Full year results to31 December 2017

Morgan Sindall Group plc22 February 2018

2

Agenda

bull Introduction John Morgan

bull FY 2017 Financial and Operational Review Steve Crummett

bull Investments John Morgan

3

Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

4

FY 2017 Financial and Operational ReviewSteve Crummett

5

Highlights

bull Strong profit growth PBT up 46

bull Balance sheet in very good shape

average daily net cash for the year of pound118m

closing net cash of pound193m

no pension concerns

bull High quality order book up 6 to pound38bn

bull Positive outlook for 2018

bull Total dividend up 29

6

Summary income statement

poundm FY 2017 FY 2016 change

Revenue 2793 2562 +9

Operating profit1

Operating margin168625

48819

+41+60bps

Profit before tax1 661 453 +46

Earnings per share1 1211p 847p +43

Total dividend per share 450p 350p +29

1 Before intangible amortisation of pound12m (FY 2016 intangible amortisation of pound14m and (in the case of earnings per share) deferred tax credit of pound07m)

7

Divisional performance

poundm Revenue Operating Profit1

Operating Margin1

FY 2017 FY 2017 FY 2017 bps

Construction amp Infrastructure 1395 +6 204 +129 15 +80bps

Fit Out 735 +16 391 +42 53 +100bps

Property Services 66 +20 (13) na (20) -330bps

Partnership Housing 474 +9 141 +5 30 -10bps

Urban Regeneration 175 +12 100 -25 na na

Investments 11 na 05 na na na

CentralElims (63) (142)

Total 2793 +9 686 +41 25 +60bps

1 Before intangible amortisation of pound12m (FY 2016 intangible amortisation of pound14m)

8

Cash flow

1 Before intangible amortisation of pound12m 2 lsquoNon-cash adjustmentsrsquo include depreciation pound56m share option charge pound55m non-cash provision movements pound37m less shared equity valuation movements pound05m and share of JV profits pound41m3 lsquoOtherrsquo includes JV dividends and interest income pound37m shared equity redemptions pound33m investment property disposals pound07m less provision utilisations pound15m and gains on disposals pound01m

poundm

Operating Profit 1

Non-cash adjmts 2

Net capex amp finance leases

Working Capital

Other 3 Operating cash flow

Net interest (non JV)

Tax Free cash flow

0

686

(61)

(378)

102

61 410

271

(43)(96)(96)

271

bull Operating cash inflow of pound41m

60 cash conversion

after net investment of pound40m in Regeneration (included in working capital outflow)

Cash Flow

686

(61)

(378)

102

61

410

271

2087

271

(256)

1934

(43)

(96)

(168)

686

(61)

(378)

102

61

410

271

(43)

(96)

(96)

(168)

(256)

271

(153)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

9

Working capitaltrade payables

bull Increase in total lsquoTrade amp Other Payablesrsquo of pound112m in year

lsquoTrade amp Other Payablesrsquo of pound864m at year end mainly comprises contract and other accruals pound573m (lsquoOtherrsquo)

bull lsquoTrade Payablesrsquo at year end of pound162m

increase of pound174m in year

Trade Payable Days3 (TPD) = 24

TPD of 23 in 2016

bull Trade receivable days4 of 18 (15 in 2016)

bull Group has never utilised reverse factoring1 cash flow excludes transfer of land between PPampE and inventories2 adjusted to exclude deferred consideration accrued interest and derivative financial liabilities3 Trade Payable Days = (Trade PayablesCost of Sales) x 3654 Trade Receivable Days = ((Trade Receivables less retentions due)Revenue) x 365

Inventories1 (787)

Receivables (713)

Payables2 +1122

Working capital (378)

Change in working capitalpoundm

No significant change to pattern of receivables and

payables

10

Net cash movements

bull Year end net cash of pound193m

bull Average daily net cash of pound118m

bull Bank facilities renewed in year Total of pound180m with main pound150m facility expiring in May 2022

bull Further investment in Regeneration expected through 2018 2018 average daily cash expected to be at

least pound50m

1 lsquoOtherrsquo includes net loans advanced to JVs (pound142m) consideration paid to acquire an additional interest in JVs (pound96m) payment to establish an lsquootherrsquo investment (pound11m) proceeds from issue of new shares (pound01m) proceeds from the exercise of share options (pound03m) and payment by the employee benefit trust to acquire shares in the Company (pound11m)

poundm

Opening net cash

Free cash flow

Dividends Other1 Closing net cash

0

2087

271

(256)

1934

(168)

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

11

Summary balance sheet

poundm FY 2017 FY 2016

Intangibles 2158 2170

PPampE 144 166

Investments (incl JVs) 839 635

Shared equity loan receivables 156 184

Net working capital (1642) (2036)

Current and deferred tax (228) (194)

Pension scheme 28 26

Net cash 1934 2087

Other1 (223) (266)

Net assets - reported 3166 2772

1 lsquoOtherrsquo includes provisions finance lease liabilities deferred consideration accruedprepaid interest derivative financial assets and liabilities

bull Strong balance sheet

net cash and significant undrawn committed facilities

pension scheme net surplus

gross liabilities of pound11m

12

Order book

bull Group committed order book up 6 to pound38bn

projects only included in order book when signed contract or letter of intent

does not include preferred bidder or lsquoprospectivesrsquo

51 for 2019 and beyond

Order book

poundmpound3849m

pound3637m

FY 16 FY 17 2018 2019 2020 +

49

20

31

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

13

Regeneration amp development pipeline

bull Group regeneration amp development pipeline up 1 at pound32bn

relevant to Regeneration businesses

only includes secured schemes (no preferred bidder or lsquoprospectivesrsquo)

our share of Gross Development Value of schemes

provides long-term visibility 86 for 2019 and beyond

Regeneration amp development pipeline

poundmpound3210m pound3233m

FY 16 FY 17 2018 2019 2020 +

1419

67

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

14

Divisional Performances

15

bull Revenue split Construction 58 Infrastructure 42bull Construction revenue up 2 Infrastructure up 10bull Margin recovery well underway

continued focus on operational delivery and quality of earnings not volume

Construction margin of 13 up 130bps 16 margin in H2

Infrastructure margin of 17 up 10 bps stronger H2 due to work mix

Construction amp Infrastructure

poundm FY 2017 FY 2016 change

Revenue 1395 1321 +6

Operating profit1 204 89 +129

Margin 15 07 +80bps

1 Adjusted

16

poundm pound1886m pound1855m

Infrastructure

Construction

FY 16 FY 17

pound1377mpound1296m

pound590m pound478m

bull Divisional order book down 2 to pound1855m

significant contract wins in Infrastructure with order book up 6 to pound1377m

Construction order book down 19

positive evidence of contract selectivity and focus on quality not chasing volume

93 of Construction order book by value continuing to be derived through negotiatedframework2-stage bidding processes

Construction amp InfrastructureO

rder

Boo

k

Expect further margin improvement in 2018

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound410m

pound257m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

17

Fit Out

poundm FY 2017 FY 2016 change

Revenue 735 634 +16

Operating profit1 391 275 +42

Margin 53 43 +100bps

1 Adjusted

bull Another very strong performance All key metrics showing further progress record revenue of pound735m up 16

operating profit up 42 to pound391m

margin up 100bps to 53

focus on operational delivery

bull 77 of revenue relates to fit out of existing office spacebull London region accounts for 71 of revenue

18

poundmpound500m

pound466m

12 month forward order book

Order book beyond 12 months

FY 16 FY 17

pound468m

pound410m

Fit Out

bull Order book of pound500m

increase of 7 compared to previous year end

down 12 from the half year position

12 month forward order book 14 higher than last year

still relatively short term visibility

Ord

er B

ook

Positive outlook for 2018 another strong performance expected

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

19

Property Services

poundm FY 2017 FY 2016 change

Revenue 66 55 +20

Operating (loss)profit1 (13) 07 na

Margin (20) 13 -330bps

1 Adjusted

bull Revenue up 20 as new work mobilised

bull Operating loss of pound13m includes closure of insurance business and exit from loss-making contracts

bull New work secured to support future growth order book up 22 to pound836m including pound102m for 2018

Benefit of restructuring and new work will drive profit in 2018

20

bull Slightly disappointing result lower Q4 open market sales in mixed-tenure cost escalation on one contracting job in London due to finish H1 2018

bull Revenue increase driven by Contracting activities Contracting revenue up 27 (pound290m) ndash 61 of division lower lsquocontractorrsquosrsquo margin

bull Mixed-tenure revenue down 10 to pound184m missed some Q4 completions due to programme slippage total 887 units sold (private and social) 16 lower than 2016

Partnership Housing

1 Adjusted

poundm FY 2017 FY 2016 change

Revenue 474 433 +9

Operating profit1 141 134 +5

Margin 30 31 -10bps

21

Partnership Housing

bull Capital employed at year end up pound24m to pound88m but average capital down to pound100m

combination of turning non-performing capital into cash and slower investment in new schemes than anticipated

poundm FY 2017 FY 2016

Capital employed1 at year end 880 639

LTM average capital employed1 997 1108

1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing)3 Return on average capital employed = adjusted operating profit divided by average capital employed

Improvement in profit and ROCE expected in 2018

bull LTM ROCE2 of 14 up from 12 prior yearbull Order book up 18 to pound523mbull Regeneration amp development pipeline up 11 to pound851m

currently 45 active mixed-tenure sites average 102 units average duration 39 months

bull Average Capital Employed estimated to increase to cpound120m in 2018

22

Urban Regeneration

poundm FY 2017 FY 2016 change

Capital employed1 at year end 850 689 +23

LTM average capital employed1 885 800 +11

Revenue 175 156 +12

Operating profit2 100 134 -25

bull Lower profit in year as expected In line with scheduled development completionsbull Average capital employed increased to pound885m as schemes are developed for sale

in 2018 and beyond

LTM ROCE3 of 9 Well below target threshold

capital employed in 2018 expected to be in range of pound100m-pound110m 1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing) At period end non-recourse debt was pound265m (FY 2016 pound48m) and deferred consideration was poundnil (FY 2016 pound75m) LTM non-recourse debt was pound154m (FY 2016 pound147m) and LTM deferred consideration was pound35m (FY 2016 pound114m)2 Adjusted3 Return on average capital employed = (Adjusted operating profit less interest on non-recourse debt less unwind of discount on deferred consideration) divided by (LTM average capital employed)

23

Urban Regeneration

Pipeline schedule indicates uplift in profit and ROCE in 2018

bull Regeneration amp development pipeline down 8 to pound21bn preferred bidder gt pound200m GDV

not included

broad geographic and sector split

bull Significant activity currently lsquoon sitersquo cpound400m of construction work

currently ongoing further cpound420m to be procured in

year

South East amp London

44

South West3

North West35

YorksNE17

Scotland1

Development pipeline by region

Offices30

Retail3Leisure

6Industrial

8

Residential51

Other2

Development pipeline by sector

24

Investments

poundm FY 2017 FY 2016 change

Operating profit(loss)1 05 (20) na

bull Year of evolution for Investments role of securing work for other divisions in the Group

cpound135m of construction and regeneration work secured for future delivery across the Group

now also expected to be a profit contributor with own returns target

bull Work delivered mainly through strategic JVs property partnerships with Slough Borough Council Bournemouth Borough Council etc

bull Small profit in year due to residential sales in strategic JVsbull Capital employed2 in all of its partnerships of pound39m (average for year of pound31m)

1 Adjusted2 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities

Consistent profit contribution with medium term 20 ROCE target

25

Accounting PoliciesIFRS 15 amp 16

26

IFRS 15

bull IFRS 15 lsquoRevenue from Contracts with Customersrsquo

bull Effective from 1 January 2018

bull No impact on cash flow

bull No impact on lifetime profitability of contracts

bull Does not fundamentally change the way we report or operate

not restating prior years

instead adjustment to opening reserves adjusts for revenue taken in previous years which wouldnrsquot fulfil IFRS 15 criteria

net adjustment to reserves of pound7m relating to revenue recognised prior to 31 December 2017 which would have been deferred to later years

27

bull lsquoIFRS 16 Leasesrsquo being adopted a year early to align with implementation of IFRS 15

requires all leases to be recognised on the balance sheet as a right of use asset with a corresponding lease liability Estimated gross asset and liability on transition of cpound40m-pound45m

mainly relates to property leases

future expense in the income statement will comprise depreciation and finance costs rather than rental payments

impact not expected to be material

increase in operating profit and interest expense of cpound1m

IFRS 16

28

Summary and Outlook

29

Progress against medium-term targets1

Medium-termtarget1

Construction Activities

Margin in Construction 2

Opnl leverage in Property Services gt3 margin

Maintain profits at Fit Out pound25m-pound30m pa

25Margin in Infrastructure

FY16

0

16

pound275m

11

1 Medium-term targets as set out in February 2017

FY17

13

17

pound391m

(20)

30

Progress against medium-term targets1

Medium-termtarget1

Regeneration Activities

ROCE in Partnership Housing gt 20

ROCE in Investments Towards 20

Towards 20ROCE in Urban Regeneration

FY16

12

15

1 Medium-term targets as set out in February 2017

FY17

14

9

1

31

Summary amp Outlook for 2018

bull Strong set of results for FY 2017 profit margin cash all improved

bull Well-positioned for further growth in 2018

margin improvement in Construction amp Infrastructure good prospects for Fit Out better year in Partnership Housing more development completions scheduled in Urban Regeneration Property Services back into profit positive contribution from Investments no material impact of the Carillion situation

bull Total dividend up 29

32

InvestmentsJohn Morgan

Construction RegenerationConstruction

amp Infrastructure

Fit Out PropertyServices

PartnershipHousing

Urban Regeneration

Investments

Investments underpins Group activities

Morgan Sindall Group today

33

Group structure

34

Our Regeneration businesses

Urban Regeneration

Developer only large mixed-use schemes schemes have multi-phases schemes of long duration

Partnership Housing

Builder and developer houses for sale and rent in partnership with local authorities and housing associations

Investments

Developer only long-term strategic partnerships incorporate multiple smaller schemes individual schemes of relatively short duration delivery by other Group companies

ldquoInvesting cash generated from the Construction divisions into development partnerships with the public sectorrdquo

35

Investments today

5 public private partnerships

poundm FY 2017 FY 2016 change

Operating profit(loss) 05 (20) na

Average capital employed 307 207 +48

2 Independent Living JVs

5 Public Private Partnerships

pound143m Sister Company revenue delivered in 2017

Potential pound26bn

GDV from current partnerships 1 Investment

Partnership Fund

36

Investments today

bull Local Authorities

bull County Councils

bull NHS Foundation Trusts

Who our partners are How we win work

bull Public procurement (OJEU)

bull Proactive early engagement with identified prospective partners to shape thinking and approach to market

bull allows the Group to win work which individual divisions could not win

bull provides a long-term profit stream and visibility of work

bull provides high quality construction work for rest of the Group

Role of division in the

Group

bull Construction margin for other Group companies

How we make money

bull Development profits

bull Development management fees

plus

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound445m

pound342m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 15

FY 16

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound466m

pound1499m

pound2826m

pound341m

pound445m

pound342m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 15

FY 16

FY 15

FY 16

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound523m

pound445m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 16

FY 17

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other1			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound523m

pound445m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 16

FY 17

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other1			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound523m

pound445m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 16

FY 17

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

poundm

poundm

0

0

Operating Profit 1

Non-cash adjmts 2

Net capex amp finance leases

Working Capital

Other 3

Operating cash flow

Net interest (non JV)

Tax

Free cash flow

Operating Profit

Non-cash adjustments 1

Net capex amp finance leases

Working Capital

Other operating cash flows 2

Operating cash flow

Net interest (non JV)

Tax

Free cash flow

Dividends

Other 3

Total cash flow

1 Non-cash adjustments include depreciation share option charge shared equity valuation movements and share of JV profit

2 Other operating cash flows include JV dividends and interest income provision movements shared equity redemptions investment property disposals and gains on disposal of property plant and equipment

3 Other includes net loans advanced to JVs consideration paid to acquire interests in JVs proceeds from the issue of new shares and purchase of shares in the Company by The Morgan Sindall Employee Benefit Trust

poundm

0

Opening net cash

Free cash flow

Dividends

Other1

Closing net cash

FY 2017

Non-cash

Other

poundm

poundm

poundm

Operating profit - adjusted

686

Depreciation

56

56

Share option expense

55

55

Movement in fair value of shared equity loans

-05

-05

Gains on disposal of joint ventures

-

-

Gain on disposal of PPE

-01

Share of net profit of joint ventures

-41

-41

Additional pension contributions

0

Gain on disposal of PPE

0

0

Investment property disposals

07

Impairment of investments

-

-

Shared equity redemptions

33

Other operating items

61

61

Provision movements

22

Change in working capital

-378

Total other operating items

61

Net capital expenditure (including repayment of finance leases)

-61

Dividends and interest received from joint ventures

37

37

Operating cash flow

410

65

98

Income taxes paid

-96

Net interest paid (non-joint venture)

-43

Free cash flow

271

2

Agenda

bull Introduction John Morgan

bull FY 2017 Financial and Operational Review Steve Crummett

bull Investments John Morgan

3

Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

4

FY 2017 Financial and Operational ReviewSteve Crummett

5

Highlights

bull Strong profit growth PBT up 46

bull Balance sheet in very good shape

average daily net cash for the year of pound118m

closing net cash of pound193m

no pension concerns

bull High quality order book up 6 to pound38bn

bull Positive outlook for 2018

bull Total dividend up 29

6

Summary income statement

poundm FY 2017 FY 2016 change

Revenue 2793 2562 +9

Operating profit1

Operating margin168625

48819

+41+60bps

Profit before tax1 661 453 +46

Earnings per share1 1211p 847p +43

Total dividend per share 450p 350p +29

1 Before intangible amortisation of pound12m (FY 2016 intangible amortisation of pound14m and (in the case of earnings per share) deferred tax credit of pound07m)

7

Divisional performance

poundm Revenue Operating Profit1

Operating Margin1

FY 2017 FY 2017 FY 2017 bps

Construction amp Infrastructure 1395 +6 204 +129 15 +80bps

Fit Out 735 +16 391 +42 53 +100bps

Property Services 66 +20 (13) na (20) -330bps

Partnership Housing 474 +9 141 +5 30 -10bps

Urban Regeneration 175 +12 100 -25 na na

Investments 11 na 05 na na na

CentralElims (63) (142)

Total 2793 +9 686 +41 25 +60bps

1 Before intangible amortisation of pound12m (FY 2016 intangible amortisation of pound14m)

8

Cash flow

1 Before intangible amortisation of pound12m 2 lsquoNon-cash adjustmentsrsquo include depreciation pound56m share option charge pound55m non-cash provision movements pound37m less shared equity valuation movements pound05m and share of JV profits pound41m3 lsquoOtherrsquo includes JV dividends and interest income pound37m shared equity redemptions pound33m investment property disposals pound07m less provision utilisations pound15m and gains on disposals pound01m

poundm

Operating Profit 1

Non-cash adjmts 2

Net capex amp finance leases

Working Capital

Other 3 Operating cash flow

Net interest (non JV)

Tax Free cash flow

0

686

(61)

(378)

102

61 410

271

(43)(96)(96)

271

bull Operating cash inflow of pound41m

60 cash conversion

after net investment of pound40m in Regeneration (included in working capital outflow)

Cash Flow

686

(61)

(378)

102

61

410

271

2087

271

(256)

1934

(43)

(96)

(168)

686

(61)

(378)

102

61

410

271

(43)

(96)

(96)

(168)

(256)

271

(153)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

9

Working capitaltrade payables

bull Increase in total lsquoTrade amp Other Payablesrsquo of pound112m in year

lsquoTrade amp Other Payablesrsquo of pound864m at year end mainly comprises contract and other accruals pound573m (lsquoOtherrsquo)

bull lsquoTrade Payablesrsquo at year end of pound162m

increase of pound174m in year

Trade Payable Days3 (TPD) = 24

TPD of 23 in 2016

bull Trade receivable days4 of 18 (15 in 2016)

bull Group has never utilised reverse factoring1 cash flow excludes transfer of land between PPampE and inventories2 adjusted to exclude deferred consideration accrued interest and derivative financial liabilities3 Trade Payable Days = (Trade PayablesCost of Sales) x 3654 Trade Receivable Days = ((Trade Receivables less retentions due)Revenue) x 365

Inventories1 (787)

Receivables (713)

Payables2 +1122

Working capital (378)

Change in working capitalpoundm

No significant change to pattern of receivables and

payables

10

Net cash movements

bull Year end net cash of pound193m

bull Average daily net cash of pound118m

bull Bank facilities renewed in year Total of pound180m with main pound150m facility expiring in May 2022

bull Further investment in Regeneration expected through 2018 2018 average daily cash expected to be at

least pound50m

1 lsquoOtherrsquo includes net loans advanced to JVs (pound142m) consideration paid to acquire an additional interest in JVs (pound96m) payment to establish an lsquootherrsquo investment (pound11m) proceeds from issue of new shares (pound01m) proceeds from the exercise of share options (pound03m) and payment by the employee benefit trust to acquire shares in the Company (pound11m)

poundm

Opening net cash

Free cash flow

Dividends Other1 Closing net cash

0

2087

271

(256)

1934

(168)

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

11

Summary balance sheet

poundm FY 2017 FY 2016

Intangibles 2158 2170

PPampE 144 166

Investments (incl JVs) 839 635

Shared equity loan receivables 156 184

Net working capital (1642) (2036)

Current and deferred tax (228) (194)

Pension scheme 28 26

Net cash 1934 2087

Other1 (223) (266)

Net assets - reported 3166 2772

1 lsquoOtherrsquo includes provisions finance lease liabilities deferred consideration accruedprepaid interest derivative financial assets and liabilities

bull Strong balance sheet

net cash and significant undrawn committed facilities

pension scheme net surplus

gross liabilities of pound11m

12

Order book

bull Group committed order book up 6 to pound38bn

projects only included in order book when signed contract or letter of intent

does not include preferred bidder or lsquoprospectivesrsquo

51 for 2019 and beyond

Order book

poundmpound3849m

pound3637m

FY 16 FY 17 2018 2019 2020 +

49

20

31

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

13

Regeneration amp development pipeline

bull Group regeneration amp development pipeline up 1 at pound32bn

relevant to Regeneration businesses

only includes secured schemes (no preferred bidder or lsquoprospectivesrsquo)

our share of Gross Development Value of schemes

provides long-term visibility 86 for 2019 and beyond

Regeneration amp development pipeline

poundmpound3210m pound3233m

FY 16 FY 17 2018 2019 2020 +

1419

67

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

14

Divisional Performances

15

bull Revenue split Construction 58 Infrastructure 42bull Construction revenue up 2 Infrastructure up 10bull Margin recovery well underway

continued focus on operational delivery and quality of earnings not volume

Construction margin of 13 up 130bps 16 margin in H2

Infrastructure margin of 17 up 10 bps stronger H2 due to work mix

Construction amp Infrastructure

poundm FY 2017 FY 2016 change

Revenue 1395 1321 +6

Operating profit1 204 89 +129

Margin 15 07 +80bps

1 Adjusted

16

poundm pound1886m pound1855m

Infrastructure

Construction

FY 16 FY 17

pound1377mpound1296m

pound590m pound478m

bull Divisional order book down 2 to pound1855m

significant contract wins in Infrastructure with order book up 6 to pound1377m

Construction order book down 19

positive evidence of contract selectivity and focus on quality not chasing volume

93 of Construction order book by value continuing to be derived through negotiatedframework2-stage bidding processes

Construction amp InfrastructureO

rder

Boo

k

Expect further margin improvement in 2018

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound410m

pound257m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

17

Fit Out

poundm FY 2017 FY 2016 change

Revenue 735 634 +16

Operating profit1 391 275 +42

Margin 53 43 +100bps

1 Adjusted

bull Another very strong performance All key metrics showing further progress record revenue of pound735m up 16

operating profit up 42 to pound391m

margin up 100bps to 53

focus on operational delivery

bull 77 of revenue relates to fit out of existing office spacebull London region accounts for 71 of revenue

18

poundmpound500m

pound466m

12 month forward order book

Order book beyond 12 months

FY 16 FY 17

pound468m

pound410m

Fit Out

bull Order book of pound500m

increase of 7 compared to previous year end

down 12 from the half year position

12 month forward order book 14 higher than last year

still relatively short term visibility

Ord

er B

ook

Positive outlook for 2018 another strong performance expected

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

19

Property Services

poundm FY 2017 FY 2016 change

Revenue 66 55 +20

Operating (loss)profit1 (13) 07 na

Margin (20) 13 -330bps

1 Adjusted

bull Revenue up 20 as new work mobilised

bull Operating loss of pound13m includes closure of insurance business and exit from loss-making contracts

bull New work secured to support future growth order book up 22 to pound836m including pound102m for 2018

Benefit of restructuring and new work will drive profit in 2018

20

bull Slightly disappointing result lower Q4 open market sales in mixed-tenure cost escalation on one contracting job in London due to finish H1 2018

bull Revenue increase driven by Contracting activities Contracting revenue up 27 (pound290m) ndash 61 of division lower lsquocontractorrsquosrsquo margin

bull Mixed-tenure revenue down 10 to pound184m missed some Q4 completions due to programme slippage total 887 units sold (private and social) 16 lower than 2016

Partnership Housing

1 Adjusted

poundm FY 2017 FY 2016 change

Revenue 474 433 +9

Operating profit1 141 134 +5

Margin 30 31 -10bps

21

Partnership Housing

bull Capital employed at year end up pound24m to pound88m but average capital down to pound100m

combination of turning non-performing capital into cash and slower investment in new schemes than anticipated

poundm FY 2017 FY 2016

Capital employed1 at year end 880 639

LTM average capital employed1 997 1108

1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing)3 Return on average capital employed = adjusted operating profit divided by average capital employed

Improvement in profit and ROCE expected in 2018

bull LTM ROCE2 of 14 up from 12 prior yearbull Order book up 18 to pound523mbull Regeneration amp development pipeline up 11 to pound851m

currently 45 active mixed-tenure sites average 102 units average duration 39 months

bull Average Capital Employed estimated to increase to cpound120m in 2018

22

Urban Regeneration

poundm FY 2017 FY 2016 change

Capital employed1 at year end 850 689 +23

LTM average capital employed1 885 800 +11

Revenue 175 156 +12

Operating profit2 100 134 -25

bull Lower profit in year as expected In line with scheduled development completionsbull Average capital employed increased to pound885m as schemes are developed for sale

in 2018 and beyond

LTM ROCE3 of 9 Well below target threshold

capital employed in 2018 expected to be in range of pound100m-pound110m 1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing) At period end non-recourse debt was pound265m (FY 2016 pound48m) and deferred consideration was poundnil (FY 2016 pound75m) LTM non-recourse debt was pound154m (FY 2016 pound147m) and LTM deferred consideration was pound35m (FY 2016 pound114m)2 Adjusted3 Return on average capital employed = (Adjusted operating profit less interest on non-recourse debt less unwind of discount on deferred consideration) divided by (LTM average capital employed)

23

Urban Regeneration

Pipeline schedule indicates uplift in profit and ROCE in 2018

bull Regeneration amp development pipeline down 8 to pound21bn preferred bidder gt pound200m GDV

not included

broad geographic and sector split

bull Significant activity currently lsquoon sitersquo cpound400m of construction work

currently ongoing further cpound420m to be procured in

year

South East amp London

44

South West3

North West35

YorksNE17

Scotland1

Development pipeline by region

Offices30

Retail3Leisure

6Industrial

8

Residential51

Other2

Development pipeline by sector

24

Investments

poundm FY 2017 FY 2016 change

Operating profit(loss)1 05 (20) na

bull Year of evolution for Investments role of securing work for other divisions in the Group

cpound135m of construction and regeneration work secured for future delivery across the Group

now also expected to be a profit contributor with own returns target

bull Work delivered mainly through strategic JVs property partnerships with Slough Borough Council Bournemouth Borough Council etc

bull Small profit in year due to residential sales in strategic JVsbull Capital employed2 in all of its partnerships of pound39m (average for year of pound31m)

1 Adjusted2 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities

Consistent profit contribution with medium term 20 ROCE target

25

Accounting PoliciesIFRS 15 amp 16

26

IFRS 15

bull IFRS 15 lsquoRevenue from Contracts with Customersrsquo

bull Effective from 1 January 2018

bull No impact on cash flow

bull No impact on lifetime profitability of contracts

bull Does not fundamentally change the way we report or operate

not restating prior years

instead adjustment to opening reserves adjusts for revenue taken in previous years which wouldnrsquot fulfil IFRS 15 criteria

net adjustment to reserves of pound7m relating to revenue recognised prior to 31 December 2017 which would have been deferred to later years

27

bull lsquoIFRS 16 Leasesrsquo being adopted a year early to align with implementation of IFRS 15

requires all leases to be recognised on the balance sheet as a right of use asset with a corresponding lease liability Estimated gross asset and liability on transition of cpound40m-pound45m

mainly relates to property leases

future expense in the income statement will comprise depreciation and finance costs rather than rental payments

impact not expected to be material

increase in operating profit and interest expense of cpound1m

IFRS 16

28

Summary and Outlook

29

Progress against medium-term targets1

Medium-termtarget1

Construction Activities

Margin in Construction 2

Opnl leverage in Property Services gt3 margin

Maintain profits at Fit Out pound25m-pound30m pa

25Margin in Infrastructure

FY16

0

16

pound275m

11

1 Medium-term targets as set out in February 2017

FY17

13

17

pound391m

(20)

30

Progress against medium-term targets1

Medium-termtarget1

Regeneration Activities

ROCE in Partnership Housing gt 20

ROCE in Investments Towards 20

Towards 20ROCE in Urban Regeneration

FY16

12

15

1 Medium-term targets as set out in February 2017

FY17

14

9

1

31

Summary amp Outlook for 2018

bull Strong set of results for FY 2017 profit margin cash all improved

bull Well-positioned for further growth in 2018

margin improvement in Construction amp Infrastructure good prospects for Fit Out better year in Partnership Housing more development completions scheduled in Urban Regeneration Property Services back into profit positive contribution from Investments no material impact of the Carillion situation

bull Total dividend up 29

32

InvestmentsJohn Morgan

Construction RegenerationConstruction

amp Infrastructure

Fit Out PropertyServices

PartnershipHousing

Urban Regeneration

Investments

Investments underpins Group activities

Morgan Sindall Group today

33

Group structure

34

Our Regeneration businesses

Urban Regeneration

Developer only large mixed-use schemes schemes have multi-phases schemes of long duration

Partnership Housing

Builder and developer houses for sale and rent in partnership with local authorities and housing associations

Investments

Developer only long-term strategic partnerships incorporate multiple smaller schemes individual schemes of relatively short duration delivery by other Group companies

ldquoInvesting cash generated from the Construction divisions into development partnerships with the public sectorrdquo

35

Investments today

5 public private partnerships

poundm FY 2017 FY 2016 change

Operating profit(loss) 05 (20) na

Average capital employed 307 207 +48

2 Independent Living JVs

5 Public Private Partnerships

pound143m Sister Company revenue delivered in 2017

Potential pound26bn

GDV from current partnerships 1 Investment

Partnership Fund

36

Investments today

bull Local Authorities

bull County Councils

bull NHS Foundation Trusts

Who our partners are How we win work

bull Public procurement (OJEU)

bull Proactive early engagement with identified prospective partners to shape thinking and approach to market

bull allows the Group to win work which individual divisions could not win

bull provides a long-term profit stream and visibility of work

bull provides high quality construction work for rest of the Group

Role of division in the

Group

bull Construction margin for other Group companies

How we make money

bull Development profits

bull Development management fees

plus

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound445m

pound342m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 15

FY 16

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound466m

pound1499m

pound2826m

pound341m

pound445m

pound342m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 15

FY 16

FY 15

FY 16

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound523m

pound445m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 16

FY 17

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other1			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound523m

pound445m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 16

FY 17

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other1			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound523m

pound445m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 16

FY 17

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

poundm

poundm

0

0

Operating Profit 1

Non-cash adjmts 2

Net capex amp finance leases

Working Capital

Other 3

Operating cash flow

Net interest (non JV)

Tax

Free cash flow

Operating Profit

Non-cash adjustments 1

Net capex amp finance leases

Working Capital

Other operating cash flows 2

Operating cash flow

Net interest (non JV)

Tax

Free cash flow

Dividends

Other 3

Total cash flow

1 Non-cash adjustments include depreciation share option charge shared equity valuation movements and share of JV profit

2 Other operating cash flows include JV dividends and interest income provision movements shared equity redemptions investment property disposals and gains on disposal of property plant and equipment

3 Other includes net loans advanced to JVs consideration paid to acquire interests in JVs proceeds from the issue of new shares and purchase of shares in the Company by The Morgan Sindall Employee Benefit Trust

poundm

0

Opening net cash

Free cash flow

Dividends

Other1

Closing net cash

FY 2017

Non-cash

Other

poundm

poundm

poundm

Operating profit - adjusted

686

Depreciation

56

56

Share option expense

55

55

Movement in fair value of shared equity loans

-05

-05

Gains on disposal of joint ventures

-

-

Gain on disposal of PPE

-01

Share of net profit of joint ventures

-41

-41

Additional pension contributions

0

Gain on disposal of PPE

0

0

Investment property disposals

07

Impairment of investments

-

-

Shared equity redemptions

33

Other operating items

61

61

Provision movements

22

Change in working capital

-378

Total other operating items

61

Net capital expenditure (including repayment of finance leases)

-61

Dividends and interest received from joint ventures

37

37

Operating cash flow

410

65

98

Income taxes paid

-96

Net interest paid (non-joint venture)

-43

Free cash flow

271

3

Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

4

FY 2017 Financial and Operational ReviewSteve Crummett

5

Highlights

bull Strong profit growth PBT up 46

bull Balance sheet in very good shape

average daily net cash for the year of pound118m

closing net cash of pound193m

no pension concerns

bull High quality order book up 6 to pound38bn

bull Positive outlook for 2018

bull Total dividend up 29

6

Summary income statement

poundm FY 2017 FY 2016 change

Revenue 2793 2562 +9

Operating profit1

Operating margin168625

48819

+41+60bps

Profit before tax1 661 453 +46

Earnings per share1 1211p 847p +43

Total dividend per share 450p 350p +29

1 Before intangible amortisation of pound12m (FY 2016 intangible amortisation of pound14m and (in the case of earnings per share) deferred tax credit of pound07m)

7

Divisional performance

poundm Revenue Operating Profit1

Operating Margin1

FY 2017 FY 2017 FY 2017 bps

Construction amp Infrastructure 1395 +6 204 +129 15 +80bps

Fit Out 735 +16 391 +42 53 +100bps

Property Services 66 +20 (13) na (20) -330bps

Partnership Housing 474 +9 141 +5 30 -10bps

Urban Regeneration 175 +12 100 -25 na na

Investments 11 na 05 na na na

CentralElims (63) (142)

Total 2793 +9 686 +41 25 +60bps

1 Before intangible amortisation of pound12m (FY 2016 intangible amortisation of pound14m)

8

Cash flow

1 Before intangible amortisation of pound12m 2 lsquoNon-cash adjustmentsrsquo include depreciation pound56m share option charge pound55m non-cash provision movements pound37m less shared equity valuation movements pound05m and share of JV profits pound41m3 lsquoOtherrsquo includes JV dividends and interest income pound37m shared equity redemptions pound33m investment property disposals pound07m less provision utilisations pound15m and gains on disposals pound01m

poundm

Operating Profit 1

Non-cash adjmts 2

Net capex amp finance leases

Working Capital

Other 3 Operating cash flow

Net interest (non JV)

Tax Free cash flow

0

686

(61)

(378)

102

61 410

271

(43)(96)(96)

271

bull Operating cash inflow of pound41m

60 cash conversion

after net investment of pound40m in Regeneration (included in working capital outflow)

Cash Flow

686

(61)

(378)

102

61

410

271

2087

271

(256)

1934

(43)

(96)

(168)

686

(61)

(378)

102

61

410

271

(43)

(96)

(96)

(168)

(256)

271

(153)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

9

Working capitaltrade payables

bull Increase in total lsquoTrade amp Other Payablesrsquo of pound112m in year

lsquoTrade amp Other Payablesrsquo of pound864m at year end mainly comprises contract and other accruals pound573m (lsquoOtherrsquo)

bull lsquoTrade Payablesrsquo at year end of pound162m

increase of pound174m in year

Trade Payable Days3 (TPD) = 24

TPD of 23 in 2016

bull Trade receivable days4 of 18 (15 in 2016)

bull Group has never utilised reverse factoring1 cash flow excludes transfer of land between PPampE and inventories2 adjusted to exclude deferred consideration accrued interest and derivative financial liabilities3 Trade Payable Days = (Trade PayablesCost of Sales) x 3654 Trade Receivable Days = ((Trade Receivables less retentions due)Revenue) x 365

Inventories1 (787)

Receivables (713)

Payables2 +1122

Working capital (378)

Change in working capitalpoundm

No significant change to pattern of receivables and

payables

10

Net cash movements

bull Year end net cash of pound193m

bull Average daily net cash of pound118m

bull Bank facilities renewed in year Total of pound180m with main pound150m facility expiring in May 2022

bull Further investment in Regeneration expected through 2018 2018 average daily cash expected to be at

least pound50m

1 lsquoOtherrsquo includes net loans advanced to JVs (pound142m) consideration paid to acquire an additional interest in JVs (pound96m) payment to establish an lsquootherrsquo investment (pound11m) proceeds from issue of new shares (pound01m) proceeds from the exercise of share options (pound03m) and payment by the employee benefit trust to acquire shares in the Company (pound11m)

poundm

Opening net cash

Free cash flow

Dividends Other1 Closing net cash

0

2087

271

(256)

