engineering certainty in a complex world/media/lor/files/annual-review-2014/l… · annual review...

ENGINEERING THE FUTURE

ANNUAL REVIEW 2014

ENGINEERING CERTAINTY IN A COMPLEX WORLD

We aim to become the fi rst choice

engineering and construction

partner for our customers

Laing O’Rourke is a globally diverse engineering and

construction group with a commitment to delivering

excellence plus performance, founded on 166 years

of experience. We fund, design, manufacture, construct

and maintain the modern world – providing the buildings

and infrastructure to accommodate, educate, employ,

transport, care for and sustain communities.

Our business model comprises the full range of

engineering, manufacturing, construction and project

management services. Through our fully integrated

offering we deliver bespoke solutions to meet the

particular requirements of some of the world’s most

prestigious public and private organisations.

Our collaborative approach combines discipline in

delivery with the continuous pursuit of innovation:

engaging with customers and partners at the earliest

stages, advising on and providing the best ways to

complete projects with certainty and achieve greatest

value for all stakeholders – employees, customers,

communities and shareholders.

We are enabling the organisation to be leaner and more

agile, and deepening relationships through signifi cant

investment in our unique business offering (UBO).

Our long-term strategy aims to create sustainable

growth by meeting the economic, social and

environmental challenges of our rapidly changing world.

SEE OVERLEAF FOR LAING O’ROURKE AT A GLANCE

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Cape Lambert, Pilbara, Western Australia

LAING O’ROURKE AT A GLANCE

DYNAMIC GROWTH SECTORSWe are carefully targeting customers in dynamic growth

sectors and selectively pursuing opportunities that

complement our values, capabilities, fi nancial goals

and delivery discipline

TARGETED GEOGRAPHIC MARKETS

We are delivering a built environment

that meets the economic, social

and environmental challenges of a

rapidly changing world, targeting

attractive geographic markets.

EUROPE HUB• Canada

• Saudi Arabia

• United Arab Emirates

• United Kingdom

FOR MORE DETAIL

SEE PAGE 34

AUSTRALIA HUB• Australia

• Hong Kong

• New Zealand

• Southeast Asia

FOR MORE DETAIL

SEE PAGE 50

CA

NA

DA

UNITED KINGDOM

AUST

HO

NG

KO

NG

PROJECT

INVESTMENT

SERVICES

ENGINEERING

CONSULTANCY

DIGITAL

ENGINEERING

PROJECT

MANAGEMENT

DESIGN FOR

MANUFACTURE AND

ASSEMBLY (DfMA)

WORLD-CLASS CAPABILITIES

COMMERCIAL

• Commercial Offi ces

• Retail & Mixed-use

• Data Centres

• Industrial

• Science & Research

• Sport & Leisure

— Hotels

— Stadia

— Leisure Complexes

ACCOMMODATION

• High-rise

• Single-unit Residential

• Multi-unit Residential

• Social Housing

SOCIAL

INFRASTRUCTURE

• Defence

• Education

• Healthcare

• Law & Order

ECONOMIC

INFRASTRUCTURE

Transport• Aviation

• Highways

• Marine

• Commuter Rail

Power• Generation

• Networks

• New Nuclear

• Renewables

Water & Utilities

Networks• Utility Networks

• Waste Treatment

• Water Treatment

Mining & Natural

Resources• Coal & Minerals Processing

• Heavy-haul Rail

• Labour Accommodation

• Industrial Equipment

Installation

• Minerals-handling

Oil & Gas• Labour Accommodation

• LNG & CSG Terminals

• Pipelines & Pump Stations

• Processing Plants

• Storage

• Water Treatment

• Civil Infrastructure

UN

ITED A

RA

B E

MIR

ATE

S

SAUDI ARABIA

NEW

ZE

ALA

ND

TRALIA

PLANT AND

LOGISTICS

MANAGEMENT

CIVIL

ENGINEERING

CONSTRUCTION

SERVICES

INFRASTRUCTURE

SERVICES

MECHANICAL,

ELECTRICAL

AND PROCESS

TECHNOLOGIES

ASSET

MANAGEMENT

Laing O’Rourke | Annual Review 20141

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CONTENTSOVERVIEWLaing O’Rourke at a glance ifc

Contents 1

Performance highlights 2

Chairman’s statement 4

STRATEGIC REPORTGroup Chief Executive’s review 6

Market overview 9

Business model 12

Strategy 18

Key performance indicators 26

Group fi nancial review 30

Hub performanceEurope Hub 34

Australia Hub 50

Safety and sustainabilityOverview 58

Europe Hub 63

Australia Hub 72

Risk management 78

Summary of principal risks 81

GOVERNANCECorporate governance 83

Board of Directors 88

Senior leadership team 89

FINANCIALSDirectors, offi cers and advisers 92

Directors’ report 94

Independent auditors’ report 95

Consolidated income statement 96

Consolidated statement of comprehensive income 97

Consolidated statement of fi nancial position 98

Consolidated statement of cash fl ows 99

Consolidated statement of changes in equity 100

Notes to the fi nancial statements 101

Contacts 136

Laing O’Rourke’s capabilities ibc

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2Laing O’Rourke | Annual Review 2014

2

PERFORMANCE HIGHLIGHTS

FINANCIAL PERFORMANCE:

Stable trading performance despite

continuing economic uncertainties

Managed revenue

Total revenue

0

1

2

3

4

5

1413*121110

(£ billion)

MANAGED REVENUE

£4.41bn

3.6

4.4

3.53.3

3.5 3.6

4.44.34.0

4.3

EBIT pre-exceptional items

EBIT post-exceptional tems

0

20

40

60

80

100

120

1413*121110

(£ million)

EARNINGS BEFORE INTEREST AND TAX

£60.1m

53

6067

4034

58

78

5451

110

0

2

4

6

8

10

12

1413*121110

(%)

GROSS MARGIN

8.5%

8.5

10.1 10.2

9.18.7

Gross cash

Net funds

0

200

400

600

800

1413*121110

(£ million)

CASH BALANCES

£691m

409

691

270 283321

440

716

619 601

714

0

200

400

600

800

1,000

1413*121110

(£ million)

FINANCIAL CAPACITY

£772m

772

905

751 762

873

0

2

4

6

8

10

1413*121110

(£ billion)

ORDER BOOK

£7.4bn

7.4

8.2 8.1 8.2 8.2

Managed revenue increased 0.5 per cent

to £4.41 billion.

Maintained strong gross cash position

of £691 million.

Financial capacity declined 12 per cent

to £772 million.

High-quality order book of £7.4 billion

creating good medium-term

earnings visibility.

Pre-exceptional earnings before tax

and interest down 23.3 per cent to

£60.1 million.

Gross margin pre-exceptional items at

8.5 per cent refl ecting project portfolio

quality and cost control.

* FY 13 restated for adoption of IFRS 11 Joint Arrangements.

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OPERATIONAL PERFORMANCE:

Good progress in project

delivery and strategy

implementation

• Value-enhancing project wins from

new customers in target sectors.

• Increasing repeat business

and contract extensions from

existing customers.

• Broadened manufacturing capabilities

following infi ll acquisitions.

• Maintained commercial discipline to

create higher-value project portfolio.

• Increased investment in Mission Zero

health and safety programme and

sustainability campaign.

• Digital engineering and Design for

Manufacture and Assembly (DfMA)

methodology creating effi ciencies in

project delivery and new market

openings in asset management.

• Continued focus on human capital

agenda, with substantial commitment

to enhancing entry-level development

opportunities and bridging the

predicted engineering shortfall.

• Strengthened corporate governance

and risk management frameworks

through better integration of core

processes and senior appointments.

• Progressed product development as

competitive differentiator.

• Moderate growth can be expected for

the Group through to 2015, despite the

diffi cult economic conditions.

• Group well positioned to respond

to increased customer demands

for greater certainty in time, cost

and quality.

• Good future revenue visibility and an

attractive pipeline of contract

opportunities in key sectors, including

social infrastructure, power, mining,

oil and gas, and accommodation.

• Anticipated benefi ts derived from the

widespread deployment of Design for

Manufacture and Assembly (DfMA),

plus greater cost effi ciencies in

Group overheads.

• Laing O’Rourke remains on track to

achieve its 2014/15 fi nancial targets

and, beyond these, is well positioned

to fulfi l its strategic objectives over

the medium to long term.

OUTLOOK:

Drive customer adoption

of our unique business

offering

We maintained our management discipline, and

deepened relationships with customers who value

the certainty of our integrated business model. As a

result we delivered another profi table performance

and made good progress against the key elements

of our strategy to offer innovative solutions that

benefi t our business and the wider industry.”

ANNA STEWART

GROUP CHIEF EXECUTIVE

0.00

0.05

0.10

0.15

0.20

0.25

1413121110

ACCIDENT FREQUENCY RATE (AFR)

0.18

0.180.18

0.230.24

0.21

CLIENT SATISFACTION

85%Aggregated customer satisfaction

score of 85 per cent received from

seven of our key UK customers

representing current major projects

totalling over £1.7 billion.

AFR improved to 0.18 in the year

refl ecting an industry-leading

performance and further validation

of our investment in Mission Zero.

SAFETY AND SUSTAINABILITY:

Improved safety

performance and

high degree of

client satisfaction


CHAIRMAN’S STATEMENT

DELIVERING A DIFFERENT WAY

I am pleased to report another profi table year in which we have

sustained revenues and operating margin, outperformed our

industry in cash generation and achieved our targets for new

business. This is a creditable performance and I am proud of

the commitment and hard work of all my colleagues around

the Group.

Since the global economic crisis impacted our industry, we have

faced some extraordinary challenges; as a business we stayed

true to our mission and guiding principles.

We put in place the building blocks to ensure we emerged

from the period a stronger and more focused business, able

to respond to the changing dynamics of the markets and

our clients.

Laing O’Rourke has been built on the

belief of fi nding and following a better

way, and our people remain the key to

this success.”

RAY O’ROURKE KBE

CHAIRMAN

Our Group Chief Executive, Anna Stewart, introduced greater

discipline in our decision-making processes, took major steps

to increase our operational effi ciency, put in place a new

governance framework, refreshed our senior management

team and formalised our Group Strategic Roadmap (GSR)

with human capital and engineering excellence at its core.

Our business model is resilient, and is underpinned by a

management and performance framework that ensures we

remain selective in securing those projects which embrace

our unique business offering (UBO) of engineering excellence,

Design for Manufacture and Assembly (DfMA) and direct

delivery through digital technologies.

Over the past few years, we have faced signifi cant economic

challenges, but thanks to the expertise of our people we have

delivered consistent results during a period of huge uncertainty,

and invested in securing our future.


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COMMITMENT TO SAFETY AND SUSTAINABILITYSafety excellence underpins our business, guiding our decisions

and helping us to achieve our business goals in a responsible

way. Safety has always been our highest priority, and therefore

it is pleasing to be able to report a fall in our Group Accident

Frequency Rate (AFR) from 0.21 to 0.18, driven by a strong

performance from the Australia Hub. This result has been

achieved in the light of the increasingly complex nature of the

engineering and contracting work we now undertake across

the Group, coupled with a more intense period of construction

activity across our core sectors. However, it is with regret that

I report that in November 2013 a worker from our supply chain

died from injuries sustained on the Francis Crick Institute

project in central London.

The Board is fully committed to the integration of sustainable

development across the Group with a focus on broader

social and environmental issues to benefi t the stakeholder

groups most directly impacted by our operations. Our project

delivery teams work tirelessly to enhance the contributions

of Laing O’Rourke by focusing on responsible procurement,

minimising waste, health and wellbeing of the workforce

and greater levels of positive engagement with local

communities. Details of the progress we are making against

these and other priorities can be found on pages 58 to 77.

LEADERSHIP AND OUR PEOPLEDuring her fi rst year as Group Chief Executive, Anna Stewart

has made a number of changes to the organisational structure

and management team to accelerate the implementation of the

Group’s strategy. This has included the creation of the Specialist

Trading Business Group in the UK to drive greater focus and

effi ciency into the delivery model for our DfMA agenda.

Anna also announced a number of senior internal and external

appointments, ensuring that we continue to strike the right

balance between new skill-sets and core engineering and

construction expertise. Most recent amongst these was the

external appointment of Paul Westbury as Group Technical

Director from engineering consultancy, Buro Happold, to lead

our global technical and engineering functions, including the

Engineering Excellence Group (EnEx.G). Paul’s extensive

expertise will accelerate the development of the Group’s

design and engineering offering.

The Group also appointed Stephen Harley, a global logistics and

manufacturing professional who joined us from the Ford Motor

Company, to lead the implementation of the next phase of our

masterplan for advanced manufacturing in the UK.

During the year we announced that Roger Robinson would step

down as Chief Executive of the Europe Hub and as a member

of the Group Executive Committee. I would like to thank Roger

for his contributions as we navigated one of the worst trading

periods in history. He will continue to represent the Group,

supporting our business activities with a number of our

strategic clients.

I am pleased that Cathal O’Rourke has been appointed to the

role of Managing Director of the Australia Hub and to the Group

Executive Committee. Similarly, John O’Connor will assume

responsibility for our people agenda when he becomes Group

Human Capital Director and a member of our Group Executive

Committee in September 2014.

We continue to work hard to put in place succession and

development programmes that serve as attractors for the

very best talent in the construction industry. I believe our

commitment to invest in these areas through the downturn

has been instrumental in the Group’s continued profi tability

and growing levels of market confi dence in our unique

delivery approach.

I am consistently impressed by the quality and dedication of our

teams, and their ability to challenge the traditional methods

of delivery, and innovate in an industry which has for too long

shunned new ideas and perspectives.

Laing O’Rourke has been built on the belief of fi nding and

following a better way, and our people remain the key to

this success.

On behalf of the shareholders and the Directors, I thank them

for what we have achieved together during the year.

PERFORMANCE SUMMARY AND OUTLOOKWe remain positive about the opportunities to grow the

business, and we are on track to capitalise on the inherent

value that the unique combinations of the main elements of

our delivery model offer us globally.

I remain confi dent in our ability to determine our own future

to create value that rewards the loyalty and support of all

our stakeholders.

It remains for me to thank our clients, stakeholders and supply

chain partners for the trust they place in us to deliver and for

their continued support of our strategy.

RAY O’ROURKE KBE

CHAIRMAN


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REVIEW VIDEO AT:

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GROUP CHIEF EXECUTIVE’S REVIEW

GETTING CLOSER TO OUR CUSTOMERS

Our best customers are those who are

confi dent in what they want and can

defi ne their high-level expectations,

including what they expect to pay,

which then allows us to respond with

ideas and a commercial proposition

which we hope will delight them.”

ANNA STEWART



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7

I am delighted to report on my fi rst full year as Group

Chief Executive. The year has been packed full of exciting

developments and I am pleased to say that across the

business we have made great strides in embedding our

strategy. We have been carefully navigating the challenging

economic landscape and our fi nancial performance pays

testimony to that. Most pleasing has been the deepening

relationships with our major customers and the privilege of

increasingly being given the opportunity to tailor our offerings

to respond to their particular requirements.

SAFETY AND SUSTAINABILITYWe have achieved positive progress in our safety agenda

during the year and a particular success has been a marked

performance improvement in our Australia Hub. However,

I am afraid the year has been entirely overshadowed by the

desperately sad circumstances of an employee from one of our

supply chain partners losing his life in a tragic accident onsite.

We have resolved to redouble our safety efforts and intensify

our focus to avoid any accidents or incidents which could

result in serious harm.

Our Mission Zero campaign continues and we are shifting the

focus from the measurement of lagging indicators to increase

the focus on leading indicators with emphasis on major risks.

As the global economy picks up and project opportunities

increase, the skills shortage experienced before the fi nancial

crisis will soon be felt again acutely. We are confi dent that

following our strategy of Design for Manufacture and

Assembly (DfMA), and transferring as many activities away

from construction sites into controlled factory environments,

will ensure we are less impacted by the skills shortage in

traditional trades and will not be driven to engage a lower

skilled and inherently less safe workforce.

We have also strengthened our safety leadership and added

experience and challenge from high assurance industries.

We are keen to learn and benefi t from others.

Our Engineering Excellence Group (EnEx.G) is leading on the

production of an energy and carbon strategy for the business.

We have also launched a campaign entitled ‘Engineering

Sustainable Futures’ which encourages employees to

participate more meaningfully in this critical agenda.

An important sustainability imperative for the future will be

using our valuable talent judiciously. Diffi culty in assessing

what constitutes value often leads to very ineffi cient tendering

processes with the substantial efforts of the unsuccessful

tender teams being entirely wasted and the associated

costs increasingly unsustainable. We do not believe our

industry has suffi cient capacity to continue to condone such

waste. We will have to fi nd better ways of determining the

value of a proposition.

PERFORMANCE OVERVIEWAlthough there are signs in some of our markets of an

increasing number of project opportunities, they are not

consistent across all of our geographies. We expect the next

two years to be challenging for our industry and for us, as we

complete projects secured in recessionary times while at the

same time balancing labour and material price recoveries.

We are fortunate that we control much of the costs with our

self-delivery model and are less exposed to the external

supply chain, but inevitably we will all be affected by

infl ationary pressures.

While continuing to invest extensively in the year, we have

generated strong cash fl ows and profi tability. Profi t after tax

was slightly up on last year at £41.9 million on fl at revenue

fi gures. Year-end gross cash was £691 million with net cash

at £409 million, an excellent performance when many in the

tier-one peer group have been reporting challenges around

marked consumption of working capital.

We manage our business for the long term and are confi dent

that our robust discipline will ensure we will deliver consistent

strong performances. We enjoy the confi dence of our

shareholders and fi nancial stakeholders and we respect

and appreciate the importance of their support.

STRATEGYIn my review last year I communicated our refreshed strategy.

I am pleased to report that we are making good progress

with implementation in both our Australia and Europe Hubs.

Our leadership team, charged with successfully embedding

our strategic roadmap, meets regularly and ensures that

focus and resources are concentrated on our priority areas.

Our future plans are ambitious and rely on the universal

support and adoption of the business strategy. We know the

prize is great and we are viewing the near-time market

dynamics as providing an environment which is extremely

conducive to our transformational agenda, as our customers,

who are serial procurers of our industry’s products, seek a

more reliable outcome.

We are fi nalising our business case for substantial additional

investment in advanced manufacturing facilities on our

campus at Explore Industrial Park (EIP) in the UK and expect

to confi rm a fi nal investment decision later this year. Such a

facility would vastly extend our range of product offering and

take our manufacturing processes to a level to compete with

world-leading industries. Prototypes of our new residential


and accommodation products will also be assembled this

summer in the grounds of EIP and will help us showcase the

attractiveness of offsite-manufactured homes.

PEOPLEI can again report that we continue to recruit extensively at the

entry level, for apprentices, cadets, scholars and graduates.

We have also backed government campaigns in the UK and

Australia to encourage greater participation by women in

careers in engineering and construction and we have

committed to some very stretching targets to increase the

proportion of women among our recruits. As we continue to

modernise the appeal of the sector we have also revamped

our maternity and paternity provisions to help support longer-

term careers.

I recently announced some exciting leadership changes with

the appointment of John O’Connor as Group Human Capital

Director, Stephen Harley as Director of Advanced Manufacturing

in the UK and the addition of Paul Westbury as Group Technical

Director. In the coming months I expect to announce further

strategic leadership appointments, as we fi nalise the team

capable of leading the Group’s ambitions.

MARKET DYNAMICS

Europe HubIn the UK, we are defi nitely experiencing an improvement in the

opportunities now available and in the pipeline. Infl ationary

pressures and resource shortages are being felt, but these are

not immediately translating into adjustments to customers’

budgets or bidding prices. We are carefully navigating this risky

territory and expect modest work-winning success until the

market adjustment is more consistent. Encouragingly, we are

seeing improvement across the whole of the country but

confi dence is still fragile.

We are using this period of change as a catalyst for long-

overdue structural reform. We expect our competitors, who are

showing the results of a protracted and unforgiving recession,

also to be attracted to steps which make the industry a more

sustainable place for high-performing participants. Together

this could provide the momentum for permanent reform.

We have maintained a steady business in the Middle East and,

although the environment continues to catch the unsuspecting,

it does offer the opportunity for good solid returns for those

who differentiate with the quality and reliability of their service.

We think the time for the return of profi table growth is very

close. We will be strengthening our team this year to prepare

for that opportunity.

In Canada, we are building on our early success in Ontario and

Quebec, with expansion to the west of the country where we are

carefully transferring our oil and gas capability and experience

from Australia, to position ourselves with new Canadian

leadership for the major LNG projects planned.

We are carefully considering limited opportunities to work in

other territories, where our customers are investing, but so

far we have not progressed any opportunities on the ground.

Australia HubThe slowdown in oil and gas and mining opportunities is being

replaced by economic infrastructure investment plans by the

new Federal Government. This is providing opportunities in road

and rail across Australia.

We have recently established a permanent presence in Victoria

as we expect reforms in that state to make our offering more

attractive. Our existing large resource projects also present the

opportunity for growth as additional work within the investment

programmes comes to market.

We have gained a lot of traction this year with our major

customers as a result of our delivery performance and this can

only be helpful when they go on to commission their future

programmes of work.

In Hong Kong, our projects for MTR Corporation are going well

and we have excellent relationships with our customer on each

project. We are currently bidding further exciting MTR projects

and are hopeful of success.

We are also considering some other selective opportunities in

Asia but have nothing specifi c to report at this time.

GOVERNANCEDuring the year we evolved our governance structure and

committee composition in line with our business strategy, and

continued to enjoy excellent relationships with our fi nancial

stakeholders, the tax authorities, our auditors and advisers.

We have not experienced failure on the part of any of our

customers and in our supply chain have managed to avoid any

failure which would be material to our business. We continue in

our careful selectivity and diligence.

We have a deservedly excellent reputation for our payment

practices and recently were one of only two top-tier suppliers

who have committed to the UK Government’s payment charter.

GROUP CHIEF EXECUTIVE’S REVIEW CONTINUED


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MARKET OVERVIEW

GLOBAL ECONOMIC ENVIRONMENT AND TRENDSThe global economy grew by 3.0 per cent in the 2013 January

to December fi scal period. Although still relatively slow, with

a slight downward trend in real terms, the rate of decline

has slowed signifi cantly compared with the prior-year period.

Recently, the rate of growth in emerging and developing

markets has also slowed, while several industrial nations

saw a slight acceleration in growth. However, emerging and

developing economies will drive the majority of global growth

in the medium term. According to the International Monetary

Fund (IMF), economic growth in industrial nations stood at

1.3 per cent in 2013 and at 4.7 per cent in emerging and

developing economies.

For the near future, the IMF expects global growth to be

affected by two macro trends. Firstly, global capital markets

could be adversely impacted by a more cautionary approach

to monetary policy in the USA. Secondly, China’s growth is

likely to progress at a more moderate rate in the near term.

Their overall forecast for the 2014 to 2015 period is predicted

economic growth world-wide of 3.7 per cent, up from

3.0 per cent, with further stabilisation of the European

economies as they continue to emerge from recession.

Region

2013 Economic Growth Rate

(EGR)

2014 Anticipated

EGR

Australia 2.6 2.8

Canada 1.7 2.2

UK 1.7 2.4

Hong Kong (China) 7.7 7.5

United Arab Emirates 4.0 3.9

World 3.0 3.7

Source: International Monetary Fund: World Economic Situation and Prospects 2014 Report (publication date: January 2014).

We have been carefully

navigating the challenging

economic landscape and

our fi nancial performance

pays testimony to that.”

ANNA STEWART


INNOVATIONOur Engineering Excellence Group (EnEx.G) is now fully

formed and has become central to our innovation agenda

in both hubs. Emphasis is slowly shifting from supporting

the short-term bid and project opportunities to longer-term

product and process development in conjunction with our

sector teams to anticipate the future needs of our customers.

We have developed a number of new products this year and

have patented the designs, and I am confi dent our innovation

agenda is becoming a meaningful differentiator as customers

consider more carefully the partners they choose to work with.

Additionally, we have also made two small acquisitions to

broaden our in-house product capability and offerings to

help accelerate our innovation agenda.

OUTLOOK We continue to be restless in our pursuit of excellence.

No one party has all the answers and we thrive best when

given the opportunity to collaborate in wider teams and share

ideas and develop solutions together.

Our best customers are those who are confi dent of what they

want and can defi ne their high-level expectations, including

what they expect to pay, which then allows us to respond

with ideas and a commercial proposition which we hope will

delight them.

We are increasingly fortunate to work with such customers,

the product of which you will see in the projects delivered

this year throughout this Annual Review.

I am privileged to work with great people and to lead a superb

team. We are confi dent about the future and passionate about

what we do. To all of you who have worked with us or for us

this year, I say a big thank-you and look forward to the

future together.

ANNA STEWART



GROUP CHIEF EXECUTIVE’S REVIEW CONTINUED

GENERAL ECONOMIC ENVIRONMENT AND MACRO

TRENDS IN REGIONS SERVED BY LAING O’ROURKE

Europe HubUK

After several years of contraction, the UK construction market

returned to growth in 2013/14 with a total increase in output of

5.4 per cent in the year to March 20141 and projected growth

into 2015. However, competitive tender margins remain tight

and there are signs of cost infl ation as demand increases.

UK construction increased in 2013/14 to £75 billion, supported

by government investments in infrastructure and affordable

housing, and growth in the private residential sector.

Interest rates remain at historically low levels and, with capital

starting to fl ow into construction again, the outlook is more

positive. Rising employment, increasing consumer and investor

confi dence, a growing population and increasing urbanisation

all suggest good growth prospects for UK construction.

The private residential sector grew 12 per cent in 20131,

with activity particularly strong in the London market.

The economic drivers above mean that demand in London

and the southeast remains high and growth looks set to

continue. Laing O’Rourke focuses on large scale developments

and is well positioned with key clients like British Land, and

a pipeline of prestigious projects that include the Clarges

estate in Piccadilly, 190 The Strand and Riverlight, Nine Elms.

The London commercial market is also growing. Together with

the residential sector, this is leading to a new boom in tall

building construction, where Laing O’Rourke is recognised for

its expertise and recently completed the iconic Leadenhall

Building. Recent analysis by New London Architects shows that

there are 236 tall (20+ storeys) buildings in the pipeline, 113 of

which are already approved for planning. Outside London the

commercial sector is more subdued, though there are still

major schemes, such as Scottish Power’s new headquarters

in Glasgow, where Laing O’Rourke is the main contractor.

Laing O’Rourke has strategically increased its presence in

infrastructure sectors such as power, rail and water, which all

have good long-term growth prospects.

The Group welcomes the government’s commitment to

long-term infrastructure investment, with projects such as

Hinkley Point C, Crossrail, High Speed 2 and the Northern

Line extension creating opportunities for growth. Overall,

the government’s National Infrastructure Plan (updated

December 2013) provides for a total investment of £377 billion

to beyond 2020, with projects in energy and transportation

featuring heavily (£219 billion and £121 billion respectively).

The table (right) summarises key elements of spend in these

two categories.

UK Government Planned Investment (Energy and Transport)

Sector Spend

Wind, Tidal and Other Renewables £73.2 billion

Nuclear £62.5 billion

Roads £33.6 billion

Rail £30.0 billion

Electricity Transmission £24.8 billion

High Speed Rail £24.2 billion

London Transport £17.2 billion

Electricity Distribution £15.2 billion

Nuclear Decommissioning £12.6 billion

Laing O’Rourke has historically been very active in social

infrastructure sectors such as health and education, and these

remain key areas going forward as the UK Government looks to

upgrade and replace its ageing schools and hospitals estates.

Despite initial signs of recovery, overall volumes remain well

below the 2008 peak and the market for new work remains very

competitive, with many tenders being awarded on a lowest-

price basis, leading to an overall dilution in industry margins.

As construction volumes pick up, there are clear signs of cost

infl ation in the supply chain and shortages of supply in some

key trades. Laing O’Rourke’s direct delivery model and its

Design for Manufacture and Assembly approach should help

to mitigate the impact of this. However, we continue to closely

monitor input and output prices.

Canada

Canada is the largest construction market that Laing O’Rourke

operates in, with total construction output of CAD$318 billion

placing it as the seventh largest construction market in the

world. It grew by 3.7 per cent in 2013 and is forecast to be the

fi fth largest by 2020.

Growth in Canada is expected to be driven by oil and gas,

in particular from the oil sands in Alberta (Fort McMurray)

and LNG in British Columbia. Specifi c large-scale upcoming

projects in these areas include Kitimat Export Terminal,

Prince Rupert and Pacifi c Northwest LNG Plants and the

Kearl, Jocelyn North and Christina Lake oil sands projects.

In August 2013 the Canadian Government launched the

“Building Canada Plan”, which aims to encourage greater

involvement of the private sector in the provision of public

infrastructure to build roads, bridges, subways, commuter

rail and other infrastructure in cooperation with provinces,

territories and municipalities. The plan offers CAD$53 billion

of funding over the next 10 years.

1. UK Offi ce for National Statistics.


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Middle East

The United Arab Emirates’ economy has demonstrated strong

growth since 2010, with increase in GDP in 2013 estimated at

4.5-5.0 per cent. This is expected to continue, with the IMF

projecting growth of 4.4 per cent in 2014 and 4.2 per cent

in 2015.

The economy is still heavily dependent on oil and gas, which

accounts for 38 per cent of GDP. The Department of Economic

Development has indicated that Abu Dhabi’s oil production

would rise steadily from 2.907 million barrels per day in 2015

to 3.114 million in 2017. However, it expects the oil price to fall

back moderately. In order to reduce its reliance on oil and gas,

the government has been investing in other sectors such as

tourism, fi nance and manufacturing, creating opportunities

for the construction sector.

Australia HubAustralia

Unlike the decline seen in most of the western economies as

a result of the global fi nancial crisis, Australia has enjoyed

an unprecedented 22 consecutive years of growth, driven by

mining and natural resources investment sustained by strong

demand, in particular from China and other Asian markets.

GDP growth in 2013 was 2.8 per cent2 and is forecast to remain

at the same rate into 2014. Offi cial interest rates fell during

2013 to a record low of 2.5 per cent and are anticipated to

remain at this level for the foreseeable future. Australia is now

one of only ten countries worldwide to hold AAA sovereign debt

ratings from all three major ratings agencies.

The construction sector has grown rapidly over the last ten

years and in 2013 grew by a further 1.9 per cent, underpinned

by mega resources projects in the oil and gas sector such as

the Wheatstone and Gorgon projects in Western Australia and

the Ichthys scheme in the Northern Territory. Laing O’Rourke

is well positioned on these projects, as well as work for

QGC and Australia Pacifi c LNG in Queensland. In the sector,

Laing O’Rourke is now participating in more oil and gas

projects than any other tier-one contractor, with these

generating revenues through to 2017.

As a result of the natural resources boom, the associated

construction sector is now worth AUD$59 billion per annum,

some six times the size it was ten years ago. However, this

phenomenal growth rate is viewed as unsustainable in the

medium to long term and investments will start to reduce as

the capital phases of major projects complete.

Despite these changes, Laing O’Rourke is committed to its

preferred contractor status in the mining and oil and gas

sectors and is well placed to take advantage of the next phase

of projects with key clients, which include the expansion of

existing infrastructure as well as brownfi eld developments.

Outside the resources sector, investment in transport and

other infrastructure is expected to increase going forward.

The Australian Government intends to invest in improved

transport links, in particular in major PPP road schemes,

freight rail projects and new minerals export infrastructure –

with capital freed up from the sale and renewal of public

assets. Major projects expected to come to the market in

the near term include the Kingsford Smith Drive project in

Brisbane, light rail services in Sydney, Perth and Canberra,

motorway expansions in Victoria and major airport expansion

works in Perth.

The Australian Constructors Association forecasts growth

in transport infrastructure spending of 9 per cent in 2015.

Laing O’Rourke has a strong track record in this sector,

delivering successful projects such as the billion dollar

Novo Rail alliance in Sydney, the electrifi cation of the Adelaide

(South Australia), Auckland (New Zealand) and Sunbury

(Victoria) rail services and a new rail stabling facility

outside Brisbane which forms a critical part of Queensland’s

largest-ever public transport project. Laing O’Rourke also

has extensive experience in structuring, fi nancing and

managing PPP projects.

The commercial construction market has declined in recent

years and was down 1.8 per cent in 2013. However, market

indicators suggest that this may pick up in 2014 through

2015, as private sector-led investment increases. A range

of commercial clients are engaged in discussions aimed at

bringing signifi cant schemes to market.

Hong Kong

The Hong Kong construction market is mature and well

established. Laing O’Rourke’s activities are focused on

transport infrastructure, which accounted for around

19 per cent of construction output in 2013 and is expected

to remain substantial, with 35 transport infrastructure

projects worth HKD$481 billion currently under construction.

While overall economic growth in the province remains

subdued, the outlook for new infrastructure projects is

positive, with plans for the airport, further rail links into

mainland China and a major new public infrastructure and

development precinct in West Kowloon.

Laing O’Rourke has strategically

increased its presence in key

construction and infrastructure

sectors which have good long-term

growth prospects.”

ANNA STEWART


2. Australian Bureau of Statistics.

OUR PROVEN APPROACH

BUSINESS MODEL


SEE OVERLEAF FOR MORE INFORMATION ON OUR BUSINESS MODEL

MANCHESTER

CENTRAL LIBRARY

AND TOWN HALLThe award winning

transformation of one of

Manchester’s major

landmarks was

accomplished with a

stunning refurbishment of

the historic Grade 2* listed

complex. As well as a

sensitive restoration, the

project has created an

entirely new exhibition and

entertainment space, and

extensive civic facilities.

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See more

PROJECT MANAGEProject management provides the

critical link between all activities on

a project. Our project management

professionals expertly integrate and

manage all the phases, from bidding

and contract award negotiations to

commissioning and maintenance, to

ensure the project is delivered within

budget, meets the schedule and

achieves the required technical

quality safely and sustainably.

Using a proprietary quality management

system called The LOR Way,

incorporating our proven Core and

Enabling Processes, we resolve

confl icts, establish priorities and verify

readiness to proceed through key project

gateways. Coupled with the know-how of

our project managers, this process

supports even the most complex

projects. We also expertly resolve

confl icts and identify issues before they

become problems.

MANUFACTUREOnce a design is completed, the

specifi cations for the preassembled

components are fed directly to our

manufacturing facilities where both

standardised structural and modular

components are manufactured and

preassembled in a controlled factory

environment. This assures much higher

quality, greater design integrity and

more reliable and resource-effi cient

delivery. Our signifi cant investment in

offsite manufacturing means that we

have, in-house, some of the most

advanced facilities in the world.

ASSEMBLEOur specialist delivery businesses

manage the complex logistics involved

in scheduling delivery of, and then

transporting, lifting and positioning,

the components ready for fi nal fi xing.

DfMA components are delivered to site

ready to ‘plug and play’, allowing the

testing and commissioning phases to

commence at the point of manufacture.

Thus, they are fi nalised much sooner,

once again reducing time, and handing

control of the asset to the client much

earlier than traditional construction

can achieve.

Laing O’Rourke’s civil engineering

division will complete the groundworks,

and deliver the civil and structural

engineering know-how to assemble the

major DfMA components and in-situ

elements optimally for a project.

Following this, our in-house mechanical,

electrical and process specialists will

commence work on the modular

mechanical, electrical and process-

handling installations and fi xings.

This approach radically reduces waste,

minimises offsite traffi c and onsite

labour, reduces programme, assures

quality and delivers cost certainty.

SELF-DELIVERLaing O’Rourke’s construction and

infrastructure delivery teams manage

construction of the project in parallel

with the testing and commissioning

phases with the client. With our directly

employed workforce and substantial

in-house resources, we can undertake

the most complex engineering

challenges with unmatched expertise.

Our experience extends across

international construction regulations

and industrial relations. We have

developed and embedded many

innovative construction techniques

into our approach over many years,

and today we deploy one of the most

technologically advanced construction

quality assurance processes in the

world – The LOR Way.

Our expertise in construction extends

from the start to the fi nish of a project

and covers supply chain management,

fi eld procurement, materials

consolidation for controlled site release,

project controls and site administration

to fi nal commissioning and ongoing

maintenance.

ASSET MANAGEAs a natural extension of our

relationship with clients, we provide

integrated operational management,

refurbishment and maintenance

services. The extensive knowledge we

acquire through designing and delivering

buildings and infrastructure provides a

unique insight into how capital assets

can be more effi ciently managed

and maintained.

The multi-dimensional digital model

transforms into the asset management

system over the lifespan of the capital

investment. This unique source of

technical data creates smarter buildings

and infrastructure by increasing the

operating effi ciency while reducing

the running and maintenance costs

for the client.

VALUE CREATIONOur formula for sustainable growth is

based on a collective commitment to

innovate, develop, perform and improve.

We work hard to attract, satisfy and

retain our clients. Our geographic

spread and focus on dynamic sectors

present the right opportunities to

grow organically and generate value.

As we grow we take advantage of

the economies of scale in areas like

procurement and in operational

synergies. Our relentless focus on zero

and negative overhead growth enables

us to reduce the cost of doing business

and deliver improvements in margin,

as well as prioritise investment in areas

that will accelerate growth in our two

operating hubs.

Taken together, our business model and

approach improve our competitiveness

and is helping us achieve our goal of

being the fi rst choice engineering and

construction partner for our customers.

Our people are at the heart of delivering

excellence plus performance and

achieving our targets and those of our

clients and partners. We aim to attract

the very best in the industry who share

our vision and values, to develop their

careers, contribute to our success and,

most importantly, share in it.

ENABLING THE

ORGANISATION

BUSINESS MODEL CONTINUEDDUENUTIONCOL CDEODMOSESNESIBUB EDUO OSSE MUS D CINB L NNT EDUNNTOCLDOMSSEINUSB DUEBU ESS ODMO NUL CCOB DE ONSINE TI UUNTTCCDDMEEUS EDNNOOELLOOSSINBB UUTNTCCDDMEESU DENNOOLELOOSSNIBBBUSINESS MODEL CONTINUED

Laing O’Rourke is committed to

consistently delivering superior

service in the most effi cient and

effective ways possible, for the

shared benefi t of our customers,

shareholders, employees and the

communities in which we work

CLIENTS, MARKETS

AND SECTORS

PRIORITISE AND SECUREWe focus exclusively on markets, sectors

and client opportunities with high growth

rates that meet our fi nancial targets

and align with our business ethics and

delivery approach. To achieve this we

maintain engineering and commercial

discipline in the application of our unique

business offering (UBO) and its ability to

produce greater quality and certainty in

an industry that is characterised by time

and cost overruns. Therefore we will

only commit resources to opportunities

where there is a high likelihood of

long-term relationships based on

mutual respect and value creation.

HOW WE CREATE VALUE

PRIORITISE & SECURE

EARLY ENGAGEMENT

DESIGN & ENGINEER

MARKETS SECTORS

CLIENTS

CLIENTS, MARKETS AND SECTORS

UNIQUE BUSINESS OFFERING

SELF-DELIVER

EARLY ENGAGEMENTActing as a trusted adviser we help our

clients defi ne and validate their capital

investment decisions at the very start of

a project through a detailed appraisal of

the fi nancial risks. Our early engagement

reduces risk exposure and helps to

maximise their rate of return by

combining an engineering and

commercial perspective, based on

our knowledge of appropriate funding

and procurement routes with proven

expertise in delivering certainty.

We also collaborate with architects,

design consultants and supply chain

partners early in the process, improving

predictability through the application of

consistent standards and a component-

led design, reducing the complexities and

timescales associated with the traditional

design process.

UNIQUE BUSINESS

OFFERING

DESIGN AND ENGINEEROur commitment to engineering

excellence is at the heart of our early

engagement approach. The Engineering

Excellence Group (EnEx.G) and our

extensive ‘fi eld’ engineering capability

are responsible for driving innovative

solutions, collaborating with technology,

design and educational partners to help

clients right at the front end of a project.

This generates greater value from their

investment by incentivising designers to

embrace standard design protocols,

embedding more effi cient and effective

DfMA solutions into the fi nal design.

ENABLINGTHE ORGANISATION

VALUECREATION

THROUGH-LIFE PROJECT MANAGEMENT

ASSEMBLE

MANUFACTURE

ASS

ET

MA

NA

GE

Digital engineering is a key enabler of

this approach through the production of a

virtual data-driven model. These models

are allowing us to engineer and price

projects to an unprecedented level of

accuracy much earlier in the process,

providing clients and investors with the

cost predictability that justifi es their

investment decisions.

All projects share common elements,

therefore major benefi ts come from

using standardised components, without

compromising the architectural intent

of the agreed design. Our extensive

component library contains the full range

of intelligent building and infrastructure

products that can be technically

confi gured to suit any project type.

A growing number of leading design

consultants are adopting our approach

as the industry’s default design process.

PAGE TITLE


SHAPING THE LONDON SKYLINE…SEE OVERLEAF FOR MORE INFORMATION ON OUR BUSINESS MODEL

THE LEADENHALL

BUILDINGThe Leadenhall Building is

a bold and dynamic addition

to the capital’s skyline, but

has also set new standards

in lean construction. Over 85

per cent of the building was

manufactured offsite, and

the delivery programme

pioneered many new

approaches in construction,

including a prefabricated

fl oor system, the application

of an ‘active alignment’

system to ensure precise

steelwork fi xing, and an

RFID (radio frequency

identifi cation) system linked

to digital engineering.


COLLABORATIVE CUSTOMER RELATIONSHIPSThe Leadenhall Development Company,

a joint venture between British Land

and Oxford Properties, has developed

a huge amount of respect and trust for

Laing O’Rourke over the course of the

contract up to practical completion in

June 2014. The organisation singled out

Laing O’Rourke’s hands-on engineering

approach, open and transparent

information sharing and the ‘can-do’

ability to tackle the challenges faced.

Coupled with the Group’s highly

motivated and driven project team,

led by Project Director Steve Cork,

the customer categorised us as

‘the ideal delivery partner’.

STRATEGIC DESIGN PARTNERSHIP

Because of its asymmetric geometry, the

building’s dead load causes it to move to

the north. Laing O’Rourke worked with

world-leading engineering consultancy

Skidmore Owings & Merrill to develop

an innovative active alignment strategy

to ensure the lateral stability of the

building and accommodate some of the

world’s fastest lifts. This has become

known as the ‘start straight, end

straight’ methodology.

DIGITAL ENGINEERING

The digital engineering approach during

the early engagement stage generated

nearly 500 technical queries which would

traditionally manifest themselves in the

building phase, causing time-delaying

changes and related additional costs.

Building the project virtually before any

activity even commenced onsite provided

surety in both programme and cost,

achieving the extraordinary quality

standards required.

… SHAPING THE FUTURE OF ENGINEERING

CLIENTS, MARKETS AND SECTORS UNIQUE BUSINESS OFFERING


Digital engineering has been particularly

critical to the design and construction

methodology of the ‘attic’ which houses

the building’s extensive plant

requirements. The complexity of the

geometry and intersections of the

steelwork would make it incredibly

diffi cult to use traditional two-dimensional

drawings. In-house specialists produced

detailed information models to optimise

the sequence of installation, building

the elements digitally over and over

again, creating greater installation

predictability once onsite.

DfMA OPTIMISED

With a highly restrictive building footprint,

the Laing O’Rourke project team utilised

the Group’s proprietary-developed

E6 structural fl ooring solution, which

enabled the fl oors to be constructed

from solid precast concrete components

manufactured at Explore Industrial Park

(EIP) and delivered for assembly by Select

Plant. The process is typically twice as

fast as working with wet concrete and the

fl oorplates can be assembled and usable

within a matter of hours – resulting in

faster construction and fewer trades.

EIP produced 7,191 precast planks

covering a total fl oor area of 65,000m².

DEVELOPING TALENT

As a National Skills Academy for

Construction, Leadenhall has been at

the centre of a drive to create a positive

impact on the local community

by developing the skills of workers and

inspiring young people. Workers were

identifi ed who could benefi t from further

skills training and these were encouraged

to take the next step in their careers.

For example, 123 subcontractors started

NVQs and 26 apprenticeships have been

successfully completed. To inspire

secondary school children to consider

careers in construction, the project

engaged closely with Newham and

Hackney councils, giving talks and

arranging careers days onsite. Work

experience placements were also run

in disciplines such as engineering,

construction and digital modelling.

The iconic Leadenhall Building has already become

a major landmark on London’s skyline. The structure

also reached new heights in the range of innovative

and more sustainable techniques and technologies

deployed to make it all possible

SEE PAGES 12-13 FOR MORE

DETAIL ON OUR BUSINESS MODEL

ENABLING THE ORGANISATION

PAGE TITLE


SEE OVERLEAF FOR MORE INFORMATION ON OUR BUSINESS MODEL

RE-ENGINEERING AUSTRALIA’S RESOURCES INDUSTRY


CAPE LAMBERTThe Cape Lambert port serves

Rio Tinto’s mining operations

in Western Australia’s Pilbara

region. Laing O’Rourke is

currently delivering Phase B of

an expansion programme, which

will expand the Cape’s iron ore

export capacity from 80 to

183 million tonnes per annum.

Our commitment includes the

supply, fabrication, delivery

and installation of structural,

mechanical and piping works

needed for the in-loading and

out-loading conveyors and ore

transfer towers, as well as the

fabrication of around 3,500

tonnes of structural steel.


DEEPENING CLIENT RELATIONSHIPS

Laing O’Rourke has a long history with

Rio Tinto, having delivered numerous

mining infrastructure projects for the

company dating back to 1975. We have

successfully completed the fi rst phase

of the structural, mechanical and piping

(SMP) works for the in-loading and

out-loading conveyors and transfer

towers at the Cape Lambert Port B

stockyards, one of the seaports used

to export iron ore from the western

region of Australia. The business is

currently performing the second phase

of Rio Tinto’s expansion of the port.

This relationship has benefi ted extensively

from the intelligent deployment of key

elements of the Group’s integrated

offering, providing the customer

with greater levels of assurance by

demonstrating our understanding of the

complexity of the construction process,

risks, logistics and programme, as well

as maximising the safe delivery of their

project on time and to budget.

DIGITALLY ENGINEERING SUCCESSAs the project moves towards completion

in September 2014, the team can refl ect

on the many advantages that digital

engineering has brought to the scheme

at Cape Lambert. Major benefi ts

include a greater proportion of offsite

preassembly than on any previous mining

project, elimination of clashes, the ability

to determine accurately the best possible

construction methodology, and detailed

construction reviews where many

more safety issues were identifi ed

and mitigated than would previously

have been possible.

TAILORING DfMA

Laing O’Rourke adopted state-of-the-art

techniques that raised the bar for delivery

of industrial infrastructure projects

on this scale. The digital engineering

strategy directly supported a Design

for Manufacture and Assembly (DfMA)

approach, and specifi cally the use of

preassembled modules, while enhancing

safety, planning, sequencing site work

and quality control.

Working with BJC, Laing O’Rourke’s steel

fabrication partners in Thailand, DfMA

facilitated the integration of additional

… RE-ENGINEERING HOW WE DELIVER

CLIENTS, MARKETS AND SECTORS UNIQUE BUSINESS OFFERING


steel features which enabled safe and

effi cient transportation and lifting. The

steel was fabricated at BJC’s facility and

then transferred to a modularisation plant

where it was fully assembled and tested

before being re-modularised for shipping

to Australia. The digital model was

integral to the coordination of exactly

where to position the steel supports for

both clash avoidance and logistical ease

and effi ciency of movement once the

modules arrived onsite for reassembly.

ENABLING SITE-LEVEL INNOVATIONGreater adoption of new technologies

brought massive changes to site practices.

The project embraces use of tablet

devices to allow real-time coordination

of the 3D models with day-to-day work

planning to give a 4D sequencing

installation methodology. Laing O’Rourke

has also developed customised 3D viewing

software that gives site-based engineers

the ability to see project information in

real time – for example, critical path

analysis, overall project status and

planned progress versus actual.

3D video presentations have also been

implemented for construction planning

workshops, showing a digital model of

the site to work crews and helping them

to understand the construction sequencing

prior to the arrival of the ships and their

modular cargo.

DRIVING PROCESS IMPROVEMENT

The project implemented a material

tracking system, where modules and

steelwork are tagged for easy onsite

verifi cation of their location and

incorporation into the structures.

This provides an effi cient and planned

distribution of the components and avoids

losses – either through time spent locating

the material or the cost of re-ordering.

The module location is updated on a

cloud-based system that overlays the data

on a GPS map. As the system uses active

radio frequency identifi cation (RFID) tags,

the location of the tags can be updated

with a mobile reader attached to a site

vehicle. This has a reliable range of over

100m, so when searching for a particular

module, users will go to the GPS map

location onsite and use the mobile readers

to further pinpoint the location of the

required module for installation, reducing

both programme and cost.

