Вы находитесь на странице: 1из 150

ANNUAL REVIEW 2014

ENGINEERING CERTAINTY
IN A COMPLEX WORLD

ENGINEERING THE FUTURE

We aim to become the rst choice


engineering and construction
partner for our customers

Laing ORourke 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 worlds 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 signicant
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 OROURKE AT A GLANCE
OR VISIT: WWW.LAINGOROURKE.COM

Cape Lambert, Pilbara, Western Australia

LAING OROURKE AT A GLANCE

DYNAMIC GROWTH
SECTORS
We are carefully targeting customers in dynamic growth
sectors and selectively pursuing opportunities that
complement our values, capabilities, nancial goals
and delivery discipline

TARGETED GEOGRAPHIC
MARKETS
CAN
AD
A

We are delivering a built environment


that meets the economic, social
and environmental challenges of a
rapidly changing world, targeting
attractive geographic markets.

GDOM
KIN
D
ITE
UN

EUROPE HUB

Canada
Saudi Arabia
United Arab Emirates
United Kingdom

FOR MORE DETAIL


SEE PAGE 34

NG
KO
NG
HO

AUSTRALIA HUB

Australia
Hong Kong
New Zealand
Southeast Asia

FOR MORE DETAIL


SEE PAGE 50

AUST

WORLD-CLASS CAPABILITIES
PROJECT
INVESTMENT
SERVICES

ENGINEERING
CONSULTANCY

DIGITAL
ENGINEERING

PROJECT
MANAGEMENT

DESIGN FOR
MANUFACTURE AND
ASSEMBLY (DfMA)

COMMERCIAL

ACCOMMODATION

SOCIAL
INFRASTRUCTURE

ECONOMIC
INFRASTRUCTURE

Transport

Commercial Ofces
Retail & Mixed-use
Data Centres
Industrial
Science & Research
Sport & Leisure
Hotels
Stadia
Leisure Complexes

High-rise
Single-unit Residential
Multi-unit Residential
Social Housing

Defence
Education
Healthcare
Law & Order

Aviation
Highways
Marine
Commuter Rail

Power

SAUD
I AR
AB
IA

Generation
Networks
New Nuclear
Renewables

ATES
EMIR
RAB
DA
ITE
UN

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

NE
W

ZE
AL
AN
D

Oil & Gas

TRALIA

PLANT AND
LOGISTICS
MANAGEMENT

CIVIL
ENGINEERING

CONSTRUCTION
SERVICES

INFRASTRUCTURE
SERVICES

Labour Accommodation
LNG & CSG Terminals
Pipelines & Pump Stations
Processing Plants
Storage
Water Treatment
Civil Infrastructure

MECHANICAL,
ELECTRICAL
AND PROCESS
TECHNOLOGIES

ASSET
MANAGEMENT

Laing ORourke at a glance


Contents
Performance highlights
Chairmans statement

ifc
1
2
4

OVERVIEW

OVERVIEW

CONTENTS

STRATEGIC REPORT
Group Chief Executives review
Market overview
Business model
Strategy
Key performance indicators
Group nancial review

6
9
12
18
26
30

Hub performance
34
50

Safety and sustainability


Overview
Europe Hub
Australia Hub

Risk management
Summary of principal risks

58
63
72
78
81

STRATEGIC REPORT

Europe Hub
Australia Hub

GOVERNANCE
Corporate governance
Board of Directors
Senior leadership team

83
88
89

92
94
95
96
97
98
99
100
101
136
ibc

GOVERNANCE

FINANCIALS
Directors, ofcers and advisers
Directors report
Independent auditors report
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated statement of nancial position
Consolidated statement of cash ows
Consolidated statement of changes in equity
Notes to the nancial statements
Contacts
Laing ORourkes capabilities

FINANCIALS

VIEW OUR ANNUAL REVIEW ONLINE


A FULL VERSION OF OUR ANNUAL REVIEW
IS AVAILABLE ONLINE AT:
ANNUALREVIEW2014.LAINGOROURKE.COM
FOR MORE INFORMATION VISIT:
WWW.LAINGOROURKE.COM
FOR THE LATEST NEWS VISIT:
WWW.INFOWORKS.LAINGOROURKE.COM

Laing ORourke | Annual Review 2014

PERFORMANCE HIGHLIGHTS

FINANCIAL PERFORMANCE:
Stable trading performance despite
continuing economic uncertainties

MANAGED REVENUE

ORDER BOOK

EARNINGS BEFORE INTEREST AND TAX

4.41bn

7.4bn

60.1m

( billion)

( billion)

( million)

4
3

120

10

5
4.3
3.5

4.0
3.3

4.3

4.4

3.5

3.6

4.4

8.2

8.1

8.2

100

8.2
7.4

3.6

110

80

78

6
60
4

40
2

1
0

10

11

12

13*

14

60

67
51
40

54

11

12

58

53

34

20

10

11

12

13*

14

10

13*

14

EBIT pre-exceptional items


EBIT post-exceptional tems

Managed revenue
Total revenue

Managed revenue increased 0.5 per cent


to 4.41 billion.

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

CASH BALANCES

FINANCIAL CAPACITY

8.5%

691m

772m

(%)

( million)

( million)

12
10

800
10.1

716

10.2
9.1

1,000

600
8.7

714
619

8.5

691

905

873

800

601

751

762

11

12

772

600
6

440

400

4
200

270

283

409
400

321

200

2
0

10

11

12

13*

14

10

11

12

13*

14

10

13*

14

Gross cash
Net funds

Gross margin pre-exceptional items at


8.5 per cent reecting project portfolio
quality and cost control.

Maintained strong gross cash position


of 691 million.

Financial capacity declined 12 per cent


to 772 million.

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

Laing ORourke | Annual Review 2014

OPERATIONAL
PERFORMANCE:

Improved safety
performance and
high degree of
client satisfaction

Good progress in project


delivery and strategy
implementation

ACCIDENT FREQUENCY RATE (AFR)

Value-enhancing project wins from


new customers in target sectors.
Increasing repeat business
and contract extensions from
existing customers.
Broadened manufacturing capabilities
following inll 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 efciencies 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.

0.18
0.25
0.23

0.24

0.20

0.21
0.18

0.18
0.15
0.10
0.05
0.00

10

11

12

13

14

AFR improved to 0.18 in the year


reecting an industry-leading
performance and further validation
of our investment in Mission Zero.

CLIENT SATISFACTION

OUTLOOK:
Drive customer adoption
of our unique business
offering

Moderate growth can be expected for


the Group through to 2015, despite the
difcult 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 benets derived from the
widespread deployment of Design for
Manufacture and Assembly (DfMA),
plus greater cost efciencies in
Group overheads.
Laing ORourke remains on track to
achieve its 2014/15 nancial targets
and, beyond these, is well positioned
to full its strategic objectives over
the medium to long term.

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.

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 protable performance
and made good progress against the key elements
of our strategy to offer innovative solutions that
benet our business and the wider industry.
ANNA STEWART
GROUP CHIEF EXECUTIVE

OVERVIEW

SAFETY AND
SUSTAINABILITY:

CHAIRMANS STATEMENT

DELIVERING A
DIFFERENT WAY

Laing ORourke has been built on the


belief of nding and following a better
way, and our people remain the key to
this success.
RAY OROURKE KBE
CHAIRMAN

I am pleased to report another protable 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.

Our Group Chief Executive, Anna Stewart, introduced greater


discipline in our decision-making processes, took major steps
to increase our operational efciency, 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.

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.

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.

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.

Over the past few years, we have faced signicant 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.

