Annual Report 2025

For more information visit

morgansindall.com

We are the partnerships, fit out

and construction services group.

Our record performance in 2025 is a result

of the energy and commitment of our

empowered teams, together with our deeply

held Core Values.

Our leadership in sustainability has been

recognised with an ESG rating of AAA from

MSCI

1

and an A– climate rating from CDP.

Strategic report

04

2025 in numbers

05

Chief executive’s

statement

06

Our businesses

07

Market conditions

08

Business model

10

Purpose, values

and strategy

11

Our stakeholders

14

Key performance

indicators

16

Financial review

19

Capital allocation

21

Operating review

34

Responsible business

strategy and performance

47

Managing risk

56

Climate reporting

63

Section 172 statement

64

Non-financial and

sustainability information

statement

66

Going concern and

viability statement

Governance

69

The UK Corporate

Governance Code

71

Chair’s statement

72

Board overview

73

Our Board

75

Governance framework

76

Board review

80

Nomination

committee report

86

Audit committee report

93

Responsible business

committee report

95

Directors’ remuneration

report

121

Other statutory

information

Financial statements

126

Independent auditor’s

report

137

Consolidated financial

statements

173

Company financial

statements

184

Shareholder information

185

Appendix – Carbon

emissions background

and terminology

2025 in numbers

Strong operating performance

Revenue

£5,018.6m

(2024: £4,546.2m)

Operating profit (adjusted*)

£225.7m

(2024: £162.6m)

Operating profit

£224.9m

(2024: £162.0m)

Secured workload

£11,972.2m

(2024: £11,419.3m)

Financial strength and shareholder returns

Profit before tax (adjusted*)

£232.6m

(2024: £172.5m)

Profit before tax

£231.8m

(2024: £171.9m)

Average daily net cash

£367.6m

(2024: £374.2m)

Total dividend per share

158p

(2024: 131.5p)

Social and environmental value

Reduction in Scope 1 and 2 carbon emissions since 2019

1

55%

(2024: 44%)

CDP Climate score

A–

(2024: A)

Apprentices, sponsored students

and professional learning

2

1,045

(2024: 1,087)

Lost time

incident rate

3

0.18

(2024: 0.23)

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 35), we either include it in this report or refer to other reports and information on our

1

The 2019 baseline for Scope 1 and 2 emissions was 20,903 tonnes CO

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.

Chief executive’s statement

A decade of strong organic

growth delivered through

our decentralised and

empowered businesses

Values- and performance-led culture

Over the last 10 years, we have delivered an 18% CAGR

1

for

adjusted profit before tax. This has been delivered by our

decentralised operating model through each of our five

empowered businesses, based on our vision to harness the

energy of our teams to achieve the improbable. Our performance

is a result of their huge commitment, together with our deeply

held Core Values, as they have responsibly overcome challenges

and taken advantage of opportunities with pace and agility, while

making their businesses even better.

Over the last year, we achieved significant growth in adjusted

profit before tax, up 35% to £233m from the prior year. We also

continued to make significant strategic progress across the wide

number of sectors the Group operates in, entering 2026 with a

record level secured order book and work at preferred bidder

stage up 17% to £19.1bn from the prior year. As a result, the

improved outlook has given us the confidence to increase the

medium-term targets for both the Mixed Use Partnerships and

Infrastructure divisions.

Our balance sheet, which is supported by a substantial average

daily cash position, continues to allow us to focus on making the

right decisions to drive long-term sustainable growth while also

supporting strong returns to shareholders in the year, with the

full-year dividend increasing by 20% to 158p per share.

Our strategy for long-term growth

Our ability to take a long-term view has been underpinned by

the strong organic profitable growth we have enjoyed over the

last decade, achieved through agility and decisions made over

the short term to benefit the long term.

I am pleased to report that, during 2025, Mixed Use Partnerships

converted eight sizeable schemes, previously at preferred bidder

stage, to signed development agreements, followed by the

appointment as preferred developer for eight sizeable new

schemes during the year. Importantly, the division was successful

in securing funding applications for a number of schemes that will

now start on site during 2026.

Despite the private housing market continuing to be subdued,

the Partnership Housing division secured sizeable partnership

schemes during the year, including Cardiff Council, Vale of

Glamorgan Council and Barnet Council to collectively deliver

3,000 homes over the next decade, while also being appointed

as preferred developer by Druids Heath regeneration scheme

with Birmingham City Council to build around 3,500 new homes

over the next two decades.

1

Compound annual growth rate.

Our Total Commitments

Our responsible business strategy continues to enable our

long-term growth ambitions as we prioritise delivering social and

environmental value. In 2025 we retained our MSCI AAA ESG

rating for the fifth consecutive year and achieved an A– for CDP

Climate, while also supporting the development and safeguarding

of our people and partners.

Board changes

I am delighted to welcome Peter Harrison as our new chair,

succeeding Michael Findlay who retired from the Board in

July 2025 after nine years of service. I would like to thank

Michael personally for being such a great, supportive chair.

