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Morgan Sindall plc
77 Newman Street,
London W1T 3EU
Tel: 020 7307 9200
Fax: 020 7307 9201
Visit our website at
www.morgansindall.co.uk
The Construction
Brands Group
Annual Report
& Accounts
1999
Report and Accounts 2000
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Morgan Sindall plc is one of the fastest growing construction groups
in the UK. It comprises a balanced portfolio of operating divisions
— fit out, construction, affordable housing and investments.
Morgan Sindall is uniquely positioned to take advantage of significant
opportunities as the industry faces dramatic change. Three key challenges
are the pressure for consolidation within the sector, a more demanding
and discerning client base which requires better all round service and
central Government seeking community construction solutions to
dramatically improve health, education and the housing stock.
Morgan Sindall differentiates itself from the competition through its
management style and culture, which supports empowerment and
decentralisation. This leaves its operating units ideally positioned to
serve properly their individual customer needs.
Contents
Financial Highlights
Chairman’s Statement
Divisional Review
Fit Out
Construction
Affordable Housing
Investments
Group Overview
Board of Directors
Report of the Directors
1
2
6
8
10
12
14
16
18
Corporate Governance
Directors’ Responsibilities
Auditors’ Report
Group Profit and Loss Account
Group Balance Sheet
Company Balance Sheet
Group Cash Flow Statement
Combined Statement of
Movements in Reserves and
Shareholders’ Funds
22
25
25
26
27
28
29
30
Other Primary Statements
Principal Accounting Policies
Notes to the Accounts
Notice of Annual General Meeting
Corporate Directory
31
32
34
46
50
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Financial Highlights
Turnover
2000
1999
£655m
£521m
%
+26
Profit on ordinary activities before taxation
£15.36m
£10.08m +52
Earnings per ordinary share
Dividends per ordinary share
Net assets
Net cash funds
29.75p
10.50p
£45.7m
£23.5m
22.17p
8.50p
£37.9m
£22.0m
+34
+24
+20
+6
Turnover £m
Profit Before Tax £m
2000
99
98
97
96
654.8
520.6
424.6
331.2
283.1
2000
99
98
97
96
10.1
9.8
7.3
5.2
15.4
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2
We have started the year well and the Group is
in a healthy financial position. It is now time to
increase the pace of the Group’s development.
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It is always a pleasure to report
on a successful year, 2000
being the sixth consecutive
record performance. More
importantly I believe 2001
can be even better. The Group
entered the year with an order
book of £406m, an improvement
of 49% on last year. Our three
core business Divisions are
stronger from a management
perspective than ever before.
With a restructured central
management team in support
and increased potential returns
from the investment of our
balance sheet we look ahead
with confidence.
Turnover in 2000 of £655m
is 26% ahead of the previous
year and whilst this is flattered
by a full year's turnover from
Lovell compared to six months
in 1999, the second half turnover
was still ahead of last year by 22%.
Profit before tax on ongoing
businesses increased by 16%
to £16.0m despite reduced
contribution from property
investment, where one major
property completion originally
expected for 2000 is now
anticipated this year. The bottom
line result is that profit available
to ordinary shareholders are up
41% to £11.2m. The Board is
pleased to recommend a further
increase in dividend with a
proposed final dividend of 7.5p
to make a total of l0.5p for the
year (1999: 8.5p).
Against a backdrop of good
news I am sorry to inform you
that Andy Stoddart our Managing
Director will today be resigning
due to ill health. His contribution
to the Group over the last six
years has been immense and
all of us wish him success in
overcoming his health problems
and a long and happy retirement.
It is typical of the man that
he leaves us with a newly
reshaped and improved structure.
Whereas previously all Brands
reported to the centre, this year
has seen the formation of three
Divisional boards moving more
of the decision-making closer
to the operational front.
The Divisions are supported
at the centre by Paul Whitmore,
who joined us in April 2000 as
Commercial Director, and Jack
Lovell and John Bishop who
have been with the Group since
its creation in 1994. The three
Divisional Managing Directors
will now report to me as
Executive Chairman and as
such the Board believes the
structure needs no further
expansion at this time.
Chairman’s Statement
Market Capitalisation
£125m
Share Price£3.30
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4
Trading Overview
The Fit Out Division is Ied by
Steve Elliott and traded well
through 2000. For 20 years
Overbury and Morgan Lovell
have been providing fit out
services almost exclusively for
offices with contract values up
to £l5m on either a traditional
or design and build basis.
Changes in procurement patterns
such as partnering, framework
agreements and ongoing
maintenance support have
demanded greater flexibility and
closer co-operation between our
Fit Out Brands.
The new divisional structure
will assist in ensuring that we
offer the best service to our
clients irrespective of historic
Brand boundaries. In addition
I believe that a divisional
structure will accelerate the
opportunities of expansion of
this business into related areas.
This year has seen
the formation of three
operating Divisions
left to right
Stewart Davenport – Affordable Housing
Steve Elliott – Fit Out
Chris Saxton – Construction
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The Construction Division is
headed by Chris Saxton who
as Managing Director of Snape
was responsible for transforming
that company from losses to a
successful regional Brand with
margins of over 3%.
The seven regional Brands
that comprise the Construction
Division are all profitable and
have reached varying degrees
of success in establishing
themselves as regional forces.
The formation of the Division
will not only improve the Brands’
individual performances but
enable them to respond better
to national clients and initiatives.
The Division's 2000
performance with turnover of
£318m and operating profits
of £4.5m is its best so far but
still leaves tremendous scope
for improvement in both
volume and margin.
Affordable Housing represented
by Lovell, headed by Stewart
Davenport, has always been a
divisional structure split into
five geographical areas each
with its own management team.
Since its acquisition in June 1999
Lovell has undergone intense
scrutiny and significant
strengthening. I have always
been confident that the
combination of the Lovell
Brand strength and the Morgan
Sindall resource and motivation
would be a winning formula,
my only question was how
soon the benefits would flow
through to the bottom line.
The results for 2000 are a
welcome improvement ahead
of expectation.
The fact that the improvement
has been achieved whilst investing
in new staff and increasing
Lovell’s forward opportunity
levels augurs well for the future.
Prospects
I feel optimistic for the coming
year with the three Divisions
all in good shape. Returns from
property should be ahead as the
delayed 2000 project completes
and this will give us extra
income to offset the early costs
of investing in Private Finance
Initiative projects, which in the
longer term will give us a more
steady income flow. I see that
there is both the potential and
the determination to achieve
substantial organic growth.
This will not preclude us from
looking at further strategic
development, but should
ensure that we only make
moves that are truly capable
of taking the Group up to the
next level.
John Morgan
Executive Chairman
13 February 2001
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6
Our ‘Perfect Delivery’ initiative is making a
significant contribution to repeat order levels.
>
15.2%
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It was a lively year for Fit Out.
The market sector has been
healthy and the Division was
able to generate increased
levels of repeat orders from a
customer base that has been
carefully nurtured over the
years. The Fit Out Division
is committed to continually
improving the quality of our
service delivery.
Our ‘Perfect Delivery’
initiative, now in its third year,
seeks to identify and deliver
the bases of competitive
advantage that enable us to
always delight our customers.
This is making a significant
contribution to repeat order
levels and the incidence of
partnering which we confidently
expect will deliver increased
profitability.
The growth of the Fit Out
Division continued with a
turnover of £229m and operating
profits of £8.7m, a 15.2%
increase from last year.