1934

(168)

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

11

Summary balance sheet

poundm FY 2017 FY 2016

Intangibles 2158 2170

PPampE 144 166

Investments (incl JVs) 839 635

Shared equity loan receivables 156 184

Net working capital (1642) (2036)

Current and deferred tax (228) (194)

Pension scheme 28 26

Net cash 1934 2087

Other1 (223) (266)

Net assets - reported 3166 2772

1 lsquoOtherrsquo includes provisions finance lease liabilities deferred consideration accruedprepaid interest derivative financial assets and liabilities

bull Strong balance sheet

net cash and significant undrawn committed facilities

pension scheme net surplus

gross liabilities of pound11m

12

Order book

bull Group committed order book up 6 to pound38bn

projects only included in order book when signed contract or letter of intent

does not include preferred bidder or lsquoprospectivesrsquo

51 for 2019 and beyond

Order book

poundmpound3849m

pound3637m

FY 16 FY 17 2018 2019 2020 +

49

20

31

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

13

Regeneration amp development pipeline

bull Group regeneration amp development pipeline up 1 at pound32bn

relevant to Regeneration businesses

only includes secured schemes (no preferred bidder or lsquoprospectivesrsquo)

our share of Gross Development Value of schemes

provides long-term visibility 86 for 2019 and beyond

Regeneration amp development pipeline

poundmpound3210m pound3233m

FY 16 FY 17 2018 2019 2020 +

1419

67

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

14

Divisional Performances

15

bull Revenue split Construction 58 Infrastructure 42bull Construction revenue up 2 Infrastructure up 10bull Margin recovery well underway

continued focus on operational delivery and quality of earnings not volume

Construction margin of 13 up 130bps 16 margin in H2

Infrastructure margin of 17 up 10 bps stronger H2 due to work mix

Construction amp Infrastructure

poundm FY 2017 FY 2016 change

Revenue 1395 1321 +6

Operating profit1 204 89 +129

Margin 15 07 +80bps

1 Adjusted

16

poundm pound1886m pound1855m

Infrastructure

Construction

FY 16 FY 17

pound1377mpound1296m

pound590m pound478m

bull Divisional order book down 2 to pound1855m

significant contract wins in Infrastructure with order book up 6 to pound1377m

Construction order book down 19

positive evidence of contract selectivity and focus on quality not chasing volume

93 of Construction order book by value continuing to be derived through negotiatedframework2-stage bidding processes

Construction amp InfrastructureO

rder

Boo

k

Expect further margin improvement in 2018

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound410m

pound257m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

17

Fit Out

poundm FY 2017 FY 2016 change

Revenue 735 634 +16

Operating profit1 391 275 +42

Margin 53 43 +100bps

1 Adjusted

bull Another very strong performance All key metrics showing further progress record revenue of pound735m up 16

operating profit up 42 to pound391m

margin up 100bps to 53

focus on operational delivery

bull 77 of revenue relates to fit out of existing office spacebull London region accounts for 71 of revenue

18

poundmpound500m

pound466m

12 month forward order book

Order book beyond 12 months

FY 16 FY 17

pound468m

pound410m

Fit Out

bull Order book of pound500m

increase of 7 compared to previous year end

down 12 from the half year position

12 month forward order book 14 higher than last year

still relatively short term visibility

Ord

er B

ook

Positive outlook for 2018 another strong performance expected

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

19

Property Services

poundm FY 2017 FY 2016 change

Revenue 66 55 +20

Operating (loss)profit1 (13) 07 na

Margin (20) 13 -330bps

1 Adjusted

bull Revenue up 20 as new work mobilised

bull Operating loss of pound13m includes closure of insurance business and exit from loss-making contracts

bull New work secured to support future growth order book up 22 to pound836m including pound102m for 2018

Benefit of restructuring and new work will drive profit in 2018

20

bull Slightly disappointing result lower Q4 open market sales in mixed-tenure cost escalation on one contracting job in London due to finish H1 2018

bull Revenue increase driven by Contracting activities Contracting revenue up 27 (pound290m) ndash 61 of division lower lsquocontractorrsquosrsquo margin

bull Mixed-tenure revenue down 10 to pound184m missed some Q4 completions due to programme slippage total 887 units sold (private and social) 16 lower than 2016

Partnership Housing

1 Adjusted

poundm FY 2017 FY 2016 change

Revenue 474 433 +9

Operating profit1 141 134 +5

Margin 30 31 -10bps

21

Partnership Housing

bull Capital employed at year end up pound24m to pound88m but average capital down to pound100m

combination of turning non-performing capital into cash and slower investment in new schemes than anticipated

poundm FY 2017 FY 2016

Capital employed1 at year end 880 639

LTM average capital employed1 997 1108

1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing)3 Return on average capital employed = adjusted operating profit divided by average capital employed

Improvement in profit and ROCE expected in 2018

bull LTM ROCE2 of 14 up from 12 prior yearbull Order book up 18 to pound523mbull Regeneration amp development pipeline up 11 to pound851m

currently 45 active mixed-tenure sites average 102 units average duration 39 months

bull Average Capital Employed estimated to increase to cpound120m in 2018

22

Urban Regeneration

poundm FY 2017 FY 2016 change

Capital employed1 at year end 850 689 +23

LTM average capital employed1 885 800 +11

Revenue 175 156 +12

Operating profit2 100 134 -25

bull Lower profit in year as expected In line with scheduled development completionsbull Average capital employed increased to pound885m as schemes are developed for sale

in 2018 and beyond

LTM ROCE3 of 9 Well below target threshold

capital employed in 2018 expected to be in range of pound100m-pound110m 1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing) At period end non-recourse debt was pound265m (FY 2016 pound48m) and deferred consideration was poundnil (FY 2016 pound75m) LTM non-recourse debt was pound154m (FY 2016 pound147m) and LTM deferred consideration was pound35m (FY 2016 pound114m)2 Adjusted3 Return on average capital employed = (Adjusted operating profit less interest on non-recourse debt less unwind of discount on deferred consideration) divided by (LTM average capital employed)

23

Urban Regeneration

Pipeline schedule indicates uplift in profit and ROCE in 2018

bull Regeneration amp development pipeline down 8 to pound21bn preferred bidder gt pound200m GDV

not included

broad geographic and sector split

bull Significant activity currently lsquoon sitersquo cpound400m of construction work

currently ongoing further cpound420m to be procured in

year

South East amp London

44

South West3

North West35

YorksNE17

Scotland1

Development pipeline by region

Offices30

Retail3Leisure

6Industrial

8

Residential51

Other2

Development pipeline by sector

24

Investments

poundm FY 2017 FY 2016 change

Operating profit(loss)1 05 (20) na

bull Year of evolution for Investments role of securing work for other divisions in the Group

cpound135m of construction and regeneration work secured for future delivery across the Group

now also expected to be a profit contributor with own returns target

bull Work delivered mainly through strategic JVs property partnerships with Slough Borough Council Bournemouth Borough Council etc

bull Small profit in year due to residential sales in strategic JVsbull Capital employed2 in all of its partnerships of pound39m (average for year of pound31m)

1 Adjusted2 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities

Consistent profit contribution with medium term 20 ROCE target

25

Accounting PoliciesIFRS 15 amp 16

26

IFRS 15

bull IFRS 15 lsquoRevenue from Contracts with Customersrsquo

bull Effective from 1 January 2018

bull No impact on cash flow

bull No impact on lifetime profitability of contracts

bull Does not fundamentally change the way we report or operate

not restating prior years

instead adjustment to opening reserves adjusts for revenue taken in previous years which wouldnrsquot fulfil IFRS 15 criteria

net adjustment to reserves of pound7m relating to revenue recognised prior to 31 December 2017 which would have been deferred to later years

27

bull lsquoIFRS 16 Leasesrsquo being adopted a year early to align with implementation of IFRS 15

requires all leases to be recognised on the balance sheet as a right of use asset with a corresponding lease liability Estimated gross asset and liability on transition of cpound40m-pound45m

mainly relates to property leases

future expense in the income statement will comprise depreciation and finance costs rather than rental payments

impact not expected to be material

increase in operating profit and interest expense of cpound1m

IFRS 16

28

Summary and Outlook

29

Progress against medium-term targets1

Medium-termtarget1

Construction Activities

Margin in Construction 2

Opnl leverage in Property Services gt3 margin

Maintain profits at Fit Out pound25m-pound30m pa

25Margin in Infrastructure

FY16

0

16

pound275m

11

1 Medium-term targets as set out in February 2017

FY17

13

17

pound391m

(20)

30

Progress against medium-term targets1

Medium-termtarget1

Regeneration Activities

ROCE in Partnership Housing gt 20

ROCE in Investments Towards 20

Towards 20ROCE in Urban Regeneration

FY16

12

15

1 Medium-term targets as set out in February 2017

FY17

14

9

1

31

Summary amp Outlook for 2018

bull Strong set of results for FY 2017 profit margin cash all improved

bull Well-positioned for further growth in 2018

margin improvement in Construction amp Infrastructure good prospects for Fit Out better year in Partnership Housing more development completions scheduled in Urban Regeneration Property Services back into profit positive contribution from Investments no material impact of the Carillion situation

bull Total dividend up 29

32

InvestmentsJohn Morgan

Construction RegenerationConstruction

amp Infrastructure

Fit Out PropertyServices

PartnershipHousing

Urban Regeneration

Investments

Investments underpins Group activities

Morgan Sindall Group today

33

Group structure

34

Our Regeneration businesses

Urban Regeneration

Developer only large mixed-use schemes schemes have multi-phases schemes of long duration

Partnership Housing

Builder and developer houses for sale and rent in partnership with local authorities and housing associations

Investments

Developer only long-term strategic partnerships incorporate multiple smaller schemes individual schemes of relatively short duration delivery by other Group companies

ldquoInvesting cash generated from the Construction divisions into development partnerships with the public sectorrdquo

35

Investments today

5 public private partnerships

poundm FY 2017 FY 2016 change

Operating profit(loss) 05 (20) na

Average capital employed 307 207 +48

2 Independent Living JVs

5 Public Private Partnerships

pound143m Sister Company revenue delivered in 2017

Potential pound26bn

GDV from current partnerships 1 Investment

Partnership Fund

36

Investments today

bull Local Authorities

bull County Councils

bull NHS Foundation Trusts

Who our partners are How we win work

bull Public procurement (OJEU)

bull Proactive early engagement with identified prospective partners to shape thinking and approach to market

bull allows the Group to win work which individual divisions could not win

bull provides a long-term profit stream and visibility of work

bull provides high quality construction work for rest of the Group

Role of division in the

Group

bull Construction margin for other Group companies

How we make money

bull Development profits

bull Development management fees

plus

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound445m

pound342m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 15

FY 16

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound466m

pound1499m

pound2826m

pound341m

pound445m

pound342m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 15

FY 16

FY 15

FY 16

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound523m

pound445m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 16

FY 17

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other1			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound523m

pound445m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 16

FY 17

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other1			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound523m

pound445m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 16

FY 17

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

poundm

poundm

0

0

Operating Profit 1

Non-cash adjmts 2

Net capex amp finance leases

Working Capital

Other 3

Operating cash flow

Net interest (non JV)

Tax

Free cash flow

Operating Profit

Non-cash adjustments 1

Net capex amp finance leases

Working Capital

Other operating cash flows 2

Operating cash flow

Net interest (non JV)

Tax

Free cash flow

Dividends

Other 3

Total cash flow

1 Non-cash adjustments include depreciation share option charge shared equity valuation movements and share of JV profit

2 Other operating cash flows include JV dividends and interest income provision movements shared equity redemptions investment property disposals and gains on disposal of property plant and equipment

3 Other includes net loans advanced to JVs consideration paid to acquire interests in JVs proceeds from the issue of new shares and purchase of shares in the Company by The Morgan Sindall Employee Benefit Trust

poundm

0

Opening net cash

Free cash flow

Dividends

Other1

Closing net cash

FY 2017

Non-cash

Other

poundm

poundm

poundm

Operating profit - adjusted

686

Depreciation

56

56

Share option expense

55

55

Movement in fair value of shared equity loans

-05

-05

Gains on disposal of joint ventures

-

-

Gain on disposal of PPE

-01

Share of net profit of joint ventures

-41

-41

Additional pension contributions

0

Gain on disposal of PPE

0

0

Investment property disposals

07

Impairment of investments

-

-

Shared equity redemptions

33

Other operating items

61

61

Provision movements

22

Change in working capital

-378

Total other operating items

61

Net capital expenditure (including repayment of finance leases)

-61

Dividends and interest received from joint ventures

37

37

Operating cash flow

410

65

98

Income taxes paid

-96

Net interest paid (non-joint venture)

-43

Free cash flow

271

4

FY 2017 Financial and Operational ReviewSteve Crummett

5

Highlights

bull Strong profit growth PBT up 46

bull Balance sheet in very good shape

average daily net cash for the year of pound118m

closing net cash of pound193m

no pension concerns

bull High quality order book up 6 to pound38bn

bull Positive outlook for 2018

bull Total dividend up 29

6

Summary income statement

poundm FY 2017 FY 2016 change

Revenue 2793 2562 +9

Operating profit1

Operating margin168625

48819

+41+60bps

Profit before tax1 661 453 +46

Earnings per share1 1211p 847p +43

Total dividend per share 450p 350p +29

1 Before intangible amortisation of pound12m (FY 2016 intangible amortisation of pound14m and (in the case of earnings per share) deferred tax credit of pound07m)

7

Divisional performance

poundm Revenue Operating Profit1

Operating Margin1

FY 2017 FY 2017 FY 2017 bps

Construction amp Infrastructure 1395 +6 204 +129 15 +80bps

Fit Out 735 +16 391 +42 53 +100bps

Property Services 66 +20 (13) na (20) -330bps

Partnership Housing 474 +9 141 +5 30 -10bps

Urban Regeneration 175 +12 100 -25 na na

Investments 11 na 05 na na na

CentralElims (63) (142)

Total 2793 +9 686 +41 25 +60bps

1 Before intangible amortisation of pound12m (FY 2016 intangible amortisation of pound14m)

8

Cash flow

1 Before intangible amortisation of pound12m 2 lsquoNon-cash adjustmentsrsquo include depreciation pound56m share option charge pound55m non-cash provision movements pound37m less shared equity valuation movements pound05m and share of JV profits pound41m3 lsquoOtherrsquo includes JV dividends and interest income pound37m shared equity redemptions pound33m investment property disposals pound07m less provision utilisations pound15m and gains on disposals pound01m

poundm

Operating Profit 1

Non-cash adjmts 2

Net capex amp finance leases

Working Capital

Other 3 Operating cash flow

Net interest (non JV)

Tax Free cash flow

0

686

(61)

(378)

102

61 410

271

(43)(96)(96)

271

bull Operating cash inflow of pound41m

60 cash conversion

after net investment of pound40m in Regeneration (included in working capital outflow)

Cash Flow

686

(61)

(378)

102

61

410

271

2087

271

(256)

1934

(43)

(96)

(168)

686

(61)

(378)

102

61

410

271

(43)

(96)

(96)

(168)

(256)

271

(153)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

9

Working capitaltrade payables

bull Increase in total lsquoTrade amp Other Payablesrsquo of pound112m in year

lsquoTrade amp Other Payablesrsquo of pound864m at year end mainly comprises contract and other accruals pound573m (lsquoOtherrsquo)

bull lsquoTrade Payablesrsquo at year end of pound162m

increase of pound174m in year

Trade Payable Days3 (TPD) = 24

TPD of 23 in 2016

bull Trade receivable days4 of 18 (15 in 2016)

bull Group has never utilised reverse factoring1 cash flow excludes transfer of land between PPampE and inventories2 adjusted to exclude deferred consideration accrued interest and derivative financial liabilities3 Trade Payable Days = (Trade PayablesCost of Sales) x 3654 Trade Receivable Days = ((Trade Receivables less retentions due)Revenue) x 365

Inventories1 (787)

Receivables (713)

Payables2 +1122

Working capital (378)

Change in working capitalpoundm

No significant change to pattern of receivables and

payables

10

Net cash movements

bull Year end net cash of pound193m

bull Average daily net cash of pound118m

bull Bank facilities renewed in year Total of pound180m with main pound150m facility expiring in May 2022

bull Further investment in Regeneration expected through 2018 2018 average daily cash expected to be at

least pound50m

1 lsquoOtherrsquo includes net loans advanced to JVs (pound142m) consideration paid to acquire an additional interest in JVs (pound96m) payment to establish an lsquootherrsquo investment (pound11m) proceeds from issue of new shares (pound01m) proceeds from the exercise of share options (pound03m) and payment by the employee benefit trust to acquire shares in the Company (pound11m)

poundm

Opening net cash

Free cash flow

Dividends Other1 Closing net cash

0

2087

271

(256)

1934

(168)

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

11

Summary balance sheet

poundm FY 2017 FY 2016

Intangibles 2158 2170

PPampE 144 166

Investments (incl JVs) 839 635

Shared equity loan receivables 156 184

Net working capital (1642) (2036)

Current and deferred tax (228) (194)

Pension scheme 28 26

Net cash 1934 2087

Other1 (223) (266)

Net assets - reported 3166 2772

1 lsquoOtherrsquo includes provisions finance lease liabilities deferred consideration accruedprepaid interest derivative financial assets and liabilities

bull Strong balance sheet

net cash and significant undrawn committed facilities

pension scheme net surplus

gross liabilities of pound11m

12

Order book

bull Group committed order book up 6 to pound38bn

projects only included in order book when signed contract or letter of intent

does not include preferred bidder or lsquoprospectivesrsquo

51 for 2019 and beyond

Order book

poundmpound3849m

pound3637m

FY 16 FY 17 2018 2019 2020 +

49

20

31

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

13

Regeneration amp development pipeline

bull Group regeneration amp development pipeline up 1 at pound32bn

relevant to Regeneration businesses

only includes secured schemes (no preferred bidder or lsquoprospectivesrsquo)

our share of Gross Development Value of schemes

provides long-term visibility 86 for 2019 and beyond

Regeneration amp development pipeline

poundmpound3210m pound3233m

FY 16 FY 17 2018 2019 2020 +

1419

67

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

14

Divisional Performances

15

bull Revenue split Construction 58 Infrastructure 42bull Construction revenue up 2 Infrastructure up 10bull Margin recovery well underway

continued focus on operational delivery and quality of earnings not volume

Construction margin of 13 up 130bps 16 margin in H2

Infrastructure margin of 17 up 10 bps stronger H2 due to work mix

Construction amp Infrastructure

poundm FY 2017 FY 2016 change

Revenue 1395 1321 +6

Operating profit1 204 89 +129

Margin 15 07 +80bps

1 Adjusted

16

poundm pound1886m pound1855m

Infrastructure

Construction

FY 16 FY 17

pound1377mpound1296m

pound590m pound478m

bull Divisional order book down 2 to pound1855m

significant contract wins in Infrastructure with order book up 6 to pound1377m

Construction order book down 19

positive evidence of contract selectivity and focus on quality not chasing volume

93 of Construction order book by value continuing to be derived through negotiatedframework2-stage bidding processes

Construction amp InfrastructureO

rder

Boo

k

Expect further margin improvement in 2018

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound410m

pound257m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

17

Fit Out

poundm FY 2017 FY 2016 change

Revenue 735 634 +16

Operating profit1 391 275 +42

Margin 53 43 +100bps

1 Adjusted

bull Another very strong performance All key metrics showing further progress record revenue of pound735m up 16

operating profit up 42 to pound391m

margin up 100bps to 53

focus on operational delivery

bull 77 of revenue relates to fit out of existing office spacebull London region accounts for 71 of revenue

18

poundmpound500m

pound466m

12 month forward order book

Order book beyond 12 months

FY 16 FY 17

pound468m

pound410m

Fit Out

bull Order book of pound500m

increase of 7 compared to previous year end

down 12 from the half year position

12 month forward order book 14 higher than last year

still relatively short term visibility

Ord

er B

ook

Positive outlook for 2018 another strong performance expected

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

19

Property Services

poundm FY 2017 FY 2016 change

Revenue 66 55 +20

Operating (loss)profit1 (13) 07 na

Margin (20) 13 -330bps

1 Adjusted

bull Revenue up 20 as new work mobilised

bull Operating loss of pound13m includes closure of insurance business and exit from loss-making contracts

bull New work secured to support future growth order book up 22 to pound836m including pound102m for 2018

Benefit of restructuring and new work will drive profit in 2018

20

bull Slightly disappointing result lower Q4 open market sales in mixed-tenure cost escalation on one contracting job in London due to finish H1 2018

bull Revenue increase driven by Contracting activities Contracting revenue up 27 (pound290m) ndash 61 of division lower lsquocontractorrsquosrsquo margin

bull Mixed-tenure revenue down 10 to pound184m missed some Q4 completions due to programme slippage total 887 units sold (private and social) 16 lower than 2016

Partnership Housing

1 Adjusted

poundm FY 2017 FY 2016 change

Revenue 474 433 +9

Operating profit1 141 134 +5

Margin 30 31 -10bps

21

Partnership Housing

bull Capital employed at year end up pound24m to pound88m but average capital down to pound100m

combination of turning non-performing capital into cash and slower investment in new schemes than anticipated

poundm FY 2017 FY 2016

Capital employed1 at year end 880 639

LTM average capital employed1 997 1108

1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing)3 Return on average capital employed = adjusted operating profit divided by average capital employed

Improvement in profit and ROCE expected in 2018

bull LTM ROCE2 of 14 up from 12 prior yearbull Order book up 18 to pound523mbull Regeneration amp development pipeline up 11 to pound851m

currently 45 active mixed-tenure sites average 102 units average duration 39 months

bull Average Capital Employed estimated to increase to cpound120m in 2018

22

Urban Regeneration

poundm FY 2017 FY 2016 change

Capital employed1 at year end 850 689 +23

LTM average capital employed1 885 800 +11

Revenue 175 156 +12

Operating profit2 100 134 -25

bull Lower profit in year as expected In line with scheduled development completionsbull Average capital employed increased to pound885m as schemes are developed for sale

in 2018 and beyond

LTM ROCE3 of 9 Well below target threshold

capital employed in 2018 expected to be in range of pound100m-pound110m 1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing) At period end non-recourse debt was pound265m (FY 2016 pound48m) and deferred consideration was poundnil (FY 2016 pound75m) LTM non-recourse debt was pound154m (FY 2016 pound147m) and LTM deferred consideration was pound35m (FY 2016 pound114m)2 Adjusted3 Return on average capital employed = (Adjusted operating profit less interest on non-recourse debt less unwind of discount on deferred consideration) divided by (LTM average capital employed)

23

Urban Regeneration

Pipeline schedule indicates uplift in profit and ROCE in 2018

bull Regeneration amp development pipeline down 8 to pound21bn preferred bidder gt pound200m GDV

not included

broad geographic and sector split

bull Significant activity currently lsquoon sitersquo cpound400m of construction work

currently ongoing further cpound420m to be procured in

year

South East amp London

44

South West3

North West35

YorksNE17

Scotland1

Development pipeline by region

Offices30

Retail3Leisure

6Industrial

8

Residential51

Other2

Development pipeline by sector

24

Investments

poundm FY 2017 FY 2016 change

Operating profit(loss)1 05 (20) na

bull Year of evolution for Investments role of securing work for other divisions in the Group

cpound135m of construction and regeneration work secured for future delivery across the Group

now also expected to be a profit contributor with own returns target

bull Work delivered mainly through strategic JVs property partnerships with Slough Borough Council Bournemouth Borough Council etc

bull Small profit in year due to residential sales in strategic JVsbull Capital employed2 in all of its partnerships of pound39m (average for year of pound31m)

1 Adjusted2 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities

Consistent profit contribution with medium term 20 ROCE target

25

Accounting PoliciesIFRS 15 amp 16

26

IFRS 15

bull IFRS 15 lsquoRevenue from Contracts with Customersrsquo

bull Effective from 1 January 2018

bull No impact on cash flow

bull No impact on lifetime profitability of contracts

bull Does not fundamentally change the way we report or operate

not restating prior years

instead adjustment to opening reserves adjusts for revenue taken in previous years which wouldnrsquot fulfil IFRS 15 criteria

net adjustment to reserves of pound7m relating to revenue recognised prior to 31 December 2017 which would have been deferred to later years

27

bull lsquoIFRS 16 Leasesrsquo being adopted a year early to align with implementation of IFRS 15

requires all leases to be recognised on the balance sheet as a right of use asset with a corresponding lease liability Estimated gross asset and liability on transition of cpound40m-pound45m

mainly relates to property leases

future expense in the income statement will comprise depreciation and finance costs rather than rental payments

impact not expected to be material

increase in operating profit and interest expense of cpound1m

IFRS 16

28

Summary and Outlook

29

Progress against medium-term targets1

Medium-termtarget1

Construction Activities

Margin in Construction 2

Opnl leverage in Property Services gt3 margin

Maintain profits at Fit Out pound25m-pound30m pa

25Margin in Infrastructure

FY16

0

16

pound275m

11

1 Medium-term targets as set out in February 2017

FY17

13

17

pound391m

(20)

30

Progress against medium-term targets1

Medium-termtarget1

Regeneration Activities

ROCE in Partnership Housing gt 20

ROCE in Investments Towards 20

Towards 20ROCE in Urban Regeneration

FY16

12

15

1 Medium-term targets as set out in February 2017

FY17

14

9

1

31

Summary amp Outlook for 2018

bull Strong set of results for FY 2017 profit margin cash all improved

bull Well-positioned for further growth in 2018

margin improvement in Construction amp Infrastructure good prospects for Fit Out better year in Partnership Housing more development completions scheduled in Urban Regeneration Property Services back into profit positive contribution from Investments no material impact of the Carillion situation

bull Total dividend up 29

32

InvestmentsJohn Morgan

Construction RegenerationConstruction

amp Infrastructure

Fit Out PropertyServices

PartnershipHousing

Urban Regeneration

Investments

Investments underpins Group activities

Morgan Sindall Group today

33

Group structure

34

Our Regeneration businesses

Urban Regeneration

Developer only large mixed-use schemes schemes have multi-phases schemes of long duration

Partnership Housing

Builder and developer houses for sale and rent in partnership with local authorities and housing associations

Investments

Developer only long-term strategic partnerships incorporate multiple smaller schemes individual schemes of relatively short duration delivery by other Group companies

ldquoInvesting cash generated from the Construction divisions into development partnerships with the public sectorrdquo

35

Investments today

5 public private partnerships

poundm FY 2017 FY 2016 change

Operating profit(loss) 05 (20) na

Average capital employed 307 207 +48

2 Independent Living JVs

5 Public Private Partnerships

pound143m Sister Company revenue delivered in 2017

Potential pound26bn

GDV from current partnerships 1 Investment

Partnership Fund

36

Investments today

bull Local Authorities

bull County Councils

bull NHS Foundation Trusts

Who our partners are How we win work

bull Public procurement (OJEU)

bull Proactive early engagement with identified prospective partners to shape thinking and approach to market

bull allows the Group to win work which individual divisions could not win

bull provides a long-term profit stream and visibility of work

bull provides high quality construction work for rest of the Group

Role of division in the

Group

bull Construction margin for other Group companies

How we make money

bull Development profits

bull Development management fees

plus

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound445m

pound342m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 15

FY 16

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound466m

pound1499m

pound2826m

pound341m

pound445m

pound342m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 15

FY 16

FY 15

FY 16

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound523m

pound445m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 16

FY 17

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other1			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound523m

pound445m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 16

FY 17

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other1			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound523m

pound445m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 16

FY 17

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

poundm

poundm

0

0

Operating Profit 1

Non-cash adjmts 2

Net capex amp finance leases

Working Capital

Other 3

Operating cash flow

Net interest (non JV)

Tax

Free cash flow

Operating Profit

Non-cash adjustments 1

Net capex amp finance leases

Working Capital

Other operating cash flows 2

Operating cash flow

Net interest (non JV)

Tax

Free cash flow

Dividends

Other 3

Total cash flow

1 Non-cash adjustments include depreciation share option charge shared equity valuation movements and share of JV profit

2 Other operating cash flows include JV dividends and interest income provision movements shared equity redemptions investment property disposals and gains on disposal of property plant and equipment

3 Other includes net loans advanced to JVs consideration paid to acquire interests in JVs proceeds from the issue of new shares and purchase of shares in the Company by The Morgan Sindall Employee Benefit Trust

poundm

0

Opening net cash

Free cash flow

Dividends

Other1

Closing net cash

FY 2017

Non-cash

Other

poundm

poundm

poundm

Operating profit - adjusted

686

Depreciation

56

56

Share option expense

55

55

Movement in fair value of shared equity loans

-05

-05

Gains on disposal of joint ventures

-

-

Gain on disposal of PPE

-01

Share of net profit of joint ventures

-41

-41

Additional pension contributions

0

Gain on disposal of PPE

0

0

Investment property disposals

07

Impairment of investments

-

-

Shared equity redemptions

33

Other operating items

61

61

Provision movements

22

Change in working capital

-378

Total other operating items

61

Net capital expenditure (including repayment of finance leases)

-61

Dividends and interest received from joint ventures

37

37

Operating cash flow

410

65

98

Income taxes paid

-96

Net interest paid (non-joint venture)

-43

Free cash flow

271

5

Highlights

bull Strong profit growth PBT up 46

bull Balance sheet in very good shape

average daily net cash for the year of pound118m

closing net cash of pound193m

no pension concerns

bull High quality order book up 6 to pound38bn

bull Positive outlook for 2018

bull Total dividend up 29

6

Summary income statement

poundm FY 2017 FY 2016 change

Revenue 2793 2562 +9

Operating profit1

Operating margin168625

48819

+41+60bps

Profit before tax1 661 453 +46

Earnings per share1 1211p 847p +43

Total dividend per share 450p 350p +29

1 Before intangible amortisation of pound12m (FY 2016 intangible amortisation of pound14m and (in the case of earnings per share) deferred tax credit of pound07m)

7

Divisional performance

poundm Revenue Operating Profit1

Operating Margin1

FY 2017 FY 2017 FY 2017 bps

Construction amp Infrastructure 1395 +6 204 +129 15 +80bps

Fit Out 735 +16 391 +42 53 +100bps

Property Services 66 +20 (13) na (20) -330bps

Partnership Housing 474 +9 141 +5 30 -10bps

Urban Regeneration 175 +12 100 -25 na na

Investments 11 na 05 na na na

CentralElims (63) (142)

Total 2793 +9 686 +41 25 +60bps

1 Before intangible amortisation of pound12m (FY 2016 intangible amortisation of pound14m)

8

Cash flow

1 Before intangible amortisation of pound12m 2 lsquoNon-cash adjustmentsrsquo include depreciation pound56m share option charge pound55m non-cash provision movements pound37m less shared equity valuation movements pound05m and share of JV profits pound41m3 lsquoOtherrsquo includes JV dividends and interest income pound37m shared equity redemptions pound33m investment property disposals pound07m less provision utilisations pound15m and gains on disposals pound01m

poundm

Operating Profit 1

Non-cash adjmts 2

Net capex amp finance leases

Working Capital

Other 3 Operating cash flow

Net interest (non JV)

Tax Free cash flow

0

686

(61)

(378)

102

61 410

271

(43)(96)(96)

271

bull Operating cash inflow of pound41m

60 cash conversion

after net investment of pound40m in Regeneration (included in working capital outflow)

Cash Flow

686

(61)

(378)

102

61

410

271

2087

271

(256)

1934

(43)

(96)

(168)

686

(61)

(378)

102

61

410

271

(43)

(96)

(96)

(168)

(256)

271

(153)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

9

Working capitaltrade payables

bull Increase in total lsquoTrade amp Other Payablesrsquo of pound112m in year

lsquoTrade amp Other Payablesrsquo of pound864m at year end mainly comprises contract and other accruals pound573m (lsquoOtherrsquo)

bull lsquoTrade Payablesrsquo at year end of pound162m

increase of pound174m in year

Trade Payable Days3 (TPD) = 24

TPD of 23 in 2016

bull Trade receivable days4 of 18 (15 in 2016)

bull Group has never utilised reverse factoring1 cash flow excludes transfer of land between PPampE and inventories2 adjusted to exclude deferred consideration accrued interest and derivative financial liabilities3 Trade Payable Days = (Trade PayablesCost of Sales) x 3654 Trade Receivable Days = ((Trade Receivables less retentions due)Revenue) x 365

Inventories1 (787)

Receivables (713)

Payables2 +1122

Working capital (378)

Change in working capitalpoundm

No significant change to pattern of receivables and

payables

10

Net cash movements

bull Year end net cash of pound193m

bull Average daily net cash of pound118m

bull Bank facilities renewed in year Total of pound180m with main pound150m facility expiring in May 2022

bull Further investment in Regeneration expected through 2018 2018 average daily cash expected to be at

least pound50m

1 lsquoOtherrsquo includes net loans advanced to JVs (pound142m) consideration paid to acquire an additional interest in JVs (pound96m) payment to establish an lsquootherrsquo investment (pound11m) proceeds from issue of new shares (pound01m) proceeds from the exercise of share options (pound03m) and payment by the employee benefit trust to acquire shares in the Company (pound11m)

poundm

Opening net cash

Free cash flow

Dividends Other1 Closing net cash

0

2087

271

(256)

1934

(168)

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

11

Summary balance sheet

poundm FY 2017 FY 2016

Intangibles 2158 2170

PPampE 144 166

Investments (incl JVs) 839 635

Shared equity loan receivables 156 184

Net working capital (1642) (2036)

Current and deferred tax (228) (194)

Pension scheme 28 26

Net cash 1934 2087

Other1 (223) (266)

Net assets - reported 3166 2772

1 lsquoOtherrsquo includes provisions finance lease liabilities deferred consideration accruedprepaid interest derivative financial assets and liabilities

bull Strong balance sheet

net cash and significant undrawn committed facilities

pension scheme net surplus

gross liabilities of pound11m

12

Order book

bull Group committed order book up 6 to pound38bn

projects only included in order book when signed contract or letter of intent

does not include preferred bidder or lsquoprospectivesrsquo

51 for 2019 and beyond

Order book

poundmpound3849m

pound3637m

FY 16 FY 17 2018 2019 2020 +

49

20

31

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

13

Regeneration amp development pipeline

bull Group regeneration amp development pipeline up 1 at pound32bn

relevant to Regeneration businesses

only includes secured schemes (no preferred bidder or lsquoprospectivesrsquo)

our share of Gross Development Value of schemes

provides long-term visibility 86 for 2019 and beyond

Regeneration amp development pipeline

poundmpound3210m pound3233m

FY 16 FY 17 2018 2019 2020 +

1419

67

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

14

Divisional Performances

15

bull Revenue split Construction 58 Infrastructure 42bull Construction revenue up 2 Infrastructure up 10bull Margin recovery well underway

continued focus on operational delivery and quality of earnings not volume

Construction margin of 13 up 130bps 16 margin in H2

Infrastructure margin of 17 up 10 bps stronger H2 due to work mix

Construction amp Infrastructure

poundm FY 2017 FY 2016 change

Revenue 1395 1321 +6

Operating profit1 204 89 +129

Margin 15 07 +80bps

1 Adjusted

16

poundm pound1886m pound1855m

Infrastructure

Construction

FY 16 FY 17

pound1377mpound1296m

pound590m pound478m

bull Divisional order book down 2 to pound1855m

significant contract wins in Infrastructure with order book up 6 to pound1377m

Construction order book down 19

positive evidence of contract selectivity and focus on quality not chasing volume

93 of Construction order book by value continuing to be derived through negotiatedframework2-stage bidding processes

Construction amp InfrastructureO

rder

Boo

k

Expect further margin improvement in 2018

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound410m

pound257m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

17

Fit Out

poundm FY 2017 FY 2016 change

Revenue 735 634 +16

Operating profit1 391 275 +42

Margin 53 43 +100bps

1 Adjusted

bull Another very strong performance All key metrics showing further progress record revenue of pound735m up 16

operating profit up 42 to pound391m

margin up 100bps to 53

focus on operational delivery

bull 77 of revenue relates to fit out of existing office spacebull London region accounts for 71 of revenue

18

poundmpound500m

pound466m

12 month forward order book

Order book beyond 12 months

FY 16 FY 17

pound468m

pound410m

Fit Out

bull Order book of pound500m

increase of 7 compared to previous year end

down 12 from the half year position

12 month forward order book 14 higher than last year

still relatively short term visibility

Ord

er B

ook

Positive outlook for 2018 another strong performance expected

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

19

Property Services

poundm FY 2017 FY 2016 change

Revenue 66 55 +20

Operating (loss)profit1 (13) 07 na

Margin (20) 13 -330bps

1 Adjusted

bull Revenue up 20 as new work mobilised

bull Operating loss of pound13m includes closure of insurance business and exit from loss-making contracts

bull New work secured to support future growth order book up 22 to pound836m including pound102m for 2018