Laing ORourke | Annual Review 2014

The Board is fully committed to the integration of sustainable


development across the Group with a focus on broader
social and environmental issues to benet the stakeholder
groups most directly impacted by our operations. Our project
delivery teams work tirelessly to enhance the contributions
of Laing ORourke 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 PEOPLE


During her 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
Groups strategy. This has included the creation of the Specialist
Trading Business Group in the UK to drive greater focus and
efciency 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). Pauls extensive
expertise will accelerate the development of the Groups
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.

I am pleased that Cathal ORourke has been appointed to the


role of Managing Director of the Australia Hub and to the Group
Executive Committee. Similarly, John OConnor 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 Groups continued protability
and growing levels of market condence 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 ORourke has been built on the belief of 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 OUTLOOK


We 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 condent 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 OROURKE KBE


CHAIRMAN

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.

Laing ORourke | Annual Review 2014

OVERVIEW

COMMITMENT TO SAFETY AND SUSTAINABILITY


Safety 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.

GROUP CHIEF EXECUTIVES REVIEW

GETTING CLOSER
TO OUR CUSTOMERS

Our best customers are those who are


condent in what they want and can
dene 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
GROUP CHIEF EXECUTIVE

WATCH THE CHIEF EXECUTIVES


REVIEW VIDEO AT:
ANNUALREVIEW2014.LAINGOROURKE.COM

Laing ORourke | Annual Review 2014

SAFETY AND SUSTAINABILITY


We 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 nancial
crisis will soon be felt again acutely. We are condent 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 benet 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. Difculty in assessing
what constitutes value often leads to very inefcient 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

Laing ORourke | Annual Review 2014

industry has sufcient capacity to continue to condone such


waste. We will have to nd better ways of determining the
value of a proposition.

PERFORMANCE OVERVIEW
Although 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
inationary pressures.
While continuing to invest extensively in the year, we have
generated strong cash ows and protability. Prot after tax
was slightly up on last year at 41.9 million on at revenue
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 condent
that our robust discipline will ensure we will deliver consistent
strong performances. We enjoy the condence of our
shareholders and nancial stakeholders and we respect
and appreciate the importance of their support.

STRATEGY
In 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 industrys products, seek a
more reliable outcome.
We are 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 conrm a 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

STRATEGIC REPORT

I am delighted to report on my 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 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.

GROUP CHIEF EXECUTIVES REVIEW CONTINUED

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.

PEOPLE
I 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 longerterm careers.
I recently announced some exciting leadership changes with
the appointment of John OConnor 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 nalise the team
capable of leading the Groups ambitions.

MARKET DYNAMICS
Europe Hub
In the UK, we are denitely experiencing an improvement in the
opportunities now available and in the pipeline. Inationary
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
condence is still fragile.
We are using this period of change as a catalyst for longoverdue 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 protable 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 Hub
The 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 specic to report at this time.

GOVERNANCE
During the year we evolved our governance structure and
committee composition in line with our business strategy, and
continued to enjoy excellent relationships with our 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 Governments payment charter.

Laing ORourke | Annual Review 2014

MARKET
OVERVIEW

INNOVATION

We have developed a number of new products this year and


have patented the designs, and I am condent 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.

STRATEGIC REPORT

Our 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 been carefully


navigating the challenging
economic landscape and
our nancial performance
pays testimony to that.
ANNA STEWART
GROUP CHIEF EXECUTIVE

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 condent of what they
want and can dene 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 condent 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

GLOBAL ECONOMIC ENVIRONMENT AND TRENDS


The global economy grew by 3.0 per cent in the 2013 January
to December scal period. Although still relatively slow, with
a slight downward trend in real terms, the rate of decline
has slowed signicantly 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, Chinas 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

Australia
Canada
UK
Hong Kong (China)
United Arab Emirates
World

2013 Economic
Growth Rate
(EGR)

2014
Anticipated
EGR

2.6
1.7
1.7
7.7
4.0
3.0

2.8
2.2
2.4
7.5
3.9
3.7

Source: International Monetary Fund: World Economic Situation and


Prospects 2014 Report (publication date: January 2014).

Laing ORourke | Annual Review 2014

GROUP CHIEF EXECUTIVES REVIEW CONTINUED

GENERAL ECONOMIC ENVIRONMENT AND MACRO


TRENDS IN REGIONS SERVED BY LAING OROURKE
Europe Hub
UK
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 ination 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 ow into construction again, the outlook is more
positive. Rising employment, increasing consumer and investor
condence, 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 ORourke 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 ORourke 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 Powers new headquarters
in Glasgow, where Laing ORourke is the main contractor.
Laing ORourke 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 governments 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 governments 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

Wind, Tidal and Other Renewables


Nuclear
Roads
Rail
Electricity Transmission
High Speed Rail
London Transport
Electricity Distribution
Nuclear Decommissioning

Laing ORourke 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 lowestprice basis, leading to an overall dilution in industry margins.
As construction volumes pick up, there are clear signs of cost
ination in the supply chain and shortages of supply in some
key trades. Laing ORourkes 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 ORourke
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
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. Specic large-scale upcoming
projects in these areas include Kitimat Export Terminal,
Prince Rupert and Pacic 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 Ofce for National Statistics.

10

Spend

73.2 billion
62.5 billion
33.6 billion
30.0 billion
24.8 billion
24.2 billion
17.2 billion
15.2 billion
12.6 billion

Laing ORourke | Annual Review 2014

Laing ORourke has strategically


increased its presence in key
construction and infrastructure
sectors which have good long-term
growth prospects.
ANNA STEWART
GROUP CHIEF EXECUTIVE

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 Dhabis 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, nance and manufacturing, creating opportunities
for the construction sector.

Australia Hub
Australia
Unlike the decline seen in most of the western economies as
a result of the global 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. Ofcial 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 ORourke
is well positioned on these projects, as well as work for
QGC and Australia Pacic LNG in Queensland. In the sector,
Laing ORourke 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 ORourke 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 browneld 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 ORourke has a strong track record in this sector,
delivering successful projects such as the billion dollar
Novo Rail alliance in Sydney, the electrication 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 Queenslands
largest-ever public transport project. Laing ORourke also
has extensive experience in structuring, 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 signicant schemes to market.
Hong Kong
The Hong Kong construction market is mature and well
established. Laing ORourkes 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.

2. Australian Bureau of Statistics.

Laing ORourke | Annual Review 2014

11

STRATEGIC REPORT

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.

BUSINESS MODEL

OUR PROVEN
APPROACH
SEE OVERLEAF FOR MORE INFORMATION ON OUR BUSINESS MODEL

MANCHESTER
CENTRAL LIBRARY
AND TOWN HALL
The award winning
transformation of one of
Manchesters 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.

12

Laing ORourke | Annual Review 2014

See more

ENABLING THE
ORGANISATION
PROJECT MANAGE

Using a proprietary quality management


system called The LOR Way,
incorporating our proven Core and
Enabling Processes, we resolve
conicts, 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
conicts and identify issues before they
become problems.

MANUFACTURE
Once a design is completed, the
specications 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-efcient
delivery. Our signicant investment in
offsite manufacturing means that we
have, in-house, some of the most
advanced facilities in the world.

ASSEMBLE
Our specialist delivery businesses
manage the complex logistics involved
in scheduling delivery of, and then
transporting, lifting and positioning,
the components ready for nal 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 nalised much sooner,
once again reducing time, and handing
control of the asset to the client much
earlier than traditional construction
can achieve.
Laing ORourkes 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 processhandling installations and xings.
This approach radically reduces waste,
minimises offsite trafc and onsite
labour, reduces programme, assures
quality and delivers cost certainty.

