TIDMMGNS
RNS Number : 2128T
Morgan Sindall Group PLC
24 March 2016
Morgan Sindall Group plc ('the Company')
Annual Financial Report
Further to the release of the Company's Preliminary Results
announcement on 23 February 2016, the Company announces that it has
today posted the following documents on its website at
www.corporate.morgansindall.comwww.investors.morgansindall.com:
-- 2015 Annual Report
-- Circular containing the notice of the 2016 annual general meeting
The Company will hold its annual general meeting at 10.00am on
Thursday 5 May 2016 at the offices of Jefferies Hoare Govett,
Vintners Place, 68 Upper Thames Street, London EC4V 3BJ.
A copy of each of the documents listed above has been submitted
to the Financial Conduct Authority's national storage mechanism
('NSM') and can be accessed via the NSM website at
www.hemscott.com/nsm.do.
In accordance with the requirements of Rules 4.1 and 6.3.5 of
the Disclosure and Transparency Rules, a description of the
principal risks and uncertainties affecting the Group is set out in
appendix 1 to this announcement. The Company's Preliminary Results
announcement released on 23 February 2016 contained all other
information required by DTR 6.3.5.
ENQUIRIES:
Morgan Sindall Group plc Tel: 020 7307 9200
Clare Sheridan, Company Secretary
End
24 March 2016
Appendix 1
The Board recognises the importance of risk in the running of
its business. It recognises that circumstances are continuously
changing and that the risks need to remain under regular review.
This review should be read in conjunction with the viability
statement below.
Overview
Operating in the construction industry, risk is at the heart of
everything we do. We therefore have well-embedded risk and control
processes in place to manage both material and day-to-day
circumstances.
The Group's risk and governance model is designed so that the
Board maintains overall responsibility for risk. Each division
identifies controls and mitigates threats within their operations.
The reporting structure ensures that once the risk appetite is
determined by the Board, risks are managed within acceptable
tolerance levels.
Senior managers within the divisions take ownership of specific
business risks. The likely causes and consequences of each risk are
recorded and each risk is evaluated (both before and after the
effect of mitigation) on its likelihood of occurrence and severity
of impact on strategy. This approach allows the identification and
consistent evaluation of principal risks, as well as consideration
of the effect of the current lines of defence in mitigation.
Process
Risk is managed across the Group in the following way:
-- The Group and its divisions undertake a comprehensive annual
business planning process to identify objectives and set strategies
to achieve their goals taking account of the risk appetite set by
the Board.
-- The executive directors meet with the divisions regularly
throughout the year and with an established agenda and reporting
format covering a range of matters. This allows the executive
directors to ensure that they maintain oversight and control over
the material aspects of strategic, financial, operational and risk
issues.
-- The risk environment is further underpinned by a clear set of
Group and divisional delegated authorities (DELAPS) that define
processes and procedures for approving material decisions,
particularly with regard to project selectivity, tender pricing,
risk, bid submissions and capital requirements. This ensures that
projects are approved at the appropriate level of management, with
the largest and most complex projects being approved at Board
level.
-- Twice yearly each division carries out a detailed risk review
which identifies mitigations or proposed actions for each
significant risk. Risk registers document these together with any
timescale by which actions are targeted for completion. In
conjunction with the divisional risk reviews the Group's executive
directors compile their own assessment thus ensuring that a top
down, bottom up approach is undertaken when considering the
Group-wide environment. These risks are then considered at the
monthly divisional board meetings, to ensure that they remain under
continuous review.
-- The Group risk committee meets three times a year. Its
purpose is to assist the Board in assessing and monitoring risk
management across the Group. The committee's role is to ensure that
inherent and emerging risks in the business are identified and
managed in a timely manner and at an appropriate level. The
committee reviews the response of the Group to specific areas of
risk, and approves standards and processes where weaknesses are
considered to exist.
