Annual Review 2009

Our vision and purpose— We will be the company of first

choice for all stakeholders. — We will challenge and change

the image of construction worldwide.

— With leanness and agility we will adopt processes to compete with world-leading businesses.

01 Introduction 02 Operating and financial highlights04 At a glance 06 Chairman’s statement10 Our leadership team12 Our strategic ambition14 Lifestyle18 Business22 Social Infrastructure26 Transport and Mining30 Energy, Utilities and Waste34 Operating and financial review 52 Corporate responsibility54 Directors’ report56 Directors, officers and advisors58 Financial statements

Lain

g O

’Ro

urke

Ann

ual R

evie

w 2

009

Intr

od

ucti

onLaing O’Rourke is an

engineering-led construction solutions provider. We are renowned for delivering world-class built asset and infrastructure lifecycle services, working with prestigious clients in a truly collaborative way.

Our expertise spans five core sectors comprising Lifestyle, Business, Social Infrastructure, Transport and Mining, and Energy, Utilities and Waste. Our growing international presence across these sectors will ensure we remain a resilient and successful enterprise over the long term.

Across our integrated offering we are creating sustainable competitive advantage as one of the true construction differentiators.

01

Operating and financial highlights— Resilient operational

performance during a period of unprecedented turbulence.

— Profit-generating revenue growth across all major businesses.

— Good progress against strategic priorities, with particularly strong operational performances in European and Australasian hubs.

— Increased manufacturing capability through management of Bison and near completion of Explore Industrial Park.

Managed revenue(1) £m

+18%

2,123.5

2005

5,002.9

2009

2,624.5

2006

3,488.5

2007

4,235.9

2008

1,933.9

2005

4,087.1

2009

2,271.7

2006

3,037.3

2007

3,603.1

2008

EBITDA(2) £m

+25%

58.8

2005

178.6

2009

79.3

2006

111.1

2007

142.6

2008

Total net assets £m

+15%

118.9

2005

532.8

2009

133.6

200653.82007

464.0

2008

Data for 2007, 2008 and 2009 are extracted from the audited consolidated financial statements of Laing O’Rourke Corporation Limited prepared under IFRS. Data for 2005 and 2006 are extracted from the Laing O’Rourke plc audited consolidated financial statements prepared under UK GAAP. (1) Managed revenue includes share of joint ventures’ revenue, inter-segment revenue and revenue from managed operations.

Managed revenueRevenue, including share of joint ventures

Pre-exceptional itemsPost-exceptional items

161.5

2009

100.2

2007

Lain

g O

’Ro

urke

Ann

ual R

evie

w 2

009

— Major project milestones

met or exceeded. — Completion and handover on

time and on budget of some of the world’s most iconic projects.

— Major new cash-generative project wins, feeding an already robust order book.

— Strong balance sheet with cash balances over £600 million.

Op

erat

ing

and

fina

ncia

l hig

hlig

hts

Total number of employees(3)

+16%

23,704

2005

35,753

2009

23,348

2006

27,344

2007

30,847

2008

Order book £m

+7%

5,268.2

2005

9,955.0

2009

5,582.5

2006

8,366.9

2007

9,310.0

2008

EBIT(2) £m

+31%

26.4

2005

115.0

2009

41.1

2006

64.4

2007

53.5

2007

87.7

2008

(2) EBIT includes profit from operations, net non-operating expense and excludes joint venture interest and tax. EBITDA is EBIT excluding depreciation and amortisation. (3) Employee numbers are at 31 March and include staff and workforce employed by joint venture companies.

Pre-exceptional itemsPost-exceptional items

97.9

2009

02—

03

What we doScale, vision, innovation, experience, expertise and responsibility. Laing O’Rourke provides exceptional engineering capabilities in project management, construction delivery, specialist and support services.

Investment and DevelopmentWe have a deep understanding of a new development’s commercial complexities.

By undertaking a full feasibility study at the initial concept phase, we are able to determine a project’s investment viability, and our Explore businesses are highly skilled in analysing client and stakeholder requirements, managing risks and providing a high-level delivery plan.

Our self-delivery capabilities in construction, and expertise in applying Modern Methods of Construction to residential and mixed-use developments, ensures a project’s smooth progression to successful completion.

Programme Management We pride ourselves on our ability to offer an integrated solution for clients on major, complex projects.

We offer an end-to-end capability through a broad range of professional programme management and construction services.

Our proven project delivery effectiveness model assures rapid mobilisation, interface management, planning and consents approval, procurement and construction delivery within a highly controlled risk management and quality assurance framework.

This proven approach creates opportunities and resolves conflicts to keep projects on track to completion and handover.

Design and EngineeringWe are a leading specialist in the design and engineering of smart solutions.

Our approach is guided by the impact our work has on many aspects of modern life.

We offer innovative solutions to complex construction challenges through our ability to seamlessly integrate the architectural design phase with our expertise in civil and technical engineering.

We deliver structures that are designed and engineered to perform safely and sustainably, creating superior lifetime value to clients.

Lain

g O

’Ro

urke

Ann

ual R

evie

w 2

009

As the engineering and construction delivery partner of choice, our track record of completing projects on time and budget, and to the highest quality, safety and environmental standards marks us out as the unique industry differentiator.

Manufacturing and ConstructionConstruction delivery excellence forms the essence of our brand and reputation. We are a pioneer in the application of Modern Methods of Construction.

Employing our contemporary off-site manufacturing and preassembly capabilities directly into project delivery phases, we deliver tailored client solutions (through the application of mass customisation principles) to exceed the quality and safety standards of traditionally constructed capital assets.

Our unique ‘One Team’ ethos unites our portfolio of businesses to deliver site-enabling works, logistics management, heavy civil engineering works, structures, core construction and complex mechanical and electrical building systems installation, right the way through to internal fit-out.

Operations and MaintenanceOur ability to provide clients with operations, maintenance and refurbishment services enhances value over the lifetime of a capital asset.

We work collaboratively with clients over the longer term to prolong the quality, safety and usability of buildings and major social and heavy infrastructure, including transport, energy and oil, gas and mining facilities.

Through the application of intelligent building management control systems we are able to optimise building performance, reduce costs of operation and ensure a fit-for-purpose, sustainability-compliant working environment.

Support Services

We bring together the skills and expertise required to support projects at every stage of delivery, from early construction right through to operational management and maintenance.

For example, our Select plant hire business offers a large and diverse range of plant and equipment, providing clients with a unique ‘one stop shop’ in Europe, the Middle East and Australia. Select’s modern fleet is maintained to the very highest standards of safety and quality, backed by professional servicing and expert advice.

At

a g

lanc

e 04

—05

Where we operateFounded over 30 years ago, we are the largest privately owned, UK-based construction solutions provider delivering programme management, engineering and construction, and specialist services across the lifecycle of infrastructure and built assets.

With significant operations across three major international hubs, we work in partnership with prestigious clients and collaboratively integrate through the global supply chain to assure delivery of some of the most challenging and iconic construction projects in the world.

Europe

Managed revenue

£3,248m

Pre-exceptional EBIT

£54m

Share of Group managed revenue

65%

Principal offices

United KingdomCardiffDartfordEdinburghManchesterGermanyEltmannIrelandDublin

2009 achievements

— Strong performance with significant progress on flagship projects

— Successful completion and handover of major infrastructure and energy projects

— Major contract wins including London Gateway Port, Manchester Metrolink and Heathrow East

— Continued investment in our human capital agenda, with renewed commitment to graduate and apprenticeship schemes

01 Liverpool One, Liverpool, UK02 One Hyde Park, London, UK

01

02

01 MotorCity, Dubai, UAE02 Atlantis Hotel, The Palm, Dubai, UAE

Middle East and South Asia

Managed revenue

£903m

EBIT

£40m

Share of Group managed revenue

18%

2009 achievements

Principal offices

United Arab EmiratesAbu DhabiDubaiIndiaDelhiMumbai

— Completion of the prestigious Atlantis Hotel, The Palm, Dubai on budget and ahead of schedule

— 30 per cent of Al Raha Beach complete and construction of Mussafah workforce community in Abu Dhabi

— New project wins including Motor World, Abu Dhabi — Commencement of the North-South Railway project

in the Kingdom of Saudi Arabia— Firmly established market position in Abu Dhabi

01

02

01 Chatswood Transport Interchange, Sydney, New South Wales, Australia

02 Darwin Convention Centre, Darwin, Northern Territory, Australia

Australasia

Managed revenue

£852m

EBIT

£21m

Share of Group managed revenue

17%

2009 achievements

Principal offices

AustraliaBrisbanePerthSydneyAsiaHong KongIndonesiaMalaysia

— Good growth, with strong pipeline of new business — Successful completion of major projects including

Chatswood Transport Interchange and Darwin Convention Centre

— New wins including the Strategic Indigenous Housing Programme in the Northern Territory and the Novo Rail Alliance Upgrade in New South Wales

01

02

Chairman’s statementLaing O’Rourke’s operational performance is testament to our robust strategic development in creating long-term value and growth.

Ray O’RourkeChairman and Chief Executive

Lain

g O

’Ro

urke

Ann

ual R

evie

w 2

009

Overview 2009 was another year of significant development and progress for Laing O’Rourke. We grew our managed revenue by 18 per cent to over £5 billion. Margins remained broadly stable at nearly three per cent, with earnings before interest, tax and exceptional items reaching £115 million. We maintained our strong cashflow position, with cash balances in excess of £600 million. At the year-end Laing O’Rourke directly employed 35,753 people across its three international hubs. Overall, the Group delivered a resilient performance during a year of unprecedented turbulence.

This operational performance is testament to our robust strategic development in creating long-term value and growth. As a business, we made significant progress in developing and instituting ‘Complete Thinking’ – our unique way of delivering for clients. This approach guides and directs the way we deliver projects of any scale, operating to world-class processes and standards. It is the codification of years of learning and best practice, and has been brought to market at pace in the past year through the freedom afforded by our private ownership status.

I am pleased to be able to report that these new methodologies, processes and systems are lifting our project delivery capabilities to create maximum effectiveness and consistency. This systematic way of going to work for clients has ensured our successful track record for delivering civil engineering solutions has once again been reflected in our operational highlights.

Operational highlightsOur collaborative approach to partnering with stakeholders across the value chain, providing core skills in programme management, engineering and construction, and specialist building and infrastructure services, is a proposition that our clients continually value. Our ability to integrate the supply chain and mitigate risk assures the greatest value for all our stakeholders.

The operational achievements during the reporting period give me confidence that we are on track to deliver our long-term value goals.

EuropeIn Europe, we have continued to make strong progress under the stewardship of Tony Douglas and a leadership team strengthened by a number of senior appointments. The organisational effectiveness achievements he has brought to the business are considerable. During the year we launched the Group operating model and governance structure, anchoring project delivery at the heart of the business. These changes are driving greater performance and control in our construction and specialist businesses, generating a corresponding improvement in profitability at project level.

This has enabled us to deliver exceptional value for clients across the full range of sectors, from lifestyle and business in the private sector, through to healthcare, education, transport and energy in the public sector. Away from these headline projects, we posted a robust performance in our core construction activities, receiving industry recognition for our standards of excellence in engineering quality. Overall, we demonstrated strong progress against our strategic goals.

Middle East and South AsiaThe rapid pace of development in some parts of the Middle East has proved unsustainable over the longer term and, in the second half of the year, areas of the region including Dubai, slowed significantly. We have responded to the market turbulence in a measured and responsible manner, right-sizing our operations to allow us to move rapidly when more positive economic conditions prevail. We will continue to review the situation but our underlying strategic ambition in the United Arab Emirates (UAE) is unchanged.

Indeed, the Group marked 30 years of business in the UAE during 2008 which is testament to our long-term commitment to the region. Continuing to nurture valuable relationships during this period will be essential for the future, and we have recently reshaped the leadership team to sustain this effort.

AustralasiaI am delighted to be able to report significant progress in the Australasian hub, as our operations continue to go from strength to strength following the acquisition of the Barclay Mowlem business in 2006. In the intervening three years the combined businesses have been fully integrated, delivering a corresponding three-fold increase in revenues over the period and exposing the wider organisation to significant best practice that resided in the acquired operations.

The leadership team, under the guidance of Andrew Wilson and Matthew Furrer, has evolved the business into a dynamic enterprise. The value of opportunities, particularly in rail infrastructure, mining, and energy are compelling, and we are starting to make real progress in these core markets as we challenge the more established incumbents and secure new work. These achievements are having a positive material impact on the Group’s performance and I see genuine opportunity to grow this business still further over the next two to three years.

Cha

irm

an’s

sta

tem

ent

06—

07

Safety and corporate responsibility Safety continues to sit at the heart of everything we do. Our underlying performance during the year saw further improvements in our safety record with an accident frequency rate of 0.13 over the reporting period. This makes the dreadful experience of two separate fatalities in Europe during the last 12 months even harder to bear. Our thoughts will continue to be with everyone affected by these tragic events.

These incidents serve as unwanted reminders of the risks we face daily in project delivery. I am confident we have learnt important lessons and implemented clear actions which will raise our standards still further, delivering continuous improvements in our safety processes, plans, policies and, ultimately, performance.

Corporate responsibility underpins our mission to be the first choice for all stakeholders. We have made important advances in our social and environmental practices during the past year. Our practical approach to corporate responsibility management recognises the regional and local diversity of our project operations. Our aim is to provide greatest legacy benefit to the immediate communities who are most directly impacted by our activities, both in the construction phases, as well as over the lifetime of the structures we create. A comprehensive review of our progress across our four pillars of Environment, People, Industry and Community is contained in the 2009 Corporate Responsibility review.

Engineering enterpriseOur leading design and engineering capabilities have also continued to grow and unite our international businesses over the past year. In particular, we have worked tirelessly to create a real competitive advantage by advancing our plans to lead the industry in Modern Methods of Construction.

During the year we grew our capacity in off-site manufacturing, preassembly and standardisation. We now manage the Bison operations following their entry into administration, protecting valuable jobs in the factory localities. We also reached a major milestone in the delivery of our state-of-the-art Explore Industrial Park in Steetley, UK, achieving the necessary planning consents during 2008 which have moved us seamlessly into the delivery stage. The facility will be completed during 2009 and we remain confident that the first products will roll off the production line later in the year.

Our investment in manufacturing, most notably but not exclusively at the Explore Industrial Park, is considerable. To ensure current momentum is maintained, we are engaging with clients earlier to drive our ‘Design for Manufacture and Assembly’ approach into the project delivery phases.

This directly supports our strategy to deliver better value and predictability to our clients. Through smarter design technologies and working practices we can self-deliver precast and preassembled products and materials to site, fully-tested, to the highest standards of safety and environmental quality, on time and to budget.

Additionally, I have instituted a ‘One Team’ management board between our engineering and manufacturing businesses. This senior governance forum will ensure we are mandating the required levels of design standardisation and engineering quality into our project delivery activities.

Human capital managementKey to achieving future growth and establishing the Group as a leading provider of engineering solutions is our ability to attract, motivate and develop the most talented people. Our human capital management approach has already started to pay important dividends in this regard. We believe we have a duty of care in developing and nurturing the future resource capability and capacity in the construction sector, providing a much needed stimulus to aid economic recovery.

During the year, we further demonstrated our industry-leading commitment to education, training and skills, supporting the UK government’s push to deliver a more meaningful framework for training and developing young people in the vocational skills to support economic development and national employment. We have once more set the benchmark with the creation of our innovative ‘Apprenticeship Plus’ scheme (in partnership with ConstructionSkills), alongside our continuing commitment to graduate development. I believe this effective programme of initiatives will create real value for the industry, and enhance our own brand reputation.

My ambition is to lead and drive this agenda from the very top of the business. With the creation of the Group Human Capital Board, a sub-committee of the main Group Board, I am pleased to report that we now have an exceptional team in the field of human capital management.

Our approach to talent management is set out in more detail in our 2009 Corporate Responsibility review.

Our leading design and engineering capabilities unite our international businesses. Smarter design technologies and working practices can deliver the highest standards of safety, environmental quality, on time and to budget.

Lain

g O

’Ro

urke

Ann

ual R

evie

w 2

009

OutlookAmid the current economic uncertainty, the Laing O’Rourke Group remains strong and resilient. We continue to make good progress in transforming our business, driving greater performance and control throughout our operations, and delivering greater predictability in client satisfaction, earnings quality and, ultimately, enterprise value.

With our continuing focus on operational efficiency and effective cash management, both of which are key priorities for us in the tightening liquidity markets, the value of the Group’s cash reserves, over £600 million, should not be understated. This will allow us to invest for organic growth and take advantage of opportunities as they present themselves.

During the year under review, the Group maintained its leading strike-rate in work-winning with our order book at the year-end standing at £10.0 billion. We have achieved a more balanced portfolio of public and private sector clients, with a growing emphasis in the infrastructure sectors (particularly healthcare, education, energy and transport). As governments accelerate their investment programmes, we see opportunities to benefit in these important markets.

We will continue to deliver our confident yet realistic plans in the year ahead. Over time, these will improve our scale, earnings quality, forward visibility and ultimately add real value to the bottom line.

To achieve this, I will be tasking the senior leadership of the Group to focus our efforts on developing our businesses and winning work across all sectors where our capabilities are strong or there are no significant barriers to entry.

We will leverage our expertise in design and engineering, embedding DfMA as a mandatory part of our project delivery offering. We will continue to invest in our people, while ensuring we protect our cash reserves and manage our cost base in a responsible manner.

SummaryThe success we enjoy is a direct result of the hard work and dedication of our employees. I would like to thank them all on behalf of my fellow shareholders for their continued commitment and outstanding contributions.

During the year under review, Dennis Johnson and Norman Haste both retired from the Group. Dennis has been instrumental in shaping Laing O’Rourke, playing a major role in the transformational acquisition of John Laing Construction that created the extended organisation of today. Norman has played a significant role in developing our business operations in the Middle East and South Asia. They both leave with my personal thanks, and I am grateful that the Group will continue to benefit from their wise counsel in an advisory capacity.

With forecasts of further deterioration in market conditions over the coming year, and a continuing slowdown in private sector work and more generally in the Middle East, I foresee the delivery of our business goals becoming more challenging. However our trusted brand, secure pipeline of work, strength of balance sheet allied to strong cash flows, together with the determination of our people to deliver excellence for our clients, means we will continue to earn, invest and grow during 2009 and beyond.

Ray O’RourkeChairman and Chief Executive

Cha

irm

an’s

sta

tem

ent

The Group will continue to invest in our people, protect our cash and manage our costs in a responsible manner.

08—

09

Our leadership teamLaing O’Rourke’s unrivalled reputation for delivering world-class projects has been achieved through the commitment and capabilities of its senior leadership.

Bernard Dempsey*Deputy Chairman

Age 60. Equity shareholder and co-founding director of the Laing O’Rourke Group. He plays a pivotal role in identifying and reinforcing strategic client and supply chain relationships, and in leveraging new client opportunities across the Group’s international construction operations.

His extensive commercial experience gained over 35 years, coupled with a profound understanding of the nuances and complexities of employment issues and industrial relations, has proved invaluable in Laing O’Rourke’s rapid expansion over the last three decades.

Board committee membership is as follows: Group Executive Committee (*) Group Human Capital Board (†) Engineering and Manufacturing Committee (‡)

Ray O’Rourke*†‡ Chairman and Chief Executive

Age 62. Major equity shareholder and founder of the Laing O’Rourke Group. As chairman of the main Executive Board, he leads the strategic direction and operational management of the Group.

His earlier career included a wide range of roles at Kier Plc and J Murphy & Sons.

He founded R O’Rourke & Son in 1977, and commenced trading in June 1978. Through unprecedented organic growth and acquisition, the Company became a major force in the UK construction industry specialising in civil engineering on sub and superstructure package contracting.

Acquired the construction arm of John Laing Plc in 2001, creating today’s international engineering and construction solutions Group.

Des O’Rourke*Deputy Chairman

Age 60. Equity shareholder and co-founding director of the Laing O’Rourke Group. He provides board-level support to the Chairman and Chief Executive in the development and operational execution of Group strategy. He also has responsibility for assuring delivery on major projects, as a key member of the Group’s performance and control governance framework.

His expertise in supply chain management and project delivery has played a key, galvanising role in the Group’s rapid growth and development into an internationally focused construction Group. He has performed a strategic role in identifying growth opportunities for Laing O’Rourke’s specialist businesses.

Lain

g O

’Ro

urke

Ann

ual R

evie

w 2

009

Tony Douglas* Chief Operating Officer, Europe, the Middle East and South Asia

Age 46. Joined the Group and appointed a director in 2007. As Chief Operating Officer he is accountable for development and execution of strategy, with primary accountability for leading the European and Middle Eastern hubs’ operational delivery and performance. Joined from BAA where he worked for nine years. During this time he held a number of senior positions, latterly as Chief Executive Officer for Heathrow Airport. He was previously Managing Director, Heathrow Airport and Managing Director of the Terminal 5 build programme.