Our outlook for 2026

Looking ahead, and despite some of the current headwinds in the

housing market, we remain positive for the year ahead and are on

track to deliver an outcome for 2026 which is in line with revised

expectations as set out in our trading update released on

12 February 2026.

John Morgan

Our businesses

Specialists in our chosen markets

Partnerships

Construction Services

Fit Out

Partnership Housing

Construction

Mixed Use Partnerships

Infrastructure

Fit Out

Revenue

£1,159m

Revenue

£212m

Revenue

£935m

Education, healthcare, commercial, industrial,

leisure and retail markets.

morgansindallconstruction.com

Infrastructure includes the BakerHicks design

activities based out of the UK and Switzerland.

bakerhicks.com

Planned maintenance services for social housing

and the wider public sector.

morgansindallpropertyservices.com

Nuclear, energy, defence, rail, water, highways

and aviation markets.

morgansindallinfrastructure.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 limited refurbishment.

lovell.co.uk

Transforming the urban landscape through

partnership working and the development

of large forward-funded multi-phase sites

and mixed-use placemaking.

museplaces.com

Office interior design and build services

direct to occupiers.

morganlovell.co.uk

Revenue

£1,784m

Fit out and refurbishment in commercial,

central and local government offices, as well as

further education.

overbury.com

Revenue

Revenue

Market conditions

In Fit Out, business and market changes impacting tenants

continue to be a robust and supportive driver, ranging from more

regular lease events with a resurgence of refurbishments and

retrofit schemes, to prioritising the need for sustainability and

energy efficiency from high-quality offices, together with more

flexible and collaborative workspaces.

In other well-established sectors for the Group, the Spending

Review announced an increase in planned spending

commitments in defence, transport, nuclear, energy and

education, providing several attractive long-term bidding

opportunities for Construction, Infrastructure and

Partnership Housing.

2026 outlook

Looking ahead, and despite some of the current headwinds in

the housing market, we remain positive for 2026 and are on track

to deliver an outcome in line with our revised expectations set out

in our trading update released on 12 February 2026.

The 2026 outlook for each division is detailed in the operating

review on pages 21 to 33.

Despite some of the current

market headwinds, we remain

confident of the strength of the

markets in which we operate

over the medium and long term

The fundamentals for the fit out market continue to remain

favourable, while UK construction and partnership programmes

are expected to benefit from the recent government investment

commitments announced in the June 2025 Spending Review

and subsequent Autumn Budget together with the continued

supportive market environment within the energy infrastructure

sector. These investments are expected to support both

government and regulatory target objectives over the medium

to long term, noting that the pace of delivering against these

commitments will be key.

Elsewhere, following a year of slow housing and apartment sales

activity in the private housing market, a gradual pace of recovery

is expected over the forthcoming year as affordability constraints

are expected to slowly ease with the lowering of interest rates,

while planning reforms progress at a moderate pace.

Against the backdrop of the affordable home targets set out

by the government in 2024, we welcomed the investment

commitments made in the Spending Review to support the

delivery of these targets over the medium term. Of note was the

launch of the National Housing Bank, which includes £16bn of

new public investment to unlock and bring forward large and

complex sites at pace through the provision of infrastructure

finance and guarantees, while also unlocking private investment.

This was followed by an established Affordable Homes

Programme, with the UK government’s commitment to invest

£39bn over 10 years. Importantly, the social housing sector

will also benefit from a 10-year rent settlement that allows

landlords to raise rents by 1% above inflation, providing

housing associations with both medium- and long-term visibility

over revenue and therefore supporting earlier investment

planning decisions.

07

Strategic report

Governance

Financial statements

Business model

See page 6 for detail on our divisions’ services and markets,

and pages 7 and 21 to 33 for an update on their respective

business environments

For information on how we manage and sustain our resources,

see pages 11 to 13 (our stakeholders); 34 to 46 (responsible business

strategy and performance); 16 to 18 (financial review); 21 to 33

(operating review); and 47 to 55 (managing risk)

A decade of strong organic growth

enabling continued investment

over the medium and long term

Our sources of

competitive advantage

A strong culture

A strong culture underpins our decentralised approach.

Our people are focused on the customer, partner and

end-user experience, as well as the potential impacts of

our activities on the environment and wider society.

Decentralised philosophy

Our businesses are empowered to be innovative,

entrepreneurial, agile and responsive. Each business is a

trusted brand with extensive experience in its field and a

strong track record. The diversity of our offering protects

the Group against the cyclical nature of our markets.

Collaborative relationships with clients and partners

Partnerships with local authorities, housing associations,

landowners and private enterprises to deliver long-term

schemes; long-term client relationships and repeat

business achieved through our commitment to delivering

exceptional projects.

People

The knowledge, skills and experience of talented people

who are passionate about what they do and trusted to

make decisions.

Supply chain partners

A national network of suppliers and subcontractors with

local knowledge. Each division has its own pool of suppliers,

mitigating risk across the Group.

Financial strength

The Group’s strong cash balance enables us to make

sound decisions for its long-term development, while

also enhancing its competitive advantage and future

work-winning.

Sustainable and responsible solutions

Ability to deliver energy-saving, carbon-reducing projects

and buildings.

Morgan Sindall Group plc

Business model

continued

Driving organic long-term growth

Value we create

We use cash from our

fit out and construction

services activities to

invest in long-term

housing and mixed-use

schemes delivered

through partnerships.

More detail on investment in our

partnership activities can be found

on page 20.

Transforming the built environment:

New housing, schools and colleges, commercial and critical services infrastructure, mixed-use urban places,

and property services for social housing.

