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
1
MSCI is a provider of decision support services for the global investment community; its environmental, social and governance (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.
03
Strategic report
Governance
Financial statements
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
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 page 185
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.
Morgan Sindall Group plc
Annual Report 2025
04
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
Chief Executive
05
Strategic report
Governance
Financial statements
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
£903m
Revenue
£52m
Morgan Sindall Group plc
Annual Report 2025
06
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
mixed-use placemaking, fit out and construction
services to public sector, regulated-industry and
commercial partners and clients.
We operate in specialist markets where there is
strong demand, high barriers to entry and potential
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
Annual Report 2025
08
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
09
Strategic report
Governance
Financial statements
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.
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
Deliver on our Total
Commitments to being
a responsible business:
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 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
Morgan Sindall Group plc
Annual Report 2025
10
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
11
Strategic report
Governance
Financial statements
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.
13
Strategic report
Governance
Financial statements
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
Achieve quality of earnings
4.2%
3.6%
4.7%
23
24
25
£99.0m
£71.8m
£139.9m
23
24
25
3.7%
4.3%
4.0%
23
24
25
11%
12%
10%
23
24
25
3.0%
2.7%
3.2%
23
24
25
£1,047.0m
£886.7m
£935.3m
23
24
25
2%
15%
(4)%
23
24
25
£1,044.1m
£966.6m
£1,159.2m
23
24
25
Morgan Sindall Group plc
Annual Report 2025
14
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
monitored, reported and reviewed at divisional
board level.
Reduction in Scope 1 and 2 carbon
emissions
7
from 2019 baseline
of 20,903 tonnes CO
2
e
60%
2030 target
Lost time incident rate
10
0.18
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
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).
Reduction in Scope 3
carbon emissions
7
from 2020 baseline
of 1,603,880 tonnes CO
2
e
8
42%
2030 target
Percentage of invoices paid within 30 days
11
80%
2030 target
Social value generated in 2025
12
£1.9bn
Social value generated since 2023
£6.5bn
(2024: £4.6bn)
Average daily net cash
Maintaining significant levels of cash gives us
a real competitive advantage. Our cash levels
are monitored on a daily basis.
Number of training days
9
per year per employee
6 days
2030 target
Deliver on our Total Commitments
44%
45%
55%
23
24
25
0.23
0.24
0.18
23
24
25
61.5%
68.8%
70.5%
23
24
25
13% increase
13% increase
24
25
3.2 days
3.2 days
3.9
days
23
24
25
91%
92%
91%
23
24
25
£11,419.3m
£8,920.2m
£11,972.2m
23
24
25
£374.2m
£281.7m
£367.6m
23
24
25
15
Strategic report
Governance
Financial statements
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
2025
2024
Change
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%
*
See note 28 to the consolidated financial statements for alternative performance measure
definitions and reconciliations.
Morgan Sindall Group plc
Annual Report 2025
16
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
2
Net capex
and finance
leases
3
Movement
in working
capital
4
Other
5
Operating
cash flow
48.6
(44.4)
(21.0)
(13.0)
195.9
225.7
Operating cash flow*
(£m)
1
Adjusted – before intangible amortisation of £0.4m and exceptional building safety charge of £0.4m.
2
Includes depreciation £35.8m, impairment of property, plant and equipment £3.5m and share option expense £10.8m; less the reversal of impairment of joint ventures £1.2m and share
of underlying net profits of joint ventures £0.3m.
3
Includes repayment of lease liabilities £28.3m, purchases of property, plant and equipment £16.0m, purchases of intangibles £0.6m; less proceeds on disposal of property, plant and
equipment £0.5m.
4
Adjusted – before exceptional building safety debtors increase of £5.9m.
5
Decrease in provisions £16.0m, increase in building safety debtors £5.9m and dividend received from joint ventures £4.7m; less exceptional building safety provision decrease £7.3m and
gain on disposal of property, plant and equipment £0.3m.
*
See note 28 to the consolidated financial statements for alternative performance measure definitions and reconciliations.
17
Strategic report
Governance
Financial statements
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
1
Adjusted to exclude building safety receivable of £17.5m (2024: £11.6m) and capitalised
arrangement fees and accrued interest receivable of £1.8m (2024: £2.3m).
2
Adjusted to exclude accrued interest payable of £0.4m (2024: £0.5m).
3
Movements in trade and other payables also include the non-cash movements relating
to the unwinding of discounting on land creditors (£2.4m) and other smaller non-cash
movements.
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 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 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
1
The Construction and Infrastructure divisions form a single legal entity for which this data
is reported.
Provisions
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%
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
Morgan Sindall Group plc
Annual Report 2025
18
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
Governance
Financial statements
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
1,2
at year end
(£m)
+£133.2m
Average capital employed
1,2
(last 12 months)
(£m)
+£107.9m
Operating margin
(%)
+50bps
Operating profit
1
(£m)
+16%
Return on capital employed
1,3
(last 12 months) (%)
£861.2m
£837.5m
£903.1m
23
24
25
£318.7m
£234.4m
£451.9m
23
24
25
£337.8m
£254.5m
£445.7m
23
24
25
4.2%
3.6%
4.7%
23
24
25
£36.1m
£30.5m
£42.0m
23
24
25
11%
12%
10%
23
24
25
Throughout the year, challenging market conditions continued
to impact the private housing market as consumer confidence
continued to be adversely affected. Notwithstanding this, the
division delivered a resilient and strong performance as it
continued to invest and grow its long-term partnerships with local
authorities and housing associations with momentum. Notable
appointments in the year included being preferred developer on
the Druids Heath regeneration scheme with Birmingham City
Council to build around 3,500 new homes over the next two
decades, and progression of partnership agreements with Barnet
Council and Cardiff Council and Vale of Glamorgan Council to
deliver 3,000 new homes over the next 10 years.
The quick read...
n
Strategy to invest in long-term partnerships with the
public sector has been underpinned by growth in the
secured order book and preferred bidder work
n
Demand for contracting activities with the public sector
has remained strong
n
Stronger margins achieved in both mixed-tenure and
contracting activities
n
Solid profit growth expected in 2026
21
Strategic report
Governance
Financial statements
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.
264
new affordable and low-cost homes
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.
Morgan Sindall Group plc
Annual Report 2025
22
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.
1
Before exceptional building safety credit of £0.6m (2024: credit of £5.9m). 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.
Revenue
(£m)
Capital employed
2
at year end
(£m)
+£57.2m
Average capital employed
2
(last 12 months)
(£m)
+£38.2m
Operating profit
1
(£m)
Return on capital employed
3
(last 12 months)
(%)
£90.5m
£185.3m
£51.6m
23
24
25
£94.4m
£79.7m
£151.6m
23
24
25
£86.9m
£98.6m
£125.1m
23
24
25
£1.5m
£14.8m
£(5.3)m
23
24
25
2%
15%
(4)%
23
24
25
Morgan Sindall Group plc
Annual Report 2025
24
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.
25
Strategic report
Governance
Financial statements
The London region continued to generate a strong proportion
of the division’s revenue, accounting for 75% of revenue
(2024: 72%), while other key regions accounted for the balance
of revenue, reinforcing Fit Out’s focused but agile approach to
its markets and understanding of its own capabilities and skills.
There was no significant change to the market sectors served.
The commercial office market remained the largest, contributing
87% of revenue (2024: 86%), with higher education amounting
to 4% of revenue (2024: 6%), government/local authority
representing 6% (2024: 6%), and other sectors covering the
remaining 3% of revenue (2024: 2%).
In terms of type of work delivered in the year, 88% related to
traditional fit out work (2024: 86%), while 12% related to design
and build (2024: 14%). The proportion of revenue generated from
the fit out of existing office space was 73% (2024: 82%), with the
remainder attributable to the fit out of new office space. Of the fit
out of existing office space, 49% of the work was refurbishment
‘in occupation’ compared with 51% where work was performed
in non-occupied space.
At the year end, the secured order book was £1,312m, a
reduction of 9% from the previous year end (2024: £1,439m),
reflecting the normalisation in volumes for the period ahead.
Of this total, £1,220m (93%) relates to 2026, 11 points higher than
it was at the same time last year for the 12-month look ahead.
Operating review
continued
Fit Out
Fit Out delivered another significant and market-
leading performance in the year, underpinned by
consistent operational delivery and an enhanced
customer experience.
Chris Booth
Managing Director
The quick read...
n
Significant growth in both revenue and operating profit
n
Continued laser focus on both project delivery and
customer experience
n
Secured order book 9% lower than the prior year,
reflecting normalisation following a change in the
competitive environment
Revenue
(£m)
+37%
Operating profit
(£m)
+41%
Operating margin
(%)
+20bps
£1,300.3m
£1,105.2m
£1,783.9m
23
24
25
£99.0m
£71.8m
£139.9m
23
24
25
7.6%
6.5%
7.8%
23
24
25
Fit Out delivered another market-leading performance in the year,
enjoying significant growth for both revenue and operating profit.
With revenue increasing by 37% to £1,784m (2024: £1,300m),
operating profit was up 41% to £139.9m (2024: £99.0m), resulting
in further margin expansion to 7.8% (2024: 7.6%) as the division
continued to benefit from exceptional volumes in a transitional
competitive environment together with operational leverage.
The excellent performance delivered in the year is underpinned
by consistent operational delivery and an enhanced customer
experience, complemented by a high-quality workload through
disciplined and focused bidding, which in turn supports the
division’s 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.
Morgan Sindall Group plc
Annual Report 2025
26
Commercial
Notable projects won in London during the year included
HSBC (592,000 sq ft); Clifford Chance at Aldermanbury Square
(320,000 sq ft); Octopus Group on Giltspur Street (90,000 sq ft);
Standard Chartered Bank near Moorgate (78,000 sq ft);
Dentons UK and Middle East (77,500 sq ft); Morgan Lewis on
Fleet Street (76,000 sq ft); and Premier League Studios at
One Olympia (73,000 sq ft).
Key regional project wins included Bank of New York in
Manchester (200,000 sq ft); CooperVision in Southampton
(164,000 sq ft); YASA in Bicester (87,000 sq ft); two projects for
Arm, in Cambridge (110,000 sq ft) and Manchester (70,000 sq ft);
British Airways in Newcastle (77,000 sq ft); and Aviva in Bristol
(65,000 sq ft).
Commercial fit out projects on site or completed in London
included Citi in Canary Wharf; PwC at More London
(380,000 sq ft); A&O Shearman at 2 Broadgate (355,000 sq ft);
Latham & Watkins on Leadenhall Street (277,000 sq ft);
Unilever in Kingston-upon-Thames (182,000 sq ft); Travers Smith
(155,000 sq ft); JLL at 1 Broadgate (90,000 sq ft); Aviva at
80 Fenchurch Street (109,000 sq ft); two projects for Deloitte at
New Street Square (totalling 99,500 sq ft); Wise in Worship Square
(83,000 sq ft); and a prior phase of works for Standard Chartered
Bank near Moorgate (55,000 sq ft). Outside London, work
continued or completed for a global financial services provider
in Northampton (185,000 sq ft) and Lloyds Banking Group,
Birmingham (151,000 sq ft).
Science and research and higher education
Key projects won in the year included Begbroke Science Park for
the University of Oxford (28,000 sq ft) and Queen Mary University
of London (25,000 sq ft). A 310,000 sq ft project for British Land
at 1 Triton Square in London was completed.
Design and build
Significant design and build projects won or on site included
lab and research facilities for Riverlabs in Ware (137,000 sq ft);
200 Aldersgate for Savills IM (106,000 sq ft); EDF in Bristol
(78,000 sq ft); and Monster Energy Europe in Uxbridge
(53,000 sq ft).
Frameworks
Notable projects won through frameworks and corporate
partnerships included £46.1m of works for the Mayor’s Office
for Policing and Crime (MOPAC). The future order book with
MOPAC is £51.3m.
Divisional outlook
The medium-term target for Fit Out is to deliver an average
annual operating profit of £80m–£100m.
Based on the timing of projects in the order book and the current
visibility of future workload for the forthcoming year, the division
is expected to have another strong year in 2026, with profits
lower than 2025 but still significantly above the top end of the
medium-term target range.
Operating review
continued
Fit Out
Our strategy in action
Helping our client achieve their
quality and sustainability goals
Rabobank wanted their new UK headquarters at Sixty London Wall to
reflect their commitment to innovation and wellbeing, support flexible
ways of working, meet ambitious environmental targets and be delivered
to a high standard.
The new multifunctional workspace features bespoke curved elements
and high-quality finishes. To ensure precision in delivery, Fit Out produced
full-size mock-ups, organised factory visits for the client and architects,
including to a veneer workshop, and created templates for all trades
to follow.
The division introduced sustainable alternatives to materials, such as
plywood, and reused a significant amount of existing materials, such as
ceiling tiles.
The new offices were completed in just 33 weeks, achieving Perfect
Delivery. The project is targeting BREEAM Outstanding and WELL
Platinum ratings.
27
Strategic report
Governance
Financial statements
In addition to Construction’s secured order book, there continues
to be a significant amount of suitable work available in the market
aligned to the sectors that the division operates in, much of which
is being generated through negotiated or existing frameworks.
At the end of the year, the division had £1,452m of work at
preferred bidder stage (2024: £1,179m), providing confidence
of a sizeable ongoing workload for the forthcoming year.
Education
In the second half of the year, Construction was appointed to
the Department for Education’s (DfE) framework for projects
over £12m in the North and South of England. Additionally,
the division secured five lower-value lots (£4.4m to £12m)
across various regions.
Project wins during the year included the new £103m Ardrossan
Community Campus in Scotland for North Ayrshire Council,
which will provide educational facilities for over 1,400 pupils as
well as community facilities; a £35m replacement building for
Llangatwg Comprehensive School in Neath; a £29m extension
and refurbishment of Grade II listed Appleby Grammar School
in Appleby-In-Westmorland, Cumbria for the DfE; a £26m,
three-storey teaching block at Villiers High School in Ealing;
and a £17.6m facility for the University of Salford’s Acoustics
Department, including anechoic (non-echoing) chambers and
lab space.
Operating review
continued
Construction
Construction delivered another strong
performance, driven by disciplined contract
selectivity through to operational delivery and
prudent risk management.
Pat Boyle
Managing Director
The quick read...
n
Strong performance for both revenue and operating
profit
n
Significant proportion of work for the public sector,
delivered through existing frameworks, directly
negotiated or through a two-stage procurement process
n
Another strong year of work-winning, with secured order
book and work at preferred bidder stage up 20%
n
Integration of Property Services into Construction
successfully completed on 1 January 2026
Revenue
(£m)
+11%
Operating profit
1
(£m)
+20%
Operating margin
1
(%)
+20bps
£30.9m
£25.9m
£37.0m
23
24
25
1
Before exceptional building safety charge of £1.6m (2024: credit of £0.1m). See note 2 of the consolidated financial statements.
£1,044.1m
£966.6m
£1,159.2m
23
24
25
3.0%
2.7%
3.2%
23
24
25
Construction’s revenue increased by 11% to £1,159m
(2024: £1,044m), while operating profit increased by 20% to
£37.0m (2024: £30.9m), resulting in an expansion to its operating
margin by 20bps to 3.2% (2024: 3.0%), which is in the middle of
its targeted range for operating margin of 3.0% to 3.5%. The
strong profit performance was driven by improving the overall
quality of earnings from disciplined contract selectivity through
to operational delivery and handover, together with prudent
risk management in its order book.
Throughout the year, the division maintained its strong
momentum in winning new work, with the secured order
book at £1,112m, 17% ahead of the prior year (2024: £952m).
Of the total, £885m (80% by value) is secured for 2026;
this compares with £771m (81% by value) of work which
was secured for the year ahead at the start of last year.
Morgan Sindall Group plc
Annual Report 2025
28
Other sectors
The division secured a series of projects totalling £30m for the
Scottish Fire and Rescue Service; a £52m contract to provide
retail, residential and commercial units in Bideford, Devon; and a
project to construct a £12m operations and maintenance building
in Great Yarmouth as part of the Norfolk Offshore Wind Zone.
In leisure, wins included the £24.5m Bishop Auckland leisure
centre, via Alliance Leisure and the UK Leisure Framework; the
£29.4m Outer West Leisure Centre for Newcastle City Council;
and the £17.3m refurbishment of the Princess Royal Theatre
for Neath Port Talbot Council, funded by the Levelling Up Fund.
Significant completions included a £32m waste recycling centre
for Walsall Metropolitan Council; three fire station refurbishments
totalling £33.5m; and a £37m refurbishment of Hammerstone
Road train depot in Manchester.
Divisional outlook
The 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 £1.5bn.
For 2026, based on its secured order book and projects at
preferred bidder stage, together with the timing of projects being
delivered, the division’s operating margin is expected to be in the
middle of the target range and revenues are expected to make
continued progress towards £1.5bn.
The division also secured a number of primary school projects:
the £27.4m Balmuildy Primary School and Early Years Centre
in Bishopbriggs for East Dunbartonshire Council; the £16.5m
Orchard View Primary Academy in Aylesbury, the third school
delivered as part of the growing Kingsbrook development; the
£14.8m Great Haddon Primary School in Peterborough; and the
£13.5m Birchington Church of England Primary School for the
DfE in Kent.
Completions included the £64.9m King Henry VIII 1,900-place
all-through school in Abergavenny; the £59m transformation
of a former Debenhams site into the University of Gloucester’s
new City Campus; the £39m Callerton Academy in Newcastle
upon Tyne; the £26.7m Ravensdale special educational needs and
disabilities (SEND) school in Mansfield; the £21m new build and
refurbishment of the University of Central Lancashire’s School of
Veterinary Medicine; and the £13m Rosherville Church of England
Academy in Northfleet, Kent.
Healthcare
Project wins included two refurbishment projects totalling £13.1m
for St Richard’s Hospital in Chichester for University Hospitals
Sussex NHS Trust: the Same Day Emergency Care unit and a
stroke unit. Work started on a £35m theatre and ward expansion
at Harrogate District Hospital and an £18m imaging centre at
Milton Keynes University Hospital.
Completions included a £25m diagnostic centre for Norfolk
and Norwich University Hospital; an £11.2m extension for
Grange University Hospital’s emergency department in Cwmbran;
and a £9m redevelopment of Bradford Royal Infirmary’s
maternity department.
Operating review
continued
Construction
Our strategy in action
A transformational forestry
facility for Scotland
The £22.3m Newton Tree Nursery near Elgin represents Forestry and
Land Scotland’s largest ever single infrastructure investment. The new
12,500 sq m glasshouse, together with cold storage, distribution,
operations and administration facilities, will increase the organisation’s
tree-growing capacity from 7 million to 25 million trees a year, supporting
Scotland’s climate ambitions.
Efficient use of energy and resource was central to the project. Local
Scottish timber was used in construction of the offices, the building design
incorporates low-energy technology, and the seedlings are irrigated with
water from boreholes and ponds, avoiding new demand on the mains
water system.
Advanced off-site modular systems were used for the glasshouse
installation, and an innovative approach to ground preparation eliminated
the need for traditional cement stabilisation, saving 958 tonnes of
carbon emissions.
25m trees
growing capacity
29
Strategic report
Governance
Financial statements
As part of L&Q’s Major Works Investment Programme, residents at Steve Biko
Court in Westminster are now benefiting from warmer, quieter and more
energy-efficient homes. Funded through the Social Housing Decarbonisation
Fund, 23 homes were retrofitted to achieve an EPC rating of C, supporting L&Q’s
commitment to meet this standard across its portfolio by 2028. Residents are
expected to save an average of £337 per year on energy bills.
Following the completion of the business remediation
programme at the end of 2024, the division delivered a modest
profit in the year of £2.0m (2024: operating loss £(17.8)m).
Revenues were down by 5% to £212m (2024: £223m), with a
secured order book at £714m, down 20% from the prior year
(2024: £887m), as the division focused its efforts on operational
delivery across its existing contract portfolio, as well as rebalancing
its maintenance activities more towards planned work.
During the year, Property Services secured a £4.5m facilities
management contract with Thames Valley Police to deliver
maintenance and repairs to over 350 buildings. The contract is
for three years, with an option to extend for a further two years.
The planned maintenance business continued to win work under
the Department for Energy Security and Net Zero’s Warm Homes:
Social Housing Fund and was awarded places on the Fusion 21
and South East Consortium decarbonisation frameworks, each
valued at £1bn. In addition, a partnering contract was secured
with The Guinness Partnership, building on planned maintenance
works awarded in 2024. The contract is worth up to £120m over
the next 15 years.
Given the alignment of its ongoing activities to Construction,
the division has now fully integrated into the Construction
division from 1 January 2026 and will no longer report as a
separate division.
Operating review
continued
Property Services
We delivered a modest operating profit in 2025,
following the successful completion of our
business remediation plan in the prior year.
Pat Boyle
Managing Director
Revenue
(£m)
–5%
Operating profit/(loss)
1
(£m)
n/a
£(17.8)m
£(16.8)m
£2.0m
23
24
25
(8.0)%
(9.1)%
0.9%
23
24
25
1
Before intangible amortisation of £0.4m (2024: £0.5m). See note 2 of the consolidated financial statements.
£223.2m
£185.2m
£212.5m
23
24
25
Operating margin
1
(%)
n/a
Morgan Sindall Group plc
Annual Report 2025
30
Following its strong work-winning successes over the last two
years, Infrastructure’s trading performance over 2025 for both
revenue and profits reflected the high proportion of projects
at the early contractor involvement stage from those recently
awarded large frameworks, while still ensuring it maintained
high-quality operational delivery across its existing contract
portfolio. Revenue decreased by 11% to £935m (2024: £1,047m)
with operating profit declining marginally by 3% to £37.2m (2024:
£38.5m), while operating margin expanded by 30bps to 4.0%
(2024: 3.7%), in the middle of the target range of 3.75%–4.25%.
Infrastructure’s order book of £1,890m remained in line with the
prior year (2024: £1,883m) and continues to remain long term in
nature, with a further £657m at preferred bidder stage, noting
that around 98% of its order book is derived through frameworks.
The division remains focused and well positioned to deliver
long-term sustainable infrastructure solutions for its customers
in its key sectors, namely nuclear, energy, defence, rail, water and
highways. Its markets have significant long-term committed
investment programmes in place, largely driven by government
and regulatory objectives. Clients are continuing to award large
long-term frameworks with their delivery partners, awarding
projects focused on delivering strategic outcomes over the term
of the framework.
Operating review
continued
Infrastructure
During the year we started early planning and
design activities on a high number of projects
secured through large, recently awarded frameworks
while maintaining high-quality project delivery.
Simon Smith
Managing Director
The quick read...
n
High volume of planning and design activities in the early
phases for a number of recently awarded frameworks
n
Positions secured on National Grid’s Electricity
Transmission Partnership and Sellafield Infrastructure
Delivery Partnership
n
Medium-term target for revenue increased up towards
£1.5bn from 2026
Revenue
1
(£m)
–11%
Operating profit
1
(£m)
–3%
Operating margin
1
(%)
+30bps
£38.5m
£38.5m
£37.2m
23
24
25
1
Design results are reported within Infrastructure.
£1,047.0m
£886.7m
£935.3m
23
24
25
3.7%
4.3%
4.0%
23
24
25
31
Strategic report
Governance
Financial statements
Nuclear
The division was appointed as electrical distribution partner on
the Sellafield Infrastructure Delivery Partnership; the contract,
which was awarded to three partners, has a total value of £2.9bn
across its life cycle, with an initial nine-year term and an option
to extend for a further six years. Decommissioning works for
Sellafield continued during the year as part of the Infrastructure
Strategic Alliance and the £1.6bn Programme and Project
Partners contract. Work also progressed at Clyde in Scotland
under the Defence Infrastructure Organisation framework.
Energy
Significant growth was achieved in the energy sector during the
year. Key awards included a position on National Grid’s new £8bn
Electricity Transmission Partnership to deliver vital substation
work in the North West region and construction works on the
Tilbury to Grain project as part of National Grid’s Great Grid
Partnership to upgrade electricity infrastructure. Additionally,
the division was appointed by Scottish Power Energy Networks
as sole contractor for substation and overhead line upgrades on
the Denny to Wishaw network, which will enable an additional
1,000 MW of green energy to flow through Scotland’s central belt.
Project completions included the grid supply point project for
SSEN at Gremista on Shetland (see below).
Rail
Good progress was made on a number of projects, including
the £22m roof replacement at Liverpool Street Station, which
will allow more natural light into Britain’s busiest station, and
restoration works on the River Plym viaduct in Devon, both
under Network Rail frameworks.
Works also progressed on upgrades to Beckton Depot and
Surrey Quays station for Transport for London; and the delivery
of six new stations over 18 miles of track on the Northumberland
Line for Northumberland County Council, which is leading the
scheme in collaboration with the Department for Transport,
Network Rail and Northern Trains.
Water
Work completed on the 16-mile West section of the Thames
Tideway Tunnel, a 10-year project, delivered in joint venture.
The tunnel as a whole protects the Thames by diverting 34 of the
most-polluting sewage outflows and aims to reduce sewage spills
into the river by 95%.
For Wessex Water, the team began work on several combined
sewer overflow projects as part of the AMP8 Framework awarded
in 2024. The year marked the 30th anniversary of the division’s
collaborative relationship with Welsh Water, with a focus on
completing schemes under the AMP7 Framework in advance
of transitioning to AMP8.
Highways and aviation
Work continued on the £87m M27 project as part of National
Highways’ Concrete Roads Programme to repair or replace the
concrete surface of motorways and major A roads in England.
Infrastructure re-entered the aviation market with the award
of a place on Gatwick Airport’s Construction Framework.
The framework is valued at c.£270m in total, with project values
ranging between £3m and £20m, and is expected to run for
four years with an option, subject to scope, to extend by a further
two years.
Operating review
continued
Infrastructure
Our strategy in action
Bringing renewable energy
to Shetland
Infrastructure built a new grid supply point at Gremista in Shetland for
SSEN, linking to the Kergord substation and connecting the islands for the
first time to the mainland power grid. The project has removed Shetland’s
dependence on diesel energy as a primary source, enabling access to
renewable power and supporting decarbonisation.
The team constructed two grid transformer buildings, with 132 kV/33 kV
transformers and associated equipment, and a control building. They also
installed 11 km of underground ducting and cabling between Gremista
and Kergord.
Infrastructure achieved a Green Apple Award while working on the project,
for its ‘Sow, Grow and Share’ campaign. The team engaged with c.950
children from 15 schools, teaching them about biodiversity, plant growing
and how gardening and nature can boost physical and mental wellbeing.
59-tonne
transformers installed
Morgan Sindall Group plc
Annual Report 2025
32
Design
The BakerHicks design business experienced growth in the
power sector during the year with the award of its first project
in mainland Europe, to design cable sectioning and monitoring
stations for two major high-voltage direct current (HVDC)
corridors in Germany. In the UK, work progressed on various
network reinforcement projects, subsea cabling installation in
Shetland and data centre upgrades in London. BakerHicks also
provided design and assurance services to key original equipment
manufacturers and contractors on the Eastern Green Link 1 and
2 Schemes, one of the largest electrical infrastructure projects to
be delivered in the UK.
In nuclear, the business was reappointed to UKAEA’s Embedded
Engineering Resource Framework, a four-year programme
supporting fusion energy research. In aviation, BakerHicks was the
BIM (building information modelling) lead on Manchester Airport’s
Terminal 2 Departures East project, supporting refurbishment
works and construction of a new pier as part of the £1.3bn
transformation. The final BIM model will provide an asset
management tool for Manchester Airport Group.
In life sciences, BakerHicks completed the Riverlabs research
facility in Hertfordshire (see below), while in defence, work began
at RAF Leeming on a new headquarters and training facility
for Yorkshire Universities Air Squadron. Public sector projects
progressed at HMP Highpoint in Suffolk (a £300m expansion)
and HMP Highland, aiming to be Scotland’s first net zero prison,
using modular and renewable technologies. In education, work
continued on Perth High School, an £80m Passivhaus facility
for 1,600 pupils, and completed at St Sophia’s Primary School
in East Ayrshire, the UK’s first EnerPHit-certified school, which
was shortlisted for a Building Innovation Award.
Divisional outlook
The increased medium-term target for Infrastructure is to
deliver annual revenues towards £1.5bn, while its operating
margin target remains unchanged, between 3.75% and 4.25%
per annum.
For 2026, based on the timing of projects and the projected type
of work, Infrastructure’s operating margin is expected to be in the
middle of the target range, while revenues are expected to be
closer to £1bn. This is underpinned by the division’s continued
focus on long-term client relationships, disciplined contract
selectivity, risk management and project delivery.
Operating review
continued
Infrastructure
Our strategy in action
State-of-the-art research facility
designed to be fit for the future
BakerHicks worked alongside sister company Morgan Lovell to deliver
100,000 sq ft of cutting-edge Containment Level 2 (CL2) laboratory space
for the 28-acre Riverlabs life science campus in Ware, Hertfordshire. CL2
laboratories are designed for the safe handling of medium-risk biological
agents. The new facility is split into three 33,000 sq ft specialised science
and research spaces, and has transformed three floors of a former GSK
building into a flexible, future-proofed environment designed to be easily
reconfigured to CL3 as required by tenants.
BakerHicks delivered RIBA Stage 2 and 3 multi-disciplinary design services
for both Cat A (landlord’s base condition) and Cat B (customised for
tenants) fit out and refurbishment works. This included assessing existing
mechanical and electrical systems, providing a new central plant, and
undertaking civil and structural works such as a rooftop plant area, goods
lift installation, atrium floor infill and extensive site engineering.
100,000 sq ft
of laboratory space
33
Strategic report
Governance
Financial statements
Our five Total Commitments drive ESG
action across the Group by targeting our
key material priorities.
Responsible business strategy and performance
Our approach
As a leading partnerships, fit out and construction services group,
we are well positioned to support the UK’s long-term housing,
development and infrastructure needs while creating lasting value
for people and the environment.
Our projects affect many aspects of daily life, from essential
infrastructure such as energy and transport to built spaces where
people live, work, learn and connect. As such, we recognise the duty
we have to deliver our work responsibly and in ways that align with
government objectives for housing, job creation, regeneration and
net zero. Guided by our Core Values (see page 10), we maintain
high standards of responsible business conduct across our divisions.
Our responsible business strategy underpins our commercial
growth ambitions by targeting operational improvements that
strengthen our performance, embed sustainable principles into
project delivery and create lasting social value for stakeholders,
communities and wider society. Through our Total Commitments,
which include our science-based target to achieve net zero
across our business and value chain by 2045, we are delivering
sustainable growth, amplifying our impact and accelerating the
shift towards a resilient, prosperous and low-carbon economy.
Our strategy
Our five Total Commitments address the Group’s most material
ESG priorities. These priorities are not standalone – they are
integrated into our divisional strategies, embedded in our project
delivery and at the core of our social value framework. This focus
ensures that responsible business is central to our operational
approach and commercial strategy, to scale our impact in ways
that align with our growth ambitions and customer needs.
In 2025, to ensure consistency and prioritisation of key ESG
issues, we conducted a double materiality assessment with
stakeholders which looked at the Group’s material impact on
people and the environment as well as sustainability factors that
are financially material to the Group (see page 35 for details).
The outcomes of the process confirmed that while our existing
Total Commitments remain relevant, some priorities have
broadened and require renewed focus.
Therefore, while we will retain our current environmental metrics,
including our near- and long-term science-based targets, we will
review our other Total Commitment metrics and targets in 2026.
This will help ensure we continue to progress against our ESG
priorities while addressing the evolving needs of our stakeholders.
Creating shared value through responsible growth and sustainable
project delivery
Our Total Commitments
Protecting
people
Developing
people
Improving the
environment
Working
together with
our supply chain
Enhancing
communities
Our Total
Commitments
Protecting people
Lost time incident rate
1
0.18
(2024: 0.23)
Developing people
Training days per employee
3.9 days
(2024: 3.2 days)
Improving the environment
Scope 1 and 2 emissions
reduction
2
55%
(2024: 44%)
Working together with our
supply chain
Invoices paid within 30 days
70.5%
(2024: 61.5%)
Enhancing communities
Social value delivered
3
£6.5bn
(2024: £4.6bn)
1
Number of lost time incidents x 100,000 divided by 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.
2
From 2019 baseline of 20,903 tonnes CO
2
e. See Appendix on page 185 for emission
scope definitions.
3
Total social value contribution since October 2023 as tracked by SVP. In 2025, we
generated £1.9bn in social value through completed projects tracked through SVP.
Morgan Sindall Group plc
Annual Report 2025
34
Responsible business strategy and performance
continued
Double materiality assessment
In 2025, we conducted a double materiality assessment using a
robust and proportionate application of the double materiality
principle. As a UK-listed business, we are not required to adhere
to the Corporate Sustainability Reporting Directive (CSRD);
however, our 2025 process applied the European Sustainability
Reporting Standards (ESRS) implementation guidelines to align
with current best practice reporting standards.
Our assessment involved detailed desk research, an online
survey completed by 2,124 internal and external stakeholders,
as well as in-depth interviews and workshops to identify material
topics and their key impacts, risks and opportunities.
Identified topics were evaluated from two perspectives: (i) the
impact they have on society and the environment (impact
materiality), and (ii) the business risks and opportunities that arise
from them (financial materiality). A ranking was then applied to
each topic to bring together the double materiality assessment
(see matrix, left). A description of our material topics and where
they sit across our value chain can be found below.
Total
Commitment
Material topics
Description
Value chain
impact
Protecting people
1
Health, safety and
wellbeing
Prioritising physical and mental health, safety and wellbeing across every site and
project to foster a culture of care and deliver safe spaces.
2
Fair employment rights
Ensuring high-quality working conditions, fair pay and strong workplace benefits
while working to eliminate modern slavery across the supply chain.
Developing
people
3
Training, skills and
development
Investing in inclusive training and skills development opportunities for all to attract
and retain top talent, close skills gaps and secure project delivery.
4
Inclusive and diverse
workforce
Embracing inclusion and diversity to level the playing field, attract new talent and
create a culture of innovation to challenge the status quo.
Improving the
environment
5
Net zero, energy
use and climate
Contributing solutions that accelerate net zero, improve operational efficiency,
facilitate a just transition and build climate resilience.
6
Water use
Managing water use responsibly, preventing spillages and preserving freshwater
ecosystems in the communities where people live and work.
7
Nature and biodiversity
Integrating nature-positive principles into projects to support biodiversity, natural
habitats and conservation.
8
Resource use and
circular economy
Embracing circular principles, reducing exposure to scarce resources, unlocking
customer efficiencies and cost savings, and addressing embedded carbon.
Working with our
supply chain
9
Resilient supply chain
Building lasting relationships with our supply chain partners to enhance trust,
reduce risk, embed sustainability principles and ensure reliable project delivery.
Enhancing
communities
10
Social value, community
cohesion and wellbeing
Delivering measurable social and economic value through our projects to support
community cohesion, improved health, education, employability and wellbeing.
Governance
11
Responsible business
and governance
Upholding consistently high standards of ethics and conduct to ensure
compliance, while retaining strong relationships to maintain our reputation.
Immaterial topics
Key
Upstream
Operational
Downstream
12
Wider supply chain
While some topics fell outside the materiality threshold, we will continue to
monitor them on an ongoing basis to take appropriate action where necessary.
13
Air pollution
14
Deforestation
Group impact on people and environment
Financial impact on the Group
Impact material
Immaterial
Double material
Financially material
Low
High
Low
High
35
Strategic report
Governance
Financial statements
Fit Out launched ‘Safely Delivered’ as part of its Perfect Delivery model to ensure
that safety is planned, monitored and managed at every project phase.
Responsible business strategy and performance
continued
Measuring our progress
In 2025, we continued to take proactive steps to reinforce safety
across our divisions, delivering measurable progress against core
KPIs. Our LTIR
1
fell to 0.18, surpassing our 2025 target of 0.21 and
hitting our 2030 target. Our LTIR performance is linked to the
large number of positive safety interventions during the year as
well as our established culture of near-miss reporting.
Our accident frequency rate continued to decline, with 94% of
projects accident-free and over 95% RIDDOR
2
-free (2024: 91%).
We also maintained a high rate of subcontractor safety training
to ensure consistent alignment to Group standards.
2025
2024
Lost time incidents
110
122
Lost time incident rate
1
0.18
0.23
RIDDOR
2
incidents
25
34
RIDDOR-free project days (%)
95
91
Accident frequency rate
3
0.04
0.06
1
Number of lost time incidents x 100,000 divided by hours worked.
2
The Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 2013.
3
Number of accidents x 100,000 divided by average number of people on-site.
While these results demonstrate progress, we know that safety
demands constant vigilance and ongoing improvement. We
remain committed to learning from every incident, sharing
insights across the Group and driving better outcomes through
collaboration, positive intervention and data-driven decisions.
Protecting people
We are committed to safeguarding our people and partners by
fostering a culture built on safety, compliance and respect. Through
our focus on care, collaboration and empowerment, we promote
safe practices and positive behaviours that protect people at every
stage of their journey with us.
The quick read...
n
Over 94% of projects remained accident-free
n
Lost time incident rate target of 0.18 met five years
ahead of 2030 ambition
n
Leading indicators reinforced to improve safety
engagement and drive positive interventions
Strengthening our safety culture
The health, safety and wellbeing of our people and contractors
working on our projects is our first priority. Despite performance
improvements across key metrics, we were deeply saddened by
the loss of a contractor at Mill Road, Cambridge in July 2025,
and our thoughts are with their family, friends and colleagues.
The site was immediately closed to ensure a detailed regulatory
investigation could be conducted by the authorities, followed
by a phased reopening. As of December 2025, the incident
remained under investigation and we are cooperating with all
lines of enquiry.
Our protecting people forum met monthly during the year to
drive cross-divisional learning and share best practices that
reinforce our safety-first culture. Discussions were supported by
the continued roll-out of our health and safety data management
system, which is enabling divisions to promptly identify risks and
take immediate action to implement improvements at scale.
In 2025, divisions continued to develop their health and safety
strategies, processes and targets, with supporting campaigns to
promote them. Infrastructure formalised its ‘Just and Fair’ culture,
reinforcing every employee’s role in creating positive behaviours;
BakerHicks progressed its ‘100% Safe Together’ strategy,
introducing eight new risk standards, a comprehensive health and
wellbeing framework and a support network; and Construction
adopted leading safety indicators targeting project design,
leadership and engagement to further strengthen performance.
All of our UK divisions hold ISO 45001 Occupational Health and
Safety Management Systems accreditation and ISO 9001 Quality
Management accreditation.
Lost time incident rate (LTIR)
0.18
(2024: 0.23)
Positive safety interventions
>36,000
(2024: >43,000)
Morgan Sindall Group plc
Annual Report 2025
36
Promoting responsible behaviours
We empower our divisions to establish targeted health and safety
programmes tailored to the unique nature of their projects,
including appropriate and effective onboarding and technical
training. Divisions also promote positive behaviours so that near
misses become opportunities for learning and improvement.
In 2025, proactive steps were taken to reduce incidents by
implementing more than 36,000 positive safety interventions
across the Group focused on incident prevention.
During the year, Fit Out embedded health, safety and wellbeing
into its Perfect Delivery model through the launch of ‘Safely
Delivered’. The initiative ensures that safety is planned, monitored
and managed at every project phase, backed by cultural initiatives
and training. The division also implemented universal health and
safety supply chain standards and a new safety management
system with open-book assessments and progressive supplier
scoring to identify and minimise risk.
Investment in behavioural training also remained a priority.
Construction rolled out its immersive virtual-reality-based safety
training to over 2,000 employees, while Infrastructure launched
a programme to ‘put health back into health and safety’, which
will become part of its leadership syllabus in 2026. Meanwhile,
BakerHicks focused on starting positive safety conversations and
Partnership Housing developed a bespoke underground service
safety film supported by regular audits.
Supporting physical and mental wellbeing
Our focus on wellbeing promotes physical and mental health as
well as social and financial security to ensure that our colleagues,
partners and their families have access to resources that
strengthen their long-term resilience, health and happiness.
We provide comprehensive wellbeing packages, including 24/7
virtual GP access for colleagues and their families and employee
assistance programmes that offer immediate mental health
support, counselling and guidance on financial, legal and medical
matters. Lifestyle and wellbeing assessments with personalised
plans further empower individuals to achieve their health goals.
During the year, 82% of Group employees received private
medical insurance and 100% of eligible employees were covered
by life insurance. In 2025, Construction and Infrastructure
maintained their Investors in People’s ‘We Invest in Wellbeing’
accreditations, with Property Services also aligning for the
first time.
Our commitment to wellbeing extends beyond our employees
to include the people who use the spaces we build and develop.
All divisions continue to deliver WELL Building-, BREEAM- or
DREAAM-rated projects that incorporate health and wellbeing
design principles – such as fresh air, water, nourishment, light,
fitness, comfort and mind – into building design and functionality.
Upholding human rights and fair
employment practices
We are committed to upholding the highest standards of
business ethics and conduct to ensure that our employees and
value chain partners are treated with dignity, care and respect.
Our human rights policy is guided by internationally recognised
standards, including the UN Guiding Principles on Business and
Human Rights, the Universal Declaration of Human Rights and
International Labour Organization Standards.
To ensure alignment across the Group, our Code of Conduct sets
clear expectations for how we engage with clients, colleagues,
suppliers and communities, consistently reinforcing ethical
behaviour and accountability at every level. The Code is
supplemented by our Supplier Code of Conduct. Our annual
modern slavery statement details actions to eliminate all forms of
human trafficking and forced labour in our business and supply
chain. Our divisions take action to reduce the risk of modern
slavery and promote awareness; for example, Construction
developed a solar panel procurement policy in 2025 to ensure
that solar panels are sourced without conflict minerals or
forced labour.
We continue to encourage our people and contractors to report
any concerns or instances of non-compliance. In 2025, we
received 34 reports through our confidential and independently
operated whistleblowing service, ‘Raising Concerns’, and six
reports through other channels. Our investigations found no
instances of modern slavery within our business or supply chain.
Responsible business strategy and performance
continued
Protecting people
Infrastructure’s ‘Healthy Hearts and Minds’ campaign delivered over 2,000
wellbeing assessments to help employees monitor and manage their wellbeing.
37
Strategic report
Governance
Financial statements
Mixed Use Partnerships retained Great Place to Work accreditation for a fourth
consecutive year.
Investing in training, skills and
career development
Talented people are key to our success. By investing in their skills,
knowledge and expertise, we continue to innovate and exceed
the expectations of our stakeholders. In 2025, employees
completed more than 32,000 training days consisting of on-the-
job learning, formal courses, e-learning modules and structured
education programmes (2024: 26,000 days). On average, training
days per employee also increased to 3.9 days (2024: 3.2 days).
Attracting and developing senior leaders remains a key priority.
In 2025, a new Developing Business Leadership Programme was
launched to strengthen the confidence and capabilities of future
leaders, encouraging them to develop their strategic skills while
leveraging our brand, culture and expertise to drive further
innovation. Within the divisions, Fit Out developed its ‘First 5
Female Development Programme’ to accelerate female
leadership, Construction continued its ‘Developing Personal
Leadership’ focus, and Infrastructure evolved its ‘Reach Higher’
ethos to help high-potential individuals progress into senior roles.
As well as attracting new talent, it is important to nurture and
retain our existing talent, and in 2025 we focused on enhancing
internal recruitment and divisional skills sharing. Infrastructure’s
focus on internal redeployment saved the business £1.3m in
recruitment fees while enabling it to retain key skills. The division
is also launching a new internal applicant tracking system in 2026
to further enhance candidate selection and efficiency.
Looking ahead, we will continue to assess the quality and impact
of our training and development initiatives while strengthening
the expertise of senior leadership teams. In addition, we will be
reviewing our developing people metrics to ensure that they drive
increased engagement, retention and inclusivity.
Responsible business strategy and performance
continued
Developing people
Our employees are the lifeforce behind our organisation, driving
excellence to exceed stakeholder expectations. Through our
decentralised structure, we empower divisions to make agile decisions
that reflect the evolving needs of their teams. This includes building
capacity and developing the skills needed to support long-term growth.
The quick read...
n
Employees participated in over 32,000 training days
n
New leadership training strengthened core skills
n
New pathways opened for the next generation of
workers to enter the workplace
Training days per employee
3.9 days
(2024: 3.2 days)
Total training days
>32,000
(2024: 26,000)
Becoming an employer of choice
Our purpose is to harness the energy of our people to achieve
the improbable. To deliver this consistently, we provide a wide
range of learning and development opportunities, competitive
benefits, attractive rewards and award-winning wellbeing
initiatives to all our staff to help us retain and attract top talent.
Divisional HR leads meet monthly at our developing people forum
to share best practice, learning and key actions to drive
engagement. In 2025, emphasis was placed on broadening our
range of wellbeing initiatives, targeting pay equity and providing
new development opportunities to support future leaders and
attract the next-generation workforce.
Accreditation is a critical way to embed actions that improve our
attractiveness to prospective employees. In 2025, several divisions
maintained their Investors in People accreditation: Construction
retained its Platinum status, with Infrastructure, Partnership
Housing and Mixed Use Partnerships maintaining Gold status.
Mixed Use Partnerships also retained its Great Place to Work
accreditation for a fourth consecutive year.
We pay the real living wage or above as minimum practice, and
two of our divisions are accredited Living Wage Foundation
employers. We also respect our employees’ right to freedom of
association and collective bargaining and in 2025, 2.6% of our
employees were covered under a relevant scheme.
Morgan Sindall Group plc
Annual Report 2025
38
Supporting employability and early careers
With the construction industry requiring an estimated one million
additional workers by 2032 to meet the UK government’s
ambitions for homebuilding, infrastructure and clean energy jobs,
it is vital that we continue to attract new talent to secure the skills
needed for future project delivery.
To onboard the next generation of workers, our divisions provide
high-quality structured apprenticeships, graduate programmes,
sponsored placements and earn-and-learn opportunities. In
2025, our direct employment of apprentices increased to 466
(2024: 458) and our teams continued to deliver a best-in-class
range of educational and engaging work opportunities.
2025
2024
Apprentices
466
458
New graduates recruited
69
71
Students sponsored
44
41
5% Club total number of employees
579
570
5% Club coverage across the Group
1
7.0%
7.0%
1
Based on total number of UK employees at 31 December 2025.
In 2025, we surpassed the 5% Club’s benchmark for employment
of apprentices, graduates and sponsored students, with 7% of
our employees in earn-and-learn roles. Our social impact teams
also invested in local projects relating to employability and early
careers, youth education and upskilling for NEETs (young people
not in education, employment or training) to help young people
find pathways into work (see pages 45 and 46).
Building an inclusive and diverse workforce
To secure future capacity and attract new talent, it is vital that
we break down traditional barriers to entry to our industry. We
want to shift perceptions around the built environment sector by
showcasing the broad range of vibrant career opportunities
available to people of all experience and backgrounds.
To foster an open, dynamic and inclusive culture, we are
passionate about enhancing female representation and ethnic
diversity across the Group and wider industry. Historically, the
sector has struggled to attract and retain diverse talent, which we
are taking active steps to change through our focus on inclusivity
and equal opportunities for all.
In 2025, 27% of our workforce were women, including 33%
female direct reports to the Group management team and 42.9%
women on the Board. Eleven percent of our people self-reported
as being from an ethnic minority background (see page 83 for
more detailed diversity data). Our divisions have continued to
work towards building a more diverse workforce and leadership
team. This included broadening inclusive recruitment efforts,
setting up resource networks for minority groups, delivering
conscious inclusion training, providing effective and equitable
career development opportunities for all, and taking measures
to reduce our gender, ethnicity and disability pay gaps. In 2025,
Infrastructure developed a new job architecture framework and
salary benchmarks, while BakerHicks held calibration meetings to
ensure equitable pay categories for all staff and Construction set
a 2030 target to reduce its gender pay gap to less than 1%.
Supporting underrepresented groups
We continue to participate in national partnerships that promote
the construction industry to new, diverse and underrepresented
talent, with divisions collaborating with partners like Women into
Home Building, the Construction Inclusive Coalition and Inclusive
Employers. Our partnerships with BuildForce UK and Building
Heroes deliver training and career opportunities to skilled former
service personnel. In 2025, all our divisions achieved Gold
accreditation from the Armed Forces Covenant in recognition of
this work.
We give full and fair consideration to applicants and employees
with disabilities and make reasonable adjustments to support
them in their roles. In 2025, 4% of our employees reported having
a disability, with several divisions achieving Level 1 and 2 Disability
Confident Employer accreditation to enhance access and inclusivity.
Responsible business strategy and performance
continued
Developing people
Case study
Delivering apprenticeships
of the future
The construction industry has long struggled to bridge the gap between
academic study and real-world application. To address this, Construction
joined forces with Nottingham Trent University to develop a pioneering
block release Level 6 Chartered Surveyor Degree Apprenticeship.
Launched in 2025, the unique programme helps apprentices to ‘earn as
they learn’ by working towards a degree and chartership while receiving
hands-on work experience from the division. The first cohort successfully
completed their studies in December 2025, and a new Level 4 ‘Construction
Site Supervisor’ programme will be launched in 2026.
The dynamic syllabus sets a new benchmark for apprenticeships by raising
academic quality and strengthening professional standards simultaneously.
This is not only helping to close the construction skills gap, but is also
securing a sustainable pipeline of future leaders for the industry.
“Since starting the apprenticeship, my expectations have been far exceeded.
With Morgan Sindall, I received on-site learning from experts to support my
studies. It’s given me new confidence and real skills to set me up for the future.”
2025 cohort apprentice
39
Strategic report
Governance
Financial statements
As of 2025, we remain on track to meet our direct emissions
reduction targets. To date, we have achieved a 55% reduction
in Scope 1 and 2 emissions against a 2019 baseline. Through
improvements in operational efficiency, our carbon intensity has
also reduced to 1.9 (2024: 2.6). We are also on track to transition
to an electric company car fleet by 2030, with 99% of company
cars now hybrid or electric. Following improvements to our
reporting methodology, our Scope 3 emissions increased in 2025,
with further work needed to accelerate progress (see page 41).
During the year, we retained our MSCI AAA ESG rating and
achieved an A– for CDP Climate. We were also named as a 2025
European Climate Leader by the
Financial Times
and a Low
Carbon Leader by Sustainalytics for our climate transition strategy.
Responsible business strategy and performance
continued
Improving the environment
Our scale, expertise and role in shaping the built environment enable us to
support the UK’s transition to a low-carbon economy. We are committed
to achieving net zero by 2045 and to collaborating with our customers and
partners to deliver solutions that support nature, create natural capital and
facilitate a just transition.
The quick read...
n
Reduced Scope 1 and 2 emissions by 55% since 2019
while helping clients decarbonise their activities
n
Improved environmental data capture to enhance
analysis and drive performance
n
Deployed CarboniCa intelligence tool on 211 projects
n
Increased our internal carbon charge to £110 per tonne
Our net zero pathway and progress
Our science-based targets commit us to achieving net zero across
our operations and value chain by 2045. This includes a 90%
reduction in Scope 1, 2 and 3 emissions against a 1.5°C scenario,
while using high-quality offsets for the remaining 10% of residual
emissions. Our roadmap includes interim 2030 targets to reduce
Scope 1 and 2 emissions by 60% and Scope 3 emissions by 42%.
Direct emissions reduction pathway
Our pathway to achieving a 60% reduction in direct Scope 1 and 2 emissions by 2030. See page 62 for a full breakdown of Group emissions.
2019
Tonnes CO
2
e
Revenue (£bn)
2020
2021
2022
2023
2024
2025
2030
2045
0
5,000
10,000
15,000
20,000
2
3
4
5
Scope 2
Scope 1
Target: 90%
reduction.
10% offsets
Target: 60%
reduction
Revenue
1.5ºC pathway
Scope 1 and 2 carbon emissions
reduction (from 2019 baseline)
1
55%
(2024: 44% reduction)
Scope 3 carbon emissions
increase (from 2020 baseline)
2
13%
(2024: 13% increase)
1
Our 2019 Scope 1 and 2 emissions baseline is 20,903 tonnes CO
2
e.
2
In 2025, we rebaselined our 2020 Scope 3 emissions to 1,603,880 tonnes CO
2
e and revised our 2024 Scope 3 figure of 1,314,055 tonnes CO
2
e to 1,804,591 tonnes. This has resulted in a
13% increase in our Scope 3 emissions since 2020. See page 62 for more information, and the Appendix on page 185 for definitions.
Morgan Sindall Group plc
Annual Report 2025
40
In accordance with our decentralised approach, our divisions
undertake initiatives to address their own carbon-reduction
targets and environmental KPIs throughout the year.
Our climate action panel meets quarterly to provide performance
updates and share best practice. To ensure consistency in our
approach, all sites maintained ISO 14001 certification for
environmental management in 2025. The Group also continued
to apply an internal carbon charge to divisions to encourage
decarbonisation efforts. In 2025, the charge increased to £110
per tonne CO
2
e emitted (2024: £90). Capital generated is invested
in natural capital projects that support our net zero target
(see page 42).
Enhancing data collection and disclosure
During the year, we enhanced our internal environmental data
platform and processing to enable our divisions to receive timely,
consolidated performance data from the thousands of UK-wide
projects they work on. A new data platform will be launched in
2026 to further automate and streamline data sets. This will allow
for more frequent reporting and analysis to guide strategic action
and targeted initiatives that will further accelerate progress.
To further improve the transparency of our reporting and drive
progress against our carbon reduction targets, we rebaselined
our Scope 3 emissions data to reflect improvements to divisional
reporting methodologies and scope (see page 62 for full data
and the Appendix on page 185 for our methodology). We also
continued to encourage divisions to externally assure their
Scope 3 emissions data. While this work has strengthened data
integrity, it has resulted in a 13% increase in our Scope 3
emissions against our revised 2020 baseline. We acknowledge the
work ahead and remain committed to accelerating efforts across
our value chain to reduce our wider impacts, and meet our net
zero target.
Decarbonising our direct operations
Our divisions continued to implement initiatives to reduce direct
emissions in line with our 2030 and 2045 science-based targets.
The majority of our Scope 1 and 2 emissions come from purchased
electricity, emissions from our Group fleet, and bulk fuel used
for on-site generators, cabins and machinery. Decarbonisation
activities therefore focus on energy reduction, obtaining energy
from renewable resources, and using alternative fuels.
In 2025, 63% of our electricity came from renewable sources
(2024: 56%). Fit Out uses 100% renewable energy for its offices,
including those with landlord-controlled supply, and in 2025,
installed a new energy-efficient heating and cooling system to
further enhance operational efficiency. The use of energy
monitoring and reduction systems also yields both environmental
and financial benefits. For example, Construction’s use of Gaia
Smart Energy software has helped to save c.260,000 kWh of
electricity, representing a £70,000 cost saving. Partnership
Housing, Construction and Infrastructure also worked with
measurable energy to install smart sockets which reduce wasted
energy in real time to save a further 80,500 kWh.
Construction and Infrastructure continued to promote on-site
carbon reduction and sustainable decision-making through their
‘10- and 20-tonne challenge’, an initiative to incentivise project
teams to reduce emissions by at least 10 tonnes of carbon. Since
2021, Construction has avoided over 62,000 tonnes CO
2
e through
the initiative. Further savings were achieved in the year through
the adoption of new innovations, including Construction’s use of
the first fully battery-powered pile-driving rig in the UK and
Infrastructure’s adoption of hydrogen cell technology to reduce
on-site diesel use (see case study below).
In 2025, Fit Out supported its design and furniture teams by
providing knowledge and skills to deliver low-carbon fit outs.
This included bespoke training and a ‘low-carbon cheat sheet’
to provide best practice benchmarks for different fit out elements.
The division will publish further guides in 2026 for furniture,
mechanical and electrical systems, and new materials. The guides
will feature data on product emissions, embodied carbon,
responsible sourcing, and material inputs and reuse to drive
sustainable decision-making.
In 2026, we will launch our Materials+ database, designed by
Fit Out, to help teams quickly and effectively determine the
sustainability attributes of products and the impact of materials
used across our construction and refurbishment projects.
Responsible business strategy and performance
continued
Improving the environment
Case study
Infrastructure deploys on-site hydrogen
power to lead the way to net zero
In 2025, Infrastructure advanced its net zero ambitions by introducing
hydrogen-powered technologies across its sites to deliver major carbon
reduction and cost savings.
At its Sellafield site in Cold Fell, Cumbria, a cutting-edge hydrogen and
solar lighting tower cut fuel use by 75%, achieving zero-emissions lighting.
Alongside a hydrogen-powered forklift and other innovations, these steps
support the goal of a diesel-free site by 2030. This milestone marks the
first ever use of hydrogen equipment at a nuclear decommissioning site,
made possible through years of collaboration between plant teams,
supply chain partners and Sellafield Ltd.
Hydrogen fuel cell technology also powered the division’s roof
replacement project at Liverpool Street Station, using half the amount of
emissions that a diesel power source would use, while also reducing noise
and fumes. Higher upfront costs were offset by refuelling savings to create
a win-win for the division, its partners and surrounding businesses.
41
Strategic report
Governance
Financial statements
The database will inform sustainable design and procurement,
aligned to project requirements and customer aspirations.
Helping our clients decarbonise
Decarbonising the built environment requires a fundamental
shift in how we select materials and partner with our supply chain.
We are committed to delivering our project work in ways that
accelerate the transition to a low-carbon economy, empower our
customers to make more sustainable choices and encourage our
suppliers to improve both material choices and transparency.
Scope 3 emissions account for c.99% of the Group’s carbon
footprint, with the most significant impact generated from the
products and services we procure, including embodied carbon
in materials, as well as estimated carbon emitted from use of the
buildings, homes and infrastructure we develop. In 2025, our
Scope 3 emissions were 1,817,157 tonnes CO
2
, which represents
a 13% increase from our revised 2020 baseline. Read more about
our performance on page 62.
During the year, we continued to promote the use of CarboniCa,
an intelligent tool which enables teams, clients and suppliers to
manage and reduce embodied and operational carbon emissions
of built assets. Since 2021, CarboniCa has been deployed on over
840 projects across the Group and has been aligned to the RICS
standard and BREEAM accreditation. The software works by
measuring the entire project life cycle (A–D) according to EN
15978 standards to produce a report that recommends carbon
reduction measures and compares building performance with
industry targets set by bodies such as RIBA and LETI (London
Energy Transformation Initiative). In 2025, CarboniCa was aligned
with the second edition of the RICS standard, with third-party
verification from Anthesis Group. The tool was used to prototype
artificial intelligence (AI) functionality in carbon assessments as
part of Innovate UK’s BridgeAI programme.
To further support onboarding to CarboniCa, a two-tier
educational functionality was built into the platform in 2025 with
funding support from Innovate UK: CarboniCa Engage and
CarboniCa Immerse. The first tier is a design and construction
decisions quiz, and the second is an interactive tutorial package
consisting of four modules and supporting videos on how to
complete a whole-life carbon assessment, how to reduce
embodied carbon in assets, a deep dive into carbon databases
and Environmental Product Declarations (EPDs), and tips to
understand operational energy.
In 2025, BakerHicks helped clients save over 6,000 tonnes
of carbon emissions by using CarboniCa to influence project
design in line with its commitment to reduce embodied carbon
intensity of all new buildings and major retrofits by 50% by 2030.
The business also achieved PAS 2080 certification for managing
whole-life carbon in buildings, and received a Climate Action
Award at the 2025 Cytiva Sustainability Conference.
Across our divisions, sustainable certification continues to play
a role in reducing our direct and indirect environmental impact.
In 2025, 81 sustainable certifications were achieved on projects,
including BREEAM assessments, LEED, SKA and WELL ratings.
Efficient resource use and circularity
We are committed to reducing waste by working with our
partners and supply chain to embed circular solutions that
achieve zero avoidable waste on our sites. Where viable, we reuse
on-site materials, purchase reused goods and identify innovative
ways to reduce material inputs. For example, we work with Pallet
Loop to use durable FSC-certified pallets. Adopted by Fit Out,
Construction and Partnership Housing, a total of c.38,000 pallets
were collected in 2025 to prevent 7,660 m
3
of waste being sent to
landfill. Divisions also participated in Community Wood Recycling,
a UK enterprise to collect and repurpose waste wood from
construction sites. Construction and Partnership Housing saved
a total of c.523 tonnes of wood in the year from its waste stream,
equivalent to 260 tonnes in avoided emissions.
In response to increased client demand, Fit Out has prioritised
reuse of materials, such as lighting, furniture, floor finishes, raised
access flooring and ceilings, across many of its projects. Low-
carbon glass and sustainable lighting were also used to help
customers cut carbon and costs. Meanwhile, Infrastructure’s rail
team won an award for their use of low-carbon steel on a project
to upgrade Surrey Quays Station, avoiding 200 tonnes of carbon.
Creating natural capital
To reach our 2045 net zero target, we will use credible UK-certified
offsets on residual emissions. Our strategy is to invest in
high-quality natural capital projects and offsets that contribute
to a healthier climate for local communities. By the end of 2025,
work on our legacy natural capital projects had either been
completed or brought to a close. From the Dorn & Glyme
Woodlands project completed at the Blenheim Estate in 2024,
we expect to receive c.20,000 of the site’s Peatland Carbon Units.
In 2025, divisions continued to complete biodiversity net gain
(BNG) assessments on all new projects. This includes measuring
the impact our projects have on waterways, habitats and
hedgerows while developing plans to leave the site with a 10%
biodiversity improvement or greater. Divisions continued to
exceed this target in 2025, with Construction achieving an average
BNG of 38% across projects completed in the year.
During the year, Fit Out created a nature impact register in line
with the Taskforce on Nature-related Financial Disclosures (TNFD),
while Construction launched a Carbon and Nature Champions
Forum to accelerate nature-based solutions. Divisions also
delivered nature projects, habitat restoration work, conservation
initiatives, greening and rewilding schemes as part of project
delivery and our social value focus (see page 46).
Responsible business strategy and performance
continued
Improving the environment
Number of projects using CarboniCa
0
100
200
300
400
500
600
700
800
900
2021
2022
2023
2024
2025
Construction projects over £1m
using CarboniCa
Projects using CarboniCa
Morgan Sindall Group plc
Annual Report 2025
42
Aligning suppliers to our standards
Small- to medium-sized enterprises (SMEs) represent a significant
share of our procurement activity, allowing us to work with agile
local teams across our regions. We recognise that these
businesses often need support to align their activities with our
high standards of business conduct. We therefore focus on
providing a broad range of educational resources, training and
onboarding guidance.
In 2025, 64% of Group spend was with regional SMEs (2024: 62%),
reinforcing our commitment to generating social value by
supporting small businesses and reducing our environmental
footprint by prioritising regional sourcing.
To further support SMEs, our divisional procurement teams
run their own supplier relationship management programmes
that focus on helping suppliers drive continuous improvements
across key areas of performance, including health, safety and
the environment.
Responsible business strategy and performance
continued
Working together with our supply chain
We rely on our supply chain partners to deliver successful projects.
To build strong relationships, we collaborate with our suppliers to
provide practical support and best practice guidance to align their
activities to our high standards of ethics, compliance and sustainability.
The quick read...
n
Expanded our Morgan Sindall Supply Chain Family to
423 members
n
Paid 98.4% of invoices within 60 days in the last six
months of 2025
n
Continued to collaborate with the Supply Chain
Sustainability School to educate suppliers on ESG topics
n
Identified ways to collaborate with our suppliers to
reduce Scope 3 emissions
Building strong relationships
We depend on our suppliers to deliver high-quality solutions
and services that help us exceed our stakeholders’ expectations.
By forging close relationships with preferred partners, we are
securing our supply chain, building trust and establishing strong
standards of ethics, conduct and sustainability.
In 2025, we continued to deepen engagement with our Morgan
Sindall Supply Chain Family of preferred suppliers, which grew to
423 members (2024: 416). These partners benefit from tailored
training, on-site support and dedicated relationship management
teams as part of their elevated status. In 2025, 77% of Group
spend by value was with Supply Chain Family members,
reinforcing the strength of our close partnership.
To maintain dialogue and collaboration, divisions hosted supplier
events throughout 2025, creating new opportunities to engage
with suppliers and promote sustainability. Construction’s North
East and Cumbria region hosted its first ‘Getting Connected’ event,
inviting regional contractors to share insights, collaborate and
strengthen relationships. Infrastructure held a ‘Future Fuels’ event
to spotlight and promote emerging supply chain technologies for
sustainable innovation.
Our commitment to paying suppliers promptly remains a key
metric for building trust. In the last six months of 2025, 70.5% of
invoices were paid within 30 days (meeting our 2025 target) and
98.4% were settled within 60 days (2024: 97.7%). Our 2030 target
is to ensure that 80% of invoices are paid within 30 days.
Invoices paid within 30 days
70.5%
(2024: 61.5%)
Supply Chain Family members
423
(2024: 416)
Attendees at Construction’s ‘Getting Connected’ Supply Chain Family event in
Newcastle, May 2025.
43
Strategic report
Governance
Financial statements
Around 300 suppliers, partners and contractors attended an Infrastructure-led
‘Future Fuels’ event to showcase innovative new low-carbon technologies.