-- The Group's audit committee is responsible for monitoring and
approving the work undertaken by the internal audit function and
for ensuring that the internal audit process remains efficient and
effective. The committee annually approves the internal audit which
covers both project and corporate level risks. The plan is
developed by focusing upon the principal risks identified from the
risk review process and feedback from current divisional
performance. The internal audit team reports regularly to the Board
and the audit committee on its findings. This process has been
strengthened by divisional audit committees established separately
for Construction & Infrastructure and Affordable Housing, which
have larger and more complex operations than other divisions.
Principal risks
The Board has carried out a robust assessment of the principal
risks that may threaten the Group's strategic priorities. The risks
represent a snapshot of the Company's current risk profile. This is
not an exhaustive list of all the risks the Company faces. As the
global economic environment changes and industry circumstances
evolve, new risks may arise or existing risks may recede or the
ranking of these risks may change.
Our principal risks are set out below:
Strategic Priority Principal risk
------------------------ ------------------------------
Win in targeted markets Macroeconomics - new
opportunities
------------------------ ------------------------------
Market capacity
------------------------ ------------------------------
Exposure to UK housing
market
------------------------------
Poor contract selection
------------------------ ------------------------------
Develop and retain Safety or environmental
talented people incident
------------------------ ------------------------------
Failing to attract and
retain talented people
------------------------ ------------------------------
Disciplined use of Insolvency of key client,
capital subcontractor or supplier
------------------------ ------------------------------
Treasury and funding
------------------------ ------------------------------
Management of working
capital
------------------------ ------------------------------
Maximise efficiency Misprice contracts
of resources
------------------------ ------------------------------
Managing changes to contracts
and disputes
------------------------ ------------------------------
Poor project delivery
------------------------ ------------------------------
Pursuing innovation Innovation
------------------------ ------------------------------
Information technology
------------------------ ------------------------------
In general terms there is a continuing decrease in the overall
risk perceived by the Group, due partly to the completion of a
small number of contracts in London and the South which had
experienced timetable slippages and increased costs. Other factors
reducing risk are the more favourable project procurement routes
that prevail and the sustained UK economy and housing market.
However global economic effects could impact UK investor confidence
and there remains some uncertainty ahead of the EU referendum and
the effect this may have on the market.
Construction: Contract terms, procurement routes and entry
margins are all more favourable,, which, added to improvements in
project controls, means the Group will operate in a more favourable
risk and opportunity environment than in recent years.
Regeneration: The Group's schemes are subject to economic
viability tests, are non-speculative and have robust risk and
capital controls, which allows us to take advantage of the current
prevailing UK economy but at the same time limiting any possible
negative fluctuations in the future markets.
Capital and cash: The Group has committed banking facilities
until 2018, which together with our robust cash and capital
controls allow us to confidently manage our investment portfolio
into the foreseeable future.
Resource: The People Promise initiated to address the Group's
future talent requirement is gathering momentum. This investment
has already begun to secure and develop the talent required to
enable our longer-term growth plans.
Viability statement
As required by provision C.2.2 of the Code, the directors have
assessed the prospects of the Group and have concluded that they
have a reasonable expectation that the Group will be able to
continue in operation and meet its liabilities as they fall due
over the period of the assessment. This assessment took account of
the Group's current position and principal risks and has been made
using a period of three years commencing on 1 January 2016, which
is consistent with the Group's budgeting cycle.
(MORE TO FOLLOW) Dow Jones Newswires
March 24, 2016 08:02 ET (12:02 GMT)
The directors have considered the Group's solvency and liquidity
using cash flow projections. These are compiled on a bottom up
basis incorporating each division's detailed business plans. At
Group level, the base case financial projections assume modest
revenue growth and an improvement in gross margin back to more
normal levels for the Group as the problem contracts that impacted
2015 do not recur and procurement routes become more favourable
with less single stage, competitive tendering. Overheads are
expected to increase ahead of inflation to support the expected
growth in volumes and activity. Operating cash flows are assumed to
broadly follow forecast profitability in the Group's construction
activities, but are much more independently variable in
regeneration, driven by the timing of construction spend and
programmed completions on schemes.
The Group's main committed facility matures in September 2018.
The directors draw attention to the key assumption that there is a
reasonable expectation that this will be renewed at the appropriate
time or the term extended and that there will not be a material
reduction in the level of facilities available to the Group or a
material change in the pricing.