Benefit of restructuring and new work will drive profit in 2018

20

bull Slightly disappointing result lower Q4 open market sales in mixed-tenure cost escalation on one contracting job in London due to finish H1 2018

bull Revenue increase driven by Contracting activities Contracting revenue up 27 (pound290m) ndash 61 of division lower lsquocontractorrsquosrsquo margin

bull Mixed-tenure revenue down 10 to pound184m missed some Q4 completions due to programme slippage total 887 units sold (private and social) 16 lower than 2016

Partnership Housing

1 Adjusted

poundm FY 2017 FY 2016 change

Revenue 474 433 +9

Operating profit1 141 134 +5

Margin 30 31 -10bps

21

Partnership Housing

bull Capital employed at year end up pound24m to pound88m but average capital down to pound100m

combination of turning non-performing capital into cash and slower investment in new schemes than anticipated

poundm FY 2017 FY 2016

Capital employed1 at year end 880 639

LTM average capital employed1 997 1108

1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing)3 Return on average capital employed = adjusted operating profit divided by average capital employed

Improvement in profit and ROCE expected in 2018

bull LTM ROCE2 of 14 up from 12 prior yearbull Order book up 18 to pound523mbull Regeneration amp development pipeline up 11 to pound851m

currently 45 active mixed-tenure sites average 102 units average duration 39 months

bull Average Capital Employed estimated to increase to cpound120m in 2018

22

Urban Regeneration

poundm FY 2017 FY 2016 change

Capital employed1 at year end 850 689 +23

LTM average capital employed1 885 800 +11

Revenue 175 156 +12

Operating profit2 100 134 -25

bull Lower profit in year as expected In line with scheduled development completionsbull Average capital employed increased to pound885m as schemes are developed for sale

in 2018 and beyond

LTM ROCE3 of 9 Well below target threshold

capital employed in 2018 expected to be in range of pound100m-pound110m 1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing) At period end non-recourse debt was pound265m (FY 2016 pound48m) and deferred consideration was poundnil (FY 2016 pound75m) LTM non-recourse debt was pound154m (FY 2016 pound147m) and LTM deferred consideration was pound35m (FY 2016 pound114m)2 Adjusted3 Return on average capital employed = (Adjusted operating profit less interest on non-recourse debt less unwind of discount on deferred consideration) divided by (LTM average capital employed)

23

Urban Regeneration

Pipeline schedule indicates uplift in profit and ROCE in 2018

bull Regeneration amp development pipeline down 8 to pound21bn preferred bidder gt pound200m GDV

not included

broad geographic and sector split

bull Significant activity currently lsquoon sitersquo cpound400m of construction work

currently ongoing further cpound420m to be procured in

year

South East amp London

44

South West3

North West35

YorksNE17

Scotland1

Development pipeline by region

Offices30

Retail3Leisure

6Industrial

8

Residential51

Other2

Development pipeline by sector

24

Investments

poundm FY 2017 FY 2016 change

Operating profit(loss)1 05 (20) na

bull Year of evolution for Investments role of securing work for other divisions in the Group

cpound135m of construction and regeneration work secured for future delivery across the Group

now also expected to be a profit contributor with own returns target

bull Work delivered mainly through strategic JVs property partnerships with Slough Borough Council Bournemouth Borough Council etc

bull Small profit in year due to residential sales in strategic JVsbull Capital employed2 in all of its partnerships of pound39m (average for year of pound31m)

1 Adjusted2 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities

Consistent profit contribution with medium term 20 ROCE target

25

Accounting PoliciesIFRS 15 amp 16

26

IFRS 15

bull IFRS 15 lsquoRevenue from Contracts with Customersrsquo

bull Effective from 1 January 2018

bull No impact on cash flow

bull No impact on lifetime profitability of contracts

bull Does not fundamentally change the way we report or operate

not restating prior years

instead adjustment to opening reserves adjusts for revenue taken in previous years which wouldnrsquot fulfil IFRS 15 criteria

net adjustment to reserves of pound7m relating to revenue recognised prior to 31 December 2017 which would have been deferred to later years

27

bull lsquoIFRS 16 Leasesrsquo being adopted a year early to align with implementation of IFRS 15

requires all leases to be recognised on the balance sheet as a right of use asset with a corresponding lease liability Estimated gross asset and liability on transition of cpound40m-pound45m

mainly relates to property leases

future expense in the income statement will comprise depreciation and finance costs rather than rental payments

impact not expected to be material

increase in operating profit and interest expense of cpound1m

IFRS 16

28

Summary and Outlook

29

Progress against medium-term targets1

Medium-termtarget1

Construction Activities

Margin in Construction 2

Opnl leverage in Property Services gt3 margin

Maintain profits at Fit Out pound25m-pound30m pa

25Margin in Infrastructure

FY16

0

16

pound275m

11

1 Medium-term targets as set out in February 2017

FY17

13

17

pound391m

(20)

30

Progress against medium-term targets1

Medium-termtarget1

Regeneration Activities

ROCE in Partnership Housing gt 20

ROCE in Investments Towards 20

Towards 20ROCE in Urban Regeneration

FY16

12

15

1 Medium-term targets as set out in February 2017

FY17

14

9

1

31

Summary amp Outlook for 2018

bull Strong set of results for FY 2017 profit margin cash all improved

bull Well-positioned for further growth in 2018

margin improvement in Construction amp Infrastructure good prospects for Fit Out better year in Partnership Housing more development completions scheduled in Urban Regeneration Property Services back into profit positive contribution from Investments no material impact of the Carillion situation

bull Total dividend up 29

32

InvestmentsJohn Morgan

Construction RegenerationConstruction

amp Infrastructure

Fit Out PropertyServices

PartnershipHousing

Urban Regeneration

Investments

Investments underpins Group activities

Morgan Sindall Group today

33

Group structure

34

Our Regeneration businesses

Urban Regeneration

Developer only large mixed-use schemes schemes have multi-phases schemes of long duration

Partnership Housing

Builder and developer houses for sale and rent in partnership with local authorities and housing associations

Investments

Developer only long-term strategic partnerships incorporate multiple smaller schemes individual schemes of relatively short duration delivery by other Group companies

ldquoInvesting cash generated from the Construction divisions into development partnerships with the public sectorrdquo

35

Investments today

5 public private partnerships

poundm FY 2017 FY 2016 change

Operating profit(loss) 05 (20) na

Average capital employed 307 207 +48

2 Independent Living JVs

5 Public Private Partnerships

pound143m Sister Company revenue delivered in 2017

Potential pound26bn

GDV from current partnerships 1 Investment

Partnership Fund

36

Investments today

bull Local Authorities

bull County Councils

bull NHS Foundation Trusts

Who our partners are How we win work

bull Public procurement (OJEU)

bull Proactive early engagement with identified prospective partners to shape thinking and approach to market

bull allows the Group to win work which individual divisions could not win

bull provides a long-term profit stream and visibility of work

bull provides high quality construction work for rest of the Group

Role of division in the

Group

bull Construction margin for other Group companies

How we make money

bull Development profits

bull Development management fees

plus

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound445m

pound342m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 15

FY 16

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound466m

pound1499m

pound2826m

pound341m

pound445m

pound342m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 15

FY 16

FY 15

FY 16

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound523m

pound445m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 16

FY 17

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other1			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound523m

pound445m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 16

FY 17

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other1			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound523m

pound445m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 16

FY 17

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

poundm

poundm

0

0

Operating Profit 1

Non-cash adjmts 2

Net capex amp finance leases

Working Capital

Other 3

Operating cash flow

Net interest (non JV)

Tax

Free cash flow

Operating Profit

Non-cash adjustments 1

Net capex amp finance leases

Working Capital

Other operating cash flows 2

Operating cash flow

Net interest (non JV)

Tax

Free cash flow

Dividends

Other 3

Total cash flow

1 Non-cash adjustments include depreciation share option charge shared equity valuation movements and share of JV profit

2 Other operating cash flows include JV dividends and interest income provision movements shared equity redemptions investment property disposals and gains on disposal of property plant and equipment

3 Other includes net loans advanced to JVs consideration paid to acquire interests in JVs proceeds from the issue of new shares and purchase of shares in the Company by The Morgan Sindall Employee Benefit Trust

poundm

0

Opening net cash

Free cash flow

Dividends

Other1

Closing net cash

FY 2017

Non-cash

Other

poundm

poundm

poundm

Operating profit - adjusted

686

Depreciation

56

56

Share option expense

55

55

Movement in fair value of shared equity loans

-05

-05

Gains on disposal of joint ventures

-

-

Gain on disposal of PPE

-01

Share of net profit of joint ventures

-41

-41

Additional pension contributions

0

Gain on disposal of PPE

0

0

Investment property disposals

07

Impairment of investments

-

-

Shared equity redemptions

33

Other operating items

61

61

Provision movements

22

Change in working capital

-378

Total other operating items

61

Net capital expenditure (including repayment of finance leases)

-61

Dividends and interest received from joint ventures

37

37

Operating cash flow

410

65

98

Income taxes paid

-96

Net interest paid (non-joint venture)

-43

Free cash flow

271

6

Summary income statement

poundm FY 2017 FY 2016 change

Revenue 2793 2562 +9

Operating profit1

Operating margin168625

48819

+41+60bps

Profit before tax1 661 453 +46

Earnings per share1 1211p 847p +43

Total dividend per share 450p 350p +29

1 Before intangible amortisation of pound12m (FY 2016 intangible amortisation of pound14m and (in the case of earnings per share) deferred tax credit of pound07m)

7

Divisional performance

poundm Revenue Operating Profit1

Operating Margin1

FY 2017 FY 2017 FY 2017 bps

Construction amp Infrastructure 1395 +6 204 +129 15 +80bps

Fit Out 735 +16 391 +42 53 +100bps

Property Services 66 +20 (13) na (20) -330bps

Partnership Housing 474 +9 141 +5 30 -10bps

Urban Regeneration 175 +12 100 -25 na na

Investments 11 na 05 na na na

CentralElims (63) (142)

Total 2793 +9 686 +41 25 +60bps

1 Before intangible amortisation of pound12m (FY 2016 intangible amortisation of pound14m)

8

Cash flow

1 Before intangible amortisation of pound12m 2 lsquoNon-cash adjustmentsrsquo include depreciation pound56m share option charge pound55m non-cash provision movements pound37m less shared equity valuation movements pound05m and share of JV profits pound41m3 lsquoOtherrsquo includes JV dividends and interest income pound37m shared equity redemptions pound33m investment property disposals pound07m less provision utilisations pound15m and gains on disposals pound01m

poundm

Operating Profit 1

Non-cash adjmts 2

Net capex amp finance leases

Working Capital

Other 3 Operating cash flow

Net interest (non JV)

Tax Free cash flow

0

686

(61)

(378)

102

61 410

271

(43)(96)(96)

271

bull Operating cash inflow of pound41m

60 cash conversion

after net investment of pound40m in Regeneration (included in working capital outflow)

Cash Flow

686

(61)

(378)

102

61

410

271

2087

271

(256)

1934

(43)

(96)

(168)

686

(61)

(378)

102

61

410

271

(43)

(96)

(96)

(168)

(256)

271

(153)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

9

Working capitaltrade payables

bull Increase in total lsquoTrade amp Other Payablesrsquo of pound112m in year

lsquoTrade amp Other Payablesrsquo of pound864m at year end mainly comprises contract and other accruals pound573m (lsquoOtherrsquo)

bull lsquoTrade Payablesrsquo at year end of pound162m

increase of pound174m in year

Trade Payable Days3 (TPD) = 24

TPD of 23 in 2016

bull Trade receivable days4 of 18 (15 in 2016)

bull Group has never utilised reverse factoring1 cash flow excludes transfer of land between PPampE and inventories2 adjusted to exclude deferred consideration accrued interest and derivative financial liabilities3 Trade Payable Days = (Trade PayablesCost of Sales) x 3654 Trade Receivable Days = ((Trade Receivables less retentions due)Revenue) x 365

Inventories1 (787)

Receivables (713)

Payables2 +1122

Working capital (378)

Change in working capitalpoundm

No significant change to pattern of receivables and

payables

10

Net cash movements

bull Year end net cash of pound193m

bull Average daily net cash of pound118m

bull Bank facilities renewed in year Total of pound180m with main pound150m facility expiring in May 2022

bull Further investment in Regeneration expected through 2018 2018 average daily cash expected to be at

least pound50m

1 lsquoOtherrsquo includes net loans advanced to JVs (pound142m) consideration paid to acquire an additional interest in JVs (pound96m) payment to establish an lsquootherrsquo investment (pound11m) proceeds from issue of new shares (pound01m) proceeds from the exercise of share options (pound03m) and payment by the employee benefit trust to acquire shares in the Company (pound11m)

poundm

Opening net cash

Free cash flow

Dividends Other1 Closing net cash

0

2087

271

(256)

1934

(168)

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

11

Summary balance sheet

poundm FY 2017 FY 2016

Intangibles 2158 2170

PPampE 144 166

Investments (incl JVs) 839 635

Shared equity loan receivables 156 184

Net working capital (1642) (2036)

Current and deferred tax (228) (194)

Pension scheme 28 26

Net cash 1934 2087

Other1 (223) (266)

Net assets - reported 3166 2772

1 lsquoOtherrsquo includes provisions finance lease liabilities deferred consideration accruedprepaid interest derivative financial assets and liabilities

bull Strong balance sheet

net cash and significant undrawn committed facilities

pension scheme net surplus

gross liabilities of pound11m

12

Order book

bull Group committed order book up 6 to pound38bn

projects only included in order book when signed contract or letter of intent

does not include preferred bidder or lsquoprospectivesrsquo

51 for 2019 and beyond

Order book

poundmpound3849m

pound3637m

FY 16 FY 17 2018 2019 2020 +

49

20

31

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

13

Regeneration amp development pipeline

bull Group regeneration amp development pipeline up 1 at pound32bn

relevant to Regeneration businesses

only includes secured schemes (no preferred bidder or lsquoprospectivesrsquo)

our share of Gross Development Value of schemes

provides long-term visibility 86 for 2019 and beyond

Regeneration amp development pipeline

poundmpound3210m pound3233m

FY 16 FY 17 2018 2019 2020 +

1419

67

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

14

Divisional Performances

15

bull Revenue split Construction 58 Infrastructure 42bull Construction revenue up 2 Infrastructure up 10bull Margin recovery well underway

continued focus on operational delivery and quality of earnings not volume

Construction margin of 13 up 130bps 16 margin in H2

Infrastructure margin of 17 up 10 bps stronger H2 due to work mix

Construction amp Infrastructure

poundm FY 2017 FY 2016 change

Revenue 1395 1321 +6

Operating profit1 204 89 +129

Margin 15 07 +80bps

1 Adjusted

16

poundm pound1886m pound1855m

Infrastructure

Construction

FY 16 FY 17

pound1377mpound1296m

pound590m pound478m

bull Divisional order book down 2 to pound1855m

significant contract wins in Infrastructure with order book up 6 to pound1377m

Construction order book down 19

positive evidence of contract selectivity and focus on quality not chasing volume

93 of Construction order book by value continuing to be derived through negotiatedframework2-stage bidding processes

Construction amp InfrastructureO

rder

Boo

k

Expect further margin improvement in 2018

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound410m

pound257m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

17

Fit Out

poundm FY 2017 FY 2016 change

Revenue 735 634 +16

Operating profit1 391 275 +42

Margin 53 43 +100bps

1 Adjusted

bull Another very strong performance All key metrics showing further progress record revenue of pound735m up 16

operating profit up 42 to pound391m

margin up 100bps to 53

focus on operational delivery

bull 77 of revenue relates to fit out of existing office spacebull London region accounts for 71 of revenue

18

poundmpound500m

pound466m

12 month forward order book

Order book beyond 12 months

FY 16 FY 17

pound468m

pound410m

Fit Out

bull Order book of pound500m

increase of 7 compared to previous year end

down 12 from the half year position

12 month forward order book 14 higher than last year

still relatively short term visibility

Ord

er B

ook

Positive outlook for 2018 another strong performance expected

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

19

Property Services

poundm FY 2017 FY 2016 change

Revenue 66 55 +20

Operating (loss)profit1 (13) 07 na

Margin (20) 13 -330bps

1 Adjusted

bull Revenue up 20 as new work mobilised

bull Operating loss of pound13m includes closure of insurance business and exit from loss-making contracts

bull New work secured to support future growth order book up 22 to pound836m including pound102m for 2018

Benefit of restructuring and new work will drive profit in 2018

20

bull Slightly disappointing result lower Q4 open market sales in mixed-tenure cost escalation on one contracting job in London due to finish H1 2018

bull Revenue increase driven by Contracting activities Contracting revenue up 27 (pound290m) ndash 61 of division lower lsquocontractorrsquosrsquo margin

bull Mixed-tenure revenue down 10 to pound184m missed some Q4 completions due to programme slippage total 887 units sold (private and social) 16 lower than 2016

Partnership Housing

1 Adjusted

poundm FY 2017 FY 2016 change

Revenue 474 433 +9

Operating profit1 141 134 +5

Margin 30 31 -10bps

21

Partnership Housing

bull Capital employed at year end up pound24m to pound88m but average capital down to pound100m

combination of turning non-performing capital into cash and slower investment in new schemes than anticipated

poundm FY 2017 FY 2016

Capital employed1 at year end 880 639

LTM average capital employed1 997 1108

1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing)3 Return on average capital employed = adjusted operating profit divided by average capital employed

Improvement in profit and ROCE expected in 2018

bull LTM ROCE2 of 14 up from 12 prior yearbull Order book up 18 to pound523mbull Regeneration amp development pipeline up 11 to pound851m

currently 45 active mixed-tenure sites average 102 units average duration 39 months

bull Average Capital Employed estimated to increase to cpound120m in 2018

22

Urban Regeneration

poundm FY 2017 FY 2016 change

Capital employed1 at year end 850 689 +23

LTM average capital employed1 885 800 +11

Revenue 175 156 +12

Operating profit2 100 134 -25

bull Lower profit in year as expected In line with scheduled development completionsbull Average capital employed increased to pound885m as schemes are developed for sale

in 2018 and beyond

LTM ROCE3 of 9 Well below target threshold

capital employed in 2018 expected to be in range of pound100m-pound110m 1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing) At period end non-recourse debt was pound265m (FY 2016 pound48m) and deferred consideration was poundnil (FY 2016 pound75m) LTM non-recourse debt was pound154m (FY 2016 pound147m) and LTM deferred consideration was pound35m (FY 2016 pound114m)2 Adjusted3 Return on average capital employed = (Adjusted operating profit less interest on non-recourse debt less unwind of discount on deferred consideration) divided by (LTM average capital employed)

23

Urban Regeneration

Pipeline schedule indicates uplift in profit and ROCE in 2018

bull Regeneration amp development pipeline down 8 to pound21bn preferred bidder gt pound200m GDV

not included

broad geographic and sector split

bull Significant activity currently lsquoon sitersquo cpound400m of construction work

currently ongoing further cpound420m to be procured in

year

South East amp London

44

South West3

North West35

YorksNE17

Scotland1

Development pipeline by region

Offices30

Retail3Leisure

6Industrial

8

Residential51

Other2

Development pipeline by sector

24

Investments

poundm FY 2017 FY 2016 change

Operating profit(loss)1 05 (20) na

bull Year of evolution for Investments role of securing work for other divisions in the Group

cpound135m of construction and regeneration work secured for future delivery across the Group

now also expected to be a profit contributor with own returns target

bull Work delivered mainly through strategic JVs property partnerships with Slough Borough Council Bournemouth Borough Council etc

bull Small profit in year due to residential sales in strategic JVsbull Capital employed2 in all of its partnerships of pound39m (average for year of pound31m)

1 Adjusted2 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities

Consistent profit contribution with medium term 20 ROCE target

25

Accounting PoliciesIFRS 15 amp 16

26

IFRS 15

bull IFRS 15 lsquoRevenue from Contracts with Customersrsquo

bull Effective from 1 January 2018

bull No impact on cash flow

bull No impact on lifetime profitability of contracts

bull Does not fundamentally change the way we report or operate

not restating prior years

instead adjustment to opening reserves adjusts for revenue taken in previous years which wouldnrsquot fulfil IFRS 15 criteria

net adjustment to reserves of pound7m relating to revenue recognised prior to 31 December 2017 which would have been deferred to later years

27

bull lsquoIFRS 16 Leasesrsquo being adopted a year early to align with implementation of IFRS 15

requires all leases to be recognised on the balance sheet as a right of use asset with a corresponding lease liability Estimated gross asset and liability on transition of cpound40m-pound45m

mainly relates to property leases

future expense in the income statement will comprise depreciation and finance costs rather than rental payments

impact not expected to be material

increase in operating profit and interest expense of cpound1m

IFRS 16

28

Summary and Outlook

29

Progress against medium-term targets1

Medium-termtarget1

Construction Activities

Margin in Construction 2

Opnl leverage in Property Services gt3 margin

Maintain profits at Fit Out pound25m-pound30m pa

25Margin in Infrastructure

FY16

0

16

pound275m

11

1 Medium-term targets as set out in February 2017

FY17

13

17

pound391m

(20)

30

Progress against medium-term targets1

Medium-termtarget1

Regeneration Activities

ROCE in Partnership Housing gt 20

ROCE in Investments Towards 20

Towards 20ROCE in Urban Regeneration

FY16

12

15

1 Medium-term targets as set out in February 2017

FY17

14

9

1

31

Summary amp Outlook for 2018

bull Strong set of results for FY 2017 profit margin cash all improved

bull Well-positioned for further growth in 2018

margin improvement in Construction amp Infrastructure good prospects for Fit Out better year in Partnership Housing more development completions scheduled in Urban Regeneration Property Services back into profit positive contribution from Investments no material impact of the Carillion situation

bull Total dividend up 29

32

InvestmentsJohn Morgan

Construction RegenerationConstruction

amp Infrastructure

Fit Out PropertyServices

PartnershipHousing

Urban Regeneration

Investments

Investments underpins Group activities

Morgan Sindall Group today

33

Group structure

34

Our Regeneration businesses

Urban Regeneration

Developer only large mixed-use schemes schemes have multi-phases schemes of long duration

Partnership Housing

Builder and developer houses for sale and rent in partnership with local authorities and housing associations

Investments

Developer only long-term strategic partnerships incorporate multiple smaller schemes individual schemes of relatively short duration delivery by other Group companies

ldquoInvesting cash generated from the Construction divisions into development partnerships with the public sectorrdquo

35

Investments today

5 public private partnerships

poundm FY 2017 FY 2016 change

Operating profit(loss) 05 (20) na

Average capital employed 307 207 +48

2 Independent Living JVs

5 Public Private Partnerships

pound143m Sister Company revenue delivered in 2017

Potential pound26bn

GDV from current partnerships 1 Investment

Partnership Fund

36

Investments today

bull Local Authorities

bull County Councils

bull NHS Foundation Trusts

Who our partners are How we win work

bull Public procurement (OJEU)

bull Proactive early engagement with identified prospective partners to shape thinking and approach to market

bull allows the Group to win work which individual divisions could not win

bull provides a long-term profit stream and visibility of work

bull provides high quality construction work for rest of the Group

Role of division in the

Group

bull Construction margin for other Group companies

How we make money

bull Development profits

bull Development management fees

plus

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound445m

pound342m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 15

FY 16

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound466m

pound1499m

pound2826m

pound341m

pound445m

pound342m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 15

FY 16

FY 15

FY 16

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound523m

pound445m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 16

FY 17

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other1			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound523m

pound445m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 16

FY 17

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other1			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound523m

pound445m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 16

FY 17

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

poundm

poundm

0

0

Operating Profit 1

Non-cash adjmts 2

Net capex amp finance leases

Working Capital

Other 3

Operating cash flow

Net interest (non JV)

Tax

Free cash flow

Operating Profit

Non-cash adjustments 1

Net capex amp finance leases

Working Capital

Other operating cash flows 2

Operating cash flow

Net interest (non JV)

Tax

Free cash flow

Dividends

Other 3

Total cash flow

1 Non-cash adjustments include depreciation share option charge shared equity valuation movements and share of JV profit

2 Other operating cash flows include JV dividends and interest income provision movements shared equity redemptions investment property disposals and gains on disposal of property plant and equipment

3 Other includes net loans advanced to JVs consideration paid to acquire interests in JVs proceeds from the issue of new shares and purchase of shares in the Company by The Morgan Sindall Employee Benefit Trust

poundm

0

Opening net cash

Free cash flow

Dividends

Other1

Closing net cash

FY 2017

Non-cash

Other

poundm

poundm

poundm

Operating profit - adjusted

686

Depreciation

56

56

Share option expense

55

55

Movement in fair value of shared equity loans

-05

-05

Gains on disposal of joint ventures

-

-

Gain on disposal of PPE

-01

Share of net profit of joint ventures

-41

-41

Additional pension contributions

0

Gain on disposal of PPE

0

0

Investment property disposals

07

Impairment of investments

-

-

Shared equity redemptions

33

Other operating items

61

61

Provision movements

22

Change in working capital

-378

Total other operating items

61

Net capital expenditure (including repayment of finance leases)

-61

Dividends and interest received from joint ventures

37

37

Operating cash flow

410

65

98

Income taxes paid

-96

Net interest paid (non-joint venture)

-43

Free cash flow

271

7

Divisional performance

poundm Revenue Operating Profit1

Operating Margin1

FY 2017 FY 2017 FY 2017 bps

Construction amp Infrastructure 1395 +6 204 +129 15 +80bps

Fit Out 735 +16 391 +42 53 +100bps

Property Services 66 +20 (13) na (20) -330bps

Partnership Housing 474 +9 141 +5 30 -10bps

Urban Regeneration 175 +12 100 -25 na na

Investments 11 na 05 na na na

CentralElims (63) (142)

Total 2793 +9 686 +41 25 +60bps

1 Before intangible amortisation of pound12m (FY 2016 intangible amortisation of pound14m)

8

Cash flow

1 Before intangible amortisation of pound12m 2 lsquoNon-cash adjustmentsrsquo include depreciation pound56m share option charge pound55m non-cash provision movements pound37m less shared equity valuation movements pound05m and share of JV profits pound41m3 lsquoOtherrsquo includes JV dividends and interest income pound37m shared equity redemptions pound33m investment property disposals pound07m less provision utilisations pound15m and gains on disposals pound01m

poundm

Operating Profit 1

Non-cash adjmts 2

Net capex amp finance leases

Working Capital

Other 3 Operating cash flow

Net interest (non JV)

Tax Free cash flow

0

686

(61)

(378)

102

61 410

271

(43)(96)(96)

271

bull Operating cash inflow of pound41m

60 cash conversion

after net investment of pound40m in Regeneration (included in working capital outflow)

Cash Flow

686

(61)

(378)

102

61

410

271

2087

271

(256)

1934

(43)

(96)

(168)

686

(61)

(378)

102

61

410

271

(43)

(96)

(96)

(168)

(256)

271

(153)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

9

Working capitaltrade payables

bull Increase in total lsquoTrade amp Other Payablesrsquo of pound112m in year

lsquoTrade amp Other Payablesrsquo of pound864m at year end mainly comprises contract and other accruals pound573m (lsquoOtherrsquo)

bull lsquoTrade Payablesrsquo at year end of pound162m

increase of pound174m in year

Trade Payable Days3 (TPD) = 24

TPD of 23 in 2016

bull Trade receivable days4 of 18 (15 in 2016)

bull Group has never utilised reverse factoring1 cash flow excludes transfer of land between PPampE and inventories2 adjusted to exclude deferred consideration accrued interest and derivative financial liabilities3 Trade Payable Days = (Trade PayablesCost of Sales) x 3654 Trade Receivable Days = ((Trade Receivables less retentions due)Revenue) x 365

Inventories1 (787)

Receivables (713)

Payables2 +1122

Working capital (378)

Change in working capitalpoundm

No significant change to pattern of receivables and

payables

10

Net cash movements

bull Year end net cash of pound193m

bull Average daily net cash of pound118m

bull Bank facilities renewed in year Total of pound180m with main pound150m facility expiring in May 2022

bull Further investment in Regeneration expected through 2018 2018 average daily cash expected to be at

least pound50m

1 lsquoOtherrsquo includes net loans advanced to JVs (pound142m) consideration paid to acquire an additional interest in JVs (pound96m) payment to establish an lsquootherrsquo investment (pound11m) proceeds from issue of new shares (pound01m) proceeds from the exercise of share options (pound03m) and payment by the employee benefit trust to acquire shares in the Company (pound11m)

poundm

Opening net cash

Free cash flow

Dividends Other1 Closing net cash

0

2087

271

(256)

1934

(168)

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

11

Summary balance sheet

poundm FY 2017 FY 2016

Intangibles 2158 2170

PPampE 144 166

Investments (incl JVs) 839 635

Shared equity loan receivables 156 184

Net working capital (1642) (2036)

Current and deferred tax (228) (194)

Pension scheme 28 26

Net cash 1934 2087

Other1 (223) (266)

Net assets - reported 3166 2772

1 lsquoOtherrsquo includes provisions finance lease liabilities deferred consideration accruedprepaid interest derivative financial assets and liabilities

bull Strong balance sheet

net cash and significant undrawn committed facilities

pension scheme net surplus

gross liabilities of pound11m

12

Order book

bull Group committed order book up 6 to pound38bn

projects only included in order book when signed contract or letter of intent

does not include preferred bidder or lsquoprospectivesrsquo

51 for 2019 and beyond

Order book

poundmpound3849m

pound3637m

FY 16 FY 17 2018 2019 2020 +

49

20

31

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

13

Regeneration amp development pipeline

bull Group regeneration amp development pipeline up 1 at pound32bn

relevant to Regeneration businesses

only includes secured schemes (no preferred bidder or lsquoprospectivesrsquo)

our share of Gross Development Value of schemes

provides long-term visibility 86 for 2019 and beyond

Regeneration amp development pipeline

poundmpound3210m pound3233m

FY 16 FY 17 2018 2019 2020 +

1419

67

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

14

Divisional Performances

15

bull Revenue split Construction 58 Infrastructure 42bull Construction revenue up 2 Infrastructure up 10bull Margin recovery well underway

continued focus on operational delivery and quality of earnings not volume

Construction margin of 13 up 130bps 16 margin in H2

Infrastructure margin of 17 up 10 bps stronger H2 due to work mix

Construction amp Infrastructure

poundm FY 2017 FY 2016 change

Revenue 1395 1321 +6

Operating profit1 204 89 +129

Margin 15 07 +80bps

1 Adjusted

16

poundm pound1886m pound1855m

Infrastructure

Construction

FY 16 FY 17

pound1377mpound1296m

pound590m pound478m

bull Divisional order book down 2 to pound1855m

significant contract wins in Infrastructure with order book up 6 to pound1377m

Construction order book down 19

positive evidence of contract selectivity and focus on quality not chasing volume

93 of Construction order book by value continuing to be derived through negotiatedframework2-stage bidding processes

Construction amp InfrastructureO

rder

Boo

k

Expect further margin improvement in 2018

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound410m

pound257m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

17

Fit Out

poundm FY 2017 FY 2016 change

Revenue 735 634 +16

Operating profit1 391 275 +42

Margin 53 43 +100bps

1 Adjusted

bull Another very strong performance All key metrics showing further progress record revenue of pound735m up 16

operating profit up 42 to pound391m

margin up 100bps to 53

focus on operational delivery

bull 77 of revenue relates to fit out of existing office spacebull London region accounts for 71 of revenue

18

poundmpound500m

pound466m

12 month forward order book

Order book beyond 12 months

FY 16 FY 17

pound468m

pound410m

Fit Out

bull Order book of pound500m

increase of 7 compared to previous year end

down 12 from the half year position

12 month forward order book 14 higher than last year

still relatively short term visibility

Ord

er B

ook

Positive outlook for 2018 another strong performance expected

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

19

Property Services

poundm FY 2017 FY 2016 change

Revenue 66 55 +20

Operating (loss)profit1 (13) 07 na

Margin (20) 13 -330bps

1 Adjusted

bull Revenue up 20 as new work mobilised

bull Operating loss of pound13m includes closure of insurance business and exit from loss-making contracts

bull New work secured to support future growth order book up 22 to pound836m including pound102m for 2018

Benefit of restructuring and new work will drive profit in 2018

20

bull Slightly disappointing result lower Q4 open market sales in mixed-tenure cost escalation on one contracting job in London due to finish H1 2018

bull Revenue increase driven by Contracting activities Contracting revenue up 27 (pound290m) ndash 61 of division lower lsquocontractorrsquosrsquo margin

bull Mixed-tenure revenue down 10 to pound184m missed some Q4 completions due to programme slippage total 887 units sold (private and social) 16 lower than 2016

Partnership Housing

1 Adjusted

poundm FY 2017 FY 2016 change

Revenue 474 433 +9

Operating profit1 141 134 +5

Margin 30 31 -10bps

21

Partnership Housing

bull Capital employed at year end up pound24m to pound88m but average capital down to pound100m

combination of turning non-performing capital into cash and slower investment in new schemes than anticipated

poundm FY 2017 FY 2016

Capital employed1 at year end 880 639

LTM average capital employed1 997 1108

1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing)3 Return on average capital employed = adjusted operating profit divided by average capital employed

Improvement in profit and ROCE expected in 2018

bull LTM ROCE2 of 14 up from 12 prior yearbull Order book up 18 to pound523mbull Regeneration amp development pipeline up 11 to pound851m

currently 45 active mixed-tenure sites average 102 units average duration 39 months

bull Average Capital Employed estimated to increase to cpound120m in 2018

22

Urban Regeneration

poundm FY 2017 FY 2016 change

Capital employed1 at year end 850 689 +23

LTM average capital employed1 885 800 +11

Revenue 175 156 +12

Operating profit2 100 134 -25

bull Lower profit in year as expected In line with scheduled development completionsbull Average capital employed increased to pound885m as schemes are developed for sale

in 2018 and beyond

LTM ROCE3 of 9 Well below target threshold

capital employed in 2018 expected to be in range of pound100m-pound110m 1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing) At period end non-recourse debt was pound265m (FY 2016 pound48m) and deferred consideration was poundnil (FY 2016 pound75m) LTM non-recourse debt was pound154m (FY 2016 pound147m) and LTM deferred consideration was pound35m (FY 2016 pound114m)2 Adjusted3 Return on average capital employed = (Adjusted operating profit less interest on non-recourse debt less unwind of discount on deferred consideration) divided by (LTM average capital employed)

23

Urban Regeneration

Pipeline schedule indicates uplift in profit and ROCE in 2018

bull Regeneration amp development pipeline down 8 to pound21bn preferred bidder gt pound200m GDV

not included

broad geographic and sector split

bull Significant activity currently lsquoon sitersquo cpound400m of construction work

currently ongoing further cpound420m to be procured in

year

South East amp London

44

South West3

North West35

YorksNE17

Scotland1

Development pipeline by region

Offices30

Retail3Leisure

6Industrial

8

Residential51

Other2

Development pipeline by sector

24

Investments

poundm FY 2017 FY 2016 change

Operating profit(loss)1 05 (20) na

bull Year of evolution for Investments role of securing work for other divisions in the Group

cpound135m of construction and regeneration work secured for future delivery across the Group

now also expected to be a profit contributor with own returns target

bull Work delivered mainly through strategic JVs property partnerships with Slough Borough Council Bournemouth Borough Council etc

bull Small profit in year due to residential sales in strategic JVsbull Capital employed2 in all of its partnerships of pound39m (average for year of pound31m)

1 Adjusted2 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities

Consistent profit contribution with medium term 20 ROCE target

25

Accounting PoliciesIFRS 15 amp 16

26

IFRS 15

bull IFRS 15 lsquoRevenue from Contracts with Customersrsquo

bull Effective from 1 January 2018

bull No impact on cash flow

bull No impact on lifetime profitability of contracts

bull Does not fundamentally change the way we report or operate

not restating prior years

instead adjustment to opening reserves adjusts for revenue taken in previous years which wouldnrsquot fulfil IFRS 15 criteria

net adjustment to reserves of pound7m relating to revenue recognised prior to 31 December 2017 which would have been deferred to later years

27

bull lsquoIFRS 16 Leasesrsquo being adopted a year early to align with implementation of IFRS 15

requires all leases to be recognised on the balance sheet as a right of use asset with a corresponding lease liability Estimated gross asset and liability on transition of cpound40m-pound45m

mainly relates to property leases

future expense in the income statement will comprise depreciation and finance costs rather than rental payments

impact not expected to be material

increase in operating profit and interest expense of cpound1m

IFRS 16

28

Summary and Outlook

29

Progress against medium-term targets1

Medium-termtarget1

Construction Activities

Margin in Construction 2

Opnl leverage in Property Services gt3 margin

Maintain profits at Fit Out pound25m-pound30m pa

25Margin in Infrastructure

FY16

0

16

pound275m

11

1 Medium-term targets as set out in February 2017

FY17

13

17

pound391m

(20)

30

Progress against medium-term targets1

Medium-termtarget1

Regeneration Activities

ROCE in Partnership Housing gt 20

ROCE in Investments Towards 20

Towards 20ROCE in Urban Regeneration

FY16

12

15

1 Medium-term targets as set out in February 2017

FY17

14

9

1

31

Summary amp Outlook for 2018

bull Strong set of results for FY 2017 profit margin cash all improved

bull Well-positioned for further growth in 2018

margin improvement in Construction amp Infrastructure good prospects for Fit Out better year in Partnership Housing more development completions scheduled in Urban Regeneration Property Services back into profit positive contribution from Investments no material impact of the Carillion situation

bull Total dividend up 29

32

InvestmentsJohn Morgan

Construction RegenerationConstruction

amp Infrastructure

Fit Out PropertyServices

PartnershipHousing

Urban Regeneration

Investments

Investments underpins Group activities

Morgan Sindall Group today

33

Group structure

34

Our Regeneration businesses

Urban Regeneration

Developer only large mixed-use schemes schemes have multi-phases schemes of long duration