Driving sustainability through collaboration
In 2025, we advanced climate-focused initiatives by conducting
annual supplier surveys, hosting workshops and providing tools
for smaller suppliers to support low-carbon procurement. These
actions are helping suppliers adopt more sustainable practices,
which, in turn, contribute to our own decarbonisation objectives.
Our partnership with the Supply Chain Sustainability School
(SCSS) remains pivotal for delivering climate education and
upskilling our partners to reduce emissions. By the end of 2025,
2,853 suppliers were SCSS members (2024: 2,835), of which
628 participated in sustainability workshops and learning events
(2024: 591).
In 2025, divisions conducted supplier sustainability questionnaires
to gain insight into the maturity of value chain approaches and to
identify opportunities to provide upskilling. Construction launched
its updated carbon maturity framework, leading the way as the
first contractor to use the Carbon Reduction Code for the Built
Environment (CRCBE) to help our supply chain evidence climate
progress. To date, 276 Supply Chain Family members are
involved, with over 60 companies progressing in maturity – from
training employees in carbon literacy to measuring and reporting
emissions, setting targets and delivering performance
improvements.
Fit Out also ran a questionnaire to map manufacturers and
subcontractors to its carbon maturity framework. Additional work
was undertaken to assess biodiversity impacts, including
questions relating to recycled content, dye use, manufacturing
locations and water use to build a clear picture of sustainable
supply chain sourcing. Furthermore, Construction has drafted
waste minimum standards for suppliers, which are set to reduce
waste intensity significantly. See page 42 for more on how we
work with our supply chain to reduce waste on our projects.
Decarbonising our value chain
Finding ways to reduce embodied carbon in the materials we
source remains a key focus to meet our long-term Scope 3
emissions reduction targets. To address this, Mixed Use
Partnerships embedded key net zero carbon and circular
economy KPIs into its contractor procurement decision-making
process in 2025. The division also conducted its first UKNZCBS
1
Pilot at a residential development in Stockport, which focused on
reducing embodied emissions to align to the standard by using
CarboniCa to identify sustainable material alternatives.
In 2025, we continued to onboard our major suppliers towards
automated Scope 3 emissions reporting by using invoices to
calculate embodied carbon in real time. This is helping us to build
a clearer Scope 3 emissions profile for purchased goods and
services, transport and distribution, fuel and energy-related
activities and use of sold products, among other categories.
Throughout the year, divisions continued to work with suppliers
and partners to use CarboniCa while participating in project
initiatives such as the 10- and 20-tonne challenges to help identify
and reduce emissions as part of project design (see page 41).
1
UK Net Zero Carbon Buildings Standard.
Reducing risk and improving safety
As part of our rigorous selection process, our divisions screen
suppliers and subcontractors using detailed pre-qualification
questionnaires (PQQs) which include mandatory questions
relating to health and safety practices and performance.
Our PQQ process is supported by a supplier onboarding platform
which allows us to identify, vet and engage a pool of more than
50,000 pre-qualified suppliers using a range of industry
standards, regulations and risk criteria, including safety and
wellbeing. In doing so, we are able to reduce project risk and
improve supplier performance, particularly relating to safety and
wellbeing. See pages 36 and 37 for more detail on our
health and safety approach and performance.
Cyber security awareness and education also remain a key focus.
We take part in the National Cyber Security Centre (NCSC)
Industry 100 scheme and work closely with the Department for
Science, Innovation and Technology to partner on best practices
to reduce cyber risk in the supply chain (see page 53).
Responsible business strategy and performance
continued
Working together with our supply chain
Morgan Sindall Group plc
Annual Report 2025
44
Measuring our social value contribution
With the diverse nature of our businesses and project work,
we recognise that quantifying the social, economic, community
and environmental impact of our activities remains a challenge.
To ensure consistency in our approach, we onboarded all
divisions onto SVP for the first time in 2025. We also aligned our
process with the Group’s reporting cycle to disclose our annual
social value contribution, rather than the cumulative total
delivered since reporting to the portal from October 2023.
In 2025, the Group delivered over £1.9bn in social value using
SVP and the TOMs System™. Our Group Data Validation score
achieved an ‘Established Grade’. Since October 2023, we have
logged more than £6.5bn in social value via the portal.
With our new enhancing communities framework now in place,
we will disclose our annual social value breakdown across our
three pillars via 15 TOMs metrics. These figures can be found in
our responsible business data sheet. We will also monitor and
report our community contribution via the following metrics:
2025
Social value delivered (£)
1.9bn
Amount of money fundraised and sponsored (£)
774k
Projects with a social value commitment (%)
79
Projects designed with a local needs analysis (%)
63
Social value delivered
on SVP in 2025
£1.9bn
Social value delivered
on SVP since 2023
£6.5bn
(2024: £4.6bn)
Providing employment, training and skills
We are passionate about working with schools and colleges to
support and inspire the next-generation workforce. By leveraging
our expertise, we want to help apprentices, students and
graduates build important skills that help them find effective
pathways into employment, including careers in construction.
Our divisions work with schools, colleges and universities across
the country, hosting events and workshops and using their two
days of volunteering leave to deliver skill-sharing days to help
young people thrive. In 2025, Partnership Housing engaged over
16,000 young people through ‘meaningful employer encounters’,
helping deliver one of the Gatsby Benchmarks, a framework for
quality careers guidance used by 90% of UK schools and colleges.
Our strategy
We are committed to delivering our projects in ways that leave a
lasting positive legacy on society – one that prioritises wellbeing,
community and sustainable growth while aligning to the delivery
of a just transition. We also want to support the government’s
goal to build 1.5 million homes by 2029 while contributing to
infrastructure, education and job-creation needs.
Our customers across the public and private sectors want to
understand how and where projects will deliver social value, with
social, economic, community and environmental impact now
making up an increasing proportion of competitive proposals,
bids and tenders.
To track and measure our contribution, our divisions utilise a wide
range of third-party-verified tools to measure and quantify the
value projects generate for clients, suppliers, contractors and
communities. By adopting a blended approach, teams can tailor
their approach to customer needs, targeting initiatives and
activities that will deliver the most impact. In 2025, we used
platforms like YemeTech to analyse local needs and identify
where to target social value activities. We also continued to work
with the Social Value Portal (SVP) to quantify our social value
contribution. SVP is an independent organisation that measures
and reports social and economic value generated using the
National Themes, Outcomes and Measures (TOMs) System™ to
quantify the value our activities generate for local people,
communities and wider society.
To drive further action across the Group, our social value forum
meets quarterly to discuss priorities and initiatives. In 2025, this
led to the launch of a new enhancing communities framework
that structures social value activities across three pillars that are
most closely aligned to our Total Commitment priorities: (i)
providing employment, training and skills; (ii) building climate-
ready communities; and (iii) improving social and economic
wellbeing. Moving forward, we will report our progress against
each of these areas on an annual basis.
Responsible business strategy and performance
continued
Enhancing communities
We want all our projects to leave a positive and lasting legacy by
creating social value for local communities. To deliver this consistently,
we are quantifying our social impact to better understand how and
where we are creating shared value and what we can do to further
support the communities surrounding our projects.
The quick read...
n
Added £1.9bn to our social value contribution, as
reported and validated by the Social Value Portal
n
Developed our enhancing communities framework to
target activities across core impact areas
n
Partnered with clients, local community groups and
charities to enhance community health, wellbeing and
employment
45
Strategic report
Governance
Financial statements
Case study
Delivering £6m in social value at
a historic site
The Cocoa Works (phases 1 and 2) is a transformative regeneration
project led by Partnership Housing. Located on the iconic former Terry’s
Chocolate Factory site in York, the project aims to revitalise the area by
delivering high-quality housing and infrastructure for residents via 425
new homes, commercial space and community facilities that preserve the
site’s rich heritage.
Since August 2023, the project has created a meaningful economic uplift,
with over £5.9m in social and local economic value generated. This
includes substantial engagement with micro-, small- and medium-sized
enterprises, totalling more than £7.1m in contract spend.
To deliver additional value in line with our enhancing communities focus,
10 team members donated 78 hours of community volunteering time
to support a local woodland litter pick-up and built a garden at a local
school to enhance green spaces surrounding the site and support
local wellbeing.
In 2025, Fit Out welcomed seven T-level students on 45-day
placements and employees volunteered a total of 2,520 hours to
help students gain insights into real-life project delivery to help
support their qualifications in design, planning and quantity
surveying. Meanwhile, BakerHicks collaborated with over 30
schools, colleges and universities to support activities related to
science, technology, engineering and mathematics (STEM).
We also take pride in helping local residents secure employment,
whether in our divisions, our supply chain or with our partners.
In 2025, Partnership Housing supported 471 armed forces
learners through its national partnership with Building Heroes,
providing structured placements and on-site learning. This
initiative has resulted in a 48% transition into construction-related
employment for participants.
The SVP determined that our focus on employment, training and
skills delivered c.£200m in social value during the year. Read
about how we support employability, early careers and
underrepresented groups on page 39.
Building climate-ready communities
With the demand for green skills in construction set to be among
the highest across all sectors over the next decade, it is essential
that we support skills development to bring our people and
communities along on the climate journey to help deliver a just
transition. We also want to help local communities prepare for
and mitigate the risks posed by a changing climate.
To spearhead an equitable transition to a low-carbon economy,
Construction’s pioneering Just Transition programme has invested
£300,000 in six post-industrial areas across the UK to support
communities by co-creating programmes that enable them to
benefit from the transition. Focus areas include upskilling and
creating new job opportunities for retrofit and green skills,
developing local financial literacy, supporting and empowering
economically disempowered individuals, and helping women and
children in areas of abrupt de-industrialisation to re-imagine their
futures. The six initiatives have been expert-informed to deliver
long-term benefit and adopt a place-based approach to systemic
change. Further investments will be made in 2026.
With projects across the UK, we have a significant opportunity
to enhance community wellbeing and the natural environment.
Drawing on our natural capital projects and BNG activities, we are
committed to creating thriving green spaces on and around our
project sites. For example, in 2025, Construction launched its
‘Community Nature Wellbeing Challenge’ to encourage each of its
regions to deliver at least one nature‑focused initiative each year,
with a corresponding wellbeing improvement. For information
on our climate strategy, separate from our social value initiatives,
see pages 40 to 42.
Improving social and economic
health and wellbeing
By partnering with our clients, suppliers, local community groups
and businesses, we seek to enhance social and economic
wellbeing to create inclusive and resilient communities. In 2025,
the SVP calculated that our improving social and economic
wellbeing activities generated c.£1.8bn in social value,
predominantly through our supply chain spend with SMEs and
local businesses.
In 2025, 64% of Group spend was with regional SMEs (2024:
62%), which includes several family businesses, new ventures and
enterprises, as well as businesses that are closely connected to
the regional community network. This enables us to enhance our
local impact by supporting local economic development and
supporting jobs (see page 39).
During the year, Infrastructure’s rail team delivered over £1.13m
in social value across two major projects. Measured by the Rail
Social Value Tool (RSVT), this work directly boosts the social and
economic wellbeing of local communities through spend,
employment and job creation.
Read about how we are improving social and economic wellbeing
for our people on page 37, and supporting local economies
through our work with supply chain partners on pages 43 and 44.
To read more about our social value impact, access our 2025 Social
Value Portal report in the responsible business section of our website.
Additional detail can be found on divisions’ websites (see page 6)
Responsible business strategy and performance
continued
Enhancing communities
Morgan Sindall Group plc
Annual Report 2025
46
We have a clear governance
framework in place for managing
risk throughout our operations
Our risk governance model, shown below, ensures that our
principal risks and robust internal controls are under regular
review at all levels.
Our operational teams are highly skilled in their fields and valued
for their ability to identify and manage the risk embedded in our
day-to-day operations. Their mix of knowledge and experience
is invaluable at all key stages, from project selection, through
bidding to project delivery. A detailed system of delegated
authorities allows our people the ability to perform while at the
same time being responsible and accountable for their actions
through our decentralised business model. Our senior
management teams at divisional and Group level, aided by our
internal reporting process, maintain oversight to ensure that all
decisions and actions remain in line with our expectations and
risk appetite.
Managing risk
Risk governance
Top–down
Define risk
appetite;
identify,
assess and
mitigate risk
at corporate
level
Bottom–up
Identify,
monitor,
report and
mitigate risk
at operational
level
Cross-divisional working groups
Dedicated to topics such as health and safety, HR, IT security, social value and climate action. Meet regularly to discuss matters
arising, taking action where necessary via established authorities and reporting lines.
Group Board
Responsible for setting the Group’s risk appetite and ongoing risk management, including assessing principal and emerging risks.
Audit committee
Assists the Board in monitoring risk management and internal controls and by formally reviewing Group and divisional risk registers.
Divisional boards
Identify risks facing their businesses and take measures
to mitigate the impacts. Senior managers take ownership
of specific risks and ensure that appetite levels are
not exceeded.
Risk committee
Chaired by the CFO, members are heads of Group functions:
legal, company secretarial, health and safety, ESG, IT, finance,
audit, tax and treasury. Reviews Group/divisional risk registers
before presentation to the Board and audit committee.
Ensures inherent and emerging risks across the Group are
identified and managed appropriately.
Divisional reporting
Divisional risk registers
highlight risks and
mitigations embedded in
day-to-day operations for
which every employee has
some responsibility.
Significant risks are
monitored via rigorous
reporting and
communicated to the Board
and delegated authorities.
Delegated authorities
Approval of material
decisions – such as project
selection, tender pricing and
capital requirements – is
assigned to appropriate
levels of management up to
and including the Board.
Strategic planning
Objectives and strategies
are set to align with the risk
appetite defined by the
Board. Any changes are
reviewed at monthly Group
and divisional Board
meetings to ensure matters
are addressed in an ongoing
and timely manner.
Detailed risk reviews
Conducted twice a year
by each division, recording
significant matters in their
risk registers. Each risk is
evaluated, before and after
the effect of mitigation, as
to likelihood of occurrence
and severity of impact
on strategy.
Internal audit
Group head of audit and assurance reviews and collates the divisional risk registers and draws from them when compiling the
Group risk register. An annual review across the Group focuses on significant projects, themes, trends and areas of concern.
47
Strategic report
Governance
Financial statements
Principal risks
Our principal risks are those we consider the most
significant in terms of potential impact to the
business and have been extensively reviewed.
The Board recognises that our culture is essential to our success
as a decentralised business, as is ethicality, legal compliance and
adherence to relevant standards and regulations.
In its annual review of the Group’s risk appetite, the Board noted
that our markets remain structurally secure. Our business model
continues to be supported by strong levels of investment from the
public, private and regulated sectors, particularly in partnership
developments, commercial office fit out, critical infrastructure,
schools, health and other construction-related activity.
The Board considered the increasing threat posed by cyber
attacks and the need to maintain robust cyber security defences
and appropriate business continuity planning arrangements.
Over the past year, challenging market conditions and subdued
consumer confidence have continued to impact the private
housing market. Elsewhere, uncertainty in the wider
macroeconomic landscape has been impacted by ongoing global
conflicts and rising tariffs. The Group’s strong financial health and
current strategy make it well positioned to navigate these issues,
with the Board monitoring them closely during 2026 and
appropriate action being taken should the need arise.
The chart below indicates our risk appetite and velocity (the speed
at which the risk would impact the Group).
This review should be read in conjunction with the viability
statement on pages 66 and 67.
Managing risk
continued
Achieve
quality of
earnings
Maintain
financial
strength
Excel in
project
delivery
Deliver on
our Total
Commitments
Secure
long-term
workstreams
Within three
months
Within
one year
Over
a year
Increase
Stable
Decrease
Principal risk
Risk
appetite
Risk
velocity
Risk
category
Internal/
external
risk
Strategic
priority
A. Economic change
and uncertainty
Medium
Strategic
External
B. Exposure to the
UK residential
market
Medium
Strategic
External
C. Health and safety
incident
Low
Operational
Internal
D. Talent attraction
and retention
Medium
People
External
and
internal
E. Partner insolvency
or other
performance and
compliance issues
Low
Financial
and
operational
External
and
internal
F. Inadequate
funding
Low
Financial
Internal
G. Mismanagement
of working capital
and investments
Low
Financial
Internal
H. Poor contract
selectivity
Medium
Operational
Internal
I. Poor project
delivery
Low
Operational
Internal
J. Cyber attack
Low
Operational
External
and
internal
K. Climate change
Low
Strategic,
operational
and
financial
External
D
F
I
K
High resilience
Low resilience
Low risk
High risk
A
G
J
C
E
B
Risk appetite and velocity
Risk severity and resilience
Risk velocity
Strategy key
H
Morgan Sindall Group plc
Annual Report 2025
48
Managing risk
continued
Principal risks
Strategic risk
A. Economic change and uncertainty
Risk description
Growth and investor and market confidence are vulnerable to ongoing
uncertainties. There could be fewer or less profitable opportunities in
our chosen markets, including a decline in construction activity caused by
macroeconomic shifts and/or reduced demand for our developments.
Allocating resources and capital to declining markets or less attractive
opportunities would reduce our profitability and cash generation.
Responsibility:
The Board
Change in risk:
Update on risk status
n
Sustained operational delivery, a high-quality order book and a strong
balance sheet underpin our competitive position in our sectors and give
confidence to our clients, employees and supply chain.
n
The diversity of our operations together with the high-quality secured
order book and preferred bidder status achieved across all of our
divisions provide a level of insulation against difficult market conditions,
with Construction in particular delivering a robust performance and Fit
Out significantly exceeding expectations.
n
The government is continuing to invest in areas that complement
our strategy, including affordable housing, education, health, critical
infrastructure and town regeneration.
n
In a volatile market, our strong balance sheet allows us to remain agile,
continue to take long-term decisions and respond to opportunities.
Mitigation
n
Our business model is designed to provide a mix of earnings across
different market cycles. The diversity of our operations protects against
fluctuations in individual markets while our decentralised approach
enables our divisions to respond quickly to change.
n
The Board regularly reviews the economic environment to assess
whether any changes to the outlook justify a reassessment of our risk
appetite or business model.
n
We stress-test our business plan against the current economic outlook
to ensure our financial position is sufficiently flexible and resilient.
n
We are strategically focused on a high-quality order book underpinned
by a strong balance sheet and financial strength.
n
A high proportion of our secured workload is with public sector and
regulated entities via long-term arrangements, with a healthy level of
demand and typically preferential terms.
n
We continue to be very selective, and our procurement routes, margins,
contract terms and secured workload remain favourable.
B. Exposure to the UK residential market
Risk description
The UK housing sector is strongly influenced by government stimulus and
consumer confidence.
Inflationary and interest rate pressures could challenge scheme viability,
slowing down decision-making and project commencement.
If mortgage availability, affordability or consumer confidence is reduced, this
could impact on demand and make existing schemes difficult to sell and
future developments unviable, reducing profitability and tying up capital.
Responsibility:
The Board, executive
directors and divisional senior
management teams
Change in risk:
Update on risk status
n
While inflation and interest rates have been generally falling, with an
improvement in mortgage availability, uncertainty remains in the market
and affordability for first-time buyers is impacting demand.
n
In these challenging open market conditions, our business model has
enabled us to pivot to contracting activities for affordable housing with
largely public sector clients, to help mitigate the risk.
n
In Mixed Use Partnerships, there are short-term viability challenges to
navigate due to build cost pressures. Our model and expertise allow
us to work through this with our partners and, where necessary, seek
additional grant funding and sources of finance with better terms.
n
Constrained planning remains slow, despite the government’s planned
reforms to address the issue, and has the potential to delay our
schemes. In the medium to long term, improvements in the system will
enable further efficiencies and increase the speed at which we bring
developments forward.
Mitigation
n
A rigorous three-stage formal appraisal process is undertaken before
committing to development schemes and capital commitments.
n
We work closely with public sector partners and government agencies
such as Homes England to secure extra development funding if required.
n
On selected large-scale residential schemes, we seek to forward sell
and/or fund sections to targeted institutional investors to reduce risk.
n
Our residential portfolio has a wide geographical spread, protecting
against regional market variations, and is geared towards providing an
affordable product.
n
Rather than building up a land bank, we target option agreements with
landowners that limit and/or defer long-term exposure and boost return
on capital employed.
n
We regularly monitor and forecast our pipeline of development
opportunities and secured workload, which includes monitoring
key UK statistics such as unemployment, lending and affordability.
n
For a large proportion of current schemes, we have the ability to slow
(or accelerate) build rates should the need arise.
n
Our partnership model provides resilience by allowing us to flex scheme
phasing, timing, tenure mix and funding structures to suit varying market
scenarios. The model can be de-risked by increasing the proportion of
contracting work in Partnership Housing, forming strategic joint ventures
and increasing the proportion of affordable units.
49
Strategic report
Governance
Financial statements
Managing risk
continued
Principal risks
Operational risk
People risk
C. We cause a major health and safety
incident and/or adopt a poor safety culture
Risk description
Our first priority is to protect the health, safety and wellbeing of our key
stakeholders and the wider public. Health and safety will always feature
significantly in the risk profile of a construction business as we carry out a
significant portion of our work in public areas and complex environments.
Accidents could result in legal action, fines, insurance claims, delays and,
in the worst case, a fatality. Poor health and safety performance could also
impact our reputation and ability to secure future work.
Responsibility:
The Board, divisional senior
management teams, protecting
people forum
Change in risk:
Update on risk status
n
Our overall health and safety performance data has improved compared
with previous years. However, our vigilance and commitment to high
health and safety standards remain and we continually look for ways to
drive improvement.
n
In 2025, our Group protecting people forum continued to meet monthly
to share learnings, review trends and insights from accidents and also
consider policies and standards.
Mitigation
n
The Board is responsible for health and safety and it is a key topic for
discussion at every Board meeting.
n
Individuals in each division and on the Board are given specific
responsibility for health and safety matters.
n
Our Group protecting people forum meets regularly, with representatives
from all divisions sharing best practice and exchanging information on
emerging risks.
n
Safety leaders from across the divisions hold monthly meetings focusing
on addressing and learning from issues and opportunities as they arise.
n
We have a well-established health, safety and wellbeing framework in
place which is reviewed annually to ensure it remains fit for purpose.
The framework includes policies, risk assessments and method
statements, regular communications, leadership site visits and audits.
n
We report on the implementation of leading indicators and monitor
and report near-miss incidents and incidents that could potentially
have resulted in serious injury. Any incidents are investigated and root
causes analysed.
n
Our regular health and safety training includes behavioural change,
housekeeping on site, and leadership engagement in driving site
standards.
n
Each division’s health and safety policy is communicated to all its
employees, and senior managers are appointed to ensure the policies
are implemented.
n
We have major incident management and business continuity plans
in place, which are periodically tested and reviewed.
n
All divisions are accredited to ISO 45001 for occupational health
and safety.
n
We continue to offer our colleagues a range of benefits that promote
physical and mental wellbeing.
See pages 36 and 37 for more information about our commitment
to protecting people
D. We fail to attract and retain the talent we
need to maintain and grow the business
Risk description
If we fail to attract and retain the talent required to excel in project delivery
and meet our clients’ and other stakeholders’ expectations, this could
damage our reputation and our ability to secure future work and meet
our targets.
Skills shortages in the construction industry will remain an issue for the
foreseeable future.
Responsibility:
The Board, divisional senior
management teams
Change in risk:
Update on risk status
n
Our current success is helping us attract and retain people. Our voluntary
staff turnover rate was 10% in 2025, compared with 11% in 2024.
n
We have ambitious growth plans and recognise that we will need to
recruit and retain a quality workforce to achieve our targets, facing
competition from peers and against the backdrop of an ageing
population working in the industry.
n
We remain focused on providing new employees with a robust
onboarding and induction programme, covering our decentralised
structure, culture and values, development programmes and wider
wellbeing and benefits packages.
n
We are responding to the challenge of an ageing employee population
through succession planning, promoting from within, and investing
in training.
n
We are also continuing with our work to improve our inclusion and
diversity (see page 39).
n
It is recognised that the sector as a whole has work to do in terms
of attracting talent and being the first choice for young people.
Mitigation
n
We empower our people through our decentralised business model
and give them responsibility together with clear leadership and support.
n
We offer them a strong Group culture and attractive benefits, working
environments, technology and wellbeing initiatives to help improve their
working lives.
n
We conduct employee engagement surveys and monitor joiner and
retention metrics, including voluntary staff turnover.
n
We carry out annual appraisals that provide two-way feedback on
performance, and conduct exit interviews when people leave.
n
Our succession planning includes identifying and developing skills
needed for the future.
n
We provide training and development to build skills and experience,
such as our leadership development and graduate, trainee and
apprenticeship programmes.
See pages 38 and 39 for more information about our commitment
to developing people
Morgan Sindall Group plc
Annual Report 2025
50
Managing risk
continued
Principal risks
Financial and operational risk
Financial risk
E. Partner insolvency or other
performance and compliance issues
Risk description
Poor selection and inadequate due diligence could lead to the insolvency of
a key client, subcontractor, joint venture partner or supplier, delaying project
works and incurring the costs of finding a replacement.
Appointing partners with the wrong behaviours could lead to quality issues,
or safety or other serious compliance breaches.
Responsibility:
The Board, divisional senior
management teams
Change in risk:
Update on risk status
n
Following some well-publicised failures in the mainstream contractor
market, supply chain insolvency risk has largely been contained.
n
Some partners may have been trading with stretched finances following
the pandemic, the unwind of government measures introduced to
support business recovery, the VAT reverse-charge initiative and, more
recently, employers’ National Insurance increases.
n
Where supply chain failures have occurred, they have been disruptive
but manageable, with costs being absorbed at project level by utilising
contingency and/or, in a small number of instances, a reduction in margin
which has not been material to the Group.
n
We have nurtured close relationships with our supply chain as part of a
long-term strategy, sharing our values and desired behaviours, so that we
can provide an offering our clients can rely on to deliver a quality product
compliant with relevant building standards, laws and regulations.
Mitigation
n
Our business model and order book are predominantly focused on the
public sector, regulated industries and commercial customers in sound
market sectors, reducing the likelihood of a material customer failure.
n
We carry out rigorous due diligence preconstruction, particularly on
commercial clients and key supply chain partners, including a focus
on payment behaviours, cash terms and profiling, and likely liquidity
outcomes. Where necessary, we may obtain additional security in the
form of guarantees, bonds, escrows and/or more favourable payment
terms, or, in some cases, decline a project.
n
Formal due diligence is carried out when selecting joint venture partners,
including seeking protection in the event of default by one of the
partners. Joint ventures require executive director approval.
n
We work with preferred or approved suppliers where possible, which
aids visibility of both financial and workload commitments. We use
supply chain credit checks but the information is somewhat historical.
Our relationships with our suppliers mean we can monitor the situation
in real time, by gaining transparency and understanding their levels of
exposure, and our operational teams are highly alert to early signs of
stress. This gives us a better chance of stepping in if needed.
n
Our strategy has been to reduce payment days and our supply chain
partners regard us as dependable and responsible. We do not hold
cash in the form of retention from our preferred supply chain partners,
which helps reduce their cash flow pressures and likelihood of failure.
n
Our business model reduces the concentration of supply chain risk as
our divisions operate in different markets and geographical regions, using
local supply chains.
n
Our predominantly negotiated and two-stage procurement routes
1
allow us to select appropriate supply chain partners for our projects.
This enables predictable outcomes for the Group, our clients and our
supply chain.
n
We rigorously monitor work in progress, debts and retentions.
1
Negotiated and two-stage procurement routes allow us early engagement in the
project and greater visibility, influence and certainty over pricing and programming.
F. Inadequate funding
Risk description
A lack of liquidity could impact our ability to continue to trade, or restrict our
ability to achieve market growth or invest in partnership schemes.
Responsibility:
Executive directors, Group tax and
treasury director, divisional senior
management teams
Change in risk:
Update on risk status
n
The Group has £180m of undrawn committed revolving credit facilities,
which have been extended to 2028.
n
During the reporting period and for the foreseeable future, our
average net daily cash continues to be healthy and supports the
strong conversion of Group profits to cash as we continue to invest
in partnership activities.
n
Our balance sheet provides assurance to our stakeholders, allowing us
to continue investing in partnership schemes while remaining selective
in construction.
Mitigation
n
We have a Group-led disciplined capital allocation process for
significant project-related capital, which takes into consideration future
requirements and return on investment.
n
We monitor our cash levels daily and conduct regular forecasting
of future cash balances and facility headroom.
n
Our long-term cash forecasts are regularly stress-tested.
51
Strategic report
Governance
Financial statements
Managing risk
continued
Principal risks
Financial risk
Operational risk
G. Mismanagement of working
capital and investments
Risk description
Poor management of working capital and investments leads to insufficient
liquidity and funding problems.
Responsibility:
Executive directors, divisional senior
management teams
Change in risk:
Update on risk status
n
As a result of a subdued housing market, we have seen work in progress
levels increase on a small number of our open market developments,
which we continue to monitor closely.
n
Our ongoing focus on working capital management has enabled us to
maintain levels similar to prior years while maintaining payment practices
that are favourable to our supply chain.
n
Our strong balance sheet and cash position continue to support
investment in strategic partnership schemes and protect against
economic downturn, allowing us to make the right long-term decisions.
n
Our cash position is not supported by any form of supply chain debtor
finance and gives a clear indication of our financial health.
n
We continue to maintain a positive momentum in cash management
in construction due to a combination of improved returns, cash
optimisation and cash conversion.
n
Our average net daily cash for the period demonstrates our disciplined
working capital management.
Mitigation
n
Our delegation and limits of authority procedures require that capital and
investment commitments are notified and signed off at key stages with
the relevant senior-level approval.
n
The divisions have robust cost–value reconciliations in place at project
level which are updated monthly and provide visibility of work in
progress. Management review meetings focus on overdue work in
progress, debtors and retentions.
n
We reinforce a culture in our bidding and project teams of focusing on
cash returns to ensure they meet expectations.
n
We monitor cash levels daily and produce regular cash forecasts.
n
We manage our capital on partnership schemes efficiently, for example
through phased delivery, institutional and government funding solutions,
and forward funding where possible.
H. Poor contract selectivity
Risk description
In a volatile market where competition is high, a division might accept
a contract outside its core competencies or for which it has insufficient
resources. If a contract is incorrectly bid, this could lead to contract
losses and an overall reduction in gross margin. It might also damage
our relationship with the client and supply chain, leading to a reduction
in work volumes.
There is also a risk that we fail to win sufficient profitable work to achieve
our targets.
Responsibility:
Executive directors, divisional senior
management teams
Change in risk:
Update on risk status
n
Our order book consists of a high proportion of public sector and
regulated-industry clients with typically healthier risk profiles and is
secured in limited competition, allowing us to continue selecting the
right projects.
n
We have not changed the sectors or markets we operate in and are
therefore unlikely to engage in a project outside our capability. Generally,
we avoid tendering for single-stage, fixed-price, lump sum work.
n
Input cost pressures have eased, with newer projects benefiting from
more realistic client budgets and greater pricing stability in the supply
chain. However, client budgets, while more aligned to inflation, remain
stretched, which results in extended preconstruction periods.
n
We continue to maintain sensible contingency levels, and some contracts
contain mechanisms for passing through inflationary costs, particularly
on the essential and critical infrastructure work we carry out.
Mitigation
n
It is part of our strategy and culture to be selective in our work by
targeting optimal markets, sectors, clients and projects.
n
We limit our participation in open market bids, securing a large
proportion of our projects via framework or partnership arrangements
with repeat clients who share our values. This provides a high probability
of predictable and successful outcomes.
n
When bidding, we aim for negotiated and two-stage procurement routes
that allow us early engagement and collaboration, including the early
identification of the most appropriate supply chain delivery partners.
n
Our divisions select projects according to pre-agreed types of work,
project size, contract terms and risk profile. A multi-stage process of bid
review and approval includes tender review boards, risk profiling and a
system of delegated authorities to ensure approval at appropriate levels
of management.
n
We profile the skills and capabilities required for the project to ensure
that we allocate the right people.
n
Our divisions have processes in place to select supply chain partners who
match our expectations in terms of quality, sustainability and availability.
n
We conduct a robust review of our pipeline and bids at key stages,
including rigorous due diligence and risk assessment, and obtain senior-
level approval in accordance with the Group’s delegation and limits of
authority procedures.
Morgan Sindall Group plc
Annual Report 2025
52
Managing risk
continued
Principal risks
Operational risk
Operational risk
I. Poor project delivery
Risk description
Failure to deliver projects on budget and on time that meet client
expectations could incur costs that erode profit margins, lead to the
withholding of cash payments and impact working capital. It may also result
in reduction of repeat business and client referrals.
Changes to the scope of works and contract disputes could lead to costs
being incurred that are not recovered, loss of profitability and delayed
receipt of cash.
Not understanding the project risks may lead to poor delivery and could
result in reputational damage and loss of opportunities.
Ultimately, we may need to resort to legal action to resolve disputes, which
can prove costly with uncertain outcomes as well as damaging relationships.
Responsibility:
Executive directors, divisional senior
management teams
Change in risk:
Update on risk status
n
Inflationary pressures have eased and newer projects are benefiting
from client budgets more aligned with the impacts of inflation; however,
in some instances it can take time to remodel a scheme to ensure it is
viable and this can lengthen the preconstruction period.
n
There is a recognised shortfall in the construction labour market,
exacerbated by impacts from Brexit. However, in the short term, while we
have seen issues, we are managing the situation with our supply chain.
n
We have responded to the Building Safety Act, which primarily deals
with building regulations and fire safety, with Construction, Partnership
Housing and Mixed Use Partnerships having updated their methodology
to ensure that project specifications remain compliant. This includes a
complete refresh of design management and procedures and increased
on-site scrutiny and records, as well as engagement of independent fire
consultants on more complex schemes.
n
We continue to actively engage with the Ministry of Housing,
Communities and Local Government with regard to the Building Safety
Act, and have committed to rectifying issues with appropriate remedial
activity, which is being undertaken and expenditure provided for. Some
of this may be recoverable, but will take time to resolve.
Mitigation
n
Our focus on project selectivity, the quality of our order book and our
close engagement with our supply chain partners help reduce the
probability of poor performance.
n
We have well-established systems of measuring and reporting project
progress and estimated outturns through robust project cost–value
reconciliations that take into account contract variations and their impact
on programme, cost and quality, with management review meetings to
closely monitor performance.
n
The strength of our supply chain relationships and preference to work
with selected partners reduces the probability of project failure and helps
to ensure we deliver predictable outcomes. Maintaining good supply
chain relationships has helped us navigate labour and/or materials
availability issues.
n
Where legal action is necessary, we notify the Board, take appropriate
advice and make suitable provision for costs.
n
A programme of internal project audits is used to highlight areas of
improvement and share best practice and lessons learned.
n
Various Perfect Delivery
1
initiatives focus on improvements in product
quality and predictability as well as the client experience.
n
Regular formal and informal stakeholder feedback allows us to intervene
when required and refine our offering to provide exceptional outcomes.
n
We continue to use and enhance our digital project management tools
and commercial metrics that highlight areas for focus and provide early
warnings, enabling early intervention in the construction cycle.
1
Perfect Delivery status is granted to Fit Out, Construction and Infrastructure projects
that meet all four client service criteria specified by the division.
J. Cyber attack
Risk description
The Group, one of its divisions or a supplier could become the victim of a
cyber attack, leading to potential sensitive data loss, loss of key systems,
fines, prosecution and, in a worst case, the inability to do business.
Responsibility:
The Board, divisional senior
management, IT security
steering group (reporting to the
chief financial officer)
Change in risk:
Update on risk status
n
In response to an increasing number of cyber attacks on UK businesses,
we have elevated our cyber security posture.
n
We have re-certified to ISO 27001, the government’s Cyber Essentials
Plus, Secure by Design and were the first organisation to be certified
under the new Ministry of Defence Cyber Certification scheme.
n
We have continued to enhance our visibility of security events and
‘indicators of compromise’.
n
The Board has agreed a rolling security strategy, supported by
continuous improvement and review. This ensures we remain aware
of emerging risks and changes to the threats we face.
n
We have continued to run workshops hosted by industry experts to
educate key stakeholders around incident response best practices,
focusing on business, technical and legal impacts of a major incident.
We have increased the number of network and systems penetration
tests that we undertake on an annual basis.
n
Data/business intelligence, digital construction and AI are at the forefront
of our technology investment. To support the seamless delivery of these
new technologies, we have also delivered our next-generation, modern
data network. This improves the security of our network and enhances
access to cloud services.
n
We have continued to invest in cloud platforms to expand functional
capabilities and resilience and have prepared for the expected
acceleration to cloud-hosting away from data centres on the premises.
Mitigation
n
We have a dedicated Group team focused on providing a stable and
resilient IT environment. Our Group head of information security and
compliance presents an update to the Board on a biannual basis to
ensure oversight and challenge.
n
Our IT security steering group provides governance and oversight of the
Group’s cyber strategy, resources and funding.
n
We have business continuity and disaster recovery plans in place, which
were reviewed during the year.
n
We adopt best practices to secure our people and data. Endpoint
protection tools are deployed and monitored to safeguard devices
from malware, unauthorised access and data breaches. Multi-factor
authentication is applied to enhance security and prevent unauthorised
access from our devices and key systems.
n
We commission an external industry expert to conduct regular cyber
risk analysis on devices used on our network. The data collected is
independent of our other security systems and acts as an audit of our
security controls and their effectiveness.
n
We engage with industry-leading partners to adopt appropriate
technologies to protect the Group.
n
We run regular audits using different parties (both technical and non-
technical) to confirm that our controls remain effective. Audit reports are
shared with the IT security steering group.
n
We train all our employees in data protection and information security,
including awareness and responsibilities.
n
We follow the National Cyber Security Centre’s guidance on third-party
risk management and perform ongoing risk assessments of our digital
supply chain partners.
53
Strategic report
Governance
Financial statements
Managing risk
continued
Principal risks
Operational and financial risk
K. Climate change
Risk description
More extreme weather events could impact our operations through
increased costs, project delays and supply chain disruption.
Limited advances in technology and issues with data availability and
accuracy could impact our ability to take effective action in response
to climate change and result in slower progress towards our carbon
reduction targets.
Changes to environmental or climate legislation could lead to increased
project costs and potential compliance breaches if we do not manage this
risk effectively.
Responsibility:
Executive directors, divisional senior
management teams
Change in risk:
Update on risk status
n
Momentum behind climate and social value action remains significant
across the Group, with clients requesting more information and evidence
of activity in tenders to win work.
n
While the timing, status and metrics used to identify climate-related risks
and opportunities remain unchanged from 2024, mitigating actions have
been updated in our Task Force on Climate-related Financial Disclosures
(TCFD) statement to reflect initiatives and progress made across the
Group in 2025.
Mitigation
n
The Group adheres to the 11 recommendations of the TCFD and has
commenced alignment to the International Sustainability Standards
Board (ISSB) IFRS S2 Climate-related Disclosures.
n
A Group double materiality assessment was undertaken in 2025 to
evaluate sustainability topics from two perspectives: (i) the impact
they have on society and the environment and (ii) the business risks
and opportunities that arise from them (see page 35 for more detail).
The process reconfirmed net zero, energy use and climate as a material
issue, which will drive continued strategic action around climate change
risk and mitigation. We have a Group-wide carbon reduction plan in place
that includes science-based targets. In addition, each division has its own
KPIs and action plans and provides updates on progress at quarterly
climate action panel meetings.
n
A central data platform has been established to ensure continued
effectiveness of ESG data, capture and quality.
n
Divisional environmental and social value leads help to collate and
coordinate data and implement relevant climate initiatives.
n
Our carbon and social value data is subject to internal and independent
external validation.
Morgan Sindall Group plc
Annual Report 2025
54
Managing risk
continued
Emerging risks
While our principal risks address shorter-term
issues, our strategic planning includes identifying
emerging risks that may affect our ability to deliver
our objectives over the medium to longer term.
Long-term scarcity of skilled labour in the industry (including ‘green’ skills)
AI and technology’s advancing pace
Issue/risk
This is a UK-wide issue which, while the sector
works to broaden its appeal as a career
option, will require considerable government
and sector collaboration to resolve. There
is a need for clean energy and green skills
across technical, professional and innovation
roles, and the number of people employed
in renewable, wind, solar and nuclear is
expected to double to 860,000 in five years.
Additionally, the government expects skilled
construction and building trades to require
almost three times as many clean energy
workforce jobs by 2030. A skills shortage
could impact our ability to deliver long-term
growth and/or disrupt project delivery. It could
lead to the ultimate resizing of the industry
and the Group.
Comment/outlook
n
Government commitments to build a new network of colleges that will receive substantial
investment to train future builders, electricians, carpenters and plumbers, as well as a further funding
programme over four years to train up to 60,000 construction workers, are positive for the industry.
n
We continue to manage some short-term issues, largely mitigated by our predominant two-stage
procurement approach, which helps with longer-term labour resourcing and planning.
n
We engage with schools and local communities to encourage people to join the industry and provide
training and work opportunities. Our inclusion and diversity initiatives help make the industry more
attractive and increase the talent pool.
n
Off-site, modular and new methods of construction help reduce on-site resource needs.
n
Technology plays its part in reducing the need for site-based resource and attracting people into the
industry but will require some upskilling to be undertaken.
Issue/risk
We could suffer compliance breaches as a
result of employees using unapproved AI
tools and other emerging technology without
due consideration and understanding of the
risks involved. We must adapt to (or adopt)
new ways of working, invest in technology
or develop skills and/or supply chain
relationships to allow us to compete in the
future marketplace. If we fail to embrace AI
or other innovative technologies to increase
efficiency for the Group and our clients,
this could result in a loss of competitive
advantage and a reduced ability to secure
repeat business.
Comment/outlook
n
AI, machine learning, IoT (Internet of Things), augmented reality, robotics, exoskeletons, 3D printing
and virtual reality are evolving within the sector.
n
We have implemented new AI guardrails that will help us apply governance around the use of AI and
avoid regulatory breaches while benefiting from efficiencies. This has involved blocking hundreds of
riskier AI websites, implementing pop-ups for users reminding them not to upload business data to
AI sites, issuing updated guidance on acceptable use and rolling out training.
n
We continue to develop and manage new technological tools and ideas that allow us to remain
competitive in our markets, including evolving the use of data analytics, business intelligence tools
and other business systems.
n
Microsoft collaboration tools provide our employees with easy access to systems at home, on site or
on the move, and strengthen our cyber security.
We review any matters likely to impact strategy as part of our
twice-yearly review of our internal risk management process and
our monthly Board reporting.
The following emerging risks are currently being tracked and
monitored by the Board. The Board is satisfied with progress
being made in these areas, although it will continue to revisit them
as matters develop.
55
Strategic report
Governance
Financial statements
Climate reporting
Task Force on Climate-related
Financial Disclosures (TCFD)
Our TCFD reporting is aligned with the requirements of UK Listing
Rule 6.6.6(8) by including climate-related financial disclosures
consistent with the 11 TCFD recommendations. Our Group-level
disclosures also represent the reporting requirements of our
subsidiaries, including Morgan Sindall Construction &
Infrastructure Ltd, Lovell Partnerships Limited and Overbury plc.
We comply with the Companies (Strategic Report) (Climate-related
Financial Disclosure) Regulations 2022 and Limited Liability
Partnerships (Climate-related Financial Disclosure) Regulations
2022 (referred to as ‘UK CFD’). Where possible, we have continued
to utilise TCFD guidance, including the TCFD technical supplement
and the ‘Guidance for All Sectors’ in section C of the TCFD Annex.
We have commenced alignment with ISSB’s IFRS S1and S2
Climate-related Disclosure standards, with initial disclosures
included within this section and on page 35 which highlights our
double materiality assessment (DMA) process. We will seek to
align our climate reporting to the UK Sustainability Reporting
Standards (UK SRS) once guidance is released to further enhance
data transparency and comparability.
TCFD recommendation
UK CFD alignment
2025 reference
Governance
(A) Describe the Board’s oversight of
climate-related risks and opportunities.
Description of the governance arrangements
of the company or LLP in relation to
assessing and managing climate-related risks
and opportunities.
n
See TCFD governance on page 57.
n
See responsible business committee report
on pages 93 and 94.
n
See audit committee report on pages 88
and 90.
(B) Describe management’s role in assessing
and managing climate-related risks and
opportunities.
Strategy
(A) Describe the climate-related risks
and opportunities the organisation has
identified over the short, medium and
long term.
Description of (i) the principal climate-related
risks and opportunities arising in connection
with the operations of the company or LLP, and
(ii) the time periods by reference to which those
risks and opportunities are assessed.
n
See TCFD strategy on pages 57 and 58.
n
See our responsible business strategy and
performance section on pages 34 to 46 for
progress against our Total Commitments,
including ‘Improving the environment’.
n
See page 35 for details of our DMA, which
helped to identify and prioritise material
topics, including those relating to climate
change, net zero progress, energy and
climate adaptation.
(B) Describe the impact of climate-related
risks and opportunities on the organisation’s
business, strategy and financial planning.
Description of the actual and potential impacts
of the principal climate-related risks and
opportunities on the business model and
strategy of the company or LLP.
(C) Describe the resilience of the
organisation’s strategy, taking into
consideration different climate-related
scenarios, including a 2
o
C or lower scenario.
Analysis of the resilience of the business model
and strategy of the company or LLP, taking
into consideration different climate-related
scenarios.
Risk management
(A) Describe the organisation’s process for
identifying and assessing climate-related risks.
Description of how the company or LLP
identifies, assesses and manages climate-
related risks and opportunities.
n
See TCFD risk management on page 61 and
strategy on pages 57 and 58.
n
See the managing risk section on page 54
for our Group risk management process.
n
See the audit committee report on page 90
for how we manage risk across our divisions.
(B) Describe the organisation’s processes for
managing climate-related risks.
(C) Describe how processes for identifying,
assessing and managing climate-related
risks are integrated into the organisation’s
overall risk management.
Description of how processes for identifying,
assessing and managing climate-related risks
are integrated into the overall risk management
process in the company or LLP.
Metrics and targets
(A) Disclose the metrics used by the
organisation to assess climate-related risks
and opportunities in line with its strategy
and risk management process.
KPIs used to assess progress against targets
used to manage climate-related risks and
realise climate-related opportunities and a
description of the calculations on which those
KPIs are based.
n
See TCFD metrics and targets on page 61.
n
See the Group’s non-financial KPIs on
page 15.
n
See our GHG emissions on page 62,
reported in line with the Streamlined Energy
and Carbon Reporting (SECR) regulation.
n
See details of our performance against our
science-based targets covering Scope 1, 2
and 3 emissions (pages 40 to 42).
n
See our responsible business data sheet on
our website for additional metrics monitored
across all Total Commitments.
(B) Disclose Scope 1, Scope 2 and, if
appropriate, Scope 3 greenhouse gas (GHG)
emissions, and the related risks.
(C) Describe the targets used by
the organisation to manage climate-related
risks and opportunities and performance
against targets.
Description of the targets used by the company
or LLPs to manage climate-related risks and
to realise climate-related opportunities and
performance against those targets.
Morgan Sindall Group plc
Annual Report 2025
56
Governance
The chart below summarises our climate governance framework, which is fully integrated into our wider corporate governance
structure (detailed on page 75).
Climate reporting
continued
TCFD
Strategy
Scenario analysis
Our scenario analysis uses two scenarios: the first aligns with the Paris Agreement (RCP2.6) and the second is an unmitigated
‘business-as-usual’ response (RCP8.5), to identify transition risks and opportunities associated with the shift to a low-carbon economy
across the short, medium and long term. These timelines are linked to our business strategy and financial planning, as detailed below:
Short term
0–1 year
We identify climate change as a
principal risk and conduct biannual
divisional risk reviews. Climate risks
and opportunities are considered in
project bids and planning. Our KPI
performance is monitored annually.
Medium term
1–3 years
We issue an annual three-year viability
statement aligned with Group budgeting
to ensure resources for continued
operations. Climate risks were also
assessed as part of our DMA process
and transition planning.
Long term
3+ years
We assess long-term climate transition
risks and opportunities associated with
a near- and long-term science-based
target and physical climate risks
through strategic planning, scenario
analysis and emerging risk disclosure.
Group Board
n
Has oversight of Group climate-related matters, including approval of the net zero strategy, Transition Plan and TCFD statement.
n
Ultimate responsibility for climate-related matters sits with the chief executive. Our chief financial officer presents the Group’s climate plans and
performance to investors.
n
Considers climate-related risks and opportunities at least once a year as part of its annual risk and strategic review, while also monitoring performance
against climate objectives.
n
Continues to evaluate the inclusion of ESG factors, including climate change, in remuneration.
Responsible business committee
1
n
Assists the Board in managing climate-related risks and opportunities
to meet net zero targets and execute our Transition Plan. Our
chief financial officer attends all meetings during the year. See the
responsible business committee report on page 93.
Audit committee
n
Reviews the TCFD statement on behalf of the Board and considers
climate-related risks and opportunities twice annually through the
Group’s risk register review. See the audit committee report on
page 87.
Group management team
n
Our cross-functional management team is responsible for agreeing our approach to managing climate change across our divisions.
n
Led by our chief financial officer, the team holds responsibility for delivering our climate strategy and sets climate-related targets, objectives and
investment requirements in line with data, information and recommendations received from divisional environmental managers; the Group
management team also holds strategic oversight for our divisional boards.
n
Our climate action panel, led by the head of ESG and sustainability, meets with divisional environmental leads up to four times a year to share
progress against the Group’s net zero ambitions, and to deliver best practice guidance to mitigate climate risk and enhance impact.
In 2023, we conducted a quantitative scenario analysis to estimate financial ranges for climate-related risks and opportunities identified
as ‘high likelihood’ (≥30% chance of occurring over the short, medium or long term if unmitigated) in our previous qualitative analysis.
These risks were found to be immaterial when compared with the Group’s financial reporting materiality threshold of £8.5m and, where
mitigated, we do not expect any of the identified transition risks to translate into a financially material impact in the short to medium
term. Our assessment outlined that climate-related opportunities rank higher than risks due to the service-based nature of our
business; however, further analysis is required.
To assess physical climate risk, we assessed a sample of project locations using the Sust Global platform in 2024, evaluating long-term
climate risks to 2050 under multiple scenarios (RCP8.5/SSP5, RCP4.5/SSP2, RCP2.6/SSP1). The platform draws on high-resolution
satellite data and the latest climate models (CMIP6) to assess risks from flood, sea level rise, cyclone, heatwave, wildfire and water stress.
Findings indicated low overall climate risk across sampled assets, with heatwaves identified as a medium risk.
1
Committee dissolved 24 February 2026.
57
Strategic report
Governance
Financial statements
Climate reporting
continued
TCFD
Initial financial implications, including potential ‘value of risk’ from high-impact events, were considered but deemed immaterial.
As a business we do not own any long-term assets and we secure terms and conditions of projects prior to investment, which
therefore reduces our exposure. We do however recognise that we may need to invest in further mitigation to combat disruption
to our operations and those of our customers and supply chain partners (particularly under a >4°C scenario) over the long term.
Further analysis is needed to understand broader climate risks across our supply chain over a wider sample of projects.
Due to the evolving governmental and societal response to climate change, limited data availability and changing climate disclosure
requirements, we are unable to determine the full future economic impact of climate-related risks and opportunities on our business
model (see page 142). We have therefore continued to assess climate risks and opportunities identified in our original qualitative
analysis as part of our wider risk management process.
Decarbonisation and resilience
We have a resilient business strategy that is poised to respond well to changing market conditions and take advantage of the transition
to a low-carbon economy. Our net zero science-based targets commit us to reducing our Scope 1 and 2 emissions by 60% by 2030 and
90% by 2045, as well as our Scope 3 emissions by 42% by 2030 and 90% by 2045. Steep emission reductions combined with residual
offsetting will enable us to reach a net zero position, aligned to a 1.5ºC scenario as defined by the Science Based Target initiative (SBTi)
by 2045.
In 2024, we published our first Transition Plan, which details the key actions we are taking to meet our science-based targets, while also
mitigating risks and maximising climate opportunities. The Plan is structured around the five disclosure elements of the Transition Plan
Taskforce (TPT) guidance and can be found on our website. In 2025, our divisions continued to implement their own carbon reduction
plans and initiatives to progress our improving the environment Total Commitment (see pages 41 and 42 for more details). At Group
level, we have focused on identifying our sustainability impacts, risks and opportunities through a detailed DMA (see page 35), as well as
improving our climate-related data capture and quality, by developing an internal platform to capture environmental performance
metrics, including carbon, on a quarterly basis (see page 41).
Our divisions have been contributing to an internal carbon charge since 2021 and, in 2025, we increased it to £110 per tonne of CO
2
e
(2024: £90). Our quantitative analysis shows that if a high external carbon tax were imposed, this would not be a material tax burden
(>£3m per year) for the Group; however, having an internal charge mitigates this risk for our divisions and allows us to support
nature-based projects and purchase future carbon removals as required.
Identified climate-related risks and opportunities
Transition
Description and impacts
2025 initiatives and progress
Metrics monitored
1. Legal
Timing of risk:
Long term
Movement of risk:
Status of risk:
High
Increasing legislation aimed at
mitigating climate change in
the form of carbon taxes could
result in new operational costs
for the Group.
n
Increased internal carbon charge to
encourage carbon reduction activity.
n
Continued to implement initiatives to
reduce emissions such as sourcing low-
carbon materials and renewable energy.
n
Scope 1, 2 and 3 emissions (tonnes
CO
2
e).
n
Internal carbon charge
(£/tonne CO
2
e).
n
% of electricity purchased from
renewable sources.
Regulatory requirement to
report Scope 3 emissions
based on direct data from
suppliers in place of revenue-
based estimation could lead to
enhanced costs of calculation.
n
Increased third-party verification of our
Scope 3 inventory across divisions.
n
Increased use of CarboniCa across
projects to capture whole-life emissions.
n
Continued to engage suppliers through
the Supply Chain Sustainability School
(SCSS).
n
Scope 3 carbon emissions
(tonnes CO
2
e).
n
% of verified Scope 3 emissions.
n
Subcontractors (by spend) providing
their own carbon data.
n
Number of projects using CarboniCa.
Adopting immature products
or services that may result
in legal proceedings against
the Group.
n
Design teams continued to take a
precautionary approach to adopting
new technologies.
n
Engaged with insurance providers, legal
firms and suppliers to prevent legacy
defects and reduce risk.
n
Piloted experimental technologies on
a material scale.
n
Number of projects using CarboniCa.
n
Number of projects achieving
sustainability accreditation
(including BREEAM, LEED or SKA).
n
% of timber sourced using sustainable
sourcing certification standards such as
FSC and PEFC.
Increased focus on carbon,
particularly operational carbon,
may lead to litigation if space
does not perform as designed.
n
Continued implementation of CarboniCa
across projects.
n
Post-occupancy evaluations.
n
Scope 1 and 2 carbon emissions
(tonnes CO
2
e).
n
Number of projects using CarboniCa.
n
Number of projects achieving
sustainability accreditation (including
BREEAM, LEED or SKA).
Increase
Stable
Decrease
Morgan Sindall Group plc
Annual Report 2025
58
Transition
Description and impacts
2025 initiatives and progress
Metrics monitored
2. Regulatory
Timing of risk:
Medium
Movement of risk:
Status of risk:
High
Changes to regulation to
address new efficiency
standards, climate adaptation
or the ban of certain sites
or materials could increase
operational costs and
lengthen project timelines
or increase delays.
n
Continued to participate in trade
associations and conduct periodic
assessments of emerging regulations.
n
Continued to prioritise sustainable
procurement practices.
n
Implemented improved
decommissioning and recycling practices.
n
Number of projects achieving
sustainability accreditation (including
BREEAM, LEED or SKA).
n
% of hybrid or electric vehicles in fleet.
n
% of waste diverted from landfill.
n
% of electricity purchased from
renewable sources.
New sector-wide standards
to be met for construction
projects may result in losing
members of the supply chain
who are not quick enough
to adapt.
n
Construction developed a supply chain
carbon maturity framework aligned to
the Carbon Reduction Code.
n
Conducted supplier audits, conferences,
workshops and training for the supply
chain on low-carbon design, waste and
materials.
n
Scope 3 carbon emissions (tonnes CO
2
e).
n
Number of suppliers registered with
the SCSS and the number attending
dedicated training and workshops.
n
Subcontractors (by spend) providing their
own carbon data.
Timing of opportunity:
Short to medium term
Movement of opportunity:
Status of opportunity:
High
Supportive government
incentives to develop low-
carbon solutions to meet net
zero targets are implemented,
leading to tax incentives and
competitive advantage.
n
Property Services continued to work
under the Department for Energy
Security and Net Zero’s Social Housing
Fund.
n
Stricter Energy Performance Certificate
requirements.
n
Continued to promote and develop
green skills in line with the government’s
ambitions to increase clean energy jobs.
n
Number of projects achieving
sustainability accreditation
(including BREEAM, LEED or SKA).
n
% of revenue from sustainable projects.
3. Reputational
Timing of risk:
Long term
Movement of risk:
Status of risk:
Low
Risk of losing our competitive
position on climate, which
leads to failure to win contracts,
secure lending or attract
investors.
n
Continued to transparently disclose
progress against our science-based
targets while enhancing internal data
collection and verification processes.
n
Conducted a DMA to evolve strategy in
line with stakeholder expectations.
n
Continued to pursue carbon reduction
through divisional initiatives and
CarboniCa implementation.
n
Maintained strong scores among
ESG rating agencies.
n
% reduction of Scope 1 and 2 emissions
since 2019 baseline.
n
% reduction in Scope 3 emissions since
2020 baseline.
n
Number of projects achieving
sustainability accreditation (including
BREEAM, CEEQUAL, LEED or SKA).
n
Number of projects using CarboniCa.
n
MSCI and CDP scores.
n
Award wins.
4. Technological
Timing of risk:
Medium term
Movement of risk:
Status of risk:
Low
Increased costs or scarcity of
latest low-carbon technologies
to contribute to our
decarbonisation efforts lead to
slowdown in decarbonisation
progress and increased
operational costs.
n
Improved business case for clients and
bids to showcase low-carbon project
options and implement CarboniCa.
n
Developed divisional carbon reduction
plans and are implementing circular
solutions across sites.
n
Construction published regenerative twin
research findings to demonstrate and
replicate carbon savings across projects.
n
Internal carbon charge
(£/tonne CO
2
e).
n
% of hybrid or electric vehicles in fleet.
n
% of electricity purchased from
renewable sources.
Increase
Stable
Decrease
Climate reporting
continued
TCFD
59
Strategic report
Governance
Financial statements
Climate reporting
continued
TCFD
Transition
Description and impacts
2025 initiatives and progress
Metrics monitored
5. Market and resource efficiency
Timing of risk:
Medium term
Movement of risk:
Status of risk:
High
Demand for low-carbon
materials (e.g. timber,
innovative steel, insulation,
air source heat pumps) results
in supply chain bottlenecks
or increased costs.
n
Launching our Materials+ database to
understand carbon impact and cost of
materials in our supply chain.
n
Continued to strengthen relationships
with the Morgan Sindall Supply Chain
Family to gain favourable terms and
secure fixed prices.
n
Increasing reuse across projects to
reduce demand.
n
Number of projects achieving sustainable
accreditation (including BREEAM, LEED
or SKA).
n
% of timber sourced using sustainable
sourcing certification standards such as
FSC and PEFC.
Timing of risk:
Long term
Movement of risk:
Status of risk:
Medium
Market favouring improving
existing structures over
new builds.
n
Increased revenue across Construction
and Fit Out divisions in 2025.
n
Construction and Infrastructure
continuing to reduce carbon through
‘10- and 20-tonne challenges’.
n
Cultivated fit out, retrofit and
regeneration segments of business.
n
Revenue from Fit Out, Construction and
Infrastructure.
n
Number of projects achieving sustainable
accreditation (including BREEAM, LEED
or SKA).
n
Number of projects using CarboniCa.
Timing of opportunity:
Short to medium term
Movement of opportunity:
Status of opportunity:
High
Greater demand and
requirements for low-carbon
builds or requirement that
new construction be net zero,
including use of recycled
materials and retrofit demand
to adapt to warmer climate.
n
Identifying waste hotspots at
preconstruction phase to design out
waste.
n
Continued to support our clients to
decarbonise and provide solutions.
n
Number of projects achieving
sustainability accreditation (including
BREEAM, LEED or SKA).
n
Number of homes retrofitted under
government-funded environmental
or social initiatives.
n
% of revenue from sustainable projects.
Demand for climate-adaptable
or resilient assets or for
building assets to withstand
the physical impacts of
climate change (e.g. highway
improvements, water capacity
and rail extensions).
n
Fit Out have developed low-carbon
design guides and an internal reuse app.
n
Switching to low-carbon materials and
increasing reuse of materials.
n
Measuring biodiversity net gain across
projects and incorporating greenscaping
into designs.
n
Revenue from infrastructure,
construction and design, and repair and
maintenance services for wastewater.
n
Revenue from engineering and
construction services for railway
infrastructure.
n
Number of biodiversity net gain projects.
Using low-emission energy
such as renewable energy
or alternative fuels reduces
energy costs and improves
energy security.
n
Procuring green energy across offices
and sites.
n
Incentivising electric vehicle use and
installing smart and intelligent energy
monitoring on sites.
n
% of hybrid or electric vehicles in fleet.
n
% of electricity purchased from
renewable sources.
Physical
6. Chronic and acute
Timing of risk:
Medium to long term
Movement of risk:
Status of risk:
Medium
Vulnerabilities due to increasing
extreme weather events,
specifically heatwaves and
prolonged wet seasons leading
to project delays, increased
risk of re-work, supply chain
disruption and increased costs
or sales prices.
n
Negotiated contracts continued to
consider extreme weather to protect the
Group and assets.
n
Designing and implementing passive and
active design measures, such as raised
floors, solar shading, natural vegetation
and wind resistance structures.
n
Aligning with Passivhaus principles for
energy efficiency and thermal comfort
and implementing nature-based
solutions.
n
Number of projects achieving sustainable
accreditation (including BREEAM, LEED
or SKA).
n
Number of homes retrofitted under
government-funded environmental
or social initiatives.
n
Number of biodiversity net gain projects.
Increase in unviable land, such
as greenbelts and flood plains,
reducing availability of building
plots, as well as saturated
ground causing site run-off and
pollution events, limited access
to sites, delays or damage to
materials.
n
Conducting project risk assessments and
ongoing due diligence.
n
BakerHicks supports clients with climate
risk mapping to guide site layout and
emergency access.
n
Applying PAS 2080 for adaptation and
integrating BREEAM resilience into
specifications.
n
Number of projects achieving sustainable
accreditation (including BREEAM, LEED
or SKA).
n
Number of homes retrofitted under
government-funded environmental
or social initiatives.
n
Number of biodiversity net gain projects.
Increase
Stable
Decrease
Morgan Sindall Group plc
Annual Report 2025
60
Climate reporting
continued
TCFD
Risk management
Climate change is a principal risk for the Group and is therefore
managed through our Group risk governance framework and
integrated into our wider risk management framework (detailed
on pages 47 to 55). Climate-related risks and opportunities are
identified and assessed at least twice yearly at a Group and
divisional level, based on likelihood and severity. Emerging risks
are also reviewed regularly, alongside horizon scanning, to
consider changes in regulation, legislation and policy.
At an operational level, identification of climate-related risks and
opportunities begins early in the process, starting at the bidding
stage, by assessing project viability, costs, budgets and
environmental requirements. CarboniCa is also applied across
the project design phase to calculate the whole-life carbon impact
of the project and to suggest lower-carbon alternatives to teams,
designers, clients and supply chain partners. Once a project starts,
we conduct a risk assessment and carry out further due diligence
to identify additional ways of reducing carbon.
Metrics and targets
Our metrics and targets help us to manage the climate-related
risks and opportunities outlined on pages 58 to 60. The table
below includes some of the key metrics we monitor annually.
As we move closer to align with ISSB S2 and the UK Sustainable
Reporting Standards, we will look to enhance the operational
and financial metrics we disclose in the future.
We also report our GHG emissions as part of our compliance
with the UK’s SECR, found on page 62. A full breakdown of our
environmental metrics and associated data can also be found in
our responsible business data sheet, which is published annually
on our website alongside our annual report. Details of our
science-based targets and progress can be found on page 40,
and non-financial KPIs on page 15.
Key external metrics
2025
2024
2023
1. Legal
2. Regulatory
Scope 1, 2 and 3 carbon emissions (tonnes CO
2
e)
1,826,634
1,816,275
1
1,618,943
Internal carbon charge (£/tonne CO
2
e)
£110
£90
£70
3. Reputational
% reduction against Scope 1 and 2 science-based targets
55%
44%
45%
Number of projects achieving BREEAM, LEED and SKA or other
sustainable certifications
81
160
161
4. Technological
5. Market and
resource
efficiency
% of hybrid or electric vehicles in Group fleet
2
99%
98%
64%
Number of new projects using CarboniCa
211
218
280
% of electricity purchased from renewable sources
63%
56%
70%
% of waste diverted from landfill
93%
97%
94%
1
Our 2024 Scope 1, 2 and 3 historical data has been restated due to improvements to our Scope 3 methodology. See footnote 2 on page 40 for more detail.