A significant proportion of
growth came from the major
projects team which has
successfully become a leading
contender for large projects in
London and the Home Counties.
Our newest team, Overbury
Special Projects, established to
manage small works, had a
good first year and proved an
effective way of consolidating
established customer
relationships. The Fit Out
Division is now able to offer
customers a service from the
smallest to largest project that
we believe will enable us to
further lock out competitors.
Both Morgan Lovell and
Overbury have continued their
successful growth in the
southern Home Counties and
particularly the Thames Valley,
working with a broad mix
of old and new economy
customers. Growth outside
of London will continue with
Morgan Lovell seeking to
establish themselves in the
northern Home Counties with
a new Milton Keynes office.
Current order levels show a
strong start for the year ahead.
The establishment of a divisional
structure gives the Overbury
and Morgan Lovell Brands a
unique opportunity to learn from
each other’s strengths and
consequently offer customers
a strong and effective service,
regardless of procurement route.
It also gives us a wider base
from which to investigate
opportunities to expand the
Fit Out Division into new
related areas.
Fit Out
Turnover £’000s
2000
99
229,350
174,146
Operating Profit £’000s
2000
99
8,716
7,564
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8
All our Construction Brands are profitable,
have strong order books for 2001 and are
in a good position to show further growth
in the coming year.
>
47%
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Strong profit centre teams
who deliver on promises to
clients are the key to achieving
net margins above historic
industry norms. The Morgan
Sindall culture of decentralised
management will continue
to encourage the enthusiasm
and motivation of our people
upon whom our future
success depends.
In 2000, the Construction
Division delivered a record
annual turnover of £318m
and a record operating profit
of £4.5m up 47% on last year.
The second half result
demonstrated a continuing
improvement in our business.
All our Construction Brands
are profitable, have strong order
books for 2001 and are in a
good position to show further
growth in the coming year.
Since 1994 seven Brands
have been acquired providing
a network which now covers
England and Wales. Dramatic
organic growth in turnover
has been achieved and the
opportunity for future
expansion remains as exciting.
The present emphasis
however is to lift margins
by improving Brand
performance and building
lasting relationships with our
clients and our supply chain.
We will achieve this by
promoting the individual
abilities of the profit centre
units all of which are continually
developing a track record in
specific areas of construction.
Collectively, we are also
able to pool the resources of
our network to respond to
national clients and national
initiatives. New procurement
initiatives such as ProCure 21
in the health sector offer
significant opportunity for us.
Our divisional management
structure will facilitate our
ability to respond to such
market opportunities.
Construction
Turnover £’000s
2000
99
317,605
274,516
Operating Profit £’000s
2000
99
4,542
3,097
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10
The Government continues its commitment
to increase the provision of social and
affordable housing where Lovell is ideally
positioned to benefit.
>
55%
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Lovell produced very pleasing
results in 2000 with turnover
of £108m and operating profit
of £2.7m an increase in margin
of 55% to 2.5%. This was despite
considerable investment
in people, premises and new
systems. The value of new
contracts secured in the year
was £156m with an even mix
between partnership housing
and open market in line with
the business plan.
Whilst lead in times are lengthy
on these types of project, Lovell
entered 2001 with a healthy
forward order book significantly
ahead of this time last year.
A considerable proportion
of this new work was secured
under the principles of Best
Value. In addition Lovell is
in discussions on a range of
exciting projects where they
have been appointed preferred
developer and from which
they will secure work for
2002 and beyond.
The Government continues its
commitment to increase the
provision of social and affordable
housing from which Lovell is
ideally positioned to benefit,
particularly in mixed tenure
urban regeneration schemes.
One such project secured
this year is the £16m
regeneration of the Trowbridge
Estate in Hackney which involves
the building over three years
of 220 mixed tenure homes.
Price was only one of many
factors considered in the award
of this project.
Other opportunities for Lovell
include PFI housing schemes.
In 2000 eight Pathfinder schemes
were announced with a further
thirty schemes expected to be
released in 2001.
Affordable Housing
Turnover £’000s
2000
99*
107,709
65,065
Operating Profit £’000s
2000
99*
1,057
2,715
*6 months
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12
It remains the Group’s policy to keep strengthening
the balance sheet, as buyers of construction
services increasingly favour companies whose
turnover is sufficiently supported by assets.
>
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In 2000 the return from our
property profits and interest
was £2.2m (1999: £3.7m)
which was lower than expected
due to a delay in the letting
of our office development
in Wigmore Street, London.
The building had been under
offer in mid-year but the
lease was not finalised and
we eventually let to a new
tenant in December at
a higher rental. When the
remaining ground floor and
basement units are let this
building will be added to our
investment property portfolio
or sold.
Our refurbishment of offices
in Shepherds Bush which we
purchased in 2000 will also
be completed shortly and is
already attracting interest
from potential tenants.
Whilst we will continue
to look for further property
opportunities we have
established a company for
investing in PFI projects. This
will assist the core Divisions
in pursuing PFl opportunities
and will also become an
important investment vehicle
gradually acquiring a quality
stream of income through
its holdings in individual
project companies.
Primary Medical Property, our
joint venture business which
develops and retains primary
care buildings, continues to
expand its portfolio and now
has £41m of projects either
completed or under construction.
This investment has excellent
capital growth potential,
provides construction work
opportunities for Group
companies and is proving
invaluable as a partner when
we are dealing with national
Government procurement of
medical facilities.
It remains the Group’s policy
to keep strengthening the
balance sheet, as buyers of
construction services increasingly
favour companies whose turnover
is sufficiently supported by
assets. Our policy has been to
invest our reserves in a mixture
of cash and property and to be
proactive but conservative.
Investments
Property Profits and Interest £’000s
2000
99
2,187
3,661
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Fit Out
Construction
Affordable Housing
Jersey
Barnes & Elliott
Hinkins & Frewin
Roberts
Sindall
Snape
Stansell
Wheatley
Snape
Lovell
Altrincham
Barnet
Basingstoke
Birmingham
Bristol
Cardiff
Leeds
Tamworth
Morgan Lovell
The Workplace Specialist
London
Milton Keynes
Wokingham
Overbury
The Fitting Out &
Refurbishment Contractor
Bracknell
London
Investments
Morgan Sindall
London
Cambridge
Primary Medical Property
London
Ipswich
Leeds
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The Construction
Brands Group
A top 10 UK construction company
50 offices throughout England and Wales
2,600 employees
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16
Jack Lovell (45)
Client Director
Bernard Asher (64)
Senior Non-executive
John Morgan (45)
Executive Chairman
John Bishop (55)
Finance Director
Board of Directors
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Sir Derek Hornby (71)
Non-executive
Paul Whitmore (45)
Commercial Director
Geraldine Gallacher (41)
Non-executive
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18
Report of the Directors
The directors have pleasure in submitting their report to the members together with the audited
accounts for the year ended 31 December 2000.
Principal activities
Morgan Sindall is a construction group with activities
including fit out, construction, affordable housing and
investments. 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
Bernard Asher and John Bishop are the directors to retire by
rotation and, being eligible, offer themselves for re-election.
Biographical details of Bernard Asher are shown below.
John Bishop (aged 55) is a Chartered Accountant with
twenty years experience in UK quoted companies. On the
creation of the Morgan Sindall Group in October 1994 he
joined the Board initially as Corporate Development Director
and became Finance Director in June 1998.
The Group made a profit for the year, after taxation,
of £11.396 million.