Partnership Housing

Builder and developer houses for sale and rent in partnership with local authorities and housing associations

Investments

Developer only long-term strategic partnerships incorporate multiple smaller schemes individual schemes of relatively short duration delivery by other Group companies

ldquoInvesting cash generated from the Construction divisions into development partnerships with the public sectorrdquo

35

Investments today

5 public private partnerships

poundm FY 2017 FY 2016 change

Operating profit(loss) 05 (20) na

Average capital employed 307 207 +48

2 Independent Living JVs

5 Public Private Partnerships

pound143m Sister Company revenue delivered in 2017

Potential pound26bn

GDV from current partnerships 1 Investment

Partnership Fund

36

Investments today

bull Local Authorities

bull County Councils

bull NHS Foundation Trusts

Who our partners are How we win work

bull Public procurement (OJEU)

bull Proactive early engagement with identified prospective partners to shape thinking and approach to market

bull allows the Group to win work which individual divisions could not win

bull provides a long-term profit stream and visibility of work

bull provides high quality construction work for rest of the Group

Role of division in the

Group

bull Construction margin for other Group companies

How we make money

bull Development profits

bull Development management fees

plus

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound445m

pound342m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 15

FY 16

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound466m

pound1499m

pound2826m

pound341m

pound445m

pound342m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 15

FY 16

FY 15

FY 16

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound523m

pound445m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 16

FY 17

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other1			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound523m

pound445m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 16

FY 17

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other1			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound523m

pound445m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 16

FY 17

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

poundm

poundm

0

0

Operating Profit 1

Non-cash adjmts 2

Net capex amp finance leases

Working Capital

Other 3

Operating cash flow

Net interest (non JV)

Tax

Free cash flow

Operating Profit

Non-cash adjustments 1

Net capex amp finance leases

Working Capital

Other operating cash flows 2

Operating cash flow

Net interest (non JV)

Tax

Free cash flow

Dividends

Other 3

Total cash flow

1 Non-cash adjustments include depreciation share option charge shared equity valuation movements and share of JV profit

2 Other operating cash flows include JV dividends and interest income provision movements shared equity redemptions investment property disposals and gains on disposal of property plant and equipment

3 Other includes net loans advanced to JVs consideration paid to acquire interests in JVs proceeds from the issue of new shares and purchase of shares in the Company by The Morgan Sindall Employee Benefit Trust

poundm

0

Opening net cash

Free cash flow

Dividends

Other1

Closing net cash

FY 2017

Non-cash

Other

poundm

poundm

poundm

Operating profit - adjusted

686

Depreciation

56

56

Share option expense

55

55

Movement in fair value of shared equity loans

-05

-05

Gains on disposal of joint ventures

-

-

Gain on disposal of PPE

-01

Share of net profit of joint ventures

-41

-41

Additional pension contributions

0

Gain on disposal of PPE

0

0

Investment property disposals

07

Impairment of investments

-

-

Shared equity redemptions

33

Other operating items

61

61

Provision movements

22

Change in working capital

-378

Total other operating items

61

Net capital expenditure (including repayment of finance leases)

-61

Dividends and interest received from joint ventures

37

37

Operating cash flow

410

65

98

Income taxes paid

-96

Net interest paid (non-joint venture)

-43

Free cash flow

271

8

Cash flow

1 Before intangible amortisation of pound12m 2 lsquoNon-cash adjustmentsrsquo include depreciation pound56m share option charge pound55m non-cash provision movements pound37m less shared equity valuation movements pound05m and share of JV profits pound41m3 lsquoOtherrsquo includes JV dividends and interest income pound37m shared equity redemptions pound33m investment property disposals pound07m less provision utilisations pound15m and gains on disposals pound01m

poundm

Operating Profit 1

Non-cash adjmts 2

Net capex amp finance leases

Working Capital

Other 3 Operating cash flow

Net interest (non JV)

Tax Free cash flow

0

686

(61)

(378)

102

61 410

271

(43)(96)(96)

271

bull Operating cash inflow of pound41m

60 cash conversion

after net investment of pound40m in Regeneration (included in working capital outflow)

Cash Flow

686

(61)

(378)

102

61

410

271

2087

271

(256)

1934

(43)

(96)

(168)

686

(61)

(378)

102

61

410

271

(43)

(96)

(96)

(168)

(256)

271

(153)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

9

Working capitaltrade payables

bull Increase in total lsquoTrade amp Other Payablesrsquo of pound112m in year

lsquoTrade amp Other Payablesrsquo of pound864m at year end mainly comprises contract and other accruals pound573m (lsquoOtherrsquo)

bull lsquoTrade Payablesrsquo at year end of pound162m

increase of pound174m in year

Trade Payable Days3 (TPD) = 24

TPD of 23 in 2016

bull Trade receivable days4 of 18 (15 in 2016)

bull Group has never utilised reverse factoring1 cash flow excludes transfer of land between PPampE and inventories2 adjusted to exclude deferred consideration accrued interest and derivative financial liabilities3 Trade Payable Days = (Trade PayablesCost of Sales) x 3654 Trade Receivable Days = ((Trade Receivables less retentions due)Revenue) x 365

Inventories1 (787)

Receivables (713)

Payables2 +1122

Working capital (378)

Change in working capitalpoundm

No significant change to pattern of receivables and

payables

10

Net cash movements

bull Year end net cash of pound193m

bull Average daily net cash of pound118m

bull Bank facilities renewed in year Total of pound180m with main pound150m facility expiring in May 2022

bull Further investment in Regeneration expected through 2018 2018 average daily cash expected to be at

least pound50m

1 lsquoOtherrsquo includes net loans advanced to JVs (pound142m) consideration paid to acquire an additional interest in JVs (pound96m) payment to establish an lsquootherrsquo investment (pound11m) proceeds from issue of new shares (pound01m) proceeds from the exercise of share options (pound03m) and payment by the employee benefit trust to acquire shares in the Company (pound11m)

poundm

Opening net cash

Free cash flow

Dividends Other1 Closing net cash

0

2087

271

(256)

1934

(168)

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

11

Summary balance sheet

poundm FY 2017 FY 2016

Intangibles 2158 2170

PPampE 144 166

Investments (incl JVs) 839 635

Shared equity loan receivables 156 184

Net working capital (1642) (2036)

Current and deferred tax (228) (194)

Pension scheme 28 26

Net cash 1934 2087

Other1 (223) (266)

Net assets - reported 3166 2772

1 lsquoOtherrsquo includes provisions finance lease liabilities deferred consideration accruedprepaid interest derivative financial assets and liabilities

bull Strong balance sheet

net cash and significant undrawn committed facilities

pension scheme net surplus

gross liabilities of pound11m

12

Order book

bull Group committed order book up 6 to pound38bn

projects only included in order book when signed contract or letter of intent

does not include preferred bidder or lsquoprospectivesrsquo

51 for 2019 and beyond

Order book

poundmpound3849m

pound3637m

FY 16 FY 17 2018 2019 2020 +

49

20

31

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

13

Regeneration amp development pipeline

bull Group regeneration amp development pipeline up 1 at pound32bn

relevant to Regeneration businesses

only includes secured schemes (no preferred bidder or lsquoprospectivesrsquo)

our share of Gross Development Value of schemes

provides long-term visibility 86 for 2019 and beyond

Regeneration amp development pipeline

poundmpound3210m pound3233m

FY 16 FY 17 2018 2019 2020 +

1419

67

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

14

Divisional Performances

15

bull Revenue split Construction 58 Infrastructure 42bull Construction revenue up 2 Infrastructure up 10bull Margin recovery well underway

continued focus on operational delivery and quality of earnings not volume

Construction margin of 13 up 130bps 16 margin in H2

Infrastructure margin of 17 up 10 bps stronger H2 due to work mix

Construction amp Infrastructure

poundm FY 2017 FY 2016 change

Revenue 1395 1321 +6

Operating profit1 204 89 +129

Margin 15 07 +80bps

1 Adjusted

16

poundm pound1886m pound1855m

Infrastructure

Construction

FY 16 FY 17

pound1377mpound1296m

pound590m pound478m

bull Divisional order book down 2 to pound1855m

significant contract wins in Infrastructure with order book up 6 to pound1377m

Construction order book down 19

positive evidence of contract selectivity and focus on quality not chasing volume

93 of Construction order book by value continuing to be derived through negotiatedframework2-stage bidding processes

Construction amp InfrastructureO

rder

Boo

k

Expect further margin improvement in 2018

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound410m

pound257m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

17

Fit Out

poundm FY 2017 FY 2016 change

Revenue 735 634 +16

Operating profit1 391 275 +42

Margin 53 43 +100bps

1 Adjusted

bull Another very strong performance All key metrics showing further progress record revenue of pound735m up 16

operating profit up 42 to pound391m

margin up 100bps to 53

focus on operational delivery

bull 77 of revenue relates to fit out of existing office spacebull London region accounts for 71 of revenue

18

poundmpound500m

pound466m

12 month forward order book

Order book beyond 12 months

FY 16 FY 17

pound468m

pound410m

Fit Out

bull Order book of pound500m

increase of 7 compared to previous year end

down 12 from the half year position

12 month forward order book 14 higher than last year

still relatively short term visibility

Ord

er B

ook

Positive outlook for 2018 another strong performance expected

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

19

Property Services

poundm FY 2017 FY 2016 change

Revenue 66 55 +20

Operating (loss)profit1 (13) 07 na

Margin (20) 13 -330bps

1 Adjusted

bull Revenue up 20 as new work mobilised

bull Operating loss of pound13m includes closure of insurance business and exit from loss-making contracts

bull New work secured to support future growth order book up 22 to pound836m including pound102m for 2018

Benefit of restructuring and new work will drive profit in 2018

20

bull Slightly disappointing result lower Q4 open market sales in mixed-tenure cost escalation on one contracting job in London due to finish H1 2018

bull Revenue increase driven by Contracting activities Contracting revenue up 27 (pound290m) ndash 61 of division lower lsquocontractorrsquosrsquo margin

bull Mixed-tenure revenue down 10 to pound184m missed some Q4 completions due to programme slippage total 887 units sold (private and social) 16 lower than 2016

Partnership Housing

1 Adjusted

poundm FY 2017 FY 2016 change

Revenue 474 433 +9

Operating profit1 141 134 +5

Margin 30 31 -10bps

21

Partnership Housing

bull Capital employed at year end up pound24m to pound88m but average capital down to pound100m

combination of turning non-performing capital into cash and slower investment in new schemes than anticipated

poundm FY 2017 FY 2016

Capital employed1 at year end 880 639

LTM average capital employed1 997 1108

1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing)3 Return on average capital employed = adjusted operating profit divided by average capital employed

Improvement in profit and ROCE expected in 2018

bull LTM ROCE2 of 14 up from 12 prior yearbull Order book up 18 to pound523mbull Regeneration amp development pipeline up 11 to pound851m

currently 45 active mixed-tenure sites average 102 units average duration 39 months

bull Average Capital Employed estimated to increase to cpound120m in 2018

22

Urban Regeneration

poundm FY 2017 FY 2016 change

Capital employed1 at year end 850 689 +23

LTM average capital employed1 885 800 +11

Revenue 175 156 +12

Operating profit2 100 134 -25

bull Lower profit in year as expected In line with scheduled development completionsbull Average capital employed increased to pound885m as schemes are developed for sale

in 2018 and beyond

LTM ROCE3 of 9 Well below target threshold

capital employed in 2018 expected to be in range of pound100m-pound110m 1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing) At period end non-recourse debt was pound265m (FY 2016 pound48m) and deferred consideration was poundnil (FY 2016 pound75m) LTM non-recourse debt was pound154m (FY 2016 pound147m) and LTM deferred consideration was pound35m (FY 2016 pound114m)2 Adjusted3 Return on average capital employed = (Adjusted operating profit less interest on non-recourse debt less unwind of discount on deferred consideration) divided by (LTM average capital employed)

23

Urban Regeneration

Pipeline schedule indicates uplift in profit and ROCE in 2018

bull Regeneration amp development pipeline down 8 to pound21bn preferred bidder gt pound200m GDV

not included

broad geographic and sector split

bull Significant activity currently lsquoon sitersquo cpound400m of construction work

currently ongoing further cpound420m to be procured in

year

South East amp London

44

South West3

North West35

YorksNE17

Scotland1

Development pipeline by region

Offices30

Retail3Leisure

6Industrial

8

Residential51

Other2

Development pipeline by sector

24

Investments

poundm FY 2017 FY 2016 change

Operating profit(loss)1 05 (20) na

bull Year of evolution for Investments role of securing work for other divisions in the Group

cpound135m of construction and regeneration work secured for future delivery across the Group

now also expected to be a profit contributor with own returns target

bull Work delivered mainly through strategic JVs property partnerships with Slough Borough Council Bournemouth Borough Council etc

bull Small profit in year due to residential sales in strategic JVsbull Capital employed2 in all of its partnerships of pound39m (average for year of pound31m)

1 Adjusted2 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities

Consistent profit contribution with medium term 20 ROCE target

25

Accounting PoliciesIFRS 15 amp 16

26

IFRS 15

bull IFRS 15 lsquoRevenue from Contracts with Customersrsquo

bull Effective from 1 January 2018

bull No impact on cash flow

bull No impact on lifetime profitability of contracts

bull Does not fundamentally change the way we report or operate

not restating prior years

instead adjustment to opening reserves adjusts for revenue taken in previous years which wouldnrsquot fulfil IFRS 15 criteria

net adjustment to reserves of pound7m relating to revenue recognised prior to 31 December 2017 which would have been deferred to later years

27

bull lsquoIFRS 16 Leasesrsquo being adopted a year early to align with implementation of IFRS 15

requires all leases to be recognised on the balance sheet as a right of use asset with a corresponding lease liability Estimated gross asset and liability on transition of cpound40m-pound45m

mainly relates to property leases

future expense in the income statement will comprise depreciation and finance costs rather than rental payments

impact not expected to be material

increase in operating profit and interest expense of cpound1m

IFRS 16

28

Summary and Outlook

29

Progress against medium-term targets1

Medium-termtarget1

Construction Activities

Margin in Construction 2

Opnl leverage in Property Services gt3 margin

Maintain profits at Fit Out pound25m-pound30m pa

25Margin in Infrastructure

FY16

0

16

pound275m

11

1 Medium-term targets as set out in February 2017

FY17

13

17

pound391m

(20)

30

Progress against medium-term targets1

Medium-termtarget1

Regeneration Activities

ROCE in Partnership Housing gt 20

ROCE in Investments Towards 20

Towards 20ROCE in Urban Regeneration

FY16

12

15

1 Medium-term targets as set out in February 2017

FY17

14

9

1

31

Summary amp Outlook for 2018

bull Strong set of results for FY 2017 profit margin cash all improved

bull Well-positioned for further growth in 2018

margin improvement in Construction amp Infrastructure good prospects for Fit Out better year in Partnership Housing more development completions scheduled in Urban Regeneration Property Services back into profit positive contribution from Investments no material impact of the Carillion situation

bull Total dividend up 29

32

InvestmentsJohn Morgan

Construction RegenerationConstruction

amp Infrastructure

Fit Out PropertyServices

PartnershipHousing

Urban Regeneration

Investments

Investments underpins Group activities

Morgan Sindall Group today

33

Group structure

34

Our Regeneration businesses

Urban Regeneration

Developer only large mixed-use schemes schemes have multi-phases schemes of long duration

Partnership Housing

Builder and developer houses for sale and rent in partnership with local authorities and housing associations

Investments

Developer only long-term strategic partnerships incorporate multiple smaller schemes individual schemes of relatively short duration delivery by other Group companies

ldquoInvesting cash generated from the Construction divisions into development partnerships with the public sectorrdquo

35

Investments today

5 public private partnerships

poundm FY 2017 FY 2016 change

Operating profit(loss) 05 (20) na

Average capital employed 307 207 +48

2 Independent Living JVs

5 Public Private Partnerships

pound143m Sister Company revenue delivered in 2017

Potential pound26bn

GDV from current partnerships 1 Investment

Partnership Fund

36

Investments today

bull Local Authorities

bull County Councils

bull NHS Foundation Trusts

Who our partners are How we win work

bull Public procurement (OJEU)

bull Proactive early engagement with identified prospective partners to shape thinking and approach to market

bull allows the Group to win work which individual divisions could not win

bull provides a long-term profit stream and visibility of work

bull provides high quality construction work for rest of the Group

Role of division in the

Group

bull Construction margin for other Group companies

How we make money

bull Development profits

bull Development management fees

plus

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound445m

pound342m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 15

FY 16

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound466m

pound1499m

pound2826m

pound341m

pound445m

pound342m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 15

FY 16

FY 15

FY 16

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound523m

pound445m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 16

FY 17

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other1			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound523m

pound445m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 16

FY 17

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other1			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound523m

pound445m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 16

FY 17

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

poundm

poundm

0

0

Operating Profit 1

Non-cash adjmts 2

Net capex amp finance leases

Working Capital

Other 3

Operating cash flow

Net interest (non JV)

Tax

Free cash flow

Operating Profit

Non-cash adjustments 1

Net capex amp finance leases

Working Capital

Other operating cash flows 2

Operating cash flow

Net interest (non JV)

Tax

Free cash flow

Dividends

Other 3

Total cash flow

1 Non-cash adjustments include depreciation share option charge shared equity valuation movements and share of JV profit

2 Other operating cash flows include JV dividends and interest income provision movements shared equity redemptions investment property disposals and gains on disposal of property plant and equipment

3 Other includes net loans advanced to JVs consideration paid to acquire interests in JVs proceeds from the issue of new shares and purchase of shares in the Company by The Morgan Sindall Employee Benefit Trust

poundm

0

Opening net cash

Free cash flow

Dividends

Other1

Closing net cash

FY 2017

Non-cash

Other

poundm

poundm

poundm

Operating profit - adjusted

686

Depreciation

56

56

Share option expense

55

55

Movement in fair value of shared equity loans

-05

-05

Gains on disposal of joint ventures

-

-

Gain on disposal of PPE

-01

Share of net profit of joint ventures

-41

-41

Additional pension contributions

0

Gain on disposal of PPE

0

0

Investment property disposals

07

Impairment of investments

-

-

Shared equity redemptions

33

Other operating items

61

61

Provision movements

22

Change in working capital

-378

Total other operating items

61

Net capital expenditure (including repayment of finance leases)

-61

Dividends and interest received from joint ventures

37

37

Operating cash flow

410

65

98

Income taxes paid

-96

Net interest paid (non-joint venture)

-43

Free cash flow

271

9

Working capitaltrade payables

bull Increase in total lsquoTrade amp Other Payablesrsquo of pound112m in year

lsquoTrade amp Other Payablesrsquo of pound864m at year end mainly comprises contract and other accruals pound573m (lsquoOtherrsquo)

bull lsquoTrade Payablesrsquo at year end of pound162m

increase of pound174m in year

Trade Payable Days3 (TPD) = 24

TPD of 23 in 2016

bull Trade receivable days4 of 18 (15 in 2016)

bull Group has never utilised reverse factoring1 cash flow excludes transfer of land between PPampE and inventories2 adjusted to exclude deferred consideration accrued interest and derivative financial liabilities3 Trade Payable Days = (Trade PayablesCost of Sales) x 3654 Trade Receivable Days = ((Trade Receivables less retentions due)Revenue) x 365

Inventories1 (787)

Receivables (713)

Payables2 +1122

Working capital (378)

Change in working capitalpoundm

No significant change to pattern of receivables and

payables

10

Net cash movements

bull Year end net cash of pound193m

bull Average daily net cash of pound118m

bull Bank facilities renewed in year Total of pound180m with main pound150m facility expiring in May 2022

bull Further investment in Regeneration expected through 2018 2018 average daily cash expected to be at

least pound50m

1 lsquoOtherrsquo includes net loans advanced to JVs (pound142m) consideration paid to acquire an additional interest in JVs (pound96m) payment to establish an lsquootherrsquo investment (pound11m) proceeds from issue of new shares (pound01m) proceeds from the exercise of share options (pound03m) and payment by the employee benefit trust to acquire shares in the Company (pound11m)

poundm

Opening net cash

Free cash flow

Dividends Other1 Closing net cash

0

2087

271

(256)

1934

(168)

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

11

Summary balance sheet

poundm FY 2017 FY 2016

Intangibles 2158 2170

PPampE 144 166

Investments (incl JVs) 839 635

Shared equity loan receivables 156 184

Net working capital (1642) (2036)

Current and deferred tax (228) (194)

Pension scheme 28 26

Net cash 1934 2087

Other1 (223) (266)

Net assets - reported 3166 2772

1 lsquoOtherrsquo includes provisions finance lease liabilities deferred consideration accruedprepaid interest derivative financial assets and liabilities

bull Strong balance sheet

net cash and significant undrawn committed facilities

pension scheme net surplus

gross liabilities of pound11m

12

Order book

bull Group committed order book up 6 to pound38bn

projects only included in order book when signed contract or letter of intent

does not include preferred bidder or lsquoprospectivesrsquo

51 for 2019 and beyond

Order book

poundmpound3849m

pound3637m

FY 16 FY 17 2018 2019 2020 +

49

20

31

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

13

Regeneration amp development pipeline

bull Group regeneration amp development pipeline up 1 at pound32bn

relevant to Regeneration businesses

only includes secured schemes (no preferred bidder or lsquoprospectivesrsquo)

our share of Gross Development Value of schemes

provides long-term visibility 86 for 2019 and beyond

Regeneration amp development pipeline

poundmpound3210m pound3233m

FY 16 FY 17 2018 2019 2020 +

1419

67

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

14

Divisional Performances

15

bull Revenue split Construction 58 Infrastructure 42bull Construction revenue up 2 Infrastructure up 10bull Margin recovery well underway

continued focus on operational delivery and quality of earnings not volume

Construction margin of 13 up 130bps 16 margin in H2

Infrastructure margin of 17 up 10 bps stronger H2 due to work mix

Construction amp Infrastructure

poundm FY 2017 FY 2016 change

Revenue 1395 1321 +6

Operating profit1 204 89 +129

Margin 15 07 +80bps

1 Adjusted

16

poundm pound1886m pound1855m

Infrastructure

Construction

FY 16 FY 17

pound1377mpound1296m

pound590m pound478m

bull Divisional order book down 2 to pound1855m

significant contract wins in Infrastructure with order book up 6 to pound1377m

Construction order book down 19

positive evidence of contract selectivity and focus on quality not chasing volume

93 of Construction order book by value continuing to be derived through negotiatedframework2-stage bidding processes

Construction amp InfrastructureO

rder

Boo

k

Expect further margin improvement in 2018

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound410m

pound257m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

17

Fit Out

poundm FY 2017 FY 2016 change

Revenue 735 634 +16

Operating profit1 391 275 +42

Margin 53 43 +100bps

1 Adjusted

bull Another very strong performance All key metrics showing further progress record revenue of pound735m up 16

operating profit up 42 to pound391m

margin up 100bps to 53

focus on operational delivery

bull 77 of revenue relates to fit out of existing office spacebull London region accounts for 71 of revenue

18

poundmpound500m

pound466m

12 month forward order book

Order book beyond 12 months

FY 16 FY 17

pound468m

pound410m

Fit Out

bull Order book of pound500m

increase of 7 compared to previous year end

down 12 from the half year position

12 month forward order book 14 higher than last year

still relatively short term visibility

Ord

er B

ook

Positive outlook for 2018 another strong performance expected

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

19

Property Services

poundm FY 2017 FY 2016 change

Revenue 66 55 +20

Operating (loss)profit1 (13) 07 na

Margin (20) 13 -330bps

1 Adjusted

bull Revenue up 20 as new work mobilised

bull Operating loss of pound13m includes closure of insurance business and exit from loss-making contracts

bull New work secured to support future growth order book up 22 to pound836m including pound102m for 2018

Benefit of restructuring and new work will drive profit in 2018

20

bull Slightly disappointing result lower Q4 open market sales in mixed-tenure cost escalation on one contracting job in London due to finish H1 2018

bull Revenue increase driven by Contracting activities Contracting revenue up 27 (pound290m) ndash 61 of division lower lsquocontractorrsquosrsquo margin

bull Mixed-tenure revenue down 10 to pound184m missed some Q4 completions due to programme slippage total 887 units sold (private and social) 16 lower than 2016

Partnership Housing

1 Adjusted

poundm FY 2017 FY 2016 change

Revenue 474 433 +9

Operating profit1 141 134 +5

Margin 30 31 -10bps

21

Partnership Housing

bull Capital employed at year end up pound24m to pound88m but average capital down to pound100m

combination of turning non-performing capital into cash and slower investment in new schemes than anticipated

poundm FY 2017 FY 2016

Capital employed1 at year end 880 639

LTM average capital employed1 997 1108

1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing)3 Return on average capital employed = adjusted operating profit divided by average capital employed

Improvement in profit and ROCE expected in 2018

bull LTM ROCE2 of 14 up from 12 prior yearbull Order book up 18 to pound523mbull Regeneration amp development pipeline up 11 to pound851m

currently 45 active mixed-tenure sites average 102 units average duration 39 months

bull Average Capital Employed estimated to increase to cpound120m in 2018

22

Urban Regeneration

poundm FY 2017 FY 2016 change

Capital employed1 at year end 850 689 +23

LTM average capital employed1 885 800 +11

Revenue 175 156 +12

Operating profit2 100 134 -25

bull Lower profit in year as expected In line with scheduled development completionsbull Average capital employed increased to pound885m as schemes are developed for sale

in 2018 and beyond

LTM ROCE3 of 9 Well below target threshold

capital employed in 2018 expected to be in range of pound100m-pound110m 1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing) At period end non-recourse debt was pound265m (FY 2016 pound48m) and deferred consideration was poundnil (FY 2016 pound75m) LTM non-recourse debt was pound154m (FY 2016 pound147m) and LTM deferred consideration was pound35m (FY 2016 pound114m)2 Adjusted3 Return on average capital employed = (Adjusted operating profit less interest on non-recourse debt less unwind of discount on deferred consideration) divided by (LTM average capital employed)

23

Urban Regeneration

Pipeline schedule indicates uplift in profit and ROCE in 2018

bull Regeneration amp development pipeline down 8 to pound21bn preferred bidder gt pound200m GDV

not included

broad geographic and sector split

bull Significant activity currently lsquoon sitersquo cpound400m of construction work

currently ongoing further cpound420m to be procured in

year

South East amp London

44

South West3

North West35

YorksNE17

Scotland1

Development pipeline by region

Offices30

Retail3Leisure

6Industrial

8

Residential51

Other2

Development pipeline by sector

24

Investments

poundm FY 2017 FY 2016 change

Operating profit(loss)1 05 (20) na

bull Year of evolution for Investments role of securing work for other divisions in the Group

cpound135m of construction and regeneration work secured for future delivery across the Group

now also expected to be a profit contributor with own returns target

bull Work delivered mainly through strategic JVs property partnerships with Slough Borough Council Bournemouth Borough Council etc

bull Small profit in year due to residential sales in strategic JVsbull Capital employed2 in all of its partnerships of pound39m (average for year of pound31m)

1 Adjusted2 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities

Consistent profit contribution with medium term 20 ROCE target

25

Accounting PoliciesIFRS 15 amp 16

26

IFRS 15

bull IFRS 15 lsquoRevenue from Contracts with Customersrsquo

bull Effective from 1 January 2018

bull No impact on cash flow

bull No impact on lifetime profitability of contracts

bull Does not fundamentally change the way we report or operate

not restating prior years

instead adjustment to opening reserves adjusts for revenue taken in previous years which wouldnrsquot fulfil IFRS 15 criteria

net adjustment to reserves of pound7m relating to revenue recognised prior to 31 December 2017 which would have been deferred to later years

27

bull lsquoIFRS 16 Leasesrsquo being adopted a year early to align with implementation of IFRS 15

requires all leases to be recognised on the balance sheet as a right of use asset with a corresponding lease liability Estimated gross asset and liability on transition of cpound40m-pound45m

mainly relates to property leases

future expense in the income statement will comprise depreciation and finance costs rather than rental payments

impact not expected to be material

increase in operating profit and interest expense of cpound1m

IFRS 16

28

Summary and Outlook

29

Progress against medium-term targets1

Medium-termtarget1

Construction Activities

Margin in Construction 2

Opnl leverage in Property Services gt3 margin

Maintain profits at Fit Out pound25m-pound30m pa

25Margin in Infrastructure

FY16

0

16

pound275m

11

1 Medium-term targets as set out in February 2017

FY17

13

17

pound391m

(20)

30

Progress against medium-term targets1

Medium-termtarget1

Regeneration Activities

ROCE in Partnership Housing gt 20

ROCE in Investments Towards 20

Towards 20ROCE in Urban Regeneration

FY16

12

15

1 Medium-term targets as set out in February 2017

FY17

14

9

1

31

Summary amp Outlook for 2018

bull Strong set of results for FY 2017 profit margin cash all improved

bull Well-positioned for further growth in 2018

margin improvement in Construction amp Infrastructure good prospects for Fit Out better year in Partnership Housing more development completions scheduled in Urban Regeneration Property Services back into profit positive contribution from Investments no material impact of the Carillion situation

bull Total dividend up 29

32

InvestmentsJohn Morgan

Construction RegenerationConstruction

amp Infrastructure

Fit Out PropertyServices

PartnershipHousing

Urban Regeneration

Investments

Investments underpins Group activities

Morgan Sindall Group today

33

Group structure

34

Our Regeneration businesses

Urban Regeneration

Developer only large mixed-use schemes schemes have multi-phases schemes of long duration

Partnership Housing

Builder and developer houses for sale and rent in partnership with local authorities and housing associations

Investments

Developer only long-term strategic partnerships incorporate multiple smaller schemes individual schemes of relatively short duration delivery by other Group companies

ldquoInvesting cash generated from the Construction divisions into development partnerships with the public sectorrdquo

35

Investments today

5 public private partnerships

poundm FY 2017 FY 2016 change

Operating profit(loss) 05 (20) na

Average capital employed 307 207 +48

2 Independent Living JVs

5 Public Private Partnerships

pound143m Sister Company revenue delivered in 2017

Potential pound26bn

GDV from current partnerships 1 Investment

Partnership Fund

36

Investments today

bull Local Authorities

bull County Councils

bull NHS Foundation Trusts

Who our partners are How we win work

bull Public procurement (OJEU)

bull Proactive early engagement with identified prospective partners to shape thinking and approach to market

bull allows the Group to win work which individual divisions could not win

bull provides a long-term profit stream and visibility of work

bull provides high quality construction work for rest of the Group

Role of division in the

Group

bull Construction margin for other Group companies

How we make money

bull Development profits

bull Development management fees

plus

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound445m

pound342m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 15

FY 16

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound466m

pound1499m

pound2826m

pound341m

pound445m

pound342m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 15

FY 16

FY 15

FY 16

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound523m

pound445m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 16

FY 17

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other1			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound523m

pound445m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 16

FY 17

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other1			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

10

Net cash movements

bull Year end net cash of pound193m

bull Average daily net cash of pound118m

bull Bank facilities renewed in year Total of pound180m with main pound150m facility expiring in May 2022

bull Further investment in Regeneration expected through 2018 2018 average daily cash expected to be at

least pound50m

1 lsquoOtherrsquo includes net loans advanced to JVs (pound142m) consideration paid to acquire an additional interest in JVs (pound96m) payment to establish an lsquootherrsquo investment (pound11m) proceeds from issue of new shares (pound01m) proceeds from the exercise of share options (pound03m) and payment by the employee benefit trust to acquire shares in the Company (pound11m)

poundm

Opening net cash

Free cash flow

Dividends Other1 Closing net cash

0

2087

271

(256)

1934

(168)

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

11

Summary balance sheet

poundm FY 2017 FY 2016

Intangibles 2158 2170

PPampE 144 166

Investments (incl JVs) 839 635

Shared equity loan receivables 156 184

Net working capital (1642) (2036)

Current and deferred tax (228) (194)

Pension scheme 28 26

Net cash 1934 2087

Other1 (223) (266)

Net assets - reported 3166 2772

1 lsquoOtherrsquo includes provisions finance lease liabilities deferred consideration accruedprepaid interest derivative financial assets and liabilities

bull Strong balance sheet

net cash and significant undrawn committed facilities

pension scheme net surplus

gross liabilities of pound11m

12

Order book

bull Group committed order book up 6 to pound38bn

projects only included in order book when signed contract or letter of intent

does not include preferred bidder or lsquoprospectivesrsquo

51 for 2019 and beyond

Order book

poundmpound3849m

pound3637m

FY 16 FY 17 2018 2019 2020 +

49

20

31

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

13

Regeneration amp development pipeline

bull Group regeneration amp development pipeline up 1 at pound32bn

relevant to Regeneration businesses

only includes secured schemes (no preferred bidder or lsquoprospectivesrsquo)

our share of Gross Development Value of schemes

provides long-term visibility 86 for 2019 and beyond

Regeneration amp development pipeline

poundmpound3210m pound3233m

FY 16 FY 17 2018 2019 2020 +

1419

67

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

14

Divisional Performances

15

bull Revenue split Construction 58 Infrastructure 42bull Construction revenue up 2 Infrastructure up 10bull Margin recovery well underway

continued focus on operational delivery and quality of earnings not volume

Construction margin of 13 up 130bps 16 margin in H2

Infrastructure margin of 17 up 10 bps stronger H2 due to work mix

Construction amp Infrastructure

poundm FY 2017 FY 2016 change

Revenue 1395 1321 +6

Operating profit1 204 89 +129

Margin 15 07 +80bps

1 Adjusted

16

poundm pound1886m pound1855m

Infrastructure

Construction

FY 16 FY 17

pound1377mpound1296m

pound590m pound478m

bull Divisional order book down 2 to pound1855m

significant contract wins in Infrastructure with order book up 6 to pound1377m

Construction order book down 19

positive evidence of contract selectivity and focus on quality not chasing volume

93 of Construction order book by value continuing to be derived through negotiatedframework2-stage bidding processes

Construction amp InfrastructureO

rder

Boo

k

Expect further margin improvement in 2018

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound410m

pound257m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

17

Fit Out

poundm FY 2017 FY 2016 change

Revenue 735 634 +16

Operating profit1 391 275 +42

Margin 53 43 +100bps

1 Adjusted

bull Another very strong performance All key metrics showing further progress record revenue of pound735m up 16

operating profit up 42 to pound391m

margin up 100bps to 53

focus on operational delivery

bull 77 of revenue relates to fit out of existing office spacebull London region accounts for 71 of revenue

18

poundmpound500m

pound466m

12 month forward order book

Order book beyond 12 months

FY 16 FY 17

pound468m

pound410m

Fit Out

bull Order book of pound500m

increase of 7 compared to previous year end

down 12 from the half year position

12 month forward order book 14 higher than last year

still relatively short term visibility

Ord

er B

ook

Positive outlook for 2018 another strong performance expected

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

19

Property Services

poundm FY 2017 FY 2016 change

Revenue 66 55 +20

Operating (loss)profit1 (13) 07 na

Margin (20) 13 -330bps

1 Adjusted

bull Revenue up 20 as new work mobilised

bull Operating loss of pound13m includes closure of insurance business and exit from loss-making contracts

bull New work secured to support future growth order book up 22 to pound836m including pound102m for 2018

Benefit of restructuring and new work will drive profit in 2018

20

bull Slightly disappointing result lower Q4 open market sales in mixed-tenure cost escalation on one contracting job in London due to finish H1 2018

bull Revenue increase driven by Contracting activities Contracting revenue up 27 (pound290m) ndash 61 of division lower lsquocontractorrsquosrsquo margin

bull Mixed-tenure revenue down 10 to pound184m missed some Q4 completions due to programme slippage total 887 units sold (private and social) 16 lower than 2016

Partnership Housing

1 Adjusted

poundm FY 2017 FY 2016 change

Revenue 474 433 +9

Operating profit1 141 134 +5

Margin 30 31 -10bps

21

Partnership Housing

bull Capital employed at year end up pound24m to pound88m but average capital down to pound100m

combination of turning non-performing capital into cash and slower investment in new schemes than anticipated

poundm FY 2017 FY 2016

Capital employed1 at year end 880 639

LTM average capital employed1 997 1108

1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing)3 Return on average capital employed = adjusted operating profit divided by average capital employed

Improvement in profit and ROCE expected in 2018

bull LTM ROCE2 of 14 up from 12 prior yearbull Order book up 18 to pound523mbull Regeneration amp development pipeline up 11 to pound851m

currently 45 active mixed-tenure sites average 102 units average duration 39 months

bull Average Capital Employed estimated to increase to cpound120m in 2018

22

Urban Regeneration

poundm FY 2017 FY 2016 change

Capital employed1 at year end 850 689 +23

LTM average capital employed1 885 800 +11

Revenue 175 156 +12

Operating profit2 100 134 -25

bull Lower profit in year as expected In line with scheduled development completionsbull Average capital employed increased to pound885m as schemes are developed for sale

in 2018 and beyond

LTM ROCE3 of 9 Well below target threshold

capital employed in 2018 expected to be in range of pound100m-pound110m 1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing) At period end non-recourse debt was pound265m (FY 2016 pound48m) and deferred consideration was poundnil (FY 2016 pound75m) LTM non-recourse debt was pound154m (FY 2016 pound147m) and LTM deferred consideration was pound35m (FY 2016 pound114m)2 Adjusted3 Return on average capital employed = (Adjusted operating profit less interest on non-recourse debt less unwind of discount on deferred consideration) divided by (LTM average capital employed)