Laing O’Rourke’s innovative approach to delivery

on the Cape Lambert Port B expansion project in

Western Australia is raising the standard for how

industrial infrastructure projects on this scale will

be delivered in the future


SEE PAGES 12-13 FOR MORE

DETAIL ON OUR BUSINESS MODEL

18

STRATEGYSTRATEGY

HONG KONG MASS

TRANSIT RAILWAYWork to connect Hong Kong’s

metro infrastructure with

high-speed connections to

mainland China continues

with our twin tunnelling and

terminus contracts at West

Kowloon. When complete,

this southernmost link to the

16,000km Chinese national

high-speed rail network

will provide access for

99,000 passengers a day.

OUR STRATEGY FRAMEWORK

Laing O’Rourke aims to become

the preferred choice engineering

and construction partner for clients

through the performance excellence

of its operational assets, fi nancial

resources and human capital in

attractive markets and sectors, while

at all times maintaining a resolute

commitment to the highest standards

of safe and sustainable delivery

19

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• Make safety personal and work

responsibly

• Lead by example

• Work as one team, listen to everyone

• Find or follow a better way

• Deliver on our promises,

aim to exceed

• Collaborate with clients and partners

VALUES

To be the company of first choice for all stakeholders.

To challenge and change construction worldwide. To be lean and agile

in the adoption of processes to compete with world-leading businesses

LAING O’ROURKE VISION

MISSION

To become a globally focused and enduring engineering enterprise through our

commitment to a culture of excellence plus performance. Focused on: business

improvement, engineering excellence, financial performance and human

capital management

UNIQUE

BUSINESS

OFFERING

CLIENTS,

MARKETS AND

SECTORS

ENABLING

THE ORGANISATION

We will challenge and

change the market by

delivering a unique

business offering

We will enable the

organisation by being

lean and agile

We will build collaborative

relationships – becoming

a partner of first choice

STRATEGIC ACTION AREAS

• Expand in high-growthmarkets

• Develop bespoke sector strategies

• Deepen customerrelationships

• Mandate digitalengineering

• Integrate EnEx.G

• Scale DfMA

• Advance direct delivery

• Optimise businessperformance

• Grow human capital

• Drive safetyand sustainability agenda

GROUP STRATEGIC ROADMAP

Laing O’Rourke’s well-

established vision describes

the overall goal and core

philosophy that underpin our

activities, and are key to the

achievement of our mission.

Our values are the unifying

force for all our activities

around the world and are

embedded through the culture

of our business worldwide.

These are the expression of

our shared understanding

of what we stand for, how we

behave and what we aspire to

become as an organisation.

Our mission provides a clear

defi nition of the future state

we wish to achieve. Excellence

plus performance defi nes

our delivery culture and is

demonstrated in every

aspect of the way the Group

does business.

The Group Strategic Roadmap

(GSR) creates the framework

which defi nes the direction

and shape we will pursue

over the medium to long term

to achieve our mission. This

provides a clear mechanism

to enable the Board and

Group Executive Committee to

fully understand the operating

environment and prevailing

market forces, prioritise

objectives and then allocate

the necessary fi nancial and

non-fi nancial resources to

achieve the required state.

Our strategic action areas

form the short-term steps

required to shape the

business portfolio in line with

our GSR and drive excellence

plus performance over

the medium to long term.

These objectives translate

the overarching strategic

intent into operational plans

that are then delivered by

the business units in our

two operational hubs.

The Group’s activities are underpinned by

our unique character. This is described in

our vision and values, mission and strategy.

Together they form a compelling guide to

what our goals are and how we will achieve

them. They continue to unite us in pointing

the way towards achieving future success

that is in the common interest.

We pride ourselves on having a

straightforward vision and core purpose.

Based on the philosophy and values of the

founding shareholders, it is clear, powerful

and relevant to the business challenges of

today and tomorrow.


STRATEGY CONTINUED

ALDER HEY CHILDREN’S

HEALTH PARKThis world renowned children’s

hospital is undergoing a radical

transformation, and Laing

O’Rourke’s imaginative proposal

with its joint venture partners

recognises the Group’s

reputation for healthcare

excellence. Over 300 beds and

30 theatres, and extensive car

parking will offer world-class

medical care in a beautiful park

environment. Our modular

construction methodology and

DfMA strategy have ensured

rapid progress to date.


Our Group Strategic Roadmap (GSR)

defi nes the direction, shape and

delivery culture of the Group over

the long term as a globally focused

engineering enterprise

Laing O’Rourke is now an internationalised business

operating successfully in a rapidly evolving world – a world

in which volatile conditions and the changing structure of

markets are creating signifi cant new challenges and very

substantial new opportunities.

Our mission and strategy focus on specifi c high-value

sectors and markets. We employ our vertically integrated

direct delivery model to create value for clients and procure

competitively to connect and integrate the supply chain.

We combine a deep understanding of global building and

infrastructure markets with a proven track record in

engineering and constructing high-performing capital

assets. We have the people and skills to capture value

at any point in the client value chain – from development

feasibility to operational management.


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CLIENTS, MARKETS AND SECTORS

We will build closer relationships with our clients in key

markets to become their partner of choice, creating

more value for them and for us. Our way of working with

supporting partners, stakeholders and suppliers is the

basis for growing our business and increasing profi tability

KEY

ELEMENTSEXPAND IN HIGH

GROWTH MARKETS

DEVELOP BESPOKE

SECTOR STRATEGIES

DEEPEN CUSTOMER

RELATIONSHIPS

MEDIUM-TERM

PRIORITIES

We will concentrate exclusively

on regions and markets with high

growth rates and socioeconomic

environments that align with our

values and delivery expertise.

This level of globalisation will

create a broader business base

to shield us from economic

fl uctuations in, or an over-

reliance on, any one market.

We will extend our presence in

infrastructure to create a more

balanced earnings profi le with

growing markets.

We will increase our footprint in

the UK, Australia and Middle East,

while seeking to strengthen our

presence in Canada and countries

with similar economies, where

markets are benefi ting from a

number of economic, social and

environmental developments.

Dedicated sector leaders

will focus exclusively on tracking

preferred opportunities and

nurturing key client relationships

to build understanding externally

of our capability and increase

our strike rate. Over the next

few years, we will build up our

capacity to deliver projects in

key markets and sectors through

organic development, and

potentially, in-fi ll acquisitions.

We will enhance how we win

work with the use of our

SCOPE customer relationship

management model – sharing

knowledge and infl uencing major

projects early, and boosting our

presence with more innovative

and proactive marketing.

Our plan is to target high-margin,

complex technical projects that

utilise more of our unique

business offering (UBO).

We will remain disciplined in

targeting opportunities and

will only commit resources to

projects that meet our fi nancial

objectives or where we have the

potential to build longer-term

strategic relationships.

We will enhance our customer

interactions, moving from

a transactional nature to one

based on trusted relationships.

We will differentiate on the basis

of technical capabilities in

engineering and construction.

We will develop a ‘licence to

operate’ in selective building and

infrastructure sectors on a global

basis. We will leverage our talent,

signifi cant in-house resources and

reputation for delivery.

Our strategic focus is based on

the pursuit of a varied building

and infrastructure client portfolio

spanning both public and private

sectors to create future

market resilience.

2013/14

ACHIEVEMENTS

• Secured repeat business with

key customers through early

engagement and directly

negotiated procurement routes.

• Increased presence in targeted

infrastructure sectors by

exporting capabilities to regions

benefi ting from the global trend

of investment in economic

infrastructure like oil and gas.

• Formalised our dedicated

sector specialist approach

and introduced a clear

engagement framework which

tracks and measures customer

satisfaction with our services.

KEY

PERFORMANCE

INDICATORS

Financial Performance

• EBIT

• Order Book

• Managed Revenue

Engineering Excellence

• Repeat Business

• Client Satisfaction

• Quality

Business Improvement

• Accident Frequency Rate


STRATEGY CONTINUED

UNIQUE BUSINESS OFFERING

Laing O’Rourke is an engineering-led organisation with

global expertise in delivering major projects. We will

consistently construct high-quality complex buildings and

infrastructure to budget, on time, safely and sustainably,

that exceed customers’ expectations

KEY

ELEMENTSINTEGRATE

EnEx.G

MANDATE DIGITAL

ENGINEERING

SCALE DfMA ADVANCE DIRECT

DELIVERY

MEDIUM-TERM

PRIORITIES

The Engineering

Excellence Group’s

(EnEx.G) principal role

is to drive our innovation

agenda, creating

competitive advantage

through the delivery

of superior engineering

strategies.

This unique in-house

consultancy integrates

seamlessly with clients,

partners and project

teams engaging at the

earliest stages of a

project, examining

challenges from new

angles and seeking out

transferable solutions

from other sectors.

The EnEx.G has four

primary roles: external

advisory, internal

consultancy, research

and development,

and education.

We will proactively

deploy new skills and

technologies ensuring

that complex projects

are ‘built’ twice – once

virtually in a digital

engineering-enabled

environment and then

at the point of delivery

onsite, ensuring greater

predictability of the time,

cost, quality, safety and

sustainability outcomes

for clients. To meet

the demand for more

intelligent assets, we

will create smarter,

engineering-led

solutions, constructed

with a focus on whole-

life value and long-term

controlled performance,

where the digitally

engineered model

transforms into the

asset management

system.

Design for Manufacture

and Assembly (DfMA)

will help revolutionise

the process of

construction, making

it faster, cleaner,

cheaper and more

reliable. By taking

much of the construction

activity offsite and into

a controlled factory

environment we are able

to achieve consistently

high standards.

Our highly automated

approach enhances

quality and effi ciency

at every stage – both in

the products themselves,

which are repeatedly

honed to support

optimum performance,

and in the production

process. This

optimisation process

can also improve the

sustainability credentials

of our products.

Laing O’Rourke has

a unique integrated

delivery capability,

bringing together the

people, technologies and

processes under one roof

to enable a full-service

approach. Owning our

own supply chain and

directly employing the

necessary skills helps

us reduce the risks

normally associated

with a traditional delivery

approach.

Through the integration

of our core competencies

in project management

and construction delivery,

the specialist knowledge,

shared values and level

of control we maintain

deliver the value inherent

in our UBO.

2013/14

ACHIEVEMENTS

• Major Group

investments in

resources and training

to further integrate the

EnEx.G and mandate

digital engineering on

all projects globally.

• Accelerated DfMA

deployment across

both hubs through

greater alignment of

our core engineering,

manufacturing and

delivery business units.

• Developed new

component-based

propositions to

disrupt and advance

the traditional

construction market

approach to delivery.

• Formulated the

Specialist Trading

Business Group in

the UK to deliver

productivity gains.

KEY

PERFORMANCE

INDICATORS


• EBIT

• Order Book

Human Capital

• Employee Engagement

• Training Spend

Per Head


• Digital Engineering

Deployment

• Quality

• Client Satisfaction

• Repeat Business


• Accident Frequency Rate


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We will focus on cost effi ciency and cash generation

across all our business activities to improve the productivity

of the Group and enhance our ability to grow. To achieve

this we will recruit, retain and develop the very best people

for the job

KEY

ELEMENTSOPTIMISE BUSINESS

PERFORMANCE

GROW HUMAN CAPITAL EMBED SAFETY AND

SUSTAINABILITY

MEDIUM-TERM

PRIORITIES

Our projects, business units and

supporting functions will reduce

operating costs by removing

duplication and activities that do

not add value – to achieve zero

or negative overhead growth. This

will ensure we are continually

challenging ourselves to deliver

superior levels of performance

at an acceptable cost.

In parallel we will invest in

state-of-the-art plant, equipment,

services and technologies that

enhance our UBO, allowing us

to deliver more with less.

We will share this knowledge

and the associated processes,

encouraging the supply chain

to adopt and comply with

Laing O’Rourke’s policies and

best practices.

Our DfMA approach will drive up

productivity levels, addressing

the skills gap in our industry

by creating more sustainable

careers. It will ensure our people

are trained in more future-

proofed and exportable skill-sets,

deployed in cleaner and safer

working environments.

The long-term success of our

industry depends on its ability

to attract the very best talent.

We will prioritise investment in

our human capital practices to

sustain our position as a

recognised employer of choice.

We will continue to recruit talent

across all our development

programmes, including

graduates, scholars, cadets

and apprentices.

We will derive additional value

from our network of alliances

with prestigious universities,

including University of Cambridge,

University of Oxford and Imperial

College London.

We believe that a strong

leadership capability is vital to

any organisation, and will work

to build the skills of our senior

executives, functional leaders

and key project delivery teams.

Our ‘Guns’ and ‘Young Guns’

programmes are designed

to fast-track high-potential

employees into leadership roles.

Protecting the health and safety

of everyone involved in or affected

by our operations is, and will

remain, a core business value.

We will continue to lead the

industry by investing to further

develop and embed our

behaviour-based safety culture

to eliminate all accidents from

our operations by 2020.

We respect the value of all

resources and endeavour to

deliver more with less by

completing projects quicker

and without mistakes.

In parallel we will minimise the

amount of energy and materials

we consume, helping us to comply

with sustainability best practice.

2013/14

ACHIEVEMENTS

• Increased productivity

and reduced associated

overheads through

further effi ciency

gains in our

manufacturing process.

• Invested in and

promoted our

leading entry-level

training programmes

to help bridge the

industry skills gap.

• Invested in scaleable

technology platforms

and associated training

to support our digital

engineering focus.

• Introduced greater

consistency in our

global safety and

sustainability agendas.

KEY

PERFORMANCE

INDICATORS


• EBIT

• Managed Revenue

Human Capital


• Training Spend

Per Head


• Digital Engineering

Deployment

• Quality


• Accident Frequency

Rate

• Profi t Per Head



STRATEGY CONTINUED

CUSTOM HOUSECustom House will be the

only surface station in the

central section of Crossrail,

and is currently being

delivered adjacent to the

existing Docklands Light

Railway platforms and the

ExCel exhibition centre.

This £35 million project is

a showcase of our DfMA

capability, and will be

assembled from over 700

components manufactured

at Explore Industrial Park.

EXCELLENCE PLUS DELIVERY CULTURE


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COMMITMENT INNOVATE DEVELOP PERFORM OPTIMISE

ELEMENT Engineering

Excellence

Human Capital

Management

Financial

Performance

Business

Improvement

DESCRIPTION The Group’s priority is

to fully understand the

needs of its customers

and deliver on its

promises through

the engineering

and construction

services provided.

Engineering excellence

is fundamental to

our strategy through

extensive deployment


offering (UBO),

embracing the

innovative EnEx.G,

digital engineering

technologies, Design

for Manufacture and

Assembly methodologies

and integrated self-

delivery capabilities,

across all our key

sectors and markets.

Excellence plus in

execution means

delivering on projects

within tight tolerances

of quality, time and

cost performance in a

reliable, predictable and

repeatable manner.

Achieving the required

levels of excellence

plus performance is

dependent on the quality

and commitment of all

employees. It is critical

that the Group attracts,

develops and retains

the best leadership and

operational delivery

talent in the marketplace

to ensure delivery of

our strategic goals

through the creation of

a culture and working

environment that

inspires our people

to give their best.

The level of enterprise-

wide employee

engagement

determines the degree

of understanding of

and commitment to the

Group’s strategic goals,

and hence provides a

direct correlation to

service levels, customer

satisfaction, responsible

behaviour and fi nancial

performance.

Financial discipline is of

paramount importance

to a company’s stability,

reputation and future

growth. The Group sets

stretching but achievable

fi nancial performance

targets as part of its

annual budget planning

process to improve

performance from

both a cost and sales

perspective. This creates

greater value for clients

and enables delivery

of appropriate and

sustainable returns and

complementary capital

structures that better

reward stakeholders

over time. These

measures are derived

from our consolidated

fi nancial statements

and include order book,

managed revenue,

earnings before tax and

operating cash fl ow.

By constantly refi ning

our business systems

and processes to optimise

assets, capabilities and

risk appetite we will

create a leaner and more

agile business. Through

the prioritisation of

resources and removal of

duplication and wasteful

practices, the Group will

become more productive

and profi table. Our

governance framework

and Global Code of

Conduct set the standards

by which the Group will

sustain long-term

business success.

Our health and safety

performance determines

our strength as a

business. It is not an

isolated measure but one

that defi nes our success

in all other areas. For this

reason, it is central to

business improvement

and a precondition of

our continued growth.

LINK TO

STRATEGY

EXECUTION

The extent of our

engineering excellence

and ability to innovate

relative to competitors is

a key driver of customer

buying behaviour.

Promotion of a

meritocratic,

learning-based culture

where rewarding

performance increases

productivity and delivers

higher returns.

Financial performance

determines our ability to

sustain our business and

reinvest for future growth

and development.

Controlling costs and

optimising resources

increases value creation

for the Group and

its stakeholders.

MEASURES • DfMA Quality

Acceptance Levels

• DE Deployment

• Customer Satisfaction

• Repeat Business


• Training Per Head

• Managed Revenue

• EBIT

• Order Book

• Cash Balance

• Accident Frequency

Rate

• Profi t Per Head

Our progress is determined not just by what

we achieve, but the way in which we achieve it.

Our success is enabled through a commitment

to excellence plus performance encompassing

four pillars around which our strategic action

plans are aligned


KEY PERFORMANCE INDICATORS

The Board uses a balanced range

of fi nancial and non-fi nancial

indicators across our business units

to measure the Group’s performance

against its excellence plus targets

and key Group Strategic Roadmap

(GSR) objectives, helping to guide

our thinking and decision making

at every stage of development

OUR GROUP STRATEGIC ROADMAP (GSR)Laing O’Rourke’s 2020 vision and longer-term mission of

building an enduring engineering enterprise of considerable

scale committed to excellence plus performance remains

in place as the long-term driver of all our strategic plans.

The GSR’s role is to better articulate and guide the

immediate next steps along this journey.

Our strategy is enabled through our commitment to

excellence plus performance. Excellence plus performance

encompasses four pillars around which our action plans

are being aligned:

• Engineering excellence;

• Human capital management;

• Financial performance;

• Business improvement.

MEASURING OUR PERFORMANCE


FINANCIAL PERFORMANCEThe Group sets stretching but achievable fi nancial performance

targets as part of its annual budget and planning process to

improve performance from both a cost and sales perspective

to drive appropriate fi nancial returns, with complementary

capital structures. These are derived from the Group’s

consolidated fi nancial statements.

0

2

4

6

8

10

1413121110

(£ billion)

ORDER BOOK

£7.4bn

7.4

8.2 8.2 8.28.1

Managed revenue

Total revenue

0

1

2

3

4

5

1413121110

(£ billion)

MANAGED REVENUE

£4.41bn

3.6

4.4

3.53.3

3.5 3.6

4.44.34.0

4.3

EBIT pre-exceptional items

EBIT post-exceptional items

0

20

40

60

80

100

120

1413121110

(£ million)

EARNINGS BEFORE

INTEREST AND TAX

£60.1m

53

6067

4034

58

78

5451

110

Defi nition: Order book represents

the amount of outstanding

work on secured contracts.

It is a key measure of our

success in winning new work

and also provides visibility of

future earnings.

Performance: The Group order

book declined to £7.4 billion

(2012/13: £8.2 billion). Half of

the decline is attributable to

adverse foreign exchange

movements, primarily the weaker

Australian dollar. The remaining

decline refl ects the Group’s focus

on high-quality, profi table work

rather than volume, in targeted

key sectors such as oil and gas

exploration and processing and

mining in Australia, and

infrastructure in the UK.

Defi nition: Managed revenue

represents the amount of sales

generated from the provision

of engineering and construction-

related services, including

the Group’s share of joint

ventures, associates and

inter-segment sales.

Performance: Managed revenue

increased by 0.5 per cent

to £4.41 billion (2012/13:

£4.39 billion), with continued

growth in our Australian business

and a return to growth in the UK,

refl ecting increased activity in

the UK market and the resilience

of our integrated business model.

Reported managed revenue was

adversely affected by the weaker

Australian dollar and at constant

exchange rates managed revenue

was up 5.2 per cent. Our platform

in Canada continues to develop

and is well placed for future

growth. Market conditions

in the Middle East remain

relatively challenging.

Defi nition: Earnings before

interest and taxes is a key

measure of the operating

profi tability of all revenue-

generating business units.

Performance: Earnings before

interest and taxes, prior to

exceptional items, declined by

23 per cent to £60.1 million

(2012/13: £78.4 million), refl ecting

the challenging market conditions

in the UK, where we continue to

see pressure on selling prices

despite the upturn in new tender

volumes, and the completion in

the prior year of higher-margin

projects won in a better

environment. Profi tability in our

Australian business continues

to improve, benefi ting from strict

bid criteria, delivery process

effi ciency and a focus on more

complex, higher-margin

engineering contracts.

Defi nition: Net funds position

at the year-end is a key factor

in evaluating the Group’s cash

and liquidity position. The Group’s

capacity to generate positive net

cash balances is an important

measure of its ability to invest

in business growth and serves

as a strong attractor to

outside investment.

Performance: The Group ended

the fi nancial year with gross

cash of £691 million (2013/13:

£714 million) and net funds

of £409 million (2012/13:

£440 million). The decline is

largely due to adverse foreign

exchange movements on the

translation of Australian dollar

balances. On a like-for-like local

currency basis, our net funds

position increased slightly,

refl ecting our continued focus

on strong cash management and

a prudent investment strategy.

The Group’s strong cash

performance has been achieved

while maintaining alignment to

the UK Government’s Prompt

Payment Code and our creditor

days outstanding reduced in the

year. In April 2014 the Group

committed to the Construction

Supply Chain Payment Charter.

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Gross cash

Net funds

0

100

200

300

400

500

600

700

800

1413121110

(£ million)

CASH BALANCES

£691m

409

691

270 283321

440

714

601619

716


KEY PERFORMANCE INDICATORS CONTINUED

HUMAN CAPITAL MANAGEMENTThe Group’s pursuit of excellence plus fi nancial and operational

performance is dependent on the quality and commitment of

its people. It is critical that the Group attracts, develops and

retains the best talent to ensure project delivery within the

tight tolerances of quality, time, cost, safety and sustainability

required by clients.

BUSINESS IMPROVEMENTWe are refi ning our business systems and processes to

optimise our assets, capabilities and risk appetite. By working

according to our governance framework and complying with the

high standards set out in our Global Code of Conduct, the Group

will sustain long-term business success.

The elimination of all accidents from our business is an

objective of the highest strategic signifi cance. Our health and

safety performance determines our strength as a business.

It is not an isolated measure but one that defi nes our success

in all other areas of our operations. For this reason, it is

central to business improvement – a precondition of our

continued growth.

ACCIDENT FREQUENCY

RATE

0.18

PROFIT PER HEAD

£9,960

Defi nition: Accident Frequency

Rate (AFR) is an industry-standard

measurement equivalent to one

reportable lost-time incident

resulting in more than three

working days’ absence per

100,000 hours worked.*

The Group’s health and safety

approach is aligned globally.

Performance: AFR improved to

0.18 in the year (2012/13: 0.21).

This refl ects an industry-leading

performance relative to our

peers, validating the investment

in leadership time and resources

given to all aspects of safety

management. Sadly, however,

there was a fatality on one of

our projects. On 6 November

2013 an incident occurred at the

construction site of the Francis

Crick Institute in London causing

the death of 31-year-old

metalworker Richard Laco.

Our ability to protect the health

and safety of everyone involved

in or affected by our operations

is, we believe, the single most

important measure of our value.

Harm of any kind in our

workplaces – especially the loss of

a life – is a matter for the deepest

regret, shared by colleagues in

every part of the business.

EMPLOYEE

ENGAGEMENT

64%

TRAINING SPEND PER

EMPLOYEE

£1,424

Defi nition: Profi t per head is

earnings before interest and tax

divided by the average number

of salaried staff, and is a key

measure of operating effi ciency.

Performance: Profi t per head

decreased to £9,960 (2012/13:

£12,800) largely as a result of

the reduction in profi tability

caused by margin pressure

in the UK alongside continued

investment in the Group’s

engineering excellence and

DfMA strategies. Overall staff

effi ciency remains high,

demonstrated by the underlying

increase in managed revenue.

The Group took decisive action

in rightsizing the organisation

following the global fi nancial

crisis and continues to drive

operational effi ciencies, with

further reductions in overheads

in the year. However, we expect

gross margins to remain tight

in the UK as cost infl ation

becomes more of a factor.

Defi nition: Employee

engagement is an

all-encompassing metric

which determines the level

of understanding and

commitment of the Group’s

employee base to our

strategic goals, and hence

provides a direct correlation

to service levels, client

satisfaction, business growth

and fi nancial performance.

We increasingly use our

employee engagement survey –

SHAPE – to assess individual

motivation and organisational

processes in this regard.

Performance: Employee

engagement is measured

every other year and in the

last survey was 64 per cent.

This compares to a global norm

of 57 per cent and once again

places us in the top quartile

of global high-performing

companies for the motivation

and commitment of

our workforce.

Defi nition: Training investment

per employee is an important

indicator of the Group’s

commitment to developing the

knowledge, skills and abilities of

its people to deliver its strategic

objectives and drive up company

performance through increased

productivity. Formal training

programmes also help each

employee perform their current

job more safely and effectively,

and are therefore viewed as

a benefi t. Training also increases

loyalty, and thus retention, and

helps the Group attract the best

possible employees from the

external marketplace. The metric

is computed by dividing the total

Group training spend by total

headcount, defi ned as all directly

employed staff and operatives.

Performance: The Group’s

industry-leading commitment

to building the skills and

capabilities of its workforce is

refl ected in the level of training

investment per employee of

£1,424, up 14 per cent on the

previous year (FY13: £1,244).

By way of example, the metric

justifi es our in-depth safety

training initiatives, because

developing the capabilities of

the workforce by providing staff

and operatives with the additional

skills to positively resolve safety

confl icts at source and assure

the delivery programme

enhances our productivity

and competitiveness in

the marketplace.

* On 1 October 2013 the threshold for reporting in the UK was raised from three to seven days. Laing O’Rourke continues to observe the previous more stringent regulations.


Defi nition: Repeat business*

ratio is the value of external

contracting turnover in the year

generated from repeat clients

as a proportion of total external

contracting turnover in the year.

It is a measure of client

satisfaction and a driver of

revenue and earnings growth

as retention drives an increase

in the lifetime value of a client,

reduces marketing costs and

provides key insights into

client behaviour, which drives

continuous improvements in

our business offering.

Performance: Repeat business

declined to 67 per cent of our

revenue (2012/13: 71 per cent),

with the Europe Hub accounting

for this small decline. In both

the European and Australian

businesses we have seen a shift

into new sectors with new clients,

refl ecting the Group’s strategy

of focusing on higher-margin,

complex engineering projects

in infrastructure sectors, which

has had the impact of diluting the

repeat business ratio. We aim to

achieve ‘trusted delivery partner’

status with our key clients,

through our unique business

offering (UBO) and the quality

of Laing O’Rourke’s delivery.

Defi nition: ‘Right fi rst time’ is

a measure of output quality from

our manufacturing facilities and

is calculated as the number of

products produced less those

rejected for quality or non-

conformance. It is a key measure

of operational effi ciency and

effectiveness as the impact on

projects of defective products

– in terms of client satisfaction

and the costs and delays of

rectifi cations – can be substantial.

Performance: 96 per cent of

products in our UK manufacturing

facilities and 98 per cent of

products in our Australian

facilities are approved as

‘right fi rst time’ output. This

fi gure is vastly in excess of what

can be achieved using traditional

in-situ construction and

demonstrates the value of

our Design for Manufacture

and Assembly strategy.

As our manufacturing capability

continues to grow, we expect

not only to improve this ratio,

but also to increase the proportion

of our business utilising

manufactured components to

continue to drive improvements

in quality and effi ciency.

Defi nition: Digital engineering

(DE) delivers an integrated set

of geometric models, data and

documentation that builds over

the life of a project to capture all

knowledge related to that project.

Utilising our experience gained

over many projects, DE will give

our clients confi dence in our

abilities by demonstrating our

understanding of the complexity

of the construction process, risks,

logistics and programme, thereby

enhancing our reputation for safe

delivery on time and to cost at the

required quality.

Performance: Our deployment

of digital engineering has

accelerated in pace and execution

and is now across our global

business. In our tendering activity

we now deploy a level of DE on

all projects and have completed

117 projects using DE since 2009.

We have invested signifi cantly in

developing our DE capability

across all delivery functions,

with over 1,900 staff completing

software training and over 170

case studies now available to staff.

DE supports our Design for

Manufacturing and Assembly

agenda and we now have over

2,000 components digitally

manufactured at our Explore

Industrial Park facility.

DE has become the ‘way we go

to work’, providing a greater level

of assurance and predictability of

outcome to our clients.

Defi nition: All of our key clients

have a dedicated Client

Relationship Manager. Client

satisfaction data is collected from

key clients relating to the Group’s

operational performance on

projects as part of Core Process.

This provides clients with an

opportunity to share their views

on strengths and weaknesses

in the Group’s delivery approach

and supports our continuous

improvement process by allowing

us to track and manage client

engagement and drive further

improvement across all aspects

of our business.

Performance: The Group’s

goal is an overall year-on-year

improvement in client

satisfaction on its major projects.

These metrics are contract-

specifi c and subject to variations

in interpretation, therefore

Group-wide aggregated data is

not presented.

Processes for the tracking and

reporting of customer service

KPIs differ by geography.

An example is given for the UK,

representing the largest operating

region in the Group, where the

client satisfaction level is a

material representation of the

wider business. In the most recent

feedback from seven of our key

UK clients, representing current

major projects totalling over

£1.7 billion, Laing O’Rourke

scored an average of 8.5 out of 10,

(or 85 per cent) customer service.

ENGINEERING EXCELLENCEThe Group’s desire is to fully understand the needs of its

clients and deliver on its promises throughout the life of the

engineering and construction services provided. Engineering

excellence is fundamental to our strategy – through extensive

deployment of our unique business offering (UBO) embracing

the innovative Engineering Excellence Group (EnEx.G), digital

engineering technologies, Design for Manufacture and

Assembly (DfMA) methodologies and integrated self-delivery

capabilities, across all our key sectors and markets.

To assess progress towards our aim of achieving engineering

excellence, we are monitoring the use of DfMA and digital

engineering across our projects. We also use repeat business

and qualitative client satisfaction survey results as key

indicators of our engineering and delivery performance

on client projects.

REPEAT BUSINESS

67%70% – EUROPE HUB

63% – AUSTRALIA HUB

QUALITY

96-98%RIGHT FIRST TIME ACROSS

OUR GLOBAL

MANUFACTURING FACILITIES

DIGITAL ENGINEERING

DEPLOYMENT

117117 PROJECTS COMPLETED

USING DIGITAL

ENGINEERING SINCE 2009

CLIENT SATISFACTION

85%

* ‘Repeat clients’ represents clients with whom we have a previous relationship, having delivered more than one project. All healthcare and education projects in the UK have been aggregated under National Health Service and Department for Education respectively.

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GROUP FINANCIAL REVIEW

INVESTING FOR FUTURE GROWTH

We will continue to strengthen

the relationships with our

clients through further

development and refi nement


offering and increasing the

effectiveness of our fi nancial

and human resources.”

CALLUM TUCKETT

GROUP DIRECTOR, FINANCE AND COMMERCE


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Laing O’Rourke has maintained focus on its established

objective to deepen capability as an integrated engineering

enterprise. Our focused investment in innovation through

the Engineering Excellence Group (EnEx.G), digital engineering,

Design for Manufacture and Assembly approach and our

specialist direct delivery businesses is beginning to have

a signifi cantly positive impact on the way we deliver value

and benefi t to our clients. We also continue to diversify

geographically with a renewed emphasis on northwest Canada

and Australia, coupled with further investment in key sectors

including oil and gas, power and accommodation, particularly

the private rental and social housing markets in the UK.

It is our fi rm belief that a cross-industry commitment to

meaningful investment in research and development is required

to improve and advance the products and services it offers

to clients. A material increase in these levels of investment

will also further mitigate the risks associated with resource

shortages and strengthen the relative attractiveness of

our industry to the best talent from universities, colleges,

schools and apprenticeship schemes.

Despite the continuing economic pressures, we have also

continued to increase investment in our strategic training

and development programmes. Our sustainable approach

covers entry-level trade apprenticeships, through to cadet,

graduate, management training, Young Guns and Guns

leadership development, alongside the technical and

professional development courses. This level of Group spend

directly supports strategy implementation, as well as continuing

to develop the capabilities of supply chain partners who work

with us, and ensuring we offer something different and more

valuable to clients.

The Group continued to deliver a strong cash performance

and consistent overall fi nancial performance in 2013/14,

despite the negative translation impact of the weaker

Australian dollar. Managed revenue increased 0.5 per cent

to £4.41 billion; however, total revenue declined 0.3 per cent

to £3.57 billion. These fi gures were adversely impacted by

foreign exchange movements in the trading period. On a

like-for-like basis, applying foreign exchange rates from

the previous 2012/13 trading period, managed revenue

increased over 5 per cent. Profi t after tax of £41.9 million

has been delivered, up slightly from £41.1 million in 2012/13.

This is supported by a strong cash performance with net cash

of £409 million down from £440 million in the previous year.

Although marginally lower than 2013, in the context of the

current market conditions this can be considered a strong

outturn relative to our tier-one peer group.

There has been the anticipated tightening of gross margins,

with pre-exceptional gross margin down from 8.7 per cent

(restated for IFRS11) in 2013 to 8.5 per cent, resulting in a

£9 million reduction from £291.4 million to £282.4 million.

This has been offset by a reduction in overheads from

£226.8 million to £219.0 million generating a fl at operating

profi t performance of £65.7 million pre-joint ventures and

exceptional items. The contribution from joint ventures has

fallen back in the year; however, this has been offset by a

lower level of exceptional costs and a lower tax charge.

GROSS MARGINGross margin pre-exceptional items reduced from 8.7 per cent

(restated) to 8.5 per cent as a result of lower margins in the

European business. Whilst the outlook in the UK economy

is more positive and activity levels are beginning to pick up,

market conditions remain challenging and pricing levels are

very competitive. Additionally a number of major profi table

projects were completed in the prior year and this has further

contributed to the margin reduction. A highly selective and

rigorous approvals process continues to be applied to our

pipeline of projects to bid and although this does put pressure

on the order book we believe that this will reduce the impact

in future years of the challenging market conditions that

currently exist.

We are also growing capability in more profi table sectors

including oil and gas, power and accommodation to drive

more sustainable margins moving forward. In contrast,

the Australian business has benefi ted from the strategic

re-balancing of its project portfolio away from an over-reliance

on the traditional building sectors towards more complex

projects in economic infrastructure, including oil and gas

and mining. Our focus on generating diversifi ed sources of

revenue from both a geographic and a sector perspective

should help us maintain our profi table performance

notwithstanding the pressures felt in the European markets.

CASH FLOW AND BORROWINGSThe Group ended the fi nancial year with gross cash of

£691 million down from £714 million (restated) and our net

cash reduced from £440 million to £409 million. The weaker

Australian dollar adversely affected gross cash by £52 million;

however, on an underlying basis excluding currency effect,

gross cash increased. We believe that this is a strong

performance in the current market and indicates the

underlying strength of these results and our business model.

We anticipate cash will come under continued pressure over

the next few years; however, our sales and planned sales of

non-core assets and refi nancing of debt facilities will help

mitigate any negative cash impact. Our average month-end

cash balances are healthy and at the year-end the Group had

undrawn credit facilities of £81 million.


GROUP FINANCIAL REVIEW CONTINUED

Gross debt remained broadly fl at in the year; however, the

underlying mix has changed, with a reduction in non-core

property-related debt and an increased investment in core

operational plant assets. Debt held in relation to property

developments reduced by £93 million, primarily as a result of

the completion of the McLachlan and Ann Street development

in Brisbane and planned repayments on our UK property facility.

Disposal of non-core assets is progressing well allowing us

to achieve carrying value or better, and we remain confi dent

the targeted balance will be sold during the 2014/15 period,

facilitating repayment of the associated debt.

Joint venture borrowings solely relate to non-recourse debt

within Public Private Partnership (PPP) and Private Finance

Initiative (PFI) investments in which the Group participates.

The Group supports prompt payments to suppliers and has

consistently been amongst the industry leaders in its standard

payment terms. As such we welcome and have committed

to the UK Government’s Construction Supply Chain Payment

Charter which has been agreed by the Construction Leadership

Council (CLC), the body set up to deliver the government’s

industrial strategy for construction.

ORDER BOOKThe Group order book reduced to £7.4 billion (2013/14:

£8.2 billion). The reduction is partially due to a foreign exchange

impact of £0.4 billion following translation from the weaker

Australian dollar to the UK sterling denomination. Europe

has maintained its order book at £5.5 billion; however, the

combination of the translational effect and slowing oil and gas

and mining sectors has reduced the Australian order book to

£1.9 billion from £2.6 billion.

In volume of activity terms, the European market is growing

stronger; however, we need to remain cautious as trading terms

remain under pressure following the recent deterioration as

supply chain pricing recovers, therefore we will continue to be

extremely selective in our bidding processes. The Australian

market profi le is changing and we have identifi ed signifi cant

opportunities in the infrastructure markets that play to our

strengths. As a result we have further strengthened our

leadership team in Queensland and Victoria, and are investing

in work-winning to secure further work in these more buoyant

geographies. We also continue to benefi t from high levels of

repeat business, with an increasing number of major clients

choosing to negotiate directly with us to gain exclusive

access to our capabilities in engineering excellence, digital

engineering, Design for Manufacture and Assembly and

direct delivery.

COST MANAGEMENTThe Group continued to focus on improving the cost effi ciency of

its operations, and overheads have reduced from £226.8 million

to £219.0 million in the year. We have sustained additional

overhead investment in developing sector expertise and staff

training in the business units, with further global investment

planned in the EnEx.G and digital engineering function. We

believe these levels of investment spend exceed those made

by others in the industry, and remain confi dent they will deliver

the targeted benefi ts and act as one of the main catalysts for

the implementation of our strategy.

TAXATIONThe Group tax charge for 2013/14 is £10.0 million on profi t

before tax of £51.9 million, which equates to an effective tax

rate for 2013/14 of 19.3 per cent. This is below the UK corporate

tax rate of 23 per cent due to the mix of profi ts generated in

different jurisdictions.

PENSIONSThe Group operates a number of pension schemes with leading

industry providers in Europe and Australia. These are defi ned

contribution schemes and as such there are no outstanding

pension liabilities.

INSURANCEInsurance broking globally is consolidated with Marsh, given

its technical expertise in underwriting engineering-based

projects, combined with international market coverage.

During 2013/14 the Group continued to experience low levels

of claims, although we carefully monitor the balance between

insurance risk retained by the Group through its insurance

captive, and that which we purchase in the external market. Our

insurance profi le closely tracks and correlates with our safety

performance, which this year improved further with a rolling

Accident Frequency Rate (AFR) of 0.18. We remain comfortable

with the level of insurance risk we are carrying internally.

EXCEPTIONAL ITEMSTotal exceptional costs before tax of £6.7 million have been

recognised in the year. The Group continues to monitor

its exposure to development assets and this charge is a

non-cash impairment against this portfolio.

Further details are provided in note 4 to the fi nancial

statements.

GOODWILL AND INTANGIBLE ASSETSThe Group carries £328 million of goodwill in the consolidated

balance sheet. Goodwill is not amortised under International

Financial Reporting Standards, but is tested annually

for impairment.


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In accordance with IAS 36, the recoverable amount has been

tested by reference to four-year forecasts, discounted at the

Group’s estimated weighted average cost of capital. As at

31 March 2014, based on the internal value-in-use calculations,

the Board concluded that the recoverable value of the cash-

generating units exceeded the carrying amount. Details of

this test can be found in note 13 to the fi nancial statements.

FINANCE AND TREASURYThe Group maintains suffi cient fi nancial capacity to support

its long-term contracting commitments and accommodate

future economic and operational challenges. The quantum

of the cash and committed credit lines to which the Group

has access to satisfy the current and future funding

requirements of the Group’s business plan totalled

£772 million (2012/13: £873 million).

The Group’s centralised treasury function has prudently

managed the Group’s liquidity, funding and fi nancial risks

arising from movements in areas such as interest rates

and foreign currency exchange rates.

The Group continues to review its credit support requirement

and broaden its base of key fi nancial stakeholders, including

key banking relationships and surety bonding providers who

support our long-term strategic growth agenda.

We will continue to ensure our treasury policy is appropriate

for the scale, complexity and operating environment of our

business. We will further develop our credit support capacity

in line with the requirements of our core markets and to ensure

we are optimising the Group’s signifi cant cash position.

RISK AND ACCOUNTING POLICIESThe Group’s risk management framework and processes are

largely unchanged from 31 March 2013. The Board continuously

assesses and monitors risks affecting the Group, and the

Chairman’s Statement, Group Chief Executive’s Review and

Hub operating reviews include consideration of the relevant

uncertainties affecting the business. Further details of how

the Group has managed key fi nancial and operational risks

such as credit and liquidity risks are set out on pages 78 to 82.

As an EU-domiciled company, Laing O’Rourke reports

its consolidated fi nancial statements in accordance with

International Financial Reporting Standards as adopted

by the European Union and the Cyprus Companies Law,

Cap 113. The Group’s signifi cant accounting policies

and measures are explained in the Notes to the Financial

Statements on pages 101 to 135.

During the year the Group adopted IFRS 11 Joint Arrangements

(and associated standards, see note 2.3) and as a result

presents restated comparative fi gures for the year ended

31 March 2013.

CONCLUSIONThe Group has continued to focus on its core business,

disposing of non-core assets and building internal capability

through our specialist businesses whilst continuing to invest

in our unique business offering (UBO) to clients. Our globally

diversifi ed revenue and profi t sources are well balanced and we

are working to extend our sector diversifi cation. The European

market continues to be challenged by diffi cult trading terms

and the Australian market in oil and gas and mining has

become more muted. We have anticipated these changing

market dynamics and are putting in place effective plans to

address these challenges and their implementation is on track.

Our Board continues to review our capital structure and we will

always consider more effi cient options that are aligned to our

operating model. At present we are satisfi ed that we have an

appropriate structure, well balanced cash fl ows, acceptable risk

exposure to the supply chain, and a high-quality order book,

which taken together are providing suffi cient fi nancial resources

to meet today’s requirements and fund future growth.

We will continue to strengthen the relationships with our

clients, through further development and refi nement of our

UBO and increasing the effectiveness of our fi nancial and

human resources. Establishing and consolidating deeper and

longer-term relationships with major clients and supply chain

partners across high-value sectors and markets provides

greater confi dence in the validity of our strategic direction.

As a result, the Board has considered the Group’s fi nancial

requirements, based on current commitments and its

secured order book as well as the latest projections of

future opportunities, against its banking and surety bonding

arrangements and has concluded that, despite continuing

uncertainty in the global economic outlook, the Group is

well placed to manage its business risks and meet its

fi nancial targets successfully.

CALLUM TUCKETT

GROUP DIRECTOR, FINANCE AND COMMERCE


HUB PERFORMANCE

EUROPE HUBCANADA

SAUDI ARABIA

UNITED ARAB EMIRATES

UNITED KINGDOM

Our future focus will remain very much in

markets and sectors where enlightened

customers’ preferred procurement routes

and working practices all play to our core

strengths and values as an integrated

engineering, construction and asset

management provider.”

ANNA STEWART


HEATHROW TERMINAL 2AOpened by HM the Queen in

June 2014, Heathrow’s iconic

new Terminal 2A was a

£2.5 billion project, delivered

as a joint venture of Laing

O’Rourke and Ferrovial

Agroman, utilising our DfMA

strategy and digital engineering

throughout. The adjoining

multi-storey car park was

constructed solely by

Laing O’Rourke.

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FINANCIAL HIGHLIGHTS

Managed revenue

£2.6bnOrder book

£5.5bnGross margin

9.5%


(GSR) NEAR-TERM PRIORITIES

• Build repeat business customer relationships based

on early engagement and delivery certainty of our

proven business proposition.

• Leverage the scale and effi ciencies of our vertically

integrated delivery model using preferred

procurement routes.

• Selectively extend our international coverage in Canada

focused primarily on sectors with the right strategic fi t,

building on existing global expertise in oil and gas.

• Enhance technological and digital engineering

capabilities to assure delivery of complex,

multidisciplinary projects.

• Control costs and improve operational and

fi nancial performance.

• Drive forward our Mission Zero safety agenda and

‘Engineering Sustainable Futures’ programme.

6

1 2

34

5

8

7

11

10

9

UNITED KIN

GD

OM

SAU

DI ARABIA

CAN

ADA

UNITED ARAB E

MIR

ATE

S

UNITED KINGDOM

1. CARDIFF

2. DARTFORD

3. EXPLORE INDUSTRIAL

PARK, WORKSOP

4. MANCHESTER

5. MOTHERWELL


6. ABU DHABI

7. DUBAI

SAUDI ARABIA

8. RIYADH

CANADA

9. CALGARY

10. TORONTO

11. VANCOUVER

Our Europe Hub comprises

Laing O’Rourke’s operations in key

building and infrastructure sectors

covering principal markets in Canada,

Saudi Arabia, the United Arab

Emirates and the United Kingdom

The Group is one of the leading engineering and construction

solution providers in its chosen sectors. Our aim is to leverage

the scale and effi ciencies of our unique business offering (UBO)

and vertically integrated delivery model to generate profi table

revenues in our core markets, collaborating with like-minded

partners. We will complement this approach by building leading

positions in selective growth-oriented sectors and geographies

with the right strategic and cultural fi t.

PRINCIPAL OFFICES


HUB PERFORMANCE CONTINUED

FINANCIAL PERFORMANCE OVERVIEWThe Hub posted a good managed revenue performance of

£2.6 billion (including share of joint ventures and associates),

maintaining the performance of the previous year (2012/13:

£2.6 billion), with pre-exceptional earnings before interest and

tax of £47.1 million (2012/13: £67.1 million). This fall can be

attributed to the continuation of diffi cult trading conditions in

the UK building market, coupled with strategic investments

made in our Engineering Excellence Group (EnEx.G) and

sector-led work-winning approach to bolster our bid-to-win

ratio in future years. It is also important to note that 2012/13

profi ts benefi ted from a number of contracts in the fi nal stages

or completing that year, with favourable outturns triggering

bonus incentive payments. There was good underlying growth

in Infrastructure, Crown House Technologies and Select Plant,

partially offset by reductions in the UK Construction business.

The Construction business had a solid performance overall,

although a small number of productivity issues on joint venture

projects affected profi tability during the period.

The increasing penetration of our UBO has also helped us

maintain operating margin at the project level despite coming

under pressure from supply price infl ation. We have continued

to maintain selectivity and avoid bidding for lower-margin

work at a time when price competition in the market remains

intense. We further enhanced our ‘permission to bid’ criteria,

basing our UK activities progressively on our specifi c

sectors where the combination of digital engineering,

DfMA methodologies and integrated delivery provides the

greatest value potential.

We continued to focus on controllable costs as we removed

functional duplication in the delivery business units, specifi cally

through the creation of the Specialist Trading Business Group,

helping to reduce overhead strain. At the year-end the Hub

maintained its order book at £5.5 billion, with £2.4 billion of

new work won during the period, maintaining long-term

revenue visibility of 82 per cent for 2015, 34 per cent for 2016

and 16 per cent for 2017. We have invested in sector specialists

and associated marketing resources to rebuild future workload

beyond 2015 and, encouragingly, our medium-term pipeline of

higher-certainty opportunities includes signifi cant prospects

in Canada, the Middle East and the UK. In addition, at the

year-end, we had a pipeline of ‘in-bid’ opportunities worth

approximately £7.3 billion.

Accommodation 5%

Commercial 15%

Social Infrastructure 40%

Transport 11%

Utilities & Waste 4%

Power 25%

EUROPE 2014 ORDER BOOK BY SECTOR

OPERATIONAL PERFORMANCE OVERVIEWSafety will always be the Group’s number-one priority. During

the year, the Safety and Sustainability Committee implemented

a series of business interventions to improve safety compliance,

posting a rolling Accident Frequency Rate (AFR) of 0.16.

This creditable performance is one of many benefi ts we

derive from DfMA and our direct employment business model.

By controlling delivery of the major work packages on a project

through the use of in-house resources and offsite techniques,

our construction leaders directly infl uence the outcomes

‘on the ground’, mitigating many of the risks associated

with subcontracting through the supply chain, where there

are wide variations in standards and practices.

A range of new initiatives was launched to support our

Mission Zero objective to eradicate all accidents from our

business by 2020. A number of our clients are also seeing

the direct benefi t of adopting our approach in their own

business activities, and we are beginning to see tangible

examples of this behaviour-based methodology being applied

more widely across the industry.

Our core UK-based engineering and construction businesses

all performed in line with expectations, continuing to deliver

profi t-generating revenues despite the ongoing market

diffi culties. The 2013/14 reporting period has been another year

of productivity improvement across our manufacturing facilities,

with a concerted focus on the effi ciency, quality and safety of

our operations. We increased production volumes with a

corresponding improvement in labour effi ciency, as clients

increasingly recognise the incremental value offered by our

DfMA proposition. We still have a long way to go to achieve

the full potential of its wide scale adoption, but the direction

of travel remains positive.