2
Includes company car fleet only; excludes company vans.
Climate-related metrics and targets
61
Strategic report
Governance
Financial statements
Climate reporting
continued
Streamlined Energy and Carbon
Reporting (SECR)
GHG reporting improvements
Our direct GHG emissions reporting for Scope 1 and 2 has been
independently assured since 2010 in accordance with the
requirements of Toitū’s accredited organisational GHG
programme: Toitū ‘carbonreduce’. This programme is based on,
and fully incorporates, the Greenhouse Gas Protocol Corporate
Accounting and Reporting Standard (2015) and ISO 14064–1:2018
Specification with Guidance at the Organization Level for
Quantification and Reporting of Greenhouse Gas Emissions
and Removals. Where relevant, the inventory is aligned with the
GHG emissions protocol methodology.
The data reported in our SECR table below corresponds with our
financial year (1 January to 31 December 2025) and includes all
areas for which we have operational control in the UK and Europe.
The materiality threshold has been set at 5% with all operations
estimated to contribute more than 1% of the total emissions
included. The allowance built into the ‘carbonreduce’ accreditation
also permits +/–5% variance in the gross emissions total in case
a miscalculation is discovered following a carbon audit.
As Scope 3 emissions account for c.99% of our total carbon
footprint, it is important that we monitor and track these
emissions accurately. The complexity of our value chain has
meant that our Scope 3 methodology has been reliant on
estimates, for example using annual procurement spend on
materials, using revenue-based assumptions and applying
estimated emission factors. In 2025, we strengthened this
process by updating our methodology (see pages 41 and 185).
Our use of CarboniCa continues to strengthen inputs to improve
data accuracy across key categories.
This work is also enabling us to increase the proportion of
externally assured Scope 3 emissions data from our divisions.
GHG emissions (tonnes CO
2
e)
1
2025
2024
Baseline
2
Scope 1 emissions – Direct emissions
6,504
8,056
18,124
Scope 2 emissions – Indirect emissions
2,973
3,628
2,779
Scope 1 and 2 emissions – Total
9,477
11,684
20,903
Scope 3 emissions – Other indirect emissions
3
1,817,157
1,804,591
1,603,880
Scope 1, 2 and 3 emissions – Total
1,826,634
1,816,275
1,624,783
Carbon intensity – Scope 1 and 2 per £m revenue
1.9
2.6
6.8
Carbon intensity – Scope 1, 2 and 3 per £m revenue
364
400
528
Revenue
£5,018.6m
£4,546.2m
£3,071.3m
1
Includes GHG emissions associated with our UK and European operations. See Appendix on page 185 for Scope 1, 2 and 3 emission definitions and our responsible business data sheet on
our website for a full breakdown of our environmental data.
2
Our baseline for Scope 1 and 2 emissions is 2019 and baseline year for Scope 3 is 2020. In 2025, we rebaselined our Scope 3 emissions to apply new methodologies and assumptions.
See Appendix on page 185 for more information.
3
In 2025 we revised our 2024 Scope 3 emissions figure. See footnote 2 on page 40 for additional information.
2025
2024
2019
Energy use
1
– MWh
63,135
87,602
118,004
Energy intensity – energy use per £ revenue
12.6
19.2
38.4
1
Includes energy use from electricity, heat, steam and cooling, and fuel consumption from boilers, furnaces, generators and transportation (including company cars and private vehicle
mileage). Energy figures include both our UK and European operations.
We anticipate this coverage to increase further in 2026 and we
will continue to work with divisions to achieve full coverage of their
Scope 3 emissions across all relevant categories.
We report our carbon emissions using a location-based
methodology as this aligns to our science-based targets; however,
this means that progress shown against our emissions reduction
targets does not take into account the percentage of electricity
that we source from renewables and instead relies on the UK’s
grid decarbonisation. In 2025, 63% of our electricity was from
renewable sources. A breakdown of this data and our market-
based emissions can be found in our 2025 responsible business
data sheet, available on our website.
Increasing energy efficiency
Our focus on energy efficiency is evidenced through our
improved energy intensity, which has declined from 38.4 in 2019
to 12.6 in 2025 (see below).
In 2024, we submitted our action plan for the Energy Savings
Opportunity Scheme (ESOS) Phase 3 covering the period
December 2023 to December 2027. This year, we have reported
progress against our action plan, which includes increasing our
use of smart energy monitoring systems, such as Gaia Smart
Energy and measurable.energy, both of which have led to
significant savings across project sites (see page 41). A further
focus has been on implementing energy-efficient solutions
through design optimisation, including reducing the use of
energy-intensive materials where applicable. Divisions also took
action to increase renewable energy capture, with Partnership
Housing increasing solar production across its offices and sites
by 462,000 kWh.
These actions continue to support our journey towards net zero
in line with our Transition Plan. Further detail on our progress and
performance can be found on pages 40 to 42, and in the
responsible business section of our website.
Morgan Sindall Group plc
Annual Report 2025
62
Making informed decisions
The Board’s objective is to promote the Group’s
success for the benefit of all stakeholders, in line
with the directors’ duties set out in section 172
of the Companies Act 2006. The Board has
direct responsibility for, or receives information
for consideration on, the section 172 matters
listed here.
n
The Board sets the Group’s purpose, values and strategy
and ensures they are aligned with our culture.
See page 79
n
The Board reviews the Group’s strategy and conducts
strategy reviews with each division, to ensure the
long-term sustainable success of the business with good
outcomes for all our stakeholders.
See page 77
n
The Board sets the Group’s risk appetite, assesses
the principal risks that could impact on our strategy,
performance and stakeholders, and reviews the
mitigations we have in place.
See page 78
n
The Board engages directly or indirectly with our
stakeholders, monitors the impact of our activities on
them, and takes their interests and priorities into account
when making decisions.
See pages 11 to 13, 71 and 76 to 78
n
The Board monitors our performance against our five
Total Commitments to our stakeholders and wider
society.
See page 71
n
Directors and senior managers undertake training
on directors’ duties and other relevant topics.
See page 81
The likely consequences of any
decision in the long term
Purpose and strategy
10
Business model
8–9
Capital allocation
19
–
20
Pipeline of work
18
Divisional markets
6–7
The interests of the Company’s employees
Employee engagement
11
Protecting people
36–37
Developing people
38–39
Employee policies
64–65
Rewarding employees fairly
98–99, 101
The need to foster the Company’s business
relationships with suppliers, customers and others
Supply chain engagement
12
Working together with our supply chain
43–44
Human rights and modern slavery
37, 64
Client and partner engagement
12
Funder engagement
13
The impact of the Company’s operations on
the community and the environment
Community engagement
13
Enhancing communities
45–46
Improving the environment
40–42
Environmental policies
64
The Company’s reputation for high
standards of business conduct
Non-financial and sustainability information statement
64–65
Culture and values
10, 79
Code of Conduct
37, 64–65, 79
Raising concerns
37, 92
Board’s oversight of workplace policies and practices
69
Internal controls framework
90–92
The need to act fairly between members
of the Company
Shareholder engagement
13, 76
Annual general meeting (AGM)
71, 121
Rights attached to shares
122
Voting rights
122
Section 172 statement
How our directors perform their duties
How the directors have had regard
to Section 172 matters
63
Strategic report
Governance
Financial statements
Non-financial and sustainability information statement
We aim to comply with the non-financial and sustainability reporting regulations contained in sections 414CA and 414CB of the
Companies Act 2006. Our divisions communicate Group and divisional policies to their employees and supply chains. Our due diligence
with regard to environmental matters, employees and social matters is driven by our Total Commitments, which are a strategic priority
for the Group (see page 10).
Policies
Due diligence, impacts and principal risks
Environmental
matters
n
For our climate-related financial disclosures,
see pages 56 to 61.
n
Environmental policy, published on our
website: provides a framework for the effective
management of our environmental activities
across the Group.
n
Code of Conduct and Supplier Code of
Conduct, published on our website: commit
to protecting and improving the environment.
n
Sustainable procurement policy: commits
to being socially and environmentally
conscientious in our procurement.
Due diligence, pages 40 to 42.
Impacts, pages 40 to 42 and 62.
Principal risks, page 54.
Employees
n
Code of Conduct: commits to conducting
business in an open and ethical way
in line with our Core Values and Total
Commitments.
n
Group health, safety and wellbeing
management policy framework: includes our
occupational health, safety and wellbeing
policy, which commits to providing a healthy
and safe working environment for our
employees and others affected by our work.
n
Divisional health and safety policies: cover all
employees and extend to our subcontractors
and suppliers working on our projects.
n
Group inclusion and diversity policy: promoting
a dynamic and open workplace that nurtures
an engaged and talented team reflective of the
communities we serve.
Due diligence, pages 11, 36 to 39, 50, 69, 76, 79, 82,
94, 98 to 99, 101, 123.
Impacts, pages 11, 36 to 39.
Principal risks, page 50.
Social matters
n
We are committed to providing a better built
environment for all, and our services include
urban regeneration, social housing and critical
infrastructure. A large proportion of our
work is for the public sector and therefore
falls under the Public Services (Social Value)
Act 2012.
n
Sustainable procurement policy: commits
to being socially and environmentally
conscientious in our procurement.
Due diligence, pages 13, 45 and 46.
Impacts, pages 13, 45 and 46.
While social matters are not regarded as a
principal risk, each division carries out regular
risk assessments to identify any areas of its
business and markets that may be susceptible
to risk, and embeds appropriate procedures
in its day-to-day operations.
Human rights
n
Human rights policy, published on our website.
n
Code of Conduct and Supplier Code of
Conduct (see page 37).
n
Modern slavery statement, published on
our website.
n
Whistleblowing procedure (see page 37).
Due diligence, pages 37 and 79.
Impacts, pages 12 and 37. See also our modern
slavery statement on our website.
Human rights breaches are not considered a
principal risk; however, information on how we
manage this risk can be found in our modern
slavery statement.
Morgan Sindall Group plc
Annual Report 2025
64
Non-financial and sustainability information statement
continued
Policies
Due diligence, impacts and principal risks
Anti-corruption
and anti-bribery
n
Code of Conduct and Supplier Code of
Conduct: state that we will not tolerate any
form of bribery or corruption.
n
Group anti-fraud policy, published on our
website: setting out the Group’s zero-tolerance
approach to all forms of fraud.
n
Bribery Act guidance note: provides guidance
on the Bribery Act 2010 and how it is relevant
to the Group.
n
Group-wide dealing policy: clarifies to all
employees regulations relating to the misuse
of inside information.
n
Dealing code: states directors’ and
others’ obligations to comply with market
abuse regulation.
n
Competition law compliance policy: clarifies
requirements under the Competition Act
1998 and Enterprise Act 2002. Each division
provides its employees with guidelines tailored
to the division’s activities.
Due diligence, pages 90 and 91.
Impacts: there was no evidence of any systemic
bribery or corrupt activity in 2025.
We do not regard corruption and bribery as a
principal risk to the Group.
Copies of our policies are available on our website or can be obtained from the Group’s company secretary on request. Our business
model is set out on pages 8 and 9 and our non-financial KPIs on page 15.
Non-financial data collection
In 2025, we continued to review the means and methodologies used to collect and report non-financial data across our five Total
Commitments (see page 34). In 2026, we are launching a new data collection platform through which all divisions’ ESG metrics will be
collated, monitored and reviewed. This will ensure improved reliability, accountability and transparency of the Group’s non-financial and
ESG performance data.
The sources of our non-financial KPI data, as reported on page 15, are listed below:
n
Lost time incident rate: calculated in accordance with industry standards and reviewed monthly by divisional teams, the Group
management team and the Board.
n
Training days: recorded directly from each division’s automated HR system and verified by appointed employees.
n
Carbon emissions: all Scope 1 and 2 data is independently verified (see page 62). See pages 41 and 62 for how we are addressing the
collection of wider Scope 3 emissions data.
n
Payment of supply chain: we report our payment to suppliers in accordance with the Prompt Payment Code, and the data is checked
by our Group finance team (see pages 18 and 43).
n
See pages 45 and 46
for how we measure social value on our projects.
65
Strategic report
Governance
Financial statements
Going concern and viability statement
Going concern
The Group’s business activities, together with the factors likely
to affect our future development, performance and position,
are set out in this strategic report.
As at 31 December 2025, the Group had net cash of £531.2m
and committed banking facilities of £180m, of which £15m
matures in June 2028 and £165m matures in October 2028.
The directors have reviewed the Group’s forecasts and
projections, which show that we will have a sufficient level of
headroom within facility limits and covenants over the period
of assessment which the directors have defined as the date of
approval of the 31 December 2025 financial statements through
to 28 February 2027. After making enquiries, including the review
of sensitivities for plausible downside scenarios to the forecasts,
the directors have a reasonable expectation that the Company
and the Group have adequate resources to continue in
operational existence for the foreseeable future. Thus they
continue to prepare the annual financial statements on the
going concern basis. See page 142 for the going concern
basis of preparation in the consolidated financial statements.
Viability
As required by Provision 31 of the UK Corporate Governance
Code, the directors have assessed the prospects and financial
viability of the Group and have concluded that they have a
reasonable expectation that the Group will be able to continue
in operation and meet its liabilities as they fall due over the period
of the assessment.
This assessment took account of the Group’s current position and
the potential financial and reputational impact of the principal
risks (as set out on pages 48 to 54) on the Group’s ability to deliver
its business plan. This assessment describes and tests the
significant solvency and liquidity risks involved in delivering the
strategic objectives within our business model.
The assessment has been made using a period of three years
commencing on 1 January 2026, which is in line with the Group’s
budgeting cycle. This gives good visibility of future work as the
majority of the Group’s workload falls within three years and
enables more specific forecasting as the Group’s contracts follow
a life cycle of three years or less. There is inherently less visibility
over the expected workload beyond three years, and increased
uncertainty around the forecasted costs to deliver. Consequently,
it is deemed most appropriate to perform its medium-term
planning over a three-year period.
The directors have compiled cash flow projections incorporating
each division’s detailed business plans with an overlay of
Group-level contingency. At Group level, the base case financial
projections assume revenue growth and improvements in both
profit margin and return on capital employed in line with the
Group’s strategy and medium-term targets.
As per the business model, operating cash flows are assumed
to broadly follow forecast profitability in the Group’s construction
activities, but are more independently variable in partnerships,
driven by the timing of construction spend and programmed
completions on schemes.
The base case business plan includes the Group maintaining
positive net cash for the entirety of the period reviewed, with
no drawings under its loan facilities. The Group has £180m of
committed revolving credit facilities, undrawn at 31 December
2025, of which £15m is committed until June 2028 and £165m
is committed until October 2028. For the purposes of testing
viability, it is assumed that equivalent facilities are available past
these maturities.
The impact of a number of plausible downside scenarios on the
Group’s funding headroom (including financial covenants within
committed bank facilities) have been modelled with consideration
of the Group’s principal risks that could have a direct impact on
operational cash flows.
The table on page 67 gives an overview of the scenarios modelled
and the mapping to the relevant Group’s principal risks.
There are no individual scenarios which are considered to
materially impact the Group’s viability, and our assessment
included modelling the financial impact on the business plan of
a severe downside scenario where the impact of a reasonably
plausible combination of the divisional risks were applied
in aggregate.
In the event of this severe collection of scenarios occurring, there
is still a reasonable expectation that the Group will be able to
continue in operation and meet its liabilities.
In addition, the Board has considered a range of potential
mitigating actions that may be available if this worst-case
collection of scenarios arose. These primarily include a reduction
in investment in working capital and a reduction in the dividend.
As part of the sensitivity analysis, the directors also modelled a
scenario that stress-tests the Group’s forecasts and projects to
determine the scenario under which the headroom would exceed
the committed bank facilities. The model showed that the Group’s
operating profit would need to deteriorate substantially for the
headroom to exceed the committed facilities. The directors
consider there is no plausible scenario where cash inflows would
deteriorate this significantly.
Based on the results of its review and analysis, the Board has a
reasonable expectation that the Group will be able to continue
in operation and meet its liabilities as they fall due over the
three-year period of its assessment until 31 December 2028.
Assessing the Group’s prospects beyond the review period, the
directors consider that demand will remain strong across all
divisions. The Group has maintained a healthy balance sheet,
has a strong order book and operates a resilient and prudent
business model.
Morgan Sindall Group plc
Annual Report 2025
66
Going concern and viability statement
continued
Scenario
Principal risk mapping
Reduced revenue and margins in our construction and fit out businesses
The cash performance of our construction and fit out businesses is correlated to the
levels of revenue and margin achieved by each division.
We have modelled a scenario of reduced revenue that could be caused by changes
in the UK economic conditions or the insolvency of a key client/partner. In addition
to this, we have modelled reduced profit margins which may result from increased
inflation, inefficiencies that could be a result of poor project selection, poor project
delivery, resourcing issues, health and safety issues, and the impact of disruption that
could be caused by cyber activity or climate change.
n
Economic change and uncertainty
n
Partner insolvency or other
performance and compliance issues
n
Poor contract selectivity
n
Poor project delivery
n
Health and safety incident
n
Talent attraction and retention
n
Cyber attack
n
Climate change
Working capital deterioration in our construction and fit out businesses
We have modelled a scenario including a deterioration of working capital in our
construction and fit out businesses that could be caused by delays in receiving
payments from customers and also having to pay suppliers earlier.
n
Mismanagement of working capital
and investments
n
Partner insolvency or other
performance and compliance issues
Reduction in open market sales values and sales pace in Partnership Housing
We have modelled a scenario where there is a reduction in the open market housing
sales values and a slowdown in the sales pace caused by further changes and
uncertainty in the UK economic conditions, exposure to the UK residential market
or poor project delivery.
n
Economic change and uncertainty
n
Exposure to the UK residential
market
n
Poor project delivery
Project delays or viability concerns, and cost increases in Mixed Use Partnerships
We have modelled a scenario where there were project delays or cancellations in
respect of Mixed Use Partnerships and also reduced margins.
This scenario could be the result of further changes and uncertainty in the UK economic
conditions, including changes in the UK residential market, and also inefficiencies that
could be a result of poor project delivery, resourcing issues, health and safety issues,
or the impact of disruption that could be caused by cyber activity or climate change.
n
Economic change and uncertainty
n
Exposure to the UK residential
market
n
Partner insolvency or other
performance and compliance issues
n
Poor project delivery
n
Health and safety incident
n
Talent attraction and retention
n
Cyber attack
n
Climate change
Higher developers’ pledge expenses
We have modelled a scenario where we incur higher than expected expenses in
respect to our obligations under the building safety developers’ pledge, but these
costs are not fully recovered through contractual remedies.
n
Poor project delivery (including
changes to contracts and
contract disputes)
n
Health and safety incident
n
Mismanagement of working capital
and investments
Severe downside case
We have modelled a scenario where all of the scenarios above combined at the same
time to represent a severe downside scenario.
n
All of the above
This strategic report was approved by the
Board and signed on its behalf by:
John Morgan
Chief Executive
24 February 2026
67
Strategic report
Governance
Financial statements
In this section
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
Governance
Morgan Sindall Group plc
Annual Report 2025
68
As a UK-listed company, our governance structure is based
on the UK Corporate Governance Code.
The UK Corporate Governance Code
The Company has applied all the Principles, and complied with all Provisions, of the 2024 UK Corporate Governance Code (the ‘Code’)
that were applicable to the 2025 reporting period. The Code is available on the Financial Reporting Council’s website at frc.org.uk.
1
In line with the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013, further information on how the directors
have performed their duties under section 172 of the Companies Act 2006 (the ‘Act’) is contained in the strategic report.
1 Provision 29, which requires the Board to make a declaration on the effectiveness of our material controls, does not come into force until 1 January 2026 and is
therefore not applicable to the 2025 reporting period. In this year’s annual report, we have disclosed our continuing preparations for compliance with Provision 29
(see page 92). We intend to report in full on Provision 29 in our 2026 annual report.
Board leadership and company purpose
A. Board effectiveness
The Board provides effective leadership by setting a strategy to deliver our purpose and underpinning it with
strong governance. It oversees the Group’s performance, using key financial and non-financial indicators to ensure
that long-term value is generated for our stakeholders and wider society. The Board is committed to a culture of
decentralisation that encourages entrepreneurialism across the divisions. It ensures that sufficient resources are
in place to maximise opportunities and that the future success of the Group is safeguarded through an effective
framework of risk management and internal control. The audit committee supports the Board in its oversight of
risks and internal controls to enable the Board to set the Group’s risk appetite.
See strategic report on pages 4 to 67, Board review on page 76 to 79, and audit committee report on pages 86 to 92
B. Purpose, values,
strategy and culture
The Board is responsible for establishing and promoting our purpose, values and strategy and ensuring they are
aligned to our culture. The Board assesses and monitors culture, including how the desired culture has been
embedded, through regular meetings with divisional management, analysis of cultural indicators and conversations
with employees throughout the Group.
See purpose, values, strategy and culture on page 79
C. Board decisions
The Board’s principal decisions focus on areas that are material to the Group as a whole in the context of the
Group’s strategy and objectives. In its discussions, the Board takes into consideration the issues that are key to our
stakeholders and any potential impact of their decisions.
See the Board’s principal decisions on pages 77 and 78 and outcome of stakeholder double materiality survey on page 35
D. Engagement with
shareholders and
stakeholders
The Board recognises that effective engagement with our stakeholders is critical to the long-term resilience of the
business. It engages directly with employees and shareholders and is kept fully informed via the executive directors
of any material issues or feedback relating to other stakeholders.
See strategic report on pages 11 to 13
E. Oversight of workplace
policies and practices and
workforce engagement
The Board approves the Code of Conduct and all key Group policies to ensure they are consistent with our Core
Values and support long-term sustainable success. The internal audit team monitors compliance with our policies
and reports any areas of non-compliance to the audit committee. Employees also have access to our raising
concerns/whistleblowing service, which the Board reviews biannually. The Board has adopted an alternative method
for employee engagement to the Code’s three suggested options. Given the structure and culture of our business
and the size of our Board, all our non-executive directors share responsibility for employee engagement. This allows
them to meet a broad range of employees each year through a mix of group and one-to-one discussions, including
without management present. The Board considers that this remains an appropriate way for it to engage most
effectively with a large number of people across our decentralised business.
See strategic report on page 11 and pages 64 and 65
Division of responsibilities
F. Role of the chair
The chair is responsible for the overall effectiveness of the Board, promoting a culture of openness and debate at
meetings and facilitating effective contribution by all non-executives. The chair and committee chairs work with the
company secretary to set meeting agendas in line with their terms of reference and to ensure that directors receive
accurate, timely and clear information ahead of each meeting. These measures support constructive relations and
well-informed and transparent decision-making. Our chair, Peter Harrison, was independent on appointment when
assessed against the circumstances set out in Provision 10 of the Code.
G. Board composition
Our Board consists of a majority of independent directors. The nomination committee reviews the composition
of the Board and future succession plans to ensure that there remains an appropriate balance of executive and
non-executive directors such that no individual or group of individuals is in a position to dominate its decision-
making. The tenure of directors is regularly reviewed to maintain independence and ensure regular refreshment
of the Board. There is a clear division of responsibilities between the chair, chief executive and senior independent
director, as summarised on our website.
See nomination committee report on page 81
69
Strategic report
Governance
Financial statements
The UK Corporate Governance Code
continued
Division of responsibilities
continued
H. Role of non-executives
When making new appointments, the Board ensures non-executives have sufficient time to meet their
responsibilities of providing challenge, guidance and advice to the Board. New directors are asked to disclose any
significant commitments they have, together with an indication of the time involved, to enable the Board to assess
whether they will be able to devote the time necessary to their role. After appointment, prior approval must be
sought before additional appointments are accepted so that the Board can assess any potential conflicts and the
additional demands on the director’s time.
See Board biographies on page 74
I. Company secretary
The Board has access to the advice and services of the company secretary, who is responsible for advising
the Board on all governance matters. There are agreed procedures by which directors can take independent
professional advice, at the expense of the Company, on matters relating to their duties. The appointment and
removal of the company secretary is a matter for the Board as a whole.
Composition, succession and evaluation
J. Succession planning
and appointments
Succession planning and the process for Board appointments is led by the nomination committee to ensure
orderly succession to both Board and senior management positions. During the year, Peter Harrison was appointed
as the new chair, replacing Michael Findlay who had completed his nine-year term.
See nomination committee report on pages 81 and 82
K. Board composition
and skills
The nomination committee reviews and updates the Board skills matrix to identify the skills and experience required
by future appointments. The skills matrix was reviewed and updated during the year following Peter Harrison’s
appointment.
See nomination committee report on page 81
L. Board performance review
The 2025 Board, committee and individual performance reviews were carried out internally by the chair. The senior
independent director led the chair’s performance review. In accordance with the Code requirements, an external
review was carried out in 2023 by Longwater Partners and the next external review is planned for 2026.
See nomination committee report on pages 84 and 85
Audit, risk and internal control
M. External and internal
audit and integrity of
financial statements
The audit committee oversees the Company’s relationship with the external auditor, Ernst & Young LLP, and
annually reviews its independence and effectiveness. The head of audit and assurance reports directly to the audit
committee at each meeting on the activities and findings of the internal audit function. The committee reviews the
financial reporting in detail and monitors the integrity of the financial and narrative statements.
See audit committee report on pages 86 to 92
N. Fair, balanced and
understandable
assessment
The audit committee advises the Board on whether the annual report and accounts, taken as a whole, is fair,
balanced and understandable and provides the information necessary for shareholders to assess the Company’s
position and performance, business model and strategy.
See audit committee report on pages 88 and 89
O. Risk management and
internal control framework
The Board monitors the Group’s risk management and internal control framework and carries out an annual
review of its effectiveness. It conducts a robust assessment of the Group’s principal and emerging risks and sets
the Group’s risk appetite to align with our long-term strategic objectives. The audit committee assists the Board
in these activities.
See audit committee report on pages 87 and 90 to 92
Remuneration
P. Remuneration objectives
and key responsibilities
The remuneration committee is responsible for determining the remuneration policy and ensuring executive
remuneration is designed to align with the Company’s purpose and drives the right behaviours to support our
strategy and promote long-term sustainable success.
See directors’ remuneration report on pages 95 to 101
Q. Remuneration policy
Our current remuneration policy was approved by shareholders at the 2023 AGM and is due for renewal at the
2026 AGM. The remuneration committee sets the remuneration of the chair and executive directors within the
approved policy. No director is involved in deciding their own remuneration outcome.
See proposed forward-looking remuneration policy on pages 102 to 111
R. 2025 remuneration
outcomes
The remuneration committee exercises independent judgement and discretion when authorising remuneration
outcomes, taking into consideration the performance of the Company, individual performance and wider company
pay policy.
See directors’ remuneration report on page 99 and annual report on remuneration on pages 112 to 114
Morgan Sindall Group plc
Annual Report 2025
70
Chair’s statement
Board performance review
During the fourth quarter of the year, we conducted an internally
facilitated Board performance review (the outcomes are set out
on page 85). This review assessed the Board’s effectiveness, with
a particular focus on the key areas identified in last year’s annual
report. An externally facilitated review will be undertaken in 2026.
Following discussions after completion of the review process,
the Board agreed at its meeting in February this year to dissolve
the responsible business committee. This decision reflects
consideration to the size of the Board and the desire to increase
effectiveness by avoiding duplication of oversight, as well as the
evolving regulatory landscape. Driving progress on our Total
Commitments remains central to our strategy and to our ability
to secure future work and deliver long-term social value.
Responsibility for monitoring performance against these
commitments will rest with the Board, supported by the
audit committee.
Stakeholder engagement
I am keen to listen carefully to the views of our stakeholders.
I have met with many of our largest shareholders to understand
their areas of focus and to share the Board’s priorities for the
future. In addition, the chair of the remuneration committee
wrote separately to the major shareholders and proxy advisory
firms to invite their input as part of the remuneration committee’s
triennial review of the directors’ remuneration policy ahead of the
new policy being put forward to shareholders at this year’s AGM
(see page 98). The discussions with shareholders covered a
range of topics, including succession planning, capital allocation,
the proposed remuneration policy, risk management and ESG.
The feedback from these engagements was that overall
shareholders are supportive of our approach and strategy,
including the proposed remuneration policy. The valuable views
received from those meetings were discussed at the Board and
at the remuneration committee.
Our AGM will be held in May, at which we look forward to
welcoming shareholders in person. Shareholders are also invited
to submit questions in advance of the meeting by email. Further
details on the AGM can be found on page 121 and in our AGM
circular issued along with this annual report.
Peter Harrison
Chair
24 February 2026
I am pleased to present our corporate governance
report for the year ended 31 December 2025. This
report provides detail on how the Board operates
to benefit shareholders and other stakeholders.
First, on behalf of the Board, I would like to extend our sincere
thanks to Michael Findlay for his outstanding leadership and
invaluable contribution as chair. He retired from the Board in July
after nine years of service.
Since joining the Board in May and ahead of assuming the role of
chair, I took the opportunity to visit our divisions and engage with
their teams to deepen my understanding of the business. I was
hugely impressed by the strength of our culture – evident in the
quality of our leadership, the operational discipline across the
Group, and the commitment and professionalism of our people.
I look forward to working closely with the Board and management
to uphold the reputation they have established with our partners
and customers and to ensure we continue to deliver a positive
impact for our many stakeholders.
2025 was a year that validated our business strategy and focus
on execution: the Group delivered another record set of results,
despite the ongoing uncertainties in the economic environment.
The Board was impressed by the responsiveness of the executive
team in reacting to opportunities, and their excellent delivery.
Looking ahead, we remain committed to maintaining this
momentum by continuing to invest in partnerships and through
driving further innovation across our operations. The Board will
continue to play an important role in ensuring that our
governance framework supports sustainable growth, resilience
and long-term value creation.
We have once again delivered a strong performance in our
external ESG ratings, something which is highly valued by our
customers (see page 40). With less than five years remaining to
achieve our medium-term KPIs, the Board will continue to oversee
the continuing refinement of our strategy and focus on the areas
that matter most to our stakeholders and to our business. These
commitments reflect our determination to deliver not only
financial performance but also positive environmental and social
outcomes. For further details, see responsible business strategy
and performance on pages 34 to 46.
Of the many things that are special within Morgan Sindall, our
people stand out. On behalf of the Board, I would like to thank
our colleagues for these great achievements.
Board succession and diversity
The Board and the nomination committee have continued to
prioritise succession planning and Board composition. During the
year, we refreshed our Board inclusion and diversity policy and
approved a Group-wide policy to support divisions in developing
their own frameworks to further embed inclusive practices into
their operations. While progress has been made, we recognise
that improving diversity across our industry remains a significant
challenge. Each division remains committed to driving inclusion
and diversity at all levels, including initiatives to help strengthen
diversity in our senior leadership roles.
71
Strategic report
Governance
Financial statements
Board overview
A strong leadership team delivering value for
our stakeholders
Board
Audit
Responsible
business
Nomination
Remuneration
Total in 2025
10
3
3
3
6
4
Peter Harrison¹
7
1
2
2
John Morgan
10
1
2
3
2
Kelly Gangotra
10
3
2
3
2
3
2
David Lowden
3
9
2
1
2
2
3
Jen Tippin
4
9
3
1
2
3
4
Sharon Fennessy
10
3
1
2
3
Mark Robson
4
9
3
2
3
3
4
Michael Findlay
5
7
2
2
2
2
1
2
In 2025, the Board held four additional meetings, primarily to discuss and review the Group’s performance and approve stock market announcements,
and the remuneration committee
held one additional meeting as part of their triennial review of the forward-looking directors’ remuneration policy. The Board also allocated time at the end of each of the six scheduled
meetings during the year for the chair and other non-executive directors to meet without the executive directors present. No material issues were raised at any of these meetings.
1
Peter Harrison attended all Board and nomination committee meetings during the year since his appointment date. He attended the May Board meeting, AGM and nomination
committee meeting by invitation.
2
Attended by invitation.
3
David Lowden was unable to attend the meetings held on 24 February 2025 due to a change in the original meeting date which conflicted with a prior commitment.
4
Jen Tippin and Mark Robson were unable to attend one unscheduled Board call in June due to prior commitments that could not be changed at short notice.
5
Michael Findlay stepped down from the Board on 28 July 2025. He attended all scheduled Board and nomination committee meetings prior to his resignation date.
6
An additional subcommittee meeting of the nomination committee was held in January 2025 to finalise the approval of Peter Harrison’s appointment and the related stock exchange
announcement (not included in the attendance figures above).
Board diversity
Board attendance
The Board’s experience
As at 31 December 2025
As at 31 December 2025
The Board’s experience
More information on Board and senior leadership diversity can be found on pages 82 and 83.
4
7
6
3
4
2
4
6
Industry knowledge/experience
Strategy development
Financial expertise
Responsible business (ESG)
IT/cyber security
Risk management
Complex supply chain
management
External FTSE 350
board experience
Gender diversity
Ethnic diversity
4
3
Male
Female
6
1
White
Ethnically diverse
Total number of directors: 7
Chair and non-executive director tenure
0–3 years
4–6 years
7–9 years
3
1
1
Total number of directors: 5
Role
Chair
Executive
Non-executive
1
2
4
Total number of directors: 7
Morgan Sindall Group plc
Annual Report 2025
72
Our Board
An experienced Board
committed to delivering value
for our stakeholders
The Board consists of the chair, two executive directors and
four non-executive directors, each bringing a range of skills,
experience, knowledge and background to Board discussions.
Each Board member has considerable experience in strategy
development and implementation, corporate governance and
regulatory requirements, which enables them to discharge their
responsibilities and promote the long-term sustainable success
of the Group.
The non-executive directors are responsible for providing
independent oversight, constructively challenging the executive
directors and monitoring delivery of the Group’s strategy within
the risk and control framework set by the Board.
As at the date of this report, 57% of our Board (excluding
the chair) are considered by the Board to be independent
according to the criteria set out in the Code. None of the
non-executive directors, including the chair, had any previous
connection with the Company or its executive directors on
appointment. Our chair was considered independent on his
appointment when assessed against the circumstances set out
in Provision 10 of the Code. No cross-directorships exist between
any of the directors.
Brief biographical details and skillsets of the directors in office at
31 December 2025 and the date of this report are set out below.
Board of directors
Peter Harrison
Chair
John Morgan
Chief Executive
Board committees
A
Audit committee
N
Nomination committee
R
Remuneration committee
RB
Responsible business committee
(dissolved February 2026)
Committee chair
Kelly Gangotra
Chief Financial Officer
The executive directors are supported by our
Group management team in implementing the
strategy and policies approved by the Board.
The Group management team includes the
divisional managing directors and the general
counsel and company secretary. Full details of
Group management team membership and
biographies are available on our website.
N
Sharon Fennessy
Non-executive Director
N
A
David Lowden
Senior Independent Director
N
R
A
Jen Tippin
Non-executive Director
A
N
R
Mark Robson
Non-executive Director
R
N
RB
73
Strategic report
Governance
Financial statements
Our Board
continued
Peter Harrison
Chair
Appointed: May 2025
Independent on appointment:
Yes
Skills and experience:
Peter has spent his career
in asset and wealth management, serving in both
executive and non-executive roles. He was Group
CEO at Schroders plc until November 2024, prior
to which he was global head of investment. Prior
to this he had leadership roles at RWC Partners,
Deutsche Bank and JP Morgan. Peter has served as
a non-executive director of various organisations,
including The Investment Association (also as chair),
FCLT Global, Greencoat Capital and Blue Orchard.
He has served as a member of the Takeover Panel
and on the advisory board of Antler, a venture
capital firm.
Contribution to long-term success:
The Board
benefits from Peter’s extensive experience in
running a complex business, including his expertise
in capital markets, finance, governance, risk,
technology, climate change and human resource
management. His contribution assists the Group
in pursuing its strategy, maximising the value of
the business, and delivering long-term sustainable
value for all our stakeholders. Peter’s leadership of
the Board encourages open debate by all Board
members and effective decision-making by drawing
on each director’s skills, experience and knowledge.
Current external roles:
Peter is currently a non-
executive director and member of the audit and
workplace and culture committees at Lazard Inc.
and chair of Business in the Community. He is also
a member of The Economy Honours Committee
and the UK Capital Markets Industry Taskforce.
During the year he served on the Advisory Board
of the Water Commission.
John Morgan
Chief Executive
Appointed: October 1994
Independent:
No
Executive responsibilities:
John leads the Group,
developing and implementing the strategy and
policies approved by the Board, embedding values
and culture, and driving inclusion and diversity
throughout the business.
Skills and experience:
John co-founded
Morgan Lovell in 1977, which merged with
William Sindall plc in 1994 to form Morgan Sindall
Group plc. He instituted and champions the Group’s
decentralised business model that empowers the
divisions to challenge the status quo and keep
innovating and winning in their respective markets.
Contribution to long-term success:
The Board
benefits from John’s in-depth knowledge and
experience of property and construction. His
significant leadership and people management
skills continue to drive forward the Group’s strategy
to ensure quality of earnings and grow the business
organically for the benefit of all our stakeholders.
John is responsible for ensuring that career
opportunities within the Group are accessible to
people from a variety of backgrounds so that we can
recruit the best people from a wide pool of talent.
Current external roles:
John does not currently
hold any external appointments.
Kelly Gangotra
Chief Financial Officer
Appointed: May 2024
Independent:
No
Executive responsibilities:
Kelly leads the Group’s
financial strategy and has overall responsibility
for corporate reporting, finance, IT, ESG and
responsible business, procurement, taxation and
treasury. She contributes to the development and
implementation of the strategy and policies approved
by the Board. Kelly is chair of the risk committee.
Skills and experience:
Kelly was the healthcare
sector chief financial officer at Halma plc between
2022 and 2024. Prior to that, she was CFO for
Skanska UK, having previously been finance director
from 2012 to 2015 and executive vice president
between 2015 and 2022.
Contribution to long-term success:
The
Board benefits from Kelly’s extensive financial
and commercial leadership experience in the
construction and property sectors and her track
record as a CFO working in a decentralised
business. Her expertise supports the chief executive
and the Board in maintaining the Group’s financial
resilience and strong balance sheet as the business
continues to develop and grow.
Current external roles:
Kelly does not currently
hold any external appointments.
Sharon Fennessy
Non-executive Director
Appointed: January 2024
Independent:
Yes
Skills and experience:
Sharon is a fellow of the
Institute of Chartered Accountants. She has an
extensive background in corporate finance, treasury
and investor relations. Sharon’s previous experience
includes John Lewis Partnership plc, where she
was non-executive member of the risk and audit
committee, and Diageo plc, where she was most
recently group controller and prior to that head of
investor relations, group treasurer and finance and
strategy director for Western Europe. Before joining
Diageo, Sharon held a number of senior finance
leadership positions at Nortel Networks, in multiple
locations across Europe and the US.
Contribution to long-term success:
The Board
benefits from Sharon’s wide knowledge in finance,
audit and treasury as well as her strong strategic
and commercial experience.
Current external roles:
Sharon is currently
appointed as a non-executive director and member
of the remuneration and audit committees at
Gowan Group Limited.
David Lowden
Senior Independent Director
Appointed: September 2018
Independent:
Yes
Skills and experience:
David is a highly
experienced non-executive director and chair
of UK-listed companies in several sectors. He
has experience in both financial and general
management through his prior executive roles
of finance director and chief executive at Taylor
Nelson Sofres plc, where he supported growth and
profitability through the efficient design of business
operations and appropriate use of systems
and processes. David’s public board experience
includes prior roles as chair of Page Group plc,
chair of Huntsworth plc, chair of the audit and risk
committee at William Hill plc, and chair of the audit
committee at Cable & Wireless Worldwide plc.
Contribution to long-term success:
David’s
strong strategic understanding and financial,
marketing and commercial skills, gained through
his many years’ experience working in international
businesses, are invaluable to the Board as the
Group pursues its strategy for growth.
Current external roles:
David is currently chair
of the board of Diploma plc and chair of the board
of Capita plc, having previously been the senior
independent director.
Mark Robson
Non-executive Director
Appointed: September 2024
Independent:
Yes
Skills and experience:
Mark was the Group CFO
at Howden Joinery Group plc for 16 years, where
he also served as deputy CEO. His expertise in
the City and corporate finance, in addition to
his operational experience, was instrumental in
driving the company’s turnaround and exceptional
value creation. He is highly experienced in leading
complex changes involving mergers, demergers,
flotations and joint ventures. Mark qualified as
a chartered accountant with PwC. He gained
extensive international experience earlier in his
career as a CFO in various ICI businesses as well as
with Delta plc, where he was Group CFO.
Contribution to long-term success:
Mark’s
experience is key to maintaining the Group’s
strong balance sheet and growing order book.
His ability to identify and execute profitable growth
in competitive environments supports our strategy
for the positive development of profit before tax
based on an understanding of the dynamics and
opportunities in our businesses.
Current external roles:
Mark is currently
appointed as a non-executive director at Grafton
plc, where he is chair of the audit and risk
committee and a member of the nomination and
remuneration committees.
Jen Tippin
Non-executive Director
Appointed: March 2020
Independent:
Yes
Skills and experience:
Jen has extensive strategic
and commercial experience developed through her
career in financial services and in the engineering
and airline sectors. She has wide experience in
business leadership and transformation, human
resources, efficiency, sourcing, supply chain
management and property, together with a deep
understanding of customer experience. Jen has
previously been group chief operating officer for
NatWest Group and has sat on the boards of
City University, Lloyds Bank Corporate Markets,
the Financial Services Skills Commission and Kent
Community NHS Foundation Trust.
Contribution to long-term success:
The Board
benefits from Jen’s strengths in consumer-facing
markets, and her insights into IT, people and
complex supply chain management are relevant
to the Group’s strategy to deliver long-term
sustainable value to our stakeholders. Her
knowledge and understanding of remuneration and
related corporate governance issues enable her as
chair of the remuneration committee to lead on the
Group’s remuneration philosophy to ensure that
we motivate and retain executive directors of the
calibre required to deliver our strategy.
Current external roles:
Jen is a non-executive
director of HMRC, where she is chair of the
customer service committee and a member of the
nomination committee. She is also a member of the
board of City HR Association Limited.
Morgan Sindall Group plc
Annual Report 2025
74
Governance framework
Our governance framework supports our long-established philosophy of decentralisation and ensures there is supervision
at appropriate levels of the organisation to drive performance and manage risks and opportunities. Our divisions are given autonomy
to operate in the way that best serves their respective stakeholders and allows them to respond quickly and effectively to changes in
their markets. We believe this approach remains fundamental to the divisions delivering their business strategies and contributing to
the long-term success of the Group.
The Board
The Board, assisted by its committees, is responsible for:
n
determining overall strategy and
long-term objectives to align with
our purpose;
n
ensuring that the divisions have
appropriate strategies and
resources in place and a culture
that drives the right behaviours;
n
overseeing material social
and environmental risks and
opportunities;
n
approving the annual business
plan and budget;
n
determining risk appetite and
principal risks;
n
overall corporate governance
arrangements, including a
framework of prudent and
effective controls that enable risk
to be assessed and managed;
n
approving the financial results
statements, annual report and
accounts and other statutory
announcements;
n
remuneration strategy; and
n
considering all policy matters
relating to the Company’s
activities, including any major
changes of policy.
The full list of matters that are
required to be brought to the
Board for consideration is available
on our website.
Board committees
The Board delegates certain matters to its committees. The Board and
committees are supported by the company secretary, who provides
advice and assistance, particularly in relation to corporate governance
and training and induction. The appointment and removal of the
company secretary is a matter for the Board as a whole.
Audit committee
Monitors the integrity of the financial and narrative
statements. Maintains the relationship with the
external auditor and reviews the effectiveness
of the external and internal audit functions.
Reviews the Group’s risk management and internal
control framework.
See page 86
Chair:
Sharon Fennessy
Membership:
David Lowden
Jen Tippin
Nomination committee
Oversees Board and committee composition and
inclusion and diversity. Monitors leadership and
succession needs for the Board and the wider
Group. Oversees the annual Board performance
review process.
See page 80
Chair:
Peter Harrison
Membership:
Sharon Fennessy
David Lowden
Mark Robson
Jen Tippin
Remuneration committee
Responsible for recommending overall
remuneration policy and setting remuneration
for our executive directors and members of the
Group management team.
See page 95
Chair:
Jen Tippin
Membership:
David Lowden
Mark Robson
Responsible business committee
1
Oversees the Group’s responsible business strategy,
targets and performance and monitors progress
against our Total Commitments.
1
Committee dissolved 24 February 2026
See page 93
Chair:
Mark Robson
Membership:
Lisa Minns
Chief executive
The chief executive, supported by the chief financial officer, is responsible
for leadership of the Group, developing and implementing strategy,
managing overall Group performance and ensuring an effective
leadership team.
Group management team
Supports the executive directors in implementing strategy and policies
approved by the Board and ensuring our culture, Core Values and Total
Commitments are embedded. The team meets regularly to consider
strategic and operational matters affecting the Group as a whole,
including strategy, risk and the Group budget.
See page 73
Divisions
Each division operates autonomously with its own management board
that includes the chief executive and chief financial officer. The divisions
are responsible for setting their own five-year strategic plans and annual
budgets for sign-off by the Board, for their operational performance and
for managing relationships with their stakeholders.
See pages 21 to 33 for further information on each division’s
performance during the year
Risk committee
Assists the Board and audit committee in reviewing Group and divisional
risk registers and ensuring inherent and emerging risks across the Group
are identified and managed appropriately.
See page 47
Cross-divisional protecting people and HR forums, IT security
steering group, and climate action, supply chain and social
value panels
Divisional representatives meet on a regular basis to focus on specific
topics and share ideas and best practice. The forums assist the Board
and Group management team in ensuring that good governance is
adopted at all levels of the Group.
Role of the chair and senior independent director
The chair is responsible for the overall effectiveness of the Board and for promoting a culture of openness and debate at meetings which supports
well-informed and transparent decision-making through constructive dialogue. The chair is supported by the senior independent director, who is
available to the other directors and shareholders where necessary. To ensure accountability and oversight, there is a clear division of responsibilities
between the chair, chief executive and senior independent director, set out in writing, approved by the Board and summarised on our website.
75
Strategic report
Governance
Financial statements
Key activities of the Board in 2025
Board meeting agendas combine regular reviews of performance against the Group’s values and strategic priorities with deep dives
into specialised topics and presentations from divisional teams. In addition, internal and external experts are invited to lead detailed
discussions into our progress in particular areas, such as health and safety, environmental and social value, and cyber security. Internal
experts include our head of information security, Group procurement director, head of ESG and sustainability, and head of audit and
assurance, while external experts include our auditors and remuneration advisers.
Board review
Strategy
Financial and operational matters
Risk and compliance
Governance
Employees
Shareholder engagement
n
Review of executive reports covering market updates, commercial and
financial performance, implementation of divisional strategies and
divisional performance, including against medium-term targets and KPIs
n
Approval of upgrades to medium-term targets for Mixed Use
Partnerships, Fit Out, Construction and Infrastructure
n
Divisional and Group strategy review and Board strategy session
(see page 77 for further detail)
n
Responsible business performance updates
n
Review of responsible business strategy and approval of focus areas,
including approval of Group double materiality assessment
n
Approval of the results for the year ended 31 December 2024
n
Recommendation of final dividend for the year ended 31 December 2024
n
Review of 2025 half-year results and approval of announcement
n
Declaration of 2025 interim dividend
n
Approval of trading updates
n
Review of insurance arrangements
n
Risk appetite review (see page 78 for further detail)
n
Capital allocation review
n
Group budget approval (see page 78 for further detail)
n
Updates on tax and treasury matters and approval of tax strategy
n
Approval of Property Services being incorporated into Construction for
2026 financial reporting
n
Modern slavery statement approval
n
Risk appetite review
n
Biannual update on information security, including in-depth
presentations on cyber risk management
n
IT strategy and risk update
n
Board and committee performance review
n
Review of Delegated and Limits of Authority Procedures (delegated
authorities) to ensure they remain appropriate for the divisions and the
risks faced by the Group
n
Participation in and review of the Board performance review and
agreement of future actions
n
Review of the gender pay gap report
n
Board approval of new/updated policies: remuneration policy, Board
inclusion and diversity policy, Group inclusion and diversity policy, Group
environmental policy and anti-fraud policy
n
Review of Board’s skills matrix
n
Board succession planning and induction of the new chair
n
Review of the directors’ conflicts of interest register
n
Health and safety reviews
n
Biannual review of the channels through which employees can raise
concerns, whistleblowing reports and investigation outcomes
n
Review of employee engagement activities, including activities to support
their physical, mental and financial wellbeing
n
Informal divisional meetings with Mixed Use Partnerships, Fit Out and
BakerHicks
n
Attendance at senior management conference
n
Review of results of 2024 cultural assessment to understand how well
our culture is embedded across the Group
n
Non-executive directors’ meetings with employees from across
the divisions during the strategy review process in order to gain an
understanding of culture and employees’ views
n
Review of AGM investor feedback
n
2025 AGM
n
Review of analyst and proxy voting feedback
n
Review of investor roadshow feedback following half- and
full-year results
n
Engagement by the chair following his appointment with our largest
institutional investors
n
Engagement by the remuneration committee with our largest
institutional investors and proxy advisory firms during the triennial review
of the directors’ remuneration policy
Morgan Sindall Group plc
Annual Report 2025
76
Board review
continued
Principal decisions
The following tables give an overview of the Board’s principal decisions during the year. In line with our governance framework and
decentralised approach, the Board normally makes a limited number of decisions that are material to the Group as a whole. To ensure
its decision-making is robust, the Board will consider the Group’s purpose, strategic priorities and long-term success, recognising that,
while it seeks to balance the requirements of our different stakeholders, each decision will not necessarily result in a positive outcome
for every stakeholder group.
Factors
considered
The Group’s success depends on maintaining relationships with all our key stakeholders and ensuring we keep pace with changes
in our target markets. In approving strategy, the Board recognises its duties and responsibilities to our shareholders and other key
stakeholders and ensures that their views and priorities are considered.
Action taken
n
Comprehensively reviewed progress against strategy, tracking performance against agreed KPIs.
n
Reviewed divisional medium-term targets, including each division’s contribution to the overall Group strategy and long-term
strategic plan.
n
Discussed market trends and the macroeconomic environment, referring to comparative data and client insight.
n
Attended presentations by each divisional managing director on their strategic plan, including meetings with employees and visits
to some of their projects.
n
Reviewed each division’s contribution to the Total Commitments and monitored the Group’s progress in implementing our
responsible business strategy, including our performance against climate targets and net zero plans.
n
Reviewed the Group’s long-term financial outlook and assessed and prioritised growth opportunities.
n
Considered whether the level of provision made for the Group’s obligations under the Building Safety Act remained appropriate.
Outcome
As a result of the strategy review process, the Board concluded that:
n
our strategy would remain unchanged, focusing on organic growth across the divisions and in particular maximising investment
in our partnership activities. The Board agreed it would invite senior representatives from Partnership Housing and Mixed Use
Partnerships to present to the Board in 2026;
n
we remain committed to maintaining a strong balance sheet and significant net cash levels, and the capital allocation policy remains
appropriate and will remain unchanged;
n
the divisions’ medium-term targets remained appropriate following the increases for Mixed Use Partnerships, Fit Out, Construction
and Infrastructure announced with the full-year 2024 results and increases for Fit Out and Construction announced with the
half-year 2025 results but would be kept under review (increased targets for Mixed Use Partnerships and Infrastructure were
subsequently approved at the February 2026 Board meeting);
n
following Property Services’ return to a modest profit and its integration into the Construction division, the Board will continue to
monitor progress;
n
our Total Commitments remain appropriate; however, the results of our double materiality assessment will inform potential
refinements to ensure continued relevance;
n
succession planning throughout the Group remains a focus area as well as ensuring we continue to build an inclusive and diverse
workforce; and
n
our strategy remains appropriate, supported by a sustainable business model designed to manage risks and capture opportunities.
Annual strategy review process
Each non-executive director is allocated one or two divisions.
The divisions are allocated on a rotational basis each year so that the Board
learns about the concerns and issues of all divisions’ stakeholders.
The non-executive meets with the managing director and senior
team of their allocated division to review:
n
recent operational and financial performance, including risk
management and safety;
n
market and pipeline of opportunities;
n
culture;
n
adequacy of resources to deliver on strategy;
n
employee engagement;
n
outlook and medium-term targets; and
n
initiatives to assess the impact of operations on the environment
and to deliver social value to local communities.
The non-executive meets with their allocated division’s employees without
managers present and visits one or two live projects where they can engage
with a mix of employees, subcontractors and suppliers.
The wider management teams of the division are also invited on a rotational
basis to meet the Board in a less formal meeting each year, which provides
an opportunity for the non-executives to engage with employees outside the
formal strategy review process.
These meetings enable the non-executives to assess the division’s
contribution to the Group’s long-term success as well as its impact on its key
stakeholders.
The non-executive, chair, chief executive and chief financial officer hold a
meeting with the divisional managing director.
The non-executive provides feedback to the divisional managing director
on their strategic plan, including how stakeholders have been taken into
consideration.
The Board holds a strategy day in October where the non-executives
each present a summary of their observations and opinions on their
allocated divisions’ strategic plans.
The non-executives provide feedback to the rest of the Board from their
respective divisional reviews. The Board as a whole reviews and approves the
divisional strategic plans and the Group strategy.
Strategy review
77
Strategic report
Governance
Financial statements
Board review
continued
Factors
considered
The Board refers to our risk appetite when setting our strategic priorities and targets, making decisions, and allocating resources.
In agreeing risk appetite, the Board considers the key risks that could impact our business model, strategy or reputation. It takes
into consideration the expectations of our stakeholders, particularly those identified in the principal risks section on pages 48 to 54.
The Board recognises that a prudent and robust approach to risk mitigation must be balanced with some flexibility. This is to ensure
that our divisions are not restricted in embracing business opportunities appropriate to their markets and expertise while securing
high levels of customer satisfaction and maintaining the Group’s reputation.
Action taken
n
Confirmed that, through the activities of the audit committee, a robust assessment of the principal and emerging risks facing the
Group, including those that would threaten our business model, future performance and solvency, had been carried out and that
the effectiveness of our systems of internal control and risk management had been reviewed.
n
Considered any changes to the Group’s principal and emerging risks that could impact our long-term strategic plans.
n
Reviewed progress being made in respect of Provision 29 of the Code and preparation for the 2026 annual report, when the Board
intends to make its first declaration on the effectiveness of material controls.
n
Reviewed and approved the Group’s updated delegated authorities.
n
Considered the balance and breadth of our activities to ensure we have a reasonable level of protection against risks arising from
uncertainties in the macroeconomic environment.
n
Monitored any risks arising that lie outside or towards the upper end of our risk appetite so that they could be managed
appropriately.
n
Reviewed general market conditions and key trends to identify and assess future risks and opportunities.
n
Requested that the risk appetite statement be reviewed and updated to take account of the increasing external cyber threat.
Outcome
The Board’s review of risk appetite conducted during the year concluded:
n
the net level of risk for cyber attacks had increased during the period and currently sits outside the Board’s risk appetite. Continued
oversight of this risk will remain a Board priority;
n
key areas of focus remain our culture, health and safety, oversight of IT and cyber, including business continuity planning, project
selectivity, working capital management and supply chain solvency;
n
our governance framework, structures and policies, such as our delegation and limits of authority procedures, adequately reflect
our approach with regard to specified risks;
n
the government’s June Spending Review and subsequent Autumn Budget remained highly supportive of the sectors and markets
in which the Group operates, and we are well placed to respond to the commitments included within the Budget. However, these
matters will be kept under review, particularly given the pace at which action might be taken to fulfil these commitments; and
n
overall, the Group has the right controls, strategy and risk mitigation measures in place and our risk appetite and framework remain
appropriate for providing the business with medium- to long-term resilience.
Reviewing our risk appetite
Audit committee
review –
August and
December 2025
The audit committee assists the Board by formally reviewing twice a year the Group and divisional risk registers and risk
management and internal control processes, including conducting deep dives into key topics (see page 87 and pages 90 to 92).
Board review –
October and
December 2025
Following its review of the Group risk register, five-year strategic plan and three-year budget period, the Board considers the Group’s
established risk appetite statements, which broadly cover strategic, tactical, operational and compliance objectives, to compare
current levels of risk in these categories with our risk appetite and risk tolerance levels.
The Board then agrees any actions to be taken for future monitoring as a result of changes to net risk levels.
Our integrated approach to risk management (see page 47) facilitates our annual assessment of the Group’s long-term viability.
See pages 66 and 67 for our approach to assessing long-term viability, incorporating scenario modelling based on relevant
principal risks.
Factors
considered
In reviewing the budget for 2026, the Board considers the impact on our employees, suppliers, clients, shareholders and wider
stakeholders to ensure we are managing our finances and have the appropriate resources to deliver against our strategy.
Action taken
n
Tracked performance of the Group budget against agreed KPIs.
n
Reviewed Group and divisional budgets, which form the basis for setting the overall Group budget.
n
Reviewed market conditions, in particular current economic uncertainty and key trends that support the Group’s future growth
(see page 7).
n
Reviewed the contribution that the budget will make to delivering our five-year strategic plan.
Outcome
Approved the Group budget, ensuring that we have sufficient resources and that targets are suitably stretching but achievable and will
contribute to the Group’s long-term growth.
Determining the Group’s risk appetite
Setting the Group budget
Morgan Sindall Group plc
Annual Report 2025
78
The Board ensures we maintain a positive culture so that we
can attract and retain talent and achieve the highest levels
of productivity and performance. This is vital to retaining
a competitive market presence and achieving our purpose
and strategy.
Our culture has developed from our long-held Core Values,
which form the basis of our Group Code of Conduct.
The Code of Conduct is designed to ensure that our
employees understand the need to act responsibly and
maintain our reputation when working and interacting with
our stakeholders. The Code of Conduct and supporting
policies are approved by the Board.
Board review
continued
Purpose, values, strategy and culture
How culture is embedded by
the divisions
Looking behind the stats
Outcomes
Future priorities
How the Board promotes the desired culture and monitors
the degree to which culture and values are embedded
n
Recruitment processes
n
Induction and mandatory e-learning,
including on our Code of Conduct
n
Objective-setting, development plans and
remuneration policies
n
Leadership development programmes
n
Annual conferences and other internal
communications
n
Employee share plan participation
n
Ensuring our suppliers meet the expected
standards of behaviour set out in our
Supplier Code of Conduct
The Board reviews activities and initiatives by
our divisions in the following areas to ensure
they are on the right track to achieving
desired outcomes:
n
succession planning and talent
development;
n
health, safety, physical, mental and
financial wellbeing;
n
inclusion and diversity;
n
employee engagement, such as survey
participation, feedback and follow-up
actions; and
n
remuneration, to ensure that it aligns
with our values and encourages
desired behaviours.
The Board was satisfied that:
n
engagement levels across the Group
remain strong, with employees
demonstrating a willingness to speak
up. This is evidenced by whistleblowing
submissions, which have provided
the Board with valuable insights into
the Group’s culture and employee
perspectives;
n
discussions between non-executive
directors and employees did not identify
any issues requiring further intervention.
Employees engaged in these sessions
were consistently open, positive and
constructive; and
n
all whistleblowing reports received during
2025 were appropriately resolved and did
not indicate any systemic concerns across
the Group. Where allegations of theft or
fraud were substantiated, the individuals
involved were dismissed, reinforcing the
Group’s commitment to lawful and ethical
conduct.
The Board will continue to monitor,
in particular:
n
incidents of unsafe behaviour on our sites,
which may indicate the need for policy
changes or additional training;
n
the effectiveness of divisional activities
aimed at advancing equality, inclusion and
diversity;
n
the performance of the whistleblowing
helpline, ensuring it is well communicated
and that employees remain willing to use it
appropriately; and
n
processes that enable non-executive
directors to gain meaningful insight into
organisational culture and employee
perspectives, ensuring these mechanisms
remain effective and appropriate.
During 2026, the chair of the remuneration
committee and the company secretary will be
meeting with the Group’s HR forum and with
groups of employees from within the
businesses to understand any issues
impacting the wider workforce at a deeper
level (see page 99).
n
Regular meetings with management
n
Inviting employees to present at Board and
committee meetings
n
Non-executive directors’ meetings and
discussions with a wide range of employees
during the strategy review process and
without senior management present enable
the directors to strengthen their assessment
of cultural alignment and the degree to
which it is consistently reflected across the
divisions
n
Whistleblowing feedback and any external or
internal audit reports of possible breaches
of the Code of Conduct
n
Considering meeting papers to identify any
areas of concern, for example:
–
people statistics, including employee
turnover, internal promotions,
absenteeism and diversity
–
health and safety performance
–
client/partner feedback and satisfaction
scores
n
Investor feedback
n
External ESG ratings
1
3
2
4
5
Construction employee survey
response rate
86%
Infrastructure employees’ engagement
index score
85%
Mixed Use Partnerships employees agreeing
Muse is a great place to work
86%
79
Strategic report
Governance
Financial statements
Nomination committee report
On behalf of the Board, I am pleased to
present the committee’s report for the
year ended 31 December 2025.
Peter Harrison
Chair
Committee composition and performance review
The committee’s membership is shown in the table below.
The executive directors, members of the senior management
team and external advisers may be invited by the committee to
attend all or part of any meeting, as and when appropriate.
Members
1
Member since
Attended/
scheduled
5
Peter Harrison
2
(chair)
2025
2/3
David Lowden
3
2018
2/3
Jen Tippin
2020
3/3
Sharon Fennessy
2024
3/3
Mark Robson
2024
3/3
Michael Findlay
4
2016
2/3
1
Biographies of members are set out on page 74. In compliance with the UK Corporate
Governance Code (the ‘Code’), the majority of committee members are independent
non-executive directors.
2
Peter Harrison attended the meeting in May by invitation and all scheduled meetings of
the committee following his appointment. He is not permitted to chair parts of meetings
where his own succession and performance are discussed.
3
David Lowden was unable to attend one meeting due to a change in date that conflicted
with a prior commitment that could not be changed.
4
Michael Findlay was a member of the committee until his resignation as chair of the Board
on 28 July 2025. He attended all scheduled meetings of the committee until he stepped
down from the Board.
5
An additional subcommittee meeting was held in January 2025 to finalise the approval of
Peter Harrison’s appointment and the related stock exchange announcement.
Our internally facilitated performance review of the Board in 2025
included a review of the committee (see page 85 for further
details of the process).
This concluded that the committee is operating effectively,
with good open discussion. The chair succession process,
which concluded during 2025, was considered to have been well
managed and effective. Looking ahead, the committee agreed
that its key areas of focus will include:
n
Board succession planning, particularly as David Lowden is
in his eighth year of service on the Board;
n
continued succession planning for the Group management
team and senior leadership roles, ensuring that all future
training and development needs are being identified and
addressed; and
n
driving progress on inclusion and diversity initiatives,
ensuring that all divisions remain focused on achieving
meaningful outcomes.
The quick read...
n
Regularly reviewed the composition and balance of skills
of the Board and its committees to ensure that they
remain suitable
n
Reviewed Board/committee succession planning and
recommended the appointment of Peter Harrison
as a new non-executive director and chair designate
(appointed in May 2025)
n
Recommended the appointment of a new company
secretary (appointed in June 2025)
n
Reviewed succession plans for the Group management
team and senior leaders and progress in building a
diverse workforce
n
Managed the internally facilitated performance review
of the Board, committees and individual directors
Key responsibilities:
n
Board and committee composition
n
Identifying potential skills and experience gaps
n
Leading the Board appointment process
n
Reviewing succession planning for the Board and Group
management team
n
Reviewing wider senior leadership and divisional
succession planning
n
Overseeing the Board performance review process
n
Monitoring activities to build an inclusive and diverse
workforce throughout the Group
The committee’s full role and responsibilities are set out in its terms of
reference, which are available on our website.
Morgan Sindall Group plc
Annual Report 2025
80
Nomination committee report
continued
Board composition and skills
The committee has been active in fulfilling its responsibilities,
ensuring adequate succession planning for the Board. The
committee has also overseen my induction programme since
I joined the Board in May, ensuring a smooth handover from the
departing chair, Michael Findlay, who stepped down in July having
completed his nine-year term (the maximum the Code deems
appropriate for a director to be considered independent).
Each year, the committee adopts a formal process for assessing
the Board’s composition to ensure it maintains the right balance
of skills, expertise and backgrounds to provide effective challenge
at Board and committee meetings. Any skills or knowledge gaps
identified during this process will be considered in future
succession planning as well as when selecting subject matter
experts to attend Board discussions to enhance the quality
of debate.
During 2025, the committee reviewed:
n
an updated Board skills matrix following changes in 2025,
showing each director’s self-assessment of their skills and
experience across 26 categories;
n
the Board skills matrix mapped against our principal risks, with
consideration of emerging risks, to determine if there are any
current or future gaps in the skills and knowledge we need;
n
the current tenure of the existing directors; and
n
the outcome of the annual performance reviews of the Board
and individual directors to ensure that their contributions
continue to support the Group’s long-term success.