23

Urban Regeneration

Pipeline schedule indicates uplift in profit and ROCE in 2018

bull Regeneration amp development pipeline down 8 to pound21bn preferred bidder gt pound200m GDV

not included

broad geographic and sector split

bull Significant activity currently lsquoon sitersquo cpound400m of construction work

currently ongoing further cpound420m to be procured in

year

South East amp London

44

South West3

North West35

YorksNE17

Scotland1

Development pipeline by region

Offices30

Retail3Leisure

6Industrial

8

Residential51

Other2

Development pipeline by sector

24

Investments

poundm FY 2017 FY 2016 change

Operating profit(loss)1 05 (20) na

bull Year of evolution for Investments role of securing work for other divisions in the Group

cpound135m of construction and regeneration work secured for future delivery across the Group

now also expected to be a profit contributor with own returns target

bull Work delivered mainly through strategic JVs property partnerships with Slough Borough Council Bournemouth Borough Council etc

bull Small profit in year due to residential sales in strategic JVsbull Capital employed2 in all of its partnerships of pound39m (average for year of pound31m)

1 Adjusted2 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities

Consistent profit contribution with medium term 20 ROCE target

25

Accounting PoliciesIFRS 15 amp 16

26

IFRS 15

bull IFRS 15 lsquoRevenue from Contracts with Customersrsquo

bull Effective from 1 January 2018

bull No impact on cash flow

bull No impact on lifetime profitability of contracts

bull Does not fundamentally change the way we report or operate

not restating prior years

instead adjustment to opening reserves adjusts for revenue taken in previous years which wouldnrsquot fulfil IFRS 15 criteria

net adjustment to reserves of pound7m relating to revenue recognised prior to 31 December 2017 which would have been deferred to later years

27

bull lsquoIFRS 16 Leasesrsquo being adopted a year early to align with implementation of IFRS 15

requires all leases to be recognised on the balance sheet as a right of use asset with a corresponding lease liability Estimated gross asset and liability on transition of cpound40m-pound45m

mainly relates to property leases

future expense in the income statement will comprise depreciation and finance costs rather than rental payments

impact not expected to be material

increase in operating profit and interest expense of cpound1m

IFRS 16

28

Summary and Outlook

29

Progress against medium-term targets1

Medium-termtarget1

Construction Activities

Margin in Construction 2

Opnl leverage in Property Services gt3 margin

Maintain profits at Fit Out pound25m-pound30m pa

25Margin in Infrastructure

FY16

0

16

pound275m

11

1 Medium-term targets as set out in February 2017

FY17

13

17

pound391m

(20)

30

Progress against medium-term targets1

Medium-termtarget1

Regeneration Activities

ROCE in Partnership Housing gt 20

ROCE in Investments Towards 20

Towards 20ROCE in Urban Regeneration

FY16

12

15

1 Medium-term targets as set out in February 2017

FY17

14

9

1

31

Summary amp Outlook for 2018

bull Strong set of results for FY 2017 profit margin cash all improved

bull Well-positioned for further growth in 2018

margin improvement in Construction amp Infrastructure good prospects for Fit Out better year in Partnership Housing more development completions scheduled in Urban Regeneration Property Services back into profit positive contribution from Investments no material impact of the Carillion situation

bull Total dividend up 29

32

InvestmentsJohn Morgan

Construction RegenerationConstruction

amp Infrastructure

Fit Out PropertyServices

PartnershipHousing

Urban Regeneration

Investments

Investments underpins Group activities

Morgan Sindall Group today

33

Group structure

34

Our Regeneration businesses

Urban Regeneration

Developer only large mixed-use schemes schemes have multi-phases schemes of long duration

Partnership Housing

Builder and developer houses for sale and rent in partnership with local authorities and housing associations

Investments

Developer only long-term strategic partnerships incorporate multiple smaller schemes individual schemes of relatively short duration delivery by other Group companies

ldquoInvesting cash generated from the Construction divisions into development partnerships with the public sectorrdquo

35

Investments today

5 public private partnerships

poundm FY 2017 FY 2016 change

Operating profit(loss) 05 (20) na

Average capital employed 307 207 +48

2 Independent Living JVs

5 Public Private Partnerships

pound143m Sister Company revenue delivered in 2017

Potential pound26bn

GDV from current partnerships 1 Investment

Partnership Fund

36

Investments today

bull Local Authorities

bull County Councils

bull NHS Foundation Trusts

Who our partners are How we win work

bull Public procurement (OJEU)

bull Proactive early engagement with identified prospective partners to shape thinking and approach to market

bull allows the Group to win work which individual divisions could not win

bull provides a long-term profit stream and visibility of work

bull provides high quality construction work for rest of the Group

Role of division in the

Group

bull Construction margin for other Group companies

How we make money

bull Development profits

bull Development management fees

plus

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound445m

pound342m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 15

FY 16

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound466m

pound1499m

pound2826m

pound341m

pound445m

pound342m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 15

FY 16

FY 15

FY 16

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound523m

pound445m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 16

FY 17

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other1			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound523m

pound445m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 16

FY 17

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other1			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

11

Summary balance sheet

poundm FY 2017 FY 2016

Intangibles 2158 2170

PPampE 144 166

Investments (incl JVs) 839 635

Shared equity loan receivables 156 184

Net working capital (1642) (2036)

Current and deferred tax (228) (194)

Pension scheme 28 26

Net cash 1934 2087

Other1 (223) (266)

Net assets - reported 3166 2772

1 lsquoOtherrsquo includes provisions finance lease liabilities deferred consideration accruedprepaid interest derivative financial assets and liabilities

bull Strong balance sheet

net cash and significant undrawn committed facilities

pension scheme net surplus

gross liabilities of pound11m

12

Order book

bull Group committed order book up 6 to pound38bn

projects only included in order book when signed contract or letter of intent

does not include preferred bidder or lsquoprospectivesrsquo

51 for 2019 and beyond

Order book

poundmpound3849m

pound3637m

FY 16 FY 17 2018 2019 2020 +

49

20

31

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

13

Regeneration amp development pipeline

bull Group regeneration amp development pipeline up 1 at pound32bn

relevant to Regeneration businesses

only includes secured schemes (no preferred bidder or lsquoprospectivesrsquo)

our share of Gross Development Value of schemes

provides long-term visibility 86 for 2019 and beyond

Regeneration amp development pipeline

poundmpound3210m pound3233m

FY 16 FY 17 2018 2019 2020 +

1419

67

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

14

Divisional Performances

15

bull Revenue split Construction 58 Infrastructure 42bull Construction revenue up 2 Infrastructure up 10bull Margin recovery well underway

continued focus on operational delivery and quality of earnings not volume

Construction margin of 13 up 130bps 16 margin in H2

Infrastructure margin of 17 up 10 bps stronger H2 due to work mix

Construction amp Infrastructure

poundm FY 2017 FY 2016 change

Revenue 1395 1321 +6

Operating profit1 204 89 +129

Margin 15 07 +80bps

1 Adjusted

16

poundm pound1886m pound1855m

Infrastructure

Construction

FY 16 FY 17

pound1377mpound1296m

pound590m pound478m

bull Divisional order book down 2 to pound1855m

significant contract wins in Infrastructure with order book up 6 to pound1377m

Construction order book down 19

positive evidence of contract selectivity and focus on quality not chasing volume

93 of Construction order book by value continuing to be derived through negotiatedframework2-stage bidding processes

Construction amp InfrastructureO

rder

Boo

k

Expect further margin improvement in 2018

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound410m

pound257m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

17

Fit Out

poundm FY 2017 FY 2016 change

Revenue 735 634 +16

Operating profit1 391 275 +42

Margin 53 43 +100bps

1 Adjusted

bull Another very strong performance All key metrics showing further progress record revenue of pound735m up 16

operating profit up 42 to pound391m

margin up 100bps to 53

focus on operational delivery

bull 77 of revenue relates to fit out of existing office spacebull London region accounts for 71 of revenue

18

poundmpound500m

pound466m

12 month forward order book

Order book beyond 12 months

FY 16 FY 17

pound468m

pound410m

Fit Out

bull Order book of pound500m

increase of 7 compared to previous year end

down 12 from the half year position

12 month forward order book 14 higher than last year

still relatively short term visibility

Ord

er B

ook

Positive outlook for 2018 another strong performance expected

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

19

Property Services

poundm FY 2017 FY 2016 change

Revenue 66 55 +20

Operating (loss)profit1 (13) 07 na

Margin (20) 13 -330bps

1 Adjusted

bull Revenue up 20 as new work mobilised

bull Operating loss of pound13m includes closure of insurance business and exit from loss-making contracts

bull New work secured to support future growth order book up 22 to pound836m including pound102m for 2018

Benefit of restructuring and new work will drive profit in 2018

20

bull Slightly disappointing result lower Q4 open market sales in mixed-tenure cost escalation on one contracting job in London due to finish H1 2018

bull Revenue increase driven by Contracting activities Contracting revenue up 27 (pound290m) ndash 61 of division lower lsquocontractorrsquosrsquo margin

bull Mixed-tenure revenue down 10 to pound184m missed some Q4 completions due to programme slippage total 887 units sold (private and social) 16 lower than 2016

Partnership Housing

1 Adjusted

poundm FY 2017 FY 2016 change

Revenue 474 433 +9

Operating profit1 141 134 +5

Margin 30 31 -10bps

21

Partnership Housing

bull Capital employed at year end up pound24m to pound88m but average capital down to pound100m

combination of turning non-performing capital into cash and slower investment in new schemes than anticipated

poundm FY 2017 FY 2016

Capital employed1 at year end 880 639

LTM average capital employed1 997 1108

1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing)3 Return on average capital employed = adjusted operating profit divided by average capital employed

Improvement in profit and ROCE expected in 2018

bull LTM ROCE2 of 14 up from 12 prior yearbull Order book up 18 to pound523mbull Regeneration amp development pipeline up 11 to pound851m

currently 45 active mixed-tenure sites average 102 units average duration 39 months

bull Average Capital Employed estimated to increase to cpound120m in 2018

22

Urban Regeneration

poundm FY 2017 FY 2016 change

Capital employed1 at year end 850 689 +23

LTM average capital employed1 885 800 +11

Revenue 175 156 +12

Operating profit2 100 134 -25

bull Lower profit in year as expected In line with scheduled development completionsbull Average capital employed increased to pound885m as schemes are developed for sale

in 2018 and beyond

LTM ROCE3 of 9 Well below target threshold

capital employed in 2018 expected to be in range of pound100m-pound110m 1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing) At period end non-recourse debt was pound265m (FY 2016 pound48m) and deferred consideration was poundnil (FY 2016 pound75m) LTM non-recourse debt was pound154m (FY 2016 pound147m) and LTM deferred consideration was pound35m (FY 2016 pound114m)2 Adjusted3 Return on average capital employed = (Adjusted operating profit less interest on non-recourse debt less unwind of discount on deferred consideration) divided by (LTM average capital employed)

23

Urban Regeneration

Pipeline schedule indicates uplift in profit and ROCE in 2018

bull Regeneration amp development pipeline down 8 to pound21bn preferred bidder gt pound200m GDV

not included

broad geographic and sector split

bull Significant activity currently lsquoon sitersquo cpound400m of construction work

currently ongoing further cpound420m to be procured in

year

South East amp London

44

South West3

North West35

YorksNE17

Scotland1

Development pipeline by region

Offices30

Retail3Leisure

6Industrial

8

Residential51

Other2

Development pipeline by sector

24

Investments

poundm FY 2017 FY 2016 change

Operating profit(loss)1 05 (20) na

bull Year of evolution for Investments role of securing work for other divisions in the Group

cpound135m of construction and regeneration work secured for future delivery across the Group

now also expected to be a profit contributor with own returns target

bull Work delivered mainly through strategic JVs property partnerships with Slough Borough Council Bournemouth Borough Council etc

bull Small profit in year due to residential sales in strategic JVsbull Capital employed2 in all of its partnerships of pound39m (average for year of pound31m)

1 Adjusted2 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities

Consistent profit contribution with medium term 20 ROCE target

25

Accounting PoliciesIFRS 15 amp 16

26

IFRS 15

bull IFRS 15 lsquoRevenue from Contracts with Customersrsquo

bull Effective from 1 January 2018

bull No impact on cash flow

bull No impact on lifetime profitability of contracts

bull Does not fundamentally change the way we report or operate

not restating prior years

instead adjustment to opening reserves adjusts for revenue taken in previous years which wouldnrsquot fulfil IFRS 15 criteria

net adjustment to reserves of pound7m relating to revenue recognised prior to 31 December 2017 which would have been deferred to later years

27

bull lsquoIFRS 16 Leasesrsquo being adopted a year early to align with implementation of IFRS 15

requires all leases to be recognised on the balance sheet as a right of use asset with a corresponding lease liability Estimated gross asset and liability on transition of cpound40m-pound45m

mainly relates to property leases

future expense in the income statement will comprise depreciation and finance costs rather than rental payments

impact not expected to be material

increase in operating profit and interest expense of cpound1m

IFRS 16

28

Summary and Outlook

29

Progress against medium-term targets1

Medium-termtarget1

Construction Activities

Margin in Construction 2

Opnl leverage in Property Services gt3 margin

Maintain profits at Fit Out pound25m-pound30m pa

25Margin in Infrastructure

FY16

0

16

pound275m

11

1 Medium-term targets as set out in February 2017

FY17

13

17

pound391m

(20)

30

Progress against medium-term targets1

Medium-termtarget1

Regeneration Activities

ROCE in Partnership Housing gt 20

ROCE in Investments Towards 20

Towards 20ROCE in Urban Regeneration

FY16

12

15

1 Medium-term targets as set out in February 2017

FY17

14

9

1

31

Summary amp Outlook for 2018

bull Strong set of results for FY 2017 profit margin cash all improved

bull Well-positioned for further growth in 2018

margin improvement in Construction amp Infrastructure good prospects for Fit Out better year in Partnership Housing more development completions scheduled in Urban Regeneration Property Services back into profit positive contribution from Investments no material impact of the Carillion situation

bull Total dividend up 29

32

InvestmentsJohn Morgan

Construction RegenerationConstruction

amp Infrastructure

Fit Out PropertyServices

PartnershipHousing

Urban Regeneration

Investments

Investments underpins Group activities

Morgan Sindall Group today

33

Group structure

34

Our Regeneration businesses

Urban Regeneration

Developer only large mixed-use schemes schemes have multi-phases schemes of long duration

Partnership Housing

Builder and developer houses for sale and rent in partnership with local authorities and housing associations

Investments

Developer only long-term strategic partnerships incorporate multiple smaller schemes individual schemes of relatively short duration delivery by other Group companies

ldquoInvesting cash generated from the Construction divisions into development partnerships with the public sectorrdquo

35

Investments today

5 public private partnerships

poundm FY 2017 FY 2016 change

Operating profit(loss) 05 (20) na

Average capital employed 307 207 +48

2 Independent Living JVs

5 Public Private Partnerships

pound143m Sister Company revenue delivered in 2017

Potential pound26bn

GDV from current partnerships 1 Investment

Partnership Fund

36

Investments today

bull Local Authorities

bull County Councils

bull NHS Foundation Trusts

Who our partners are How we win work

bull Public procurement (OJEU)

bull Proactive early engagement with identified prospective partners to shape thinking and approach to market

bull allows the Group to win work which individual divisions could not win

bull provides a long-term profit stream and visibility of work

bull provides high quality construction work for rest of the Group

Role of division in the

Group

bull Construction margin for other Group companies

How we make money

bull Development profits

bull Development management fees

plus

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound445m

pound342m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 15

FY 16

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound466m

pound1499m

pound2826m

pound341m

pound445m

pound342m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 15

FY 16

FY 15

FY 16

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound523m

pound445m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 16

FY 17

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other1			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

12

Order book

bull Group committed order book up 6 to pound38bn

projects only included in order book when signed contract or letter of intent

does not include preferred bidder or lsquoprospectivesrsquo

51 for 2019 and beyond

Order book

poundmpound3849m

pound3637m

FY 16 FY 17 2018 2019 2020 +

49

20

31

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

13

Regeneration amp development pipeline

bull Group regeneration amp development pipeline up 1 at pound32bn

relevant to Regeneration businesses

only includes secured schemes (no preferred bidder or lsquoprospectivesrsquo)

our share of Gross Development Value of schemes

provides long-term visibility 86 for 2019 and beyond

Regeneration amp development pipeline

poundmpound3210m pound3233m

FY 16 FY 17 2018 2019 2020 +

1419

67

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

14

Divisional Performances

15

bull Revenue split Construction 58 Infrastructure 42bull Construction revenue up 2 Infrastructure up 10bull Margin recovery well underway

continued focus on operational delivery and quality of earnings not volume

Construction margin of 13 up 130bps 16 margin in H2

Infrastructure margin of 17 up 10 bps stronger H2 due to work mix

Construction amp Infrastructure

poundm FY 2017 FY 2016 change

Revenue 1395 1321 +6

Operating profit1 204 89 +129

Margin 15 07 +80bps

1 Adjusted

16

poundm pound1886m pound1855m

Infrastructure

Construction

FY 16 FY 17

pound1377mpound1296m

pound590m pound478m

bull Divisional order book down 2 to pound1855m

significant contract wins in Infrastructure with order book up 6 to pound1377m

Construction order book down 19

positive evidence of contract selectivity and focus on quality not chasing volume

93 of Construction order book by value continuing to be derived through negotiatedframework2-stage bidding processes

Construction amp InfrastructureO

rder

Boo

k

Expect further margin improvement in 2018

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound410m

pound257m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

17

Fit Out

poundm FY 2017 FY 2016 change

Revenue 735 634 +16

Operating profit1 391 275 +42

Margin 53 43 +100bps

1 Adjusted

bull Another very strong performance All key metrics showing further progress record revenue of pound735m up 16

operating profit up 42 to pound391m

margin up 100bps to 53

focus on operational delivery

bull 77 of revenue relates to fit out of existing office spacebull London region accounts for 71 of revenue

18

poundmpound500m

pound466m

12 month forward order book

Order book beyond 12 months

FY 16 FY 17

pound468m

pound410m

Fit Out

bull Order book of pound500m

increase of 7 compared to previous year end

down 12 from the half year position

12 month forward order book 14 higher than last year

still relatively short term visibility

Ord

er B

ook

Positive outlook for 2018 another strong performance expected

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

19

Property Services

poundm FY 2017 FY 2016 change

Revenue 66 55 +20

Operating (loss)profit1 (13) 07 na

Margin (20) 13 -330bps

1 Adjusted

bull Revenue up 20 as new work mobilised

bull Operating loss of pound13m includes closure of insurance business and exit from loss-making contracts

bull New work secured to support future growth order book up 22 to pound836m including pound102m for 2018

Benefit of restructuring and new work will drive profit in 2018

20

bull Slightly disappointing result lower Q4 open market sales in mixed-tenure cost escalation on one contracting job in London due to finish H1 2018

bull Revenue increase driven by Contracting activities Contracting revenue up 27 (pound290m) ndash 61 of division lower lsquocontractorrsquosrsquo margin

bull Mixed-tenure revenue down 10 to pound184m missed some Q4 completions due to programme slippage total 887 units sold (private and social) 16 lower than 2016

Partnership Housing

1 Adjusted

poundm FY 2017 FY 2016 change

Revenue 474 433 +9

Operating profit1 141 134 +5

Margin 30 31 -10bps

21

Partnership Housing

bull Capital employed at year end up pound24m to pound88m but average capital down to pound100m

combination of turning non-performing capital into cash and slower investment in new schemes than anticipated

poundm FY 2017 FY 2016

Capital employed1 at year end 880 639

LTM average capital employed1 997 1108

1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing)3 Return on average capital employed = adjusted operating profit divided by average capital employed

Improvement in profit and ROCE expected in 2018

bull LTM ROCE2 of 14 up from 12 prior yearbull Order book up 18 to pound523mbull Regeneration amp development pipeline up 11 to pound851m

currently 45 active mixed-tenure sites average 102 units average duration 39 months

bull Average Capital Employed estimated to increase to cpound120m in 2018

22

Urban Regeneration

poundm FY 2017 FY 2016 change

Capital employed1 at year end 850 689 +23

LTM average capital employed1 885 800 +11

Revenue 175 156 +12

Operating profit2 100 134 -25

bull Lower profit in year as expected In line with scheduled development completionsbull Average capital employed increased to pound885m as schemes are developed for sale

in 2018 and beyond

LTM ROCE3 of 9 Well below target threshold

capital employed in 2018 expected to be in range of pound100m-pound110m 1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing) At period end non-recourse debt was pound265m (FY 2016 pound48m) and deferred consideration was poundnil (FY 2016 pound75m) LTM non-recourse debt was pound154m (FY 2016 pound147m) and LTM deferred consideration was pound35m (FY 2016 pound114m)2 Adjusted3 Return on average capital employed = (Adjusted operating profit less interest on non-recourse debt less unwind of discount on deferred consideration) divided by (LTM average capital employed)

23

Urban Regeneration

Pipeline schedule indicates uplift in profit and ROCE in 2018

bull Regeneration amp development pipeline down 8 to pound21bn preferred bidder gt pound200m GDV

not included

broad geographic and sector split

bull Significant activity currently lsquoon sitersquo cpound400m of construction work

currently ongoing further cpound420m to be procured in

year

South East amp London

44

South West3

North West35

YorksNE17

Scotland1

Development pipeline by region

Offices30

Retail3Leisure

6Industrial

8

Residential51

Other2

Development pipeline by sector

24

Investments

poundm FY 2017 FY 2016 change

Operating profit(loss)1 05 (20) na

bull Year of evolution for Investments role of securing work for other divisions in the Group

cpound135m of construction and regeneration work secured for future delivery across the Group

now also expected to be a profit contributor with own returns target

bull Work delivered mainly through strategic JVs property partnerships with Slough Borough Council Bournemouth Borough Council etc

bull Small profit in year due to residential sales in strategic JVsbull Capital employed2 in all of its partnerships of pound39m (average for year of pound31m)

1 Adjusted2 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities

Consistent profit contribution with medium term 20 ROCE target

25

Accounting PoliciesIFRS 15 amp 16

26

IFRS 15

bull IFRS 15 lsquoRevenue from Contracts with Customersrsquo

bull Effective from 1 January 2018

bull No impact on cash flow

bull No impact on lifetime profitability of contracts

bull Does not fundamentally change the way we report or operate

not restating prior years

instead adjustment to opening reserves adjusts for revenue taken in previous years which wouldnrsquot fulfil IFRS 15 criteria

net adjustment to reserves of pound7m relating to revenue recognised prior to 31 December 2017 which would have been deferred to later years

27

bull lsquoIFRS 16 Leasesrsquo being adopted a year early to align with implementation of IFRS 15

requires all leases to be recognised on the balance sheet as a right of use asset with a corresponding lease liability Estimated gross asset and liability on transition of cpound40m-pound45m

mainly relates to property leases

future expense in the income statement will comprise depreciation and finance costs rather than rental payments

impact not expected to be material

increase in operating profit and interest expense of cpound1m

IFRS 16

28

Summary and Outlook

29

Progress against medium-term targets1

Medium-termtarget1

Construction Activities

Margin in Construction 2

Opnl leverage in Property Services gt3 margin

Maintain profits at Fit Out pound25m-pound30m pa

25Margin in Infrastructure

FY16

0

16

pound275m

11

1 Medium-term targets as set out in February 2017

FY17

13

17

pound391m

(20)

30

Progress against medium-term targets1

Medium-termtarget1

Regeneration Activities

ROCE in Partnership Housing gt 20

ROCE in Investments Towards 20

Towards 20ROCE in Urban Regeneration

FY16

12

15

1 Medium-term targets as set out in February 2017

FY17

14

9

1

31

Summary amp Outlook for 2018

bull Strong set of results for FY 2017 profit margin cash all improved

bull Well-positioned for further growth in 2018

margin improvement in Construction amp Infrastructure good prospects for Fit Out better year in Partnership Housing more development completions scheduled in Urban Regeneration Property Services back into profit positive contribution from Investments no material impact of the Carillion situation

bull Total dividend up 29

32

InvestmentsJohn Morgan

Construction RegenerationConstruction

amp Infrastructure

Fit Out PropertyServices

PartnershipHousing

Urban Regeneration

Investments

Investments underpins Group activities

Morgan Sindall Group today

33

Group structure

34

Our Regeneration businesses

Urban Regeneration

Developer only large mixed-use schemes schemes have multi-phases schemes of long duration

Partnership Housing

Builder and developer houses for sale and rent in partnership with local authorities and housing associations

Investments

Developer only long-term strategic partnerships incorporate multiple smaller schemes individual schemes of relatively short duration delivery by other Group companies

ldquoInvesting cash generated from the Construction divisions into development partnerships with the public sectorrdquo

35

Investments today

5 public private partnerships

poundm FY 2017 FY 2016 change

Operating profit(loss) 05 (20) na

Average capital employed 307 207 +48

2 Independent Living JVs

5 Public Private Partnerships

pound143m Sister Company revenue delivered in 2017

Potential pound26bn

GDV from current partnerships 1 Investment

Partnership Fund

36

Investments today

bull Local Authorities

bull County Councils

bull NHS Foundation Trusts

Who our partners are How we win work

bull Public procurement (OJEU)

bull Proactive early engagement with identified prospective partners to shape thinking and approach to market

bull allows the Group to win work which individual divisions could not win

bull provides a long-term profit stream and visibility of work

bull provides high quality construction work for rest of the Group

Role of division in the

Group

bull Construction margin for other Group companies

How we make money

bull Development profits

bull Development management fees

plus

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound445m

pound342m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 15

FY 16

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound466m

pound1499m

pound2826m

pound341m

pound445m

pound342m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 15

FY 16

FY 15

FY 16

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound523m

pound445m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 16

FY 17

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other1			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

13

Regeneration amp development pipeline

bull Group regeneration amp development pipeline up 1 at pound32bn

relevant to Regeneration businesses

only includes secured schemes (no preferred bidder or lsquoprospectivesrsquo)

our share of Gross Development Value of schemes

provides long-term visibility 86 for 2019 and beyond

Regeneration amp development pipeline

poundmpound3210m pound3233m

FY 16 FY 17 2018 2019 2020 +

1419

67

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

14

Divisional Performances

15

bull Revenue split Construction 58 Infrastructure 42bull Construction revenue up 2 Infrastructure up 10bull Margin recovery well underway

continued focus on operational delivery and quality of earnings not volume

Construction margin of 13 up 130bps 16 margin in H2

Infrastructure margin of 17 up 10 bps stronger H2 due to work mix

Construction amp Infrastructure

poundm FY 2017 FY 2016 change

Revenue 1395 1321 +6

Operating profit1 204 89 +129

Margin 15 07 +80bps

1 Adjusted

16

poundm pound1886m pound1855m

Infrastructure

Construction

FY 16 FY 17

pound1377mpound1296m

pound590m pound478m

bull Divisional order book down 2 to pound1855m

significant contract wins in Infrastructure with order book up 6 to pound1377m

Construction order book down 19

positive evidence of contract selectivity and focus on quality not chasing volume

93 of Construction order book by value continuing to be derived through negotiatedframework2-stage bidding processes

Construction amp InfrastructureO

rder

Boo

k

Expect further margin improvement in 2018

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound410m

pound257m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

17

Fit Out

poundm FY 2017 FY 2016 change

Revenue 735 634 +16

Operating profit1 391 275 +42

Margin 53 43 +100bps

1 Adjusted

bull Another very strong performance All key metrics showing further progress record revenue of pound735m up 16

operating profit up 42 to pound391m

margin up 100bps to 53

focus on operational delivery

bull 77 of revenue relates to fit out of existing office spacebull London region accounts for 71 of revenue

18

poundmpound500m

pound466m

12 month forward order book

Order book beyond 12 months

FY 16 FY 17

pound468m

pound410m

Fit Out

bull Order book of pound500m

increase of 7 compared to previous year end

down 12 from the half year position

12 month forward order book 14 higher than last year

still relatively short term visibility

Ord

er B

ook

Positive outlook for 2018 another strong performance expected

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

19

Property Services

poundm FY 2017 FY 2016 change

Revenue 66 55 +20

Operating (loss)profit1 (13) 07 na

Margin (20) 13 -330bps

1 Adjusted

bull Revenue up 20 as new work mobilised

bull Operating loss of pound13m includes closure of insurance business and exit from loss-making contracts

bull New work secured to support future growth order book up 22 to pound836m including pound102m for 2018

Benefit of restructuring and new work will drive profit in 2018

20

bull Slightly disappointing result lower Q4 open market sales in mixed-tenure cost escalation on one contracting job in London due to finish H1 2018

bull Revenue increase driven by Contracting activities Contracting revenue up 27 (pound290m) ndash 61 of division lower lsquocontractorrsquosrsquo margin

bull Mixed-tenure revenue down 10 to pound184m missed some Q4 completions due to programme slippage total 887 units sold (private and social) 16 lower than 2016

Partnership Housing

1 Adjusted

poundm FY 2017 FY 2016 change

Revenue 474 433 +9

Operating profit1 141 134 +5

Margin 30 31 -10bps

21

Partnership Housing

bull Capital employed at year end up pound24m to pound88m but average capital down to pound100m

combination of turning non-performing capital into cash and slower investment in new schemes than anticipated

poundm FY 2017 FY 2016

Capital employed1 at year end 880 639

LTM average capital employed1 997 1108

1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing)3 Return on average capital employed = adjusted operating profit divided by average capital employed

Improvement in profit and ROCE expected in 2018

bull LTM ROCE2 of 14 up from 12 prior yearbull Order book up 18 to pound523mbull Regeneration amp development pipeline up 11 to pound851m

currently 45 active mixed-tenure sites average 102 units average duration 39 months

bull Average Capital Employed estimated to increase to cpound120m in 2018

22

Urban Regeneration

poundm FY 2017 FY 2016 change

Capital employed1 at year end 850 689 +23

LTM average capital employed1 885 800 +11

Revenue 175 156 +12

Operating profit2 100 134 -25

bull Lower profit in year as expected In line with scheduled development completionsbull Average capital employed increased to pound885m as schemes are developed for sale

in 2018 and beyond

LTM ROCE3 of 9 Well below target threshold

capital employed in 2018 expected to be in range of pound100m-pound110m 1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing) At period end non-recourse debt was pound265m (FY 2016 pound48m) and deferred consideration was poundnil (FY 2016 pound75m) LTM non-recourse debt was pound154m (FY 2016 pound147m) and LTM deferred consideration was pound35m (FY 2016 pound114m)2 Adjusted3 Return on average capital employed = (Adjusted operating profit less interest on non-recourse debt less unwind of discount on deferred consideration) divided by (LTM average capital employed)

23

Urban Regeneration

Pipeline schedule indicates uplift in profit and ROCE in 2018

bull Regeneration amp development pipeline down 8 to pound21bn preferred bidder gt pound200m GDV

not included

broad geographic and sector split

bull Significant activity currently lsquoon sitersquo cpound400m of construction work

currently ongoing further cpound420m to be procured in

year

South East amp London

44

South West3

North West35

YorksNE17

Scotland1

Development pipeline by region

Offices30

Retail3Leisure

6Industrial

8

Residential51

Other2

Development pipeline by sector

24

Investments

poundm FY 2017 FY 2016 change

Operating profit(loss)1 05 (20) na

bull Year of evolution for Investments role of securing work for other divisions in the Group

cpound135m of construction and regeneration work secured for future delivery across the Group

now also expected to be a profit contributor with own returns target

bull Work delivered mainly through strategic JVs property partnerships with Slough Borough Council Bournemouth Borough Council etc

bull Small profit in year due to residential sales in strategic JVsbull Capital employed2 in all of its partnerships of pound39m (average for year of pound31m)

1 Adjusted2 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities

Consistent profit contribution with medium term 20 ROCE target

25

Accounting PoliciesIFRS 15 amp 16

26

IFRS 15

bull IFRS 15 lsquoRevenue from Contracts with Customersrsquo

bull Effective from 1 January 2018

bull No impact on cash flow

bull No impact on lifetime profitability of contracts

bull Does not fundamentally change the way we report or operate

not restating prior years

instead adjustment to opening reserves adjusts for revenue taken in previous years which wouldnrsquot fulfil IFRS 15 criteria

net adjustment to reserves of pound7m relating to revenue recognised prior to 31 December 2017 which would have been deferred to later years

27

bull lsquoIFRS 16 Leasesrsquo being adopted a year early to align with implementation of IFRS 15

requires all leases to be recognised on the balance sheet as a right of use asset with a corresponding lease liability Estimated gross asset and liability on transition of cpound40m-pound45m

mainly relates to property leases

future expense in the income statement will comprise depreciation and finance costs rather than rental payments

impact not expected to be material

increase in operating profit and interest expense of cpound1m

IFRS 16

28

Summary and Outlook

29

Progress against medium-term targets1

Medium-termtarget1

Construction Activities

Margin in Construction 2

Opnl leverage in Property Services gt3 margin

Maintain profits at Fit Out pound25m-pound30m pa

25Margin in Infrastructure

FY16

0

16

pound275m

11

1 Medium-term targets as set out in February 2017

FY17

13

17

pound391m

(20)

30

Progress against medium-term targets1

Medium-termtarget1

Regeneration Activities

ROCE in Partnership Housing gt 20

ROCE in Investments Towards 20

Towards 20ROCE in Urban Regeneration

FY16

12

15

1 Medium-term targets as set out in February 2017

FY17

14

9

1

31

Summary amp Outlook for 2018

bull Strong set of results for FY 2017 profit margin cash all improved

bull Well-positioned for further growth in 2018

margin improvement in Construction amp Infrastructure good prospects for Fit Out better year in Partnership Housing more development completions scheduled in Urban Regeneration Property Services back into profit positive contribution from Investments no material impact of the Carillion situation

bull Total dividend up 29

32

InvestmentsJohn Morgan

Construction RegenerationConstruction

amp Infrastructure

Fit Out PropertyServices

PartnershipHousing

Urban Regeneration

Investments

Investments underpins Group activities

Morgan Sindall Group today

33

Group structure

34

Our Regeneration businesses

Urban Regeneration

Developer only large mixed-use schemes schemes have multi-phases schemes of long duration

Partnership Housing

Builder and developer houses for sale and rent in partnership with local authorities and housing associations

Investments

Developer only long-term strategic partnerships incorporate multiple smaller schemes individual schemes of relatively short duration delivery by other Group companies

ldquoInvesting cash generated from the Construction divisions into development partnerships with the public sectorrdquo

35

Investments today

5 public private partnerships

poundm FY 2017 FY 2016 change

Operating profit(loss) 05 (20) na

Average capital employed 307 207 +48

2 Independent Living JVs

5 Public Private Partnerships

pound143m Sister Company revenue delivered in 2017

Potential pound26bn

GDV from current partnerships 1 Investment

Partnership Fund

36

Investments today

bull Local Authorities

bull County Councils

bull NHS Foundation Trusts

Who our partners are How we win work

bull Public procurement (OJEU)

bull Proactive early engagement with identified prospective partners to shape thinking and approach to market

bull allows the Group to win work which individual divisions could not win

bull provides a long-term profit stream and visibility of work

bull provides high quality construction work for rest of the Group

Role of division in the

Group

bull Construction margin for other Group companies

How we make money

bull Development profits

bull Development management fees

plus

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound445m

pound342m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 15

FY 16

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound466m

pound1499m

pound2826m

pound341m

pound445m

pound342m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 15

FY 16

FY 15

FY 16

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

14

Divisional Performances

15

bull Revenue split Construction 58 Infrastructure 42bull Construction revenue up 2 Infrastructure up 10bull Margin recovery well underway

continued focus on operational delivery and quality of earnings not volume

Construction margin of 13 up 130bps 16 margin in H2

Infrastructure margin of 17 up 10 bps stronger H2 due to work mix

Construction amp Infrastructure

poundm FY 2017 FY 2016 change

Revenue 1395 1321 +6

Operating profit1 204 89 +129

Margin 15 07 +80bps

1 Adjusted

16

poundm pound1886m pound1855m

Infrastructure

Construction

FY 16 FY 17

pound1377mpound1296m

pound590m pound478m

bull Divisional order book down 2 to pound1855m

significant contract wins in Infrastructure with order book up 6 to pound1377m

Construction order book down 19

positive evidence of contract selectivity and focus on quality not chasing volume

93 of Construction order book by value continuing to be derived through negotiatedframework2-stage bidding processes

Construction amp InfrastructureO

rder

Boo

k

Expect further margin improvement in 2018

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound410m

pound257m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

17

Fit Out

poundm FY 2017 FY 2016 change

Revenue 735 634 +16

Operating profit1 391 275 +42

Margin 53 43 +100bps

1 Adjusted

bull Another very strong performance All key metrics showing further progress record revenue of pound735m up 16

operating profit up 42 to pound391m

margin up 100bps to 53

focus on operational delivery

bull 77 of revenue relates to fit out of existing office spacebull London region accounts for 71 of revenue