Invests cash for long-term

value and provides

construction opportunities

Generates cash

Generates cash

High-quality

projects

91%

Perfect Delivery

Social value

£1.9bn

as determined by the Social Value

Portal (see page 45 for detail)

Helping our

people succeed

728

promoted internally

Environmental value

55%

reduction in Scope 1 and 2

carbon emissions since 2019

Supporting our

supply chain

98.4%

invoices paid within 60 days

Shareholder returns

158p

total dividend

per share

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.

Purpose, values and strategy

Focused on exceeding our

stakeholders’ expectations

Purpose

Values

Strategy

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.

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 79 for how the Board monitors our culture and the degree to which it is embedded

Long-term organic growth for the Group through the exceptional performance of our businesses.

by selecting the right projects

aligned to our core strengths

for

our customers and end users

underpinned

by our teams’ strong and

lasting client and partner

relationships

protecting people

developing people

improving the environment

working together with our

supply chain

enhancing communities

with a strong balance sheet,

significant levels of cash and

attractive dividend policy,

and by investing in

partnership activities to

enable long-term growth

See pages 14 and 15 for our performance against our strategic priorities and pages 48 to 54 for our principal risks

Our stakeholders

Understanding our

stakeholders’ priorities

We develop long-term relationships through close working and communication. The Board

engages directly with our people, shareholders and analysts; 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.

Our people

The passion, expertise and

empowerment of more than

8,500 employees enable us

to achieve the improbable for

our stakeholders.

How the Group engaged

Our divisions undertake a variety of employee

engagement activities which include surveys,

conferences and forums for gathering ideas and

innovations.

Examples of actions taken during the year in direct

response to feedback include the following:

n

Mixed Use Partnerships launched a ‘Great

Things’ engagement inbox and newsletter that

reinforces the division’s values and sense of

community, and is preparing to launch ‘Appraisd’,

a bespoke learning and development portal.

n

Fit Out employees were asking for more one-

on-one time with their line managers and the

division has reinstated annual performance

development plans (PDPs) that will cover

wellbeing as well as career development. Fit Out

will be reviewing its PDP guidance in 2026 to

clarify purpose and expectations.

n

Construction heard from employees that they

wanted continued support with their technical,

management and leadership capabilities. The

division is addressing this through performance

management processes, 360-degree feedback,

coaching/mentoring, and a suite of formal

technical training, early careers and management

and leadership programmes.

How the Board engaged

All non-executive directors, including the

chair, engage with employees as part of our

annual strategy review, through meetings

and site visits. Each non-executive is matched

with a division on an annual rotational basis,

enabling fresh perspectives and insights which

they can share with the Board. Divisional

managing directors and other internal experts

present at Board meetings, and each year the

Board meets informally with representatives

from two divisions.

In 2025, some of our non-executives met

with c.70 employees at our 2025 senior

management conference, which provided

an opportunity for multiple discussions

with employees without their managers or

executive directors present. Jen Tippin, in

her role as remuneration committee chair,

attended a meeting of the Group’s HR

forum to gain a better understanding of any

concerns raised by employees and to discuss

remuneration across the Group.

No issues arose from discussions with

employees in 2025 that impacted the Board’s

principal decisions. The meetings provided

evidence of a culture of openness and

transparency, and confirmed that employees

feel engaged and consider our Core Values

to be a true differentiator for the business.

See pages 36 to 39 for more

information on our engagement

with our people during the year

Our stakeholders

continued

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 many channels, including

site inductions, toolbox talks and data platforms.

Through these channels we seek to convey

our culture, values and standards and provide

information on upcoming projects, procurement

prospects and other relevant information.

Discussion topics are varied but include safety,

wellbeing and our approach to legal obligations

such as data security and modern slavery. We

offer our supply chain constructive feedback and,

where needed, guidance on performance against

set criteria.

Supply chain engagement events were hosted by

divisions during 2025 to share ideas and strengthen

relationships. The divisions continued to collaborate

with their supply chains to drive carbon reduction.

How the Board engaged

The Board reviews the divisions’ health and

safety statistics and strategies and actions

to prevent modern slavery. The executive

directors are updated on supply chain

relationships, including payment practices,

at their monthly divisional board meetings

and refer any significant issues to the Board,

including how the divisions continue to

support their supply chains to help mitigate

the risk of insolvency.

See pages 43 and 44 for more

information on our engagement

with our supply chain during the year

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 solutions and respond quickly to

clients from different sectors, with different needs.

Partnership Housing stepped in for a client for

whom a number of projects had been affected by

their original contractors going into administration,

leaving developments incomplete or with significant

issues. The division worked with the client to

investigate and resolve the issues while remaining

as close as possible within the client’s budget. The

client described Partnership Housing as “open and

honest in their valuations… they honour what they

say they are going to do.”

Fit Out’s growing international client base was asking

for more effective ways of monitoring the progress

of their projects. The division has expanded its

use of digital tools, such as drone flythroughs, 3D

surveys, timelapse photography and its ProjectPLUS

tool, to help its clients stay connected and involved.

This has improved transparency, strengthened trust

and assisted clients and their consultant teams in

making real-time decisions.

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.

Morgan Sindall Group plc

Annual Report 2025

12

Our stakeholders

continued

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 run 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.