The impact of a number of downside scenarios on the Group's
headroom against its committed facilities and the financial
covenants thereon has been modelled based on the Group's principal
risks. The scenarios are focused on the risks that are scored as
most likely to occur or that would have the greatest potential
severity should they occur and include lower revenue growth,
failure to improve gross margin from current levels, a decline in
gross margin and deterioration in working capital, specifically
client receivables.
The Board has also considered a range of potential mitigating
actions that may be available if one or more of the scenarios
arose.
Strategic priority - Win in targeted markets
The markets in which we operate are affected to varying degrees
by general global economic conditions.
We welcome the sustained improvements in the UK economy and in
turn the quality of our related pipeline in Construction and
Regeneration markets. Unsettled world-wide conditions, such as the
impact of the EU referendum, interest rates and crude oil prices,
remain a concern in their ability to influence investor confidence
that could impact on the Group's longer-term strategy.
Principal Mitigation Key Risk change in
risk monitor reporting period(1)
/ metric
/
instrument
Frequency
-------------- ----------------------------------------------------------- ------------ -------------------------------------------------------------
Macroeconomic Business Decrease
- new * Strategic focus on market spread, geographical planning
opportunities capability and diversification offer measured process * We continue to enjoy sustained levels of opportunity
protection against the cyclical effect of individual Annual in our Construction and Regeneration markets and high
Failure to markets. levels of demand for its development schemes.
anticipate Board
and respond reporting
to global * Business planning processes focus on future markets Monthly * This is partially tempered by levels of competition
economic and those opportunities that are consistent with our in the Construction market, albeit procurement routes
changes risk appetite. Pipeline ,
could result and order margins and terms continue to be favourable.
in the book
inappropriate * Scale adds resilience by enabling the Group to reporting
allocation compete and work in areas with higher barriers to Weekly * Development schemes are sensitive to market and
of resources entry. consumer confidence. Our strategy continues to be
and capital. Sales and geared to commit only if schemes prove economically
This could marketing viable. This means we can maximise our residential
affect the * Added value can be offered to clients when our report portfolio whilst being able to respond quickly to any
Group's divisions work together. Weekly future negative market fluctuations.
profitability
and cash Controls
generation. * Regular monitoring and reporting of financial over * Construction & Infrastructure has been reshaped in
performance, work won, prospects and pipeline of delegated order to take advantage of the current UK economy, be
We have opportunities. authorities more selective to minimise risk and maximise
identified (DELAPS) opportunities for sustainable growth.
the markets Ongoing
and sectors * Market intelligence helps detect potential shifts in
in which we spending and allows us to adapt our strategy if * Group strategic reviews have been refocused by the
anticipate necessary. appointment of a group strategy director who is
future validating strategy and business planning in line
growth. with UK economic indicators and our growth
Within those aspirations
areas we
remain
focused on
selecting
opportunities
that will
provide
sustainable
margins and
repeat
business.
We seek to
anticipate
and
appropriately
respond to
changes in
the global
economic
environment
that may
negatively
impact on
these chosen
markets and
sectors.
-------------- ----------------------------------------------------------- ------------ -------------------------------------------------------------
Market Resource No Change
capacity * Rigorous DELAPS process requires teams at bid stage planning
to verify that appropriate levels of qualified reviews * The industry continues to experience skills and cost
Failure to resource are available. Weekly inflation pressures that we are managing through
rigorously disciplined bid and project selection processes.
review Supply
internal * Our operational resource levels are regularly chain
and third reviewed against anticipated workload. feedback * Construction & Infrastructure's supply chain
party reporting leadership team continues to drive initiatives, which
resource Ongoing/ include the promotion of supply chain partners and
levels * We monitor and report on supply chain utilisation Quarterly increasing engagement to align the business with the
against with a continued focus on initiatives within each 'Customer of Choice' strategy. Moving forward our
anticipated division. DELAPS reporting will include monitoring of progress and
workloads Ongoing improvements in performance throughout the year. This
as a result will help us secure the best supply chain partners to
of sustained * We seeks to differentiate ourselves by being the Tender meet our future needs whilst in return offering
levels of customer of choice to our partners through the review attractive terms.
activity. development and management of effective supply chain boards
Current relationships. Ongoing
(MORE TO FOLLOW) Dow Jones Newswires
March 24, 2016 08:02 ET (12:02 GMT)
positive * The People Promise initiative to help secure and
market develop talent has now been deployed into each of our
conditions * The business planning process identifies future divisions.
continue to resource requirements and supply chain strategies.
create a risk
of potential
overtrading
and, we,
together
with our
supply
chain, are
facing
increasing
pressure on
cost and
skills
availability.