We have also added to our capabilities in complex geotechnical

and civil engineering solutions through our Expanded division,

to support project delivery activities and provide competitive

advantage in bidding for new opportunities.

GLASS REINFORCED

CONCRETE UK LIMITED

In March 2014 Laing O’Rourke acquired Glass Reinforced

Concrete UK Limited, one of the UK’s leading providers

of bespoke architectural glass reinforced concrete

(GRC) products. The acquisition strengthens

Laing O’Rourke’s manufacturing portfolio.


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In Manufacturing we increased our expertise and delivery

capacity with the acquisition of Glass Reinforced Concrete

UK Limited, one of the UK’s leading specialists in bespoke

architectural glass reinforced concrete products, making it

a wholly owned subsidiary of the Group. The factories also

delivered a strong operating performance, with major

productivity gains at Explore Industrial Park, as it consistently

achieved £1 million of product being detailed, manufactured

and ready for despatch on a weekly basis. Aligned to this, the

range, scale and complexity of products being manufactured

have grown as expertise and capability within the factory

have expanded.

Crown House Technologies’ Oldbury offsite factory has also

seen a marked uplift in productivity through the introduction

of leaner, more effi cient working practices. This has helped

increase the number of mechanical and electrical modules

being produced, with over 150 completed units now being

produced at the West Midlands facility every week.

In September, Bison Manufacturing’s Uddingston facility was

recognised as a ‘Centre of Excellence’ for bespoke precast

concrete products following a £100,000 investment in the plant.

The investment, supported by £60,000 from Scottish Enterprise,

has been used to protect a minimum of 27 jobs and to purchase

new machinery, making the site more effi cient and equipped to

produce an even wider range of products for the Scottish and

wider UK construction markets.

During the year, Bison was also among the fi rst UK companies

to receive the BSI Certifi cate of Conformity for the factory

production control for precast concrete products against

internationally recognised standards of quality and service.

To achieve accreditation, Bison’s two plants in Uddingston

and Swadlincote were audited in June. For customers, the CE

mark is further proof of Bison’s competence and performance

capability which has been independently evaluated and thereby

reduces any performance or delivery risk for their projects.

Our approach to business development and work-winning

has once again served us well in the year. We have remained

disciplined in our selective sales strategy over the period.

The further strengthening and mandating of our Core Process

governance procedures in the tendering stages are proving

highly effective in securing profi table work that fi ts our strategic

growth criteria, as the continuing strength of our order book

has clearly demonstrated. This strategy was accelerated by

the further integration of our in-house cost planning activities

to maximise the return on the investment we are making in

state-of-the-art digital engineering technologies, moving us

beyond the limitations of Building Information Modelling to

provide clients with a more holistic asset information

management resource tool.

We are committed to our human capital agenda, and continue

to invest in the development of our people. During the year,

the Hub continued its focus on the recruitment and training

of young talent, with 567 people placed on our entry-level

and fast-track leadership programmes from trade apprentices

to graduate engineers. Our recently published employee

engagement score marks Laing O’Rourke out as one of the

highest-performing companies globally for the loyalty and

dedication of its people – once again demonstrating the

resilience and motivation that exist across the Group. We also

continued to support the Australia Hub by recruiting and

exporting sector expertise to seize the signifi cant business

development opportunities in this part of the business.

Laing O’Rourke’s brand has always been synonymous with

delivery quality and certainty, and during the year in review

we further enhanced our reputation for world-class client

solutions – on time, on budget and to the exacting quality,

safety and sustainability standards demanded.

THE FRANCIS CRICK INSTITUTE, LONDON

The Francis Crick Institute, which is due for completion in

2015, will be a world-class research centre and one of the

most signifi cant developments supporting biomedical science

for the UK for a generation. The LB2 basement plantroom,

which houses the majority of the plant for the building, was

a critical milestone for the project. Much of the installation

was built at Laing O’Rourke’s Oldbury factory with digital

engineering and DfMA playing a signifi cant part in

a sophisticated visual sequencing programme to

communicate this diffi cult and complex installation.



CANCER CENTRE, GUYS AND ST THOMAS

NHS FOUNDATION TRUST, LONDON

Laing O’Rourke broke ground on this £160 million project

in August 2013, demolishing two buildings, excavating

more than 135,000kg of material, uncovering and then

protecting a Roman boat, and drilled 42 metres into

the ground to lay foundations. The substructure was

completed in March 2014 with the project due for

completion in April 2016.

Towards the end of the year, work began on the new cancer

centre at Guy’s Hospital in central London, adjacent to the

Shard. Laing O’Rourke played a signifi cant role in selecting

design partners Rogers Stirk Harbour + Partners and Stantec

Medical Architecture as part of the RIBA contractor-led design

competition. The design centres on the concept of three

stacking ‘health villages’ within the scheme, separating the

‘Art of Care’ from the ‘Science of Treatment’, and is the fi rst

healthcare scheme in the UK to locate the LINAC radiotherapy

bunkers above ground. Digital engineering was used to

interrogate the design and ‘deep dive’ DfMA opportunities,

helping to reduce the time to construct the frame from

33 weeks to just 16 weeks.

In Wales, following successful delivery of enabling works

and full funding approval from the Welsh Government,

Laing O’Rourke has signed the contract for the new Llandough

Adult Mental Health Unit for long-term client Cardiff and Vale

University Health Board. At 20,000m² it will bring together all

general adult mental health inpatient services, as well as

specialist services for low secure, addiction, neuropsychiatry,

intensive care, and supportive recovery services. Flexible ward

design will respond to the needs of service users, including

access to single-sex sitting rooms and bedroom areas, garden

areas and therapeutic space.

The award of the project followed the successful completion

of the 586-space multi-storey car park, which was the fi rst

project to use the Laing O’Rourke Standard Option 1 solution

of 16m-long Bison hollowcore planks, Bison columns, stairs

and edge beams with Explore Manufacturing twin wall. The

solution eliminates the need for intermediate columns due to

the large span of the hollow core planks – creating an ‘open’

car park with good visibility and no obstacles on the decks.

SECTORAL PERFORMANCE

SOCIAL INFRASTRUCTURE

HEALTHCAREIn our core Construction business, we continued to secure

and deliver essential social infrastructure to transform the

health services footprint for many communities, further

enhancing our position as the UK’s leading provider of

healthcare infrastructure. This included the commencement

and completion of major construction phases of complex

hospital, healthcare and medical research facilities around

the UK.

The Group commenced construction of the future-proofed

Alder Hey PFI Hospital in Liverpool – the fi rst NHS health

park for children in the UK. With a scheduled delivery

programme of just 117 weeks, this will be the fastest major

hospital complex ever delivered by the Group. The project won

Infrastructure Journal’s Social Infrastructure ‘Deal of the Year’

and overall ‘Deal of the Year’ awards, with the consortium

being praised for the innovative fi nancing structure that was

specifi cally developed for the scheme.

The project is proving an exemplar for the Group based on

the deployment of major strategic elements of the UBO.

The integrated delivery approach is utilising structural panels

manufactured offsite at Explore Industrial Park and completed

by Expanded onsite. The modular mechanical and electrical

installations have also been completed ahead of schedule due

to earlier assembly and commissioning phases afforded by a

DfMA approach. This success has been further aided by digital

engineering, enabling the complex services to be designed

and ‘installed’ virtually before reaching site to reduce the

potential for interface clashes and the associated delays

these cause on traditional programmes.

Elsewhere in the UK, Laing O’Rourke is undertaking the

high-speed delivery of the West Cumberland Hospital.

The single biggest investment in healthcare for West Cumbria

in over half a century, this new £90 million redevelopment

topped out in November 2013, challenging local perceptions

and winning over local politicians with the speed and quality

of construction. The pace of delivery was achieved using

a DfMA precast concrete building envelope manufactured

offsite at Explore Industrial Park, which also helped to combat

the prevailing severe weather conditions in the region over

the winter season.

In November 2013, the Tyne Centre, Morpeth – part of the

Northumberland, Tyne and Wear NHS Foundation Trust’s

wider forensic learning disability service, providing specialist

multidisciplinary care and treatment for vulnerable men –

was opened to the public by the Duchess of Northumberland.

It was awarded ‘most innovative and forward-thinking project

delivered through the Procure21 and Procure21+ frameworks’,

at the 2013 Building Better Healthcare Awards.


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Elsewhere in Wales, signifi cant progress was made during

the year on the redevelopment of the existing hospital estate

in North Wales, including the completion of the new-build

mortuary and pathology, and accident and emergency

extensions. The overall project involves refurbishing 30,000m²

of existing clinical space, over fi ve fl oors of a general district

hospital. The scheme is split into two distinct parts: new-build

elements providing mortuary building, pathology building and

a new-build accident and emergency extension, and full

internal refurbishment of all existing hospital areas to provide

new clinical facilities for patients and staff. The project received

Gold at the Green Apple Awards for the sustainability practices

being deployed.

Signifi cant milestones were also reached on the programme

of works for the redevelopment of the Bristol Royal Infi rmary

and the extension to the Bristol Royal Hospital for Children.

This complex sequence of interrelated projects totalling

£100 million over three years is helping transform fi rst

impressions for patients with the completion of a new

welcome centre, in time for the retail units to benefi t from

Christmas trade, and a new main hospital reception, which

opened its doors in January 2014. In March 2014 the fi rst cancer

patients began treatment in Bristol’s new specialist adult bone

marrow transplant unit, part of the new extension to Bristol’s

Haematology and Oncology Centre, which stretches seven

storeys high and continues 10 metres below ground.

Since year-end we also received the pleasing news that two

signifi cant Laing O’Rourke healthcare schemes achieved a

major step forward, with approval granted for the £420 million

Royal Sussex County Hospital (formerly known as Brighton 3Ts)

and the £120 million Cambridge Forum biomedical campus.

The Chancellor of the Exchequer, George Osborne, announced

Department of Health funding approval for the Brighton

reconstruction project, following fi ve years of development work

between Laing O’Rourke and Brighton and Sussex University

Hospitals NHS Trust.

EDUCATIONWe enhanced our reputation for delivering state-of-the-art

school facilities for local education authorities under the

existing Building Schools for the Future (BSF) framework

in Salford by securing the fi nal Phase 3a in August 2013.

The £31 million phase consists of two schools – Wentworth

High School and All Hallows RC High School. Wentworth High

School will be built on the existing live school site and will have

facilities for 750 students and 20 special educational needs

places once complete. All Hallows RC High School will be built

on the site of the old Oasis High School and will have facilities

for 600 students and 20 special educational needs places.

We also secured and commenced construction of the Sobell

School in Aberdare, South Wales, utilising the component

set developed for our SIGMA school solution, equating to over

60 per cent of the scheme manufactured offsite with the

majority of works completed by an integrated Laing O’Rourke

delivery team. This is the fi rst project secured through the

SEWSCAP (Southeast Wales Schools and Public Buildings

Contractor Framework).

The Group also delivered the fi rst 100 per cent modular

primary school solution to be built in the North of England

with the rapid installation of the Limetree Primary School

for Trafford Borough Council. The team combined the

specialist skills of Select Plant who installed the classrooms,

and Expanded who did the initial groundworks and fi nal

landscaping. The project was completed in 12 weeks,

with the majority of works delivered during the summer break

to minimise disruption to the academic year.

During the year we further developed and refi ned our

market-leading SIGMA sustainable schools proposition

based on the UK Department for Education’s challenge

to build schools faster, better and for considerably less than

the previous scheme cost. The solution leverages the Group’s

unique in-house manufacturing capability to deliver school

facilities that are predominantly constructed offsite for rapid

WILLIAM STREET QUARTER, LONDON

BOROUGH OF BARKING AND DAGENHAM

This year saw the second phase of 84 new affordable

homes handed over to the client. Laing O’Rourke’s

DfMA approach resulted in a programme of just

82 weeks to deliver a total of 201 new dwellings.


BLAVATNIK SCHOOL OF GOVERNMENT,

UNIVERSITY OF OXFORD

Laing O’Rourke’s eighth major project for the University

of Oxford, the Blavatnik School of Government, is due

for completion in August 2015. The project will be

delivered by an integrated team including Expanded

and Crown House Technologies, using digital

engineering and DfMA.


onsite assembly, achieving a minimum 30 per cent saving in unit

cost, with greater savings achievable for large multi-school

build programmes. The unprecedented air-tightness of these

structures makes them incredibly energy effi cient and we are

now actively marketing this value proposition with local and

central government departments, and are confi dent that it

will lead to a wider recognition of the fl exible application of

DfMA techniques to a range of public-sector construction

requirements. For these reasons, we remain confi dent in

our ability to secure work on large parts of the Department

for Education’s £2 billion PFI-backed Priority School Building

Programme, with the recent release of the fi rst tranche of

prioritised schools.

HIGHER EDUCATIONIn the higher education sector we delivered our most successful

year to date, with notable wins and delivery milestones achieved

throughout the period. Laing O’Rourke’s eighth major project

for Oxford University during a 13-year relationship got underway

with work commencing onsite to build the Blavatnik School of

Government. This integrated approach is benefi ting from the

extensive use of digital engineering, enabling component-led

use of standardised precast and mechanical and electrical

products, prior to converting into the asset management

system for the facility on completion of the construction phase.

In October 2013, Imperial College London selected

Laing O’Rourke to deliver its new Aeronautics and Mechanical

Engineering Department, continuing a well-established

and trusted relationship with the client. An integrated team

approach and early use of digital engineering were cited

as important factors in securing the project, which involves

the refurbishment of existing laboratories to create specialist

aeronautical and mechanical workshops and laboratories –

delivered while most of the surrounding research spaces

remain live.

65 per cent of the project value will be delivered by in-house

companies: Crown House Technologies will provide the

sophisticated mechanical, electrical and process installations

for the high-grade laboratories with Laing O’Rourke Facades

providing the re-cladding. The project also involves the

construction of general offi ce and teaching space for the

university. The scheme is the second part of a four-phase

redevelopment that will merge the Department of Aeronautics

with the existing Mechanical Engineering Building.

During the year Laing O‘Rourke successfully completed and

handed over the second and third phases of the Oxford Brookes

University Headington campus redevelopment – the most

signifi cant capital project in the history of the university.

In July 2013, a year on from Laing O’Rourke completing

Phase 1, the university chancellor offi cially opened the

Abercrombie Extension, closely followed in February 2014

by the John Henry Brookes Building also opening its doors

to students for the fi rst time.


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Having been completed and handed over in 2012, Durham

University Gateway project received numerous awards in 2013,

including: a Built Environment Award from the Durham

Environment Partnership, who seek to reward great design,

environmental guardianship and community spirit; Durham

Environment Partnership’s ‘Outstanding’ award, which

recognises those schemes which go beyond exemplary

status in their own category and display elements which cut

across a number of other categories; and ‘Best Education

Development’ in the Local Authority Building Control Northern

awards. The project also achieved ‘Excellent’ status in the

integration and collaboration category of Constructing

Excellence in the Northeast Awards and ‘Highly Commended’

in the Project of the Year category.

As Manchester City were once again crowned Premier League

champions for the 2013/14 season, Laing O’Rourke was equally

proud to secure the contract to extend the existing Etihad

Football Stadium, which the Group originally constructed for

the 2002 Commonwealth Games. Deploying major elements of

the Group’s UBO, the project will increase stadium capacity

from 48,000 to 60,000 through the addition of a new tier, and will

also expand the range of facilities for fans, corporate hospitality

and visitors. Ground engineering commenced at the point of

contract award, as the complex engineering works must be

seamlessly delivered around events including the new football

season and the stadium’s fi rst Rugby World Cup match in 2015.

SOBELL SCHOOL, ABERDARE, WALES

SIGMA SCHOOLS SOLUTION

Working in partnership with new client Rhondda Cynon

Taf County Borough Council, this is the fi rst project to be

secured under the SEWSCAP (Southeast Wales Schools

and Public Buildings Contractor) Framework. The £32

million development includes a 1,600 place secondary

school, reprovision of an existing dry-sports leisure

centre, new athletics track, stadium and multi-use

games courts. 60 per cent of the scheme will

be manufactured offsite by Laing O’Rourke.

SIGMA is Laing O’Rourke’s standardised approach for

schools which fully utilises Design for Manufacture

and Assembly. Our SIGMA proposition allows us to build

schools in half the time and at a minimum 30 per cent cost

reduction on traditional design and construction

methods, while still meeting the highest

environmental standards.

Elsewhere in the city, work began on the Beswick Regeneration

Project in East Manchester – a joint project between

Manchester City Council, Manchester City Football Club

and urban regeneration company New East Manchester.

The ambitious scheme will transform 16 acres of Beswick –

bringing brand new leisure, education and employment

opportunities to the area for local residents. The transformation

will include a new leisure centre with public swimming pool,

and Connell Sixth Form College – a 600-place college for

16-21 year olds meeting growing demand for sixth form

places in the area. There will also be a new rugby pitch for

community use. In addition, the plans include improved local

shops and changes to the road layout, public realm and car

parking infrastructure to improve road safety and create a

pedestrian-friendly environment for local residents.

Laing O’Rourke commenced construction of the £30 million

project to transform Chester Zoo into a major regional visitor

attraction. The fi rst stage of the unique, long-term masterplan

is the construction of the ‘islands’, to create an Indonesian

themed journey. Visitors will steadily travel between each

island on a boat, with the emphasis being on the difference

between each place. Key elements include Crown House

Technologies’ solution to control the humidity to exacting

levels, and the use of twin wall for tiger tunnels and crocodile

enclosures to exacting tolerances to ensure the animals are

securely and safely housed.



ACCOMMODATIONDuring the year the Group welcomed Stephen Trusler to lead

our route to market for a new housing solution in the UK

accommodation sector based on our Design for Manufacture

and Assembly (DfMA) approach. Stephen is considered a strong

industry infl uencer having participated in government debates

on key issues and policies affecting the national housing

market. As a well-respected fi gure in the industry, he brings

a wide ranging network of contacts throughout the housing

sector in the UK, including government, Homes and

Communities Agency, housing associations, arms-length

management organisations and local authorities. He is also a

distinguished member of the Chartered Institute of Housing,

a member of the BiTC Enterprise leadership team and a board

member and Chair of Aster Homes, the housing association.

During the year we successfully completed and handed

over the William Street Quarter housing development in the

London Borough of Barking and Dagenham. Utilising our

DfMA residential solution, the project was funded through an

innovative private partnership arrangement in which we are an

equity participant – the fi rst totally privately funded affordable

social housing scheme in the UK. By embracing DfMA, it is the

fi rst project to employ SmartWall – a modular internal walling

system manufactured offsite and delivered with fully integrated

mechanical and electrical services, saving over half the time of

traditional in-situ construction.

MANCHESTER CENTRAL

LIBRARY AND TOWN HALL

The new Manchester Central Library and Town Hall opened

its doors to the public on 22 March 2014. The project won

no less than nine awards from various institutions for its

outstanding achievements and innovations including:

RICS (Royal Institution of Chartered Surveyors),

Forum for the Built Environment, the British Council

for Offi ces and the Building Control Association.

Having only started onsite in June 2013, Laing O’Rourke’s

fi rst project for the University of Bath – the R6 student

accommodation project – reached structural completion at

the end of January 2014. The project, a £34 million 710-room

student residence scheme self-delivered over a 64-week

programme, is a fl agship project for the business. The scheme

extensively deploys a DfMA solution that provides long-term

lifecycle benefi ts, including: Crown House Technologies’

modularised risers and horizontal spine distribution; slabs,

walls and columns from Bison and Explore Manufacturing;

and concrete bathroom pods imported from in-house business

Modulor in Dubai.

Laing O’Rourke’s integrated delivery capability has been

central to the quality and certainty of programme and

demonstrates an approach that can be replicated to suit other

projects in the residential sector, from student accommodation

to private residential.

COMMERCIAL

We continued to see tangible signs

of recovery in the UK commercial

development sector, particularly in

central London where demand is

returning to pre-recessionary levels

Following the award of the prestigious contract to build

the iconic Leadenhall Building in the City of London for clients

British Land and Oxford Properties, the extensive application

of preassembly techniques to signifi cantly enhance programme

effi ciency through a material reduction in the delivery schedule

and waste volumes saw this iconic design quickly become a

reality on the UK capital’s skyline with over 85 per cent of the

building manufactured offsite. The building reached its highest

point and ‘topped out’ at a ceremony attended by Mayor of

London Boris Johnson. The project has since gone on to hit

all its major delivery milestones and remains on track for

practical completion and handover to the client in 2014.

Laing O’Rourke’s trusted relationship with British Land over

the course of the Leadenhall Building project led to the Group

being invited to directly negotiate the contract to build their

next fl agship central London commercial development

scheme – Clarges.

During the year the Group was appointed to deliver the fl agship

£55 million Scottish Power Headquarters Building in Glasgow.

Laing O’Rourke’s winning solution was predicated on a

DfMA solution and direct delivery capability combining the

in-house expertise of Select, Expanded, Explore Manufacturing,

Bison, Vetter and Crown House Technologies under the

project management of the core Construction business unit.

This approach has substantively de-risked the project, reducing

the programme time of the 13-storey, 27,000m² frame by

over 40 per cent.

Laing O’Rourke also commenced construction of a privately

funded offi ce development, working with new client Genr8,

linked closely with Stoke-on-Trent Council, who will consolidate

the region’s public services into the two new buildings on

completion. Designed to BREEAM Excellent standards,


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the project will involve delivery of two fi ve-storey offi ce buildings

and substantial public realm works, and creation of a library,

council chambers and several retail units for commercial

letting. With exteriors inspired by art deco ceramics designer

Clarice Cliff, who was born in Stoke-on-Trent, one building

facade will use a unitised curtain walling system to create

a tessellated effect, with the second building using precast

panels fi nished with Staffordshire blue brick slips with an

infi ll of curtain walling. Signifi cant local economic benefi ts

will also be generated through the construction, including

the creation of apprenticeships and local supply chain

procurement opportunities.

Adding to Laing O’Rourke’s growing portfolio of high-profi le

London schemes, in January 2014 work began onsite at the

Elephant Road development in London.

Early engagement between the clients, Oakmayne Properties

and Delancy, and the EnEx.G was infl uential in them embracing

Building Information Modelling as an enabling technology to

a component-led design solution. The project has been fully

digitally engineered, and is one of the fi rst projects to utilise

the DfMA component library in this way to achieve cost and

programme certainty. This mixed-use development comprises

three towers over a podium and basement below. The West

Tower is 23 storeys, the South Tower is 15 storeys, both private

residential, and the North Tower is 18 storeys of student

accommodation. Retail units include a Sainsburys store,

restaurants and cinema within the three-storey podium below

the towers. There is also a split level basement containing a

service yard, parking, plant rooms and storage.

SCIENCE AND RESEARCHFollowing the original contract award to construct the shell

and core for the Francis Crick Institute in the heart of London,

the Group was awarded the remaining mechanical and

electrical work packages to complete the advanced biomedical

research facility, recognising our ground-breaking collaborative

methodology to date. Laing O’Rourke’s Chairman, Ray

O’Rourke, joined George Osborne, Sir Paul Nurse, Director of

the Institute and distinguished guests, to celebrate the topping

out of the Francis Crick Institute in central London as part of

the government’s efforts to stimulate PPP investment activity

in the construction sector.

RETAILLaing O’Rourke helped breathe life back into Leeds city centre,

with the opening of western Europe’s biggest retail scheme

for 2013. Drawing on the expertise of the Group’s integrated

delivery model, including Explore Manufacturing, Expanded,

Vetter and Crown House Technologies, combined with regular

proactive engagement with the local community, meant that

the project was completed on time and to budget for the client

(and the UK’s largest commercial landlord) Land Securities.

The retail development won ‘Best Retail Development in

City Centre’ at the prestigious MAPIC awards in Cannes,

and Laing O’Rourke was proud to be named ‘Contractor of

the Year’ at the Yorkshire Property Awards.

The Group was also awarded the contract to undertake the

£34 million refurbishment of Nottingham’s Victoria Shopping

Centre for client, the intu group, involving the complex logistics

of delivering in a live retail environment.

ETIHAD STADIUM, MANCHESTER CITY

FOOTBALL CLUB

Premier league football club Manchester City has

appointed Laing O’Rourke to increase its stadium capacity

from 48,000 to 54,000 as well as expand the range

of facilities on offer to fans, visitors and corporate

hospitality. A later stage of expansion will

eventually take the stadium to 60,000 capacity.



RAILWe continue to be engaged on the UK’s largest commuter rail

projects for Network Rail, Crossrail, and Manchester Metrolink.

We have established strong working relationships with these

client organisations which continued to prove invaluable in

securing new contracts during the year.

In April, work started on the fi rst phase of the £250 million

programme to improve performance and capacity on the

Stafford section of the UK’s West Coast Main Line on behalf

of Network Rail. The Group is part of the UK’s fi rst ‘pure

construction alliance’ between Laing O’Rourke, VolkerRail,

Atkins and Network Rail. The team is working collaboratively

under one unifi ed agreement where all parties share

benefi ts and risks. The alliance model, developed in Australia,

is a move away from the more traditional ‘hub and spoke’

style of contracting towards a completely integrated

‘one team’ structure.

We continued our programme of intensive construction

on major stations for Crossrail – Tottenham Court Road, Bond

Street, Liverpool Street, Canary Wharf and Custom House. At

Canary Wharf the Group achieved the greatest milestone so far

in June 2013 as the huge 1,000 tonne tunnel boring machine

broke through into the station box. Key to our success on

Crossrail to date has been the Group’s ability to demonstrate

its extensive rail infrastructure capabilities across its internal

supply chain, from the design and digital engineering team

to Explore Manufacturing and Expanded for civil engineering

and station assembly.

HEATHROW TERMINAL T2A

The delivery and completion of Heathrow Terminal 2A

was a key milestone in the transformation of London’s

premier airport. The new terminal builds on

Laing O’Rourke’s track record of achievement, having

earlier constructed Terminal 5 and the new control tower,

as well as major upgrades to other terminals.

Work commenced in 2010 and has involved

in-house businesses from across the Group.

LEISURE, SPORTS AND PUBLIC SERVICESDuring the year, working collaboratively with English Heritage,

we successfully completed the transformation of Manchester’s

iconic Grade I listed Central Library and Town Hall, a complex

combination of refurbishment, restoration and signifi cant

contemporary enhancements to a 1930s landmark. This

sustainable form of contract delivered economic benefi ts

to the surrounding communities, including the creation of

72 project-initiated apprenticeships and a procurement

model that directly boosted local businesses.

The facility offi cially opened its doors to the public on 22 March

2014, and quickly received plaudits for the quality of engineering

and construction achieved. In the year it also won the

Northwest Constructing Excellence Award for ‘Integration and

Collaborative Working’ and a ROSPA Gold award. Subsequent

work was secured to transform St Peter’s Square public realm

and library walk, with the whole project due for completion

by Autumn 2014.

ECONOMIC INFRASTRUCTURE

Through our Infrastructure business

we continued to take advantage of

the pipeline of opportunities in the

key sectors of power, transport and

utility networks in particular

AIRWe underlined our expertise in working in live air environments

by meeting and, in some cases exceeding, delivery milestones

at Heathrow Terminal 2A, despite the challenge of keeping

the adjacent air infrastructure operational throughout the

project. In November 2013, the new Heathrow Terminal 2A –

the Queen’s Terminal – reached construction completion

to enable the customer, Heathrow Airport Limited, to undertake

operational readiness trials. This signifi cant project milestone

has been achieved on time and within budget after

a highly successful construction programme by Laing O’Rourke

and Ferrovial Agroman, working together as the HETCo joint

venture. The team also took top prize for health and safety at

the national fi nals of the Constructing Excellence Awards.

In the same month, Heathrow Terminal 2A’s multi-storey car

park delivery team won the prestigious ‘Post-Tensioned

Structure’ category at this year’s Concrete Society Awards.

The 1,340-space car park will be the gateway to the new

world-class Heathrow Terminal 2A when it opens to passengers

next year.

Integrating the expertise of Laing O’Rourke’s delivery

businesses and using innovative design techniques that

maximise the use of standardised and modular components,

this ‘new breed’ of passenger terminal was constructed at

one of the world’s busiest airports without any interruption

to fl ows of people or aircraft.


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During the year, we also secured a major project with Transport

for London with the award of a key rail infrastructure contract

for the capacity upgrades of operational railway facilities at

Willesden Junction, in northwest London.

Laing O’Rourke also received peer group recognition during

the year for its achievements in the rail sector. Working in

partnership with Network Rail and the wider rail industry,

Laing O’Rourke is providing the skills and competencies to

support the UK Government’s £4 billion programme to extend

rail line electrifi cation to bring greener trains to more parts

of the network, which will be delivered through a nationwide

series of regional framework contracts due for award early

next year. As part of the initial de-risking phase of the works,

an international team of Laing O’Rourke rail engineers were

crowned ‘Best of the Best’ at a Network Rail event to test

excellence in overhead line electrifi cation skills and

best practice.

Similarly, the team delivering Greater Manchester’s Metrolink

network also celebrated major success during the year. In

October 2013, the MPT Consortium, formed of Laing O’Rourke,

VolkerRail and Thales, and tasked by Transport for Greater

Manchester with delivering the £900 million expansion

programme for the Manchester Metrolink network, was

named ‘UK Project of the Year’ and ‘Supplier of the Year’

(over €10 million) at the 2013 International Light Rail Awards.

Additional milestones on the largest light railway project in

the UK included delivery of new tram lines and associated

structures, including stops, street furniture and control

buildings, as part of the overall expansion.

WATER AND UTILITY NETWORKS

The UK water and utilities market is also strategically important

to Laing O’Rourke, with £25 billion of investment planned by

water companies between 2015 and 2020. We are currently

constructing the massive break-pressure tank at Hallgates,

as part of Severn Trent Water’s £44 million Derwent Valley

Aqueduct resilience programme to upgrade the Victorian

water supply system. This tank is a fi rst for Severn Trent Water

at this size and scale for a clean water retaining structure

manufactured offsite. Laing O’Rourke’s project team and

Explore Manufacturing worked closely and collaboratively with

the client’s engineering standards team to incorporate the

preferred DfMA solution into their asset standards, where

previously only a traditional in-situ concrete solution would

have been acceptable.

Regulated markets are less cyclical and the margin potential

less volatile and we have made senior leadership appointments

to access these sectors. We are formalising our delivery

business capability in utility networks, such as power

distribution, where we already possess signifi cant expertise

backed up by the technology platforms, specialist plant and

equipment needed to effi ciently deploy and manage resources

on the multidisciplinary programmes of work typical of these

markets. The Group is strongly positioned in this market with

a place already secured on National Grid’s £650 million

electrical substation framework, utilising our expertise in

design and manufacturing to offer the client a fully DfMA-

enabled structural solution for the delivery of its extensive

network of substations.

A453 ROAD WIDENING, NOTTINGHAM

The A453, used by more than 30,000 motorists a day, is a

major route connecting Nottingham to the M1 motorway.

Ten new bridges will be craned into position along the

seven-mile route. A signifi cant feature of the bridges

is the high percentage of DfMA with piers, beams

and abutment and deck units all being made

offsite at Explore Industrial Park.



SMITHFIELD, STOKE-ON-TRENT

Laing O’Rourke started onsite in October 2013 in the fi rst

part of a master plan for Stoke-on-Trent city to rejuvenate

its central business district. Laing O’Rourke is responsible

for two fi ve-storey offi ce buildings and substantial public

realm works. The project will require an integrated

team comprising Construction, Crown House

Technologies, Expanded, Vetter, Explore

Manufacturing and Select Plant.

HIGHWAYSIn road infrastructure, Laing O’Rourke progressed construction

of the A453 widening work near Nottingham to alleviate one

of the UK’s most congested roads. This is the fi rst of the six

growth road schemes announced by the Highways Agency

with construction getting underway in early 2013.

The overall scheme, worth £150 million, will see a seven-mile

stretch of the A453 widened – boosting a major route for road

users travelling to Nottingham, the M1 and East Midlands

Airport. With a mixture of 11 structures (bridges and

underpasses), conventional highways construction techniques

would cause a lot of disruption to both road and public

transport users. To minimise congestion and speed up the

delivery of the project, a DfMA solution has been utilised early

in the design of the structures and other elements. This has

generated considerable time savings and wider risk mitigation

for the scheme.

MARINEAs the UK’s existing port capacity continues to come under

signifi cant pressure from increasing international trade

volumes, our engineering skills are leading the construction

of Europe’s newest and biggest deep-water development at

London Gateway Port, with a major milestone achieved in the

year with the completion of the three-berth container terminal,

plus oil berth and associated infrastructure (including road

and rail links) together with river channel dredging, quay wall

construction and advanced preparatory works for the logistics

park. Also during the year the Prime Minister, David Cameron,

visited the site, accompanied by Chairman of DP World, His

Excellency Sultan Ahmed Bin Sulayem and Laing O’Rourke

Chairman, Ray O’Rourke, describing the super-port project

as ‘an emblem of ambition’.

POWERThe Group’s strategic growth plans are predicated on

establishing a signifi cant delivery presence in the buoyant

global energy sector. Therefore the UK’s investment plans

to replace ageing power-generation infrastructure with a

fl eet of new-nuclear plants and supporting infrastructure

provide high earnings potential. We are one of only a few

UK contractors with the engineering know-how, specialist

delivery capabilities and reputation for quality needed to

perform to the exacting standards of the nuclear generation,

processing and storage industry.

As preferred bidder with our partner Bouygues TP for the

main civil engineering works package at Hinkley Point C in

June 2012, we have been working with the client under an

Early Contractor Involvement (ECI) agreement to support

the business case for the investment in nuclear new-build

and ensure that we can mobilise into the delivery phases

rapidly once the green light has been given.

HINKLEY POINT C

The fi rst new nuclear power station in the UK in a

generation is due to be delivered at Hinkley Point C

for EDF, by a joint venture of Bouygues TP and

Laing O’Rourke.

Approximately 25,000 jobs are expected to be created

during construction including around 5,000 people

working onsite at the peak of construction and

900 permanent jobs once the power station

goes into operation.


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47

SELECT PLANT INVESTMENT

In-house supplier, Select Plant, continues to reinforce its

position as one of the UK’s leading plant and construction

services companies, with sustained investment in mobile

and tower cranes, heavy plant, modular accommodation

and supporting equipment. The company now operates one

of the youngest fl eets in the industry.

SPECIALIST SERVICES

Our specialist trading businesses

are the ‘engine room’ that unlocks

the inherent value within our unique

business offering (UBO) and helps

bring it to life for our customers

CROWN HOUSE TECHNOLOGIESCrown House Technologies (CHt) retained its leading sector

position, posting a strong operational and fi nancial performance

despite the prevailing conditions which have seen a number

of high-profi le competitors scale back their ambitions. The

business expanded its range of services into new industries

and sectors to support wider Group interests in heavy industrial,

infrastructure, process engineering, power and utilities

markets. The business has also been working with the EnEx.G

and strategic design specialists from Arup, Hoare Lea, AECOM,

Atkins and Watermans during the review period to further align

the external M&E design parameters with the DfMA approach.

CHt also continued to add signifi cant offsite manufacturing

capacity during the year as part of the continuing productivity

drive at its facilities. Through early involvement in the

preconstruction phase, it has manufactured the mechanical

and electrical infrastructure on a number of the Group’s

major building and social infrastructure projects, including

the Alder Hey Children’s Health Park, the Leadenhall Building

in the City of London, the Francis Crick Institute and

Heathrow’s Terminal 2A.

The business unit also secured a number of prestigious

projects during the year. American data centre giant, Equinix,

selected CHt to increase its presence in the Berkshire ‘tech

corridor’ with the new 24,000m² LD6 data centre. The award

follows the successful and safe delivery of the LD5 data centre

for the same client. The project will take just over a year to

complete and will be a fully integrated delivery approach by

CHt, Select, Expanded and the UK Construction business.

SELECT PLANT AND LOGISTICS MANAGEMENTThe Select Plant business posted another year of achievement

providing a range of innovative heavy plant and lifting solutions,

including the tower crane fl eet and expertise to erect the City

of London’s tallest structure, the Leadenhall Building. Select

Plant developed a lift and climbing strategy with the tower

crane manufacturer Terex, which has successfully delivered

heavier lift capabilities throughout the build programme to

reduce the schedule via the extensive adoption of DfMA

components. This joint expertise with Terex is also being

deployed on the Manchester City FC Etihad stadium expansion,

where the newly developed luffi ng jib tower crane has the

heaviest lift capacity in the UK.

It also continued development of its logistics management

capabilities to support the Group’s broader DfMA agenda.

It created a logistics hub to support London-based projects,

to drive greater effi ciencies that derive from ‘just in time’

delivery. A similar approach is also being planned to support

the Alder Hey hospital build programme in Liverpool.

Select Plant progressed its fl exible primary schools solution

during the year with the delivery of additional classroom

capacity at the Orchid Vale School in Swindon to accommodate

growth in the local pupil population. Similarly, Limetree Primary

School was completed in Greater Manchester. The innovative

design, using volumetric modular construction techniques,

allowed the school to be completed in just 19 weeks. It has

since been nominated for the Northwest Construction Awards

and Construction News Awards for projects under £10 million

in value.

Select Plant has also played an instrumental role in supporting

the campaign to improve road safety for vulnerable road users

like cyclists. All future investment in the large goods vehicle

(LGV) fl eet are ‘Euro V’ compliant, low-emission vehicles

featuring safety devices such as nearside cameras, motion

sensors and audible alerts. The Group is also trialling a

prototype LGV with enhanced safety features including

fl oor-to-roof cabin doors and wider fi eld of vision on-board

cameras. This initiative is part of a safety campaign with

partners including the Metropolitan Police and Transport for

London to radically reduce accident rates caused by

construction activity on the UK’s busy city-centre roads.

ASSET MANAGEMENTWe progressed our targeted offer in ‘hard’ facilities

management during the year with the appointment of

Peter Young to lead our new asset management offering.

A facilities services specialist, Peter will be responsible for

leveraging the investments we have made in digital engineering

and DfMA. This approach includes the expertise gained in

advanced delivery techniques, visualisations and commercial

and technical data derived through the design and construction

phases of a project, to provide the client with a whole-life

asset management solution.

We believe we have the opportunity to redefi ne the value

of asset services; to meet the increasingly challenging

requirements of clients and end-users for future-proofed

buildings and infrastructure that meet the most exacting

environmental and economic performance standards.

48



OUTSIDE THE UK

The Middle EastOutside the UK, we are still active, following a rescaling of our

business activities in Dubai and Abu Dhabi. We will continue

with our cautious approach to opportunities that meet our

rigorous fi nancial requirements. There are signs that the Dubai

economy is recovering strongly and this is supported by an

increasing number of attractive opportunities for both our

construction and specialist trading business units.

Dubai has recently won the right to host EXPO 2020 and this

is likely to provide the catalyst for signifi cant government and

private sector investment in infrastructure.

Abu Dhabi remains subdued as a market, but we would

expect to see an improvement in the medium term, especially

with high-end customers who value our history of quality

and reliability.

In the wider Gulf region, Qatar is pushing ahead with its

ambitious development plans, largely linked to the award of

the 2022 FIFA World Cup, but we are cautious in our approach

to this market due to unattractive contract conditions on many

of the largest schemes.

During the year, we were designated a preferred contractor

by Majid Al Futtaim, a developer of world-class retail, hospitality

and community centres, putting us in a favourable position to

secure a regular fl ow of future work, and this was confi rmed

by the award of a contract to build a new Hilton Garden Inn

in Dubai. We also secured work packages on the Emirates

Aluminium Smelter Complex Expansion Project, leveraging our

heavy industry experience developed in the Australian market.

Likewise, we secured work with Emirates Airline, and aviation

infrastructure is expected to be a major growth area within the

Dubai market.

During the year, Austrak, the Group’s modular rail track

business, continued to market its capabilities in the design and

manufacture of concrete sleeper track panels for export to

Australia from its manufacturing facility in Dubai, supporting

our commuter and heavy-haul rail delivery businesses. Our pod

manufacturing subsidiary, Modulor, also continues to supply

preassembled kitchen and bathroom units to the region from

its Dubai factory, and has established itself as a supplier to the

Group’s projects in the UK.

The longer-term prospects for the Middle East remain

broadly positive with global demand for the region’s oil and gas

reserves remaining buoyant. Laing O’Rourke has an

outstanding track record of delivering high-quality projects in

the region, including the Atlantis Hotel, Dubai Airport’s third

terminal, Aldar headquarters and the Al Zeina and Al Bandar

residential and mixed-use developments on Al Raha Beach

in Abu Dhabi.

Therefore, as global confi dence returns, we believe the number

of planned projects expected to come to market will increase,

with the most active market being the UAE and Dubai in

particular, where we are focusing our attention. With our strong

brand recognition and track record spanning over three decades

in the region, the Group is well positioned to benefi t from the

renewed confi dence that is clear to see. We have maintained

our core construction, manufacturing and specialist services

capabilities in the region under refocused leadership to bring

greater market knowledge to our opportunity-selection process.

CanadaWe remain confi dent in our ability to establish a strong

business in Canada that, over time, could contribute a material

proportion of the Europe Hub’s revenue and earnings volumes.

As part of the Comprehensive Economic and Trade Agreement

(CETA) between Canada and the EU, Group representatives

met with Canada’s Trade Minister, Ed Fast, to outline the

company’s experience and preparedness to deliver future

opportunities in the region.

Building on our successful engagement in Australia’s oil and

gas industry, we have broadened our sector focus to embrace

Canada’s growing LNG opportunities. Our approach is based on

following existing strategic customers into new growth markets

in areas like the northwest of British Columbia where several

of our global customers are pursuing major LNG export

facility developments.

To effectively position the business for these future projects,

and leverage our current oil and gas portfolio and resources

capability, we announced the appointment of Terry Jones,

a senior Canadian sector specialist. He is a respected oil and

gas professional with over 25 years’ experience in the Canadian

market, having worked previously with Suncor and SNC Lavalin

in various locations. He will bring both sector and regional

project and construction experience to bear on the major

project proposals we are currently pursuing. To demonstrate

the seriousness of our intent, we also announced the

establishment of a regional offi ce in Vancouver to help

develop close working relationships with customers through

raising awareness of our global and local capabilities.

Although we do not expect a similar number of major projects

to be developed in parallel as we are currently experiencing

in Australia, we are confi dent that world demand for LNG

HILTON GARDEN INN

Laing O’Rourke Middle East (LORME) was awarded the

design and build contract to construct the mid-range

370-bedroom Hilton Garden Inn hotel in Dubai for

prestigious development client, Majid Al Futtaim Properties

LLC. The 16-month build programme will utilise major

elements of our UBO including LORME Construction,

Crown House Technologies, Modulor, Emirates Precast

and Laing O’Rourke Joinery.

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49

continues to support the need for additional projects to meet

what is projected to be a shortfall between demand and the

supply provided by current projects already under construction.

The social infrastructure sector continues to grow, supported

by strong political belief in the strength and viability of the

Alternative Financing Procurement (AFP) market. We expect

the Canadian construction market to maintain year-on-year

growth of over 4 per cent for the next four-year period.

AFPs, particularly in Canada’s healthcare sector, play to one

of the Group’s major strengths in complex PPP procurement.

Continual improvements being made to the country’s AFP

model and regulatory framework, as well as the sheer size of

contracts that are awarded, highlight the growing attractiveness

of the Canadian construction market to progressively-minded

international infrastructure investors and providers like

Laing O’Rourke.

As an integral part of the international consortium, CHUM

Collectif, Laing O’Rourke made signifi cant progress during

the year in the delivery of Canada’s largest PPP healthcare

scheme and the world’s second largest hospital – the Centre

Hospitalier de l’Université de Montréal.

The Group has extended its reach in Canada following

notifi cation in May 2013 that it had been appointed preferred

bidder for the contract to construct the new home of

York University’s Lassonde School of Engineering, 10km

outside Toronto. The project is being delivered without a joint

venture partner for an enlightened client who understands

the benefi ts-driven approach of our digital engineering

capabilities, utilising offsite construction techniques and an

integrated delivery programme.

OutlookThe Group is one of the leading engineering and construction

solution providers in its chosen sectors. In line with the Group

Strategic Roadmap (GSR), our aim is to leverage the scale and

effi ciencies of our vertically integrated delivery businesses

and the competitive advantage inherent in our approach to

engineering innovation, digital engineering and Design for

Manufacture and Assembly (DfMA), while optimising the value

of our supply chain relationships to deliver projects on time,

on budget and to an unrivalled level of quality, safety and

sustainability. We will complement this approach by building

leading positions in selective growth-oriented sectors and

territories with the right strategic and cultural fi t.

We will increasingly pursue multidisciplinary projects which

encompass the full range of our UBO from programme

management, civil and structural engineering, manufacturing

and construction services, to mechanical and electrical

engineering and operational maintenance.

These increasingly large and complex infrastructure-based

projects offer greater revenue and profi t retention across a

greater proportion of the client value chain, enhancing our

prospects for growth in the medium to long term.

We will continue to develop our business where growth

opportunities exist and where we believe we can positively

differentiate relative to domestic incumbents or international

competitors. Therefore, our focus will remain in Canada and

selected regions in the Middle East, where the complementary

sectors, pipeline of opportunities, preferred procurement routes

and working practices all play to our core strengths as an

integrated engineering enterprise.

CENTRE HOSPITALIER DE L’UNIVERSITÉ

DE MONTRÉAL (CHUM), QUEBEC, CANADA

As Laing O’Rourke’s fi rst project in Canada the CHUM

has helped to cement the Group as a tier-one contractor

and is generating interest in the market and with potential

new clients. The project’s success so far led to interest

by the client to bid for the new home of York

University’s Lassonde School of Engineering

which Laing O’Rourke was successful in

securing in May 2013.

HUB PERFORMANCE

AUSTRALIA HUBAUSTRALIA

HONG KONG

NEW ZEALAND

SOUTHEAST ASIA

We’re accelerating our unique journey

– working tirelessly on our approach

to the market, our culture and our

delivery – developing a business that

is sustainable in every sense.”

CATHAL O’ROURKE

MANAGING DIRECTOR, AUSTRALIA HUB


PORT BOTANY TERMINAL 3,

SYDNEY, AUSTRALIACompleted in May 2014, the

construction of a new container

terminal for Sydney has seen

Laing O’Rourke deliver the civil

and rail infrastructure work.

51

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FINANCIAL HIGHLIGHTS

Managed revenue

£1.8bnOrder book

£1.9bnGross margin

7.0%


(GSR) NEAR-TERM PRIORITIES

• Continued sector focus – with ongoing work to deliver

the needs of our blue chip clients in rail and oil and gas.

• Realise infrastructure potential, building on successful

delivery in mining, resources, ports, freight and civil

works during the period.

• Geographic expansion through new projects in the

Australian Capital Territory (ACT), and director-led

operations in Victoria for the fi rst time.

• Continued focus on client service, mobilising our unique

resources from the Engineering Excellence Group

(EnEx.G), digital engineering teams and Design for

Manufacture and Assembly (DfMA) and direct delivery

capabilities to assure complex engineering solutions.

• Capitalise on the signifi cant improvements in health

and safety performance and culture over recent years,

by continuing to deploy industry-leading methodologies

and innovation into our Mission Zero commitment.

51

7

8

1

2

4 6

5

3

AUSTR

AL

IA

NEW ZEALAND

SO

UT

HE

AST

ASIA

AUSTRALIA

1. BRISBANE

2. DARWIN

3. MELBOURNE

4. PERTH

5. PORT HEDLAND

6. SYDNEY

SOUTHEAST ASIA

7. HONG KONG

NEW ZEALAND

8. AUCKLAND

Our Australia Hub comprises

a diversifi ed and expanding

infrastructure project portfolio through

principal operations in Australia,

Hong Kong and New Zealand

Laing O’Rourke is now offering a distinctive proposition

based on superior quality of design and delivery. We are

increasingly taking leading positions in carefully targeted

building and infrastructure markets, predominantly in

economic infrastructure sectors including mining and

minerals-handling, oil and gas, rail and power, where

demand is being driven by the emerging world economic

superpowers in and around the region.

PRINCIPAL OFFICES



FINANCIAL PERFORMANCEThe Australia Hub has continued to perform well with

another record year. The Hub reported managed revenue of

AUD$3.1 billion (£1.8 billion) compared to AUD$2.8 billion

(£1.8 billion) in 2012/13.

Overall, the earnings result was again pleasing this year,

with a pre-exceptional EBIT performance of AUD$77.0 million

(£45.0 million) (2012/13: AUD$54.5 million (£35.6 million)).

The Australia business also ended the year with a strong cash

position of AUD$436.8 million (£242.7 million).