SELF-DELIVER
Laing ORourkes 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 nish of a project
and covers supply chain management,
eld procurement, materials
consolidation for controlled site release,
project controls and site administration
to nal commissioning and ongoing
maintenance.

VALUE CREATION
Our 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 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.

ASSET MANAGE
As 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 efciently 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 efciency while reducing
the running and maintenance costs
for the client.

Laing ORourke | Annual Review 2014

13

STRATEGIC REPORT

Project 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.

BUSINESS
BU
B
US
U
USINESS
SIIIN
SINE
S
NE
N
ES
ESS
E
SS
S
S MODEL
MO
M
OD
O
DE
D
EL
LC
CO
CONTINUED
ON
O
NT
TIN
T
NU
UE
U
ED
E
D

HOW WE
CREATE VALUE

CLIENTS, MARKETS
AND SECTORS
PRIORITISE AND SECURE
We focus exclusively on markets, sectors
and client opportunities with high growth
rates that meet our 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.

Laing ORourke is committed to


consistently delivering superior
service in the most efcient and
effective ways possible, for the
shared benet of our customers,
shareholders, employees and the
communities in which we work

CLIENTS, MARKETS
AND SECTORS

UNIQUE BUSINESS
OFFERING

DESIGN & ENGINEER


MARKETS

SECTORS

PRIORITISE
& SECURE

EARLY
ENGAGEMENT

CLIENTS

SELF-DELIVER

UNIQUE BUSINESS
OFFERING
EARLY ENGAGEMENT

DESIGN AND ENGINEER

Acting as a trusted adviser we help our


clients dene and validate their capital
investment decisions at the very start of
a project through a detailed appraisal of
the 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.

Our commitment to engineering


excellence is at the heart of our early
engagement approach. The Engineering
Excellence Group (EnEx.G) and our
extensive 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 efcient and effective
DfMA solutions into the nal design.

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 componentled design, reducing the complexities and
timescales associated with the traditional
design process.

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 justies their
investment decisions.
All projects share common elements,
therefore major benets 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
congured to suit any project type.
A growing number of leading design
consultants are adopting our approach
as the industrys default design process.

ENABLING
THE ORGANISATION

GE
NA
A
M

THROUGH-LIFE PROJECT MANAGEMENT

AS
SE
T

MANUFACTURE

ASSEMBLE

VALUE
CREATION

PAGE TITLE

SHAPING THE LONDON


SKYLINE
SEE OVERLEAF FOR MORE INFORMATION ON OUR BUSINESS MODEL

THE LEADENHALL
BUILDING
The Leadenhall Building is
a bold and dynamic addition
to the capitals 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
oor system, the application
of an active alignment
system to ensure precise
steelwork xing, and an
RFID (radio frequency
identication) system linked
to digital engineering.

14

Laing ORourke | Annual Review 2014

Laing ORourke | Annual Review 2014

15

SHAPING THE FUTURE


OF ENGINEERING
CLIENTS, MARKETS AND SECTORS

14

UNIQUE BUSINESS OFFERING

COLLABORATIVE
CUSTOMER
RELATIONSHIPS

STRATEGIC DESIGN
PARTNERSHIP

DIGITAL
ENGINEERING

The Leadenhall Development Company,


a joint venture between British Land
and Oxford Properties, has developed
a huge amount of respect and trust for
Laing ORourke over the course of the
contract up to practical completion in
June 2014. The organisation singled out
Laing ORourkes hands-on engineering
approach, open and transparent
information sharing and the can-do
ability to tackle the challenges faced.
Coupled with the Groups highly
motivated and driven project team,
led by Project Director Steve Cork,
the customer categorised us as
the ideal delivery partner.

Because of its asymmetric geometry, the


buildings dead load causes it to move to
the north. Laing ORourke 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
worlds fastest lifts. This has become
known as the start straight, end
straight methodology.

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.

Laing ORourke | Annual Review 2014

The iconic Leadenhall Building has already become


a major landmark on Londons 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

Digital engineering has been particularly


critical to the design and construction
methodology of the attic which houses
the buildings extensive plant
requirements. The complexity of the
geometry and intersections of the
steelwork would make it incredibly
difcult 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

DEVELOPING TALENT

With a highly restrictive building footprint,


the Laing ORourke project team utilised
the Groups proprietary-developed
E6 structural ooring solution, which
enabled the 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
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 oor area of 65,000m.

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
identied who could benet 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.

Laing ORourke | Annual Review 2014

PAGE TITLE

RE-ENGINEERING AUSTRALIAS
RESOURCES INDUSTRY
SEE OVERLEAF FOR MORE INFORMATION ON OUR BUSINESS MODEL

16

Laing ORourke | Annual Review 2014

CAPE LAMBERT
The Cape Lambert port serves
Rio Tintos mining operations
in Western Australias Pilbara
region. Laing ORourke is
currently delivering Phase B of
an expansion programme, which
will expand the Capes 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.

Laing ORourke | Annual Review 2014

17

RE-ENGINEERING
HOW WE DELIVER
CLIENTS, MARKETS AND SECTORS

UNIQUE BUSINESS OFFERING

DEEPENING CLIENT
RELATIONSHIPS

DIGITALLY
ENGINEERING
SUCCESS

TAILORING DfMA

Laing ORourke 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 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 Tintos expansion of the port.

As the project moves towards completion


in September 2014, the team can reect
on the many advantages that digital
engineering has brought to the scheme
at Cape Lambert. Major benets
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 identied
and mitigated than would previously
have been possible.

Laing ORourke 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 specically the use of
preassembled modules, while enhancing
safety, planning, sequencing site work
and quality control.

This relationship has beneted extensively


from the intelligent deployment of key
elements of the Groups 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.

Laing ORourke | Annual Review 2014

Working with BJC, Laing ORourkes steel


fabrication partners in Thailand, DfMA
facilitated the integration of additional

Laing ORourkes 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

ENABLING THE ORGANISATION

steel features which enabled safe and


efcient transportation and lifting. The
steel was fabricated at BJCs 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 efciency of movement once the
modules arrived onsite for reassembly.

ENABLING
SITE-LEVEL
INNOVATION

DRIVING PROCESS
IMPROVEMENT

Greater 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 ORourke
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.

The project implemented a material


tracking system, where modules and
steelwork are tagged for easy onsite
verication of their location and
incorporation into the structures.
This provides an efcient and planned
distribution of the components and avoids
losses either through time spent locating
the material or the cost of re-ordering.

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.

Laing ORourke | Annual Review 2014

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 identication (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.

STRATEGY

OUR STRATEGY
FRAMEWORK
Laing ORourke aims to become
the preferred choice engineering
and construction partner for clients
through the performance excellence
of its operational assets, 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

HONG KONG MASS


TRANSIT RAILWAY
Work to connect Hong Kongs
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.

18

The Groups 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.

LAING OROURKE VISION


To be the company of rst 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

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

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, nancial performance and human
capital management

GROUP STRATEGIC ROADMAP

CLIENTS,
MARKETS AND
SECTORS

UNIQUE
BUSINESS
OFFERING

We will build collaborative


relationships becoming
a partner of rst choice

We will challenge and


change the market by
delivering a unique
business offering

ENABLING
THE ORGANISATION
We will enable the
organisation by being
lean and agile

STRATEGIC ACTION AREAS


Expand in high-growth

Mandate digital

markets
Develop bespoke
sector strategies
Deepen customer
relationships

engineering
Integrate EnEx.G
Scale DfMA
Advance direct delivery

Laing ORourke | Annual Review 2014

Optimise business

performance
Grow human capital
Drive safety

and sustainability agenda

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
denition of the future state
we wish to achieve. Excellence
plus performance denes
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 denes 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 nancial and
non-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.