18

poundmpound500m

pound466m

12 month forward order book

Order book beyond 12 months

FY 16 FY 17

pound468m

pound410m

Fit Out

bull Order book of pound500m

increase of 7 compared to previous year end

down 12 from the half year position

12 month forward order book 14 higher than last year

still relatively short term visibility

Ord

er B

ook

Positive outlook for 2018 another strong performance expected

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

19

Property Services

poundm FY 2017 FY 2016 change

Revenue 66 55 +20

Operating (loss)profit1 (13) 07 na

Margin (20) 13 -330bps

1 Adjusted

bull Revenue up 20 as new work mobilised

bull Operating loss of pound13m includes closure of insurance business and exit from loss-making contracts

bull New work secured to support future growth order book up 22 to pound836m including pound102m for 2018

Benefit of restructuring and new work will drive profit in 2018

20

bull Slightly disappointing result lower Q4 open market sales in mixed-tenure cost escalation on one contracting job in London due to finish H1 2018

bull Revenue increase driven by Contracting activities Contracting revenue up 27 (pound290m) ndash 61 of division lower lsquocontractorrsquosrsquo margin

bull Mixed-tenure revenue down 10 to pound184m missed some Q4 completions due to programme slippage total 887 units sold (private and social) 16 lower than 2016

Partnership Housing

1 Adjusted

poundm FY 2017 FY 2016 change

Revenue 474 433 +9

Operating profit1 141 134 +5

Margin 30 31 -10bps

21

Partnership Housing

bull Capital employed at year end up pound24m to pound88m but average capital down to pound100m

combination of turning non-performing capital into cash and slower investment in new schemes than anticipated

poundm FY 2017 FY 2016

Capital employed1 at year end 880 639

LTM average capital employed1 997 1108

1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing)3 Return on average capital employed = adjusted operating profit divided by average capital employed

Improvement in profit and ROCE expected in 2018

bull LTM ROCE2 of 14 up from 12 prior yearbull Order book up 18 to pound523mbull Regeneration amp development pipeline up 11 to pound851m

currently 45 active mixed-tenure sites average 102 units average duration 39 months

bull Average Capital Employed estimated to increase to cpound120m in 2018

22

Urban Regeneration

poundm FY 2017 FY 2016 change

Capital employed1 at year end 850 689 +23

LTM average capital employed1 885 800 +11

Revenue 175 156 +12

Operating profit2 100 134 -25

bull Lower profit in year as expected In line with scheduled development completionsbull Average capital employed increased to pound885m as schemes are developed for sale

in 2018 and beyond

LTM ROCE3 of 9 Well below target threshold

capital employed in 2018 expected to be in range of pound100m-pound110m 1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing) At period end non-recourse debt was pound265m (FY 2016 pound48m) and deferred consideration was poundnil (FY 2016 pound75m) LTM non-recourse debt was pound154m (FY 2016 pound147m) and LTM deferred consideration was pound35m (FY 2016 pound114m)2 Adjusted3 Return on average capital employed = (Adjusted operating profit less interest on non-recourse debt less unwind of discount on deferred consideration) divided by (LTM average capital employed)

23

Urban Regeneration

Pipeline schedule indicates uplift in profit and ROCE in 2018

bull Regeneration amp development pipeline down 8 to pound21bn preferred bidder gt pound200m GDV

not included

broad geographic and sector split

bull Significant activity currently lsquoon sitersquo cpound400m of construction work

currently ongoing further cpound420m to be procured in

year

South East amp London

44

South West3

North West35

YorksNE17

Scotland1

Development pipeline by region

Offices30

Retail3Leisure

6Industrial

8

Residential51

Other2

Development pipeline by sector

24

Investments

poundm FY 2017 FY 2016 change

Operating profit(loss)1 05 (20) na

bull Year of evolution for Investments role of securing work for other divisions in the Group

cpound135m of construction and regeneration work secured for future delivery across the Group

now also expected to be a profit contributor with own returns target

bull Work delivered mainly through strategic JVs property partnerships with Slough Borough Council Bournemouth Borough Council etc

bull Small profit in year due to residential sales in strategic JVsbull Capital employed2 in all of its partnerships of pound39m (average for year of pound31m)

1 Adjusted2 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities

Consistent profit contribution with medium term 20 ROCE target

25

Accounting PoliciesIFRS 15 amp 16

26

IFRS 15

bull IFRS 15 lsquoRevenue from Contracts with Customersrsquo

bull Effective from 1 January 2018

bull No impact on cash flow

bull No impact on lifetime profitability of contracts

bull Does not fundamentally change the way we report or operate

not restating prior years

instead adjustment to opening reserves adjusts for revenue taken in previous years which wouldnrsquot fulfil IFRS 15 criteria

net adjustment to reserves of pound7m relating to revenue recognised prior to 31 December 2017 which would have been deferred to later years

27

bull lsquoIFRS 16 Leasesrsquo being adopted a year early to align with implementation of IFRS 15

requires all leases to be recognised on the balance sheet as a right of use asset with a corresponding lease liability Estimated gross asset and liability on transition of cpound40m-pound45m

mainly relates to property leases

future expense in the income statement will comprise depreciation and finance costs rather than rental payments

impact not expected to be material

increase in operating profit and interest expense of cpound1m

IFRS 16

28

Summary and Outlook

29

Progress against medium-term targets1

Medium-termtarget1

Construction Activities

Margin in Construction 2

Opnl leverage in Property Services gt3 margin

Maintain profits at Fit Out pound25m-pound30m pa

25Margin in Infrastructure

FY16

0

16

pound275m

11

1 Medium-term targets as set out in February 2017

FY17

13

17

pound391m

(20)

30

Progress against medium-term targets1

Medium-termtarget1

Regeneration Activities

ROCE in Partnership Housing gt 20

ROCE in Investments Towards 20

Towards 20ROCE in Urban Regeneration

FY16

12

15

1 Medium-term targets as set out in February 2017

FY17

14

9

1

31

Summary amp Outlook for 2018

bull Strong set of results for FY 2017 profit margin cash all improved

bull Well-positioned for further growth in 2018

margin improvement in Construction amp Infrastructure good prospects for Fit Out better year in Partnership Housing more development completions scheduled in Urban Regeneration Property Services back into profit positive contribution from Investments no material impact of the Carillion situation

bull Total dividend up 29

32

InvestmentsJohn Morgan

Construction RegenerationConstruction

amp Infrastructure

Fit Out PropertyServices

PartnershipHousing

Urban Regeneration

Investments

Investments underpins Group activities

Morgan Sindall Group today

33

Group structure

34

Our Regeneration businesses

Urban Regeneration

Developer only large mixed-use schemes schemes have multi-phases schemes of long duration

Partnership Housing

Builder and developer houses for sale and rent in partnership with local authorities and housing associations

Investments

Developer only long-term strategic partnerships incorporate multiple smaller schemes individual schemes of relatively short duration delivery by other Group companies

ldquoInvesting cash generated from the Construction divisions into development partnerships with the public sectorrdquo

35

Investments today

5 public private partnerships

poundm FY 2017 FY 2016 change

Operating profit(loss) 05 (20) na

Average capital employed 307 207 +48

2 Independent Living JVs

5 Public Private Partnerships

pound143m Sister Company revenue delivered in 2017

Potential pound26bn

GDV from current partnerships 1 Investment

Partnership Fund

36

Investments today

bull Local Authorities

bull County Councils

bull NHS Foundation Trusts

Who our partners are How we win work

bull Public procurement (OJEU)

bull Proactive early engagement with identified prospective partners to shape thinking and approach to market

bull allows the Group to win work which individual divisions could not win

bull provides a long-term profit stream and visibility of work

bull provides high quality construction work for rest of the Group

Role of division in the

Group

bull Construction margin for other Group companies

How we make money

bull Development profits

bull Development management fees

plus

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound445m

pound342m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 15

FY 16

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound466m

pound1499m

pound2826m

pound341m

pound445m

pound342m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 15

FY 16

FY 15

FY 16

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

15

bull Revenue split Construction 58 Infrastructure 42bull Construction revenue up 2 Infrastructure up 10bull Margin recovery well underway

continued focus on operational delivery and quality of earnings not volume

Construction margin of 13 up 130bps 16 margin in H2

Infrastructure margin of 17 up 10 bps stronger H2 due to work mix

Construction amp Infrastructure

poundm FY 2017 FY 2016 change

Revenue 1395 1321 +6

Operating profit1 204 89 +129

Margin 15 07 +80bps

1 Adjusted

16

poundm pound1886m pound1855m

Infrastructure

Construction

FY 16 FY 17

pound1377mpound1296m

pound590m pound478m

bull Divisional order book down 2 to pound1855m

significant contract wins in Infrastructure with order book up 6 to pound1377m

Construction order book down 19

positive evidence of contract selectivity and focus on quality not chasing volume

93 of Construction order book by value continuing to be derived through negotiatedframework2-stage bidding processes

Construction amp InfrastructureO

rder

Boo

k

Expect further margin improvement in 2018

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound410m

pound257m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

17

Fit Out

poundm FY 2017 FY 2016 change

Revenue 735 634 +16

Operating profit1 391 275 +42

Margin 53 43 +100bps

1 Adjusted

bull Another very strong performance All key metrics showing further progress record revenue of pound735m up 16

operating profit up 42 to pound391m

margin up 100bps to 53

focus on operational delivery

bull 77 of revenue relates to fit out of existing office spacebull London region accounts for 71 of revenue

18

poundmpound500m

pound466m

12 month forward order book

Order book beyond 12 months

FY 16 FY 17

pound468m

pound410m

Fit Out

bull Order book of pound500m

increase of 7 compared to previous year end

down 12 from the half year position

12 month forward order book 14 higher than last year

still relatively short term visibility

Ord

er B

ook

Positive outlook for 2018 another strong performance expected

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

19

Property Services

poundm FY 2017 FY 2016 change

Revenue 66 55 +20

Operating (loss)profit1 (13) 07 na

Margin (20) 13 -330bps

1 Adjusted

bull Revenue up 20 as new work mobilised

bull Operating loss of pound13m includes closure of insurance business and exit from loss-making contracts

bull New work secured to support future growth order book up 22 to pound836m including pound102m for 2018

Benefit of restructuring and new work will drive profit in 2018

20

bull Slightly disappointing result lower Q4 open market sales in mixed-tenure cost escalation on one contracting job in London due to finish H1 2018

bull Revenue increase driven by Contracting activities Contracting revenue up 27 (pound290m) ndash 61 of division lower lsquocontractorrsquosrsquo margin

bull Mixed-tenure revenue down 10 to pound184m missed some Q4 completions due to programme slippage total 887 units sold (private and social) 16 lower than 2016

Partnership Housing

1 Adjusted

poundm FY 2017 FY 2016 change

Revenue 474 433 +9

Operating profit1 141 134 +5

Margin 30 31 -10bps

21

Partnership Housing

bull Capital employed at year end up pound24m to pound88m but average capital down to pound100m

combination of turning non-performing capital into cash and slower investment in new schemes than anticipated

poundm FY 2017 FY 2016

Capital employed1 at year end 880 639

LTM average capital employed1 997 1108

1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing)3 Return on average capital employed = adjusted operating profit divided by average capital employed

Improvement in profit and ROCE expected in 2018

bull LTM ROCE2 of 14 up from 12 prior yearbull Order book up 18 to pound523mbull Regeneration amp development pipeline up 11 to pound851m

currently 45 active mixed-tenure sites average 102 units average duration 39 months

bull Average Capital Employed estimated to increase to cpound120m in 2018

22

Urban Regeneration

poundm FY 2017 FY 2016 change

Capital employed1 at year end 850 689 +23

LTM average capital employed1 885 800 +11

Revenue 175 156 +12

Operating profit2 100 134 -25

bull Lower profit in year as expected In line with scheduled development completionsbull Average capital employed increased to pound885m as schemes are developed for sale

in 2018 and beyond

LTM ROCE3 of 9 Well below target threshold

capital employed in 2018 expected to be in range of pound100m-pound110m 1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing) At period end non-recourse debt was pound265m (FY 2016 pound48m) and deferred consideration was poundnil (FY 2016 pound75m) LTM non-recourse debt was pound154m (FY 2016 pound147m) and LTM deferred consideration was pound35m (FY 2016 pound114m)2 Adjusted3 Return on average capital employed = (Adjusted operating profit less interest on non-recourse debt less unwind of discount on deferred consideration) divided by (LTM average capital employed)

23

Urban Regeneration

Pipeline schedule indicates uplift in profit and ROCE in 2018

bull Regeneration amp development pipeline down 8 to pound21bn preferred bidder gt pound200m GDV

not included

broad geographic and sector split

bull Significant activity currently lsquoon sitersquo cpound400m of construction work

currently ongoing further cpound420m to be procured in

year

South East amp London

44

South West3

North West35

YorksNE17

Scotland1

Development pipeline by region

Offices30

Retail3Leisure

6Industrial

8

Residential51

Other2

Development pipeline by sector

24

Investments

poundm FY 2017 FY 2016 change

Operating profit(loss)1 05 (20) na

bull Year of evolution for Investments role of securing work for other divisions in the Group

cpound135m of construction and regeneration work secured for future delivery across the Group

now also expected to be a profit contributor with own returns target

bull Work delivered mainly through strategic JVs property partnerships with Slough Borough Council Bournemouth Borough Council etc

bull Small profit in year due to residential sales in strategic JVsbull Capital employed2 in all of its partnerships of pound39m (average for year of pound31m)

1 Adjusted2 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities

Consistent profit contribution with medium term 20 ROCE target

25

Accounting PoliciesIFRS 15 amp 16

26

IFRS 15

bull IFRS 15 lsquoRevenue from Contracts with Customersrsquo

bull Effective from 1 January 2018

bull No impact on cash flow

bull No impact on lifetime profitability of contracts

bull Does not fundamentally change the way we report or operate

not restating prior years

instead adjustment to opening reserves adjusts for revenue taken in previous years which wouldnrsquot fulfil IFRS 15 criteria

net adjustment to reserves of pound7m relating to revenue recognised prior to 31 December 2017 which would have been deferred to later years

27

bull lsquoIFRS 16 Leasesrsquo being adopted a year early to align with implementation of IFRS 15

requires all leases to be recognised on the balance sheet as a right of use asset with a corresponding lease liability Estimated gross asset and liability on transition of cpound40m-pound45m

mainly relates to property leases

future expense in the income statement will comprise depreciation and finance costs rather than rental payments

impact not expected to be material

increase in operating profit and interest expense of cpound1m

IFRS 16

28

Summary and Outlook

29

Progress against medium-term targets1

Medium-termtarget1

Construction Activities

Margin in Construction 2

Opnl leverage in Property Services gt3 margin

Maintain profits at Fit Out pound25m-pound30m pa

25Margin in Infrastructure

FY16

0

16

pound275m

11

1 Medium-term targets as set out in February 2017

FY17

13

17

pound391m

(20)

30

Progress against medium-term targets1

Medium-termtarget1

Regeneration Activities

ROCE in Partnership Housing gt 20

ROCE in Investments Towards 20

Towards 20ROCE in Urban Regeneration

FY16

12

15

1 Medium-term targets as set out in February 2017

FY17

14

9

1

31

Summary amp Outlook for 2018

bull Strong set of results for FY 2017 profit margin cash all improved

bull Well-positioned for further growth in 2018

margin improvement in Construction amp Infrastructure good prospects for Fit Out better year in Partnership Housing more development completions scheduled in Urban Regeneration Property Services back into profit positive contribution from Investments no material impact of the Carillion situation

bull Total dividend up 29

32

InvestmentsJohn Morgan

Construction RegenerationConstruction

amp Infrastructure

Fit Out PropertyServices

PartnershipHousing

Urban Regeneration

Investments

Investments underpins Group activities

Morgan Sindall Group today

33

Group structure

34

Our Regeneration businesses

Urban Regeneration

Developer only large mixed-use schemes schemes have multi-phases schemes of long duration

Partnership Housing

Builder and developer houses for sale and rent in partnership with local authorities and housing associations

Investments

Developer only long-term strategic partnerships incorporate multiple smaller schemes individual schemes of relatively short duration delivery by other Group companies

ldquoInvesting cash generated from the Construction divisions into development partnerships with the public sectorrdquo

35

Investments today

5 public private partnerships

poundm FY 2017 FY 2016 change

Operating profit(loss) 05 (20) na

Average capital employed 307 207 +48

2 Independent Living JVs

5 Public Private Partnerships

pound143m Sister Company revenue delivered in 2017

Potential pound26bn

GDV from current partnerships 1 Investment

Partnership Fund

36

Investments today

bull Local Authorities

bull County Councils

bull NHS Foundation Trusts

Who our partners are How we win work

bull Public procurement (OJEU)

bull Proactive early engagement with identified prospective partners to shape thinking and approach to market

bull allows the Group to win work which individual divisions could not win

bull provides a long-term profit stream and visibility of work

bull provides high quality construction work for rest of the Group

Role of division in the

Group

bull Construction margin for other Group companies

How we make money

bull Development profits

bull Development management fees

plus

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound445m

pound342m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 15

FY 16

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound466m

pound1499m

pound2826m

pound341m

pound445m

pound342m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 15

FY 16

FY 15

FY 16

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

16

poundm pound1886m pound1855m

Infrastructure

Construction

FY 16 FY 17

pound1377mpound1296m

pound590m pound478m

bull Divisional order book down 2 to pound1855m

significant contract wins in Infrastructure with order book up 6 to pound1377m

Construction order book down 19

positive evidence of contract selectivity and focus on quality not chasing volume

93 of Construction order book by value continuing to be derived through negotiatedframework2-stage bidding processes

Construction amp InfrastructureO

rder

Boo

k

Expect further margin improvement in 2018

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound410m

pound257m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

17

Fit Out

poundm FY 2017 FY 2016 change

Revenue 735 634 +16

Operating profit1 391 275 +42

Margin 53 43 +100bps

1 Adjusted

bull Another very strong performance All key metrics showing further progress record revenue of pound735m up 16

operating profit up 42 to pound391m

margin up 100bps to 53

focus on operational delivery

bull 77 of revenue relates to fit out of existing office spacebull London region accounts for 71 of revenue

18

poundmpound500m

pound466m

12 month forward order book

Order book beyond 12 months

FY 16 FY 17

pound468m

pound410m

Fit Out

bull Order book of pound500m

increase of 7 compared to previous year end

down 12 from the half year position

12 month forward order book 14 higher than last year

still relatively short term visibility

Ord

er B

ook

Positive outlook for 2018 another strong performance expected

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

19

Property Services

poundm FY 2017 FY 2016 change

Revenue 66 55 +20

Operating (loss)profit1 (13) 07 na

Margin (20) 13 -330bps

1 Adjusted

bull Revenue up 20 as new work mobilised

bull Operating loss of pound13m includes closure of insurance business and exit from loss-making contracts

bull New work secured to support future growth order book up 22 to pound836m including pound102m for 2018

Benefit of restructuring and new work will drive profit in 2018

20

bull Slightly disappointing result lower Q4 open market sales in mixed-tenure cost escalation on one contracting job in London due to finish H1 2018

bull Revenue increase driven by Contracting activities Contracting revenue up 27 (pound290m) ndash 61 of division lower lsquocontractorrsquosrsquo margin

bull Mixed-tenure revenue down 10 to pound184m missed some Q4 completions due to programme slippage total 887 units sold (private and social) 16 lower than 2016

Partnership Housing

1 Adjusted

poundm FY 2017 FY 2016 change

Revenue 474 433 +9

Operating profit1 141 134 +5

Margin 30 31 -10bps

21

Partnership Housing

bull Capital employed at year end up pound24m to pound88m but average capital down to pound100m

combination of turning non-performing capital into cash and slower investment in new schemes than anticipated

poundm FY 2017 FY 2016

Capital employed1 at year end 880 639

LTM average capital employed1 997 1108

1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing)3 Return on average capital employed = adjusted operating profit divided by average capital employed

Improvement in profit and ROCE expected in 2018

bull LTM ROCE2 of 14 up from 12 prior yearbull Order book up 18 to pound523mbull Regeneration amp development pipeline up 11 to pound851m

currently 45 active mixed-tenure sites average 102 units average duration 39 months

bull Average Capital Employed estimated to increase to cpound120m in 2018

22

Urban Regeneration

poundm FY 2017 FY 2016 change

Capital employed1 at year end 850 689 +23

LTM average capital employed1 885 800 +11

Revenue 175 156 +12

Operating profit2 100 134 -25

bull Lower profit in year as expected In line with scheduled development completionsbull Average capital employed increased to pound885m as schemes are developed for sale

in 2018 and beyond

LTM ROCE3 of 9 Well below target threshold

capital employed in 2018 expected to be in range of pound100m-pound110m 1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing) At period end non-recourse debt was pound265m (FY 2016 pound48m) and deferred consideration was poundnil (FY 2016 pound75m) LTM non-recourse debt was pound154m (FY 2016 pound147m) and LTM deferred consideration was pound35m (FY 2016 pound114m)2 Adjusted3 Return on average capital employed = (Adjusted operating profit less interest on non-recourse debt less unwind of discount on deferred consideration) divided by (LTM average capital employed)

23

Urban Regeneration

Pipeline schedule indicates uplift in profit and ROCE in 2018

bull Regeneration amp development pipeline down 8 to pound21bn preferred bidder gt pound200m GDV

not included

broad geographic and sector split

bull Significant activity currently lsquoon sitersquo cpound400m of construction work

currently ongoing further cpound420m to be procured in

year

South East amp London

44

South West3

North West35

YorksNE17

Scotland1

Development pipeline by region

Offices30

Retail3Leisure

6Industrial

8

Residential51

Other2

Development pipeline by sector

24

Investments

poundm FY 2017 FY 2016 change

Operating profit(loss)1 05 (20) na

bull Year of evolution for Investments role of securing work for other divisions in the Group

cpound135m of construction and regeneration work secured for future delivery across the Group

now also expected to be a profit contributor with own returns target

bull Work delivered mainly through strategic JVs property partnerships with Slough Borough Council Bournemouth Borough Council etc

bull Small profit in year due to residential sales in strategic JVsbull Capital employed2 in all of its partnerships of pound39m (average for year of pound31m)

1 Adjusted2 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities

Consistent profit contribution with medium term 20 ROCE target

25

Accounting PoliciesIFRS 15 amp 16

26

IFRS 15

bull IFRS 15 lsquoRevenue from Contracts with Customersrsquo

bull Effective from 1 January 2018

bull No impact on cash flow

bull No impact on lifetime profitability of contracts

bull Does not fundamentally change the way we report or operate

not restating prior years

instead adjustment to opening reserves adjusts for revenue taken in previous years which wouldnrsquot fulfil IFRS 15 criteria

net adjustment to reserves of pound7m relating to revenue recognised prior to 31 December 2017 which would have been deferred to later years

27

bull lsquoIFRS 16 Leasesrsquo being adopted a year early to align with implementation of IFRS 15

requires all leases to be recognised on the balance sheet as a right of use asset with a corresponding lease liability Estimated gross asset and liability on transition of cpound40m-pound45m

mainly relates to property leases

future expense in the income statement will comprise depreciation and finance costs rather than rental payments

impact not expected to be material

increase in operating profit and interest expense of cpound1m

IFRS 16

28

Summary and Outlook

29

Progress against medium-term targets1

Medium-termtarget1

Construction Activities

Margin in Construction 2

Opnl leverage in Property Services gt3 margin

Maintain profits at Fit Out pound25m-pound30m pa

25Margin in Infrastructure

FY16

0

16

pound275m

11

1 Medium-term targets as set out in February 2017

FY17

13

17

pound391m

(20)

30

Progress against medium-term targets1

Medium-termtarget1

Regeneration Activities

ROCE in Partnership Housing gt 20

ROCE in Investments Towards 20

Towards 20ROCE in Urban Regeneration

FY16

12

15

1 Medium-term targets as set out in February 2017

FY17

14

9

1

31

Summary amp Outlook for 2018

bull Strong set of results for FY 2017 profit margin cash all improved

bull Well-positioned for further growth in 2018

margin improvement in Construction amp Infrastructure good prospects for Fit Out better year in Partnership Housing more development completions scheduled in Urban Regeneration Property Services back into profit positive contribution from Investments no material impact of the Carillion situation

bull Total dividend up 29

32

InvestmentsJohn Morgan

Construction RegenerationConstruction

amp Infrastructure

Fit Out PropertyServices

PartnershipHousing

Urban Regeneration

Investments

Investments underpins Group activities

Morgan Sindall Group today

33

Group structure

34

Our Regeneration businesses

Urban Regeneration

Developer only large mixed-use schemes schemes have multi-phases schemes of long duration

Partnership Housing

Builder and developer houses for sale and rent in partnership with local authorities and housing associations

Investments

Developer only long-term strategic partnerships incorporate multiple smaller schemes individual schemes of relatively short duration delivery by other Group companies

ldquoInvesting cash generated from the Construction divisions into development partnerships with the public sectorrdquo

35

Investments today

5 public private partnerships

poundm FY 2017 FY 2016 change

Operating profit(loss) 05 (20) na

Average capital employed 307 207 +48

2 Independent Living JVs

5 Public Private Partnerships

pound143m Sister Company revenue delivered in 2017

Potential pound26bn

GDV from current partnerships 1 Investment

Partnership Fund

36

Investments today

bull Local Authorities

bull County Councils

bull NHS Foundation Trusts

Who our partners are How we win work

bull Public procurement (OJEU)

bull Proactive early engagement with identified prospective partners to shape thinking and approach to market

bull allows the Group to win work which individual divisions could not win

bull provides a long-term profit stream and visibility of work

bull provides high quality construction work for rest of the Group

Role of division in the

Group

bull Construction margin for other Group companies

How we make money

bull Development profits

bull Development management fees

plus

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound445m

pound342m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 15

FY 16

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound466m

pound1499m

pound2826m

pound341m

pound445m

pound342m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 15

FY 16

FY 15

FY 16

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

17

Fit Out

poundm FY 2017 FY 2016 change

Revenue 735 634 +16

Operating profit1 391 275 +42

Margin 53 43 +100bps

1 Adjusted

bull Another very strong performance All key metrics showing further progress record revenue of pound735m up 16

operating profit up 42 to pound391m

margin up 100bps to 53

focus on operational delivery

bull 77 of revenue relates to fit out of existing office spacebull London region accounts for 71 of revenue

18

poundmpound500m

pound466m

12 month forward order book

Order book beyond 12 months

FY 16 FY 17

pound468m

pound410m

Fit Out

bull Order book of pound500m

increase of 7 compared to previous year end

down 12 from the half year position

12 month forward order book 14 higher than last year

still relatively short term visibility

Ord

er B

ook

Positive outlook for 2018 another strong performance expected

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

19

Property Services

poundm FY 2017 FY 2016 change

Revenue 66 55 +20

Operating (loss)profit1 (13) 07 na

Margin (20) 13 -330bps

1 Adjusted

bull Revenue up 20 as new work mobilised

bull Operating loss of pound13m includes closure of insurance business and exit from loss-making contracts

bull New work secured to support future growth order book up 22 to pound836m including pound102m for 2018

Benefit of restructuring and new work will drive profit in 2018

20

bull Slightly disappointing result lower Q4 open market sales in mixed-tenure cost escalation on one contracting job in London due to finish H1 2018

bull Revenue increase driven by Contracting activities Contracting revenue up 27 (pound290m) ndash 61 of division lower lsquocontractorrsquosrsquo margin

bull Mixed-tenure revenue down 10 to pound184m missed some Q4 completions due to programme slippage total 887 units sold (private and social) 16 lower than 2016

Partnership Housing

1 Adjusted

poundm FY 2017 FY 2016 change

Revenue 474 433 +9

Operating profit1 141 134 +5

Margin 30 31 -10bps

21

Partnership Housing

bull Capital employed at year end up pound24m to pound88m but average capital down to pound100m

combination of turning non-performing capital into cash and slower investment in new schemes than anticipated

poundm FY 2017 FY 2016

Capital employed1 at year end 880 639

LTM average capital employed1 997 1108

1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing)3 Return on average capital employed = adjusted operating profit divided by average capital employed

Improvement in profit and ROCE expected in 2018

bull LTM ROCE2 of 14 up from 12 prior yearbull Order book up 18 to pound523mbull Regeneration amp development pipeline up 11 to pound851m

currently 45 active mixed-tenure sites average 102 units average duration 39 months

bull Average Capital Employed estimated to increase to cpound120m in 2018

22

Urban Regeneration

poundm FY 2017 FY 2016 change

Capital employed1 at year end 850 689 +23

LTM average capital employed1 885 800 +11

Revenue 175 156 +12

Operating profit2 100 134 -25

bull Lower profit in year as expected In line with scheduled development completionsbull Average capital employed increased to pound885m as schemes are developed for sale

in 2018 and beyond

LTM ROCE3 of 9 Well below target threshold

capital employed in 2018 expected to be in range of pound100m-pound110m 1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing) At period end non-recourse debt was pound265m (FY 2016 pound48m) and deferred consideration was poundnil (FY 2016 pound75m) LTM non-recourse debt was pound154m (FY 2016 pound147m) and LTM deferred consideration was pound35m (FY 2016 pound114m)2 Adjusted3 Return on average capital employed = (Adjusted operating profit less interest on non-recourse debt less unwind of discount on deferred consideration) divided by (LTM average capital employed)

23

Urban Regeneration

Pipeline schedule indicates uplift in profit and ROCE in 2018

bull Regeneration amp development pipeline down 8 to pound21bn preferred bidder gt pound200m GDV

not included

broad geographic and sector split

bull Significant activity currently lsquoon sitersquo cpound400m of construction work

currently ongoing further cpound420m to be procured in

year

South East amp London

44

South West3

North West35

YorksNE17

Scotland1

Development pipeline by region

Offices30

Retail3Leisure

6Industrial

8

Residential51

Other2

Development pipeline by sector

24

Investments

poundm FY 2017 FY 2016 change

Operating profit(loss)1 05 (20) na

bull Year of evolution for Investments role of securing work for other divisions in the Group

cpound135m of construction and regeneration work secured for future delivery across the Group

now also expected to be a profit contributor with own returns target

bull Work delivered mainly through strategic JVs property partnerships with Slough Borough Council Bournemouth Borough Council etc

bull Small profit in year due to residential sales in strategic JVsbull Capital employed2 in all of its partnerships of pound39m (average for year of pound31m)

1 Adjusted2 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities

Consistent profit contribution with medium term 20 ROCE target

25

Accounting PoliciesIFRS 15 amp 16

26

IFRS 15

bull IFRS 15 lsquoRevenue from Contracts with Customersrsquo

bull Effective from 1 January 2018

bull No impact on cash flow

bull No impact on lifetime profitability of contracts

bull Does not fundamentally change the way we report or operate

not restating prior years

instead adjustment to opening reserves adjusts for revenue taken in previous years which wouldnrsquot fulfil IFRS 15 criteria

net adjustment to reserves of pound7m relating to revenue recognised prior to 31 December 2017 which would have been deferred to later years

27

bull lsquoIFRS 16 Leasesrsquo being adopted a year early to align with implementation of IFRS 15

requires all leases to be recognised on the balance sheet as a right of use asset with a corresponding lease liability Estimated gross asset and liability on transition of cpound40m-pound45m

mainly relates to property leases

future expense in the income statement will comprise depreciation and finance costs rather than rental payments

impact not expected to be material

increase in operating profit and interest expense of cpound1m

IFRS 16

28

Summary and Outlook

29

Progress against medium-term targets1

Medium-termtarget1

Construction Activities

Margin in Construction 2

Opnl leverage in Property Services gt3 margin

Maintain profits at Fit Out pound25m-pound30m pa

25Margin in Infrastructure

FY16

0

16

pound275m

11

1 Medium-term targets as set out in February 2017

FY17

13

17

pound391m

(20)

30

Progress against medium-term targets1

Medium-termtarget1

Regeneration Activities

ROCE in Partnership Housing gt 20

ROCE in Investments Towards 20

Towards 20ROCE in Urban Regeneration

FY16

12

15

1 Medium-term targets as set out in February 2017

FY17

14

9

1

31

Summary amp Outlook for 2018

bull Strong set of results for FY 2017 profit margin cash all improved

bull Well-positioned for further growth in 2018

margin improvement in Construction amp Infrastructure good prospects for Fit Out better year in Partnership Housing more development completions scheduled in Urban Regeneration Property Services back into profit positive contribution from Investments no material impact of the Carillion situation

bull Total dividend up 29

32

InvestmentsJohn Morgan

Construction RegenerationConstruction

amp Infrastructure

Fit Out PropertyServices

PartnershipHousing

Urban Regeneration

Investments

Investments underpins Group activities

Morgan Sindall Group today

33

Group structure

34

Our Regeneration businesses

Urban Regeneration

Developer only large mixed-use schemes schemes have multi-phases schemes of long duration

Partnership Housing

Builder and developer houses for sale and rent in partnership with local authorities and housing associations

Investments

Developer only long-term strategic partnerships incorporate multiple smaller schemes individual schemes of relatively short duration delivery by other Group companies

ldquoInvesting cash generated from the Construction divisions into development partnerships with the public sectorrdquo

35

Investments today

5 public private partnerships

poundm FY 2017 FY 2016 change

Operating profit(loss) 05 (20) na

Average capital employed 307 207 +48

2 Independent Living JVs

5 Public Private Partnerships

pound143m Sister Company revenue delivered in 2017

Potential pound26bn

GDV from current partnerships 1 Investment

Partnership Fund

36

Investments today

bull Local Authorities

bull County Councils

bull NHS Foundation Trusts

Who our partners are How we win work

bull Public procurement (OJEU)

bull Proactive early engagement with identified prospective partners to shape thinking and approach to market

bull allows the Group to win work which individual divisions could not win

bull provides a long-term profit stream and visibility of work

bull provides high quality construction work for rest of the Group

Role of division in the

Group

bull Construction margin for other Group companies

How we make money

bull Development profits

bull Development management fees

plus

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound445m

pound342m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 15

FY 16

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

18

poundmpound500m

pound466m

12 month forward order book

Order book beyond 12 months

FY 16 FY 17

pound468m

pound410m

Fit Out

bull Order book of pound500m

increase of 7 compared to previous year end

down 12 from the half year position

12 month forward order book 14 higher than last year

still relatively short term visibility

Ord

er B

ook

Positive outlook for 2018 another strong performance expected

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

19

67

Regeneration capital

Divisional order book

51

32

17

8

14

78

85

62

38

15

34

25

41

pound468m

pound410m

34

34

pound1377m

pound1296m

pound590m

pound478m

pound590m

pound1296m

19

Property Services

poundm FY 2017 FY 2016 change

Revenue 66 55 +20

Operating (loss)profit1 (13) 07 na

Margin (20) 13 -330bps

1 Adjusted

bull Revenue up 20 as new work mobilised

bull Operating loss of pound13m includes closure of insurance business and exit from loss-making contracts

bull New work secured to support future growth order book up 22 to pound836m including pound102m for 2018

Benefit of restructuring and new work will drive profit in 2018

20

bull Slightly disappointing result lower Q4 open market sales in mixed-tenure cost escalation on one contracting job in London due to finish H1 2018

bull Revenue increase driven by Contracting activities Contracting revenue up 27 (pound290m) ndash 61 of division lower lsquocontractorrsquosrsquo margin

bull Mixed-tenure revenue down 10 to pound184m missed some Q4 completions due to programme slippage total 887 units sold (private and social) 16 lower than 2016

Partnership Housing

1 Adjusted

poundm FY 2017 FY 2016 change

Revenue 474 433 +9

Operating profit1 141 134 +5

Margin 30 31 -10bps

21

Partnership Housing

bull Capital employed at year end up pound24m to pound88m but average capital down to pound100m

combination of turning non-performing capital into cash and slower investment in new schemes than anticipated

poundm FY 2017 FY 2016

Capital employed1 at year end 880 639

LTM average capital employed1 997 1108

1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing)3 Return on average capital employed = adjusted operating profit divided by average capital employed

Improvement in profit and ROCE expected in 2018

bull LTM ROCE2 of 14 up from 12 prior yearbull Order book up 18 to pound523mbull Regeneration amp development pipeline up 11 to pound851m

currently 45 active mixed-tenure sites average 102 units average duration 39 months

bull Average Capital Employed estimated to increase to cpound120m in 2018

22

Urban Regeneration

poundm FY 2017 FY 2016 change

Capital employed1 at year end 850 689 +23

LTM average capital employed1 885 800 +11

Revenue 175 156 +12

Operating profit2 100 134 -25

bull Lower profit in year as expected In line with scheduled development completionsbull Average capital employed increased to pound885m as schemes are developed for sale

in 2018 and beyond

LTM ROCE3 of 9 Well below target threshold

capital employed in 2018 expected to be in range of pound100m-pound110m 1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing) At period end non-recourse debt was pound265m (FY 2016 pound48m) and deferred consideration was poundnil (FY 2016 pound75m) LTM non-recourse debt was pound154m (FY 2016 pound147m) and LTM deferred consideration was pound35m (FY 2016 pound114m)2 Adjusted3 Return on average capital employed = (Adjusted operating profit less interest on non-recourse debt less unwind of discount on deferred consideration) divided by (LTM average capital employed)

