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Morgan Sindall plc
77 Newman Street, London W1P 3LA Tel: 020 7307 9200 Fax: 020 7307 9201
Visit our website at www.morgansindall.co.uk
Annual Report
& Accounts
1999
FINAL FRONT 12/6/00 2:58 PM Page 2
Morgan Sindall is a specialist construction group operating
in the UK. It has four main activities - Fit Out, Regional
Construction, Affordable Housing and Property Investment.
These activities are carried out by eleven individually
branded companies. The management of each of these
companies has a great deal of autonomy but they must
share our values and believe in aiming high. Our common
goal is that the last job should be the best we’ve ever done
and the next one even better.
Our Group’s record shows the organic growth achieved by
our policy of empowered management which has been added
to by careful acquisition as opportunities arise. Taken together
with the active management of our asset base, these are the
keys to achieving our commitment to long term enhancement
of shareholder value.
FINAL FRONT 12/6/00 2:58 PM Page 3
Contents
Financial Highlights
Chairman’s Statement
Chief Executive’s Review
Fit Out
Regional Construction
Affordable Housing
Property
Group Overview
Report of the Directors
Corporate Governance
Directors’ Responsibilities
Auditors’ Report
Group Profit and Loss Account
Group Balance Sheet
Company Balance Sheet
Group Cash Flow Statement
1
2
4
6
8
10
12
14
16
21
24
24
25
26
27
28
Combined Statement of
Movements in Reserves and
29
Shareholders’ Funds
30
Other Primary Statements
31
Principal Accounting Policies
Notes to the Accounts
33
Notice of Annual General Meeting 45
48
Corporate Directory
Turnover
1999
1998
£521m
£425m
%
+23
Profit on ongoing activities before taxation
£13.854m £10.018m
+38
Profit on ordinary activities before taxation
£10.075m £9.760m
Earnings per ordinary share (EPS)
22.17p
22.15p
EPS excluding exceptional loss
28.30p
22.15p
Dividends per ordinary share
8.50p
6.50p
Net assets
Net cash funds
£37.9m
£23.2m
£22.0m
£28.4m
+3
–
+28
+31
+63
-23
Financial Highlights
Turnover £m
99
98
97
96
95
520.6
424.6
331.2
283.1
175.2
Profit before tax £m
10.1
9.8
99
98
97
96
95
7.3
5.2
3.0
FINAL FRONT 12/6/00 2:58 PM Page 4
2 Chairman’s Statement
‘Whilst the size of the
Group has increased
dramatically, the sense
of being different and
the determination to
succeed are as strong
as ever.’
Growth and diversification
FINAL FRONT 12/6/00 2:58 PM Page 5
1999 was another active and successful year for Morgan Sindall.
Strategically our most significant development was the acquisition of
Lovell Partnerships. This established a third core business activity for the
Group in Affordable Housing, a significant and fast growing sector.
Our Regional Construction business has made significant progress and
our Fit Out business has had another record year.
Turnover in 1999 reached £521m, an increase of
I think that it is now appropriate for me to step
23% and profits before tax on ongoing businesses
down as Chairman at this year’s AGM to allow John
was £13.9m, an increase of 38%. Despite the loss
Morgan to take on the role as Executive Chairman.
arising from a discontinued business of £3.8m,
At the same time Andy Stoddart will move from
profit before tax was a record £10.1m. The Board
Operations Director to Managing Director. I will
is pleased to recommend a final dividend of 6.00p
continue as a Non-Executive Director.
making 8.50p for the year (1998: 6.50p).
Whilst the size of the Group has increased
It is ten years since I joined the Board of the
dramatically, the sense of being different and the
privately owned Morgan Lovell, and five years
determination to succeed are still as strong as ever,
since that company went public by the reverse
and I am sure this momentum will carry the Group
takeover that created Morgan Sindall. I am
to further successes in the future.
delighted to have been part of the team and
proud to see the Group become one of the UK’s
top construction companies.
Sir Derek Hornby
Chairman
Dividend
99
98
97
96
95
8.50p
6.50p
5.25p
4.20p
2.70p
Earnings per share
99
98
97
96
95
22.17p
22.15p
16.38p
13.13p
8.03p
FINAL FRONT 12/6/00 2:58 PM Page 6
4 Chief Executive’s Review
‘Our vision is a
balanced group of
branded companies
with above average
growth prospects...’
Realising our goals
FINAL FRONT 12/6/00 2:58 PM Page 7
1999 has been a significant year for the Group, not simply because
of record turnover and profit, but I believe the diversification into
Affordable Housing by the purchase of Lovell Partnerships is a clear
demonstration of the way we see Morgan Sindall continuing to develop.
Our Fit Out business, started 20 years ago, has
provided a solid base for the Group. The formation
of our network of Regional Construction companies
began in 1994 and was completed nationally in
1998. They are becoming stronger each year and
Prospects
still have huge potential for growth. The next few
years will see our hard work and investment in this
business rewarded. The purchase in June 1999 of
Lovell Partnerships introduces another core area of
activity for us to develop whilst our other two
businesses satisfy the demanding overall growth in
returns we have set ourselves. Our vision is a
balanced group of branded companies with above
average growth prospects.
The market remains strong and our Fit Out and
Regional Construction companies entered 2000
with order books higher than last year, both in
absolute terms and budget cover. Lovell Partnerships
has strengthened its senior management team and
is benefiting from the Group’s financial backing.
I remain confident of the long term growth
potential of this business. Overall I believe the
Group is in a great position to move forward.
The board changes detailed in the Chairman’s
Statement reflect the need to ensure separate focus
on strategic and operational issues as the Group
develops. My enthusiasm and commitment to
making Morgan Sindall the most exciting company
in our sector remains undiminished.
Year End Market Capitalisation £m
99
98
114
69
Year End Share Price £’s
99
98
3.06
2.05
FINAL FRONT 12/6/00 2:58 PM Page 8
6 Fit Out
Our Fit Out business has had another
Overbury work for clients who purchase
excellent year. Strong market recognition
fit out work in the traditional way through
allows us selectivity in the open market
professional teams. Both companies operate
tender work, while repeat business from
in London, the Home Counties and the
satisfied clients showed the benefit to both
Thames Valley undertaking contracts of
parties of the efficiencies derived from
up to £15m in value.
established working relationships.
Current order levels are satisfactory,
Consequently, turnover of £174m produced
albeit that the fast track nature of fit out
operating profits of £7.6m, 20% ahead of
does not provide long order cover. Over the
last year, which itself was a record year.
years brand loyalty has enabled us to be
Morgan Lovell and Overbury have each
resilient to construction peaks and troughs,
developed a strong client base and both
but as many companies who have tried
are aware of the need to be ahead of their
to enter the market have found it is
competitors in this fast moving sector of
a demanding and specialist segment.
the industry.
Both Morgan Lovell and Overbury
Morgan Lovell work directly for end
accept that success is only sustained by
user clients and offer a complete workplace
delighting clients and tackling each new
solution including consultancy, design,
project accordingly.
construction and ongoing support.
Creating value with clients
FINAL FRONT 12/6/00 2:58 PM Page 9
“We believe
to be successful“
in training our people
People have a lot of freedom that they
wouldn’t experience elsewhere,
never mind in the construction industry
“
“
Fit Out
Turnover £’000s
99
98
174,146
162,967
Operating Profit £’000s
99
98
7,564
6,306
FINAL FRONT 12/6/00 2:58 PM Page 10
8 Regional Construction
The second half results confirmed the
This organic growth supports our belief that
continuing trend in our Regional
clients are pleased to entrust their work and
Construction business of improving
build relationships with companies that offer
performance. Record annual turnover of
a clear regional presence combined with the
£275m and operating profits of £3.1m
technical and financial strength of a large
demonstrate the progress being made. All
group. Our view remains unchanged
seven operating Brands are now trading
that the turnover of this business in its
profitably and have good order books. We
present format can double within three or
believe this year will prove this business as
four years.
a major contributor to group profits.
On 3 November 1999 we announced
It is five years since Morgan Sindall
the closure of our tendered term maintenance
commenced development of a Regional
business for housing associations. Although
Construction network, with turnover in the
the demand was evident we were unable
first year being less than £40m. Whilst we
to find satisfactory bases for trading. This
have made four further acquisitions during
business has adversely affected 1999 results
this time, it has been the development of
by £3.8m. We will continue to monitor this
all these companies that has been the main
market through our relationship with
reason for the turnover increase.
housing associations and Lovell Partnerships.
Building relationships
FINAL FRONT 12/6/00 2:58 PM Page 11
...everybody is constantly saying
what can we do to make it better,
what can we do next?
“
“
the freedom to question
“our parent company provides
the tradition within this industry “
Regional Construction
Turnover £’000s
99
98
274,516
251,365
Ongoing Operating Profit £’000s
99
98
3,097
2,360
FINAL FRONT 12/6/00 2:58 PM Page 12
10 Affordable Housing
Lovell Partnerships made a positive
With the right structure and resource we
contribution in its first six months within
are looking to move the business forward
the Group. Turnover of £65m and operating
both in margin and volume terms. Key
profits of £1.1m are in line with our
to meeting this objective is our ability
expectations at acquisition and similarly
to increase the mix of open market
our view for 2000 remains unchanged. The
sale units to those built for housing
inherent project time cycle of this sector,
associations. This is particularly relevant
involving lengthy pre-contract negotiations
in mixed tenure schemes, for which
means that the results of our increased
Lovell Partnerships has such a strong
investment in this business will take time
track record.
to materialise.
The demand for affordable housing
Since acquisition we have undertaken
is huge and there are some interesting
a thorough review and strengthening of
opportunities for large urban regeneration
management at both the head and regional
schemes where Lovell Partnerships is clearly
offices. This will ensure that the structure
seen as one of the major brands. We are
is capable of responding to the increased
confident of the ability to develop this
challenge that results from our commitment
business to be a significant part of the
to build this business.
Morgan Sindall Group.