Non-executive directors
The final dividend for the year recommended by the
directors is 7.5p per ordinary share, which together
with the interim dividend of 3p per ordinary share gives
a total dividend for the year of 10.5p per ordinary share.
Preference dividends paid or accrued amounted to
£0.243 million.
A short biographical note on each independent
non-executive director is shown below. The role and
responsibilities of the non-executive directors have been
formally established by the Board. Further information on
these matters may be found under corporate governance
on pages 22 and 24.
Biographical notes
Review of business and future developments
Bernard Asher
A general review of the Group’s activities, development and
future prospects are included in the Chairman’s Statement
on pages 2 to 5.
Fixed assets
External professional valuations of the Group’s investment
properties were carried out as at 31 December 1999. The
directors have considered the carrying value of the Group’s
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 shown
on pages 16 and 17. Details of the changes to Board
positions which took place in the year, including the
resignation of Andy Stoddart and also of the
restructuring of the central management team are
given in the Chairman’s Statement on pages 2 to 5.
Further information on the Group Board’s constitution,
policies and procedures is set out under corporate
governance on pages 22 to 24.
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.
Sir Derek Hornby
Non-executive director of a number of companies
and charitable trusts. Formerly Chairman of London &
Continental Railways, Rank Xerox (UK) Limited and the
British Overseas Trade Board.
Geraldine Gallacher
Founder and Managing Director of The Executive
Coaching Consultancy having formerly been head of
Group Management Development for Burton Group plc
(now Arcadia plc).
Substantial shareholdings
Excluding directors, on 13 February 2001, the following
shareholdings representing 3% or more of the issued
ordinary share capital have been notified to the Company:
Number
Percentage
of Shares
Holding
Britel Fund
Nominees Limited
1,301,405
3.44
Equitable Life
Assurance Society
1,498,497
Nortrust Nominees Ltd
1,500,364
3.96
3.96
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19
Report of the Directors
Employment policies
The Company insists that a policy of equal opportunity
employment is demonstrably evident throughout the Group
at all times. Selection criteria and procedures and training
opportunities are designed to ensure that all individuals are
selected, treated and promoted on the basis of their merits,
This commitment to ensure that demanding social and
environmental objectives are set and achieved will bring
increasing rewards for the Group and the community
in general.
Creditor payment policy
abilities and potential. Subject to the nature of its businesses
The Company does not adhere to any formal Code
in the construction industry, the policy of the Company is
regarding payments to its trade creditors. Its current policy
to ensure that there are fair opportunities in the Group for
in this respect, which the Company endeavours to have its
the employment, training and career development of
subsidiary and joint venture companies also follow, is to:
disabled persons, including continuity of employment with
re-training where appropriate.
The Company recognises the need to ensure effective
communication with employees. Policies and procedures,
including in-house newsletters, have been developed in
the Group, taking account of such factors as location and
numbers employed.
Pensions
Details of pension schemes operated for the permanent
salaried staff of the Group are shown in Note 27 on
page 43.
In preparation for the launch of the Government sponsored
stakeholder pensions for employees not eligible for existing
schemes, the Group is examining the alternatives
available. It is expected that details of the arrangements
for the Group will be be advised to employees concerned
in April this year.
Environmental policy
1.
use unamended terms of Standard Forms of
Contract widely recognised in, and drawn up by,
bodies representing participants in 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 2000, the
Group’s number of creditor days outstanding was 29.
Annual General Meeting
The Annual General Meeting will be held on 10 April 2001.
The notice of the meeting is set out in pages 46 to 49 of
this Annual Report. The notice contains items which are
special business, being the authority to the Board to allot
equity securities and changes to the Company’s Articles
of Association pursuant to The Companies Act 1985
(Electronic Communications) Order 2000. Explanatory
notes on the special business items are shown on pages
Last year’s report under this heading said that ‘consistent
48 and 49.
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,
Political and charitable contributions
During the year charitable contributions amounted to
£19,603. No contributions were made to any political
copies of which are available on request.’
parties during the year.
The Board is satisfied that this approach has worked well
in the past and the Brand businesses have been diligent in
Auditors
A resolution for the reappointment of Deloitte & Touche as
auditors of the Company is to be proposed at the
forthcoming Annual General Meeting.
discharging their responsibilities. In the light of the size of
the Group after six consecutive years of expansion and
development, the Board now considers that a more proactive
approach with leadership from the centre would bring
benefits to the whole Group not least in the identification
and dissemination of best practices.
Accordingly, a Main Board director has been charged with
responsibility for these matters and external consultants
have been engaged to assist not only in the consideration
of policies and practice but also in the development of
management and monitoring systems.
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20
Report of the Directors
Remuneration report
The remuneration committee comprises:
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”) taking full
account of the Combined Code appended to The Listing
Rules issued by the Financial Services Authority.
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 on page 36.
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 cash bonuses are based on
the performance of the Group against targets set annually
by the committee. The targets comprise a scale that
takes into account the 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 Group senior management
agreed with the 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
committee as having a comparable business to the Group.
At the end of each three year period shares conditionally
awarded can be allocated to participants 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.
Fourth position in the peer group was achieved for the
measurement period ended 31 December 1999 and an
allocation of shares from those conditionally awarded for
1997 was made by the committee on 30 June 2000. The
interests of each participating director are shown below,
39,927 shares from the numbers conditionally awarded in
1997 having lapsed on 30 June 2000.
As at
31 December
2000
As at
31 December
1999
Shares conditionally awarded:
J C Morgan
J M Bishop
J J C Lovell
A M Stoddart
P Whitmore
Shares allocated:
J C Morgan
J M Bishop
J J C Lovell
A M Stoddart
88,263
82,060
66,769
83,521
13,950
14,212
12,274
12,274
12,920
91,820
83,636
71,922
84,803
-
-
-
-
-
Once shares have been allocated, a participant is entitled
to receive dividends 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.
The committee will be meeting shortly after the date
of this report to consider conditional awards and
allocations to be made in the current year.
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21
Report of the Directors
Service contracts
Executive directors’ contracts are terminable on one
year’s notice.
Share option schemes
It is the Company’s policy not to grant share options to
the directors.
In circumstances of termination by notice (except in
cases of removal for misconduct), compensation will
be determined by the committee having regard to the
particular circumstances of the case. The committee's
guidelines will be to determine an equitable compensation
package, while avoiding rewarding poor performance and
having regard to the departing director's obligations of
mitigating loss.
The service contracts of the directors who are seeking
re-election at the Annual General Meeting, Mr B H Asher
and Mr J M Bishop, do not have a notice period for
termination which is in excess of one year’s duration.
Details of options granted to employees in the Group are
shown in Note 23 to the Accounts on page 42. The total
number of options which may be granted at any time is
fixed by the committee.
No further options can be granted under the Company’s
1988 Scheme. The exercise of options granted under the
1995 Scheme will be subject to performance targets and
will normally be exercisable only if the percentage growth in
earnings per share of the Company over a five year period
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.
Directors’ interests
The shareholdings of all directors are shown in Note 31
to the Accounts on page 45 and their interests in shares
under the Long Term Incentive Plan are shown on
page 20 of this report.
Pensions
The Company contributes 10% of base salary to defined
contribution schemes of the individual director’s choice.
There are no arrangements for the provision of benefits in
excess of the Inland Revenue cap.