19

STRATEGIC REPORT

VALUES

Laing ORourkes wellestablished vision describes


the overall goal and core
philosophy that underpin our
activities, and are key to the
achievement of our mission.

STRATEGY CONTINUED

GROUP
STRATEGIC
ROADMAP
Our Group Strategic Roadmap (GSR)
denes the direction, shape and
delivery culture of the Group over
the long term as a globally focused
engineering enterprise

Laing ORourke 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 signicant new challenges and very
substantial new opportunities.
Our mission and strategy focus on specic 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.

ALDER HEY CHILDRENS


HEALTH PARK
This world renowned childrens
hospital is undergoing a radical
transformation, and Laing
ORourkes imaginative proposal
with its joint venture partners
recognises the Groups
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.

20

Laing ORourke | Annual Review 2014

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 protability
EXPAND 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.

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-ll acquisitions.

We will enhance our customer


interactions, moving from
a transactional nature to one
based on trusted relationships.

This level of globalisation will


create a broader business base
to shield us from economic
uctuations in, or an overreliance on, any one market.
We will extend our presence in
infrastructure to create a more
balanced earnings prole 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 beneting from a
number of economic, social and
environmental developments.

We will enhance how we win


work with the use of our
SCOPE customer relationship
management model sharing
knowledge and inuencing major
projects early, and boosting our
presence with more innovative
and proactive marketing.

STRATEGIC REPORT

KEY
ELEMENTS

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,
signicant 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.

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 nancial
objectives or where we have the
potential to build longer-term
strategic relationships.

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
beneting 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

Laing ORourke | Annual Review 2014

21

STRATEGY CONTINUED

UNIQUE BUSINESS OFFERING


Laing ORourke 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
ELEMENTS

INTEGRATE
EnEx.G

MANDATE DIGITAL
ENGINEERING

SCALE DfMA

ADVANCE DIRECT
DELIVERY

MEDIUM-TERM
PRIORITIES

The Engineering
Excellence Groups
(EnEx.G) principal role
is to drive our innovation
agenda, creating
competitive advantage
through the delivery
of superior engineering
strategies.

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.

Laing ORourke 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.

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 wholelife value and long-term
controlled performance,
where the digitally
engineered model
transforms into the
asset management
system.

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

Financial Performance
EBIT
Order Book

Human Capital
Employee Engagement
Training Spend
Per Head

Engineering Excellence
Digital Engineering
Deployment
Quality
Client Satisfaction
Repeat Business

Business Improvement
Accident Frequency Rate

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.

22

Our highly automated


approach enhances
quality and efciency
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 ORourke | Annual Review 2014

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.

ENABLING THE ORGANISATION


We will focus on cost efciency 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
OPTIMISE 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.

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.

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.

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 ORourkes 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 futureproofed and exportable skill-sets,
deployed in cleaner and safer
working environments.

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.

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 efciency
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

Financial Performance
EBIT
Managed Revenue

Human Capital
Employee Engagement
Training Spend
Per Head

Engineering Excellence
Digital Engineering
Deployment
Quality

Business Improvement
Accident Frequency
Rate
Prot Per Head

Laing ORourke | Annual Review 2014

23

STRATEGIC REPORT

KEY
ELEMENTS

STRATEGY CONTINUED

EXCELLENCE
PLUS DELIVERY
CULTURE

CUSTOM HOUSE
Custom 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.

24
24

Laing
Laing
ORourke
ORourke
| Annual
| Annual
Review
Review
2014
2014

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

INNOVATE

DEVELOP

PERFORM

OPTIMISE

ELEMENT

Engineering
Excellence

Human Capital
Management

Financial
Performance

Business
Improvement

DESCRIPTION

The Groups 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
of our unique business
offering (UBO),
embracing the
innovative EnEx.G,
digital engineering
technologies, Design
for Manufacture and
Assembly methodologies
and integrated selfdelivery 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.

Financial discipline is of
paramount importance
to a companys stability,
reputation and future
growth. The Group sets
stretching but achievable
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
nancial statements
and include order book,
managed revenue,
earnings before tax and
operating cash ow.

By constantly rening
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 protable. Our
governance framework
and Global Code of
Conduct set the standards
by which the Group will
sustain long-term
business success.

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

Employee Engagement
Training Per Head

Accident Frequency
Rate
Prot Per Head

The level of enterprisewide employee


engagement
determines the degree
of understanding of
and commitment to the
Groups strategic goals,
and hence provides a
direct correlation to
service levels, customer
satisfaction, responsible
behaviour and nancial
performance.

Laing ORourke | Annual Review 2014

Managed Revenue
EBIT
Order Book
Cash Balance

Our health and safety


performance determines
our strength as a
business. It is not an
isolated measure but one
that denes our success
in all other areas. For this
reason, it is central to
business improvement
and a precondition of
our continued growth.

25

STRATEGIC REPORT

COMMITMENT

KEY PERFORMANCE INDICATORS

MEASURING OUR
PERFORMANCE
The Board uses a balanced range
of nancial and non-nancial
indicators across our business units
to measure the Groups 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 ORourkes 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 GSRs 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.

26

Laing ORourke | Annual Review 2014

FINANCIAL PERFORMANCE
The Group sets stretching but achievable 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 nancial returns, with complementary
capital structures. These are derived from the Groups
consolidated nancial statements.

MANAGED REVENUE

EARNINGS BEFORE
INTEREST AND TAX

CASH BALANCES

7.4bn

4.41bn

60.1m

691m

( billion)

( billion)

( million)

( million)

10

120

800

8 8.2

8.1

8.2

8.2
7.4

4.3
3.5

4.0
3.3

4.3

4.4

4.4

100

700 716

110

600
3.5

3.6

3.6

80

60
51
40

40
2

10

11

12

13

14

54

58

53

10

11

12

13

14

Managed revenue
Total revenue

440

400
300
200

34

20
0

714 691
619 601

500

78
60 67

STRATEGIC REPORT

ORDER BOOK

270 283

409

321

100
10

11

12

13

14

EBIT pre-exceptional items


EBIT post-exceptional items

10

11

12

13

14

Gross cash
Net funds

Denition: 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.

Denition: Managed revenue


represents the amount of sales
generated from the provision
of engineering and constructionrelated services, including
the Groups share of joint
ventures, associates and
inter-segment sales.

Denition: Earnings before


interest and taxes is a key
measure of the operating
protability of all revenuegenerating business units.

Denition: Net funds position


at the year-end is a key factor
in evaluating the Groups cash
and liquidity position. The Groups
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 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 reects the Groups focus
on high-quality, protable 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.

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,
reecting 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.

Performance: Earnings before


interest and taxes, prior to
exceptional items, declined by
23 per cent to 60.1 million
(2012/13: 78.4 million), reecting
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. Protability in our
Australian business continues
to improve, beneting from strict
bid criteria, delivery process
efciency and a focus on more
complex, higher-margin
engineering contracts.

Performance: The Group ended


the 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,
reecting our continued focus
on strong cash management and
a prudent investment strategy.
The Groups strong cash
performance has been achieved
while maintaining alignment to
the UK Governments 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.

Laing ORourke | Annual Review 2014

27

KEY PERFORMANCE INDICATORS CONTINUED

BUSINESS IMPROVEMENT

HUMAN CAPITAL MANAGEMENT

We are rening 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 Groups pursuit of excellence plus 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.