As an outcome of its review, the committee was satisfied that:
n
the Board had maintained a broad mix of skills that meet our
strategic priorities and future growth;
n
there were no material skills gaps on the Board or committees;
n
reflecting the increasing relevance and increase in cyber attacks
on UK businesses, it was appropriate to separate IT and cyber
security into separate categories in the skills matrix. The Board
would continue to invite the Group IT director and head of
information security to its May and December meetings. In
particular, it was noted that this year’s discussion on the current
and future use of AI had been extremely informative with
regard to the benefits and risks and the importance of ensuring
that proper safeguards are in place;
n
the Board would also continue to regularly invite the head of
ESG and sustainability to its meetings to keep them informed of
changes in legislation; and
n
the committee would focus on succession planning for David
Lowden’s role as senior independent director prior to the
end of his nine-year term in September 2027. This will include
identifying the skills needed and ensuring a smooth handover.
Induction and training for directors
Induction programmes are arranged for new directors tailored to
their background and experience. They include meetings with the
other Board directors, divisional managing directors, the company
secretary and other senior management to help the director gain
an understanding of the Group’s governance, culture, strategic
priorities and how each division operates. The meetings are
supplemented with documents and materials, including historical
Board and committee papers, Group policies, recent results
announcements, investor relations reports and performance data.
To develop and maintain the non-executives’ understanding
of the business, Group management team (GMT) members
and other senior executives are invited from time to time, as
appropriate, to present to the Board and committees on their
areas of responsibility. The non-executives are also encouraged
to meet with the divisional teams during the year outside of
Board meetings, including visits to their projects, both during
and in addition to the Board’s annual strategy review.
All directors undertake external training and/or attend seminars
relevant to their duties. They also sit e-learning modules and
refresher training courses on a range of topics, issued periodically
by the Company.
Succession planning
Board succession planning and appointments
Following a formal recruitment process that started in 2024 and
concluded in early 2025, I joined the Board on 3 May 2025 as a
non-executive director and chair designate. The appointment
process was led by David Lowden and described in the 2024
annual report. My induction programme included visiting all our
divisions and their senior leaders and visiting their major projects,
meetings with Michael Findlay and other members of the Board,
and reviewing the last three years’ strategy review process and
outcomes prior to conducting this year’s review (see page 77).
In July 2025, following Michael Findlay’s retirement from the
Board, I assumed the roles of Board chair and chair of the
nomination committee.
In April, the Company announced the retirement of Helen Mason
as general counsel and company secretary, having been with the
Group since 2014. The Board appointed an interim company
secretary until Lisa Minns was appointed as general counsel
and company secretary in June. Lisa attended the responsible
business committee in June by invitation and was appointed
as a member on 4 December 2025. The responsible business
committee was dissolved by the Board in February 2026
(see page 93).
External appointments and conflicts of interest
Prior to appointment, new directors are asked to disclose any
significant commitments and an indication of the time involved,
so that the Board can assess whether they will be able to devote
the time necessary to fulfil their role on the Board.
Once appointed, any proposed additional external appointment
must be approved, taking into consideration any potential
conflicts and additional demands on the director’s time.
81
Strategic report
Governance
Financial statements
Nomination committee report
continued
Following its annual review in December of the non-executives’
commitments, the Board was satisfied that each director
continues to allocate sufficient time to enable them to discharge
their duties and responsibilities effectively and that their external
commitments do not conflict with their duties as directors of
the Company.
Senior management succession planning
Each year the committee reviews succession planning for the
executive directors, GMT and senior leaders as well as the
divisions’ strategies for developing a diverse pipeline of talented
people for senior leadership positions. The chief executive is
responsible for managing GMT succession planning and the
divisions are responsible for preparing plans for their senior
leaders.
Specifically, the committee receives and reviews:
n
management’s view of the characteristics, skills and expertise
needed from our most senior leaders, both now and in the
future;
n
management’s succession plans for the GMT, including
short-term contingency cover where immediate successors
have not been identified, for example due to the need for
further training and development;
n
divisions’ succession plans for their senior leaders, including
actions they are taking to develop their people and maintain a
pipeline of potential future successors aligned to the Group’s
long-term strategic priorities; and
n
divisional progress in building a diverse workforce.
Following its review in February, the committee concluded that:
n
the succession planning and development programmes in
place across the Group remain appropriate. Management was
asked to broaden and strengthen these plans to encompass
additional senior roles, and this work has since been
progressed; and
n
further effort is required to improve inclusion and diversity
outcomes at all levels of the organisation. The divisions were
encouraged to deepen their understanding of inclusivity
by reviewing attrition trends and assessing the need for a
structured, Group-wide approach to exit interviews.
Inclusion and diversity
The Board’s inclusion and diversity policy, which extends to its
committees, the GMT and their direct reports, was refreshed in
2025 and can be found in the investors/governance section of
our website. The policy sets out the Board’s responsibilities in
managing the diversity of its composition and setting a culture of
inclusive leadership from the top. The policy also sets objectives
that are aligned with the Financial Conduct Authority’s UK Listing
Rules (UKLR), the FTSE Women Leaders Review and the Parker
Review. The table and commentary on page 83 show our current
performance against these objectives.
In 2025, the Board also approved a new Group inclusion and
diversity policy, establishing a framework for our divisions to
create their own policies for an inclusive and diverse workplace
that supports the rights of all individuals who work in our
business, irrespective of age, gender, ethnicity, religion, sexual
orientation, disability or educational, professional and socio-
economic background (see page 39).
On behalf of the Board, the committee monitored each division’s
progress in increasing inclusion and diversity at all levels of the
business. As part of its review, the committee received an update
from the head of ESG and sustainability, providing an overview of:
n
recent market and worldwide inclusion and diversity trends
and challenges;
n
preparations being made for the new Employment Rights
Bill that will require large companies to publish an equality
action plan;
n
recruitment and development outcomes across the business,
including future focus areas;
n
retention of employees with a focus on understanding attrition
rates, in particular people leaving within one year; and
n
progress with inclusion and diversity programmes, including
the Parker Review recommendation to increase senior
management representation from ethnic backgrounds against
a set target by 2027.
The committee noted that the divisions have continued to ensure
that their policies promote inclusivity. In addition, the divisions
have introduced new approaches to attracting more diverse
pools of talent, particularly in the entry level/foundation
population where larger divisions are seeing their diversity levels
improve. It was agreed that the Group should continue to drive
improvement in inclusion and diversity through our recruitment,
training and development programmes so that we attract and
retain a talented workforce that is reflective of the communities
in which we live and work.
Morgan Sindall Group plc
Annual Report 2025
82
Our current levels of diversity
In accordance with UKLR 6.6.6R(10), the Act and the Code, the following two tables set out the diversity of the Board and executive
management (our GMT). For fuller disclosure, we have also included the diversity of the GMT’s direct reports.
Diversity of sex of the Board and executive management at 31 December 2025
Number of
Board
members
Percentage
of the Board
Number of
senior positions
on the Board
1
Number in
executive
management
2
Percentage
of executive
management
2
Number of
direct reports
to the GMT
Percentage of
direct reports
to the GMT
Men
4
57.1%
3
7
70%
63
67%
Women
3
42.9%
1
3
30%
31
33%
Ethnic diversity of the Board and executive management at 31 December 2025
Number of
Board
members
Percentage
of the Board
Number of
senior positions
on the Board
1
Number in
executive
management
2
Percentage
of executive
management
2
Number of
direct reports
to the GMT
Percentage of
direct reports
to the GMT
White British or other White
(including minority White groups)
6
85.7%
3
9
90.0%
86
91.5%
Mixed/multiple ethnic groups
0
0.0%
0
0
0.0%
2
2.1%
Asian/Asian British
1
14.3%
1
1
10.0%
2
2.1%
Black/African/Caribbean/
Black British
0
0.0%
0
0
0.0%
2
2.1%
Other ethnic group,
including Arab
0
0.0%
0
0
0.0%
1
1.1%
Not specified/prefer not to say
0
0.0%
0
0
0.0%
1
1.1%
1
Chief executive, chief financial officer, senior independent director and chair.
2
John Morgan and Kelly Gangotra are included in both Board and executive management (our GMT).
In accordance with the Act, the table below shows our Group-wide diversity in numbers, as well as percentages.
Group-wide diversity at 31 December 2025
2025 by number
1
2025 by percentage
2024 by number
2024 by percentage
Men
6,039
73%
5,970
74%
Women
2,214
27%
2,127
26%
Minority ethnic background
894
11%
861
11%
Non-minority ethnic background
6,757
82%
6,503
2
80%
Not specified/prefer not to say
602
7%
733
9%
1
All the data in the tables above relates to UK employees. It has been collected from our HR records, which are held securely and are accessible only to a select number of employees.
2
The 2024 non-minority ethnic background number has been restated to remove the number of employees who had either not specified or preferred not to disclose their ethnic background;
we have included a separate line for this data.
We meet the UKLR 6.6.6R(9)(a)(i), (ii) and (iii) targets and our diversity policy target, which require that: at least 40% of the Board are
women; at least one senior Board position is held by a woman (chief financial officer); and at least one Board member is from a minority
ethnic background (which also meets the Parker Review target of one director from a minority ethnic group). We have also exceeded
the Hampton-Alexander Review target of 40% of women on the Board. Board diversity will continue to be a factor of consideration in
recruitment while also having regard to the needs of the business.
At the end of 2025, women made up 30% of the GMT, which falls slightly short of our inclusion and diversity policy target of women
making up at least one third of the GMT (2024: 27.3%). Throughout the year, divisions undertook actions to support and promote
female leaders (see page 39). The percentage of direct reports to the GMT that are women currently sits at one third of our senior
leadership team (33%). In 2024, the Board approved an interim target for 2027 for ethnic diversity percentage of senior management
working in the UK. This target is included in our annual Parker Review submission.
Nomination committee report
continued
83
Strategic report
Governance
Financial statements
Board performance review
As a result of the 2024 internal review of the performance of the Board and its committees, the Board agreed that its future focus
would continue in the following areas:
Agreed focus areas
Progress
The nomination committee continues to address future
succession needs of the Board and to review divisional
succession plans. The nomination committee also reviewed
the divisions’ activities to build a diverse workforce. See page 39
for more detail. Ensuring we continue to drive progress and
achieve meaningful outcomes will remain a focus area for the
nomination committee.
Having greater oversight and understanding of wider
workforce issues, notably in respect of attrition rates
In response to the further analysis of attrition rates, in
particular people leaving within one year, each of the divisions
has strengthened its onboarding processes.
In addition, the divisions have continued to look at ways to
drive better performance through recruitment, training and
development programmes (see pages 38
and 39).
Ensuring Property Services returns to profitability
in 2025
n
Following the conclusion of its business remediation
plan in 2024, Property Services continued to stabilise its
business activities during 2025, resulting in reporting a
modest profit for the full year.
n
The Board approved the integration of Property Services
into Construction from 1 January 2026, given the alignment
of its ongoing activities with that division.
Achieving business growth in partnerships
n
The Board continued to receive regular reports from
Partnership Housing and Mixed Use Partnerships.
n
Partnership Housing continued to strengthen its long-term
partnerships in the public sector, notably with the award
of a number of strategic schemes during the year.
n
Mixed Use Partnerships continued its strategy to secure
sizeable long-term partnership agreements to deliver
placemaking. The Board upgraded its medium-term
targets in February and informally met with its leadership
team in June.
n
The managing directors of Partnership Housing and
Mixed Use Partnerships presented to analysts at the
half-year results presentation.
Our Total Commitments and the next phase of the
ESG journey
n
The Board and responsible business committee invited
the head of ESG and sustainability to update them on
continuing changes in the regulatory landscape.
n
Our five Total Commitments remain appropriate. We
will continue to evolve and refine our ESG strategy using
the output from the double materiality assessment
undertaken during the year; to streamline and enhance
our data and reporting; and to support our divisions to
create their own action plans to reduce Scope 3 emissions.
Succession planning with a continuing focus on building
a diverse workforce and maintaining the Group’s culture
Nomination committee report
continued
2024 Board performance review – actions taken in 2025
Morgan Sindall Group plc
Annual Report 2025
84
Looking ahead
In 2026, the committee will continue its focus on:
n
succession planning for the Board and GMT;
n
succession planning in the divisional management teams;
n
reviewing progress on increasing inclusion and diversity across the Group; and
n
commissioning an externally facilitated performance review in line with the Code.
Peter Harrison
Chair of the nomination committee
24 February 2026
Nomination committee report
continued
The 2025 internal performance review
Conclusions of the 2025 performance review and future focus areas
In November, we conducted an internal performance review of the Board and its committees. As part of the process:
n
each Board member completed a questionnaire on the actions taken and progress made on the five agreed focus areas
identified from the 2024 performance review (see panel on page 84). The questions in this year’s review therefore followed up
on those key areas, firstly to ensure that satisfactory progress has been made and secondly to identify any areas where further
work is required;
n
the chair presented the outcomes of the review at the December Board meeting, for discussion and to agree future areas
of focus;
n
the chair held meetings with each director individually to formally review their performance, taking into consideration any
training they had undertaken; and
n
the senior independent director led the Board appraisal of the chair’s performance.
A summary of results and agreed focus areas for 2026, including how the performance review has or will influence Board
composition, is set out below. We will report on progress against these and any further actions in our 2026 annual report.
The 2025 performance review confirmed that the Board and committees are working well, with constructive challenge between
executive and non-executive directors, an open, trusting atmosphere and good debate on all key matters. It was agreed that
during the year, discussions had been of a high quality with the right balance between business strategy/performance and
governance. The Board agreed to focus on the following areas going forward:
n
achieving business growth in Mixed Use Partnerships and Partnership Housing;
n
succession planning for the Board and GMT, ensuring robust talent pipelines and appropriate development opportunities are
in place;
n
monitoring supply chain vulnerability; and
n
promoting inclusion and diversity across all divisions particularly given the current varying levels of maturity, which are partly
reflective of the sectors in which we operate.
Following the chair’s individual meetings with the non-executive directors and the senior independent director’s meeting with
the chair, the committee agreed that each non-executive remains independent, continues to meet the time commitments
required for the role, is able to discharge their duties and responsibilities for the coming year, and remains an effective member
of the Board. In reviewing the skills and experience required for future Board appointments following completion of the
performance review process, the committee concluded that while sector-specific experience can be valuable, long-term
contracting expertise and the right cultural alignment are of greater importance to the Board in ensuring effective contribution
and performance.
85
Strategic report
Governance
Financial statements
On behalf of the Board, I am pleased to
present the committee’s report for the
year ended 31 December 2025.
Sharon Fennessy
Chair
Audit committee report
The quick read...
n
Focused on the integrity of the 2025 financial statements
with oversight and review of management’s assumptions
on key judgements as appropriate
n
Ensured the independence and effectiveness of
the internal audit function
n
Reviewed and confirmed the independence and
effectiveness of the external auditor
n
Monitored the risk management and internal control
framework and carried out a review of its effectiveness
n
Conducted robust assessments of emerging and
principal risks to facilitate the Board’s risk appetite review
n
Reviewed management’s approach and progress in
preparation for reporting under Provision 29 of the
2024 Code
Key responsibilities:
n
Monitoring the integrity of the Company’s financial results
and reviewing significant financial reporting judgements
n
Reviewing the external audit process and making
recommendations to the Board with regard to
appointing, reappointing or removing the external
auditor
n
Monitoring the Group’s risk management and internal
control framework and conducting an annual review of
its effectiveness
n
Monitoring and reviewing the effectiveness of the
Company’s internal audit function
The committee’s full role and responsibilities are set out in its terms of
reference, which are available on our website.
Committee composition and performance review
The committee’s membership is shown in the table below. At the
committee’s request, meetings are regularly attended by the chief
financial officer; Group financial controller; Group head of audit
and assurance; EY lead audit partner; and other representatives
from the external auditor. The committee also meets privately
with the external auditor and Group head of audit and assurance
in case they wish to raise any concerns outside of the formal
meetings.
Members
1
Member
since
Attended/
scheduled
Sharon Fennessy
2
(chair)
2024
3/3
David Lowden
3
2018
2/3
Jen Tippin
2020
3/3
1
Biographies of members are set out on page 74. In compliance with the Disclosure
Guidance and Transparency Rules (DTRs) and the UK Corporate Governance Code
(the ‘Code’), all committee members are independent non-executive directors and the
committee as a whole has competency, skills and experience relevant to the sector.
2
Sharon Fennessy is a qualified accountant and has competency in accounting and
financial experience that is recent and relevant for the audit committee of a company
in the sectors in which we operate, as required by the DTRs and the Code.
3
David Lowden was unable to attend the audit committee meeting in February 2025
as, due to a change of timing, he had prior commitments that could not be altered.
Our internally facilitated Board performance review in 2025
included a review of the audit committee (see page 85 for further
details of the process).
Overall, the review confirmed that the committee is operating
effectively, providing robust oversight and constructive challenge,
and supported by comprehensive and high-quality papers.
In accordance with Provision 24 of the Code, the Board has
concluded that at least one member, Sharon Fennessy, has
recent and relevant financial experience, that the committee as
a whole is competent to carry out its role effectively, and that the
committee members have between them sufficient experience
relevant to both the sector which the Group operates in and
financial management, audit and risk management more broadly.
The biographical details of the committee members can be found
on page 74.
It was noted that Mark Robson had been invited to attend
committee meetings since his appointment to the Board.
Following recommendation by the nomination committee, and
taking into consideration Mark’s financial expertise and the
dissolution of the responsible business committee, the Board
formally appointed Mark as a member of the committee with
effect from February 2026. It was agreed that the committee’s
continuing focus would be on the areas listed on page 92.
Morgan Sindall Group plc
Annual Report 2025
86
Audit committee report
continued
Committee meetings are scheduled in line with the Company’s financial reporting cycle and a formal agenda ensures that all parts of
the committee’s remit are covered. The committee considers it remained compliant with the Code throughout the reporting period
and has followed the FRC’s Audit Committees and the External Audit: Minimum Standard (the ‘FRC’s Minimum Standard’).
The work carried out by the committee during the year has been undertaken to meet the requirements of the FRC’s Minimum
Standard. The committee’s key activities are set out in the following table and further information on its work is set out on the
subsequent pages.
Key activities during the year
Financial reporting
External audit
Risk management and
internal controls
2024 reporting period
n
In early 2025, reviewed the 2024 draft
annual report, including:
–
significant accounting judgements for
the 2024 audit;
–
alternative performance measures
used by management and disclosure
of reconciliations back to the IFRS
statutory reported figures;
–
going concern statement, including
management’s forecasts and
projections for 2025;
–
viability assessments, including
management’s process and
assumptions for assessing viability;
–
undertaking a review to ensure the
annual report is fair, balanced and
understandable; and
–
the draft full-year results
announcement.
2025 reporting period
n
Reviewed, with other members of the
Board, interim trading updates released
during the year.
n
Reviewed significant accounting matters
and assessed whether suitable accounting
policies have been applied in preparation
for year-end reporting.
n
Reviewed the 2025 half-year statement
and the half-year going concern
assessment.
n
Conducted an initial review of the 2025
full-year going concern and viability
assessments and impairment testing
of goodwill.
n
Conducted a review of alternative
performance measures used by
management and disclosure of
reconciliations back to the IFRS statutory
reported figures.
n
In early 2025, evaluated the performance
of the auditor in the 2024 audit and the
effectiveness of the external audit process.
n
Recommended to the Board the
reappointment of EY as external auditor
for the 2025 audit and approved the
audit fee.
n
Reviewed EY’s proposed audit approach
and scope for the 2025 audit, including
materiality and key audit risks and the
progress made in their pre-planning and
risk assessment procedures.
n
Monitored and confirmed continuing
compliance with our Group policy on the
engagement of the external auditor to
supply non-audit services.
n
Reviewed and monitored the
independence and objectivity of the
external auditor, including receiving
updates from EY on the succession and
transition plan for the planned rotation of
the key audit partner to take effect from
the 2026 audit.
n
At its February 2026 meeting after
the conclusion of the 2025 audit,
recommended to the Board the
reappointment of EY as auditor for the
2026 reporting period.
n
Formally reviewed the effectiveness of
the risk identification process, Group and
divisional risk registers, and the Group’s
approach to addressing climate-related
financial risk.
n
Considered the approach to and
assurance of reporting against the
Task Force on Climate-related Financial
Disclosures (TCFD), including climate
change risks and the approach taken
to quantify climate-related risks and
opportunities.
n
Conducted deep dives into key risk
areas, including discussion of the Group’s
emerging risks.
n
Considered the continuing
appropriateness of the level of provision
made for building safety liabilities.
n
Reviewed the effectiveness of the Group’s
internal financial controls and internal
control and risk management systems.
n
Monitored and reviewed the effectiveness
and performance of the Group head of
audit and assurance in connection with
the 2025 agreed internal audit plan.
n
Agreed the appropriateness of the 2026
proposed internal audit plan.
n
Reviewed management’s continuing
progress in complying with the
new reporting requirements under
Provision 29 of the 2024 Code.
n
Received continuing updates of actions
being taken to ensure the Group can
continue to demonstrate it has reasonable
procedures in place to prevent fraud
under the Economic Crime and Corporate
Transparency Act.
n
Reviewed the anti-fraud policy prior to
adoption by the Board.
87
Strategic report
Governance
Financial statements
Financial reporting
The directors are responsible for preparing the annual report and accounts (see responsibility statement on page 124). The committee
is responsible for reviewing and reporting to the Board on the clarity and accuracy of the half-year and full-year financial statements
before proposing them to the Board for approval.
In order to monitor the integrity of the Group’s reporting and financial management processes, the committee receives and reviews,
in detail, papers from the chief financial officer and the Group’s financial controller together with reports on the work and findings of
the external and internal auditors, who are also regularly invited to attend meetings of the committee. The committee also receives a
report from the head of ESG and sustainability on climate data assurance in respect of the Group’s Scope 1, 2 and 3 emissions as part
of its review of the TCFD statement. This ensures that there is effective communication between all the relevant parties and that the
financial statements present a ‘true and fair’ view. It also gives committee members the opportunity to assess whether suitable
accounting policies have been adopted and to discuss and challenge management, where appropriate, on matters such as the
appropriateness of the accounting policies that have been adopted, the robustness of critical accounting judgements, and key
accounting estimates reflected in the financial results to ensure that it is satisfied with the outcome.
Significant accounting matters
As part of its review of the financial statements, the committee looked at three significant matters which required the exercise
of judgement in connection with the financial statements; these are recurring matters. The detail of what was reviewed and discussed
and the conclusions reached are set out in the table below. Further information on the significant accounting policies that have been
applied and critical judgements and estimates that the directors have made can be found on page 148.
Issue
Basis of assurance
Conclusion
Contract revenue, margin, receivables and payables,
and inventory valuation
The recognition of revenue and margin on contracts in
the financial statements, and the associated contract
receivables and payables, together with the valuation of
inventory requires management to make judgements
and estimates.
In addition to receiving updates on the key contract
issues at Board meetings, where management
identifies any significant differences in contract
valuations with either clients or suppliers, and
significant judgements relating to inventory
valuation, the committee reviewed the status of the
issues at each audit committee meeting.
Based on its review and discussions with
the management team, internal audit
and the external auditor, the committee
concluded that the treatment of contract
revenue, margin, receivables and
payables, and inventory valuation in the
financial statements is appropriate.
Impairment of goodwill
The Group is required to test goodwill for impairment
annually. This test involves a value-in-use model that
includes estimates of future cash forecasts, growth rates
and an appropriate weighted average cost of capital.
The value of goodwill is supported by a value-in-use
model prepared by the management team. This
is based on cash flows extracted from the Group
budget, which have both been approved by the
Board. The committee reviewed and challenged the
management team on the assumptions used in the
value-in-use model.
Based on its review and discussion with
the management team and the external
auditor, the committee was satisfied that
the value of goodwill is appropriate.
Viability and going concern assessment
To carry out a review of the viability of the business
and appropriateness of the going concern basis of
preparation, management prepares a model based on
its budget for the next three years. The model includes
a number of assumptions and sensitivities.
To satisfy itself that the Group has adequate
resources to continue in operation for the
foreseeable future and that there are no material
uncertainties in respect of the Group’s ability
to continue as a going concern, the committee
considered the Group’s viability statement, cash
forecasts and available borrowing facilities. It
challenged management’s assumptions and
discussed the sensitivities to risks that could
reasonably impact the future operating results.
Based on its review and discussion with
the management team and the external
auditor, the committee recommended
to the Board the adoption of the
going concern statement and the
viability statement for inclusion in the
annual report.
The committee believes that the significant accounting matters have been properly recorded in the Company’s books and records and
appropriately accounted for in the 2025 financial statements.
Going concern and viability
To support the directors in making the going concern and viability statements, the committee reviews the financial modelling scenarios
and reverse stress-testing conducted by management for the going concern assessment as well as the viability assessment process
undertaken in support of the long-term viability statement and the rationale behind the chosen three-year time horizon (see pages 66
and 67 for further information).
As a result of its review, the committee confirmed it was supportive of management’s processes, scenarios and modelling assumptions
applied for assessing going concern and long-term viability, and that the extreme downside and reverse stress-testing exercise had not
identified concerns for the Group.
Fair, balanced and understandable assessment
As part of its year-end process, the committee applied the same due diligence as in previous years to assess whether the annual report,
taken as a whole, was fair, balanced and understandable. In reaching its recommendation, the committee considered the views of the
external auditor and any significant issues raised by them, and a paper from the company secretary on the governance of the annual
report which covers the process in place to ensure the integrity and completeness of the 2025 financial records; the approach to
drafting; the review of content and messaging; and the review and input from senior executives and Company advisers.
Audit committee report
continued
Morgan Sindall Group plc
Annual Report 2025
88
Taking the above into account, together with the committee’s
review of the annual report and financial statements, the
committee recommended and the Board confirmed that it could
state that the 2025 annual report, taken as a whole, is fair,
balanced and understandable and provides the information
necessary for users to assess the Company’s position,
performance, business model and strategy.
External audit
Tenure
EY have served as the Company’s external auditor for five
consecutive financial years, following their appointment for the
2021 financial year after a formal tender process conducted in
2020. Peter McIver has acted as the lead audit partner since that
appointment and Mark Morritt will take over from Peter as lead
audit partner for the 2026 audit.
The committee oversees the Company’s relationship with the
external auditor. During the 2025 audit, the committee did not
ask the external auditor to look at any specific areas during the
course of its audit other than those already identified as part of
the audit plan. There were also no requests received from
shareholders for certain matters to be covered in the audit.
Independence
In monitoring and reviewing the independence and objectivity of
the external auditor, the committee took into consideration:
n
formal communications received from EY, at the planning stage
and at the conclusion of the audit, setting out their processes
for maintaining independence;
n
the tenure of the lead audit partner, noting the preparations
made by EY in advance of the mandatory rotation of Peter
McIver as lead audit partner at the conclusion of the 2025
audit to ensure a smooth handover and maintain future
independence;
n
confirmation from EY that they had adhered to their own
policies and safeguards to ensure their independence
and objectivity and had followed necessary guidance and
professional standards;
n
confirmation from EY of the absence of any relationships
between EY and the Company (other than in the ordinary
course of business) which could adversely affect EY’s
independence and objectivity; and
n
compliance with the Company’s policy on the engagement of
the external auditor for non-audit services, which is available on
our website. The policy sets out the circumstances and financial
limits within which EY may be permitted to provide non-audit
services. In all cases, engagement is subject to EY providing
an independence assessment and obtaining prior approval
from the committee before any permitted non-audit service is
undertaken, regardless of size. The policy also imposes a cap
whereby fees for non-audit services provided by the external
auditor must not exceed 70% of the average statutory audit
fee over the preceding three years. In addition to this, EY have
their own safeguards in place to ensure that non-audit services
prohibited by the FRC’s Ethical Standard are not provided to
the Group.
Effectiveness
In monitoring the effectiveness of the external auditor, the
committee took into consideration:
n
the committee’s meetings with EY during the year without
management present;
n
the results of an evaluation questionnaire, prepared in
accordance with the FRC’s Minimum Standard and completed
by key stakeholders, being senior members of the divisional
and Group finance teams. The questionnaire asked
stakeholders to evaluate EY in terms of the quality of the
service provided to meet the audit plan, the adequacy of their
resources, and their communication and interaction during the
process. The questionnaire also sought opinion on whether EY
had demonstrated independence, objectivity and professional
scepticism when obtaining, evaluating and challenging audit
evidence, particularly in the key areas of focus identified in the
audit plan, such as those involving key judgements (see pages
130 to 133 for examples of matters on which EY challenged
management during the course of their audit);
n
the committee’s review of key conclusions from the 2025 audit,
including: that the agreed audit plan had been met and had
incorporated and adequately addressed any changes identified
in perceived audit risks; and that EY had been thorough in the
depth and robustness of their review and the handling of key
accounting judgements; and
n
the committee’s own assessment of EY’s challenge and
professional scepticism.
Based on all the evidence presented to the committee, it was
satisfied that:
n
there were no additional fees for non-audit services approved
by the committee during the year, other than a recurring
subscription to EY Atlas (a subscription-based product
which gives clients access to EY technical insights relating to
accounting, financial reporting and regulatory filing) (see note 3
on page 151); and
n
EY had conducted the external audit effectively with
appropriate rigour and challenge, had applied professional
scepticism throughout the audit, and had continued to be
independent and objective.
Reappointment of external auditor
Having regard to the considerations referred to above, the
committee has satisfied itself that EY, the current external auditor
with responsibility for the 2025 financial year end, remain
independent and effective. As a result, following recommendation
from the committee, the Board will propose the reappointment of
EY as external auditor in a resolution put to shareholders at the
forthcoming AGM. The committee confirms that its
recommendation is free from influence by a third party, and no
contractual term of the kind mentioned in Article 16(6) of the
Audit Regulation has been imposed on the Company.
Subject to the continuing independence and effectiveness of EY
as the external auditor or changes in legislation, the committee
does not anticipate putting the audit out for tender until 2030 but
will continue to monitor this annually to ensure the timing for the
audit tender remains appropriate. The Company has complied
with the Statutory Audit Services Order 2014 for the year
under review.
Audit committee report
continued
89
Strategic report
Governance
Financial statements
Risk management, internal audit
and internal controls
Risk review
At its meetings in July and December, the committee undertook
a robust assessment of the Company’s principal and emerging
risks. For each review, the committee received a paper from the
Group head of audit and assurance which included: an overview
of the risk landscape and its potential impact on our strategy over
the medium to longer term; the movements in Group and
divisional risks during the period; a summary of the controls and
mitigations in place; and an overall assessment of the status of
each risk before and after mitigation. These reviews informed the
Board’s discussions on risk appetite (see page 78).
In 2025, the key movements in the risk register were as follows:
n
cyber attack
(see principal risk J, page 53): The committee
noted that this risk had increased during the year due to the
intensity and volume of external cyber activity. The Board
receives regular updates on actions taken to mitigate this risk;
n
mismanagement of working capital and investments
(see principal risk G, page 52): Working capital continues to be
well managed across our segments. However, working capital
levels have increased in line with planned investments in Mixed
Use Partnerships and Partnership Housing. The committee
continues to monitor these investments;
n
partner insolvency
(see principal risk E, page 51): This risk has
reduced on the basis that while there continue to be supply
chain partners who go into liquidation, which is often disruptive
and adds costs to our projects, it is a risk that has been well
managed across the business; and
n
emerging risks
(see page 55), including longer-term potential
scenarios that require monitoring.
Following its assessment at the year end, the committee noted
that, during 2025, our overall risk profile remained stable. This is
supported by more resilient macro and consumer finances,
easing inflation, and reduced cost-of-living pressures on
households and businesses. The committee also noted subdued
consumer confidence levels and affordability challenges for
first-time buyers in the private housing market, which is impacting
demand.
The committee concluded that, while some uncertainty persists,
our stable risk profile is underpinned by the diversification of our
business segments and focus on markets that are predominantly
in the public and regulated sectors. The committee regards these
sectors to be structurally secure and noted that they include
recent government commitments to critical construction and
infrastructure, such as affordable housing and regeneration,
which align with the Group’s strategy.
Further detail on market challenges and our mitigation actions
can be found in the market conditions section on page 7 and the
managing risk section on pages 49 and 51 (principal risks A, B
and E respectively).
Our continued focus on cash and robust working capital
management are reflected in our strong cash position and
balance sheet, which support us in long-term decision-making
and selecting the right projects that match our risk appetite,
particularly in any declining markets.
Review of internal audit and risk management
and internal control framework
The internal audit function is led by the Group head of audit and
assurance, who oversees divisional internal audit heads and
supports with risk management activities.
Internal audit conducts its work in line with the Institute of Internal
Auditors’ Global Internal Audit Standards. The internal audit
function is appointed by the Board to facilitate the committee’s
monitoring and review of the effectiveness of our risk
management and internal control framework.
Details of our key internal controls – policies, procedures and
monitoring activities designed to mitigate risks to achieving our
strategic objectives – are set out in the table on page 91. Internal
audit provides assurance that these controls are appropriately
designed, fit for purpose and operating effectively.
During the year, 104 internal audits were completed in line with
the plan covering a broad range of areas:
n
selected projects
– procurement, cost–value reconciliation,
margin, programme, risk, contingency, change, and health and
safety;
n
selected developments
– approvals, capital expenditure,
viability, risk, structure, funding, schedule, sales, pace and returns;
n
financial/non-financial controls
– treasury, human capital,
health and safety, anti-money laundering and payroll;
n
work-winning
– selectivity, pipeline quality, bidding and bid risk
management;
n
cyber security
– various reviews by the internal audit team that
include ISO 27001 and Cyber Essentials Plus gap analysis plus a
plan of external IT and cyber assurance supported by third-
party subject matter experts; and
n
other areas
– procurement, anti-bribery management system,
right to work, build quality, sales and marketing, ESG, customer
care and IT.
Throughout the year, internal audit engaged extensively with each
divisional business unit as well as colleagues in health, safety and
environment, IT and cyber security, legal, company secretariat,
finance, tax and treasury, business improvement and HR to gain
insight into performance in these areas.
Beyond the audit plan, internal audit conducts a number of site
visits across divisions to observe and monitor site culture,
progress and performance. These visits provide the internal audit
team with a greater understanding of our operational risks across
a broad portfolio of work.
At its December meeting, the committee reviewed and approved
the 2026 internal audit plan. The plan adopts a risk-based
approach consistent with prior years and comprises 92 audits,
with a particular focus on:
n
project activities
– cost and value assumptions, operational,
commercial, change management and risk (varying in scope
but covering Partnership Housing, Fit Out, Construction
(including Property Services) and Infrastructure);
n
development activities
– cost and value assumptions,
approvals, risks, capital structuring, partner performance,
funding, programme, return on capital, profit and sales
(Partnership Housing, Mixed Use Partnerships);
Audit committee report
continued
Morgan Sindall Group plc
Annual Report 2025
90
n
key financial controls
– cash, debt, work in progress,
Construction Industry Scheme tax compliance, payroll, payment
and consolidated reporting (selected divisions);
n
work-winning
– selectivity, pipeline quality, tender workbooks,
bidding and bid risk management (selected divisions), client
feedback, lessons learned;
n
cyber security
– reviews by the internal audit team plus
external experts brought in to support an extensive cyber
assurance plan that includes ISO 27001, Cyber Essentials Plus
certifications, AI governance and compliance, disaster recovery
preparedness, help desk simulated social engineering attacks
and endpoint protection reviews; and
n
material controls
– specific audits to provide assurance
around our material controls to support the Provision 29 Code
requirement for the Board to make a declaration on control
effectiveness as at the balance sheet date.
During 2025, the committee:
n
received reports from internal audit on
:
–
progress made against the internal audit plan, including
audits completed versus scheduled, highlighting any
significant findings;
–
formal ratings of effectiveness for each audit conducted
based on whether the audit had identified any issues;
–
recommendations for improvements to the internal control
framework, with agreed timescales for completion; and
–
the implementation status of recommendations (i.e. not
due, overdue, and high priority and overdue), enabling the
committee to request further information on any areas
requiring greater scrutiny;
n
reviewed preparation for Provision 29 of the Code
–
(see page 92) noting good progress towards readiness for
the Board’s declaration in the 2026 annual report; and
n
assessed the Group’s fraud prevention framework
–
confirming it remains adequate while noting opportunities to
strengthen controls in a small number of areas, which are being
addressed by management.
Audit committee report
continued
Internal controls
Financial
n
Financial reporting system
– to ensure the effective
safeguarding of assets,
proper recognition of liabilities
and accurate reporting of
profits: a comprehensive
budgeting and forecasting
system, regularly reviewed
and updated; a management
reporting system, including
monthly divisional reports to
the Board; and financial reviews
in the annual internal audit
plan to validate the integrity
of divisional management
accounts.
n
Investment and capital
expenditure
– detailed
procedures and defined
levels of authority, depending
on the value and nature of
the investment or contract,
in relation to corporate
transactions, investment,
capital expenditure, significant
cost commitments and asset
disposals.
n
Working capital
– continual
monitoring of current and
forecast cash and working
capital balances through daily
and monthly reporting.
Operational
n
Group structure
– divisional
boards, with certain key
functions such as tax, treasury,
internal audit, IT, pensions
and insurance retained at
Group level, and a system of
delegated authorities to ensure
that decisions are made at
the appropriate level (see risk
governance framework on
page 47).
n
Tender, project selection and
contract controls
– tenders
reviewed in detail with approval
required at relevant levels and
at various stages from the start
of the bidding process through
to contract award; assessment
of the financial standing of
clients and key subcontractors;
and robust procedures to
manage ongoing contract
risks, with monthly operational
reviews of each contract’s
performance, including a
detailed appraisal of related
commercial performance via
our cost and value process.
Compliance
n
Legal compliance
– monitored
by divisional commercial
directors, HR managers and
heads of legal, and general
counsel and company
secretary, training provided
on topics including GDPR,
competition law, anti-bribery
and corruption, and the market
abuse regulation.
n
ISO accreditation
– includes
9001 (quality), 14001
(environmental), 45001
(occupational health and safety)
and 27001 (information security
management).
n
Corporate governance
framework and Group
policies
– written guidance and
policies (see pages 64 and 65
for more detail on our policies)
at Group and divisional levels.
Reporting
n
Reconciliation checks
–
monthly general ledger and
balance sheet reconciliations
in each division. Group finance
team review management
accounts packs and undertake
variance analysis each month.
n
Review meetings
– monthly
business unit and divisional
review meetings to review
financial, operational, ESG and
safety performance, including
variance against forecast.
n
Internal audit assurance
– regular internal audits
of financial, operational
and ESG data capture and
reporting disclosures.
91
Strategic report
Governance
Financial statements
The Group head of audit and assurance also provides assurance
to the committee on whether the overall framework of internal
controls is operating effectively. The committee’s oversight of
internal controls is further supported by:
n
direct access to senior managers, including the general counsel
and company secretary, Group IT director, Group director of
procurement and the head of ESG and sustainability;
n
fraud log reporting detailing all concerns raised either directly
to the Group or via the independently managed Raising
Concerns phone line. Investigations are conducted by the
general counsel and company secretary and/or internal audit,
with updates provided to the Board throughout the year;
n
the delegation and limits of authority procedures, enabling
the Board to confirm that the commercial projects under
consideration align with the Group’s strategic priorities;
n
health and safety incident reporting, providing the Board with
visibility of compliance with working practices designed to
prevent harm to our workers and other stakeholders; and
n
discussions with the external auditor, including their
assessment of our control environment and any observations
arising during their audit.
In 2025, these processes, together with internal audit’s
conclusions from audits performed during the year, enabled the
committee to conclude that the Group maintains an effective risk
management and internal control framework.
Preparations to comply with Provision 29
Throughout 2025, the committee received regular updates from
the Group head of audit and assurance on progress towards
compliance with Provision 29 of the Code. The committee actively
challenged both the approach and the pace of delivery.
Our preparations have built on existing divisional and Group-level
activity, supported by a robust internal audit plan. Our material
controls are identified through biannual reviews of risk and
control matrices, which cover financial reporting, operational,
commercial, ESG and fraud-related risks. These matrices
underpin control self-assessments and effectiveness declarations
submitted twice-yearly by divisions and Group functions.
Internal audit led a comprehensive review to validate the
appropriateness of material controls, engaging divisional finance
directors and Group functional heads, with further review by
the risk committee and final consideration by the committee.
This process provided an opportunity to reassess principal risks
to ensure alignment with our business model. The committee
expects this framework to continue evolving and maturing
over time.
Following this work, the committee is satisfied that the approved
internal audit plan for 2026 aligns with the agreed list of material
controls and the principal risks of the Group.
Independence and effectiveness
The internal audit function is independently validated every
five years. The last external assessment was carried out by
Blackmores (UK) Ltd in 2021, with details disclosed in our 2021
annual report.
Each year, the committee assesses the effectiveness of the
internal audit function. In 2025, this included:
n
reviewing and assessing the internal audit plan;
n
reviewing that the actions to address any failing or weaknesses
identified by internal audit were implemented promptly;
n
considering whether any failing or weaknesses identified
indicated poor decision-making, the need for enhanced
monitoring, or reassessment of management’s control
processes; and
n
evaluating the role and effectiveness of internal audit within the
Group’s risk management framework and of its ability to meet
the Group’s needs.
The chair of the committee also met separately with the Group
head of audit and assurance without executive directors present,
to discuss internal audit findings, the outcome of investigations
and any other observations of note. No new matters were raised
beyond those already reported by the executive directors.
Following its assessment in December 2025, the committee was
satisfied that:
n
internal audit and internal controls were operating effectively;
n
the small number of improvement opportunities identified
during the 2025 internal audits were being addressed and
implemented;
n
the internal audit team is adequately staffed and remains
independent;
n
fraud prevention procedures are adequate; and
n
preparations for Provision 29 were progressing appropriately.
Looking ahead
In 2026, the committee will give particular attention to:
n
the integrity of our financial reporting; and
n
risk management and internal controls, in particular oversight
of the evidence being prepared by management in order
that the annual declaration can be made by the Board on the
effectiveness of our material controls in line with Provision 29
of the Code.
Sharon Fennessy
Chair of the audit committee
24 February 2026
Audit committee report
continued
Morgan Sindall Group plc
Annual Report 2025
92
Responsible business committee report
Committee composition and performance review
The committee operated during 2025 and its membership during
the year is shown in the table below. The committee invited the
chief financial officer to attend each meeting and other members
of senior management were invited to attend all or part of
meetings, as appropriate.
Members
Member
since
Attended/
scheduled
Mark Robson (chair)
2024
3/3
Lisa Minns
1
2025
2/3
Michael Findlay
2
2024
2/3
1
Lisa Minns was appointed to the committee on 4 December 2025. Lisa attended the
committee meeting held in June by invitation.
2
Michael Findlay stepped down from the Board and the committee on 28 July 2025.
As part of the performance review, the activities of the committee
were assessed. The review concluded that the committee had
played a significant role in shaping the Group’s health and safety
and ESG strategies and goals, and in overseeing their delivery
across the business. However, given the maturity and strategic
importance of these areas, and with the Group’s responsible
business activities overseen by the CFO, the Board agreed to
streamline the governance structure to avoid duplication and
ensure consistent strategic action and oversight. Accordingly, the
committee was dissolved by the Board on 24 February 2026, with
its responsibilities reallocated between the Board and the audit
committee as appropriate.
Key activities during the year
During 2025, the committee reviewed:
n
our safety performance, to ensure that we are driving towards
our goal of zero incidents and that we have a clear strategic
plan in place to address any issues that arise;
n
our Group health and safety framework, and protecting people
Total Commitment to ensure they remain focused on the right
objectives;
n
the divisions’ activities to support their employees’ physical and
mental wellbeing;
n
progress made on our Total Commitments to improving
the environment, working together with our supply chain,
and enhancing communities; and
n
the ESG regulatory reporting landscape and emerging
reporting requirements.
The nomination committee assists the Board in reviewing the
Group’s performance in developing our people and the audit
committee reviews climate-related risks and opportunities and
the Task Force on Climate-related Financial Disclosures (TCFD)
statement (which can be found on pages 56 to 61).
The quick read...
n
Reviewed safety performance and wellbeing support
n
Reviewed the Group environmental policy
n
Received presentations on our performance against our
Total Commitments targets and progress against our
broader ESG strategy
n
Monitored our progress towards achieving our 2030 and
2045 net zero carbon targets
n
Received an update on our social value initiatives
Key responsibilities:
n
Reviewing the Group’s responsible business strategy,
targets, risk exposure and performance against our
Total Commitments
n
Monitoring how our governance, skills and resources
are used to ensure compliance with our Group policies
and applicable law and regulations
n
Receiving regular reports on safety performance and
reviewing key issues arising and the impact of our
operations on the health and wellbeing of employees
I am pleased to present the report
of the responsible business
committee for 2025.
Mark Robson
Chair
93
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Governance
Financial statements
Responsible business committee report
continued
Safety performance
Both the committee and the Board receive regular updates on
the Group’s safety performance and the actions we are taking to
maintain a positive health and safety culture.
At the committee’s February 2025 meeting, health and safety
directors from our Construction and Infrastructure divisions
provided updates on how the four Group-wide health and safety
leading indicators (HSLIs) and business-specific leading indicators
had been implemented in their divisions in line with the Group
health and safety framework. This included insight into the
divisions’ initial findings and observations since the leading
indicators were launched.
At its June 2025 meeting, the committee invited Fit Out’s health
and safety director to present on its performance against the
HSLIs and other improvements the division had made to its safety
culture to help mitigate the top causes of high-potential incidents.
At its December meeting, and based on the information received
and reviewed by the committee during the year, it was agreed
that we should remain focused on our Total Commitment of
protecting people, as safety is our first priority. The committee
emphasised the importance of recording positive interventions
and ensuring that corrective actions and lessons learned are
shared across all divisions while driving continuous improvement
across our key safety metrics.
Physical, mental and financial wellbeing
The Group provides access to various Group-wide benefits, for
example an employee assistance programme and a financial
education portal, while the divisions are responsible for providing
wellbeing support to their employees through targeted activities
taking feedback from employees into consideration (see page 37).
In June, the committee reviewed reports from each division on the
actions they were taking to support their employees’ wellbeing,
and concluded that:
n
the divisions continue to invest in a range of activities that
help strengthen the resilience of their teams and foster a
collaborative and supportive working environment; and
n
through regular employee engagement and surveys, the
divisions can measure the extent to which their employees
feel supported in these areas, identify future target areas and
respond with appropriate action plans to ensure they continue
to develop and enhance their wellbeing strategies.
Responsible business strategy and ESG reporting
We have continued with refocusing and refining our responsible
business strategy and improving our ESG reporting. The
committee received updates from the head of ESG and
sustainability at each of its meetings on progress being made to
ensure our strategy remains focused on the areas where we can
have the most impact.
In June, the committee reviewed and recommended for Board
approval a draft Group environment policy, the purpose of which
is to provide a framework for the divisions to manage the Group’s
environmental activities and develop policies that are appropriate
to their respective businesses while being aligned to Group policy.
A copy of the Group environmental policy and other key ESG-
related policies are available on our website.
During the year, the committee received updates on:
n
the outcome of the double materiality assessment conducted
in 2025 to ensure that feedback from stakeholders is
considered as we evolve and refine our responsible business
strategy, metrics and targets (see page 35);
n
the development of a formal enhancing communities
framework to support our divisions in creating social value local
to their projects (see page 45);
n
continuing work being undertaken to refine, streamline
and enhance our data collection and collation process in
preparation for future regulatory requirements and to enable
better data-driven decision-making;
n
activities being undertaken by our divisions to identify targeted
carbon reduction opportunities and progress on meeting our
medium- and longer-term Scope 1, 2 and 3 emissions science-
based targets (see pages 40 to 42); and
n
a report on the evolving ESG legislative reporting landscape,
including an update on delays to publishing regulations and
updated reporting requirements both in the UK and overseas.
Having considered the above, the committee agreed that:
n
the Group remains on track to achieve its 2030 and 2045 net
zero targets, while continuing to evolve existing areas of focus,
metrics and targets across its remaining Total Commitments;
n
continued Group-level support will be given to the divisions
in developing their strategic action plans across our Total
Commitments, with a specific focus on validating and
addressing Scope 3 emissions as part of our Transition Plan;
and
n
while uncertainty in the ESG reporting landscape remains,
we should ensure our disclosures keep pace with evolving
developments and continue to monitor our ESG performance
scores and engage proactively with the ESG rating agencies
most used by our top institutional shareholders.
Looking ahead
In 2026, the Board will focus on the following priorities:
n
continuing to challenge the divisions to reduce the number of
RIDDOR-reportable incidents, lost time incidents, high-potential
incidents and all accidents;
n
reviewing ongoing initiatives to support employee health and
wellbeing;
n
monitoring the Group’s ESG performance to ensure it
continues to support long-term performance;
n
assessing progress against our Total Commitments, including
staying abreast of the evolving stakeholder expectations on
ESG, emerging regulations and shifting reporting requirements;
and
n
driving continued improvement in the disclosure of material
responsible business impacts, both in the quality of information
provided and through stakeholder engagement.
Mark Robson
Chair of the responsible business committee
24 February 2026
Morgan Sindall Group plc
Annual Report 2025
94
Directors’ remuneration report
I am pleased to present to you
the report from the remuneration
committee for 2025.
Jen Tippin
Chair
The quick read...
n
Reviewed remuneration policy and concluded that
it broadly remains fit for purpose. One minor policy
change is proposed for approval at the 2026 AGM and
three implementation changes are put forward by the
committee to ensure the remuneration of our executive
directors remains appropriately competitive and, in
the case of the chief financial officer, reflects a recently
agreed increase to her role responsibilities
n
Consulted extensively with shareholders and proxy
advisory firms regarding proposed changes to our
remuneration policy and implementation for 2026
n
Monitored remuneration market practices and the
implications for the Group
n
Approved the 2025 and 2026 remuneration for the Board
chair, executive directors and Group management team
n
Reviewed wider workforce remuneration and the
alignment of incentives and awards with the Group’s
purpose, culture and values
n
Set targets for the 2026 annual bonus and LTIP and
reviewed performance against targets for the 2025
annual bonus and 2023 LTIP awards
n
Sought feedback from employees across the Group and
considered whether different interventions were needed
from the committee or the Board
Committee composition and
performance review
The remuneration committee is composed solely of
independent non-executive directors: David Lowden,
Mark Robson and chair, Jen Tippin. Details of the skills and
experience of the committee members can be found in
their biographies on page 74.
As part of the annual performance review of the Board,
a review of the committee concluded that it continued to
work effectively, with well-structured papers and strong
external advisers. It was agreed that the committee’s
focus in 2026 would be to seek to further develop its
understanding of wider workforce issues and evaluate
whether they are connected to remuneration.
In this report:
n
Our remuneration objectives and key responsibilities
(page 96)
n
Executive remuneration in context (page 96)
n
Remuneration policy review and consultation with
stakeholders (pages 97 and 98)
n
2025 remuneration outcomes (page 99)
n
Remuneration proposals for executive directors in 2026
(pages 99 and 100)
n
2026 remuneration policy (pages 102 to 111)
n
Annual remuneration report (pages 112 to 114)
n
Other disclosures from the committee (pages 115 to 118)
n
Implementation of remuneration policy in the following
financial year (pages 119 and 120)
Focus of the committee
In a year marked by significant growth for adjusted profit before
tax, a substantial daily cash balance, a record-level secured order
book and work at preferred bidder stage, together with continued
delivery of long-term value for our stakeholders, the focus of the
committee has been to ensure that our remuneration policy
and our decisions under it continue to support the delivery
of our short- and long-term goals and enable us to attract,
motivate and retain the senior talent required to continue
to deliver our strategy.
This report complies with the requirements of the Large and Medium-sized Companies
and Groups (Accounts and Reports) Regulations 2008 as amended in 2013, the provisions
of the 2024 UK Corporate Governance Code (the ‘Code’), the Companies (Miscellaneous
Reporting) Regulations 2018, the Companies (Directors’ Remuneration Policy and Directors’
Remuneration Report) Regulations 2019, and the UK Listing Rules.
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Directors’ remuneration report
continued
Remuneration objectives and key responsibilities
As a committee we continue to drive a strong culture of pay in line with performance and shareholder experience. We are committed
to being open and transparent in our approach to executive remuneration and strive to keep remuneration arrangements clear,
consistent and simple to facilitate effective stakeholder scrutiny. Performance-related components of remuneration form a significant
portion of the total remuneration opportunity, with the maximum potential reward available only through the achievement of stretching
performance targets based on measures that the committee believes reflect the interests of shareholders and wider stakeholders.
Our remuneration principles align with the requirements of the Code. They apply across the Group and are designed to drive the
behaviours and results required to support our strategy. They seek to ensure that remuneration:
n
helps retain and motivate executive directors of the calibre required to deliver the Group’s strategy;
n
aligns reward outcomes and value created for shareholders;
n
is appropriately competitive in the marketplace;
n
is clear and simple to enable transparency for all stakeholders; and
n
rewards value creation over the long term.
The extent of their responsibilities means executive directors are well paid, but the policy is designed to ensure that they are paid
appropriately in line with performance and market. Reference points such as the performance of the business during the financial year
in question and, over the longer term, the ratio of the chief executive’s pay to the median pay for all employees, the policy for wider
workforce remuneration and the experience of our wider stakeholders are important to us, in addition to the use of external
benchmarking data when considering executive pay levels.
Our key responsibilities include:
n
ensuring our remuneration policy is designed to align with the Group’s purpose, values and culture and to encourage the effective
stewardship that is vital to delivering our strategy;
n
approving the design of all share incentive plans for approval by the Board and, where required, by shareholders;
n
reviewing wider workforce remuneration and policies and the alignment of incentives and awards with culture, and taking these into
consideration when setting the remuneration policy or determining remuneration for the executive directors;
n
ensuring the policy promotes long-term shareholdings by executive directors by ensuring share awards granted are released on a
phased basis and subject to a total vesting and holding period of five years;
n
setting the remuneration of the Board chair, executive directors and Group management team; and
n
ensuring our targets for remuneration are appropriately stretching and aligned to the Group’s strategy.
The committee’s full role and responsibilities are set out in its terms of reference, which were last updated in December 2024 and are
available on our website.
Executive remuneration in context
The Group has delivered another record performance with continued dividend growth, despite some current market headwinds,
which reflects the quality of the work we have won and our operational delivery.
2025
2024
2023
2022
Percentage change
2025 vs 2024
Revenue
£5,018.6m
£4,546.2m
£4,117.7m
£3,612.2m
+10%
Profit before tax adjusted* (PBTA*)
£232.6m
£172.5m
£144.6m
£136.2m
+35%
Average daily net cash
£367.6m
£374.2m
£281.7m
£256.3m
–2%
Earnings per share (EPS) adjusted*
370.0p
278.8p
247.7p
237.9p
+33%
Share price (end of year)
£46.50
£39.00
£22.15
£15.30
+19%
*
See note 28 to the consolidated financial statements for alternative performance definitions and reconciliations.
As a result of their performance in 2025, their market position and future prospects, the medium-term targets for Fit Out and
Construction were upgraded as of 29 July 2025, while the Group as a whole issued three profit upgrades during the year (and a further
upgrade following year end).
The strength of our balance sheet and cash generation have remained high priorities for the Board, enabling us to continue to do the
right thing for all stakeholders and ensure that we select the right construction contracts and invest in long-term partnership schemes
that will secure future earnings.
Against this backdrop, the committee continues to strive to ensure that executive remuneration remains aligned to our strategy,
external environment and the UK corporate governance requirements.
Morgan Sindall Group plc
Annual Report 2025
96
Directors’ remuneration report
continued
Review of remuneration policy and
2026 implementation
Our existing remuneration policy was last approved by
shareholders in 2023 and, in line with regulations, needs to be
resubmitted for approval at the 2026 AGM.
During 2025, the committee undertook a comprehensive review
of the existing policy and concluded that it remains credible,
effective and aligned to the Group’s short- and long-term strategy,
and that it has contributed to the strong performance delivered
in recent years. Accordingly, the committee is proposing only a
single minor amendment to the policy to provide flexibility around
the selection of future Long Term Investment Plan (LTIP)
performance measures.
Specifically, we are proposing to drop wording in the existing
policy about the LTIP being based on ‘the Company’s EPS and
on relative TSR compared to a group of UK-listed peers”, and the
limits around supplementing these measures “for up to one third
of future awards’. The committee considers that this wording is
unduly limiting for a policy framework which needs to be flexible
to evolving circumstances over a three-year period and is contrary
to typical market practice in this area. As you will see in the
forward-looking implementation section, the committee has no
immediate plans to change the current blend of EPS and relative
TSR in the LTIP, and would write to major shareholders should
any material changes be proposed at a future date.
In addition to this proposed minor policy change, the committee
has also made three key implementation changes for 2026, namely:
n
a one-off rebasing of the chief executive’s salary to £795,000
with effect from 1 January 2026;
n
an increase in the chief financial officer’s LTIP opportunity from
175% to 200% of salary; and
n
an 18.4% increase to the chief financial officer’s salary with
effect from 1 April 2026 to reflect increased role responsibilities
(in addition to an inflationary increase of 4.0% with effect from
1 January 2026).
The background to and rationale for these changes are set out
below.
Salary increase for the chief executive
The committee has considered carefully on several occasions
how to address the chief executive’s salary, which remains well
below the market. During the last policy review we explored the
possibility of a ‘notional’ salary but ultimately dropped the
proposal based on both shareholder feedback and our desire to
maintain the simplicity of executive pay arrangements. We have
continued to signpost in subsequent reports and letters to
investors that the chief executive’s salary is significantly below
market levels, and that the recruitment of a successor would likely
require a significant rebasing.
Since our previous deliberations, the Group has continued to
deliver strong and sustained performance under the leadership
of John Morgan – as evidenced in the results for 2025, which
represent significant growth for PBTA*, up 35% to £233m from
the prior year, with the full-year dividend increasing by 20% to
158p per share. Over the last 10 years, the Group’s PBTA* has
grown at an equivalent of 18% CAGR and the dividend has grown
at c.16% per annum, while between December 2015 and
December 2025, the Group has delivered top decile TSR of 830%
(equivalent to c.25% per annum). In each case, this performance
positions the Group in the top two compared with sector
comparators, as illustrated in the following table.
Ranking the Company’s performance against 15 comparators
drawn from the construction, housebuilding, and engineering and
real estate sectors:
Ranking
Total shareholder
return (TSR)
1
Profit before
tax (PBTA)
2
Dividend per
share
3
Highest
25% p.a.
18% p.a.
16% p.a.
Lowest
1
Annualised TSR between December 2015 and December 2025.
2
Annualised growth in PBTA* between FY–9 and FY–0 (e.g. between
December 2016 and December 2025 for the Group, using broker
consensus where actual results are not yet known).
3
Annualised growth in total dividend per share between FY–9 and FY–0 (or
the most recent financial year for which full-year dividend data is available).
In light of financial and operational performance, the committee
believes that now is an appropriate moment to right-size the
current chief executive’s salary, to ensure that he is being paid
fairly and appropriately for the growing size and scale of his role,
and the positive outcomes being delivered for all stakeholders by
his leadership of the Group. We are also keen to ensure that
John’s salary is set at an appropriate level so as not to impose an
unnecessarily low ceiling on the rest of the senior management
team’s remuneration.
Agreeing a proposed salary increase to reflect the aforementioned
performance context and considerations around the chief
executive’s role is a somewhat subjective matter and therefore,
to provide an additional reference point to its decision-making
process, the committee also considered market data provided
by its independent advisers.
The committee’s approach to benchmarking has been articulated
in previous remuneration reports (e.g. page 114 of last year’s
report) and involves looking at size-adjusted data for both sector
comparators and size comparators drawn from the broader FTSE.
This year we reviewed the make-up of the sector comparator
group, a key reference point, and approved a small number
of additions to recognise companies against which we have
previously competed for senior talent (Galliford Try), and to
include companies with similar expertise in complex design
and development activities (Land Securities, British Land and
Grainger). The result is a robust and relevant group of 15 sector
comparators, with five each in construction, housebuilding, and
engineering and real estate.
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Directors’ remuneration report
continued
In terms of outcomes, size-adjusted data for the sector
comparator group suggests a market base salary for the chief
executive of between £750k and £835k (median: £780k), while
data for the size comparator group suggests a market base salary
of between £705k and £870k (median: £805k). As part of its
review, the committee also considered the absolute salary levels
on a company-by-company basis within the sector, with the
evolution of pay in recent years supporting our view that the
Group continues to operate in a particularly competitive sector
for senior executive talent. Reflecting on considerations around
performance, scale and scope of role, and this additional market
context, the committee concluded that a base salary of £795,000
would therefore be appropriate for 2026.
Mindful that increases to base salary have a ratcheting effect
on the overall package, and that we have increased the chief
executive’s LTIP opportunity in recent years, the committee also
considered market data looking at the fair value of total pay
against the same comparators. Through this lens, the committee
noted that the proposed salary increase would position the
chief executive’s total package just below median against the
size-adjusted sector comparator group, and around lower
quartile against the size comparator group.
Finally, the committee considered whether the salary increase
should be implemented as a one-off or phased in over a number
of years. On balance, the committee concluded that a single
increase with effect from 1 January 2026 would be appropriate,
recognising that the chief executive is already an experienced and
long-tenured executive director with a demonstrable track record
of delivery (compared with a newer appointee for whom we might
want to link future increases to continued development in role),
and noting that the proposal takes his overall package to a market
level (rather than significantly above, which might otherwise
warrant phasing).
LTIP award level increase and salary increase for the
chief financial officer
Kelly Gangotra was appointed as chief financial officer in May
2024 and the Board is delighted with the progress she has made
in the role to date. Following the retirement of the Group
commercial director, and to ensure that we continue to stretch
Kelly, the Board agreed to expand her role to include those
responsibilities. In this expanded capacity, Kelly will provide critical
strategic business, procurement and commercial governance to
key contract and investment decisions at tender stage, followed
by robust oversight throughout the project life cycle. Reflecting
this broadened mandate, Kelly’s official job title will be amended
to ‘chief financial and commercial officer’ from 1 April 2026.
In light of her performance to date and the significant change to
her role responsibilities, the committee has implemented two
changes to Kelly’s package for 2026: (i) an increase to her LTIP
opportunity from 175% to 200% of base salary; and (ii) an
additional 18.4% increase to her base salary with effect from
1 April 2026 (noting that Kelly’s salary was increased by 4.0% on
1 January 2026 in line with the wider workforce and prior to the
decision to expand her role). Kelly’s 2026 LTIP award will be based
on a salary of c.£528k, i.e. her chief financial officer salary at the
time of the grant and prior to the uplift for her additional
responsibilities in April.
The increase to Kelly’s LTIP opportunity aligns her with the chief
executive’s award level (which had been the Group’s standard
practice for her predecessor) and the maximum available under
the new (and existing) policy, and is seen by the committee as an
appropriate way of reflecting her performance to date while
reinforcing shareholder alignment.
Regarding the salary increase, the committee recognised that
determining an appropriate salary increase to reflect a change
in responsibilities is a particularly subjective exercise. On balance,
we concluded that the 18.4% increase, in addition to a 4.0%
inflationary increase applied from January, would be appropriate,
and will position Kelly’s salary (£625,000) and total remuneration
package competitively against market. The committee would also
note that the increase for Kelly represents an overall cost saving
for the Company, with the role of Group commercial director not
being replaced and the salary uplift for Kelly being significantly
lower than that of the original role holder. As noted above, the
Board as a whole is delighted with the progress that Kelly has
made in her time at the Group, and believes this change is
strongly warranted by both individual performance and the
broader performance context.
Consultation on changes
The aforementioned policy and implementation changes were
subject to an extensive consultation exercise undertaken
between October 2025 and February 2026. The committee
shared its proposals with the Company’s largest institutional
shareholders, covering more than 50% of the register. The
committee also shared and discussed the proposals with UK
proxy advisers – the Investment Association, ISS and Glass Lewis.
Feedback received during the consultation process was positive,
with no concerns raised around the minor policy wording change
and broad support for the proposed changes to base salaries and
the chief financial officer’s LTIP award level. Constructive feedback
tended to focus on measure selection, including varying levels of
support for relative TSR, questions about the possible future use
of a returns-based metric and thoughts around short- and
long-term target setting. Given the strong overall support
received, the committee did not make any changes to its original
proposals.
Wider workforce remuneration and engagement
Our divisions pay at or above the real living wage (excluding
apprentices) and two divisions are accredited Living Wage
Foundation employers.
The average salary increase across the divisions for 2025 is 4.0%.
In 2025, 78.6% of employees received a bonus, with an average
bonus paid of £14,061.
The annual review of wider workforce remuneration determined
that the remuneration of the executive directors and Group
management team is well aligned with the rest of the Group with
a consistent approach taken to fixed pay (salary, benefits and
pension). The key differences are pay levels, the split between
different elements of pay and the metrics used to measure
underlying performance. A much higher proportion of
remuneration for the executive directors and Group management
team is performance related. The executive directors’
remuneration is also subject to various best practice features,
required by shareholders, such as bonus deferral and holding
periods for vested long-term incentive shares which would be
uncompetitive if applied to the wider employee population.