Matt Furrer*Managing Director, Australia

Age 41. Joined the Group and appointed a director in 2004. He was responsible for establishing Laing O’Rourke’s Australasian hub, and continues to lead the operations as the Group’s presence expands across Australia and Asia. Prior to joining Laing O’Rourke in 2004, he held a number of senior positions with Lend Lease in both Australia and the UK. He joined Lend Lease in 1990, where he was latterly appointed Managing Director of Bovis Lend Lease Australia in 2003.

Clive McKenzieGeneral Counsel and Company Secretary

Age 55. Joined the Group and appointed a director in 1999. As General Counsel to the Laing O’Rourke Group, he is responsible for ensuring the executive committee is exercising powers within the authority given and acting in accordance with the Company’s constitution, best interests, and those of its stakeholders. A corporate and commercial solicitor by background he was previously a director of the Sears Plc Group.

Iain Ferguson*Group Finance Director

Age 54. Joined Laing O’Rourke as Group Finance Director in May 2006. Prior to that he had worked for the Meridien Hotels Group since 2002, latterly as Chief Executive Officer of Starman Hotels following a group restructure. Previously he had been Chief Financial Officer and Vice President, Finance. He has also held a number of senior finance positions at Thomson Travel Group, British Aerospace and Arlington Securities.

Anna Stewart*† Group Commercial Director

Age 45. Appointed Group Commercial Director in 2004, she joined the Group from John Laing Limited following the acquisition in 2001. She is responsible for the Group’s commercial and work-winning activities, as well as supporting business development and Group strategy. Prior to that, she was Commercial Director for John Laing Limited, where she had been employed in a number of senior management roles since joining in 1982. She has also previously held a non-executive directorship with the RICS Business Services, and was Vice Chairman of the RICS in Scotland.

Andrew Wilson*†

Executive Chairman, Australia

Age 48. Joined the Group and appointed a director in 2002. He is currently responsible for setting corporate direction and leading implementation of the construction and investment strategy within the Australasia region. Prior to that he spent over 20 years in the construction industry, predominantly in Australia and Europe. He has held senior positions for Lend Lease over 17 years. As Managing Director of Lend Lease Projects UK, he led the design and construction of the UK’s Bluewater Shopping Centre, the largest retail development in Europe at the time.

Our

lead

ersh

ip t

eam

10—

11

Our strategic ambitionLaing O’Rourke continues to push industry boundaries and evolve, ensuring that we retain our engineering heritage and competitive edge.

StrategyServices Further develop and successfully market a broadened client offering that delivers the full complement of engineering, construction and related building services across the value chain.

SectorsTarget specific sectors and prioritise work-winning to create an optimum portfolio of public and private clients, focusing on the long-term relationships that create sustainable, profit-generating revenues.

Skills Leverage the competitive advantage of our world-class engineering capabilities to embed Design for Manufacture and Assembly (DfMA) to drive greater predictability of outcomes in the construction phases of project delivery.

We will continue to develop and grow our capabilities as an engineering-led provider of smart construction solutions.

We will deliver a broad range of built asset and infrastructure lifecycle services, partner with prestigious clients and work in targeted sectors across our chosen geographical markets.

We will proactively manage our balance sheet to strengthen our cash reserves, and create the liquidity to invest in our continued organic growth and fund future acquisitions.

We will earn, invest and grow our business over the long term to achieve this goal.

Progress will be judged against a number of criteria and performance indicators. Our project control and delivery needs to be exemplary. Value-adding revenue generation will lead to enhanced quality of earnings and an industry leading, sustainable margin. Finally, top quartile performance will create long-term enterprise value.

As we strive to realise our ambition we will not lose sight of the guiding principles that define Laing O’Rourke. They are: — Make safety personal and work responsibly— Lead by example— Work as ‘One Team’— Find or follow a better way— Deliver on our promises— Collaborate with clients and partners

Successful execution of our strategic priorities will ensure we continue our extraordinary growth and development into an engineering-led construction solutions provider. We will be a well balanced and resilient business that builds enduring relationships with valuable clients, wins new work in selected markets and sectors, and continually improves its capabilities.

We invest in, manage and directly deliver projects that create the greatest value for our clients and benefit the communities they serve. We build hotels, residential housing, retail, sport and leisure complexes, industrial buildings, commercial offices, data and research centres, schools, hospitals, airport terminals, roads, railways, ports, mining facilities, power stations, water and waste treatment plants. All are designed to the highest standards and engineered to perform.

Lain

g O

’Ro

urke

Ann

ual R

evie

w 2

009

Our

str

ateg

ic a

mb

itio

n

Explore ManufacturingLaing O’Rourke is challenging and changing construction through radical and innovative approaches to manufacturing and preassembly, transforming traditional construction methodologies into a modern process of assembly.

Laing O’Rourke’s Explore Manufacturing provides a unique self-delivery capability that leads the construction industry in driving greater levels of design standardisation and construction quality into project delivery. With an international manufacturing capability, our off-site operations utilise lean automation processes together with quality assurance systems. The adoption of smarter technologies and working practices deliver precast and preassembled products and materials to our clients to the time, cost and exacting quality standards required.

At the heart of Laing O’Rourke’s commitment to off-site manufacturing sits the Explore Industrial Park, Steetley, the most advanced facility of its type in Europe. This facility, commencing production in July 2009, will manufacture a range of concrete construction products including walls, floors, columns and beams which will be used on our projects throughout the UK.

Explore Industrial Park complements our existing international off-site solution providers, which include:— Crown House Technology Off-site,

which produces mechanical and electrical units;

— Modulor in Dubai, producing fully finished bathroom pods;

— Redispan and Austrak in Australia which manufacture (among their extensive component sets) conveyor systems and concrete railway sleepers.

Working as ‘One Team’ with our construction and infrastructure businesses, Explore Manufacturing has created a ‘one stop shop’ solution for all off-site manufacturing products and services. Features include:— enhanced corporate responsibility

through a focus on Health and Safety, and a reduction in waste materials, environmental impact, and inefficient deployment of project labour;

— a dedicated research and development facility to provide a continuous stream of innovative products and materials;

— increased application of automated solutions and innovation to enhance quality and drive increased productivity;

— greater standardisation and reduced cost through more efficient operational maintenance over the lifespan of the capital asset.

01 Explore Industrial Park, Steetley, UK

ProjectsPursue a selective approach to vertically integrating with our supply chain partners to create ‘One Team’ propositions that assure the achievement of time, cost, quality, safety and corporate responsibility standards in project delivery.

PeopleAttract, develop and retain the very best talent to deliver the future human capital capability for the organisation and the wider industry.

ProcessesMaintain organisational effectiveness through long-term investments in developing ‘Complete Thinking’ – world-class processes and systems in DfMA, project delivery, safety leadership, corporate responsibility and sustainability management.

01

12—

13

LifestyleAtlantis HotelThe Palm, Dubai, UAE

Delivering outstanding quality through design and engineering excellence

14—

15La

ing

O’R

our

ke A

nnua

l Rev

iew

200

9

This was made possible in part due to our expertise in delivering manufactured and preassembled modular solutions. The official opening received worldwide media attention securing its reputation as one of the world’s premier tourist destinations.

This iconic 1,539 room resort forms part of the exclusive Palm Jumeriah. The Atlantis includes a water theme park, conference centre and significant high-end retail facilities. We were responsible for the design and construction phases, completing the hotel ahead of schedule and on budget.

Life

styl

e

Lifestyle

—Hotels—Residential—Retail—Sport and leisure

We provide engineering, construction, project management and operational maintenance services to the hotel, sport and leisure industries in the UK, Middle East and Australasia. Our projects include sports and entertainment arenas, hotels and resort complexes.

In the retail sector we provide extensive design, manufacturing, construction, mechanical and electrical engineering and facilities management services on some of the largest and most complex retail developments in the UK, Middle East and Australasia.

Our residential development arm, Explore Living, builds on our long-standing experience in the residential housing market. Since inception, the business has won multiple awards for the quality of its developments in the UK and has a growing presence in Australia.

We also provide refurbishment and construction services for social housing projects in Australia.

02 2012 Olympic and Paralympic Park, London, UK

The 2012 Olympic and Paralympic Park is being constructed on a 500-acre site in Stratford, east London. As a key member of the CLM consortium, we are tasked with programme managing delivery of major elements of the stadium infrastructure.

Delivering to the highest standards of quality and sustainability, to a time and cost schedule that simply cannot slip, we are ensuring London will host a games that the UK will be proud of, creating a longer term legacy to benefit communities after the Olympic torch has been handed on.

01

02

Lain

g O

’Ro

urke

Ann

ual R

evie

w 2

009

One Hyde Park, London, UK

Scheduled for completion in 2010, we have been commissioned by Candy & Candy to deliver London’s most exclusive residential development. One Hyde Park has been designed to synthesise with the existing landscape – on one side, the style and vibrancy of Knightsbridge – on the other, tall groves of trees from which the tranquillity of Hyde Park unfolds. The development of 80 apartments, which contain some of the world’s highest specification living accommodation, also incorporates exclusive boutiques within interlinked pavilions, a reception, business suite and leisure facilities. The building ‘topped out’ in 2009 and the complex internal fit-out has now commenced.

03 Liverpool One, Liverpool, UK

Liverpool One is a £1 billion regeneration project and one of the largest developments of its kind in Europe. Sitting on a 42-acre site, it comprises 40 individually designed buildings, six districts and over 148,000 sqm of retail space. Handed over in 2008 to coincide with Liverpool’s status as the European City of Culture, this new development seamlessly integrates into the city providing a new retail and leisure experience. This year we reached the final delivery milestone with completion of the 326-unit residential scheme, known as One Park West, which has a prime location in Liverpool city centre facing the world heritage site of the Albert Dock. Our achievements on Liverpool One have been recognised by an enviable string of industry awards.

01 Al Raha Beach, Abu Dhabi, UAE

We are the Programme Delivery Partner tasked with managing delivery of Abu Dhabi’s most exclusive development, Al Raha Beach – a 12 million sqm mixed-use waterfront development comprising 11 distinct precincts. It is a flagship project for the Middle East, creating a unique gateway to the United Arab Emirate’s capital city, Abu Dhabi.

The project commenced in 2006 and is scheduled for completion in 2018. The development is being built on reclaimed land and will eventually be home to 120,000 residents spread along 11 km of Gulf Coast.

Life

styl

e

03 16—

17

BusinessALDAR headquartersAl Raha Beach, Abu Dhabi, UAE

Shaping the future of construction through industry-leading capabilities

18—

19La

ing

O’R

our

ke A

nnua

l Rev

iew

200

9

The Al Raha Beach development will be a new city district serving as the gateway to Abu Dhabi. It will accommodate 120,000 residents in a range of property developments in eight residential districts and over 50,000 sqm of commercial space.

The new 110 m high ALDAR headquarters on Al Raha Beach will be the first spherical building in the region. It boasts a futuristic aluminium and glass exterior, underground parking, turnstile security, combined with marble floors and walls. The building also features many examples of the latest technology including 12 elevators fitted with automated destination controls.

Bus

ines

s

Business

—Government facilities—Industrial— Commercial— Science and

research—Data centres

We design, programme manage, build, renovate, refurbish and maintain commercial, industrial and governmental buildings for a range of public and private sector clients. These vary from small specialist schemes through to the largest and most complex projects.

We work across a project’s lifecycle from site remediation to ongoing maintenance. Access to sites is often restricted requiring innovative solutions to logistics and waste management, including ‘just-in-time’ delivery of materials. Through our involvement early in the design process and our integrated delivery capabilities, we are able to complete high-quality projects quickly, within budget and to highly sustainable standards.

Data centres

Data centres are, by their very nature, high-performance buildings requiring tight construction tolerances, exceptional thermal operations and multiple redundant contingency systems.

With rapidly increasing business demands driving unprecedented growth in data management volumes, data centres are an identified growth market for the Group and, through Crown House Technologies, we are leaders in this field.

Our off-site manufacturing expertise, particularly in preassembled mechanical and electrical solutions, differentiates Laing O’Rourke as a pioneer in new data centre construction methodologies.

However, fully functioning data centres have among the highest energy consumption and carbon emission profiles of any commercial building, together with the related operational costs. Therefore optimising energy performance to reduce running costs and environmental impacts is of paramount importance to clients. Upfront design plays a significant role, building in smart solutions like on-site micro generation.

During 2008, we were involved in five major data centre build programmes. Two of these projects have achieved ‘excellent’ ratings under the Building Research Establishment’s BREEAM certification – the first and second centres in the UK to achieve the BRE’s highest environmental rating.

01 Pinnacle Office Park, Sydney, New South Wales, Australia

Situated within Sydney’s technology hub, Pinnacle Office Park is a premier development of exceptionally high quality, comprising 31,000 sqm of office space, a 580-space car park, on-site childcare facilities, a gymnasium, café and landscaped gardens.

Pinnacle was successfully completed during the year for our client, Goodman International. We were responsible for the enabling works, civil engineering services and overall design and construction of the development. The building is designed to achieve a 4.5 star NABERS (National Australian Built Environment Rating System) for its energy- saving and sustainability credentials.

01

03

20—

21La

ing

O’R

our

ke A

nnua

l Rev

iew

200

9B

usin

ess

02 Tooley Street, London, UK

This innovative design, intended to provide lean and flexible office space on a confined site in central London, created considerable engineering challenges during the construction phase and resulted in the application of bridge-building techniques to deliver a workable solution. The quality of the concrete frame was paramount, as virtually all the surface area is exposed, forming an integral part of the energy-efficient ventilation system.

Off-site manufacturing was fundamental to our ability to achieve the required standards, through the application of our automated precasting and assembly approach in a highly quality-controlled factory environment.

03 Cannon Place, London, UK

Cannon Place is a major redevelopment of an existing commercial building over an operational mainline and underground train concourse in central London. It incorporates retail and office space as well as much needed improvements to public areas.

The key requirement to avoid any transport disruption (and protect the archaeological artefacts that have been discovered under the building) marks this project out as a highly complex undertaking that benefits from our expertise in engineering and logistics management.

02

Social InfrastructureForth Valley Acute Services (PPP)Forth Valley, Scotland, UK

Creating smarter, high performing design solutions to benefit future generations

22—

23La

ing

O’R

our

ke A

nnua

l Rev

iew

200

9

The project was ‘topped-out’ during the year by Scotland’s First Minister, when it received a commendation for the collaborative approach of the project team in sustaining productive working relationships with the stakeholders, which have been pivotal to the success of the project to this point.

The new Forth Valley Acute Services project is creating a state-of-the-art healthcare solution. Once complete, the world-class facilities will replace existing hospitals at Stirling and Falkirk as part of an integrated strategy for delivery of healthcare services across central Scotland. We are carrying out the construction of the hospital on the 320-acre site, with the first phase due for completion in 2010.

So

cial

Infr

astr

uctu

re

Social Infrastructure

—Education—Healthcare —Defence—Public buildings —Law and order—Urban regeneration—Social housing— Heritage, culture

and religion

We are a leading supplier to key social infrastructure markets, delivering schemes under both government and traditional procurement and contracting models. In particular, we deliver prestigious healthcare and education projects, from small specialist units to large, complex, multi-disciplinary facilities.

Our offering in public buildings provides construction, refurbishment and mechanical and electrical engineering services to both public and private sector clients.

We offer off-site manufacturing techniques to create greater standardisation of core building components (essential in the delivery of heavily utilised social infrastructure).

We are increasingly being recognised as the preferred delivery partner for the UK defence sector, working collaboratively to deliver facilities to the highest specification requirements demanded by the armed forces.

We are vastly experienced at working with important conservation partners such as English Heritage, privately funded interest groups, and local communities in the delivery and upkeep of buildings and infrastructure of social and religious importance.

We have a core capability in the social housing and urban regeneration markets. Our preference for using Modern Methods of Construction deliver smart solutions which create higher quality at lower cost.

02 Building Schools for the Future (BSF), UK

BSF is the UK government’s national schools investment programme designed to transform education through improving England’s secondary school buildings and facilities over the next 10 to 15 years (subject to future public spending decisions).

We successfully completed the Gorton Education Village during the year – the first BSF project of its type to be undertaken in Northern England. The multi-million pound project brings together Cedar Mount High School and Melland Special Education Needs High School onto one campus.

Created on an eight-acre site providing 900 co-educational spaces and 110 specialist support places, the building features a two-storey 100m internal ‘street’, a sports hall and community wing, a learning resource centre, and specialist subject zones.

The successful delivery of this flagship project was vital to the launch of Manchester’s £450 million BSF programme, which is set to build or refurbish a total of 27 new schools and six academies over the next six years.

A Laing O’Rourke consortium has also been appointed preferred bidder for the BSF programme in Barnsley. The programme is being developed in conjunction with government agency, Partnerships for Schools (PfS), and is scheduled for completion in 2012. It aims to replace all 13 secondary schools with nine completely new-build advanced learning centres and replace or refurbish its two special learning needs facilities.

Laing O’Rourke is pioneering a modular-based standard core design for schools, with the capacity to allow for variations when required. These new design features provide greater flexibility in space configuration, with many of the component parts manufactured off-site for quick and easy on-site assembly. The design efficiencies deliver time and cost benefits and a consistently high- quality product. This approach is also more sustainable delivering better environmental performance through the use of thermal-mass and energy-saving features.

01

02

24—

25La

ing

O’R

our

ke A

nnua

l Rev

iew

200

9

01 Northern Territory Aboriginal Housing Alliance, Australia

Laing O’Rourke, in alliance, has been awarded a major work package as part of the Northern Territory Aboriginal Housing Alliance Contract to provide social housing to remote indigenous communities in the Northern Territory.

Jointly funded by the Australian and Northern Territory governments, the Strategic Indigenous Housing and Infrastructure Programme (SIHIP) is one of the largest investments in indigenous housing ever undertaken. Through the programme, remote communities and urban residential areas across the Northern Territory will benefit from improved housing and infrastructure to be delivered over a four-year period.

So

cial

Infr

astr

uctu

re

Pembury (PFI), Tunbridge Wells, Kent, UK

We are the construction partner responsible for delivering the new state-of-the-art Pembury Hospital. Exceptional delivery, to schedule, over the past 12 months has seen 60 per cent of the external work completed with internal fit-out (including plumbing, mechanical and electrical services) well advanced.

The development is one of the biggest of its kind in the UK, with over 1,000 site operatives at its peak. The hospital complex was designed using the latest 5-dimensional modelling software, assuring build quality and functionality are of the highest standards. The safety and efficiency of the build programme has also been enhanced by the use of preassembled building components.

The new 213,360 sqm hospital will provide all in-patient accommodation in single en-suite rooms – the first NHS acute hospital to do so. Designed by Anshen and Allen, Pembury incorporates the concept of hospitals within a hospital, with separate planned emergency areas to reduce the risk of infection. The new hospital has been developed to blend with its rural setting and will include 1,200 parking bays and an air ambulance helipad.

Due for completion in the next two years, Pembury will raise the bar in public healthcare, setting new standards in the provision of modern hospital facilities for the UK.

Transport and MiningCTW300 Saudi North-South Railway Kingdom of Saudi Arabia

26—

27La

ing

O’R

our

ke A

nnua

l Rev

iew

200

9

Using experience gained building railways across inhospitable terrain, we are managing and delivering the main track work and rail systems as part of a joint venture with a local civil engineering contractor. The scope of the project includes programme management, procurement, and rail system design and delivery.

The project commenced in April 2007 and is scheduled for completion in late 2010.

The Saudi North-South Railway, the CTW300, is a new rail line spanning approximately 800 km across remote desert, linking the Jordanian border to key Gulf ports and also Riyadh. While intended primarily for the transportation of minerals and raw materials, it is also a passenger railway.

Tran

spo

rt a

nd M

inin

g

Applying complete thinking and world-class processes to complex engineering challenges

Transport and Mining

—Air—Marine—Rail—Roads and bridges—Mining

02 Heathrow East, London, UK

A joint venture between Laing O’Rourke and Ferrovial Agromán, has secured a major contract through the BAA Framework to build phase 1 of the new Heathrow East, Terminal 2A. Our unique ‘One Team’ approach combines infrastructure and construction skills with specialist services provided by Crown House Technologies, Vetter and Select. Our expertise, honed on Heathrow’s Terminal 5, will be critical in delivering the forecasted efficiencies, including a projected 10 per cent reduction in delivery time.

Constructing in a ‘live’ airport environment presents unique logistical challenges. These include restrictions on use of tower cranes in protected air space, as well as the complexities of building directly above London Underground lines. Once fully operational, a combined total of more than 45 million passengers will use Terminals 5 and 2A annually – comprising 70 per cent of Heathrow’s passenger footfall at one of the world’s busiest airports.

Laing O’Rourke is also recognised as a leading rail infrastructure contractor, delivering major multi-disciplinary rail projects and maintenance services to major clients in the UK, Australia and Saudi Arabia.

As a major mining infrastructure provider, our ability to deliver infrastructure to enable the transport of minerals from pit to port has made us a highly regarded partner to the mining sector in Australia.