The elimination of all accidents from our business is an


objective of the highest strategic signicance. Our health and
safety performance determines our strength as a business.
It is not an isolated measure but one that denes 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

PROFIT PER HEAD

0.18

9,960 64%

1,424

Denition: 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.*

Denition: Prot per head is


earnings before interest and tax
divided by the average number
of salaried staff, and is a key
measure of operating efciency.

Denition: Training investment


per employee is an important
indicator of the Groups
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 benet. 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, dened as all directly
employed staff and operatives.

The Groups health and safety


approach is aligned globally.
Performance: AFR improved to
0.18 in the year (2012/13: 0.21).
This reects 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.

Performance: Prot per head


decreased to 9,960 (2012/13:
12,800) largely as a result of
the reduction in protability
caused by margin pressure
in the UK alongside continued
investment in the Groups
engineering excellence and
DfMA strategies. Overall staff
efciency remains high,
demonstrated by the underlying
increase in managed revenue.
The Group took decisive action
in rightsizing the organisation
following the global nancial
crisis and continues to drive
operational efciencies, with
further reductions in overheads
in the year. However, we expect
gross margins to remain tight
in the UK as cost ination
becomes more of a factor.

EMPLOYEE
ENGAGEMENT

Denition: Employee
engagement is an
all-encompassing metric
which determines the level
of understanding and
commitment of the Groups
employee base to our
strategic goals, and hence
provides a direct correlation
to service levels, client
satisfaction, business growth
and 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.

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

28

Laing ORourke | Annual Review 2014

TRAINING SPEND PER


EMPLOYEE

Performance: The Groups


industry-leading commitment
to building the skills and
capabilities of its workforce is
reected 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
justies 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
conicts at source and assure
the delivery programme
enhances our productivity
and competitiveness in
the marketplace.

ENGINEERING EXCELLENCE
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

CLIENT SATISFACTION

QUALITY

67%

85%

96-98% 117
RIGHT FIRST TIME ACROSS
OUR GLOBAL
MANUFACTURING FACILITIES

117 PROJECTS COMPLETED


USING DIGITAL
ENGINEERING SINCE 2009

Denition: 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.

Denition: All of our key clients


have a dedicated Client
Relationship Manager. Client
satisfaction data is collected from
key clients relating to the Groups
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 Groups 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.

Denition: Right 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 nonconformance. It is a key measure
of operational efciency and
effectiveness as the impact on
projects of defective products
in terms of client satisfaction
and the costs and delays of
rectications can be substantial.

Denition: 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 condence 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: 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,
reecting the Groups 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 ORourkes delivery.

Performance: The Groups


goal is an overall year-on-year
improvement in client
satisfaction on its major projects.
These metrics are contractspecic and subject to variations
in interpretation, therefore
Group-wide aggregated data is
not presented.

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 rst time output. This
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 efciency.

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 signicantly 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.

70% EUROPE HUB


63% AUSTRALIA HUB

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 ORourke
scored an average of 8.5 out of 10,
(or 85 per cent) customer service.

DIGITAL ENGINEERING
DEPLOYMENT

DE has become the way we go


to work, providing a greater level
of assurance and predictability of
outcome to our clients.

* 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.
Laing ORourke | Annual Review 2014

29

STRATEGIC REPORT

The Groups 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.

GROUP FINANCIAL REVIEW

INVESTING FOR
FUTURE GROWTH

We will continue to strengthen


the relationships with our
clients through further
development and renement
of our unique business
offering and increasing the
effectiveness of our nancial
and human resources.
CALLUM TUCKETT
GROUP DIRECTOR, FINANCE AND COMMERCE

30

Laing ORourke | Annual Review 2014

It is our 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 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 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. Prot 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.

Laing ORourke | Annual Review 2014

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 at operating
prot 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 MARGIN
Gross 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 protable
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 protable sectors
including oil and gas, power and accommodation to drive
more sustainable margins moving forward. In contrast,
the Australian business has beneted 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 diversied sources of
revenue from both a geographic and a sector perspective
should help us maintain our protable performance
notwithstanding the pressures felt in the European markets.

CASH FLOW AND BORROWINGS


The Group ended the 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 renancing 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.

31

STRATEGIC REPORT

Laing ORourke 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 signicantly positive impact on the way we deliver value
and benet 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.

GROUP FINANCIAL REVIEW CONTINUED

Gross debt remained broadly 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 condent
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 Governments Construction Supply Chain Payment
Charter which has been agreed by the Construction Leadership
Council (CLC), the body set up to deliver the governments
industrial strategy for construction.

ORDER BOOK
The 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 prole is changing and we have identied signicant
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 benet 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.

32

COST MANAGEMENT
The Group continued to focus on improving the cost efciency 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 condent they will deliver
the targeted benets and act as one of the main catalysts for
the implementation of our strategy.

TAXATION
The Group tax charge for 2013/14 is 10.0 million on prot
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 prots generated in
different jurisdictions.

PENSIONS
The Group operates a number of pension schemes with leading
industry providers in Europe and Australia. These are dened
contribution schemes and as such there are no outstanding
pension liabilities.

INSURANCE
Insurance 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 prole 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 ITEMS
Total 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 nancial
statements.

GOODWILL AND INTANGIBLE ASSETS


The 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.

Laing ORourke | Annual Review 2014

FINANCE AND TREASURY


The Group maintains sufcient 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 Groups business plan totalled
772 million (2012/13: 873 million).
The Groups centralised treasury function has prudently
managed the Groups liquidity, funding and 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 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 Groups signicant cash position.

RISK AND ACCOUNTING POLICIES


The Groups risk management framework and processes are
largely unchanged from 31 March 2013. The Board continuously
assesses and monitors risks affecting the Group, and the
Chairmans Statement, Group Chief Executives Review and
Hub operating reviews include consideration of the relevant
uncertainties affecting the business. Further details of how
the Group has managed key nancial and operational risks
such as credit and liquidity risks are set out on pages 78 to 82.

CONCLUSION
The 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
diversied revenue and prot sources are well balanced and we
are working to extend our sector diversication. The European
market continues to be challenged by difcult 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 efcient options that are aligned to our
operating model. At present we are satised that we have an
appropriate structure, well balanced cash ows, acceptable risk
exposure to the supply chain, and a high-quality order book,
which taken together are providing sufcient nancial resources
to meet todays requirements and fund future growth.
We will continue to strengthen the relationships with our
clients, through further development and renement of our
UBO and increasing the effectiveness of our 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 condence in the validity of our strategic direction.
As a result, the Board has considered the Groups 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
nancial targets successfully.

CALLUM TUCKETT
GROUP DIRECTOR, FINANCE AND COMMERCE

As an EU-domiciled company, Laing ORourke reports


its consolidated nancial statements in accordance with
International Financial Reporting Standards as adopted
by the European Union and the Cyprus Companies Law,
Cap 113. The Groups signicant 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 gures for the year ended
31 March 2013.

Laing ORourke | Annual Review 2014

33

STRATEGIC REPORT

In accordance with IAS 36, the recoverable amount has been


tested by reference to four-year forecasts, discounted at the
Groups 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 cashgenerating units exceeded the carrying amount. Details of
this test can be found in note 13 to the nancial statements.

HUB PERFORMANCE

EUROPE HUB
CANADA
SAUDI ARABIA
UNITED ARAB EMIRATES
UNITED KINGDOM

HEATHROW TERMINAL 2A
Opened by HM the Queen in
June 2014, Heathrows iconic
new Terminal 2A was a
2.5 billion project, delivered
as a joint venture of Laing
ORourke and Ferrovial
Agroman, utilising our DfMA
strategy and digital engineering
throughout. The adjoining
multi-storey car park was
constructed solely by
Laing ORourke.

