included the £86m Devonshire Gardens
mixed-use redevelopment scheme for Railpen in Cambridge;
a £27m life sciences development in King’s Cross; a £32m
redevelopment and upgrade of a household waste recycling
centre and waste transfer station in Aldridge, West Midlands
for Walsall Metropolitan Council; a £32m major public realm
development for Plymouth City Council; a £10.5m upgrade
to Ashford Fire Station in Kent; and the £10m redevelopment
of Reading Central Library. The £43m residential project in
New Bailey Salford for English Cities Fund, being carried out
in collaboration with Mixed Use Partnerships, made good
progress in the period, while other completions included five
fire station projects across the UK, including the new £15.4m
Cosham Fire Station in Portsmouth.
Divisional outlook
The increased medium-term target for Construction is to
deliver an operating margin between 3.0% and 3.5% per
annum with an annual revenue target in excess of £1bn.
For 2025, based on its secured order book and the timing of
projects at preferred bidder stage expected to convert into
contract and commence in the year, the division’s operating
margin is expected to be towards the lower end of the revised
range and its revenues to slightly exceed £1bn.
the £25m Ravensdale special educational needs and
disabilities (SEND) school in Mansfield for Derby City Council;
the £19m Carleton High School in Pontefract; Maendy (£14m)
and Goetre (£20m) primary schools in South Wales; and the
£13m, 420-place Cable Wharf primary and SEN school in Kent
for Kent County Council and the DfE to support a growing
residential development.
During the year, work progressed on Orbiston Community
Hub, a £42m facility near Glasgow accommodating two
primary schools, a family learning centre and a community
centre; a £32m, 1,900-place all-through school in Abergavenny;
and the £21m new build and refurbishment of the School of
Veterinary Medicine at the University of Central Lancashire.
Completions in the year included: the £35m 150-place
Alconbury SEN school in Huntingdon; the £18m Pear Tree
SEND school in Stockport; the £13.9m Little Reddings Primary
School in Bushey, delivered via the DfE’s School Rebuilding
Programme; a £12m facility for Middlesbrough College to
deliver training in specialist engineering; an £11m three-storey
teaching block for Castle School in Thornbury, Bristol;
Limebrook School in Maldon, Essex, a new 420-place primary
school and nursery; the £24m London Institute for Healthcare
Engineering, a state-of-the-art life sciences facility for King’s
College London and Guy’s and St Thomas’ NHS Foundation
Trust; and a £19.5m ‘Living Lab’ public science centre for Anglia
Ruskin University.
Healthcare
Project wins included a £35m theatre and ward expansion
and refurbishment at Harrogate District Hospital; a £32m
expansion to create a new 48-bed ward block and imaging
facility at Milton Keynes University Hospital; a £9m extension
to The Grange University Hospital’s emergency department
in Cwmbran; and a £9m redevelopment of Bradford Royal
Infirmary’s maternity department.
Our strategy in action
Creating an inspiring and
sustainable learning environment
Prestley Wood Academy is a £36m SEND school for 150 pupils in
Alconbury Weald, Cambridgeshire. Facilities include two sensory
rooms, a state-of-the-art hydrotherapy pool, trampoline room and
soft play area. The landscaped design will support forest school
learning, specialist art creativity, and sport and fitness activities.
In line with the Council’s ‘Nearly Zero Energy Building Initiative’,
the team used CarboniCa, the Group’s intelligent carbon-reduction
tool, to help reduce the project’s carbon by 1,220 tonnes, for
example by re-assessing the foundation design, repurposing
material, using diesel-free equipment and solar site cabins, and
using a 25% PFA (coal waste) concrete mix. To save energy in
running the school, an air source heat pump system was installed
as well as 200 photovoltaic panels.
32
Morgan Sindall Group plc
Annual Report 2024
Infrastructure
We delivered a robust performance and
achieved our medium-term targets while
ensuring high-quality operational delivery.
Simon Smith
Managing Director
Key highlights and performance
against KPIs
Revenue (£m)
+18%
1,047.0
886.7
767.7
22
23
24
Medium-term target
£1bn
Operating profit (£m)
38.5
38.5
29.5
22
23
24
Operating margin (%)
–60bps
3.7
4.3
3.8
22
23
24
Medium-term target
3.5%–4.0%
Operating review
continued
The quick read...
Growth in revenue while operating profit in line with
prior year due to the timing and phasing of project
starts and completions
Order book up by 11%, mostly long term in nature
Positions secured on long-term programmes
including National Grid’s Great Grid Partnership,
Wessex Water’s AMP8 and Network Rail’s CP7
Eastern Framework
Medium-term target for operating margin increased
to 3.75%–4.25% from 2025
Infrastructure
1
delivered another strong performance in the
year, with both profits and margin influenced by the timing
and nature of projects delivered through its frameworks
while still ensuring a high-quality operational delivery across
the business. Revenue increased by 18% to £1,047.0m
(2023: £886.7m) with operating profit of £38.5m, in line with
the prior year (2023: £38.5m), supported by an operating
margin of 3.7% in the middle of its targeted range of 3.5%–
4.0% (2023: 4.3%).
Infrastructure’s order book of £1,883m was 11% up compared
to the prior year (2023: £1,689m). The order book continues to
remain long term in nature, with around 98% derived through
existing frameworks.
The division remains focused on the key sectors of nuclear,
energy, water, highways and rail, with visible opportunities
in defence. Its markets have significant long-term committed
investment programmes in place, largely driven by
government and regulatory objectives. Infrastructure
continues to see its clients awarding large long-term
frameworks with its delivery partners, awarding projects
focused on delivering strategic outcomes over the term
of the framework.
Energy
Infrastructure secured a position on the £9bn Great Grid
Partnership, as part of the Accelerated Strategic Transmission
Investment projects. The Great Grid Partnership will build new
electricity network infrastructure required to reduce the UK’s
reliance on fossil fuels by connecting 50GW of offshore wind
by 2030. In Scotland, the division secured a position as a
strategic partner on ScottishPower’s £5.4bn programme of
contracts to deliver the biggest rewiring of the electricity grid
since its inception. The partnership will run for an initial five
years, with the option to extend up to 10 years.
1
Design results are reported within Infrastructure.
33
Strategic report