Mixed Use Partnerships’ English Cities Fund joint

venture invited students from a local primary

school to contribute ideas for a new park at Manor

Road Quarter in Canning Town. The students’ brief

was to think about how the park could promote

movement and wellbeing, and their input inspired

the inclusion of an outdoor gym and skate park.

The park also features rain gardens, wildlife habitats,

planted terraces and picnic areas.

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 45 and 46 for more

information on our engagement

with local communities during

the year

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

We make clear and quantitative statements

about our key performance indicators (KPIs) and

objectives to enable shareholders to understand

the performance of the business. We update them

regularly if these change. The executive directors

deliver live full- and half-year results presentations,

with a video link to enable those unable to attend

in person to take part in a live Q&A. We encourage

shareholders to attend our annual general

meeting (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, Glass Lewis and Pensions & Investment

Research Consultants ahead of our AGM each year.

In 2025, our new chair, Peter Harrison, proactively

offered meetings to all major shareholders

and met with any shareholder who requested

a meeting, while our remuneration committee

chair, Jen Tippin, consulted with shareholders on

proposed changes to our remuneration policy

and implementation. See our chair’s statement

on page 71 and directors’ remuneration report

on page 98 for more information.

Our executive directors held 55 meetings

with shareholders during the year, including

discussions around our 2024 performance

and strategy and our 2025 half-year results.

They also hosted a capital markets day in May

and met with an additional 39 shareholders

and potential investors at conferences in the

UK, the US and Germany.

Investors asked to learn more about the

Group’s partnerships activity; our half-year

results presentation included updates

from the respective managing directors

of Partnership Housing and Mixed Use

Partnerships. The half-year results roadshow

and subsequent shareholder meetings

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 executive directors shared

feedback from their meetings with the rest

of the Board.

Funders and performance

bond issuers

Our funders and performance

bond issuers provide us

with access to competitively

priced banking, performance

bonding and debt facilities.

Performance bonds, often

known as surety bonds,

are issued by a third party

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 2025, we secured the extension of our

committed loan facilities (totalling £180m) from

2027 to 2028 (see page 17 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.

Continuing to make

strategic progress

Key performance indicators

1

Before exceptional building safety credit of £0.6m (2024: charge of £2.7m). See note 2

of the consolidated financial statements.

2

Return on average capital employed = (adjusted operating profit plus interest from

joint ventures) divided by average capital employed.

3

Target updated on 29 July 2025 from £60m–£85m.

4

Before exceptional building safety charge of £1.7m (2024: credit of £0.1m).

5

Target updated on 29 July 2025 from £1bn.

Partnership Housing operating margin

8%

Medium-term target

Fit Out operating profit

£80m–£100m

Medium-term target

3

Infrastructure operating margin

3.75%–4.25%

Medium-term target

Partnership Housing return on average

capital employed

1,2

(last 12 months)

Up towards

25%

Medium-term target

Construction operating margin

4

3.0%–3.5%

Medium-term target

Infrastructure revenue

In excess of

£1bn

Medium-term target

Mixed Use Partnerships

return on capital employed

2

(last 12 months)

Up towards

25%

Medium-term target

Construction revenue

In excess of

£1.5bn

Medium-term target

5

Targets shown are those in place during 2025. See pages 21 to 33 for commentary on performance and targets going forward

4.2%

3.6%

4.7%

23

24

£99.0m

£71.8m

£139.9m

23

24

3.7%

4.3%

4.0%

23

24

11%

12%

10%

23

24

3.0%

2.7%

3.2%

23

24

£1,047.0m

£886.7m

£935.3m

23

24

2%

15%

(4)%

23

24

£1,044.1m

£966.6m

£1,159.2m

23

24

Key performance indicators

continued

6

Perfect Delivery status is granted to Fit Out, Construction and Infrastructure projects

that clients have confirmed meet all four service criteria specified by the division.

7

Scope 1 and 2 carbon emissions data covers our UK and European operations.

See Appendix on page 185 for emissions scope definitions.

8

Scope 3 carbon emissions data covers our UK and European operations. In 2025,

we rebaselined our 2020 Scope 3 emissions across all relevant categories and restated

our 2024 figure to apply new methodologies, assumptions and data points. Our

previously reported baseline was 1,300,271 tCO

2

e. Our Scope 3 emissions increased by

0.7% between 2024 and 2025. Read more about our methodology on page 185.

9

A training day is a minimum of six hours’ training.

10

Number of lost time incidents x 100,000 divided by number of hours worked. Lost time

incidents result in absence from work for a minimum of one working day, excluding the

day the incident occurred.

11

Within the last six months of the year.

12

In 2025, we onboarded all divisions onto the Social Value Portal (SVP). This is the first year

we have aligned the SVP with our annual reporting cycle, although we have been tracking

our contribution on the platform since October 2023.

See pages 34 to 46 for commentary on performance against our Total Commitments

Excel in project

delivery

Secure long-term

workstreams

Maintain financial

strength

Projects achieving Perfect Delivery

6

The divisions are responsible for driving Perfect

Delivery on their projects. Results are regularly

board level.

Reduction in Scope 1 and 2 carbon

from 2019 baseline

of 20,903 tonnes CO

2030 target

10

2030 target

Workload secured for the next three years

We monitor our secured workload for the

current year and beyond as well as the pipeline

(where we have been verbally awarded the

of intent in place).