Investment in the oil and gas sector continues to pay dividends,

with the Australia Hub engaged on every major gas scheme

in the region with the exception of one. This heavy infrastructure

capability extends across the entire oil and gas value chain:

from accommodation villages to support massive LNG

schemes, to water treatment support for coal-seam production

sites, and the civil, structural, mechanical and piping work

underpinning processing plants. Our industry-leading capability

to integrate our services in this sector complements the

established skills and experience the Hub has long offered

the rail, infrastructure and building industries, giving

Laing O’Rourke a diverse construction and engineering offering

that can respond to any changes in the marketplace.

While the Australian target markets have continued to remain

uneven across building, rail and infrastructure, all sectors

still offer strong profi tability on the back of sound delivery.

With a smaller pipeline of building projects, industrial relations

concerns have not had the same impact on costs this year as

they did last year; however, deployment of regional workforces

on infrastructure projects remains a challenge. The Hub also

continues to focus on controllable costs at all levels, looking

at a range of measures to keep costs down and ensure the

business remains lean and agile. Some of the approaches

adopted include sourcing of materials in cheaper markets;

removal of functional duplication; rigour around tender spend;

and improved effi ciencies through digital engineering

technology and DfMA methodology.

During the year the construction of a mixed-use offi ce, retail

and residential development was completed with less than

20 per cent of the residential portion remaining to be sold.

This generated sales revenue of AUD$234 million (£137 million)

and proceeds were partially used to retire the development

project debt.

Looking forward to 2014/15 and beyond, the Hub is well

positioned to further improve profi t next year given its current

portfolio of work and engagement with key clients and active

involvement in mega resource projects such as Wheatstone,

Gorgon and Ichthys. As Australia’s resources and energy

boom moves from construction phase to production phase,

the Hub will continue to explore opportunities in new sectors

and territories. Key sectors will include roads, where the

Federal Government has committed to spending billions of

dollars. The Hub will renew focus on existing sectors such as

rail and building, where it has a strong track record, and

establish itself in new territories such as Victoria, Australia’s

second most populous state, and the Australian Capital

Territory (ACT). In the May federal budget, the government

announced a package of measures that will signifi cantly

increase investment in infrastructure across Australia over

the next six years. The Federal Government will help the

states build new roads, rail, ports and airports to stimulate

the construction sector as the economy transitions from

resource-led growth to broader-based growth. The government

announced that its investment is intended to drive over

AUD$125 billion of spending on new infrastructure across

the continent, and the Hub is ready to participate in these

new opportunities.

Commercial 10%Social Infrastructure 6%Transport 23%Oil & Gas 59%Mining & Natural Resources 2%

AUSTRALIA 2014 ORDER BOOK BY SECTOR

OPERATIONAL PERFORMANCEThe Australia Hub has continued a strong record of delivery

and the pursuit of complex and exciting engineering projects

across the region. During the period, the business continued

to develop its range of services and further established its

reputation in strategic sectors.

New work was secured in the priority sector of healthcare

with the contract secured for Blacktown Hospital’s Clinical

Services Building project in Sydney’s western suburbs and

in the rail sector with the Novo Rail alliance signing multiple

new packages, new electrifi cation works at Bauhinia in

Queensland for client Aurizon, and the securing of a stabling

project at Wulkuraka just outside Brisbane, part of

Queensland’s biggest-ever investment in public transport.

HOWARD SPRINGS ACCOMMODATION

VILLAGE, ICHTHYS PROJECT, DARWIN

Phase one of this accommodation village, which

includes 1,000 rooms, ten support buildings and a

swimming pool, was handed over to the client in August

2013. When complete, the Howard Springs Accommodation

Village will provide high-quality accommodation for

4,000 people, as they construct and operate the

$42 billion Ichthys LNG terminal at Blaydin Point.


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In our oil and gas sector, we have closed out the Kenya

Water Treatment Plant for QGC and are moving into the

pre-commissioning stages for the client’s larger Northern

Water Treatment Plant, also in the Queensland Gasfi elds.

We are also into the fi nal stages of our General Utilities

programme at Chevron’s Gorgon facility on Barrow Island,

on the other side of the country, and have commenced a major

programme of civil works on the Wheatstone Project, near

Onslow in Western Australia, also for Chevron. Work is

continuing strongly on the Ichthys LNG packages in Darwin,

where having completed the accommodation village building

works for up to 4,000 workers our role in delivering the four

cryogenic tanks at Blaydin Point is entering its critical

construction phases. In a key development, and thanks to

a programme of collaboration and one team working with

our clients, the scope of our Australia Pacifi c LNG project in

Queensland has been expanded and is being delivered across

six gas processing sites.

In resources, our relationship with Rio Tinto has netted us

two further contracts in the period at their Cape Lambert

expansion, a continuation of our three-decade working history

with the mining giant. In the iron ore sector, we have also

developed a new relationship with Samsung C&T and the

Roy Hill Group, to deliver parts of the world’s largest

single-pit mining operation.

Another new client in 2013/14 is the Commonwealth Science

and Industrial Research Organisation (CSIRO) who selected

Laing O’Rourke to consolidate and expand their research

facilities at Black Mountain in Canberra at the same time

formally expanding our Australian operations into the ACT.

In another geographic expansion, Laing O’Rourke has now

formally entered the Victoria market with the establishment

of a new Melbourne offi ce. At the close of the fi nancial year,

a team was being recruited and initial project opportunities

being examined by our new Regional Director, the experienced

local infrastructure and building leader Patrick Cashin.

We have seen the Engineering Excellence Group (EnEx.G) hone

its impact in the Australia Hub, providing assistance to clients

and infl uencing our approach to bids and projects through

technology and innovation, something that will continue to be

prioritised. The EnEx.G’s work is just one part of a deeper

client conversation taking place across all our markets

where a number of key strategic partners have sought out

Laing O’Rourke’s unique capabilities during the year, to realise

the benefi ts of our digital engineering, DfMA, direct delivery

and engineering excellence strategies, skills and resources on

their own work programmes.

NORTHERN WATER TREATMENT

PLANT, QUEENSLAND, AUSTRALIA

Due for completion in September 2014, the Northern

Water Treatment Plant, by Laing O’Rourke and a

GE Consortium, is an advanced facility that will treat

100 megalitres of water a day.



In October 2013 Cathal O’Rourke was appointed Managing

Director of the Australia Hub. Cathal has an intimate knowledge

of the culture and operations of the business, having held a

number of senior leadership roles in the UK, Europe and

Australia for the Group.

The period also saw the appointment of new leadership talent

to the executive team. Nick Luzar was appointed as Southern

Region Director in April 2013, overseeing operations in NSW,

the ACT and New Zealand. Darren Weir joined the Hub in

early 2014 to take over the reins as Northern Region Director,

assuming responsibility for the company’s operations in

Queensland and the Northern Territory. Tim Larkin joined

Laing O’Rourke as Oil and Gas Sector Leader in May 2013,

followed closely by the appointment of Stephen Pascall as

Rail Sector Leader for the Australian business in June 2013.

INFRASTRUCTUREThe Hub’s western region operation continues to be at the

forefront of infrastructure opportunities, leveraging our long

history in the west’s materials handling sector. Following a

period of sustained strong performance, the Group secured

more than AUD$300 million of additional work in the mining

sector during the period.

Laing O’Rourke is now working on the biggest single-pit mining

operation in Australia, Western Australia’s Roy Hill iron ore

deposit, following the award of Roy Hill Package 3 by Roy Hill

Holdings and Samsung C&T, a contract involving the

construction of structural steel and associated mechanical,

piping, electrical and instrumentation works for the AUD$10

billion mining project. It also incorporates the stockyard

facilities to support the ore’s extraction and export, comprising

car dumpers, interconnection conveyors and transfer stations.

The major project award followed receipt of a new negotiated

contract with Rio Tinto to take on our third tranche of work at

the Cape Lambert export facility, a project that forms a key part

of their iron ore expansion plans.

Laing O’Rourke has worked for Rio Tinto since 1975, recently

completing Cape Lambert Phase B Package 1, and currently

delivering Package 2. The reliable delivery of this materials

handling and processing infrastructure led to the award

of Package 3, which will include modifi cations to existing

conveyors, construction of new conveyors, associated transfer

stations and pipework.

In addition to securing these new projects, we successfully

delivered the Hope Downs Sandvik Machine Erection project,

where we delivered two stackers and one reclaimer for

Sandvik Mining and Construction as part of Rio Tinto’s new

Hope Downs 4 iron ore mine in the Pilbara.

The region continues to pursue signifi cant opportunities in

the resources sector, with several major results pending.

Elsewhere in the Hub, we handed over AUD$100 million

in works on the Broadmeadow Sustaining Operations

Mechanical Electrical Works project, where we delivered

a coal clearance system as part of a US$900 million mine

expansion in central Queensland.

Our capabilities in marine projects continued to be drawn

upon, substantially completing major works on the

Port Botany Terminal 3 project in Sydney. The project involved

the construction of a new container terminal for Sydney

International Container Terminal Ltd, owned by Hutchison Port

Holdings, the largest freight operator in the world. Laing

O’Rourke undertook the major civil works and associated

services over 46 hectares of reclaimed land.

Our work on the construction of the K10 berth at Kooragang

Island for Newcastle Coal Infrastructure Group received

industry acclaim during the year, winning both the 2013 NSW

Master Builders Association Excellence in Construction Award

Civil Engineering Projects, and the 2013 Master Builders

Australia National Excellence in Building and Construction

Award Toyota National Civil/Infrastructure Award.

GRIFFITH UNIVERSITY HEALTH CENTRE,

GOLD COAST, QUEENSLAND

Offi cially opened on 19 July 2013 by Australia’s Governor

General, Quentin Bryce, the Griffi th University Health

Centre has been described as being at the forefront of

innovation and a state-of-the-art design-and-construction

project. The $136 million project includes a new

Centre for Medicine and Oral Health as well

as a teaching facility, and is situated next to

Gold Coast University Hospital.

NOVO RAIL ALLIANCE, NEW SOUTH WALES

Setting a trend for the global rail industry to follow, the

NOVO rail alliance has successfully brought client and

delivery teams together in this landmark Australian

infrastructure project. The Alliance is transforming

the complex Sydney commuter rail network, and

recently won the Clyde Junction and Penrith

Substation projects.


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Q CATERING, QANTAS, BRISBANE AIRPORT

Reaching practical completion in May 2013, the new

Q Catering facility for Qantas will see it move to a

just-in-time model, where automation has been

introduced to reduce the time taken to assemble

catering requirements for a fl ight.

BUILDINGOur oil and gas sector clients continued to benefi t from

our integrated delivery model through the provision of

accommodation villages for their CSG and LNG projects

across the Hub.

During the period we closed out delivery of the AUD$66 million

Ruby Jo Accommodation Village – a 550-person accommodation

village to house workers for the development and ongoing

operations of QGC’s gas facilities, west of Dalby in the

Darling Downs, as well as the AUD$120 million Woleebee

Accommodation Village – a 1,100-person accommodation

village to house workers for the development and ongoing

operations of QGC’s gas facilities southwest of Wandoan.

Works at the 4,000-bed Howard Spring Accommodation Village

– part of the AUD$34 billion Ichthys LNG Project – were also

completed, with the last accommodation unit placed onsite

in late 2013.

Capitalising on our global health expertise, we commenced

delivery of the AUD$145 million clinical services building at

Blacktown Hospital, one of Sydney’s busiest public health

precincts. Meanwhile, Laing O’Rourke’s Griffi th University

Health Centre was offi cially opened by Australia’s Governor-

General Quentin Bryce and our work on the car park at the

Gold Coast University Hospital received the 2013 Gold Coast

Region Master Builders’ Awards for Industrial Buildings over

AUD$5 million.

We continued our long relationship with Brisbane Airport,

with work on the Qantas Airways ‘Q-Catering’ facility drawing

to a close. The combined food manufacturing, commercial

kitchen, and food assembly and logistics facility was ‘Highly

Commended’ in the 2013 National Airport Industry Awards

overseen by the Australian Airports Association.

Following completion of the commercial towers last year, the

adjacent residential and retail zones of the McLachlan and Ann

Street development in Brisbane’s Fortitude Valley are now also

complete. The centre also became the new headquarters for

Laing O’Rourke’s northern region, with our teams co-locating

to the fi rst-class facility from Easter 2013.

As part of the Territory Alliance in Australia’s Northern Territory,

a partnership between Laing O’Rourke, Sitzler and McMahon

Services, we completed delivery of our component of the

Strategic Indigenous Housing and Infrastructure Programme

(SIHIP). SIHIP delivered 750 new houses, 230 rebuilds of

existing houses and 2,500 house refurbishments across

73 remote Indigenous communities and a number of

community living areas (town camps) throughout the Territory.

Work also continued on our AUD$870 million Moorebank Units

Relocation (MUR) project with the Department of Defence.

The MUR project is the biggest single defence capital works

project in Australia since the Second World War and involves

the planning and delivery of the complete relocation of

100 hectares of defence assets, while simultaneously

preparing other site upgrades at the nearby Holsworthy

Base to support future defence needs.

Following investigation of opportunities in the ACT, we secured

the Commonwealth Scientifi c and Industrial Research

Organisation (CSIRO) Consolidation Project in Canberra.

The project, which provides a strong foothold for other projects

in and around the ACT, will enable the CSIRO to consolidate

three leased sites by relocating its workforce and operations.

RAILWith planning for, and delivery of, metropolitan rail expansion

projects continuing during the period, the Hub’s rail sector

strategy focused in part on the successful delivery of current

metropolitan rail projects while targeting signifi cant rail

projects across the Hub aligned with our UBO.

Work was signifi cantly completed on rail electrifi cation projects

in Auckland, New Zealand and in Adelaide, South Australia.

The AUD$56 million Auckland Electrifi cation project has

Laing O’Rourke, in joint venture with Hawkins Infrastructure,

delivering 3,700 overhead wiring structures, 80 switching

structures and 170km of overhead wiring in a major boost

to the local rail network.

The fi rst trains have run on the newly electrifi ed line between

Adelaide and Seaford, following an AUD$113 million project

delivered for the Department of Planning, Transport and

Infrastructure over the past two years. The multidisciplined

works have introduced new technologies to South Australia,

including 25kV electrifi cation infrastructure assets and a

custom-built fi bre-optical telecommunications network.

Following the restructuring of governance arrangements for

Sydney’s metropolitan rail network, we continued to work

constructively with Transport for NSW and Sydney Trains.

During the period we successfully delivered the AUD$65 million

Auburn Stabling Project Stage 1, providing a new stabling

facility for suburban train sets on the Sydney network.

We also continued our strong working relationship with

Transport for NSW as part of the Novo Rail Alliance, securing

a fi ve-year extension to the existing alliance agreement.

The alliance has completed over AUD$590 million worth

of work on Sydney rail network to date, with an additional

AUD$260 million to be completed over the next two and

a half years. The execution of the agreement allows the NSW

State Government to refer additional work to the Alliance,

with incentives for all parties for this work to be undertaken.



The Queensland Government is also investing heavily in

metropolitan rail infrastructure through its New Generation

Rollingstock project, which will see the delivery of 75 new

six-car trains, maintenance of the trains for a period of

around 30 years, and construction and maintenance of a train

maintenance centre. Laing O’Rourke secured the contract to

deliver the AUD$190 million purpose-built train maintenance

centre at Wulkuraka in Ipswich. The project will run for two

years and is due for completion in early 2016.

Outside metropolitan networks we continued to build our

portfolio of work in the rail electrifi cation and heavy haul

markets. In Queensland we secured the AUD$110 million

Bauhinia Electrifi cation Project with key client Aurizon.

The project involves 110km of rail electrifi cation, linking

Xstrata Coal’s Rolleston Mine to the Wiggins Island

Coal Export Terminal.

In Western Australia we advanced our heavy-haul rail work

for BHP Billiton Iron Ore Pty Ltd, closing out the

AUD$106 million Port Hedland Inner Harbour and Jimblebar

Project and continued with our heavy-haul rail maintenance

contract in the Pilbarra. Also in the Pilbarra we completed

the AUD$42 million Solomon Rail Spur Construction for

Fortescue Metals Group Ltd.

With a strong pipeline of work available across the Hub, we are

working to target opportunities which draw on the elements of

our UBO, including our digital engineering and DfMA capability,

as well as the innovations offered by the EnEx.G.

OIL AND GASLaing O’Rourke is delivering oil and gas projects in Queensland,

the Northern Territory and Western Australia, including civil,

structural and mechanical infrastructure, gas processing

facilities, cryogenic tanks, water treatment plants and

accommodation villages. With the expansion of oil and gas

investment slowing domestically, the Group focused on

successfully delivering existing projects while positioning

potential existing plant expansions, developing new clients

and expanding our market offering.

A signifi cant result of this focus, and following a close working

relationship with the client, Australia Pacifi c LNG (APLNG),

the northern region’s APLNG project in Queensland has

signifi cantly increased during the period to be worth more than

AUD$1 billion, confi rming its status as a landmark project for

the Australia Hub in size, complexity and sector importance.

Laing O’Rourke’s scope of work includes the construction of six

new gas processing facilities and the construction of temporary

camps and support facilities to house 1,600 workers.

MOOREBANK UNITS RELOCATION,

DEPARTMENT OF DEFENCE,

NEW SOUTH WALES

This fi ve-year project, which is due to be completed in

October 2015, sees the relocation of the Department of

Defence assets from Moorebank to Holsworthy Barracks,

creating a modern facility in Sydney. The project

includes instructional and teaching spaces,

accommodation, sport facilities, civil works,

roads and car parks.


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57

AUBURN STABLING PROJECT STAGE ONE,

NEW SOUTH WALES

The AUD$65 million project delivered a new stabling facility

for suburban train sets on the Sydney metropolitan rail

network. The site was heavily contaminated and in an

environmentally sensitive area, running adjacent

to Duck River, requiring special provisions in the

design and management to protect the river.

The construction team for the INPEX Ichthys LNG Project

Cryogenic Tanks contract mobilised to site in late 2013.

Construction work is well underway on the fi rst two LNG

storage tanks, while work on the two LPG tanks will commence

later in 2014. The scope of work for this contract is among the

most technically demanding that Laing O’Rourke has

undertaken in Australia.

The delivery of the civil works at Wheatstone LNG and the

general utilities for Gorgon LNG, both for Chevron, continued

with major milestones and increases to contract scope

both being achieved. The successful application of digital

engineering at Wheatstone is of particular signifi cance.

Elsewhere in the Hub, our work at the Kenya Water Treatment

Plant for QGC (wholly owned subsidiary of BG), was marked at

the offi cial opening in October 2013, while our work continued

on the AUD$400 million QGC Northern Water Treatment Plant

(NWTP). The NWTP team embraced a DfMA approach to the

project, in collaboration with our subsidiary manufacturing

business Redispan, with the production of in-situ piperacks

resulting in packages of works being completed 60 per cent

faster and with 70 per cent less labour required onsite.

HONG KONGRail work for MTR Corporation Ltd continued to be the major

focus of activities in Hong Kong during the period. Our three

key projects for MTR are C810B and C811A at West Kowloon

and C901 at Admiralty, forming part of a dramatic expansion

of Hong Kong’s MTR network. C901 involves building new rail

tunnels and platforms below and adjacent to the existing

Admiralty Station, as well as adding a major below-ground

interchange concourse. Our joint venture team is now

implementing engineering solutions that link the new station

box with the newly constructed tunnels, directly below the

existing Island Line platform tunnels which remain fully

operational with the trains running every 45 seconds at peak.

In late 2013 we completed our HKD$88 million early works

contract for the West Kowloon Cultural District. Laing O’Rourke

was the fi rst contractor onsite as part of the HKD$21.6 billion

project to deliver a 40-hectare integrated arts and cultural

district. As part of the enabling works, we delivered temporary

access roads and temporary project site facilities, consisting of

3,300m² of offi ce space and parking facilities for 30 cars.

Laing O’Rourke is proud to have attained Caring Company

status in Hong Kong. Launched by the Hong Kong Council of

Social Service in 2002, the Caring Company Scheme aims to

build strategic partnerships among businesses and non-profi t

organisations, to create a more cohesive society by recognising

organisations who excel in corporate social responsibility.

Laing O’Rourke’s Caring Company application was sponsored

by Oxfam, with whom Laing O’Rourke will partner during the

course of our involvement in the scheme.

OUTLOOKWith the Group Strategic Roadmap (GSR) now embedded and

well understood across the business, the Hub is focused on

converting the GSR into practical measures for adoption at all

levels of the business. With multiple coordinated streams of

implementation underway, we are focused on driving excellence

in productivity across the business, delivering improvements

in line with 2015 goals and targets, with a view to the medium-

term goals to 2020.

Our sector-based approach will continue, building on successes

in the oil and gas and rail sectors, and continually assessing

where strong market performance and opportunities warrant

formalisation of new dedicated sector teams.

To fully explore opportunities in the wider Australian market

we have set up a new offi ce in Melbourne from which to drive

our UBO with local clients and in surrounding locations.

We will also continue our exploration of opportunities

in the ACT, building on the early success in the form of the

CSIRO Consolidation Project.

Our continued investment in our engineering excellence agenda

particularly Design for Manufacturing and Assembly and digital

engineering, will see our relationships with clients continue to

evolve and deepen, refl ecting our vision of being the company

of fi rst choice for all stakeholders.

We will drive our industry-leading Mission Zero health and

safety programme to the next level identifying how injuries

occur across the business and implementing ways of

reducing harm.


SAFETY AND SUSTAINABILITY: OVERVIEW

SAFETY ANDSUSTAINABILITY

HEALTH AND SAFETYTo protect the health and safety of everyone involved in or

affected by our operations, eliminating all accidents by 2020.

In 2010, we launched Mission Zero – and with it our vision

of a future where everyone goes home safe and well every

single day. There are two key targets attached to this agenda.

• The fi rst is a 0.1 DIFR (Disabling Incident Frequency Rate)

by 2015. An accident resulting in an absence from work of

one or more days.

• The second is a 0.1 AAFR (All Accident Frequency Rate)

by 2020. Any accident at all, from serious injuries to

minor incidents.

0.18Group AFR1

(2012/13: 0.21)

0.29Group DIFR2

(2012/13: 0.35)

2.71Group AAFR3

(2012/13: 3.19)

£12.1mHealth and safety training

(2012/13: £8.9m)

£456kCorporate donations

(2012/13: £429k)

£9,960Profi t per head

(2012/13: £12,800)

6%Women in senior

leadership positions

58

PERFORMANCE

1. AFR (Accident Frequency Rate): An accident resulting in more than three days’ absence from work. Note: On 1 October 2013, the threshold for reporting was increased to seven or more days. Laing O’Rourke continues to observe the previous regulations in calculating AFR (see page 63 for detail).

2. DIFR (Disabling Incident Frequency Rate): An accident resulting in the loss of one or more shifts.

3. AAFR (All Accident Frequency Rate): Any accident at all, from serious injuries to minor incidents.

£59.9mInvestment in training,

development, education

networks, R&D and DfMA

(2012/13: £49.4m)

l £38.1mR&D and DfMA

(2012/13: £30.0m)

l £21.8mTraining, development

and education networks

(2012/13: £19.4m)

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ENVIRONMENTTo minimise the negative impacts of our operations

and maximise the quality of the built environment for

future generations.

COMMUNITYTo work with the communities in which we operate to

deliver truly transformational projects that enable economic

progression and leave behind a positive public legacy.

INDUSTRYTo grow our business by delivering superior engineering

strategies that meet the needs of individual clients, while

responding to the wider challenges facing our industry.

PEOPLETo attract, develop and retain world-class talent, creating an

environment that inspires our people to give their best and

makes human capital one of our greatest strengths.

59


SAFETY AND SUSTAINABILITY: OVERVIEW CONTINUED

The subject of sustainability touches

almost every part of modern life. The

decisions we make today – consciously

or otherwise – will leave their mark

on the world for generations to come

For Laing O’Rourke, the degree to which that impact is a

positive one is increasingly coming to defi ne our value in

the eyes of clients, communities, suppliers, investors

and employees.

In times of limited resources, we must all do more with less.

But beyond these immediate concerns there are bigger social,

economic and environmental factors at play that are changing

the way we do business.

In developing our Group Strategic Roadmap (GSR) we have

sought to understand how these dynamics will impact our

industry – and devise solutions to address the demands that a

larger, more urbanised and more mobile population will place

on both the built and natural environments.

By taking the necessary steps now (and aligning our practices

accordingly) we are working to transform these challenges

into opportunities.

OUR GLOBAL CODE OF CONDUCTOur Global Code of Conduct sets out our standards for working

together and with others – and defi nes the way we manage the

social, economic and environmental challenges associated with

our activities. A full copy of the Code is available on our website.

As the ‘rulebook’ for how we do business, it is vital the

document keeps pace with the world in which we work.

During the year we carried out a comprehensive review of

its contents, resulting in the roll-out of an updated edition.

This was communicated to every member of staff across

the Group – and will be followed in the coming months with

mandatory anti-bribery and corruption training.

Compliance with the Code is monitored by our Group security

and business resilience function, working closely with our

legal and internal audit teams. All employees must pledge

their commitment to uphold its principles – and anyone found

in breach will be subject to disciplinary action, up to and

including dismissal.

We operate an independent ‘conductline’ for individuals

wishing to raise a concern. This is open to everyone (including

members of the public), with contact details displayed in all

our workplaces. During the year 14 suspected breaches of the

Code were reported. Ten have been closed out, the remaining

are under investigation. None represents material risk to

the business.

To ensure we maintain the highest ethical standards in all our

commercial interactions, staff must report ‘gifts and hospitality’

and ‘confl icts of interest’ through our online registers. The

threshold is as follows: Australia more than AUD$100, Canada

more than CAD$40, UAE more than AED150, UK more than

£25. All gifts and hospitality regardless of value must be

registered in Hong Kong.

UNDERSTANDING OUR RESPONSIBILITIESIn 2013 the Europe Hub formalised its approach through

the creation of a ‘sustainability roadmap’. Following on from

this, a corresponding version was rolled out across our

Australia Hub, with adjustments made where necessary

to accommodate local requirements.

The targets set out in each roadmap are broadly aligned –

and refl ect the key challenges and opportunities identifi ed by

the business. These are grouped under: environment, people,

industry and community.

• Environment, including: carbon, water and waste.

• People, including: professional development, employee

engagement, attraction, retention and diversity.

• Industry, including: client satisfaction, sustainable

procurement, research and innovation.

• Community, including: engagement with social enterprises

and marginalised groups, local employment and skills

building, volunteering and charitable giving.

DRIVING PERFORMANCEThe management of key sustainability issues is monitored at

every level of the business through the governance framework

outlined (right). Specifi c targets relating to health and safety

and human capital (employee engagement) are included within

the performance contracts used to determine the remuneration

levels of our most senior employees.

60


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As part of our annual appraisal process, all staff receive a

formal rating – 7.5 per cent of this is based on the health and

safety performance within their business unit. 52.5 per cent is

based on personal objectives – and from this year at least one

of these must be sustainability related. A further 40 per cent is

based on a defi ned set of behaviours (including engagement in

and understanding of our sustainability agenda).

GOVERNANCEWe operate a comprehensive governance framework to

ensure issues impacting on our sustainability are appropriately

addressed. This is managed through a network of boards, all

ultimately accountable to the Board and Group Executive

Committee (GEC).

The Board sets the strategic direction of our activities,

allocates investment and oversees delivery by the GEC.

As a subcommittee of the GEC, our Safety and Sustainable

Development Committee ensures risks and opportunities

associated with health, safety and sustainability are given

the highest priority across the Group.

Co-chaired by the Chairman and Group Chief Executive, the

Human Capital Committee leads the formulation of our people

agenda. Its main priority is to mitigate capability risk through

targeted attraction, development and retention of a highly

skilled, globally mobile workforce.

Primary authority for the day-to-day execution of business

strategy is assumed by our Europe and Australia Hub Executive

Committees, which are responsible for implementing the GEC’s

objectives in their respective jurisdictions. These include targets

relating to health and safety, human capital and other key

performance indicators.

The explicit management of health, safety and sustainability is

delegated to hub-level Safety and Sustainability Leadership

Forums. Chaired by the hub CEO, the forums are made up of

the leaders of each of the relevant business units, who are

responsible for ensuring hub-level strategy is implemented

within their respective areas.

In both the Europe and Australia Hubs, we have established

Sustainability Steering Committees to monitor performance

against the respective sustainability roadmaps. The committees

are made up of individuals from a wide range of disciplines and

supported by a number of regional forums, which are tasked

with validating its proposals.

ABOUT THIS REPORTThis report describes our activities for the 2013/14 fi nancial

year. Specifi cally, it addresses the issues we regard as

having the greatest material impact on the sustainability

of our business.

The fi gures published within this section are sourced from

centralised and hub-specifi c databases. The Laing O’Rourke

Group respects all national and international regulations

to which it is subject and complies with the reporting

requirements of the countries in which it operates.

It should be noted that the scope of our sustainability

activities will vary according to the size of each of our regional

businesses. While it is not always appropriate to adopt uniform

initiatives across all areas, those measures identifi ed as

business-critical are enforced across the Group.

AUDIT AND ASSURANCEThis report has been independently assured by sustainability

experts, DNV GL, in accordance with the globally recognised

AA1000 Assurance Standard (2008). To verify key claims

within this report, they have examined supporting evidence,

interviewed senior personnel, and visited our projects,

offi ces and other facilities.

61

GLOBAL CODE OF CONDUCT

The rulebook for how we do business: our updated

Global Code of Conduct was published in 2014.


SAFETY AND SUSTAINABILITY: OVERVIEW CONTINUED

62

NUMBER OF EMPLOYEES ON

DEVELOPMENT PROGRAMMES

2014 2013

Apprentices 279 265

Graduates 164 186

Scholars and Cadets 193 135

Young Guns 47 32

Guns 30 30

Masters Students 35 21

Total 748 669

STAFF LENGTH OF SERVICE

2014 2013

Less than 6 months 11% 7%

6 months to 1 year 11% 10%

1-2 years 13% 15%

2-3 years 11% 8%

3-5 years 10% 14%

5 years + 44% 46%

STAFF AGE PROFILE

2014 2013

25 and under 9% 8%

26-35 30% 30%

36-45 28% 29%

46-55 22% 22%

Over 55 11% 11%

WORKFORCE AGE PROFILE

2014 2013

25 and under 10% 10%

26-35 30% 31%

36-45 28% 29%

46-55 21% 20%

Over 55 11% 10%

EMPLOYEE TOTALS

Staff WorkforceTotal 2014

Total2013

Europe Hub 3,884 6,543 10,427 11,208

Australia Hub 2,149 2,736 4,885 4,143

GROUP 6,033 9,279 15,312 15,351

EMPLOYEES: STAFF TO

WORKFORCE RATIO

2014 2013

Staff 39% 39%

Workforce 61% 61%

STAFF: MALE TO FEMALE RATIO

2014 2013

Male 80% 81%

Female 20% 19%

ATTRITION

All Leavers

Monthly paid 2014 2013

Europe Hub 14.6% 20.1%

Australia Hub 31.8% 27.1%

Group 21.0% 22.6%

Voluntary Leavers

2014 2013

Europe Hub 11.4% 11.5%

Australia Hub 16.7% 15.2%

Group 13.4% 12.8%

SUMMARY OF CARBON EMISSIONS1

UK2 Australia3 Hong Kong4

2008/09 (baseline) 2012/13

2013/14 (provisional)

2010/11 (baseline) 2011/12 2012/13 2012/13

Scope 1 80,833 41,626 37,800 19,159 19,828 35,860 5,028

Scope 2 17,600 11,416 12,000 6,538 6,711 6,570 7,423

Total (Scope 1 and 2) 98,433 53,042 49,800 25,697 26,539 42,430 12,451

Scope 3 (Excl waste) 8,230 4,481 4,500 N/A N/A N/A N/A

Total (Scope 1,2 and 3) 106,663 57,523 54,300 25,697 26,539 42,430 12,451

Waste (Scope 3 – excluded from baseline) 1,258 1,200 N/A N/A N/A

1. All fi gures are absolute.

2. All fi gures up to and including 2012/13 CEMARS accredited. 2013/14 to be verifi ed through CEMARS, accreditation process later in the year.

3. Australia results include all projects regardless of operational control. Does not include subcontractor emissions. All fi gures verifi ed under the NGER Act.

4. Not externally verifi ed.


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EUROPE HUBWe made good progress during the year, culminating in the

launch of ‘Engineering Sustainable Futures’. The campaign

is designed to bring our objectives to life in a coherent and

engaging way – so that employees can participate more

meaningfully in our activities.

This builds on the development of our ‘sustainability roadmap’

in 2013 which sets out a range of targets to take us up to 2020.

These include carbon, water and waste, development and

diversity, staff retention and employee engagement, research

and development, responsible sourcing, client satisfaction

and ethical business practice.

Through Engineering Sustainable Futures, we have grouped our

priorities under three headings: creating high-quality careers,

enabling low-carbon living and generating value for society.

These are the areas where we believe we can make the most

positive contribution to the social, economic and environmental

challenges our industry faces.

We regard our health and safety performance as a fundamental

indicator of our strength as a business – and continue to make

every effort to progress towards our Mission Zero aspiration of

eliminating all accidents from our operations by 2020.

HEALTH AND SAFETYWe concluded the year in review with a Europe Hub Accident

Frequency Rate (AFR) of 0.16 (up from 0.14 at 31 March 2013).

While this is a satisfactory performance, it nevertheless falls

short of our target.

There were, however, a number of stand-out successes.

Our Middle East business ended the year with an AFR of 0.01.

In Dubai, Laing O’Rourke was announced by the Permanent

Committee of Labour Affairs as the highest-performing

company (out of 2,000 inspected) for its approach to employee

welfare. In in the UK our Heathrow Terminal 2A project set

a new national record for the most hours accrued without

a reportable incident on a UK construction project.

On 1 October 2013, new health and safety legislation came

into effect in the UK, introducing signifi cant changes to the

classifi cation of work-related accidents (Reporting of Injuries,

Diseases and Dangerous Occurrences Regulations 2013).

This means that organisations are no longer automatically

required to report incidents resulting in an absence from

work of three or more days. Instead, the threshold has been

increased to seven or more days.

Laing O’Rourke continues to observe the previous (more

stringent) regulations in measuring its performance. To apply

the revised criteria now – without restating historical data –

would artifi cially enhance the results going forward.

We believe this would be counterproductive.

Of the 83 incidents accounted for in our year-end AFR,

19 resulted in an absence from work of between three

and six days, and are not deemed reportable under the

new conventions.

Sadly, however, there was a fatality on our one of our projects.

On 6 November an incident occurred at the construction site

of The Francis Crick Institute in London causing the death of

31-year-old metalworker Richard Laco.

Our ability to protect the health and safety of everyone involved

in or affected by our operations is, we believe, the single

most important measure of our value. Harm of any kind in

our workplaces – especially the loss of a life – is a matter

of the deepest regret, shared by colleagues in every part of

the business.

Following on from this, we conducted a thorough review of our

protocols and introduced a number of changes in relation to the

management of major risk. (See ‘process improvements and

positive indicators’ overleaf.)

COMMUNICATION AND ENGAGEMENTThere is little doubt those in the fi eld – our site-based

employees and subcontractors – are at greatest risk. So it

is vital they are kept informed – and that channels are

available for them to contribute to the decisions that affect

their wellbeing.

In October we held our sixth annual health and safety

awareness day. The focus this year was on workforce

engagement – supported by the re-launch of our

‘Take 5’ initiative.

Take 5 emphasises the importance of ‘dynamic’ assessment

by encouraging those at the workface to routinely re-examine

their surroundings, identifying hazards as they arise and

agreeing actions to mitigate them.

In 2013/14 45,072 hazards were recorded. Take 5 improvement

cards are readily available on all our projects and facilities – and

we are currently developing a mobile app to allow individuals to

upload details directly to our reporting system, IMPACT.

63

HIGHQUALITYCAREERS

ENGINEERING SUSTAINABLE FUTURES

LOWCARBONLIVING

VALUEFOR

SOCIETY

ENGINEERING SUSTAINABLE FUTURES

Making a positive contribution to the social, economic

and environmental challenges our industry faces: through

Engineering Sustainable Futures we have set out our

commitment to creating high-quality careers, enabling

low-carbon living and generating value for society.


SAFETY AND SUSTAINABILITY: EUROPE HUB CONTINUED

Two-way dialogue In 2012 we introduced compulsory one-to-one health and

safety commitment interviews for all new-hires and transfers

(including subcontractors). The aim of these sessions is to

ensure everyone on our sites understands what is expected of

them – and what they, in turn, can expect from us. As part of

this process, individuals must pledge to uphold the highest

standards at all times. During the year, we conducted 5,632

interviews. Eight individuals were refused entry for failing

to demonstrate the requisite commitment.

It is essential our people have the information they need to work

safely and respond intelligently to risks as they arise. For this

reason, we have mandated the use of ‘visual task sheets’

wherever possible to illustrate the sequence of works being

carried out – and the environment in which they are taking

place. In the period ahead, the focus will be on actively

involving the workforce in the development of methodologies.

Over the coming months we will be piloting a new workforce

engagement survey, with the aim of rolling this out in time for

our next health and safety awareness day. The questionnaire

will seek to identify the issues that matter most to our site-

based employees – and the factors that contribute to safe,

healthy, rewarding careers.

PROCESS IMPROVEMENTS AND

POSITIVE INDICATORSWhile our current approach continues to serve us well, we

recognise that more systemic improvements are needed if we

are to achieve our Mission Zero aspirations. During the year

we conducted a back-to-basics review of our processes.

To understand which elements are the most (and least)

effective, we looked at our highest-performing projects.

Through this exercise a number of common factors were

identifi ed. The most successful projects engage the workforce

in decision-making – and encourage feedback. Team roles and

responsibilities are clearly defi ned, operations are well planned

and the right resources are available. Most importantly, major

risks are identifi ed from the outset and managed in continual

consultation with those performing the associated activities.

Using these ‘positive indicators’ we have developed a tool

which allows projects to evaluate their strengths – and develop

strategies to address areas of weakness. This is reviewed

monthly, with the results displayed in the site control room.

We have also realigned our reporting system, IMPACT, to

ensure we are capturing performance at aggregate level.

Managing major riskThe benefi ts associated with DfMA have contributed to the

reduction we have seen in the total number of accidents.

However, we remain vulnerable to higher-impact incidents –

the majority of which are caused by lifting operations and

contact with plant or machinery.

To address this, all workplaces are now required to undertake

a major risk assessment once a week. Those responsible

must demonstrate that they have sought feedback from the

individuals involved in the relevant works – and that the controls

in place are appropriate and clearly understood.

In addition, the health and safety function will carry out intense

two-week audits of high-risk operations on a bi-monthly basis.

The fi rst of these will focus on lifting and logistics. The results

will be reported to the hub leadership for review.

In order to ensure we are adequately capturing lessons learned

from the most serious incidents (and near-misses), all senior

members of the health and safety function will be required to

undergo professional training in investigative practice.

TRAINING AND DEVELOPMENTDuring the year we invested £5.6 million in health and safety

training across the hub (£4.8 million 2012/13). A range of

programmes was delivered – to our own people as well as

colleagues from client organisations, consultancies and our

supply chain.

In June we launched a refreshed safety leadership programme.

The aim of the programme is to encourage a more enlightened

management culture, ensuring our senior staff have the right

qualities and capabilities to support our aspirations. To date,

464 employees have completed the course.

We have also developed a bespoke behavioural safety

programme. The mandatory half-day module examines in

depth the ‘evolution’ of risk from design and development stage

through to delivery, and is tailored specifi cally to our operations.

In total 8,398 people have attended (2,047 from our supply

chain). We will continue to roll this out on an ongoing basis

in the coming year. 227 employees are qualifi ed to deliver

this programme.

HEALTH AND WELLBEINGWe operate a holistic approach to employee wellbeing, overseen

by the health and safety function and supported by external

occupational health service providers. Annual and new-start

medicals are available to all employees (with private healthcare

benefi ts for staff).

During the year we conducted 9,036 health surveillance

appointments and 3,997 safety critical appointments.

Of 298 management referrals, 194 were considered fi t for

work, 94 were fi t but given some restrictions to duties and

10 were fi t with permanent restrictions to duties. There were

no RIDDOR reportable health issues detected.

Our offering also includes an employee assistance programme,

work-specifi c manual handling training, random and with-

cause drug and alcohol testing, counselling and rehabilitation

support. We also deliver targeted campaigns on identifi ed risks

and regular toolbox talks to our employees and others within

our supply chain.

We enforce a zero-tolerance approach to drug and alcohol

misuse. This is enforced through random and with-cause

testing. Disciplinary action up to and including dismissal will

be taken against anyone found in breach of our drugs and

alcohol policy. During the year we conducted 2,719 screenings.

78 returned positive results (3.08 per cent). In the majority of

cases (56), cannabis was the cause.

Standards of welfare provision are exceptionally high, with

temporary facilities supplied by in-house company, Select Plant.

Tailored health and safety plans are in place on all sites and

offi ces, and include risk assessments on access, space,

lighting, heating, ventilation and hygiene facilities.

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We have developed a one-day IOSH-accredited course ‘building

a healthier workforce’. This will be delivered in the coming

year to around 2,000 individuals involved in the planning and

supervision of works – including members of our supply chain.

Content will include heart and lung disease, drug and alcohol

awareness, noise and hearing loss, hand-arm vibration

and musculoskeletal injury, skin monitoring and stress

management. We have 30 employees qualifi ed to deliver

the course.

ENVIRONMENTWe continue to work to mitigate the environmental impact

of our operations by cutting energy, water and resource use

throughout delivery stage – while seeking solutions that

enhance the effi ciency of the buildings and infrastructure

we create.

Through our sustainability roadmap, we have set ourselves

stretching targets that – supported by our innovation agenda –

provide us with clear direction. These take us up to 2020 and

include: a 30 per cent reduction in carbon emissions (against

2008/9 levels), a 50 per cent reduction in construction waste

(against 2009/10 levels) and the establishment of a water

consumption baseline and improvement strategy. Beyond this,

we are working to cut CO2 emissions by 80 per cent by 2050.

By year-end, our UK business had achieved a 15.3 per cent

reduction in energy use (against 2012/13 fi gures), equating

to a saving of £3.2 million. Scope 1 and 2 carbon emissions

were down from 53,042 tonnes (2012/13) to 49,800 tonnes

(2013/14), and construction waste was marginally up, to

146,233m3 (2013/14) from 144,645m3 (2012/13), although

taking into account increased workload this represents a

4.5 per cent reduction.

We continue to invest in more fuel-effi cient vehicles and

machinery. Our Select Plant business has one of the youngest

fl eets in the UK – and during the year acquired a number

of new units as part of its ongoing renewal programme.

Included among these was the Komatsu D65PX-16 –

a high-power, low-consumption dozer, that exceeds the

latest particulate emissions standards.

Alongside this, we have been pioneering the use of energy

management systems on our heavy plant, which has

signifi cantly cut red diesel consumption. Including our

purchases on joint ventures, we consumed 6,869,629 litres,

(2013/14) down from 10,012,934 litres (2012/13).

In June, we launched our ‘energy champions’ scheme, inviting

employees to work with us to encourage best practice at their

sites, facilities and offi ces. Activities range from common-sense

awareness-raising around equipment use and temperature

control to targeted waste reduction initiatives.

We have also been partnering with clients to address

environmental issues – participating, for example, in Crossrail’s

Carbon Working Group which seeks to encourage consistent

high standards across the industry.

CARBONA sustained reduction in the carbon emissions directly

associated with our delivery activities remains a core business

objective. However, it is in the embodied carbon and operational

effi ciency of the completed asset where we believe we can

deliver the greatest long-term value.

During the year, we conducted an exercise to compare the

outputs of our approach with traditional methodologies.

The results suggest that by exploiting our Design for

Manufacture and Assembly (DfMA) solution to the full

(combined with the benefi ts of our digital engineering

capability) we can achieve a 35 per cent reduction in lifetime

carbon emissions.

The effi ciencies of our factory delivery model and the impact

of enhanced fl eet, plant, equipment and site management

practices contribute to a reduction of 2 per cent. The use of

fewer and lower-impact materials (made possible through

DfMA) contributes to an 18 per cent reduction. Better design,

modelling, quality of end product, commissioning and handover

mean our projects are much more effi cient in use, contributing

to a 15 per cent reduction.

Certifi ed Emissions Measurement and Reduction

Scheme (CEMARS)Our UK business has maintained CEMARS accreditation for

a fourth year, demonstrating a commitment to reduce our

greenhouse gas emissions. As part of this process, companies

must open up their carbon management and measurement

processes to external scrutiny. This, in turn, provides us with

increased assurance on the accuracy of our CO2 data.

WASTEWe continue to work towards a 50 per cent reduction in

construction waste by 2020. In 2013/14, our UK operations

generated 7.8m3/£100,000 turnover – a 33 per cent

improvement on our 2009/10 baseline.

We operate strict environmental protocols on all our sites,

including mandatory recycling quotas. In the UK, we diverted

97.3 per cent of non-hazardous waste from landfi ll during the

year, 0.8 per cent up on 2012/13. This puts us on track to meet

our target of 100 per cent by 2020.

In partnership with Community Wood Recycling (CWR), we

put more than 805 tonnes of waste timber back into use

during the year, helping to fund permanent jobs in the process.

CWR is a network of UK-based social enterprises that provides

a wood collection service, while giving disadvantaged people

employment and training opportunities.

WATERWe have developed a suite of best practice guidelines to support

our projects in reducing water consumption – and encourage

the use of ‘grey’ water wherever possible. We are now working

to establish a baseline, with reduction targets in place by 2015.

Following its successful pilot last year, we are introducing a

new minimal-discharge system for fl ushing pipework prior to

commissioning. This is now being used in a number of areas,

including our data centre projects. The process requires around

80 per cent less water than conventional methods. It also uses

fewer chemicals, generating minimal effl uent, and is much

quicker and therefore less energy-intensive.

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At Pride Hopewood Park Hospital in Northumberland we have

been using an automatic wheel-wash recycling system, which

it is expected will save £76,000 in labour and £7,400 in water

over two years.

RESPONSIBLE SOURCINGOur approach to responsible sourcing is outlined in our Global

Code of Conduct, which mandates the selection of products and

services with the lowest environmental impact. This includes

the use of non-hazardous and/or re-usable materials

wherever practical.

We require our timber suppliers to provide 100 per cent FSC

(Forest Stewardship Council) or PEFC (Programme for the

Endorsement of Forest Certifi cation) accredited materials

and collect chain of custody information, as required, on each

project. This is verifi ed through environmental audits and other

assessment standards, including BREEAM. There were no

non-conformances identifi ed in 2013/14.

BES 6001Our Explore Industrial Park (EIP) facility retained ‘good’ status

under BRE’s responsible sourcing standard, BES 6001. This

means that projects using our products will automatically

achieve BREEAM points. We are now seeking to extend this

certifi cation to cover our BISON business by the end of next

year, while working to increase our EIP rating to ‘very good’

by 2015 and ‘excellent’ by 2020.

The accreditation recognises best practice in the sustainable

procurement and production of construction materials. To

qualify, manufacturers must demonstrate that their products

are made from responsibly sourced materials, while providing

detailed evidence of the way in which social, environmental,

health and safety, and other ethical issues are managed –

within the business and across the supply chain.

Environmental incidentsBy taking much of the delivery activity offsite and into controlled

conditions, our DfMA approach has seen a reduction in the

number of environmental incidents occurring on our projects.

At the same time, we are working to develop techniques to

reduce the risk of local pollution.

On our Riverlight project in London, we worked with a

manufacturer of water treatment equipment to build an

innovative system capable of delivering effective results in

space-restricted areas. In Liverpool, our Alder Hey Children’s

Health Park project team has been using Siltbuster’s Big pHil

to treat concrete wash-out and effl uent from road-sweepers,

avoiding the need for vehicles to travel back to their depot

for discharge.

There were no Category 1 environmental incidents during

the year. There were 15 Category 2 and 89 Category 3

incidents. 96 internal environmental audits were carried out.

620 environmental hazards and near misses were reported.

Assurance and accreditationWe are committed to the highest standards of environmental

compliance and management. All Laing O’Rourke Group

businesses operate to ISO 14001-accredited environmental

management systems.

External recognitionDuring the year, two of our projects won gold at the Green Apple

Awards. Pride Hopewood Park Hospital in Northumberland

was recognised for offsite manufacturing and forward-thinking

on environmental performance. Here the team used solar

panels to power site accommodation, which is expected to save

4.6 tonnes of CO2 per year during construction. Glan Clwyd

Hospital in Wales introduced a range of measures, including a

solar battery charging point for tools, rainwater recycling butts,

onsite aerosol degassing, water vole protection and the use of

recycled slate for all groundworks and hard landscaping.

PEOPLEAs a direct employer, we remain committed to creating

high-quality careers that enable our people to achieve their

aspirations while bringing value to our business. During the

reporting period, the Europe Hub invested £12.5 million in

training and development (£12.0 million in 2012/13).