-------------- ----------------------------------------------------------- ------------ ------------------------------------------------------------
Exposure to Business No Change
UK housing * Key UK statistics are monitored, including planning
market unemployment, lending and affordability. process * The industry continues to experience skills and cost
Annually inflation pressures that we are managing through
The UK disciplined bid and project selection processes.
housing * Commitments to development schemes are carefully Board
sector is controlled via a rigorous three-stage development reporting
strongly approval process. Monthly * Construction & Infrastructure's supply chain
influenced leadership team continues to drive initiatives, which
by Government Sales and include the promotion of supply chain partners and
stimulus and * Development structures limit speculative development marketing increasing engagement to align the business with the
consumer to minimise the impact of negative market report 'Customer of Choice' strategy. Moving forward our
confidence. fluctuations. Weekly reporting will include monitoring of progress and
If mortgage improvements in performance throughout the year. This
availability Development will help us secure the best supply chain partners to
and * Where possible, the forward purchase of land is forecasting meet our future needs whilst in return offering
affordability subject to economic viability prior to commitment. Monthly/ attractive terms.
become less quarterly
favourable
this could * When feasible sections of large scale residential * The People Promise initiative to help secure and
make existing schemes are forward sold to institutional investors. develop talent has now been deployed into each of our
schemes divisions.
difficult
to sell and
future
developments
unviable,
reducing
profitability
and tying
up capital.
-------------- ----------------------------------------------------------- ------------ ------------------------------------------------------------
Poor contract Pipeline Decrease
selection * Business planning identifies the markets, sectors and order
and book reporting * The majority of our material projects continue to be
There is a clients that we will target. Weekly secured with repeat clients with strong
risk that relationships.
a division Tender review
would accept * Plans for specific types of work, contract size an boards
a contract d Ongoing * The current market allows the divisions to be more
outside its risk profile are agreed by individual divisions. selective in respect of which contracts to bid for.
core Board reporting
competencies Monthly
or for which * A system of DELAPS governs bid selectivity and the * The development within Construction & Infrastructure
it has acceptance of work. DELAPS of enhanced pipeline and opportunity selectivity
insufficient Ongoing tools means we can identify work that has a higher
resources. probability of success.
This can * Staff planning ensures appropriate levels of Sales and
become qualified resource. marketing
a greater report * Greater visibility of medium-term pipeline quality
risk in a Weekly and the ability to give an early indication of longer
rising market * Initiatives are in place to select supply chain term trends mean we are better able to reshape the
when there partners that match our expectations in terms of Supply chain business in response.
are more quality, sustainability and availability. feedback
opportunities reporting
but of Ongoing/quarterly * As market conditions continue to be favourable we
varying have experienced a greater use of more attractive
quality, procurement routes (negotiated and two-stage) and in
coupled addition have been able to negotiate more favourable
with a limit terms.
on the
availability
of the
appropriate
skills and
resources.
Failure to
understand
project risks
may lead to
poor project
delivery and
ultimately
result in
contract
losses
and
reputational
damage.
-------------- --------------------------------------------------------- ------------------ ------------------------------------------------------------
Strategic priority - Develop and retain talented people
Our performance and business conduct affects employees,
subcontractors and the public and, in turn, can affect our
reputation and commercial performance. We pride ourselves on our
industry-leading practices and our work in some high profile and
technically challenging markets.
Increased market activity has resulted in higher levels of
employee turnover across the sector. If we do not succeed in
attracting and retaining the right talent for our future needs we
will not be able to develop the business as anticipated.