Reduction in Scope 3

carbon emissions

from 2020 baseline

of 1,603,880 tonnes CO

8

2030 target

Percentage of invoices paid within 30 days

2030 target

Social value generated in 2025

Social value generated since 2023

(2024: £4.6bn)

Average daily net cash

are monitored on a daily basis.

Number of training days

9

per year per employee

2030 target

Deliver on our Total Commitments

44%

45%

23

24

0.23

0.24

23

24

61.5%

68.8%

23

24

13% increase

24

3.2 days

3.2 days

23

24

91%

92%

23

24

£11,419.3m

£8,920.2m

23

24

£374.2m

£281.7m

23

24

Financial review

The quick read...

n

Adjusted* operating profit up 39%

n

Adjusted* profit before tax up 35%

n

Strong balance sheet supported by significant daily cash

and committed bank loan facilities

n

High-quality order book of £12.0bn, with a further £7.1bn

at preferred bidder stage

n

Total dividend up 20% to 158.0p per share

Kelly Gangotra

Chief Financial Officer

Financial performance

Revenue for the year increased 10% to £5,018.6m (2024:

£4,546.2m), with adjusted* operating profit increasing 39% to

£225.7m (2024: £162.6m). This resulted in an adjusted* operating

margin of 4.5%, an increase of 90 basis points (bps) compared

with the prior year (2024: 3.6%). Reported operating profit was

up 39% to £224.9m (2024: £162.0m). Details on performance

by division are shown on pages 21 to 33.

The net finance income reduced to £6.9m (2024: £9.9m),

as a result of interest rates lowering during the year. Reported

profit before tax was £231.8m, up 35% (2024: £171.9m),

while adjusted* profit before tax was £232.6m, up 35%

(2024: £172.5m). This resulted in an adjusted* profit before

tax margin of 4.6%, an increase of 80bps compared with the

prior year (2024: 3.8%).

The tax charge for the year was £56.9m (2024: £40.2m), which

equated to an effective tax rate of 24.5% and was slightly lower

than the UK statutory rate of 25% (2024: 23.4%), primarily due to

amounts relating to prior-year items. The adjusted* tax charge is

£58.7m (2024: £42.0m), which equated to an effective adjusted

tax rate of 25.2%. 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 372.1p (2024: 281.4p),

while adjusted* earnings per share increased 33% to 370.0p

(2024: 278.8p). The total dividend for the year increased 20% to

158.0p per share (2024: 131.5p).

The Group achieved a

record performance in 2025,

delivered through our

decentralised businesses

supported by our empowered

and high-quality teams

Revenue

£5,018.6m

£4,546.2m

+10%

Operating profit – reported

£224.9m

£162.0m

+39%

Operating profit – adjusted*

£225.7m

£162.6m

+39%

Profit before tax – reported

£231.8m

£171.9m

+35%

Profit before tax – adjusted*

£232.6m

£172.5m

+35%

Basic earnings per share –

reported

372.1p

281.4p

+32%

Earnings per share –

adjusted*

370.0p

278.8p

+33%

Year-end net cash*

£531.2m

£492.4m

+£38.8m

Average daily net cash

£367.6m

£374.2m

–£6.6m

Total dividend per share

158.0p

131.5p

+20%

Financial review

continued

Financing facilities

During 2025, the Group maintained a total of £180m of available

bank facilities, of which £165m matures in October 2028 and

£15m in June 2028. 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 of 31 December 2025, contract bonds in issue under

uncommitted facilities covered £290.8m (2024: £194.9m) 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 £195.9m

(2024: inflow of £134.8m), after a net decrease in working capital

of £21.0m (2024: £33.8m net decrease) as the Group continued

to support investments in our partnership activities, which

amounted to £124.6m during the year. Overall, there was a net

cash inflow for the year of £38.8m, resulting in closing net cash

of £531.2m (2024: £492.4m).

The average daily net cash* for the year was £367.6m

(2024: £374.2m), which has continued to provide significant

balance sheet strength while enhancing our competitive

advantage and future work-winning efforts.

0

50

100

150

250

200

300

Operating

profit

1

Non-cash

Net capex

leases

Movement

in working

capital

Other

Operating

cash flow

48.6

(44.4)

(21.0)

(13.0)

Operating cash flow*

Financial review

continued

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

)

reduced by £12.4m to £(104.2)m, as shown below:

2025

£m

2024

£m

Change

£m

Inventories

603.3

476.0

+127.3

Trade and other receivables

1

769.9

664.2

+105.7

Trade and other

payables

2,3

(1,477.4)

(1,256.8)

–220.6

Net working capital

(104.2)

(116.6)

+12.4

Movements in the net working capital include increased

investment in the Group’s partnership activities, offset by slower

sales activity, particularly the Partnership Housing division.

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 2025:

Invoices paid within 60 days

2025

%

2024

%

Partnership Housing

98

96

Mixed Use Partnerships

97

97

Fit Out

98

98

Construction and Infrastructure

1

98

98

Property Services

99

99

In the year, Group provisions reduced by £16.1m to £89.4m,

of which £56.9m relates to the building safety provisions

(excluding provisions relating to joint ventures).