34

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
GROUP CHIEF EXECUTIVE

Laing ORourke | Annual Review 2014

A
AD

M
DO
NG
KI

CA
N

UN
ITE
D

11

10

4 3
1 2

FINANCIAL HIGHLIGHTS
Managed revenue

2.6bn
5.5bn
9.5%
Order book

6 7

I
UD
SA

EM
IRA
TES

Gross margin

AR
AB
IA

RA
A
D
ITE
N
U

PRINCIPAL OFFICES
UNITED KINGDOM
1. CARDIFF
2. DARTFORD
3. EXPLORE INDUSTRIAL
PARK, WORKSOP
4. MANCHESTER
5. MOTHERWELL

UNITED ARAB EMIRATES


6. ABU DHABI
7. DUBAI

CANADA
9. CALGARY
10. TORONTO
11. VANCOUVER

SAUDI ARABIA
8. RIYADH

Our Europe Hub comprises


Laing ORourkes 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 efciencies of our unique business offering (UBO)
and vertically integrated delivery model to generate protable
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 t.

Laing ORourke | Annual Review 2014

GROUP STRATEGIC ROADMAP


(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 efciencies 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 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
nancial performance.
Drive forward our Mission Zero safety agenda and
Engineering Sustainable Futures programme.

35

STRATEGIC REPORT

HUB PERFORMANCE CONTINUED

FINANCIAL PERFORMANCE
OVERVIEW
The 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 difcult 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
prots beneted from a number of contracts in the 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 protability 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 ination. 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 specic
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, specically
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 signicant 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.

EUROPE 2014 ORDER BOOK BY SECTOR


Accommodation
Commercial
Social Infrastructure
Transport
Utilities & Waste
Power

5%
15%
40%
11%
4%
25%

OPERATIONAL PERFORMANCE
OVERVIEW
Safety will always be the Groups 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 benets 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 inuence 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 benet 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.

GLASS REINFORCED
CONCRETE UK LIMITED
In March 2014 Laing ORourke acquired Glass Reinforced
Concrete UK Limited, one of the UKs leading providers
of bespoke architectural glass reinforced concrete
(GRC) products. The acquisition strengthens
Laing ORourkes manufacturing portfolio.

36

Our core UK-based engineering and construction businesses


all performed in line with expectations, continuing to deliver
prot-generating revenues despite the ongoing market
difculties. The 2013/14 reporting period has been another year
of productivity improvement across our manufacturing facilities,
with a concerted focus on the efciency, quality and safety of
our operations. We increased production volumes with a
corresponding improvement in labour efciency, 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.

Laing ORourke | Annual Review 2014

STRATEGIC REPORT

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 signicant 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

In Manufacturing we increased our expertise and delivery


capacity with the acquisition of Glass Reinforced Concrete
UK Limited, one of the UKs 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 efcient 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 Manufacturings 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 efcient 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 rst UK companies
to receive the BSI Certicate of Conformity for the factory
production control for precast concrete products against
internationally recognised standards of quality and service.
To achieve accreditation, Bisons two plants in Uddingston
and Swadlincote were audited in June. For customers, the CE
mark is further proof of Bisons competence and performance
capability which has been independently evaluated and thereby
reduces any performance or delivery risk for their projects.

Laing ORourke | Annual Review 2014

a critical milestone for the project. Much of the installation


was built at Laing ORourkes Oldbury factory with digital
engineering and DfMA playing a signicant part in
a sophisticated visual sequencing programme to
communicate this difcult and complex installation.

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 protable work that 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 ORourke 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 signicant business
development opportunities in this part of the business.
Laing ORourkes 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.

37

HUB PERFORMANCE CONTINUED

SECTORAL PERFORMANCE
SOCIAL
INFRASTRUCTURE
HEALTHCARE
In 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 UKs 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 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 Journals Social Infrastructure Deal of the Year
and overall Deal of the Year awards, with the consortium
being praised for the innovative nancing structure that was
specically 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 ORourke 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 Trusts
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.

38

CANCER CENTRE, GUYS AND ST THOMAS


NHS FOUNDATION TRUST, LONDON
Laing ORourke 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 Guys Hospital in central London, adjacent to the
Shard. Laing ORourke played a signicant 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 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 ORourke has signed the contract for the new Llandough
Adult Mental Health Unit for long-term client Cardiff and Vale
University Health Board. At 20,000m 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 rst
project to use the Laing ORourke 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.

Laing ORourke | Annual Review 2014

Elsewhere in Wales, signicant 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 30,000m
of existing clinical space, over ve 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.

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


signicant Laing ORourke 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 ve years of development work
between Laing ORourke and Brighton and Sussex University
Hospitals NHS Trust.

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 ORourke
delivery team. This is the rst project secured through the
SEWSCAP (Southeast Wales Schools and Public Buildings
Contractor Framework).
The Group also delivered the 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 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 rened our
market-leading SIGMA sustainable schools proposition
based on the UK Department for Educations challenge
to build schools faster, better and for considerably less than
the previous scheme cost. The solution leverages the Groups
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 ORourkes
DfMA approach resulted in a programme of just
82 weeks to deliver a total of 201 new dwellings.

Laing ORourke | Annual Review 2014

39

STRATEGIC REPORT

Signicant milestones were also reached on the programme


of works for the redevelopment of the Bristol Royal Inrmary
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 rst
impressions for patients with the completion of a new
welcome centre, in time for the retail units to benet from
Christmas trade, and a new main hospital reception, which
opened its doors in January 2014. In March 2014 the rst cancer
patients began treatment in Bristols new specialist adult bone
marrow transplant unit, part of the new extension to Bristols
Haematology and Oncology Centre, which stretches seven
storeys high and continues 10 metres below ground.

EDUCATION
We 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 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.

HUB PERFORMANCE CONTINUED

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 efcient and we are
now actively marketing this value proposition with local and
central government departments, and are condent that it
will lead to a wider recognition of the exible application of
DfMA techniques to a range of public-sector construction
requirements. For these reasons, we remain condent in
our ability to secure work on large parts of the Department
for Educations 2 billion PFI-backed Priority School Building
Programme, with the recent release of the rst tranche of
prioritised schools.

HIGHER EDUCATION
In the higher education sector we delivered our most successful
year to date, with notable wins and delivery milestones achieved
throughout the period. Laing ORourkes 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 beneting 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 ORourke 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 ORourke Facades
providing the re-cladding. The project also involves the
construction of general ofce 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 ORourke successfully completed and
handed over the second and third phases of the Oxford Brookes
University Headington campus redevelopment the most
signicant capital project in the history of the university.
In July 2013, a year on from Laing ORourke completing
Phase 1, the university chancellor ofcially opened the
Abercrombie Extension, closely followed in February 2014
by the John Henry Brookes Building also opening its doors
to students for the rst time.

BLAVATNIK SCHOOL OF GOVERNMENT,


UNIVERSITY OF OXFORD
Laing ORourkes 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.

40

Laing ORourke | Annual Review 2014

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 Partnerships 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.
STRATEGIC REPORT

As Manchester City were once again crowned Premier League


champions for the 2013/14 season, Laing ORourke 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 Groups 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 stadiums rst Rugby World Cup match in 2015.

SOBELL SCHOOL, ABERDARE, WALES


Working in partnership with new client Rhondda Cynon
Taf County Borough Council, this is the 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 ORourke.