We have signifi cantly increased the number of development

opportunities, with a total of 748 on our entry-level development

and fast-track leadership programmes (669 in 2012/13). Of

these, 567 are based in our Europe Hub. At the same time we

have broadened our offering to staff at all levels, with increased

focus on technical training in each of our core disciplines.

In 2013 the Board endorsed a Group-wide salary review.

93 per cent of Europe Hub staff received an increase and

10 per cent were promoted.

Following on from this, we conducted an equal pay audit,

comparing the salaries of all male and female employees

(including site-based operatives) by job grade, job family and

discipline. In total 16 cases were identifi ed that required

further analysis. This resulted in fi ve immediate adjustments

– with three scheduled for further review. All relate to monthly

paid staff, with no adjustments required within the weekly-

paid population.

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YOUNG GUNS

Fast-tracking talent: members of our ‘Young Guns’

leadership development programme at Explore

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NEW SKILLS FOR A NEW GENERATIONIn October, we celebrated the graduation of the fi rst intake to

our Apprenticeship+ scheme. Launched in 2009 in partnership

with CITB, the four-year programme aims to offer participants

a wider choice of careers, helping them develop practical skills

while supporting their personal and professional growth.

During the year, we announced the creation of a new

construction assembly technician apprenticeship. The

framework is being developed as part of the UK Government’s

‘Trailblazer’ initiative – which gives businesses the

opportunity to develop programmes to address emerging

skills requirements in their sectors.

The role of a construction assembly technician is pivotal to our

delivery approach – and new apprentices will acquire a range

of competencies required to install DfMA components to the

correct specifi cations. On completion, participants will achieve

an internationally recognised qualifi cation – along with Level 1

(or equivalent) English and Maths.

We have also launched a trainee scheme for steel-fi xers,

designed to meet the growing need for our site-based

employees to work with more complex methodologies.

New technologiesAs an enabler of our DfMA approach, particular attention has

been paid to the development of digital engineering capabilities

in all areas of the business. During the year, a mandatory

training module was rolled out to every member of staff.

This was augmented by a series of intensive fi ve-hour

workshops, targeting around 500 senior managers globally.

In addition, all employees on our talent programmes are

required to attend a full-day course.

Since 2009 we have trained 1,918 employees in digital

engineering and modelling software. We have also mandated

specifi c competency requirements for ten of our key disciplines.

These are embedded within our performance management

system and mean that individuals must up-skill themselves

to the necessary level of profi ciency in order to progress.

Academic partnershipsThrough our partnerships with the University of Cambridge

and Imperial College London we have developed two unique

masters degrees. Open to applicants around the world, the

programmes seek to engage the next generation of industry

innovators, challenging participants to rethink current

practices. Presently 35 Laing O’Rourke employees are

completing the programmes, along with others from

organisations across the sector.

We are currently sponsoring 13 PhD projects through the

Universities of Cambridge, Manchester, Nottingham and

Oxford, University College London and Imperial College London.

Areas covered include energy effi ciency in buildings, structural

concrete solutions, digital technologies and automation.

In the fi rst quarter of 2014, we held our second annual

doctoral conference. Hosted by our PhD students and masters

graduates, the event is designed to enhance employees’

awareness of our research activities.

EMPLOYEE ENGAGEMENT Through our SHAPE survey we provide our staff with a

platform to share their views on the issues that most

impact on their working lives. This helps us identify areas

in need of improvement and allows us to measure levels

of ‘employee engagement’.

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APPRENTICESHIP+

Four years on: the fi rst entrants to our bespoke

Apprenticeship+ programme celebrate their graduation.

Launched in 2009, the scheme exposes participants to a

broad range of experiences.

DIGITAL ENGINEERING

Since 2009 we have trained 1,918 employees in digital

engineering and modelling software. 117 projects have

been completed and over 2,000 components have been

manufactured using this technology.


In essence, employee engagement describes how informed,

involved, valued and motivated our people feel. There is

therefore a direct correlation between this and other key

performance indicators, such as client satisfaction, revenue

and retention.

In 2013 we recorded an overall Group score of 64 per cent

(against a global average of 57 per cent). While this is a strong

result, it is nonetheless 5 per cent down on the previous year.

In response, we commissioned an external organisation to

conduct a series of confi dential workshops and one-to-one

interviews to gain a clear and candid picture of what our

people think. More than 500 staff participated from across

the spectrum of regions, business units, projects, functions,

job roles and grades.

Listening to our peopleThrough this exercise, a number of common themes were

identifi ed. Staff remain loyal to the company and passionate

about their work. However, the business is emerging from a

period of signifi cant change which has taken place during

tough economic times.

For many this has had a negative effect on work-life balance.

Likewise, a considerable number did not feel the performance

management process adequately supported their development

needs. While employees were keen to contribute to the

decision-making process, they did not always feel empowered

to do so – and wanted managers to consult their people more

so they have opportunities to feed back.

Responding to their needsWe have already taken a number of steps to address these

concerns. We are reviewing our approach to fl exible working –

and have substantially enhanced our maternity and paternity

packages. Under the new arrangements, female employees

are entitled to take up to 26 weeks’ ordinary and 26 weeks’

additional maternity leave – 13 weeks at full pay, 26 at

statutory pay and 13 weeks at full pay on return to work.

Male employees are entitled to two weeks at full pay.

These changes are part of a broader plan to encourage a

more diverse and inclusive culture.

In July our human capital function will roll out an enhanced

learning management platform – ‘Success Factors Learning’ –

across the Group. Over the coming year, all mid-level line

managers will be required to complete dedicated people-

development training.

In addition, the corporate communications function is working

with project leaders and senior managers to help them engage

more effectively with their employees through face-to-face

dialogue. To support this, a one-day skills-building module is

being developed. The team is also working with human capital

on ‘OPEN’, a new ‘onboarding and induction’ programme,

designed to ensure new recruits understand our strategy,

culture and values. In March we rolled out ‘Yammer@

LaingO’Rourke’ – a business collaboration network that

allows employees to share knowledge and news.

ENCOURAGING GREATER DIVERSITY On average, fewer than 2 per cent of trade-based employees

are female and women account for just 13 per cent of the

overall workforce. Ethnic and other minority groups are also

signifi cantly underrepresented.

We are committed to addressing this situation – and have

embarked on a wide-ranging programme of activity designed

to promote greater equality, diversity and inclusion in our

workplaces. To lead this work, we have established a hub-level

steering committee, which meets monthly. Initiatives will seek

not only to increase female participation, but to attract people

from a broad range of backgrounds. We are currently in early

discussions with the Ministry of Defence on employment

opportunities for ex-servicemen and women with disabilities.

Be FairAs a fi rst step, Laing O’Rourke will align itself to CITB’s Be Fair

framework. Developed by Constructing Equality, Be Fair is an

industry-specifi c accreditation scheme that supports and

recognises companies committed to equality, diversity and

inclusion. Following on from this, we will begin rolling out

compulsory awareness training in July to all employees

(including site-based operatives).

Your LifeIn May, Laing O’Rourke pledged its full support to the UK

Government’s ‘Your Life’ campaign, which is aimed at

encouraging more women and girls to participate in science,

technology, engineering and maths (STEM). As part of this,

we have committed to a range of targets.


68

WOMEN IN CONSTRUCTION

To understand the barriers that exist for women in our

industry, we commissioned an external consultancy to

conduct market analysis of a range of public and private

sector organisations. As part of this, a survey was sent to

all of our UK-based female staff – and a further 2,000

from outside the company.

In general, the feedback from Laing O’Rourke employees

was positive. The majority viewed it as a supportive

organisation with a progressive attitude towards women

and good female role models at senior level.

For the most part, the results from both groups (internal

and external) followed the same trends. However, the main

area of difference was around fl exible working, which was

not regarded by the Laing O’Rourke respondents as being

actively promoted. Here again, many felt a positive

work-life balance was lacking.

Perceptions of construction and engineering remained

relatively consistent among those surveyed. Even

individuals working within the industry generally viewed

it as male-dominated, unsupportive of women and

disinclined to offer fl exible working options.

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Among these: by 2016 30 per cent of our apprenticeship and

cadet programmes will be made up of women and 40 per cent

of sponsorship opportunities will be offered to female

candidates. Over the next 12 months we will deliver at least

1,000 volunteer days to support outreach programmes with

partners such as STEMNET, the Royal Institute of Engineers

and others to promote engineering and technology.

INDUSTRIAL RELATIONSLaing O’Rourke respects the right to freedom of association

with others and the right to participate in lawful activities which

do not restrict or in any way unduly infl uence an individual’s

duties. We accept and support the role of trade unions and the

assistance they can provide our employees and us.

When approached by a trade union, we offer the offi cial slot

within our site inductions to advertise the benefi ts of and seek

to recruit our employees into trade union membership. In our

view, this is the most productive and professional environment

for engagement. We offer a voluntary check-off facility to

employees who wish to have their trade union subscriptions

deducted from their weekly wage.

The Construction Workers Compensation Scheme Laing O’Rourke is one of eight major UK construction

companies which have joined together to establish The

Construction Workers Compensation Scheme to compensate

construction workers whose names were on TCA records.

The scheme has been designed to provide affected workers

with a genuine and preferable alternative to High Court

action by removing many of the hurdles that would be faced

through litigation and offering much faster access to

compensation payments.

The Construction Workers Compensation Scheme is currently

in a period of consultation with workers’ representatives and

other key stakeholders. We want to make it as simple as

possible for any worker with a legitimate claim to access

compensation and in the interests of all parties we are

committed to doing everything we can to ensure the success

of the scheme.

We believe that the issues brought to light from the closure of

TCA are historic. We have apologised for our involvement with

TCA and joined with other construction companies to develop

the above compensation scheme. Furthermore we have publicly

stated our desire to shape and support an industry-wide code

of conduct.

INDUSTRYWe are beginning to see the business-wide benefi ts of our

ongoing investment in research and development. Led by our

Engineering Excellence Group (EnEx.G), our strategy centres

around the four ‘enabling resources’ of the organisation:

people, products, processes and plant.

The overarching aim of our innovation agenda is to generate

value for all parties: us, our people, our clients and the end

user. While much of this activity is driven by project-specifi c

challenges, ‘repeatability’ is fundamental to its successful

commercial application.

Evolving product solutionsOne such example is our E6 structural fl ooring solution.

Pioneered on the prestigious Leadenhall Building project in

the City of London, the lightweight concrete plank system is

substantially quicker to erect than conventional alternatives.

This is now being developed for a range of future uses –

including the multi-residential market, where we believe the

associated time, cost and quality benefi ts could help address

the current housing crisis.

Aligned to this, we are working on a derivative foot-bridge

solution for the road and rail sectors – and looking to extend

the product set into ‘intelligent’ architectural facades (part of

a four-year plan to become a market-leader in this fi eld).

Smart services We have also been examining the feasibility of embedding

diagnostics and prognostics into modular mechanical and

electrical services. This will allow operators to monitor data

in real time, providing an up-to-the-minute picture of how

well their assets are functioning.

Similarly, work continues on our ‘energy bureau platform’ which

remotely monitors performance, highlighting consumption

patterns that deviate from modelled expectations. This is one

of a number of initiatives which are part of a broader carbon

and energy strategy, currently being developed. The strategy

will focus on three key areas: leadership, innovation

and procurement.

Digital engineering Since 2009, 117 projects have been completed using digital

engineering – and at Explore Industrial Park over 2,000

components have been manufactured using this technology.

While adoption rates across the business are mature relative to

the industry, there is still a considerable way to go in achieving

our desired level of capability. This is critical for many reasons

– not least that it is fundamental to our capacity to innovate.

To date we have commissioned 43 digital engineering related

R&D projects.

Digital engineering has also found other applications on

our projects, keeping our workforce safe (and enhancing

productivity) by enabling them to visualise activities prior

to their taking place on project sites.

On our Bristol Royal Infi rmary project, the technology is

being used to record hazards in three dimensions. A simplifi ed

version of the building model has been linked to our incident

reporting system, IMPACT, and made available as a mobile app.

This allows employees to enter details direct from the workface,

giving the management team real-time information on where

risks are arising, enabling them to take proactive steps to

mitigate them.

The development of these types of applications will also help

ensure more predictable outcomes at the commissioning phase

in areas such as quality assurance and defects management.

A key focus is the creation of an asset management system

based around a data-rich digital engineering model.

Advanced manufacturingDuring the year, a proposal was agreed in principle to establish

an advanced manufacturing research centre, to sit alongside

our existing facility at Explore Industrial Park. It is anticipated

that the centre will create 450 skilled jobs and use the latest

advances in parametric design and digital engineering to

support our Design for Manufacture and Assembly techniques.



The investment addresses calls by the UK Government for the

industry to deliver high-quality, cost-effective and sustainable

mechanical and electrical components for both domestic use

and international export. A wide range of other products will

also be manufactured, including SmartWall, internal room pods

and housing products.

SUPPLY CHAINWe appreciate the value our suppliers bring to our operations

and are committed to maintaining productive relationships that

benefi t all parties.

This is achieved at business-to-business level through the

engagement of our procurement function and others including

our senior leaders – who work closely with our trading partners

to share best practice.

We regularly host supply chain forums to communicate our

objectives and discuss industry developments, innovations and

opportunities. During the year we held eight of these events,

attended in total by 145 Laing O’Rourke staff and 415 from

external organisations.

At project level, we encourage our subcontractors’ employees

to build their knowledge and capabilities through training,

toolbox talks and educational campaigns. During the year,

2,047 completed our behavioural health and safety programme.

Ethical business practiceWe are committed to maintaining the highest ethical

standards in all our commercial interactions. This is mandated

through our Global Code of Conduct and anti-bribery and

corruption policy.

To ensure absolute impartiality in our procurement processes,

employees must report ‘gifts and hospitality’ and ‘confl icts of

interest’ through our online registers. In addition, we operate

an independent ‘conductline’ for anyone wishing to raise a

concern. This is also open to our suppliers and the public,

with contact details displayed in all workplaces.

For their part, we expect our suppliers to comply with all

national and international regulations, as a condition of

engagement. This includes legislation relating to working

hours, wages, welfare and human rights – along with the

principles outlined through the International Labour

Organization’s Core Conventions.

Commitment to our own health, safety, environmental and

people development objectives is also an important factor in

the selection process and key trades must agree to work to

strict targets.

During the year, we worked with Portwest, who supply us with

protective work wear, to help the business achieve a ‘gold

standard’ under the ‘WRAP’ certifi cation programme. WRAP

(Worldwide Responsible Accredited Production) is a not-for-

profi t body promoting humane conditions and practices in

manufacturing facilities around the world. To assist Portwest

in its drive for improvement, we commissioned an independent

report into its Bangladesh factory.

We have also become a partner to the Supply Chain

Sustainability School, which is working to develop common

standards across the industry. As part of this, organisations

must pledge their commitment to its code of ethics.

Prompt paymentWe regard prompt payment as both an ethical responsibility

and a matter of good conduct. This allows suppliers to make

the necessary investments in their businesses and, in doing so,

mitigates clients’ exposure to risk.

As a member of the Construction Leadership Council, Laing

O’Rourke has been involved in the development of a ‘prompt

payment charter’. Under the charter, we and other signatories

will commit to a staggered reduction in payment periods –

starting from 60 days or less, to 45 days from June 2015 and

30 days from January 2018.

Supporting small-to-medium enterprisesIn August 2013, it was revealed that over 63 per cent of Laing

O’Rourke’s procurement spend through UK central government

contracts is invested in small-to-medium enterprises – ranking

us second in the industry.

COMMUNITYBy supporting local employment and business opportunities we

enrich the lives of those we work alongside, while benefi ting

ourselves from much-needed talent. These interventions are

also vital in attracting a more diverse workforce – and we

recognise, in particular, the importance of early engagement

in challenging unhelpful perceptions of our industry.

To this end, our people work closely with local schools and

colleges to promote science, technology, engineering and maths

– and demonstrate to young people of all backgrounds the

variety of exciting careers we can offer them. During the year,

we commissioned a university-backed research project to

identify the factors that infl uence children’s vocational choices.

In the coming months, we will begin rolling out a ‘society action

plan’ as one of the objectives of our sustainability roadmap.

The aim is to help our sites and offi ces develop structured

strategies to support engagement, employment, development

and diversity – tailored to the specifi c needs of the

surrounding community.

Supporting skillsIn August 2013, staff from our Liverpool Street and Tottenham

Court Road Crossrail projects joined in-house business, Select

Plant, in hosting a week-long careers event at the Maria Fidelis

School for Girls in Kings Cross, London.

The 16-strong team delivered a range of activities, including

practical tasks centred on engineering, innovation,

communication and collaboration. They also accompanied the

girls on visits to local universities, shared their experiences of

the industry and held lessons on ways to enhance employability.

Since then, the Tottenham Court Road project has established

an ongoing partnership with the school and agreed an annual

programme of events.

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The construction of the Leadenhall Building in the City of

London has brought signifi cant benefi ts to the surrounding

community – with workers and locals actively encouraged

to develop their skills. To date, 123 subcontractors have

started National Vocational Qualifi cations (NVQs) and

26 apprenticeships have been completed.

The project has supported fi ve paid undergraduate placements,

with an additional 22 young people benefi ting from work

experience. 57 jobs were advertised locally and 44 ‘taster’

days provided for underrepresented groups.

The Leadenhall Building project has also been an important

resource for higher and further education, with 98 taking part

in site tours – alongside 105 school visits. Over three years,

the team has dedicated 579 days to activities to help local

pupils. The total social value of these and similar activities

is estimated at over £1 million.

Through the National Skills Academy for Construction,

Laing O’Rourke has secured support to maximise training and

employment opportunities across the northwest of England.

Previously the programme was only available to projects valued

at over £80 million. However, the revised scheme gives us the

fl exibility to include smaller projects – and align their activities

to a recognised framework.

This approach is particularly benefi cial for small-to-medium

enterprises, which are often unaware of the funding

opportunities available to them. Through early engagement

with our supply chain, we can identify training needs and,

under the guidance of dedicated skills coordinators, help them

access the support they need.

So far, 26 NVQs and 23 apprenticeships have been supported

as a result. 25 members of staff have undertaken advanced

health and safety leadership development and 12 supervisors

have received dedicated training. We have held over 100 school

events including curriculum-supported workshops and careers

fairs. In recognition, we have received two CITB ‘spotlight’

awards – for best supply chain engagement and work in

the community.

71

MANCHESTER CENTRAL LIBRARY

AND TOWN HALL, UK

In Manchester, Laing O’Rourke and its subcontractors

have employed a total of 72 apprentices on the city’s

Town Hall and Library Complex Transformation project –

exceeding the client’s target of 66.

During the year, our Moorside school campus development was

recognised as the highest performing National Skills Academy

for Construction. Here, excellent relationships with the client,

local councillors and housing associations have helped sustain

a strong community presence – with a number of not-for-profi t

organisations benefi ting. For example, equipment from the old

school was salvaged and donated to the Salfordian Trust for

recycling and reuse.

VolunteeringVolunteering not only generates social value, but improves

employee wellbeing – and we actively encourage our people to

support good causes. As a result, uptake has doubled over the

past three years. In 2013/14 we recorded 3,231 volunteering

days, exceeding our target of 3,000. Additionally staff raised

£324,405 for local and not-for-profi t organisations and donated

£134,279 worth of materials.

In top place for time given, a Manchester-based team

volunteered 2,000 hours to refurbish a community boxing club.

Initially approached to help with minor repairs, staff from

Laing O’Rourke and Crown House Technologies completed

a fully rewired electrical fi t-out for the lighting and installed

a new heating system, two extractor fans, four shower units

and a disabled toilet facility.

Transforming the Future To help our people continue their good work we have

established a charitable fund, known as ‘Transforming the

Future’. The aim of the scheme is to support projects that

promote education, employability and engagement. During

the year, £44,750 was donated to employee initiatives.

At Glan Clwyd Hospital, the project team refurbishing the

children’s cancer ward donated materials, raised money

and gave their personal time to create two new family

accommodation rooms, with the support of subcontractors and

suppliers. To cover the added cost of vital monitoring equipment

required, the team was given a Transforming the Future grant.

Corporate charitiesWe support a number of charities. These include RedR, Cancer

Research UK and the Integrated Education Fund of Northern

Ireland. In 2013/14 a total of £456,837 was donated by the

Group (including £179,932 for Europe Hub and £200,000 at

corporate level).

Considerate Constructors SchemeIn October 2013, Laing O’Rourke became an ‘associate

member’ of the Considerate Constructors Scheme (CCS).

To qualify, companies must have proved their commitment to

improving the image of the industry by consistently upholding

the principles of the CCS.

Laing O’Rourke is an active participant in the CCS scheme.

In 2013/14, 23 of our projects were recognised with CCS awards:

two gold, eight silver and 13 bronze. Through our sustainability

roadmap, we are working to achieve a score of over 40 on at

least 50 per cent of registered sites. During the year, 53 per cent

of sites achieved or exceeded that target.


SAFETY AND SUSTAINABILITY: AUSTRALIA HUB

AUSTRALIA HUBDuring the year, we rolled out a hub-wide ‘sustainability

roadmap’. The framework sets out our objectives to 2020

and marks a decisive step forward in the management of

this important agenda.

To lead this piece of work, a Sustainability Steering Committee

has been established – which brings together senior leaders

and subject matter experts from a range of disciplines. The

group is responsible for monitoring progress and reporting to

the Australia Hub Executive Committee on a quarterly basis.

In developing our roadmap, we worked closely with our Europe

Hub colleagues to ensure a globally consistent approach – with

the fl exibility to respond to regional requirements. The targets

for both parts of the business are therefore broadly aligned.

These have been grouped under EPIC: environment, people,

industry and community.

Our EPIC panel and EPIC champions continue to drive

engagement on the ground. The panel plays an important role

in developing initiatives that encourage our people to support

our roadmap objectives. It also oversees our charitable

activities, including a dedicated grants programme.

The introduction of our behaviour-based approach to health

and safety just over three years ago has fundamentally

transformed our way of thinking – and we continue to make

excellent progress towards our Mission Zero ambitions.

Founded on the principles of personal empowerment and

collective commitment, it has been a catalyst for numerous

improvements to our working practices.

HEALTH AND SAFETYWe concluded the year in review with an Australia Hub AFR of

0.24 (down from 0.41 at 31 March 2013). Our Disabling Incident

Frequency Rate (DIFR), which peaked at 1.68 in 2010, now sits

at 0.34, placing us ahead of target.

72

The health and safety function continues to support the work

of the ‘safety differently’ committee. Led by Griffi th University,

the group brings together major contractors to explore future

ways of thinking. During the year, senior leaders attended a

‘learning lab’ at the university – where we are also developing

a graduate certifi cate and masters course opening in 2015.

In October we celebrated our third global health and safety

awareness day. The focus this year was on workforce

engagement – supported by the roll out of our fi rst ever climate

survey. In total, 2,612 people participated. Areas of strength

identifi ed included training and occupational health; areas

in need of improvement included engagement, trust and

compliance with management systems.

We have used these insights to shape our strategic calendar for

the year ahead. The survey will be conducted at our next health

and safety awareness day and, in the meantime, we will work

with Griffi th University to refi ne its contents.

TRAINING AND DEVELOPMENTIn 2013/14, the hub invested £6.4 million in health and safety

training and development (£4.1 million in 2012/13). To equip

our senior staff with the capabilities to support our Mission

Zero ambitions, we have recently launched a two-day safety

leadership programme. Building on the model developed

by our Europe Hub, we have adapted the content to meet

local requirements.

Our supervisor safety essentials programme equips those

responsible for putting others to work with an in-depth

understanding of our systems and procedures. The fl agship

fi ve-day scheme also provides participants with a nationally

recognised Certifi cate IV qualifi cation. To date 421 individuals

have passed.

In addition, 760 people have completed our two-day safety

management system module (a component of supervisor

safety essentials).

In 2013/14 we delivered Mission Zero behavioural safety training

to 10,435 individuals, including members of our supply chain.

The following phase ‘Mission Zero – Next Gear’ will launch in

August 2014.

We currently have 172 Mission Zero trainers. During the year,

we held trainer forums in our southern and western regions –

and are aiming to host these twice annually across the hub.

The forums provide a platform to discuss best practice and

celebrate the effort our volunteers make in improving

our workplaces.

INFORMATION AND INNOVATIONThe ‘Our People’ mobile app is an industry-fi rst innovation that

provides all employees (staff and operatives) with access to

our intranet and other systems. This allows those working in

remote locations to download important health and safety

information, while staying in touch with events through our

news pages.

We are currently upgrading our reporting system, IMPACT,

which will be available at launch through the ‘Our People’

app. This will enable employees to report hazards direct

from the workface.

EPIC IN AUSTRALIA

Upstanding members of the community: at least

4,000 people benefi ted during the year through our

engagement with not-for-profi t organisations.


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Focusing on the importance of engagement and knowledge

sharing, we have developed a ‘collective insight’ tool which is

used to aid group discussions between project leaders and

our workforce to understand where issues are arising – and

address persistent or common risks.

COMMUNICATIONEffective (and ongoing) communication is essential to achieving

the desired cultural and behavioural outcomes – and during the

year we launched a series of major campaigns to support this.

In June 2013, we re-invigorated our ‘Don’t Walk By’ initiative to

encourage our people to challenge unsafe practices, focusing

in particular on the importance of reporting hazards and near

misses. To support this, we have set a target of one valid report

per 1,000 working hours. 15,237 were recorded during the year.

With manual handling accounting for around a quarter of our

reportable incidents, we rolled out a dedicated awareness

campaign, ‘Get-set, Re-Set, Mind-Set’, in June. Materials

included a leadership message, toolbox talk and bespoke

‘SafeSpine’ training video.

We have seen a marked reduction in manual handing injuries

on projects where our ‘SafeSpine’ scheme has been in place –

and during the year we engaged the services of Onsite Health

Solutions to deliver an industry-leading education programme.

Good design is central to the safe construction, operation and

decommissioning of buildings and infrastructure. In October

2013, we introduced animated character ‘SiD’ as the face of

our Safety in Design campaign – and challenged employees

with fi nding a model example of SiD from within the business.

The winner was Eamonn Breen, who described the application

of DfMA to the delivery of a complex structure in an awkward

location at our Northern Water Treatment Plant project.

Eamonn was able to demonstrate how the design had enabled

an erection method that signifi cantly reduced workers’

exposure to the risk of falls from height.

In November 2013, we launched a Mission Zero calendar

competition, inviting employees’ children to illustrate what

safety meant to them. Over 400 entries were submitted – and

the fi nished product was sent to the homes of all our people

in time for the new year.

SYSTEMS AND PROCESSESIn 2013/14 we substantially enhanced our Safety Management

System, supported by the development of a robust assurance

programme designed to give visibility to the challenges and

opportunities that exist in our workplaces.

A two-year schedule of audits is now published – and reporting

mechanisms to the regional senior leadership teams and hub

executive committee have been established.

While our performance continues to improve, potential

class-one near misses remain a key concern. To help address

this, we have developed a set of ‘fatal and severe risk

performance requirements’. These protocols will enable the

business to focus on the tasks and activities where serious

harm could occur – and test the controls in place.

HEALTH AND WELLBEINGDuring the year, we piloted a new pre-employment functional

assessment using our online ‘job dictionary’ – which captures

manual handling requirements for every high-risk task our

workers are required to carry out.

As a result, we have further developed our job dictionary, which

now contains a total of 146 jobs and 565 individual tasks – and

will introduce these assessments as the norm on all new sites.

Our medical review team – established last year to centralise

our occupational health information – has expanded to cover

all states and territories. To date, pre-employment medical

data for 1,489 candidates has been captured. This process will

enable us to measure employee health from medical review

to medical review – and ensure they remain fi t for work.

A trial upgrade of our computer ergonomic software has

started. This will assist in identifying those at risk of

occupational overuse syndromes and other issues, allowing

us to intervene in the early stages.

In 2013/14 199 workers’ compensation claims were submitted.

Drug and alcohol testingIn Australia, the regulatory requirements for heavy civil

engineering operations in the rail and resources sectors mean

our workforce are subject to routine checks. During the year

323,309 drug and alcohol tests were carried out with 3,237

positive results (3,078 for alcohol). This represents a failure

rate of 1 per cent. 465 Hong Kong breath tests were conducted

with four positive results.

MISSION ZERO PERFORMANCE

IMPROVEMENTS

Regular campaigns help keep our Mission Zero message

at the forefront, and supported a marked reduction in our

Australia Hub AFR during the year from 0.41 to 0.24.


SAFETY AND SUSTAINABILITY: AUSTRALIA HUB CONTINUED

74

ENVIRONMENTThrough our sustainability roadmap, we are actively working to

minimise our impact on the environment. During the year we

delivered a 12 per cent reduction in direct carbon emissions

(against our 2010/11 baseline) – exceeding our 5 per cent target.

In line with our objectives, we have established a baseline for

construction waste. This has been supported by the introduction

of a ‘waste tracker’ system. The web-based tool brings all our

information onto one platform, standardising our approach to

data capture. We are now working towards a 15 per cent

improvement on our baseline by 2015.

With many of our projects located in arid regions, water

remains a priority issue. Even in areas with more regular

rainfall, the environmental impact associated with its treatment

and transportation makes careful management key. We are

working to establish a water consumption baseline by 2015,

with reduction targets set for 2020.

There were 0 Category 1 environmental incidents during

the year and 0 infringements. In Hong Kong, a matter relating

to non-compliant marine dumping will be heard in June 2014.

There were 28 Category 2 and 307 Category 3 incidents.

51 internal environmental audits were carried out and

846 potential hazards reported.

Innovating for improvement Laing O’Rourke has secured funding from the Australian

Renewable Energy Agency for the design development of a

DfMA-based solar farm (patent pending). The hybrid product

(which integrates a traditional diesel generator) will provide

a more fuel-effi cient solution for powering off-grid operations,

enabling projects to cut CO2 emissions, while reducing their

energy bills.

During the year, we commissioned onsite energy audits for two

of our in-house businesses, Austrak and Redispan, to identify

opportunities to reduce our carbon footprint.

The manufacture of concrete sleeper products at our Austrak

facilities currently generates around 5,300 tonnes of CO2

annually. By improving insulation during the curing process,

we believe we can cut energy use by up to 45 per cent. A trial

is currently underway.

Redispan, which produces conveyors for the mining sector,

emits around 238 tonnes of CO2 per year. Here, we are

progressively rolling out a number of measures, including the

optimisation of compressed air, which we estimate will lead to

a 19 per cent reduction in electricity consumption.

Responsible sourcingThe goods and services we procure have an enormous impact

on our environmental performance. With the support of a

committed network of preferred supply chain partners, we

believe we can begin to effect industry-wide transformation.

To make the most of our purchasing power, we are taking steps

to ensure that by the end of next year 70 per cent of our top

150 delivery partners will be providing us with responsibly

sourced products and materials.

To support this, our procurement team is creating a hub-wide

database to capture detailed information relating to current

capabilities and previous performance. This will enable us to

align ourselves early with the businesses that best support our

ambitions, working together to explore sustainable solutions.

System enhancements During the year we carried out a comprehensive review of

our environmental policies, procedures and accreditations,

resulting in the launch of an enhanced Environmental

Management System (EMS). In particular, protocols relating

to risk assessment, compliance checking and incident

investigation have been substantially augmented.

The new EMS is fully compliant with the ISO 14001 standard –

and the audit processes that underpin it. To improve usability,

we have refi ned its structure, with training delivered in all

workplaces. The web-based platform is accessible to all staff

from our intranet.

OUR PEOPLE APP

An industry-fi rst innovation: the ‘Our People’ app gives

employees at the workface access to vital information.


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AUGMENTED REALITY

Blending the actual and virtual worlds, augmented reality

benefi ts our site teams and can enhance engagement

with clients and communities, helping them to visualise

a project before it’s delivered.

A series of awareness campaigns is being rolled out across our

projects. These focus on four key areas: erosion and sediment

control, waste reduction, hydrocarbon and chemicals, noise

and out-of-hours work. Materials include toolbox talks for

all employees and posters embedded with QR code links to

educational videos.

Assurance and accreditationWe are committed to the highest standards of environmental

compliance and management. All Laing O’Rourke Group

businesses operate to ISO 14001-accredited environmental

management systems.

PEOPLEWe continue to work to enhance all aspects of our employee

offering in what is an intensely competitive jobs market –

and have taken a number of positive steps in this regard.

During the reporting period, the Australia Hub invested

£9.3 million in training and development (£7.4 million in

2012/13).

In 2013 the Board endorsed a Group-wide salary review.

92 per cent of Australia Hub staff received an increase and

3 per cent were promoted. In addition, we have substantially

enhanced our parental leave package – which is now

industry-leading.

To ensure we are meeting the needs of our site-based

operatives, we have begun trialling a workforce engagement

survey. This complements our existing staff survey – and will

ensure we are capturing the views of all our people.

In line with our sustainability roadmap, we are working to

recruit at least 10 per cent of our staff through our young talent

schemes, including graduates and apprentices. In total the hub

supports 181 employees across the spectrum of entry-level

development and fast-track leadership programmes (748 at

Group level). In addition, we employ 267 trainees.

In March 2014, we launched a new ‘scholarship in engineering

leadership’. The four-year scheme, designed by the University

of Sydney – in consultation with Laing O’Rourke and others –

provides undergraduates with an accelerated progression path.

Along with fi nancial support, students benefi t from professional

experience and industry mentoring.

EMPLOYEE ENGAGEMENT We regard employee engagement as a key indicator of business

performance. This is measured through our SHAPE survey –

and based on responses to a defi ned set of questions relating

to personal fulfi lment and motivation, pride in the company

and confi dence in its management.

In 2013 we recorded an overall Group score of 64 per cent

(against a global average of 57 per cent). While this is a strong

result, it is nonetheless 5 per cent down on the previous year.

To better understand the factors informing our people’s views,

we commissioned a series of confi dential workshops and

one-to-one interviews. Participants were selected from a

representative range of regions, business units, projects,

functions, job roles and grades – with more than 500 individuals

contributing across the Group.

One of the most prevalent themes arising from the Australia

Hub respondents was access to development opportunities –

along with leadership capability. Following on from this, the

human capital function launched a new learning framework.

It also published a 12-month training calendar to ensure staff

understand what is available to them.

DEVELOPMENTWorking closely with our discipline heads, the team conducted

a comprehensive review of the business’ skills requirements.

As a result, a number of new programmes have been rolled out.

These include a range of shorter online modules and two-day

courses, focusing on areas including communication, team

building and time management.

To ensure our most senior staff have the qualities required to

encourage high levels of performance in their business areas,

we launched our ‘engaging leader’ programme. This includes

a one-day workshop delivered by one of Australia’s foremost

leadership development experts, where core characteristics

and behaviours are explored and modelled.

Other new programmes include ‘foundations of management’

and ‘exploring leadership’ – both run for a full day once a

month, over three months.

We have also upgraded our range of ‘career toolkits’ and

created a number of new ones. These contain detailed

information on the capabilities, experience and qualifi cations

required at each stage – and illustrate the multiple paths for

progression within the organisation.


SAFETY AND SUSTAINABILITY: AUSTRALIA HUB CONTINUED

DIVERSITYWork continues on refi ning our equality, diversity and inclusion

strategy. As part of this, we have established a diversity council

to implement a targeted two-year plan aimed at increasing

female and indigenous representation at all levels.

During the year we introduced a fl exible working policy, which

provides employees with a range of options to enable them to

balance their duties, family commitments and personal needs.

Briefi ngs were delivered across the business to help managers

understand how the policy affects them – and what they can do

to support it.

We have also enhanced our parental leave package. Under

the new arrangements, primary carers (after 12 months’

continuous employment) are entitled to 26 weeks of paid

leave – 18 at full pay and eight at half pay. Additional benefi ts

include fl exible working arrangements and return-to-work

coaching. Secondary carers (after 12 months’ continuous

employment) are now entitled to four weeks of parental leave,

two at full pay and two unpaid.

Through our Reconciliation Action Plan, we are developing

new targets and objectives to promote fair and equitable work

opportunities for indigenous Australians. These will be rolled

out nationally, with access to cultural awareness training

available to all employees.

INDUSTRYOur commitment to innovation and collaboration defi nes the

way we do business. We continue to seek opportunities to

enhance our delivery methods – devising superior engineering

solutions that meet the needs of our clients, while responding

to the wider challenges facing our industry. This is supported by

a network of like-minded partners, working together to achieve

common standards of excellence.

Central to this is our Design for Manufacture and Assembly

(DfMA) approach. With much of the activity taking place in

controlled factory conditions, DfMA is inherently more

sustainable – improving site safety, driving down waste,

reducing programme times and ensuring more predictable

quality outcomes.

STABILOR

A cost-effective alternative to imported infi ll materials,

Stabilor binds soil materials in-situ, reducing capital

expenditure – particularly on projects in remote locations.

To maximise opportunities for its application, we have

developed a DfMA framework. The tool helps teams make

informed decisions at tender stage – and throughout the

project lifecycle – by assessing a range of criteria, including

programme and package constraints.

The platform features a ‘cost benefi t analysis mechanism’

which calculates and compares the cost of DfMA with

traditional methodologies. Linked to this is a supply chain

database containing detailed information on businesses

across Australia and Southeast Asia providing modular and

prefabricated products – which have the potential to align

with our goals.

INNOVATIONOur in-house research and development activities are led under

the guidance of our EnEx.G. A number of EnEx.G innovations

are currently underway within the hub. Areas being explored

include 3D printing, smart hard hats and a mobile digital

engineering app.

The EnEx.G is working closely with developer, Explore Engage,

to advance cutting-edge augmented reality tools for application

on our projects. This technology blends the actual and virtual

worlds, with digital assets inserted into real-time video.

It can be used to overlay footage of a construction site with the

digital engineering model – and, in time, will be able to locate

hidden services and future works. This not only benefi ts delivery

teams, but can enhance engagement with communities, clients

and other stakeholders, helping them to visualise the activities

taking place.

These capabilities were recently explored through a

demonstration project at our Sydney Port Botany Terminal 3

project, which is helping us to develop augmented reality as

an engineering tool.

Stabilor During the year, Laing O’Rourke acquired the global patent

holder for unique polymer-based soil stabilisation solution,

Renolith International. The product, now known as Stabilor,

uses a type of liquid latex to bind in-situ soil materials for use

in the construction of roads, railways, slopes and dams – and

has the potential to generate additional revenue streams both

domestically and internationally.

The environmentally inert product replaces the need for

imported infi ll materials, reducing capital expenditure on

civil engineering projects – particularly those in remote

locations. Its durability and water resistance can also cut

operational costs.

The EnEx.G has carried out extensive testing of the technology,

which has been deployed on our Ichthys Cryogenic Tanks

project near Darwin and with a road authority in the Philippines.

SUPPLY CHAINTo achieve our aspirations, it is vital we align ourselves with

the right delivery partners – and a number of steps have

been taken during the year to support this. This includes the

creation of a comprehensive supply chain database, along

with the establishment of responsible sourcing targets.

However, the value these relationships bring to our business

is also, to a large extent, determined by our own people.


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During the year we delivered a new web-based training

programme to equip our staff with the capabilities to build

productive partnerships. The course was devised by our

procurement contracts working group – in response to

feedback from employees.

To better understand what our partners think of us, we invited

them to share their views through a survey of our top 200

suppliers across Australia and Hong Kong.

Over 50 per cent of respondents rated Laing O’Rourke as

industry leading or better than its competitors in the areas of

communication and health and safety. We also ranked highly

for innovation, quality and visibility of future opportunities.

Our procurement function is following this up through

in-depth interviews with ten companies.

In 2014 we held our third set of supply chain forums, with

events in Darwin, Perth, Sydney and Brisbane. These

conferences are a powerful way to build understanding

with our partners – and an opportunity to acknowledge

their involvement in the success of our business.

Attendees were given an early introduction to ‘Mission Zero,

the Next Gear’ – and, for the fi rst time, we formally recognised

their contribution to our health and safety goals with awards

presented for exceptional performance. We also held interactive

debates on ways to improve collaboration and teamwork.

COMMUNITYWe have performed well against the targets set out in our

sustainability roadmap. To engage our people in these

objectives, workshops and briefi ngs have been delivered to

90 per cent of sites and offi ces across the hub. There is at

least one EPIC champion on every site trained in stakeholder

engagement and responsible for implementing targeted

community development plans.

During the year, 44 per cent of our projects supported not-

for-profi t organisations in helping people in need. It is

estimated that over 4,000 people have directly benefi ted

from these activities.

Our Hong Kong business has achieved Caring Company status.

Launched by the Hong Kong Council of Social Service in 2002,

the widely recognised scheme seeks to promote social cohesion

by encouraging strategic partnerships between businesses and

not-for-profi t organisations. Laing O’Rourke’s application was

endorsed by Oxfam, who we will work with during the course of

our involvement.

Our 2013/14 corporate charity Mates in Construction delivered

training to 1,665 employees to raise awareness of the high rates

of depression in the industry – and help them identify signs

among colleagues.

In March, the EPIC panel confi rmed the selection of our 2014/15

corporate charity, the National Indigenous Youth Leadership

Academy (NIYLA). NIYLA helps young indigenous people to

drive positive transformation in communities across Australia,

as the next generation of change makers.

Our partnership will enable NIYLA to establish an indigenous

young professionals’ network – of which Laing O’Rourke will

be a foundation partner. It will also support our own objectives,

particularly the ongoing implementation of our Reconciliation

Action Plan – which we recently updated and submitted to

Reconciliation Australia for approval. Laing O’Rourke staff

will also have the opportunity to engage in, and learn from,

NIYLA initiatives.

Volunteering and employee fundraising During the year our people raised a total of £113,640 for a range

of causes in the communities where we work.

Benefi ciaries included sick colleagues and their families,

Help Kids Like Nick, Juvenile Diabetes, Soldier On, Carefl ight,

the Leukaemia Foundation, Black Dog Institute and

McGrath Foundation.

In Hong Kong, we raised £12,689 for men’s cancer charity,

Movember. 29 employees participated, ranking fourth overall

among fundraising teams across the island. The business also

participated in the Médécins Sans Frontières orienteering

competition, achieving an award of excellence. A further 2,166

volunteering hours were spent supporting our communities.

Corporate charitiesWe support a number of charities. These include Mates in

Construction and the Foundation for Young Australians. In

2013/14 a total of £456,837 was donated by the Group (including

£76,905 for Australia Hub and £200,000 at corporate level).

Project sponsorships and EPIC grants£61,438 in project sponsorships was donated to causes

including Oxfam in Hong Kong and the Indigenous Women

in Mining Conference in Western Australia.

£26,109 in EPIC grants went to support a range of programmes

including national indigenous youth leadership forums.


RISK MANAGEMENT

PROACTIVELY AND EFFECTIVELY MANAGING RISK

GROUP RISK MANAGEMENT

The effective management of risks

and opportunities is fundamental to

the delivery of the Group’s objectives,

achievement of sustainable growth,

protection and enhancement of its

reputation, and upholding the required

standards of corporate governance

HOW LAING O’ROURKE MANAGES RISKThe Group’s structured approach to risk management is based

on the principle of prevention through early identifi cation.

Detailed analysis and decisive action planning are carried out

to remove or mitigate the potential for and impact of key risks

before they actually occur. As risks and uncertainties do

materialise, this structured approach also ensures actual

issues are effectively dealt with.

The Board and senior management are committed to the

proactive protection and optimisation of its assets, which

include human, fi nancial and strategic resources, through the

consistent application of an effective risk management process,

augmented where necessary by insurance. The Group is equally

committed to the effective management of material operational

risks, covering important non-fi nancial and reputational issues

arising in connection with health and safety, environmental

impact and business conduct.

The Board and Group Executive Committee have overall

responsibility for ensuring that risk is effectively managed

across the Group to guarantee full compliance with the

legislative and regulatory requirements in the jurisdictions

where it operates. The Board delegates certain risk

management activities to designated subcommittees. Risk is

a regular agenda item at these senior management forums

and an integral component of the Group’s periodic strategy

review process. This ensures the Board has a full appreciation

of the principal risks affecting business operations as well

as a comprehensive oversight of how they are being managed

in line with our Group risk appetite statement and policy.

Further information on the activities of these committees,

together with the Group’s core business processes and

mandated policies, can be found on page 80.

The Board considers Laing O’Rourke’s internal control system

to be effective and robust. Our internal controls assurance

report maps the key activities that are undertaken to assure

the areas where the organisation has legal, contractual,

regulatory or statutory responsibilities; these elements are

placed under continuous review and improvement.

The Audit Committee reviews the effectiveness of the Group’s

risk management systems and reports regularly to the Board

directors on the key sources of risk, the monitoring of their

status and the corresponding mitigation plans.

Risk reporting at the operational business unit level is

structured so that key issues can be escalated rapidly through

the management team, and ultimately to the Board where

necessary. The individual businesses are able to tailor and

adapt standard risk management processes to suit the specifi c

circumstances of their respective operating environments.

In doing so, they must always adhere to the underlying

principles of the Group’s risk management policies, which are

to continuously identify, analyse, plan and provide for, report

and monitor the principal risks through established control

procedures. Our ‘risk aware’ culture supports this, with staff

involvement at all levels to promote an environment of learning

from experience, in order to adapt and improve our controls

and communicate on risk issues.

Project risks are monitored and reported in the controlled

Project Delivery Review Boards, which are reviewed by

business unit operational management at quarterly and

monthly contract reviews. This process covers the fi nancial

performance of projects and is overseen by the commercial

function. Reporting structures and mechanisms ensure

that project risks are continually monitored and signifi cant

exposures can be escalated from project level to business unit

level and ultimately to the Group Executive Committee and the

Board. All project-owning business units must have assurance

mechanisms to assess the likelihood and potential impact

of risks and to ensure actions can be taken to mitigate and

eliminate risks, while strengthening our internal controls and

systems to manage the recurrence of such risks at any point

in the future.

INTERNAL CONTROLSThis system of internal risk control is designed to manage

rather than eliminate the risk of detrimental business impact

to achieve business objectives, and therefore can only ever

provide reasonable assurance against the possibilities of

material fi nancial loss or organisational disruption.


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THE PROCESS

BOARD

GROUP EXECUTIVE COMMITTEE

SUBCOMMITTEES

1. IDENTIFYING RISKS

Risks are identified at a corporate and project level

and monitored regularly as their impact and

probability may change over time. Material risks are

consolidated into a material risk register, which is

reviewed by the Audit Committee and reported to the

Group Executive Committee and the Board.

Laing O’Rourke’s assessmentof strategic, financial,

operational and project risks

4. REPORTING AND MONITORING

This type of robust mitigation strategy is subject

to rigorous and ongoing review by accountable

management, and is supported through the

Group’s internal audit processes. The Audit

Committee evaluates the effectiveness of risk

controls deployed and reports its findings to the

Group Executive Committee and the Board on a

regular basis.

LAING O’ROURKE’SASSESSMENT OF STRATEGIC,

FINANCIAL, OPERATIONALAND PROJECT RISKS

3. DETERMINING MANAGEMENT ACTIONS

REQUIRED

Existing and additional risk controls will be

agreed and responsibilities assigned to

appropriate ‘risk-owning’ management forums

for implementation.

2. ANALYSING RISKS AND CONTROLS TO

MANAGE IDENTIFIED RISKS

The process evaluates identified risks to ascertain

the degree of financial and non-financial impact on

the Group, together with the root causes and level

of occurrence. Consideration of the appropriate

controls required to successfully mitigate the risks

is also undertaken, which enables identified risks

to be prioritised for action.

79

The Board has a full appreciation of the

principal risks affecting business operations

as well as a comprehensive oversight of

how they are being managed in line with

our Group risk appetite statement and policy.”

GEORGE ROSE

CHAIR, AUDIT COMMITTEE


RISK MANAGEMENT CONTINUED

OPERATIONAL RISK MANAGEMENT

CORE PROCESSA standard approach to the key business decisions

and activities, delivering effective governance,

organisational diligence and consistency for finding,

winning and delivering projects

Salesforce CRM System

• Opportunity pipeline tracking

• Key sectors contact management

• Process gateway governance – ‘permission to bid’

ENABLING PROCESSBest-in-class project delivery to assure greater

predictability in operational and financial performance

• Required minimum standards and skill-sets

• Best practice procedures – functional toolkits

• Continuous improvement – formal feedback process

OPERATIONAL GOVERNANCE

Global Code of ConductLaing O’Rourke believes laws and regulations act as our

minimum integrity standards, and we constantly seek to go

beyond this level. The Global Code of Conduct articulates our

approved set of ethical principles covering key business issues

that we expect every employee and contracted supply chain

partner to uphold in every activity, every day, wherever we

operate. By setting the expected minimum standards of

business conduct in different areas of our work, the Code is

integral to the way we do business at Laing O’Rourke and is

underpinned by our Group vision and values (see page 19).

Compliance with the Code provides heightened assurance of

our business affairs, which in turn supports the long-term

sustainability of the Group by encouraging more ethical and

effective relationships and stimulating deeper economic,

social and environmental contributions where we work.