Secured workload

The Group’s secured workload

1

at 31 December 2025 was

£11,972.2m, an increase of 5% on the prior year end (2024:

£11,419.3m). The divisional split is shown below:

2025

£m

2024

£m

Change

%

Partnership Housing

2,330.2

2,174.0

+7%

Mixed Use Partnerships

4,614.6

4,084.9

+13%

Fit Out

1,311.7

1,438.9

–9%

Construction

1,112.2

951.8

+17%

Property Services

714.4

887.1

–20%

Infrastructure

1,889.9

1,883.1

–

Inter-divisional orders

(0.8)

(0.5)

–

Total

11,972.2

11,419.3

+5%

Chief Financial Officer

Capital allocation

We are committed to

maintaining a strong balance

sheet and holding significant

cash balances at all times

The quick read...

n

Our capital allocation framework is based on a hierarchy

of priorities

n

A strong balance sheet enhances our competitive

advantage and future work-winning, while also providing

a buffer against any economic downturn

n

Investment in our partnership activities, within capital-

efficient structures, to accelerate organic expansion

remains a strategic priority

n

Our dividend cover is expected to be 2.0x–2.5x

n

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 financial review on pages 16 and 17, our net cash

at 31 December 2025 was £531m (2024: £492m) and the average

daily net cash for the year was £368m (2024: £374m). The

year-end cash position included £37m held in jointly controlled

operations or held for future payment to designated suppliers.

Over the course of 2025, the lowest net cash balance on any one

day in the year was £270m (2024: £293m). Of this, £43m 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.

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 services activities.

When assessing the suitability of long-term partners,

potential clients across our entire business portfolio 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 to be 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

Fit Out and our construction services divisions.

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.

19

Strategic report

B. Maximising investment in our partnership

activities to drive sustainable growth

D. Investment by acquisition to

accelerate sustainable growth

E. Special returns to shareholders

C. Ordinary returns to shareholders

Significant opportunities are expected to arise through the

medium and long term to invest in the existing partnership

businesses to support and accelerate the organic growth

of their activities, which remains a strategic priority:

n

For Partnership Housing, the growth potential remains

substantial despite the market headwinds experienced

over the last 12 to 24 months. 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 £150.9m in 2020

to an average of £445.7m in 2025. The scalability of the

partnership housing model provides the potential to

further increase the capital employed above current levels

over the medium term.

n

In Mixed Use Partnerships, longer-term development

activities across multi-phase sites and placemaking are

targeted to generate return on capital up towards 30%

on an annual basis over the medium term. The capital

employed in this division is expected to be less capital-

intensive relative to Partnership Housing. In 2025, the

division’s average capital employed was £125.1m. Further,

a more capital-efficient structure is expected from Mixed

Use Partnerships’ current secured development order

book, as well as those at preferred bidder stage, together

with its identified pipeline of future opportunities. As a

result, the capital employed in the division is expected to

increase modestly over the medium term.

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.

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.

Ordinary dividends are 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.

Capital allocation

continued

Morgan Sindall Group plc

Annual Report 2025

20

Operating review

Partnership Housing

1

Before exceptional building safety credit of £0.6m (2024: charge of £2.7m). 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.

We have delivered a strong and resilient performance

despite slow levels of activity in the housing market.

We have also continued to grow our long-term

partnerships with the public sector through the award

of a number of large strategic schemes.

Steve Coleby

Managing Director

Revenue

(£m)

+5%

Capital employed

at year end

(£m)

+£133.2m

(£m)

+£107.9m

Operating margin

(%)

+50bps

(£m)

+16%

Return on capital employed

£861.2m

£837.5m

£903.1m

23

24

£318.7m

£234.4m

£451.9m

23

24

£337.8m

£254.5m

£445.7m

23

24

4.2%

3.6%

4.7%

23

24

£36.1m

£30.5m

£42.0m

23

24

11%

12%

10%

23

24

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 70 active mixed-tenure sites at various stages of

construction and sales, up from 66 at the prior year end, with an

average of 172 open market units per site (up from 166 at the

prior year end). Average site duration is 55 months, providing

long-term visibility of activity.

During the year, 1,531 units were completed across open market

sales and social housing (including through joint ventures)

compared with 1,808 units in 2024, noting that the number

of open market sales within this declined by 10% to 785.

Encouragingly, the average sales price increased by 11% to

£262k (2024: £237k) due to the geographical and product type

mix profile.

Of the total divisional order book, the amount relating to

mixed-tenure activities increased by 18% to £1,541m (2024:

£1,310m). In addition, the amount of mixed-tenure business at

preferred bidder stage, or already under development agreement

but where land has not been drawn down, was £1,283m at the

year end (2024: £1,200m).

Notable work won in the year included a 2,500-home,

27-development partnership with Cardiff and Vale of Glamorgan

Councils, 500 homes with Barnet Council for phase 1 of their

Grahame Park estate, and an 820-home scheme in Barnstaple

in partnership with LiveWest. Preferred developer status was

awarded by Birmingham City Council, to partner with them on

the 3,500-home development in Druids Heath, and by North

Yorkshire Council as their development partner for over 800

homes across North Yorkshire. In addition, Partnership Housing

was appointed master developer for a 1,000-home development

in Barnsley West.