Principal Mitigation Key monitor Risk change in
risk / metric reporting period(1)
/ instrument
Frequency
-------------- ------------------------------------------------------------ ---------------- ------------------------------------------------------------
Safety or HSE Board No Change
environmental * Key executives with specific responsibility for HSE report
incident are identified in each division and on the Board. Monthly * We monitor comparable industry-leading statistics. A
significant proportion of work is carried out in
With Group HSE highly complex and public environments which require
increased * HSE policy frameworks are widely communicated and forum strict observation of the highest levels of Health
pressure on senior managers appointed to manage them in each Quarterly and Safety Executive standards.
employees division and at project level.
and the HSE project
(MORE TO FOLLOW) Dow Jones Newswires
March 24, 2016 08:02 ET (12:02 GMT)
supply audit and * Safety innovations in Construction & Infrastructure
chain there * A Group-wide HSE forum operates to share learning, HSE training this year have included: i) a 'human performance'
is an best practice and emerging risks. schedules approach to leadership, supporting focus on
increasing and ratios influential and current HSE trends and themes; ii) a
risk that Ongoing/monthly cultural development programme and the development of
an accident * Established safety systems, site visits, monitoring a behavioural model for supervisors; iii)
or incident and reporting, procedures including near miss and HSE incident improvements in our engagement with the supply chain;
occurs potential hazard reporting, are in place across the investigation iv) the introduction of High Potential Incident
causing Group. report measures to improve intelligence; v) safety
harm to an Ongoing/monthly improvement plans in place for each business unit.
individual
or community. * Investigation and root cause analysis of accidents or
This could incidents and near misses are undertaken. * A Board HSE committee was established in 2015 to
result in oversee health and safety performance.
legal
proceedings, * Regular HSE training includes behavioural training
financial and update courses are provided.
penalties,
insurance
claims, * Major incident management plans and business
reputational continuity plans are in place and periodically
damage and reviewed and tested.
project
delays.
Consequently
we fail to
pre-qualify
in our
markets
due to a poor
HSE track
record and
ultimately
fails to
deliver
our targets.
-------------- ------------------------------------------------------------ ---------------- ------------------------------------------------------------
Failing to Divisional No Change
attract and * The People Promise has been deployed in all divisions 'people
retain aiming to build the Group's talent pool, identify boards' * Although the industry continues to suffer from a lack
talented people with high potential for future leadership, to review of skilled talent that will remain an issue for the
people offer exciting career opportunities and recognise talent foreseeable future, our investment in the People
achievement. Twice a Promise and associated initiatives is helping us to
In the year retain our talented teams.
current
economic * Future skills and capability requirements are HR Board
environment, monitored. reporting * Continued investment is made in graduate, trainee and
it has Monthly apprenticeship schemes to secure an annual inflow of
become new talent.
increasingly * An annual employee appraisal process is in place, Employee
difficult providing a two-way feedback on performance. joiners
to attract and leavers * A new leadership development programme was launched
and retain report in 2016 with the aim of training 400 leaders over the
the best * Training and development plans seek to maximise Weekly/monthly next two years.
people. relevant skills and experience.
Without Recruitment
talent, monitoring
it becomes * Succession plans are in place across the Group. Weekly/monthly
very
difficult Annual
to maintain * Staff leaver and joining feedback is obtained to appraisal
the highest understand reasons for change. process
levels of Annually
customer
service * Remuneration packages are benchmarked where possible.
and
technical
excellence
that we
strive
for.
------------- ------------------------------------------------------------ --------------- ------------------------------------------------------------
Strategic priority - Disciplined use of capital
Without sufficient liquidity, our ability to meet our
liabilities as they fall due would be compromised, which could
ultimately lead to our failure to continue as a going concern. In a
rising market there is an increased risk that the Group's
counterparties overtrade, which could affect their liquidity. The
heightened market that prevails could mean that a client or supply
chain partner inadvertently over stresses their -finances, so we
need to remain vigilant.