Morgan Sindall Group plc
Annual Report 2025
98
Directors’ remuneration report
continued
I, along with our company secretary, will be meeting with the
Group’s HR forum in 2026 and with groups of employees from
within the businesses to understand issues impacting the wider
workforce at a deeper level.
In respect of employee engagement, the Board continues to use
an alternative arrangement whereby each of the non-executives
and the chair take responsibility for engaging with employees as
part of their divisional meetings and site visits for the strategy
review each year. In addition, some of the directors met with
c.70 employees at the senior management conference in 2025.
These meetings provide the directors with opportunities for
discussions with employees and individuals without the executive
directors or individuals’ managers present. The directors have
provided feedback to the Board throughout the year on these
engagements. The meetings have confirmed that employees feel
engaged, that our Core Values are embedded across the Group
and there is openness and transparency in our culture.
The divisions undertake a variety of employee engagement
activities which include employee surveys, conferences, 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.
2025 remuneration outcomes
Reflecting a further set of record business results, the executive
directors will each receive a maximum bonus payout for 2025, of
which 33% will be deferred in shares for three years. LTIP awards
granted in 2023, which vest on three-year performance to
31 December 2025 (two thirds on EPS and one third on relative
TSR), will vest at 100%. The committee satisfied itself that these
outcomes reflect the excellent underlying performance of the
business over the relevant periods and applied no discretion in
their assessment.
As it has for other awards in recent years, the committee also
considered the vesting value of the 2023 LTIP awards in relation
to guidance. 2023 LTIP awards were granted on 3 March 2023
using a share price of £17.88 while the fourth quarter 2025
average share price used to calculate the single figure of
remuneration (see page 112) was £46.72. The committee
reviewed a number of relevant perspectives in its deliberations,
concluding that the gain through share price appreciation for this
award is not indicative of any windfall gains. The committee will
confirm this decision following the actual vest date in March 2026.
2026 remuneration
Element of remuneration
Chief executive,
John Morgan
Chief financial
officer,
Kelly Gangotra
Salary increase
24.9% (from
January 2026)
4.0% from
January 2026;
18.4% from
April 2026
Annual bonus opportunity
150% of salary
150% of salary
Bonus deferral
33%
33%
LTIP award
200% of salary
200% of salary
These arrangements reflect the rebasing of the chief executive’s
salary and an initial 4.0% salary increase for the chief financial
officer, in line with the average increase awarded across the
Group’s wider workforce, and a subsequent 18.4% salary increase
for the chief financial officer reflecting the material change to her
role responsibilities from April.
The maximum bonus opportunity for 2026 will remain 150% of
salary for both executive directors and will continue to be based
wholly on PBTA*. As in previous years, the committee considered
the merits in introducing a non-financial element to the annual
bonus (based on personal/strategic objectives and/or ESG
priorities) but concluded that these facets of performance could
continue to be effectively monitored and managed through the
Board’s regular engagement with the chief executive and the chief
financial officer. ESG, in particular, remains such an integral part
of the Group’s day-to-day operations that assigning a monetary
reward to an area in which we are already performing strongly is
considered unnecessary. Full details of the PBTA* targets will be
disclosed in next year’s report. Of any bonus earned, 33% will be
deferred in nil-cost share options for three years.
Both executive directors will receive an LTIP award of 200% of
salary for 2026, with Kelly’s award being based on a salary of
c.£528k (i.e. her chief financial officer salary prior to the uplift for
her additional responsibilities in April). Vesting of the LTIP award
will continue to be based 67% on EPS and 33% on relative TSR
performance with any shares that vest subject to a further
two-year holding period. Targets for both the EPS and TSR metrics
are set out on page 119. Noting increases to maximum LTIP
opportunities for executive directors in recent years, the
committee confirms its longstanding commitment to ensuring
that the target ranges are appropriately stretching, with the full
vesting targets, for example, remaining broadly equivalent to at
least an upper-quartile level of performance.
Looking ahead
In conclusion, the committee believes that, overall, we have
maintained a balanced and considered outcome in respect of
remuneration with a clear link between performance, shareholder
experience and reward.
I hope that we can rely on your vote in support of our approach
to remuneration at our AGM in 2026. If you would like to discuss
any aspect of this report, I would be happy to hear from you.
You can contact me through our company secretary.
Jen Tippin
Chair of the remuneration committee
24 February 2026
*
See note 28 to the consolidated financial statements for alternative performance measure definitions and reconciliations.
99
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Governance
Financial statements
Directors’ remuneration report
continued
Remuneration at a glance
How executive director remuneration will be structured in 2026
Fixed pay
2026
2027
2028
2029
2030
2031
Salary
John Morgan: £795,000
(+24.9%)
Kelly Gangotra: £527,947
(+4.0% from January 2026);
£625,000 (+18.4% from April 2026)
Pension
6% of base salary to a personal pension plan and/or as a cash
supplement
Benefits
Including travel allowance, private medical insurance, ill health income
protection insurance and life insurance
Annual bonus
2026
2027
2028
2029
2030
2031
Opportunity
John Morgan: 150% of salary
Kelly Gangotra: 150% of salary
Measures
100% PBTA*
One-year performance period
67% of any bonus earned paid in early 2027
33% of any bonus earned deferred for
three years
Deferral
33% of any bonus earned, for three years
LTIP
2026
2027
2028
2029
2030
2031
Opportunity
John Morgan: 200% of salary
Kelly Gangotra: 200% of salary
Measures
67% adjusted* EPS
33% relative TSR
Three-year performance period
Two-year holding period on any vested shares
Time horizon
Three-year performance period
Vested shares subject to additional two-year holding period
Annual bonus outcome in 2025
Measure
Threshold 15% payout
On-target 50% payout
Maximum 100% payout
Payout
PBTA* 100% weighting
£164.4m
£173.0m
£190.3m
100.0%
Outturn: £232.6m
Total: 100.0%
LTIP outcome, 2023 award
Measure
Threshold 12.5%–25% payout
Stretch 100% payout
Payout
Adjusted* EPS 67% weighting
260.0p
308.0p
100.0%
Outturn: 370.0p
Relative TSR 33% weighting
Median
Median +10% p.a.
100.0%
Outturn: Median +42.6% p.a.
Total: 100.0%
Morgan Sindall Group plc
Annual Report 2025
100
Directors’ remuneration report
continued
Remuneration in practice
The table below illustrates how remuneration policy and practice compare across the different groups of employees.
Salary
Benefits
Pension
Short-term incentive
Long-term incentive
Executive
directors
Basic salary levels
take into account
market-competitive
levels. Any increases
are normally in line
with those for the
wider workforce.
A range of market-
competitive benefits
are offered in line
with the wider
workforce.
Up to 6% of
salary employer
contribution to the
LifeSight master trust
(‘LifeSight’), consistent
with the wider
workforce rate.
Annual bonus plan
linked 100% to Group
performance. 33%
of the total award is
deferred in nil-cost
options.
The LTIP is a
share award with
performance linked
to three-year EPS and
TSR performance.
The executive
directors and Group
management team
are required to hold
shares equivalent to
200% and 100% of
salary respectively.
Group
management
team
Annual bonus plan
linked 100% to
divisional or Group
performance.
Senior
management
Divisional or
Group annual cash
bonus plan linked
to both business
and personal
performance.
Wider workforce
Basic salary
levels are set in
line with market
requirements or
subject to industry-
wide working rule
agreements where
applicable.
Five of our
businesses pay
employees the
real living wage or
above. Construction
and Property
Services are Living
Wage Foundation-
accredited
employers.
A range of market-
competitive benefits
are offered.
Individual benefits
received depend on
role and seniority.
Varies by division.
Typical employer
contribution of 6%
of salary. Monthly
paid employees are
offered LifeSight
and weekly paid
employees are
offered the
opportunity to join
the B&CE’s People’s
Pension. Both
plans are defined
contribution. Weekly
paid employees are
offered contributions
in line with the
industry working rule
agreements.
Depending on
role, a proportion
of employees will
participate in their
divisional or the
Group annual cash
bonus plan linked
to a mix of business
and/or personal
performance.
Depending on role,
employees may be
invited to participate
in the Share Option
Plan (SOP). All
employees are
invited to participate
in the Save As You
Earn (SAYE) Plan.
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Financial statements
Directors’ remuneration report
continued
Remuneration policy
This part of the report sets out the Company’s policy for the remuneration of executive and non-executive directors (referred to as
either ‘the remuneration policy’ or ‘the policy’). The policy is determined by the remuneration committee and is not subject to audit by
the external auditor.
The committee is seeking shareholder approval for a new remuneration policy at the 2026 AGM and, if approved, it is intended that this
revised policy will come into effect from that date. A summary of, and rationale for, the single proposed change compared with the
previously approved policy is provided in the committee chair’s statement above.
The policy is designed to be straightforward, and to encourage effective stewardship that is vital to creating long-term value for
all stakeholders. It promotes long-term sustainable performance through significant deferral of remuneration in shares. Executive
directors are expected to build and maintain substantial personal shareholdings in the business. The extent of their responsibilities
means executive directors are well paid, but the policy is designed to ensure that they are not overpaid.
As set out in the committee chair’s statement on page 98, the committee consulted with its largest shareholders regarding
these changes.
Fixed elements
Purpose and link to strategy
Operation
Maximum opportunity
Performance targets
Base salary
To provide competitive fixed
remuneration.
To attract, retain and
motivate executive directors
of the calibre required
in order to deliver the
Company’s strategy and
enhance earnings over the
long term.
Basic salary is typically reviewed
annually or, if appropriate, in the
event of a change in an individual’s
position or responsibilities.
Salary levels are set with reference
to market rates, taking into account
individual performance and
experience, Company performance,
and the pay and conditions of other
senior management in the Group.
The committee will consider the
general increase for the broader
employee population but on
occasion may need to recognise, for
example, an increase in the scale,
scope or responsibility of the role.
There is no prescribed
maximum annual increase.
Increases will generally be in
line with those awarded to
the wider workforce, although
the committee maintains
the ability to grant larger
increases where appropriate.
Not applicable.
Benefits
To provide market-
competitive levels of
benefits, including insured
benefits to support the
individual and their family
during periods of ill health,
accidents or in the event of
death.
Car or travel allowances to
facilitate effective travel.
Current benefits include:
n
travel allowance
n
private medical insurance
n
annual health screening
n
ill health income protection
insurance
n
life insurance
n
holiday and sick pay
n
employee assistance
programme
n
professional advice in
connection with their
directorship
n
relocation expenses and legal
fees in the case of a new hire
n
travel, fuel, subsistence and
accommodation as necessary
n
occasional gifts, for example
appropriate long-service or
leaving gifts
Other benefits may be provided
where appropriate in line
with benefits offered to other
employees.
The value of benefits is based
on the cost to the Company
and is not predetermined.
Not applicable.
Morgan Sindall Group plc
Annual Report 2025
102
Directors’ remuneration report
continued
Remuneration policy
Fixed elements
Purpose and link to strategy
Operation
Maximum opportunity
Performance targets
Pension
To provide a pension
arrangement to contribute
towards retirement
planning.
The Company will contribute to
the LifeSight master trust defined
contribution pension scheme
(‘LifeSight’), or to personal pension
arrangements at the request of the
individual.
The Company may also consider
a cash alternative (e.g. where a
director has reached HMRC’s
lifetime or annual allowance limit).
Employer contributions for
current and new executive
directors will be kept aligned
with the rate offered to
the majority of employees
(currently 6% of salary).
Directors who are members
of LifeSight may elect to
exchange part of their salary
or bonus award in return for
pension contributions, where
the Company will enhance
the additional contributions
by half of the saved
employer’s National Insurance
contribution.
Not applicable.
Annual bonus
To reward the achievement
of demanding annual
performance metrics.
Performance measures and targets
are generally set annually by the
committee.
At the end of the year, the
committee determines the extent to
which targets have been achieved.
A maximum of 70% of any bonus
earned is payable in cash with the
remainder normally deferred for
at least three years and satisfied
in Company shares. The current
intention is that 33% of any bonus
earned will be deferred.
To ensure fairness to both
shareholders and participants,
the committee has discretion to:
(i) override the formulaic outturn
of the bonus to determine the
appropriate level of bonus payable
where it believes the outcome is not
truly reflective of performance; and
(ii) adjust performance measures,
targets and/or weightings during
the performance period under
exceptional circumstances. Any
additional measures which may
be introduced in the future would
be aligned to our strategy and we
would provide details at the relevant
time.
Awards under the annual bonus
are subject to malus and clawback
provisions, further details of which
are set out on page 109.
The maximum opportunity
is 150% of base salary.
Target performance will
typically deliver up to 50%
of maximum bonus, with
threshold performance
typically paying up to 15%
of maximum bonus.
Dividends accrue on deferred
bonus shares during the
deferral period and may be
paid in shares at the time
of release.
All or a majority of
the bonus will be
based on PBTA* set
relative to the Group’s
budget, or such other
financial measures as
the committee deems
appropriate.
Financial targets
will account for not
less than 80% of the
annual bonus.
A minority of the
bonus may be based
on non-financial,
strategic and/or
personal objectives
linked to the strategic
objectives of the
Group to provide a
rounded assessment
of the Group’s and
management’s
performance.
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Financial statements
Directors’ remuneration report
continued
Remuneration policy
Fixed elements
Purpose and link to strategy
Operation
Maximum opportunity
Performance targets
2023 Long-
Term Incentive
Plan (LTIP)
To drive sustained long-term
performance that supports
the creation of shareholder
value.
Annual awards of conditional shares
or nil (or nominal) cost options are
granted with vesting dependent on
the achievement of performance
conditions over a three-year period.
Award levels, performance
conditions and targets are generally
reviewed before each award cycle
to ensure they remain appropriate.
Targets take account of internal
strategic planning and external
market expectations for the
Group and are appropriate to the
economic outlook and risk factors
prevailing at the time, ensuring that
such targets remain challenging in
the circumstances while remaining
realistic enough to motivate and
incentivise management.
A proportion of net LTIP shares
vesting may, at the discretion of the
committee, be subject to a holding
period following the end of the
vesting period. The committee’s
current intention is that all awards
will be required to be held for an
additional two-year period post-
vesting, creating a total of five years
between the award being granted
and the first opportunity to sell.
To ensure fairness to both
shareholders and participants,
the committee has discretion to:
(i) override the formulaic outturn
of the performance targets to
determine the appropriate level
of vesting of the LTIP where it
believes the outcome is not truly
reflective of performance; and (ii)
adjust performance measures,
targets and/or weightings during
the performance period under
exceptional circumstances. Any
use of committee discretion with
respect to waiving or modifying
performance conditions will be
disclosed in the relevant annual
report.
Awards under the LTIP are subject
to malus and clawback provisions,
further details of which are set out
on page 109.
200% of base salary.
Vesting of LTIP
awards is subject to
performance against
relevant metrics
measured over a
period of at least
three financial years.
The committee
will typically select
performance
measures ahead of
each cycle to ensure
that they continue
to be linked to
the delivery of the
Company strategy.
For every
performance
measure, no
more than 25%
of the available
award will vest for
achieving threshold
performance,
increasing to
100% vesting
for achievement
of stretching
performance targets.
All-employee
Save As You
Earn Plan
(SAYE)
To encourage share
ownership and provide
further alignment with
shareholders.
This is an HMRC tax-advantaged
plan under which regular monthly
savings can be made over a period
of three years and can be used to
fund the exercise of an option to
purchase shares.
Options are granted at a discount
of up to 20%.
This scheme is open to all
employees, including executive
directors.
Prevailing HMRC limits apply.
The executive directors will
be eligible to participate in
any other HMRC all-employee
share plans that may be
implemented.
Not applicable.
Morgan Sindall Group plc
Annual Report 2025
104
Directors’ remuneration report
continued
Remuneration policy
Fixed elements
Purpose and link to strategy
Operation
Maximum opportunity
Performance targets
Non-executive
directors’ fees
To attract, retain and reward
talented individuals.
Non-executive directors typically
receive a basic annual fee in respect
of their Board duties. Additional
fees may be paid to the chairs of
the committees and the senior
independent director to reflect
their additional responsibilities.
The non-executive directors’ fees
are reviewed by the Board rather
than by the committee.
The chair receives a fixed annual
fee.
Fees are normally reviewed
annually. The committee and the
Board are guided by fee levels in
the non-executive director market
and may recognise an increase
in certain circumstances, such as
assumed additional responsibility
or an increase in the scale or scope
of the role.
Non-executive directors are
reimbursed for reasonable
expenses and any tax arising
on those expenses will be
settled directly by the Company.
To the extent that these are
deemed taxable expenses, they
will be included in the annual
remuneration report as required.
Non-executive directors may take
independent professional advice
relating to their role as a director
at the expense of the Company.
For the non-executive
directors, there is no
prescribed maximum annual
increase although it is
expected that any increase
in fees will usually be broadly
aligned with salary increases
granted to the wider
workforce at the time.
The Company’s articles of
association (‘the Articles’)
provide that the total
aggregate remuneration paid
to the chair of the Company
and non-executive directors
will be determined by the
Board within the limits set by
shareholders and detailed in
the Company’s Articles.
Not applicable.
Share
ownership
guidelines
To provide close alignment
between the experience
and longer-term interests
of executive directors and
shareholders.
Executive directors are expected to
build and maintain shareholdings
at a minimum specified level
(currently 200% of basic salary).
Until this threshold is achieved,
there is a requirement for executive
directors to retain no less than 50%
of the net of tax value of vested
incentive awards.
Not applicable.
Not applicable.
105
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Governance
Financial statements
Directors’ remuneration report
continued
Remuneration policy
Fixed elements
Purpose and link to strategy
Operation
Maximum opportunity
Performance targets
Post-
employment
shareholders
To encourage long-term
alignment with
shareholders.
The committee requires executive
directors to maintain a level of
shareholding for two years after
stepping down from the Board.
The committee has established
mechanisms to enforce this
requirement.
The committee will retain
discretion about the application
of post-employment shareholding
guidelines in individual cases.
Executive directors will
maintain the following
shareholdings after they
have stepped down from
the Board:
For the first 12 months, the
lower of:
a) their shareholding at the
time of leaving the business
(excluding individually
purchased shares); and
b) 200% of basic salary (this
being the current in-post
shareholding guideline).
For the second 12 months
(i.e. between 12 months and
24 months), the lower of:
a) their shareholding at the
time of leaving the business
(excluding individually
purchased shares); and
b) 100% of basic salary (this
being half of the current in-
post shareholding guideline).
Not applicable.
Existing arrangements
We will honour existing awards to executive directors, and incentives, benefits and contractual arrangements made to individuals prior
to their promotion to the Board and/or prior to the approval and implementation of this policy. For the avoidance of doubt, this
includes payments in respect of any award granted under the previous remuneration policy. This will last until the existing incentives
vest (or lapse), or the benefits or contractual arrangements no longer apply. This does not apply to pension contributions for any newly
promoted executive directors, which will be aligned with the rate offered to the majority of employees on promotion to the Board.
Service agreements
Executive directors
Executive directors have rolling service contracts that provide for 12 months’ notice on either side. There are no special provisions that
apply in the event of a change of control.
Date of service contract
John Morgan
20 February 2012
Kelly Gangotra
7 December 2023
The Company allows executive directors to hold external non-executive directorships, subject to the prior approval of the Board, and to
retain fees from these roles.
Non-executive directors
All non-executive directors have specific terms of engagement, being an initial period of three years which thereafter may be extended
by mutual consent, subject to the requirements for re-election, the UK Listing Rules of the Financial Conduct Authority (FCA) and the
relevant sections of the Companies Act 2006.
Appointment
commencement date
Month/year initial
three-year term was extended
Month/year second
three-year term was extended
David Lowden
10 September 2018
September 2021
September 2024
Jen Tippin
1 March 2020
March 2023
Sharon Fennessy
1 January 2024
Mark Robson
1 September 2024
Peter Harrison
6 May 2025
The non-executive directors are subject to annual re-election by shareholders.
Morgan Sindall Group plc
Annual Report 2025
106
Directors’ remuneration report
continued
Remuneration policy
Termination provisions
Current executive directors’ service agreements are terminable on 12 months’ notice. In circumstances of termination on notice,
the committee will determine an equitable compensation package, having regard to the particular circumstances of the case.
The committee has discretion to require notice to be worked or to make payment in lieu of notice or to place the director on garden
leave for the notice period. In respect of new hires, the initial notice period for a service contract may be longer than the policy of a
12-month notice period, provided it reduces to 12 months within a short space of time.
In case of payment in lieu or garden leave, base salary, accrued holiday, employer pension contributions and employee benefits will be
paid for the period of notice served on garden leave or paid in lieu. The committee will endeavour to make payments in phased
instalments and to apply mitigation in the case of offsetting payments against earnings elsewhere.
If a director leaves under a settlement agreement, life insurance cover may continue for up to three months after a director leaves the
Company, subject to the director not obtaining alternative employment. In addition, the Company may agree that a director will remain
covered under the private medical scheme until the next policy renewal date or, if a director is mid-treatment at their leaving date, until
the course of treatment is concluded. The same provisions are available to all employees in the Company who receive these benefits.
For ‘good leavers’, the annual bonus may be payable in respect of the period of the bonus scheme year worked by the director; there is
no provision for an amount in lieu of bonus to be payable for any part of the notice period not worked. The bonus would be payable at
the normal date. Leavers would normally retain deferred bonus shares, albeit release would normally be at the end of the deferral
period, with committee discretion to treat otherwise.
Long-term incentives granted under the LTIP will be determined by the LTIP rules, which contain discretionary good leaver provisions
for designated reasons (that is, participants who leave early on account of: injury; disability; death; a sale of their employer or business
in which they were employed; statutory redundancy; retirement; or any other reason at the discretion of the committee). In these
circumstances, a participant’s unvested awards will not be forfeited on cessation of employment and instead will vest on the normal
vesting date (save in the event of the death of a participant, where vesting will occur as soon as reasonably practicable). In exceptional
circumstances, the committee may decide that the participant’s awards will vest early on the date of cessation of employment. In all
cases, the extent to which the awards will vest will depend on the extent to which the performance conditions have been satisfied and
a pro rata reduction of the awards will be applied by reference to the time of cessation (although the committee has discretion to
disapply time pro-rating if the circumstances warrant it).
Leavers would normally retain vested LTIP shares subject to a holding period, and these would normally be released at the end of the
holding period, with committee discretion to treat otherwise; in the event of death of a participant, any holding period would cease
to apply.
In the event of a takeover or other corporate event, the committee will determine the number of LTIP shares in respect of which an
award vests based on the extent to which it determines that the performance conditions have been satisfied at the relevant time,
taking into account the shortened performance period and such other factors as the committee considers relevant. Awards will be
time pro-rated to reflect the earlier vesting unless the committee determines otherwise.
Where an executive director leaves by mutual consent, the Company may reimburse reasonable legal fees and tax advice costs,
and pay for professional outplacement services.
107
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Directors’ remuneration report
continued
Remuneration policy
Remuneration on recruitment
The committee considers the need to attract, retain and motivate the best person for each position, without paying more than
is necessary.
External appointments
For external appointments, the committee would seek to align the ongoing remuneration package with the remuneration policy
approved by shareholders, as follows:
Fixed elements
Approach
Maximum
annual grant value
Base salary
The base salaries of new executive directors will be determined by reference to relevant
market data, the experience and skills of the individual, internal relativities and their
current basic salary. In the event that the committee elects to set the initial basic salary
of a new appointee below the market, any shortfall may be managed with phased
increases over a period of two to three years subject to the individual’s development in
the role. Alternatively, the committee may approve a higher basic annual salary for a newly
appointed director than the outgoing director received where it considers it necessary in
order to recruit an individual of sufficient calibre for the role and/or where it is known that
the outgoing director’s remuneration has fallen behind appropriate market levels.
Pension
New executive directors will receive Company contributions or a cash alternative in line with
that offered to the majority of employees.
Benefits
New executive directors will be eligible to receive benefits which may include (but are
not limited to) travel allowances, private medical insurance, ill health income protection
insurance, health screening, employee assistance programme, life insurance, holiday and
sick pay, professional advice in connection with their directorship, travel, subsistence and
accommodation as necessary, occasional gifts, for example appropriate long-service or
leaving gifts, and any necessary relocation and/or incidental expenses.
The Company may make an award in cash or shares on recruitment to reflect the value of
benefits a new recruit may have received from a former employer.
Annual bonus
The structure described in the policy table will apply to new executive directors, with the
maximum opportunity being pro-rated to reflect the proportion of the financial year
served. The committee may set different performance conditions and/or targets for an
executive director who has joined part-way through the financial year.
150% of base salary
LTIP
New appointees will be granted awards under the LTIP on the same terms as other
executives, as described in the policy table. The committee may set different award levels,
performance conditions and/or targets for an executive director who has joined part-way
through the financial year.
200% of base salary
SAYE
New appointees will also be eligible to participate in all-employee share schemes.
Shareholding
guidelines
New executive directors will be expected to build up a shareholding equivalent to 200% of
basic salary in accordance with the terms set out in the policy table.
Post-employment
shareholding
The structure in the policy table will apply to new executive directors.
In determining appropriate remuneration, the committee will take into consideration all relevant factors to ensure that arrangements
are in the best interests of both the Company and its shareholders. The committee may additionally make awards or payments in
respect of deferred remuneration arrangements forfeited on leaving a previous employer.
The committee will look to replicate the arrangements being forfeited as closely as possible and, in doing so, will take account of
relevant factors, including: the value of deferred remuneration; the performance conditions; and the time over which they would have
vested or been paid. Any such arrangements would typically have an aggregate fair value no higher than the awards being forfeited.
The LTIP will be used as the basis for granting such replacement awards, to the extent possible under its rules; such awards may be
granted in excess of the ongoing policy limit outlined in the table on page 104. Awards may be granted outside of the LTIP if necessary,
as permitted under the UK Listing Rules.
Internal promotion
In cases of appointing a new executive director by way of internal promotion, the committee will act in a manner consistent with the
policy for external appointees detailed above and the provisions for existing arrangements, as set out on page 106, will apply.
Shareholders will be informed of the remuneration package and all additional payments to a newly appointed executive director in the
annual report following their appointment.
Non-executive directors
For the appointment of a new non-executive director, the fee arrangement will be set in accordance with the approved remuneration
policy at that time.
Morgan Sindall Group plc
Annual Report 2025
108
Directors’ remuneration report
continued
Remuneration policy
Overview of remuneration policy
for other employees
While our remuneration policy follows the same fundamental
principles across the Group, packages offered to employees
reflect differences in role and seniority. For example, the
remuneration package elements for our Group management
team are essentially the same as for the executive directors with
some minor differences, such as lower levels of share awards and
a lower shareholding requirement. Employees across the Group
below Board level may be eligible to participate in an annual
bonus arrangement. Long-term incentive awards and/or
discretionary share options may be awarded to certain other
senior executives and employees, for which the maximum
opportunity and the performance conditions may vary by
organisational level.
All employees are eligible to participate in the Group’s SAYE plan
and to join either the LifeSight master trust or the People’s
Pension. The Group also offers a broad range of benefits that are
open to employees with eligibility for the different benefits
determined on seniority. Benefits offered include private medical
insurance; digital GP service; income protection; holiday plus
scheme (an option to purchase some additional holiday); ill health
income protection insurance; life insurance provision; employee
assistance programme; and access to financial education.
Use of discretion
The committee will operate the incentive plans in accordance with
their respective rules, the UK Listing Rules and HMRC rules where
relevant. The committee, consistent with market practice, retains
discretion over a number of areas relating to the operation and
administration of certain plan rules. These include (but are not
limited to):
n
who participates in incentives;
n
the timing of grant of awards and/or payments;
n
the size of awards (up to plan/policy limits) and/or payments;
n
where the result indicated by the relative TSR performance
condition should be scaled back (potentially to zero) in the
event that the committee considers that financial performance
has been unsatisfactory and/or the outcome has been
distorted due to the TSR for the Company or any comparator
company TSR being considered abnormal;
n
measurement of performance in the event of a change of
control or reconstruction;
n
determination of good leaver status (in addition to any specified
categories) for incentive plan purposes;
n
payment of dividends accrued during the vesting period;
n
adjustments required in certain circumstances (e.g. rights
issues, corporate restructuring and special dividends);
n
adjustments to existing performance conditions for exceptional
events so that they can still fulfil their original purpose;
n
the release of deferred bonus shares for leavers;
n
retention of LTIP shares subject to a holding period for leavers;
and
n
the application of the post-employment shareholding guidelines.
Malus and clawback
The Company operates malus and/or clawback arrangements
in respect of variable remuneration to ensure outcomes remain
fair, proportionate and aligned with the long-term interests of
shareholders and the Company’s risk framework. Malus enables
the committee to reduce or cancel unvested or unpaid awards.
Clawback enables the committee to recover value delivered in
respect of awards that have vested or been paid (including, where
delivered in shares, the shares and/or the proceeds of sale),
subject to the rules of the relevant plan.
Malus and clawback may be applied in specified circumstances,
including (without limitation): (i) a material misstatement of the
Company’s results (financial or non-financial); (ii) an error in the
assessment or calculation of performance outcomes; (iii)
misconduct by a participant; (iv) corporate failure. In determining
whether to apply malus and/or clawback, the committee
considers the facts and circumstances, including the individual’s
level of accountability (for example whether they were culpable,
responsible or ultimately accountable), seniority and oversight
responsibilities, and will act reasonably and in good faith.
The standard clawback period for the annual bonus and LTIP is
three years following the date of payment or vesting (as applicable).
The committee considers this period appropriate having regard
to the nature of the Company’s activities and the timeframes over
which relevant matters may reasonably be expected to come to
light (including audit adjustments, claims, regulatory matters and
investigations). Where a trigger event is identified, or an
investigation is commenced, within the applicable malus/clawback
period, the committee may apply malus and/or clawback after the
expiry of that period to the extent reasonably necessary to
conclude the investigation and make a determination.
Malus and clawback were not applied in respect of any director’s
variable remuneration during the year.
109
Strategic report
Governance
Financial statements
Directors’ remuneration report
continued
Remuneration policy
Remuneration scenarios for the executive directors
The charts below provide an indication of the level of remuneration that would be received by each executive director under the
proposed 2026 implementation of the policy in the following three assumed performance scenarios:
Below threshold performance
Fixed elements of remuneration only – base salary, benefits and pension
On-target performance
Assumes 50% payout under the annual bonus (75% of salary)
Assumes 25% payout under the LTIP (50% of salary)
Maximum performance
1
Assumes 100% payout under the annual bonus (150% of salary)
Assumes 100% payout under the LTIP (200% of salary)
1
Maximum shown both with and without the impact of share price appreciation on the potential value of long-term incentive awards. For the purposes of this illustration, three-year share
price appreciation is assumed to be 50% in line with the reporting regulations.
0
500
1,000
1,500
2,000
2,500
4,500
3,500
4,000
3,000
870
1,193
2,385
870
1,193
1,590
870
596
398
870
Chief executive
Maximum +
50% share
price growth
Maximum
On-target
Minimum
£870
100%
46.7%
32.0%
21.3%
23.8%
32.7%
19.6%
26.8%
53.6%
43.5%
Fixed
Annual bonus
LTIP
(£000)
£1,863
£3,652
£4,447
0
500
1,000
1,500
2,000
2,500
4,500
3,500
4,000
3,000
586
792
1,584
586
792
1,056
586
264
396
586
Chief financial officer
Maximum +
50% share
price growth
Maximum
On-target
Minimum
£2,433
£1,246
£586
100%
47.0%
31.8%
24.1%
32.5%
19.8%
53.5%
43.4%
(£000)
£2,961
26.7%
21.2%
Note:
n
Base salary levels are as at 1 January 2026.
n
The value of benefits has been estimated based on amounts received in respect of 2025.
n
The value of pension receivable is the equivalent of 6% of base salary.
Morgan Sindall Group plc
Annual Report 2025
110
Directors’ remuneration report
continued
Remuneration policy
Ensuring transparency of the remuneration policy
Criteria
How the criteria are fulfilled
Example
Clarity
Remuneration arrangements
should be transparent and
promote effective engagement
with shareholders and the
workforce.
The committee provides open and transparent disclosures to
shareholders, employees and other stakeholders with regard to
executive remuneration arrangements.
The annual bonus plan, deferred bonus plan, LTIP and SOP are kept
under regular review.
The remuneration report sets out the remuneration arrangements for
the executive directors in a clear and transparent way. We encourage
shareholders to ask questions at the AGM and we consult with
shareholders over any proposed changes to the policy.
Although the committee does not consult the wider employee
population explicitly on remuneration policy, the Board as a whole
engages regularly with employees on a range of topics and feedback is
reflected in its discussions and decisions.
The annual bonus plan is based
entirely on PBTA* which is
published in the Group’s audited
accounts.
Simplicity
Remuneration structures
should avoid complexity and
their rationale and operation
should be easy to understand.
Our remuneration arrangements for executive directors, as well as
those for employees across the Group, are simple in nature and well
understood by participants.
Remuneration for the executive directors consists of fixed pay (salary,
benefits, pension) and variable pay (annual bonus plan and LTIP).
No complex structures are used in our variable pay plans.
The annual bonus is based on one
metric (PBTA*) which is easy to
measure and understand.
Risk
Remuneration arrangements
should ensure that reputational
and other risks arising from
excessive rewards, and
behavioural risks that can arise
from target-based incentive
plans, are identified and
mitigated.
Targets are reviewed annually to ensure they are suitably stretching and
do not encourage excessive risk-taking. Malus and clawback provisions
also apply to both the annual bonus and long-term incentive plans.
Members of the committee are provided with regular briefings on
developments and trends in executive remuneration.
The PBTA* and EPS targets are
based on several considerations,
including the latest budget and
market consensus.
Predictability
The range of possible values
of rewards to individual
directors and any other limits or
discretions should be identified
and explained at the time of
approving the remuneration
policy.
The possible reward outcomes can be easily quantified, and these
are reviewed by the committee annually. In addition, performance
is reviewed regularly so there are no surprises at the end-of-period
assessment.
The potential value and composition of the executive directors’
remuneration packages at below threshold, target and maximum
scenarios are provided in the remuneration policy.
The remuneration scenarios on
page 110 set out the potential
range of remuneration for the
executive directors.
Proportionality
The link between individual
awards, the delivery of strategy
and the long-term performance
of the Group should be clear.
Outcomes should not reward
poor performance.
Annual bonus payments and LTIP awards require robust performance
against challenging conditions that are aligned to the Group’s strategy.
The committee retains discretion to override formulaic outcomes to
ensure that payments under the variable incentives are appropriate
and reflective of overall performance.
Payment under the annual bonus
requires strong performance
against the budget.
Alignment to culture
Incentive schemes should drive
behaviours consistent with the
Company’s purpose, values
and strategy.
The variable incentive schemes and performance measures are
designed to be consistent with the Group’s purpose, values and
strategy.
At the heart of the policy is a focus on the long-term success of the
business. This reflects our culture which is aligned to creating long-term
value for all stakeholders.
Our values and unique culture are
critical to the Group’s long-term
success. Remuneration targets
will only be achieved if the Group
consistently delivers on our
commitments to all stakeholders.
111
Strategic report
Governance
Financial statements
112
Morgan Sindall Group plc
Annual Report 2025
Directors’ remuneration report
continued
This section provides details of how the existing remuneration policy was implemented during the financial year ended
31 December 2025 and how the committee intends to implement the new policy in 2026. The information provided in this section
of the remuneration report which is subject to audit has been highlighted.
Single total figures of remuneration (audited)
Executive directors
| Fixed pay |
Variable pay |
|||||||
Value of |
||||||||
Fees/basic |
Pension |
Total |
Annual |
long-term |
Total |
Total |
||
salary |
Benefits 2 |
contributions |
fixed pay |
bonuses |
incentives 3 |
variable pay |
remuneration |
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
John Morgan |
||||||||
2025 |
636 |
28 |
38 |
702 |
955 |
2,318 |
3,273 |
3,975 |
2024 |
615 |
28 |
37 |
680 |
922 |
1,266 |
2,189 |
2,869 |
Kelly Gangotra |
||||||||
2025 |
508 |
27 |
30 |
565 |
761 |
0 |
761 |
1,326 |
2024 1 |
322 |
17 |
19 |
358 |
483 |
0 |
483 |
841 |
Notes:
1
Kelly Gangotra joined the Board as chief financial officer on 7 May 2024.
2
Benefits relate to travel allowance, private medical benefits, ill health income protection insurance, employee assistance programme and life insurance.
3
As the market price on the date of vesting for the 2023 awards is currently unknown, the LTIP value shown is estimated using the average market value over the last quarter of 2025 of
£46.72. The 2024 comparative figures for the value of the long-term incentives and total remuneration have been revised from last year’s report to reflect the actual share price used for the
vesting and the value of dividend-equivalent shares awarded. Awards granted in 2022, which vested based on performance to 31 December 2024, are valued using the closing price on 6
March 2025, the date prior to the date of vesting (7 March 2025), of £31.20. (The closing share price on 7 March 2025 was £31.05.)
Annual cash bonus outturn (audited)
Annual bonus figures represent the full amount earned for 2025. Of the amounts shown, 33% will be deferred in nil-cost share options for
three years. The table below shows performance against PBTA* targets for 2025 representing 100% of the annual bonus potential.
Threshold |
Target |
Maximum |
Actual |
Payout, |
|
£m |
£m |
£m |
performance |
percentage of |
|
(15% payout) |
(50% payout) |
(100% payout) |
£m |
maximum |
|
Group PBTA* full-year 2025 |
£164.4m |
£173.0m |
£190.3m |
£232.6m |
100% |
LTIP – 2023 award outturn (audited)
LTIP awards granted in 2023 are due to vest on 3 March 2026. As set out in the table below, 100% of these awards are expected to vest.
Performance condition
Threshold |
|||||
(EPS: 12.5% vest, |
Actual |
Percentage |
|||
Weighting |
TSR: 25% vest) |
Stretch (100% vest) |
performance |
vesting |
|
Adjusted* EPS in full-year 2025 |
67% |
260.0p |
308.0p |
370.0p |
100% |
Relative TSR (vs FTSE 250 excluding |
33% |
Median |
Median + 10% p.a. |
Median + 42.6% p.a. |
100% |
investment trusts) |
outperformance |
||||
Total vesting |
100% |
As the market price on the date of vesting is currently unknown, the values shown in the single-figure table are based on the average
market value over the last quarter of 2025 of £46.72, a 161% increase on the share price at the date of grant of £17.88. Accordingly,
61.7% of the ‘value of long-term incentives’ figures shown in the single-figure table above is a result of share price appreciation,
amounting to c.£1,430,612 for John Morgan. As noted earlier in this report, the committee’s view is that the gain through share price
appreciation is not indicative of any windfall gains and therefore it has not exercised any discretion in respect of the achieved outcomes.
The value of 2025 long-term incentives in the single-figure table above does not include the value of any dividend-equivalent shares
that may be due for the 2023 awards on the date of vesting.
The net awards received (after the deduction of tax and National Insurance where applicable) will be subject to a two-year holding
period in which the director will not be able to sell the shares but will be entitled to receive dividends and vote on the shares. The
shares will be held in a Company-nominated share account for the individual and will be transferred to the individual at the end of the
holding period.
Strategic report
Governance
Financial statements
113
Directors’ remuneration report
continued
Annual report on remuneration
Non-executive directors (audited) inclusive of former directors (where applicable)
Fees | Taxable benefits 1 | Total | ||||
£000 | £000 | £000 | ||||
2025 | 2024 | 2025 | 2024 | 2025 | 2024 | |
Peter Harrison 2 | 131 | – | – | – | 131 | – |
Michael Findlay 3 | 155 | 220 | – | – | 155 | 220 |
Sharon Fennessy 4 | 80 | 68 | 5 | 7 | 85 | 75 |
David Lowden | 80 | 72 | – | – | 80 | 72 |
Mark Robson 5 | 80 | 24 | – | – | 80 | 24 |
Jen Tippin | 80 | 72 | – | – | 80 | 72 |
1
Taxable benefits include taxable relevant travel and accommodation expenses for attending Board meetings and related business. Any value disclosed is inclusive of tax arising on the
expense, which is settled by the Company.
2
Peter Harrison was appointed to the Board as non-executive director and chair designate on 6 May 2025, and as chair of the Board on 28 July 2025.
3
Michael Findlay stepped down from the Board on 28 July 2025.
4
Sharon Fennessy was appointed to the Board on 1 January 2024 and as chair of the audit committee on 2 May 2024.
5
Mark Robson was appointed to the Board and as chair of the responsible business committee on 1 September 2024.
Inclusive of former directors (where applicable), the aggregate remuneration for executive and non-executive directors in 2025 was
£3.59m (2024: £3.44m). Aggregate remuneration comprises salary, fees, benefits, pension contributions and bonus payments.
Share awards granted during the year (audited)
LTIP
In 2025, LTIP awards were made to the executive directors which will vest subject to performance over the three financial years to
31 December 2027. Of these awards, 67% are subject to an EPS performance condition and 33% are subject to a TSR performance
condition, full details of which are included in last year’s annual report on remuneration.
Five-day | No. of shares | ||||||
Percentage | average | over which | |||||
of salary | share price at | award was | Face value | Percentage of awards | |||
Date of grant | awarded | date of grant | granted | of award | vesting at threshold | Performance period | |
John Morgan | 6 March 2025 | 200% | £32.50 | 39,168 | £1,272,960 | 25% | 1 January 2025 to |
Kelly Gangotra | 175% | 27,334 | £888,355 | 31 December 2027 |
The share price used to calculate the awards at the date of grant was based on the average share price for the five dealing days
preceding the date of grant. The closing share price on 6 March 2025 was £31.20.
Deferred bonus share options
Of the annual bonus earned in 2024, 33% was deferred into nil-cost share options that will become exercisable three years from the
date of grant.
Percentage of | No. of shares | |||||
bonus earned | Five-day average | over which | Date from which | |||
which was | share price at | award was | Face value | options are | ||
Date of grant | deferred | date of grant | granted | of award | exercisable | |
John Morgan | 6 March 2025 | 33% | £32.50 | 9,366 | £304,395 | 6 March 2028 |
Kelly Gangotra | 4,903 | £159,348 |
114
Morgan Sindall Group plc
Annual Report 2025
Directors’ remuneration report
continued
Annual report on remuneration
Outstanding interests under share schemes (audited)
Details of the executive directors’ interests in long-term incentive awards as at 31 December 2025 and movements during the year are
as follows:
Performance shares
No. of | No. of | ||||||||
shares | No. of | awards | |||||||
outstanding | dividend- | outstanding | |||||||
as at | No. of | equivalent | Total no. | No. of | as at | End of | Date | ||
Date of | 1 January | shares | shares | of shares | shares | 31 December | performance | awards | |
award | 2025 | awarded | awarded | vested | lapsed | 2025 | period | vest | |
John Morgan | |||||||||
7.3.2022 | 36,823 | – | 3,759 | 40,582 | – | – | 31.12.2024 | 7.3.2025 | |
3.3.2023 | 49,606 | – | – | – | – | 49,606 | 31.12.2025 | 3.3.2026 | |
4.3.2024 | 53,105 | – | – | – | – | 53,105 | 31.12.2026 | 4.3.2027 | |
6.3.2025 | – | 39,168 | – | – | – | 39,168 | 31.12.2027 | 6.3.2028 | |
Total | 139,534 | 39,168 | 3,759 | 40,582 | – | 141,879 | |||
Kelly Gangotra | |||||||||
14.5.2024 | 40,501* | – | – | – | – | 40,501 | 31.12.2026 | 14.5.2027 | |
6.3.2025 | – | 27,334 | 27,334 | 31.12.2027 | 6.3.2028 | ||||
Total | 40,501 | 27,334 | – | – | – | 67,835 |
Notes:
Of the awards granted in 2022, 100% vested due to the EPS and TSR targets being achieved. The Group’s 2024 EPS was 278.8p, which resulted in 100% of the
EPS element of the award vesting. The Group also achieved a TSR of 21.7% per year, which exceeded the median of the comparator group by 27.1% per year and
resulted in 100% of the TSR element of the award vesting. The net awards received (after the deduction of applicable taxes) will be subject to a two-year holding
period in which the director will not be able to sell the shares but will be entitled to receive dividends and vote on the shares. The shares will be released to the
director at the end of the holding period.
Outstanding performance shares are subject to a point-to-point EPS growth target and a TSR performance condition.
*
In addition to her normal award, Kelly Gangotra received an additional one-off award of 50% of salary to compensate for long-term incentives forfeited from her
previous employer.
Deferred bonus plan nil-cost options
No. of | No. of | |||||||
options | No. of | options | ||||||
outstanding | dividend- | outstanding | ||||||
as at | No. of | equivalent | No. of | No. of | as at | Date from | ||
1 January | options | shares | options | options | 31 December | which | ||
Date of grant | 2025 | granted | awarded | exercised | lapsed | 2025 | exercisable | |
John Morgan | ||||||||
7.3.2022 | 8,937 | – | 912 | 9,849 | – | – | 7.3.2025 | |
3.3.2023 | 11,811 | – | – | – | – | 11,811 | 3.3.2026 | |
4.3.2024 | 9,142 | – | – | – | – | 9,142 | 4.3.2027 | |
6.3.2025 | – | 9,366 | – | – | – | 9,366 | 6.3.2028 | |
Total | 29,890 | 9,366 | 912 | 9,849 | – | 30,319 | ||
Kelly Gangotra | ||||||||
6.3.2025 | – | 4,903 | – | – | – | 4,903 | 6.3.2028 | |
Total | 4,903 | 4,903 |
Notes:
The closing price of a share on 31 December 2025 was £46.50 and the range during the year was £29.45 to £49.75.
Strategic report
Governance
Financial statements
115
Directors’ remuneration report
continued
Other disclosures
Remuneration committee meetings
The committee met on four occasions during the year. By invitation, the chair of the Board attended one meeting of the committee
and the chief executive presented to another of the committee meetings. The company secretary acted as secretary to the committee.
The chief financial officer did not attend any of the committee meetings. No person was present during any discussion relating to
their own remuneration.
Over the course of the year, the committee received advice on remuneration matters from remuneration advisers Ellason, who were
appointed by the committee in 2021 following a competitive tender process. The committee has also relied on information and advice
provided by the company secretary and has consulted the chief executive (albeit not in relation to his own remuneration). Ellason is a
signatory of the Code of Conduct for Remuneration Consultants, details of which can be found at remunerationconsultantsgroup.com,
and the committee is satisfied that the advice it receives from Ellason is independent and objective. The fees paid by the Company to
Ellason during the financial year were £112,080 (2024: £107,260). Ellason also provided advice to the Company on accounting for share
awards but provided no other material services to the Company or the Group.
Shareholder voting
At last year’s AGM held on 1 May 2025, the remuneration report (excluding the remuneration policy) for the year ended
31 December 2024 was approved by shareholders. The following table shows the results of the advisory vote on the 2024 annual
remuneration report as well as the results of the binding vote on the remuneration policy, which was last approved by shareholders
at the 2023 AGM.
Voting for | Voting against | |||||
Number of | Number of | Total | Votes | |||
shares | Percentage | shares | Percentage | votes cast | withheld 1 | |
Annual remuneration report | ||||||
(2025 AGM) | 35,177,243 | 95.81% | 1,539,932 | 4.19% | 36,717,175 | 5,681 |
Remuneration policy (2023 AGM) | 27,256,102 | 77.81% | 7,774,480 | 22.19% | 35,030,582 | 3,534,665 |
1
Shareholders who have indicated that they wish to actively abstain from voting are counted as a vote withheld. A vote withheld is not a vote in law and is not counted in the calculation of the
proportion of votes cast ‘for’ and ‘against’ a resolution.
Dilution and share usage under employee share plans
Shares for the Company’s discretionary and all-employee share plans may be satisfied using either new issue shares or market-
purchased shares. Our present intention is to use market-purchased shares to satisfy awards granted under the LTIP and SOP and
new issue shares to satisfy options granted under the SAYE Plan. However, we retain the ability to use new issue shares for the LTIP
and SOP and may decide to do so up to the dilution limits specified in the Plan rules (currently 10% of issued ordinary share capital for
all-employee share plans over a 10-year period and, within this limit, no more than 5% of issued ordinary share capital for executive or
discretionary share plans). The outstanding level of dilution against these limits equates to 8.43% (2024: 8.72%) of the current issued
ordinary share capital under all-employee share plans, of which 0% relates to discretionary share plans.
As at 31 December 2025, the Trust held 1,377,157 shares (2024: 1,241,722), which may be used to satisfy awards.
116
Morgan Sindall Group plc
Annual Report 2025
Directors’ remuneration report
continued
Other disclosures
Chief executive remuneration and performance graph
Historical TSR performance
The graph below shows the value to 31 December 2025 of £100 invested in the Company on 1 January 2016 compared with the value
of £100 invested in the FTSE All-Share Index and the FTSE All-Share Construction & Materials Index, these being indices of which the
Company has been a constituent over the period shown. The graph also shows the value of £100 invested in the FTSE 250 Index
(excluding investment trusts), the constituents of which are used for the purposes of the TSR element of the LTIP. In all cases, the other
points plotted are the values at intervening financial year ends.
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
Morgan Sindall
FTSE All-Share Index
FTSE 250 Index (excluding
investment trusts)
FTSE All-Share Construction
& Materials Index
Value of £100 invested at 31 December 2015
0
100
200
300
400
500
600
700
800
900
1,000
Historical pay vs performance
The graph below shows the TSR and PBTA* for the Company over the past 10 financial years. The chief executive remuneration table
provides a summary of the total remuneration received by the chief executive over the past 10 years, including details of annual bonus
payout and long-term incentive award vesting level in each year. The annual bonus payout and long-term incentive award vesting level
as a percentage of the maximum opportunity are also shown for each of these years.
2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | |
Total remuneration £000 | 1,467 | 2,447 | 2,555 | 2,599 | 1,095 | 2,806 | 2,207 | 2,577 | 2,869 | 3,975 |
Annual bonus percentage of maximum | 100 | 100 | 100 | 93 | – | 100 | 100 | 95 | 100 | 100 |
Long-term incentive award vesting | 62 | 100 | 100 | 100 | 43 | 100 | 100 | 100 | 100 | 100 |
percentage of maximum share awards |
Note: The 2024 total remuneration has been revised from last year’s report to reflect the actual share price used for the vesting and the value of dividend-equivalent shares awarded
under the 2014 LTIP (see page 112 for further information).
John Morgan single figure
of remuneration (£000)
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
£0
£1,000
£2,000
£3,000
£4,000
Morgan Sindall TSR
Morgan Sindall PBTA*
John Morgan single figure
TSR and PBTA* indexed to 100
as at 31 December 2015
0
100
200
300
400
500
600
700
800
900
1,000
Strategic report
Governance
Financial statements
117
Directors’ remuneration report
continued
Other disclosures
Chief executive pay ratio
| Chief executive pay ratio | ||||
P75 | ||||
Calculation | P25 (lower | (upper | ||
methodology | quartile) | P50 (median) | quartile) | |
2025 | B | 83:1 | 52:1 | 46:1 |
2024 | B | 65:1 | 45:1 | 31:1 |
2023 | B | 56:1 | 32:1 | 26:1 |
2022 | B | 47:1 | 34:1 | 20:1 |
2021 | B | 60:1 | 53:1 | 32:1 |
2020 | B | 30:1 | 22:1 | 15:1 |
2019 | B | 58:1 | 43:1 | 27:1 |
The lower-, median- and upper-quartile employees were
determined based on the hourly rate data as at 5 April 2025,
collected for the Group’s reporting under the gender pay gap
legislation (Option B). The gender pay gap data reviews the pay
of all UK employees. This calculation methodology was chosen
as the data was readily available from our work in determining
the gender pay gap. Furthermore, with our decentralised
business model and significant UK workforce, calculating the
single figure of remuneration for each employee (Option A)
would be prohibitively time-consuming and expensive.
The committee has considered the pay data for the three
individuals identified and believes that it fairly reflects pay at
the relevant quartiles among our UK workforce. The three
individuals identified were full-time employees during the year.
No adjustments or assumptions were made by the committee,
with the total remuneration of these employees calculated in
accordance with the methodology used to calculate the
single figure of the chief executive for the 2025 financial year.
The table below sets out the remuneration details for the
individuals identified.
Chief | ||||
Salary | executive | P25 | P50 | P75 |
Basic salary £k | 636 | 40 | 56 | 73 |
Total annual pay 1 £k | 1,658 | 48 | 77 | 86 |
Total pay 2 £k | 3,975 | 48 | 77 | 86 |
1
Total annual pay includes, where applicable, basic salary, annual bonus, pension, travel or
car allowance and the cash value of employee benefits received, such as death in service,
private medical, group income protection and employee assistance programme.
2
Total pay includes total annual pay plus the cash value of any long-term incentives
received under either the LTIP or the SOP.
The headline ratio of 52:1 is 16% higher than the median ratio
of 45.1 in 2024, with this increase driven primarily by significant
share price growth over the 2023–25 long-term incentive
vesting period.
None of the median employees in each quartile identified this
year received benefits under the Company’s long-term incentive
schemes. With a significant proportion of the pay of our chief
executive linked to the Company’s performance and share price
movements over the longer term, it is expected that the ratio will
depend substantially on long-term incentive outcomes each year,
and accordingly may fluctuate. The committee has therefore also
produced pay ratios for basic salary and total annual pay as
shown in the table below.
Ratio | P25 | P50 | P75 |
Basic salary | 16:1 | 11:1 | 9:1 |
Total annual pay 1 | 35:1 | 22:1 | 19:1 |
Total pay 2 | 83:1 | 52:1 | 46:1 |
1
Total annual pay includes, where applicable, basic salary, annual bonus, pension, travel or
car allowance and the cash value of employee benefits received, such as death in service,
private medical, group income protection and employee assistance programme.
2
Total pay includes total annual pay plus the cash value of any long-term incentives
received under either the LTIP or the SOP.
Relative importance of spend on pay
The table below shows pay for all employees compared with
other key financial indicators.
2025 | 2024 | Change | |
Employee remuneration | £825.4m | £759.7m | 9% |
Basic earnings per share | |||
(adjusted*) | 370.0p | 278.8p | 33% |
Dividends paid during | |||
the year | £65.8m | £56.1m | 17% |
Employee headcount 1 | 8,511 | 8,242 | 3% |
1
Employee headcount is the monthly average number of employees on a full-time
equivalent basis. More detail is set out in note 2 to the consolidated financial statements.
Shareholding guidelines (audited)
Through participation in performance-linked share-based plans,
there is strong encouragement for senior executives to build and
maintain a significant shareholding in the business. Shareholding
guidelines are in place requiring the executive directors to build
and maintain a shareholding in the Company equivalent to 200%
of base salary. Until this threshold is achieved, there is a
requirement for executives to retain no less than 50% of the net
of tax value of vested incentive awards.
Percentage | ||
of salary | Percentage of | |
required under | salary held at | |
shareholding | 31 December | |
guidelines | 2025 | |
John Morgan | 200% | 23,988% |
Kelly Gangotra | 200% | 24% |
The share price used to value the shares as at 31 December 2025
was £46.50 (2024: £39.00).
118
Morgan Sindall Group plc
Annual Report 2025
Directors’ remuneration report
continued
Other disclosures
Percentage change in remuneration levels
The tables below show details of the percentage change in base salary, benefits and annual bonus for the chair and the executive and
non-executive directors over the past five financial years, compared with the average percentage change for other employees of the
Group over the same periods. Where relevant, data is shown on a full-time equivalent basis.
Percentage change in base salary/fees | 2024–25 | 2023–24 | 2022–23 | 2021–22 | 2020–21 |
Michael Findlay (chair) 1 | 22.7% | 10.8% | 5.0% | 2.8% | 7.4% |
John Morgan | 3.5% | 3.5% | 5.0% | 3.0% | 7.4% |
Kelly Gangotra 2 | 3.5% | n/a | n/a | n/a | n/a |
Sharon Fennessy (audit committee chair) 3 | 11.1% | n/a | n/a | n/a | n/a |
David Lowden (senior independent director) | 11.1% | 11.1% | 5.0% | 2.5% | 7.0% |
Jen Tippin (remuneration committee chair) 4 | 11.1% | 31.0% | 6.4% | 3.0% | 8.5% |
Mark Robson (responsible business committee chair) 5 | 11.1% | n/a | n/a | n/a | n/a |
All employees | 4.4% | 5.6% | 2.7% | 1.5% | 2.6% |
Percentage change in benefits (excluding pension) | 2024–25 | 2023–24 | 2022–23 | 2021–22 | 2020–21 |
John Morgan | 0.1% | 3.7% | 0.2% | 4.8% | 2.4% |
Kelly Gangotra | 0.4% | n/a | n/a | n/a | n/a |
All employees | –0.4% | 10.1% | 4.7% | –2.8% | 1.5% |
Percentage change in bonus | 2024–25 | 2023–24 | 2022–23 | 2021–22 | 2020–21 |
John Morgan | 3.5% | 30.6% | 0.3% | 3.1% | 100% |
Kelly Gangotra | 3.5% | n/a | n/a | n/a | n/a |
All employees | 52.7% | –6.1% | 8.8% | –5.9% | 50.6% |
Non-executive directors are not eligible to participate in the annual bonus scheme and therefore no data is shown for them in the annual bonus table. Similarly, non-executive directors have not
received benefits from the Company in any of the years shown and therefore no data is shown for them in the benefits table.
1
Michael Findlay stepped down from the Board on 28 July 2025. Peter Harrison was appointed to the Board as non-executive director and chair designate on 6 May 2025 and as chair of the
Board and nomination committee on 28 July 2025. With no percentage changes to report, Peter is not included in the base salary/fees table.
2
Kelly Gangotra joined the Board on 7 May 2024. Full-time equivalent figures have been used for Kelly’s calculations in this table.
3
Sharon Fennessy was appointed to the Board on 1 January 2024 and as chair of the audit committee on 2 May 2024.
4
Jen Tippin was appointed as chair of the remuneration committee on 7 December 2023.
5
Mark Robson was appointed to the Board and as chair of the responsible business committee on 1 September 2024.
Directors’ interests (audited)
The figures below set out the shareholdings beneficially owned by directors and their family interests at 31 December 2025.
31 December 2025 | 31 December 2024 | |
No. of shares | No. of shares | |
Peter Harrison | 13,350 | n/a |
John Morgan | 3,283,380 | 3,284,113 |
Kelly Gangotra | 2,567 | 975 |
Sharon Fennessy | 650 | 650 |
David Lowden | 4,000 | 4,000 |
Jen Tippin | 1,000 | 1,000 |
Mark Robson | 13,759 | 13,325 |
There have been no changes in the interests of the directors between 31 December 2025 and 24 February 2026.
External appointments
At the discretion of the Board, executive directors are allowed to act as non-executive directors of other companies and retain any fees
relating to those posts. Neither of the executive directors currently hold external appointments for which they are remunerated.
Payments to past directors or for loss of office (audited)
In respect of former finance director, Steve Crummett, vesting of previously granted awards during the 2025 financial year were as follows:
30,417 shares (100% vesting) under the 2022 LTIP, the net amount of which remains subject to a mandatory two-year holding period; and
7,853 shares under the deferred bonus plan (in relation to the 2021 annual bonus). In both cases, the number of awards vesting includes
accrued dividend equivalents. No other payments were made to past directors during the year.
Strategic report
Governance
Financial statements
119
Directors’ remuneration report
continued
Implementation of the remuneration policy for 2026
Base salaries
As set out in the chair’s statement, the committee reviewed the
executive director salaries during the year and made the changes
set out in the table below. In respect of the chief financial officer,
an initial 4.0% increase (aligned with the budgeted increase for
other senior executives and the workforce more generally) with
effect from 1 January 2026 will be followed with a further 18.4%
increase with effect from 1 April 2026 to recognise a material
change to her role responsibilities. In confirming these salary
increases, the committee took account of the performance of
each executive director and the positioning of their current
salaries relative to market competitors.
1
From | From | ||
1 January | 1 January | ||
2026 | 2025 | ||
£ | £ | Increase | |
John Morgan | 795,000 | 636,486 | 24.9% |
527,947 | |||
(January 2026) | |||
Kelly Gangotra | 625,000 | 507,641 | 4.0% |
(April 2026) |
1
The committee considers size-adjusted market data for construction (Balfour Beatty,
Costain, Galliford Try, Keller, Kier), housebuilding (Barratt Redrow, Bellway, Persimmon,
Taylor Wimpey, Vistry) and engineering and real estate (Babcock, British Land, Grainger,
Land Securities, Mitie) comparators, as well as market data for size comparators, drawn
from the FTSE on the basis of similarity to the Company in terms of market cap, revenue
and number of employees.
Pension
The Company contributes up to 6% of base salary to a personal
pension plan and/or as a cash supplement. This is in line with the
maximum pension contribution for the employee population.
Consistent with all employees participating in the LifeSight master
trust, relevant executive directors may exchange part of their
gross salary and bonus awards in return for pension
contributions. Where additional pension contributions are made
through the salary exchange process, the Company enhances
the contributions by half of the saved employer’s National
Insurance contribution.
The majority of employees in the Group are entitled to a
Company pension contribution of up to 6% of basic salary if they
contribute 6% themselves. Senior employees within the Group
are entitled to a Company pension contribution of up to 10% of
basic salary.
Annual bonus
The maximum annual bonus potential for 2026 will be 150% of
base salary with 67% of any bonus earned paid in cash and the
remaining 33% deferred in nil-cost share options for three years.
To ensure that management is focused on the Group’s financial
performance in 2026, 100% of the bonus will continue to be
based on a PBTA* target range set in relation to the Group
budget. The annual bonus, including the deferred shares, will be
subject to malus and clawback provisions.
The targets for the forthcoming year are set in relation to the
Group budget, which is considered commercially sensitive. For
2026, the bonus trigger point for the annual bonus will be 95%
and the maximum trigger point will be 110% of budgeted PBTA*.
Retrospective disclosure of the targets and performance against
them will be disclosed in next year’s remuneration report.
Long-term incentives
The committee intends to make awards to the current executive
directors under the LTIP in March 2026.
As noted in the chair’s statement, the awards to be granted in
2026 will be over 200% of base salary for the chief executive and
the chief financial officer with Kelly’s award being based on a
salary of c.£528k (i.e. her chief financial officer salary prior to the
uplift for her additional responsibilities in April). Consistent with
prior years, two thirds of awards will be based on an EPS
performance target with the remaining one third based on the
Company’s TSR performance. Threshold performance under each
measure will deliver 25% vesting, rising on a straight-line basis to
full vesting for stretch performance. Further details on the
performance conditions are set out below.
Net shares vesting under LTIP awards granted in 2026 will be
subject to a mandatory two-year holding period at the end
of the vesting period. All awards are subject to malus and
clawback provisions.
EPS performance condition (two thirds of award)
In order to set appropriate EPS targets for the 2026 cycle, the
committee considered a number of internal and external
reference points, broker forecasts for the Company and sector
peers over the next two to three years, and typical growth rates
in our sector. The threshold has been set at a 2028 EPS of 355p
and stretch of 460p. The committee is satisfied this range is
appropriately stretching given forecasts for the sector.
Vesting of the EPS component will be based on achievement
against this range in 2028 and will also be subject to review by
the remuneration committee to ensure vesting is commensurate
with underlying Company performance, taking into account,
for example, imposed tax changes.
TSR performance condition (one third of award)
TSR targets for 2026 awards will be expressed as an
outperformance of median as per the last three cycles.
The TSR comparator group will again be based on the
constituents of the FTSE 250 Index (excluding investment trusts).
Full vesting will require 10% per year outperformance of
comparator median, a level which remains broadly equivalent
to an upper-quartile level of difficulty.
Similarly to previous cycles, the committee retains overarching
discretion to override the formulaic outturn of the LTIP where
it believes the outcome is not truly reflective of performance,
or to adjust performance measures, targets and/or weightings
during the performance period under exceptional circumstances.
Any use of committee discretion with respect to waiving or
modifying performance conditions will be disclosed in the relevant
annual report.
120
Morgan Sindall Group plc
Annual Report 2025
Directors’ remuneration report
continued
Implementation of the remuneration policy for 2026
Fees for the non-executive directors
A further review of the non-executive director fees and chair
of committee fees was undertaken during 2025, resulting in
increases for 2026 of 4% in line with the average increase
awarded to the wider workforce. The resulting fee levels,
summarised below, are now positioned broadly between the
median and upper quartile of the FTSE 250.
The committee determined that the chair’s fee for 2026 be
increased by 4% to £280,800 taking into account the fact that the
fee had been benchmarked in 2025 and remained in line with the
market for a company within the upper quartile of the FTSE 250.
Accordingly, the annual fees from 1 January 2026 are as follows:
2026 |
2025 |
Increase |
|
£ |
£ |
% |
|
Chair |
280,800 |
270,000 |
4 |
Non-executive directors |
|||
Base fee |
67,600 |
65,000 |
4 |
Additional fees: |
|||
Audit committee chair |
15,600 |
15,000 |
4 |
Responsible business |
|||
committee chair 1 |
15,600 |
15,000 |
4 |
Remuneration committee |
|||
chair |
15,600 |
15,000 |
4 |
Senior independent director |
15,600 |
15,000 |
4 |
1
Applicable until 24 February 2026 when the committee was dissolved.