The Code applies globally and its development and application

are the responsibility of the Group Executive Committee.

Group policiesOur Group policies underpin the Global Code of Conduct and

are based on government laws and regulations that impact

upon every Laing O’Rourke business and every employee.

The policies establish and defi ne the internal rules that

everyone must comply with to conduct business effectively.

As the Group expands globally, we are subject to a growing

number of regulations in the jurisdictions where we operate.

This environment demands that every employee be aware

of, knowledgeable about and committed to excellence

in the application of clear, global and mandatory

Laing O’Rourke policies.

Project Quality Management SystemThe LOR Way is a Group-wide project quality management

system. It comprises the Core and Enabling Processes

(described above) and functional toolkits, a set of standards

and procedures that guide and direct The LOR Way for fi nding,

winning and delivering projects. This proven quality assurance

framework enables us to connect and direct all of the different

decisions and activities necessary, through a series of

mandated process gateways, to achieve maximum performance

and control across the entire lifecycle of a project.

Core ProcessCore Process enables accountable business leaders to fully

understand the critical sign-off procedures in bidding for and

securing a project, and the formal governance approach which

must be observed to secure optimum performance. It is also

a vital tool for establishing accurate and reliable assessments

of risk and opportunity in commercial, design, health, safety

and environment, and Design for Manufacture and Assembly

activities. Core Process is mandatory across all of our projects

and compliance is monitored by our internal audit function.

A key element of Core Process is our centrally managed and

governed client relationship management system – Salesforce

– which captures information in relation to the opportunities the

Group is pursuing, and also acts as a repository for supporting

documentation. Information captured in Salesforce is used

across the business to aid collaboration and provide reporting

at all governance levels. Opportunity pipeline information to

this level of quality and detail helps ensure all bidding-related

decisions are fact-based and fully informed, heightening the

Group’s chance of success in the tendering phases.

Enabling ProcessEnabling Process helps accountable project leaders to fully

understand the minimum requirements, in terms of operational

procedures, for assuring success in project design and delivery.

It also supports project leaders to ensure that their teams have

the necessary skill-sets to meet these minimum requirements,

allowing them to allocate clear responsibilities to team

members. Adherence to Enabling Process is also mandatory,

and it is only permissible to omit elements in clearly defi ned

circumstances, and by specifi c dispensation from an

accountable director.

Key elements of Enabling Process are the functional toolkits,

which enable accountable functional leaders and their teams to

deploy current best practice procedures consistently, executing

project-specifi c plans in an integrated and disciplined manner.

At the end of a project, a formal feedback process is designed

to capture key information to enable us continually to assimilate

the best and most current ways of working.

Business Unit/Function Guidelines and ProceduresBusiness Unit and Function-specifi c Guidelines ensure that

the different operating hubs and their constituent parts can

effectively adapt their business practices and processes to

suit the markets and sectors in which they operate. They are

designed to align with, and complement, Group policies and

stem directly from The LOR Way. In addition, they remain true

to both the spirit and the letter of the Global Code of Conduct,

and comply with applicable laws and regulations.


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The Group’s principal risks are

identifi ed over the following pages,

together with a description of how

we mitigate them

Further information on our fi nancial risks can be found in

note 32 to the fi nancial statements on pages 124 to 128.

This list is not intended to be exhaustive, and some risks and

uncertainties have not been included in this list on the basis

that they are not considered to be material, to affect or be likely

to affect businesses in general, or are not presently known by

the Board and Audit Committee. However, we have established

controls and systems in place to manage these risks.

Key:

Increase in risk during 2013/14

No change in risk during 2013/14

Decrease in risk during 2013/14

SUMMARY OF PRINCIPAL RISKS

HEALTH, SAFETY AND SUSTAINABILITY

Risk/Impact:

Through our activities we could

cause signifi cant harm to employees,

suppliers, clients, members of the

public or the environment, which

could lead to injuries, health issues,

fi nancial loss or damage to the

Group’s reputation.

Mitigation:

Health and safety is a key focus for Laing O’Rourke and mitigation occurs at every level

of the Group’s governance framework. Our global Mission Zero safety campaign is an

integrated programme designed to eradicate all accidents from our business by 2020

by focusing on culture and leadership. Every project is regularly reviewed and changes

implemented where necessary.

The Safety and Sustainable Development Committee meets periodically to review policy

and develop a consistent approach to health, safety and environmental best practice.

Our documented Safety Management System (SMS), containing compulsory procedural,

behavioural and training requirements, is in place on every project and is continually

reviewed and updated.

Further details can be found in the Group Safety and Sustainability Review on

pages 58 to 77.

WORK-WINNING

Risk/Impact:

Failure to secure enough new

orders, or securing projects with

an inappropriate price/risk profi le,

could impact the Group’s future

profi tability and its reputation with

clients, suppliers and employees.

Mitigation:

The Group’s approach to project selection is guided by a detailed set of protocols known

as Core Process. This has defi ned delegated authority levels for approving all tenders

depending on the size and complexity of the project under consideration. Our internal

delivery capability results in greater understanding of the build sequence, cost and

risk profi le pre-contract. Regular tender review meetings are held to check progress,

understand the win strategy and interrogate the contract risk profi le.

PROJECT DELIVERY

Risk/Impact:

The Group delivers complex

construction and engineering projects

across a range of geographies and

sectors. Failure to deliver on time,

to budget and to the right quality

could result in fi nancial loss or

reputational damage.

Mitigation:

Risk mitigation starts with work-winning and project selection as described above.

Laing O’Rourke’s approach is guided by a detailed set of protocols – Core Process – and

an associated project management approach – Enabling Process. Together these form

The LOR Way, which is mandated across all global projects to ensure a standardised

approach to tendering and delivery based on strong project controls and a continuous

improvement loop. The DfMA methodology and our integrated capabilities result in

greater surety of delivery. Building Information Modelling (BIM) and digital engineering

technologies are used to achieve time and cost certainty through a full visualisation of

the build sequence. Regular project review meetings are held to check progress against

KPIs and any deviations from the programme are acted upon quickly and appropriately.


SUPPLY CHAIN AND JOINT VENTURE PARTNERS

Risk/Impact:

Non-delivery by our supply chain or

joint venture partners – through either

poor performance or fi nancial failure

– could impact the Group’s ability to

deliver projects on time, on budget

and to the right quality, and result in

fi nancial loss or reputational damage.

Mitigation:

The Group seeks to work independently wherever possible and only participates in joint

ventures to fulfi l client expectations or accelerate its strategic objectives. The majority

of our projects are self-delivered by internal companies, thus reducing reliance on

third parties.

Where specialist subcontractors are used to meet specifi c delivery needs, the risk is

mitigated through a robust selection process, including reviews to assess fi nancial

and operational viability. The list of preferred suppliers is regularly reviewed to

ensure compliance with Group standards, applicable laws and industry regulations.

Contingency planning is also undertaken. The Group also adheres to contractually

agreed payment terms to avoid fi nancial failure risk.

Joint ventures are only established when the Group’s interests are complementary to

those of its partners. Laing O’Rourke undertakes a thorough evaluation process to

determine the fi nancial, operational and reputational integrity of potential partners

before committing to any formal arrangement. Once established, implementation of

robust governance procedures ensures compliance with all contractual terms and

practices within the joint venture.

PEOPLE

Risk/Impact:

Inability to recruit, develop and retain

appropriately skilled people in the

right geographic locations could

impact the Group’s ability to meet

current commitments, deliver projects

and grow the business as planned.

Mitigation:

Human capital is a primary component of Laing O’Rourke’s strategy and is overseen

by the Group Executive Committee. The Group aims to be a progressive employer of

choice and offers attractive reward packages, training and development, and a broad

range of career opportunities. Succession planning is undertaken for all key roles.

Innovative partnerships with universities also help position Laing O’Rourke in attracting

leading graduates.

FINANCIAL

Risk/Impact:

Inability to secure funding –

in the form of cash bonding facilities

– could impact the Group’s ability

to bid work, make investments or

meet its ongoing liquidity needs, which

could adversely impact profi tability,

cash fl ow and future growth.

Mitigation:

Our experienced in-house treasury management team takes a prudent approach to

liquidity and constantly monitors and maintains suffi cient cash reserves and available

bank facilities to meet liabilities and fi nancing needs as they fall due. Procedures are

in place to monitor and forecast cash usage and other highly liquid current assets.

This, together with committed credit facilities, ensures that we have adequate

availability of cash when required. At year-end, the Group had cash and undrawn

facilities of £772 million.

POLITICAL, ECONOMIC & REGULATORY

Risk/Impact:

The Group operates in a cyclical

industry and changes in the economic

environment, government policy and

regulatory developments can have

a signifi cant impact on the number

of new projects, thus affecting the

Group’s profi tability.

Mitigation:

The Group seeks to maintain a diverse portfolio of projects for both private and public

clients and a broad exposure to a number of resilient sectors and geographic markets.

Laing O’Rourke also focuses on sustainable relationships with key clients, government

departments and related regulatory authorities.

CONDUCT, COMPLIANCE & REPUTATION

Risk/Impact:

Damage to the Group’s reputation

through poor conduct or acts of fraud,

bribery, corruption or anticompetitive

behaviour can all adversely impact

corporate reputation and result in

fi nancial loss.

Mitigation:

The Group has very clear principles governing the way in which it conducts its business

and expects all employees and partners to act in accordance with its published Global

Code of Conduct and established systems and processes. Continuous awareness

programmes ensure high levels of understanding of the Group’s expectations and

each individual’s obligations. The Group also provides a confi dential independent

‘whistle-blowing’ service to encourage the reporting of inappropriate behaviour.

We use a range of strategic advisers to protect and enhance our brand and reputation

in the eyes of key business infl uencers and opinion formers.

RISK MANAGEMENT CONTINUED


GO

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CORPORATE GOVERNANCE

The company’s governance framework is based on the

leadership principles outlined in the UK Corporate

Governance Code. The core activities of the Board and its

committees are documented and planned on an annual

basis, and this forms the basic structure within which the

Board operates.

The Board has clear terms of reference that refl ect

principles contained in the Code, and cover the following:

• Strategy – reviewing and agreeing strategy.

• Performance – monitoring the performance of the Group

and also evaluating its own performance.

• Code of Conduct – setting standards and values to guide

the affairs of the Group.

• Oversight – ensuring an effective system of internal

controls is in place, ensuring that the Board and its

nominated subcommittees receive timely and accurate

information on the performance of the Group and the

proper delegation of authority.

• People – ensuring the Group is managed by individuals

with the necessary skills and experience, and that senior

appointments are managed effectively.

COMMITTED TO GOOD GOVERNANCE AND ETHICALBUSINESS PRACTICE

Laing O’Rourke is committed to

achieving corporate governance

standards and ethical business

practices that meet the highest

possible levels of integrity and

compliance for a privately owned

enterprise. We evaluate the

effectiveness of our decision making,

accountability and audit processes

against similarly sized publicly listed

corporations. We believe this is the

best way of ensuring sustainable

long-term growth and the success

of the Group

Good corporate governance is integral to the shareholders’ and

Board’s objective to sustain an organisational culture based

on the Group’s vision and values, placing strong emphasis on

upholding the highest standards of business conduct, ethics

and integrity amongst the Group’s employees, supply chain and

other business partners. This approach is encompassed in our

Global Code of Conduct, which provides detailed guidance on a

range of standards, including compliance with the UK Bribery

Act 2010.

CORPORATE GOVERNANCE FRAMEWORKAs a large privately owned, internationally focused engineering

and construction group, Laing O’Rourke aspires to the highest

standards of governance. For that reason, the Board seeks to

ensure that the Group’s corporate governance arrangements

align with those principles set out in the UK Corporate

Governance Code which are deemed to be applicable and

appropriate given the private ownership of the Group.

The Group’s businesses operate within an established and

externally benchmarked corporate governance framework

that is underpinned by the Group’s vision and values (see

page 19). A key function of Laing O’Rourke’s corporate

governance framework is the identifi cation, management

and mitigation of operational and fi nancial risks. At every

governance level, we ensure the necessary decision-making

processes are functioning correctly, in line with developments

in company laws, corporate governance and best practice.

The framework is reviewed annually to ensure that the

committee structure and delegations of authority continue

to meet the needs of the business and provide the Board

and management with the necessary oversight of the Group’s

affairs. The current terms of reference of the Board and its

various committees and subcommittees are set out overleaf.


1 BOARD OF DIRECTORS (‘BOARD’)The Board determines the strategic direction of the Group and

allocation of necessary resources to ensure the implementation

of the Group’s strategy. It retains oversight of operations

through regular reports by the Group Chief Executive on

behalf of management. It has overall responsibility for the

management of risk and reviews the effectiveness of internal

controls and risk management procedures at Group level

through reports by the Audit Committee Chairman.

Certain key decisions are the preserve of the Board and are

identifi ed in a schedule of reserved matters for its prior approval.

These include changes to the Group’s capital structure; approval

of material mergers, acquisitions and disposals; signifi cant

investments, capital expenditure, debt facilities, contracts

and bids. Authority for the day-to-day running of the Group

is delegated to the Group Executive Committee.

The Board is responsible for ensuring that the Group’s

accounts give a true and fair view of the business using suitable

accounting standards and judgements and determining

whether the Group is a going concern. It also has responsibility

for approving the Annual Review and ensuring compliance with

Cyprus company law (where the company is registered) and

other applicable legislation.

The Board is composed of directors providing an appropriate

balance of skills, experience, independence and diverse

backgrounds. In addition to Ray O’Rourke, the current members

of the Board are Christakis Klerides, Victor Papadopoulos,

Stelios Anastasiades and Anna Stewart. Their biographies

can be found on pages 88-91.

2 AUDIT COMMITTEEThe Audit Committee provides an element of independent

assurance to the Board regarding the management of the

Group’s affairs and oversees the Group’s fi nancial reporting,

risk management and internal controls. It also provides

a formal reporting link with the external auditors,

PricewaterhouseCoopers.

Main responsibilities:• Monitoring the integrity of the fi nancial statements

and formal communications relating to the Group’s

fi nancial performance.

• Reviewing signifi cant fi nancial reporting issues and

accounting policies and disclosures in fi nancial reports.

• Reviewing the effectiveness of the Group’s internal control

procedures and risk management systems.

• Considering how the Group’s internal audit requirements

shall be satisfi ed and making recommendations to the Board.

• Making recommendations to the Board on the appointment

or reappointment of the Group’s external auditors.

• Ensuring that an effective whistleblowing procedure is

in place.

CORPORATE GOVERNANCE FRAMEWORK

Independent Assurance

1. BOARD OF DIRECTORS

2. AUDIT COMMITTEE 3. GROUP EXECUTIVE COMMITTEE

5. SAFETY AND SUSTAINABLE DEVELOPMENT

COMMITTEE

6. HUMAN CAPITAL COMMITTEE

4. GROUP MANAGEMENT COMMITTEE

7. INVESTMENT COMMITTEE

8. ENGINEERING EXCELLENCE GROUP (EnEx.G)

12. PROJECT GOVERNANCE

9. EUROPE HUB EXECUTIVE COMMITTEE

10. AUSTRALIA HUB EXECUTIVE COMMITTEE

11. BUSINESS UNIT/FUNCTIONAL COMMITTEES


CORPORATE GOVERNANCE CONTINUED


GOVERNANCE

3 GROUP EXECUTIVE COMMITTEE (GEC)The GEC is responsible to the Board for the day-to-day

management of the Group’s operations and creating

sustainable shareholder value through the management by

the Hub Executive Committees (see page 86) of the Group’s

constituent businesses. Its role includes recommending to the

Board the Group’s overall business strategy and driving its

implementation, driving the Group’s human capital agenda,

driving safety and sustainable development performance

across the Group, reviewing and monitoring the performance

of management, and setting, and ensuring compliance with,

the Group’s internal controls and risk management procedures.

The internal risk assurance function reports to the GEC through

the Chairman of the Audit Committee on a regular basis.

The members of the GEC are set out on pages 89 to 91.

The GEC has further delegated authority to a series of

subcommittees which focus on particular Group-wide matters.

Main responsibilities:• Recommending the Group’s overall strategy to the Board.

• Approving material acquisitions and disposals, material

contracts and bids, major capital expenditure projects

and budgets.

• Overseeing the Group’s succession planning.

• Overseeing the Group’s corporate governance and

compliance arrangements.

• Recommending the Group’s corporate policies to the Board

for approval.

4 GROUP MANAGEMENT COMMITTEE (GMC)A subcommittee of the GEC, the GMC has operational

responsibility for coordinating the preparation of the Group

strategy and Group budget and business plan. It also has

accountability for the day-to-day implementation of the

Group’s strategy and associated plans as approved by the

GEC and the Board. Its remit further includes recommending

the prioritisation of projects and business development

opportunities, and determining the appropriate allocation

of capital within the limits of the Board-approved Group

budget and business plan.

Main responsibilities:• Coordinating the implementation of the Group’s strategy and

monitoring excellence plus performance.

• Coordinating the Group’s budget and business plan process.

• Allocating capital across the Group within Board and

GEC-approved limits.

• Coordinating the development of Group policies

and standards.

• Maximising Group synergies, including practices, resources

and procurement.

• Driving senior talent management and development

(in liaison with the GEC and the Human Capital Committee).

5 SAFETY AND SUSTAINABLE DEVELOPMENT

COMMITTEEA subcommittee of the GEC, this forum ensures risks and

opportunities associated with safety and sustainability are given

the highest priority within the Group. It also directly supports

the delivery of business strategy through the management of

sustainable development issues covering social, economic and

environmental matters.

Main responsibilities:• Reviewing the development of policies and guidelines for

managing safety and sustainable development (SD) issues.

• Reviewing the implementation and performance of the Group

with regard to these policies.

• Monitoring reports covering matters relating to material

safety and SD risks and liabilities.

• Monitoring incidents, including key impacts and mitigation

actions and, where appropriate, ensuring these are

communicated Group-wide.

• Considering domestic and international regulatory and

technical developments affecting safety and SD management.

6 HUMAN CAPITAL COMMITTEEThis subcommittee of the GEC is co-chaired by the Group

Chairman and the Group Chief Executive, with members drawn

from the GEC and relevant functional disciplines. The main

purpose of the committee is to lead the formulation and

endorsement of the Group’s people and organisation agenda,

and ensure total alignment with Group business strategy.

Main responsibilities:• Setting guidelines for the types of skills, experience and

diversity of human capital necessary to achieve the Group’s

strategic goals.

• Ensuring the human capital function works with management

to carry out regular reviews of talent and succession plans.

• Ensuring the necessary investment in development

and education activities, including the Guns (executive

development) programmes and education networks

to meet current and future talent requirements.

• Overseeing the Group’s recruitment and resource

mobilisation plans to meet operational demands in the fi eld.

• Establishing and developing the Group’s general policy on

employee remuneration.

• Considering legal and regulatory developments affecting

human capital management.


7 INVESTMENT COMMITTEEThe subcommittee is chaired by the Group Investment Director,

and is responsible for investment and treasury policy decisions.

It oversees the commercial prioritisation and development of

Private Finance Initiative (PFI)/Public Private Partnership (PPP)

investment opportunities and the Group’s capital expenditure

programme for sanction by the GEC. Investment funding

for acquisition, disposal, partnering and joint venturing

transactions, and related commercial decisions are also

managed by this committee.

Main responsibilities:• Proposing the Group’s investment strategy to the GEC and

monitoring the implementation of the investment policy

and procedures.

• Monitoring compliance with legislation, rules and regulations

affecting the Group’s investment activities.

• Considering and recommending to the GEC for approval the

appointment of external investment advisers, managers of

the company’s investments and/or custodians, including

agreeing remuneration, approving engagement terms,

and monitoring performance.

• Considering all investment and divestment proposals.

• Approving internal processes relating to investment

transactions.

8 ENGINEERING EXCELLENCE GROUP (EnEx.G)The EnEx.G is chaired by the Group Chairman and led by the

Group’s Chief Engineering Adviser, Professor Robert Mair.

Its membership comprises the EnEx.G technical engineering

specialists. It is responsible for leading the development

and execution of the Group’s innovation agenda by devising

engineering strategies to give us competitive advantage and,

ultimately, drive industry-wide transformation.

Main responsibilities:• Identifying, proposing, prioritising and monitoring areas

where engineering excellence can add value to existing

projects, new bids and opportunities.

• Collaborating with clients, supply chain partners, government

bodies and other organisations (including charities and

not-for-profi t entities) to generate goodwill, loyalty and

new opportunities.

• Leading the research agenda to innovate across the Group’s

target sectors and markets, including extending DfMA

capabilities into new product areas.

• Partnering with leading universities and research providers

to support our research agenda, complemented by our

commercialised in-house R&D capability.

• Overseeing programmes utilising existing and new partner

universities to support mentoring of graduate engineers,

junior and senior engineers, technical and construction

specialists, project managers and management across

the business.

The Board has established a culture

and approach to governance and

business ethics that have been

adopted across the business, positively

infl uencing our ability to continually

achieve the highest standards:

honesty and integrity in all our

business dealings, respect for each

other, appreciation for those that

we trade with, and recognition and

reward for our customers.”

RAY O’ROURKE KBE

CHAIRMAN

9 EUROPE HUB EXECUTIVE COMMITTEEThis hub-level executive committee has primary authority for

the day-to-day management of business operations across

the constituent territories within agreed limits set by the GEC.

Its members are drawn from senior management in our

construction, infrastructure and specialist services businesses

and key supporting functions. The committee is also

responsible for driving the implementation of health, safety

and sustainable development policies and monitoring the

performance of related activities.

10 AUSTRALIA HUB EXECUTIVE COMMITTEEThis hub-level executive committee has primary authority for

the day-to-day management of business operations across

the constituent territories within agreed limits set by the GEC.

Members are drawn from senior management in its various

regions and key supporting functions. The committee is also

responsible for driving the implementation of health, safety

and sustainable development policies and monitoring the

performance of related activities.

CORPORATE GOVERNANCE CONTINUED


GOVERNANCE

11 BUSINESS UNIT/FUNCTIONAL COMMITTEESAs subcommittees of the main hub-level executive committees

(9 and 10), these forums have delegated authority for the

day-to-day management of individual business unit operations

or functions, ensuring the alignment of business plans with

strategic targets and that operational performance is in line

with, or ahead of, approved budget plans.

12 PROJECT GOVERNANCE

Tender and post-tender review boards These governance forums are chaired by the commercial

and project delivery leads on each tender, and membership

consists of delivery-side project representatives, accountable

senior management from fi nance, commercial and other

key supporting functions, and client-side representatives

as appropriate.

The review boards are responsible for ensuring the fi nancial

integrity of the project pre-delivery phase and are supported

by appropriate project controls to assure the achievement of

pre-agreed fi nancial targets during all stages of construction.

Project delivery review boardsProject boards are governed by the standardised processes

and practices of The LOR Way – a systematic approach to

risk management and quality assurance in the tendering

and delivery stages of all projects, whatever their scale

and complexity.

Through the Core and Enabling Processes (Laing O’Rourke’s

approved business quality management system), the project

boards ensure project activities are performed in line

with legislation, regulations, codes of practice and the

requirements of BS EN ISO 9001:2008 quality management

assurance accreditations.

Continual improvement is achieved through the implementation

of business objectives, audits, data analysis, corrective and

preventive actions and management reviews.

EffectivenessAll directors are advised regularly of likely time commitments

and are asked to seek approval from the Board if they wish

to take on additional external appointments. The ability of

individual directors to allocate suffi cient time to the discharge

of their responsibilities is considered as part of the directors’

annual performance review process overseen by the Group

Chairman. Any issues concerning the Group Chairman’s time

commitments are dealt with by the Board.

An induction programme is agreed for all new directors aimed

at ensuring that they are able to develop an understanding and

awareness of the company’s governance structure and Core

and Enabling Processes, its people and businesses. In addition

to the above, as part of the induction process, new directors

will typically visit the Group’s principal operations in order to

meet employees and gain an understanding of the Group’s

projects and services. Ongoing training is provided for individual

directors as required. Directors are supplied with mobile

tablet-based information in a timely manner that is in a form

and of a quality appropriate to enable directors to discharge

their duties. In the normal course of business, such information

is provided in a regular report to the GEC and the Board

that includes information on operational matters, strategic

developments, reports on the performance of Group

operations, fi nancial performance relative to the business

plan, business development, corporate responsibility and

client/stakeholder relations.

Independent assuranceThe fi nancial statements are independently assured by external

auditors PricewaterhouseCoopers. The Group’s internal risk

and audit function provides assurance to the Audit Committee

and, through it the Board, of the adequacy of the internal

control environment across all of Laing O’Rourke’s operations.

This includes ensuring that effi cient and effective control

processes are in place to identify, manage and, to the

greatest extent possible, mitigate business risk across

the Group’s operations.

The independent external auditors report to the members of

Laing O’Rourke Corporation Limited and the Board of Directors,

on the fi nancial position of the Group. Their audit opinion on the

fi nancial statements is set out on page 95 of this Annual Review.

Additional independent assurance and accreditation is also

carried out on the Group’s position and statements pertaining

to business risk and its health, safety and sustainable

development performance.


CHRISTAKIS KLERIDES

DIRECTOR

Age 63. Joined the Board in September

2007, when Laing O’Rourke Corporation

was incorporated in Cyprus. Fellow of

the UK Chartered Association of Certifi ed

Accountants. As a senior partner of

KPMG, he specialised in banking, fi nance

and insurance. In 1999, he was appointed

by the President of the Republic of

Cyprus to the post of Minister of Finance

(until 2003). During his term as Minister,

he introduced a major tax reform and

oversaw the harmonisation with EU laws

of the taxation, shipping and competition

laws of Cyprus. Since 2003, he has been

involved in a number of directorships in

quoted companies in London, Oslo and

Cyprus in the fi nancial, shipping, property

and IT sectors as well as participating in

corporate governance committees.

In addition to the Group Chairman, Ray O’Rourke,

and Group Chief Executive, Anna Stewart, the

current members of the Board are:

VICTOR PAPADOPOULOS

DIRECTOR



was incorporated in Cyprus. He is an

experienced senior banking executive,

founding member of the London

Forfaiting Company and previously Chief

Executive of LFC Cyprus, spearheading

the Group’s trade fi nance and capital

market operations in the Middle East and

Asia, developing a substantial network

of operations involving offi ces in Moscow,

Mumbai, Bangkok and Hong Kong. In

more recent times, he has served on the

boards of several international fi nancial

institutions and private equity groups.

STELIOS S ANASTASIADES

DIRECTOR



was incorporated in Cyprus. He is a

qualifi ed mechanical engineer with a

fi rst-class honours BSc (Eng) from

Queen Mary College, and MSc and DIC

from Imperial College London. He is

currently Managing Director of KONE

Elevators Cyprus Ltd and is President of

the Cyprus Lifts Association. He is also

Vice President of the Nicosia Chamber

of Commerce and Industry, and is a

member of the Cyprus Technical

Chamber and the Labour Court.

BOARD OF DIRECTORS


GOVERNANCE

SENIOR LEADERSHIP TEAM

1

The senior team has the breadth of expertise

and depth of experience necessary to maintain

our strategic focus

RAY O’ROURKE KBE

CHAIRMAN

JIM SLOMAN OAM

EXECUTIVE CHAIRMAN, AUSTRALIA HUB

CATHAL O’ROURKE

MANAGING DIRECTOR, AUSTRALIA HUB

DES O’ROURKE

DEPUTY CHAIRMAN

ANNA STEWART


PAUL WESTBURY CBE

GROUP TECHNICAL DIRECTOR

GEORGE ROSE

NON-EXECUTIVE CHAIRMAN,

EUROPE HUB

CALLUM TUCKETT

GROUP DIRECTOR,

FINANCE AND COMMERCE

JOHN O’CONNOR

GROUP DIRECTOR, HUMAN CAPITAL

2 3

654

7 8 9


2

1

Despite continuing economic challenges, the senior

team have remained resolute in their focus on

driving implementation of our strategy, sustaining

a profi table performance from our core business

operations, while upholding the highest standards

of business conduct

COMMITTEE MEMBERSHIP

1. BOARD OF DIRECTORS

2. AUDIT COMMITTEE

3. GROUP EXECUTIVE COMMITTEE

4. GROUP MANAGEMENT COMMITTEE

5. SAFETY AND SUSTAINABLE DEVELOPMENT COMMITTEE

6. HUMAN CAPITAL COMMITTEE

7. INVESTMENT COMMITTEE

8. ENGINEERING EXCELLENCE GROUP (EnEx.G)

9. EUROPE HUB EXECUTIVE COMMITTEE

10. AUSTRALIA HUB EXECUTIVE COMMITTEE


12. PROJECT GOVERNANCE

SENIOR LEADERSHIP TEAM CONTINUED

3 4RAY O’ROURKE KBE

CHAIRMAN

Committee membership 1,3,6,8

Age 67. Major shareholder and founder

of the Laing O’Rourke Group. He chairs

the Group Executive Committee and is

responsible for leading the strategic

direction and operational management

of the Group’s business activities.

Ray founded R O’Rourke & Son in 1977

and commenced trading the following

year. The business acquired the

construction arm of John Laing PLC

in 2001 and, with the acquisition of

Barclay Mowlem in 2006, created today’s

extended international engineering and

construction group. Ray has a passion for

developing and promoting engineering

and project delivery talent to meet global

construction challenges, and has a keen

focus on safety performance.

Other appointments Non-Executive

Director of Anglo American PLC

DES O’ROURKE

DEPUTY CHAIRMAN

Committee membership 3, 9

Age 65. Shareholder and co-founding

director of the Laing O’Rourke Group.

Des provides Board-level support to the

Chairman and Group Chief Executive in

their operational management of the

Group’s business activities. Des has a

proven track record in project delivery,

mobilising large teams of people onto

complex projects around the world.

GEORGE ROSE

NON-EXECUTIVE CHAIRMAN,

EUROPE HUB

Committee membership 2,9

Age 62. Joined Laing O’Rourke in

September 2011 as a Non-Executive

Director. Reporting jointly to the

Chairman and Group Chief Executive,

he is Chairman of the Europe Hub and

has oversight responsibility for the

Audit Committee, with the objective of

enhancing confi dence in the integrity of

our processes and procedures relating to

internal control and corporate fi nancial

reporting. This includes a continuous

review of our fi nancial internal reporting

systems and the work of the external

auditor. The Audit Committee also

plays a key role in enterprise-wide

risk management.

A chartered management accountant,

George’s previous roles include Finance

Director of Leyland DAF UK and Director

of Finance and Treasury at British

Aerospace. Following this in 1998,

George was appointed to the Board of

BAE Systems PLC as Group Finance

Director. He retired from BAE Systems

at the end of March 2011.


Director of Genel Energy PLC and

Experian PLC

JIM SLOMAN OAM

EXECUTIVE CHAIRMAN,

AUSTRALIA HUB

Committee membership 3,5,10

Age 69. Joined the Group and appointed

a director in 2010. He has oversight

responsibility for corporate direction,

as well as implementation of the

construction and investment strategy

across the territories of the Australia

Hub. During a long and distinguished

career, Jim has held a number of

high-profi le roles in the engineering and

construction industry, including Chief

Operating Offi cer responsible for the

delivery of the Sydney Olympic and

Paralympic Games in 2000.

Other appointments Independent

Director of Goodman PLUS Trust,

Non-Executive Director of ISIS Holdings

Pty Ltd, Chairman of MI Associates

Pty Ltd


GOVERNANCE

5

6

7

8

9

ANNA STEWART


Committee membership 1,3,4,6,9

Age 50. Joined the Group with the

acquisition of Laing Construction by

R O’Rourke & Son in 2001. Anna was

appointed Group Chief Executive with

effect from April 2013. She was previously

Group Commercial Director from 2004

and was appointed Group Director of

Finance and Commerce in March 2010.

Anna is responsible for leading the

operational and performance

management of the Group within the

limits agreed by the Board, including

the development and delivery of the

Group’s strategy, budget, business

plan and corporate policies.

She is a member of the Group

Executive Committee and several

of its subcommittees.

Anna was a Commercial Director at

Laing Limited, where she had been

employed in a number of senior

commercial and general management

roles since joining as a trainee in 1982.


Director of Babcock International PLC,

UK Government British Business

Ambassador

CALLUM TUCKETT

GROUP DIRECTOR, FINANCE

AND COMMERCE


Age 39. Joined the Group with the

acquisition of Laing Construction by

R O’Rourke & Son in 2001. Callum was

appointed Group Director, Finance and

Commerce in 2013, and was previously

Managing Director of the Construction

business in the UK. He is responsible for

the Group’s fi nance, commercial and

work-winning functions, as well as

supporting business development and

Group strategy formulation. He is a

member of the Group Executive

Committee and several of its

subcommittees.

He joined John Laing Construction

in 1992 and previous roles included

Commercial Services Director for Europe

as well as Commercial Director for

Laing O’Rourke’s Middle East and South

Asia portfolio of businesses from 2006

to 2009. Callum is a Chartered Quantity

Surveyor and was an inaugural member

of the ‘Young Guns’ programme for

high-potential leaders in 2003 and

subsequently the ‘Guns’ programme

in 2008.

CATHAL O’ROURKE

MANAGING DIRECTOR,

AUSTRALIA HUB


Age 37. Joined the Group following

university graduation and was appointed

to lead the Australia Hub in October

2013. He is a member of the Group and

Australia Hub Executive Committees.

He has a broad executive remit covering

strategic business development and

operational management across

the hub’s building and economic

infrastructure markets. Cathal has

over 15 years of professional experience

gained in a number of senior leadership

roles in the UK, Europe and Australia for

the Laing O’Rourke Group and has played

an active role in the development of the

strategic direction of the business.

Cathal is a chartered civil engineer

and a member of the Institution of

Civil Engineers. He graduated from

the University of Birmingham with an

honours degree in civil engineering

and was an inaugural member of the

Group’s senior leadership development

programmes – ‘Young Guns’ and ‘Guns’

– in 2003 and 2008 respectively.

PAUL WESTBURY CBE

GROUP TECHNICAL DIRECTOR


Age 44. Paul joins Laing O’Rourke in

October 2014 as the Group Technical

Director with executive responsibility

for global engineering resources,

including the EnEx.G, and will lead

the development of the organisation’s

design and engineering offering to

customers. He is a member of the

Group Executive Committee and

several of its subcommittees.

Paul previously worked for

Buro Happold, the global technical

design and engineering consultancy

where he served as chief executive

offi cer. Prior to his appointment as CEO,

Paul was managing director for the

European business, overseeing all of the

region’s offi ces and activities. He joined

Buro Happold in 1991 having graduated

from Jesus College, Cambridge with a

fi rst-class degree in engineering science.

In 2000 he became the consultancy’s

youngest-ever principal when he was

made a partner and director at 30.

Paul is a Fellow of the Royal Academy

of Engineering, the Institution of Civil

Engineers, the Institution of Structural

Engineers and the Royal Society for Arts,

Manufacture and Commerce. In January

2013, Paul was recognised for his

services to engineering and construction

in the UK’s New Years Honours list and

awarded a CBE (Commander of the

Order of the British Empire).

JOHN O’CONNOR

GROUP DIRECTOR,

HUMAN CAPITAL

Committee membership 3,4,6

Age 48. Joined the extended Group with

the acquisition of Laing Construction by

R O’Rourke & Son in 2001. John was

appointed Group Director, Human Capital

effective 1 September 2014, and was

most recently Commercial Director for

Laing O’Rourke’s Australia Hub. He will

lead implementation of the actions

agreed in our human capital agenda

under the ‘enable the organisation’

strategy workstream. John will join

the Group Executive Committee and

several of its subcommittees and will

contribute to the overall management

and governance of the Group.

John was a sponsored student with Laing

Limited and graduated from University of

Salford, Manchester in 1988 and has over

25 years’ experience working in various

areas of the business. John qualifi ed as

a Chartered Surveyor in 1990, and is a

Fellow of the Royal Institute of Chartered

Surveyors. After spending the fi rst part

of his career working in the UK, he went

on to support the Group’s activities in

Hong Kong and the Philippines, returning

to the UK in 2002 before performing a

UK-based role as Commercial Director

for overseas projects. He relocated

to the UAE in 2004 and has spent

the subsequent 10 years working

as Commercial Director in Dubai,

Abu Dhabi and the Australian Hub.


DIRECTORS, OFFICERS AND ADVISERS

Directors R G O’Rourke KBE

S Anastasiades

C Klerides V Papadopoulos

A M Stewart

Company PricewaterhouseCoopers Corporate Secretarial Services Limited

secretary Julia House

3 Themistocles Dervis Street

CY-1066 Nicosia

Cyprus

Company number 190393

Registered office Julia House


CY-1066 Nicosia

Cyprus

UK contact Laing O’Rourke plc

address Bridge Place

Anchor Boulevard

Admirals Park

Crossways

Dartford

Kent DA2 6SN

United Kingdom

Independent PricewaterhouseCoopers Limited

auditors Julia House


CY-1066 Nicosia

Cyprus

Bankers Lloyds Bank Corporate Markets Santander

Bank of Scotland plc 17 Ulster Terrace

10 Gresham Street Regent’s Park

London EC2V 7HN London NW1 4PJ

United Kingdom United Kingdom

HSBC Commonwealth Bank

8 Canada Square Darling Park Tower 1

London E14 5HQ 201 Sussex Street

United Kingdom Sydney NSW 2000

Australia

Insurance Marsh Limited

advisers Tower Place

London EC3R 5BU

United Kingdom

Insurers QBE European Operations

Plantation Place

30 Fenchurch Street

London EC3M 3BD

United Kingdom


FINANCIALS

STRATEGIC REPORTfor the year ended 31 March 2014

The Board of Directors present their strategic report on the

Laing O’Rourke Corporation Limited consolidated group

(the ‘Group’) for the year ended 31 March 2014.

Review of the business The Group’s principal activities are:

Construction

• Programme management

• Construction and building

• 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 construction products

Capital

• Property development

• House building

A list of principal subsidiaries, jointly controlled entities,

jointly controlled operations and associates can be found on

pages 134 and 135 in note 39 to the financial statements.

A review of the Group’s activities and performance for the

year is presented on pages 1 to 82.

Approval This report was approved by the Board on 25 June 2014 and

signed on its behalf by:

C KLERIDES

DIRECTOR


DIRECTORS’ REPORTfor the year ended 31 March 2014

The Board of Directors present their annual report together with the audited financial statements of the Laing O’Rourke Corporation Limited consolidated group (the ‘Group’) for the year ended 31 March 2014.

General information The Company is a wholly owned subsidiary of Suffolk Partners Corporation, a company incorporated in the British Virgin Islands.

Branches outside Cyprus Laing O’Rourke Corporation Limited did not operate through any branches during the year.

Future developments Details of future developments are presented on pages 1 to 82.

Results and dividends The results for the year are set out in the Consolidated Income Statement on page 96 and show a profit for the year after tax of £41.9m (2013: £41.1m).

The Company paid dividends of £20.5m during the year (2013: £nil). The Directors do not recommend the payment of a final dividend (2013: £nil).

Research and development Details of the Group’s research and development activities are set out on pages 69 to 70 and 76 to 77.

Charitable contributions During the year the Group contributed £0.5m (2013: £0.4m) to its nominated charities.

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

Directors and their interests The current membership of the Board is as set out on page 92. The only change to the Board in the year was the appointment of A M Stewart on 1 April 2013. R G O’Rourke KBE is the ultimate beneficiary of the trust which owns the majority of the shareholding of the Company. No other Director has an interest in the shares of the Company. Details of related party transactions can be found on pages 129 and 130 in note 35 to the financial statements.

Health, safety and welfare The 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 policy The 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.

Risk management Details of the Group’s policies and procedures for managing risk are set out on pages 78 to 82.

Key judgements and estimation uncertainty are detailed on page 106 in note 2.24 to the financial statements.

Financial risks are detailed on pages 124 to 128 in note 32 to the financial statements.

Share capital Details of the Company’s share capital are set out on page 123 in note 29 to the financial statements.

Statement of Directors’ responsibilities for the

Annual Review Company 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.

Independent Auditors and Disclosure of information

to Auditors So far as each of 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.

Approval This report was approved by the Board on 25 June 2014 and signed on its behalf by:

C KLERIDES

DIRECTOR


FINANCIALS

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF

LAING O’ROURKE CORPORATION LIMITED

Report on the consolidated financial statements We have audited the accompanying consolidated financial

statements of Laing O’Rourke Corporation Limited (the

‘Company’) and its subsidiaries (the ‘Group’) on pages 96 to 135

which comprise the consolidated statement of financial position

as at 31 March 2014, the consolidated income statement,

the consolidated statement of comprehensive income,

the consolidated statement of changes in equity and the

consolidated statement of cash flows for the year then ended,

and a summary of significant accounting policies and other

explanatory information.

Board of Directors’ responsibility for the

consolidated financial statements The Board of Directors is responsible for the preparation of

consolidated financial statements that give a true and fair

view 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, and

for such internal control as the Board of Directors determines

is necessary to enable the preparation of consolidated financial

statements that are free from material misstatement, whether

due to fraud or error.

Auditors’ responsibility Our 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

consolidated financial statements. The procedures selected

depend on the auditors’ judgement, including the assessment

of the risks of material misstatement of the consolidated

financial statements, whether due to fraud or error. In making

those risk assessments, the auditor considers internal control

relevant to the entity’s preparation of the consolidated financial

statements that give a true and fair view 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 consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient

and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the consolidated financial statements give a

true and fair view of the financial position of the Group as at

31 March 2014, 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.

Report on other legal requirements Pursuant to the requirements of the Auditors and Statutory

Audits of Annual and Consolidated Accounts Laws of 2009 and

2013, 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, so far as appears from our examination of

these books.

• The consolidated 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

Cyprus Companies Law, Cap. 113, in the manner so required.

• In our opinion, the information given in the report of the

Board of Directors on page 94 is consistent with the

consolidated financial statements.

Other matter This report, including the opinion, has been prepared for and

only for the Company’s members as a body in accordance with

Section 34 of the Auditors and Statutory Audits of Annual and

Consolidated Accounts Laws of 2009 and 2013 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.

ANDROULLA S PITTAS

CERTIFIED PUBLIC ACCOUNTANT AND REGISTERED AUDITOR

FOR AND ON BEHALF OF

PRICEWATERHOUSECOOPERS LIMITED

CERTIFIED PUBLIC ACCOUNTANTS AND REGISTERED AUDITORS

NICOSIA, 25 JUNE 2014


CONSOLIDATED INCOME STATEMENTfor the year ended 31 March 2014

Note

Pre-

exceptional

items

2014

£m

Exceptional

items

(note 4)

2014

£m

Total

2014

£m

Restated

Pre-

exceptional

items

2013

£m

Restated

Exceptional

items

(note 4)

2013

£m

Restated1

Total

2013

£m

Continuing operations

Total revenue 3,574.3 – 3,574.3 3,563.2 – 3,563.2

Less: share of joint ventures’

and associates’ revenue (247.7) – (247.7) (227.0) – (227.0)

Revenue 3 3,326.6 – 3,326.6 3,336.2 – 3,336.2

Cost of sales (3,044.2) (3.3) (3,047.5) (3,044.8) (14.1) (3,058.9)

Gross profit 282.4 (3.3) 279.1 291.4 (14.1) 277.3

Administrative expenses (219.0) – (219.0) (226.8) (2.6) (229.4)

Other operating

(expense)/income 7 2.3 (3.4) (1.1) 1.2 1.8 3.0

Operating profit 5 65.7 (6.7) 59.0 65.8 (14.9) 50.9

Share of post-tax (loss)/profit of

joint ventures and associates 15 (3.0) – (3.0) 15.1 (6.0) 9.1

Profit from operations 62.7 (6.7) 56.0 80.9 (20.9) 60.0

Net non-operating expense 8 (1.2) – (1.2) (0.4) – (0.4)

Finance income 9 6.8 – 6.8 9.1 – 9.1

Finance expense 10 (9.7) – (9.7) (11.7) – (11.7)

Net financing expense (2.9) – (2.9) (2.6) – (2.6)

Profit before tax 58.6 (6.7) 51.9 77.9 (20.9) 57.0

Income tax expense 11 (10.9) 0.9 (10.0) (16.8) 3.6 (13.2)

Profit for the year from

continuing operations 47.7 (5.8) 41.9 61.1 (17.3) 43.8

Discontinued operations

Loss for the year from

discontinued operations 28 – – – (0.2) (2.5) (2.7)

Profit for the year 47.7 (5.8) 41.9 60.9 (19.8) 41.1

Attributable to:

Owners of the Parent 47.1 (5.8) 41.3 60.1 (19.8) 40.3

Non-controlling interests 0.6 – 0.6 0.8 – 0.8

47.7 (5.8) 41.9 60.9 (19.8) 41.1

1. Re-presented for the adoption of IFRS 10, 11, 12 and IAS 27 and 28: see note 2.3.

The notes on pages 101 to 135 form part of these financial statements.


FINANCIALS

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEfor the year ended 31 March 2014

Note

Pre-

exceptional

items

2014

£m

Exceptional

items

(note 4)

2014

£m

Total

2014

£m

Restated

Pre-

exceptional

items

2013

£m

Restated

Exceptional

items

(note 4)

2013

£m

Restated1

Total

2013

£m

Profit for the year 47.7 (5.8) 41.9 60.9 (19.8) 41.1

Other comprehensive income:

Items that may be subsequently

reclassified to profit or loss

Exchange differences on

translating foreign operations (30.3) – (30.3) 7.3 – 7.3

Available-for-sale financial assets 1.0 – 1.0 0.3 – 0.3

Cash flow hedges (1.1) – (1.1) 1.1 – 1.1

Share of other comprehensive

income of investments accounted

for using the equity method 15 (10.6) – (10.6) 1.2 – 1.2

Other comprehensive income

for the year, net of tax 11 (41.0) – (41.0) 9.9 – 9.9

Total comprehensive income

for the year 6.7 (5.8) 0.9 70.8 (19.8) 51.0

Attributable to:

Owners of the Parent 30 6.3 (5.8) 0.5 69.8 (19.8) 50.0

Non-controlling interests 30 0.4 – 0.4 1.0 – 1.0

6.7 (5.8) 0.9 70.8 (19.8) 51.0




CONSOLIDATED STATEMENT OF FINANCIAL POSITIONas at 31 March 2014

Note

2014

£m

Restated1

2013

£m

Assets

Non-current assets

Intangible assets 13 333.8 345.9

Investments in joint ventures and associates 15 14.7 47.8

Loans to joint ventures 15 58.7 57.0

Property, plant and equipment 17 287.0 271.3

Investment property 18 48.4 59.0

Deferred tax assets 27 28.3 26.5

Trade and other receivables 23 44.8 24.8

Restricted financial assets 21 0.2 0.3

Total non-current assets 815.9 832.6

Current assets

Inventories 22 133.6 289.7

Trade and other receivables 23 509.0 528.3

Available-for-sale financial assets 19 0.6 0.7

Derivative financial instruments 20 2.0 2.8

Other investments 16 – 4.2

Assets held-for-sale 28 0.2 6.6

Cash and cash equivalents 690.7 713.8

Total current assets 1,336.1 1,546.1

Total assets 2,152.0 2,378.7

Liabilities

Current liabilities

Borrowings 24 (165.4) (152.6)

Trade and other payables 25 (1,145.6) (1,352.6)

Provisions 26 (7.9) (13.9)

Derivative financial instruments 20 – (0.7)

Current tax liabilities (16.0) (18.1)

Liabilities held-for-sale 28 – (1.2)

Total current liabilities (1,334.9) (1,539.1)

Non-current liabilities

Borrowings 24 (116.7) (121.8)

Trade and other payables 25 (64.5) (71.0)

Provisions 26 (36.6) (25.3)

Deferred tax liabilities 27 (5.3) (6.4)

Total non-current liabilities (223.1) (224.5)

Total liabilities (1,558.0) (1,763.6)

Net assets 594.0 615.1

Equity

Share capital 29 – –

Share premium 29 286.4 286.4

Fair value reserve 30 (0.4) (1.4)

Hedging reserve 30 (6.8) 1.1

Foreign currency translation reserve 30 21.8 55.7

Retained earnings 30 291.1 270.3

Total equity attributable to owners of the Parent 592.1 612.1

Non-controlling interests 30 1.9 3.0

Total equity 594.0 615.1


The financial statements were approved and authorised for issue by the Board of Directors on 25 June 2014 and were signed on its

behalf by:

R G O’ROURKE KBE C KLERIDES

DIRECTOR DIRECTOR



FINANCIALS

CONSOLIDATED STATEMENT OF CASH FLOWSfor the year ended 31 March 2014

Note

2014

£m

Restated1

2013

£m

Cash flows from operating activities

Profit before tax from continuing operations 51.9 57.0

Loss before tax from discontinued operations 28 – (3.7)

Adjustments for:

Non-cash exceptional items 4 6.7 14.3

Depreciation and amortisation 5 55.3 54.3

Profit on disposal of property, plant and equipment (5.0) (2.5)

Loss on disposal of intangibles – 0.1

Net financing costs 2.9 2.6

Share of post tax profit of joint ventures and associates 15 3.0 (9.1)

Increase in trade and other receivables (48.5) (20.5)

Decrease/(increase) in inventories 112.8 (47.9)

(Decrease)/increase in trade and other payables and provisions (83.7) 71.8

Other (2.0) 0.5

Cash generated from operations 93.4 116.9

Interest paid (9.7) (11.7)

Tax paid (17.3) (4.6)

Net cash generated from operating activities 66.4 100.6

Cash flows from investing activities

Purchase of property, plant and equipment (18.2) (32.0)

Purchase of intangible assets 13 (2.0) (6.3)

Acquisition of subsidiaries, net of cash acquired (6.1) –

Proceeds from disposal of available-for-sale financial assets 19 0.3 2.8

Proceeds from disposal of non-current assets held-for-sale 5.8 –

Proceeds from sale of property, plant and equipment 18.4 20.3

Proceeds from sale of intangibles – 0.1

Proceeds from sale of investment property 14.0 1.7

Proceeds from disposal of other investments 4.2 –

Proceeds from disposal of joint ventures and associates – 0.6

Loans to joint ventures and associates 15 (2.8) (4.7)

Loans repaid by joint ventures and associates 15 0.2 0.6

Interest received 6.2 9.2

Distributions received from joint ventures and associates 15 21.7 13.2

Net cash generated from investing activities 41.7 5.5

Cash flows from financing activities

Proceeds from new bank loans 53.9 58.9

Repayments of bank loans (86.5) (57.2)

Proceeds from re-financing existing property, plant and equipment 29.4 –

Finance lease principal repayments (41.7) (39.6)

Dividends paid to non-controlling interests 30 (1.5) (0.6)

Dividends paid 12 (20.5) –

Net cash used in financing activities (66.9) (38.5)

Net increase in cash and cash equivalents 41.2 67.6

Cash and cash equivalents at beginning of year 713.8 629.6

Effect of exchange rate fluctuations on cash held (64.3) 16.6

Cash and cash equivalents at end of year 690.7 713.8

Non-cash transactions principally relate to new hire purchase and finance lease agreements taken out during the year amounting

to £90.8m (2013: £39.0m).