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.

SIGMA SCHOOLS SOLUTION


SIGMA is Laing ORourkes 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.

Laing ORourke | Annual Review 2014

Laing ORourke commenced construction of the 30 million


project to transform Chester Zoo into a major regional visitor
attraction. The 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.

41

HUB PERFORMANCE CONTINUED

ACCOMMODATION
During 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 inuencer having participated in government debates
on key issues and policies affecting the national housing
market. As a well-respected 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 rst totally privately funded affordable
social housing scheme in the UK. By embracing DfMA, it is the
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.

Having only started onsite in June 2013, Laing ORourkes


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 agship project for the business. The scheme
extensively deploys a DfMA solution that provides long-term
lifecycle benets, 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 ORourkes 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 signicantly enhance programme
efciency through a material reduction in the delivery schedule
and waste volumes saw this iconic design quickly become a
reality on the UK capitals 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 ORourkes 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 agship central London commercial development
scheme Clarges.

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 Ofces and the Building Control Association.

42

During the year the Group was appointed to deliver the agship
55 million Scottish Power Headquarters Building in Glasgow.
Laing ORourkes 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, 27,000m frame by
over 40 per cent.
Laing ORourke also commenced construction of a privately
funded ofce development, working with new client Genr8,
linked closely with Stoke-on-Trent Council, who will consolidate
the regions public services into the two new buildings on
completion. Designed to BREEAM Excellent standards,

Laing ORourke | Annual Review 2014

the project will involve delivery of two ve-storey ofce 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 nished with Staffordshire blue brick slips with an
inll of curtain walling. Signicant local economic benets
will also be generated through the construction, including
the creation of apprenticeships and local supply chain
procurement opportunities.

Early engagement between the clients, Oakmayne Properties


and Delancy, and the EnEx.G was inuential 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 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.

RETAIL
Laing ORourke helped breathe life back into Leeds city centre,
with the opening of western Europes biggest retail scheme
for 2013. Drawing on the expertise of the Groups 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 UKs largest commercial landlord) Land Securities.
The retail development won Best Retail Development in
City Centre at the prestigious MAPIC awards in Cannes,
and Laing ORourke 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 Nottinghams 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 ORourke 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.

Laing ORourke | Annual Review 2014

43

STRATEGIC REPORT

Adding to Laing ORourkes growing portfolio of high-prole


London schemes, in January 2014 work began onsite at the
Elephant Road development in London.

SCIENCE AND RESEARCH


Following 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 ORourkes Chairman, Ray
ORourke, 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 governments efforts to stimulate PPP investment activity
in the construction sector.

HUB PERFORMANCE CONTINUED

LEISURE, SPORTS AND PUBLIC SERVICES


During the year, working collaboratively with English Heritage,
we successfully completed the transformation of Manchesters
iconic Grade I listed Central Library and Town Hall, a complex
combination of refurbishment, restoration and signicant
contemporary enhancements to a 1930s landmark. This
sustainable form of contract delivered economic benets
to the surrounding communities, including the creation of
72 project-initiated apprenticeships and a procurement
model that directly boosted local businesses.
The facility ofcially 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 Peters 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
AIR
We 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 Queens Terminal reached construction completion
to enable the customer, Heathrow Airport Limited, to undertake
operational readiness trials. This signicant project milestone
has been achieved on time and within budget after
a highly successful construction programme by Laing ORourke
and Ferrovial Agroman, working together as the HETCo joint
venture. The team also took top prize for health and safety at
the national nals of the Constructing Excellence Awards.
In the same month, Heathrow Terminal 2As multi-storey car
park delivery team won the prestigious Post-Tensioned
Structure category at this years 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 ORourkes 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 worlds busiest airports without any interruption
to ows of people or aircraft.

44

HEATHROW TERMINAL T2A


The delivery and completion of Heathrow Terminal 2A
was a key milestone in the transformation of Londons
premier airport. The new terminal builds on
Laing ORourkes 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.

RAIL
We continue to be engaged on the UKs 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 rst phase of the 250 million
programme to improve performance and capacity on the
Stafford section of the UKs West Coast Main Line on behalf
of Network Rail. The Group is part of the UKs rst pure
construction alliance between Laing ORourke, VolkerRail,
Atkins and Network Rail. The team is working collaboratively
under one unied agreement where all parties share
benets 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 Groups 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.

Laing ORourke | Annual Review 2014

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.

Similarly, the team delivering Greater Manchesters Metrolink


network also celebrated major success during the year. In
October 2013, the MPT Consortium, formed of Laing ORourke,
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.

The UK water and utilities market is also strategically important


to Laing ORourke, 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 Waters 44 million Derwent Valley
Aqueduct resilience programme to upgrade the Victorian
water supply system. This tank is a rst for Severn Trent Water
at this size and scale for a clean water retaining structure
manufactured offsite. Laing ORourkes project team and
Explore Manufacturing worked closely and collaboratively with
the clients 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 signicant expertise
backed up by the technology platforms, specialist plant and
equipment needed to efciently 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 Grids 650 million
electrical substation framework, utilising our expertise in
design and manufacturing to offer the client a fully DfMAenabled 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 signicant 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.

Laing ORourke | Annual Review 2014

45

STRATEGIC REPORT

Laing ORourke 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 ORourke is providing the skills and competencies to
support the UK Governments 4 billion programme to extend
rail line electrication 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 ORourke rail engineers were
crowned Best of the Best at a Network Rail event to test
excellence in overhead line electrication skills and
best practice.

WATER AND UTILITY NETWORKS

HUB PERFORMANCE CONTINUED

SMITHFIELD, STOKE-ON-TRENT

HINKLEY POINT C

Laing ORourke started onsite in October 2013 in the rst


part of a master plan for Stoke-on-Trent city to rejuvenate
its central business district. Laing ORourke is responsible
for two ve-storey ofce 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.

The 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 ORourke.

HIGHWAYS
In road infrastructure, Laing ORourke progressed construction
of the A453 widening work near Nottingham to alleviate one
of the UKs most congested roads. This is the 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.

MARINE
As the UKs existing port capacity continues to come under
signicant pressure from increasing international trade
volumes, our engineering skills are leading the construction
of Europes 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,

46

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.

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 ORourke
Chairman, Ray ORourke, describing the super-port project
as an emblem of ambition.

POWER
The Groups strategic growth plans are predicated on
establishing a signicant delivery presence in the buoyant
global energy sector. Therefore the UKs investment plans
to replace ageing power-generation infrastructure with a
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.

Laing ORourke | Annual Review 2014

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 TECHNOLOGIES

CHt also continued to add signicant 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 Groups
major building and social infrastructure projects, including
the Alder Hey Childrens Health Park, the Leadenhall Building
in the City of London, the Francis Crick Institute and
Heathrows 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 24,000m 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.

It also continued development of its logistics management


capabilities to support the Groups broader DfMA agenda.
It created a logistics hub to support London-based projects,
to drive greater efciencies 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 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) 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
oor-to-roof cabin doors and wider 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 UKs busy city-centre roads.

ASSET MANAGEMENT
We 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.

SELECT PLANT INVESTMENT


In-house supplier, Select Plant, continues to reinforce its
position as one of the UKs 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 eets in the industry.

Laing ORourke | Annual Review 2014

We believe we have the opportunity to redene 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.

47

STRATEGIC REPORT

Crown House Technologies (CHt) retained its leading sector


position, posting a strong operational and nancial performance
despite the prevailing conditions which have seen a number
of high-prole 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.