Non-executive directors do not receive pension contributions,
private medical insurance, group income protection insurance
or life insurance and do not participate in any short-term or
long-term incentive schemes.
This report was approved by the Board and signed on its
behalf by:
Jen Tippin
Chair of the remuneration committee
Other statutory information
The directors have pleasure in submitting the
Group’s annual report together with the consolidated
financial statements of the Group for the year ended
31 December 2025.
The strategic report is presented on pages 4 to 67 (inclusive).
The directors’ report required under the Act comprises the entire
governance section on pages 69 to 124 together with the sections
of the annual report incorporated by reference.
The Board has chosen, in accordance with section 414C (11)
of the Act, to include in the strategic report the following
information that it considers to be of strategic importance
that would otherwise be required to be disclosed in the
directors’ report:
n
an explanation of the steps the directors have taken to
foster the Company’s business relationships with suppliers,
customers and others (pages 11 to 13);
n
employment policies, employee consultation and involvement
(pages 11, 64 and 65);
n
disclosures concerning employment of disabled persons
(page 39);
n
additional details of the Group’s approach to inclusion and
diversity (page 39), and ESG disclosures (pages 34 to 46);
n
disclosures concerning GHG emissions, energy consumption
and energy-efficiency action and an intensity ratio appropriate
for our business (pages 40 to 42 and page 62);
n
the likely future developments in the business of the Group
(pages 21 to 33);
n
detail on principal risks (pages 48 to 54); and
n
details of research and development activities (see page 41 for
an example of design and development of a digital tool to assist
with carbon reduction and measurement on projects).
The management report as required by the FCA’s Disclosure
Guidance and Transparency Rules (Rule 4.1) comprises
the strategic report, which includes the principal risks to
our business, and the directors’ report.
There were no significant events since the balance sheet date.
The Group does not operate any branches outside of the
United Kingdom.
The table below shows where to locate information required to
be disclosed under Rule 6.6.1R of the UK Listing Rules (UKLR):
UKLR
Relevant information
Page
6.6.1R(3)
Long-term incentive plans
95 to 120
6.6.1R(11)
Dividend waiver by Employee
Benefit Trust
123
6.6.1R(12)
Shareholder waiver of future dividends
123
Directors
Biographical details are shown earlier in the directors’ report.
The directors of the Company who served during the year are
shown on page 118 in the remuneration report. Further details
of the service agreements and remuneration of the executive
directors, letters of appointment and fees of the non-executive
directors, and their interests in shares of the Company are also
given in the remuneration report.
The rules regarding the appointment and removal of directors
are contained in the Company’s Articles, the Code and the Act.
The Board may appoint a director, either to fill a vacancy or as
an addition to the existing Board, so long as the total number
of directors does not exceed the limit provided in the Articles.
At every AGM, all the directors at the date of the notice convening
the AGM must retire and offer themselves for re-election by
shareholders. Before being recommended for reappointment,
each director is subject to a formal review in relation to the
performance of their duties under section 172 of the Act. All the
directors proposed for re-election at the 2026 AGM held office
throughout the year. Peter Harrison was appointed to the Board
on 6 May 2025 and will be offering himself for election by
shareholders. The Board has set out on pages 73 and 74 the
specific reasons why each director’s contribution is, and continues
to be, important to the Group’s long-term success.
Annual general meeting
The AGM of the Company will be held on 7 May 2026 at 10.00am
at the offices of Morgan Sindall Group plc, Kent House,
14–17 Market Place, London, W1W 8AJ. The Notice of Meeting is
available to view on the Company’s website in the investors section.
Powers of directors
Subject to the Articles, the Act and any directions given by the
Company by special resolution, the business of the Company will
be managed by the Board, who may exercise all the powers of
the Company, whether relating to the management of the
business or not. In particular, the Board may exercise all the
powers of the Company to borrow money, to mortgage or charge
any of its undertakings, property, assets (present and future) and
uncalled capital, to issue debentures and other securities, and to
give security for any debt, liability or obligation of the Company or
of any third party.
Directors’ indemnities
The Articles entitle the directors of the Company to be
indemnified, to the extent permitted by the Act and any other
applicable legislation, out of the assets of the Company in
the event that they suffer any loss or incur any liability in
connection with the execution of their duties as directors. Neither
the indemnity nor any applicable insurance provides cover in the
event that a director (or officer or company secretary as the case
may be) is proved to have acted fraudulently or dishonestly.
In addition, and in common with many other companies, the
Company had during the year, and continues to have in place,
appropriate directors’ and officers’ liability insurance in favour
of its directors and other officers in respect of certain losses
or liabilities to which they may be exposed due to their office.
121
Strategic report
Governance
Financial statements
Other statutory information
continued
The Company has also indemnified each Board director and
certain directors of its Group companies to the extent permitted
by law against any liability incurred in relation to acts or omissions
arising in the ordinary course of their duties. The indemnity
arrangements are categorised as qualifying third-party indemnity
provisions under the Act and will continue in force for the
purposes of the Act and for the benefit of directors (or officers
or company secretary as the case may be) on an ongoing basis.
The Company also had, and continues to have in place, a pension
trustee liability insurance policy in favour of the trustees of the
former Morgan Sindall Retirement Savings Plan in respect of
certain losses or liabilities to which they may be exposed due
to their office. This constitutes a ‘qualifying pension scheme
indemnity provision’ for the purposes of the Act.
Articles of Association
The Company’s constitution, known as ‘the Articles’, is essentially
a contract between the Company and its shareholders, governing
many aspects of the management of the Company. The Articles
may be amended in accordance with the provisions of the Act
by way of special resolution by the Company’s shareholders.
No changes to the Articles are being proposed at this year’s AGM.
Capital structure
During the year, 18,541 ordinary shares were allotted to satisfy
amounts under the Group’s Save As You Earn (SAYE) Plan.
As at 31 December 2025, the issued share capital totalled
48,022,962 ordinary shares of 5p each. Further details of the
issued share capital are shown in note 21 to the consolidated
financial statements.
Power to issue and allot shares
At each AGM, the Board seeks authorisation from its shareholders
to allot shares. The directors were granted authority at the AGM
on 1 May 2025 to allot shares in the Company: (i) up to an
aggregate nominal amount of £800,181.65, representing
approximately one third of the Company’s total issued share
capital as at 12 March 2025; and (ii) in connection with a rights
issue, up to an aggregate nominal amount of £1,600,363.35, as
reduced by the nominal amount of any shares issued under limb
(i), representing (before any reduction) approximately two thirds
of the Company’s total issued share capital as at 12 March 2025.
In addition, two separate resolutions were passed in relation to
the disapplication of pre-emption rights, which were in line with
institutional shareholder guidelines published prior to November
2022. These resolutions granted the directors authority to allot
shares non-pre-emptively for cash: (i) up to an aggregate nominal
amount of £120,027.25, representing approximately 5% of the
Company’s issued ordinary share capital as at 12 March 2025;
and (ii) up to a further aggregate nominal amount of £120,027.25,
representing approximately a further 5% of the Company’s issued
ordinary share capital for use in connection with an acquisition
or specified capital investment. The resolutions passed did not
specifically provide for follow-on offers.
These authorities apply until the conclusion of this year’s AGM
or close of business on 1 August 2026, whichever is earlier, and
resolutions to renew these authorities will be proposed at this
year’s AGM, as explained further in the Notice of Meeting to
shareholders accompanying this annual report.
The Board confirms that the Company has not used these
authorities and there are no immediate plans to make use
of these authorities.
Rights and obligations attaching to shares
Subject to applicable statutes, shares may be issued with
such rights and restrictions as the Company may by ordinary
resolution decide or (if there is no such resolution or so far as it
does not make specific provision) as the Board may decide as set
out in the Company’s Articles. Subject to the Articles, the Act and
other shareholders’ rights, unissued shares are at the disposal of
the Board.
Subject to the Act, if at any time the share capital of the Company
is divided into different classes of shares, the rights attached to
any class of shares may be varied with the written consent of the
holders of not less than 75% in nominal value of the issued shares
of that class (calculated excluding any shares held as treasury
shares), or with the sanction of a special resolution passed at
a separate general meeting of the holders of those shares.
The rights conferred upon the holders of any shares shall not,
unless otherwise expressly provided in the rights attaching to
those shares, be deemed to be varied by the creation or issue
of further shares ranking pari passu with them.
Voting
Subject to any other provisions of the Articles, every member
present in person or by proxy at a general meeting has, upon
a show of hands, one vote and, upon a poll, one vote for every
share held by them. In the case of joint holders of a share,
the vote of the senior holder who tenders a vote, whether in
person or by proxy, shall be accepted to the exclusion of the
votes of the other joint holders and, for this purpose, seniority
shall be determined by the order in which the names stand
in the register of members in respect of the joint holding
(the first-named being the most senior).
No member shall be entitled to vote at any general meeting
in respect of any share held by them if any call or other sum then
payable by them in respect of that share remains unpaid or if a
member has been served with a restriction notice (as defined in
the Articles) after failure to provide the Company with information
concerning interests in those shares required to be provided
under the Act.
No person has any special rights of control over the Company’s
share capital and the directors are not aware of any agreements
between holders of shares which may result in restrictions on
voting rights.
Restrictions on transfer of shares
There are no restrictions on the transfer of securities in the
Company, except:
n
that certain restrictions may, from time to time, be imposed
by laws and regulations (e.g. insider trading laws); and
n
pursuant to the Listing Rules of the FCA whereby certain
employees of the Company require prior approval to deal
in the Company’s shares.
The Company is not aware of any agreements between holders
of securities that may result in restrictions on the transfer of
securities or voting rights.
Morgan Sindall Group plc
Annual Report 2025
122
Other statutory information
continued
Purchase of own shares
At the AGM on 1 May 2025, a resolution was passed giving
the directors authority to make market purchases of
Company shares up to 4,801,090 shares of 5p each at a
maximum price based on the market price of a share at the
relevant time, as set out in the resolution. No purchases of shares
were made during the year pursuant to this authority. The
authority expires on the date of this year’s AGM or close
of business on 1 August 2026, whichever is earlier. A resolution
to renew this authority will be proposed at this year’s AGM,
as explained further in the Notice of Meeting to shareholders
accompanying this annual report.
Dividends and distributions
The Company may, by ordinary resolution, from time to time,
declare dividends not exceeding the amount recommended by
the Board. Subject to the Act, the Board may pay interim
dividends, and also any fixed-rate dividend, whenever the financial
position of the Company, in the opinion of the Board, having
reviewed the level of distributable reserves, justifies its payment.
The Company’s capital allocation framework (see pages 19 and 20)
is designed to balance the needs of all our stakeholders while
enhancing the Group’s market competitiveness and capabilities
and maintaining our financial strength. As part of this framework,
the Board operates a formal dividend policy such that dividend
cover is expected to be in the range of 2.0 to 2.5 times on an
annual basis.
Having taken account of the framework and the broader
economic backdrop, an interim dividend of 50.0p per share
was paid on 23 October 2025 and the directors recommend
a final dividend of 108p, making a total for the year of 158p.
This represents dividend cover of 2.4 times. Further details can
be found in note 8 to the consolidated financial statements on
page 154. Subject to shareholder approval at the 2026 AGM, the
final dividend will be paid on Thursday 4 June 2026 to shareholders
on the register at close of business on Friday 15 May 2026.
The Board may withhold payment of all or any part of any dividends
or other monies payable in respect of the Company’s shares from a
person with a 0.25% interest if such a person has been served with
a restriction notice (as defined in the Articles) after failure to provide
the Company with information concerning interests in those shares
required to be provided under the Act. Other than as referred to
under Morgan Sindall Group Employee Benefit Trust below, during
the year there were no arrangements under which a shareholder
has waived or agreed to waive any dividends nor any agreement
by a shareholder to waive future dividends.
Morgan Sindall Group Employee Benefit Trust
Zedra Trust Company (Guernsey) Limited, as Trustee of the Trust,
holds shares on trust for the benefit of our employees and
former employees of the Group and their dependants that have
not been exercised or vested. The voting rights in relation to these
shares are exercised by the Trustee. The Trustee may vote or
abstain from voting with the shares or accept or reject any offer
relating to those shares, in any way they see fit, without incurring
any liability and without being required to give reasons for their
decision. The terms of the Trust also provide that any dividends
payable on the shares held by the Trust are waived unless and to
the extent otherwise directed by the Company from time to time.
The Trust waived its right to the 2024 final and 2025 interim
dividend paid during 2025. Details of the shares so held may be
found in the consolidated financial statements on page 166.
Substantial shareholdings
As at 31 December 2025, the following information had
been disclosed to the Company under the FCA’s Disclosure
Guidance and Transparency Rules (DTR 5) in respect of notifiable
interests in the voting rights in the Company’s issued share
capital:
Name of holder
Total
voting rights
1
% of total
voting
rights
2
Direct or
indirect
holding
BlackRock, Inc.
3,287,079
6.84
Indirect
Chase Nominees Limited
<CMBLJEQ> and HSBC
Global Custody Nominee
(UK) Limited <462704>
3
3,112,624
6.50
Indirect
abrdn plc
3,014,979
6.28
Indirect
JPMorgan Asset
Management Holdings Inc.
2,531,262
5.29
Indirect
Artemis Investment
Management LLP
2,454,413
5.18
Indirect
Ameriprise Financial, Inc.
2,228,336
4.64
Indirect
1
Total voting rights attaching to the ordinary shares of the Company at the
time of disclosure to the Company. (The date the notification was received
may not have been within the current financial year and it should be noted
that these holdings are likely to have changed since the Company was
notified. However, notification of any change is not required until the next
notifiable threshold is crossed.)
2
Percentage of total voting rights at the date of disclosure to the Company.
3
John Morgan’s shareholding.
Related party transactions
During the year, the Board reviewed all related party transactions
and, save as disclosed in note 25, there were no significant related
party transactions in the year to 31 December 2025.
Change of control
The Group’s banking facilities, which are described on page 17 in
the financial review, require repayment in the event of a change of
control. The Group’s facilities for surety bonding require provision
of cash collateral for outstanding bonds upon a change of control.
In addition, the Company’s employee share incentive plans
contain provisions whereby, upon a change of control,
outstanding options and awards would vest and become
exercisable by the relevant employees, subject to the rules of the
relevant plans.
There are no agreements between the Company and its directors
or employees providing for compensation for loss of office or
employment in the event of a takeover bid.
123
Strategic report
Governance
Financial statements
Other statutory information
continued
Financial instruments and risks
The financial risk management objectives and policies can
be found in the principal risks section in the strategic report
on page 51. Information about the use of financial instruments
by the Company and its subsidiaries and details about the Group’s
exposure to credit, liquidity and market risks are given in note 26
to the consolidated financial statements.
Political contributions
No contributions were made to any political parties during
the current or preceding year. As a precautionary measure,
shareholder approval is being sought at the forthcoming AGM for
the Company and its subsidiaries to make donations and/or incur
expenditure which may be construed as political by the wide
definition of that term included in the relevant legislation.
Further details are provided in the Notice of Meeting to
shareholders accompanying this report.
Disclosure of information to the external auditor
The directors who held office at the date of approval of the
directors’ report confirm that, so far as they are each aware:
n
there is no relevant audit information of which the Company’s
auditor is unaware; and
n
each director has taken all reasonable steps that he or she
ought to have taken as a director in order to ascertain any
relevant audit information and to ensure that the Company’s
auditor is aware of such information.
This confirmation is given and should be interpreted in
accordance with the provisions of section 418 of the Act.
Directors’ responsibilities
The directors are responsible for preparing the annual report and
the financial statements in accordance with applicable UK law
and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law, the directors
have elected to prepare the Group financial statements in
accordance with UK-adopted international accounting standards
and the Parent Company financial statements in accordance with
United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards and applicable law), including
Financial Reporting Standard 101 Reduced Disclosure Framework
(FRS 101). Under company law, the directors must not approve
the financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Group and
the Company and of the profit or loss of the Group and the
Company for that period.
In preparing these financial statements, the directors are required to:
n
select suitable accounting policies in accordance with IAS 8
Accounting Policies, ‘Changes in Accounting Estimates and
Errors’, and then apply them consistently;
n
make judgements and accounting estimates that are
reasonable and prudent;
n
present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
n
provide additional disclosures when compliance with the
specific requirements in International Financial Reporting
Standards (and in respect of the Parent Company financial
statements, FRS 101) is insufficient to enable users to
understand the impact of particular transactions, other events
and conditions on the Group and Company financial position
and financial performance;
n
in respect of the Group financial statements, state whether
UK-adopted international accounting and reporting standards
have been followed, subject to any material departures
disclosed and explained in the financial statements;
n
in respect of the Parent Company financial statements,
state whether applicable UK accounting standards, including
FRS 101, have been followed, subject to any material
departures disclosed and explained in the financial statements;
and
n
prepare the financial statements on the going concern
basis unless it is appropriate to presume that the Company
and/or the Group will not continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
and Group’s transactions and disclose with reasonable accuracy
at any time the financial position of the Company and the Group
and enable them to ensure that the Company and the Group
financial statements comply with the Act. They are also
responsible for safeguarding the assets of the Parent Company
and Group and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
Under applicable law and regulations, the directors are also
responsible for preparing a strategic report, directors’ report,
directors’ remuneration report and corporate governance
statement that comply with that law and those regulations.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company’s website.
Responsibility statement
The directors confirm that, to the best of their knowledge:
n
the consolidated financial statements, prepared in accordance with
UK-adopted International Accounting Standards, give a true and
fair view of the assets, liabilities, financial position and profit of the
Parent Company and undertakings included in the consolidation
taken as a whole;
n
the annual report, including the strategic report, includes a fair
review of the development and performance of the business and
the position of the Company and undertakings included in the
consolidation taken as a whole, together with a description of the
principal risks and uncertainties that they face; and
n
they consider the annual report including the financial statements,
taken as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Company’s
position, performance, business model and strategy.
The directors’ report was approved by the Board and signed on its
behalf by:
John Morgan
Chief Executive
24 February 2026
Morgan Sindall Group plc
Annual Report 2025
124
In this section
126
Independent auditor’s report
137
Consolidated financial statements
173
Company financial statements
184
Shareholder information
185
Appendix – Carbon emissions
background and terminology
Financial statements
125
Strategic report
Governance
Financial statements
Independent auditor’s report to the members of Morgan Sindall Group plc
Opinion
In our opinion:
n
Morgan Sindall Group plc’s Group financial statements
and Parent Company financial statements (the ‘financial
statements’) give a true and fair view of the state of the Group’s
and of the Parent Company’s affairs as at 31 December 2025
and of the Group’s profit for the year then ended;
n
the Group financial statements have been properly
prepared in accordance with UK-adopted international
accounting standards;
n
the Parent Company financial statements have been properly
prepared in accordance with United Kingdom Generally
Accepted Accounting Practice; and
n
the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
We have audited the financial statements of Morgan Sindall
Group plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’)
for the year ended 31 December 2025 which comprise:
Group
Parent Company
Consolidated statement of
financial position as at
31 December 2025
Statement of financial position
as at 31 December 2025
Consolidated income statement
for the year then ended
Statement of changes in equity
for the year then ended
Consolidated statement of
comprehensive income for
the year then ended
Related notes 1 to 3 to
the financial statements,
including material accounting
policy information
Consolidated statement of
changes in equity for the year
then ended
Consolidated cash flow
statement for the year
then ended
Related notes 1 to 28 to
the financial statements,
including material accounting
policy information
The financial reporting framework that has been applied in the
preparation of the Group financial statements is applicable law
and UK-adopted international accounting standards. The financial
reporting framework that has been applied in the preparation of
the Parent Company financial statements is applicable law and
United Kingdom Accounting Standards, including FRS 101
‘Reduced Disclosure Framework’ (United Kingdom Generally
Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described
in the auditor’s responsibilities for the audit of the financial
statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Independence
We are independent of the Group and Parent in accordance
with the ethical requirements that are relevant to our audit
of the financial statements in the UK, including the FRC’s Ethical
Standard as applied to listed public interest entities, and we
have fulfilled our other ethical responsibilities in accordance
with these requirements.
The non-audit services prohibited by the FRC’s Ethical Standard
were not provided to the Group or the Parent Company and we
remain independent of the Group and the Parent Company in
conducting the audit.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the directors’ assessment of the Group and Parent
Company’s ability to continue to adopt the going concern basis of
accounting included:
n
In conjunction with our walkthrough of the Group’s financial
statement close process, we confirmed our understanding of
management’s going concern assessment process and also
engaged with management early to ensure key factors were
considered in their assessment, including factors which we
determined from our own independent risk assessment.
n
We obtained management’s Board-approved forecast cash
flows and covenant calculation which covers the period to
28 February 2027. As part of this assessment, management
have modelled six downside scenarios. Scenarios one and two
relate to the construction business and assume a reduction
in revenues and margin, and working capital, respectively.
Scenario three assumes a reduction in value and timing of
open market sales in respect of the Partnership Housing
division. Scenario four assumes project delays and cost
increases in the partnership businesses. Scenario five assumes
a higher developer’ pledge expense in relation to building safety
matters. Lastly, scenario six is a severe downside scenario
and models the combined impact of scenarios one to five.
Management also performed a reverse stress-test to identify
what scenario could lead to the Group utilising all liquidity
and/or breaching the financial loan covenants during the
going concern period.
Morgan Sindall Group plc
Annual Report 2025
126
Independent auditor’s report to the members of Morgan Sindall Group plc
continued
n
We assessed the completeness and appropriateness of the
scenarios modelled by management which included assessing
the relevance to each division and how these compare with
principal risks and uncertainties of the Group.
n
We assessed the reasonableness of the cash flow forecast
by analysing management’s historical forecasting accuracy,
and evaluating the key assumptions used in the forecast. This
included considering the forecasts on a division-by-division
basis and assessing whether key factors specific to each of the
divisions, such as rising inflation, the economic environment
and market/sector trends, were considered in management’s
assessment. We considered management’s assessment of the
impact of climate change on the Group’s cash flow forecasts.
n
We considered the methodology used to prepare the forecast
and covenant calculations. We also tested the clerical accuracy
and logical integrity of the model used to prepare the Group’s
going concern assessment.
n
We considered whether the Group’s forecasts in the going
concern assessment were consistent with other forecasts
used by the Group in its accounting estimates, including the
assessment of goodwill impairment.
n
We performed further sensitivity analysis and our own reverse
stress-testing in order to identify what scenarios (for example,
the extent operating profit would need to deteriorate) could
lead to the Group utilising all liquidity and/or breaching the
financial loan covenants during the going concern period,
and whether these scenarios were plausible.
n
Our analysis also considered the mitigating actions that
management could undertake in an extreme downside
scenario and whether these were achievable and in control
of management.
n
We also confirmed the continued availability of credit facilities
through the going concern period and reviewed their
underlying terms, including covenants, by examination of
executed documentation.
n
We considered whether the going concern disclosures included
in the annual report were appropriate and in conformity with
applicable reporting standards.
Our key observations
The results from both management’s evaluation and our
independent sensitivity analysis and reverse stress-testing
indicates that in order to breach its covenants and exhaust its
available funding in the going concern period, the Group’s
operating profit would need to deteriorate to a loss, which is
significantly worse than any of the plausible downside scenarios.
As at 31 December 2025, the Group has a secured order book
of £12.0bn, of which £4.0bn relates to the 12 months ending
31 December 2026, and it has a net cash balance of £590.5m
(which includes £20.3m that relates to the Group’s share of cash
held with jointly controlled operations). The Group also has
substantial borrowing facilities available to it during the going
concern period. The undrawn committed facilities available at
31 December 2025 amounted to £180m. These comprise a
£165m facility expiring in October 2028 and a £15m facility
expiring in June 2028.
Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group
and Parent Company’s ability to continue as a going concern for
the period to 28 February 2027.
In relation to the Group and Parent Company’s reporting on how
they have applied the UK Corporate Governance Code, we have
nothing material to add or draw attention to in relation to the
directors’ statement in the financial statements about whether
the directors considered it appropriate to adopt the going
concern basis of accounting.
Our responsibilities and the responsibilities of the directors with
respect to going concern are described in the relevant sections of
this report. However, because not all future events or conditions
can be predicted, this statement is not a guarantee as to the
Group’s ability to continue as a going concern.
Overview of our audit approach
Audit scope
n
We performed an audit of the complete
financial information of four components and
audit procedures on specific balances for a
further six components and central procedures
on taxation, goodwill, investments in joint
ventures, leases, going concern and share-
based payments.
Key audit
matters
n
Contract revenue and margin recognition
(including valuation of contract assets, unagreed
income and contract liabilities).
n
Recoverability and valuation of inventory
balances held.
n
Impairment of goodwill and investment in
subsidiary undertakings (Parent Company only).
Materiality
n
Overall Group materiality of £11.6m which
represents 5% of profit before tax.
127
Strategic report
Governance
Financial statements
Independent auditor’s report to the members of Morgan Sindall Group plc
continued
An overview of the scope of the Parent
Company and Group audits
Tailoring the scope
We have followed a risk-based approach when developing our
audit approach to obtain sufficient appropriate audit evidence on
which to base our audit opinion. We performed risk assessment
procedures, with input from our component auditors, to identify
and assess risks of material misstatement of the Group financial
statements and identified significant accounts and disclosures.
When identifying components at which audit work needed to
be performed to respond to the identified risks of material
misstatement of the Group financial statements, we considered
our understanding of the Group and its business environment,
the potential impact of climate change, the applicable financial
framework, the Group’s system of internal control at the entity
level, the existence of centralised processes, applications and
any relevant internal audit results.
We determined that centralised audit procedures can be
performed on all components which contained material balances
in the following audit areas: taxation, goodwill, investments in joint
ventures and share-based payments, as well as the Group going
concern procedures.
We then identified seven components as individually relevant to
the Group due to a pervasive risk of material misstatement of the
Group financial statements or a significant risk or an area of
higher assessed risk of material misstatement of the Group
financial statements being associated with the components,
which included three components of the Group that were also
individually relevant due to their materiality or financial size to
the Group.
For those individually relevant components, we identified
the significant accounts where audit work needed to be
performed at these components by applying professional
judgement, having considered the Group significant accounts
on which centralised procedures will be performed, the reasons
for identifying the financial reporting component as an individually
relevant component and the size of the component’s account
balance relative to the Group significant financial statement
account balance.
We then considered whether the remaining Group significant
account balances not yet subject to audit procedures, in
aggregate, could give rise to a risk of material misstatement of
the Group financial statements. We selected three additional
components of the Group to include in our audit scope to
address these risks.
Having identified the components for which work will
be performed, we determined the scope to assign to
each component.
Of the ten components selected, we designed and performed
audit procedures on the entire financial information of four
components (‘full scope components’). For the remaining six
components, we designed and performed audit procedures on
specific significant financial statement account balances or
disclosures of the financial information of the component
(‘specific scope components’).
The reporting components where we performed audit
procedures accounted for 97% (2024: 98%) of the Group’s profit
before tax. For the current year, the full scope components
contributed 84% (2024: 97%) of the Group’s profit before tax and
the specific scope components contributed 13% (2024: 1%) of the
Group’s profit before tax. The audit scope of these components
may not have included testing of all significant accounts of the
component but will have contributed to the coverage of
significant accounts tested for the Group. Our scoping to address
the risk of material misstatement for each key audit matter is set
out in the key audit matters section of our report.
Involvement with component teams
In establishing our overall approach to the Group audit, we
determined the type of work that needed to be undertaken at
each of the components by us, as the Group audit engagement
team, or by component auditors operating under our instruction.
The Group audit team continued to follow a programme of
planned visits that has been designed to ensure that the senior
statutory auditor visits all full scope component audit teams over
the course of the audit, including accompanying them on site
visits and audit close meetings. During the current year’s audit
cycle, visits were undertaken by the primary audit team to the
component teams based in our offices in Birmingham,
Manchester and London. In addition, calls were made with the
component audit team based in Guernsey. These visits and calls
involved discussing the audit approach with component teams
and any issues arising from their work, meeting with local
management, participating in higher-risk contracts discussions,
accompanying the component team on site visits for higher-risk
contracts where appropriate, and reviewing relevant audit
planning and conclusion workpapers on higher and significant
risk areas. The primary team also participated in interim and year
end audit close meetings as considered appropriate. These visits
and meetings were supplemented by frequent video calls
between the primary team and component teams throughout all
stages of the audit to exercise oversight over component teams’
audit work. The Group audit team interacted regularly with the
component teams where appropriate during various stages of
the audit, reviewed relevant working papers and were responsible
for the scope and direction of the audit process. Where relevant,
the section on key audit matters details the level of involvement
we had with component auditors to enable us to determine that
sufficient audit evidence had been obtained as a basis for our
opinion on the Group as a whole.
This, together with the additional procedures performed at Group
level, gave us appropriate evidence for our opinion on the Group
financial statements.
Morgan Sindall Group plc
Annual Report 2025
128
Independent auditor’s report to the members of Morgan Sindall Group plc
continued
Climate change
Stakeholders are increasingly interested in how climate change
will impact Morgan Sindall Group plc. The Group has determined
that the most significant future impacts from climate change on
their operations will be from (a) more extreme weather events
impacting operations through increased costs, project delays and
supply chain disruptions; and (b) changes to environmental or
climate legislation leading to increased project costs and potential
compliance breaches. These are explained on pages 58 to 60 in
the required Task Force on Climate-related Financial Disclosures
and on page 54 in the principal risks and uncertainties. They have
also explained their climate commitments on pages 40 to 42. All
of these disclosures form part of the ‘other information’, rather
than the audited financial statements. Our procedures on these
unaudited disclosures therefore consisted solely of considering
whether they are materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit
or otherwise appear to be materially misstated, in line with our
responsibilities on ‘other information’.
In planning and performing our audit we assessed the potential
impacts of climate change on the Group’s business and any
consequential material impact on its financial statements.
The Group has explained in their basis of preparation section and
note 10 how they have reflected the impact of climate change in
their financial statements. They also include how this aligns with
their commitment to the aspirations of the Paris Agreement to
achieve net zero emissions by 2050 as part of their climate
reporting on Task Force on Climate-related Financial Disclosures.
These disclosures also explain where governmental and societal
responses to climate change risks are still developing, and where
the degree of certainty of these changes means that they cannot
be taken into account when determining asset and liability
valuations under the requirements of UK-adopted international
accounting standards. In the ‘identified climate-related risks and
opportunities‘ section of the strategic report, supplementary
narrative explanation of the impact of reasonably possible
changes in the key assumptions has been provided.
Our audit effort in considering the impact of climate change
on the financial statements was focused on evaluating
management’s assessment of the impact of climate risk, physical
and transition, their climate commitments, the effects of material
climate risks disclosed on pages 58 to 60 and whether these
have been appropriately reflected in asset values where these
are impacted by future cash flows and associated sensitivity
disclosures (see note 10) and the going concern basis of
preparation paragraph following the requirements of UK-adopted
international accounting standards. As part of this evaluation, we
performed our own risk assessment, supported by our climate
change internal specialists, to determine the risks of material
misstatement in the financial statements from climate change
which needed to be considered in our audit.
Our risk assessment identified that there may be additional
costs for the business to achieve its climate commitments, for
example in relation to carbon offsetting projects, and that these
needed to be appropriately reflected in the modelling of future
cash flows which are used in management’s assessment of the
impairment of goodwill. While management have reflected such
costs in their forecasts, these are not material to the Group, and
accordingly these do not impact the overall goodwill impairment
conclusion. Further details of our procedures and findings on the
goodwill impairment assessment are included in our key audit
matters below.
We also challenged the directors’ considerations of climate
change risks in their assessment of going concern and viability
and associated disclosures. We concluded that there was not
a material impact of climate-related risks to the business over
the short to medium term covered by the going concern and
viability periods.
Based on our work we have not identified the impact of climate
change on the financial statements to be a key audit matter or to
impact a key audit matter.
129
Strategic report
Governance
Financial statements
Independent auditor’s report to the members of Morgan Sindall Group plc
continued
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud)
that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources
in the audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the
financial statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on these matters.
Risk
Our response to the risk
Contract revenue and margin recognition
(including valuation of contract assets,
unagreed income and contract liabilities)
Revenue: £5,018.6m (2024: £4,546.2m)
Operating profit: £224.9m (2024: £162.0m)
Contract assets: £235.8m (2024: £224.6m)
Contract liabilities: £118.7m (2024: £110.4m)
Refer to the audit committee report (page 88);
accounting policies (page 144); and notes
1 and 14 of the consolidated financial
statements (pages 149 and 161)
The Group recognises revenue over
time in the Construction, Infrastructure,
Fit Out, Property Services, Mixed Use
Partnerships and Partnership Housing
(in respect of pre-let, forward-sold
developments) divisions. The Group also
recognises revenue under the point-in-time
method in the Partnership Housing and
Mixed Use Partnerships divisions.
There is a risk that revenue recognised
over time is materially misstated as
there is significant judgement involved in
determining the inputs that drive contract
revenue and margin recognition (e.g.
forecast revenue, recoverability of unagreed
income, and forecast costs to complete).
Therefore, these inputs could be susceptible
to management bias or manipulation.
There is also a risk that revenue recognised
under the point-in-time method is recorded
in the incorrect period either due to cut-off
error or management bias resulting in a
material misstatement.
Contract revenue and margin recognised over time
We worked together with our component teams to perform a risk assessment of the
contract population and selected a sample of higher-risk contracts (based on value and/or
complexity) across the Group and obtained an understanding of the: (1) contract terms;
(2) key operational or commercial issues; (3) judgements impacting the contract position;
and (4) contract revenue and margin recognised.
Factors we considered when determining higher-risk contracts to select include the: (1) size of
the contract; (2) contracts with significant unagreed income amounts; (3) low-margin and loss-
making contracts, contracts with unusual margins or contracts with a significant deterioration
in margin; and (4) stage of completion.
We selected a sample of contracts completed during the year and verified the revenue
recognised by reconciling it with the final customer payment certificate.
Our audit approach for higher-risk contracts has been outlined below:
n
Performed walkthroughs of the significant classes of revenue transactions recognised over
time and assessed the design effectiveness of key controls.
n
Discussed management’s contract risk tracker with divisional management and the Group
head of audit and assurance.
n
Performed site visits at a selection of higher-risk contracts in order to corroborate the
contract positions in person through review of the operations and discussions with contract
personnel on-site to form an independent view on the judgements taken.
n
Detailed review of the signed contract agreements to understand the commercial terms
and review any legal correspondence or expert advice that has been obtained to support
any contract positions recorded.
n
Assessed the appropriateness of supporting evidence and the requirements of IFRS 15 and
the Group’s accounting policies (e.g. where contracts include additional entitlements for
variations and claims, both for and against the Group).
n
Assessed the appropriateness of the accruals at year end and ensured these have been
incurred and not materially overstated/understated.
n
Challenged the level of unagreed income or contract assets and the adequacy of
the evidence (e.g. future certifications and cash receipts) to assess their recognition
and recoverability.
n
Reviewed contract asset balances and challenged management on the recovery of aged
balances at the year end, which have not been provided for, including consideration of
counterparty risk.
n
Assessed the reasonableness of calculations of estimated costs to complete, which
included understanding the risks/outstanding works on the contract, the impact of any
delays or other delivery issues, impact of inflation and the related provisions for cost
escalations that have been recognised.
Morgan Sindall Group plc
Annual Report 2025
130
Independent auditor’s report to the members of Morgan Sindall Group plc
continued
Risk
Our response to the risk
n
Assessed the appropriateness of cost allocations across contracts, including evaluation
of whether there has been any manipulation of costs between profit-making and
loss-making contracts.
n
Challenged the rationale for material provisions held at a contract/division level and
concluded if these are appropriate.
n
Challenged the level of onerous contract provisions recognised for loss-making contracts as
well as any cost contingencies on the remaining contracts at year end.
n
Assessed the correlation between revenue, contract assets and cash balances using data
analytical tools or through other substantive test of detail procedures.
n
Reviewed material unusual journal entries recorded to assess whether these have been
properly authorised, are appropriately substantiated and are for a valid business purpose.
Contract revenue and margin recognised at a point in time
n
Performed walkthroughs of the revenue recognition process under the point-in-time
method and assessed the design effectiveness of key controls.
n
Reviewed signed contract agreements to understand the commercial terms and ensure the
appropriate revenue recognition method is applied in line with the requirements of IFRS 15
and the Group’s accounting policies.
n
Tested a sample of transactions by agreeing to contracts, bank receipts and obtaining
evidence of fulfilment of performance obligations.
n
Performed cut-off testing to assess whether revenue recorded either side of the year end
was included in the correct accounting period.
n
Reviewed material unusual journal entries recorded in relation to revenue recognised
under the point-in-time method to assess whether these have been properly authorised,
are appropriately substantiated and are for a valid business purpose.
Key observations communicated to the audit committee
Based on our audit procedures performed, we have concluded that the recognition of revenue (including the valuation of contract assets,
unagreed income and contract liabilities) was appropriate, and the key judgements made by management are consistent with the Group’s
accounting policies. The presentation and disclosure of revenue, contract assets and contract liabilities are materially correct and appropriate.
How we scoped our audit to respond to the risk and involvement with component teams
We performed full and specific scope audit procedures over this risk in eight components, which covered 97.6% of the risk amount.
We were involved in the component audit teams’ procedures on a regular basis throughout the audit. This included discussions with the
component teams on judgements and estimations involved in revenue and margin recognition to inform our group risk assessment, issuing
tailored group audit instructions to address this key audit matter, attendance at key component audit teams’ meetings and discussions with
local management, accompanying component teams on site visits for higher-risk contracts, attendance at interim and group close meetings,
and reviewing component audit teams’ working papers on these areas.
131
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Governance
Financial statements
Risk
Our response to the risk
Recoverability and valuation of
inventory balances held
Inventory: £603.3m (2024: £476.0m)
Refer to the audit committee report
(page 88); accounting policies (page 146);
and note 13 of the consolidated financial
statements (page 161)
Partnership Housing and Mixed Use
Partnerships deliver housing and
regeneration schemes.
During construction, the cost of work in
progress is held as inventory prior to it being
recognised as cost of sales under contract
accounting. This comprises land, raw
materials, direct labour, other direct costs
and related overheads.
Inventory is held at the lower of cost and
net realisable value. Therefore, there is a
high degree of management judgement
required to determine the valuation
of inventory pertaining to land and
developments under construction.
There is a risk that the carrying value
of inventory held by the Group is overstated
in the year-end Group accounts if
management’s assessment of the
net realisable value is based on
inappropriate assumptions.
n
Performed procedures to assess the ownership of the inventories held (e.g. review of sale
purchase agreements and land title deeds) in order to evaluate whether the Group has
appropriate title over the inventory held.
n
Performed a walkthrough of the ‘net realisable value’ impairment analysis and calculation
process and evaluated how management look for indicators of inventory impairment;
n
Reviewed a sample of planning permissions obtained or submitted as well as environmental
assessment reports (where relevant) to assess their impact on the inventory on hand
at year end.
n
Assessed the nature of costs capitalised in the year-end inventory balance by vouching
a sample of these back to supporting documentary evidence, ensuring these meet the
criteria for capitalisation and have been charged to the correct project.
n
Challenged the costs to complete by agreeing a sample of items to supporting
documentation (e.g. subcontractor quotes, actual invoices issued, contracts executed and
management reports) and through enquiry of the commercial teams.
n
Recalculated the profit of contracts selected for the year based on forecast revenue
and costs.
n
Compared the forecast sale prices and price per sq ft of the unsold units in management’s
forecast to the range of prices achieved on the units reserved and sold, or comparing to
prices achieved at equivalent competitor sites where possible.
n
Inspected site plans and, for Partnership Housing, reviewed a sample of post year-end sales
(where available) to evaluate management’s forecast sales prices.
n
Evaluated the adequacy of disclosures in financial statements, particularly where the
inventories are written down to their fair values less costs to sell.
n
Engaged an EY valuation specialist to support the impairment analysis by providing market
context, particularly in relation to forecast sales prices for residential properties to be sold
on the open market at selected developments.
n
Challenged the net realisable value of undeveloped land by assessing relevant factors,
including land values and any deposits or options to purchase the land.
Key observations communicated to the audit committee
Based on our procedures we have concluded that the inventory balances are not materially misstated.
How we scoped our audit to respond to the risk and involvement with component teams
We performed full and specific scope audit procedures over this risk in Partnership Housing and Mixed Use Partnerships divisions,
which covered 100% of the risk amount.
We were involved in the component audit teams’ procedures on a regular basis throughout the audit. This included discussions with the
component teams on judgements and estimations involved in valuation of inventory to inform our group risk assessment, attendance at key
component audit teams’ meetings and discussions with local management, accompanying component teams on site visits for higher-risk
contracts, attendance at interim and group close meetings, and reviewing component audit teams’ working papers on these areas.
Independent auditor’s report to the members of Morgan Sindall Group plc
continued
Morgan Sindall Group plc
Annual Report 2025
132
Risk
Our response to the risk
Impairment of goodwill and investment
in subsidiary undertakings (Parent only)
Goodwill: £217.7m (2024: £217.7m)
Parent Company’s investment in subsidiary
undertakings: £597.8m (2024: £597.8m)
Refer to the audit committee report
(page 88); accounting policies (page 146);
note 10 of the consolidated financial
statements (page 156) and note 2 of the
Company financial statements (page 176)
Intangible assets with an indefinite useful life
must be evaluated for impairment annually,
or whenever indicators of impairment are
noted per IAS 36.
Due to the degree of estimation involved
in calculating the expected future cash
flows from cash-generating units (CGUs)
and determining the appropriate long-term
growth rates and discount rates specific to
each CGU, we have identified a significant
risk regarding the assessment of any
impairment against the goodwill carrying
values, as well as the identification of any
indicators of impairment.
There is also a risk that the recoverable
amount of the investment in subsidiary
undertakings may be less than the
investment balance on the Parent
Company’s statement of financial position.
n
Performed a walkthrough of the impairment analysis and calculation process and evaluated
the identification of CGUs performed by management.
n
Assessed and challenged the key inputs of the forecast cash flows at the CGU level,
including:
–
Challenging the discount rate used by obtaining the underlying data used in the
calculation and substantiating this against reputable independent assessments with the
support of our EY valuation specialists.
–
Validating the growth rates assumed by comparing them to economic and industry
forecasts and using the support of our EY valuation specialists, where required.
–
Challenging management on the achievability of the cash flow forecasts and assessing
the projected financial information against results achieved to date and other market
data to assess the robustness of management’s forecasting process. This also included
consideration of the impact of other relevant economic and social environmental factors,
such as inflation and climate change, on future cash flows.
n
Analysed the historical forecasting accuracy (budget to actual results) to determine
whether forecast cash flows are reliable based on past experience especially factoring in
any anomalies.
n
Understood the commercial challenges for each CGU and challenged/evaluated how these
were incorporated into management’s assessment.
n
Assessed the carrying values of each CGU considered by management in their impairment
models to determine the appropriateness of the assets and liabilities included, and the
methodology used for allocation of any corporate or shared assets between the CGUs.
n
Performed a sensitivity analysis by changing key assumptions in management’s model
to see the impact on the headroom between carrying value and fair value (including
combining the effects of different sensitivities).
n
Considered the carrying value of the CGUs in the context of the market capitalisation of
the Group.
n
Assessed the appropriateness of the net asset values and component-specific cash flows
as required for each of the investments in subsidiary undertakings held by the Parent
Company, factoring in any audit adjustments or appropriate sensitivities to conclude on the
available headroom.
n
Performed a comparison between the carrying value of the CGUs (after necessary
adjustments) against the value of these investments in subsidiaries on the Parent
Company’s statement of financial position.
n
Compared the aggregated carrying value of the investment in subsidiaries to the Group’s
market capitalisation to assess if this gives rise to any indicator of impairment for the
investment in subsidiary undertakings balance.
n
Considered the appropriateness of the related financial statement disclosures, particularly
with regard to the description of the sensitivity analyses performed.
Key observations communicated to the audit committee
Based on our audit procedures we have concluded that goodwill is not impaired. The disclosures relating to goodwill are appropriate.
We have also concluded that the carrying value of investment in subsidiary undertakings is not materially misstated.
How we scoped our audit to respond to the risk
We performed centralised procedures over this risk, which covered 100% of the risk amount.
All audit work performed to address this risk was undertaken by the Group audit team.
Independent auditor’s report to the members of Morgan Sindall Group plc
continued
133
Strategic report
Governance
Financial statements
Our application of materiality
We apply the concept of materiality in planning and performing
the audit, in evaluating the effect of identified misstatements on
the audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or
in the aggregate, could reasonably be expected to influence the
economic decisions of the users of the financial statements.
Materiality provides a basis for determining the nature and extent
of our audit procedures.
We determined materiality for the Group to be £11.6m (2024:
£8.6m), which is 5% (2024: 5%) of the Group’s profit before tax.
We believe that profit before tax provides us with an appropriate
basis for materiality and is the most relevant measure for
stakeholders as it is a focus of both management and investors.
During the course of our audit, we reassessed initial materiality
and updated its calculation for the actual financial results of the
year. This resulted in an increase of materiality levels compared to
that calculated at the planning stage of the audit due to higher
than forecasted results of the Group.
We determined materiality for the Parent Company to be £4.4m
(2024: £3.8m), which is 2% (2024: 2%) of equity.
Performance materiality
The application of materiality at the individual account or balance
level. It is set at an amount to reduce to an appropriately low level
the probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality.
On the basis of our risk assessments, together with our
assessment of the Group’s overall control environment,
our judgement was that performance materiality was 75%
(2024: 75%) of our planning materiality, namely £8.7m
(2024: £6.4m). We have set performance materiality at this
percentage as we did not expect the aggregate misstatements in
the year to be greater than 25% of our planning materiality and
our assessment of control environment supports this.
Audit work was undertaken at component locations for the
purpose of responding to the assessed risks of material
misstatement of the Group financial statements. The
performance materiality set for each component is based
on the relative scale and risk of the component to the Group
as a whole and our assessment of the risk of misstatement at
that component. In the current year, the range of performance
materiality allocated to components was £1.6m to £5.2m
(2024: £1.0m to £3.5m).
Reporting threshold
An amount below which identified misstatements are considered as
being clearly trivial.
We agreed with the audit committee that we would report
to them all uncorrected audit differences in excess of £0.6m
(2024: £0.4m), which is set at 5% of planning materiality, as well
as differences below that threshold that, in our view, warranted
reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both
the quantitative measures of materiality discussed above and
in light of other relevant qualitative considerations in forming
our opinion.
Other information
The other information comprises the information included in the
annual report set out on pages 4 to 124, other than the financial
statements and our auditor’s report thereon. The directors are
responsible for the other information contained within the
annual report.
Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly
stated in this report, we do not express any form of assurance
conclusion thereon.
Our responsibility is to read the other information and, in doing
so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the course of the audit, or otherwise appears to be
materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in
the financial statements themselves. If, based on the work we
have performed, we conclude that there is a material
misstatement of the other information, we are required to
report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed
by the Companies Act 2006
In our opinion, the part of the directors’ remuneration report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of
the audit:
n
the information given in the strategic report and the directors’
report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
n
the strategic report and the directors’ report have been
prepared in accordance with applicable legal requirements.
Independent auditor’s report to the members of Morgan Sindall Group plc
continued
Morgan Sindall Group plc
Annual Report 2025
134
Matters on which we are required
to report by exception
In the light of the knowledge and understanding of the Group
and the Parent Company and its environment obtained in the
course of the audit, we have not identified material misstatements
in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
n
adequate accounting records have not been kept by the Parent
Company, or returns adequate for our audit have not been
received from branches not visited by us; or
n
the Parent Company financial statements and the part of
the directors’ remuneration report to be audited are not in
agreement with the accounting records and returns; or
n
certain disclosures of directors’ remuneration specified by law
are not made; or
n
we have not received all the information and explanations we
require for our audit.
Corporate governance statement
We have reviewed the directors’ statement in relation to going
concern, longer-term viability and that part of the corporate
governance statement relating to the Group and Company’s
compliance with the provisions of the UK Corporate Governance
Code specified for our review by the UK Listing Rules.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the corporate
governance statement is materially consistent with the financial
statements or our knowledge obtained during the audit:
n
Directors’ statement with regards to the appropriateness
of adopting the going concern basis of accounting and any
material uncertainties identified set out on page 66.
n
Directors’ explanation as to its assessment of the Company’s
prospects, the period this assessment covers and why the
period is appropriate set out on pages 66 and 67.
n
Director’s statement on whether it has a reasonable
expectation that the Group will be able to continue in operation
and meets its liabilities set out on page 66.
n
Directors’ statement on fair, balanced and understandable
set out on page 124.
n
Board’s confirmation that it has carried out a robust
assessment of the emerging and principal risks set out on
pages 48 to 55.
n
The section of the annual report that describes the review of
effectiveness of risk management and internal control systems
set out on pages 90 to 92.
n
The section describing the work of the audit committee set out
on pages 86 to 92.
Responsibilities of Directors
As explained more fully in the directors’ responsibility statement
set out on page 124, the directors are responsible for the
preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal control as
the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the Group and Parent Company’s ability
to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
Group or the Parent Company or to cease operations, or have
no realistic alternative but to do so.
Auditor’s responsibilities for the audit
of the financial statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these
financial statements.
Independent auditor’s report to the members of Morgan Sindall Group plc
continued
135
Strategic report
Governance
Financial statements
Explanation as to what extent the audit was considered
capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect irregularities, including
fraud. The risk of not detecting a material misstatement due to
fraud is higher than the risk of not detecting one resulting from
error, as fraud may involve deliberate concealment by, for
example, forgery or intentional misrepresentations, or through
collusion. The extent to which our procedures are capable of
detecting irregularities, including fraud, is detailed below.
However, the primary responsibility for the prevention and
detection of fraud rests with both those charged with governance
of the Company and management.
n
We obtained an understanding of the legal and regulatory
frameworks that are applicable to the Group and determined
that the most significant are those that relate to the reporting
framework (UK-adopted International Accounting Standards,
the Companies Act 2006 and the UK Corporate Governance
Code), the Building Safety Act and the relevant tax compliance
regulations in the UK.
n
We understood how Morgan Sindall Group plc is complying
with those frameworks by making enquiries of management
at Group level and within the divisions, internal audit, those
responsible for legal and compliance procedures and the
company secretary. We corroborated our enquiries through
our review of Board minutes and papers provided to the
Board and audit committee, noting the strong emphasis of
transparency and honesty in the Group’s culture and the levels
of oversight the Board and Group management have over
each division despite the decentralised operating model of
the Group.
n
We assessed the susceptibility of the Group’s financial
statements to material misstatement, including how fraud
might occur, by meeting with management in each division
to understand where it considered there was a susceptibility
to fraud. We also considered performance targets and their
propensity to influence efforts made by management to
manage earnings. We considered the programmes and
controls that the Group has established to address risks
identified, or that otherwise prevent, deter and detect fraud,
and how senior management at Group level and within the
divisions monitor those programmes and controls. Where
the risk was considered to be higher, we performed audit
procedures to address each identified fraud risk. These
procedures are set out in the key audit matters section of this
report and were designed to provide reasonable assurance
that the financial statements were free from fraud and error.
n
Based on this understanding we designed our audit
procedures to identify non-compliance with such laws and
regulations. Our procedures involved journal entry testing
at each component in the scope of our Group audit with a
focus on journals indicating unusual transactions based on
our understanding of the business, enquiries of Group and
divisional management, and focused testing as referred to in
the key audit matters section above. In addition, we completed
procedures to conclude on the compliance of the disclosures
in the annual report and accounts with the requirements of
the relevant accounting standards, UK legislation and the UK
Corporate Governance Code.
n
We instructed our component teams to report all instances of
non-compliance with laws and regulations to us. For all such
matters brought to our attention, we assessed their significance
to determine their impact on our audit approach and on the
financial statements. Where appropriate, we designed and
performed additional audit procedures to address additional
risks resulting from such assessment.
A further description of our responsibilities for the audit of the
financial statements is located on the Financial Reporting Council’s
website at https://www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
Other matters we are required to address
n
Following the recommendation from the audit committee, we
were appointed by the company on 6 May 2021 to audit the
financial statements for the year ending 31 December 2021
and subsequent financial periods.
n
The period of total uninterrupted engagement including
previous renewals and reappointments is five years, covering
the years ending 31 December 2021 to 31 December 2025.
n
The audit opinion is consistent with the additional report to the
audit committee.
Use of our report
This report is made solely to the Company’s members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state
to the Company’s members those matters we are required to
state to them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company and the
Company’s members as a body, for our audit work, for this report,
or for the opinions we have formed.
Peter McIver (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
24 February 2026
Independent auditor’s report to the members of Morgan Sindall Group plc
continued
Morgan Sindall Group plc
Annual Report 2025
136
Consolidated income statement
for the year ended 31 December 2025
Notes
2025
£m
2024
£m
Revenue
1
Cost of sales
(4,406.6 )
(4,016.3 )
Gross profit
Analysed as:
Adjusted gross profit
Exceptional building safety items
4
(1.3 )
Impairment loss on contract assets
14
(2.5 )
(21.0 )
Administrative expenses
(391.3 )
(360.0 )
Share of net profit of joint ventures
12
Other operating income
Operating profit
Analysed as:
Adjusted operating profit
Exceptional building safety items
4
(0.4 )
(0.1 )
Amortisation of intangible assets
10
(0.4 )
(0.5 )
Finance income
6
Finance expense
6
(8.7 )
(8.3 )
Profit before tax
3
Analysed as:
Adjusted profit before tax
Exceptional building safety items
4
(0.4 )
(0.1 )
Amortisation of intangible assets
10
(0.4 )
(0.5 )
Tax
7
(56.9 )
(40.2 )
Profit for the year
Attributable to:
Owners of the Company
Earnings per share
Basic
9
Diluted
9
There were no discontinued operations in either the current or comparative years.
137
Strategic report
Governance
Financial statements
Consolidated statement of comprehensive income
for the year ended 31 December 2025
2025
£m
2024
£m
Profit for the year
Items that may be reclassified subsequently to profit or loss:
Foreign exchange movement on translation of overseas operations
Net gain/(loss) arising on revaluation of cash flow hedges
(0.3 )
(0.1 )
(0.4 )
Other comprehensive income/(expense)
(0.4 )
Total comprehensive income
Attributable to:
Owners of the Company
Morgan Sindall Group plc
Annual Report 2025
138
Consolidated statement of financial position
at 31 December 2025
Notes
2025
£m
2024
£m
Assets
Goodwill and other intangible assets
10
Property, plant and equipment
11
Investment property
Investments in joint ventures
12
Deferred tax asset
7
Non-current assets
Inventories
13
Contract assets
14
Trade and other receivables
15
Current tax receivables
Cash and cash equivalents
26
Assets held for sale
11
Current assets
Total assets
Liabilities
Contract liabilities
14
(118.7 )
(110.4 )
Trade and other payables
16
(1,343.6 )
(1,130.3 )
Lease liabilities
18
(24.8 )
(22.6 )
Borrowings
26
(59.3 )
(51.8 )
Provisions
19
(71.7 )
(85.1 )
Current liabilities
(1,618.1 )
(1,400.2 )
Net current assets
Trade and other payables
16
(14.9 )
(16.6 )
Lease liabilities
18
(48.8 )
(44.1 )
Deferred tax liabilities
7
(2.1 )
Provisions
19
(17.7 )
(20.4 )
Non-current liabilities
(81.4 )
(83.2 )
Total liabilities
(1,699.5 )
(1,483.4 )
Net assets
Equity
Share capital
21
Share premium account
Other reserves
22
Retained earnings
Equity attributable to owners of the Company
Total equity
24 February 2026 and signed on its behalf by:
John Morgan
Kelly Gangotra
Chief Executive
139
Strategic report
Governance
Financial statements
Consolidated cash flow statement
for the year ended 31 December 2025
Notes
2025
£m
2024
£m
Operating activities
Operating profit
Adjusted for:
Exceptional building safety items
4, 19
(1.0 )
Amortisation of intangible assets
10
Underlying share of net profit of equity-accounted joint ventures
12
(0.3 )
(4.6 )
Depreciation
11
Impairment of property, plant and equipment
11
Share-based payments
5, 24
Gain on disposal of property, plant and equipment
(0.3 )
(0.7 )
Reversal of impairment on investments in joint ventures
12
(1.2 )
(5.1 )
(Decrease)/increase in provisions excluding exceptional building safety items
19
(16.0 )
Operating cash inflow before movements in working capital
Increase in inventories
(127.3 )
(131.3 )
(Increase)/decrease in contract assets
(11.2 )
(Increase)/decrease in receivables
(100.1 )
Increase in contract liabilities
Increase in payables
Movements in working capital
(21.0 )
(33.8 )
Cash inflow from operations
Income taxes paid
(48.3 )
(43.9 )
Net cash inflow from operating activities
Investing activities
Interest received
Dividends from joint ventures
12
Proceeds on disposal of property, plant and equipment
Purchases of property, plant and equipment
11
(16.0 )
(18.2 )
Purchases of intangible fixed assets
10
(0.6 )
Capital advances to joint ventures
12
(66.3 )
(29.1 )
Capital repayments from joint ventures
12
Net cash (outflow)/inflow from investing activities
(24.2 )
Financing activities
Interest paid
(2.0 )
(1.9 )
Dividends paid
8
(65.8 )
(56.1 )
Repayments of lease liabilities
18
(28.3 )
(25.8 )
Proceeds on issue of share capital
21
Payments by the Trust to acquire shares in the Company
(40.7 )
(47.2 )
Proceeds on exercise of share options
Net cash outflow from financing activities
(124.3 )
(101.8 )
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
26
Cash and cash equivalents presented in the consolidated cash flow statement include bank overdrafts. See note 26 for a reconciliation
to cash and cash equivalents presented in the consolidated statement of financial position.
Morgan Sindall Group plc
Annual Report 2025
140
Consolidated statement of changes in equity
for the year ended 31 December 2025
Notes
Share capital
£m
Share premium
account
£m
Other
reserves
£m
22
Retained
earnings
£m
23
Total
equity
£m
1 January 2024
Profit for the year
Other comprehensive expense
(0.4 )
(0.4 )
Total comprehensive (expense)/income
(0.4 )
Share-based payments
24
Tax relating to share-based payments
1
7
Issue of shares at a premium
21
Exercise of share options
Purchase of shares in the Company by the Trust
(47.2 )
(47.2 )
Dividends paid
8
(56.1 )
(56.1 )
1 January 2025
Profit for the year
Other comprehensive income
Total comprehensive income
Share-based payments
24
Tax relating to share-based payments
1
7
Issue of shares at a premium
21
Purchase of shares in the Company by the Trust
(40.7 )
(40.7 )
Exercise of share options
Dividends paid
8
(65.8 )
(65.8 )
31 December 2025
1
Tax relating to share-based payments includes a current tax credit of £2.9 m (2024: £5.8 m) and a deferred tax credit of £6.7 m (2024: credit of £5.6 m).
141
Strategic report
Governance
Financial statements
142
Morgan Sindall Group plc
Annual Report 2025
for the year ended 31 December 2025
Reporting entity
public limited company, domiciled and incorporated in the United
address is Kent House, 14–17 Market Place, London, W1W 8AJ.
The nature of its operations and principal activities along with
those of its subsidiaries (together the ‘Group’) are set out in
note 2 and in the strategic report on page 6, and pages 8 to 9.
The Company did not change its name during the year ended
31 December 2025 or the year ended 31 December 2024.
The financial statements have been prepared on a going concern
basis in accordance with the requirements of the Companies Act
(b) Basis of accounting
The consolidated financial statements have been prepared under
the historical cost convention, except where otherwise indicated.
The impairment of contract assets has been presented separately
on the income statement due to the materiality of the impairment
loss amount recognised during the prior year.
In determining the appropriate basis of preparation of the
financial statements, the directors are required to consider
whether the Group and Company can continue in operational
existence during the going concern period, which the directors
have determined to be until 28 February 2027.
As at 31 December 2025 , the Group held cash of £590.5m,
including £20.3m (2024: £23.1m) which is the Group’s share of
cash held within jointly controlled operations, and total overdrafts
repayable on demand of £59.3m (together net cash of £531.2m).
Should further funding be required, the Group has significant
committed financial resources available, including unutilised bank
facilities of £180m (2024: £180m), of which £165m matures in
October 2028 and £15m matures in June 2028. The Group’s
secured order book at 31 December 2025 is £12.0bn (2024:
£11.4bn), of which £4.0bn relates to the 12 months ended
31 December 2026.
The directors have reviewed the Group’s forecasts and
projections for the going concern period, including sensitivity
analysis (detailed on pages 66 and 67), including reduced
revenues, margins, a working capital deterioration and project
delays, to assess the Group’s resilience to the potential financial
impact on the Group of any plausible losses of revenue or
operating profit which could arise from one of the principal
risks to the business occurring (these risks are discussed on
pages 48 to 54 and include the directors’ assessment of the
impact of climate change). The analysis also includes a
reasonable worst-case scenario in which the Group’s principal
risks manifest in aggregate to a severe but plausible level
involving the aggregation of the impacts of a number of these risks.
The modelling showed that the Group would remain profitable
throughout the going concern period and there is considerable
headroom above lending facilities such that there would be no
expected requirement for the Group to utilise the bank facility,
which underpins the going concern assumption on which these
financial statements have been prepared. As part of the sensitivity
analysis the directors also modelled a scenario that stress-tests
the Group’s forecasts and projections to determine the scenario
in which the headroom above the committed bank facility would
be exceeded. This model showed that the Group’s operating
profit would need to deteriorate substantially for the headroom
to exceed the committed bank facility. The directors consider
there is no plausible scenario where cash inflows would
deteriorate this significantly. However, as part of their analysis the
Board also considered further mitigating actions at their
discretion, such as a reduction in investments in working capital,
to improve the position identified by the reasonable worst-case
scenario. In all scenarios, including the reasonable worst case,
the Group is able to comply with its financial covenants, operate
within its current facilities, and meet its liabilities as they fall due.
Accordingly, the directors consider there to be no material
uncertainties that may cast significant doubt on the Group’s ability
to continue to operate as a going concern. They have formed a
judgement that there is a reasonable expectation that the
Group and Company have adequate resources to continue in
operational existence for the going concern period which they
determine to be until 28 February 2027. For this reason, they
continue to adopt the going concern basis in the preparation
of these financial statements. The period until 28 February 2027
has been assessed as appropriate following consideration of the
budgeting cycles and typical contract lengths undertaken across
These consolidated financial statements are presented in pounds
sterling, which is the Group’s presentational currency and the
Company’s functional currency. All financial information, unless
While the Group is committed to achieve its near-term carbon
emission targets by 2030, the governmental and societal
responses to climate change risks are still developing and
therefore the Group is currently unable to determine the full
future economic impact of climate change risks on their
business model to achieve this. As such, the potential impacts
of climate change risk are not fully incorporated in these
Strategic report
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Financial statements
143
Material accounting policy information
continued
(f) Adoption of new and amended standards
and interpretations
the Group
During the year, the Group has adopted the following new and
amended standard and interpretation. Its adoption has not had
any significant impact on the accounts or disclosures in these
financial statements:
n
Amendments to IAS 21 ‘The Effects of Changes in Foreign
interpretations which were in issue but were not yet
effective and have not been adopted early by the Group
At the date of the financial statements, the Group has not applied
the following new and amended standards that have been issued
but are not yet effective:
n
Amendments to IFRS 9 ‘Financial Instruments’ and IFRS 7
‘Financial Instruments: Disclosures’
n
Contracts Referencing Nature-dependent Electricity
(Amendments to IFRS 9 and IFRS 7)
n
Annual Improvements to IFRS Accounting Standards –
Volume 11
n
IFRS 18 ‘Presentation and Disclosures in Financial Statements’
The Group is currently assessing the impact of these new and
amended standards but does not expect that the adoption of the
standards listed above will have a material impact on the financial
statements of the Group in future periods.
The accounting policies as set out below have been applied
consistently to all periods presented in these consolidated
The consolidated financial statements incorporate the financial
statements of the Company and the entities controlled by the
Company, together with the Group’s share of the results of joint
ventures made up to 31 December each year. Control is achieved
when the Company (i) has the power over the investee; (ii) is
exposed, or has rights, to variable returns from its involvement
with the investee; and (iii) has the ability to use its power to affect
its returns. The Company reassesses whether or not it controls
an investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control listed
above. Business combinations are accounted for using the
acquisition method.
Subsidiaries are entities that are controlled by the Group.
The financial statements of subsidiaries are included in the
consolidated financial statements of the Group from the
date that control is obtained to the date that control ceases.
The accounting policies of new subsidiaries are changed where
necessary to align them with those of the Group.