By order of the Board
W R Johnston
Company Secretary
13 February 2001
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22
Corporate Governance
Policy statement
Morgan Sindall plc supports the Principles of Good
Governance and the Code of Best Practice (‘the Combined
Code’). Accordingly, this report will also deal with the
requirements of paragraphs (a) and (b) of FSA Listing Rule
12.43A relating to Section 1 of the Combined Code.
This report sets out how the principles of the Combined
Code have been applied.
Board constitution and procedures
Throughout the period covered by this report the Board
has been comprised of three non-executive and four
executive directors, increased to five with the appointment
of Paul Whitmore on 1 April 2000. Up to the Annual
General Meeting held on 11 April 2000 the roles of
Chairman and Chief Executive were held by Sir Derek
Hornby and John Morgan respectively. At that meeting
John Morgan became Executive Chairman and Andy
Stoddart Group Managing Director.
With the resignation of Andy Stoddart at the date of this
report, the Company acknowledges that in not having a
of the meeting to allow for proper detailed consideration.
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.
At the Annual General Meeting of the Company last year
amendments to the Articles of Association of the Company
were approved requiring that each director be submitted
for re-election at least once every three years. The
explanatory note to the proposed resolution confirmed
that the resolution's purpose was merely to reflect what
had been the Company's established policy and practice
since 1994.
The Company agrees with the Code provision regarding
training facilities for directors on first appointment and
subsequently as necessary. Adequate provision for these
requirements is made annually in an allocated training
budget which also covers senior head office personnel with
specific professional responsibilities relating to the proper
management and conduct of a listed company.
division of strategic and operational responsibilities between
There are agreed procedures by which directors are able to
two people it will not be in compliance with the Combined
take independent professional advice on matters relating to
Code. The Board believes that with the appointment during
their duties, if necessary, at the expense of the Company.
the reporting period of a further executive director and the
For certain purposes the Company Secretary is regarded
creation of a stronger divisional management structure
(described in more detail in the Chairman’s Statement on
pages 2 to 5) the underlying principle of Code provision
A.2 will be maintained.
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
of the Company Secretary is a matter to be considered by
All of the non-executive directors are considered to be
independent of management and free from any business
or other relationship which could materially affect their
independent judgement. Mr B H Asher is the senior
independent director.
the Board as a whole.
Board committees
The Board has established an audit, a remuneration and
a nominations committee.
The composition of the Board satisfies the Code Principles
Audit committee
and Provisions that the Board should have a balance of
The audit committee is comprised of the three
executive and non-executive directors in terms of number
non-executive directors. Its duties include keeping
and relevant experience to enable it to have effective
under review the scope and results of the audit, its cost
leadership and control of the Company and its subsidiaries.
effectiveness and the objectivity of the auditors. The
It also ensures that the decision making process cannot be
committee may request the attendance of any executive
dominated by any individual or small group of individuals.
director and a representative of the external auditors. The
The Board met on nine scheduled occasions during the
year in addition to ad hoc meetings convened for particular
purposes. For each of the scheduled meetings, a
comprehensive information pack is provided in advance
committee meets at least twice yearly and in addition, the
external auditors may request a meeting at any time they
consider it necessary.
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23
Corporate Governance
Remuneration committee
Internal control statement
The remuneration committee is composed of the three
non-executive directors. Meetings will usually 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 20 and 21.
Nominations committee
During the year to 31 December 1999, all procedures
necessary to implement ‘Internal Control: Guidance for
directors on the Combined Code’ were established and
put in place. This report therefore follows an approach
of full compliance throughout the year with Code
Principle D.2.
The Board considers that because of its small size and the
The Board has formally acknowledged that it has overall
manner in which it conducts its business, the full board will
responsibility for the Group’s system of internal control and
comprise the nominations committee.
for ongoing review of its effectiveness. The internal control
The Board’s policy on appointments to it is that every
Board member should have the opportunity of individual
meetings with prospective candidates.
system is designed to manage rather than eliminate the
risk of failure to achieve business objectives. It can only
provide reasonable, but not absolute, assurance against
material misstatement or loss.
Going concern
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
Risk management
The Board has reserved to itself specific responsibility for the
formulation of the risk management strategy of the Group.
has adequate resources to continue in operational
A formal process is now in place through which the Board
existence for the foreseeable future. For this reason, the
identifies the significant risks attached to its strategic
directors continue to adopt a going concern basis in
objectives, confirms the control strategy for each risk and
preparing the financial statements.
Relations with shareholders
identifies the appropriate early warning mechanism for
each risk. A risk management policy document has been
adopted by the Board setting out the Board’s role and
The Company actively seeks to enter into dialogue with
responsibilities and its overall approach to management and
institutional shareholders whenever possible. It also
acceptance of risk. This approach has been communicated
endorses the Combined Code principles generally on the
to the directors of each Brand business who have in turn
conduct of Annual General Meetings including that it be
undertaken their own risk identification and assessment
used as an opportunity for effective communication
exercise tailored to their own individual circumstances
with private shareholders whose participation in the
and carried out their first annual reviews.
proceedings should be encouraged.
Risk management and internal control are considered by
In addition, the Company proposes to take advantage of
the Board and each Brand business at their monthly
The Companies Act 1985 (Electronic Communications)
meetings. Steps are being taken to embed internal control
Order 2000 allowing communication with shareholders,
and risk management further into the operations of the
where individual shareholders so choose, in electronic
business and to deal with areas of improvement which
format. Explanatory notes of these proposals are set out
come to management and Board attention.
on pages 48 and 49.
The Board has also reserved to itself the evaluation of any
Taking advantage of electronic communications (see
risk arising from the acquisition or development of any new
resolution 9 in the Notice of Annual General Meeting
businesses or activities.
on page 48) the Company will make future results
announcements, including the Annual Report in complete
format, available on the Company’s website as at the dates
of releases to the London Stock Exchange Regulatory
News Service.
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24
Corporate Governance
Financial information
Annual review
The Board recognises that an essential part of the
The Board has conducted a review of the effectiveness of
responsibility for running a business is the effective
the system of internal financial control for the year ended
safeguarding of assets, the proper recognition of liabilities
31 December 2000 and up to the date of this report. The
and the accurate reporting of profits. The Group has a
review was performed on the basis of the criteria set out in
comprehensive system for monthly reporting to the Board.
the Guidance for Directors ‘Internal Control and Financial
Investment and capital expenditure appraisal
There are clear policies, detailed procedures and defined
levels of authority in relation to investment, capital
expenditure, significant cost commitments and
asset disposals.
Computer systems
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’.
Reporting’ issued in December 1994.
The process included a formal review conducted by the
Board of the consolidated report of the Brand Risk
Framework reviews, undertaken by the boards of each
operating subsidiary, together with the Group Risk
Framework document originally approved by the Board
in November 1999. In addition, the Board has also
reviewed the results of the internal financial control
reviews which had taken place during the year in a
number of the operating subsidiaries in the course of
an agreed rolling programme.
Compliance statement
Controls over central functions
A number of the Group’s key functions, including treasury
and insurance, are dealt with centrally. Each of these
functions have detailed procedure manuals.
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 appended to
the Listing Rules issued by the Financial Services Authority.
Internal audit
During the year the Board has reviewed 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.
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Directors’ Responsibilities and Auditors’ Report
25
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 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 26 to 45
statements. We consider the implications for our report if
which have been prepared under the historical cost
we become aware of any apparent misstatement or material
convention as modified by the revaluation of certain fixed
inconsistencies with the financial statements.
assets and the accounting policies set out on pages 32 and 33.
