Acquisition

Morgan Sindall PLC
04 June 2007

Morgan Sindall plc


Acquisition of Amec Developments Ltd and Amec Design & Project Services


Morgan Sindall plc ('Morgan Sindall' or the 'Company'), the construction and
urban regeneration group, is pleased to announce that it has agreed to acquire
from Amec plc (the 'Acquisition'), Amec Developments Limited ('ADL'), a
mixed-use urban regeneration business, and the assets and certain contracts
relating to the Design and Project Services division ('DPS'), a nationwide
construction and engineering business.


The Acquisition


  • Strengthens three of Morgan Sindall's four divisions and significantly
    increases the Company's scale and capabilities


  • Creates a leading, UK-wide urban regeneration business


     - ADL to operate as standalone division aligned with Morgan Sindall's Affordable
       Housing division


     - Brings large scale urban regeneration skills to Morgan Sindall in long-term
       growth market


  • Transforms Group's Construction division, creating an integrated design
    and delivery business



  • Significantly develops Morgan Sindall's Infrastructure Services division's
    market leading position particularly in the tunnelling and water sectors



  • Enhances earnings in current financial year*



  • Increases Group's pro forma forward order book at 31 December 2006 to £4.1
    billion



Consideration



  • Morgan Sindall will pay Amec the net asset value and £55 million goodwill
    associated with ADL and DPS



  • Combined net assets at completion are expected to be a liability of £29
    million, which includes cash of £8 million



  • Consideration payable by Morgan Sindall is £26 million, with the net cash
    outflow of £18 million to be met from existing resources





Commenting on the Acquisition, Morgan Sindall Executive Chairman, John Morgan
said:



'This acquisition is a key strategic next step for Morgan Sindall. It
substantially adds to our existing divisions and opens up significant growth
opportunities in our construction and regeneration markets. Morgan Sindall
represents an excellent home for ADL and DPS and their employees and customers
and we look forward to developing further the enlarged group.'



*This statement should not be interpreted to mean that Morgan Sindall's earnings
per share for the current or future financial years will necessarily match or
exceed the historic published earnings per share



AN ANALYST CONFERENCE CALL WILL BE HELD THIS MORNING AT 8.30 AM. THE DIAL IN
NUMBER IS 0845 245 3471 AND THE CONFERENCE ID IS 3091887. PARTICIPANTS CAN
ACCESS A PRESENTATION THAT WILL ACCOMPANY THE CALL THROUGH THE COMPANY'S WEBSITE
www.morgansindall.co.uk

4 June 2007

                               Morgan Sindall plc



    Acquisition of Amec Developments Ltd and Amec Design & Project Services





Introduction



Morgan Sindall plc ('Morgan Sindall' or the 'Company') is pleased to announce
that it has agreed to acquire Amec Developments Limited ('ADL') and the assets
and certain contracts relating to the Design and Project Services division 
('DPS') from Amec plc (the 'Acquisition').



The Acquisition is in line with Morgan Sindall's stated strategy to develop a
group with market leading positions in its chosen sectors. ADL and DPS are a
natural fit with Morgan Sindall's Affordable Housing, Construction and
Infrastructure Services divisions.



The Acquisition is conditional upon, inter alia, the approval of Morgan Sindall
shareholders, which is to be sought at an Extraordinary General Meeting. A
circular with further details of the transaction will be sent to shareholders as
soon as possible.



Transaction summary



Morgan Sindall will acquire the entire share capital of ADL and the assets of
DPS which include its current and future contracts. Specifically, Morgan Sindall
has agreed to acquire approximately 150 ongoing DPS contracts and the pipeline
of future projects.  Morgan Sindall will conclude certain other contracts on
behalf of Amec, that are substantially complete, and resolve any outstanding
contract obligations.  Completed contracts have been specifically excluded from
the acquisition of DPS with the exception of those relating to three key
relationship customers.



Morgan Sindall will pay £55m to Amec for the goodwill associated with ADL and
DPS. On completion ADL and DPS will have net liabilities of £29m, including cash
of £8m. Amec will compensate Morgan Sindall in cash for the net liabilities
position at completion of £29m. Consequently, the consideration will be £26m.
The net cash outflow associated with the transaction will be £18m, which will be
met from existing cash resources.



Information on ADL and DPS



Information on ADL



ADL is a mixed use urban regeneration business and has a prominent position in
securing and delivering flagship schemes across the UK.  It develops
partnerships in longer term, large development schemes which are multi phased
and typically have duration of between 10 to 15 years.



ADL is involved in more than 30 mixed use development projects with a total area
in excess of 20 million square feet. 15 of these projects are currently under
construction.



ADL's management team has a long track record in the rapidly growing urban
regeneration market and the team's combined knowledge of key market participants
is fundamental to supporting growth and sourcing new project opportunities. The
management team is led by Matt Crompton and Nigel Franklin, Joint Managing
Directors supported by David Hoyle, Finance Director and Paul Parry, Asset
Management Director and they will remain with the business.