Our ‘Design, Build and Maintain’ offering in road infrastructure demands logistics management capabilities that assure highly complex projects are delivered on time and on budget.

Laing O’Rourke is a leading constructor and operational maintenance provider of rail, marine, air, road and mining infrastructure solutions.

We have a successful track record in airport infrastructure development, and our expertise in the design and delivery of major airport terminal complexes (including Heathrow and Dubai International) is unrivalled in the industry. Project capabilities range from heavy civil engineering of major terminal buildings and the conjoining infrastructure, to improvement and expansion schemes, including interior fit-out and operational maintenance.

We are building an enviable reputation as an internationally focused marine infrastructure programme manager and project delivery contractor.

02

28—

29La

ing

O’R

our

ke A

nnua

l Rev

iew

200

9

01 London Gateway Port, London, UK

Laing O’Rourke, in joint venture with Dredging International, has been awarded the prime contract to build the first phase of a new port for Dubai Ports World. London Gateway is the UK’s first major deep-sea port to be built in over 25 years, and will be the most technically advanced container port in the world, handling over 3.5 million containers per annum.Subsequent phases will include construction of a logistics centre and supporting infrastructure. The complete site will become a national hub for the UK, reducing the need for satellite distribution centres and resulting in the removal of around 2,000 trucks from UK roads each day. Enabling works commenced in August 2008 with dredging scheduled to commence in 2009, and project completion due in 2011.

Tran

spo

rt a

nd M

inin

g

Mine to port railway for Fortescue Metals Group, Port Hedland, Western Australia

The mine to port railway is one of the world’s heaviest load-bearing railways, built to take 40-tonne axle loads. Laing O’Rourke constructed the main track work using special precast concrete sleepers and ‘continuously welded’ rail.

The entire scheme was delivered in harsh climatic conditions in just 18 months. The project also achieved the incredible feat of laying 3.5 km of track in a single day.

Designed to reduce the environmental impact on the region, the scheme was built to keep track length to an absolute minimum, with limited gradient.

The railway serves Australia’s domestic mining industry in this mineral-rich region, providing a valuable economic ‘lifeline’ in some of the most remote areas of the country.

The 480,000 sleepers required in the construction of the Pilbara Railway were manufactured by Austrak, a wholly-owned subsidiary of Laing O’Rourke, and leading supplier of concrete sleepers to the national rail industry. Austrak’s exceptional performance has seen revenues triple over a three-year period, with a corresponding uplift in profitability.

01

Energy, Utilities and Waste

Delivering innovative, responsible and collaborative projects that create extraordinary value

NewGen Kwinana Power StationWestern Australia, Australia

30—

31La

ing

O’R

our

ke A

nnua

l Rev

iew

200

9

Laing O’Rourke worked in alliance with Alstom on the NewGen Kwinana Power Station, which has the capacity to supply 10 per cent of Western Australia’s energy needs. Powered by a combined-cycle system using gas and steam, Kwinana produces about 50 per cent less greenhouse gas emissions than conventional coal-fired plants – making it amongst the most cost effective and environmentally efficient power stations operating today.

Working in collaboration with Alstom throughout the constructability and construction phases of the civil and building works, we also delivered the mechanical and electrical installations comprising the gas and steam turbines, water treatment works, the balance of plant and other packages. The Laing O’Rourke civil scope for the power station was completed in September 2007, while the mechanical/electrical phase was completed in May 2008.

Ene

rgy,

Uti

litie

s an

d W

aste

Energy, Utilities and Waste

— Next generation power stations (nuclear, clean coal, gas powered)

—Utilities infrastructure—Waste management

Over the past four decades, Laing O’Rourke has been at the forefront of the industry in the design and delivery of energy infrastructure, including the key civil engineering enabling works on nuclear facilities in the UK. We also design, deliver and maintain energy, utilities and waste management assets for a range of public and private sector clients across the world.

We offer a full range of services from programme management, design and engineering, main civil engineering works through to operational maintenance and management. We possess the industry’s leading expertise in the heavy civil engineering and waste-management aspects of nuclear generation.

Laing O’Rourke is currently the only World Association of Nuclear Operators (WANO) accredited construction services provider in the UK, recognising our industry-leading approach to safety and quality assurance in the delivery of high-specification nuclear generation and waste-storage facilities.

We are also a UK supplier and maintenance provider of utilities infrastructure solutions. Our offering covers network distribution infrastructure and waste management facilities, and we have major framework agreements with a range of utilities clients, including EDF Energy, Yorkshire Water and Thames Water.

02 Next generation power stations

Following the successful completion of projects at Sizewell B, Sellafield and Trawsfynydd nuclear power stations in the UK, we are currently working with Alstom to construct the Combined Heat and Power (CHP) power station at Isle of Grain and the Combined Cycle Gas Turbine (CCGT) power station at Staythorpe for energy providers E.ON and RWE respectively. We are delivering the site-wide civil engineering on each project and have delivered a number of innovative solutions in the construction phases.

We have commenced the construction of the Darling Downs Power Station in Queensland, Australia for Origin Energy (in joint venture with CH2M Hill), and have also secured an early engineering design project for a Liquified Natural Gas plant at Gladstone in Queensland. 02

03

Lain

g O

’Ro

urke

Ann

ual R

evie

w 2

009

03 Water and waste treatment plants

Completed in October 2008, the Luggage Point Advanced Water Treatment Plant has the capacity to produce 66 megalitres of water per day. We were responsible for designing and constructing the plant in collaboration with CH2M Hill.

Glen Water, a joint venture company between Thames Water and Laing O’Rourke was responsible for the construction phase of Project Omega, a wastewater treatment plant and sludge disposal scheme. One of the largest Public Private Partnerships in the UK, Project Omega will manage 20 per cent of Northern Ireland’s wastewater treatment capability and all of its sludge disposal needs.

Laing O’Rourke was responsible for the design, build and financing of the project and will maintain and operate the new and enhanced facilities over a contracted 25-year period. The project was completed on time during the year, achieving a Gold Considerate Constructors Award and is one of the most advanced schemes in Europe.

Ene

rgy,

Uti

litie

s an

d W

aste

Sellafield ‘Encapsulated Product Store 3’ (EPS3), Cumbria, UK

Working with the supplier and client on EPS3 Sellafield, Laing O’Rourke has produced a 100 per cent reliable, zero-wastage source of nuclear-standard concrete at an output that allows over 1,000 m3 pours to be repeatedly and consistently achieved. The business established a UKAS-accredited concrete laboratory and developed the Laing O’Rourke ‘Maturity’ system which allows increased utilisation of formwork, driving quality and consistency at speed. We also developed a method of ensuring temporary stability of wall reinforcement through a design that utilised the advantages of preassembly. Working as ‘One Team’ across our technical disciplines in design, engineering, manufacturing and concrete structures, we delivered an innovative solution to extraordinary quality standards.

Virtual modelling tested the theory, allowing over 80 per cent of all reinforcement to be manufactured off-site, resulting in no significant clashes over 4,000 tonnes.

Seismically qualified reinforcement cages, each weighing up to 10 tonnes and measuring 11 x 9 m were preassembled and installed remarkably quickly due to the effectiveness of Rollmat™.

Sellafield EPS3 was awarded ‘Best Construction Site’ by the World Association of Nuclear Operators – testament to the quality of the work by Laing O’Rourke’s nuclear infrastructure delivery team.

01 Utilities infrastructure

In 2008 we entered into a five-year framework agreement with EDF Energy to deliver London Groundworks, widely recognised as the most complex reactive project currently being undertaken in Europe. Laing O’Rourke is responsible for handling 4,000 excavations each month throughout the highly congested City and West End regions of London, UK.

In March 2009, in joint venture with Imtech Process, we were awarded Severn Trent Water’s AMP 5 framework contracts, Lot 1 (design and construction of clean water pipelines in distribution and trunk mains, and the associated pumping stations and structures) and Lot 3 (major non-infrastructure schemes).

01

32—

33

Operating and financial reviewThe breadth and depth of our business portfolio, and the diversification strategy we have been pursuing in key infrastructure markets, is serving the Group well.

01 One Hyde Park, London, UKAn excellent example of the Group working as ‘One Team’ to deliver a total solution across the lifecycle of the construction project, from design through to construction and fit-out. The constraints of the site, and the high quality demanded in absolutely every aspect of the programme, have created many challenges, but our approach has enabled us to be more responsive and aggressive with the programme schedule.

Europe

£3,248mEurope

£54mMiddle East and South Asia

£903mMiddle East and South Asia

£40mAustralasia

£852mAustralasia

£21m

Managed revenue Pre-exceptional EBIT

01

Lain

g O

’Ro

urke

Ann

ual R

evie

w 2

009

Op

erat

ing

and

fina

ncia

l rev

iewSummary

Laing O’Rourke’s financial performance for the period under review proved resilient, in the face of steadily deteriorating trading conditions as the year progressed. This is a tribute to the robustness of our strategy and the determination of the senior leadership in its execution.

Despite the general slowdown in private sector work, particularly in the second half of the year, the breadth and depth of our business portfolio, and the diversification strategy we have been pursuing in key infrastructure markets, is serving the Group well.

The strength of our balance sheet, the duration of our current projects, the size of our forward order book, and our growing capabilities upstream and downstream give us the confidence that substantial opportunities will be seized to increase our operational coverage across key sectors into the future.

With the prevailing trading conditions forecast to continue in the short to medium term, we remain cautiously optimistic about the Group’s future pipeline.

Group performanceThe long-term nature of our projects and the prudent actions we have taken to safeguard our operations has protected Laing O’Rourke from the worst of the trading conditions, positioning the Group for when markets turn out of recession.

Managed revenue rose 18 per cent year-on-year to £5.0 billion. Within this figure, intra-Group revenues (a proxy measure for our ability to work as ‘One Team’ and deliver all elements of a project) increased at a faster rate of 45 per cent to £916 million. We are seeing material improvement in earnings quality on projects where our vertically integrated delivery model is being successfully employed.

As a consequence, pre-exceptional earnings before income tax and interest rose by 31 per cent to £115 million, delivering an operating margin above last year’s level. This was a satisfactory performance given the economic backdrop, demonstrating good organic growth across our operations.

As a consequence of the unprecedented falls in market values for commercial real estate, the Group has taken a £17.1 million exceptional provision against two development projects in Ireland and one in the UK (2008: £nil). No provision was deemed necessary in respect of Explore Living’s landbank following an impairment review.

CashflowA key focus continues to be cash and working capital management.

As can be seen from the table below, the Group has generated operating cashflow in excess of pre-exceptional operating profit.

At 31 March 2009, the Group had committed banking facilities of £620 million, of which £179 million was undrawn.

Group cash balances totalled £614 million, a significant improvement on 2008 of £138 million, and net cash increased to £174 million.

Order bookThe Group’s order book stands at £10.0 billion and has been bolstered during the past year by some high-quality project wins. Our pipeline of secured work remains strong across all our businesses. Our prioritisation of public sector schemes which are benefiting from economic stimulus packages has seen a resultant uplift in levels of infrastructure work. This reflects our strategic priority to strike an optimum balance between public and private sector contracts, de-risking the Group and shielding our operations from the vagaries of market fluctuations or over-exposure in any one market sector.

Impact of joint venturesLast year we noted that the financial impact of joint ventures will grow. Our share of pre-exceptional joint venture profits rose to £62.4 million, from £23.3 million in 2008, with over £42 million distributions received.

Given the downturn in the markets in which some of our joint ventures operate, it cannot be assumed that this level of profitability can be retained in the current financial year.

TaxationThe tax charge for the year is 20 per cent (2008: 19 per cent), significantly below the rate charged in the UK but above that charged in Cyprus. Further details are provided in note 10 to the financial statements. The tax charge is expected to remain below the prevailing UK rate as a proportion of income generated by the Group is subject to lower rates of tax.

GoodwillThe Group carries £308m goodwill in the consolidated balance sheet. Goodwill is not amortised under IFRS, but is tested annually for impairment. In accordance with IAS 36 the recoverable amount has been tested by reference to four-year forecasts, discounted at the Group’s estimated WACC. Using these assumptions it was concluded that the recoverable value exceeded carrying amounts. Details of this test can be found in note 12 to the financial statements.

Pension SchemesThe Group runs a number of defined contribution pension schemes in conjunction with Scottish Equitable, AXA and Norwich Union.

34—

35

Group cashflow from operations 2009 2008 £m £m

Profit before tax 85.0 81.2Exceptional items 17.1 –Depreciation and amortisation 63.6 54.9(Profit)/loss on disposal of property, plant and equipment and intangibles (3.2) 0.8Net financing costs 5.3 3.6Working capital, share of post tax profit of joint ventures and associates and other items (20.4) 54.7Cash generated from operations 147.4 195.2

Hub performanceAcross our international businesses, our robust performance was reflected throughout our core operations.

The European hub posted a record performance with £3.2 billion of managed revenue, driven by our core construction activities, offsetting the predicted downturn in performance of our Explore Capital business. Earnings before exceptional items reached £54 million. This figure masks an even stronger underlying construction performance, benefiting from the impact of our greater focus on project delivery performance through the introduction of new control systems.

In the Middle East and South Asia, managed revenue more than doubled to £903 million. This result was delivered in spite of the sharp deterioration in trading conditions in the second half of the year and significant price pressure in the region. Our success in this regard has come from Laing O’Rourke’s established strategy to focus our end-to-end capabilities on high-quality, complex projects, collaborating with reputable, well-capitalised investment partners and clients. This assures cash collection and mitigates our credit risk exposure in the region.

We do not expect to maintain these levels of revenue during the financial year 2009/2010. Our focus is on right-sizing the business to meet current levels of demand, working with our clients to deliver existing projects and positioning ourselves so we can move quickly when better economic conditions prevail.

Australasia posted managed revenue of £852 million, reflecting the region’s delayed and milder exposure to the current economic cycle, combined with our focus on targeted infrastructure markets in rail, mining, energy and utilities.

Greater productivity in project delivery operations was offset by investment in expanding the capabilities of the business. Notwithstanding this investment, the 12-month profitability targets were exceeded and earnings grew 25 per cent. These are a good set of results and mark a significant milestone since the acquisition of Barclay Mowlem, with the business having trebled in size since 2006.

01 LifestyleJumeirah Golf Estates, Dubai, UAE02 Business123 Albert Street, Brisbane, Queensland, Australia03 Social InfrastructureFreeman Hospital, Newcastle, UK04 Transport and MiningM62, Junction 6, Merseyside, UK05 Energy, Utilities and WasteDarling Downs Power Station, Queensland, Australia

01

03

02

04

05

Lain

g O

’Ro

urke

Ann

ual R

evie

w 2

009

Operational overviewWe had another year of notable achievements, with our portfolio of projects continuing to make good progress.

A selection of our projects are described in detail as case studies on pages 14 to 33. Additionally, during the year we completed or worked on:

Lifestyle— Housing projects including the large

Jumeirah Golf Estates and MotorCity in Dubai, Hemisphere in Birmingham and Elysee Apartments on Australia’s Gold Coast.

— Shopping, leisure and entertainment complexes including Westpoint Blacktown in New South Wales, Australia, where the original contractor reneged on the contract and we successfully dealt with 19,000 defects.

Business— Office complexes, including a new

high-rise office building in Brisbane which will be the new headquarters for a major global mining group.

— An extension to the Gold Coast Convention and Exhibition Centre and a brand new convention centre in Darwin which was delivered months ahead of schedule as our innovative design and construction methodologies allowed work to continue during wet weather, a critical capability in a tropical environment with significant annual rainfall.

Social Infrastructure— Healthcare facilities including Bristol

Heart Institute, Freeman Hospital and National Blood Centre in the UK, University College in Dubai and Weipa in the far north of Queensland where we successfully overcame many logistical challenges caused by the remote location.

— Educational facilities including Broughton High School, Bonaly Primary and Juniper Green Primary in Edinburgh.

Transport and Mining— Major road infrastructure including

Junction 6 on the M62, Junction 11 on the M4 and sections of the A590 in the UK.

— Rail track construction and upgrades including work for the Australian Rail Track Corporation and rail stations including Hornsby Station in Sydney

— Maintenance of elements of the Hong Kong Metro system and the BHP heavy haul mining railways in Western Australia.

— Manchester Airport’s Terminals 1 and 2.

— Chatswood Transport Interchange, a major rail, bus, retail and commercial development in Sydney.

— Construction of a new wharf for loading coal onto ships at Newcastle, north of Sydney.

— Since the year end, commenced track laying on the North-South railway in Saudi Arabia.

Energy, Utilities and Waste— Major power generation infrastructure

including the Darling Downs Power Station in Queensland and the NewGen Kwinana Power Station in Western Australia.

— Utilities and waste management infrastructure and water treatment plants.

We now have capabilities covering the whole project lifecycle – from feasibility, programme management, design, engineering, manufacturing, construction to operations, maintenance and decommissioning.

A key challenge going forward will be for us to grow our capabilities and convert the opportunities we see into substantial businesses.

OutlookNotwithstanding the testing economic conditions, the outlook for Laing O’Rourke remains favourable. We have been effective at managing costs and cash flow, and will maintain our focus in these areas.

At any time, but particularly in the current financial environment, our capabilities in work-winning will be critical in securing and growing our market presence. Our positioning as an engineering-led construction solutions provider increases the number of tenders available to us in targeted markets. Over time, this should result in the Group securing an increased level of profitable and cash-generating new work.

Across the businesses, our ‘One Team’ approach to vertical integration is increasingly being embedded, and the Group is beginning to realise the benefits of this united thinking in improved earnings margins at the individual project delivery level.

Prior sector experience, regardless of where it is domiciled, is becoming increasingly important in the tender process. Our ability to quickly and seamlessly transfer expertise between our three international hubs represents a key differentiator for the business.

The order book comprises a strong mix of publicly and privately funded projects across our core sectors. In Europe alone we have identified an additional £9.5 billion of opportunity, with an increasing amount of infrastructure work as various government offices continue with capital investment programmes to replace ageing infrastructure, while providing an important stimulus to the wider economy. Overall, the Group’s order book stands at £10.0 billion.This figure compares favourably to previous years and has been secured under tightening market conditions.

We are leading the industry in our ability to deliver projects using Modern Methods of Construction. The benefits that our Design for Manufacture and Assembly (DfMA) approach brings are considerable. By working in a controlled factory environment, we can deliver projects faster, cost effectively and to greater quality than traditional on-site methods.

This automated approach is already standard practice in other industries but, in our view, is significantly under-utilised in commercial and residential construction. We plan to significantly expand the percentage of projects delivered in this way. We have ambitions to achieve 75 per cent of the total project delivery under our direct management through DfMA. We are investing significant sums in our major manufacturing facility, Explore Industrial Park, at Steetley in the UK, as well as in our other internationally based modular operations.

Laing O’Rourke has always led the industry in its approach to investing in people. Our continuing focus on human capital management is an important pillar of our strategy and is positioning us well for the future. Our engineering heritage and relentless pursuit of a better way in everything we do will continue to deliver superior results through the practical application of innovative and creative thinking. We believe our systematic approach to project delivery – ‘Complete Thinking’, will deliver exemplary performance and value creation, as we continue to be regarded as the company of choice by forward-thinking clients.

Op

erat

ing

and

fina

ncia

l rev

iew

36—

37

Balance sheet strengthWe are a well-capitalised company with a prudent approach to cash management.

Cash generated from operations

£147mCash and cash equivalents

£614mAvailable liquidity

£793mScaleWe are one of the world’s leading privately owned construction solutions providers.

Managed revenue

£5bnDirect employees

35,753Order book

£10bnDiversityWith a strong portfolio of clients across multiple sectors and geographic markets, we are a highly diverse, value-creating company.

Average project duration (years)

2.6FlexibilityOur operating model creates greater leanness and agility in our strategic decision-making and business operations.

Staff:workforce ratio

31:69Employees transferred between hubs

295Employees on development programmes

597

Financial resilienceOur robust position is a source of competitive advantage and will allow us to exploit future opportunities.

Public:private clients ratio

44:56

Pre-exceptional EBIT contribution by hub (%)Europe:MESA:Australasia

47:35:18

Lain

g O

’Ro

urke

Ann

ual R

evie

w 2

009

Op

erat

ing

and

fina

ncia

l rev

iew

Operational risksOperational risk management is an integral part of the way the Group conducts its business. The overall aim is to proactively mitigate key risks to minimise adverse effects, and seize appropriate opportunities.

Health and safety riskLaing O’Rourke believes it is the responsibility of every employee, business partner and subcontractor to ensure that health and safety is held as a core business value. A documented Health, Safety and Environmental Management System is maintained and contains organisational details of how these behavioural requirements are to be achieved. The management system is continually reviewed and updated. Tender riskSignificant levels of resource are allocated by the Group to tenders and bids in order to secure future work, with no guarantee of contract award. The Group ensures that tenders and bids are controlled by skilled and experienced senior personnel. All bids are approved against a Group-wide authority matrix and major bids are reviewed and approved by a senior executive bid committee.