23

Urban Regeneration

Pipeline schedule indicates uplift in profit and ROCE in 2018

bull Regeneration amp development pipeline down 8 to pound21bn preferred bidder gt pound200m GDV

not included

broad geographic and sector split

bull Significant activity currently lsquoon sitersquo cpound400m of construction work

currently ongoing further cpound420m to be procured in

year

South East amp London

44

South West3

North West35

YorksNE17

Scotland1

Development pipeline by region

Offices30

Retail3Leisure

6Industrial

8

Residential51

Other2

Development pipeline by sector

24

Investments

poundm FY 2017 FY 2016 change

Operating profit(loss)1 05 (20) na

bull Year of evolution for Investments role of securing work for other divisions in the Group

cpound135m of construction and regeneration work secured for future delivery across the Group

now also expected to be a profit contributor with own returns target

bull Work delivered mainly through strategic JVs property partnerships with Slough Borough Council Bournemouth Borough Council etc

bull Small profit in year due to residential sales in strategic JVsbull Capital employed2 in all of its partnerships of pound39m (average for year of pound31m)

1 Adjusted2 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities

Consistent profit contribution with medium term 20 ROCE target

25

Accounting PoliciesIFRS 15 amp 16

26

IFRS 15

bull IFRS 15 lsquoRevenue from Contracts with Customersrsquo

bull Effective from 1 January 2018

bull No impact on cash flow

bull No impact on lifetime profitability of contracts

bull Does not fundamentally change the way we report or operate

not restating prior years

instead adjustment to opening reserves adjusts for revenue taken in previous years which wouldnrsquot fulfil IFRS 15 criteria

net adjustment to reserves of pound7m relating to revenue recognised prior to 31 December 2017 which would have been deferred to later years

27

bull lsquoIFRS 16 Leasesrsquo being adopted a year early to align with implementation of IFRS 15

requires all leases to be recognised on the balance sheet as a right of use asset with a corresponding lease liability Estimated gross asset and liability on transition of cpound40m-pound45m

mainly relates to property leases

future expense in the income statement will comprise depreciation and finance costs rather than rental payments

impact not expected to be material

increase in operating profit and interest expense of cpound1m

IFRS 16

28

Summary and Outlook

29

Progress against medium-term targets1

Medium-termtarget1

Construction Activities

Margin in Construction 2

Opnl leverage in Property Services gt3 margin

Maintain profits at Fit Out pound25m-pound30m pa

25Margin in Infrastructure

FY16

0

16

pound275m

11

1 Medium-term targets as set out in February 2017

FY17

13

17

pound391m

(20)

30

Progress against medium-term targets1

Medium-termtarget1

Regeneration Activities

ROCE in Partnership Housing gt 20

ROCE in Investments Towards 20

Towards 20ROCE in Urban Regeneration

FY16

12

15

1 Medium-term targets as set out in February 2017

FY17

14

9

1

31

Summary amp Outlook for 2018

bull Strong set of results for FY 2017 profit margin cash all improved

bull Well-positioned for further growth in 2018

margin improvement in Construction amp Infrastructure good prospects for Fit Out better year in Partnership Housing more development completions scheduled in Urban Regeneration Property Services back into profit positive contribution from Investments no material impact of the Carillion situation

bull Total dividend up 29

32

InvestmentsJohn Morgan

Construction RegenerationConstruction

amp Infrastructure

Fit Out PropertyServices

PartnershipHousing

Urban Regeneration

Investments

Investments underpins Group activities

Morgan Sindall Group today

33

Group structure

34

Our Regeneration businesses

Urban Regeneration

Developer only large mixed-use schemes schemes have multi-phases schemes of long duration

Partnership Housing

Builder and developer houses for sale and rent in partnership with local authorities and housing associations

Investments

Developer only long-term strategic partnerships incorporate multiple smaller schemes individual schemes of relatively short duration delivery by other Group companies

ldquoInvesting cash generated from the Construction divisions into development partnerships with the public sectorrdquo

35

Investments today

5 public private partnerships

poundm FY 2017 FY 2016 change

Operating profit(loss) 05 (20) na

Average capital employed 307 207 +48

2 Independent Living JVs

5 Public Private Partnerships

pound143m Sister Company revenue delivered in 2017

Potential pound26bn

GDV from current partnerships 1 Investment

Partnership Fund

36

Investments today

bull Local Authorities

bull County Councils

bull NHS Foundation Trusts

Who our partners are How we win work

bull Public procurement (OJEU)

bull Proactive early engagement with identified prospective partners to shape thinking and approach to market

bull allows the Group to win work which individual divisions could not win

bull provides a long-term profit stream and visibility of work

bull provides high quality construction work for rest of the Group

Role of division in the

Group

bull Construction margin for other Group companies

How we make money

bull Development profits

bull Development management fees

plus

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Affordable Housing Construction amp Services

Construction amp Infrastructure

Fit Out

poundm

poundm

pound3637m

poundm

pound1537m

poundm

pound1499m

pound500m

pound2826m

pound466m

pound445m

pound342m

Work secured through frameworks two stage tenders negotiated and PFI-type work

12 month forward order book

Order book beyond 12 months

Work secured through competitive fixed price procurement

FY 15

FY 16

2017

2018

2019 +

FY 13

FY 14

FY 16

FY 17

FY 15

FY 16

poundm

pound3283m

pound3210m

FY 16

HY 17

2017

2018

2019 +

Infrastructure

poundm

pound1296m

poundm

pound1886m

pound1855m

pound849m

Infrastructure

Construction

FY 15

FY 16

2017

2018

2019 +

FY 16

FY 17

poundm

pound1886m

poundm

poundm

pound1886m

pound1595m

Infrastructure

Infrastructure

Construction

Construction

FY 15

FY 16

FY 16

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3233m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

19

Property Services

poundm FY 2017 FY 2016 change

Revenue 66 55 +20

Operating (loss)profit1 (13) 07 na

Margin (20) 13 -330bps

1 Adjusted

bull Revenue up 20 as new work mobilised

bull Operating loss of pound13m includes closure of insurance business and exit from loss-making contracts

bull New work secured to support future growth order book up 22 to pound836m including pound102m for 2018

Benefit of restructuring and new work will drive profit in 2018

20

bull Slightly disappointing result lower Q4 open market sales in mixed-tenure cost escalation on one contracting job in London due to finish H1 2018

bull Revenue increase driven by Contracting activities Contracting revenue up 27 (pound290m) ndash 61 of division lower lsquocontractorrsquosrsquo margin

bull Mixed-tenure revenue down 10 to pound184m missed some Q4 completions due to programme slippage total 887 units sold (private and social) 16 lower than 2016

Partnership Housing

1 Adjusted

poundm FY 2017 FY 2016 change

Revenue 474 433 +9

Operating profit1 141 134 +5

Margin 30 31 -10bps

21

Partnership Housing

bull Capital employed at year end up pound24m to pound88m but average capital down to pound100m

combination of turning non-performing capital into cash and slower investment in new schemes than anticipated

poundm FY 2017 FY 2016

Capital employed1 at year end 880 639

LTM average capital employed1 997 1108

1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing)3 Return on average capital employed = adjusted operating profit divided by average capital employed

Improvement in profit and ROCE expected in 2018

bull LTM ROCE2 of 14 up from 12 prior yearbull Order book up 18 to pound523mbull Regeneration amp development pipeline up 11 to pound851m

currently 45 active mixed-tenure sites average 102 units average duration 39 months

bull Average Capital Employed estimated to increase to cpound120m in 2018

22

Urban Regeneration

poundm FY 2017 FY 2016 change

Capital employed1 at year end 850 689 +23

LTM average capital employed1 885 800 +11

Revenue 175 156 +12

Operating profit2 100 134 -25

bull Lower profit in year as expected In line with scheduled development completionsbull Average capital employed increased to pound885m as schemes are developed for sale

in 2018 and beyond

LTM ROCE3 of 9 Well below target threshold

capital employed in 2018 expected to be in range of pound100m-pound110m 1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing) At period end non-recourse debt was pound265m (FY 2016 pound48m) and deferred consideration was poundnil (FY 2016 pound75m) LTM non-recourse debt was pound154m (FY 2016 pound147m) and LTM deferred consideration was pound35m (FY 2016 pound114m)2 Adjusted3 Return on average capital employed = (Adjusted operating profit less interest on non-recourse debt less unwind of discount on deferred consideration) divided by (LTM average capital employed)

23

Urban Regeneration

Pipeline schedule indicates uplift in profit and ROCE in 2018

bull Regeneration amp development pipeline down 8 to pound21bn preferred bidder gt pound200m GDV

not included

broad geographic and sector split

bull Significant activity currently lsquoon sitersquo cpound400m of construction work

currently ongoing further cpound420m to be procured in

year

South East amp London

44

South West3

North West35

YorksNE17

Scotland1

Development pipeline by region

Offices30

Retail3Leisure

6Industrial

8

Residential51

Other2

Development pipeline by sector

24

Investments

poundm FY 2017 FY 2016 change

Operating profit(loss)1 05 (20) na

bull Year of evolution for Investments role of securing work for other divisions in the Group

cpound135m of construction and regeneration work secured for future delivery across the Group

now also expected to be a profit contributor with own returns target

bull Work delivered mainly through strategic JVs property partnerships with Slough Borough Council Bournemouth Borough Council etc

bull Small profit in year due to residential sales in strategic JVsbull Capital employed2 in all of its partnerships of pound39m (average for year of pound31m)

1 Adjusted2 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities

Consistent profit contribution with medium term 20 ROCE target

25

Accounting PoliciesIFRS 15 amp 16

26

IFRS 15

bull IFRS 15 lsquoRevenue from Contracts with Customersrsquo

bull Effective from 1 January 2018

bull No impact on cash flow

bull No impact on lifetime profitability of contracts

bull Does not fundamentally change the way we report or operate

not restating prior years

instead adjustment to opening reserves adjusts for revenue taken in previous years which wouldnrsquot fulfil IFRS 15 criteria

net adjustment to reserves of pound7m relating to revenue recognised prior to 31 December 2017 which would have been deferred to later years

27

bull lsquoIFRS 16 Leasesrsquo being adopted a year early to align with implementation of IFRS 15

requires all leases to be recognised on the balance sheet as a right of use asset with a corresponding lease liability Estimated gross asset and liability on transition of cpound40m-pound45m

mainly relates to property leases

future expense in the income statement will comprise depreciation and finance costs rather than rental payments

impact not expected to be material

increase in operating profit and interest expense of cpound1m

IFRS 16

28

Summary and Outlook

29

Progress against medium-term targets1

Medium-termtarget1

Construction Activities

Margin in Construction 2

Opnl leverage in Property Services gt3 margin

Maintain profits at Fit Out pound25m-pound30m pa

25Margin in Infrastructure

FY16

0

16

pound275m

11

1 Medium-term targets as set out in February 2017

FY17

13

17

pound391m

(20)

30

Progress against medium-term targets1

Medium-termtarget1

Regeneration Activities

ROCE in Partnership Housing gt 20

ROCE in Investments Towards 20

Towards 20ROCE in Urban Regeneration

FY16

12

15

1 Medium-term targets as set out in February 2017

FY17

14

9

1

31

Summary amp Outlook for 2018

bull Strong set of results for FY 2017 profit margin cash all improved

bull Well-positioned for further growth in 2018

margin improvement in Construction amp Infrastructure good prospects for Fit Out better year in Partnership Housing more development completions scheduled in Urban Regeneration Property Services back into profit positive contribution from Investments no material impact of the Carillion situation

bull Total dividend up 29

32

InvestmentsJohn Morgan

Construction RegenerationConstruction

amp Infrastructure

Fit Out PropertyServices

PartnershipHousing

Urban Regeneration

Investments

Investments underpins Group activities

Morgan Sindall Group today

33

Group structure

34

Our Regeneration businesses

Urban Regeneration

Developer only large mixed-use schemes schemes have multi-phases schemes of long duration

Partnership Housing

Builder and developer houses for sale and rent in partnership with local authorities and housing associations

Investments

Developer only long-term strategic partnerships incorporate multiple smaller schemes individual schemes of relatively short duration delivery by other Group companies

ldquoInvesting cash generated from the Construction divisions into development partnerships with the public sectorrdquo

35

Investments today

5 public private partnerships

poundm FY 2017 FY 2016 change

Operating profit(loss) 05 (20) na

Average capital employed 307 207 +48

2 Independent Living JVs

5 Public Private Partnerships

pound143m Sister Company revenue delivered in 2017

Potential pound26bn

GDV from current partnerships 1 Investment

Partnership Fund

36

Investments today

bull Local Authorities

bull County Councils

bull NHS Foundation Trusts

Who our partners are How we win work

bull Public procurement (OJEU)

bull Proactive early engagement with identified prospective partners to shape thinking and approach to market

bull allows the Group to win work which individual divisions could not win

bull provides a long-term profit stream and visibility of work

bull provides high quality construction work for rest of the Group

Role of division in the

Group

bull Construction margin for other Group companies

How we make money

bull Development profits

bull Development management fees

plus

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

20

bull Slightly disappointing result lower Q4 open market sales in mixed-tenure cost escalation on one contracting job in London due to finish H1 2018

bull Revenue increase driven by Contracting activities Contracting revenue up 27 (pound290m) ndash 61 of division lower lsquocontractorrsquosrsquo margin

bull Mixed-tenure revenue down 10 to pound184m missed some Q4 completions due to programme slippage total 887 units sold (private and social) 16 lower than 2016

Partnership Housing

1 Adjusted

poundm FY 2017 FY 2016 change

Revenue 474 433 +9

Operating profit1 141 134 +5

Margin 30 31 -10bps

21

Partnership Housing

bull Capital employed at year end up pound24m to pound88m but average capital down to pound100m

combination of turning non-performing capital into cash and slower investment in new schemes than anticipated

poundm FY 2017 FY 2016

Capital employed1 at year end 880 639

LTM average capital employed1 997 1108

1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing)3 Return on average capital employed = adjusted operating profit divided by average capital employed

Improvement in profit and ROCE expected in 2018

bull LTM ROCE2 of 14 up from 12 prior yearbull Order book up 18 to pound523mbull Regeneration amp development pipeline up 11 to pound851m

currently 45 active mixed-tenure sites average 102 units average duration 39 months

bull Average Capital Employed estimated to increase to cpound120m in 2018

22

Urban Regeneration

poundm FY 2017 FY 2016 change

Capital employed1 at year end 850 689 +23

LTM average capital employed1 885 800 +11

Revenue 175 156 +12

Operating profit2 100 134 -25

bull Lower profit in year as expected In line with scheduled development completionsbull Average capital employed increased to pound885m as schemes are developed for sale

in 2018 and beyond

LTM ROCE3 of 9 Well below target threshold

capital employed in 2018 expected to be in range of pound100m-pound110m 1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing) At period end non-recourse debt was pound265m (FY 2016 pound48m) and deferred consideration was poundnil (FY 2016 pound75m) LTM non-recourse debt was pound154m (FY 2016 pound147m) and LTM deferred consideration was pound35m (FY 2016 pound114m)2 Adjusted3 Return on average capital employed = (Adjusted operating profit less interest on non-recourse debt less unwind of discount on deferred consideration) divided by (LTM average capital employed)

23

Urban Regeneration

Pipeline schedule indicates uplift in profit and ROCE in 2018

bull Regeneration amp development pipeline down 8 to pound21bn preferred bidder gt pound200m GDV

not included

broad geographic and sector split

bull Significant activity currently lsquoon sitersquo cpound400m of construction work

currently ongoing further cpound420m to be procured in

year

South East amp London

44

South West3

North West35

YorksNE17

Scotland1

Development pipeline by region

Offices30

Retail3Leisure

6Industrial

8

Residential51

Other2

Development pipeline by sector

24

Investments

poundm FY 2017 FY 2016 change

Operating profit(loss)1 05 (20) na

bull Year of evolution for Investments role of securing work for other divisions in the Group

cpound135m of construction and regeneration work secured for future delivery across the Group

now also expected to be a profit contributor with own returns target

bull Work delivered mainly through strategic JVs property partnerships with Slough Borough Council Bournemouth Borough Council etc

bull Small profit in year due to residential sales in strategic JVsbull Capital employed2 in all of its partnerships of pound39m (average for year of pound31m)

1 Adjusted2 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities

Consistent profit contribution with medium term 20 ROCE target

25

Accounting PoliciesIFRS 15 amp 16

26

IFRS 15

bull IFRS 15 lsquoRevenue from Contracts with Customersrsquo

bull Effective from 1 January 2018

bull No impact on cash flow

bull No impact on lifetime profitability of contracts

bull Does not fundamentally change the way we report or operate

not restating prior years

instead adjustment to opening reserves adjusts for revenue taken in previous years which wouldnrsquot fulfil IFRS 15 criteria

net adjustment to reserves of pound7m relating to revenue recognised prior to 31 December 2017 which would have been deferred to later years

27

bull lsquoIFRS 16 Leasesrsquo being adopted a year early to align with implementation of IFRS 15

requires all leases to be recognised on the balance sheet as a right of use asset with a corresponding lease liability Estimated gross asset and liability on transition of cpound40m-pound45m

mainly relates to property leases

future expense in the income statement will comprise depreciation and finance costs rather than rental payments

impact not expected to be material

increase in operating profit and interest expense of cpound1m

IFRS 16

28

Summary and Outlook

29

Progress against medium-term targets1

Medium-termtarget1

Construction Activities

Margin in Construction 2

Opnl leverage in Property Services gt3 margin

Maintain profits at Fit Out pound25m-pound30m pa

25Margin in Infrastructure

FY16

0

16

pound275m

11

1 Medium-term targets as set out in February 2017

FY17

13

17

pound391m

(20)

30

Progress against medium-term targets1

Medium-termtarget1

Regeneration Activities

ROCE in Partnership Housing gt 20

ROCE in Investments Towards 20

Towards 20ROCE in Urban Regeneration

FY16

12

15

1 Medium-term targets as set out in February 2017

FY17

14

9

1

31

Summary amp Outlook for 2018

bull Strong set of results for FY 2017 profit margin cash all improved

bull Well-positioned for further growth in 2018

margin improvement in Construction amp Infrastructure good prospects for Fit Out better year in Partnership Housing more development completions scheduled in Urban Regeneration Property Services back into profit positive contribution from Investments no material impact of the Carillion situation

bull Total dividend up 29

32

InvestmentsJohn Morgan

Construction RegenerationConstruction

amp Infrastructure

Fit Out PropertyServices

PartnershipHousing

Urban Regeneration

Investments

Investments underpins Group activities

Morgan Sindall Group today

33

Group structure

34

Our Regeneration businesses

Urban Regeneration

Developer only large mixed-use schemes schemes have multi-phases schemes of long duration

Partnership Housing

Builder and developer houses for sale and rent in partnership with local authorities and housing associations

Investments

Developer only long-term strategic partnerships incorporate multiple smaller schemes individual schemes of relatively short duration delivery by other Group companies

ldquoInvesting cash generated from the Construction divisions into development partnerships with the public sectorrdquo

35

Investments today

5 public private partnerships

poundm FY 2017 FY 2016 change

Operating profit(loss) 05 (20) na

Average capital employed 307 207 +48

2 Independent Living JVs

5 Public Private Partnerships

pound143m Sister Company revenue delivered in 2017

Potential pound26bn

GDV from current partnerships 1 Investment

Partnership Fund

36

Investments today

bull Local Authorities

bull County Councils

bull NHS Foundation Trusts

Who our partners are How we win work

bull Public procurement (OJEU)

bull Proactive early engagement with identified prospective partners to shape thinking and approach to market

bull allows the Group to win work which individual divisions could not win

bull provides a long-term profit stream and visibility of work

bull provides high quality construction work for rest of the Group

Role of division in the

Group

bull Construction margin for other Group companies

How we make money

bull Development profits

bull Development management fees

plus

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

21

Partnership Housing

bull Capital employed at year end up pound24m to pound88m but average capital down to pound100m

combination of turning non-performing capital into cash and slower investment in new schemes than anticipated

poundm FY 2017 FY 2016

Capital employed1 at year end 880 639

LTM average capital employed1 997 1108

1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing)3 Return on average capital employed = adjusted operating profit divided by average capital employed

Improvement in profit and ROCE expected in 2018

bull LTM ROCE2 of 14 up from 12 prior yearbull Order book up 18 to pound523mbull Regeneration amp development pipeline up 11 to pound851m

currently 45 active mixed-tenure sites average 102 units average duration 39 months

bull Average Capital Employed estimated to increase to cpound120m in 2018

22

Urban Regeneration

poundm FY 2017 FY 2016 change

Capital employed1 at year end 850 689 +23

LTM average capital employed1 885 800 +11

Revenue 175 156 +12

Operating profit2 100 134 -25

bull Lower profit in year as expected In line with scheduled development completionsbull Average capital employed increased to pound885m as schemes are developed for sale

in 2018 and beyond

LTM ROCE3 of 9 Well below target threshold

capital employed in 2018 expected to be in range of pound100m-pound110m 1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing) At period end non-recourse debt was pound265m (FY 2016 pound48m) and deferred consideration was poundnil (FY 2016 pound75m) LTM non-recourse debt was pound154m (FY 2016 pound147m) and LTM deferred consideration was pound35m (FY 2016 pound114m)2 Adjusted3 Return on average capital employed = (Adjusted operating profit less interest on non-recourse debt less unwind of discount on deferred consideration) divided by (LTM average capital employed)

23

Urban Regeneration

Pipeline schedule indicates uplift in profit and ROCE in 2018

bull Regeneration amp development pipeline down 8 to pound21bn preferred bidder gt pound200m GDV

not included

broad geographic and sector split

bull Significant activity currently lsquoon sitersquo cpound400m of construction work

currently ongoing further cpound420m to be procured in

year

South East amp London

44

South West3

North West35

YorksNE17

Scotland1

Development pipeline by region

Offices30

Retail3Leisure

6Industrial

8

Residential51

Other2

Development pipeline by sector

24

Investments

poundm FY 2017 FY 2016 change

Operating profit(loss)1 05 (20) na

bull Year of evolution for Investments role of securing work for other divisions in the Group

cpound135m of construction and regeneration work secured for future delivery across the Group

now also expected to be a profit contributor with own returns target

bull Work delivered mainly through strategic JVs property partnerships with Slough Borough Council Bournemouth Borough Council etc

bull Small profit in year due to residential sales in strategic JVsbull Capital employed2 in all of its partnerships of pound39m (average for year of pound31m)

1 Adjusted2 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities

Consistent profit contribution with medium term 20 ROCE target

25

Accounting PoliciesIFRS 15 amp 16

26

IFRS 15

bull IFRS 15 lsquoRevenue from Contracts with Customersrsquo

bull Effective from 1 January 2018

bull No impact on cash flow

bull No impact on lifetime profitability of contracts

bull Does not fundamentally change the way we report or operate

not restating prior years

instead adjustment to opening reserves adjusts for revenue taken in previous years which wouldnrsquot fulfil IFRS 15 criteria

net adjustment to reserves of pound7m relating to revenue recognised prior to 31 December 2017 which would have been deferred to later years

27

bull lsquoIFRS 16 Leasesrsquo being adopted a year early to align with implementation of IFRS 15

requires all leases to be recognised on the balance sheet as a right of use asset with a corresponding lease liability Estimated gross asset and liability on transition of cpound40m-pound45m

mainly relates to property leases

future expense in the income statement will comprise depreciation and finance costs rather than rental payments

impact not expected to be material

increase in operating profit and interest expense of cpound1m

IFRS 16

28

Summary and Outlook

29

Progress against medium-term targets1

Medium-termtarget1

Construction Activities

Margin in Construction 2

Opnl leverage in Property Services gt3 margin

Maintain profits at Fit Out pound25m-pound30m pa

25Margin in Infrastructure

FY16

0

16

pound275m

11

1 Medium-term targets as set out in February 2017

FY17

13

17

pound391m

(20)

30

Progress against medium-term targets1

Medium-termtarget1

Regeneration Activities

ROCE in Partnership Housing gt 20

ROCE in Investments Towards 20

Towards 20ROCE in Urban Regeneration

FY16

12

15

1 Medium-term targets as set out in February 2017

FY17

14

9

1

31

Summary amp Outlook for 2018

bull Strong set of results for FY 2017 profit margin cash all improved

bull Well-positioned for further growth in 2018

margin improvement in Construction amp Infrastructure good prospects for Fit Out better year in Partnership Housing more development completions scheduled in Urban Regeneration Property Services back into profit positive contribution from Investments no material impact of the Carillion situation

bull Total dividend up 29

32

InvestmentsJohn Morgan

Construction RegenerationConstruction

amp Infrastructure

Fit Out PropertyServices

PartnershipHousing

Urban Regeneration

Investments

Investments underpins Group activities

Morgan Sindall Group today

33

Group structure

34

Our Regeneration businesses

Urban Regeneration

Developer only large mixed-use schemes schemes have multi-phases schemes of long duration

Partnership Housing

Builder and developer houses for sale and rent in partnership with local authorities and housing associations

Investments

Developer only long-term strategic partnerships incorporate multiple smaller schemes individual schemes of relatively short duration delivery by other Group companies

ldquoInvesting cash generated from the Construction divisions into development partnerships with the public sectorrdquo

35

Investments today

5 public private partnerships

poundm FY 2017 FY 2016 change

Operating profit(loss) 05 (20) na

Average capital employed 307 207 +48

2 Independent Living JVs

5 Public Private Partnerships

pound143m Sister Company revenue delivered in 2017

Potential pound26bn

GDV from current partnerships 1 Investment

Partnership Fund

36

Investments today

bull Local Authorities

bull County Councils

bull NHS Foundation Trusts

Who our partners are How we win work

bull Public procurement (OJEU)

bull Proactive early engagement with identified prospective partners to shape thinking and approach to market

bull allows the Group to win work which individual divisions could not win

bull provides a long-term profit stream and visibility of work

bull provides high quality construction work for rest of the Group

Role of division in the

Group

bull Construction margin for other Group companies

How we make money

bull Development profits

bull Development management fees

plus

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

22

Urban Regeneration

poundm FY 2017 FY 2016 change

Capital employed1 at year end 850 689 +23

LTM average capital employed1 885 800 +11

Revenue 175 156 +12

Operating profit2 100 134 -25

bull Lower profit in year as expected In line with scheduled development completionsbull Average capital employed increased to pound885m as schemes are developed for sale

in 2018 and beyond

LTM ROCE3 of 9 Well below target threshold

capital employed in 2018 expected to be in range of pound100m-pound110m 1 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities (excluding corporation tax deferred tax and inter-company financing) At period end non-recourse debt was pound265m (FY 2016 pound48m) and deferred consideration was poundnil (FY 2016 pound75m) LTM non-recourse debt was pound154m (FY 2016 pound147m) and LTM deferred consideration was pound35m (FY 2016 pound114m)2 Adjusted3 Return on average capital employed = (Adjusted operating profit less interest on non-recourse debt less unwind of discount on deferred consideration) divided by (LTM average capital employed)

23

Urban Regeneration

Pipeline schedule indicates uplift in profit and ROCE in 2018

bull Regeneration amp development pipeline down 8 to pound21bn preferred bidder gt pound200m GDV

not included

broad geographic and sector split

bull Significant activity currently lsquoon sitersquo cpound400m of construction work

currently ongoing further cpound420m to be procured in

year

South East amp London

44

South West3

North West35

YorksNE17

Scotland1

Development pipeline by region

Offices30

Retail3Leisure

6Industrial

8

Residential51

Other2

Development pipeline by sector

24

Investments

poundm FY 2017 FY 2016 change

Operating profit(loss)1 05 (20) na

bull Year of evolution for Investments role of securing work for other divisions in the Group

cpound135m of construction and regeneration work secured for future delivery across the Group

now also expected to be a profit contributor with own returns target

bull Work delivered mainly through strategic JVs property partnerships with Slough Borough Council Bournemouth Borough Council etc

bull Small profit in year due to residential sales in strategic JVsbull Capital employed2 in all of its partnerships of pound39m (average for year of pound31m)

1 Adjusted2 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities

Consistent profit contribution with medium term 20 ROCE target

25

Accounting PoliciesIFRS 15 amp 16

26

IFRS 15

bull IFRS 15 lsquoRevenue from Contracts with Customersrsquo

bull Effective from 1 January 2018

bull No impact on cash flow

bull No impact on lifetime profitability of contracts

bull Does not fundamentally change the way we report or operate

not restating prior years

instead adjustment to opening reserves adjusts for revenue taken in previous years which wouldnrsquot fulfil IFRS 15 criteria

net adjustment to reserves of pound7m relating to revenue recognised prior to 31 December 2017 which would have been deferred to later years

27

bull lsquoIFRS 16 Leasesrsquo being adopted a year early to align with implementation of IFRS 15

requires all leases to be recognised on the balance sheet as a right of use asset with a corresponding lease liability Estimated gross asset and liability on transition of cpound40m-pound45m

mainly relates to property leases

future expense in the income statement will comprise depreciation and finance costs rather than rental payments

impact not expected to be material

increase in operating profit and interest expense of cpound1m

IFRS 16

28

Summary and Outlook

29

Progress against medium-term targets1

Medium-termtarget1

Construction Activities

Margin in Construction 2

Opnl leverage in Property Services gt3 margin

Maintain profits at Fit Out pound25m-pound30m pa

25Margin in Infrastructure

FY16

0

16

pound275m

11

1 Medium-term targets as set out in February 2017

FY17

13

17

pound391m

(20)

30

Progress against medium-term targets1

Medium-termtarget1

Regeneration Activities

ROCE in Partnership Housing gt 20

ROCE in Investments Towards 20

Towards 20ROCE in Urban Regeneration

FY16

12

15

1 Medium-term targets as set out in February 2017

FY17

14

9

1

31

Summary amp Outlook for 2018

bull Strong set of results for FY 2017 profit margin cash all improved

bull Well-positioned for further growth in 2018

margin improvement in Construction amp Infrastructure good prospects for Fit Out better year in Partnership Housing more development completions scheduled in Urban Regeneration Property Services back into profit positive contribution from Investments no material impact of the Carillion situation

bull Total dividend up 29

32

InvestmentsJohn Morgan

Construction RegenerationConstruction

amp Infrastructure

Fit Out PropertyServices

PartnershipHousing

Urban Regeneration

Investments

Investments underpins Group activities

Morgan Sindall Group today

33

Group structure

34

Our Regeneration businesses

Urban Regeneration

Developer only large mixed-use schemes schemes have multi-phases schemes of long duration

Partnership Housing

Builder and developer houses for sale and rent in partnership with local authorities and housing associations

Investments

Developer only long-term strategic partnerships incorporate multiple smaller schemes individual schemes of relatively short duration delivery by other Group companies

ldquoInvesting cash generated from the Construction divisions into development partnerships with the public sectorrdquo

35

Investments today

5 public private partnerships

poundm FY 2017 FY 2016 change

Operating profit(loss) 05 (20) na

Average capital employed 307 207 +48

2 Independent Living JVs

5 Public Private Partnerships

pound143m Sister Company revenue delivered in 2017

Potential pound26bn

GDV from current partnerships 1 Investment

Partnership Fund

36

Investments today

bull Local Authorities

bull County Councils

bull NHS Foundation Trusts

Who our partners are How we win work

bull Public procurement (OJEU)

bull Proactive early engagement with identified prospective partners to shape thinking and approach to market

bull allows the Group to win work which individual divisions could not win

bull provides a long-term profit stream and visibility of work

bull provides high quality construction work for rest of the Group

Role of division in the

Group

bull Construction margin for other Group companies

How we make money

bull Development profits

bull Development management fees

plus

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

23

Urban Regeneration

Pipeline schedule indicates uplift in profit and ROCE in 2018

bull Regeneration amp development pipeline down 8 to pound21bn preferred bidder gt pound200m GDV

not included

broad geographic and sector split

bull Significant activity currently lsquoon sitersquo cpound400m of construction work

currently ongoing further cpound420m to be procured in

year

South East amp London

44

South West3

North West35

YorksNE17

Scotland1

Development pipeline by region

Offices30

Retail3Leisure

6Industrial

8

Residential51

Other2

Development pipeline by sector

24

Investments

poundm FY 2017 FY 2016 change

Operating profit(loss)1 05 (20) na

bull Year of evolution for Investments role of securing work for other divisions in the Group

cpound135m of construction and regeneration work secured for future delivery across the Group

now also expected to be a profit contributor with own returns target

bull Work delivered mainly through strategic JVs property partnerships with Slough Borough Council Bournemouth Borough Council etc

bull Small profit in year due to residential sales in strategic JVsbull Capital employed2 in all of its partnerships of pound39m (average for year of pound31m)

1 Adjusted2 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities

Consistent profit contribution with medium term 20 ROCE target

25

Accounting PoliciesIFRS 15 amp 16

26

IFRS 15

bull IFRS 15 lsquoRevenue from Contracts with Customersrsquo

bull Effective from 1 January 2018

bull No impact on cash flow

bull No impact on lifetime profitability of contracts

bull Does not fundamentally change the way we report or operate

not restating prior years

instead adjustment to opening reserves adjusts for revenue taken in previous years which wouldnrsquot fulfil IFRS 15 criteria

net adjustment to reserves of pound7m relating to revenue recognised prior to 31 December 2017 which would have been deferred to later years

27

bull lsquoIFRS 16 Leasesrsquo being adopted a year early to align with implementation of IFRS 15

requires all leases to be recognised on the balance sheet as a right of use asset with a corresponding lease liability Estimated gross asset and liability on transition of cpound40m-pound45m

mainly relates to property leases

future expense in the income statement will comprise depreciation and finance costs rather than rental payments

impact not expected to be material

increase in operating profit and interest expense of cpound1m

IFRS 16

28

Summary and Outlook

29

Progress against medium-term targets1

Medium-termtarget1

Construction Activities

Margin in Construction 2

Opnl leverage in Property Services gt3 margin

Maintain profits at Fit Out pound25m-pound30m pa

25Margin in Infrastructure

FY16

0

16

pound275m

11

1 Medium-term targets as set out in February 2017

FY17

13

17

pound391m

(20)

30

Progress against medium-term targets1

Medium-termtarget1

Regeneration Activities

ROCE in Partnership Housing gt 20

ROCE in Investments Towards 20

Towards 20ROCE in Urban Regeneration

FY16

12

15

1 Medium-term targets as set out in February 2017

FY17

14

9

1

31

Summary amp Outlook for 2018

bull Strong set of results for FY 2017 profit margin cash all improved

bull Well-positioned for further growth in 2018

margin improvement in Construction amp Infrastructure good prospects for Fit Out better year in Partnership Housing more development completions scheduled in Urban Regeneration Property Services back into profit positive contribution from Investments no material impact of the Carillion situation

bull Total dividend up 29

32

InvestmentsJohn Morgan

Construction RegenerationConstruction

amp Infrastructure

Fit Out PropertyServices

PartnershipHousing

Urban Regeneration

Investments

Investments underpins Group activities

Morgan Sindall Group today

33

Group structure

34

Our Regeneration businesses

Urban Regeneration

Developer only large mixed-use schemes schemes have multi-phases schemes of long duration

Partnership Housing

Builder and developer houses for sale and rent in partnership with local authorities and housing associations

Investments

Developer only long-term strategic partnerships incorporate multiple smaller schemes individual schemes of relatively short duration delivery by other Group companies

ldquoInvesting cash generated from the Construction divisions into development partnerships with the public sectorrdquo

35

Investments today

5 public private partnerships

poundm FY 2017 FY 2016 change

Operating profit(loss) 05 (20) na

Average capital employed 307 207 +48

2 Independent Living JVs

5 Public Private Partnerships

pound143m Sister Company revenue delivered in 2017

Potential pound26bn

GDV from current partnerships 1 Investment

Partnership Fund

36

Investments today

bull Local Authorities

bull County Councils

bull NHS Foundation Trusts

Who our partners are How we win work

bull Public procurement (OJEU)

bull Proactive early engagement with identified prospective partners to shape thinking and approach to market

bull allows the Group to win work which individual divisions could not win

bull provides a long-term profit stream and visibility of work

bull provides high quality construction work for rest of the Group

Role of division in the

Group

bull Construction margin for other Group companies

How we make money

bull Development profits

bull Development management fees

plus

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

24

Investments

poundm FY 2017 FY 2016 change

Operating profit(loss)1 05 (20) na

bull Year of evolution for Investments role of securing work for other divisions in the Group

cpound135m of construction and regeneration work secured for future delivery across the Group

now also expected to be a profit contributor with own returns target

bull Work delivered mainly through strategic JVs property partnerships with Slough Borough Council Bournemouth Borough Council etc

bull Small profit in year due to residential sales in strategic JVsbull Capital employed2 in all of its partnerships of pound39m (average for year of pound31m)

1 Adjusted2 Capital employed is calculated as total assets (excluding goodwill intangibles and cashoverdraft) less total liabilities

Consistent profit contribution with medium term 20 ROCE target

25

Accounting PoliciesIFRS 15 amp 16

26

IFRS 15

bull IFRS 15 lsquoRevenue from Contracts with Customersrsquo

bull Effective from 1 January 2018

bull No impact on cash flow

bull No impact on lifetime profitability of contracts

bull Does not fundamentally change the way we report or operate

not restating prior years

instead adjustment to opening reserves adjusts for revenue taken in previous years which wouldnrsquot fulfil IFRS 15 criteria

net adjustment to reserves of pound7m relating to revenue recognised prior to 31 December 2017 which would have been deferred to later years