Principal Mitigation Key monitor Risk change in
risk / metric reporting period(1)
/ instrument
Frequency
-------------- ------------------------------------------------------------ ------------------- --------------------------------------------------------------
Insolvency Pipeline No Change
of key * Work is only carried out for financially sound and order
client, clients, established through rigorous due diligence book reporting * Increasing emphasis on project selectivity ensures
subcontractor and credit checks. Weekly that we optimise our focus on sectors and clients
or supplier that have secure covenants.
Insolvency Tender review
of a client * Financial security is sought and obtained where boards
may result required including specific commercial terms and Ongoing * Construction & Infrastructure have a greater focus on
in payment terms, with escrow accounts used as securing long-term supply chain relationships with
significant appropriate. WIP/debt/retention financially sound subcontractors.
financial monitoring
loss due to Daily/weekly
a bad debt, * Contracts with clients, subcontractors or suppliers
whilst are only entered into after review at the appropriate Supply chain
insolvency level of delegated authority. feedback
of a reporting
subcontractor Ongoing/quarterly
or supplier * Work with approved suppliers wherever possible
may disrupt Supply chain
a contract's prequalification
programme * Regular meetings are held with key supply chain Ongoing
of work and members to give and receive feedback and maintain the
lead to quality of the relationship. DELAPS
increased Ongoing
costs in
finding * Business strategy is largely focused on public and
replacements commercial clients based in sound market sectors,
for their reducing the risk of failure.
services.
There is also
a risk that,
given the
wider global
economic
climate,
historical
credit checks
are relied
upon that
have
subsequently
been
overtaken
by events.
-------------- ------------------------------------------------------------ ------------------- --------------------------------------------------------------
Treasury and Management Decrease
funding * We have committed banking facilities of GBP140m accounts
(MORE TO FOLLOW) Dow Jones Newswires
March 24, 2016 08:02 ET (12:02 GMT)
maturing in 2018, (of total facilities GBP175m). Monthly * Debt availability and terms continue to improve for
A lack of These will enable us to fund our planned investment the Group, our clients and our supply chain.
liquidity portfolio. Monitoring
could impact of cash
our ability levels
to continue * A three-stage process for approving development and Daily
to trade or investment-related schemes gives an early indication
restrict our of potential long-term balance sheet commitments. DELAPS
ability to Ongoing
invest in
regeneration * We have a disciplined allocation process for Cash forecast
schemes or significant project related capital which considers report
growth all future requirements and return on investment. Weekly/monthly
markets.
* Daily monitoring of cash levels and regular
forecasting of future cash balances and facility
headroom are conducted.
* Long-term cash forecasts are regularly stress tested
.
* Group DELAPS ensure prior approval is sought for
significant project related capital.
------------- ----------------------------------------------------------- --------------- ------------------------------------------------------------
Management Monitoring Decrease
of working * Working capital is monitored and managed as of cash
capital appropriate, with acute focus on any overdue work in levels * Working capital continues to improve as aged projects
progress, debtors or retentions. Daily unwind and general market terms improve.
Poor
management Cash forecast
of working * Ongoing cash management focus continues to improve. report * Continued cash optimisation focus and controls are
capital Weekly realising benefits.
leads
to * Cash profiling of key opportunities is undertaken at
inadequate an early stage to ensure they meet the Group's
liquidity expectations.
and funding
problems.
------------- ----------------------------------------------------------- --------------- ------------------------------------------------------------
Strategic priority - Maximise efficiency of resources
The Group undertakes several hundred contracts each year. It is
important that contractual terms reflect risks arising from the
nature and complexity of the works and the duration of the
contracts and that these risks are effectively managed.
Having identified the markets in which we will operate, we must
ensure that we select opportunities which we can successfully
deliver by employing capable and available resources. We must
actively manage these resources to ensure our clients receive
exceptional levels of service.