Our strategy in action

Sustainable urban living and

long-term community value

Partnership Housing, with Tirion Homes and the Welsh government,

transformed a major brownfield site at Royal Victoria Court, Newport into

a modern residential community. Previous attempts to regenerate the site

had stalled and the Welsh government facilitated a partnership approach

to take it forward.

Of the 528 new homes, 234 were affordable for rent through Tirion and

30 available for low-cost home ownership through local registered social

landlord, Hedyn; 119 of the 264 open market homes were sold through

the Help to Buy Wales scheme. The development included an eco park,

providing green space while absorbing excess rainwater, reducing flood

risk, providing natural habitats and enhancing biodiversity.

Off-site construction, such as energy-efficient closed panel timber frames

for the 214 apartments, sped up the delivery of the much-needed new

homes. The £100m development achieved an average build rate of

13 homes per month and created over 850 new jobs for local people.

Demand for contracting with the public sector has remained

strong, shielding the impact from lower open market sales activity

within the mixed-tenure activities, where the division has been

successful in optimising construction of the contracted affordable

homes on mixed-tenure sites to maintain activity.

For the year, revenue was up 5% to £903m (2024: £861m),

driven by contracting which was up 13% to £638m (71% of

divisional total) compared with the prior year. Mixed-tenure

revenue declined by 11% to £265m (29% of divisional total)

compared with the prior year.

Despite the revenue mix profile, both contracting and mixed-

tenure activities achieved stronger margins over the year, led by

the contract type and the mix of development schemes delivered,

resulting in operating profit increasing by 16% to £42.0m (2024:

£36.1m) with an operating margin of 4.7% (2024: 4.2%).

As the business continued with its strategy to optimise investment

in partnership opportunities for future growth, capital invested in

housing and apartment products launched in the London market

over the course of the year has been impacted by slower sales

activity as a result of low consumer sentiment affected by ongoing

affordability constraints. Reflective of both factors, the average

capital employed for the last 12-month period increased by

£107.9m to £445.7m (2024: £337.8m). The capital employed at

the end of the year was £451.9m, an increase of £133.2m on the

prior year (2024: £318.7m). As a result of the higher average

capital employed, the overall return on capital employed for the

last 12-month period reduced slightly to 10% (2024: 11%).

The division continues to maintain a high-quality secured order

book, through ongoing successful client engagement leading to

work being awarded through two-stage tenders, frameworks or

direct negotiation. The secured order book at the year end was

£2,330m, 7% higher than the prior year end (2024: £2,174m) and,

with 60% of its total value for 2027 and beyond, providing

long-term visibility of workload.

During the year, the division’s existing partnership with Suffolk

County Council achieved a key milestone by commencing its first

project in Newmarket, while the first two sales outlets opened

from its partnership with West Sussex County Council. Elsewhere,

good progress continued to be made on other mixed-tenure

schemes, in partnerships with Abri, Clarion Housing, Flagship

Housing, L&Q, Repton Property Developments (owned by Norfolk

County Council), Riverside Group, the Borough Council of King’s

Lynn & West Norfolk, Together Housing Group, Peabody, Pobl

Group, and Homes England.

Contracting

The division 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 12% to 3,687, up from 3,299 in the prior year. Of the total

divisional order book, the contracting secured order book

declined by 9% to £789m (2024: £863m), of which c.40% is for

2026 and beyond – noting that £1,482m of contracting work was

at preferred bidder stage, providing confidence of a sizeable

ongoing workload for the forthcoming periods.

Key contracting schemes awarded included a c.£50m scheme

with Guinness Homes in Southend; an £18m scheme with

EMH Group to build phase 2 at Standard Hill in Leicestershire;

the £51m phase 7 at Perrybrook, Gloucester with Platform

Housing Group; a £31m Extra Care scheme in Norfolk for

Saffron Housing Trust; a £19m follow-on phase at Barne Barton,

Plymouth for Clarion Housing; the £12m Crick Road phase 3

for Monmouthshire County Council; a £10m development for

Thirteen Group near Spencerbeck Farm in Ormsby; and a £21m

refurbishment contract at Hospital Close for Leicester City

Council. The division is also preferred bidder for phase 1 of a

scheme in Thanet for Riverside, valued at around £70m.

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 2026, we remain thoughtful over the pace of

demand recovery with regard to open market sales and expect

the return of consumer confidence to be gradual. Solid profit

growth is expected in the year, while the return on average capital

employed is expected to be in line with 2025 levels, reflecting a

modest return of demand while we continue to invest.

We continue to 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.£490m to £550m, reflecting the increased scale of the business

and the stage of its developments.

Operating review

continued

Partnership Housing

23

Strategic report

Governance

Financial statements

Operating review

continued

Mixed Use Partnerships

We made significant progress in the year through

expensed investment in schemes starting on site in

2026, and by securing new long-term development

agreements to deliver placemaking in the future.

Phil Mayall

Managing Director

The quick read...

n

Operating performance impacted by costs invested in

schemes planned to start on site in 2026

n

Successful conversion of eight preferred bidder schemes

into partnership agreements

n

Medium-term target for return on capital upgraded to

30% from 2026

As expected, in the year Mixed Use Partnerships reported a loss,

which included increased investment expenditure in schemes

yet to start on site and in schemes which represent future

opportunities for the division. Notwithstanding this, the division

generated profits from a land sale at Basford in Crewe, as well as

profits from schemes on site including offices for the Ministry of

Defence in Blackpool, the Willohaus and C2 buildings in Salford,

Stroudley Walk, and a travel hub in Prestwich.