If the Group loses control over a subsidiary, it derecognises the
related assets (including goodwill), liabilities, non-controlling
interest and other components of equity, while any resultant gain
or loss is recognised in the income statement. Any investment
A joint arrangement is a contractual arrangement whereby two
or more parties undertake an economic activity that is subject
to joint control, which requires unanimous consent for strategic,
financial and operating decisions.
(i) Joint ventures
A joint venture generally involves the establishment of a
corporation, partnership or other entity in which each venturer
has rights to the net assets of the joint venture and joint control
over strategic, financial and operating decisions. The results,
assets and liabilities of jointly controlled entities are incorporated
in the financial statements using the equity method of accounting.
Goodwill relating to a joint venture which is acquired directly is
included in the carrying amount of the investment and is not
amortised. After application of the equity method, the Group’s
investments in joint ventures are reviewed to determine whether
any additional impairment loss in relation to the net investment in
the joint venture is required, and if so it is written off in the period
in which those circumstances are identified. When there is a
change recognised directly in the equity of the joint venture, the
Group recognises its share of any change and discloses this,
where applicable, in the statement of comprehensive income.
Where the Group’s share of losses exceeds its equity-accounted
investment in a joint venture, the carrying amount of the equity
interest is reduced to nil and the recognition of further losses is
discontinued except to the extent that the Group has incurred
legal or constructive obligations. Appropriate adjustment is
made to the results of joint ventures where material differences
exist between a joint venture’s accounting policies and those of
the Group.
Dividend income from investments is recognised when the
shareholders’ rights to receive payment have been established.
(ii) Joint operations
Construction contracts carried out as a joint arrangement
without the establishment of a legal entity are joint operations.
The Group’s share of the results and net assets of these joint
operations are included under each relevant heading in the
144
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Material accounting policy information
continued
(c) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised
income and expense arising from intra-group transactions, are
eliminated in preparing the consolidated financial statements.
Unrealised gains arising from transactions with equity-accounted
investments are eliminated to the extent of the Group’s interest
in that investment. Unrealised losses are eliminated in the same
way as unrealised gains, but only to the extent that there is no
Revenue and margin are recognised as follows:
(a) Construction and infrastructure contracts
A significant portion of the Group’s revenue is derived from
construction and infrastructure services contracts. These services
are provided to customers across a wide variety of sectors and
the size and duration of the contracts can vary significantly from
a few weeks to more than 10 years.
The majority of contracts are considered to contain only one
performance obligation for the purposes of recognising revenue.
While the scope of works may include a number of different
components, in the context of construction and infrastructure
services activities these are usually highly interrelated and
produce a combined output for the customer.
Contracts are typically satisfied over time. For fixed price
construction contracts progress is measured through a valuation
of the works undertaken by a professional quantity surveyor,
including an assessment of any elements for which a price has
not yet been agreed such as changes in scope. For cost-
reimbursable infrastructure services contracts progress is
measured based on the costs incurred to date as a proportion of
the estimated total cost and an assessment of the final contract
price payable.
Variations are not included in the estimated total contract price
until the customer has agreed the revised scope of work.
Where the scope has been agreed but the corresponding change
in price has not yet been agreed, only the amount that is
considered highly probable not to reverse in the future is included
in the estimated total contract price. Where delays to the
programme of works are anticipated and liquidated damages
would be contractually due, the estimated total contract price is
reduced accordingly. This is only mitigated by expected
extensions of time or commercial resolution being achieved
where it is highly probable that this will not lead to a significant
reversal in the future.
For cost-reimbursable contracts, expected pain share is
recognised in the estimated total contract price immediately,
while anticipated gain share and performance bonuses are only
recognised at the point that they are agreed by the customer.
In order to recognise the profit over time it is necessary to
estimate the total costs of the contract. These estimates take
account of any uncertainties in the cost of work packages which
have not yet been let and materials which have not yet been
procured, the expected cost of any acceleration of or delays
to the programme or changes in the scope of works and the
expected cost of any rectification works during the defects
liability period.
Once the outcome of a construction contract can be estimated
reliably, margin is recognised in the income statement in line with
the corresponding stage of completion. Where a contract is
forecast to be loss-making, the full loss is recognised immediately
in the income statement.
(b) Service contracts
Service contracts include design, maintenance and management
services. Contracts are typically satisfied over time and revenue is
measured through an assessment of time incurred and materials
utilised as a proportion of the total expected or percentage of
completion depending upon the nature of the service.
(c) Sale of land and development properties
The Group derives a significant portion of revenue from the sale
of land, and the development and sale of residential and
commercial properties.
Contracts are typically satisfied at a point in time. This is usually
deemed to be legal completion as this is the point at which the
Group has an enforceable right to payment. The only exception
to this is pre-let forward-sold developments where the customer
controls the work in progress as it is created; or where the Group
is unable to put the asset being constructed to an alternative use
due to legal or practical limitations and has an enforceable right to
payment for the work completed to date. Where these conditions
are met, the contract is accounted for as a construction contract
in accordance with paragraph (a) above.
Revenue from the sale of land and residential and commercial
properties is measured at the transaction price agreed in the
contract with the customer. While deferred payment terms may
be agreed in rare circumstances, the deferral never exceeds
twelve months. The transaction price is therefore not adjusted for
the effects of a significant financing component. The Group no
longer utilises shared equity loan schemes for the sale of
residential properties.
In order to recognise the profit, it is necessary to estimate the
total costs of a development. These estimates take account of
any uncertainties in the cost of work packages which have not
yet been let and materials which have not yet been procured and
the expected cost of any rectification works during the defects
liability period, which is 12 months for commercial property and
24 months for residential property.
Profit is recognised by allocating the total costs of a scheme
to each unit at a consistent margin. For mixed-tenure schemes
which also incorporate a construction contract, the margin
recognised for the open market units is consistent with the
construction contract element of the development.
(d) Contract balances
Contract assets
Contract assets primarily relate to the Group’s right to
consideration for construction work completed but not invoiced
at the balance sheet date. The contract assets are transferred
to trade receivables when the amounts are certified by the
customer. On most contracts, certificates are issued by the
customer on a monthly basis.
Strategic report
Governance
Financial statements
145
Material accounting policy information
continued
Contract liabilities
Contract liabilities primarily relate to the advance consideration
received from customers in respect of performance obligations
which have not yet been fully satisfied and for which revenue
has not been recognised. Contract liabilities are recognised as
revenue when performance obligation to the customer has
been satisfied.
(e) Contract costs
Costs to obtain a contract are expensed unless they are
incremental, i.e. they would not have been incurred if the contract
had not been obtained, and the contract is expected to be
sufficiently profitable for them to be recovered.
Costs to fulfil a contract are expensed unless they relate to an
identified contract, generate or enhance resources that will be
used to satisfy the obligations under the contract in future years
and the contract is expected to be sufficiently profitable for them
to be recovered, in which case they are capitalised to the extent
they will be recovered in future periods.
Where costs are capitalised, they are amortised over the shorter
of the period for which revenue and profit can be forecast with
reasonable certainty and the duration of the contract except
where the contract becomes loss-making. If the contract becomes
loss-making, all capitalised costs related to that contract are
immediately expensed.
Funding received in respect of developer grants, where funding is
awarded to encourage the building and renovation of affordable
housing, is recognised as a deduction from related expenses on a
stage of completion basis over the life of the project to which the
funding relates.
Funding received to support the construction of housing where
current market prices would otherwise make a scheme financially
unviable is recognised as income on a legal completion basis
when the properties to which it relates are sold.
Government grants are initially recognised as deferred income
at fair value when there is reasonable assurance that the
Group will comply with the conditions attached and the grants
Where the Company is a lessee, a right-of-use asset and lease
liability are recognised at the outset of the lease other than those
that are less than one year in duration or of a low value.
The lease liability is initially measured at the present value of the
lease payments that are not paid at that date based on the
Group’s expectations of the likelihood of lease extension or break
options being exercised. In calculating the present value of lease
payments, the Group uses its incremental borrowing rate at the
lease commencement date because the interest rate implicit in
the lease is not readily determinable.
The lease liability is subsequently adjusted to reflect imputed
interest, payments made to the lessor and any lease modifications.
The right-of-use asset is initially measured at cost, which
comprises the amount of the lease liability, any lease payments
made at or before the commencement date, less any lease
incentives received, any initial direct costs incurred by the Group
and an estimate of any costs that are expected to be incurred at
the end of the lease to dismantle or restore the asset.
The right-of-use assets are presented within the property, plant
and equipment line in the statement of financial position and
depreciated in accordance with the Group’s accounting policy
on property, plant and equipment. The amount charged to the
income statement comprises the depreciation of the right-of-use
asset and the imputed interest on the lease liability.
Lease payments on short-term leases and leases of low-value
assets are recognised as expense on a straight-line basis over the
Finance income and expense is recognised using the effective
The income tax expense represents the current and deferred
tax charges. Income tax is recognised in the income statement
except to the extent that it relates to items recognised directly
in equity.
Current tax is the Group’s expected tax liability on taxable profit
for the year using tax rates enacted or substantively enacted at
the reporting date and any adjustments to tax payable in respect
of previous years.
Taxable profit differs from that reported in the income statement
because it is adjusted for items of income or expense that are
assessable or deductible in other years and is adjusted for items
that are never assessable or deductible.
Current tax relating to items recognised directly in equity is
recognised in equity and not in the income statement.
for temporary differences between the carrying amount of
assets and liabilities for financial reporting purposes and the
corresponding tax bases used in tax computations. Deferred tax
is not recognised for the initial recognition of assets or liabilities
in a transaction that is not a business combination and affects
neither accounting nor taxable profit, or differences relating to
investments in subsidiaries and joint ventures to the extent that
it is probable that they will not reverse in the foreseeable future.
Deferred tax is not recognised for taxable temporary differences
arising on the initial recognition of goodwill.
Deferred tax is recognised on temporary differences which result
in an obligation at the reporting date to pay more tax, or a right to
pay less tax, at a future date, at the tax rates expected to apply
when they reverse, based on the laws that have been enacted or
substantively enacted at the reporting date. Deferred tax assets
are recognised to the extent that it is regarded as more likely than
not that they will be recovered. Deferred tax assets and liabilities
are not discounted and are only offset where there is a legally
146
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Annual Report 2025
Material accounting policy information
continued
Goodwill arises on business combinations and represents the
excess of the cost of an acquisition over the Group’s share of the
identifiable net assets of the acquiree at the acquisition date. The
consideration transferred for the acquisition of a subsidiary is the
fair value of the assets transferred, the liabilities incurred and
equity interests issued by the Group in exchange for control of
the acquiree. Consideration transferred also includes the fair
value of any asset or liability resulting from a contingent
consideration arrangement. Acquisition-related costs are
expensed in administrative expenses as incurred. All identifiable
assets and liabilities acquired and contingent liabilities assumed
are initially measured at their fair values at the acquisition date.
Where the cost is less than the Group’s share of the identifiable
net assets, the difference is immediately recognised in the income
statement as a gain from a bargain purchase.
Goodwill arising on acquisitions before the date of transition to
IFRS has been retained at the previous UK GAAP amounts subject
to being tested for impairment at that date.
Other intangible assets identified on acquisition by the Group that
have finite useful lives are recognised at fair value and measured
at cost less accumulated amortisation and impairment losses.
Those that are acquired separately, such as software, are
recognised at cost less accumulated amortisation and impairment
losses. Amortisation is recognised on a straight-line basis over
their estimated useful lives. The estimated useful life and
amortisation method are reviewed at the end of each reporting
period, with the effect of any changes in estimate being
accounted for on a prospective basis. The estimated useful lives
Property, plant and equipment are stated at cost less
accumulated depreciation and any recognised impairment loss.
Depreciation is charged over their estimated useful lives using the
straight-line method on the following basis:
n freehold land | not depreciated |
n plant and equipment | between 8.3% and 33% per year |
n fixtures and fittings | over the period of the lease |
n right-of-use assets | over the period of the lease |
Residual values of property, plant and equipment are reviewed
and updated annually.
Gains and losses on disposal are determined by comparing the
proceeds from disposal against the carrying amount and are
Investment property, which is property held to earn rentals and/
or capital appreciation, is stated at its fair value at the reporting
date. Gains or losses arising from changes in the fair value of
investment property are included in the income statement for the
Inventories are stated at the lower of cost and net realisable
value. The cost of work in progress comprises raw materials,
direct labour, other direct costs and related overheads. Net
The Group assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists,
or when annual impairment testing for an asset is required, the
Group estimates the asset’s recoverable amount. When the
carrying amount of an asset exceeds its recoverable amount,
the asset is considered impaired and is written down to its
recoverable amount.
Further disclosures relating to the impairment of non-financial
assets are provided in note 10 – Goodwill and other intangible
Trade receivables are initially recognised at fair value and are
subsequently measured at amortised cost using the effective
interest rate method with an appropriate allowance for estimated
irrecoverable amounts recognised in the income statement.
In accordance with IAS 1, trade receivables are recognised as
current when the Group expects to realise the assets in its normal
Cash and cash equivalents can include cash in hand, demand
deposits and other short-term, highly liquid investments that are
readily convertible to a known amount of cash and are subject to
an insignificant risk of changes in value. The carrying amount of
these assets approximates to their fair value.
Bank borrowings are generally considered to be financing
activities. However, bank overdrafts which are repayable on
demand form an integral part of an entity’s cash management.
In these circumstances, bank overdrafts are included as a
component of cash and cash equivalents for the purpose
of presentation in the consolidated cash flow statement.
A characteristic of such banking arrangements is that the bank
Trade payables are recognised initially at fair value and are
subsequently measured at amortised cost using the effective
A defined contribution plan is a post-retirement benefit plan
under which the Group pays fixed contributions to a separate
entity and has no legal or constructive obligation to pay further
amounts. The Group recognises payments to defined
contribution pension plans as staff costs in the income statement
as and when they fall due. Prepaid contributions are recognised
as an asset to the extent that a cash refund or reduction on
Strategic report
Governance
Financial statements
147
Material accounting policy information
continued
Provisions are recognised when the Group has a present legal or
constructive obligation as a result of a past event, it is probable
that an outflow of resources will be required to settle the
obligation and the amount of the obligation can be estimated
reliably. Provisions are recognised for events covered by the
Group’s captive or self-insurance arrangements, legal claims
and restructuring.
When the Group expects some or all of a provision to be
reimbursed, for example under an insurance contract, the
reimbursement is recognised as a separate asset, but only when
the reimbursement is virtually certain. The expense relating to a
provision is presented in the statement of profit or loss net of any
reimbursement where the reimbursement has met the virtually
certain recognition criteria.
If the effect of the time value of money is material, provisions
are discounted using a current pre-tax rate that reflects, when
appropriate, the risks specific to the liability. When discounting
is used, the increase in the provision due to the passage of time
The Group recognises lifetime expected credit losses for trade
receivables, contract assets and loans to joint ventures. The
expected credit losses on these financial assets are estimated
using a provision matrix based on the Group’s historical credit
loss experience, adjusted for factors that are specific to the
debtors, general economic conditions and an assessment of both
the current as well as the forecast direction of conditions at the
Equity-settled share-based payments to employees are measured
at the fair value of the equity instruments at the grant date.
The fair value is expensed in employee benefits expenses on a
straight-line basis over the vesting period, based on the Group’s
estimate of equity instruments that will eventually vest.
At each reporting date, the Group revises its estimate of the
number of equity instruments expected to vest as a result of the
effect of non-market-based vesting conditions. The impact of the
revision of the original estimates, if any, is recognised in profit or
loss such that the cumulative expense reflects the revised
estimate, with a corresponding adjustment to equity reserves.
No expense is recognised for awards that do not ultimately vest
because non-market performance and/or service conditions have
not been met. Where awards include a market or non-vesting
condition, the transactions are treated as vested irrespective of
whether the market or non-vesting condition is satisfied, provided
that all other performance and/or service conditions are satisfied.
The dilutive effect of outstanding options is reflected as additional
share dilution in the computation of diluted earnings per share
and hedge accounting
Derivative financial instruments may be used in joint ventures to
hedge long-term floating interest rate and Retail Price Index (RPI)
exposures and in Group companies to manage their exposure to
foreign exchange rate risk.
Interest rate swaps, RPI swaps and foreign exchange forward
contracts are stated in the statement of financial position at fair
value. At the inception of the hedge relationship, the entity
documents the relationship between the hedging instrument and
the hedged item, along with its risk management objectives and
its strategy for undertaking various hedge transactions.
Furthermore, at the inception of the hedge and on an ongoing
basis, the Group documents whether the hedging instruments
that are used in hedging transactions are highly effective in
offsetting changes in fair values or cash flows of hedged items.
Where financial instruments are designated as cash flow hedges
and are deemed to be effective, gains and losses on
remeasurement relating to the effective portion are recognised in
equity, and gains and losses on the ineffective portion are
recognised in the income statement.
Net investment hedges may be used to hedge exposure on
translation of net investments in foreign operations. Any gain or
loss on the hedging instrument relating to the effective portion
of the hedge is recognised in other comprehensive income;
the gain or loss relating to the ineffective portion is recognised
immediately in the income statement. In the event of disposal of
a foreign operation, the gains and losses accumulated in other
comprehensive income are recognised in the income statement.
There have been no transfers between categories in the fair value
Non-current assets classified as held for sale are presented
separately and measured at the lower of their carrying amounts
immediately prior to their classification as held-for-sale and their
fair value less costs to sell. However, some held-for-sale assets
such as financial assets or deferred tax assets continue to be
measured in accordance with the Group’s relevant accounting
policy for those assets.
Once classified as held for sale, the assets are not subject to
depreciation or amortisation. Any profit or loss arising from the
sale or its remeasurement to fair value less costs to sell is
148
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Critical accounting judgements and estimates
for the year ended 31 December 2025
Company’s management to make judgements, assumptions and
estimates that affect the application of accounting policies and
the reported amounts of assets, liabilities, income and expense.
Actual results may differ from these estimates. The estimates
and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period
in which the estimate is revised if the revision affects only that
period, or in the period of the revision and future periods if the
revision affects both current and future periods.
applying the Group’s accounting policies
The following are the critical judgements and estimates that the
directors have made in the process of applying the Group’s
accounting policies and that have a significant effect on the
amounts recognised in the financial statements:
Revenue recognition – mixed-use schemes (judgement)
The Group acts as developer and/or contractor on a number of
mixed-use schemes. In some instances, judgement is required to
determine whether the revenue on a particular element of the
scheme should be recognised as work progresses (recognised
over time) or upon legal completion (recognised at a point in
time). A detailed assessment is performed of the contractual
agreements with the customer as well as the substance of the
transaction to determine whether performance obligations have
been satisfied. Relevant factors that are considered include the
point at which legal ownership of the land passes to the
customer, the degree to which the customer can specify the
major structural elements of the design prior to construction
work commencing and the degree to which the customer can
specify modifications to the major structural elements of the
building during construction.
Revenue and profit recognition for long-term contracts
(judgement and estimate)
In order to determine the revenue and profit recognition in
respect of the Group’s construction contracts, the Group has to
estimate the total costs to deliver the contract as well as the final
contract value. The Group has to allocate total expected costs
between the amount incurred on the contract to the end of the
reporting period and the proportion to complete in a future
period. The assessment of the total costs to be incurred and final
contract value requires a degree of judgement and estimation.
The final contract value may include assessments of the recovery
of variations which have yet to be agreed with the customer, as
well as additional compensation claim amounts. The amount of
variations and claims are often not fully agreed with the customer
due to timing and requirements of the normal contractual
process. Therefore, assessments are based on judgement and
estimates of the potential cost impact of the compensation
claims, and the revenue recognised is constrained to amounts
where the Group believes it is highly probable that a significant
reversal will not occur. The estimation of costs to complete is
based on all available relevant information and may include
judgements and estimates of any potential defect liabilities or
liquidated damages for unagreed scope or timing variations.
Costs incurred in advance of the contract or contract fulfilment
costs that are directly attributable to the contract may also be
included as part of the total costs to complete the contract.
Judgement is required to consider when any pre-contract costs
or contract fulfilment costs are directly attributable to a specific
contract and the recognition of the related costs over the life of
the contract.
The reference to estimates above is not intended to comply with
the requirements of paragraph 125 of IAS 1 ‘Presentation of
Financial Statements’ as it is not expected there is a significant risk
of a material adjustment to the carrying amount of assets and
liabilities within the next financial year. The above is presented as
additional disclosure in order to give more detail on the process
for revenue and profit recognition for long-term contracts.
Inventory valuation (judgement and estimate)
Inventory is stated at the lower of cost and net realisable value.
Costs include materials and direct labour. Net realisable value
is based on estimated selling price, less further costs expected
to be incurred to complete and sell the asset. A provision is made
for obsolete, slow-moving or defective items where appropriate.
Management is required to use judgement when estimating
the profitability of a site/phase and in assessing any indicators
of impairment.
Land held for development, including land in the course of
development until legal completion of the sale of the asset, is
initially recorded at cost. Regular reviews are carried out to identify
any impairment in the value of the land by comparing the total
estimated selling prices less estimated selling expenses against
the carrying amount of the land plus estimated costs to complete.
A provision is made for any irrecoverable amounts. Where, through
deferred payment terms, the fair value of land purchased differs
from the amount that will subsequently be paid in settling the
liability, the difference is charged as a finance expense in the
statement of comprehensive income over the period to settlement.
Investments in land without the benefit of planning consent,
either through the purchase of land or non-refundable deposits
paid on land purchase contracts subject to planning consent,
are included initially at cost. Regular reviews are carried out for
impairment in the values of these investments, and a provision
is made to reflect any irrecoverable element. The impairment
reviews consider the existing use value of the land and assess the
likelihood of achieving planning consent and the value thereof.
Building safety provisions (estimate)
Management has reviewed legal and constructive obligations with
regard to remedial work to rectify legacy building safety issues.
Where obligations exist, these have been evaluated for the likely
cost to address, including repayments of the Building Safety Fund,
and an appropriate provision has been created.
The ongoing legislative and regulatory changes in respect of
legacy building safety issues create uncertainty around the extent
of remediation required for legacy buildings, the liability for such
remediation, recoveries from other parties (which would only be
recognised when virtually certain to be received) and the time
to be considered. This implies inherent uncertainty as to the
precise future obligations of the Group in respect of building fire
safety issues.
Management has recognised a provision based on its best estimate
of the future obligations. However, should the costs of remediation
increase by 5%, due to factors such as higher-than-expected
inflation, the impact on the remediation costs would be £2.8m.
Strategic report
Governance
Financial statements
149
Notes to the consolidated financial statements
An analysis of the Group’s revenue is as follows:
2025 |
2024 |
|
£m |
£m |
|
Partnership activities revenue |
949.5 |
946.4 |
Construction contracts |
3,712.4 |
3,230.0 |
Other services |
356.7 |
369.8 |
Construction services and fit out activities revenue |
4,069.1 |
3,599.8 |
Total revenue |
5,018.6 |
4,546.2 |
2025 |
2024 |
|||||
Recognised on |
Recognised on |
Recognised on |
Recognised on |
|||
performance |
performance |
performance |
performance |
|||
obligations |
obligations |
obligations |
obligations |
|||
satisfied |
satisfied at a |
Total |
satisfied |
satisfied at a |
Total |
|
over time |
point in time |
revenue |
over time |
point in time |
revenue |
|
£m |
£m |
£m |
£m |
£m |
£m |
|
Contracting |
620.6 |
17.9 |
638.5 |
549.7 |
14.8 |
564.5 |
Mixed tenure |
90.2 |
174.4 |
264.6 |
116.9 |
179.8 |
296.7 |
Partnership Housing |
710.8 |
192.3 |
903.1 |
666.6 |
194.6 |
861.2 |
Mixed Use Partnerships |
14.9 |
36.7 |
51.6 |
27.9 |
62.6 |
90.5 |
Traditional fit out |
1,569.0 |
– |
1,569.0 |
1,116.9 |
– |
1,116.9 |
Design and build |
214.9 |
– |
214.9 |
183.4 |
– |
183.4 |
Fit Out |
1,783.9 |
– |
1,783.9 |
1,300.3 |
– |
1,300.3 |
Construction |
1,159.2 |
– |
1,159.2 |
1,044.1 |
– |
1,044.1 |
Property Services |
212.5 |
– |
212.5 |
223.2 |
– |
223.2 |
Infrastructure |
935.3 |
– |
935.3 |
1,047.0 |
– |
1,047.0 |
Inter-segment revenue |
(27.0) |
– |
(27.0) |
(20.1) |
– |
(20.1) |
Total revenue |
4,789.6 |
229.0 |
5,018.6 |
4,289.0 |
257.2 |
4,546.2 |
150
Morgan Sindall Group plc
Annual Report 2025
Notes to the consolidated financial statements
continued
Business segments
For management purposes, the Group was organised into six operating divisions: Partnership Housing, Mixed Use Partnerships,
Fit Out, Construction, Property Services and Infrastructure, and this is the structure of segment information reviewed by the Chief
Operating Decision Maker (CODM). The CODM is determined to be the Board of directors and reporting provided to the Board is
in line with these six divisions, which have been considered to be the Group’s operating segments in 2025.
The six operating divisions’ activities are as follows:
n
Partnership Housing: Lovell Partnerships Limited is focused on working in partnerships with local authorities and housing
associations. Activities include mixed-tenure developments, building and developing homes for open market sales and for social/
affordable rent, design and build house contracting, and limited refurbishment.
n
Mixed Use Partnerships: Muse Places Limited is focused on transforming the urban landscape through partnership working and the
development of large forward-funded multi-phase sites and mixed-use placemaking.
n
Fit Out: Overbury plc specialises in fit out and refurbishment in commercial, central and local government offices and further
education. Morgan Lovell plc provides office interior design and build services direct to occupiers.
n
Construction: Morgan Sindall Construction focuses on education, healthcare, commercial, industrial, leisure and retail markets.
n
Property Services: Morgan Sindall Property Services Limited provides planned maintenance services for social housing and the wider
public sector.
1
n
Infrastructure: Morgan Sindall Infrastructure focuses on nuclear, energy, defence, rail, water, highways and aviation markets.
Infrastructure also includes the BakerHicks design activities based out of the UK and Switzerland.
Group activities represent costs and income arising from corporate activities which cannot be meaningfully allocated to the operating
segments. These include the costs of the Group Board, treasury management, corporate tax coordination, Group finance and internal
audit, insurance management, company secretarial services, Group general counsel services, information technology services, finance
income and finance expense.
1
Given the alignment of its ongoing activities to Construction, the Property Services division has now fully integrated into the Construction division from 1 January
2026. Under the three strategic lines of business of Partnerships, Fit Out and Construction Services, the Group is now organised into five reporting segments
and will be reported as such from 2026.
The Group reports its segmental information as presented below:
Partnership |
Mixed Use |
Property |
Group |
||||||
Housing |
Partnerships |
Fit Out |
Construction |
Services |
Infrastructure |
activities |
Eliminations |
Total |
|
Year ended 31 December 2025 |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
External revenue |
897.9 |
51.6 |
1,778.4 |
1,159.2 |
212.5 |
919.0 |
– |
– |
5,018.6 |
Inter-segment revenue |
5.2 |
– |
5.5 |
– |
– |
16.3 |
– |
(27.0) |
– |
Total revenue |
903.1 |
51.6 |
1,783.9 |
1,159.2 |
212.5 |
935.3 |
– |
(27.0) |
5,018.6 |
Impairment loss on |
|||||||||
contract assets |
– |
– |
– |
– |
(2.5) |
– |
– |
– |
(2.5) |
Adjusted operating |
|||||||||
profit/(loss) (note 28) |
42.0 |
(5.3) |
139.9 |
37.0 |
2.0 |
37.2 |
(26.4) |
(0.7) |
225.7 |
Amortisation of |
|||||||||
intangible assets |
– |
– |
– |
– |
(0.4) |
– |
– |
– |
(0.4) |
Exceptional operating items |
0.6 |
0.6 |
– |
(1.6) |
– |
– |
– |
– |
(0.4) |
Operating profit/(loss) |
42.6 |
(4.7) |
139.9 |
35.4 |
1.6 |
37.2 |
(26.4) |
(0.7) |
224.9 |
Finance income |
15.6 |
||||||||
Finance expense |
(8.7) |
||||||||
Profit before tax |
231.8 |
||||||||
Other information: |
|||||||||
Depreciation |
(2.5) |
(0.7) |
(3.6) |
(2.2) |
(3.8) |
(22.0) |
(1.0) |
– |
(35.8) |
Average number of employees |
1,231 |
119 |
1,283 |
1,637 |
983 |
3,164 |
94 |
– |
8,511 |
Strategic report
Governance
Financial statements
151
Notes to the consolidated financial statements
continued
2
Business segments
continued
Partnership |
Mixed Use |
Property |
Group |
||||||
Housing |
Partnerships |
Fit Out |
Construction |
Services |
Infrastructure |
activities |
Eliminations |
Total |
|
Year ended 31 December 2024 |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
External revenue |
855.9 |
90.5 |
1,299.2 |
1,043.3 |
223.2 |
1,034.1 |
– |
– |
4,546.2 |
Inter-segment revenue |
5.3 |
– |
1.1 |
0.8 |
– |
12.9 |
– |
(20.1) |
– |
Total revenue |
861.2 |
90.5 |
1,300.3 |
1,044.1 |
223.2 |
1,047.0 |
– |
(20.1) |
4,546.2 |
Impairment loss on |
|||||||||
contract assets |
– |
– |
– |
– |
(21.0) |
– |
– |
– |
(21.0) |
Adjusted operating |
|||||||||
profit/(loss) (note 28) |
36.1 |
1.5 |
99.0 |
30.9 |
(17.8) |
38.5 |
(25.6) |
– |
162.6 |
Amortisation of |
|||||||||
intangible assets |
– |
– |
– |
– |
(0.5) |
– |
– |
– |
(0.5) |
Exceptional operating items |
(2.7) |
5.9 |
– |
0.1 |
(3.4) |
– |
– |
– |
(0.1) |
Operating profit/(loss) |
33.4 |
7.4 |
99.0 |
31.0 |
(21.7) |
38.5 |
(25.6) |
– |
162.0 |
Finance income |
18.2 |
||||||||
Finance expense |
(8.3) |
||||||||
Profit before tax |
171.9 |
||||||||
Other information: |
|||||||||
Depreciation |
(2.6) |
(0.8) |
(3.0) |
(2.5) |
(4.2) |
(18.9) |
(1.1) |
– |
(33.1) |
Average number of employees |
1,193 |
108 |
1,121 |
1,533 |
1,097 |
3,080 |
110 |
– |
8,242 |
Profit for the year
Profit before tax for the year is stated after charging/(crediting):
2025 |
2024 |
||
Notes |
£m |
£m |
|
Depreciation charge: |
|||
Plant, equipment, fixtures and fittings |
11 |
10.0 |
9.7 |
Right-of-use assets |
11 |
25.8 |
23.4 |
Government grants received |
(0.6) |
(1.4) |
|
Amortisation of intangible assets |
10 |
0.4 |
0.5 |
2025 |
2024 |
|
£m |
£m |
|
Audit of the Company’s annual report |
0.6 |
0.5 |
Audit of the Company’s subsidiaries and joint ventures |
2.7 |
2.3 |
Total audit fees |
3.3 |
2.8 |
Total non-audit fees |
– |
– |
Total audit and non-audit fees |
3.3 |
2.8 |
152
Morgan Sindall Group plc
Annual Report 2025
Notes to the consolidated financial statements
continued
Exceptional building safety items
2025 |
2024 |
||
Notes |
£m |
£m |
|
Net additions on building safety provisions |
19 |
(7.2) |
(8.0) |
Insurance and recoveries recognised in receivables |
5.9 |
9.3 |
|
Exceptional building safety (charge)/credit within cost of sales |
(1.3) |
1.3 |
|
Exceptional building safety credit/(charge) within joint ventures |
12 |
0.9 |
(1.4) |
Total exceptional building safety (charge)/credit |
(0.4) |
(0.1) |
In the current year, the legal and constructive obligations related to the developers’ pledge (including reimbursement of grants provided
by the Building Safety Fund), the Building Safety Act and associated fire safety regulations have been reassessed based on further
information. The overall movement in the building safety items is a net charge of £0.4m and is shown separately as an exceptional item
consistent with prior-year treatment.
Included in the £0.4m exceptional building safety charge (2024: £0.1m charge) is a £0.9m credit (2024: £1.4m charge) that has been
recognised in respect of the Group’s share of constructive and legal obligations to remediate legacy building safety issues within joint
ventures, and this has been recognised within the Group’s share of net profit of joint ventures. The remaining net charge of £1.3m
(2024: £1.3m credit) has been recognised in cost of sales.
At the reporting date the Group had not yet made any reimbursements to the Building Safety Fund for amounts previously granted
and drawn on any of the developments for which the Group has taken responsibility. As notified by the MHCLG (Ministry of Housing,
Communities and Local Government), any repayments will only be requested upon final completion of all the relevant works. On this
Staff costs
2025 |
2024 |
||
Notes |
£m |
£m |
|
Wages and salaries |
694.9 |
646.6 |
|
Social security costs |
88.5 |
73.9 |
|
Other pension costs |
17 |
31.2 |
28.7 |
Share options expense |
24 |
10.8 |
10.5 |
825.4 |
759.7 |
Finance income and expense
2025 |
2024 |
||
Notes |
£m |
£m |
|
Interest receivable from joint ventures |
0.3 |
0.8 |
|
Interest income on bank deposits |
15.3 |
17.4 |
|
Finance income |
15.6 |
18.2 |
|
Interest expense on lease liabilities |
18 |
(4.2) |
(3.8) |
Loan arrangement and commitment fees |
(2.1) |
(2.2) |
|
Discount unwind on deferred land payments |
(2.4) |
(2.3) |
|
Finance expense |
(8.7) |
(8.3) |
|
Net finance income |
6.9 |
9.9 |
Strategic report
Governance
Financial statements
153
Notes to the consolidated financial statements
continued
Tax expense for the year
2025 |
2024 |
|
£m |
£m |
|
Current tax: |
||
Current year |
59.5 |
40.1 |
Adjustment in respect of prior years |
(3.0) |
1.1 |
56.5 |
41.2 |
|
Deferred tax: |
||
Current year |
(1.0) |
1.7 |
Adjustment in respect of prior years |
1.4 |
(2.7) |
0.4 |
(1.0) |
|
Tax expense for the year |
56.9 |
40.2 |
UK corporation tax is calculated at 25.0% (2024: 25.0%) of the estimated taxable profit for the year.
The table below reconciles the tax charge for the year to tax at the UK statutory rate:
2025 |
2024 |
||
Notes |
£m |
£m |
|
Profit before tax |
231.8 |
171.9 |
|
Less: underlying post-tax share of profits from joint ventures |
12 |
(0.3) |
(4.5) |
231.5 |
167.4 |
||
UK corporation tax rate |
25.0% |
25.0% |
|
Income tax expense at UK corporation tax rate |
57.9 |
41.9 |
|
Tax effect of: |
|||
Adjustments in respect of prior years: |
|||
Relating to exceptional items |
(1.6) |
– |
|
Other |
– |
(1.6) |
|
Expenses for which no tax relief is recognised: |
|||
Proportion of exceptional items |
– |
(1.6) |
|
Proportion of share-based payments |
– |
(0.8) |
|
Other non-deductible expenses |
0.9 |
0.6 |
|
Tax liability upon underlying joint venture profits 1 |
0.2 |
1.5 |
|
Recognition of deferred tax assets on brought forward tax losses |
(0.5) |
– |
|
Other |
– |
0.2 |
|
Tax expense for the year |
56.9 |
40.2 |
1
Certain of the Group’s joint ventures are partnerships for which profits are taxed within the Group rather than within the joint venture.
154
Morgan Sindall Group plc
Annual Report 2025
Notes to the consolidated financial statements
continued
7 Tax
continued
Non-current |
||||
asset |
Tax losses and |
|||
amortisation and |
short-term timing |
Share-based |
||
depreciation |
differences |
payments |
Total |
|
£m |
£m |
£m |
£m |
|
1 January 2024 |
(19.1) |
4.1 |
6.3 |
(8.7) |
(Charge)/credit to income statement |
(0.8) |
(0.9) |
2.7 |
1.0 |
Credit to equity |
– |
– |
5.6 |
5.6 |
1 January 2025 |
(19.9) |
3.2 |
14.6 |
(2.1) |
(Charge)/credit to income statement |
(3.0) |
2.1 |
0.5 |
(0.4) |
Credit to equity |
– |
– |
6.7 |
6.7 |
31 December 2025 |
(22.9) |
5.3 |
21.8 |
4.2 |
Certain deferred tax assets and liabilities, as shown above, have been offset as the Group has a legally enforceable right to do so.
The applicable tax rate for the Group in 2025 was 25% (2024: 25.0%).
Residential Property Developer Tax (RPDT) applies at a rate of 4% on profits arising from residential property development. A £25m
annual tax-free allowance applies in aggregate for the Group. A portion of the profits of the Group’s Partnership Housing and Mixed
Use Partnerships businesses are subject to RPDT. No liability has been accrued for 2025 (2024: liability less than £0.1m).
Deferred taxes at the balance sheet date are measured at the enacted rates that are expected to apply to the unwind of each asset or
liability. Accordingly deferred tax balances as at 31 December 2025 have been calculated at a tax rate of 25% (2024: 25%), with an
allowance for RPDT where applicable.
Pillar Two legislation has been enacted in the UK, effective from 1 January 2024. The Group is within the scope of Pillar Two and has
assessed its potential exposure to Pillar Two income taxes. The Group does not expect any material exposure to Pillar Two top-up taxes
and no provision has been made for Pillar Two top-up taxes.
At 31 December 2025, the Group had unused tax losses of £33.8m (2024: £27.9m) available for offset against future profits. A deferred
tax asset of £1.7m (2024: £0.6m) has been recognised in respect of £6.9m (2024: £2.3m) of these losses. No deferred tax asset has
been recognised in respect of the remaining £26.9m of losses as these losses can only be utilised against profits from specific sources,
Amounts recognised as distributions to equity holders in the year:
2025 |
2024 |
|
£m |
£m |
|
Final dividend for the year ended 31 December 2024 of 90p per share |
42.3 |
– |
Final dividend for the year ended 31 December 2023 of 78p per share |
– |
36.5 |
Interim dividend for the year ended 31 December 2025 of 50p per share |
23.5 |
– |
Interim dividend for the year ended 31 December 2024 of 41.5p per share |
– |
19.6 |
65.8 |
56.1 |
The proposed final dividend for the year ended 31 December 2025 of 108.0 p per share is subject to approval by shareholders at the
Strategic report
Governance
Financial statements
155
Notes to the consolidated financial statements
continued
Earnings per share
2025 |
2024 |
||
Notes |
£m |
£m |
|
Profit attributable to the owners of the Company |
174.9 |
131.7 |
|
Adjustments: |
|||
Exceptional building safety items |
4 |
0.4 |
0.1 |
Amortisation of intangible assets |
10 |
0.4 |
0.5 |
Tax relating to the above adjustments |
(1.8) |
(1.8) |
|
Adjusted earnings |
173.9 |
130.5 |
2025 |
2024 |
|
Number of |
Number of |
|
shares |
shares |
|
(millions) |
(millions) |
|
Basic weighted average number of ordinary shares |
47.0 |
46.8 |
Dilutive effect of share options and conditional shares not vested |
2.3 |
1.7 |
Diluted weighted average number of ordinary shares |
49.3 |
48.5 |
Basic earnings per share |
372.1p |
281.4p |
Diluted earnings per share |
354.8p |
271.5p |
Adjusted earnings per share |
370.0p |
278.8p |
Diluted adjusted earnings per share |
352.7p |
269.1p |
The average market value of the Company’s shares for the purpose of calculating the dilutive effect of share options and Long Term
Incentive Plan shares was based on quoted market prices for the year. The average share price for the year was £40.77 (2024: £28.05).
A total of 649,071 share options that could potentially dilute earnings per share in the future were excluded from the above calculations
156
Morgan Sindall Group plc
Annual Report 2025
Notes to the consolidated financial statements
continued
Goodwill and other intangible assets
Other intangible |
|||
Goodwill |
assets |
Total |
|
£m |
£m |
£m |
|
Cost |
|||
1 January 2024 |
217.7 |
41.7 |
259.4 |
Additions |
– |
– |
– |
Disposals |
– |
(2.7) |
(2.7) |
1 January 2025 |
217.7 |
39.0 |
256.7 |
Additions |
– |
0.6 |
0.6 |
Disposals |
– |
(0.1) |
(0.1) |
31 December 2025 |
217.7 |
39.5 |
257.2 |
Accumulated amortisation |
|||
1 January 2024 |
– |
(40.8) |
(40.8) |
Amortisation |
– |
(0.5) |
(0.5) |
Disposals |
– |
2.7 |
2.7 |
1 January 2025 |
– |
(38.6) |
(38.6) |
Amortisation |
– |
(0.4) |
(0.4) |
Disposals |
– |
0.1 |
0.1 |
31 December 2025 |
– |
(38.9) |
(38.9) |
Net book value at 31 December 2025 |
217.7 |
0.6 |
218.3 |
Net book value at 31 December 2024 |
217.7 |
0.4 |
218.1 |
Goodwill represents the value of people, track record and expertise acquired within acquisitions that are not capable of being
individually identified and separately recognised. Goodwill is allocated at acquisition to the cash-generating units that are expected to
benefit from the business combination. The allocation is as follows: Partnership Housing £50.6m (2024: £50.6m), Mixed Use
Partnerships £16.0m (2024: £16.0m), Construction £68.7m (2024: £68.7m) and Infrastructure £82.4m (2024: £82.4m).
The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired. In testing
goodwill and other intangible assets for impairment, the recoverable amount of each cash-generating unit has been estimated from
value-in-use calculations. The key assumptions for the value-in-use calculations are those regarding the forecast revenue and margin,
discount rates and long-term growth rates by market sector. Forecast revenue and margin are based on past performance, secured
workload and workload likely to be achievable in the short to medium term, given trends in the relevant market sector as well as
macroeconomic factors.
Cash flow forecasts have been determined by using Board-approved budgets for the next three years. Cash flows beyond three years
have been extrapolated into perpetuity using an estimated nominal growth rate of 3.0% (2024: 3.4%). This growth rate does not exceed
the long-term average for the relevant markets.
Discount rates are pre-tax and reflect the current market assessment of the time value of money and the risks specific to the cash-
generating units. The risk-adjusted nominal rates used for the cash-generating units with goodwill balances are 15.1% (2024: 14.2%) for
Partnership Housing, 14.5% (2024: 14.2%) for Mixed Use Partnerships, 13.8% (2024: 12.3%) for Construction and 13.8% (2024: 12.3%)
for Infrastructure. The increased discount rates in 2025 are due to a higher risk-free rate and an increased market risk premium for
the UK.
In carrying out this exercise, management concluded that no impairment of goodwill or other intangible assets was required. Sensitivity
analyses indicate that no reasonably foreseeable changes in the key assumptions underpinning the value-in-use calculations would give
rise to an impairment across any cash-generating unit. In forming this judgement, management performed additional cash-generating
unit-specific downside scenario testing to ensure that all plausible changes in assumptions were appropriately evaluated.
Other intangible assets relate to internally generated software in Construction and Infrastructure £0.6m (2024: £0.4m in Property
Services). The cost and accumulated amortisation amounts for acquired intangible assets (excluding goodwill) that were fully written
down at 31 December 2025 were £37.8m (2024: £35.3m and £(35.3)m).
Strategic report
Governance
Financial statements
157
Notes to the consolidated financial statements
continued
10
Goodwill and other intangible assets
continued
Consideration of the impact of climate change
In terms of the possible impacts of climate change, the two key assumptions that could be sensitive to this are the growth rate and
discount rates noted above. If climate change has a negative impact on revenues and/or the operating costs of the Group, there could
be a potential impact on the discounted cash flow growth rates used within the valuation model. Lower future growth rates would
reduce the level of the discounted cash flow valuation and hence the amount of headroom available to the Group above an
impairment trigger. At present, the material short- to medium-term risks presented by possible climate change impacts are considered
to be factored into the growth and discount rates where they are known and can be quantified.
Using the current assumptions, no reasonably foreseeable change in the assumptions used within the value-in-use calculations would
cause an impairment in any of the segments. Therefore, at present, changes in the long-term assumptions due to the impact of climate
Property, plant and equipment
Right-of-use assets |
|||||
Freehold |
Plant, equipment, |
||||
property and |
fixtures and |
Leasehold |
Plant and |
||
land |
fittings |
property |
equipment |
Total |
|
£m |
£m |
£m |
£m |
£m |
|
Cost |
|||||
1 January 2024 |
6.7 |
59.3 |
54.3 |
51.0 |
171.3 |
Additions |
– |
18.2 |
7.3 |
20.7 |
46.2 |
Foreign exchange adjustments |
– |
(0.3) |
(0.1) |
– |
(0.4) |
Disposals |
– |
(11.9) |
(5.6) |
(6.9) |
(24.4) |
1 January 2025 |
6.7 |
65.3 |
55.9 |
64.8 |
192.7 |
Additions |
– |
16.0 |
9.6 |
22.6 |
48.2 |
Foreign exchange adjustments |
– |
0.4 |
0.1 |
– |
0.5 |
Disposals/transfers |
(4.3) |
(6.2) |
(7.9) |
(14.0) |
(32.4) |
31 December 2025 |
2.4 |
75.5 |
57.7 |
73.4 |
209.0 |
Accumulated depreciation |
|||||
1 January 2024 |
– |
(41.7) |
(25.0) |
(18.6) |
(85.3) |
Depreciation charge |
– |
(9.7) |
(7.8) |
(15.6) |
(33.1) |
Foreign exchange adjustments |
– |
0.2 |
0.1 |
– |
0.3 |
Disposals |
– |
10.7 |
4.0 |
5.8 |
20.5 |
1 January 2025 |
– |
(40.5) |
(28.7) |
(28.4) |
(97.6) |
Depreciation charge |
– |
(10.0) |
(7.9) |
(17.9) |
(35.8) |
Impairment |
(3.2) |
(0.2) |
(0.1) |
– |
(3.5) |
Foreign exchange adjustments |
– |
(0.2) |
(0.1) |
– |
(0.3) |
Disposals/transfers |
3.2 |
6.1 |
7.8 |
13.3 |
30.4 |
31 December 2025 |
– |
(44.8) |
(29.0) |
(33.0) |
(106.8) |
Net book value at 31 December 2025 |
2.4 |
30.7 |
28.7 |
40.4 |
102.2 |
Net book value at 31 December 2024 |
6.7 |
24.8 |
27.2 |
36.4 |
95.1 |
The Group holds some property, plant and equipment that is fully depreciated. The cost and accumulated depreciation amounts of this
fully written down property, plant and equipment at 31 December 2025 are £14.8m (2024: £22.4m) and (£14.8m) (2024: (£22.4m))
158
Morgan Sindall Group plc
Annual Report 2025
Notes to the consolidated financial statements
continued
11
Property, plant and equipment
continued
The carrying amount of assets held for sale are summarised as follows:
2025 |
2024 |
||
Note |
£m |
£m |
|
Freehold property and land |
1.0 |
– |
|
Investment in joint ventures |
12 |
5.6 |
– |
Assets held for sale |
6.6 |
– |
Investments in joint ventures
The Group has interests in the following joint ventures:
Aykley Heads Development LLP 50% partner
Aykley Heads Development LLP is a joint venture with Durham County Council established to deliver the strategic development of an
Innovation District at a site in Durham over a 10-year period.
Brentwood Development Partnership LLP 50% partner
Brentwood Development Partnership LLP is a partnership with Seven Arches Investments Limited (a subsidiary of Brentwood Borough
Council) which is developing a series of sites in Brentwood over a 30-year period.
Chalkdene Developments LLP 50% partner
Chalkdene Developments LLP is a partnership with Herts Living Ltd (a subsidiary of Hertfordshire County Council) which is developing a
series of sites across Hertfordshire over a 15-year period.
Claymore Roads (Holdings) Limited 50% share
Claymore Roads (Holdings) Limited is a joint venture with Infrastructure Investments (Roads) Limited and is responsible for the upgrade
and operation of the A92 between Dundee and Arbroath in Scotland.
Edmundham Developments LLP 50% partner
Edmundham Developments LLP is a joint venture with Suffolk County Council which has been established to progress the development
of residential homes across Suffolk, inclusive of associated infrastructure, local centres, employment land, education land and extra
care provision.
English Cities Fund Limited Partnership 24% share
English Cities Fund is a limited partnership with Homes England and Legal & General to develop mixed-use regeneration schemes in
assisted areas. Joint control is exercised through the board of the general partner at which each partner is represented by two directors
and no decision can be taken without the agreement of a director representing each partner.
Habiko LLP 33.3% partner
Habiko LLP is a housing innovation joint venture between Muse Places, Homes England and Pension Insurance Corporation which aims
to deliver low-carbon, low-energy affordable homes for rent, with a target of 3,000 homes over an initial term of 12 years.
Health Innovation Partners Limited 50% share
Through the Health Innovation Partners joint venture with Arcadis BAC Limited, the Group had a 25% interest in The Oxleas Property
Partnership LLP (TOPP), a joint venture with the Oxleas NHS Foundation Trust. In agreement with our partners, TOPP was dissolved in
2024 and the joint venture is in the process of being wound up.
Kinsted Developments LLP 50% partner
Kinsted Developments LLP is a joint venture with Edes Estates Limited (a subsidiary of West Sussex County Council) established to carry
out strategic developments of residential homes, town centre regeneration and extra care provision across West Sussex.
Strategic report
Governance
Financial statements
159
Notes to the consolidated financial statements
continued
12
Investments in joint ventures
continued
L&Q Lovell Trafford LLP 50% partner
L&Q Lovell Trafford LLP is a joint venture with L&Q New Homes Limited (a subsidiary of London & Quadrant Housing Trust) carrying
out a strategic development project of a residential nature.
Laurus Lovell Whalley LLP 50% partner
Laurus Lovell Whalley LLP is a joint venture with THT Developments Limited (a subsidiary of Trafford Housing Limited) established to
carry out a strategic development project of a residential nature in the north west of England.
Lingley Mere Business Park Development Company Limited 50% share
Lingley Mere Business Park Development Company Limited is a joint venture with United Utilities Property Services Limited (a subsidiary
of United Utilities PLC) delivering development at a site in Warrington.
Lovell Flagship LLP 50% partner
Lovell Flagship LLP is a joint venture with Flagship Housing Developments Limited (a subsidiary of Flagship Housing Group Limited)
established to carry out strategic development and/or regeneration projects of a primarily residential nature.
Lovell Latimer LLP 50% partner
Lovell Latimer LLP is a joint venture with Latimer Developments Limited (a subsidiary of Clarion Housing Group) established to carry out
a strategic development project of a residential nature in the north west of England.
Lovell Together (Pendleton) LLP 50% partner
Lovell Together (Pendleton) LLP is a joint venture with Together Commercial Limited (a subsidiary of Together Housing Group Limited)
established to carry out a strategic development project of a residential nature in the north west of England.
Lovell Together LLP 50% partner
Lovell Together LLP is a joint venture with Together Commercial Limited (a subsidiary of Together Housing Group Limited) carrying out
three strategic development projects of a residential nature in eastern England.
Lovell/Abri Weymouth LLP 50% partner
Lovell/Abri Weymouth LLP is a joint venture with Radian Developments Limited (a subsidiary of Abri Group Limited) carrying out a
strategic development project of a residential nature.
Morgan-Vinci Limited 50% share
Morgan-Vinci Limited is a joint venture with Vinci Newport DBFO Limited and is responsible for the construction and operation of the
Newport Southern Distributor Road. In 2025, a Sale and Purchase Agreement was signed for the sale of the 50% shareholding in
Morgan-Vinci Limited. The sale process is expected to complete in 2026.
Slough Urban Renewal LLP 50% partner
Slough Urban Renewal LLP is a partnership with Slough Borough Council which is developing a series of sites in Slough over an initial
term of 15 years extendable by 10 years.
South Thamesmead LLP 50% partner
South Thamesmead LLP is a joint venture with Peabody Developments Limited (a subsidiary of Peabody Trust) established to carry out
the next mixed-tenure phases of the regeneration of South Thamesmead in South East London.
St Andrews Brae Developments Limited 50% share
St Andrews Brae Developments Limited is a joint venture with Miller Homes which has completed a development of residential housing
and apartments in Bearsden, Glasgow.
The Bournemouth Development Company LLP 50% partner
The Bournemouth Development Company LLP is a partnership with Bournemouth, Christchurch and Poole Council which is developing
a series of sites in Bournemouth over a 20-year period.
The Compendium Group Limited 50% share
The Compendium Group Limited is a joint venture with The Riverside Group Limited and is a company formed to carry out strategic
development and regeneration projects of a primarily residential nature.
160
Morgan Sindall Group plc
Annual Report 2025
Notes to the consolidated financial statements
continued
12
Investments in joint ventures
continued
The Prestwich Regeneration LLP 50% partner
The Prestwich Regeneration LLP is a joint venture with Bury Metropolitan Borough Council and was set up to undertake the
redevelopment of the Longfield Shopping Centre in Prestwich, located in the Metropolitan Borough of Bury, Greater Manchester.
Wapping Wharf (Alpha) LLP 50% partner
Wapping Wharf (Alpha) LLP is a joint venture with Wapping Wharf (Umberslade) Limited which has completed development of the first
phase of residential apartments within the Harbourside Regeneration Area of Bristol.
Wapping Wharf (Beta) LLP 40% partner
Wapping Wharf (Beta) LLP is a joint venture with Wapping Wharf (Umberslade) Limited which has completed the second phase of
residential apartments within the Harbourside Regeneration Area of Bristol.
Waterside Places Limited Partnership 50% partner
Waterside Places Limited Partnership is a joint venture with the Canal and River Trust to undertake regeneration of waterside sites.
Waterside Places (General Partner) Limited 50% share
Waterside Places (General Partner) is a joint venture with the Canal and River Trust to undertake regeneration of waterside sites.
Wirral Growth Company LLP 50% partner
Wirral Growth Company LLP is a joint venture with Wirral Borough Council and was set up to undertake regeneration of numerous sites
in the Wirral region of north west England.
Wythenshawe Civic Regeneration LLP 20% partner
Wythenshawe Civic Regeneration LLP is a joint venture with the Council of the City of Manchester. The principal activity of the LLP is to
undertake the regeneration and ongoing operation and management of Wythenshawe Shopping Centre, located in Wythenshawe,
Manchester.
Investments in equity-accounted joint ventures are as follows:
2025 | 2024 | ||
Notes | £m | £m | |
1 January | 111.9 | 106.6 | |
Equity-accounted share of net profits: | |||
Underlying share of net profits | 0.3 | 4.6 | |
Exceptional building safety credit/(charge) | 4 | 0.9 | (1.4) |
1.2 | 3.2 | ||
Capital advances to joint ventures | 66.3 | 29.1 | |
Capital repayments by joint ventures | (37.6) | (27.9) | |
Non-cash impairment reversal – other operating income | 1.2 | 5.1 | |
Dividends received | (4.7) | (4.2) | |
Reclassification to asset held for sale 1 | 11 | (5.6) | – |
31 December | 132.7 | 111.9 |
1
The investment in Morgan-Vinci Limited has been reclassified as a held-for-sale investment. The joint venture sale process is currently ongoing and is expected
to be completed during 2026.
During 2025, an exceptional building safety credit of £0.9m (2024: charge of £1.4m) has been recognised in respect of the Group’s
share of constructive and legal obligations to remediate legacy building safety issues within joint ventures.
Strategic report
Governance
Financial statements
161
Notes to the consolidated financial statements
continued
12
Investments in joint ventures
continued
Summarised financial information related to equity-accounted joint ventures that are not individually material is set out below.
2025 |
2024 |
|
£m |
£m |
|
Non-current assets (100%) |
12.8 |
60.7 |
Current assets (100%) |
527.7 |
471.7 |
Current liabilities (100%) |
(112.2) |
(90.8) |
Non-current liabilities (100%) |
(111.9) |
(191.4) |
Net assets reported by equity-accounted joint ventures (100%) |
316.4 |
250.2 |
Revenue (100%) |
244.8 |
238.2 |
Expenses (100%) |
(248.8) |
(233.5) |
Net (loss)/profit (100%) |
(4.0) |
4.7 |
Results of equity-accounted joint ventures:
2025 |
2024 |
|
£m |
£m |
|
Group share of profit before tax |
0.3 |
4.6 |
Exceptional building safety credit/(charge) |
0.9 |
(1.4) |
Group share of tax |
(0.5) |
(0.1) |
Group share of profit after tax |
0.7 |
3.1 |
2025 |
2024 |
|
£m |
£m |
|
Land |
167.2 |
154.1 |
Work in progress |
436.1 |
321.9 |
Inventories |
603.3 |
476.0 |
Contract assets and liabilities
2025 |
2024 |
|
£m |
£m |
|
Contract assets |
235.8 |
224.6 |
Contract liabilities |
(118.7) |
(110.4) |
Net contract assets |
117.1 |
114.2 |
The contract assets primarily relate to the Group’s right to consideration for construction work completed but not invoiced at the
balance sheet date. The contract assets are transferred to trade receivables when the amounts are certified by the customer. On most
contracts, certificates are issued by the customer on a monthly basis. All contract assets held at 31 December 2025 are expected to be
invoiced and transferred to trade receivables within the next 12 months.
The Group has taken advantage of the practical expedient in paragraph 94 of IFRS 15 to immediately expense the incremental costs of
obtaining contracts where the amortisation period of the assets would have been one year or less.
The contract liabilities primarily relate to the advance consideration received from customers in respect of performance obligations
which have not yet been fully satisfied and for which revenue has not been recognised. All contract liabilities held at 31 December 2025
are expected to satisfy performance obligations in the next 12 months.
162
Morgan Sindall Group plc
Annual Report 2025
Notes to the consolidated financial statements
continued
14
Contract assets and liabilities
continued
2025 |
2024 |
|||
Contract |
Contract |
Contract |
Contract |
|
assets |
liabilities |
assets |
liabilities |
|
£m |
£m |
£m |
£m |
|
1 January |
224.6 |
(110.4) |
270.6 |
(95.8) |
Revenue recognised: |
||||
Performance obligations satisfied in the current year |
4,908.2 |
110.4 |
4,450.4 |
95.8 |
Cash received for performance obligations not yet satisfied |
– |
(118.7) |
– |
(110.4) |
Amounts transferred to trade receivables |
(4,894.5) |
– |
(4,475.4) |
– |
Impairment of contract assets |
(2.5) |
– |
(21.0) |
– |
31 December |
235.8 |
(118.7) |
224.6 |
(110.4) |
The following table sets out the Group secured workload by operating segment, which is deemed to be the revenue expected to be
recognised in the future related to performance obligations that are unsatisfied or partially unsatisfied at the balance sheet date:
2026 |
2027 |
2028+ |
Total |
|
£m |
£m |
£m |
£m |
|
Partnership Housing |
853.7 |
594.7 |
881.9 |
2,330.3 |
Mixed Use Partnerships |
264.6 |
506.3 |
3,843.6 |
4,614.5 |
Fit Out |
1,219.7 |
92.0 |
– |
1,311.7 |
Construction |
884.9 |
208.6 |
18.8 |
1,112.3 |
Property Services |
160.7 |
101.2 |
452.5 |
714.4 |
Infrastructure |
643.6 |
546.2 |
700.1 |
1,889.9 |
Eliminations |
(0.9) |
– |
– |
(0.9) |
4,026.3 |
2,049.0 |
5,896.9 |
11,972.2 |
Of these amounts, £6,294.9m (2024: £6,164.5m) relates to performance obligations to be satisfied for in-progress contracts at the
Trade and other receivables
2025 |
2024 |
||
Notes |
£m |
£m |
|
Amounts falling due within one year |
|||
Trade receivables |
26 |
382.4 |
300.2 |
Amounts owed by joint ventures |
25 |
14.8 |
15.8 |
Prepayments |
19.5 |
16.1 |
|
Insurance receivables |
19.7 |
23.1 |
|
Other receivables |
31.7 |
29.0 |
|
468.1 |
384.2 |
||
Amounts falling due after more than one year |
|||
Trade receivables |
26 |
85.3 |
69.3 |
85.3 |
69.3 |
||
Trade and other receivables |
553.4 |
453.5 |
The directors consider that the carrying amount of trade and other receivables approximates to their fair value.
Trade receivables are stated after provisions for impairment losses of £0.4m (2024: £1.3m); see note 26.
Strategic report
Governance
Financial statements
163
Notes to the consolidated financial statements
continued
15
Trade and other receivables
continued
Retentions held by customers for contract work included within trade receivables at 31 December 2025 were £158.4m (2024: £129.1m).
These will be collected in the normal operating cycle of the Group, including £85.3m (2024: £69.3m) that falls due in more than one
year. The Group manages the collection of retentions through its post-completion project monitoring procedures and ongoing contact
with clients to ensure that potential issues that could lead to the non-payment of retentions are identified and addressed promptly.
The Group holds third-party insurances that may mitigate the contract and legal liabilities described in note 19 Provisions and note 20
Trade and other payables
2025 |
2024 |
||
Notes |
£m |
£m |
|
Trade payables |
237.3 |
211.1 |
|
Amounts owed to joint ventures |
25 |
0.2 |
0.2 |
Other tax and social security |
174.7 |
139.3 |
|
Accrued expenses |
890.8 |
729.8 |
|
Deferred income |
3.0 |
7.1 |
|
Land creditors |
25.4 |
30.8 |
|
Other payables |
12.2 |
12.0 |
|
Current |
1,343.6 |
1,130.3 |
|
Land creditors |
14.9 |
15.3 |
|
Other payables |
– |
1.3 |
|
Non-current |
14.9 |
16.6 |
The directors consider that the carrying amount of trade payables approximates to their fair value. No interest was incurred on
outstanding balances. Non-current other payables have been discounted by £1.5m (2024: £1.3m) to reflect the time value of money.
Retirement benefit schemes
Defined contribution plan
Between 1995 and 2024, the Group operated a defined contribution plan, the Morgan Sindall Retirement Benefits Plan (‘the Retirement
Plan’), for employees of the Group. The assets of the Retirement Plan were held separately from those of the Group in funds under the
control of the Trustee of the Retirement Plan.
During 2024, the Group replaced these arrangements, with past and present employees’ savings and future contributions being
transferred into LifeSight, WTW’s master trust, a defined contribution multi-employer pension trust (‘LifeSight’) with an independent
trustee board.
The total cost charged to the income statement of £31.2m (2024: £28.7m) represents contributions payable to defined contribution
pension plans by the Group.
As at 31 December 2025, contributions of £4.7m (2024: £4.2m) were due in respect of December’s contribution not paid over
to LifeSight.
In 2023, the Trustees of the Morgan Sindall Retirement Savings Plan completed a buy-out transaction with Aviva, whereby Aviva
164
Morgan Sindall Group plc
Annual Report 2025
Notes to the consolidated financial statements
continued
Lease liabilities
The Group leases several assets, including the buildings, plant and vehicles, to enable the Group to carry out its day-to-day operations.
The average lease term is five years. There are no variable terms to any of the leases. The maturity profile for the lease liabilities at
31 December 2025 is set out below:
| 2025 |
2024 |
|||||
Plant and |
Plant and |
|||||
Property |
equipment |
Total |
Property |
equipment |
Total |
|
£m |
£m |
£m |
£m |
£m |
£m |
|
Within one year |
7.0 |
17.8 |
24.8 |
6.5 |
16.1 |
22.6 |
Within two to five years |
19.0 |
25.7 |
44.7 |
19.4 |
23.6 |
43.0 |
After more than five years |
9.5 |
– |
9.5 |
5.9 |
– |
5.9 |
Total undiscounted cash flows |
35.5 |
43.5 |
79.0 |
31.8 |
39.7 |
71.5 |
Deduct impact of discounting |
(3.5) |
(1.9) |
(5.4) |
(2.4) |
(2.4) |
(4.8) |
31 December |
32.0 |
41.6 |
73.6 |
29.4 |
37.3 |
66.7 |
| 2025 |
2024 |
|||||
Plant and |
Plant and |
|||||
Property |
equipment |
Total |
Property |
equipment |
Total |
|
£m |
£m |
£m |
£m |
£m |
£m |
|
1 January |
29.4 |
37.3 |
66.7 |
31.4 |
32.4 |
63.8 |
Additions |
9.2 |
22.6 |
31.8 |
7.3 |
20.7 |
28.0 |
Terminations |
(0.1) |
(0.7) |
(0.8) |
(2.1) |
(1.0) |
(3.1) |
Repayments |
(8.3) |
(20.0) |
(28.3) |
(8.9) |
(16.9) |
(25.8) |
Interest expense (note 6) |
1.8 |
2.4 |
4.2 |
1.7 |
2.1 |
3.8 |
31 December |
32.0 |
41.6 |
73.6 |
29.4 |
37.3 |
66.7 |
Lease payments on short-term leases and leases of low-value assets recognised as an expense within the income statement totalled
Building |
Contract |
||||
safety |
Self-insurance |
and legal |
Other |
Total |
|
£m |
£m |
£m |
£m |
£m |
|
1 January 2024 |
56.1 |
19.2 |
18.3 |
2.5 |
96.1 |
Utilised |
(7.3) |
(1.3) |
(7.6) |
– |
(16.2) |
Additions |
11.9 |
4.3 |
21.5 |
1.1 |
38.8 |
Released |
(3.9) |
(3.0) |
(5.2) |
(1.1) |
(13.2) |
1 January 2025 |
56.8 |
19.2 |
27.0 |
2.5 |
105.5 |
Utilised |
(7.3) |
(2.0) |
(5.3) |
(0.1) |
(14.7) |
Additions |
7.4 |
4.4 |
10.2 |
0.6 |
22.6 |
Released |
– |
(5.5) |
(18.5) |
– |
(24.0) |
31 December 2025 |
56.9 |
16.1 |
13.4 |
3.0 |
89.4 |
Current |
56.9 |
1.2 |
13.4 |
0.2 |
71.7 |
Non-current |
– |
14.9 |
– |
2.8 |
17.7 |
31 December 2025 |
56.9 |
16.1 |
13.4 |
3.0 |
89.4 |
Strategic report
Governance
Financial statements
165
Notes to the consolidated financial statements
continued
19 Provisions
continued
Building safety provisions
Management has reviewed legal and constructive obligations arising from the developers’ pledge, the Building Safety Act and other
associated fire regulations. Where obligations exist, these have been evaluated for the likely cost to address, including repayments of
the Building Safety Fund. As a result of this review process provisions are recognised, as reported in the table above, excluding those
recognised in joint ventures. The provision is expected to be utilised in the next two years, with repayments to the Building Safety Fund
commencing in the middle of 2026.