Key monitor
Principal Mitigation / metric Risk change in
risk / reporting period(1)
instrument
Frequency
-------------- ------------------------------------------------------------ ------------ ------------------------------------------------------------
Mispricing Tender No Change
a contract * Robust DELAPS govern the selection of all bids and review
the acceptance of work at key stages. boards * We continue to secure improved contract procurement
If contracts Ongoing routes and terms.
are not
costed * We have a well-established bidding process and Board
correctly experienced bidding teams. reporting * The development within Construction & Infrastructure
this could Monthly of enhanced pipeline and opportunity selectivity
lead to loss tools means we can identify work that has a higher
of * Robust pre-selection, due diligence and risk DELAPS probability of success. Greater visibility of
profitability assessment of individual bids take place. Ongoing medium-term pipeline quality and the ability to give
on a contract an early indication of longer term trends better
that reduces enable us to reshape the business in response.
overall gross * Contract tender reviews are conducted at three key
margin. It stages: pre-qualification, pre-tender and final
may also tender submission. Each stage is approved by an
result appropriate level of senior management via tender
in damaged review boards.
client and
project team
relationships
.
-------------- ------------------------------------------------------------ ------------ ------------------------------------------------------------
Managing Project Decrease
changes * Work is carried out under standard terms wherever financial
to contracts possible. performance * Contract procurement routes and terms are improved
and contract Monthly with an increasing two-stage and negotiated approach.
disputes
* Contract terms are reviewed at tender stage and any Project
Changes to variations approved by the appropriate level of operational * Further enhancements have been made to contract early
contracts management. performance warning techniques.
and contract Monthly
disputes
could * We have well-established systems of measuring and Electronic * The BIM strategy has been fully developed to provide
lead to costs reporting project progress and estimated outturns, project more efficient asset management across the whole
being including contract variations. management lifecycle.
incurred tool
that are not dashboard
recovered * Enhanced project management systems have lead Ongoing
and loss of indicators that assist in the early identification of
profitability potential issues.
on a contract
and delayed
cash. * Increasing building information management ('BIM')
Ultimately adoption is helping us overcome potential design and
we may need constructability issues before they become too costly
to resort or time consuming.
to legal
action
to resolve * Regularised project review process including peer
disputes reviews ensures rigour is applied in core processes
which to facilitate early warning and subsequent mitigation
can prove strategies.
costly with
uncertain
outcomes, * A decision to take legal action is based on
and can appropriate legal advice and suitable provision made
adversely for legal costs.
affect our
client
relationships
.
-------------- ------------------------------------------------------------ ------------ ------------------------------------------------------------
Poor project Electronic Decrease
delivery * A project review process facilitates early warning project
and subsequent mitigation strategies. management * New enhanced project related electronic early warning
The quality tool 'Lead Indicator' tool monitors programme, margin,
of Ongoing change and cash, allowing early identification of
workmanship * Electronic project management workbooks enhance issues.
or poor functionality, client experience and efficiency with CSQ and
commercial the ability for 'live' reporting of key project Perfect
(MORE TO FOLLOW) Dow Jones Newswires
March 24, 2016 08:02 ET (12:02 GMT)
and aspects such as programme and change control. Delivery * The improving market and terms under which we
operational performance contract reduce the probability of disputes. However
delivery of monitoring the upward pressure on skills and commodities needs
a contract, * An escalation process ensures senior management Ongoing/monthly careful management to avoid surprises.
whether by intervention at early stage.
the Group Project
or a joint financial * The development within Construction & Infrastructure
venture * Formal internal peer reviews highlight areas of performance of an enhanced opportunity selectivity process
partner improvement, risk and/or best practice. Monthly affords greater visibility of both project and
or portfolio risk. This means we select projects that
subcontractor Project have a higher probability of success.
does not meet * Client feedback is collated and reviewed using operational
the customer satisfaction questionnaires ('CSQs') and the performance
expectations Perfect Delivery process. Monthly * A significant BIM capability means we are ready to
of clients. meet the government's 2016 mandate and overcome
Project potential design and constructability issues before
failures * Lessons learned exercises are carried out on they become too costly or time consuming.
could incur projects.
additional
costs that * The Perfect Delivery philosophy and culture is
erode profit * Teams are incentivised on Perfect Delivery outcomes embedded in each division and differentiates the
margins and to achieve high levels of client satisfaction. Group's offering.
lead to the
withholding
of Interim * Strategic supply chain trading arrangements are in * Advanced client experience developments are under way
cash payments place to help ensure consistent quality. in the Fit Out division.
impacting
on working
capital. It
is also
possible
that client
experiences
will fall
short of the
standards
we set by
the Group,
potentially
leading to
a reduction
in repeat
business or
in client
referrals.