Contract completion riskOur revenue and profit recognition rules on our construction activities are prudent and are applied consistently across the Group. A monthly contract review process underpins the financial assessment of the project, focusing on both financial and non-financial risk within each contract and how these risks, once identified, will be controlled and mitigated. Investment riskThe strategy to deliver a broadened client offering across the construction value chain requires investment in the Group’s capabilities. We occasionally become active participants in the financial risk and reward profile of projects by entering into joint ventures or similar arrangements, or by acting as a developer.

Risk managementWe have proven systems, policies and procedures in place to manage and mitigate risks in our tendering, business unit, project delivery and corporate activities.

The Group has made a number of successful acquisitions in the past to boost our capabilities, market penetration or enter new markets. In pursuing such non-organic opportunities, there is no guarantee that the integration of future acquisitions will be successful.

Supply chain riskWhile a significant proportion of projects are typically self-delivered by Group companies, inevitably specialist subcontractors and suppliers are used. Critical subcontractors are screened for credit worthiness and rigorously assessed for financial robustness before being contractually engaged. Full contingency planning is also undertaken. The Group ensures that it adheres to contractually agreed payment terms.

Personnel riskThe Group relies on key individuals to secure new work and deliver projects. It allocates significant resources to recruit, train and retain highly skilled and experienced personnel. It also operates a number of talent management programmes. Further details can be found in the 2009 Corporate Responsibility Review.

Financial risksThe Group’s treasury department manages the principal financial risks within policies and operating parameters approved by the Board, and purchases derivative financial instruments where appropriate. The treasury function is not a profit centre and does not enter into speculative proprietary transactions.

Further details of the Group’s financial instruments can be found in note 27 to the financial statements. Foreign currency riskIt is Group policy to enter into forward contracts or borrow/deposit funds in foreign currencies in order to hedge against significant transactional foreign currency exposures. Interest rate riskThe Group is exposed to interest rate risks in relation to some of its borrowings. Interest rate swaps are employed by the Group to manage its exposure to fluctuating interest rates.

Liquidity riskThe Group has a prudent approach to liquidity, and maintains sufficient cash and available funding to meet liabilities as they fall due. Procedures are in place to ensure cash and other highly liquid current assets, together with committed credit facilities, are adequate for the Group’s needs.

Credit riskThe Group’s credit exposure is primarily attributable to its loan assets, trade and other receivables. The Group has no significant concentrations of credit risk and has policies in place to ensure that sales are only made to customers with an appropriate credit history or payment profile. The age profile of receivables is continually monitored.

Cash and highly liquid current assets are held with high credit quality financial institutions.

38—

39

Europe Working as ‘One Team’, our focus on control and performance has yielded greater consistency in delivery – on time, within budget and to the highest quality.

OverviewOur European construction operations posted a strong performance, exceeding revenue targets and delivering satisfactory earnings quality in line with our own internal budget expectations. This would be gratifying in any year but the difficult economic conditions across Europe during the period makes it even more noteworthy.

Much of this success is due to our ‘One Team’ delivery philosophy. A focus on control and performance has yielded greater consistency in terms of delivery – on time, within budget and to the highest quality.

Another element in our success to date is our ability to deliver world-class solutions to our clients in a collaborative way. We have a unique capacity to understand projects from end to end, helping us to deliver better value and greater predictability in the outcomes for the client, flowing through into our bottom line performance.

Our priorities remain to exercise prudence in our investments, redouble our efforts in securing a strong pipeline of future work, and deliver to target on our ‘live’ portfolio of projects across the hub. We have strong grounds for confidence in this regard. The forward order book remains significant, with £9.5 billion worth of additional identified opportunity, which we are directing resources to pursue accordingly.

We have a growing record in converting opportunities into confirmed work and are further developing the required capabilities to drive our ‘bid to win’ ratios to best-in-class levels. Clearly, this augurs well for the future, especially once the economic backdrop improves.

Highlights for 2009— Strong and growing portfolio of infrastructure projects— Good strategic progress in broadening client service offering— Manufacturing capabilities coming on stream as Explore Industrial

Park nears completion and Bison is successfully integrated

Capabilities— Investment and development— Programme and project

delivery management— Engineering design — Enabling works and core

construction— Mechanical and electrical

engineering— Operational maintenance — Residential development— Support services

Companies— Explore Capital — Explore Investments — Explore Living— Laing O’Rourke Construction— Expanded — StrongForce— Explore Manufacturing — Malling — Vetter — Bison— Crown House Technologies— Select

Priorities for 2010— Pursue infrastructure opportunities within the public sector — Continue to grow our rail, energy, water and waste businesses— Deliver better value to our clients through smarter designs and

more efficient methods of construction— Continuous training and development of our people

Financial summary£m 2009 2008 Change

Managed revenue 3,248.1 3,239.5 +0.3%EBIT (pre-exceptional) 54.0 41.8 +29.2%

Lain

g O

’Ro

urke

Ann

ual R

evie

w 2

009

Ope

ratin

g re

view

— E

urop

e

Liverpool One, Liverpool, UKLaing O’Rourke was construction partner on this key project – one of the largest city-centre regeneration projects in Europe. Its completion and official launch in 2008 was a major achievement for the Group. 40

—41

ConstructionDuring the year we made solid progress in our core construction capability, further developing our presence in healthcare and education – where framework agreements are increasingly prevalent across the broader social infrastructure sector. These agreements bring significant benefits through reduced tender risk and greater standardisation. In turn, this allows our ‘Design for Manufacture and Assembly’ (DfMA) approach to be fully exploited. Overall, this approach is gaining greater significance across our portfolio and its importance to the Group is likely to grow in future years.

Data centres share many of the same characteristics and, as business-critical operations, have not been subjected to the general slow-down in private-sector work. We also have the added ‘One Team’ benefits of our Crown House Technologies business, where these three market sectors (healthcare, education and data centres) are currently contributing around 60 per cent of their order book. Our infrastructure activities continue to grow, particularly in the areas of energy generation, water, rail and waste management. Here we are successfully transferring expertise between our international hubs to capture the disproportionate opportunities presented by these sectors.

Specialist businessesOur specialist businesses – including Expanded, Crown House Technologies, Select, and Explore Manufacturing – are all now well established as UK-based businesses with significant international coverage. They have provided the Group with a broader set of market opportunities which complement our core construction activities, and deliver a more complete service offering for clients.

Expanded provides services including: site remediation; demolition; and site decontamination through to heavy civil engineering including piling and structures. It saw notable projects delivered over the year, particularly in support of our healthcare schemes.

Crown House Technologies, our mechanical and electrical engineering business, is now the UK’s second largest building technologies provider. It has developed unique skills in environmental performance and building energy management in particular. While results in the year were solid, the opportunity – as the business moves away from its traditional mechanical and electrical roots and expands into new sectors – is compelling.

Select is the second largest plant provider in the UK, which gives the Group the ability to self-deliver, and provides external clients with a wide range of state-of-the-art plant and equipment. Increasingly, clients are looking to Select to provide a technical solution to a problem rather than just the provision of construction equipment.

Inevitably, overall construction activity, particularly in the early stages of a project, impacts on the demand for plant. The prevailing economic turbulence meant that the business experienced tougher trading conditions in the latter part of the year under review, as excess capacity built up in the market. As a consequence Select has reviewed its asset base and rationalised stock levels, taking the opportunity to dispose of older plant and equipment and returning cash onto the balance sheet.

02 Manchester Metrolink, Manchester, UKLaing O’Rourke, in partnership with Thales UK and VolkerRail, secured a three-year contract to design, construct and maintain three new Metrolink lines for Greater Manchester Public Transport Executive.

03 Balls Park, Hertford, Hertfordshire, UKSituated in a prized location with breathtaking views across picturesque parkland, Balls Park is a flagship development for Explore Living comprising a range of apartments and houses with a high level of specification.

02

03

Lain

g O

’Ro

urke

Ann

ual R

evie

w 2

009

Ope

ratin

g re

view

— E

urop

e

Explore ManufacturingOur investment in the state-of-the-art Explore Industrial Park at Steetley resulted in a number of key milestones during the year under review. Planning consent was achieved and the project moved quickly into the delivery phases. The industrial park is due for completion in 2009 and when fully operational, will have created 270 jobs for the local community. Alongside the well-documented advantages that our manufacturing approach will bring to commercial construction, over the longer term we believe it has enormous potential in shaping the future of UK house building.

Explore CapitalExplore is our property investment, development and residential housing business unit. As has been well reported, the residential development and house-building sectors have faced an unprecedented downturn in fortune over the reporting period. Consequently, the pace of development has slowed in line with the prevailing market dynamics.

Explore acquired no new land last year, merely funding deferred payments on existing stock. While the number of enquiries has risen significantly since the end of the year, we do not expect to see house prices increasing in the short to medium term.

Explore Living maintained its reputation for high quality and technical innovation in home building, winning the most prestigious quality award in house building in the UK.

OutlookLaing O’Rourke’s European hub is well placed in the industry for the period ahead. In the year under review, our construction business remained at broadly the same scale as before the recession – a testimony to how robust the business has become.

The business does not foresee significant growth in the current financial year. We do, however, see significant contract opportunities ahead and have identified a number of major projects that we are pursuing. We remain very positive about rail, waste, education and healthcare where we already have or are building a strong presence. In particular, we see energy as a strategically important sector, and are already in active dialogue on the opportunities for new nuclear projects. Not withstanding these prospects, the achievement of our business goals in the year ahead will remain challenging.

We will hold our investment in our people at current levels to ensure we maintain the required human resource capacity to achieve the Group’s strategic ambitions. We are actively developing future leaders and strengthening our senior management team. We are committed to skills training, to modern apprenticeships and to continuing our graduate intake. All this will help make the UK more productive and consolidate our ability to deliver large, complex and vital projects in the long term.

01 Cardiff Stadium, Wales, UKA major achievement during the year was the topping out on the long-awaited Cardiff International Sports Stadium – the new 30,000-seat home to Cardiff City FC. Additional facilities include a new athletics stadium and multi-purpose House of Sport and Football Academy.

01

42—

43

Middle East and South Asia In 2008, we celebrated 30 years of business in the UAE which is testament to our long-term commitment to the region and we are confident the region offers good long-term prospects.

OverviewDuring 2008, we celebrated 30 years of business in the UAE which is testament to our long-term commitment to the region. However, the year under review was one of two halves with considerably more exposure in the region to the global downturn than other hubs.

The first six months were characterised by continuing growth and optimism but as we entered the second half of the financial year, confidence suffered a buffeting in many parts of the region with a subsequent withdrawal of funding facilities and scope modifications across the entire construction sector. Laing O’Rourke was not immune from this downturn, although our prudent management in rapidly right-sizing our operations to match reduced demand has protected us from the worst effects of these events.

Furthermore, our procurement methodology, which is founded on a partnering approach as opposed to the traditional tendering process, has meant we have a better understanding of our clients’ needs and have worked with them to fulfil their short term aspirations.

This change created a different risk profile for many of our clients who were suddenly faced with constraints on access to capital as a result of reduced market liquidity. This has inevitably led us to revise down our own growth targets in the region. However, this needs to be placed in context. In 2009 our managed revenue reached over £900 million, double the 2008 revenue level. Even under the most pessimistic scenario for 2010 we do not foresee revenue levels significantly lower than 2008.

Inevitably, we are making appropriate adjustments to employee levels, and approaching this difficult situation in a responsible manner, redeploying expertise into our other international operations wherever possible.

Highlights for 2009— Major project delivery milestones achieved— Resilient revenue performance during unprecedented

market turbulence— Delivered operational efficiencies to safeguard business — Celebrated 30 years of business in the United Arab Emirates

Priorities for 2010— Adapt to current market conditions through

appropriate cost control and cash management— Focus on delivery of current projects— Secure new business in existing markets and develop

opportunities in the wider region, particularly in growth sectors like infrastructure and waste management

— Continue to invest in our specialist businesses to deliver profit-backed revenue growth

Financial summary

Capabilities— Investment and development— Programme and project

delivery management — Design — Enabling works — Core construction— Mechanical and electrical

engineering— Operational maintenance

Companies— Laing O’Rourke Construction— Expanded — Strongforce— Manufacturing — Joinery — Emirates Precast — Rebar — Modulor— Crown House Technologies— Select

£m 2009 2008 Change

Managed revenue 903.0 422.0 +114.0%EBIT 40.0 29.1 +37.5%

Lain

g O

’Ro

urke

Ann

ual R

evie

w 2

009

Ope

ratin

g re

view

— M

iddl

e E

ast a

nd S

outh

Asi

a

MotorCity, Dubai, UAEAl Naboodah Laing O’Rourke LLC completed MotorCity for leading developer Union Properties PJSC during the year. Located on Emirates Road, the development comprises F1X Dubai, and MotorCity’s Business Park and Green Community. 44

—45

Our ongoing commitment to maintain our presence and grow our capabilities once the region turns out of recession remains undimmed. Our prudent management and continuing work on projects like the Al Raha Beach development will ensure we stay organisationally fit and ready for a recovery in activity. Our training and development programmes remain in place and we will continue with these activities in the region.

We firmly believe that the Middle East has significant long-term opportunities – especially given our heritage, delivery track record and unique strength in the market. Abu Dhabi in particular has challenging and ambitious construction plans extending to 2030. The region possesses 40 per cent of the world’s oil and gas reserves, making it a priority market for our business development activities over the coming period.

ConstructionThe undoubted highlight of the year was the testing, commissioning and handover of the extraordinary Atlantis Hotel, The Palm, Dubai, ahead of schedule and on budget. The official opening was a global media spectacular and a fitting showcase for our integrated construction capabilities in the region.

Our joint venture company ALDAR Laing O’Rourke posted another good financial and operational performance, with significant progress made on the Al Raha Beach project. ALDAR is Abu Dhabi’s largest property investment and development company, and we will continue to seek opportunities to partner with them to deliver future projects.

Specialist businessesCrown House Technologies has a growing presence in the region and will receive continuing strategic focus, particularly in the energy sector. The market currently operates using traditional construction methodologies, with the mechanical and electrical (M&E)components of a project delivered primarily by subcontractors. We are working hard to educate potential clients of the benefits of our Design for Manufacture and Assembly approach in the M&E phase, and remain confident that we will convert opportunities into secured work.

One product, the bathroom pod, has already made notable inroads into the market. The Atlantis Hotel installed over 1,500 bathroom pods, and the business has an order placed for 5,000 more in Abu Dhabi. Our specialist joinery business has been operating in the region since 1984. It enjoyed another buoyant year and currently has a healthy order book with a high level of repeat custom.

02 Al Zeina, Al Raha Beach, Abu Dhabi, UAEComprising a mixture of luxury apartments, villas and townhouses, Al Zeina is a residential development which sits at the heart of the exclusive Al Raha Beach development. Laing O’Rourke is the programme delivery partner responsible for managing construction of Al Zeina and the other precincts which comprise Al Raha Beach.

03 Dubai University Hospital, Dubai, UAELaing O’Rourke is building University Hospital in Dubai, a new tertiary-care teaching hospital that will be a regional hub for world-class patient care and continuous learning. Scheduled for completion in 2011, the 400-bed medical centre was designed in collaboration with Harvard Medical International.03

02

Lain

g O

’Ro

urke

Ann

ual R

evie

w 2

009

Ope

ratin

g re

view

— M

iddl

e E

ast a

nd S

outh

Asi

a

The lower level of activity in the region has reduced the demand for rebar products and plant. Select is in the process of transferring equipment back out of Dubai to areas of higher demand in our other international hubs. This process is a reversal of the mobilisation strategy Select employed in the region when the rate of demand was at its peak, highlighting the competitive advantage of Select’s international coverage strategy, coupled with its ability to export plant and equipment rapidly overseas as required.

Select has a continual-replacement programme and new purchases reflect the changing sectoral focus we are pursuing in the Middle East, targeting social infrastructure, energy, utilities and transport infrastructure work. For example, the business recently purchased rail equipment required for the North-South rail line project, in the Kingdom of Saudi Arabia.

IndiaThe economic slowdown has not passed India by. There has been a significant reduction in real estate prices over the past year, which has impacted demand for construction services. Nevertheless, we continue to work on 15 schemes with our joint venture partner, but remain cautious over the medium term outlook.

OutlookWe remain committed to the region and view the strategic development of our presence across prioritised sectors in Abu Dhabi as a key goal. We will continue to tender for contracts with well-funded clients that offer appropriate growth opportunities, meet our earnings quality targets and are cash-positive in terms of their contracting arrangements.

Additionally, we will continue to evaluate opportunities elsewhere in the UAE, particularly in programme management, leveraging our credentials from Al Raha Beach. Many of our Middle Eastern clients operate in multiple jurisdictions and we have established very strong contacts in the region over the last 30 years, which we continue to nurture and develop.

Overall, despite the current challenges, we are confident the region offers good long-term prospects. We have the people, the client base, the delivery capabilities and the expertise to maximise opportunities as they present themselves.

01 Atlantis Hotel, The Palm, Dubai, UAEThe prestigious Atlantis Hotel and Water Park was completed ahead of schedule in 2008.

01

46—

47

Australasia Our success this year is matched by a growing reputation and brand presence. We continue to build a strong portfolio of forward work.

OverviewThe Australian economy was one of the last to be impacted by the change in global economic conditions, partly due to its mineral wealth and highly regulated banking system.

Consequently, our business enjoyed a good year. Indeed, since 2006 the business has trebled managed revenues to over £850 million and profits exceeded budget.

Our Australasian hub is diversified in both the range of sectors and client types it serves. Our continuing strategic focus on rail, mine infrastructure and energy projects has positioned the business well to benefit from the planned public and private sector investment programmes.

Our growing reputation and brand presence in the region is serving us well in the work-winning stages as we continue to build a strong portfolio of forward work such as the Newcastle Port upgrade.

During the year under review, we expanded further our operational reach from the hub, exporting our expertise in rail infrastructure into Saudi Arabia, working in joint venture with others delivering the North-South Railway. We will continue enhancing the level and quality of our earnings profile by targeting and broadening our client coverage in this way.

Capabilities— Investment and development— Programme and project

delivery management — Design — Enabling works — Core construction— Mechanical and electrical

engineering— Operational maintenance— Support services

Companies— Explore Investments— Laing O’Rourke Construction— Expanded— Austrak— Redispan— Select

Highlights for 2009— Substantial project wins in key strategic sectors— Exporting rail capability into new markets in Saudi Arabia— Strong revenue performance — Completion and handover of major projects on time,

on budget, and to the highest quality

Priorities for 2010— Training and development of our people— Further establish leadership position in the rail, mine infrastructure

and energy sectors— Invest in operation platform improvements to support the

business for further growth—Expansion into further Australian regions and Indonesia

Financial summary£m 2009 2008 Change

Managed revenue 851.8 574.4 +48.3%EBIT 21.0 16.8 +25.0%

Lain

g O

’Ro

urke

Ann

ual R

evie

w 2

009

Ope

ratin

g re

view

— A

ustr

alas

ia

Chatswood Transport Interchange, Sydney, New South Wales, AustraliaCompleted during the year, this engineering and construction project required the design and construction of a new railway station comprising twin island platforms and commuter concourse, bridgeworks, new bus interchange, a car park, 10,000 sqm of retail space, and rail trackwork to accommodate a new rail line. 48

—49

Construction Of all our international hubs, Australasia has the highest proportion of infrastructure related projects. These have weathered the economic conditions more favourably than our commercially orientated activities in the lifestyle and business sectors. They also, typically have longer project durations. Consequently the business experienced a minimal slowdown in the pace of construction activity in the period.

One of our key strengths in engineering and construction is our growing capability around the provision of operations and maintenance services.

We currently maintain extensive rail track infrastructure for clients operating predominantly in the mineral industries. These include the operation of a number of valuable maintenance contracts on behalf of global natural resource companies.

We also bolstered our human capital in the region and our capability in the fast growing rail sector during the year under review. This enhanced further our total solution model in programme management, whole design and construction, supply chain management and operational maintenance.

Explore InvestmentsExplore Investments in Australia enjoyed a positive year, as the development portfolio was not negatively impacted by large-scale asset write-downs. We achieved planning approval on several of our sites, and the remainder of our developments are in a solid position to come through the current economic downturn.

Specialist businessesDuring the period under review, Expanded added a structures capability to the earthworks business that was established in the previous year. A major operational highlight for the Expanded business was the first self-delivery of the structures for 123 Albert Street, an office development in Brisbane.

Austrak, our business for the manufacture and supply of concrete railway sleepers, had an excellent year. It has nearly trebled its revenues in just three years and continues to exceed its profit targets.

The business now has four factories across Australia and has produced over 15 million sleepers since its establishment in 1980. Alongside designing and manufacturing sleepers and turnout bearers for the rail industry, it offers integrated solutions incorporating the design and construction capabilities of our automated factory approach to manufacturing key component sets.

02 NCIG Coal Loading Wharf, Newcastle, New South Wales, Australia

Laing O’Rourke is constructing a new wharf for coal loading of ships at Newcastle in New South Wales. The infrastructure will comprise land and marine piles, main wharf structure, shiploader support rails and maintenance access roads and walkways and is part of our client’s vision to expand the region’s existing shiploading facilities.