A major brand
FINAL FRONT 12/6/00 2:58 PM Page 13
work because there is a high level of
trust between us and our clients
“Our partnering arrangements
“
Affordable Housing
Turnover £’000s
99
(6 months)
65,065
Operating Profit £’000s
99 (6 months)
1,057
FINAL FRONT 12/6/00 2:58 PM Page 14
12 Property
Before expansion into Affordable Housing,
In the coming year the construction of the
the Group’s trading operations were all
Wigmore Street offices should be complete,
cash generative and our policy had been
and at present the rental market is strong
to maintain reserves in cash and property
and at higher levels than when we
investment. Whilst Lovell Partnerships will
purchased the building. Out of London,
require working capital investment, the
the strong market has enabled us to move
continued strengthening of the balance
ahead with a partnering agreement on our
sheet from the growth in overall activity
property in Chatham, and we are noting
will result in the Group having ongoing
interest in some of the undeveloped sectors
funds to invest. Our approach will continue
of our industrial estate in Cambridge.
to be proactive but conservative.
Primary Medical Property, our joint
As highlighted in the interim report,
venture business which develops and retains
the current year’s Property profits are mainly
primary medical buildings, has had another
attributable to the sale of the office building
successful year adding a further seven
in Jockey’s Fields.
properties to its portfolio. Whilst it is still
premature to expect capital growth from
rent reviews, it is clear that yields are already
improving as appreciation of this type of
investment broadens amongst private and
institutional investors.
Increasing returns
FINAL FRONT 12/6/00 2:58 PM Page 15
“
Our approach to property will
continue to be proactive
but conservative
“
Property Profits and Interest £’000s
99
98
3,661
2,794
FINAL FRONT 12/6/00 2:58 PM Page 16
14 Group Overview
Committed to brands
A top 20 UK
construction company
2,500 employees
50 offices throughout
England and Wales
FINAL FRONT 12/6/00 2:58 PM Page 17
Regional construction
Regional Construction
Jersey & Guernsey
Barnes & Elliott
Hinkins & Frewin
Roberts
Sindall
Snape
Stansell
Wheatley
Fit Out
Property
Morgan Lovell
The Workplace Specialist
London
Milton Keynes
Redhill
Wokingham
Overbury
The Fitting Out &
Refurbishment Specialist
Bracknell
London
Morgan Sindall
London
Cambridge
Primary Medical Property
London
Ipswich
Leeds
Affordable Housing
Lovell Partnerships
FINAL FRONT 12/6/00 2:58 PM Page 18
16 Report of the Directors
Jack Lovell (44)
Client Director
John Bishop (54)
Finance Director
John Morgan (44)
Chief Executive
Andy Stoddart (53)
Operations Director
Bernard Asher (63)
Senior Non-executive
Geraldine Gallacher (40)
Non-executive
Sir Derek Hornby (70)
Chairman
Report of the Directors
Sir Derek Hornby
Chairman of IRG plc and a non-executive
director of a number of other companies
and charitable trusts. Formerly Chairman of
London & Continental Railways, Rank Xerox
(UK) Limited and the British Overseas
Trade Board.
Bernard Asher
Chairman of Lonrho Africa plc. Vice-Chairman
of the Court of Governors of The London
School of Economics, Non-Executive Director
of Legal & General Group plc, Remy Cointreau
and Randgold Resources. Formerly Chairman
of HSBC Investment Bank plc and a director
of HSBC Plc and Midland Bank Plc.
Geraldine Gallacher
Founder and Managing Director of The
Executive Coaching Consultancy having
formerly been head of Group Management
Development for Burton Group plc.
FINAL FRONT 12/6/00 2:58 PM Page 19
Report of the Directors 17
The directors have pleasure in submitting their report to the members together with the audited
accounts for the year ended 31 December 1999.
Principal activities
Morgan Sindall is a specialist construction group with
activities including fit out, regional construction, affordable
housing and property investment. The principal subsidiary
companies are shown on page 44. All activities are carried
out in the United Kingdom and the Channel Islands.
Results and dividends
Mr J J C Lovell and Ms G Gallacher are the directors to retire
by rotation, and being eligible offer themselves for re-election.
Biographical details of Ms G Gallacher are shown on page
16. Mr J J C Lovell (aged 44) was a co-founder with Mr J
C Morgan of Morgan Lovell in 1977. He was managing
director of Morgan Lovell and on the reverse take-over
which formed the enlarged Group in October 1994
became a director of Morgan Sindall plc. He is currently
Client Director, with particular responsibilities for client
The Group made a profit for the year, after taxation,
relationships and marketing strategy.
of £8.165 million.
The final dividend for the year recommended by the
Non-executive directors
directors is 6.00p per ordinary share, which together
A short biographical note on each independent
with the interim dividend of 2.50p per ordinary share gives
non-executive director is shown on page 16. The role and
a total dividend for the year of 8.50p per ordinary share.
responsibilities of the non-executive directors have been
Preference dividends paid or accrued amounted to
formally established by the Board. Further information on
£0.275 million.
these matters may be found under corporate governance
Review of business and future developments
A general review of the Group’s activities, development and
Corporate governance
on pages 21 and 22.
future prospects are included in the Chairman’s Statement
The statement on corporate governance appears on pages
on pages 2 and 3 and the Chief Executive’s Review on pages
21 to 23.
4 to 13.
Fixed assets
Substantial shareholdings
Excluding directors, on 11 February 2000, the following
External professional valuations of the Group’s investment
shareholdings representing 3% or more of the issued
properties were carried out as at 31 December 1999. The
ordinary share capital have been notified to the Company:
Hermes Asset
Management Limited
Jupiter Asset
Management Limited
Number
of Shares
Percentage
Holding
2,016,000
1,700,000
5.42
4.57
directors have considered the carrying value of the Group’s
other interests in property and consider that there is no
substantial difference between market and balance
sheet values.
Directors
The directors at the date of this report are as set out on
page 48. Details of the changes to Board positions
which will take place in the current year are given in the
Chairman’s Statement on page 3.
Further information on the Group Board’s constitution,
policies and procedures is set out under corporate
governance on pages 21 to 23.
Pre.Accounts 12/6/00 2:11 PM Page 18
18
Report of the Directors
Employment policies
Year 2000 issues
The Company insists that a policy of equal opportunity
Following earlier investigative work in January 1998 the
employment is demonstrably evident throughout the Group
Board gave authority to a committee co-ordinated by the
at all times. Selection criteria and procedures and training
Group IT Manager to identify and, subject to approval,
opportunities are designed to ensure that all individuals are
introduce standardised IT financial management systems
selected, treated and promoted on the basis of their merits,
throughout the Group. The committee, which reports to
abilities and potential. Subject to the nature of its
a Main Board director was also charged with identifying,
businesses in the construction industry, the policy of the
assessing and minimising the risks associated with the
Company is to ensure that there are fair opportunities in the
year 2000.
Group for the employment, training and career development
of disabled persons, including continuity of employment
with re-training where appropriate.
The Group recognises the need to ensure effective
communication with employees. Policies and procedures,
including in-house newsletters, have been developed, taking
account of such factors as location and numbers employed.
Environmental policy
Consistent with the Group’s policy of autonomous operation
and responsibility, each of the brand businesses has
developed its own environmental policy tailored to the
particular nature of its own activities. Each policy statement
is consistent with the principles contained in the Group
environmental policy, copies of which are available
on request.
Creditor payment policy
As at the date of this report, no problems have arisen which
ought to be brought to the attention of shareholders.
In view of the nature of the Group’s activities and the
implementation of new IT systems as a part of the Group’s
developing control requirements, the Board consider that
the external costs attributable solely to year 2000 issues
were not significant.
Annual General Meeting
The Annual General Meeting will be held on 11 April 2000.
The notice of the meeting is set out in pages 45 to 47 of
this Annual Report. The notice contains items which are
special business, being an increase to the Company’s
authorised share capital, the authority to the Board to allot
equity securities and changes to the retirement by rotation
provisions for directors. Explanatory notes on the special
business items are shown on page 47.
The Company does not adhere to any formal Code
regarding payments to its trade creditors. Its current policy
Political and charitable contributions
in this respect, which the Company endeavours to have its
During the year charitable contributions amounted to
subsidiary and joint venture companies also follow, is to:
£16,000. No contributions were made to any political
1.
use unamended terms of Standard Forms of
Contract widely recognised in, and drawn up by,
bodies representing the industry
2.
clearly agree and set down the terms of payment
with suppliers and subcontractors
3.
make payments in accordance with its obligations.
Calculated in accordance with Regulations made
under the Companies Act 1985, as at 31 December
1999, the Group’s number of creditor days
outstanding was 36.
parties during the year.
Auditors
A resolution for the reappointment of Deloitte & Touche as
auditors of the Company is to be proposed at the
forthcoming Annual General Meeting.
Pre.Accounts 12/6/00 2:11 PM Page 19
Report of the Directors
19
Remuneration report
The remuneration committee is comprised of:
Ms G Gallacher (Chairman)
Mr B H Asher
Sir D P Hornby
Policy on executive directors’ remuneration
The remuneration of the executive directors is determined
by the remuneration committee (“the committee”).
The committee seeks to develop remuneration packages
which satisfy the following principles:
•
•
•
to attract, retain and motivate the best possible
person for each position;
to recognise the importance of achieving the
expectations of performance in short and long term;
to align the interests of executives with those of
the shareholders.
The committee reviews salaries annually and seeks
independent professional advice when appropriate.
Remuneration details
Details of the remuneration of all directors who have
held office during the year are shown in Note 11 to
the Accounts.
Bonus arrangements and Long Term Incentive Plan
Performance related bonuses are a key feature of
remuneration policy throughout the Group. Performance
targets are set against matters in which the individual
concerned has a direct influence. In subsidiary companies
this means the performance of the relevant individual
brand. For executive directors of Morgan Sindall plc and
senior head office personnel the cash bonus is based on
the performance of the Group against targets set annually
by the remuneration committee. The targets comprise a
scale that takes into account previous year’s result and
growth expectations both internally set and those
externally published.
The Long Term Incentive Plan (the ‘LTIP’) approved by
shareholders is designed to provide additional rewards for
consistent out-performance and service over the longer
period. It was introduced in 1997 for the executive
directors of the Company and certain key senior
management agreed by the remuneration committee.
Shares are conditionally awarded to participants in each
financial year and can be allocated in whole or part after
the Group’s performance over the next three financial
years has been measured and compared to a selected
peer group.
The comparison made is of the increase in total
shareholder value over those years with the corresponding
increase of the fourteen companies listed in the Financial
Times as construction companies which are considered by
the remuneration committee as having a comparable
business to the Group.