-------------- ------------------------------------------------------------ ---------------- -------------------------------------------------------------
Strategic priority - Pursuing innovation
We are committed to offering clients innovative and
cost-effective solutions. If we fail to encourage an innovative
approach across the Group we will lose our competitive edge and
suffer reputational damage.
This is coupled with the risk that our systems will not provide
appropriate security levels or resilience needed to ensure reliable
levels of business continuity.
The ever evolving technology environment and persistent cyber
security threat will remain a challenge for the foreseeable
future.
Principal Mitigation Key monitor Risk change in
risk / metric reporting period(1)
/ instrument
Frequency
------------- ------------------------------------------------------------ ---------------- ------------------------------------------------------------
Innovation IT budget Decrease
* A culture of innovation is encouraged and relevant forecasting
A failure ideas, sourced via employees, supply chain, clients Annual/monthly * We are progressively adopting new technologies in
to adopt and external sources, are promoted into the business order to work more efficiently and sustainability,
appropriate environment. Annual business attract and retain talent, and ultimately attain
innovations planning greater returns.
in new Annual
products * Reviews are undertaken to promote elimination of
or waste of both resources and processes, adopting lean Work winning * Recent innovation examples include Lync, BIM, a
techniques methodology where appropriate. Ongoing careers website, upgraded electronic site management
could result tools, smart device facilitation, cost value
in the Group Project reconciliation online recruitment and applicant
being less * Business improvement and IT forum structures are in operational tracking system metrics, management information
effective place to review, sponsor and promote new innovations performance systems, enhanced enterprise finance tools and a
than our into the business. monitoring web-enabled housing stock system.
competitors Ongoing
and unable
to secure * In the near future our largest division, Constructio
best value n
for, or & Infrastructure, plans to introduce a new electroni
offer c
the best work winning tool designed to provide workflow
solutions management of our tender pipeline and enhanced live
to, our business information tools.
clients.
If new
technologies
and
innovation
are not
promoted
into the
business
environment
we may
become
a less
attractive
proposition
to new and
existing
talent.
------------- ------------------------------------------------------------ ---------------- ------------------------------------------------------------
Information Group and No Change
technology * Our Group-wide IT strategy has been remodelled to divisional
encompass an optimised shared services approach, IT forums * Our progressive investment and focus on our IT
If we fail direction and investment. Monthly strategy and programme is maturing, but at the same
to manage time needs to remain focused.
and invest IT monitoring
in our IT * A co-ordinated services approach drives optimisation, and performance
environment efficiency and performance across the whole reporting * We continue to make significant headway in the
we will not technology environment. Ongoing/monthly centralisation of our IT capability and as a result
meet the have enhanced levels of resilience across the network
future that include our data and security environments.
needs of the * A Group-wide IT forum structure is in place ensuring
business in focused strategic development and day-to-day running
terms of of our technology environment.
expected
growth,
security * Progressive IT investment continues to yield
and Infrastructure, application and service delivery
innovation, improvements.
ultimately
meaning that
we will fail * Group-wide risk and security strategies are enacted,
to maintain creating awareness, threat alert, risk and
a vulnerability prioritisation and response.
sustainable
business
(MORE TO FOLLOW) Dow Jones Newswires
March 24, 2016 08:02 ET (12:02 GMT)
------------- ------------------------------------------------------------ ---------------- ------------------------------------------------------------
1 Risk change in reporting period - signifies the Board's
opinion of pre-mitigation risk movement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
ACSUSVARNKAOUAR
(END) Dow Jones Newswires
March 24, 2016 08:02 ET (12:02 GMT)
Morgan Sindall (LSE:MGNS)
Historical Stock Chart
From Jun 2024 to Jul 2024
Morgan Sindall (LSE:MGNS)
Historical Stock Chart
From Jul 2023 to Jul 2024