03 Darwin Convention Centre, Darwin, Northern Territory, Australia

This multi-award winning building is the centrepiece of the Darwin City Waterfront Redevelopment. Laing O’Rourke, with our joint venture partner, delivered the project under a ‘turnkey’ arrangement and the team was responsible for all aspects of construction delivery.

02

03

Lain

g O

’Ro

urke

Ann

ual R

evie

w 2

009

OutlookThe Australasian hub has made huge progress in recent years as the leadership team has successfully integrated the business operations and exploited the opportunities.

We are becoming increasingly active in securing contracts in sectors which have been previously closed to us, or where we have had restricted access due to dominant market incumbents or through our own lack of capability. We will continue to nurture and pursue these opportunities, drawing upon the Group’s wider management and process expertise to bring them to fruition.

Opportunities for further growth remain substantial, notably in the rail, mine infrastructure, and energy sectors. We believe that Australasia will continue to provide very good prospects in the coming months and years, and remain confident that the business will enjoy further value-creating growth.

Ope

ratin

g re

view

— A

ustr

alas

ia01 100 Mount Street, North Sydney, New South Wales, Australia

Located in the heart of North Sydney, Laing O’Rourke is developing and constructing this 38-storey office development, which is currently in the planning phase. Once complete, it will be Laing O’Rourke’s headquarters in Sydney.

01

50—

51

Our philosophy centres on the belief that responsible and sustainable business practices go beyond just the creation of goodwill; they are a mark of good business.

While profits allow companies to prosper and provide the means for personal and corporate growth, we believe longer-term legacy benefits (such as the careers we build for our people and the improvements in standards of living we are able to create – for this generation and those to come) must also be accurately measured.

Consequently, Laing O’Rourke is embracing an agenda that covers a broad spectrum of corporate responsibility, so that we can seek to deliver long-term, authentic sustainable policies and practices.

As the foundation upon which we have built this approach, our overarching priority is to maintain a business that sends everyone home safely at the end of each day. The health and safety of our people is of paramount importance, and we rigorously and consistently drive safety as our number one objective – both for individuals and the business.

Furthermore, we approach our environmental responsibilities through tangible initiatives and policies, and we work tirelessly to attract, retain, develop and engage with our people. We continually aim to raise the bar as an industry leader, and we carefully consider the way in which we interact with the communities we work with and alongside.

We call this our EPIC Agenda, and these central pillars – Environment, People, Industry and Communities – are the key drivers to our investment, development and construction operations.

Further information can be found in our 2009 Corporate Responsibility review.

Corporate responsibilityLaing O’Rourke’s mission to be first choice for all stakeholders recognises the commercial and operational benefits of acting responsibly.

Accident frequency rate by year — Group AFR for year Total hours (yearly)

* Reported last year as 0.21 but restated this year to reflect a change in the reporting criteria in Australia

0

49

98

147

0.00

0.10

0.20

0.30

0.40 196

Acc

iden

t fre

que

ncy

rate

Tota

l ho

urs

(mill

ions

)

0.39

2005

0.33

2006

0.26

2007

0.19*

2008

0.13

2009

Apr 08

Acc

iden

t fre

que

ncy

rate

Tota

l ho

urs

(mill

ions

)

0.10

May 08

0.11

Jun 08

0.14

Jul 08

0.11

Aug 08

0.13

Sep 08

0.08

Oct 08

0.13

Nov 08

0.10

Dec 08

0.10

Jan 09

0.12

Feb 09

0.21

Mar 09

Accident frequency rate by month — Group AFR for month Total hours (monthly) Cumulative (2008) / rolling 12 month AFR

0

5

10

15

20

0.00

0.6

0.12

0.18

0.24

0.19

Lain

g O

’Ro

urke

Ann

ual R

evie

w 2

009

01 EnvironmentLaing O’Rourke recognises that the construction industry is a significant consumer of energy, resources and water in the buildings we construct, use and maintain. Our overall ambition is to leave a positive legacy for future generations. We are taking our responsibility for safeguarding the planet for future generations seriously, tackling environmental issues such as climate change head on.

By seeking and implementing long-term and authentic sustainability policies and practices on every level (and in every way that we interact with our employees, businesses, governments and communities) we can ensure that our business – and our planet – grows and prospers.

02 PeoplePeople are the lifeblood of our organisation. We believe in direct employment and investing in our 35,753 employees through learning and development, work experience opportunities, health programmes and safe working practices. This gives us a solid platform to continue our success and prosper into the future.

We believe our Human Capital agenda sets us apart from many in this industry, serving as an attractor for world-class talent and assisting the Group in sourcing and developing the very best people in a consistent and sustainable manner.

03 IndustryAs an industry leader, Laing O’Rourke’s aim remains unchanged – to challenge and change the image of construction worldwide, and with leanness and agility, adopt processes to compete with world-leading businesses.

We are able to deliver efficiency, effectiveness and control over the whole project lifecycle and our clear aim is to deliver to time, cost and quality, safely, responsibly and sustainably in every single one of our project activities. We will relentlessly pursue the achievement of this goal.

04 CommunityFrom remote locations to major urban centres, Laing O’Rourke works in a diverse range of international and indigenous communities, and our proactive involvement with them is central to our approach in the planning, delivery and operation of our businesses.

Through the delivery of world-class construction solutions, we are in the unique position of being able to help communities progress economically and to enjoy positive improvements to both their standards of living and the local infrastructure that serves their needs.

Co

rpo

rate

res

po

nsib

ility

01

02

03

04

52—

53

The Board of Directors presents its annual report together with the audited financial statements of the Laing O’Rourke Corporation Limited consolidated Group for the year ended 31 March 2009.

Principal activitiesThe Group’s principal activities are:

Construction— Building— Programme management— Civil engineering— Mechanical and electrical engineering— Core enabling and logistics management

services— Infrastructure and support services— Construction and maintenance of utilities— Architectural and environmental services— Plant hire and operations— Building products— Design services— Building operations management— Manufacturing of precast materials

Capital— Property development— Housebuilding

A list of principal subsidiaries, jointly controlled entities, jointly controlled operations and associates can be found on page 87 in note 33 to the financial statements.

A review of the Group’s activities and performance for the year is presented on pages 1 to 51.

Parent undertakingThe Company is a wholly owned subsidiary of Suffolk Partners Corporation, a company incorporated in the British Virgin Islands.

Results and dividendsThe results for the year are set out in the Consolidated Income Statement on page 58 and show a profit for the year after tax of £68.2m (2008: £65.6m).

The Company paid dividends of £19.6m during the year (2008: £nil). The Directors do not recommend the payment of a final dividend (2008: £nil).

Health, safety and welfareThe Group is committed to ensuring the health, safety and welfare of all employees at work. All reasonable measures have been taken to achieve this policy. Arrangements have been made to protect other persons against risk to health and safety arising from the activities of the Group’s employees when at work.

Employment policyThe Group continues to provide employees with relevant information and to seek their views on matters of common concern through their representatives and through line managers. Priority is given to ensuring that employees are aware of significant matters affecting the Group’s trading position and of any significant organisational changes.

The Group treats each application for employment, training and promotion on merit. Full and fair consideration is given to both disabled and able-bodied applicants and employees. If existing employees become disabled, every effort is made to find them appropriate work and training is provided if necessary.

Payment of creditorsWhilst the Group does not follow a formal code of practice, its policy for the period to 31 March 2010 for all suppliers is to fix terms of payment when agreeing the terms of each business transaction, to ensure that the supplier is aware of those terms, and to abide by the agreed terms of payment. The number of days billing from suppliers outstanding to the Group as at 31 March 2009 was 28 days (2008: 29 days).

Directors and their interestsThe current membership of the Board is as set out on page 56. The ultimate majority shareholder of the Company is R G O’Rourke. No other Director has an interest in the shares of the Company. Details of related party transactions can be found on pages 85-86 in note 30 to the financial statements.

Charitable contributionsDuring the year the Group contributed £0.5m (2008: £0.5m) to its nominated charities.

Risk managementDetails of the Group’s policies and procedures for managing risk are set out on page 39 of the Operating and Financial review.

Key judgements and estimation uncertainty are detailed on page 66 in note 2.22 to the financial statements.

Share capitalDetails of the Company’s share capital are set out on page 79 in note 24 to the financial statements.

Post balance sheet eventsThere were no post balance sheet events requiring disclosure.

Directors’ reportfor the year ended 31 March 2009

Lain

g O

’Ro

urke

Ann

ual R

evie

w 2

009

Statement of Directors’ responsibilities for the Annual ReviewCompany law in Cyprus requires the Directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Group and of the Group’s profit or loss for that period. In preparing those financial statements, the Directors are required to:— select suitable accounting policies

and then apply them consistently;— make judgements and estimates

that are reasonable and prudent;— state whether applicable International

Financial Reporting Standards (IFRS) as adopted by the European Union have been followed, subject to any material departures disclosed and explained in the financial statements;

— prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Group will continue in business.

The Directors confirm that they have complied with the above requirements in preparing the financial statements.

The Directors are responsible for keeping proper accounting records which disclose, with reasonable accuracy at any time, the financial position of the Group and enable them to ensure the financial statements comply with the Cyprus Companies Law, Cap. 113. The Directors have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

Information published on the internet is accessible in many countries with different legal requirements relating to the preparation and dissemination of financial statements. Cyprus legislation governing preparation and dissemination of financial statements may therefore differ from that in other jurisdictions. The maintenance and integrity of the Group’s website at www.laingorourke.com is also part of the Directors’ responsibilities.

Auditors and disclosure of information to auditorsSo far as the Directors are aware, there is no relevant audit information of which the Group’s auditors are unaware, and the Directors have taken all the steps that ought to have been taken as Directors in order to make themselves aware of any relevant audit information and to establish that the Group’s auditors are aware of that information.

The auditors, PricewaterhouseCoopers Limited, have indicated their willingness to continue in office as auditors of the Group. A resolution for the reappointment of PricewaterhouseCoopers Limited as auditors of Laing O’Rourke Corporation Limited will be proposed at the Annual General Meeting.

ApprovalThis report was approved by the Board on 6 July 2009 and signed on its behalf by:

C KleridesDirector

Dir

ecto

rs’ r

epo

rt54

—55

Directors

Secretary

Company number

Registered Office

UK contact address

Auditors

Bankers

Solicitors

Insurance consultants

Website

R G O’Rourke S AnastasiadesV PapadopoulosC Klerides

PricewaterhouseCoopers Associates LimitedJulia House3 Themistocles Dervis Street, CY-1066 Nicosia, Cyprus

190393

Julia House3 Themistocles Dervis Street, CY-1066 Nicosia, Cyprus

Laing O’Rourke plcBridge PlaceAnchor BoulevardAdmirals Park, CrosswaysDartford, Kent DA2 6SN, United Kingdom

PricewaterhouseCoopersJulia House3 Themistocles Dervis Street, CY-1066 Nicosia, Cyprus

Bank of Scotland155 Bishopsgate, London, EC2M 3YB, United Kingdom

HSBC 8 Canada Square, London, E14 5HQ, United Kingdom

ANZ40 Bank Street, Canary Wharf, London E14 SEJ, United Kingdom

NabarroLacon HouseTheobalds RoadLondon WC1X 8RW, United Kingdom

K&L Gates 110 Cannon StreetLondon EC4N 6AR, United Kingdom

Kerry London Clare HouseWorton Road, IsleworthMiddlesex TW7 6ER, United Kingdom

www.laingorourke.com

Directors, officers and advisors

Lain

g O

’Ro

urke

Ann

ual R

evie

w 2

009

Independent auditors’ reportto the Members of Laing O’Rourke Corporation Limited

We have audited the consolidated financial statements of Laing O’Rourke Corporation Limited (the ‘Company’) and its subsidiaries (the ‘Group’) on pages 58 to 87 which comprise the consolidated balance sheet as at 31 March 2009, the consolidated income statement, consolidated statement of changes in equity and consolidated cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes. These financial statements have been prepared under the accounting policies set out therein.

Board of Directors’ Responsibility for the Financial StatementsThe Company’s Board of Directors is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and the requirements of the Cyprus Companies Law, Cap. 113. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’ ResponsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the consolidated financial statements give a true and fair view of the financial position of the Laing O’Rourke Corporation Limited Group as at 31 March 2009, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU and the requirements of the Cyprus Companies Law, Cap. 113. The information given in the Directors report is consistent with the financial statements.

Report on Other Legal RequirementsPursuant to the requirements of the Cyprus Companies Law, Cap. 113, we report the following:— We have obtained all the information

and explanations we considered necessary for the purposes of our audit.

— In our opinion, proper books of account have been kept by the Company.

— The Company’s financial statements are in agreement with the books of account.

— In our opinion and to the best of our information and according to the explanations given to us, the consolidated financial statements give the information required by the Companies Law, Cap. 113, in the manner so required.

— In our opinion, the information given in the report of the Board of Directors on pages 54 and 55 is consistent with the consolidated financial statements.

Other MattersThis report, including the opinion, has been prepared for and only for the Company’s members as a body in accordance with Section 156 of the Cyprus Companies Law, Cap. 113 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whose knowledge this report may come to.

PricewaterhouseCoopers Limited Chartered Accountants Nicosia, 6 July 2009

Dir

ecto

rs, o

ffice

rs a

nd a

dvi

sors

56—

57

Pre Exceptional exceptional items items (note 4) Total Total 2009 2009 2009 2008 Continuing operations Note £m £m £m £m

Total revenue 4,087.1 – 4,087.1 3,603.1 Less: share of joint ventures’ revenue (561.5) – (561.5) (281.0)

Revenue 3 3,525.6 – 3,525.6 3,322.1Cost of sales (3,265.9) (11.1) (3,277.0) (3,085.9)Gross profit 259.7 (11.1) 248.6 236.2 Administrative expenses (213.3) – (213.3) (175.0)Other operating income 0.6 – 0.6 0.7 Operating profit 5 47.0 (11.1) 35.9 61.9

Share of post tax profit of joint ventures and associates 13 62.4 (6.0) 56.4 23.3Profit from operations 109.4 (17.1) 92.3 85.2

Net non operating expense 7 (2.0) – (2.0) (0.5)Finance income 8 13.6 – 13.6 13.9 Finance expense 9 (18.9) – (18.9) (17.4)Net financing expense (5.3) – (5.3) (3.5)Profit before tax 102.1 (17.1) 85.0 81.2

Income tax expense 10 (16.8) – (16.8) (15.6)Profit for the year 85.3 (17.1) 68.2 65.6

Attributable to: Equity holders of the Company 84.1 (17.1) 67.0 65.0Minority interest 25 1.2 – 1.2 0.6 85.3 (17.1) 68.2 65.6

The notes on pages 62 to 87 form part of these financial statements.

Consolidated income statementfor the year ended 31 March 2009

Lain

g O

’Ro

urke

Ann

ual R

evie

w 2

009

2009 2008 Assets Note £m £m

Non-current assets Intangible assets 12 312.5 311.2Investments in joint ventures and associates 13 60.8 26.9Loans to joint ventures 13 16.1 13.8Property, plant and equipment 14 304.7 261.9Investment property 15 18.0 9.5Deferred tax assets 23 20.4 11.6 Trade and other receivables 20 21.9 10.4 Derivative financial instruments 17 3.0 –Restricted financial assets 18 4.4 3.4 Total non-current assets 761.8 648.7 Current assets Inventories 19 250.6 253.2Trade and other receivables 20 664.0 505.3Available-for-sale financial assets 16 9.0 10.5 Derivative financial instruments 17 1.9 0.6Cash and cash equivalents 614.3 476.5Total current assets 1,539.8 1,246.1Total assets 2,301.6 1,894.8 LiabilitiesCurrent liabilities Borrowings 21 (120.9) (62.8)Trade and other payables 22 (1,266.1) (1,028.5)Current tax liabilities (11.5) (8.2) Total current liabilities (1,398.5) (1,099.5)

Non-current liabilitiesBorrowings 21 (319.9) (277.4)Trade and other payables 22 (30.6) (40.0)Deferred tax liabilities 23 (19.8) (13.9) Total non-current liabilities (370.3) (331.3)Total liabilities (1,768.8) (1,430.8)Net assets 532.8 464.0

Equity Share capital 24 – –Share premium 24 339.5 339.5Fair value reserve 25 (2.2) (0.2) Foreign currency translation reserve 25 24.9 3.3 Retained earnings 25 168.2 120.8Total equity attributable to equity holders of the Company 530.4 463.4Minority interest 25 2.4 0.6Total equity 532.8 464.0

The financial statements were approved by the Board of Directors on 6 July 2009 and were signed on its behalf by:

R G O’Rourke C KleridesDirector Director

The notes on pages 62 to 87 form part of these financial statements.

Consolidated balance sheetas at 31 March 2009

Fina

ncia

l sta

tem

ents

58—

59

Consolidated cash flow statementfor the year ended 31 March 2009

2009 2008 Continuing operations Note £m £m

Cash flows from operating activitiesProfit before tax 85.0 81.2 Adjustments for:Non-cash exceptional items 4 17.1 – Depreciation and amortisation 63.6 54.9 (Profit)/loss on disposal of property, plant and equipment (3.6) 0.5 Loss on disposal of intangibles 0.4 0.3 Net financing costs 5.3 3.6 Share of post tax profit of joint ventures and associates pre-exceptional items (62.4) (23.3)(Increase)/decrease in trade and other receivables (103.2) 71.3 Increase in inventories (18.9) (174.8)Increase in trade and other payables and provisions 157.1 180.8 Other 7.0 0.7 Cash generated from operations 147.4 195.2 Interest paid (18.6) (17.4)Tax paid (15.7) (5.1)Net cash generated from operating activities 113.1 172.7

Cash flows from investing activitiesPurchase of property, plant and equipment (65.2) (22.8)Purchase of investment property 15 (10.5) – Purchase of intangible assets 12 (1.8) (2.8)Purchase of available-for-sale financial assets 16 (1.3) (8.5)Acquisition of subsidiary, net of cash acquired 12 (2.7) –Payments to acquire joint ventures 13 (4.0) –Disposal of property, plant and equipment 21.1 7.0 Disposal of joint ventures – 2.0 Loans to joint ventures and associated companies 13 (7.6) (12.2)Loans repaid by joint ventures 13 1.6 –Interest received 13.6 14.0 Dividends received from joint ventures and associated companies 13 42.1 14.7 Net cash used in investing activities (14.7) (8.6)

Cash flows from financing activitiesProceeds from new bank loans 141.4 92.5 Repayments of bank loans (39.5) (10.2)Finance lease principal repayments (54.5) (43.2)Repayment of shareholder loan – (363.4)Proceeds from issue of share capital – 339.5 Share capital issued to minority interest of subsidiary 0.3 –Dividends paid to minority interest of subsidiary – (0.3)Dividends paid 11 (19.6) – Net cash generated from financing activities 28.1 14.9

Net increase in cash and cash equivalents 126.5 179.0Cash and cash equivalents at beginning of year 476.5 301.3Effect of exchange rate fluctuations on cash held 11.3 (3.8) Cash and cash equivalents at end of year 614.3 476.5

Non-cash transactions principally relate to new hire purchase and finance lease agreements taken out during the year amounting to £41.1m (2008: £70.1m).

Cash and cash equivalents comprise: Cash at bank and on hand 613.4 475.7 Short-term bank deposits 0.9 0.8 614.3 476.5

The notes on pages 62 to 87 form part of these financial statements.

Lain

g O

’Ro

urke

Ann

ual R

evie

w 2

009

Consolidated statement of changes in equityfor the year ended 31 March 2009

Fina

ncia

l sta

tem

ents

Total Share capital & Other Retained shareholders’ Minority Total share premium reserves earnings equity interest equity £m £m £m £m £m £m

Balance at 1 April 2007 – (1.2) 54.5 53.3 0.5 53.8 Profit for the year – – 65.0 65.0 0.6 65.6 Exchange differences on translation – 5.5 1.3 6.8 (0.2) 6.6 Fair value loss on available-for-sale financial assets – (1.2) – (1.2) – (1.2)Issue of share capital 339.5 – – 339.5 – 339.5 Dividends paid – – – – (0.3) (0.3)Balance at 31 March 2008 339.5 3.1 120.8 463.4 0.6 464.0 Profit for the year – - 67.0 67.0 1.2 68.2 Exchange differences on translation – 22.8 – 22.8 0.3 23.1 Fair value loss on available-for-sale financial assets – (3.2) – (3.2) – (3.2)Issue of share capital in subsidiary – – – – 0.3 0.3 Dividends paid – – (19.6) (19.6) – (19.6)Balance at 31 March 2009 339.5 22.7 168.2 530.4 2.4 532.8

Additional disclosure and details are provided in note 25.

The notes on pages 62 to 87 form part of these financial statements.