At the end of each three year period shares conditionally
awarded can be allocated if the Company is ranked first
in the peer group and none will be allocated if the ranking
is in the middle of the peer group or lower. Shares
are allocated on a graduated scale between these
two positions.
Participation in the LTIP is voluntary and requires the
individual to forego payment of a proportion of the cash
bonus part of remuneration for each year in return for the
conditional award of the number of shares in the Company
that the cash sum concerned would purchase at the then
market price.
The remuneration committee has confirmed that fourth
position in the peer group has been achieved for the three
years to 31 December 1999 and that an allocation of
shares from those conditionally awarded for 1997 will be
made on 30 June 2000.
The interests of directors participating in the plan are the
shares conditionally awarded as shown below:
As at
31 December
1999
As at
31 December
1998
91,820
83,636
71,922
84,803
60,348
54,412
48,104
55,579
J C Morgan
J M Bishop
J J C Lovell
A M Stoddart
Once shares have been allocated, a participant is entitled
to dividends paid in respect of those shares and to
exercise voting rights. The participant is not entitled to
transfer, sell or otherwise deal in the shares until a further
two years have elapsed.
None of the shares conditionally awarded to the executive
directors have lapsed during the period.
Pre.Accounts 12/6/00 2:11 PM Page 20
20
Report of the Directors
Service contracts
Executive directors’ contracts are terminable on one
year’s notice.
The service contracts of the directors who are seeking
re-election at the Annual General Meeting, Mr J J C Lovell
and Ms G Gallacher, do not have a notice period for
termination which is in excess of one year’s duration.
Directors’ interests
The shareholdings of all directors are shown in Note 31 to
the Accounts.
Pensions
Share option schemes
It is the Company’s policy not to grant share options to
the directors.
Details of options granted to employees in the Group are
shown in Note 23 to the Accounts. The total number of
options which may be granted at any time is fixed by
the remuneration committee acting with the advice of
the Operations Director and the Finance Director, and
the recommendations of subsidiary company
Managing Directors.
No further options can be granted under the Company’s
1988 Scheme. The exercise of options granted under the
The Company contributes 10% of base salary to defined
1995 Scheme will be subject to performance targets and
contribution schemes of the individual director’s choice.
will normally be exercisable only if the percentage growth in
There are no arrangements for the provision of benefits in
earnings per share of the Company over a five year period
excess of the Inland Revenue cap.
has at least been equal to the percentage growth in
earnings per share of at least three-fourths of the
constituent companies in the FTSE 100 index over the
same period.
By order of the Board
W R Johnston
Company Secretary
15 February 2000
Pre.Accounts 12/6/00 2:11 PM Page 21
Corporate Governance 21
Policy statement
Morgan Sindall plc supports the Principles of Good
of the Company Secretary is a matter to be considered by
the Board as a whole.
Governance and the Code of Best Practice (‘the Combined
As regards the periodic re-election of all directors (including
Code’). Accordingly, this report will also deal with the
non-executives) the practices of the Board comply with
requirements of paragraphs (a) and (b) of Stock Exchange
the Combined Code. Two changes to the Articles of
Listing Rule 12.43A relating to Section 1 of the
Association of the Company are included in the Special
Combined Code.
This report sets out how the principles of the Combined
Code have been applied.
Board constitution and procedures
The Board is comprised of seven directors of whom three
are non-executive and four are executive directors. The
roles of Chairman and Chief Executive are clearly defined
and separate.
Business to be dealt with at the forthcoming Annual
General Meeting. These changes merely formalise in the
Company’s constitutional document what has in any
event been the established practice of the Board. Where
a non-executive is appointed for a specified period, the
appointment is in any case subject to Companies Act
provisions regarding the removal of a director.
Board committees
The Board has established an audit, a remuneration and
All of the non-executive directors are considered to be
a nominations committee.
independent of management and free from any business
or other relationship which could materially affect their
Audit committee
independent judgement. Mr B H Asher is the senior
The audit committee is comprised of the three
independent director.
The composition of the Board satisfies the Code Principles
and Provisions that the Board should have a balance of
executive and non-executive directors in terms of number
and relevant experience to enable it to have effective
leadership and control of the Company and its subsidiaries.
It also ensures that the decision making process cannot be
dominated by any individual or small group of individuals.
non-executive directors. Its duties include keeping
under review the scope and results of the audit, its cost
effectiveness and the objectivity of the auditors. Meetings
of the committee may be attended by the Finance Director
or the Chief Executive and by a representative of the
external auditors. The committee meets at least twice
yearly and in addition, the external auditors may request a
meeting at any time they consider it necessary.
The Board met on eleven scheduled occasions during the
Remuneration committee
year in addition to ad hoc meetings convened for particular
The remuneration committee is composed of the three
purposes. For each of the scheduled meetings, a
non-executive directors and meetings are normally
comprehensive information pack is provided in advance
attended by the Chief Executive. Meetings will usually
of the meeting to allow for proper detailed consideration.
be held twice in each year to cover all elements of the
directors’ remuneration. A remuneration report is included
in the Directors’ Report on pages 19 and 20.
The key purposes of these meetings were to review all
significant aspects of the Group’s activities, supervise
the executive management and to make decisions in
relation to those matters which are specifically reserved
to the Board.
There are agreed procedures by which directors are able to
take independent professional advice on matters relating to
their duties, if necessary, at the expense of the Company.
For certain purposes the Company Secretary is regarded
as falling within that category of advisers and has been
instructed by the Board to act accordingly. The Board has
also resolved that any question of the removal from office
Pre.Accounts 12/6/00 2:11 PM Page 22
22
Corporate Governance
Nominations committee
out the Board’s role and responsibilities, its overall
The Board considers that because of its small size and the
approach to management and acceptance of risk and
manner in which it conducts its business, the full board will
outlines the way in which it will annually review the
comprise the nominations committee.
effectiveness of the Group’s internal controls. This approach
The Board’s policy on appointments to it is that every
to risk management and the acceptance of risk has been
Board member should have the opportunity of individual
communicated to the directors of each brand business
meetings with prospective candidates.
who have in turn undertaken their own risk identification
and assessment exercise tailored to their own individual
Going concern
circumstances.
After making enquiries, the directors have formed a
judgement at the time of approving the financial statements
that there is a reasonable expectation that the Company
has adequate resources to continue in operational
existence for the foreseeable future. For this reason, the
directors continue to adopt a going concern basis in
preparing the financial statements.
Risk management and internal control are now considered
by the Boards of the Company and each brand business
at their monthly meetings. In addition, annually there will be
comprehensive assessment of risk and controls.
The Board has also reserved to itself the evaluation of any
risk arising from the acquisition or development of any new
Relations with shareholders
The Company actively seeks to enter into dialogue with
institutional shareholders whenever possible. It also
endorses the Combined Code principles generally on the
conduct of Annual General Meetings including that it be
used as an opportunity for effective communication with
private shareholders whose participation in the
proceedings should be encouraged.
Internal control statement
During the year to 31 December 1999, all procedures
necessary to implement ‘Internal Control: Guidance for
businesses or activities.
Internal financial control
The Board has formally acknowledged that it has overall
responsibility for the Group’s system of internal financial
control and for ongoing review of its effectiveness. Such a
system can only provide reasonable, but not absolute,
assurance that the Group’s assets are correctly stated and
are protected against loss. Key features of the system are
described under the following headings:
Financial information
The Board recognises that an essential part of the
responsibility for running a business is the effective
safeguarding of assets, the proper recognition of liabilities
directors on the Combined Code’ were established and
and the accurate reporting of profits. The Group has a
put in place. This report follows the transitional approach to
comprehensive system for monthly reporting to the Board.
the internal control aspects of the Combined Code set out
A group executive director also attends the monthly board
in the letter from the London Stock Exchange to listed
meeting of each brand business.
companies dated 27 September 1999.
Wider aspects of internal control
Investment and capital expenditure appraisal
There are clear policies, detailed procedures and defined
The Board has reserved to itself specific responsibility for the
levels of authority in relation to investment, capital
formulation of the risk management strategy of the Group.
expenditure, significant cost commitments and
asset disposals.
New procedures have been formulated with the help of
external consultants. A formal process is now in place
through which the Board identifies the significant risks
attached to its strategic objectives, confirms the control
strategy for each risk, and identifies the appropriate early
warning mechanism for each risk. A risk management
policy document has been adopted by the Board setting
Pre.Accounts 12/6/00 2:11 PM Page 23
Corporate Governance 23
Computer systems
Compliance statement
The Group has established controls and procedures
over the security of data held on computer systems.
These controls and procedures are reviewed under the
rolling examination programme described below under
‘Internal audit’.
Controls over central functions
The Company has throughout the year been in compliance
with the Code Provisions set out in Section 1 of the
Combined Code on Corporate Governance issued by the
London Stock Exchange.
As permitted by the London Stock Exchange, the
Company has complied with Code provision D.2.1 on
A number of the Group’s key functions, including treasury
internal control by reporting on internal financial control in
and insurance, are dealt with centrally. Each of these
accordance with the guidance on internal control and
functions have detailed procedures manuals.
financial reporting that was issued in December 1994.
Internal audit
The Board reviews from time to time the need or otherwise
for an internal audit function and remains of the opinion
that such a function is not necessary. Instead, led by
specialist central Group personnel, there is a rolling
programme of Peer Group examination in which selected
staff participate in the examination and review of the
practices and procedures of brand businesses other than
their own. It is felt that this programme not only provides
many of the benefits to be derived from an internal audit
function but also assists in the professional development
of the individual staff concerned whilst at the same
time identifying and providing a mechanism for the
cross-fertilisation of ideas and best practice throughout
the Group.
The Board has conducted a review of the effectiveness of
the system of internal financial control for the year ended
31 December 1999 and up to the date of this report. The
review was performed on the basis of the criteria set out in
the Guidance for Directors ‘Internal Control and Financial
Reporting’ issued in December 1994.
Pre.Accounts 12/6/00 2:11 PM Page 24
24 Directors’ Responsibilities
Company law requires the directors to prepare financial
2.
Make judgements and estimates that are
statements for each financial year which give a true and fair
reasonable and prudent
view of the state of affairs of the Company and the Group
as at the end of the financial year and of the profit or loss
of the Group for that period. In preparing those financial
statements, the directors are required to:
1.
Select suitable accounting policies and then
apply them consistently
3.