Cash and cash equivalents comprise:

Cash at bank and on hand 644.7 677.6

Short-term bank deposits 33 46.0 36.2

690.7 713.8




CONSOLIDATED STATEMENT OF CHANGES IN EQUITYfor the year ended 31 March 2014

Note

Share capital

and share

premium

£m

Other

reserves

£m

Retained

earnings

£m

Total

shareholders’

equity

£m

Non-

controlling

interests

£m

Total

equity

£m

At 1 April 2012 (restated) 286.4 45.7 230.0 562.1 2.6 564.7

Profit for the year – – 40.3 40.3 0.8 41.1


after tax – 9.7 – 9.7 0.2 9.9


for the year – 9.7 40.3 50.0 1.0 51.0

Dividends paid 12 – – – – (0.6) (0.6)

At 31 March 2013 (restated) 286.4 55.4 270.3 612.1 3.0 615.1

Profit for the year – – 41.3 41.3 0.6 41.9


after tax – (40.8) – (40.8) (0.2) (41.0)


for the year – (40.8) 41.3 0.5 0.4 0.9

Dividends paid 12 – – (20.5) (20.5) (1.5) (22.0)

At 31 March 2014 286.4 14.6 291.1 592.1 1.9 594.0

Additional disclosure and details are provided in note 30.



FINANCIALS

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 March 2014

1 General Information Laing O’Rourke Corporation Limited (the ‘Company’) is a

company incorporated and domiciled in Cyprus. The Company

prepares parent company financial statements in accordance

with International Financial Reporting Standards as adopted by

the European Union and the Cyprus Companies Law, Cap. 113.

The address of the registered office is given on page 92. The

nature of the Group’s operations and its principal activities are

set out in note 39 and in the Group Financial Review on pages

30 to 33. The consolidated financial statements of the Company

for the year ended 31 March 2014 comprise the Company and

its subsidiaries (together referred to as the ‘Group’) and the

Group’s interest in joint arrangements and associates.

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, its subsidiary

undertakings and the Group’s interest in joint arrangements

and associates for the year ended 31 March 2014. The

consolidated financial statements have been prepared on a

going concern basis 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 principal

accounting policies which have been consistently applied for all

consolidated entities including subsidiaries, joint arrangements

and associates are set out below.

The following standards, amendments and interpretations

became effective in the year ended 31 March 2014 and have

been adopted:

a) Amendment to IAS 1, Presentation of other

comprehensive income, (effective for accounting

periods beginning on or after 1 July 2012)

b) Amendment to IFRS 7, Disclosures – Offsetting assets

and financial liabilities, (effective for accounting periods

beginning on or after 1 January 2013)

c) IFRS 13, Fair Value Measurement, (effective for

accounting periods beginning on or after 1 January 2013)

d) IAS 19 (revised 2011), Employee benefits, (effective for


Standards that are not yet effective and have been early-

adopted by the Group:

a) IFRS 10, Consolidated Financial Statements, (effective for


b) IFRS 11, Joint Arrangements, (effective for accounting

periods beginning on or after 1 January 2014)

c) IFRS 12, Disclosures of Interests in Other Entities,

(effective for accounting periods beginning on or after

1 January 2014)

d) Amendments to IFRS 10, 11 and 12, Transition guidance,


1 January 2014)

e) Amendments to IAS 27, Separate Financial Statements,


1 January 2014)

f) Amendments to IAS 28, Associates and Joint ventures,


1 January 2014)

g) Amendments to IAS 36, ‘Impairment of assets’ on

recoverable amount disclosures, (effective for accounting


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 with the exception of those detailed below:

IFRS 10, ‘Consolidated financial statements’ builds on

existing principles by identifying the concept of control as the

determining factor in whether an entity should be included

within the consolidated financial statements of the parent

company. The standard provides additional guidance to assist

in the determination of control where this is difficult to assess.

IFRS 11, ‘Joint arrangements’ focuses on the rights and

obligations of the parties to the arrangement rather than its

legal form. There are two types of joint arrangement: joint

operations and joint ventures. Joint operations arise where

the investors have rights to the assets and obligations for the

liabilities of an arrangement. A joint operator accounts for

its share of the assets, liabilities, revenue and expenses.

Joint ventures arise where the investors have rights to the

net assets of the arrangement; joint ventures are accounted

for under the equity method.

IFRS 12, ‘Disclosures of interests in other entities’ includes

the disclosure requirements for all forms of interests in other

entities, including joint arrangements, associates, structured

entities and other off balance sheet vehicles.

IFRS 10, 11, 12 and IAS 27 and 28 are not mandatory for the

Group until 1 April 2014; however the Group has decided to

early adopt the standard as of 1 April 2013. See note 38 for

the impact on the financial statements.

IFRS 13, ‘Fair value measurement’, aims to improve

consistency and reduce complexity by providing a precise

definition of fair value and a single source of fair value

measurement and disclosure requirements for use across

all IFRSs. The requirements do not extend the use of fair

value accounting but provide guidance on how it should be

applied where its use is already required or permitted by

other standards within IFRS.

Amendments to IAS 36, ‘Impairment of assets’, on the

recoverable amount disclosures for non-financial assets.

This amendment removed certain disclosures of the

recoverable amount of CGUs which had been included in IAS 36

by the issue of IFRS 13. The amendment is not mandatory for

the Group until 1 April 2014, however the Group has decided to

early adopt the amendment as of 1 April 2013.

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 2014.


NOTES TO THE FINANCIAL STATEMENTS CONTINUED

2 Significant Accounting Policies continued Standards that are not yet effective and have not been early-

adopted by the Group:

a) Amendments to IFRS 10, 12 and IAS 27, Investment

entities, (effective for accounting periods beginning on or

after 1 January 2014)

b) Amendment to IAS 32, Offsetting assets and financial

liabilities, (effective for accounting periods beginning on or

after 1 January 2014)

c) Amendment to IAS 39, Financial Instruments Novation of

Derivatives, (effective for accounting periods beginning on

or after 1 January 2014)

d) IFRIC 21, Levies, (effective for accounting periods

beginning on or after 1 January 2014)

e) IFRS 15, Revenue from Contracts with Customers,


1 January 2017)

f) IFRS 9, Financial Instruments, (effective for accounting


The effect on the Group financial statements of adopting these

new standards, amendments and interpretations has been

determined to be minimal with the exception of those

detailed below:

IFRS 9 is expected to replace IAS 39 Financial Instruments:

Recognition and Measurement from 2018, subject to EU

adoption. The standard covers the classification, measurement

and derecognition of financial assets and financial liabilities

together with a new hedge accounting model. The IASB intends

to expand IFRS 9 to add new requirements for impairment.

The mandatory effective date for IFRS 9 is 1 January 2018.

The standard has not yet been endorsed by the EU. The Group

will consider the impact of IFRS 9 when the remaining phases

of the IAS 39 Replacement Project are complete.

2.3 Re-presentation of comparative information

As detailed in note 2.2 above, the Group has adopted IFRS 10,

11, 12 and IAS 27 and 28 for the year ended 31 March 2014.

As a result the comparative information for the year ended

31 March 2013 has been re-presented as shown in note 38.

2.4 Basis of consolidation

a) The Group financial statements include the financial

statements of the Company and subsidiaries controlled

by the Company. Subsidiaries are all entities (including

structured entities) over which the Group has control.

The Group controls an entity when the Group is exposed

to, or has rights to, variable returns from its involvement

with the entity and has the ability to affect those returns

through its power over the entity. 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 consideration transferred for the acquisition of

a subsidiary is the fair values of the assets, equity

instruments issued and liabilities incurred or assumed

at the date of exchange. Acquisition related costs are

expensed as incurred. Identifiable assets acquired and

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

non-controlling interest. The excess of the consideration

transferred over the fair value of the Group’s share of the

identifiable net assets acquired is recorded as goodwill.

If this 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 percent

and 50 percent 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 other comprehensive income

is recognised in the statement of other comprehensive

income. 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, in which

case a provision is recognised.

c) The Group has applied IFRS 11 to all joint arrangements

as of 1 April 2012. Under IFRS 11 investments in joint

arrangements are classified as either joint operations or

joint ventures depending on the contractual rights and

obligations of each investor. The Group has assessed the

nature of each joint arrangement and has determined

some to be joint operations and some to be joint ventures,

as detailed in Note 39.

i) The Group accounts for its share of the assets,

liabilities, revenue and expenses in a joint operation,

under each relevant heading in the income

statement and the statement of financial position.

ii) Joint ventures are accounted for using the equity

method. Under the equity method of accounting,

interests in joint ventures are initially recognised

at cost and adjusted thereafter to recognise the

Group’s share of the post-acquisition profits or

losses and movements in other comprehensive

income. When the Group’s share of losses in a joint

venture equals or exceeds its interest in the joint

ventures (which includes any long-term interests

that, in substance, form part of the Group’s net

investment in the joint venture), the Group does not

recognise further losses, unless it has incurred

obligations or made payments on behalf of the

joint venture.


FINANCIALS

2 Significant Accounting Policies continued d) 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.

2.5 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 the income statement 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

have a functional currency different from the presentation

currency are translated into the presentation currency

as follows:

i) assets and liabilities for each statement of financial

position presented are translated at the closing rate at

the reporting date;

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 other comprehensive income. When a foreign operation is

partially disposed of, or sold, exchange differences that were

recorded in other comprehensive income 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.

2.6 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:

Group owner occupied property 2%

Other buildings 2%

Plant, equipment and vehicles 6% – 50%

Certain land and buildings were revalued under previous

accounting standards. 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 are recognised within cost

of sales, administrative expenses or non-operating

income/expense in the income statement as appropriate.

2.7 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

immediately within operating profit in the income statement.

Separately recognised goodwill is tested annually for

impairment and carried at cost less impairment losses.

Goodwill is included when determining the profit or loss on

subsequent disposal of the business to which it relates.

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:

Brands 8-10 years

Computer software and licences 2-4 years



2 Significant Accounting Policies continued 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 or reversal of prior impairments

when circumstances or events indicate there may be a change

in 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.

2.8 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.

2.9 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.

Under the terms of a PFI or similar project, where the risks

and rewards of ownership remain largely with the purchaser

of the associated services, the Group’s interest in the asset

is classified as a financial asset and included at its amortised

cost within investment in joint ventures.

2.10 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. Fair value

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.

The hedging reserve comprises the effective portion of the

cumulative net change in fair value of cash flow hedging

instruments related to hedged transactions that have not

yet occurred, together with any related deferred taxation.

2.11 Cash and cash equivalents

Cash and cash equivalents consist of cash at bank and in 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 borrowings in the statement of

financial position.

2.12 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.

Subsequent recoveries of amounts previously written off are

credited to the income statement line in which the provision

was originally recognised.

2.13 Trade and other payables

Trade payables are initially recognised at fair value and

subsequently measured at amortised cost using the effective

interest method.

2.14 Provisions

Provisions are recognised when the Group has a present legal

or constructive obligation as a result of a past event, where it is

probable that an outflow will be required to settle the obligation

and the amount of the obligation can be estimated reliably.

Provisions are measured at the best estimate of the present

value of the expenditures expected to be required to settle

the obligation.

2.15 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 the sale of private housing and commercial

property is recognised on legal completion of the sale.

2.16 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 immediately.


FINANCIALS

2 Significant Accounting Policies continued 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.

Private Finance Initiative (PFI)/Public Private Partnership

(PPP) 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/PPP bid

costs incurred after the appointment as preferred bidder

are included within receivables. The PFI/PPP bid costs are

expensed on reimbursement at financial close. Any surplus

on reimbursement of costs compared with those recorded in

receivables is recognised in the income statement.

2.17 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.

2.18 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 17) and are depreciated

to their residual values over the estimated useful lives or the

lease term as appropriate and are adjusted for impairment

losses. Obligations under such agreements are included in

‘Borrowings’ (note 24).

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.

2.19 Pension costs

The Group operates defined contribution pension schemes for

staff and Directors. The contributions paid by the Group and

the employees are invested in the pension fund within 30 days

following 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.

2.20 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 nor deductible.

The Group’s liability for current tax is calculated using tax rates

and laws that have been enacted or substantially enacted by the

reporting 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 income tax assets are

recognised to the extent that it is probable that future taxable

profit will be available against which the temporary differences

can be utilised. 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.

Deferred tax assets and liabilities are offset when there is a

legally enforceable right to offset current tax assets against

current tax liabilities and when the deferred tax assets and

liabilities relate to income taxes levied by the same taxation

authority on either the same taxable entity or different taxable

entities where there is an intention to settle the balances on a

net basis.

2.21 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 Significant Accounting Policies continued 2.22 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 consolidated income

statement in accordance with IAS 1, ‘Presentation of

Financial Statements’.

2.23 Trading analysis

Trading analysis information is based on the Group’s internal

reporting structure of two operational hubs and corporate

management centre. Further information on the business

trading activities is set out in the operating overview on pages

34 to 57. Trading analysis results represent the contribution

directly attributable for the different hubs to profit of the

Group. Transactions between hubs are conducted on an

arm’s length basis.

2.24 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 recognition

The Group’s revenue recognition and margin recognition

policies, which are set out in notes 2.15 and 2.16, 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 changes in work scopes, contract

programmes and maintenance liabilities.

b) Disputes

Management’s best judgement has been taken into

account in reporting disputed amounts, legal cases and

claims but the actual future outcome may be different

from this judgement.

c) Impairment of goodwill

Determining 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 13.

d) Taxation

The Group is subject to tax in a number of jurisdictions

and judgement is required in determining the worldwide

provision for income taxes including the recognition of

deferred tax assets. 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. Assets are only recognised

where it is reasonably certain additional tax will become

payable in future periods and when the asset can

be utilised.

e) Development land and work in progress

Determining whether land developments are impaired

requires an estimation of the fair values of expected

selling prices and costs to complete.

f) Investment property

Determining the fair value of investment properties

requires an estimation of future rental yields compared

to current market evidence. In certain cases comparable

market price information is limited due to the current

economic conditions and management have exercised

their best judgements in determining the fair value of

investment properties.

g) Captive insurance company

The Group operates a captive insurance company which

provides reinsurance exclusively to the Group. Provision

is made on actuarial assessment of the reserve for future

claims, which necessarily includes estimates of the likely

trend of future claims costs and the emergence of further

claims subsequent to the year-end. An actuarial review of

claims is performed annually. To the extent that actual

claims differ from those projected, the provisions could

vary significantly.

h) Financial risk management

In the course of its business, the Group is exposed to

foreign currency risk, liquidity risk, interest rate 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 32 to

these financial statements.


FINANCIALS

3 Trading Analysis

Europe Hub

2014

£m

Australia Hub

2014

£m

Corporate

Management

& Treasury

2014

£m

Total Group

2014

£m

Performance by geography:

Managed revenue 2,585.8 1,808.2 14.5 4,408.5

Less: Inter-segment revenue (627.0) (193.8) (13.4) (834.2)

Total revenue 1,958.8 1,614.4 1.1 3,574.3

Less: Share of joint ventures’ and associates revenue (247.7) – – (247.7)

Revenue 1,711.1 1,614.4 1.1 3,326.6

Profit from operations post-exceptional items 45.9 42.1 (32.0) 56.0

Profit before tax post-exceptional items 42.0 38.7 (28.8) 51.9

EBIT post-exceptional items 43.3 42.1 (32.0) 53.4

EBITDA post-exceptional items 79.4 60.2 (30.9) 108.7

Profit from operations pre-exceptional items 49.7 45.0 (32.0) 62.7

Profit before tax and exceptional items 45.8 41.6 (28.8) 58.6

EBIT pre-exceptional items 47.1 45.0 (32.0) 60.1

EBITDA pre-exceptional items 83.2 63.1 (30.9) 115.4

Restated

Europe Hub

2013

£m

Restated

Australia Hub

2013

£m

Restated

Corporate

Management

& Treasury

2013

£m

Restated

Total Group

2013

£m

Managed revenue 2,554.9 1,820.8 15.2 4,390.9

Less: Inter-segment revenue (603.0) (211.5) (13.2) (827.7)

Total revenue 1,951.9 1,609.3 2.0 3,563.2

Less: Share of joint ventures’ and associates revenue (227.0) – – (227.0)

Revenue 1,724.9 1,609.3 2.0 3,336.2

Profit from operations post-exceptional items 53.9 30.4 (24.3) 60.0

Profit before tax post-exceptional items 50.3 27.3 (20.6) 57.0

EBIT post-exceptional items 51.7 30.1 (24.3) 57.5

EBITDA post-exceptional items 86.9 48.2 (23.3) 111.8

Profit from operations pre-exceptional items 69.3 35.9 (24.3) 80.9

Profit before tax and exceptional items 65.6 32.9 (20.6) 77.9

EBIT pre-exceptional items 67.1 35.6 (24.3) 78.4

EBITDA pre-exceptional items 102.3 53.7 (23.3) 132.7



3 Trading Analysis continued

EBIT and EBITDA Reconciliation: Note

Pre-

exceptional

items

2014

£m

Exceptional

items

(note 4)

2014

£m

Total

2014

£m

Restated

Pre-

exceptional

items

2013

£m

Restated

Exceptional

items

(note 4)

2013

£m

Restated

Total

2013

£m

Profit from operations 62.7 (6.7) 56.0 80.9 (20.9) 60.0

Adjusted for:

Net non-operating expense 8 (1.2) – (1.2) (0.4) – (0.4)

JV net finance income 15 (2.0) – (2.0) (2.4) – (2.4)

JV tax expense 15 0.6 – 0.6 0.3 – 0.3

EBIT 60.1 (6.7) 53.4 78.4 (20.9) 57.5

Depreciation 5 52.0 – 52.0 51.2 – 51.2

Amortisation 5 3.3 – 3.3 3.1 – 3.1

EBITDA 115.4 (6.7) 108.7 132.7 (20.9) 111.8

There is no material difference between revenue by origin and revenue by destination. Revenue includes £2,791.3m on

construction contracts (2013: £2,844.0m) calculated on the definition included in IAS 11, Construction Contracts. Revenue arising

from the sale of goods amounted to £87.8m (2013: £145.4m) and from the sale of services amounted to £447.5m (2013: £346.8m).

Contracts in progress at the balance sheet date comprise contract costs incurred plus recognised profits less losses of £6,338.0m

(2013: £6,511.5m).

4 Exceptional Items

2014

£m

2013

£m

Impairment of land and developments 3.3 22.7

Impairment of investment property 3.4 0.6

Gain on renegotiation of debt – (2.4)

Closure costs – 2.5

Exceptional costs before tax 6.7 23.4

Income tax credit on exceptional items (0.9) (3.6)

Exceptional costs after tax 5.8 19.8

Impairment of land and developments

During the year the Directors reviewed the carrying value of the Group’s residential and mixed-use development assets in

accordance with current accounting standards. The valuations incorporated forecast selling prices based on recent market

conditions and in certain instances the Directors assumed appropriate planning consents will be granted. Costs to complete

(including finance costs) were assessed at the balance sheet date. As a result of the review, the Group recognised exceptional

impairments of £3.3m (2013: £22.7m).

Impairment of investment property

During the year the Directors reviewed the fair value of the Group’s investment properties. The valuations incorporated future

rental yields compared to current market evidence. As a result of the review, the Group recognised exceptional impairments of

£3.4m (2013: £0.6m).

Gain on renegotiation of debt

During the prior year the Directors renegotiated the debt facility of a property development subsidiary of the Group. A final

payment was accepted by the lender as full and final settlement for the outstanding loan and security over the development site

was released. This restructure resulted in an exceptional gain of £2.4m which was recognised within other operating income.

Impairment of group owner occupied property and closure costs

Following the approval of the Group’s management and Directors on 9 February 2012 to sell Naturstein Vetter GmbH the assets

were reclassified as held-for-sale (see note 28). The sale of the assets was completed on 27 September 2012, and the loss on

sale recognised in the prior year was £2.5m, which was recognised within discontinued operations in the income statement.


FINANCIALS

5 Operating Profit

Operating profit is stated after charging/(crediting): Note

2014

£m

Restated

2013

£m

Staff costs 6 940.6 867.1

Depreciation of property, plant and equipment: 17

Owned assets 26.7 28.4

Under finance leases 25.3 22.8

Operating lease rentals and short term hires:

Property, plant and equipment 73.4 80.3

Amortisation of other intangible assets 13 3.3 3.1

Profit on disposal of plant and equipment (5.4) (2.7)

Loss on disposal of intangibles – 0.1

Research and development expenditure 38.1 30.0

Foreign exchange losses/(gains) 3.4 (3.6)

Investment property income 18 (2.5) (2.4)

Cost of inventories recognised as an expense:

Amount of inventories recognised as an expense 190.6 75.5

Amount of inventories written off as an expense 3.3 21.9

Auditors’ remuneration (see below) 2.7 2.4

Auditors’ remuneration Note

2014

£m

2013

£m

Fees payable to the Company’s auditor for the audit of:

The Company’s annual financial statements and consolidated financial statements 0.3 0.3

The Company’s subsidiaries pursuant to legislation 0.9 0.9

Total audit fees 1.2 1.2

Fees payable to the Company’s auditor and its associates for other services:

Services relating to taxation 0.8 0.8

All other services 0.7 0.4

Total non-audit fees 1.5 1.2

Total fees 2.7 2.4

The fees stated above include £0.2m for other non-assurance services and £0.1m for audit fees charged by the Company’s

statutory audit firm PricewaterhouseCoopers Limited Cyprus.

6 Staff Costs and Employee Numbers

Number of employees 2014

Number

2013

Number

The average monthly number of employees (including Directors) during the period was:

Europe Hub 10,427 11,208

Australia Hub 4,885 4,143

Total number of employees 15,312 15,351

Aggregate remuneration and related costs, including Directors: 2014

£m

2013

£m

Wages and salaries 835.4 773.6

Social security costs 66.3 57.2

Other pension costs 38.9 36.3

940.6 867.1

At 31 March 2014 £1.7m (2013: £1.4m) was payable in respect of defined contribution schemes and included in other payables

(note 25).



6 Staff Costs and Employee Numbers continued Transactions with key management personnel

The Group’s key management personnel during the period include the five Directors and eleven other members (2013:

four Directors and seven other members) who served on the Group Executive Committee during the year.

The compensation of key management personnel is as follows:


£m

2013

£m

Salaries and other short-term employee benefits 8.3 4.1

Directors’ remuneration

The total remuneration of the Directors (included in key management personnel compensation above) was as follows:


£m

2013

£m

Salaries and other short-term benefits 2.8 0.3

One of the directors is accruing benefits under a defined contribution scheme (2013: nil). No post-retirement benefits were paid

on behalf of Directors (2013: £nil).

7 Other Operating (Expense)/Income

2014

£m

Restated

2013

£m

Exceptional gain on renegotiation of debt (see note 4) – 2.4

Loss on sale of subsidiary – (0.2)

Exceptional impairment on investment properties (3.4) (0.6)

Loss on sale of investment properties (0.7) –

Investment income – 0.1

Rents received 1.1 0.8

Research and development expenditure credit 1.8 –

Other operating income 0.1 0.5

(1.1) 3.0

8 Net Non-operating Expense

2014

£m

Restated

2013

£m

Loss on sale of property (0.4) (0.2)

(Loss)/profit on sale of investments (0.8) 0.1

Impairment of investments – (0.3)

(1.2) (0.4)

9 Finance Income

2014

£m

Restated

2013

£m

Bank interest 4.3 7.4

Other interest and similar income 2.5 1.7

6.8 9.1

10 Finance Expense

2014

£m

Restated

2013

£m

Interest payable on bank loans and overdrafts 5.0 7.4

Finance lease charges 3.7 3.3

Other interest payable and similar charges 1.0 1.0

9.7 11.7


FINANCIALS

11 Income Tax

2014

£m

Restated

2013

£m

Cyprus corporation tax

Current tax on income for the year 0.5 0.3

Foreign tax

Current tax on income for the year 21.3 16.5

Adjustment in respect of prior years (3.6) (3.3)

Total current tax 18.2 13.5

Net origination of temporary differences (8.6) (0.3)

Impact of change in tax rate 0.4 –

Total deferred taxation (8.2) (0.3)

Tax expense for the year 10.0 13.2

The overall tax expense for the year of £10.0m is explained relative to the UK statutory rate of 23 per cent below:

Total tax reconciliation

Profit before tax 51.9 57.0

Tax at the UK corporation tax rate of 23% (2013: UK 24%) 11.9 13.7

Effects of

– lower overseas tax rates (1.3) (0.3)

– other expenditure that is not tax deductible 2.8 1.4

– adjustments in respect of prior years (4.4) (3.3)

– impact of unrecognised losses (0.5) 3.3

– tax effect of joint ventures 0.7 (0.3)

– impact of change in UK tax rate 0.5 (0.3)

– other adjustments 0.3 (1.0)

Total tax charge 10.0 13.2

The total tax expense for the year of £10.0m includes an exceptional tax credit of £0.9m (2013: £3.6m) in relation to tax allowable

exceptional expenditure for impairments of land and developments (see note 4).

The standard rate of corporation tax in the UK changed from 24 per cent to 23 per cent with effect from 1 April 2013. Accordingly,

the Group’s profits for this accounting period are taxed at an effective rate of 23 per cent.

A number of changes to the UK corporation tax system were announced in the 2012 Autumn Statement and the March 2013

UK Budget Statement. The main rate of corporation tax reduces to 21 per cent from 1 April 2014 and to 20 per cent from

1 April 2015. These changes had been substantively enacted at the balance sheet date and, therefore, are included in these

financial statements.

Tax effects relating to each component of comprehensive income

2014 2013 Restated

Before-tax

amount

£m

Tax credit

£m

Net-of-tax

amount

£m

Before-tax

amount

£m

Tax expense

£m

Net-of-tax

amount

£m

Exchange differences on translating

foreign operations (30.3) – (30.3) 7.3 – 7.3

Available-for-sale financial assets 1.0 – 1.0 0.4 (0.1) 0.3

Cash flow hedges (1.5) 0.4 (1.1) 1.6 (0.5) 1.1

Share of other comprehensive income of

joint ventures and associates (10.6) – (10.6) 1.2 – 1.2

(41.4) 0.4 (41.0) 10.5 (0.6) 9.9



12 Dividends

2014

£m

2013

£m

Interim dividends paid of £2,278 per ordinary share (2013: £nil). 20.5 –

The Directors do not recommend the payment of a final dividend (2013: £nil).

13 Intangible Assets

Goodwill

£m

Brands

£m

Computer

software and

licences

£m

Total

£m

Cost

At 1 April 2013 (restated) 339.3 2.7 22.9 364.9

Acquisitions 1.0 – – 1.0

Additions – – 2.0 2.0

Disposals – – (1.8) (1.8)

Exchange differences (11.3) (0.5) (0.9) (12.7)

At 31 March 2014 329.0 2.2 22.2 353.4

Accumulated amortisation and impairment


Amortisation for the year – 0.3 3.0 3.3

Disposals – – (1.8) (1.8)


At 31 March 2014 1.0 2.1 16.5 19.6

Net book value at 31 March 2014 328.0 0.1 5.7 333.8

Cost


Acquisitions – – 4.3 4.3

Additions – – 2.0 2.0

Disposals – – (1.6) (1.6)

Exchange differences 3.1 0.1 0.3 3.5

At 31 March 2013 (restated) 339.3 2.7 22.9 364.9

Accumulated amortisation


Amortisation for the year – 0.3 2.8 3.1

Impairment 0.3 – – 0.3

Disposals – – (1.3) (1.3)

Exchange differences – – 0.1 0.1


Net book value at 31 March 2013 (restated) 338.2 0.5 7.2 345.9


Acquisitions

During the year, the Group acquired Sycamore Properties Limited, Glass Reinforced Concrete UK Limited and Renolith

International Pty Limited. Further details can be found in note 14.

During the prior year, the Group acquired the trade and certain assets of Symmetry Digital and Visual Limited, a company

incorporated in Hong Kong. The consideration included £4.3m relating to computer software included within prior year

acquisitions above.

Prior year impairment

During the prior year the Group fully impaired goodwill of £0.3m which related to an Australian scaffolding business, this amount

was recognised in net non-operating expense.


FINANCIALS

13 Intangible Assets continued Impairment tests for cash-generating units containing goodwill

The following units have significant amounts of goodwill

2014

£m

2013

£m

Australia 48.4 59.3

United Kingdom 279.6 278.9

328.0 338.2

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 per cent (2013: 3 per cent), discounted at the Group’s estimated pre-tax

weighted average cost of capital of 10 per cent (2013: 10 per cent). Budgeted gross margins are based on past performance

and management’s market expectations. The estimated perpetual growth rate of 3 per cent (2013: 3 per cent) 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 an estimate from listed industry competitors, adjusted for changes in

capital structures.

As at 31 March 2014, based on the internal value in use calculations, management concluded that the recoverable value of the

cash generating units exceeded their carrying amount.

Amortisation charge

The amortisation charge in respect of software, licences and brands is recognised in the following line item in the

income statement:

2014

£m

2013

£m

Administrative expenses 3.3 3.1

14 Business Combinations Sycamore Properties Limited

On 30 April 2013, Explore Capital Limited, a subsidiary of the Group, acquired 100 per cent of the share capital of Sycamore

Properties Limited (‘Sycamore’), a company incorporated in the Bahamas for a total consideration of £7.3m. Sycamore is a

group of companies that own property currently occupied by the Group. Prior to the acquisition the interests in Sycamore were

held in trust, the beneficiaries of which were R G O’Rourke KBE and H D O’Rourke, who are also beneficiaries of the trusts which

ultimately own Suffolk Partners Corporation. The assets acquired were:

Book value

acquired

£m

Fair value

adjustments

£m

Fair value

acquired

£m

Property, plant and equipment 19.0 0.7 19.7

Cash and cash equivalents 1.4 – 1.4

Trade and other payables (0.6) – (0.6)

Borrowings (13.2) – (13.2)

Deferred tax liabilities – (0.1) (0.1)

Total identifiable net assets acquired 6.6 0.6 7.2

Goodwill recognised on acquisition 0.1

Total cash consideration 7.3

The fair value adjustments are to revalue the property from historical cost to market value at the date of acquisition and to

recognise the associated deferred tax liability.

From the date of acquisition to 31 March 2014, Sycamore contributed £nil to revenue, a loss of £0.1m to operating profit and a

loss of £0.3m to the Group’s profit before tax.

Had Sycamore been consolidated from 1 April 2013, the consolidated income statement would include revenue of £nil and loss

before tax of £0.4m.

Other acquisitions

On 31 January 2014, Explore Manufacturing Limited, a subsidiary of the Group, acquired 100 per cent of the share capital of

Glass Reinforced Concrete UK Limited (‘GRC’), a company incorporated in England and Wales. GRC is a specialist in bespoke

architectural glass reinforced concrete products. The total consideration of £6 included net liabilities of £0.6m and goodwill

of £0.6m.

On 17 March 2014, Laing O’Rourke Australia Pty Limited, a subsidiary of the Group, acquired 100 per cent of the share capital of

Renolith International Pty Limited (‘Renolith’), a company incorporated in Australia. Renolith is the global patent holder for a

unique polymer soil stabilisation solution, known as ‘Stabilor’. The total consideration of £0.3m included goodwill of £0.3m.



15 Investments in Joint Ventures and Associates Joint ventures

equity

investments

£m

Associates

equity

investments

£m

Loans

to joint

ventures

£m

Total

£m

Cost


Loans advanced – – 2.8 2.8

Loans repaid – – (0.2) (0.2)

Exchange differences – – (1.6) (1.6)

At 31 March 2014 2.3 13.3 84.4 100.0

Share of post-acquisition results

At 1 April 2013 (restated) 5.0 0.8 – 5.8

Share of results for the year after tax (3.0) – – (3.0)

Share of change in fair value of cash flow hedges (net of taxation) (6.8) – – (6.8)

Distributions received (21.7) – – (21.7)

Exchange differences (1.1) (2.7) – (3.8)

At 31 March 2014 (27.6) (1.9) – (29.5)

Net book value at 31 March 2014 (25.3) 11.4 84.4 70.5

Cost


Equity investment disposals (0.1) – – (0.1)

Loans advanced – – 4.7 4.7

Loans repaid – – (0.6) (0.6)

Impairment – – (2.6) (2.6)

Exchange differences – – 0.9 0.9


Share of post-acquisition results


Share of results for the year after tax 9.1 – – 9.1

Disposals (0.6) – – (0.6)

Distributions received (13.2) – – (13.2)

Exchange differences 0.5 0.7 – 1.2

At 31 March 2013 (restated) 5.0 0.8 – 5.8



The Group’s share of joint venture and associate equity investments and loans to joint ventures are presented above. IAS 31,

Interests in Joint Ventures, and IAS 28, Investments in Associates, require the following presentation adjustments:

• where the Group has already accounted for an obligation to fund net liabilities of a joint venture or associate this is deducted

from loans made to the joint venture or associate; and

• where the Group’s obligation to fund net liabilities of a joint venture or associate exceeds the amount loaned, a provision is

recorded (see note 26).

The Group’s investments in joint ventures and associates are presented in the statement of financial position as:

2014

£m

Restated

2013

£m

Investments in joint ventures and associates 14.7 47.8

Loans to joint ventures 58.7 57.0

Provisions (2.9) –

70.5 104.8

No impairment losses to equity investments were brought forward at 31 March 2014 or charged in the year (2013: £nil).


FINANCIALS

15 Investments in Joint Ventures and Associates continued The principal joint ventures and associate are shown in note 39. Each joint venture and associate has share capital consisting

solely of ordinary shares, which is held directly by the Group. Each joint venture is a private company and there is no quoted

market price available for its shares.

Set out below is the summarised financial information for the joint ventures and associates which are material to the group and

are accounted for using the equity method.

Aldar Laing

O’Rourke

Construction

LLC

2014

£m

Emirates

Precast

Construction

LLC

2014

£m

Canal

Harbour

Development

Company

Limited

2014

£m

CLM

Delivery

Partner

Limited

2014

£m

Health

Montreal

Collective

CJV Limited

Partnership

2014

£m

Private

Finance

Initiative’s

(PFI’s)

2014

£m

Other joint

ventures

2014

£m

Associates

2014

£m

Total

2014

£m

Revenue 0.4 5.0 – 0.3 83.0 146.9 12.1 – 247.7

Depreciation and

amortisation (1.0) (0.4) – – – – – – (1.4)

Other expenses/(income) 0.4 (3.8) – 0.1 (86.1) (146.4) (14.9) – (250.7)

Operating (loss)/profit (0.2) 0.8 – 0.4 (3.1) 0.5 (2.8) – (4.4)

Net finance income – – – – 0.6 1.4 – – 2.0

(Loss)/profit before tax (0.2) 0.8 – 0.4 (2.5) 1.9 (2.8) – (2.4)

Tax expense – – – (0.1) – (0.5) – – (0.6)

(Loss)/profit after tax (0.2) 0.8 – 0.3 (2.5) 1.4 (2.8) – (3.0)

Other comprehensive

income (0.8) (0.5) 0.7 – (0.6) (6.7) – (2.7) (10.6)

Total comprehensive

income (1.0) 0.3 0.7 0.3 (3.1) (5.3) (2.8) (2.7) (13.6)

Dividends received from

joint ventures 0.8 0.9 – 8.6 10.9 0.5 – – 21.7

Non-current assets

Goodwill – – – – – – – 4.4 4.4

Property, plant and

equipment 2.8 0.5 – – – – – – 3.3

Other non-current assets – 0.6 11.1 – – 372.3 – 0.1 384.1

Current assets

Cash and cash equivalents 5.4 1.5 – 0.2 44.6 51.7 3.5 – 106.9

Other current assets 0.4 4.2 – 0.1 39.1 46.6 1.1 7.8 99.3

Total assets 8.6 6.8 11.1 0.3 83.7 470.6 4.6 12.3 598.0

Current liabilities

Borrowings – – – – – – – (0.1) (0.1)

Other current liabilities (1.1) (1.4) (0.1) (0.2) (89.9) (23.7) (7.2) (0.1) (123.7)


Borrowings – – – – – (441.6) – (0.7) (442.3)

Other non-current liabilities – (0.5) (36.8) – – (8.5) – – (45.8)

Total liabilities (1.1) (1.9) (36.9) (0.2) (89.9) (473.8) (7.2) (0.9) (611.9)

Net assets/(liabilities) 7.5 4.9 (25.8) 0.1 (6.2) (3.2) (2.6) 11.4 (13.9)

Financial commitments – – – – – – – – –

Capital commitments – – – – – – – – –



15 Investments in Joint Ventures and Associates continued

Aldar Laing

O’Rourke

Construction

LLC

2013

£m

Emirates

Precast

Construction

LLC

2013

£m

Canal

Harbour

Development

Company

Limited

2013

£m

CLM

Delivery

Partner

Limited

2013

£m

Health

Montreal

Collective

CJV Limited

Partnership

2013

£m

Private

Finance

Initiative’s

(PFI’s)

2013

£m

Other joint

ventures

2013

£m

Associates

2013

£m

Restated

Total

2013

£m

Revenue 2.3 6.3 – 8.7 62.5 126.1 21.1 – 227.0

Depreciation and

amortisation (1.9) (0.6) – – – – – – (2.5)

Other expenses (3.8) (4.6) – (6.6) (58.4) (126.5) (11.6) – (211.5)

Exceptional items

(see note 4) – – (6.0) – – – – – (6.0)

Operating (loss)/profit (3.4) 1.1 (6.0) 2.1 4.1 (0.4) 9.5 – 7.0

Net finance income – – – – 0.4 2.0 – – 2.4

Profit/(loss) before tax (3.4) 1.1 (6.0) 2.1 4.5 1.6 9.5 – 9.4

Tax expense – – – (0.3) – (0.4) 0.4 – (0.3)

Profit/(loss) after tax (3.4) 1.1 (6.0) 1.8 4.5 1.2 9.9 – 9.1

Other comprehensive

income 0.6 0.2 (0.5) – 0.2 – – 0.7 1.2

Total comprehensive

income (2.8) 1.3 (6.5) 1.8 4.7 1.2 9.9 0.7 10.3

Dividends received from

joint ventures 8.6 0.8 – 3.0 – 0.2 0.6 – 13.2

Non-current assets

Goodwill – – – – – – – 4.4 4.4

Property, plant and

equipment 8.2 0.8 – – – – – – 9.0

Other non-current assets – 1.3 11.4 – – 386.6 – 0.9 400.2

Current assets

Cash and cash equivalents 2.5 1.3 – 0.8 25.7 30.9 5.0 – 66.2

Other current assets 0.8 5.2 – 11.0 58.9 60.9 4.9 10.3 152.0

Total assets 11.5 8.6 11.4 11.8 84.6 478.4 9.9 15.6 631.8

Current liabilities

Borrowings – – – – – – – (0.5) (0.5)

Other current liabilities (2.1) (2.7) (0.1) (3.3) (77.1) (39.8) (9.7) – (134.8)


Borrowings – – – – – (435.6) – (1.0) (436.6)

Other non-current liabilities – (0.5) (37.8) – – (0.2) – – (38.5)

Total liabilities (2.1) (3.2) (37.9) (3.3) (77.1) (475.6) (9.7) (1.5) (610.4)

Net assets/(liabilities) 9.4 5.4 (26.5) 8.5 7.5 2.8 0.2 14.1 21.4

Financial commitments 0.1 – – – – – – – 0.1

Capital commitments – – – – – – – – –

16 Other Investments

Fair Value 2014

£m

2013

£m

At 1 April 4.2 4.2

Disposals (4.2) –

At 31 March – 4.2

Disclosed within:

Current assets – 4.2

– 4.2

In the prior year, other investments related to mezzanine debt in a property development company. The debt was repaid in full

during the current year.


FINANCIALS

17 Property, Plant and Equipment Group owner

occupied

property

£m

Other land

and buildings

£m

Plant,

equipment

and vehicles

£m

Total

£m

Cost


Additions – 0.9 78.5 79.4

Acquisitions 19.7 – 0.2 19.9

Disposals – (1.8) (50.7) (52.5)

Transfer between categories – (1.3) 1.3 –


At 31 March 2014 35.5 23.6 504.1 563.2

Accumulated depreciation


Depreciation charge for the year 0.3 1.6 50.1 52.0

Disposals – (1.4) (37.8) (39.2)

Transfer between categories – (2.8) 2.8 –

Exchange differences – (0.8) (16.2) (17.0)

At 31 March 2014 2.1 13.5 260.6 276.2

Net book value at 31 March 2014 33.4 10.1 243.5 287.0

Cost


Additions – 0.4 70.0 70.4

Disposals – (0.6) (58.3) (58.9)

Transferred to disposal group classified as held-for-sale – – (4.5) (4.5)

Exchange differences 0.2 0.5 10.2 10.9


Accumulated depreciation


Depreciation charge for the year 0.2 1.7 49.3 51.2

Disposals – (0.4) (47.8) (48.2)

Transferred to disposal group classified as held-for-sale – – (4.0) (4.0)

Exchange differences – 0.4 5.2 5.6




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

2014

£m

Restated

2013

£m

Cost at 1 April 172.7 256.1

Accumulated depreciation at 1 April (49.7) (101.3)

Net book value at 1 April 123.0 154.8

Additions/acquisitions 61.3 38.3

Refinanced assets/transfers in 22.5 –

Cost of disposals/transfers out (22.7) (124.3)

Depreciation on disposals/transfers out 12.3 75.2

Depreciation charge for the year (25.3) (22.8)

Exchange differences (7.7) 1.8

Net book value at 31 March 163.4 123.0

Finance lease terms are between one and five years, see note 24 for ageing of finance lease obligations.

Additions and transfers in of assets under finance leases in the year are lower than new lease agreements taken out by £7.0m

as the Group refinanced existing assets.



18 Investment Property

Freehold

2014

£m

Freehold

2013

£m

Net book value at 1 April 59.0 38.8

Transfers in 7.7 22.4

Disposals (14.8) (1.7)

Exceptional fair value adjustment (3.4) (0.6)

Exchange differences (0.1) 0.1

Net book value at 31 March 48.4 59.0

Investment property income earned by the Group, all of which was received under operating leases, amounted to £2.5m (2013:

£2.4m) and is shown as revenue in the income statement. Direct operating expenses arising on investment properties generating

rental income in the year amounted to £0.7m (2013: £0.4m). Direct operating expenses arising on investment properties not

generating rental income in the year amounted to £nil (2013: £nil).

The Group’s investment properties are let under non-cancellable operating lease agreements. The leases have varying terms,

escalating clauses and renewal rights. The Group’s future operating lease income commitments comprise:

2014

£m

2013

£m

Expiry date:

Due within one year 1.3 1.7

Due between one and five years 2.7 2.5

Due after more than five years 15.3 14.9

19.3 19.1

19 Available-For-Sale Financial Assets

2014

£m

2013

£m

At 1 April 0.7 3.5

Disposals (0.3) (2.8)

Exchange differences (0.1) –

Net gains transferred to equity 0.3 –

At 31 March 0.6 0.7

Available-for-sale financial assets include the following:

Unlisted securities 0.6 0.7

The fair value of available-for-sale financial assets is determined from quoted prices in active markets.

20 Derivative Financial Instruments 2014 2013

Assets

£m

Liabilities

£m

Assets

£m

Liabilities

£m

Current portion:

Foreign exchange cash flow hedges 0.1 – 1.6 –

Forward foreign exchange contracts 1.9 – 1.2 (0.7)

Total derivative financial instruments 2.0 – 2.8 (0.7)

Foreign Exchange Cash Flow Hedges

The cashflow hedge is to hedge forecast revenue which is denominated in a foreign currency. The hedge instruments are forward

exchange contracts designed to minimise the risk of exchange fluctuation in future revenue.

The gain from remeasuring the hedge instruments at fair value is recognised in other comprehensive income to the extent that the

hedge is effective. In the year ended 31 March 2014, the ineffective hedge portion recognised in the income statement is £1.0m

(2013: £nil).

Forward Exchange Contracts

The Group enters into forward contracts to hedge its foreign currency exposure arising on a number of construction contracts

where construction 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.


FINANCIALS

21 Restricted Financial Assets

2014

£m

2013

£m

Restricted cash deposits 0.2 0.3

At 31 March 2014 £0.2m (2013: £0.3m) relates to bank deposits held as collateral in relation to specific construction and

development projects. 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.

22 Inventories

2014

£m

2013

£m

Development land and work in progress 122.4 277.7

Raw materials and consumables 8.2 8.4

Finished goods and goods for resale 3.0 3.6

133.6 289.7

Development land and work in progress at 31 March 2014 includes assets to a value of £71.5m (2013: £144.7m) expected to be

consumed after more than one year.

Capitalised specific borrowing costs attributable to qualifying assets and included in development land and work in progress

decreased in the year by £4.5m (2013: increased by £0.1m).

Inventories carried at net realisable value at 31 March 2014 had a carrying value of £20.7m (2013: £47.7m).

23 Trade and Other Receivables

2014

£m

Restated

2013

£m

Amounts expected to be recovered within one year:

Gross amounts due from customers on construction contracts 349.6 331.4

Trade receivables 90.7 124.1

Prepayments and accrued income 32.1 32.1

Other receivables 36.6 40.7

509.0 528.3

Amounts expected to be recovered after more than one year:

Gross amounts due from customers on construction contracts 35.5 17.5

Trade receivables 2.4 2.4

Other receivables 6.9 4.9

44.8 24.8

Total trade and other receivables 553.8 553.1

At 31 March 2014, trade and other receivables include retentions of £101.2m (2013: £96.9m) relating to construction contracts of

which £35.5m (2013: £17.5m) are non-current assets.

For construction contracts in progress at 31 March 2014, £371.5m (2013: £375.7m) was received as an advance and is included

within advance payments on construction contracts in trade and other payables (see note 25).

At 31 March 2014 the bad debt provision for trade receivables amounted to £1.2m (2013: £11.7m). The net losses recognised via

write off or impairment of trade and other receivables in the year to 31 March 2014 amounted to £0.1m (2013: £1.2m) which has

been recognised in administrative expenses, £10.1m of debts previously provided for have now been fully written off or recovered,

the remaining £0.5m movement is a result of exchange rate fluctuations.



24 Borrowings

2014

£m

2013

£m

Amounts expected to be settled within one year:

Bank loans 123.0 119.6

Finance lease obligations 42.4 33.0

165.4 152.6

Amounts expected to be settled after more than one year:

Bank loans 33.1 72.4

Finance lease obligations 83.6 49.4

116.7 121.8

Total borrowings 282.1 274.4

Bank loans amounting to £106.1m (2013: £192.0m) are secured on the assets to which they relate.