60—

61

1 General information Laing O’Rourke Corporation Limited (the ‘Company’) is a company incorporated and domiciled in Cyprus. The address of the registered office is given on page 56. The nature of the Group’s operations and its principal activities are set out in note 33 and in the Operating and Financial Review on pages 34 to 51. The consolidated financial statements of the Company for the year ended 31 March 2009 comprise the Company and its subsidiaries (together referred to as the ‘Group’) and the Group’s interest in associates and jointly controlled entities.

2 Significant accounting policies 2.1 Statement of compliance The Group consolidated financial statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted by the European Union (Adopted IFRS and International Financial Reporting Interpretations Committee (IFRIC) interpretations) and the Cyprus Companies Law, Cap. 113.

2.2 Basis of preparation The Group consolidated financial statements are presented in pounds sterling, rounded to the nearest hundred thousand and include the results of the holding company and its subsidiary undertakings for the year ended 31 March 2009. The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of land and buildings (prior to the adoption of IFRS), available-for-sale financial assets, and financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

The Directors have considered recently published IFRSs, new interpretations and amendments to existing standards that are mandatory to the Group’s accounting periods commencing on or after 1 April 2009. Each standard has been reviewed, and the effect on the Group financial statements of adopting these new standards, amendments and interpretations has been determined to be minimal.

1) Standards that are not yet effective and have not been early-adopted by the Group:

a) IAS 1, Presentation of Financial Statements (Revised), (effective for accounting periods beginning on or after 1 January 2009).

b) IAS 23 (2007), (Amendment) Borrowing Costs, (effective for accounting periods beginning on or after 1 January 2009).

c) IAS 27 (Amendment), Consolidated and Separate Financial Statements, (effective for accounting periods beginning on or after 1 July 2009).

d) Amendments to IAS 32, Financial Instruments: Presentation and IAS 1, Presentation of Financial Statements, Puttable Financial Instruments and Obligations Arising on Liquidation, (effective for accounting periods beginning on or after 1 January 2009).

e) Amendment to IAS 39, Financial Instruments: Recognition and Measurement, Eligible Hedged Items, (effective for accounting periods beginning on or after 1 July 2009).

f) IFRS 2 (Amendment), Share-based Payment Vesting Conditions and Cancellations, (effective for accounting periods beginning on or after 1 January 2009).

g) IFRS 3 (Amendment), Business Combinations, (effective for accounting periods beginning on or after 1 July 2009).

2) Standards, amendments and interpretations effective in the current financial year but are not relevant or have no material impact:

a) Amendments to IAS 39, Financial Instruments: Recognition and Measurement and IFRS 7, Financial Instruments: Disclosure, Reclassification of Financial Assets, (effective from 1 July 2008).

b) IFRIC 12, Service concession arrangements, (effective for accounting periods beginning on or after 1 January 2008) outlines an approach to account for contractual arrangements arising from entities providing public services.

c) IFRIC 14, IAS 19, The limit on a defined benefit asset, minimum funding requirements and their interaction, (effective for accounting periods beginning on or after 1 January 2008).

3) Interpretations to existing standards that are not yet effective and have not been early-adopted by the Group:

a) IFRIC 15, Agreements for the Construction of Real Estate, (effective for accounting periods beginning on or after 1 January 2009).

b) IFRIC 16, Hedges of a Net Investment in a Foreign Operation, (effective for accounting periods beginning on or after 1 October 2008).

c) IFRIC 17, Distributions of Non-cash Assets to Owners, (effective for accounting periods beginning on or after 1 July 2009).

d) IFRIC 18, Transfers of Assets from Customers, (effective for transfers of assets from customers received on or after 1 July 2009).

4) Interpretations to existing standards that are not yet effective and not relevant for the Group’s operations:

a) IFRIC 13, Customer loyalty programmes, (effective for accounting periods beginning on or after 1 July 2008).

Notes to financial statementsfor the year ended 31 March 2009

Lain

g O

’Ro

urke

Ann

ual R

evie

w 2

009

2.3 Basis of consolidation a) The Group financial statements include

the accounts of the Company and subsidiaries controlled by the Company. Control exists where the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account. Subsidiaries are consolidated from the date on which effective control is transferred to the Group and are deconsolidated from the date control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group falling within the scope of IFRS 3 ‘Business Combinations’. The cost of an acquisition is measured at the fair value of the assets, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets, liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.

b) Associates are operations over which the Group has the power to exercise significant influence but not control, generally accompanied by a share of between 20% and 50% of the voting rights. Associates are accounted for using the equity method and are initially recognised at cost. The Group’s investment in associates includes goodwill identified on acquisition, net of any accumulated impairment loss. The Group’s share of its associates’ post-acquisition profits or losses is recognised in the income statement, and its share of post-acquisition movements in reserves is recognised in reserves. If the Group’s share of losses in an associate equals its investment, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

c) Jointly controlled entities are those entities over whose activities the Group has joint control, established by contractual agreement. In a number of these, the Group’s share of the underlying assets and liabilities may be greater than 50% but the terms of the relevant agreements make it clear that control is not exercised. Jointly controlled entities are accounted for using the equity method from the date that the jointly controlled entity commences until the date that joint control of the entity ceases. If the Group’s share of the losses in the jointly controlled entity equals or exceeds its interest in the undertaking, the Group does not recognise further losses unless it has incurred obligations or made payments on behalf of the entity.

d) Jointly controlled operations are where the Group undertakes a joint venture, established by contractual agreement, without establishing a separate entity. The Group uses its own assets and incurs its own liabilities, the joint venture agreement provides a means by which revenue and any joint expenses are shared amongst the venturers. The Group recognises its share of the assets it controls, liabilities and cash flows it incurs and its share of the results under each relevant heading in the income statement and balance sheet.

e) Intra-Group balances and transactions together with any unrealised gains arising from intra-Group transactions are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with jointly controlled entities and jointly controlled operations are eliminated to the extent of the Group’s interest in the entity. The Group’s share of unrealised gains arising from transactions with associates is eliminated against the investment in the associate. The Group’s share of unrealised losses is eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

2.4 Foreign currency translation

Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in pounds sterling, which is the functional and presentation currency of Laing O’Rourke Corporation Limited and the currency of the primary economic environment in which the Group operates.

Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies, are recognised in the income statement.

Translation differences on non-monetary financial assets and liabilities are reported as part of the fair value gain or loss. Translation differences on non-monetary financial assets and liabilities such as equities held at ‘fair value through profit or loss’ are recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets such as equities classified as available-for-sale are included in the fair value reserve in equity.

Group companies The results and financial position of all Group entities (none of which has the currency of a hyper-inflationary economy) that has a functional currency different from the presentation currency are translated into the presentation currency as follows:i) assets and liabilities for each balance

sheet presented are translated at the closing rate at the date of that balance sheet;

ii) income and expenses for each income statement are translated at average exchange rates; and

iii) all resulting exchange differences are recognised in the foreign currency translation reserve.

On consolidation, exchange differences arising from the translation of the net investment in foreign operations, and of borrowings designed as hedges of such investments, are taken to shareholders’ equity. When a foreign operation is partially disposed of, or sold, exchange differences that were recorded in equity are recognised in the income statement as part of the gain or loss on sale. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

Fina

ncia

l sta

tem

ents

62—

63

2 Significant accounting policies (continued) 2.5 Property, plant and equipment Property, plant and equipment are reported at historical cost less accumulated depreciation and any recognised impairment loss. Land is not depreciated. Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items. Cost comprises purchase price and directly attributable costs. Depreciation is calculated on the straight-line method to write down the cost to their residual values over their estimated useful lives as follows:

Owner occupied properties 2%Plant and machinery 6%-50%Motor vehicles 25%

Certain land and buildings were revalued under UK GAAP. On transition to IFRS, the Group elected to use the revalued amount as deemed cost.

Assets held under finance leases are depreciated over the term of the lease or the estimated useful life of the asset as appropriate.

Gains and losses on disposal, which are not exceptional items, are recognised within administrative expenses or in non operating income/expense in the income statement.

2.6 Goodwill and other intangible assets

Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net assets of the acquired subsidiary, associate or joint venture at the date of acquisition. Goodwill on acquisitions prior to 1 April 2006 (the date of transition to IFRS) is carried at its book value (original cost less cumulative amortisation) on that date, less any subsequent impairment. This is in accordance with the transitional provisions of IFRS 1. Goodwill arising before 1 January 1998 was eliminated against reserves and has not been reinstated in accordance with the transitional provisions

of IFRS 3 ‘Business Combinations’. Goodwill arising on the Group’s investments in associates and joint ventures since that date is included within the carrying value of these investments. Negative goodwill arising on or after 1 April 2006 is recognised in the income statement immediately. Separately recognised goodwill is tested annually for impairment and carried at cost less impairment losses. Goodwill is allocated to cash generating units for the purpose of impairment testing.

Other intangible assets Other intangible assets are stated at cost less accumulated amortisation and impairment losses. Amortisation is based on the useful lives of the assets concerned, and recognised on a straight line basis over the following periods:— Computer software and licences –

2-4 years; — Brands, customer contracts and lists –

8 years. Impairment of non-financial assets Assets that have an indefinite useful life are not subject to amortisation and are tested for impairment annually. Assets that are subject to amortisation or depreciation are reviewed for impairment when circumstances or events indicate there may be uncertainty over the carrying value. For impairment testing, goodwill is allocated to cash-generating units by geographical reporting unit and business segment. Assets are grouped at the lowest level for which there are separately identifiable cash flows.

2.7 Investment property Investment properties are held for long-term rental yields and are not occupied by the Group. Acquired investment properties are initially measured at cost, being the fair value of consideration given to acquire the property. The cost of self-constructed investment properties include all directly attributable costs. Completed investment properties are stated at fair value, which is supported by market evidence, as assessed annually by the chief surveyor or by qualified external valuers at three year intervals. Depreciation is not provided on investment properties. Changes in fair values are recorded in the income statement as part of non-operating income/expense.

2.8 Financial investments The Group has classified its financial investments as available-for-sale financial assets which are recognised at fair value. Purchases and sales of investments are recognised on the trade date, which is the date that the Group commits to purchase or sell the assets, at their fair values less transaction costs. The fair values of listed financial investments are determined using bid market prices. Changes in the fair value of financial investments classified as available-for-sale are recorded in the fair value reserve within equity. When these are sold, the fair value adjustments recognised in equity are included in the income statement.

2.9 Derivative financial instruments The Group enters into forward contracts or borrows/deposits funds in foreign currencies in order to hedge against transactional foreign currency exposures. Derivatives are initially recognised at fair value on the date of the contract and are subsequently remeasured at their fair value. Movements in fair value are recorded in the income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The full fair value of a hedging derivative is classified as a non-current asset or liability if the remaining maturity of the hedged item is more than 12 months and, as a current asset or liability, if the maturity of the hedged item is less than 12 months.

Notes to financial statementsfor the year ended 31 March 2009

Lain

g O

’Ro

urke

Ann

ual R

evie

w 2

009

2.10 Cash and cash equivalents Cash and cash equivalents consist of cash at banks and on hand, deposits held at call with banks, and other short-term highly liquid investments with less than 90 days maturity from the date of acquisition. For the purpose of the cash flow statement, cash and cash equivalents also include bank overdrafts, which are included in bank loans and overdrafts on the balance sheet.

2.11 Trade and other receivables Trade receivables are initially recorded at fair value and subsequently measured at amortised cost as reduced by appropriate allowances for estimated irrecoverable amounts.

2.12 Trade and other payables Trade payables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method.

2.13 Revenue recognition Revenue is measured at the fair value of the consideration received or receivable, net of sales tax, for goods and services supplied to external customers. It includes the Group’s share of revenue from work carried out under jointly controlled operations. Revenue from services and construction contracts is recognised by reference to the stage of completion of the contract, as set out in the accounting policy for construction and service contracts. Revenue from the sale of goods is recognised when the Group has transferred significant risks and rewards of ownership of the goods to the buyer, the amount of revenue can be measured reliably and it is probable that the economic benefits associated with the transaction will flow to the Group.

Rental income is recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives are recognised as an integral part of the total rental income.

Revenue on private housing and commercial property is recognised on legal completion of the sale.

2.14 Construction and service contracts

When the outcome of a construction contract can be estimated reliably, contract revenue and costs are recognised by reference to the stage of completion of each contract, as measured by the proportion of total costs at the balance sheet date to the estimated total cost of the contract.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

Where costs incurred plus recognised profits less recognised losses exceed progress billings, the balance is recognised as due from customers on construction contracts within trade and other receivables. Where progress billings exceed costs incurred plus recognised profits less recognised losses, the balance is recognised as advance payments on construction contracts within trade and other payables.

PFI bid costs are expensed as incurred until the Group is appointed preferred bidder. Provided the contract is expected to generate sufficient net cash inflows to enable recovery and the award of the contract is virtually certain, PFI bid costs incurred post the appointment as preferred bidder are included within receivables. The PFI bid costs are expensed on reimbursement at financial close. Any surplus on reimbursement of costs compared with those recorded in receivables are recognised in the income statement.

2.15 Inventories Inventories, including land and related development activity thereon, are stated at the lower of cost and estimated net realisable value. Cost comprises direct materials, direct and subcontract labour, specific borrowing costs and those overheads that have been incurred in bringing inventories to their present location and condition. Net realisable value represents the estimated income less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

2.16 Leases and hire purchase commitments

Assets obtained under hire purchase contracts and leases, where a significant portion of the risks and rewards of ownership is transferred to the Group, are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased asset and the present value of the minimum lease payments. Lease payments are apportioned between the liability and finance charge to produce a constant rate of interest on the finance lease balance outstanding. Assets held for use in such leases are included in ‘Property, plant and equipment’ (note 14) and are depreciated to their residual values over the estimated useful lives or the lease term as apprpriate and are adjusted for impairment losses. Obligations under such agreements are included in ‘Borrowings’ (note 21).

Leases other than finance leases are classified as operating leases. Payments made under operating leases are recognised as an expense in the income statement on a straight-line basis over the lease term. Any incentives to enter into operating leases are recognised as a reduction of rental expense over the lease term on a straight-line basis.

2.17 Pension costs The Group operates a defined contribution pension scheme for staff and Directors. The contributions paid by the Group and the employees are invested within the pension fund in the month following the month of deduction. Once the contributions have been paid, the Group, as employer, has no further payment obligations. The Group’s contributions are charged to the income statement in the year to which they relate.

2.18 Tax Tax expense represents the sum of the tax currently payable and deferred tax. The current tax expense is based on the taxable profits for the year, after any adjustments in respect of prior years. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it also excludes items that are neither taxable or deductible. The Group’s liability for current tax is calculated using tax rates and laws that have been enacted or substantially enacted by the balance sheet date.

Deferred tax is provided on temporary differences arising from investments in subsidiaries, associates and joint ventures, except where the timing of the reversal of the temporary difference can be controlled and it is probable that the difference will not reverse in the foreseeable future. Deferred taxes are not provided in respect of temporary differences arising from the initial recognition of goodwill, or from goodwill for which amortisation is not deductible for tax purposes, or from the initial recognition of an asset or liability in a transaction which is not a business combination and affects neither accounting profit nor taxable profit or loss at the time of the transaction. Deferred tax is calculated at the tax rates based on those enacted or substantially enacted at the balance sheet date and are expected to apply when the related asset is realised or liability settled. Deferred tax is charged or credited in the income statement except when it relates to items charged or credited directly to equity, in which case the deferred tax is also included in equity.

Fina

ncia

l sta

tem

ents

64—

65

2 Significant accounting policies (continued) 2.19 Borrowings and borrowing costs Interest bearing bank loans and overdrafts are recognised initially at fair value net of transaction costs incurred. All borrowings are subsequently stated at amortised cost with the difference between initial net proceeds and redemption value recognised in the income statement over the period to redemption.

Borrowing costs are capitalised where the Group borrows funds specifically for the purpose of acquiring, constructing or producing a qualifying asset, in accordance with IAS 23 ‘Borrowing Costs’. All other finance costs of debt, including premiums payable on settlement and direct issue costs, are charged to the income statement on an accruals basis over the term of the instrument, using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date. 2.20 Exceptional items Exceptional items are defined as items of income or expenditure which, in the opinion of the Directors, are material and unusual in nature or of such significance that they require separate disclosure on the face of the income statement in accordance with IAS 1 ‘Presentation of Financial Statements’.

2.21 Trading analysis Trading analysis information is based on the Group’s internal reporting structure of three operational hubs. Further information on the business trading activities is set out in the Operating and Financial Review on pages 34 to 51. Trading analysis results represent the contribution directly attributable for the different hubs to profit of the Group. Transactions between hubs are conducted at arm’s length market prices.

2.22 Key judgements and estimation uncertainty The preparation of consolidated financial statements under IFRS requires management to make estimates and assumptions that affect amounts recognised for assets and liabilities at the balance sheet date and the amounts of revenue and the expenses incurred during the reported period. Actual outcomes may therefore differ from these estimates and assumptions. The estimates and assumptions that have the most significant impact on the carrying value of assets and liabilities of the Group within the next financial year are detailed as follows:

a) Revenue and margin recognitionThe Group’s revenue recognition and margin recognition policies, which are set out in notes 2.13 and 2.14, are central to the way the Group values the work it has carried out in each financial year and have been consistently applied. These policies require forecasts to be made of the outcomes of long-term construction and service contracts, which require assessments and judgements to be made on recovery of pre-contract costs, changes in work scopes, contract programmes and maintenance liabilities.

b) DisputesManagement’s best judgement has been taken into account in reporting disputed amounts, but the actual future outcome may diverge from this judgement.

c) Impairment of goodwillDetermining whether goodwill is impaired requires an estimation of the value in use of the cash generating units to which the goodwill has been allocated. The value in use calculation requires an estimation to be made of the timing and amount of future cash flows expected to arise from the cash generating unit, and a suitable discount rate in order to calculate the present value. The discount rate used, carrying value of goodwill and further details of the impairment loss calculation are included in note 12.

d) TaxationThe Group is subject to tax in a number of jurisdictions and judgement is required in determining the worldwide provision for income taxes. The Group provides for future liabilities in respect of uncertain tax positions where additional tax may become payable in future periods and such provisions are based upon management’s assessment of exposures.

e) Land developmentsDetermining whether land developments are impaired requires an estimation of the fair values of expected selling prices and costs to complete. A detailed review was completed at 31 March 2009 which resulted in an exceptional impairment of £17.1m being recognised. Further details are included in note 4.

f) Investment propertyDetermining the fair value of investment properties requires an estimation of future rental yields compared to current market evidence. Comparable market price information is limited due to the current economic conditions and management have excercised their best judgements in determining the fair value of investment properties.

g) Financial risk managementIn the course of its business, the Group is exposed to foreign currency risk, liquidity risk and credit risk. The overall aim of the Group’s financial risk management policies is to use judgement to minimise potential adverse effects on financial performance and net assets. Further details are provided in note 27 to the financial statements.

Notes to financial statementsfor the year ended 31 March 2009

Lain

g O

’Ro

urke

Ann

ual R

evie

w 2

009

Fina

ncia

l sta

tem

ents

66—

67

Middle East Europe and South Asia Australasia Total Group 2009 2009 2009 2009 £m £m £m £m

Performance by geography:Total revenue 2,532.8 828.7 725.6 4,087.1Less: Share of joint ventures’ and associates revenue (53.0) (357.6) (150.9) (561.5)Revenue 2,479.8 471.1 574.7 3,525.6 Profit from operations post exceptional items 34.4 36.9 21.0 92.3Profit for the year before tax post exceptional items 31.2 37.2 16.6 85.0

EBIT post exceptional items 36.9 40.0 21.0 97.9EBITDA post exceptional items 78.4 48.9 34.2 161.5

Profit from operations pre exceptional items 51.5 36.9 21.0 109.4Profit for the year pre tax and exceptional items 48.3 37.2 16.6 102.1 EBIT pre exceptional items 54.0 40.0 21.0 115.0EBITDA pre exceptional items 95.5 48.9 34.2 178.6

Middle East Europe and South Asia Australasia Total Group 2008 2008 2008 2008 £m £m £m £m

Total revenue 2,608.8 419.9 574.4 3,603.1Less: Share of joint ventures’ and associates revenue (43.7) (162.3) (75.0) (281.0)Revenue 2,565.1 257.6 499.4 3,322.1 Profit from operations 39.5 28.1 17.6 85.2 Profit for the year before tax 38.8 27.8 14.6 81.2 EBIT 41.8 29.1 16.8 87.7EBITDA 84.1 35.0 23.5 142.6

EBIT and EBITDA reconciliation

Pre exceptional Exceptional Post exceptional items items items 2009 2009 2009 2008 Note £m £m £m £m

Profit from operations 109.4 (17.1) 92.3 85.2Less: Net non operating expense 7 (2.0) – (2.0) (0.5)Add back: JV net finance expense 13 1.9 – 1.9 0.5 JV tax expense 13 5.7 – 5.7 2.5EBIT 115.0 (17.1) 97.9 87.7Depreciation 5 61.0 – 61.0 52.3Amortisation 5 2.6 – 2.6 2.6EBITDA 178.6 (17.1) 161.5 142.6

There is no material difference between revenue by origin and revenue by destination. Revenue includes £2,814.8m on construction contracts (2008: £2,588.4m) calculated on the definition included in IAS11, Construction Contracts.