State whether applicable accounting standards
have been followed
The directors are responsible for keeping proper
accounting records, for safeguarding the assets of
the Group, for the Group systems of internal financial
control and for the prevention and detection of fraud
and other irregularities.
Auditors’ Report to the Members of Morgan Sindall plc
We have audited the financial statements on pages 25 to 44
for our report if we become aware of any apparent
which have been prepared under the historical cost convention
misstatement or material inconsistencies with the
as modified by the revaluation of certain fixed assets and the
financial statements.
accounting policies set out on pages 31 and 32.
Respective responsibilities of directors
and auditors
The directors are responsible for preparing the Annual
Basis of audit opinion
We conducted our audit in accordance with Auditing
Standards issued by the Auditing Practices Board. An audit
includes examination, on a test basis, of evidence relevant to
Report, as described on this page of the financial
the amounts and disclosures in the financial statements. It
statements. Our responsibilities, as independent auditors,
also includes an assessment of the significant estimates and
are established by statute, the Auditing Practices Board,
judgements made by the directors in the preparation of the
the Listing Rules of the London Stock Exchange, and by
financial statements, and of whether the accounting policies
our profession’s ethical guidance.
are appropriate to the Company’s and the Group’s
We report to you our opinion as to whether the financial
circumstances, consistently applied and adequately disclosed.
statements give a true and fair view and are properly
We planned and performed our audit so as to obtain all the
prepared in accordance with the Companies Act 1985. We
information and explanations which we considered
also report to you if, in our opinion, the directors’ report is
necessary in order to provide us with sufficient evidence to
not consistent with the financial statements, if the company
give reasonable assurance that the financial statements are
has not kept proper accounting records, if we have not
free from material misstatement, whether caused by fraud
received all the information and explanations we require for
or other irregularity or error. In forming our opinion, we also
our audit, or if information specified by law or the Listing
evaluated the overall adequacy of the presentation of
Rules regarding directors’ remuneration and transactions
information in the financial statements.
with the Company is not disclosed.
We review whether the corporate governance statement on
page 23 reflects the Company’s compliance with the seven
provisions of the Combined Code specified for our review
by the Stock Exchange, and we report if it does not. We
are not required to consider whether the Board’s
statements on internal control cover all risks and controls,
or form an opinion on the effectiveness of the Group’s
corporate governance procedures or its risk and control
procedures. We read the other information contained in the
Annual Report, including the corporate governance
statement, and consider whether it is consistent with the
audited financial statements. We consider the implications
Opinion
In our opinion the financial statements give a true and fair
view of the state of affairs of the Company and the Group
as at 31 December 1999 and of the profit of the Group for
the year then ended and have been properly prepared in
accordance with the Companies Act 1985.
Deloitte & Touche
Chartered Accountants and Registered Auditors
Leda House, Station Road, Cambridge
15 February 2000
Pre.Accounts 12/6/00 2:11 PM Page 25
Group Profit and Loss Account
for the year ended 31 December 1999
25
Notes
£’000s
£’000s
£’000s
£’000s
1999
1998
Turnover
Continuing operations
Acquisitions
Discontinued operations
Less share of joint venture turnover
Group turnover
Cost of sales
Gross profit
Administrative expenses
Other operating income
Operating profit
Continuing operations
Acquisitions
Discontinued operations
1
1
2
454,320
65,065
1,900
(658)
520,627
(465,584)
55,043
(44,299)
983
11,320
1,057
(650)
8,705
–
(258)
Total operating profit
1,3
Exceptional loss on closure of discontinued business 26
Share of profits of joint venture
Net interest receivable
Profit on ordinary activities before taxation
Tax charge on profit on ordinary activities
Profit on ordinary activities after taxation
Dividends on equity and non-equity shares
Retained profit for the year
Earnings per ordinary share
4
5
6
8
Earnings per ordinary share before exceptional loss
8
Diluted earnings per ordinary share
8
11,727
(3,129)
51
1,426
10,075
(1,910)
8,165
(3,439)
4,726
22.17p
28.30p
21.34p
423,169
–
3,235
(1,837)
424,567
(379,084)
45,483
(38,081)
1,045
8,447
–
67
1,246
9,760
(2,046)
7,714
(2,464)
5,250
22.15p
22.15p
21.11p
Accounts 12/6/00 2:06 PM Page 26
26 Group Balance Sheet
at 31 December 1999
Notes
£’000s
£’000s
£’000s
£’000s
1999
1998
Fixed assets
Intangible assets
Tangible assets
Share of joint venture gross assets
Share of joint venture gross liabilities
Investment in joint venture
Investment in own shares
Current assets
Stocks
Debtors
Cash at bank and in hand
13,697
(12,904)
12
13
14
14
15
16
17
Creditors: amounts falling due within one year
18
23
24
Net current assets
Net assets
Capital and reserves
Called up share capital
Share premium account
Revaluation reserve
Profit and loss account
Total shareholders’ funds
Shareholders’ funds are attributable to:
Equity shareholders’ funds
Non-equity shareholders’ funds
Approved by the Board on 15 February 2000
J C Morgan
J M Bishop
11,768
12,637
793
1,170
26,368
24,812
88,820
22,042
135,674
(124,113)
11,561
37,929
6,714
11,794
3,963
15,458
37,929
33,076
4,853
37,929
6,754
(6,570)
3,970
11,384
184
690
16,228
7,155
67,828
28,386
103,369
(96,415)
6,954
23,182
6,619
3,419
2,620
10,524
23,182
18,247
4,935
23,182
Accounts 12/6/00 2:06 PM Page 27
Fixed assets
Tangible assets
Investments
Current assets
Stocks
Debtors
Cash at bank and in hand
Creditors: amounts falling due within one year
Net current liabilities
Total assets less current liabilities
Provisions for liabilities and charges
Net assets
Capital and reserves
Called up share capital
Share premium account
Revaluation reserve
Special reserve
Profit and loss account
Total shareholders’ funds
Shareholders’ funds are attributable to:
Equity shareholders’ funds
Non-equity shareholders’ funds
Approved by the Board on 15 February 2000
J C Morgan
J M Bishop
Company Balance Sheet
at 31 December 1999
27
Notes
13
14
15
16
17
18
19
23
24
1999
£’000s
8,732
63,113
71,845
6,511
3,697
–
10,208
(21,794)
(11,586)
60,259
(80)
60,179
6,714
11,794
3,074
13,644
24,953
60,179
55,326
4,853
60,179
1998
£’000s
7,503
35,302
42,805
6,992
3,655
3,289
13,936
(16,162)
(2,226)
40,579
(80)
40,499
6,619
3,419
2,289
13,644
14,528
40,499
35,564
4,935
40,499
Accounts 12/6/00 2:06 PM Page 28
28 Group Cash Flow Statement
for the year ended 31 December 1999
Notes
28
Net cash inflow from operating activities
Returns on investments and servicing of finance
Interest received
Interest paid
Dividends paid to preference shareholders
Taxation
Corporation tax paid
Capital expenditure and financial investment
Payments to acquire tangible fixed assets
Receipts from sale of tangible fixed assets
Payments to acquire fixed asset investments
Acquisitions and disposals
Purchase of subsidiary undertakings
Net cash/(overdrafts) acquired with subsidiary undertakings
Sale of subsidiary undertaking
Net cash disposed of with subsidiary undertaking
25
25
1999
£’000s
12,648
1,494
(395)
(275)
824
1998
£’000s
9,276
1,358
(412)
(278)
668
(2,191)
(1,264)
(3,286)
778
(480)
(2,988)
(20,689)
9
–
–
(2,000)
6,687
(190)
4,497
(424)
(888)
35
(90)
(20,680)
(1,367)
Equity dividends paid
(2,427)
(1,889)
Net cash (outflow)/inflow before financing
(14,814)
9,921
Financing
Issue of shares, net of expenses
Loans repaid
Net cash inflow/(outflow) from financing activities
8,470
–
8,470
79
(4,334)
(4,255)
(Decrease)/increase in cash
29
(6,344)
5,666
Accounts 12/6/00 2:06 PM Page 29
Combined Statement of Movements in Reserves and Shareholders’ Funds
for the year ended 31 December 1999
29
Group
Share
premium
account
£'000s
Revaluation
reserve
£'000s
Profit
and loss
account
£'000s
Total
reserves
£'000s
Share
capital
£'000s
1999
Share-
holders'
funds
1998
Share-
holders'
funds
£'000s
£'000s
Balance at 1 January
3,419
2,620
10,524
16,563
6,619
23,182
17,398
4,726
4,726
–
4,726
5,250
7,989
162
8,151
124
Retained profit for year
–
New shares issued
net of expenses
Converted preference shares
Options exercised
Goodwill realised on
discontinued operations
Transfer of realised
revaluation reserve
Surplus on revaluation
7,989
81
305
–
–
–
–
–
–
–
–
–
–
–
81
305
68
68
(140)
140
–
1,483
–
1,483
(81)
14
–
–
–
–
319
68
–
–
79
–
–
1,483
331
Balance at 31 December
11,794
3,963
15,458
31,215
6,714
37,929
23,182
Included within the profit and loss account balance at 31 December 1999 is an amount for unrealised goodwill totalling
£7,034,000 (1998: £7,102,000).
Company
Share
premium
account
Profit
Special Revaluation and loss
reserve account
reserve
Total
reserves
£'000s
£'000s
£'000s
£'000s
£'000s
Share
capital
£'000s
1999
Share-
holders'
funds
1998
Share-
holders'
funds
£'000s
£'000s
Balance at 1 January
3,419
13,644
2,289
14,528
33,880
6,619
40,499
37,945
Retained profit for year
New shares issued
Converted preference shares
Options exercised
Transfer of realised
revaluation reserve
Surplus on revaluation
–
7,989
81
305
–
–
–
–
–
–
–
–
10,285
10,285
–
10,285
2,351
7,989
162
8,151
124
–
–
–
–
–
–
–
81
305
(81)
14
–
–
–
319
–
925
–
79
–
–
(140)
140
–
925
–
925
Balance at 31 December
11,794
13,644
3,074
24,953
53,465
6,714
60,179
40,499
Accounts 12/6/00 2:06 PM Page 30
30
Other Primary Statements
Statement of Total Recognised Gains and Losses
for the year ended 31 December 1999
Profit for the financial year before dividends
Share of joint venture’s surplus on revaluation of investment property
Surplus on revaluation of investment property
1999
£’000s
8,165
558
925
1998
£’000s
7,714
331
–
Total recognised gains and losses
9,648
8,045
Note of Historical Cost Profits and Losses
for the year ended 31 December 1999
Profit on ordinary activities before taxation
Realisation of property valuation gains of prior years
1999
£’000s
10,075
140
1998
£’000s
9,760
4,032
Difference between the historical cost depreciation charge and the actual
depreciation charge for the year calculated on the revalued amount
6
19
Historical cost profit on ordinary activities before taxation
10,221
13,811
Historical cost profit on ordinary activities after taxation
and dividends
4,872
9,301
Accounts 12/6/00 2:06 PM Page 31
Principal Accounting Policies 31
Basis of accounting
The financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain
fixed asset properties, and in accordance with applicable accounting standards. Compliance with SSAP19 accounting for
investment properties requires departure from the requirements of the Companies Act 1985 relating to depreciation and an
explanation is given below.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and all its subsidiary undertakings.