Respective responsibilities of directors
and auditors
Basis of audit opinion
We conducted our audit in accordance with United Kingdom
auditing standards issued by the Auditing Practices Board.
The directors are responsible for preparation of the Annual
An audit includes examination, on a test basis, of evidence
Report, which is required to be prepared in accordance
relevant to the amounts and disclosures in the financial
with United Kingdom law and accounting standards as
statements. It also includes an assessment of the significant
described above. Our responsibilities, as independent
estimates and judgements made by the directors in the
auditors, are established by statute, the Auditing Practices
preparation of the financial statements, and of whether the
Board, the UK Listing Authority, and by our profession’s
accounting policies are appropriate to the Company’s and
ethical guidance.
the Group’s circumstances, consistently applied and
We report to you our opinion as to whether the financial
adequately disclosed.
statements give a true and fair view and are properly prepared
We planned and performed our audit so as to obtain all
in accordance with the Companies Act 1985. We also
the information and explanations which we considered
report to you if, in our opinion, the directors’ report is not
necessary in order to provide us with sufficient evidence to
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
Opinion
page 24 reflects the Company’s compliance with the seven
In our opinion the financial statements give a true and fair
provisions of the Combined Code specified for our review
view of the state of affairs of the Company and the Group
by the UK Listing Authority, and we report if it does not. We
as at 31 December 2000 and of the profit of the Group for
are not required to consider whether the Board’s statements
the year then ended and have been properly prepared in
on internal control cover all risks and controls, or form an
accordance with the Companies Act 1985.
opinion on the effectiveness of the Group’s corporate
governance procedures or its risk and control procedures.
Deloitte & Touche
We read the other information contained in the Annual
Chartered Accountants and Registered Auditors
Report, including the corporate governance statement, and
Stonecutter Court, Stonecutter Street, London EC4A 4TR
consider whether it is consistent with the audited financial
13 February 2001
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26
Group Profit and Loss Account
for the year ended 31 December 2000
Notes
£’000s
£’000s
£’000s
£’000s
2000
1999
Turnover
Continuing operations
Discontinued operations
Less share of joint venture turnover
Group turnover
Cost of sales
Gross profit
Administrative expenses
Other operating income
Operating profit
Continuing operations
Discontinued operations
655,980
–
(1,144)
654,836
(588,180)
66,656
(52,804)
897
1
2
14,749
–
12,377
(650)
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
Diluted earnings per ordinary share
4
5
6
7
7
14,749
(684)
–
1,295
15,360
(3,964)
11,396
(4,163)
7,233
29.75p
28.58p
519,385
1,900
(658)
520,627
(465,584)
55,043
(44,299)
983
11,727
(3,129)
51
1,426
10,075
(1,910)
8,165
(3,439)
4,726
22.17p
21.34p
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27
Group Balance Sheet
at 31 December 2000
2000
1999
Notes
£’000s
£’000s
£’000s
£’000s
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)
17,929
(16,840)
12
13
14
14
15
16
17
11,218
11,865
1,089
1,245
25,417
35,355
117,964
23,474
176,793
Creditors: amounts falling due within one year
18
(156,510)
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
23
24
Approved by the Board on 13 February 2001
J C Morgan
J M Bishop
20,283
45,700
5,686
13,064
4,259
22,691
45,700
41,907
3,793
45,700
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
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28
Company Balance Sheet
at 31 December 2000
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 13 February 2001
J C Morgan
J M Bishop
Notes
13
14
15
16
17
18
19
23
24
2000
£’000s
7,727
63,880
71,607
14,797
15,382
343
30,522
(36,010)
(5,488)
66,119
(80)
66,039
5,686
13,064
3,074
13,644
30,571
66,039
62,246
3,793
66,039
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
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29
Group Cash Flow Statement
for the year ended 31 December 2000
Net cash inflow from operating activities
Returns on investments and servicing of finance
Interest received
Interest paid
Dividends paid to preference shareholders
Notes
28
2000
£’000s
8,211
1,411
(615)
(253)
543
1999
£’000s
12,648
1,494
(395)
(275)
824
Taxation
Corporation tax paid
(2,563)
(2,191)
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
Repayment of purchase consideration
Purchase of subsidiary undertakings
Net cash acquired with subsidiary undertakings
25
25
Equity dividends paid
Net cash inflow/(outflow) before financing
Financing
Issue of shares, net of expenses
Net cash inflow from financing activities
(2,288)
8
(155)
(2,435)
750
–
–
750
(3,316)
1,190
242
242
(3,286)
778
(480)
(2,988)
–
(20,689)
9
(20,680)
(2,427)
(14,814)
8,470
8,470
Increase/(decrease) in cash
29
1,432
(6,344)
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30
Combined Statement of Movements in Reserves and Shareholders’ Funds
for the year ended 31 December 2000
Group
Share
premium
account
£'000s
Revaluation
reserve
£'000s
Profit
and loss
account
£'000s
Total
reserves
£'000s
Share
capital
£'000s
2000
Share-
holders'
funds
1999
Share-
holders'
funds
£'000s
£'000s
Balance at 1 January
11,794
3,963
15,458
31,215
6,714
37,929
23,182
Retained profit for year
New shares issued
–
–
Converted preference shares
1,038
Options exercised
Goodwill realised on
discontinued operations
Surplus on revaluation
232
–
–
–
–
–
–
–
296
–
–
–
–
–
7,233
7,233
–
–
–
1,038
(1,038)
7,233
4,726
–
–
8,151
–
232
10
242
319
–
296
–
–
–
68
296
1,483
Balance at 31 December
13,064
4,259
22,691
40,014
5,686
45,700
37,929
Included within the profit and loss account balance at 31 December 2000 is an amount for unrealised goodwill totalling £7,034,000
(1999: £7,034,000).
Company
Share
premium
account
Profit
Special Revaluation and loss
reserve account
reserve
Total
reserves
£'000s
£'000s
£'000s
£'000s
£'000s
Share
capital
£'000s
2000
Share-
holders'
funds
1999
Share-
holders'
funds
£'000s
£'000s
Balance at 1 January
11,794
13,644
3,074
24,953
53,465
6,714
60,179
40,499
Retained profit for year
New shares issued
–
–
Converted preference shares
1,038
Options exercised
Surplus on revaluation
232
–
–
–
–
–
–
–
–
–
–
–
5,618
5,618
–
–
–
–
–
–
–
1,038
(1,038)
232
–
10
–
5,618
10,285
–
–
242
–
8,151
–
319
925
Balance at 31 December
13,064
13,644
3,074
30,571
60,353
5,686
66,039
60,179
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31
Other Primary Statements
for the year ended 31 December 2000
Statement of Total Recognised Gains and Losses
Profit for the financial year before dividends
Share of joint venture’s surplus on revaluation of investment property
Surplus on revaluation of investment property
2000
£’000s
11,396
296
–
1999
£’000s
8,165
558
925
Total recognised gains and losses
11,692
9,648
Note of Historical Cost Profits and Losses
Profit on ordinary activities before taxation
Realisation of property valuation gains of prior years
Difference between the historical cost depreciation charge and the actual
depreciation charge for the year calculated on the revalued amount
2000
£’000s
15,360
–
73
1999
£’000s
10,075
140
6
Historical cost profit on ordinary activities before taxation
15,433
10,221
Historical cost profit on ordinary activities after taxation
and dividends
7,306
4,872
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32
Principal Accounting Policies
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 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.
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.