Finance lease obligations

Finance lease obligations are payable as follows:

Interest

2014

£m

Principal

2014

£m

Minimum

lease

payments

2014

£m

Restated

Interest

2013

£m

Restated

Principal

2013

£m

Restated

Minimum

lease

payments

2013

£m

Less than one year 4.1 42.4 46.5 2.6 33.0 35.6

Between one and five years 5.7 80.2 85.9 2.0 48.7 50.7

More than five years – 3.4 3.4 – 0.7 0.7

9.8 126.0 135.8 4.6 82.4 87.0

Obligations under finance leases are secured by legal charges on certain non-current assets of the Group with an original cost of

£245.9m (2013: £172.7m) and total net book value of £163.4m (2013: £123.0m).

25 Trade and Other Payables

2014

£m

Restated

2013

£m

Amounts expected to be settled within one year:

Advance payments on construction contracts 348.2 355.3

Trade payables 225.6 333.7

Other tax and social security 43.2 25.0

Other payables 73.2 87.5

Accruals and deferred income 455.4 551.1

1,145.6 1,352.6

Amounts expected to be settled after more than one year:

Advance payments on construction contracts 23.3 20.4

Trade payables 26.6 20.8

Other payables 1.8 3.0

Accruals and deferred income 12.8 26.8

64.5 71.0

Total trade and other payables 1,210.1 1,423.6

At 31 March 2014, trade and other payables include retentions of £66.9m (2013: £71.2m) relating to construction contracts of which

£24.2m (2013: £20.2m) are non-current liabilities.


FINANCIALS

26 Provisions Insurance

technical

provisions

£m

Employee

provisions

£m

Joint venture

provisions

£m

Total

provisions

£m


Provisions created 3.4 0.2 2.9 6.5

Provisions utilised – (1.2) – (1.2)

At 31 March 2014 36.8 4.8 2.9 44.5

Disclosed within:

Current liabilities 2.5 2.5 2.9 7.9

Non-current liabilities 34.3 2.3 – 36.6

36.8 4.8 2.9 44.5


Provisions created 4.6 0.7 – 5.3

Provisions utilised (0.6) – – (0.6)

At 31 March 2013 (restated) 33.4 5.8 – 39.2

Disclosed within:

Current liabilities 10.9 3.0 – 13.9

Non-current liabilities 22.5 2.8 – 25.3

33.4 5.8 – 39.2

Insurance provisions relate to provisions held by the Group’s captive insurer Laing O’Rourke Insurance Limited. Such provisions

are held until utilised or such times as further claims are considered unlikely under the respective insurance policies.

The employee provision relates to the accrual of long service leave for employees in Australia and New Zealand.

The Group provides in full for obligations to remedy net liabilities of jointly controlled entities in excess of amounts already

loaned. At 31 March 2014 these provisions amounted to £2.9m (2013: £nil) which were measured in accordance with the

Group’s accounting policies. Amounts provided are assessed based on judgements of contract costs, contract programmes

and maintenance liabilities and are expected to be paid within one year.

27 Deferred Tax Assets and Liabilities Deferred tax assets and liabilities are attributable to the following:

Recognised deferred tax assets and liabilities

Assets

2014

£m

Restated

Assets

2013

£m

Liabilities

2014

£m

Restated

Liabilities

2013

£m

Net

2014

£m

Restated

Net

2013

£m

Property, plant and equipment 2.3 2.5 (12.9) (6.4) (10.6) (3.9)

Other temporary differences 33.6 24.0 – – 33.6 24.0

Offsetting of deferred tax balances (7.6) – 7.6 – – –

Deferred tax assets/(liabilities) 28.3 26.5 (5.3) (6.4) 23.0 20.1

The ageing of deferred tax assets/(liabilities) at the year-end was:

Less than one year 17.1 19.8 – (0.4) 17.1 19.4

More than one year 11.2 6.7 (5.3) (6.0) 5.9 0.7

28.3 26.5 (5.3) (6.4) 23.0 20.1



27 Deferred Tax Assets and Liabilities continued Movements in deferred tax assets and liabilities during the year

As at

1 April

2013

(restated)

£m

Exchange

and other

movements

£m

Recognised

in income

£m

Recognised

in equity

£m

As at

31 March

2014

£m

Property, plant and equipment (3.9) – (6.7) – (10.6)

Other temporary differences 24.0 (5.7) 14.9 0.4 33.6

Tax losses carried forward – – – – –

20.1 (5.7) 8.2 0.4 23.0

As at

1 April

2012

(restated)

£m

Exchange

and other

movements

£m

Recognised

in income

£m

Recognised

in equity

£m

As at

31 March

2013

(restated)

£m

Property, plant and equipment (7.9) – 4.0 – (3.9)

Other temporary differences 14.0 2.0 8.6 (0.6) 24.0

Tax losses carried forward 12.3 – (12.3) – –

18.4 2.0 0.3 (0.6) 20.1

Other items relate to Laing O’Rourke Australia Pty Limited where employee benefits, project accruals and cost provisions have

been charged in one period but will be taxed in another.

Unrecognised deferred tax assets and liabilities

Deferred tax assets have not been recognised in respect of the following items:

2014

£m

2013

£m

Tax losses 8.5 7.1

The Group has unrecognised deferred tax assets of £8.5m relating to unused tax losses. The tax losses have arisen in the Group

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 and the constraints in using the losses.

28 Non-current Assets Held-for-sale and Discontinued Operations Discontinued operations relate to the assets and liabilities of the Group’s German operations following the approval to sell by the

group’s management and Directors on 9 February 2012. The sale of the assets completed on 27 September 2012. The current year

values shown below relate solely to discontinued operations.

2014

Total

£m

2013

Total

£m

Assets of disposal group classified as held-for-sale

Property, plant and equipment – 5.7

Other current assets 0.2 0.9

0.2 6.6

Liabilities of disposal group classified as held-for-sale

Trade and other payables – (1.1)

Other current liabilities – (0.1)

– (1.2)

Cumulative income or expense recognised in other comprehensive income relating to disposal group

classified as held-for-sale

Foreign exchange translation adjustments (2.6) (3.2)

Cash flows of discontinued operations

Operating cash flow (0.4) (3.2)

Investing cash flow 0.1 3.9

(0.3) 0.7


FINANCIALS

28 Non-current Assets Held-for-sale and Discontinued Operations continued Analysis of the results of discontinued operations, and the result recognised on re-measurement of disposal groups

Discontinued Operations

2014

£m

2013

£m

Revenue – 2.1

Expenses – (3.3)

Exceptional items (see note 4) – (2.5)

Loss before tax of discontinued operations – (3.7)

Income tax benefit – 1.0

Loss for the year from discontinued operations – (2.7)

Closure costs and re-measurement of assets of the disposal group were included as exceptional items last year, see note 4.

29 Share Capital and Premium

Number of

€1 shares

Share

premium

£m

At 1 April 2013 and at 31 March 2014 9,000 286.4

The authorised share capital of Laing O’Rourke Corporation Limited at 31 March 2014 was 18,000 ordinary shares of €1 each

(2013: 18,000 shares).

30 Reconciliation of Movements in Shareholders’ Equity

Called-up

share

capital

£m

Share

premium

£m

Fair value

reserve

£m

Hedging

reserve

£m

Foreign

currency

translation

reserve

£m

Retained

earnings

£m

Total

shareholders’

equity

£m

Non-

controlling

interests

£m

Total

equity

£m

At 1 April 2012 (restated) – 286.4 (1.7) – 47.4 230.0 562.1 2.6 564.7

Profit for the year – – – – – 40.3 40.3 0.8 41.1

Other comprehensive

income after tax – – 0.3 1.1 8.3 – 9.7 0.2 9.9

Total comprehensive

income for the year – – 0.3 1.1 8.3 40.3 50.0 1.0 51.0

Reduction in share

premium – – – – – – – – –

Dividends paid – – – – – – – (0.6) (0.6)

At 31 March 2013

(restated) – 286.4 (1.4) 1.1 55.7 270.3 612.1 3.0 615.1

Profit for the year – – – – – 41.3 41.3 0.6 41.9

Other comprehensive

income after tax – – 1.0 (7.9) (33.9) – (40.8) (0.2) (41.0)

Total comprehensive

income for the year – – 1.0 (7.9) (33.9) 41.3 0.5 0.4 0.9

Dividends paid – – – – – (20.5) (20.5) (1.5) (22.0)

At 31 March 2014 – 286.4 (0.4) (6.8) 21.8 291.1 592.1 1.9 594.0

Fair value reserve

The fair value reserve includes the cumulative net change in the fair value of available-for-sale financial assets until the

investment is de-recognised, together with any related deferred tax.

Hedging reserve

The hedging reserve comprises the effective portion of the cumulative net change in fair value of cash flow hedging instruments

related to hedged transactions that have not yet occurred, together with any related deferred tax. The movement in the year of

£7.9m includes £6.8m relating to the Group’s share of the change in fair value of effective cash flow hedges within joint ventures

(net of taxation), see note 15.

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 earnings

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



31 Guarantees and Contingent Liabilities 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 2014, 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 (2013: £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.

32 Financial Instruments Financial risk management

Financial 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, interest rate 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.

32.1 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 pound sterling equivalents of the currency of the Group’s financial assets and liabilities, were as follows:

Pound sterling value of equivalent currency (m)

2014

GBP

2014

EUR

2014

AUD

2014

AED

2014

SAR

2014

CAD

2014

HKD

2014

Other

2014

Total

£m

Loans to joint ventures 21.8 62.6 – – – – – – 84.4

Trade and other receivables 318.6 0.3 140.9 11.3 29.2 0.9 19.7 2.0 522.9

Available-for-sale

financial assets – 0.6 – – – – – – 0.6

Derivative financial

instruments 0.1 – 1.9 – – – – – 2.0

Restricted financial assets 0.2 – – – – – – – 0.2

Cash and cash equivalents 398.6 9.6 195.3 7.0 0.3 30.8 36.0 13.1 690.7

Total financial assets 739.3 73.1 338.1 18.3 29.5 31.7 55.7 15.1 1,300.8

Borrowings (212.4) – (69.7) – – – – – (282.1)

Trade and other payables (725.3) (1.1) (298.2) (38.5) (1.3) (30.9) (66.6) (5.4) (1,167.3)

Net financial

(liabilities)/assets (198.4) 72.0 (29.8) (20.2) 28.2 0.8 (10.9) 9.7 (148.6)

Other cash and cash equivalents include £5.5m (2013: £4.0m) held in USD and £5.2m (2013: £10.0m) held in NZD.


FINANCIALS

32 Financial Instruments continued

Pound sterling value of equivalent currency (m) (restated)

2013

GBP

2013

EUR

2013

AUD

2013

AED

2013

SAR

2013

CAD

2013

HKD

2013

Other

2013

Total

£m

Loans to joint ventures 19.2 64.2 – – – – – – 83.4

Other investments 4.2 – – – – – – – 4.2

Trade and other receivables 289.1 1.8 138.1 52.5 32.4 0.6 17.6 0.6 532.7

Available-for-sale

financial assets – 0.7 – – – – – – 0.7


instruments 0.2 – 2.6 – – – – – 2.8

Restricted financial assets 0.2 – – 0.1 – – – – 0.3

Cash and cash equivalents 357.9 7.6 237.5 10.9 5.0 47.5 32.6 14.8 713.8

Total financial assets 670.8 74.3 378.2 63.5 37.4 48.1 50.2 15.4 1,337.9

Borrowings (147.3) – (127.1) – – – – – (274.4)


instruments – – (0.7) – – – – – (0.7)

Trade and other payables (774.5) (3.0) (437.7) (55.0) (1.9) (46.1) (68.8) (12.2) (1,399.2)

Net financial

(liabilities)/assets (251.0) 71.3 (187.3) 8.5 35.5 2.0 (18.6) 3.2 (336.4)

Of the total foreign currency borrowings of £69.7m (2013: £127.1m), the amount of borrowings used to finance overseas operations

amounts to £69.7m (2013: £127.1m).

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 percent at the balance sheet date, the

profit for the year and equity would have decreased by £2.9m (2013: £1.0m). This sensitivity analysis takes into account the tax

impact and the forward exchange contracts in place.

32.2 Interest Rate Risk

Interest 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

Total

£m

Within

one year

£m

Between

one and

two years

£m

After

two years

£m

Effective

interest

rate

%

At 31 March 2014

Bank loans 156.1 123.0 20.5 12.6 3.52%

Finance lease obligations 126.0 42.4 33.1 50.5 4.28%

282.1 165.4 53.6 63.1 3.86%

At 31 March 2013 (restated)

Bank loans 192.0 119.6 14.0 58.4 4.82%

Finance lease obligations 82.4 33.0 27.2 22.2 4.50%

274.4 152.6 41.2 80.6 4.63%

If interest rates had been 1 percent higher during the period, profit and equity would have reduced by £2.2m (2013: £2.1m).

This sensitivity analysis takes into account the tax impact.



32 Financial Instruments continued 32.3 Liquidity Risk

Prudent 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 liabilities

The maturity profile of the carrying amount of the Group’s non-current liabilities including interest is as follows:

Trade

and other

payables

£m

Bank loans

£m

Finance

leases

£m

Total

£m

At 31 March 2014

Between one and less than two years 47.3 21.5 35.9 104.7

Between two and less than five years 11.4 3.5 49.9 64.8

Five or more years 5.8 11.1 3.5 20.4

64.5 36.1 89.3 189.9

At 31 March 2013 (restated)

Between one and less than two years 49.7 16.7 28.5 94.9

Between two and less than five years 15.6 57.5 22.2 95.3

Five or more years 5.7 4.7 0.7 11.1

71.0 78.9 51.4 201.3

Borrowing facilities

The Group has the following undrawn committed borrowing facilities at the year-end in respect of which all conditions precedent

had been met:

2014

£m

Restated

2013

£m

Expiring within one year 77.8 105.6

Expiring between one and two years – –

Expiring in more than two years 3.5 53.3

81.3 158.9

32.4 Credit Risk

Credit 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

receivables

2014

£m

Impairment

2014

£m

Restated

Gross

receivables

2013

£m

Restated

Impairment

2013

£m

Not past due 79.7 – 83.4 –

Past due 0-30 days 7.7 – 17.9 –

Past due 31-120 days 3.1 – 16.3 –

Past due 121-365 days 1.4 – 5.4 –

More than one year 2.4 (1.2) 15.2 (11.7)

94.3 (1.2) 138.2 (11.7)

Receivables at 31 March 2014 that are more than one year past due date but not impaired amount to £1.2m (2013: £3.5m).

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.


FINANCIALS

32 Financial Instruments continued 32.5 Fair Values

Financial instruments carried at fair value in the statement of financial position are other investments, available-for-sale financial

assets and derivative financial instruments. The following hierarchy classifies each class of financial instrument depending on the

valuation technique applied in determining its fair value.

Level 1: The fair value is calculated based on quoted prices traded in active markets for identical assets or liabilities. The Group

holds available-for-sale investments which are traded in active markets and valued based on the closing per unit market price at

31 March 2014.

Level 2: The fair value is based on inputs other than quoted prices included within Level 1 that are observable for the asset or

liability, either directly or indirectly. 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.

Level 3: The fair value is based on unobservable inputs. The fair value of other investments is calculated by discounting expected

future cash flows using asset specific discount rates.

There have been no transfers between these categories in the current or preceding year.

The following table presents the Group’s financial assets and liabilities that are measured at fair value at 31 March 2014.

Fair value measurement 2014 Fair value measurement 2013 (restated)

Level 1

£m

Level 2

£m

Level 3

£m

Total

£m

Level 1

£m

Level 2

£m

Level 3

£m

Total

£m

Other investments – – – – – – 4.2 4.2

Derivative financial instruments – 2.0 – 2.0 – 2.1 – 2.1

Available-for-sale financial assets 0.6 – – 0.6 0.7 – – 0.7

0.6 2.0 – 2.6 0.7 2.1 4.2 7.0

The fair value movements on other investments and certain derivative financial instruments are recognised in the consolidated

income statement. The fair value movements on available-for-sale financial assets and cash flow hedges are recognised in the

statement of comprehensive income.

The carrying and fair values of the Group’s financial instruments at 31 March 2014 and 31 March 2013 are as follows:

Fair value

2014

£m

Carrying

amount

2014

£m

Restated

Fair value

2013

£m

Restated

Carrying

amount

2013

£m

Other investments – – 4.2 4.2

Derivative financial instruments 2.0 2.0 2.1 2.1

Available-for-sale financial assets 0.6 0.6 0.7 0.7

Loans and receivables 607.3 607.3 616.1 616.1

Financial liabilities measured at amortised cost (1,449.4) (1,449.4) (1,673.6) (1,673.6)

The carrying and fair values of the Group’s financial instruments were not materially different at 31 March 2014.

Loans, receivables and financial liabilities are valued at their amortised cost which is deemed to reflect fair value due to their

short-term nature.

The fair values of investment properties are based on an annual assessment of future rental yields compared to current market

evidence. Further details are found in note 2.24 (f). The fair values are within level 3 of the hierarchy above.



32 Financial Instruments continued 32.6 Capital Risk Management

The 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, to maintain an optimal capital structure to reduce the

cost of capital and to comply with the insurance capital required by the regulator, The Companies (Guernsey) Law, 2008 and

The Insurance Business (Bailiwick of Guernsey) Law, 2002.

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 a long-term basis. Performance against

forecasts is also reviewed and analysed to ensure the Group efficiently manages its net funds/debt position.

Net funds is calculated as cash and cash equivalents less total borrowings (including ‘current and non-current borrowings’ as

shown in the consolidated statement of financial position).

At 31 March 2014 the Group had net funds of £408.6m (2013: £439.4m); see note 37.

The Group is required to hold regulatory capital for its captive insurance company in compliance with the rules issued by the

Guernsey Financial Services Commission. The Company must hold assets in excess of the higher of two amounts. The first is

based on a fixed percentage of premium income. The second is based on a fixed percentage of claims outstanding (including

claims incurred but not reported). In addition the Company must complete an own risk solvency assessment which is reviewed

by the Guernsey Financial Services Commission. The Group’s capital is sufficient to meet all regulatory requirements.

33 Assets Charged as Security for Liabilities and Collateral Accepted as Security for Assets Financial assets pledged to secure liabilities are as follows:

2014

£m

2013

£m

Restricted financial assets 0.2 0.3

Financial assets pledged as short-term collateral and included within cash equivalents were £46.0m (2013: £36.2m).

As part of the Group’s management of its insurable risks a proportion of this risk is managed through self insurance programmes

operated by its captive insurance subsidiary company, Laing O’Rourke Insurance Limited. This Company is a wholly owned

subsidiary of the Group and premiums paid are held to meet future claims. The cash balances held by the Company are reported

within cash and cash equivalents. As is usual practice for captive insurance companies some of the cash is used as collateral

against contingent liabilities, standby letters of credit to the value of £46.0m (2013: £36.2m) have been provided to certain external

insurance companies. The standby letters of credit have been issued via banking facilities that Laing O’Rourke Insurance Limited

has in place.

No financial assets have been provided to the Group as collateral (2013: £nil).

34 Financial and Capital Commitments Capital expenditure for property, plant and equipment, authorised and contracted for which has not been provided for in the

financial statements amounted to £18.4m (2013: £14.7m) in the Group.

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 aggregate minimum lease payments comprise:

Land and

buildings

2014

£m

Other

2014

£m

Land and

buildings

2013

£m

Other

2013

£m

Future operating lease expenditure commitments:

Due within one year 21.6 4.0 27.2 5.7

Due between one and five years 58.7 1.4 76.7 5.5

Due after more than five years 104.6 – 132.2 –

184.9 5.4 236.1 11.2

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

The prior year figures above include financial commitments of £21.6m payable over the next 10 years that are no longer a

commitment for the Group following the acquisition of Sycamore Properties Limited (see note 14).

The Group has committed to provide its share of further equity funding and subordinated debt investments in PPP (Public Private

Partnerships) special purpose entities amounting to £31.0m (2013: £38.6m).


FINANCIALS

35 Related Party Transactions and Balances Identity of related parties

The Group has a related party relationship with its major shareholder, subsidiaries, joint arrangements, associates and key

management personnel.

Group

The 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 15.

Sale of goods and services provided to related parties

2014

2013 (restated)

Income

earned

in year

£m

Receivable

at year-end

£m

Income

earned

in year

£m

Receivable

at year-end

£m

Joint ventures 239.1 7.4 105.6 27.1

Purchase of goods and services provided by related parties

2014

2013 (restated)

Expenses paid

in year

£m

Payable at

year-end

£m

Expenses paid

in year

£m

Payable at

year-end

£m

Joint ventures – – – 0.5

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.

Property Leases

During the year the Group incurred expenditure of £2.1m (2013: £2.0m) with Mark Holding and Finance Limited and £7.4m (2013:

£7.1m) with Steetley Investments Limited in respect of amounts due under lease agreements for premises occupied by the Group.

During the year the interests in Mark Holding and Finance Limited and Steetley Investments Limited were held in trust, the

beneficiaries of which are R G O’Rourke KBE and H D O’Rourke, who are also the beneficiaries of the trusts which ultimately own

Suffolk Partners Corporation. At the year-end the balance outstanding to Mark Holding and Finance Limited was £nil (2013: £0.5m)

and to Steetley Investments Limited was £nil (2013: £nil). No amounts were written off in the period by either party in respect of

amounts payable under the agreements entered into.

Consultancy costs

During the year the Group incurred expenditure of £0.9m (2013: £0.7m) with Cellence Plus Limited. During the year the interests

in Cellence Plus Limited were held in trust, the beneficiaries of which are R G O’Rourke KBE and H D O’Rourke, who are also the

beneficiaries of the trusts which ultimately own Suffolk Partners Corporation. At the year-end the balance outstanding to Cellence

Plus Limited was £nil (2013: £nil). No amounts were written off in the period by either party in respect of amounts payable under

the agreements entered into.

Share acquisition

On 30 April 2013, Explore Capital Limited, a subsidiary of the Group, acquired 100 per cent of the share capital of Sycamore

Properties Limited (‘Sycamore’). Prior to the acquisition the interests in Sycamore were held in trust, the beneficiaries of which

were R G O’Rourke KBE and H D O’Rourke, who are also the beneficiaries of the trusts which ultimately own Suffolk Partners

Corporation. Further details are provided in note 14.

Loans

During the year, the Group loaned £0.2m (2013: £2.4m) 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 £16.1m (2013: £15.3m).

The Group has a minority share of a syndicated senior debt facility jointly repayable from Southside & City Developments Limited

and KDC Properties Limited. The Group’s interest in the senior debt facility ranks pari-passu with other lenders, who are financial

institutions. During the year the Group loaned £0.8m (2013: £1.4m) to Southside & City Developments Limited. The loans entered

into are based on normal commercial terms. C Klerides and V Papadopoulos are Directors of Laing O’Rourke Corporation Limited

and Southside & City Developments Limited. At the year-end the fair value of the amounts outstanding was £10.7m (2013: £9.2m).

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 loaned £1.1m (2013: £0.5m) to Augur Investments Limited. Suffolk Partners Corporation is the ultimate

parent company of Laing O’Rourke Corporation Limited and a 50 percent shareholder of Augur Investments Limited. The loan is

subject to interest at commercial rates. At the year-end the balance outstanding was £5.1m (2013: £3.8m).

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



35 Related Party Transactions and Balances continued Loans to and from joint ventures and associates

At 31 March 2014 loans to joint ventures amounted to £84.4m (2013: £83.4m) and loans from joint ventures amounted to £28.7m

(2013: £46.2m). During the normal course of business the Group provided services to, and received management fees from

certain joint ventures and associates amounting to £4.3m (2013: £2.2m). Amounts due to and from joint ventures and associates

at 31 March 2014 are disclosed within investments in joint ventures and associates, trade and other receivables and trade and

other payables in notes 15, 23 and 25 respectively.

36 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

KBE and H D O’Rourke.

37 Reconciliation of Net Cash Flow to Movement in Net Funds

2014

£m

Restated

2013

£m

Increase in cash and cash equivalents for the year 41.2 67.6

Cash inflow from debt and lease financing 74.3 37.9

Change in net funds resulting from cash flows 115.5 105.5

New finance leases (90.8) (39.0)

Non-cash exceptional items – 9.4

Acquisitions (13.2) –

Foreign exchange translation differences (42.3) 13.0

Movement in net funds in the year (30.8) 88.9

Net funds at 1 April 439.4 350.5

Net funds at 31 March 408.6 439.4

38 Changes in accounting policies During the current year the Group early adopted IFRS 10, ‘Consolidated financial statements’, IFRS 11, ‘Joint arrangements’,

IFRS 12, ‘Disclosure of interests in other entities’, and consequential amendments to IAS 28, ‘Investments in associates and

joint ventures’ and IAS 27, ‘Separate financial statements’.

The Group has considered the structure and legal form of each joint arrangement, the terms agreed by the parties in the

contractual arrangement and, where relevant, other facts and circumstances. While in the majority of cases, the accounting

treatment of the joint arrangement remains unchanged under the new guidance, the following joint arrangements are affected;

Joint arrangement Accounting treatment prior to the adoption of IFRS 11 New classification

HILOR JV Equity method Joint operation

Laing O’Rourke – Bachy Soletanche JV Equity method Joint operation

Laing O’Rourke – Hsin Chong Paul Y JV Equity method Joint operation

Laing O’Rourke – Kier Kaden JV Equity method Joint operation

LORRCRPT JV Equity method Joint operation

Strategic Indigenous Housing and Infrastructure

Program Alliance Equity method Joint operation

The Group recognised its share of the assets, liabilities, revenue and expenses in the joint operations listed above at the beginning

of the earliest period presented (1 April 2012).

The effect of the change in accounting policies is shown in the following tables. As per the adoption criteria included in IFRS 11,

only one comparative period is shown.


FINANCIALS

38 Changes in accounting policies continued 38.1 Impact of change in accounting policy on the consolidated statement of financial position

As at

31 March

2013

(previously

stated)

£m

Change in

treatment of

certain JAs

£m

As at

31 March

2013

(restated)

£m

Assets

Non-current assets

Intangible assets 345.8 0.1 345.9

Investments in joint ventures and associates 51.5 (3.7) 47.8

Loans to joint ventures 59.1 (2.1) 57.0

Property, plant and equipment 268.0 3.3 271.3

Investment property 59.0 – 59.0

Deferred tax assets 26.5 – 26.5

Trade and other receivables 24.8 – 24.8

Restricted financial assets 0.3 – 0.3

Total non-current assets 835.0 (2.4) 832.6

Current assets

Inventories 289.7 – 289.7

Trade and other receivables 499.4 28.9 528.3

Available-for-sale financial assets 0.7 – 0.7

Derivative financial instruments 2.8 – 2.8

Other investments 4.2 – 4.2

Assets held-for-sale 6.6 – 6.6

Cash and cash equivalents 684.0 29.8 713.8

Total current assets 1,487.4 58.7 1,546.1

Total assets 2,322.4 56.3 2,378.7

Liabilities

Current liabilities

Borrowings (152.6) – (152.6)

Trade and other payables (1,295.1) (57.5) (1,352.6)

Provisions (15.5) 1.6 (13.9)

Derivative financial instruments (0.7) – (0.7)

Current tax liabilities (18.1) – (18.1)

Liabilities held-for-sale (1.2) – (1.2)

Total current liabilities (1,483.2) (55.9) (1,539.1)


Borrowings (121.8) – (121.8)

Trade and other payables (70.6) (0.4) (71.0)

Provisions (25.3) – (25.3)

Deferred tax liabilities (6.4) – (6.4)

Total non-current liabilities (224.1) (0.4) (224.5)

Total liabilities (1,707.3) (56.3) (1,763.6)

Net assets 615.1 – 615.1

Equity

Share capital – – –

Share premium 286.4 – 286.4

Fair value reserve (1.4) – (1.4)

Hedging reserve 1.1 – 1.1

Foreign currency translation reserve 55.7 – 55.7

Retained earnings 270.3 – 270.3

Total equity attributable to owners of the Parent 612.1 – 612.1

Non-controlling interests 3.0 – 3.0

Total equity 615.1 – 615.1



38 Changes in accounting policies continued 38.2 Impact of change in accounting policy on the consolidated income statement

Total

2013

(previously

stated)

£m

Change in

treatment of

certain JAs

£m

Total

2013

(restated)

£m

Continuing operations

Total revenue 3,566.9 (3.7) 3,563.2

Less: share of joint ventures’ and associates’ revenue (339.3) 112.3 (227.0)

Revenue 3,227.6 108.6 3,336.2

Cost of sales (2,942.7) (116.2) (3,058.9)

Gross profit 284.9 (7.6) 277.3

Administrative expenses (229.4) – (229.4)

Other operating income 3.6 (0.6) 3.0

Operating profit 59.1 (8.2) 50.9

Share of post-tax profit of joint ventures and associates 1.1 8.0 9.1

Profit from operations 60.2 (0.2) 60.0

Net non-operating expense (0.4) – (0.4)

Finance income 8.9 0.2 9.1

Finance expense (11.7) – (11.7)

Net financing expense (2.8) 0.2 (2.6)

Profit before tax 57.0 – 57.0

Income tax expense (13.2) – (13.2)

Profit for the year from continuing operations 43.8 – 43.8

Discontinued operations

Loss for the year from discontinued operations (2.7) – (2.7)

Profit for the year 41.1 – 41.1

38.3 Impact of change in accounting policy on the consolidated statement of comprehensive income

Total

2013

(previously

stated)

£m

Change in

treatment of

certain JAs

£m

Total

2013

(restated)

£m

Profit for the year 41.1 – 41.1

Other comprehensive income:

Items that may be subsequently reclassified to profit or loss

Exchange differences on translating foreign operations 7.6 (0.3) 7.3

Available-for-sale financial assets 0.3 – 0.3

Cash flow hedges 1.1 – 1.1

Share of other comprehensive income of investments accounted for using the

equity method 0.9 0.3 1.2

Other comprehensive income for the year, net of tax 9.9 – 9.9

Total comprehensive income for the year 51.0 – 51.0

Attributable to:

Owners of the Parent 50.0 – 50.0

Non-controlling interests 1.0 – 1.0

51.0 – 51.0


FINANCIALS

38 Changes in accounting policies continued 38.4 Impact of change in accounting policy on the consolidated statement of cash flows

2013

(previously

stated)

£m

Change in

treatment of

certain JAs

£m

2013

(restated)

£m

Cash flows from operating activities

Profit before tax from continuing operations 57.0 – 57.0

Loss before tax from discontinued operations (3.7) – (3.7)

Adjustments for:

Non-cash exceptional items 14.9 (0.6) 14.3

Depreciation and amortisation 52.9 1.4 54.3

Profit on disposal of property, plant and equipment (2.5) – (2.5)

Loss on disposal of intangibles 0.1 – 0.1

Net financing costs 2.8 (0.2) 2.6

Share of post tax profit of joint ventures and associates (1.1) (8.0) (9.1)

Increase in trade and other receivables (32.9) 12.4 (20.5)

Increase in inventories (47.9) – (47.9)

Increase in trade and other payables and provisions 68.9 2.9 71.8

Other (0.1) 0.6 0.5

Cash generated from operations 108.4 8.5 116.9

Interest paid (11.7) – (11.7)

Tax paid (4.6) – (4.6)

Net cash generated from operating activities 92.1 8.5 100.6

Cash flows from investing activities

Purchase of property, plant and equipment (29.4) (2.6) (32.0)

Purchase of intangible assets (6.3) – (6.3)

Payments to acquire joint ventures and associates (3.9) 3.9 –

Proceeds from disposal of available-for-sale financial assets 2.8 – 2.8

Proceeds from sale of property, plant and equipment 20.3 – 20.3

Proceeds from sale of intangibles 0.1 – 0.1

Proceeds from sale of investment property 1.7 – 1.7

Proceeds from disposal of joint ventures and associates 0.6 – 0.6

Loans to joint ventures and associates (4.9) 0.2 (4.7)

Loans repaid by joint ventures and associates 2.3 (1.7) 0.6

Interest received 8.9 0.3 9.2

Distributions received from joint ventures and associates 23.3 (10.1) 13.2

Net cash generated from investing activities 15.5 (10.0) 5.5

Cash flows from financing activities

Proceeds from new bank loans 58.9 – 58.9

Repayments of bank loans (57.2) – (57.2)

Finance lease principal repayments (39.4) (0.2) (39.6)

Dividends paid to non-controlling interests (0.6) – (0.6)

Net cash used in financing activities (38.3) (0.2) (38.5)

Net increase in cash and cash equivalents 69.3 (1.7) 67.6

Cash and cash equivalents at beginning of year 600.6 29.0 629.6

Effect of exchange rate fluctuations on cash held 14.1 2.5 16.6

Cash and cash equivalents at end of year 684.0 29.8 713.8

38.5 Impact of change in accounting policy on the statement of changes in equity

There is no impact on the statement of changes in equity resulting from the change in accounting policies.



39 Principal Subsidiaries, Joint Arrangements and Associates

Principal subsidiaries Principal activity

Group interest

in ordinary

voting shares Principal place of business

Austrak Pty Limited Manufacture of construction products 100% Australia

Bison Manufacturing Limited Manufacture of precast concrete 100% England and Wales

Crown House Technologies Limited Mechanical and electrical contracting 100% England and Wales

Expanded Limited Civil and structural engineering, piling

and demolition 100% England and Wales

Explore Capital Limited Holding company 100% England and Wales

Explore Investments Australia Pty Limited Property development 100% Australia

Explore Investments Limited Commercial property development 100% England and Wales

Explore Living Limited Residential development 100% England and Wales

Explore Living Balls Park Limited Residential development 100% England and Wales

Explore Manufacturing Limited Manufacture of construction products 100% England and Wales

John Laing International Limited Overseas contracting 100% England and Wales

Laing O’Rourke Australia Construction

Pty Limited

Building contracting, civil engineering,

infrastructure and plant hire 100% Australia

Laing O’Rourke Australia Holdings Limited Holding company 100% Cyprus

Laing O’Rourke Australia Pty Limited Holding company 100% Australia

Laing O’Rourke Canada Limited Building contracting 100% Canada

Laing O’Rourke Construction Limited Building contracting, civil engineering

and infrastructure 100% England and Wales

Laing O’Rourke Construction Hong Kong

Limited

Building contracting, civil engineering

and infrastructure 100% Hong Kong

Laing O’Rourke Infrastructure Limited Civil engineering and infrastructure 100% England and Wales

Laing O’Rourke Ireland Holdings Limited Holding company 100% Cyprus

Laing O’Rourke Ireland Limited Building contracting 100% Ireland

Laing O’Rourke Middle East

Holdings Limited

Building contracting and

civil engineering 100% Cyprus

Laing O’Rourke plc Holding company 100% England and Wales

Laing O’Rourke Services Limited Service company 100% England and Wales

Laing O’Rourke Utilities Limited Utilities contracting 100% England and Wales

Naturstein Vetter GmbH Finished stone products 100% Germany

O’Rourke Investments Holdings (UK) Limited Holding company 100% England and Wales

Select Plant Hire Company Limited Plant hire and operations 100% England and Wales

Vetter UK Limited Finished stone products 100% England and Wales


FINANCIALS

39 Principal Subsidiaries, Joint Arrangements and Associates continued

Joint ventures Principal activity

Group

ownership

interest Principal place of business

Aldar Laing O’Rourke Construction LLC Construction and project management 49% United Arab Emirates

Alder Hey SPV Limited PFI accommodation operator hospital 40% England and Wales

Barnsley SPV One Limited PFI accommodation operator schools 40% England and Wales

Barnsley SPV Two Limited PFI accommodation operator schools 40% England and Wales

Barnsley SPV Three Limited PFI accommodation operator schools 40% England and Wales

Barnsley Local Education Partnership Limited PFI accommodation operator schools 40% England and Wales

CLM Delivery Partner Limited Delivery partner for 2012 Olympics 37.5% England and Wales

Emirates Precast Construction LLC Manufacture of precast concrete 40% United Arab Emirates

Health Montreal Collective CJV

Limited Partnership Building and civil engineering 50% Canada

Health Montreal Collective

Limited Partnership PFI accommodation operator hospital 25% Canada

Newham Transformation Partnership Limited PFI accommodation operator schools 68% England and Wales

Newham Learning Partnership Project

Co Limited PFI accommodation operator schools 68% England and Wales

S&W TLP Project Co One Limited PFI accommodation operator schools 40% England and Wales

S&W TLP Project Co Two Limited PFI accommodation operator schools 40% England and Wales

S&W TLP Education Partnership Limited PFI accommodation operator schools 40% England and Wales

Thames Partnership for Learning Limited PFI accommodation operator schools 40% England and Wales

TPFL Project Co One Limited PFI accommodation operator schools 80% England and Wales

TPFL Regeneration Limited Affordable housing 80% England and Wales

The Laing O’Rourke Corporation Limited Group has greater than 50 percent ownership interest in a number of joint ventures.

These ownership interests do not constitute control as the voting power attached to each of these ownership interests is

50 percent or less.

All of the above joint arrangements have a year-end of 31 March with the exception of Aldar Laing O’Rourke Construction LLC,

Alder Hey SPV Limited, CLM Delivery Partner Limited and Health Montreal Collective Limited Partnership which have

31 December year-ends and Health Montreal Collective CJV Limited Partnership which has a 30 April year-end.

Joint operations

BYLOR Civil engineering 50% England and Wales

Heathrow East Terminal Project Civil engineering 45% England and Wales

HILOR JV Rail infrastructure 50% Australia

Laing O’Rourke – Bachy Soletanche JV Infrastructure and building construction 50% Hong Kong

Laing O’Rourke – Hsin Chong Paul Y JV Infrastructure and building construction 55% Hong Kong

Laing O’Rourke – Kier Kaden JV Infrastructure and building construction 43% Hong Kong

LORRCRPT JV Mining infrastructure 67.5% Australia

M-Pact Manchester Civil engineering 60% England and Wales

Strategic Indigenous Housing and

Infrastructure Program Alliance Housing construction 33.3% Australia

Tamesis – Main Works Civil engineering 75% England and Wales

Tamesis – Thermal Hydrolysis Plant Civil engineering 50% England and Wales

Associates

North East Business Park Pty Limited Property development 25% Australia


CONTACTS

Europe Hub offices

UNITED KINGDOM

Dartford

Bridge Place 1 & 2

Anchor Boulevard

Crossways

Dartford

Kent DA2 6SN

United Kingdom

Tel: +44 (0)1322 296200

Fax: +44 (0)1322 296262

Cambridgeshire

Barford Road

Little Barford

St Neots

Cambridgeshire PE19 6WB

United Kingdom

Tel: +44 (0)1480 402500

Fax: +44 (0)1480 402572

Cardiff

Building 2

The Eastern Business Park

Wern Fawr Lane

St Mellons

Cardiff CF3 5XA

United Kingdom

Tel: +44 (0)2920 775000

Fax: +44 (0)2920 778482

Leeds

3320 Century Way

Thorpe Park

Leeds LS15 8ZB

United Kingdom

Tel: +44 (0)113 2840250

Fax: +44 (0)113 2607054

Manchester

Archway 3

Birley Fields

Greenheys Lane West

Hulme

Manchester M15 5QJ

United Kingdom

Tel: +44 (0)161 2276000

Fax: +44 (0)161 2276199

Newcastle

Rushwood

Balliol Business Park

Benton Lane

Newcastle upon Tyne

NE12 8EW

United Kingdom

Tel: +44 (0)191 2381430

Fax: +44 (0)191 2381431

Scotland

21 Woodhall

Eurocentral

Holytown

Motherwell ML1 4YT

United Kingdom

Tel: +44 (0)1698 731000

Fax: +44 (0)1698 731001

Steetley

Explore Industrial Park

Off A619

Worksop

Nottinghamshire S80 3DT

United Kingdom

Tel: +44 (0)1777 353000

Fax: +44 (0)1777 353027

CANADA

Calgary

888 – 3rd Street SW

Suite 1000

Bankers Hall

West Tower

Calgary

Alberta

Toronto

401 Bay Street

Suite 1600

Toronto M5H 2Y4

Ontario

Canada

Tel: +1416 (0)646 5167

Vancouver

Suite 500

666 Burrard Street

Vancouver

BC

V6C 3P6


Abu Dhabi

Ladies Beach

PO Box 110800

Abu Dhabi

United Arab Emirates

Tel: +971 (0)25017 017

Fax: +971 (0)25017 018

Dubai

Al Shoala Building

5th Floor

Block A

PO Box 25948

Dubai

United Arab Emirates

Tel: +971 (0)42949 944

Fax: +971 (0)42949 049

Australia Hub offices

AUSTRALIA

NEW SOUTH WALES

Sydney

Level 4

Innovation Place

100 Arthur Street

North Sydney NSW 2060

Australia

Tel: +61 (0)2 9903 0300

Fax: +61 (0)2 9903 0333

Hunter Valley

Cnr Strathmore and

Blakefield Roads

Muswellbrook

NSW 2333

Australia

Tel: +61 (0)2 6543 4600

Fax: +61 (0)2 6543 4060

Sydney Rail Operations

14 Carter Street

Homebush Bay

NSW 2127

Australia

Tel: +61 (0)2 9647 3200

Fax: +61 (0)2 9647 3205

Hunter Valley Rail Operations

Junction St

Telarah

NSW 2333

Australia

Tel: +61 (0)2 4932 3636

Fax: +61 (0)2 4932 3680

QUEENSLAND

Brisbane – Principal Office

Level 3

895 Ann Street

Fortitude Valley

QLD 4006

Australia

Tel: +61 (0)7 3223 2300

Fax: +61 (0)7 3223 2303

Brisbane

Level 3

825 Ann Street

Brisbane

QLD 4000

Australia

Tel: +61 (0)7 3012 3300

VICTORIA/SOUTH AUSTRALIA

HWT Tower

40 City Road

Southgate

VIC 3006

WESTERN AUSTRALIA

Perth

Level 1

3 Craig Street

Burswood

WA 6100

Australia

Tel: +61 (0)8 9362 7111

Fax: +61 (0)8 9362 7100

NORTHERN TERRITORY

Darwin

24 Sandgroves Crescent

Winnellie

NT 0820

Australia

Tel: +61 (0)8 8984 3477

Fax: +61 (0)8 8984 4325

HONG KONG

11/F Kerry Centre

683 King’s Road

Quarry Bay

Hong Kong

Tel: +852 (0) 2721 0143

Fax: +852 (0) 2721 0807

LAING O’ROURKE’S CAPABILITIES

WORLD-CLASS CAPABILITIES

Project investment services The Group’s global project development,

structured property and infrastructure

fi nancing activities cover the full range

of preconstruction services, including

feasibility studies, investment appraisals,

lifecycle costs and management.

Expertise includes complex Private

Finance Initiative (PFI) and Public

Private Partnership (PPP) investment

arrangements and management.

Engineering consultancyOur internal advisory taskforce, the

Engineering Excellence Group (EnEx.G),

provides research, innovation, expertise,

advice and direction. The group is

responsible for driving the adoption

of standardised design protocols and

Design for Manufacture and Assembly

(DfMA), collaborating with design,

technology, supply chain and educational

partners to support clients’ needs.

Capabilities include civil, structural,

materials, mechanical, electrical,

chemical and process engineering.

With differing opportunities and challenges in our

geographic regions, the Group brings an informed

and incisive focus to each area. With a growing

proportion of revenue generated outside the UK,

Laing O’Rourke is a truly international business with

operations across four continents. The business

is operationally managed from two major hubs,

with each comprising countries and markets that

provide attractive sector and customer opportunities

aligned to our business model and ways of working

Concept Feasibility Funding

Concept Feasibility Funding

Site Preparation

SitePreparation

Construction

Design & Engineering

Design &Engineering

Manufacture

Assembly

Fit-out & Finishing

Fit-out& Finishing

Testing & Commissioning

Testing & Commissioning

Completion

Completion

Laing O’Rourke’s Unique Business Offering

Target

Time

Traditional Construction

%70DfMA deployment

%60onsite labour reduction

%30time saving

Digital engineering Information modelling, visualisation,

pricing and benchmarking capabilities

– digital engineering generates additional

value through the intelligent application

of best-practice thinking and technologies

much earlier in the design process. Our

detailed database of previous projects and


(DfMA) component libraries allows us to

set design parameters before concept

design. This drives effi ciencies from day

one, reduces capital and whole-life

running costs and enables us to develop

accurate milestones for the build

programme to ensure greater

predictability and assurance of the

outcome at the outset.

Project managementLaing O’Rourke’s project management

experience includes some of the most

complex engineering and construction

jobs in recent history. Using a proprietary

quality management system called

The LOR Way, we verify readiness to

proceed through key project gateways.

Coupled with the know-how of our project

managers, this process facilitates

successful completion of the most

complex projects, from engineering

and procurement to construction

and handover.

Our procurement approach sources

high-quality goods and services, at the

right time, at the lowest cost, produced

sustainably and delivered safely. We

provide integrated, reliable, and cost-

effi cient supply chain management

services based our extensive knowledge

of procurement practices across global

and local markets, coupled with the

right tools, and know-how to ensure

the success of our projects.

Design for Manufacture and

Assembly (DfMA)Explore Manufacturing and modular

solutions comprise offsite factory

operations combining lean automation

processes and quality assurance systems,

transforming traditional construction

methodologies into a modern process

of component-based assembly. Product

sets include precast concrete building

components, modular mechanical and

electrical installations, minerals-handling

conveyor systems, rail sleepers and

completed internal room ‘pods’, and are

marketed through a number of industry-

leading brands including Austrak, Bison,

Modulor and Redispan.

Plant and logistics management Select Plant is one of the industry’s

leading integrated construction plant

and equipment service providers to

major project delivery, underpinned by

risk-based processes and systems.

Made up exclusively of leading brands,

our fl eet of lifting solutions, vehicles

and construction-related equipment

and services meets the unique demands

of a project, from congested high-rise

construction to mega-scale groundworks

and civil engineering packages on

economic infrastructure projects.

We are one of the largest providers of

mining and minerals-handling industrial

plant services in Australia, offering

full-service installation, maintenance

and reliability checks. We work in close

partnership with some of the world’s

leading heavy industrial equipment and

machinery manufacturers as an accredited

installation and maintenance provider.

Civil engineeringWe offer an end-to-end capability in the

geotechnical, environmental, structural

and civil engineering construction phases

of major projects. Backed by a central

technical design and engineering

resource, we can deliver the full range

of demolition, site remediation, piling,

tunnelling, precast concrete, post-

tensioning, component assembly and

structures delivery techniques. This

diverse capability streamlines the delivery

process by enabling us to undertake

works directly, reducing the time and

cost implications associated with

multiple interfaces.

Construction servicesWe offer a full range of building and

refurbishment services to provide a

complete project delivery solution.

Capabilities include ‘buildability’ studies,


(DfMA), remediation and enabling works,

logistics management, integrated

construction delivery, building

technologies installation and testing, and

commissioning of major building projects.

Infrastructure services Infrastructure services comprise the full

range of civil engineering and programme

management expertise on major economic

infrastructure projects. Expertise covers

oil and gas exploration, processing and

transportation, commuter and heavy-haul

rail, power generation and distribution,

water and utilities networks, mining and

natural resources across the lifecycle of

capital assets. Services span the lifecycle

of capital assets, from feasibility through

planning, design and delivery to

operational maintenance.

Mechanical, electrical and

process technologiesThe Group, which includes Crown House

Technologies, is one of the industry’s

leading building and infrastructure

technology services integrators. We are

redefi ning the value of asset services as

a major systems integrator on complex

construction programmes, utilising digital

engineering and standardised components

to meet the increasingly challenging

requirements of clients and end-users

for future-proofed buildings and

infrastructure that meet the most

exacting environmental and economic

performance standards.

Asset management Laing O’Rourke provides a fully populated

asset management system derived from

the digitally engineered model and

proactively supports effi cient operation

and maintenance. This ensures that the

capital asset remains sustainable and

cost-effective at all times. Advanced

animated visualisation technologies

are integral to this approach, allowing

facilities management and maintenance

teams to maximise the value of the

asset over its operational life through

re-purposing and continually improving

operational effectiveness.

SEE OVERLEAF FOR LAING O’ROURKE’S CAPABILITIES

OR VISIT: WWW.LAINGOROURKE.COM

Production of this reportThis report is printed by an EMAS-certifi ed Carbon Neutral® company, whose Environmental Management System is certifi ed to ISO 14001. 100 per cent of the inks used are vegetable-based, 95 per cent of press chemicals are recycled for further use and, on average, 99 per cent of waste associated with this production will be recycled. The papers used are FSC® certifi ed. The pulp for each is bleached using an Elemental Chlorine Free (ECF) process.

Written, designed and produced by Laing O’Rourke Corporate Communications and Black Sun Plc.

© Laing O’Rourke 2014, all rights reserved

LAING O’ROURKE CORPORATION

UK contact address:

Laing O’Rourke plc

Bridge Place

Anchor Boulevard

Crossways

Dartford, Kent

DA2 6SN

United Kingdom

T +44 (0)1322 296 200

F +44 (0)1322 296 262

www.laingorourke.com

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