Acquisitions and disposals
The results of subsidiaries acquired during the year are included in the consolidated profit and loss account from the date of
acquisition. Goodwill is the difference between the fair value of consideration given on acquisition of a business and the
aggregate fair value of its separable net assets. Goodwill arising on consolidation is capitalised and written off in equal
instalments over its useful economic life of 20 years.
Goodwill that arose on acquisitions prior to 31 December 1997 is eliminated against the profit and loss reserve. Amounts will
be charged or credited to the profit and loss account on subsequent disposal of the business to which it relates.
Turnover
Turnover is defined as the value of goods and services rendered excluding VAT.
Fixed asset investments
Except as stated below, investments held as fixed assets are stated at cost less provision for any impairment in value. In the
consolidated accounts the Group’s share of the results of the joint venture is shown each year in the profit and loss account
and the Group’s share of retained profits and reserves is added to the cost of the investment in the balance sheet.
Fixed assets and depreciation
By adopting Financial Reporting Standard 15, non-investment properties are now held at cost. Under the transitional rules
of the Standard, the Group has retained the book amounts of certain revalued properties and the valuation has not been
updated. The date of the last valuation was 21 September 1994.
No depreciation is provided on freehold land. On other assets depreciation is provided in equal annual instalments at rates
calculated to write off the cost or valuation of fixed assets over their estimated useful lives as follows:
Freehold buildings
Leasehold property
Plant, machinery, motor vehicles and equipment
–
–
–
50 years
period of the lease
between 3 and 10 years
No depreciation is provided in respect of freehold investment properties which are revalued annually and the aggregate
surplus or deficit is transferred to revaluation reserve. The Companies Act 1985 requires all properties to be depreciated.
However, this requirement conflicts with the generally held accounting principle set out in SSAP19. The directors consider
that, as these properties are not held for consumption, but for their investment potential, to depreciate them would not give
a true and fair view, and that it is necessary to adopt SSAP19 in order to give a true and fair view.
If this departure from the Act had not been made, the profit for the financial year would have been reduced by depreciation.
However, the amount of depreciation cannot reasonably be quantified because depreciation is only one of many factors
reflected in the annual valuation.
Accounts 12/6/00 2:06 PM Page 32
32
Principal Accounting Policies
Stocks
Stocks are valued at the lower of cost and net realisable value. Interest incurred on borrowings to finance specific
developments is capitalised.
Contract accounting
Contracts are accounted for as long term contracts. Anticipated net sales value of contracts include a proportion of
attributable profit where a profitable outcome can be foreseen, provision being made for foreseeable losses. Turnover less
progress payments is recorded in “amounts recoverable on contracts”, within debtors. Where progress payments exceed
turnover and other contract balances the excess is shown as “payments on account” in creditors.
Deferred taxation
Provision under the liability method is made for deferred taxation at the current rate of corporation tax on all timing differences,
to the extent that they are expected to crystallise.
Leases
Rental costs under operating leases are charged to the profit and loss account in equal amounts over the period of the leases.
Pensions
The Group contributes to The Morgan Sindall Retirement Benefits Plan and to other employees’ personal pension
arrangements which are of a defined contribution type. Subject to the circumstances referred to in Note 27, the annual
costs are charged to the profit and loss account.
Accounts 12/6/00 2:06 PM Page 33
Notes to the Accounts 33
1 Analysis of turnover, gross profit, operating profit and net assets
Turnover
£’000s
274,516
174,146
65,065
5,000
–
518,727
1,900
1999
Profits/
(losses)
£’000s
3,097
7,564
1,057
2,235
(1,576)
12,377
(650)
520,627
11,727
Turnover
£’000s
251,365
162,967
–
7,000
–
421,332
3,235
424,567
Net assets
£’000s
(684)
(4,427)
8,546
14,866
(4,190)
14,111
1,776
15,887
22,042
37,929
1998
Profits/
(losses)
£’000s
2,360
6,306
–
1,548
(1,509)
8,705
(258)
8,447
Net assets
£’000s
(2,033)
(11,005)
–
14,404
(8,595)
(7,229)
2,025
(5,204)
28,386
23,182
Regional construction
Fit out
Affordable housing
Property
Group activities
Ongoing activities
Discontinued operations
Net cash balances
Net assets
Segmental net assets are stated after deducting interest bearing net cash balances.
Continuing
operations
£’000s
453,662
(403,989)
49,673
(39,336)
983
11,320
Acquisitions
£’000s
Discontinued
operations
£’000s
1999
Total
£’000s
1998
Total
£’000s
65,065
(59,403)
5,662
(4,605)
–
1,057
1,900
(2,192)
520,627
(465,584)
424,567
(379,084)
(292)
(358)
–
(650)
55,043
(44,299)
983
45,483
(38,081)
1,045
11,727
8,447
Group turnover
Cost of sales
Gross profit
Administrative expenses
Other operating income
Operating profit
2 Other operating income
Rent receivable
3 Operating profit
Operating profit is stated after charging
Depreciation
Amortisation of goodwill
Hire of plant and machinery
Operating lease costs
Land and buildings
Other
Auditors’ remuneration Audit – Morgan Sindall plc
Audit – Subsidiary undertakings
Other
1999
£’000s
983
1999
£’000s
1,660
379
6,155
1,759
2,517
15
170
30
1998
£’000s
1,045
1998
£’000s
1,507
191
4,584
1,026
1,269
11
139
34
Further fees of £71,000 (1998: nil) paid to Deloitte & Touche in 1999 are included in the cost of investment in subsidiary
undertakings.
Accounts 12/6/00 2:06 PM Page 34
34 Notes to the Accounts
4 Net interest receivable
Interest receivable
Interest payable on bank loans and overdrafts
Interest payable on other loans
Add: Interest capitalised
5 Tax charge on profit on ordinary activities
Corporation tax payable at 30.25% (1998: 31%)
(Over)/under provision in prior years
Share of tax of joint venture
Tax on exceptional loss
1999
£’000s
1,494
(395)
–
1,099
327
1,426
1999
£’000s
3,000
(143)
–
(947)
1,910
The tax charge for the year is lower than the standard rate due to the availability of tax losses brought forward.
6 Dividends on equity and non-equity shares
Non-equity dividends on preference shares
Paid
Accrued
Equity dividends on ordinary shares
Interim paid
Final proposed
2.50p (1998: 2.05p)
6.00p (1998: 4.45p)
1999
£’000s
219
56
275
929
2,235
3,164
1998
£’000s
1,358
(394)
(18)
946
300
1,246
1998
£’000s
1,773
273
–
–
2,046
1998
£’000s
219
59
278
688
1,498
2,186
3,439
2,464
7 Profit of parent company
The Company has taken advantage of s230 of the Companies Act 1985 and consequently the profit and loss account of the
parent company is not presented as part of these accounts. The profit of the parent company for the financial year amounted
to £13,724,000 (1998: £4,815,000).
8 Earnings per ordinary share
The calculation of the earnings per share is based on the weighted average number of 35,591,000 ordinary shares in
issue during the year (1998: 33,575,000) and on the profits for the year attributable to ordinary shareholders of £7,890,000
(1998: £7,436,000).
In calculating the earnings per share before exceptional loss, earnings are adjusted for the exceptional loss of £3,129,000
(1998: nil) and the tax on exceptional loss of £947,000 (1998: nil) making adjusted earnings of £10,072,000
(1998: £7,436,000).
Accounts 12/6/00 2:06 PM Page 35
Notes to the Accounts
35
In calculating the diluted earnings per share, earnings are adjusted for the preference dividend of £275,000 (1998: £278,000)
making adjusted earnings of £8,165,000 (1998: £7,714,000). The weighted average number of ordinary shares are adjusted
for the dilutive effect of the convertible preference shares by 1,941,000 (1998: 1,974,000) and share options by 722,000
(1998: 999,000) giving an adjusted number of ordinary shares of 38,254,000 (1998: 36,548,000).
9 Employees
The average number of people employed by the Group during the year was:
1999
No.
2,122
1999
£’000s
56,932
5,732
1,205
1998
No.
1,869
1998
£’000s
46,461
4,284
1,051
63,869
51,796
Salary
and fees
£’000s
Bonus
£’000s
Benefits
£’000s
Pension
£’000s
147
137
137
111
–
532
36
20
20
76
32
29
29
24
–
114
–
–
–
–
16
18
13
13
–
60
–
–
–
–
15
14
14
11
–
54
–
–
–
–
1999
Totals
£’000s
210
198
193
159
–
760
36
20
20
76
1998
Totals
£’000s
275
259
254
206
231
1,225
36
20
17
73
608
114
60
54
836
1,298
10 Staff costs
Wages and salaries
Social security costs
Pension costs
11 Directors’ remuneration
J C Morgan (Highest paid director)
A M Stoddart
J M Bishop
J J C Lovell
B J Moorhouse*
Executive directors
Sir D P Hornby (Chairman)
G Gallacher
B H Asher
Non executive directors
Totals
The totals of directors’ remuneration shown above include fees of £76,000 (1998: £73,000). Pension contributions made on
behalf of the executive directors are made to money purchase pension schemes. Further details of the directors’
remuneration are contained in the Directors’ Report on pages 19 and 20.
* Includes £180,000 compensation for loss of office in 1998.