See note 4 for further detail.
The Group also holds third-party insurances that may mitigate the liabilities. Third-party insurance reimbursement in respect of these
provisions has been recognised as a separate asset, but only when the reimbursement is virtually certain. See notes 4 and 15 for details
of mitigating insurance receivables recognised at the period end.
Note 20 includes details of contingent liabilities related to building safety.
Self-insurance provisions
Self-insurance provisions comprise the Group’s self-insurance of certain risks and include £6.7m (2024: £11.5m) held in the Group’s
captive insurance company, Newman Insurance Company Limited.
The Group makes provisions in respect of specific types of claims incurred but not reported (IBNR). The valuation of IBNR considers
past claims experience and the risk profile of the Group. These are reviewed periodically and are intended to provide a best estimate
of the most likely or expected outcome.
Contract and legal provisions
Contract and legal provisions include liabilities, loss provisions, and defect and warranty provisions on contracts that have reached
completion.
The Group also holds third-party insurances that may mitigate the liabilities. Third-party insurance reimbursement is recognised as
a separate asset, but only when the reimbursement is virtually certain. See note 15 for details of mitigating insurance receivables
recognised at the period end.
Note 20 includes details of contingent liabilities related to claims.
Other provisions
Contingent liabilities
Group banking facilities and surety bond facilities are supported by cross guarantees given by the Company and participating
companies in the Group. There are contingent liabilities in respect of surety bond facilities, guarantees and claims under contracting
and other arrangements, including joint arrangements and joint ventures entered into in the normal course of business. As at
31 December 2025, contract bonds in issue under uncommitted facilities covered £290.8m of contract commitments of the Group,
of which £19.4m relates to joint arrangements and £nil relates to joint ventures (2024: £194.9m, of which £19.4m related to joint
arrangements and £nil related to joint ventures).
Contingent liabilities may also arise in respect of subcontractor and other third-party claims made against the Group, in the normal
course of trading. These claims can include those relating to health and safety incidents, cladding/legacy fire safety matters and defects.
A provision for such claims is only recognised to the extent that the directors believe that the Group has a legal or constructive
obligation as a result of a past event and it is probable that an outflow of economic benefit will be required to settle the obligation.
However, such claims are predominantly covered by the Group’s insurance arrangements. Recoveries under insurance arrangements
are recognised as insurance receivables when they are considered virtually certain.
Building safety
At 31 December 2025, provisions in respect of liabilities arising from the developers’ pledge, the Building Safety Act and other
associated fire regulations totalled £62.9m (2024: £63.7m), including those related to joint ventures.
The ongoing legislative and regulatory changes in respect of legacy building safety issues create uncertainty around the extent of
remediation required for legacy buildings, the liability for such remediation, recoveries from other parties and the time to be
considered. It is possible that as remediation work proceeds, additional remedial works are required that may not have been identified
from the reviews and physical inspections undertaken to date. The scope of buildings and remediation works to be considered may
also change as legislation and regulations continue to evolve.
166
Morgan Sindall Group plc
Annual Report 2025
Notes to the consolidated financial statements
continued
Share capital
2025 |
2024 |
|||
Number |
£m |
Number |
£m |
|
Issued and fully paid ordinary shares of 5p each: |
||||
1 January |
48,004,421 |
2.4 |
47,357,726 |
2.4 |
Exercise of share options |
18,541 |
– |
646,695 |
– |
31 December |
48,022,962 |
2.4 |
48,004,421 |
2.4 |
All issued ordinary shares are fully paid. Ordinary shares are entitled to dividends when declared and each share carries the right to
one vote at a meeting of the Company.
During 2025, 18,541 shares were issued in respect of options exercised under the Group’s Save As You Earn (SAYE) Plan for a total
Other reserves
Capital |
||||
redemption |
Translation |
Hedging |
Total other |
|
reserve |
reserve |
reserve |
reserves |
|
£m |
£m |
£m |
£m |
|
1 January 2024 |
0.6 |
1.5 |
(0.8) |
1.3 |
Exchange rate variances |
– |
(0.3) |
– |
(0.3) |
Fair value gains/(losses) |
– |
– |
(0.1) |
(0.1) |
1 January 2025 |
0.6 |
1.2 |
(0.9) |
0.9 |
Exchange rate variances |
– |
0.3 |
– |
0.3 |
31 December 2025 |
0.6 |
1.5 |
(0.9) |
1.2 |
The capital redemption reserve was created on the redemption of preference shares in 2003.
The hedging reserve arises from cash flow hedge accounting. Movements on the effective portion of hedges are recognised through
the hedging reserve, while any ineffectiveness is taken to the income statement.
The translation reserve comprises the aggregate effect of translating overseas operations into the Group’s functional currency.
Retained earnings
Retained earnings include shares in Morgan Sindall Group plc purchased in the market and held by the Morgan Sindall Employee
Benefit Trust (‘the Trust’) to satisfy options under the Company’s share incentive schemes. The number of shares held by the Trust
at 31 December 2025 was 1,377,157 (2024: 1,241,722) with a cost of £79.9m (2024: £51.5m). All of the shares held by the Trust
were unallocated at the year end and dividends on these shares have been waived. Based on the Company’s share price at
Share-based payments
The Group recognised a share-based payment expense of £10.8m (2024: £10.5m) related to equity-settled share-based payment
transactions. The Group has four share option schemes with unvested options or awards at 31 December 2025:
n
Share Option Plan (2014 SOP and 2023 SOP) for eligible employees across the Group. Options granted prior to 2022 can be
exercised if the EPS performance conditions are met over a three-year vesting period. If the options remain unexercised after a
period of 10 years from the date of grant the options lapse. If employees are not deemed to be good leavers under the rules of the
2014 and 2023 SOP, their options will be forfeited if they leave the Group before the end of the three-year vesting period.
n
Save As You Earn (SAYE) Plan for all employees who are employed by the Group at the relevant invitation date. There are no
performance criteria for SAYE and options are issued to participants in accordance with HMRC rules.
n
Long-Term Incentive Plan (2014 LTIP and 2023 LTIP). Details of the performance conditions and other information in respect of the
2014 and 2023 LTIP are set out in the directors’ remuneration report on page 119.
n
Deferred bonus plan nil-cost options (deferred bonus plan). Information in respect of the deferred bonus plan is set out in the
directors’ remuneration report on pages 113 and 114.
Strategic report
Governance
Financial statements
167
Notes to the consolidated financial statements
continued
24
Share-based payments
continued
Details of the share awards and options granted during the year and the valuation methodology are as follows:
Share awards under 2023 LTIP |
|||||
Awards with |
Awards with |
Share options |
|||
SAYE |
TSR condition |
EPS condition |
under 2023 SOP |
||
Number of awards or options granted |
666,370 |
54,591 |
109,183 |
605,740 |
|
Weighted average fair value at date of grant (per share) |
£9.81 |
£13.43 |
£28.61 |
£8.53 |
|
Weighted average share price at date of grant |
£42.30 |
£31.20 |
£31.20 |
£31.20 |
|
Weighted average exercise price |
£37.24 |
n/a |
n/a |
£32.50 |
|
Valuation model |
Black-Scholes |
Monte Carlo |
Black-Scholes |
Black-Scholes |
|
Expected term (from date of grant) |
3.0 years |
3.0 years |
3.0 years |
6.5 years |
|
Expected volatility |
(a) |
28.30% |
27.40% |
25.60% |
36.20% |
Expected dividend yield |
(b) |
3.20% |
n/a |
n/a |
3.85% |
Risk-free rate |
3.75% |
3.99% |
3.96% |
4.26% |
|
(a)
Volatility has been calculated over the period of time commensurate with the expected award term immediately prior to the date
of grant.
(b)
Under the 2014 and 2023 LTIP, award holders may receive the value of any dividends paid during the vesting period in respect
of their vested shares at the end of the vesting period. Consequently, the fair value is not discounted for value lost in respect
of dividends.
The following table provides a summary of the options granted under the Company’s employee share option schemes during the
current and comparative year:
2025 |
2024 |
|||
Weighted |
Weighted |
|||
Number |
average |
Number |
average |
|
of share |
exercise price |
of share |
exercise price |
|
options |
(£) |
options |
(£) |
|
Outstanding at 1 January |
3,726,785 |
18.11 |
5,075,634 |
16.40 |
Granted during the year |
1,295,488 |
34.35 |
835,756 |
22.71 |
Lapsed during the year |
(159,002) |
21.36 |
(229,040) |
16.03 |
Exercised during the year |
(656,284) |
19.62 |
(1,955,565) |
15.76 |
Outstanding at 31 December |
4,206,987 |
22.72 |
3,726,785 |
18.11 |
Exercisable at 31 December |
562,281 |
16.32 |
572,074 |
13.90 |
Weighted average remaining contractual life |
5.53 years |
6.29 years |
||
The weighted average share price at the date of exercise for share options exercised during the year was £41.22 (2024: £26.58).
168
Morgan Sindall Group plc
Annual Report 2025
Notes to the consolidated financial statements
continued
Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not
disclosed in this note. During the year, Group companies entered into transactions to provide construction and property development
services with related parties, all of which were joint ventures, not members of the Group, amounting to £159.2m (2024: £136.5m). At 31
December 2025, amounts owed to the Group by joint ventures was £14.8m (2024: £15.8m) and amounts owed by the Group to joint
ventures was £0.2m (2024: £0.2m), including joint venture funding obligations as described in note 12.
The Group considers key management personnel to be the members of the Group management team, and sets out below, in
aggregate, remuneration for each of the categories specified in IAS 24 ‘Related Party Disclosures’.
2025 |
2024 |
|
£m |
£m |
|
Short-term employee benefits |
11.6 |
11.2 |
Post-employment benefits |
0.2 |
0.2 |
Termination benefits |
0.9 |
– |
Share-based payments |
4.0 |
3.3 |
16.7 |
14.7 |
Details of directors’ remuneration are set out in the directors’ remuneration report on pages 95 to 120.
Directors’ transactions
There have been no related party transactions with any director in the year or in the subsequent period to 24 February 2026.
Directors’ material interests in contracts with the Company
No director held any material interest in any contract with the Company or any Group company in the year or in the subsequent period
Financial instruments
Net cash is defined as cash and cash equivalents less borrowings and non-recourse project financing as shown below:
2025 |
2024 |
|
£m |
£m |
|
Cash and cash equivalents |
590.5 |
544.2 |
Bank overdrafts presented as borrowings due within one year |
(59.3) |
(51.8) |
Cash and cash equivalents reported in the consolidated cash flow statement |
531.2 |
492.4 |
Net cash |
531.2 |
492.4 |
operations. There is £16.5m included within cash and cash equivalents that is held for future payment to designated suppliers
(2024: £26.0m). There is a third-party charge of £0.3m (2024: £0.3m) on a bank account in Switzerland for the purpose of rental
The Group has £180m of committed loan facilities maturing more than one year from the balance sheet date, of which £15m matures
in June 2028 and £165m in October 2028. These facilities are undrawn at 31 December 2025.
Average daily net cash during 2025 was £367.6m (2024: £374.2m). Average daily net cash is defined as the average of the 365
(2024: 366) end-of-day balances of the net cash (as defined above) over the course of a reporting period. Management uses this as
Strategic report
Governance
Financial statements
169
Notes to the consolidated financial statements
continued
26
Financial instruments
continued
The Group has exposure to a variety of financial risks through the conduct of its operations. Risk management is governed by the
Group’s operational policies, which are subject to periodic review by the Group’s internal audit team and twice-yearly review by
management. The policies include written principles for the Group’s risk management as well as specific policies, guidelines and
authorisation procedures in respect of specific risk mitigation techniques such as the use of derivative financial instruments. The Group
does not enter into derivative financial instruments for speculative purposes.
The following represent the key financial risks resulting from the Group’s use of financial instruments:
n
credit risk
n
liquidity risk
n
market risk
Credit risk
Credit risk is the risk of financial loss to the Group if a client or counterparty to a financial instrument fails to meet its contractual
obligations and arises primarily in respect of the Group’s trade receivables and contract assets.
The degree to which the Group is exposed to this credit risk depends on the individual characteristics of the contract counterparty and
the nature of the project. The Group’s credit risk is also influenced by general macroeconomic conditions. The Group does not have any
significant concentration risk in respect of contract assets or trade receivable balances at the reporting date with receivables spread
across a wide range of clients. Due to the nature of the Group’s operations, it is normal practice for clients to hold retentions in respect
of contracts completed. Retentions held by clients at 31 December 2025 were £158.4m (2024: £129.1m). These will be collected in the
normal operating cycle of the Group (see note 15).
The Group manages its exposure to credit risk through the application of its credit risk management policies, which specify the
minimum requirements in respect of the creditworthiness of potential customers, assessed through reports from credit agencies, and
the timing and extent of progress payments in respect of contracts.
The risk management policies of the Group also specify procedures in respect of obtaining Parent Company guarantees or, in certain
circumstances, use of escrow accounts, which, in the event of default, mean that the Group may have a secure claim. The Group does
not require collateral in respect of contract assets or trade receivables.
The Group manages the collection of retentions through its post-completion project monitoring procedures and ongoing contact with
clients to ensure that potential issues that could lead to the non-payment of retentions are identified and addressed promptly. The
directors always estimate the loss allowance on contract assets and trade receivables at the end of the reporting period at an amount
equal to lifetime expected credit losses.
Apart from the impairments recognised in the year, none of the contract assets at the end of the reporting period are past due, and,
taking into account the historical default experience and the future prospects in the industry, the directors consider that no further
contract assets are impaired.
The expected credit losses on trade receivables are estimated using a provision matrix by reference to past default experience of the
debtor and an analysis of the debtor’s current financial position, adjusted for factors that are specific to the debtors, general economic
conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecast direction of
conditions at the reporting date.
2025 |
2024 |
|||
Provision for |
Provision for |
|||
Gross trade |
expected |
Gross trade |
expected |
|
receivables |
credit losses |
receivables |
credit losses |
|
£m |
£m |
£m |
£m |
|
Not past due |
415.5 |
– |
322.3 |
– |
Past due 1 to 30 days |
28.3 |
– |
18.8 |
– |
Past due 31 to 120 days |
4.8 |
0.1 |
10.4 |
0.1 |
Past due 121 to 365 days |
8.6 |
– |
5.4 |
0.2 |
Past due greater than one year |
10.9 |
0.3 |
13.9 |
1.0 |
468.1 |
0.4 |
370.8 |
1.3 |
|
170
Morgan Sindall Group plc
Annual Report 2025
Notes to the consolidated financial statements
continued
26
Financial instruments
continued
The following table shows the movement in lifetime expected credit losses that has been recognised for trade and other receivables in
accordance with the simplified approach set out in IFRS 9:
2025 |
2024 |
|
£m |
£m |
|
Balance at 1 January |
1.3 |
1.5 |
Net movement in loss allowance arising from new amounts recognised in current year, |
||
net of those derecognised upon billing |
(0.9) |
(0.2) |
31 December |
0.4 |
1.3 |
Other than the impairment loss recognised in the year (see note 14), there has not been any other significant change in the gross
amounts of contract assets that has affected the estimation of the loss allowance.
The average credit period on revenue is 34 days (2024: 30 days). No interest is charged on the trade receivables outstanding balance.
Trade receivables overdue are provided for based on estimated irrecoverable amounts.
Included in the Group’s trade receivable balance are debtors with a carrying amount of £52.2m (2024: £47.2m) which are past due at
the reporting date, for which the Group has not provided as there has not been a significant change in credit quality and the Group
considers that the amounts are still recoverable. The average age of these receivables is 129 days (2024: 149 days).
In determining the recoverability of trade receivables, the Group considers any change in the credit quality of the trade receivable from
the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer base being
large and spread across the Group’s operating segments. Accordingly, the directors believe that there is no further credit provision
required in excess of the provision for impairment losses.
At the reporting date, there were no trade and other receivables which have had renegotiated terms that would otherwise have been
past due.
The Group regularly reviews its loans to joint ventures against expected future cash flows and net assets of the joint ventures to
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as and when they fall due. The ultimate
responsibility for liquidity risk rests with the Board.
The Group aims to manage liquidity by ensuring that it will always have sufficient liquidity to meet its liabilities when due, under both
normal and stress conditions.
Liquidity is provided through cash balances and committed bank loan facilities. Additional project finance borrowings may be used
to fund specific projects. These project finance borrowings are without recourse to the remainder of the Group’s assets.
The Group reports cash balances daily and invests surplus cash to maximise income while preserving liquidity and credit quality.
The Group prepares weekly short-term and monthly medium-term cash forecasts, which are used to assess the Group’s expected
cash performance and compare with the facilities available to the Group and the Group’s covenants.
Key risks to liquidity and cash balances are a downturn in contracting volumes, a reduction in the profitability of work, delayed receipt of
cash from customers and the risk that major clients or suppliers suffer financial distress leading to non-payment of debts or costly and
time-consuming reallocation and rescheduling of work. Certain measures and key performance indicators are continually monitored
throughout the Group and used to quickly identify issues as they arise, enabling the Group to address them promptly.
Key among these are continual monitoring of the secured order book, including the status of orders and likely timescales for realisation
so that contracting volumes are well understood; monitoring of overhead levels to ensure they remain appropriate to contracting
volumes; continual monitoring of working capital exceptions (overdue debts and conversion of work performed into certificates and
invoices); continual review of levels of current and forecast profitability on contracts; review of client and supplier credit references; and
approval of credit terms with clients and suppliers to ensure they are appropriate.
The Group does not have any material derivative or non-derivative financial liabilities with the exception of trade and other payables,
borrowings and lease liabilities. Trade and other payables are generally non-interest bearing and, therefore, have no weighted average
effective interest rates. Lease liabilities are carried at the present value of the minimum lease payments. Trade and other payables are
Strategic report
Governance
Financial statements
171
Notes to the consolidated financial statements
continued
26
Financial instruments
continued
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates or equity prices, will affect the
Group’s income or the carrying amount of its holdings of financial instruments. The objective of market risk management is to achieve a
level of market risk that is within acceptable parameters as set out in the Group risk management framework.
Interest rate risk
The Group is not exposed to significant interest rate risk as it does not have significant interest-bearing liabilities and its only interest-
bearing asset is cash invested on a short-term basis.
Certain of the Group’s equity-accounted joint ventures have entered into interest rate swaps to manage their exposure to interest rate
risk arising on floating rate bank borrowings.
The Group’s share of joint ventures’ interest rate swap contracts has a nominal value of £9.6m (2024: £10.4m) and fixed interest
payments at an average rate of 5.1% (2024: 5.1%) for periods up until 2033.
Currency risk
The majority of the Group’s operations are carried out in the UK and the Group has a low level of exposure to currency risk on sales
and purchases. The Group’s policy is to hedge foreign currency transactions where they are material, at which point derivative financial
instruments are entered into so as to hedge forecast or actual foreign currency exposures.
The Board aims to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain the future
development of the business, and its approach to capital management is explained fully in the capital allocation section on pages 19
and 20.
The capital structure of the Group consists of cash and cash equivalents and equity attributable to equity holders of the Company,
comprising issued capital, reserves and retained earnings as disclosed in the consolidated statement of changes in equity. The cash and
cash equivalents are supplemented by £180m of committed bank facilities, of which £15m expires in June 2028 and £165m expires in
October 2028. In order to manage its capital structure, the Group may adjust the amounts of dividends paid to shareholders, return
capital to shareholders, issue new shares or sell assets.
There were no changes in the Group’s approach to capital management during the year and the Group is not subject to any capital
Subsequent events
Adjusted performance measures
In addition to monitoring and reviewing the financial performance of the operating segments and the Group on a statutory basis,
management also uses adjusted performance measures which are also disclosed in the annual report. These measures are not an
alternative or substitute to statutory IFRS measures but are seen by management as useful in assessing the performance of the
business on a comparable basis. These financial measures are also aligned with the measures used internally to assess business
performance in the Group’s budgeting process and when determining compensation. The Group also uses other non-statutory
measures which cannot be derived directly from the financial statements. There are four alternative performance measures used by
management and disclosed in the annual report:
‘
Adjusted
’ In all cases the term ‘adjusted’ excludes the impact of intangible amortisation and exceptional items. This is used to improve
the comparability of information between reporting periods to aid the use of the annual report in understanding the activities across
the Group’s portfolio.
172
Morgan Sindall Group plc
Annual Report 2025
Notes to the consolidated financial statements
continued
28
Adjusted performance measures
continued
Below is a reconciliation between the reported gross profit, operating profit and profit before tax measures on a statutory basis and the
adjustment made to calculate adjusted gross profit, adjusted operating profit and adjusted profit before tax.
Adjusted basic earnings per share and adjusted diluted earnings per share are the statutory measures excluding the post-tax impact of
intangible amortisation and exceptional items, and the deferred tax charge arising due to changes in UK corporation tax rates. See note 9
for a detailed reconciliation of the adjusted EPS measures.
Gross profit | Operating profit | Profit before tax | |||||
2025 | 2024 | 2025 | 2024 | 2025 | 2024 | ||
Notes | £m | £m | £m | £m | £m | £m | |
Reported | 612.0 | 529.9 | 224.9 | 162.0 | 231.8 | 171.9 | |
Adjust for: exceptional building safety items 1 | 1.3 | (1.3) | 0.4 | 0.1 | 0.4 | 0.1 | |
Adjust for: amortisation of intangible assets | – | – | 0.4 | 0.5 | 0.4 | 0.5 | |
Adjusted | 613.3 | 528.6 | 225.7 | 162.6 | 232.6 | 172.5 | |
Reported tax charge | (56.9) | (40.2) | |||||
Adjust for: tax relating to amortisation | (0.1) | (0.1) | |||||
Adjust for: tax relating to exceptional items | (1.7) | (1.7) | |||||
Adjusted profit after tax/earnings | 9 | 173.9 | 130.5 | ||||
1
The exceptional building safety items include amounts recognised in cost of sales (£1.3m charge (2024: £1.3m credit)) and share of net profit of joint ventures
(£0.9m credit (2024: £1.4m charge)). See note 4.
‘
Net cash
’ Net cash is defined as cash and cash equivalents less borrowings. Lease liabilities are not deducted from net cash.
A reconciliation of this number at the reporting date can be found in note 26. In addition, management monitors and reviews average
daily net cash as good discipline in managing capital. Average daily net cash is defined as the average of the 365 (2024: 366) end-of-day
balances of net cash over the course of a reporting period.
‘
Operating cash flow
’ Management uses an adjusted measure for operating cash flow as it encompasses other cash flows that are key
to the ongoing operations of the Group, such as repayments of lease liabilities, investment in property, plant and equipment,
investment in intangible assets, and returns from equity-accounted joint ventures. Operating cash flow can be derived from the cash
inflow from operations reported in the consolidated cash flow statement as shown below.
Operating cash flow conversion is operating cash flow divided by adjusted operating profit as defined above.
2025 |
2024 |
||
Notes |
£m |
£m |
|
Cash inflow from operations – reported |
235.6 |
172.7 |
|
Dividends from joint ventures |
12 |
4.7 |
4.2 |
Proceeds on disposal of property, plant and equipment |
0.5 |
1.9 |
|
Purchases of property, plant and equipment |
11 |
(16.0) |
(18.2) |
Purchases of intangible fixed assets |
10 |
(0.6) |
– |
Repayments of lease liabilities |
18 |
(28.3) |
(25.8) |
Operating cash flow |
195.9 |
134.8 |
‘
Return on capital employed
’ Management uses return on capital employed (ROCE) in assessing the performance and efficient use
of capital within the regeneration activities. ROCE is calculated as adjusted operating profit plus interest received from joint ventures
divided by adjusted average capital employed. Adjusted average capital employed is the 13-month average of total assets (excluding
goodwill, other intangible assets and cash) less total liabilities (excluding corporation tax, deferred tax, inter-company financing,
Company statement of financial position
at 31 December 2025
Notes
2025
£m
2024
£m
Assets
Property, plant and equipment
2.1
2.9
Net investment in sublease
1.4
2.6
Investments
2
597.8
597.8
Deferred tax asset
4.0
2.8
Amounts owed by subsidiary undertakings
162.8
2.8
Prepayments
1.5
0.4
Non-current assets
769.6
609.3
Trade receivables
0.8
0.6
Net investment in sublease
1.2
1.1
Amounts owed by subsidiary undertakings
–
55.0
Current tax receivables
–
1.6
Prepayments
6.9
6.4
Other receivables
4.7
3.6
Cash and cash equivalents
262.2
276.8
Current assets
275.8
345.1
Total assets
1,045.4
954.4
Liabilities
Bank overdrafts
(20.5)
(47.0)
Lease liabilities
(1.4)
(1.5)
Trade payables
(4.6)
(2.2)
Amounts owed to subsidiary undertakings
(766.4)
(686.0)
Current tax liabilities
(8.5)
–
Other tax and social security
(0.8)
(1.0)
Accrued expenses
(13.6)
(11.8)
Other payables
(0.8)
(1.3)
Provisions
3
(1.0)
(1.2)
Current liabilities
(817.6)
(752.0)
Net current liabilities
(541.8)
(406.9)
Total assets less current liabilities
227.8
202.4
Lease liabilities
(1.6)
(3.0)
Provisions
3
(8.5)
(7.7)
Non-current liabilities
(10.1)
(10.7)
Net assets
217.7
191.7
Equity
Share capital
2.4
2.4
Share premium account
65.9
65.7
Capital redemption reserve
0.6
0.6
Special reserve
13.7
13.7
Retained earnings
135.1
109.3
Total equity
217.7
191.7
The Company reported a profit for the financial year ended 31 December 2025 of £105.7m (2024: profit of £68.2m).
The financial statements of the Company (company number 00521970) were approved by the Board and authorised for issue on
24 February 2026 and signed on its behalf by:
John Morgan
Kelly Gangotra
Chief Executive
Chief Financial Officer
173
Strategic report
Governance
Financial statements
Company statement of changes in equity
for the year ended 31 December 2025
Share
capital
£m
Share
premium
account
£m
Capital
redemption
reserve
£m
Special
reserve
£m
Profit and
loss account
£m
Shareholders’
funds
£m
1 January 2024
2.4
56.0
0.6
13.7
108.1
180.8
Profit for the year
–
–
–
–
68.2
68.2
Total comprehensive income
–
–
–
–
68.2
68.2
Share option expense
–
–
–
–
10.5
10.5
Tax relating to share options
–
–
–
–
6.3
6.3
Issue of shares at a premium
–
9.7
–
–
–
9.7
Purchase of shares in
the Company by the Trust
–
–
–
–
(47.2)
(47.2)
Exercise of share options
–
–
–
–
19.5
19.5
Dividends paid
–
–
–
–
(56.1)
(56.1)
1 January 2025
2.4
65.7
0.6
13.7
109.3
191.7
Profit for the year
–
–
–
–
105.7
105.7
Total comprehensive income
–
–
–
–
105.7
105.7
Share option expense
–
–
–
–
10.8
10.8
Tax relating to share options
–
–
–
–
3.5
3.5
Issue of shares at a premium
–
0.2
–
–
–
0.2
Purchase of shares in the
Company by the Trust
–
–
–
–
(40.7)
(40.7)
Exercise of share options
–
–
–
–
12.3
12.3
Dividends paid
–
–
–
–
(65.8)
(65.8)
31 December 2025
2.4
65.9
0.6
13.7
135.1
217.7
Morgan Sindall Group plc
Annual Report 2025
174
Material accounting policy information
for the year ended 31 December 2025
Basis of accounting
The separate financial statements of the Company are presented
as required by the Companies Act 2006 (‘the Act’). The Company
meets the definition of a qualifying entity under FRS 100 (Financial
Reporting Standard 100) issued by the Financial Reporting
Council. Accordingly, the Company has prepared its financial
statements in accordance with FRS 101 (Financial Reporting
Standard 101) ‘Reduced Disclosure Framework’ as issued by the
Financial Reporting Council.
The Company’s accounting policies are consistent with those
described in the consolidated accounts of Morgan Sindall Group
plc, except that, as permitted by FRS 101, the Company has taken
advantage of the disclosure exemptions available under that
standard in relation to share-based payments, financial
instruments, capital management, presentation of a cash flow
statement and related party transactions. Where required,
equivalent disclosures are given in the consolidated accounts.
In addition, disclosures in relation to retirement benefit schemes
(note 17), share capital (note 21) and dividends (note 8) have not
been repeated here as there are no differences to those provided
in the consolidated accounts. The accounting policy for the
Company as intermediate lessor is shown below.
When the Company is an intermediate lessor, it accounts for the
head lease and the sublease as two separate contracts. The
sublease is classified as a finance or operating lease by reference
to the right-of-use asset arising from the head lease. Whenever
the terms of the lease transfer substantially all the risks and
rewards of ownership to the lessee, the contract is classified as a
finance lease. All other leases are classified as operating leases.
In the current year two property leases, where the Company is an
intermediate lessor, were classified as a finance lease. Amounts
due from lessees under finance leases are recognised as
receivables at the amount of the Company’s net investment in
the leases.
The directors do not consider there to be any critical accounting
judgements or estimates in the Company’s financial statements.
These separate financial statements have been prepared on the
going concern basis as set out in the basis of preparation to the
consolidated financial statements on page 142.
The separate financial statements have been prepared under the
historical cost convention.
The separate financial statements are presented in pounds
sterling, which is the Company’s functional currency, and unless
otherwise stated, has been rounded to the nearest £0.1m.
The Company has taken advantage of section 408 of the Act and
consequently the statement of comprehensive income (including
the profit and loss account) of the Parent Company is not
presented as part of these accounts.
Investments represent equity holdings in subsidiaries and are
measured at cost less accumulated impairment.
The Morgan Sindall Employee Benefit Trust (‘the Trust’) is
considered an extension of the Company on the basis that the
Trust was specifically created with the sole purpose of fulfilling the
share plans of the Company and thus the assets and liabilities of
the Trust plans are included on the Company balance sheet and
shares held by the Trust in the Company are presented as a
deduction from equity.
175
Strategic report
Governance
Financial statements
176
Morgan Sindall Group plc
Annual Report 2025
Notes to the Company financial statements
1
Staff costs
2025 |
2024 |
|
£m |
£m |
|
Wages and salaries |
13.9 |
14.5 |
Social security costs |
3.0 |
2.7 |
Other pension costs |
0.4 |
0.7 |
Share options expense |
4.9 |
6.2 |
22.2 |
24.1 |
|
The average number of employees |
94 |
110 |
Social security costs include an expense of £1.0m (2024: expense of £0.8m) related to the Group share option scheme.
Subsidiary |
Subsidiary |
|
undertakings |
undertakings |
|
2025 |
2024 |
|
£m |
£m |
|
Cost |
||
1 January |
666.5 |
457.8 |
Additions |
– |
208.7 |
31 December |
666.5 |
666.5 |
Accumulated impairment |
||
1 January |
(68.7) |
(28.7) |
Impairment |
– |
(40.0) |
31 December |
(68.7) |
(68.7) |
Net book value at 31 December |
597.8 |
597.8 |
The Company tests investments for impairment where there are indications that investments might be impaired. In testing investments
for impairment, the recoverable amount of each investment has been estimated from value-in-use calculations. The key assumptions
for the value-in-use calculations are those regarding the forecast revenue and margin, discount rates and long-term growth rates by
market sector. Forecast revenue and margin are based on past performance, secured workload and workload likely to be achievable
in the short to medium term, given trends in the relevant market sector as well as macroeconomic factors.
Cash flow forecasts have been determined by using Board-approved budgets for the next three years. Cash flows beyond three years
have been extrapolated into perpetuity using an estimated nominal growth rate of 3.0% (2024: 3.4%). This growth rate does not exceed
the long-term average for the relevant markets.
Discount rates are pre-tax and reflect the current market assessment of the time value of money and the risks specific to the
investments. The risk-adjusted nominal rates for Construction, Infrastructure, Fit Out and Property Services are 13.8% (2024: 12.3%).
The risk-adjusted nominal rates used for the cash-generating units with goodwill balances are 15.1% (2024: 14.2%) for Partnership
Housing, 14.5% (2024: 14.2%) for Mixed Use Partnerships, 13.8% (2024: 12.3%) for Construction and 13.8% (2024: 12.3%) for
Infrastructure. The increased discount rates in 2025 are due to a higher risk-free rate and an increased market risk premium for the UK.
Strategic report
Governance
Financial statements
177
Notes to the Company financial statements
continued
2 Investments
continued
A list of all subsidiary, associated undertakings and significant holdings owned by the Group at 31 December 2025 is shown below:
Partnership Housing
Direct or | Group interest in | |
Name of undertaking | indirect holding | allotted capital (%) |
Lovell Partnerships Limited | Direct | 100 |
345 Park Place Residents Management Company Limited (a)(1) | Indirect | 100 |
Abbey Walk Management Company Limited (a)(1) | Indirect | 100 |
AH Burnholme Limited | Indirect | 100 |
All Saints Green Residents Management Company Limited (b)(1) | Indirect | 100 |
Anthem Lovell LLP (2) | Indirect | 50 |
Astley Place Residents Management Company Limited (a)(1) | Indirect | 100 |
Balderton Rise Residents Management Company Limited (a)(1) | Indirect | 100 |
Barnet Lovell Regeneration LLP (2) | Indirect | 100 |
B:Home Birmingham Limited | Indirect | 100 |
Bincombe Park Residents Management Company Limited (a)(1) | Indirect | 100 |
Blossomfield (Thorp Arch) Management Company Limited (a)(1) | Indirect | 100 |
Briarswood Residents Management Company Limited (a)(1) | Indirect | 100 |
Bryn Castell Residents Management Company Limited (a)(1) | Indirect | 100 |
Caldon Quay Residents Management Company Limited (a)(1) | Indirect | 100 |
Castle Green Residents Management Company Limited (a)(1) | Indirect | 100 |
Chalkdene Developments LLP (2) | Indirect | 50 |
Cherry Pie Meadow Residents Management Company Limited (a)(1) | Indirect | 100 |
Claymore Roads (Holdings) Limited (c) | Indirect | 50 |
Community Solutions for Education Limited | Indirect | 100 |
Community Solutions for Regeneration Limited | Indirect | 100 |
Community Solutions for Regeneration (Hertfordshire) Limited | Indirect | 100 |
Community Solutions (Hub West Scotland) Limited (d) | Indirect | 100 |
Community Solutions Living Limited | Indirect | 100 |
Community Solutions Management Services Limited | Indirect | 100 |
Community Solutions Management Services (Hub) Limited | Indirect | 100 |
Community Solutions Partnership Services Limited | Indirect | 100 |
Crown Meadows Residents Management Company Limited (a)(1) | Indirect | 100 |
Drummond Park (Ludgershall) Residents Management Company Limited (a)(1) | Indirect | 100 |
Durleigh View Residents Management Company Limited (a)(1)(7) | Indirect | 100 |
Eden Park (Bonscale Crescent) Residents Management Company Limited (a)(1) | Indirect | 100 |
Eden Valley Management Company Limited (a)(1) | Indirect | 100 |
Edmundham Developments LLP (2) | Indirect | 50 |
Edwards Birch (Morpeth) Residents Management Company Limited (a)(1) | Indirect | 100 |
Electric Quarter Residents Management Company Limited (a)(1) | Indirect | 100 |
Exford Drive Management Company Limited (a)(1) | Indirect | 100 |
Foxglove Meadows Residents Management Company Limited (a)(1) | Indirect | 100 |
Gallus Fields Residents Management Company Limited (a)(1) | Indirect | 100 |
Garrett Grove Residents Management Company Limited (a)(1) | Indirect | 100 |
Golwg Y Bryn Residents Management Company Limited (a)(1) | Indirect | 100 |
178
Morgan Sindall Group plc
Annual Report 2025
Notes to the Company financial statements
continued
2 Investments
continued
Direct or | Group interest in | |
Name of undertaking | indirect holding | allotted capital (%) |
Hamilton Wharf Residents Management Company Limited (a)(1) | Indirect | 100 |
Hamsard 3134 Limited | Indirect | 100 |
Hamsard 3135 Limited | Indirect | 100 |
Health Innovation Partners Limited | Indirect | 50 |
Heath Farm Residents Management Company Limited (a)(1) | Indirect | 100 |
Heathstock Rise Residents Management Company Limited (a)(1) | Indirect | 100 |
Keepers Gate (WSM) Residents Management Company Limited (a)(1) | Indirect | 100 |
Kensington Gardens Management Limited (a)(1) | Indirect | 100 |
Kings Reach (Snaith) Residents Management Company (a)(1) | Indirect | 100 |
Kinsted Developments LLP (2) | Indirect | 50 |
L&Q Lovell Trafford LLP (2) | Indirect | 50 |
Laurel Gate (Whitburn) Residents Management Company Limited (a)(1)(8) | Indirect | 100 |
Laurus Lovell Whalley LLP (2) | Indirect | 50 |
Lavender Chase and The Driftwoods Residents Management Company Limited (a)(1) | Indirect | 100 |
Laxton Close Management Company Limited (a)(1) | Indirect | 100 |
Littlehampton Management Company Limited (a)(1) | Indirect | 100 |
Lockside Residents Management Company Limited (a)(1) | Indirect | 100 |
Lovell Bow Limited | Indirect | 100 |
Lovell Director Limited | Indirect | 100 |
Lovell Flagship LLP (2) | Indirect | 50 |
Lovell Guf Limited | Indirect | 100 |
Lovell Later Living LLP (2) | Indirect | 100 |
Lovell Latimer LLP (2) | Indirect | 50 |
Lovell Plus Limited | Indirect | 100 |
Lovell Property Rental Limited | Indirect | 100 |
Lovell Together (Pendleton) LLP (2) | Indirect | 50 |
Lovell Together LLP (2) | Indirect | 50 |
Lovell/Abri Weymouth LLP (2) | Indirect | 50 |
Luker Place Management Company Limited (a)(1) | Indirect | 100 |
Lymington Mews Management Company Limited (a)(1) | Indirect | 100 |
Maryon Road Residents Management Company Limited (a)(1) | Indirect | 100 |
Meggeson Management Company Limited (a)(1) | Indirect | 100 |
Minshull Way Residents Management Company Limited (a)(1) | Indirect | 100 |
Morgan Sindall Consortium LLP (2) | Indirect | 100 |
Morgan Sindall Investments (Newport SDR) Limited | Indirect | 100 |
Morgan-Vinci Limited | Indirect | 50 |
Morris Walk North Management Company Limited (a)(1) | Indirect | 100 |
Morris Walk South Residents Management Company Limited (a)(1) | Indirect | 100 |
Mount View (Melton Mowbray) Residents Company Limited (a)(1) | Indirect | 100 |
Oaktree Grange Residents Management Company Limited (a)(1) | Indirect | 100 |
Oakwood Gardens (Burniston) Residents Management Company Limited (a)(1) | Indirect | 100 |
Park View (Holt) Residents Management Company Limited (a)(1) | Indirect | 100 |
Strategic report
Governance
Financial statements
179
Notes to the Company financial statements
continued
2 Investments
continued
Direct or | Group interest in | |
Name of undertaking | indirect holding | allotted capital (%) |
Pich Management Company Limited (a)(1) | Indirect | 100 |
Pipit Mews Management Company Limited (a)(1) | Indirect | 100 |
Pool House Wombourne Ltd | Indirect | 100 |
Principal Point Residents Management Company Limited (a)(1) | Indirect | 100 |
Queensbury Park Management Company Limited (a)(1) | Indirect | 100 |
RMC The Meadows, Clifton-upon-Teme Limited (a)(1) | Indirect | 100 |
Romsey Extra Care Limited | Indirect | 100 |
Ruby Brook Estate Management Company Limited (a)(1) | Indirect | 100 |
Ruby Brook Management Company Limited (a)(1) | Indirect | 100 |
Ruby Meadow Management Company Limited (a)(1) | Indirect | 100 |
Saddlers Grange (Howden) Management Company Limited (a)(1) | Indirect | 100 |
Saints Green (South Otterington) Residents Management Company Limited (a)(1) | Indirect | 100 |
Saints Quarter (Steelhouse Lane) Residents Management Company Limited (a)(1) | Indirect | 100 |
Saredon Gardens Residents Management Company Limited (a)(1) | Indirect | 100 |
Shawbrook Manor (Residents) Management Company Limited (a)(1) | Indirect | 100 |
Somerford Park Residents Management Company Limited (a)(1) | Indirect | 100 |
South Thamesmead LLP (e)(2) | Indirect | 50 |
St Mary’s View (Residents) Management Company Limited (a)(1) | Indirect | 100 |
Station House (Stourbridge) Management Company Limited (a)(1) | Indirect | 100 |
Stoke Development Limited | Indirect | 100 |
Tennyson Fields (Phase 2) Residents Management Company Limited (a)(1) | Indirect | 100 |
Tennyson Fields Management Company Limited (a)(1) | Indirect | 100 |
The Acorns (Walsham Le Willows) Residents Management Company Limited (a)(1) | Indirect | 100 |
The Compendium Group Limited | Indirect | 50 |
The East Avenue Residents Management Company Limited (a)(1) | Indirect | 100 |
The Junction Apartments Residents Management Company Limited (a)(1) | Indirect | 100 |
The Junction Residents Management Company Limited (a)(1) | Indirect | 100 |
The Laureates Residents Management Company Limited (a)(1) | Indirect | 100 |
The Mill (Site 1) Residents Management Company Limited (a)(1) | Indirect | 100 |
The Mill (Site 2) Residents Management Company Limited (a)(1) | Indirect | 100 |
The Paddocks (Beverley) Residents Management Company Limited (a)(1) | Indirect | 100 |
The Sycamores (Kirk Ella) Management Company Limited (a)(1) | Indirect | 100 |
The Way Beswick (Zone 1) Management Limited (a)(1) | Indirect | 100 |
The Way Beswick (Zone 2) Management Limited (a)(1) | Indirect | 100 |
The Way Beswick (Zone 3) Management Limited (a)(1) | Indirect | 100 |
The Way Beswick (Zone 4) Management Limited (a)(1) | Indirect | 100 |
The Way Beswick (Zone 5) Management Limited (a)(1) | Indirect | 100 |
The Way Beswick (Zone 6) Management Limited (a)(1) | Indirect | 100 |
The Way Beswick (Zone 7) Management Limited (a)(1) | Indirect | 100 |
The Woodlands (Hessle) Residents Management Company Limited (a)(1) | Indirect | 100 |
Tixall View Residents Management Company Limited (a)(1) | Indirect | 100 |
Towcester Regeneration Limited | Indirect | 100 |
180
Morgan Sindall Group plc
Annual Report 2025
Notes to the Company financial statements
continued
2 Investments
continued
Direct or | Group interest in | |
Name of undertaking | indirect holding | allotted capital (%) |
Trinity Walk Residents Management Company Limited (a)(1) | Indirect | 100 |
Victoria Court (Newport No 1) Residents Management Company Limited (f)(1) | Indirect | 50 |
Victoria Court (Newport No 2) Residents Management Company Limited (a)(1) | Indirect | 100 |
Waterside Quay Residents Management Company Limited (a)(1) | Indirect | 100 |
Wensum Grange Management Company Limited (a)(1) | Indirect | 100 |
Westcroft 12 Management Company Limited (a)(1) | Indirect | 100 |
Weston Woods Residents Management Company Limited (a)(1) | Indirect | 100 |
Weymouth Community Sports LLP (2) | Indirect | 100 |
Wild Walk Donnington Wood Residents Management Company Limited (a)(1) | Indirect | 100 |
William’s Park Residents Management Company Limited (a)(1) | Indirect | 100 |
Woodgate (West Sussex) Residents Management Company Limited (a)(1) | Indirect | 100 |
Woodlark Chase (Warren Drive) Residents Management Company Limited (a)(1) | Indirect | 100 |
Mixed Use Partnerships
Direct or | Group interest in | |
Name of undertaking | indirect holding | allotted capital (%) |
Muse Places Limited | Direct | 100 |
Alexandria Business Park Management Company Limited (g)(3) | Indirect | 100 |
Ashton Moss Developments Limited | Indirect | 50 |
Aykley Heads Development LLP (2) | Indirect | 50 |
Basford East Management Company Limited | Indirect | 100 |
Brentwood Development Partnership LLP (2) | Indirect | 50 |
Bromley Park (Holdings) Limited | Indirect | 50 |
Chatham Place (Building 1) Limited | Indirect | 100 |
Chatham Place Building 1 (Commercial) Limited | Indirect | 100 |
Chatham Square Limited | Indirect | 100 |
Cheadle Royal Management Company Limited (g)(4) | Indirect | 27.9 |
Community Solutions for Regeneration (Bournemouth) Limited | Indirect | 100 |
Community Solutions for Regeneration (Brentwood) Limited | Indirect | 100 |
Community Solutions for Regeneration (Slough) Limited | Indirect | 100 |
ECF (General Partner) Limited (h) | Indirect | 33.3 |
English Cities Fund (h)(5) | Indirect | 24 |
Eurocentral Partnership Limited | Indirect | 99.2 |
EPL Developer (Plot B West) Limited | Indirect | 99.2 |
Habiko LLP (2) | Indirect | 33.3 |
Harrier Park Management Company Limited (1) | Indirect | 100 |
ICIAN Developments Limited | Indirect | 100 |
Intercity Developments Limited | Indirect | 50 |
Lewisham Gateway Developments (Holdings) Limited | Indirect | 100 |
Lewisham Gateway Developments Limited | Indirect | 100 |
Lingley Mere Business Park Development Company Limited (i) | Indirect | 50 |
Logic Leeds Management Company Limited (j)(1) | Indirect | 50 |
Muse Aberdeen Limited | Indirect | 100 |
Strategic report
Governance
Financial statements
181
Notes to the Company financial statements
continued
2 Investments
continued
Direct or | Group interest in | |
Name of undertaking | indirect holding | allotted capital (%) |
Muse (Brixton) Limited | Indirect | 100 |
Muse (ECF) Partner Limited | Indirect | 100 |
Muse (Warp 4) Partner Limited | Indirect | 100 |
Muse Brixton (Phase 2) Limited | Indirect | 100 |
Muse Chester Limited | Indirect | 100 |
Muse Developments (Northwich) Limited | Indirect | 100 |
Muse Properties Limited | Indirect | 100 |
North Shore Development Partnership Limited | Indirect | 100 |
Northshore Management Company Limited (1) | Indirect | 50 |
Olive Morris House (Brixton) Management Company Limited (k)(1) | Indirect | 100 |
Rail Link Europe Limited | Indirect | 100 |
Slough Urban Renewal LLP (2) | Indirect | 50 |
Sovereign Leeds Limited | Indirect | 100 |
St Andrews Brae Developments Limited | Indirect | 50 |
The Bournemouth Development Company LLP (2) | Indirect | 50 |
The Prestwich Regeneration LLP (2) | Indirect | 50 |
Wapping Wharf (Alpha) LLP (2) | Indirect | 50 |
Wapping Wharf (Beta) LLP (2) | Indirect | 40 |
Warp 4 General Partner Limited | Indirect | 100 |
Warp 4 General Partner Nominees Limited | Indirect | 100 |
Warp 4 Limited Partnership (5) | Indirect | 100 |
Waterside Places (General Partner) Limited (l) | Indirect | 50 |
Waterside Places Limited Partnership (l) | Indirect | 50 |
Wirral Growth Company LLP (m)(2) | Indirect | 50 |
Wythenshawe Civic Regeneration LLP (2) | Indirect | 20 |
Fit Out
Direct or | Group interest in | |
Name of undertaking | indirect holding | allotted capital (%) |
Overbury plc | Direct | 100 |
Morgan Lovell plc | Direct | 100 |
Construction & Infrastructure
Direct or | Group interest in | |
Name of undertaking | indirect holding | allotted capital (%) |
Morgan Sindall Construction & Infrastructure Ltd | Indirect | 100 |
Bluestone Limited | Indirect | 100 |
Magnor Plant Hire Limited | Direct | 100 |
Morgan Sindall All Together Cumbria CIC (6) | Indirect | 100 |
Morgan Sindall Engineering Solutions Limited | Indirect | 100 |
Morgan Sindall Holdings Limited | Direct | 100 |
Morgan Utilities Limited | Indirect | 100 |
MS (MEST) Limited | Indirect | 100 |
Newman Insurance Company Limited *(n) | Indirect | 100 |
182
Morgan Sindall Group plc
Annual Report 2025
Notes to the Company financial statements
continued
2 Investments
continued
Direct or | Group interest in | |
Name of undertaking | indirect holding | allotted capital (%) |
Baker Hicks Limited | Direct | 100 |
Baker Hicks Europe Holdings Limited | Indirect | 100 |
BakerHicks AG *(o) | Indirect | 100 |
BakerHicks ApS *(p) | Indirect | 100 |
BakerHicks GmbH *(q) | Indirect | 100 |
BakerHicks GmbH *(r) | Indirect | 100 |
BakerHicks SA *(s) | Indirect | 100 |
Property Services
Direct or | Group interest in | |
Name of undertaking | indirect holding | allotted capital (%) |
Morgan Sindall Property Services Limited | Direct | 100 |
Golden i Limited | Indirect | 100 |
Lovell Powerminster Limited | Indirect | 100 |
Manchester Energy Company Limited | Indirect | 100 |
Morgan Sindall Group
Direct or | Group interest in | |
Name of undertaking | indirect holding | allotted capital (%) |
Barnes & Elliott Limited | Direct | 100 |
Bluebell Printing Limited | Direct | 100 |
CarboniCa Licensing Limited (t) | Direct | 50 |
Hinkins & Frewin Limited | Direct | 100 |
Lovell Partnerships (Northern) Limited | Direct | 100 |
Lovell Partnerships (Southern) Limited | Direct | 100 |
Morgan Est (Scotland) Limited (d) | Direct | 100 |
Morgan Lovell London Limited | Direct | 100 |
Morgan Sindall Investments Limited | Direct | 100 |
Morgan Sindall Limited | Direct | 100 |
Morgan Sindall Trustee Company Limited | Direct | 100 |
Morgan Utilities Group Limited | Direct | 100 |
Muse Developments Limited | Direct | 100 |
Roberts Construction Limited | Direct | 100 |
Sindall Eastern Limited | Indirect | 100 |
Snape Design & Build Limited | Indirect | 100 |
T.J. Braybon & Son Limited | Direct | 100 |
The Snape Group Limited | Direct | 100 |
Underground Professional Services Limited | Direct | 100 |
Wheatley Construction Limited | Direct | 100 |
*
With the exception of Newman Insurance Company Limited, registered and operating in Guernsey, BakerHicks AG, registered and operating in Switzerland,
BakerHicks ApS, registered and operating in Denmark, BakerHicks GmbH, registered and operating in Austria and Germany, and BakerHicks SA, registered and
operating in Denmark, all undertakings are registered in England and Wales or Scotland and the principal place of business is the UK .
Unless otherwise stated the registered office address for each of the above is Kent House, 14–17 Market Place, London, W1W 8AJ.
Strategic report
Governance
Financial statements
183
Notes to the Company financial statements
continued
2 Investments
continued
Unless otherwise stated, the Group’s interest is in the ordinary shares issued
(or the equivalent of ordinary shares issued in the relevant country of issue).
Classification key:
(1)
Limited by guarantee
(2)
Limited liability partnership
(3)
Holding special shares
(4)
Holding ordinary and special shares
(5)
Limited partnership
(6)
Community Interest Company
(7)
Incorporated on 15 January 2026; wholly owned by Lovell Director Limited
(8)
Incorporated on 28 January 2026; wholly owned by Lovell Director Limited
The proportion of ownership interest is the same as the proportion of voting
power held, except English Cities Fund, details of which are shown in note 12
of the consolidated financial statements.
Registered office key:
(a)
One Eleven, Edmund Street, Birmingham, West Midlands, B3 2HJ
(b)
1 Bow Churchyard, London, EC4M 9DQ
(c)
8th Floor, 6 Kean Street, London, WC2B 4AS
(d)
c/o Anderson Strathern LLP, 58 Morrison St, Edinburgh, EH3 8BP
(e)
45 Westminster Bridge Road, London, SE1 7JB
(f)
7 Neptune Court, Vanguard Way, Cardiff, CF24 5PJ
(g)
Ground Solutions UK Ltd, A5 Optimum Business Park, Optimum Road,
Swadlincote, Derbyshire, DE11 0WT
(h)
One Coleman Street, London, EC2R 5AA
(i)
Haweswater House, Lingley Mere Business Park, Lingley Green Avenue,
Great Sankey, Warrington, WA5 3LP
(j)
One St Peter’s Square, Manchester, M2 3DE
(k)
Fisher House, 84 Fisherton Street, Salisbury, SP2 7QY
(l)
National Waterways Museum, South Pier Road, Ellesmere Port, Cheshire,
CH65 4FW
(m) c/o Head of Legal, Wirral Borough Council, Town Hall, Brighton Street,
Wallasey, Wirral, CH44 8ED
(n)
Willis Management (Guernsey) Limited, Suite 1 North, First Floor,
Albert House, South Esplanade, St Peter Port, Guernsey, GY1 1AJ
(o)
Badenstrasse 3, 4057, Basel, Switzerland
(p)
Borupvang 3, 4., 2750 Ballerup, Denmark
(q)
Albert-Nestler-Strasse 26, 76131 Karlsruhe, Germany
(r)
Am Euro Platz 3, 1120 Wien, Austria
(s)
Boulevard Louis Schmidt 29 15, 1040 Etterbeek, Belgium
(t)
3 Provisions
Self-insurance |
Other |
Total |
|
£m |
£m |
£m |
|
1 January 2024 |
9.3 |
1.9 |
11.2 |
Utilised |
(1.0) |
(1.7) |
(2.7) |
Additions |
1.5 |
– |
(1.1) |
Released |
(1.1) |
– |
(1.1) |
1 January 2025 |
8.7 |
0.2 |
8.9 |
Utilised |
(0.7) |
– |
(0.7) |
Additions |
1.5 |
– |
1.5 |
Released |
(0.2) |
– |
(0.2) |
31 December 2025 |
9.3 |
0.2 |
9.5 |
Current |
1.0 |
– |
1.0 |
Non-current |
8.3 |
0.2 |
8.5 |
31 December 2025 |
9.3 |
0.2 |
9.5 |
Self-insurance provisions
Self-insurance provisions comprise the Group’s self-insurance of certain risks. The Group makes provisions in respect of specific types
of claims incurred but not reported (IBNR). The valuation of IBNR considers past claims experience and the risk profile of the Group.
These are reviewed periodically and are intended to provide a best estimate of the most likely or expected outcome.
Other provisions
Other provisions include property dilapidations and other personnel-related provisions.
The majority of the provisions are expected to be utilised within 10 years.
Shareholder information
Analysis of share register
As at 31 December 2025, the Company had 1,649 registered
holders of ordinary shares and their shareholdings are analysed
in the table below. It should be noted that a number of our
private investors hold their shares through nominee companies.
Holding of shares
Number of
shareholders
% of total
shareholders
Number of
shares
% of issued
capital
Up to 1,000
944
57.25
367,246
0.76
1,001 to 5,000
406
24.63
790,836
1.65
5,001 to 100,000
210
12.73
5,621,623
11.71
100,001 to
1,000,000
81
4.91
22,145,864
46.11
Over 1,000,000
8
0.48
19,097,393
39.77
Totals
1,649
100.00
48,022,962
100.00
Morgan Sindall Group plc
Registered office
Registered in England and Wales No: 00521970
Email:
cosec@morgansindall.com
Telephone:
020 7307 9200
A wide range of Company information is available on our website
at morgansindall.com including:
n
financial information (annual reports and half-year results);
n
financial news and events;
n
share price information; and
n
information on how to manage your shares, including
share dealing.
Shareholder documents are made available via our website,
unless a shareholder has requested hard copies from
the registrar.
Company registrar
All administrative enquiries relating to shareholdings should be
directed to Computershare Investor Services PLC:
Address:
The Pavilions, Bridgwater Road, Bristol, BS99 6ZZ
Telephone:
+44 (0) 370 707 1695. Lines open 8.30am to 5.30pm
(UK time), Monday to Friday (excluding UK public holidays)
Email:
webcorres@computershare.co.uk
Website:
computershare.com
Shareholders can also manage their shareholding online at
investorcentre.co.uk where the following services are available:
n
elect for electronic communications;
n
change of address;
n
view share balance information; and
n
view dividend payment and tax information.
To register for the Investor Centre, shareholders will need their
shareholder reference number, which can be found on either
their share certificate or dividend confirmations.
Financial calendar 2026
AGM and trading update
7 May 2026
Ex-dividend date – final dividend
14 May 2026
Record date to be eligible for final dividend
15 May 2026
Payment date for final dividend
4 June 2026
Half-year results announcement
July 2026
Interim dividend payable
October 2026
Trading update
November 2026
Dividend payment by BACS
The Company does not issue dividend payments by cheque.
Shareholders should complete a bank mandate form available
from Computershare on request or at investorcentre.co.uk by
selecting ‘Company info’, Morgan Sindall Group plc, ‘Printable
Forms’, ‘Amendments’ and ‘Dividend Mandate Form’.
Shareholders registered with Investor Centre can add or change
a mandate by selecting ‘My Profile’ and ‘Banking Details’.
Forward-looking statements
This document and written information released, or oral
statements made, to the public in the future by or on behalf of the
Group may include certain forward-looking statements, beliefs or
opinions that are based on current expectations or beliefs, as well
as assumptions about future events. These forward-looking
statements give the Group’s current expectations or forecasts of
future events. Forward-looking statements can be identified by
the fact that they do not relate strictly to historical or current facts.
Without limitation, forward-looking statements often use words
such as anticipate, target, expect, estimate, intend, plan, goal,
believe, will, may, should, would, could or other words of similar
meaning. No assurance can be given that any particular
expectation will be met and shareholders are cautioned not
to place undue reliance on any such statements because, by their
very nature, they are subject to risks and uncertainties and can be
affected by other factors that could cause actual results, and the
Group’s plans and objectives, to differ materially from those
expressed or implied in the forward-looking statements.
All forward-looking statements contained in this document
are expressly qualified in their entirety by the cautionary
statements contained or referred to in this section.
There are several factors that could cause actual results to differ
materially from those expressed or implied in forward-looking
statements. Among the factors that could cause actual results to
differ materially from those described in forward-looking
statements are changes in the global, political, economic,
business, competitive, market and regulatory forces, fluctuations
in exchange and interest rates, changes in tax rates and future
business combinations or dispositions.
Forward-looking statements speak only as of the date they are
made. Other than in accordance with its legal or regulatory
obligations (including under the UK Listing Rules and the
Disclosure and Transparency Rules of the Financial Conduct
Authority), the Group, its directors, officers, employees, advisers
and associates disclaim any intention or obligation to revise or
update any forward-looking or other statements contained within
this document, regardless of whether those statements are
affected as a result of new information, future events or
otherwise, except as required by applicable law.
Morgan Sindall Group plc
Annual Report 2025
184
Appendix – Carbon emissions background and terminology
Net zero
The Paris Agreement (COP21, December 2015) saw c.200
countries pledge to pursue efforts to limit global temperature
rises to 1.5°C and to keep them well below 2°C above
pre-industrial levels. It also committed pledging countries
to achieving net zero by 2050.
Science-based targets
The Science Based Targets initiative (SBTi) is the body responsible
for approving and assuring science-based targets. The SBTi
Corporate Net-Zero Standard is the world’s only framework for
corporate net zero target-setting in line with climate science. It
provides guidance, criteria and recommendations for companies
to set net zero commitments consistent with limiting global
temperature rise to 1.5
o
C, as represented by the SBTi’s 2050 goal.
Our SBTi-aligned, science-based targets go beyond a 1.5°C
trajectory as we are targeting net zero by 2045. We are committed
to reducing our Scope 1, 2 and 3 emissions by 90% by 2045, with
the remaining 10% of emissions offset by high-quality carbon credits
in accordance with SBTi methodology (see pages 40 and 42).
Scope 1, 2 and 3 emissions
Our GHG emissions are reported for the financial year (1 January to
31 December). Our methodology is aligned to the GHG Protocol,
where we monitor and report against the following emissions:
Scope 1
n
other fuels – emissions via air conditioning (gas recharge and
gas type) and generation of electricity (fuel consumption/gas oil)
n
company cars – petrol purchased on fuel cards (litres)
n
transport fuels (litres)
n
natural gas (kWh)
Scope 2
n
electricity purchased (kWh)
n
steam and heat purchased from off site (kWh)
n
electricity consumed in landlord-controlled offices
(sq m of lease floor area)
Our Scope 2 emissions are calculated using location-based
methodology: UK emissions factors published by the Department
for Energy Security and Net Zero (DESNZ). A location-based
method assigns a local grid average emissions factor to all off-site
electricity usage. As the generation of electricity shifts away from
fossil fuels, emission factors evolve. We therefore update our
factors annually to reflect any changes.
Scope 3
Our Scope 3 emissions cover all relevant categories: 1 (purchased
goods and services); 3 (fuel and energy-related activities);
4 (upstream transportation and distribution); 5 (waste generated
in operations); 6 (business travel); 7 (employee commuting);
8 (upstream leased assets); 10 (processing of sold products);
11 (use of sold products); 12 (end-of-life treatment of sold
products); and 15 (investments). Categories 2, 9, 13 and 14
are insignificant and have been classified as non-relevant to
the Group.
Specifically, the scope of categories included in our 2030 and
2045 targets consist of:
n
carbon embodied in materials (emitted during raw extraction,
manufacture, transport to site, and disposal or recycling);
n
carbon emitted during construction (via energy use and waste);
n
estimated carbon emitted from operating the buildings for 60
years following handover to the client, based on how our clients
tell us they will use the buildings;
n
carbon emitted when a sold product undergoes further
processing or transformation by a third party before it reaches
the end consumer;
n
upstream electricity generation, transmission and distribution
losses;
n
employees with travel allowances – petrol purchased via
expense claims and mileage claims (miles);
n
transport – public transport (passenger miles), supplier
freight (miles);
n
waste – tonnes of waste produced that is not recycled or used
and goes to landfill; and
n
water and wastewater – metres cubed of potable water
consumption and wastewater generated.
We work with our supply chain and clients to gather and enhance
the integrity of this data. More information on our Scope 3
emissions, including calculations and categories, can be found in
our CDP Climate submission available on our website.
Our GHG emissions baseline year
Our Scope 1 and 2 emissions reduction target uses a 2019
baseline, while our Scope 3 emissions use a 2020 baseline. In
2025, we updated our Scope 3 emissions baseline to ensure
greater accuracy across all relevant categories. By moving from
revenue-based estimates to spend and activity-based data where
available, we identified a higher use of carbon-intensive materials
than previously recorded. As a result, our 2020 baseline has been
revised from 1,300,271 to 1,603,880 tonnes CO
2
e. We have also
restated our annual performance figures to reflect these
methodological improvements and alignment to appropriate UK
reporting factors. See page 62 for more information on our
performance and approach.
Our 2025 responsible business data sheet available on our
website includes a breakdown of our historical emissions data.
Offsets
Offsets are a mechanism whereby companies can effectively buy
or generate ‘credits’ to reduce the balance of their carbon
emissions. An offset is generally an investment in a recognised
emission-reduction activity or process that reduces or removes
carbon dioxide and other GHGs from the atmosphere.
To meet our 2045 net zero target and reduce our Scope 1, 2 and
3 emissions by 90%, we will neutralise the remaining 10% of
emissions using high-quality offsets derived from natural capital
projects (see page 42).
185
Strategic report
Governance
Financial statements
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Morgan Sindall Group plc
Kent House
14–17 Market Place
London, W1W 8AJ
Company number: 00521970
@morgansindall
morgansindall.com