Importantly, the division continued to build on its prior-year

successes by converting eight schemes previously at preferred

bidder stage to signed development agreements, with six sizeable

schemes at preferred bidder stage at the end of 2025.

Capital invested in a London scheme which launched its

apartment products during 2025 into a weak London market

impacted returns for the division due to low consumer sentiment

affected by ongoing affordability constraints. Reflective of this

and the trading performance during the year, the return on

capital employed for the last 12 months was significantly down

on the prior year, based on average capital employed of £125.1m.

At the end of the year, the division’s order book amounted to

£4,615m, 13% ahead of the prior year end (2024: £4,085m),

reflecting the success the division has had in converting a number

of preferred bidder schemes into new and secured long-term

partnership agreements. These include agreements with:

n

Wakefield Council, to accelerate delivery of the city’s

regeneration plans;

n

West Northamptonshire Council, for the regeneration of

Greyfriars in Northampton through ECF, the division’s joint

venture with Homes England and Legal & General;

n

Hull City Council, for the 850-home East Bank Urban Village,

also through ECF;

n

Wythenshawe Community Housing Group and Manchester City

Council, to advance delivery of the first phases of new homes in

Wythenshawe town centre;

n

Stevenage Borough Council, to develop a masterplan and vision

for Station Gateway in Stevenage, through ECF;

n

Durham County Council, to deliver the first phase of the

Durham Innovation District at Aykley Heads; and

n

Salford City Council, to regenerate Eccles town centre.

In the second half of the year, the division was selected as

preferred bidder by Bristol Temple Quarter LLP for Temple

Meads West and St Philip’s Marsh; and by Gateshead Council for

the regeneration of the Baltic Quarter, through ECF. Since the

year end, also through ECF, the division was appointed by

Westmorland and Furness Council as strategic development

partner for Marina Village, Barrow.

During the year, as part of the mixed-use regeneration scheme

at Talbot Gateway in Blackpool, the division completed a

215,000 sq ft workplace for the Department for Work and

Pensions and began construction on a 53,000 sq ft workplace for

the Ministry of Defence. Construction also started on a four-storey

travel hub as part of the first phase of the Prestwich Village

regeneration; and infrastructure works began at Weston M6,

a commercial and business park in Crewe designed to prioritise

the health and wellbeing of employees and visitors.

Progress continued across other active schemes, including two

in Salford through ECF: C2, a residential building containing 196

build-to-rent homes, and Willohaus, an affordable Passivhaus

apartment building. At Stroudley Walk in Bromley-by-Bow, the first

phase of affordable homes was handed over.

The ECF partnership secured planning approval for a number

of developments, including the first phase of the St Helens town

centre regeneration; Stockport 8, a ‘walkable neighbourhood’ with

green space and leisure facilities; a world-leading acoustics facility

as part of the Crescent Salford masterplan; and Smithgate, a new

city centre neighbourhood in Wolverhampton. Working with local

authority partners, the division also secured planning approval

for the regeneration of Oldham town centre, a new culture hub

in Wythenshawe and 244 affordable homes in Horsham. ECF

submitted planning applications during the year for a new city

centre neighbourhood in Bradford and 185 new homes as part

of Crescent Salford. Planning applications were submitted by

Mixed Use Partnerships for Slough’s North West Quadrant and

Mell Square in Solihull.

Mixed Use Partnership’s Habiko partnership with Pension

Insurance Corporation and Homes England announced its first

two sites, Chester and Warrington, for the delivery of 590 new

affordable, sustainable homes.

The division’s development portfolio included seven projects on site at

the end of the year, totalling £205m gross development value (GDV),

with a further 17 planned to start in 2026 with a GDV of £448m.

Divisional outlook

Given the Board’s increased confidence in the long-term prospects

for this division, the medium-term target for Mixed Use Partnerships

has been increased to generate a return on capital up towards 30%.

While the division has experienced a substantial increase in its

development order book for a number of long-term sizeable

schemes over the last two years, profits (and the resulting return

on capital employed) in 2026 are expected to be modest as the

division prioritises the number of schemes starting on site. The

average capital employed for the year is expected to be between

c.£125m and £140m.

Operating review

continued

Mixed Use Partnerships

Our strategy in action

Contributing towards

London’s affordable housing targets

Mixed Use Partnerships reached the first milestone at Stroudley Walk

in Bromley-by-Bow, London with the completion of 82 affordable homes

for rent.

The new mixed-use neighbourhood is being delivered in partnership

with Poplar HARCA, the Greater London Authority (GLA) and the London

Borough of Tower Hamlets. Once complete, the development will provide

a total of 274 homes (115 affordable), a reimagined high street with shops

and civic spaces, a new pocket park and part-pedestrianised public space,

and community spaces including a café and community kitchen.

A proportion of the new homes include sensory-friendly features to help

provide a calm and comfortable environment, in response to an identified

local housing need.

The new homes at Stroudley Walk will make a valuable contribution

towards the GLA’s housing delivery targets, and support the mayor’s vision

for accessible, high-quality housing across London.