Long term incentive plan
A long term incentive plan has been established as explained in detail in the long term incentive plan section of the Directors’
Report on page 19. Conditional awards which have been made are shown therein. An amount of £133,000 has been accrued
for potential awards relating to 1999 which will be calculated based on the three year period ending 31 December 2001.
Accounts 12/6/00 2:06 PM Page 36
36
Notes to the Accounts
12 Intangible fixed assets
Group
Cost or valuation
At 1 January 1999
Additions (see note 25)
At 31 December 1999
Amortisation
At 1 January 1999
Provided in the year
At 31 December 1999
Net book value at 31 December 1999
Net book value at 31 December 1998
13 Tangible fixed assets
(a) Group
Cost or valuation
At 1 January 1999
Additions
Surplus/(deficit) on revaluation
Acquisition of subsidiary undertaking
Transfer to current assets
Reclassification
Disposals
At 31 December 1999
Depreciation
At 1 January 1999
Provided in the year
Surplus on revaluation
Acquisition of subsidiary undertaking
Reclassification
Disposals
At 31 December 1999
Net book value at 31 December 1999
Net book value at 31 December 1998
Goodwill
£’000s
4,161
8,177
12,338
191
379
570
11,768
3,970
Total
£’000s
16,400
3,286
768
47
(535)
–
(1,857)
Plant, machinery
& equipment
£’000s
Motor
vehicles
£’000s
Freehold
property
£’000s
Leasehold
property
£’000s
5,655
1,868
–
47
–
49
(648)
6,971
3,413
1,357
–
4
2
(584)
4,192
2,779
2,242
1,249
54
–
–
–
–
(452)
6,367
1,034
812
–
(535)
–
(640)
3,129
330
(44)
–
–
(49)
(117)
851
7,038
3,249
18,109
1,030
83
–
–
–
(391)
722
129
219
177
46
–
–
–
–
223
6,815
6,190
396
174
(157)
–
(2)
(76)
335
2,914
2,733
5,016
1,660
(157)
4
–
(1,051)
5,472
12,637
11,384
Accounts 12/6/00 2:06 PM Page 37
Notes to the Accounts 37
13 Tangible fixed assets (continued)
(b) Company
Cost or valuation
At 1 January 1999
Additions
Surplus/(deficit) on revaluation
Transfer to current assets
Disposals
At 31 December 1999
Depreciation
At 1 January 1999
Provided in the year
Surplus on revaluation
Disposals
At 31 December 1999
Net book value at 31 December 1999
Net book value at 31 December 1998
Plant, machinery
& equipment
£’000s
Freehold
property
£’000s
Leasehold
property
£’000s
168
13
–
–
(19)
162
61
49
–
(18)
92
70
107
5,832
1,034
812
(535)
(125)
7,018
173
44
–
–
217
6,801
5,659
1,888
51
(44)
–
(20)
1,875
151
37
(157)
(17)
14
1,861
1,737
Total
£’000s
7,888
1,098
768
(535)
(164)
9,055
385
130
(157)
(35)
323
8,732
7,503
The net book value of land and buildings comprises:
Group
Company
Investment properties
Freehold
Short leasehold
Other properties
Freehold
Short leasehold
Total net book value
1999
£’000s
1998
£’000s
1999
£’000s
1998
£’000s
3,655
1,600
5,255
3,160
1,314
4,474
9,729
3,072
1,466
4,538
3,118
1,267
4,385
8,923
3,655
1,600
5,255
3,146
261
3,407
8,662
2,767
1,466
4,233
2,892
271
3,163
7,396
Land and buildings at cost or valuation are stated:
Group
Company
At valuation
1994
1998
1999
At cost
Comparable amounts determined according to
the historical cost convention:
1999
£’000s
1,626
–
5,250
3,411
10,287
1998
£’000s
1,626
4,668
–
3,202
9,496
1999
£’000s
1,626
–
5,250
2,017
8,893
1998
£’000s
1,626
4,363
–
1,731
7,720
Cost
1999
£’000s
Accumulated
depreciation
1999
£’000s
Net book
value
1999
£’000s
Net book
value
1998
£’000s
Land and buildings
7,946
1,248
6,698
6,303
An independent valuation of the Group’s investment properties was undertaken by Healy & Baker Real Estate Consultants
as at 31 December 1999 on the basis of Existing Use Value in accordance with the RICS Appraisal and Valuation Manual.
The directors have reflected these valuations in the financial statements as at the date of the valuation. The net surplus arising
on revaluation of £925,000 was taken to the revaluation reserve.
Accounts 12/6/00 2:06 PM Page 38
38
Notes to the Accounts
14 Investments
(a) Group
At 1 January 1999
Additions
Share of results for the year
Share of revaluation reserve
At 31 December 1999
Joint
venture
£’000s
Own shares
at cost
£’000s
184
–
51
558
793
690
480
–
–
1,170
Investment in joint venture
The Group’s joint venture investment is in Primary Medical Property Limited, which develops and invests in primary care
health centres. The principal place of business of Primary Medical Property Limited is 77 Newman Street, London W1P 3LA.
Morgan Sindall plc’s involvement in the management of Primary Medical Property Limited is restricted to the appointment of
two directors under the terms of a shareholder agreement under which certain matters may only be undertaken by the
Company with the approval of all directors.
Investment in own shares
The own shares at cost represent 588,181 Morgan Sindall plc ordinary shares held in trust in connection with the long term
incentive plan as detailed in the Directors’ Report on page 19. Based on the Company’s share price on 31 December 1999
of £3.06, the market value of the shares was £1,799,834.
(b) Company
Cost
At 1 January 1999
Additions
Repaid during the year
At 31 December 1999
Provisions
At 1 January 1999
(Release of provisions)/
provisions created in year
At 31 December 1999
Net book value at 31 December 1999
Net book value at 31 December 1998
Own
shares
£’000s
690
480
–
1,170
–
–
–
1,170
690
Subsidiary undertakings
Loans
Shares
£’000s
£’000s
Joint
venture
shares
£’000s
33,893
28,189
–
62,082
852
(139)
713
61,369
33,041
2,251
–
(611)
1,640
680
386
1,066
574
1,571
4
–
–
4
4
–
4
–
–
Total
£’000s
36,838
28,669
(611)
64,896
1,536
247
1,783
63,113
35,302
The additions to shares in subsidiary undertakings include the acquisition of Lovell Partnerships (see note 25), the issue of
£3,400,000 share capital by existing subsidiaries and the transfer of the shareholding in Overbury plc from Morgan Lovell plc
at a nominal value of £4,100,000.
Accounts 12/6/00 2:06 PM Page 39
Notes to the Accounts 39
15 Stocks
Group
Company
Development works and building land
Trading properties
Materials and equipment
1999
£’000s
23,863
863
86
24,812
1998
£’000s
4,364
2,628
163
7,155
1999
£’000s
5,931
580
–
6,511
1998
£’000s
4,364
2,628
–
6,992
Included within development works and building land is £224,000 (1998: £177,000) in respect of interest capitalised.
16 Debtors
Group
Company
Trade debtors
Amounts recoverable on contracts
Amounts owed by subsidiary undertakings
Amounts owed by joint venture
Corporation tax recoverable
Other debtors
Prepayments and accrued income
1999
£’000s
48,387
36,755
–
276
–
2,196
1,206
1998
£’000s
31,591
33,826
–
40
–
1,369
1,002
88,820
67,828
1999
£’000s
270
–
3,014
40
–
163
210
3,697
1998
£’000s
219
–
2,452
40
200
614
130
3 , 6 5 5
17 Cash at bank and in hand
The Group’s financial instruments comprise cash and various short-term items such as trade debtors and trade creditors that
arise directly from its operations. In particular the Group holds cash in the form of sterling deposits with counterparties, which
are at a fixed interest rate and for periods not exceeding three months.
The objective of placing these deposits with financial institutions approved by the Board is to maximise interest received. The
Group’s treasury policy sets out lending limits and minimum liquidity requirements to be met. By lending surplus funds to
counterparties the Group’s risk profile is not significantly changed.
During the period under review the Group did not enter into derivative transactions and has not undertaken trading in any
financial instruments.
18 Creditors: amounts falling due within one year
Bank overdraft
Payments on account
Trade creditors
Amounts owed to subsidiary undertakings
Other creditors
Corporation tax
Other tax and social security
Accruals and deferred income
Dividend
Group
Company
1999
£’000s
–
8,162
49,127
–
2,917
1,388
2,253
57,975
2,291
1998
£’000s
–
–
32,271
–
1,988
1,669
2,896
56,034
1,557
1999
£’000s
1,119
–
695
15,815
127
262
36
2,069
1,671
124,113
96,415
21,794
1998
£’000s
–
–
74
11,543
167
–
185
2,636
1,557
16,162
Accounts 12/6/00 2:06 PM Page 40
40
Notes to the Accounts
19 Provisions for liabilities and charges
Provisions for losses:
At 1 January 1999
Reclassified as investment
Released to profit and loss account
At 31 December 1999
Group
Company
1999
£’000s
1998
£’000s
1999
£’000s
1998
£’000s
–
–
–
–
218
(218)
–
–
80
–
–
80
173
–
(93)
80
The amounts of deferred taxation provided and not provided in the accounts are as follows:
Group
Provided
Not provided
Capital allowances in excess of depreciation
Taxation loss relief and other timing differences
1999
£’000s
1998
£’000s
1999
£’000s
–
–
–
–
–
–
154
(154)
–
1998
£’000s
235
(235)
–
There are taxation losses to carry forward of approximately £10 million (1998: £7 million).
20 Operating lease commitments
At 31 December 1999 the Group was committed to making the following payments during the next year in respect of
non-cancellable operating leases.
Leases which expire:
Within one year
Within two to five years
After five years
Land and
buildings
£’000s
68
533
1,253
1,854
Other
£’000s
589
2,184
148
2,921
1998
£’000s
–
21 Financial commitments
Group
Company
Capital expenditure
Authorised and contracted
22 Contingent liabilities
1999
£’000s
53
1998
£’000s
78
1999
£’000s
–
Group bank accounts and performance bond facilities are supported by cross-guarantees given by the Company and
participating trading companies in the Group. The overdraft facility of the joint venture is supported by a Group guarantee.