ADL operates from a head office in Salford Quays, Manchester and employs 65
people. It is a nationwide business with developments across the country from
Devon to Scotland.






Information on DPS



DPS is a construction and civil engineering business that was formed in January
2006 from the integration of Amec Design and Management and Amec Construction
Services to combine pre-construction design and project management skills with
the delivery of the construction projects.  A new management team was appointed
at that time.



DPS operates nationwide from 5 key locations across the UK, employs
approximately 2,800 people and specialises in medium to large size contracts.
Its main markets are in the education, health, defence, retail, industrial,
transport and nuclear sectors.



In recent years DPS has made operating losses.  The formation of the business in
2006 heralded a review of the processes and controls deployed in the business
and new tendering, commercial and financial procedures were introduced.  The
business also withdrew from bidding for fixed price road contracts and wrote
down the carrying value of work in progress on a number of historic contracts.



DPS now benefits from strong visibility of revenues through the nature of its
portfolio of contracts and the excellent levels of repeat business it enjoys.
Currently DPS has a contracted revenue pipeline of approximately £800 million.



The management team of DPS is led by John Moss, Managing Director supported by
Martin Broome, Commercial Director and Warren Underwood, Finance Director. The
management team are remaining with the business.



Financial Information on ADL and DPS



For the year ended 31 December 2006 ADL achieved an operating profit of £32.3
million on turnover of £72.2 million. The operating profit included a one-off
profit of £24.0 million relating to the sale of a significant property. Over the
same period, DPS achieved an operating loss of £27.4 million on turnover of
£685.4 million. The operating loss included losses of £24.1m relating to
unprofitable contracts which have been completed or excluded from the
transaction.



As at 31 December 2006, ADL had gross assets of £125.2 million and DPS had gross
assets of £107.6 million.



Background to and reasons for the Acquisition



Morgan Sindall's strategy is to create market leading positions in its chosen
sector in order to provide long-term growth and success.  This Acquisition is
consistent with this strategy and following an extensive review the Board
believes that it will be beneficial for the following reasons:



•  It creates a UK-wide leading urban regeneration business for the Company


   Aligning ADL's expertise in mixed use developments with Affordable Housing's
   mixed tenure residential skills will create a leading force in urban
   regeneration across the whole of the UK. ADL will continue as a standalone
   entity becoming a fifth division of Morgan Sindall but, together with 
   Affordable Housing will seek to undertake joint initiatives that will
   significantly enhance the enlarged group's position in the urban regeneration
   market.



•  It significantly enhances the enlarged group's construction offering.


   The construction business of DPS will be merged with Morgan Sindall's
   Construction division to significantly increase the range of services offered
   and the geographic footprint over which the services are offered. Whilst 
   Morgan Sindall's Construction division has traditionally focused on smaller
   scale assignments, DPS has focused on larger assignments.  The combination of 
   the two businesses will create an integrated design and delivery business 
   that offers customers a full range of services nationally extending the 
   geographical reach beyond England into Scotland.



•  It develops Infrastructure Services' market leading position.


   The acquisition will introduce Infrastructure Services to new key clients 
   such as BAA and the MOD and strengthens its existing market position in the
   tunnelling and water sectors.



Overall, the Acquisition further strengthens three of Morgan Sindall's four
existing divisions and helps the Company to significantly increase its scale and
capability at a time when clients are seeking larger and more sophisticated
businesses to meet their needs. Most importantly, it brings large scale property
development and urban regeneration skills into Morgan Sindall, thereby allowing
the Company to enter a new long-term growth market where barriers to entry are
high.



In terms of structure, ADL will operate as a standalone division but will be
aligned with Affordable Housing's urban regeneration activities.  DPS's current
operations will be reorganised to align them with Morgan Sindall's existing
Construction and Infrastructure Services divisions.



Financial effects of Acquisition



The Acquisition is expected to enhance earnings in Morgan Sindall's current
financial year and materially enhance earnings in the next financial year*.



Current trading and prospects



Overall, the conditions in Morgan Sindall's key markets remain positive and
current year trading continues to be in line with management's expectations.  A
full update on current trading will be provided towards the end of June.



The outlook for the enlarged group is very encouraging, with all of Morgan
Sindall's chosen markets growing.  Looking more widely the construction sector's
growth in the medium term is expected to outstrip GDP growth.  The addition of
DPS and ADL gives the enlarged group a pro forma order book at 31 December 2006
of £4.1 billion.  Combining the urban development skills of ADL and the design
and construction capabilities of DPS with Morgan Sindall's existing businesses
creates a Group well placed to meet the full range of demands and requirements
of UK construction clients.









*This statement should not be interpreted to mean that Morgan Sindall's earnings
per share for the current or future financial years will necessarily match or
exceed the historic published earnings per share





Enquiries:


Morgan Sindall plc                              Tel: [phone]
John Morgan, Executive Chairman
Paul Smith, Chief Executive
David Mulligan, Finance Director

College Hill                                    Tel: [phone]
Matthew Smallwood/Kate Pope

Close Brothers
Peter Alcaraz                                   Tel: [phone]




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