3 Trading analysis

Notes to financial statementsfor the year ended 31 March 2009

4 Exceptional items

During the year the Directors reviewed the carrying value of the Group’s residential and mixed-use development assets. The valuations incorporated forecast selling prices and costs to complete as assessed at the balance sheet date. As a result of the review, the Group recognised exceptional land and work in progress impairments of £17.1m (2008: £nil).

5 Operating profit 2009 2008 Note £m £m

Operating profit is stated after charging/(crediting):

Staff costs: 6 Staff costs excluding bonuses 824.1 771.0 Staff bonuses 28.5 3.4Depreciation of property, plant and equipment: 14 Owned assets 27.3 23.4 Under finance leases 33.7 28.9 Operating lease rentals and short-term hires: Property, plant and equipment 88.1 73.5 Amortisation of other intangible assets 12 2.6 2.6 (Profit)/loss on disposal of plant and equipment (4.0) 0.5Loss on disposal of intangibles – 0.3Foreign exchange gains (10.9) (0.8) Investment property income 15 0.6 0.5Cost of inventories recognised as an expense: Exceptional items 4 17.1 – Other 1.7 0.2 Auditors’ remuneration (see below) 1.6 2.0

Auditors’ remuneration Fees payable to the Company’s auditor for the audit of: The Company’s annual accounts and consolidated financial statements 0.4 0.3 The Company’s subsidiaries pursuant to legislation 0.5 0.5Total audit fees 0.9 0.8 Fees payable to the Company’s auditor and its associates for other services: Services relating to taxation 0.5 1.1 All other services 0.2 0.1 Total non-audit fees 0.7 1.2Total fees 1.6 2.0

Lain

g O

’Ro

urke

Ann

ual R

evie

w 2

009

Fina

ncia

l sta

tem

ents

6 Staff costs and employee numbers

2009 2008 Number Number

Number of employees

The average monthly number of employees (including the Directors) during the period were: 23,205 22,567

2009 2008 £m £m

Aggregate remuneration and related costs, including Directors:Wages and salaries 768.8 695.6 Social security costs 68.0 64.4Other pension costs 15.8 14.4 852.6 774.4

Transactions with key management personnelThe Group’s key management personnel include the four Directors and the nine other members who served on the Group Executive Committee during the year.

The compensation of key management personnel is as follows:

Salaries and other short-term employee benefits 5.9 3.7Post retirement benefits 0.1 0.1 6.0 3.8 Directors’ remunerationThe total remuneration of the Directors (included in key management personnel compensation above) was as follows:

Salaries and other short-term benefits 0.6 0.4

No post retirement benefits were paid on behalf of Directors (2008: £nil).

7 Net non operating expense

Loss on sale of property 0.4 – (Profit)/loss on sale of investments (0.2) 0.4 Net losses on investment property at fair value 1.8 0.1 2.0 0.5

8 Finance income

Bank interest 13.5 13.8 Other interest and similar income 0.1 0.1 13.6 13.9

68—

69

Notes to financial statementsfor the year ended 31 March 2009

9 Finance expense 2009 2008 £m £m

Interest payable on bank loans and overdrafts 8.2 8.0 Other interest payable and similar charges 0.7 0.3 Finance lease charges 10.0 9.1 18.9 17.4

10 Income tax expense

Cyprus corporation taxCurrent tax on income for the year 0.4 – Foreign tax Current tax on income for the year 19.7 10.8 Total current tax 20.1 10.8

Net origination of temporary differences (1.2) 2.6 Adjustment in respect of prior years (2.1) 2.2Total deferred tax (3.3) 4.8Tax expense for the year 16.8 15.6

The tax expense for the current and prior year is lower than the standard rate of corporation tax in the UK (28%) (2008: 30%). The differences are explained below:

Total tax reconciliation Profit before tax 85.0 81.2

Tax at the UK corporation tax rate of 28% (2008: UK 30%) 23.8 24.4Effects of: Lower overseas tax rates (10.3) (9.9) Other expenditure that is not tax deductible 2.9 1.8 Adjustments to prior years (2.1) – Other adjustments 2.5 (0.7)Total tax charge 16.8 15.6

11 Dividends

Interim dividends paid of £2,178 per ordinary share (2008: £nil). 19.6 –

The Directors do not recommend the payment of a final dividend (2008: £nil).

Lain

g O

’Ro

urke

Ann

ual R

evie

w 2

009

Fina

ncia

l sta

tem

ents12 Intangible assets

Computer software Goodwill Brands and licences Total £m £m £m £m

Cost At 1 April 2008 305.7 1.8 17.3 324.8Acquisitions 0.2 – – 0.2Additions – – 1.8 1.8Disposals – – (7.9) (7.9)Exchange differences 2.2 0.1 – 2.3At 31 March 2009 308.1 1.9 11.2 321.2 Accumulated amortisationAt 1 April 2008 – 0.4 13.2 13.6Amortisation for the year – 0.2 2.4 2.6Disposals – – (7.5) (7.5)At 31 March 2009 – 0.6 8.1 8.7

Net book value at 31 March 2009 308.1 1.3 3.1 312.5

CostAt 1 April 2007 301.2 1.7 15.2 318.1 Additions – – 2.8 2.8 Disposals – – (0.7) (0.7)Exchange differences 4.5 0.1 – 4.6 At 31 March 2008 305.7 1.8 17.3 324.8 Accumulated amortisation At 1 April 2007 – 0.2 11.2 11.4 Amortisation for the year – 0.2 2.4 2.6 Disposals – – (0.4) (0.4)At 31 March 2008 – 0.4 13.2 13.6 Net book value at 31 March 2008 305.7 1.4 4.1 311.2

On 4 April 2008 the Group acquired the trade and assets of the Hecdal scaffolding business in Australia for a total consideration of £2.7m. The acquisition price included property, plant and equipment of £2.5m and goodwill of £0.2m.

Impairment tests for cash-generating units containing goodwillThe following units have significant amounts of goodwill

2009 2008 £m £m

Australasia 42.3 40.0Europe 265.8 265.7 308.1 305.7

The recoverable amount of goodwill attached to each cash generating unit is based on value in use calculations in accordance with IAS 36 ‘Impairment of Assets’. Each calculation uses cash flow projections based on four-year financial budgets approved by management and a perpetual growth rate of 3% thereafter, discounted at the Group’s estimated pre tax weighted average cost of capital of 15%. Budgeted gross margins are based on past performance and management’s market expectations. The estimated perpetual growth rate of 3% does not exceed the long-term average growth rate for the business in which the cash-generating unit operates and is consistent with industry forecast reports. The weighted average cost of capital is a prudent estimate from listed industry competitors, adjusted for changes in capital structures.

As at 31 March 2009, based on the internal value in use calculations, management concluded that the recoverable value of the cash generating units exceeded their carrying amount.

Amortisation chargeThe amortisation charge in respect of software, licences and brands is recognised in the following line items in the income statement:

Cost of sales 2.4 2.4Administrative expenses 0.2 0.2 2.6 2.6

70—

71

Notes to financial statementsfor the year ended 31 March 2009

13 Investments in joint ventures and associates

Joint ventures Associates Loans to equity equity joint investments investment ventures Total £m £m £m £m

CostAt 1 April 2008 4.6 9.3 13.8 27.7Equity investment purchases 4.0 – – 4.0Equity investment disposals – – (0.6) (0.6)Loans advanced – – 7.6 7.6Loans repaid – – (1.6) (1.6) Transfers 5.3 – (5.3) – Exchange differences – 0.5 2.2 2.7At 31 March 2009 13.9 9.8 16.1 39.8 Share of post-acquisition resultsAt 1 April 2008 13.0 – – 13.0Share of results for the year after tax 56.4 – – 56.4Disposals 0.5 – – 0.5Distributions received (42.1) – – (42.1)Exchange differences 9.3 – – 9.3At 31 March 2009 37.1 – – 37.1

Net book value 31 March 2009 51.0 9.8 16.1 76.9Net book value 31 March 2008 17.6 9.3 13.8 40.7

CostAt 1 April 2007 6.9 8.3 1.5 16.7Equity investment disposals (2.0) – – (2.0)Loans advanced – – 12.2 12.2Exchange differences (0.3) 1.0 0.1 0.8At 31 March 2008 4.6 9.3 13.8 27.7

Share of post-acquisition resultsAt 1 April 2007 4.0 – – 4.0Share of results for the year after tax 23.3 – – 23.3Distributions received (14.7) – – (14.7)Exchange differences 0.4 – – 0.4At 31 March 2008 13.0 – – 13.0

Net book value 31 March 2008 17.6 9.3 13.8 40.7Net book value 31 March 2007 10.9 8.3 1.5 20.7

No impairment losses to equity investments were brought forward at 31 March 2009 or charged in the year (2008: £nil). An exceptional impairment of £6.0m (2008: £nil) to land and work in progress was recognised in share of results for the year after tax, see note 4 for further details.

Lain

g O

’Ro

urke

Ann

ual R

evie

w 2

009

Fina

ncia

l sta

tem

ents13 Investments in joint ventures and associates (continued)

The analysis of revenue, income, assets and liabilities of the Group’s interest in joint ventures and associates is set out below:

Joint Joint ventures Associates Total ventures Associates Total 2009 2009 2009 2008 2008 2008 £m £m £m £m £m £m

Revenue 561.5 – 561.5 281.0 – 281.0Operating profit 64.0 – 64.0 26.3 – 26.3Net finance expense (1.9) – (1.9) (0.5) – (0.5 )Profit before tax 62.1 – 62.1 25.8 – 25.8Tax expense (5.7) – (5.7) (2.5) – (2.5)Profit after tax 56.4 – 56.4 23.3 – 23.3 Non-current assetsGoodwill – 4.4 4.4 – 4.4 4.4Property, plant and equipment 67.6 – 67.6 96.0 – 96.0Other non-current assets 28.5 0.7 29.2 0.5 – 0.5Current assetsCash and cash equivalents 16.5 – 16.5 39.4 – 39.4Other current assets 254.2 5.5 259.7 128.4 5.0 133.4Total assets 366.8 10.6 377.4 264.3 9.4 273.7 Current liabilitiesBorrowings (52.9) – (52.9) (56.2) (0.1) (56.3)Other current liabilities (223.9) – (223.9) (119.1) – (119.1)Non-current liabilitiesBorrowings (30.2) (0.8) (31.0) (69.2) – (69.2)Other non-current liabilities (8.8) – (8.8) (2.2) – (2.2)Total liabilities (315.8) (0.8) (316.6) (246.7) (0.1) (246.8) Net assets 51.0 9.8 60.8 17.6 9.3 26.9

Financial commitments 9.0 – 9.0 2.6 – 2.6Capital commitments 11.5 – 11.5 21.1 – 21.1

72—

73

Notes to financial statementsfor the year ended 31 March 2009

14 Property, plant and equipment

Group owner Other land Plant, occupied and equipment property buildings and vehicles Total £m £m £m £m

Cost At 1 April 2008 17.9 22.5 385.5 425.9Additions 1.8 5.8 98.7 106.3Acquisitions – – 2.5 2.5Disposals (0.5) (1.2) (29.8) (31.5)Exchange differences 0.5 2.5 21.4 24.4At 31 March 2009 19.7 29.6 478.3 527.6 Accumulated depreciationAt 1 April 2008 1.1 6.9 156.0 164.0Depreciation charge for the year 0.3 2.6 58.1 61.0Disposals (0.1) (0.8) (13.1) (14.0)Exchange differences 0.2 1.1 10.6 11.9At 31 March 2009 1.5 9.8 211.6 222.9

Net book value at 31 March 2009 18.2 19.8 266.7 304.7

CostAt 1 April 2007 17.0 19.1 326.0 362.1 Additions/transfers in 0.7 4.0 88.4 93.1 Disposals (0.5) (0.7) (31.0) (32.2) Exchange differences 0.7 0.1 2.1 2.9 At 31 March 2008 17.9 22.5 385.5 425.9

Accumulated depreciation At 1 April 2007 0.8 5.3 129.8 135.9 Depreciation charge for the year 0.2 2.0 50.1 52.3 Disposals – (0.4) (24.3) (24.7) Exchange differences 0.1 – 0.4 0.5 At 31 March 2008 1.1 6.9 156.0 164.0

Net book value at 31 March 2008 16.8 15.6 229.5 261.9

No impairment charges were made during the year (2008: £nil).

Acquisitions relate solely to the purchase of the Hecdal scaffolding business in Australia.

Lain

g O

’Ro

urke

Ann

ual R

evie

w 2

009

Fina

ncia

l sta

tem

ents

74—

75

14 Property, plant and equipment (continued)

Finance leases: Included in ‘plant, equipment and vehicles’ are assets held under finance leases at the following amounts:

2009 2008 £m £m

Cost at 1 April 230.7 176.1Accumulated depreciation at 1 April (73.1) (55.1)Net book value at 1 April 157.6 121.0Additions/acquisitions 41.1 70.1Cost of disposals/transfers out (25.6) (15.8)Depreciation on disposals/transfers out 25.4 10.9Depreciation charge for the year (33.7) (28.9)Exchange differences 0.5 0.3Net book value at 31 March 165.3 157.6

15 Investment property

Freehold Freehold 2009 2008 £m £m

Net book value at 1 April 9.5 9.9Additions/transfers in 10.5 –Disposals/transfers out – (0.3)Exchange differences (0.2) –Fair value adjustments (1.8) (0.1)Net book value at 31 March 18.0 9.5

The investment property income earned by the Group, all of which was received under operating leases, amounted to £0.6m (2008: £0.5m) and is shown as revenue in the income statement. Direct operating expenses arising on the investment properties in the year amounted to £0.1m (2008: £0.1m).

16 Available-for-sale financial assets 2009 2008 £m £m

At 1 April 10.5 3.2Additions 1.3 8.5Exchange differences 1.7 0.5Net losses transferred to equity (4.5) (1.7)At 31 March 9.0 10.5

Available-for-sale financial assets include the following:

Listed securities 8.3 8.5Unlisted securities 0.7 2.0 9.0 10.5

The fair value of available-for-sale financial assets are recognised at quoted prices in active markets.

Notes to financial statementsfor the year ended 31 March 2009

17 Derivative financial instruments 2009 2008 £m £m

Current portion:Foreign exchange fair value hedges 1.9 –Forward foreign exchange contracts – 0.6 1.9 0.6 Non-current portion:Foreign exchange fair value hedges 3.0 –

Total derivative financial instruments 4.9 0.6

Foreign exchange fair value hedges The Group borrows funds in foreign currency to hedge any material foreign currency exposure of future income. The highly probable forecast income is expected to be received at various dates over the next 27 months. No gains or losses were recognised in the period to 31 March 2009 (2008: £nil). There were no ineffective portions to be recognised in the income statement arising from fair value hedges (2008: £nil). The full fair value of a hedging derivative is classified as a non-current asset or liability if the remaining maturity of the hedged item is more than 12 months and, as a current asset or liability, if the maturity of the hedged item is less than 12 months.

Forward exchange contractsThe Group enters into forward contracts to hedge its foreign currency exposure arising on a number of contracts where costs have been agreed to be paid in foreign currencies. The highly probable forecast transactions denominated in foreign currencies are expected to occur at various dates during the next 12 months.

18 Restricted financial assets

Restricted cash deposits 4.4 3.4

£4.0m relates to a cash deposit held in relation to rectification works at a former site, the remaining £0.4m relates to short-term bank deposits held as collateral in relation to specific construction projects. In all cases it is a contractual requirement that permission from third parties is obtained to withdraw these monies. The Directors consider the carrying amount of the restricted cash deposits to be at fair value.

The restricted cash deposit at 31 March 2008 related to cash collateral deposits held in the Group’s name with surety companies in relation to specific construction projects.

19 Inventories

Development land and work in progress 217.6 228.5Raw materials and consumables 27.9 22.3Finished goods and goods for resale 5.1 2.4 250.6 253.2

Development land and work in progress at 31 March 2009 includes assets to a value of £170.4m (2008: £170.8m) expected to be consumed after more than one year.

Development land and work in progress at 31 March 2009 includes capitalised specific borrowing costs attributable to qualifying assets of £5.8m (2008: £0.9m).

Inventories carried at fair value less costs to sell at 31 March 2009 had a carrying value of £17.5m (2008: £nil).

Lain

g O

’Ro

urke

Ann

ual R

evie

w 2

009

Fina

ncia

l sta

tem

ents20 Trade and other receivables

2009 2008 £m £m

Amounts expected to be recovered within one year:Gross amounts due from customers on construction contracts 486.8 339.7Trade receivables 112.4 91.1Prepayments and accrued income 19.5 17.0Other receivables 45.3 57.5 664.0 505.3Amounts expected to be recovered after more than one year:Gross amounts due from customers on construction contracts 2.1 5.7Trade receivables 5.2 4.7Other receivables 14.6 – 21.9 10.4

Total trade and other receivables 685.9 515.7

At 31 March 2009, trade and other receivables include retentions of £101.4m (2008: £88.5m) relating to construction contracts of which £2.1m (2008: £5.7m) are non-current assets.

For construction contracts in progress at 31 March 2009, £308.0m (2008: £180.2m) was received as an advance and is included within advance payments on construction contracts in trade and other payables (see note 22).

The net losses recognised via write off or impairment of trade and other receivables in the year to 31 March 2009 amounted to £10.7m (2008: £0.3m). At 31 March 2009 the bad debt provision for trade receivables amounted to £8.7m (2008: £12.1m) and for other receivables amounted to £2.0m (2008: £nil).

21 Borrowings

Amounts expected to be settled within one year: Bank loans 76.6 21.1Finance lease obligations 44.3 41.7 120.9 62.8Amounts expected to be settled after more than one year: Bank loans 252.7 196.0Finance lease obligations 67.2 81.4 319.9 277.4

Total borrowings 440.8 340.2

Finance lease obligationsFinance lease obligations are payable as follows:

Minimum lease Minimum lease Interest Principal payments Interest Principal payments 2009 2009 2009 2008 2008 2008 £m £m £m £m £m £m

Less than one year 5.9 44.3 50.2 6.5 41.7 48.2Between one and five years 5.5 67.1 72.6 6.3 81.0 87.3More than five years – 0.1 0.1 0.1 0.4 0.5 11.4 111.5 122.9 12.9 123.1 136.0

Obligations under finance leases are secured by legal charges on certain fixed assets of the Group with an original cost of £247.2m (2008: £230.7m) and total net book value of £165.3m (2008: £157.6m).

76—

77

Notes to financial statementsfor the year ended 31 March 2009

22 Trade and other payables

2009 2008 £m £m

Amounts expected to be settled within one year: Advance payments on construction contracts 308.0 180.2Trade payables 293.7 265.6Other tax and social security 29.3 25.5Other creditors 139.8 105.4Accruals and deferred income 495.3 451.8 1,266.1 1,028.5Amounts expected to be settled after more than one year: Trade payables 4.4 6.8Other creditors 13.1 21.7Accruals and deferred income 13.1 11.5 30.6 40.0

Total trade and other payables 1,296.7 1,068.5

At 31 March 2009, trade and other payables include retentions of £89.2m (2008: £79.5m) relating to construction contracts of which £4.4m (2008: £6.8m) are non-current liabilities.

23 Deferred tax assets and liabilities

Deferred tax assets and liabilities are attributable to the following:

Recognised deferred tax assets and liabilities

Assets Assets Liabilities Liabilities Net Net 2009 2008 2009 2008 2009 2008 £m £m £m £m £m £m

Property, plant and equipment 5.0 1.1 (14.3) (13.9) (9.3) (12.8)Intangible assets – – (0.3) – (0.3) –Other items 10.6 9.6 (5.2) – 5.4 9.6Tax losses carried forward 4.8 0.9 – – 4.8 0.9Deferred tax assets/(liabilities) 20.4 11.6 (19.8) (13.9) 0.6 (2.3)

Lain

g O

’Ro

urke

Ann

ual R

evie

w 2

009

Fina

ncia

l sta

tem

ents23 Deferred tax assets and liabilities (continued)

Movements in deferred tax assets and liabilities during the year

As at Exchange As at 1 April and other Recognised Recognised 31 March 2008 movements in income in equity 2009 £m £m £m £m £m

Property, plant and equipment (12.8) 0.1 3.4 – (9.3)Intangible assets – – (0.3) – (0.3)Other items 9.6 1.5 (5.7) – 5.4Tax losses carried forward 0.9 0.1 3.8 – 4.8 (2.3) 1.7 1.2 – 0.6

Other items brought forward relate to contract losses in Laing O’Rourke Australia Pty Limited from the acquisition of Barclay Mowlem Pty Limited which are available for off-set in future years.