27

bull lsquoIFRS 16 Leasesrsquo being adopted a year early to align with implementation of IFRS 15

requires all leases to be recognised on the balance sheet as a right of use asset with a corresponding lease liability Estimated gross asset and liability on transition of cpound40m-pound45m

mainly relates to property leases

future expense in the income statement will comprise depreciation and finance costs rather than rental payments

impact not expected to be material

increase in operating profit and interest expense of cpound1m

IFRS 16

28

Summary and Outlook

29

Progress against medium-term targets1

Medium-termtarget1

Construction Activities

Margin in Construction 2

Opnl leverage in Property Services gt3 margin

Maintain profits at Fit Out pound25m-pound30m pa

25Margin in Infrastructure

FY16

0

16

pound275m

11

1 Medium-term targets as set out in February 2017

FY17

13

17

pound391m

(20)

30

Progress against medium-term targets1

Medium-termtarget1

Regeneration Activities

ROCE in Partnership Housing gt 20

ROCE in Investments Towards 20

Towards 20ROCE in Urban Regeneration

FY16

12

15

1 Medium-term targets as set out in February 2017

FY17

14

9

1

31

Summary amp Outlook for 2018

bull Strong set of results for FY 2017 profit margin cash all improved

bull Well-positioned for further growth in 2018

margin improvement in Construction amp Infrastructure good prospects for Fit Out better year in Partnership Housing more development completions scheduled in Urban Regeneration Property Services back into profit positive contribution from Investments no material impact of the Carillion situation

bull Total dividend up 29

32

InvestmentsJohn Morgan

Construction RegenerationConstruction

amp Infrastructure

Fit Out PropertyServices

PartnershipHousing

Urban Regeneration

Investments

Investments underpins Group activities

Morgan Sindall Group today

33

Group structure

34

Our Regeneration businesses

Urban Regeneration

Developer only large mixed-use schemes schemes have multi-phases schemes of long duration

Partnership Housing

Builder and developer houses for sale and rent in partnership with local authorities and housing associations

Investments

Developer only long-term strategic partnerships incorporate multiple smaller schemes individual schemes of relatively short duration delivery by other Group companies

ldquoInvesting cash generated from the Construction divisions into development partnerships with the public sectorrdquo

35

Investments today

5 public private partnerships

poundm FY 2017 FY 2016 change

Operating profit(loss) 05 (20) na

Average capital employed 307 207 +48

2 Independent Living JVs

5 Public Private Partnerships

pound143m Sister Company revenue delivered in 2017

Potential pound26bn

GDV from current partnerships 1 Investment

Partnership Fund

36

Investments today

bull Local Authorities

bull County Councils

bull NHS Foundation Trusts

Who our partners are How we win work

bull Public procurement (OJEU)

bull Proactive early engagement with identified prospective partners to shape thinking and approach to market

bull allows the Group to win work which individual divisions could not win

bull provides a long-term profit stream and visibility of work

bull provides high quality construction work for rest of the Group

Role of division in the

Group

bull Construction margin for other Group companies

How we make money

bull Development profits

bull Development management fees

plus

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

25

Accounting PoliciesIFRS 15 amp 16

26

IFRS 15

bull IFRS 15 lsquoRevenue from Contracts with Customersrsquo

bull Effective from 1 January 2018

bull No impact on cash flow

bull No impact on lifetime profitability of contracts

bull Does not fundamentally change the way we report or operate

not restating prior years

instead adjustment to opening reserves adjusts for revenue taken in previous years which wouldnrsquot fulfil IFRS 15 criteria

net adjustment to reserves of pound7m relating to revenue recognised prior to 31 December 2017 which would have been deferred to later years

27

bull lsquoIFRS 16 Leasesrsquo being adopted a year early to align with implementation of IFRS 15

requires all leases to be recognised on the balance sheet as a right of use asset with a corresponding lease liability Estimated gross asset and liability on transition of cpound40m-pound45m

mainly relates to property leases

future expense in the income statement will comprise depreciation and finance costs rather than rental payments

impact not expected to be material

increase in operating profit and interest expense of cpound1m

IFRS 16

28

Summary and Outlook

29

Progress against medium-term targets1

Medium-termtarget1

Construction Activities

Margin in Construction 2

Opnl leverage in Property Services gt3 margin

Maintain profits at Fit Out pound25m-pound30m pa

25Margin in Infrastructure

FY16

0

16

pound275m

11

1 Medium-term targets as set out in February 2017

FY17

13

17

pound391m

(20)

30

Progress against medium-term targets1

Medium-termtarget1

Regeneration Activities

ROCE in Partnership Housing gt 20

ROCE in Investments Towards 20

Towards 20ROCE in Urban Regeneration

FY16

12

15

1 Medium-term targets as set out in February 2017

FY17

14

9

1

31

Summary amp Outlook for 2018

bull Strong set of results for FY 2017 profit margin cash all improved

bull Well-positioned for further growth in 2018

margin improvement in Construction amp Infrastructure good prospects for Fit Out better year in Partnership Housing more development completions scheduled in Urban Regeneration Property Services back into profit positive contribution from Investments no material impact of the Carillion situation

bull Total dividend up 29

32

InvestmentsJohn Morgan

Construction RegenerationConstruction

amp Infrastructure

Fit Out PropertyServices

PartnershipHousing

Urban Regeneration

Investments

Investments underpins Group activities

Morgan Sindall Group today

33

Group structure

34

Our Regeneration businesses

Urban Regeneration

Developer only large mixed-use schemes schemes have multi-phases schemes of long duration

Partnership Housing

Builder and developer houses for sale and rent in partnership with local authorities and housing associations

Investments

Developer only long-term strategic partnerships incorporate multiple smaller schemes individual schemes of relatively short duration delivery by other Group companies

ldquoInvesting cash generated from the Construction divisions into development partnerships with the public sectorrdquo

35

Investments today

5 public private partnerships

poundm FY 2017 FY 2016 change

Operating profit(loss) 05 (20) na

Average capital employed 307 207 +48

2 Independent Living JVs

5 Public Private Partnerships

pound143m Sister Company revenue delivered in 2017

Potential pound26bn

GDV from current partnerships 1 Investment

Partnership Fund

36

Investments today

bull Local Authorities

bull County Councils

bull NHS Foundation Trusts

Who our partners are How we win work

bull Public procurement (OJEU)

bull Proactive early engagement with identified prospective partners to shape thinking and approach to market

bull allows the Group to win work which individual divisions could not win

bull provides a long-term profit stream and visibility of work

bull provides high quality construction work for rest of the Group

Role of division in the

Group

bull Construction margin for other Group companies

How we make money

bull Development profits

bull Development management fees

plus

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

26

IFRS 15

bull IFRS 15 lsquoRevenue from Contracts with Customersrsquo

bull Effective from 1 January 2018

bull No impact on cash flow

bull No impact on lifetime profitability of contracts

bull Does not fundamentally change the way we report or operate

not restating prior years

instead adjustment to opening reserves adjusts for revenue taken in previous years which wouldnrsquot fulfil IFRS 15 criteria

net adjustment to reserves of pound7m relating to revenue recognised prior to 31 December 2017 which would have been deferred to later years

27

bull lsquoIFRS 16 Leasesrsquo being adopted a year early to align with implementation of IFRS 15

requires all leases to be recognised on the balance sheet as a right of use asset with a corresponding lease liability Estimated gross asset and liability on transition of cpound40m-pound45m

mainly relates to property leases

future expense in the income statement will comprise depreciation and finance costs rather than rental payments

impact not expected to be material

increase in operating profit and interest expense of cpound1m

IFRS 16

28

Summary and Outlook

29

Progress against medium-term targets1

Medium-termtarget1

Construction Activities

Margin in Construction 2

Opnl leverage in Property Services gt3 margin

Maintain profits at Fit Out pound25m-pound30m pa

25Margin in Infrastructure

FY16

0

16

pound275m

11

1 Medium-term targets as set out in February 2017

FY17

13

17

pound391m

(20)

30

Progress against medium-term targets1

Medium-termtarget1

Regeneration Activities

ROCE in Partnership Housing gt 20

ROCE in Investments Towards 20

Towards 20ROCE in Urban Regeneration

FY16

12

15

1 Medium-term targets as set out in February 2017

FY17

14

9

1

31

Summary amp Outlook for 2018

bull Strong set of results for FY 2017 profit margin cash all improved

bull Well-positioned for further growth in 2018

margin improvement in Construction amp Infrastructure good prospects for Fit Out better year in Partnership Housing more development completions scheduled in Urban Regeneration Property Services back into profit positive contribution from Investments no material impact of the Carillion situation

bull Total dividend up 29

32

InvestmentsJohn Morgan

Construction RegenerationConstruction

amp Infrastructure

Fit Out PropertyServices

PartnershipHousing

Urban Regeneration

Investments

Investments underpins Group activities

Morgan Sindall Group today

33

Group structure

34

Our Regeneration businesses

Urban Regeneration

Developer only large mixed-use schemes schemes have multi-phases schemes of long duration

Partnership Housing

Builder and developer houses for sale and rent in partnership with local authorities and housing associations

Investments

Developer only long-term strategic partnerships incorporate multiple smaller schemes individual schemes of relatively short duration delivery by other Group companies

ldquoInvesting cash generated from the Construction divisions into development partnerships with the public sectorrdquo

35

Investments today

5 public private partnerships

poundm FY 2017 FY 2016 change

Operating profit(loss) 05 (20) na

Average capital employed 307 207 +48

2 Independent Living JVs

5 Public Private Partnerships

pound143m Sister Company revenue delivered in 2017

Potential pound26bn

GDV from current partnerships 1 Investment

Partnership Fund

36

Investments today

bull Local Authorities

bull County Councils

bull NHS Foundation Trusts

Who our partners are How we win work

bull Public procurement (OJEU)

bull Proactive early engagement with identified prospective partners to shape thinking and approach to market

bull allows the Group to win work which individual divisions could not win

bull provides a long-term profit stream and visibility of work

bull provides high quality construction work for rest of the Group

Role of division in the

Group

bull Construction margin for other Group companies

How we make money

bull Development profits

bull Development management fees

plus

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

27

bull lsquoIFRS 16 Leasesrsquo being adopted a year early to align with implementation of IFRS 15

requires all leases to be recognised on the balance sheet as a right of use asset with a corresponding lease liability Estimated gross asset and liability on transition of cpound40m-pound45m

mainly relates to property leases

future expense in the income statement will comprise depreciation and finance costs rather than rental payments

impact not expected to be material

increase in operating profit and interest expense of cpound1m

IFRS 16

28

Summary and Outlook

29

Progress against medium-term targets1

Medium-termtarget1

Construction Activities

Margin in Construction 2

Opnl leverage in Property Services gt3 margin

Maintain profits at Fit Out pound25m-pound30m pa

25Margin in Infrastructure

FY16

0

16

pound275m

11

1 Medium-term targets as set out in February 2017

FY17

13

17

pound391m

(20)

30

Progress against medium-term targets1

Medium-termtarget1

Regeneration Activities

ROCE in Partnership Housing gt 20

ROCE in Investments Towards 20

Towards 20ROCE in Urban Regeneration

FY16

12

15

1 Medium-term targets as set out in February 2017

FY17

14

9

1

31

Summary amp Outlook for 2018

bull Strong set of results for FY 2017 profit margin cash all improved

bull Well-positioned for further growth in 2018

margin improvement in Construction amp Infrastructure good prospects for Fit Out better year in Partnership Housing more development completions scheduled in Urban Regeneration Property Services back into profit positive contribution from Investments no material impact of the Carillion situation

bull Total dividend up 29

32

InvestmentsJohn Morgan

Construction RegenerationConstruction

amp Infrastructure

Fit Out PropertyServices

PartnershipHousing

Urban Regeneration

Investments

Investments underpins Group activities

Morgan Sindall Group today

33

Group structure

34

Our Regeneration businesses

Urban Regeneration

Developer only large mixed-use schemes schemes have multi-phases schemes of long duration

Partnership Housing

Builder and developer houses for sale and rent in partnership with local authorities and housing associations

Investments

Developer only long-term strategic partnerships incorporate multiple smaller schemes individual schemes of relatively short duration delivery by other Group companies

ldquoInvesting cash generated from the Construction divisions into development partnerships with the public sectorrdquo

35

Investments today

5 public private partnerships

poundm FY 2017 FY 2016 change

Operating profit(loss) 05 (20) na

Average capital employed 307 207 +48

2 Independent Living JVs

5 Public Private Partnerships

pound143m Sister Company revenue delivered in 2017

Potential pound26bn

GDV from current partnerships 1 Investment

Partnership Fund

36

Investments today

bull Local Authorities

bull County Councils

bull NHS Foundation Trusts

Who our partners are How we win work

bull Public procurement (OJEU)

bull Proactive early engagement with identified prospective partners to shape thinking and approach to market

bull allows the Group to win work which individual divisions could not win

bull provides a long-term profit stream and visibility of work

bull provides high quality construction work for rest of the Group

Role of division in the

Group

bull Construction margin for other Group companies

How we make money

bull Development profits

bull Development management fees

plus

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

28

Summary and Outlook

29

Progress against medium-term targets1

Medium-termtarget1

Construction Activities

Margin in Construction 2

Opnl leverage in Property Services gt3 margin

Maintain profits at Fit Out pound25m-pound30m pa

25Margin in Infrastructure

FY16

0

16

pound275m

11

1 Medium-term targets as set out in February 2017

FY17

13

17

pound391m

(20)

30

Progress against medium-term targets1

Medium-termtarget1

Regeneration Activities

ROCE in Partnership Housing gt 20

ROCE in Investments Towards 20

Towards 20ROCE in Urban Regeneration

FY16

12

15

1 Medium-term targets as set out in February 2017

FY17

14

9

1

31

Summary amp Outlook for 2018

bull Strong set of results for FY 2017 profit margin cash all improved

bull Well-positioned for further growth in 2018

margin improvement in Construction amp Infrastructure good prospects for Fit Out better year in Partnership Housing more development completions scheduled in Urban Regeneration Property Services back into profit positive contribution from Investments no material impact of the Carillion situation

bull Total dividend up 29

32

InvestmentsJohn Morgan

Construction RegenerationConstruction

amp Infrastructure

Fit Out PropertyServices

PartnershipHousing

Urban Regeneration

Investments

Investments underpins Group activities

Morgan Sindall Group today

33

Group structure

34

Our Regeneration businesses

Urban Regeneration

Developer only large mixed-use schemes schemes have multi-phases schemes of long duration

Partnership Housing

Builder and developer houses for sale and rent in partnership with local authorities and housing associations

Investments

Developer only long-term strategic partnerships incorporate multiple smaller schemes individual schemes of relatively short duration delivery by other Group companies

ldquoInvesting cash generated from the Construction divisions into development partnerships with the public sectorrdquo

35

Investments today

5 public private partnerships

poundm FY 2017 FY 2016 change

Operating profit(loss) 05 (20) na

Average capital employed 307 207 +48

2 Independent Living JVs

5 Public Private Partnerships

pound143m Sister Company revenue delivered in 2017

Potential pound26bn

GDV from current partnerships 1 Investment

Partnership Fund

36

Investments today

bull Local Authorities

bull County Councils

bull NHS Foundation Trusts

Who our partners are How we win work

bull Public procurement (OJEU)

bull Proactive early engagement with identified prospective partners to shape thinking and approach to market

bull allows the Group to win work which individual divisions could not win

bull provides a long-term profit stream and visibility of work

bull provides high quality construction work for rest of the Group

Role of division in the

Group

bull Construction margin for other Group companies

How we make money

bull Development profits

bull Development management fees

plus

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

29

Progress against medium-term targets1

Medium-termtarget1

Construction Activities

Margin in Construction 2

Opnl leverage in Property Services gt3 margin

Maintain profits at Fit Out pound25m-pound30m pa

25Margin in Infrastructure

FY16

0

16

pound275m

11

1 Medium-term targets as set out in February 2017

FY17

13

17

pound391m

(20)

30

Progress against medium-term targets1

Medium-termtarget1

Regeneration Activities

ROCE in Partnership Housing gt 20

ROCE in Investments Towards 20

Towards 20ROCE in Urban Regeneration

FY16

12

15

1 Medium-term targets as set out in February 2017

FY17

14

9

1

31

Summary amp Outlook for 2018

bull Strong set of results for FY 2017 profit margin cash all improved

bull Well-positioned for further growth in 2018

margin improvement in Construction amp Infrastructure good prospects for Fit Out better year in Partnership Housing more development completions scheduled in Urban Regeneration Property Services back into profit positive contribution from Investments no material impact of the Carillion situation

bull Total dividend up 29

32

InvestmentsJohn Morgan

Construction RegenerationConstruction

amp Infrastructure

Fit Out PropertyServices

PartnershipHousing

Urban Regeneration

Investments

Investments underpins Group activities

Morgan Sindall Group today

33

Group structure

34

Our Regeneration businesses

Urban Regeneration

Developer only large mixed-use schemes schemes have multi-phases schemes of long duration

Partnership Housing

Builder and developer houses for sale and rent in partnership with local authorities and housing associations

Investments

Developer only long-term strategic partnerships incorporate multiple smaller schemes individual schemes of relatively short duration delivery by other Group companies

ldquoInvesting cash generated from the Construction divisions into development partnerships with the public sectorrdquo

35

Investments today

5 public private partnerships

poundm FY 2017 FY 2016 change

Operating profit(loss) 05 (20) na

Average capital employed 307 207 +48

2 Independent Living JVs

5 Public Private Partnerships

pound143m Sister Company revenue delivered in 2017

Potential pound26bn

GDV from current partnerships 1 Investment

Partnership Fund

36

Investments today

bull Local Authorities

bull County Councils

bull NHS Foundation Trusts

Who our partners are How we win work

bull Public procurement (OJEU)

bull Proactive early engagement with identified prospective partners to shape thinking and approach to market

bull allows the Group to win work which individual divisions could not win

bull provides a long-term profit stream and visibility of work

bull provides high quality construction work for rest of the Group

Role of division in the

Group

bull Construction margin for other Group companies

How we make money

bull Development profits

bull Development management fees

plus

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

30

Progress against medium-term targets1

Medium-termtarget1

Regeneration Activities

ROCE in Partnership Housing gt 20

ROCE in Investments Towards 20

Towards 20ROCE in Urban Regeneration

FY16

12

15

1 Medium-term targets as set out in February 2017

FY17

14

9

1

31

Summary amp Outlook for 2018

bull Strong set of results for FY 2017 profit margin cash all improved

bull Well-positioned for further growth in 2018

margin improvement in Construction amp Infrastructure good prospects for Fit Out better year in Partnership Housing more development completions scheduled in Urban Regeneration Property Services back into profit positive contribution from Investments no material impact of the Carillion situation

bull Total dividend up 29

32

InvestmentsJohn Morgan

Construction RegenerationConstruction

amp Infrastructure

Fit Out PropertyServices

PartnershipHousing

Urban Regeneration

Investments

Investments underpins Group activities

Morgan Sindall Group today

33

Group structure

34

Our Regeneration businesses

Urban Regeneration

Developer only large mixed-use schemes schemes have multi-phases schemes of long duration

Partnership Housing

Builder and developer houses for sale and rent in partnership with local authorities and housing associations

Investments

Developer only long-term strategic partnerships incorporate multiple smaller schemes individual schemes of relatively short duration delivery by other Group companies

ldquoInvesting cash generated from the Construction divisions into development partnerships with the public sectorrdquo

35

Investments today

5 public private partnerships

poundm FY 2017 FY 2016 change

Operating profit(loss) 05 (20) na

Average capital employed 307 207 +48

2 Independent Living JVs

5 Public Private Partnerships

pound143m Sister Company revenue delivered in 2017

Potential pound26bn

GDV from current partnerships 1 Investment

Partnership Fund

36

Investments today

bull Local Authorities

bull County Councils

bull NHS Foundation Trusts

Who our partners are How we win work

bull Public procurement (OJEU)

bull Proactive early engagement with identified prospective partners to shape thinking and approach to market

bull allows the Group to win work which individual divisions could not win

bull provides a long-term profit stream and visibility of work

bull provides high quality construction work for rest of the Group

Role of division in the

Group

bull Construction margin for other Group companies

How we make money

bull Development profits

bull Development management fees

plus

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

31

Summary amp Outlook for 2018

bull Strong set of results for FY 2017 profit margin cash all improved

bull Well-positioned for further growth in 2018

margin improvement in Construction amp Infrastructure good prospects for Fit Out better year in Partnership Housing more development completions scheduled in Urban Regeneration Property Services back into profit positive contribution from Investments no material impact of the Carillion situation

bull Total dividend up 29

32

InvestmentsJohn Morgan

Construction RegenerationConstruction

amp Infrastructure

Fit Out PropertyServices

PartnershipHousing

Urban Regeneration

Investments

Investments underpins Group activities

Morgan Sindall Group today

33

Group structure

34

Our Regeneration businesses

Urban Regeneration

Developer only large mixed-use schemes schemes have multi-phases schemes of long duration

Partnership Housing

Builder and developer houses for sale and rent in partnership with local authorities and housing associations

Investments

Developer only long-term strategic partnerships incorporate multiple smaller schemes individual schemes of relatively short duration delivery by other Group companies

ldquoInvesting cash generated from the Construction divisions into development partnerships with the public sectorrdquo

35

Investments today

5 public private partnerships

poundm FY 2017 FY 2016 change

Operating profit(loss) 05 (20) na

Average capital employed 307 207 +48

2 Independent Living JVs

5 Public Private Partnerships

pound143m Sister Company revenue delivered in 2017

Potential pound26bn

GDV from current partnerships 1 Investment

Partnership Fund

36

Investments today

bull Local Authorities

bull County Councils

bull NHS Foundation Trusts

Who our partners are How we win work

bull Public procurement (OJEU)

bull Proactive early engagement with identified prospective partners to shape thinking and approach to market

bull allows the Group to win work which individual divisions could not win

bull provides a long-term profit stream and visibility of work

bull provides high quality construction work for rest of the Group

Role of division in the

Group

bull Construction margin for other Group companies

How we make money

bull Development profits

bull Development management fees

plus

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

32

InvestmentsJohn Morgan

Construction RegenerationConstruction

amp Infrastructure

Fit Out PropertyServices

PartnershipHousing

Urban Regeneration

Investments

Investments underpins Group activities

Morgan Sindall Group today

33

Group structure

34

Our Regeneration businesses

Urban Regeneration

Developer only large mixed-use schemes schemes have multi-phases schemes of long duration

Partnership Housing

Builder and developer houses for sale and rent in partnership with local authorities and housing associations

Investments

Developer only long-term strategic partnerships incorporate multiple smaller schemes individual schemes of relatively short duration delivery by other Group companies

ldquoInvesting cash generated from the Construction divisions into development partnerships with the public sectorrdquo

35

Investments today

5 public private partnerships

poundm FY 2017 FY 2016 change

Operating profit(loss) 05 (20) na

Average capital employed 307 207 +48

2 Independent Living JVs

5 Public Private Partnerships

pound143m Sister Company revenue delivered in 2017

Potential pound26bn

GDV from current partnerships 1 Investment

Partnership Fund

36

Investments today

bull Local Authorities

bull County Councils

bull NHS Foundation Trusts

Who our partners are How we win work

bull Public procurement (OJEU)

bull Proactive early engagement with identified prospective partners to shape thinking and approach to market

bull allows the Group to win work which individual divisions could not win

bull provides a long-term profit stream and visibility of work

bull provides high quality construction work for rest of the Group

Role of division in the

Group

bull Construction margin for other Group companies

How we make money

bull Development profits

bull Development management fees

plus

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

Construction RegenerationConstruction

amp Infrastructure

Fit Out PropertyServices

PartnershipHousing

Urban Regeneration

Investments

Investments underpins Group activities

Morgan Sindall Group today

33

Group structure

34

Our Regeneration businesses

Urban Regeneration

Developer only large mixed-use schemes schemes have multi-phases schemes of long duration

Partnership Housing

Builder and developer houses for sale and rent in partnership with local authorities and housing associations

Investments

Developer only long-term strategic partnerships incorporate multiple smaller schemes individual schemes of relatively short duration delivery by other Group companies

ldquoInvesting cash generated from the Construction divisions into development partnerships with the public sectorrdquo

35

Investments today

5 public private partnerships

poundm FY 2017 FY 2016 change

Operating profit(loss) 05 (20) na

Average capital employed 307 207 +48

2 Independent Living JVs

5 Public Private Partnerships

pound143m Sister Company revenue delivered in 2017

Potential pound26bn

GDV from current partnerships 1 Investment

Partnership Fund

36

Investments today

bull Local Authorities

bull County Councils

bull NHS Foundation Trusts

Who our partners are How we win work

bull Public procurement (OJEU)

bull Proactive early engagement with identified prospective partners to shape thinking and approach to market

bull allows the Group to win work which individual divisions could not win

bull provides a long-term profit stream and visibility of work

bull provides high quality construction work for rest of the Group

Role of division in the

Group

bull Construction margin for other Group companies

How we make money

bull Development profits

bull Development management fees

plus

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

34

Our Regeneration businesses

Urban Regeneration

Developer only large mixed-use schemes schemes have multi-phases schemes of long duration

Partnership Housing

Builder and developer houses for sale and rent in partnership with local authorities and housing associations

Investments

Developer only long-term strategic partnerships incorporate multiple smaller schemes individual schemes of relatively short duration delivery by other Group companies

ldquoInvesting cash generated from the Construction divisions into development partnerships with the public sectorrdquo

35

Investments today

5 public private partnerships

poundm FY 2017 FY 2016 change

Operating profit(loss) 05 (20) na

Average capital employed 307 207 +48

2 Independent Living JVs

5 Public Private Partnerships

pound143m Sister Company revenue delivered in 2017

Potential pound26bn

GDV from current partnerships 1 Investment

Partnership Fund

36

Investments today

bull Local Authorities

bull County Councils

bull NHS Foundation Trusts

Who our partners are How we win work

bull Public procurement (OJEU)

bull Proactive early engagement with identified prospective partners to shape thinking and approach to market

bull allows the Group to win work which individual divisions could not win

bull provides a long-term profit stream and visibility of work

bull provides high quality construction work for rest of the Group

Role of division in the

Group

bull Construction margin for other Group companies

How we make money

bull Development profits

bull Development management fees

plus

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

35

Investments today

5 public private partnerships

poundm FY 2017 FY 2016 change

Operating profit(loss) 05 (20) na

Average capital employed 307 207 +48

2 Independent Living JVs

5 Public Private Partnerships

pound143m Sister Company revenue delivered in 2017

Potential pound26bn

GDV from current partnerships 1 Investment

Partnership Fund

36

Investments today

bull Local Authorities

bull County Councils

bull NHS Foundation Trusts

Who our partners are How we win work

bull Public procurement (OJEU)

bull Proactive early engagement with identified prospective partners to shape thinking and approach to market

bull allows the Group to win work which individual divisions could not win

bull provides a long-term profit stream and visibility of work

bull provides high quality construction work for rest of the Group

Role of division in the

Group

bull Construction margin for other Group companies

How we make money

bull Development profits

bull Development management fees

plus

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

36

Investments today

bull Local Authorities

bull County Councils

bull NHS Foundation Trusts

Who our partners are How we win work

bull Public procurement (OJEU)

bull Proactive early engagement with identified prospective partners to shape thinking and approach to market

bull allows the Group to win work which individual divisions could not win

bull provides a long-term profit stream and visibility of work

bull provides high quality construction work for rest of the Group

Role of division in the

Group

bull Construction margin for other Group companies

How we make money

bull Development profits

bull Development management fees

plus

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

37

Investments today

bull length of potential relationship 15-25 year strategic partnership

bull a true 5050 partnership

bull scale that justifies building a business around the partnership

bull political and Officer stability

bull local ambition

bull multiple schemes which need delivering at scale and pace

Characteristics we look for in partners

Large barriers to entry

Reputation and track record count

Long lead in times

Experience of the softer issues of publicprivate partnerships

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

38

Current partnerships within Investments

JV Property Partnerships

Independent Supported Living

FundStrategic Estates Partnerships

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

39

Property Partnership JVs

bull Manage all projects from inception to delivery using Group capabilities and resources as appropriate

includes funding and investment expertise

pound500m GDV

pound1bn GDV

pound400m GDV

Capital employed pound105m

Capital employed pound60m

Capital employed pound06m

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

40

Strategic Estates Partnerships

bull Provide access to arrange and deliver private sector capital to finance new projects

bull New projects may involve

capital and refurbishment works

disposal andor acquisition of land

facilities to support NHS related health and social care services

commercial development opportunities

A partnership with

A partnership with

pound200m GDV

pound60m GDV

Two strategic estates property partnerships in early stages

Capital employed pound0m

Capital employed pound0m

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

41

Independent Supported Living JVs

bull Capital and resource is provided to deliver pipeline of developments across the UK

bull HBV specialise in providing independent supporting living for people with complex care needs

pound250m GDV

pound200m GDV bull JV with Ashley House to develop extra care housing

bull Support and capabilities from Group helps deliver pipeline at an increased pace and scale

50 stakes held in two independent supported living JVs

Capital employed pound56m

Capital employed pound41m

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

42

The Fund

bull JV with Universities Superannuation Scheme Ltd (USS) and Investments to form Supported Housing Investment Limited Partnership (SHIP)

bull Committed pound100m to SHIP

bull USS providing 95 of the capital Investments retain 5

bull Financial benefits

fees from managing portfolio

profits from sale of portfolio

Manager of a fund holding supported housing property investments

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

43

Projects

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

44

Slough Urban Renewal

Old library site

bull Objective to create value for the Council and improve the image of Slough through a programme of development and regeneration

bull Term 25 year partnership currently in year 5

bull 8 developments completed library schools housing sports and community facilities

bull 9 developments on site leisure centres housing schools

bull 11 jobs in the design phase

bull Group companies involved Urban Regeneration | Partnership Housing | Construction

bull Original value pound250m but has grown to cpound1bn

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

45

Bournemouth Development Company

Bournemouth town centre

bull Objective to deliver 20 year town centre vision

bull Term 20 year partnership currently in year 6

bull Completed schemes

Student accommodation Multi-storey car park Residential and retail

bull On site

113 unit private rental scheme

bull In planning

mixed-use schemes (352 residential 5000m2 leisure 2000m2 retail and car park)

46 unit private rental scheme 44 open market residential

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

46

HB Villages

Example development in Leamington Spa

bull JV to provide specialised living for vulnerable adults allowing them to live in an independent setting

bull Delivered 36 schemes to date

bull Expect to deliver another 40 schemes over the next twothree years

bull Average size of each development - pound3m GDV

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

47

InvestmentsLooking ahead

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

48

Prospects

bull Investments is an important part of our Regeneration strategy

bull Maximise benefit from existing portfolio

pipeline of opportunities from current developments is very strong indicates a potential investment of up to pound50m in medium term

bull Medium-term target is to increase ROCE up towards 20

expect consistent future profit contribution

bull Long-term work loads of high quality work mainly for Construction and Partnership Housing

bull Expect more major wins this year

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

49

Group Summary

2

Strength of balance sheet gives flexibility to invest in the business

Good progress made against our medium-term targets 1

Following a simple strategy of self-help and organic growth

Strong performance in 2017

Positive momentum to deliver continued growth in 2018 and beyond4

1 Medium-term targets as set out in February 2017

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

50

QuestionsThank you

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

51

Appendices

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

52

Net finance expense

poundm FY 2017 FY 2016

Interest payable on project financing amp other debt (09) (18)

Amortisation of fees amp non-utilisation fees (26) (21)

Interest from JVs 13 11

Other (03) (07)

Total (25) (35)

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

53

Tax

poundm FY 2017 FY 2016

Profit before tax 649 439

Less share of net JV profit1 (41) (74)

Profit subject to tax 608 365

Statutory tax rate 1925 200

Current tax charge at statutory rate (117) (73)

Tax of joint venture profits1 (06) (12)

Effect of tax rate change on deferred tax - 07

Other adjustments (02) 07

Tax charge (125) (71)

1 Certain of the Grouprsquos joint ventures are reported net of tax Other joint ventures are partnerships where profits are taxed within the Group rather than the joint venture

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

54

Adjusted earnings per share

poundm FY 2017 FY 2016

Profit after tax and minority interest 524 368

Adjusted for

Amortisation of intangibles (net of tax) 10 11

Deferred tax credit 1 - (07)

Adjusted earnings 534 372

Average number of shares 441m 439m

Adjusted earnings per share 1211p 847p

1 Due to reduction in UK statutory tax rate

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

55

Capital employed in Regeneration at year end

poundmRegeneration Partnership

HousingUrban

Regeneration

Total net land amp regeneration WIP 263 154 109

Unsold completed units (excl JVs) 8 7 1

Amounts invested in joint ventures 40 2 38

Shared equity loans and investment properties 22 22 -

Other working capital -137 -100 -37

Non-recourse debt -27 - -27

Deferred consideration 0 - 0

Other net assets 4 3 1

Total capital employed at 31 December 2017 173 88 85

As at 31 December 2016 133 64 69

Cash Flow

686

(61)

(378)

65

98

410

271

2087

271

(256)

1934

(43)

(96)

(168)

Order book

49

20

31

14

18

68

Regeneration capital

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

				poundm			Regeneration			Partnership Housing			Urban Regeneration
				Total net land amp regeneration WIP			263			154			109
				Unsold completed units (excl JVs)			8			7			1
				Amounts invested in joint ventures			40			2			38
				Shared equity loans and investment properties			22			22			-
				Other working capital			-137			-100			-37
				Non-recourse debt			-27			-			-27
				Deferred consideration			0			-			0
				Other net assets			4			3			1
				Total capital employed at 31 December 2017			173			88			85
				As at 31 December 2016			133			64			69

poundm

pound3849m

pound3637m

FY 16

FY 17

2018

2019

2020 +

poundm

pound3210m

pound3133m

FY 16

FY 17

2018

2019

2020 +

	poundm
	0
		Operating Profit 1			Non-cash adjmts 2			Net capex amp finance leases			Working Capital 36			Other 4			Operating cash flow			Net interest (non JV)			Tax			Free cash flow
	poundm
	0
		Opening net cash			Free cash flow			Dividends			Other			Closing net cash
				FY 2017					Non-cash			Other
				poundm					poundm			poundm
		Operating profit - adjusted			686
		Depreciation			56					56
		Share option expense			55					55
		Movement in fair value of shared equity loans			-05					-05
		Gains on disposal of joint ventures			-							-					Gain on disposal of PPE					-01
		Share of net profit of joint ventures			-41					-41							Additional pension contributions					0
		Gain on disposal of PPE							0			0					Investment property disposals					07
		Impairment of investments			-					-							Shared equity redemptions					33
		Other operating items			61							61					Provision movements					22
		Change in working capital			-378											Total other operating items					61
		Net capital expenditure (including repayment of finance leases)			-61
		Dividends and interest received from joint ventures			37							37
		Operating cash flow			410					65			98
		Income taxes paid			-96
		Net interest paid (non-joint venture)			-43
		Free cash flow			271

56

IFRS 15

Areas of difference for Group

bull Recognition of uncertain revenue lsquoprobablersquo vs lsquohighly probablersquo (Construction Infrastructure Partnership Housing)

deduction from revenue of liquidated damages where contractually-entitled

formalised tests to meet higher threshold

bull Recognition of revenue for forward-sold pre-let developments (Urban Regeneration)

move from lsquoriskreward transferrsquo to performance obligations in contract

bull Costs of fulfilment (Property Services)

mobilisation costs on service contracts only capitalised when there is a contractual right to reimbursement on early termination

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018

57

IFRS 15 adjustment to opening reserves in 2018

poundmEstimated

adjustment at 1 Jan 2018

Recognition of uncertain revenue (pound6m)

Recognition of revenue for forward-sold pre-let developments pound1m

Costs of fulfilment (pound3m)

Tax effect of the above pound1m

Increase(decrease) in opening equity (pound7m)

• Slide Number 1
• Agenda
• Summary
• Slide Number 4
• Highlights
• Summary income statement
• Divisional performance
• Cash flow
• Working capitaltrade payables
• Net cash movements
• Summary balance sheet
• Order book
• Regeneration amp development pipeline
• Slide Number 14
• Construction amp Infrastructure
• Construction amp Infrastructure
• Fit Out
• Fit Out
• Property Services
• Partnership Housing
• Partnership Housing
• Urban Regeneration
• Urban Regeneration
• Investments
• Slide Number 25
• IFRS 15
• IFRS 16
• Slide Number 28
• Progress against medium-term targets1
• Progress against medium-term targets1
• Summary amp Outlook for 2018
• Slide Number 32
• Slide Number 33
• Our Regeneration businesses
• Investments today
• Investments today
• Investments today
• Current partnerships within Investments
• Property Partnership JVs
• Strategic Estates Partnerships
• Independent Supported Living JVs
• The Fund
• Slide Number 43
• Slough Urban Renewal
• Bournemouth Development Company
• HB Villages
• Slide Number 47
• Prospects
• Group Summary
• Slide Number 50
• Slide Number 51
• Net finance expense
• Tax
• Adjusted earnings per share
• Capital employed in Regeneration at year end
• IFRS 15
• IFRS 15 adjustment to opening reserves in 2018