Accounts 12/6/00 2:06 PM Page 41
Notes to the Accounts 41
23 Called up share capital
1999
1998
Authorised
Ordinary shares of 5p each
5.625% Convertible cumulative redeemable
preference shares of £1 each
Issued and fully paid
Ordinary shares of 5p each
5.625% Convertible cumulative redeemable
preference shares of £1 each
No. ’000s £’000s
No. ’000s £’000s
42,960
2,148
42,960
2,148
5,000
47,960
5,000
7,148
5,000
5,000
47,960
7 , 1 4 8
37,222
1,861
33,661
1,684
4,853
42,075
4,853
6,714
4,935
38,596
4,935
6,619
Ordinary shares
The ordinary shares of 5p each of the Company issued during the year are shown below. Details of the share option schemes
referred to are given later in this note.
1.
2.
3.
4.
3,249,612 ordinary shares by way of a Placing and Open Offer at 255p per share, the new shares being admitted to
the Official List on 21 June 1999.
184,850 ordinary shares in respect of options exercised under the Company's 1988 Scheme (referred to below) for
total consideration of £201,878.
93,000 ordinary shares in respect of options exercised under the Company's 1995 Scheme (referred to below) for total
consideration of £116,930.
33,179 ordinary shares in respect of conversion rights attached to 82,950 convertible preference shares exercised as
at 30 June 1999.
Preference shares
The convertible preference shares are convertible at the option of the holder on 30 June in each of the years 1991 to 2003
inclusive on the basis of 40 ordinary shares for every 100 convertible preference shares. After conversion of 75% of the convertible
preference shares the Company has the right to require the conversion of the outstanding balance. The convertible preference
shares are redeemable at par at the Company's option after the last date of conversion in 2003 and are finally redeemable on 30
June 2005. There is no premium payable on a return of capital on a winding up and the convertible preference shares do not
entitle the holders to any participation in the profits or assets of the Company beyond their preference dividend entitlement.
Options
The company has two share option schemes. The first scheme ('the 1988 Scheme') was introduced on 21 January 1988
and the second scheme ('the 1995 Scheme') received shareholders’ approval on 24 May 1995. Options granted under the
1988 Scheme are exercisable between three and ten years from the date of grant and under the 1995 Scheme are
exercisable between five and seven years from the date of grant. The period for the granting of options under the 1988
Scheme expired in January 1998. As at 31 December 1999 there remain 366,525 options outstanding under that Scheme
exercisable at prices between £0.73 and £1.71. At the same date there were 1,568,925 options outstanding under the 1995
Scheme exercisable at prices between £0.73 and £2.01.
No options have been granted to any members of the Morgan Sindall plc Board.
24 Revaluation reserve
Group
Company
Investment property revaluation reserve
Other property revaluation reserve
1999
£’000s
2,854
1,109
3,963
1998
£’000s
2,069
551
2,620
1999
£’000s
2,854
220
3,074
1998
£’000s
2,069
220
2,289
Accounts 12/6/00 2:06 PM Page 42
42
Notes to the Accounts
25 Acquisitions
Lovell Partnerships
On 16 June 1999 the Company acquired the entire issued share capital of Lovell Partnerships Limited, Lovell Partnerships
(Northern) Limited and Lovell Partnerships (Southern) Limited (“Lovell Partnerships”) for cash consideration of £20.3m. The
consolidated profits/(losses), after taxation, of Lovell Partnerships were as follows:
Financial year ended 30 September 1998
1 October 1998 to date of acquisition (includes exceptional write-off of intercompany debt of £6,532,000)
The following table analyses the book value of the major categories of assets and liabilities acquired:
Book value
at date of
acquisition
£’000s
Provisional
fair value
adjustments
£’000s
–
18,815
12,069
946
9
(8,236)
(8,380)
15,223
43
(2,262)
(200)
–
–
(53)
(239)
(2,711)
Note
a
b
b
c
c
Tangible fixed assets
Work in progress
Trade debtors
Other debtors
Bank
Trade creditors
Other creditors and accruals
Net assets
Cash consideration
Acquisition cost
Total cost
Goodwill
£’000s
888
(6,592)
Provisional
fair value
of net
assets
£’000s
43
16,553
11,869
946
9
(8,289)
(8,619)
12,512
20,316
373
20,689
8,177
The acquisition has been accounted for by the acquisition method of accounting. The provisional fair value adjustments are
explained as follows:
a: Adjustments to align accounting policies
b: Adjustment to carrying value of assets
c: Provision for known liabilities
Cash flow
During the year, acquisitions contributed £5,580,000 to the Group's net operating cash flows, paid £235,000 in respect of
net returns on investment and servicing of finance and paid £238,000 on investing activities.
26 Exceptional loss on closure of discontinued business
On 3 November 1999, the Company announced the Group’s withdrawal from tendered term maintenance work for housing
associations. At the year end the maintenance operation of SMHA Limited has been discontinued and existing agreements
have been phased out. This has resulted in a charge in the year of £3,129,000, which represents the write down of assets to
recoverable amounts and closure costs, and includes an amount of £68,000 goodwill previously eliminated against the profit
and loss reserve.
Accounts 12/6/00 2:06 PM Page 43
Notes to the Accounts 43
27 Pensions
Defined contribution and hybrid schemes
The Morgan Sindall Retirement Benefits Plan was established on 31 May 1995 and operates on defined contribution
principles where contributions are invested to accumulated capital sums to provide members with retirement and death
benefits. The Plan includes some defined benefit liabilities and transfers of funds representing the accrued benefit rights of
former active and deferred members of pension plans of companies which are part of the Group as it now stands. In addition
the Plan provides final salary related benefits for the members of the former Sindall Group Pension Fund in respect of benefits
accrued before 31 May 1995.
Subject as provided below, pension costs for the Plan and for other small defined contribution schemes in the Group
represent the employers’ contributions actually paid in the year together with employers’ contributions to the personal pension
plans of individuals, where applicable.
The latest actuarial valuation was dated 1 June 1998 and was prepared using the assumptions of rate of investment return
of 6.5% per annum, rate of earnings escalation of 5.5% per annum and rate of inflation of 4.5% per annum. The ongoing
liabilities of the Plan were assessed using the attained age method whereas the assets were taken at realisable market value.
The defined benefit liabilities are fully funded. The actuarial valuation referred to shows that on an ongoing basis, the value of
the assets represented 137% of the value of these liabilities. The actuarial valuation also showed that the realisable market
value of the Plan’s assets is in excess of its minimum liabilities when assessed on the Minimum Funding Requirement basis
(as defined in the Pensions Act 1995).
Accordingly, on the recommendation of the Plan actuary, certain employers’ contributions during the year have been funded
using the unallocated reserve of the Plan assets and in these circumstances no charge to the profit and loss account of the
employer is recorded. The Plan actuary has recommended that this practice should continue to apply until 31 May 2000
when the actuary will conduct a further review. The contributions paid by the Group for the year amounted to £1,205,000.
28 Reconciliation of operating profit to net cash inflow from operating activities
Operating profit
Depreciation of tangible fixed assets
Amortisation of goodwill
Profit on disposal of business
(Loss)/profit on sale of fixed assets
Increase in stocks and work in progress
Increase in debtors
Increase in creditors
Exceptional loss
1999
£’000s
11,727
1,660
379
–
28
(242)
(8,177)
10,334
(3,061)
1998
£’000s
8,447
1,507
191
(40)
(494)
(285)
(8,444)
8,394
–
Net cash inflow from operating activities
12,648
9,276
29 Reconciliation and analysis of net cash flow to movement in net cash
Cash at bank and in hand
28,386
(6,344)
22,042
1998
£’000s
Cash flow
£’000s
1999
£’000s
Accounts 12/6/00 2:06 PM Page 44
44
Notes to the Accounts
30 Additional information on subsidiary undertakings and joint venture
The Company acts as a holding company for the Group and has the following principal subsidiary undertakings and joint
venture which affected the Group's results or net assets.
Subsidiary undertakings
Barnes & Elliott Limited
Hinkins & Frewin Limited
Lovell Partnerships Limited
*Morgan Lovell London Limited
*Morgan Lovell Regions Limited
Overbury plc
Roberts Construction Limited
(formerly Roberts R Roberts (Leeds) Limited)
Sindall Limited
SMHA Limited (formerly Sindall Maintenance Limited)
*Snape Limited
Stansell Limited
*Stansell QVC Limited
The Snape Group Limited
Wheatley Construction Limited
Joint venture
Primary Medical Property Limited (50%)
Activity
Construction
Construction
Affordable Housing
Office design, fitting out and refurbishment specialists
Office design, fitting out and refurbishment specialists
Fitting out and refurbishment contractor
Construction
Construction
Construction
Construction
Construction
Construction
Intermediate holding company
Construction
Development and investment of medical properties
All subsidiary undertakings are wholly owned unless shown otherwise and with the exception of companies marked * all
shareholdings are in the name of Morgan Sindall plc. With the exception of Stansell QVC Limited, registered and operating
in Jersey, all undertakings are registered in England and England is the principal place of business.
31 Directors’ interests
According to the register maintained as required by the Companies Act 1985, the interests of the directors in office at
31 December 1999 and 1 January 1999 were as follows:
Sir D P Hornby
J C Morgan
J M Bishop
J J C Lovell
A M Stoddart
G Gallacher
B H Asher
5p Ordinary
Beneficial
31 December 1999
5,452
6,206,926
12,814
6,183,706
5,000
–
–
1 January 1999
5,452
6,206,926
20,000
6,183,706
5,000
–
–
No director had any non beneficial interest in the ordinary shares or any interest in the preference shares of the Company.
There have been no changes in the interests of the directors between the year end and 15 February 2000. No director had
any material interest in any contract with the Company.
32 Related party transaction
During the year the Company appointed IRG plc as its Registrars. Sir Derek Hornby is the non-executive Chairman of IRG
plc. From the date of taking up their duties on 22 November 1999 to the end of the period, IRG plc have been paid £1,550
for their services. No amounts are outstanding at the year end.
Accounts 12/6/00 2:06 PM Page 45
Notice of Annual General Meeting 45
Notice is hereby given that the forty-third Annual General Meeting of the Company will be held in the Drawing Room of The
Armourers’ Hall, 81 Coleman Street, London, EC2R 5BJ at 12 noon on Tuesday 11 April 2000 for the following purposes:
Ordinary business
1.
2.
3.
4.
5.
6.
To receive the Reports of the Directors and the Auditors and the Accounts for the year ended 31 December 1999.