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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 on page 43, the
annual costs are charged to the profit and loss account.
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Notes to the Accounts
1 Analysis of turnover, operating profit and net assets
Construction
Fit out
Affordable housing
Investments
Group activities
2000
Profits/
(losses)
£’000s
4,542
8,716
2,715
892
(2,116)
Turnover
£’000s
317,605
229,350
107,709
172
–
Net assets
£’000s
(2,366)
(13,817)
16,879
22,487
(957)
Turnover
£’000s
274,516
174,146
65,065
5,000
–
1999
Profits/
(losses)
£’000s
3,097
7,564
1,057
2,235
(1,576)
Net assets
£’000s
(684)
(4,427)
8,546
14,866
(4,190)
654,836
14,749
22,226
518,727
12,377
14,111
Discontinued operations
–
–
–
1,900
(650)
1,776
654,836
14,749
22,226
520,627
11,727
15,887
Net cash balances
Net assets
23,474
45,700
22,042
37,929
Segmental net assets are stated after deducting interest bearing net cash balances. All activities are carried out in the
United Kingdom and Channel Islands.
2 Other operating income
Rent receivable
3 Operating profit
Operating profit is stated after charging/(crediting)
Depreciation
(Profit)/loss on sale of fixed assets
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
2000
£’000s
897
2000
£’000s
2,082
(360)
650
8,388
2,338
2,460
16
178
–
1999
£’000s
983
1999
£’000s
1,660
28
379
6,155
1,759
2,517
15
170
30
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Notes to the Accounts
2000
£’000s
(615)
499
(116)
1,411
1,295
2000
£’000s
4,073
96
–
(205)
3,964
1999
£’000s
(395)
327
(68)
1,494
1,426
1999
£’000s
3,000
(143)
–
(947)
1,910
4 Net interest receivable
Interest payable
Interest capitalised
Interest receivable
5 Tax charge on profit on ordinary activities
Corporation tax payable at 30% (1999: 30.25%)
Under/(over) provision in prior years
Share of tax of joint venture
Tax on exceptional loss
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
3.00p (1999 : 2.50p)
7.50p (1999 : 6.00p)
Total dividends
Dividends on shares held in trust relating to the Long Term Incentive Plan
2000
£’000s
1999
£’000s
197
46
243
1,133
2,839
3,972
4,215
(52)
4,163
219
56
275
929
2,235
3,164
3,439
–
3,439
7 Earnings per ordinary share
The calculation of the earnings per share is based on the weighted average number of 37,494,000 (1999: 35,591,000)
ordinary shares in issue during the year and on the profits for the year attributable to ordinary shareholders of £11,153,000
(1999: £7,890,000).
In calculating the diluted earnings per share, earnings are adjusted for the preference dividend of £243,000 (1999: £275,000)
making adjusted earnings of £11,396,000 (1999: £8,165,000). The weighted average number of ordinary shares are adjusted
for the dilutive effect of the convertible preference shares by 1,517,000 (1999: 1,941,000), share options by 554,000
(1999: 722,000) and contingent Long Term Incentive Plan shares by 290,000 (1999: nil) giving an adjusted number of ordinary
shares of 39,855,000 (1999: 38,254,000).
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Notes to the Accounts
8 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 £9,781,000 (1999: £13,724,000).
9 Employees
The average number of people employed by the Group during the year was:
Fit out
Construction
Affordable housing
Other (including discontinued business)
2000
No.
471
1,612
443
29
2,555
2000
£’000s
67,950
7,195
1,637
1999
No.
392
1,432
171
127
2,122
1999
£’000s
56,932
5,732
1,205
76,782
63,869
Salary
and fees
£’000s
Bonus
£’000s
Benefits
£’000s
Pension
£’000s
2000
Totals
£’000s
1999
Totals
£’000s
180
175
160
120
98
733
23
20
20
63
96
93
85
64
52
390
–
–
–
–
16
18
13
13
12
72
–
–
–
–
18
18
16
12
10
74
–
–
–
–
310
304
274
209
172
1,269
23
20
20
63
210
198
193
159
–
760
36
20
20
76
796
390
72
74
1,332
836
10 Staff costs
Wages and salaries
Social security costs
Pension costs
11 Directors’ remuneration
J C Morgan
A M Stoddart
J M Bishop
J J C Lovell
P Whitmore
Executive directors
Sir D P Hornby
G Gallacher
B H Asher
Non-executive directors
Totals
The totals of directors’ remuneration shown above include fees of £63,000 (1999: £76,000). 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 20 and 21.
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 20. Conditional awards which have been made are shown therein. Excluded from the above table is
an amount of £183,000 which has been accrued for potential awards relating to 2000.
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Notes to the Accounts
12 Intangible fixed assets
Group
Cost or valuation
At 1 January 2000
Additions (see note 25)
At 31 December 2000
Amortisation
At 1 January 2000
Provided in the year
At 31 December 2000
Net book value at 31 December 2000
Net book value at 31 December 1999
13 Tangible fixed assets
(a) Group
Cost or valuation
At 1 January 2000
Additions
Disposals
At 31 December 2000
Depreciation
At 1 January 2000
Provided in the year
Disposals
At 31 December 2000
Net book value at 31 December 2000
Net book value at 31 December 1999
Goodwill
£’000s
12,338
100
12,438
570
650
1,220
11,218
11,768
Total
£’000s
18,109
2,288
(2,123)
Plant, machinery
& equipment
£’000s
Motor
vehicles
£’000s
Freehold
property
£’000s
Leasehold
property
£’000s
6,971
1,789
(631)
8,129
4,192
1,630
(625)
5,197
2,932
2,779
851
35
(224)
662
722
65
(217)
570
92
129
7,038
–
(958)
6,080
223
62
(51)
234
5,846
6,815
3,249
464
(310)
3,403
18,274
335
325
(252)
408
2,995
2,914
5,472
2,082
(1,145)
6,409
11,865
12,637
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Notes to the Accounts
13 Tangible fixed assets (continued)
(b) Company
Cost or valuation
At 1 January 2000
Additions
Disposals
At 31 December 2000
Depreciation
At 1 January 2000
Provided in the year
Disposals
At 31 December 2000
Net book value at 31 December 2000
Net book value at 31 December 1999
Plant, machinery
& equipment
£’000s
Freehold
property
£’000s
Leasehold
property
£’000s
162
104
(9)
257
92
58
(8)
142
115
70
7,018
–
(959)
6,059
217
60
(51)
226
5,833
6,801
1,875
–
–
1,875
14
82
–
96
1,779
1,861
Total
£’000s
9,055
104
(968)
8,191
323
200
(59)
464
7,727
8,732
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
2000
£’000s
1999
£’000s
2000
£’000s
1999
£’000s
3,655
1,521
5,176
2,191
1,474
3,665
8,841
3,655
1,600
5,255
3,160
1,314
4,474
9,729
3,655
1,521
5,176
2,178
258
2,436
7,612
3,655
1,600
5,255
3,146
261
3,407
8,662
Land and buildings at cost or valuation are stated:
Group
Company
Investment properties at valuation
Other properties at valuation
Other properties at cost
2000
£’000s
5,250
1,626
2,607
9,483
1999
£’000s
5,250
1,626
3,411
10,287
2000
£’000s
5,250
1,626
1,058
7,934
1999
£’000s
5,250
1,626
2,017
8,893
An independent valuation of the Group’s investment properties was undertaken by Healey & 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 considered these valuations as at the balance sheet date and have concluded that no change is required
to their carrying value.