Unrecognised deferred tax assets and liabilities

Deferred tax assets have not been recognised in respect of the following items: 2009 2008 £m £m

Tax losses 5.7 5.1

The Group has unrecognised deferred tax assets of £5.7m relating to unused tax losses. The 2008 unrecognised deferred tax assets relating to unused tax losses has been restated to £5.1m from that disclosed in the financial statements for the year ended 31 March 2008 following clarification of the amounts of losses arising. The tax losses have arisen in the Group’s German subsidiaries and can be carried forward to future periods for use against part of future profits. No deferred tax asset has been recognised in respect of these amounts due to the unpredictability of future taxable profits.

24 Share capital and premium

Number of €1 shares Share premium £m

At 1 April 2008 and 31 March 2009 9,000 339.5

The authorised share capital of Laing O’Rourke Corporation Limited at 31 March 2009 was 18,000 ordinary shares of €1 each (2008: 18,000 shares).

25 Reconciliation of movements in shareholders’ equity

Foreign Called-up currency Total share Share Fair value translation Retained shareholders’ Minority Total capital premium reserve reserve earnings equity interest equity £m £m £m £m £m £m £m £m

At 1 April 2007 – – 0.7 (1.9) 54.5 53.3 0.5 53.8 Profit for the year – – – – 65.0 65.0 0.6 65.6 Exchange differences on translation – – 0.3 5.2 1.3 6.8 (0.2) 6.6 Fair value loss on available-for-sale financial assets – – (1.2) – – (1.2) – (1.2)Issue of share capital – 339.5 – – – 339.5 – 339.5 Dividends paid – – – – – – (0.3) (0.3)At 31 March 2008 – 339.5 (0.2) 3.3 120.8 463.4 0.6 464.0 Profit for the year – – – – 67.0 67.0 1.2 68.2 Exchange differences on translation – – 1.2 21.6 – 22.8 0.3 23.1 Fair value loss on available-for-sale financial assets – – (3.2) – – (3.2) – (3.2)Issue of share capital in subsidiary – – – – – – 0.3 0.3 Dividends paid – – – – (19.6) (19.6) – (19.6)At 31 March 2009 – 339.5 (2.2) 24.9 168.2 530.4 2.4 532.8

78—

79

Notes to financial statementsfor the year ended 31 March 2009

25 Reconciliation of movements in shareholders’ equity (continued)

Fair value reserve The fair value reserve includes the cumulative net change in the fair value of available-for-sale investments until the investment is de-recognised, together with any related deferred tax.

Foreign currency translation reserve The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations, as well as from the translation of liabilities and the cumulative net change in the fair value of instruments that hedge the Group’s net investment in foreign operations. The translation reserve also includes any related current tax.

Retained earningsRetained earnings relate to the proportion of net income retained by the Group less distributions.

26 Guarantees and contingent liabilities

Contingent liabilities, which are not expected to give rise to any material loss, include:

2009 2008 £m £m

Guarantees of subsidiaries and other support 617.2 541.0 The Group and certain subsidiaries have, in the normal course of business, given guarantees and entered into counter-indemnities in respect of bonds relating to the Group’s own contracts. The Group has given guarantees in respect of its share of certain contractual obligations of joint ventures and associates.

At 31 March 2009, Group companies are parties to disputes from which legal actions have arisen or may arise in the ordinary course of business. While the outcome of these disputes is uncertain, the Directors believe that, except where provided in these financial statements, no material loss to the Group will occur (2008: £nil). In forming their opinion the Directors have taken relevant legal advice. Undertakings have been given by certain Group companies that they will not seek repayment of amounts due by other Group companies, except to the extent of their ability to pay.

Lain

g O

’Ro

urke

Ann

ual R

evie

w 2

009

Fina

ncia

l sta

tem

ents27 Financial instruments

Financial risk managementFinancial risk management is an integral part of the way the Group is managed. In the course of its business, the Group is exposed primarily to foreign currency risk, liquidity risk and credit risk. The overall aim of the Group’s financial risk management policies is to minimise potential adverse effects on financial performance and net assets.

The Group’s treasury department manages the principal financial risks within policies and operating parameters approved by the Board of Directors and purchases derivative financial instruments where appropriate. Treasury is not a profit centre and does not enter into speculative transactions.

27.1 Foreign currency risk

Foreign currency risk is the risk that the value of financial instruments will fluctuate as a result of changes in foreign exchange rates. The pounds sterling equivalent of the currency of the Group’s financial assets and liabilities, were as follows:

Pounds sterling value of equivalent currency (m) 2009 2009 2009 2009 2009 2009 2009 Total GBP EUR AUD AED INR Other £m

Loans to joint ventures – 15.1 0.7 – 0.3 – 16.1Trade and other receivables 369.6 33.6 130.0 141.9 1.6 0.4 677.1Available-for-sale financial assets – 8.9 0.1 – – – 9.0Derivative financial instruments 4.9 – – – – – 4.9Restricted financial assets 4.0 0.4 – – – – 4.4Cash and cash equivalents 406.4 77.6 88.6 38.9 0.3 2.5 614.3Total financial assets 784.9 135.6 219.4 180.8 2.2 2.9 1,325.8

Borrowings (264.4) (8.6) (85.5) (24.9) – (57.4) (440.8)Trade and other payables (874.7) (52.9) (140.5) (180.2) (1.7) (3.0) (1,253.0)Net financial (liabilities)/ assets (354.2) 74.1 (6.6) (24.3) 0.5 (57.5) (368.0) Other borrowings relate to £34.0m of Saudi riyal (SAR) and £23.4m of USD loans.

Pounds sterling value of equivalent currency (m) 2008 2008 2008 2008 2008 2008 2008 Total GBP EUR AUD AED INR Other £m

Loans to joint ventures – 5.8 7.2 – 0.8 – 13.8Trade and other receivables 314.3 50.5 33.9 110.1 1.4 0.6 510.8Available-for-sale financial assets – 10.5 – – – – 10.5Derivative financial instruments – – 0.6 – – – 0.6Restricted financial assets 3.4 – – – – – 3.4Cash and cash equivalents 379.9 19.9 62.1 12.8 0.5 1.3 476.5Total financial assets 697.6 86.7 103.8 122.9 2.7 1.9 1,015.6

Borrowings (271.0) (7.3) (52.5) (9.4) – – (340.2)Trade and other payables (653.2) (88.2) (149.7) (147.5) (2.7) (1.6) (1,042.9)Net financial (liabilities)/ assets (226.6) (8.8) (98.4) (34.0) – 0.3 (367.5)

Of the total foreign currency borrowings of £176.4m (2008: £69.2m), the amount of borrowings used to finance overseas operations amounts to £176.4m (2008: £69.2m).

It is Group policy that forward exchange contracts are taken out for all material foreign currency receivables and payables where they differ from the functional currency of the Company or subsidiary.

If the foreign exchange rates that the Group is exposed to had changed adversely by 10% at the balance sheet date, the profit for the year and equity would have reduced by £5.4m (2008: £3.7m). This sensitivity analysis takes into account the tax impact and the forward exchange contracts in place.

80—

81

Notes to financial statementsfor the year ended 31 March 2009

27 Financial instruments (continued)

27.2 Interest rate riskInterest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest rates. The Group is exposed to interest rate risk in relation to some of its borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. The contractual repricing or maturity dates, whichever dates are earlier, and effective interest rates of borrowings are as follows:

Repricing / maturity date Between Effective Within one and After interest Total one year two years two years rateAt 31 March 2009 £m £m £m £m %

Bank loans 329.3 76.6 37.2 215.5 3.23%Finance lease obligations 111.5 44.3 32.4 34.8 6.33% 440.8 120.9 69.6 250.3 4.01%At 31 March 2008Bank loans 217.1 21.1 54.9 141.1 6.14%Finance lease obligations 123.1 41.7 35.1 46.3 4.28% 340.2 62.8 90.0 187.4 5.47%

If interest rates had been 1% higher during the period, profit and equity would have reduced by £3.2m (2008: £3.1m). This sensitivity analysis takes into account the tax impact.

Lain

g O

’Ro

urke

Ann

ual R

evie

w 2

009

Fina

ncia

l sta

tem

ents27 Financial instruments (continued)

27.3 Liquidity riskPrudent liquidity risk management involves maintaining sufficient cash and available funding to meet liabilities as they fall due. The Group has procedures in place to minimise liquidity risk such as maintaining sufficient cash and other highly liquid current assets and by having an adequate amount of committed credit facilities.

Maturity of financial liabilitiesThe maturity profile of the carrying amount of the Group’s non-current liabilities is as follows:

Trade and other Bank Finance payables loans leases TotalAt 31 March 2009 £m £m £m £m

Between one and less than two years 21.4 37.2 32.4 91.0Between two and less than five years 8.1 210.4 34.7 253.2Five or more years 1.1 5.1 0.1 6.3 30.6 252.7 67.2 350.5At 31 March 2008Between one and less than two years 20.0 54.9 35.1 110.0Between two and less than five years 12.5 140.8 45.9 199.2Five or more years 7.5 0.3 0.4 8.2 40.0 196.0 81.4 317.4 Borrowing facilities The Group has the following undrawn committed borrowing facilities available at the year end in respect of which all conditions precedent had been met: 2009 2008 £m £m

Expiring within one year 158.6 123.0Expiring between one and two years 5.8 10.7Expiring in more than two years 14.4 35.8 178.8 169.5

27.4 Credit riskCredit risk arises when a failure by counterparties to discharge their obligations could reduce the amount of future cash inflows from financial assets on hand at the balance sheet date. The Group’s credit risk is primarily attributable to its loan assets, trade and other receivables.

The ageing of trade receivables at the year end was:

Gross Gross receivables Impairment receivables Impairment 2009 2009 2008 2008 £m £m £m £m

Not past due 58.7 – 55.1 –Past due 0-30 days 33.5 – 21.7 –Past due 31-120 days 10.0 – 12.7 –Past due 121-365 days 15.3 (7.0) 3.4 –More than one year 8.8 (1.7) 15.0 (12.1) 126.3 (8.7) 107.9 (12.1)

Receivables at 31 March 2009 that are more than one year past due date but not impaired amount to £7.1m (2008: £2.9m). The Group believes that there is no material exposure in respect of these balances.

Based on prior experience and an assessment of the current economic environment, management believes there is no further credit risk provision required in excess of the normal provision for impairment of its loan assets, trade and other receivables. The Group has no significant concentrations of credit risk. The Group has policies in place to ensure that sales are made to customers with an appropriate credit history and monitors on a continuing basis the ageing profile of its receivables. Cash balances are held with high credit quality financial institutions.

82—

83

Notes to financial statementsfor the year ended 31 March 2009

27 Financial instruments (continued)

27.5 Fair valuesThe carrying and fair values of the Group’s financial instruments at 31 March 2009 and 31 March 2008 are as follows:

Carrying Carrying Fair value amount Fair value amount 2009 2009 2008 2008 £m £m £m £m

Derivative financial instruments 4.9 4.9 0.6 0.6Available-for-sale financial assets 9.0 9.0 10.5 10.5Loans and receivables 693.2 693.2 524.6 524.6Financial liabilities measured at amortised cost (1,693.8) (1,693.8) (1,383.1) (1,383.1)

The carrying and fair values of the Group’s financial instruments were not materially different at 31 March 2009.

Fair values are determined as follows:

— The fair value of derivative financial instruments is estimated to be the difference between the fixed forward price of the instrument and the current forward price for the residual maturity of the instrument at the balance sheet date.

— The fair value of available-for-sale financial assets are recognised at quoted prices in active markets.— Loans, receivables and financial liabilities are valued at their amortised cost which is deemed to reflect fair value due to their

short-term nature.

27.6 Capital risk managementThe Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

The Group regularly forecasts its cash position to management on both a short-term and long-term basis. Performance against forecasts are also reviewed and analysed to ensure the Group efficiently manages its net funds/debt position.

Net funds/debt is calculated as cash and cash equivalents less total borrowings (including ‘current and non-current borrowings’ as shown in the consolidated balance sheet).

At 31 March 2009 the Group had net funds of £173.5m (2008: £136.3m), see note 32.

The Group complied with all externally imposed capital requirements which it is subject to during the two years to 31 March 2009.

28 Assets charged as security for liabilities and collateral accepted as security for assets

Financial assets pledged to secure liabilities are as follows: 2009 2008 £m £m

Restricted financial assets 4.4 3.4

Financial assets pledged as short-term collateral and included within cash equivalents were £0.9m (2008: £0.8m).

No financial assets have been provided to the Group as collateral (2008: £nil).

Lain

g O

’Ro

urke

Ann

ual R

evie

w 2

009

Fina

ncia

l sta

tem

ents29 Financial and capital commitments

Capital expenditure for property, plant and equipment, authorised and contracted for which has not been provided for in the Group financial statements amounted to £32.8m (2008: £37.4m).

The Group leases land and buildings, equipment and other various assets under non-cancellable operating lease agreements. The leases have varying terms, escalating clauses and renewal rights. The lease expenditure charge to the income statement is disclosed in note 5. The Group’s future operating lease expense commitments comprise:

Land Land and buildings Other and buildings Other 2009 2009 2008 2008 £m £m £m £m

Expiry date: Due within one year 28.8 9.8 21.2 5.6Due between one and five years 73.6 8.7 45.5 4.0Due after more than five years 136.0 1.4 57.2 – 238.4 19.9 123.9 9.6

Future commitments have been computed on current rental payments which are subject to periodic review.

30 Related party transactions and balances

Identity of related partiesThe Group has a related party relationship with its major shareholders, subsidiaries, jointly controlled entities, jointly controlled operations, associates and key management personnel.

GroupThe Group received income and incurred expenses with related parties from transactions made in the normal course of business. Details of loans to related parties are given in note 13.

Sale of goods and services provided to related parties

2009 2008 Income earned Receivable at Income earned Receivable at in year year end in year year end £m £m £m £m

Jointly controlled entities 65.3 6.2 98.9 15.1

Purchase of goods and services provided by related parties

2009 2008 Expenses Payable at Expenses Payable at paid in year year end paid in year year end £m £m £m £m

Jointly controlled entities 41.4 13.6 76.5 8.5

The related parties’ receivables are not secured and no guarantees were received in respect thereof. The receivables will be settled in accordance with normal credit terms.

Companies held in trust by DirectorsDuring the year, the Group paid £3.0m (four quarterly payments) (2008: £3.7m five quarterly payments) to Sycamore Properties Limited and £1.7m (2008: £1.7m) to Mark Holding & Finance Limited in respect of amounts due under lease agreements for premises occupied by the Group. The interests in Sycamore Properties Limited and Mark Holding & Finance Limited are held in trust, the beneficiaries of which are R G O’Rourke, H D O’Rourke and B A Dempsey, who are also the beneficiaries of the trusts which ultimately own Suffolk Partners Corporation. At the year end the balance outstanding was £nil (2008: £nil). No amounts were written off in the period by either party in respect of amounts payable under the agreements entered into.

During the year, the Group paid £6.3m (2008: £6.8m) to Laing O’Rourke Insurance Limited in respect of insurance premiums. The interests in Laing O’Rourke Insurance Limited are held in trust, the beneficiaries of which are R G O’Rourke, H D O’Rourke and B A Dempsey, who are also the beneficiaries of the trust which ultimately own Suffolk Partners Corporation. At the year end the balance outstanding was £nil (2008: £nil). No amounts were written off in the period by either party in respect of amounts payable under the agreements entered into.

During the year, the Group received £32.0m (2008: £8.5m) from Steetley Investments Limited in respect of construction work carried out by the Group. The ultimate interests in Steetley Investments Limited are held in trust, the beneficiaries of which are R G O’Rourke, H D O’Rourke and B A Dempsey, who are also the beneficiaries of the trusts which ultimately own Suffolk Partners Corporation. At the year end the balance outstanding was £14.6m (2008: £1.6m). No amounts were written off in the period by either party in respect of amounts payable under the construction agreement.

In the opinion of the Directors the agreements entered into are based on normal commercial terms.

84—

85

Notes to financial statementsfor the year ended 31 March 2009

30 Related party transactions and balances (continued)

Loans to parent companyDuring the year, the Group loaned £5.7m (2008: £nil) to its ultimate parent company Suffolk Partners Corporation. The loan is subject to interest at commercial rates. At the year end the balance outstanding was £5.7m (2008: £nil).

Loans to joint ventures and associated companiesAt 31 March 2009 loans to joint ventures amounted to £16.1m (2008:£13.8m). During the normal course of business the Group provided services to, and received management fees from certain joint ventures and associates amounting to £0.2m (2008: £1.5m). Amounts due to and from joint ventures and associates at 31 March 2009 are disclosed within trade and other receivables and trade and other payables in notes 20 and 22 respectively.

31 Ultimate parent company

The immediate and ultimate parent company of Laing O’Rourke Corporation Limited is Suffolk Partners Corporation, a company incorporated in the British Virgin Islands.

The interests in the share capital of Suffolk Partners Corporation are held in trusts, the beneficiaries of which are R G O’Rourke, H D O’Rourke and B A Dempsey.

32 Reconciliation of net cash flow to movement in net funds

2009 2008 £m £m

Increase in cash and cash equivalents for the year 126.5 179.0Cash (outflow)/inflow from debt and lease financing (47.4) 324.3Change in net funds resulting from cash flows 79.1 503.3New finance leases (41.1) (70.1)Foreign exchange translation differences (0.8) (2.0)Movement in net funds in the year 37.2 431.2Net funds/(borrowings) at 1 April 136.3 (294.9)Net funds at 31 March 173.5 136.3 Significant movements in net funds are explained in the Operating and Financial Review on page 35.

Lain

g O

’Ro

urke

Ann

ual R

evie

w 2

009

Fina

ncia

l sta

tem

ents33 Principal subsidiaries, jointly controlled entities and associates

Group interest in Country of ordinary incorporationPrincipal subsidiaries Principal activity voting shares or registration

Laing O’Rourke Australia (Holdings) Limited Holding company 100% Cyprus Laing O’Rourke India (Holdings) Limited Holding company 100% Cyprus Laing O’Rourke Ireland (Holdings) Limited Holding company 100% Cyprus Laing O’Rourke Middle East (Holdings) Limited Holding company 100% Cyprus Laing O’Rourke plc Holding company 100% England and Wales O’Rourke Investments Holdings (UK) Limited Holding company 100% England and Wales Laing O’Rourke Construction Limited Building contracting 100% England and Wales Laing O’Rourke Ireland Limited Building contracting 100% Ireland Laing O’Rourke Infrastructure Limited Civil engineering and infrastructure 100% England and Wales Laing O’Rourke Utilities Limited Utilities contracting 100% England and Wales Crown House Technologies Limited Mechanical and electrical contracting 100% England and Wales Expanded Structures Limited Civil and structural engineering 100% England and Wales Expanded Piling Limited Piling 100% England and Wales Select Plant Hire Company Limited Plant hire and operations 100% England and Wales Malling Products Limited Precast concrete 100% England and Wales Naturstein Vetter GmbH Finished stone products 100% Germany Vetter UK Limited Finished stone products 100% England and Wales Explore Capital Limited Holding company 100% England and Wales Explore Living plc Residential development 100% England and Wales Explore Living South East Limited Residential development 100% England and Wales Explore Investments Limited Commercial property development 100% England and WalesAl Naboodah Laing O’Rourke LLC Building and civil engineering 49% United Arab Emirates John Laing International Limited Overseas contracting 100% England and Wales Laing O’Rourke Australia Pty Limited Construction, infrastructure, rail and 100% Australia property development

Group Country of ownership incorporationJointly controlled entities Principal activity interest or registration

Emirates Precast Construction LLC Building and civil engineering 40% United Arab EmiratesAldar Laing O’Rourke Construction LLC Construction and project management 49% United Arab EmiratesDLF Laing O’Rourke (India) Limited Building and civil engineering 50% IndiaCLM Delivery Partners Limited Delivery partner for 2012 Olympics 37.5% England and WalesBison Manufacturing Limited Manufacture of precast concrete 19.9% England and WalesDarling Downs Construction Power station construction 50% AustraliaLuggage Point Alliance Water treatment plant construction 50% AustraliaAustralia Transport Express Rail track construction 70% AustraliaLORCIV Mining infrastructure 70% AustraliaPetrosea/Barclay Mowlem (Indonesia) JV Coal terminal construction 50% IndonesiaBGC LORAC JV Highway upgrade 50% Australia

Jointly controlled operations

Channel Tunnel Rail Link Civil engineering 27% England and WalesThames Water Laing O’Rourke Omega JV Civil engineering 50% England and WalesHeathrow East Terminal Project Civil engineering 35% England and WalesM-Pact Manchester Civil engineering 60% England and WalesM-Pact Ireland Civil engineering 50% Ireland

Associates

North East Business Park Pty Limited Property development 25% Australia

86—

87

Notes

Live

rpoo

l One

(pag

e 17

) by

kind

per

mis

sion

of S

teve

Gor

ton

Pho

togr

aphy

Laing O’Rourke Corporation

Laing O’Rourke plcBridge PlaceAnchor BoulevardCrosswaysDartford KentDA2 6SNUnited KingdomT +44 (0)1322 296200F +44 (0)1322 296262www.laingorourke.com

UK contact address