To declare a final dividend of 6.00 pence per Ordinary Share.
To re-elect Mr J J C Lovell a Director.
To re-elect Ms G Gallacher a Director
To re-appoint Deloitte & Touche as Auditors.
To authorise the Directors to fix the Auditors’ remuneration.
Special business
To consider and if thought fit pass the following resolutions of which resolutions 7 and 8 will be proposed as Ordinary Resolutions
and resolutions 9 and 10 will be proposed as Special Resolutions.
7.
That the authorised share capital of the Company be increased from £7,148,000 to £7,500,000 by the creation of
7,040,000 new Ordinary Shares of 5p each ranking pari passu in all respects with the existing Ordinary Shares.
8.
That subject to the passing of the previous resolution, the Directors be and are hereby generally and unconditionally
authorised in accordance with section 80 of the Companies Act 1985 (‘the Act’) to exercise all of the powers of the
Company to allot relevant securities (within the meaning of that section) of the Company up to an aggregate amount of
£638,895.50 such authority (unless previously revoked or varied) to expire on the earlier of the conclusion of the
Company’s next Annual General Meeting and fifteen months from the date of the passing of this resolution save that the
Company may make offers or agreements which would or might require relevant securities to be allotted after such expiry
and the Directors may allot relevant securities in pursuance of such offers or agreements as if the authority conferred
hereby had not expired.
9.
That, subject to the passing of the previous resolution, the Directors be and they are hereby authorised and empowered
pursuant to section 95 of the Act to allot equity securities (as defined in section 94 of the Act) for cash pursuant to the
authority given in the previous resolution as if section 89(1) of the Act did not apply to such allotment, provided that such
power be limited to:
i)
the allotment of equity securities which are offered to all the holders of equity securities of the Company (at a date
specified by the Directors) where the equity securities respectively attributable to the interests of such holders are
as nearly as practicable in proportion to the respective number of equity securities held by them, but subject to
such exclusions and other arrangements as the Directors may deem necessary or expedient in relation to fractional
entitlements and any legal or practical problems under any laws, or requirements of any regulatory body or stock
exchange in any territory or otherwise; and
Accounts 12/6/00 2:06 PM Page 46
46
Notice of Annual General Meeting
ii)
the allotment (otherwise than pursuant to sub-paragraphs i) above and iii) below) of equity securities up to an
aggregate nominal amount of £93,055.23; and
iii)
the allotment of equity securities up to a total nominal amount of £97,050.20 in connection with the satisfaction
of conversion rights attached to the 5.625% Convertible Cumulative Redeemable Preference Shares of £1 each
currently in issue
and this power shall expire on the earlier of the conclusion of the Company’s next Annual General Meeting and
fifteen months from the date of the passing of this resolution save that the Company may make an offer or enter
into an agreement before the expiry of that date which would or might require equity securities to be allotted
after that date and the Directors may allot equity securities in pursuance of such an offer as if the power
conferred hereby had not expired.
10.
That the Articles of Association of the Company be amended as follows:
i)
ii)
by deleting the second sentence in article 85; and
by adding the following sentence to the end of article 86:
“In addition, any Director who would not otherwise be required to retire shall retire by rotation at the third Annual
General Meeting after his last appointment or re-appointment.”
By order of the Board
W R Johnston
Company Secretary
15 February 2000
Notes
Registered Office
77 Newman Street
London
W1P 3LA
1.
2.
3.
4.
5.
6.
7.
A member entitled to attend and vote at this meeting is entitled to appoint one or more proxies to attend and vote on
a poll in his place. A proxy need not also be a member of the Company. A form of proxy accompanies this notice.
In the case of joint holders the vote of the senior who tenders a vote, whether in person or by proxy, will be accepted
to the exclusion of the votes of any other joint holders. For these purposes, seniority shall be determined by the order
in which the names stand in the register of members in respect of the joint holding.
In the case of a corporation the form of proxy must be executed under its common seal or signed on its behalf by a
duly authorised attorney or a duly authorised officer of the corporation.
To be effective, the form of proxy, together with any power of attorney or other authority under which it is executed
or a notarially certified copy thereof must be sent to IRG plc, Bourne House, 34 Beckenham Road, Beckenham,
Kent BR3 4TU as to arrive no later than 12 noon on 9 April 2000.
Short biographical details of the directors seeking re-election are shown on page 16 and 17.
Service contracts of Directors will be available for inspection at 77 Newman Street, London, W1P 3LA during usual
business hours on any business day from the date of this notice until the date of the meeting and for 15 minutes prior
to the meeting at The Armourers’ Hall, 81 Coleman Street, London, EC2R 5BJ.
The Company, pursuant to regulation 34 of The Uncertificated Securities Regulations 1995, specifies that only those
ordinary shareholders registered in the register of members of the Company 48 hours before the meeting shall be
entitled to attend or vote at the meeting in respect of the number of shares registered in their name at that time.
Changes to entries on the relevant register of securities after that time will be disregarded in determining the rights of
any person to attend or vote at the meeting.
Accounts 12/6/00 2:06 PM Page 47
Notice of Annual General Meeting 47
8.
Resolution 7
Pursuant to resolution 7 the authorised share capital of the Company would be increased from £7,148,000 to
£7,500,000 representing an increase in the current authorised share capital of approximately 5% and an increase of
approximately 16% in the current authorised Ordinary Share capital. This increase is being sought to ensure that the
Company has adequate flexibility should the need arise to issue further Ordinary Shares, particularly following the new
Ordinary Shares issued under the open offer in 1999, and the Ordinary Shares reserved for issue pursuant to the
exercise of options and the conversion of Preference Shares requiring the issue of new Ordinary Shares.
9.
Resolution 8
When resolution 8 in the notice of the Annual General Meeting is passed, the Board will have general and unconditional
authority to allot 12,777,910 Ordinary Shares, which authority will expire fifteen months from the date on which this
resolution is passed or, if earlier, at the conclusion of the next Annual General Meeting. Of that number, 3,976,453
authorised but unissued Ordinary Shares will be reserved in respect of share options granted under the two Share
Option Schemes which members have approved and to provide for the conversion of Preference Shares. Accordingly,
following the passing of this resolution 8,801,457 Ordinary Shares, representing approximately 24 per cent of the issued
Ordinary Share capital of the Company, will remain authorised, unissued and unreserved.
10. Resolution 9
In addition to the above, on the passing of resolution 9, the Board will have authority to allot equity securities up to an
aggregate value of £93,055.23, representing approximately 5 per cent of the issued Ordinary Share capital of the
Company, for cash otherwise than pro-rata to existing shareholders, which authority will expire fifteen months from the
date on which the resolution is passed or, if earlier, at the conclusion of the next Annual General Meeting of the
Company. The Board will also have authority to allot equity securities in order to satisfy the conversion rights attaching
to the Preference Shares. However, currently there is no intention to issue any further share capital otherwise than
pursuant to the exercise of conversion rights in respect of the Preference Shares in issue and in the exercise of any
options under the two Share Option Schemes.
11. Resolution 10
Pursuant to resolution 10 it is proposed to amend the Articles of Association to ensure compliance with the Combined
Code of the London Stock Exchange. Following this amendment, all directors, including the Chief Executive or
Managing Director, will be subject to retirement by rotation and each director will be required to submit himself for
re-election at least at every third Annual General Meeting. However, both of the changes in the resolution merely formally
reflect what has been the Company’s policy and practice since 1994.
Private Shareholders
For ease of reference paragraph C.2 of the Principles of Good Governance as set out in Section 1 of the Combined Code is
reproduced below.
C.2 Constructive Use of the AGM
Principle
Boards should use the AGM to communicate with private investors and encourage their participation.
Code Provisions
C.2.1 Companies should count all proxy votes and, except where a poll is called, should indicate the level of proxies lodged
on each resolution, and the balance for and against the resolution, after it has been dealt with on a show of hands.
C.2.2 Companies should propose a separate resolution at the AGM on each substantially separate issue, and should
in particular propose a resolution at the AGM relating to the report and accounts.
C.2.3
The chairman of the board should arrange for the chairmen of the audit, remuneration and nomination
committees to be available to answer questions at the AGM.
C.2.4 Companies should arrange for the Notice of the AGM and related papers to be sent to shareholders at least 20
working days before the meeting.
Accounts 12/6/00 2:06 PM Page 48
48
Corporate Directory
Directors
Shareholder communication
Sir D P Hornby (Non-Executive Chairman)
Contact with existing and prospective shareholders is
J C Morgan (Chief Executive)
welcomed by the Company. If you have any questions or
J M Bishop
J J C Lovell
A M Stoddart
B H Asher (Non-Executive)
G Gallacher (Non-Executive)
Secretary
W R Johnston
Registered Office
77 Newman Street, London W1P 3LA
Tel: 020 7307 9200
Fax: 020 7307 9201
Registration No.00521970
Solicitors
Charles Russell,
enquiries about the Company or the activities of the
Group, please contact: Jack Lovell, Client Director, at the
registered office.
Web Site
www.morgansindall.co.uk
Share prices (FT Cityline)
Current buying and selling prices of the Company’s
shares, together with recorded information on key dates,
can be obtained by dialling 0336 434027.
Financial Calendar
8-10 New Fetter Lane, London EC4 1RS
Annual General Meeting:
11 April 2000
Auditors
Deloitte & Touche,
Ordinary shares
Final dividend:
Leda House, Station Road, Cambridge CB1 2RN
Ex-dividend date:
13 March 2000
Tax Advisors
Grant Thornton,
Record date:
Payment date:
17 March 2000
13 April 2000
Grant Thornton House, Melton Street, Euston Square,
Interim results announcement:
August 2000
London NW1 2EP
Clearing Bankers
Lloyds TSB Bank plc,
Preference shares
Dividend payment dates:
15 April 2000
15 October 2000
Po Box 17328, 11-15 Monument Street, London EC3V 9JA
Next conversion date:
30 June 2000
Merchant Bankers
Close Brothers Corporate Finance Limited,
10 Crown Place, Clifton Street, London EC2A 4FT
Brokers
Peel, Hunt & Company Limited,
62 Threadneedle Street, London EC2R 8HP
Registrars
IRG plc,
Bourne House, 34 Beckenham Road,
Beckenham, Kent BR3 4TU
Accounts 12/6/00 2:06 PM Page 49
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