Comparable amounts determined according to
the historical cost convention:
Land and buildings
Cost
2000
£’000s
7,172
Accumulated
depreciation
Net book
value
Net book
value
2000
£’000s
1,260
2000
£’000s
5,912
1999
£’000s
6,698
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Notes to the Accounts
Joint
venture
£’000s
Own shares
at cost
£’000s
793
–
–
–
296
1,089
1,170
155
(80)
–
–
1,245
14 Investments
(a) Group
At 1 January 2000
Additions
Allocations
Share of results for the year
Share of revaluation reserve
At 31 December 2000
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 Camilla Court, Nacton, Ipswich
IP10 0EU. 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. At 31 December 2000 the fixed assets of Primary Medical
Property Limited were £35.3m, current assets £0.5m, current liabilities £2.5m and long term liabilities £31.1m.
Investment in own shares
The own shares at cost represent 598,542 Morgan Sindall plc ordinary shares held in trust in connection with the Long Term
Incentive Plan as detailed in the Directors’ Report on page 20. Based on the Company’s share price on 31 December 2000
of £2.94 the market value of the shares was £1,759,713.
(b) Company
Cost at 1 January 2000
Additions
Allocations
Disposals
Repaid during the year
Cost at 31 December 2000
Provisions at 1 January 2000
Disposals
Provisions created in year
Provisions at 31 December 2000
Net book value at 31 December 2000
Net book value at 31 December 1999
Own shares
at cost
£’000s
Subsidiary undertakings
Loans
Shares
£’000s
£’000s
Joint
venture
shares
£’000s
1,170
155
(80)
–
–
1,245
–
–
–
–
1,245
1,170
62,082
2,000
–
(66)
(750)
63,266
713
(53)
–
660
62,606
61,369
1,640
–
–
–
(300)
1,340
1,066
–
245
1,311
29
574
4
–
–
–
–
4
4
–
–
4
–
–
Total
£’000s
64,896
2,155
(80)
(66)
(1,050)
65,855
1,783
(53)
245
1,975
63,880
63,113
The additions to shares in subsidiary undertakings include £0.1m relating to the acquisition of Lovell Partnerships Limited
(see note 25) and the issue of £1.9m share capital by existing subsidiaries.
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Notes to the Accounts
15 Stocks
Group
Company
Development works and building land
Trading properties
Materials and equipment
2000
£’000s
33,534
1,693
128
1999
£’000s
23,863
863
86
2000
£’000s
14,217
580
–
35,355
24,812
14,797
1999
£’000s
5,931
580
–
6,511
Included within development works and building land is £900,000 (1999: £401,000) 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
2000
£’000s
51,915
51,975
–
46
–
11,598
2,430
1999
£’000s
48,387
36,755
–
276
–
2,196
1,206
117,964
88,820
2000
£’000s
183
–
11,572
40
326
1,862
1,399
15,382
1999
£’000s
270
–
3,014
40
–
163
210
3,697
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
2000
£’000s
–
7,559
47,132
–
3,444
2,789
5,773
86,928
2,885
1999
£’000s
–
8,162
49,127
–
2,917
1,388
2,253
57,975
2,291
2000
£’000s
9,864
–
486
18,865
1,741
–
41
2,128
2,885
156,510
124,113
36,010
1999
£’000s
1,119
–
695
15,815
127
262
36
2,069
1,671
21,794
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Notes to the Accounts
19 Provisions for liabilities and charges
Group
Company
Provisions for losses:
At 1 January 2000 and 31 December 2000
–
–
80
80
2000
£’000s
1999
£’000s
2000
£’000s
1999
£’000s
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
2000
£’000s
1999
£’000s
–
–
–
–
–
–
2000
£’000s
426
(426)
–
1999
£’000s
154
(154)
–
There are taxation losses to carry forward of approximately £8 million (1999: £10 million).
20 Operating lease commitments
At 31 December 2000 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
£’000s
192
671
1,610
2,473
Land and
buildings
Other
£’000s
1,015
1,830
3
2,848
Total
£’000s
1,207
2,501
1,613
5,321
21 Financial commitments
Group
Company
Capital expenditure
Authorised and contracted
22 Contingent liabilities
2000
£’000s
1999
£’000s
2000
£’000s
1999
£’000s
120
53
–
–
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.
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Notes to the Accounts
23 Called up share capital
2000
1999
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
50,000
2,500
42,960
2,148
5,000
55,000
5,000
7,500
5,000
47,960
37,854
1,893
37,222
3,793
3,793
4,853
41,647
5,686
42,075
5,000
7,148
1,861
4,853
6,714
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.
80,700 ordinary shares in respect of options exercised under the Company's 1988 Scheme (referred to below) for total
consideration of £131,384.
127,750 ordinary shares in respect of options exercised under the Company's 1995 Scheme (referred to below) for
total consideration of £111,013.
423,683 ordinary shares in respect of conversion rights attached to 1,059,209 convertible preference shares exercised
as at 30 June 2000.
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 2000 there remain 271,150 options outstanding under that Scheme
exercisable at prices between £0.73 and £1.71. At the same date there were 1,354,850 options outstanding under the 1995
Scheme exercisable at prices between £0.73 and £2.70.
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
2000
£’000s
2,854
1,405
4,259
1999
£’000s
2,854
1,109
3,963
2000
£’000s
2,854
220
1999
£’000s
2,854
220
3,074
3,074
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Notes to the Accounts
25 Acquisitions
Lovell Partnerships
On 16 June 1999 the Company acquired Lovell Partnerships. The final cash consideration was £19.6m with cost of
acquisition of £0.5m. Additional fair value adjustments of £0.75m were made to the provisional fair values, relating to the
carrying value of work in progress.
Cash consideration
Acquisition cost
Total cost
Net assets
Goodwill
Provisional
values
1999
Adjustments
£’000s
20,316
373
20,689
12,512
8,177
£’000s
(750)
100
(650)
(750)
100
Final
values
2000
£’000s
19,566
473
20,039
11,762
8,277
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. The majority of the closure costs were provided in 1999. However additional and final costs have been incurred
during the year totalling £684,000.
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 accumulate 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 in the period to 30 June 2000 were
funded using the unallocated reserve of the Plan and in these circumstances no charge to the profit and loss account of the
employer is recorded. Following a further review by the Plan actuary in May 2000, this practice then ceased as at the date
referred to above.
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Notes to the Accounts
28 Reconciliation of operating profit to net cash inflow from operating activities
Operating profit
Depreciation of tangible fixed assets
Amortisation of goodwill
(Profit)/loss on sale of fixed assets
Increase in stocks and work in progress
Increase in debtors
Increase in creditors
Exceptional loss
2000
£’000s
14,749
2,082
650
(360)
(10,044)
(28,564)
30,382
(684)
1999
£’000s
11,727
1,660
379
28
(242)
(8,177)
10,334
(3,061)
Net cash inflow from operating activities
8,211
12,648
29 Reconciliation and analysis of net cash flow to movement in net cash
Cash at bank and in hand
22,042
1,432
23,474
1999
£’000s
Cash flow
£’000s
2000
£’000s
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 Group Limited
Overbury plc
Roberts Construction Limited
Sindall Limited
*Snape Limited
Stansell Limited
*Stansell QVC Limited
Wheatley Construction Limited
Activity
Construction
Construction
Affordable housing
The workplace specialist
Fitting out and refurbishment specialist
Construction
Construction
Construction
Construction
Construction
Construction
Joint venture
Primary Medical Property Limited (50%)
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, which is the principal place of business.
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45
Notes to the Accounts
31 Directors’ interests
According to the register maintained as required by the Companies Act 1985, the interests of the directors in office at
the start and end of the year are shown below and their interests in shares under the Long Term Incentive Plan are shown in
the Remuneration Report on page 20.
J C Morgan
J M Bishop
J J C Lovell
A M Stoddart
P Whitmore
G Gallacher
B H Asher
Sir D P Hornby
5p Ordinary
Beneficial
2000
No.
6,226,801
17,814
6,223,581
10,000
2,250
3,000
5,000
5,452
1999
No.
6,206,926
12,814
6,183,706
5,000
–
–
–
5,452
No director had any non-beneficial interest in the ordinary shares or any interest in the preference shares of the Company or
the shares of any Group company. There have been no changes in the interests of the directors between the year end and
13 February 2001. No director had any material interest in any contract with the Company.
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46
Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting of the Company will be held in the Conference Room, College Hill
Associates, 4th Floor, Elizabeth House, 9/11 Bush Lane, London, EC4N 0AR at 12 noon on Tuesday 10 April 2001 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 2000.
To declare a final dividend of 7.5 pence per Ordinary Share.
To re-elect Mr B H Asher a Director.
To re-elect Mr J M Bishop 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 resolution 7 will be proposed as an Ordinary Resolution
and resolutions 8 and 9 will be proposed as Special Resolutions.
7.
That 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 £607,288.20 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.
8.
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
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Notice of Annual General Meeting
47
ii)
the allotment (otherwise than pursuant to sub-paragraphs i) above and iii) below) of equity securities up to an
aggregate nominal amount of £94,635.55; and
iii)
the allotment of equity securities up to a total nominal amount of £75,866 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.
9.
That the Articles of Association of the Company be amended as follows:
i)
by adding the following sentence at the end of article 69:
“Subject to the Statutes, and if and on the terms that the directors so determine, an instrument appointing a proxy
may be delivered electronically to an electronic address or facsimile number designated by the Company for this
purpose, in which case the requirements of these Articles that an instrument appointing a proxy be signed or
executed in any particular way or (as the case may require) be in writing shall not apply;”
ii)
by adding the words “or, subject to the Statutes, electronically to an electronic address or facsimile number notified
to the Company by the shareholder for this purpose, provided that a share certificate may only be delivered
personally or by post” to the end of the first sentence in article 136; and
iii)
by adding the following sentence after the third sentence in article 136
“Where a notice or document is sent electronically service or delivery is deemed to be effected at the time of
transmission and in proving such service or delivery it shall be sufficient to show that the sender’s equipment
indicates successful transmission.”
By order of the Board
W R Johnston
Company Secretary
13 February 2001
Registered Office
77 Newman Street
London
W1T 3EW
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48
Notice of Annual General Meeting
Notes
1.
2.
3.
4.
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 Capita IRG plc, Bourne House, 34 Beckenham Road, Beckenham,
Kent BR3 4TU as to arrive no later than 12 noon on 7 April 2001.
5.
Short biographical details of the directors seeking re-election are shown on page 18.
6.
7.
8.
9.
Service contracts of Directors will be available for inspection at 77 Newman Street, London, W1T 3EW 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 Conference Room, College Hill Associates, 4th Floor, Elizabeth House, 9/11 Bush Lane,
London, EC4N 0AR.
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.
Resolution 7
When resolution 7 in the notice of the Annual General Meeting is passed, the Board will have general and unconditional
authority to allot 12,145,776 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, 3,143,320
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 9,002,456 Ordinary Shares, representing approximately 18 per cent of the
issued Ordinary Share capital of the Company, will remain authorised, unissued and unreserved.
Resolution 8
In addition to the above, on the passing of resolution 8, the Board will have authority to allot equity securities up to an
aggregate value of £94,635.55, 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.
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Notice of Annual General Meeting
49
10. Resolution 9
The Companies Act 1985 (Electronic Communications) Order 2000 (‘the Order’) passed through Parliament in
December 2000.The Order allows the principal documents which the Act requires to be sent to shareholders in written
form to be transmitted (where a shareholder so agrees) to an electronic address nominated by the shareholder
concerned for that purpose. In addition, it will allow the principal communications required by the Act (Notices of
Meetings for example) to be placed on the company’s website accessible by the shareholders entitled to receive that
information and also for the appointment of a proxy to be transmitted to the Company by electronic means.
The Order allows companies to use electronic communications despite any provisions to the contrary in the relevant
Articles of Association but best practice dictates that a company’s Articles should mirror the underlying legal position
and this is the purpose of resolution 9.
As this enabling Order is of very recent effect and the sophistication and availability of electronic communications is fast
developing, a considerable amount of work needs to be done before more detailed proposals can be circulated to
shareholders. It is expected that this will be completed during the current year. It is, however, appropriate to stress that
participation in the electronic communications regime will be entirely at the option of individual shareholders and there
are no proposals by Government legislation or by Company initiatives to in any way affect shareholders’ rights to
continue to receive written documentation.
11.
12.
Institutional Shareholders
Facilitated by the Company’s brokers, regular presentations are made to institutional shareholders to further mutual
understanding of objectives.
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.
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50
Corporate Directory
Directors
J C Morgan (Chairman)
J M Bishop
J J C Lovell
P Whitmore
B H Asher (Non-Executive)
G Gallacher (Non-Executive)
Sir D P Hornby (Non-Executive)
Secretary
W R Johnston
Registered Office
77 Newman Street, London W1T 3EW
Tel: 020 7307 9200
Fax: 020 7307 9201
Registration No. 521970
Solicitors
Charles Russell,
8-10 New Fetter Lane, London EC4 1RS
Auditors
Deloitte & Touche,
Stonecutter Court, Stonecutter Street,
London EC4A 4TR
Tax Advisors
Grant Thornton,
Grant Thornton House, Melton Street, Euston Square,
London NW1 2EP
Clearing Bankers
Lloyds TSB Bank plc,
Shareholder communication
Contact with existing and prospective shareholders is
welcomed by the Company. If you have any questions or
enquiries about the Company or the activities of the
Group, please contact Jack Lovell, Client Director, at the
registered office.
Website
www.morgansindall.co.uk
Share prices (FT Cityline)
Current buying and selling prices of the Company’s
shares, can be obtained by dialling 0336 434027.
Please note that the EPIC code as used in the Topic and
Datastream Share Price information services was changed
in January 2001 to MGNS.
Financial Calendar
Annual General Meeting
10 April 2001
Ordinary shares
Final dividend:
Ex-dividend date
Record date
Payment date
7 March 2001
9 March 2001
12 April 2001
Interim results announcement
August 2001
Preference shares
Po Box 17328, 11-15 Monument Street, London EC3V 9JA
Dividend payment dates:
15 April 2001
Next conversion date
30 June 2001
15 October 2001
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
Capita IRG plc,
Bourne House, 34 Beckenham Road,
Beckenham, Kent BR3 4TU
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Company Balance Sheet at 31 December 2000
51
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Morgan Sindall plc
77 Newman Street,
London W1T 3EU
Tel: 020 7307 9200
Fax: 020 7307 9201
Visit our website at
www.morgansindall.co.uk
The Construction
Brands Group
Annual Report
& Accounts
1999
Report and Accounts 2000