SELECT PLANT AND LOGISTICS MANAGEMENT


The Select Plant business posted another year of achievement
providing a range of innovative heavy plant and lifting solutions,
including the tower crane eet and expertise to erect the City
of Londons 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 lufng jib tower crane has the
heaviest lift capacity in the UK.

HUB PERFORMANCE CONTINUED

HILTON GARDEN INN


Laing ORourke 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 ORourke Joinery.

OUTSIDE THE UK
The Middle East
Outside 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 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 signicant 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 ow of future work, and this was conrmed
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 Groups 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
Groups projects in the UK.
The longer-term prospects for the Middle East remain
broadly positive with global demand for the regions oil and gas
reserves remaining buoyant. Laing ORourke has an
outstanding track record of delivering high-quality projects in

48

the region, including the Atlantis Hotel, Dubai Airports 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 condence 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 benet from the
renewed condence 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.

Canada
We remain condent in our ability to establish a strong
business in Canada that, over time, could contribute a material
proportion of the Europe Hubs revenue and earnings volumes.
As part of the Comprehensive Economic and Trade Agreement
(CETA) between Canada and the EU, Group representatives
met with Canadas Trade Minister, Ed Fast, to outline the
companys experience and preparedness to deliver future
opportunities in the region.
Building on our successful engagement in Australias oil and
gas industry, we have broadened our sector focus to embrace
Canadas 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 ofce 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 condent that world demand for LNG

Laing ORourke | Annual Review 2014

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.

As an integral part of the international consortium, CHUM


Collectif, Laing ORourke made signicant progress during
the year in the delivery of Canadas largest PPP healthcare
scheme and the worlds second largest hospital the Centre
Hospitalier de lUniversit de Montral.
The Group has extended its reach in Canada following
notication in May 2013 that it had been appointed preferred
bidder for the contract to construct the new home of
York Universitys Lassonde School of Engineering, 10km
outside Toronto. The project is being delivered without a joint
venture partner for an enlightened client who understands
the benets-driven approach of our digital engineering
capabilities, utilising offsite construction techniques and an
integrated delivery programme.

The 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
efciencies 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 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 prot 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 LUNIVERSIT


DE MONTRAL (CHUM), QUEBEC, CANADA
As Laing ORourkes 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 projects success so far led to interest
by the client to bid for the new home of York
Universitys Lassonde School of Engineering
which Laing ORourke was successful in
securing in May 2013.

Laing ORourke | Annual Review 2014

49

STRATEGIC REPORT

AFPs, particularly in Canadas healthcare sector, play to one


of the Groups major strengths in complex PPP procurement.
Continual improvements being made to the countrys 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 ORourke.

Outlook

HUB PERFORMANCE

AUSTRALIA HUB
AUSTRALIA
HONG KONG
NEW ZEALAND
SOUTHEAST ASIA

PORT BOTANY TERMINAL 3,


SYDNEY, AUSTRALIA
Completed in May 2014, the
construction of a new container
terminal for Sydney has seen
Laing ORourke deliver the civil
and rail infrastructure work.

50

Were 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 OROURKE
MANAGING DIRECTOR, AUSTRALIA HUB

Laing ORourke | Annual Review 2014

SOUT
HE
AS
T

LIA
RA
ST
AU

AS
IA

FINANCIAL HIGHLIGHTS
Managed revenue

1.8bn
1.9bn
7.0%
Order book

1
4

Gross margin

6
3
8

NEW ZEALAND
PRINCIPAL OFFICES
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 diversied and expanding
infrastructure project portfolio through
principal operations in Australia,
Hong Kong and New Zealand
Laing ORourke 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.

Laing ORourke | Annual Review 2014

GROUP STRATEGIC ROADMAP


(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 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 signicant 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

STRATEGIC REPORT

HUB PERFORMANCE CONTINUED

FINANCIAL PERFORMANCE
The 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 ORourke 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 protability 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 efciencies through digital engineering
technology and DfMA methodology.

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.

AUSTRALIA 2014 ORDER BOOK BY SECTOR


Commercial
Social Infrastructure
Transport
Oil & Gas
Mining & Natural
Resources

10%
6%
23%
59%
2%

OPERATIONAL PERFORMANCE
The 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 Hospitals Clinical
Services Building project in Sydneys western suburbs and
in the rail sector with the Novo Rail alliance signing multiple
new packages, new electrication works at Bauhinia in
Queensland for client Aurizon, and the securing of a stabling
project at Wulkuraka just outside Brisbane, part of
Queenslands biggest-ever investment in public transport.

During the year the construction of a mixed-use ofce, 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 prot 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 Australias 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, Australias
second most populous state, and the Australian Capital
Territory (ACT). In the May federal budget, the government
announced a package of measures that will signicantly
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

52

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.

Laing ORourke | Annual Review 2014

NORTHERN WATER TREATMENT


PLANT, QUEENSLAND, AUSTRALIA
Due for completion in September 2014, the Northern
Water Treatment Plant, by Laing ORourke and a
GE Consortium, is an advanced facility that will treat
100 megalitres of water a day.

STRATEGIC REPORT

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 clients larger Northern
Water Treatment Plant, also in the Queensland Gaselds.
We are also into the nal stages of our General Utilities
programme at Chevrons 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 Pacic 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 worlds largest
single-pit mining operation.

Laing ORourke | Annual Review 2014

Another new client in 2013/14 is the Commonwealth Science


and Industrial Research Organisation (CSIRO) who selected
Laing ORourke 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 ORourke has now
formally entered the Victoria market with the establishment
of a new Melbourne ofce. At the close of the 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 inuencing our approach to bids and projects through
technology and innovation, something that will continue to be
prioritised. The EnEx.Gs 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 ORourkes unique capabilities during the year, to realise
the benets of our digital engineering, DfMA, direct delivery
and engineering excellence strategies, skills and resources on
their own work programmes.

53

HUB PERFORMANCE CONTINUED

GRIFFITH UNIVERSITY HEALTH CENTRE,


GOLD COAST, QUEENSLAND
Ofcially opened on 19 July 2013 by Australias Governor
General, Quentin Bryce, the Grifth 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.

In October 2013 Cathal ORourke 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 companys operations in
Queensland and the Northern Territory. Tim Larkin joined
Laing ORourke 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.

INFRASTRUCTURE
The Hubs western region operation continues to be at the
forefront of infrastructure opportunities, leveraging our long
history in the wests 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 ORourke is now working on the biggest single-pit mining
operation in Australia, Western Australias 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 ores 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.

54

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.

Laing ORourke 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 modications 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 Tintos new
Hope Downs 4 iron ore mine in the Pilbara.
The region continues to pursue signicant 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
ORourke 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.

Laing ORourke | Annual Review 2014

BUILDING
Our oil and gas sector clients continued to benet 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 QGCs 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 QGCs gas facilities southwest of Wandoan.

Capitalising on our global health expertise, we commenced


delivery of the AUD$145 million clinical services building at
Blacktown Hospital, one of Sydneys busiest public health
precincts. Meanwhile, Laing ORourkes Grifth University
Health Centre was ofcially opened by Australias GovernorGeneral 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 Brisbanes Fortitude Valley are now also
complete. The centre also became the new headquarters for
Laing ORourkes northern region, with our teams co-locating
to the rst-class facility from Easter 2013.

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 Scientic 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.

RAIL
With planning for, and delivery of, metropolitan rail expansion
projects continuing during the period, the Hubs rail sector
strategy focused in part on the successful delivery of current
metropolitan rail projects while targeting signicant rail
projects across the Hub aligned with our UBO.
Work was signicantly completed on rail electrication projects
in Auckland, New Zealand and in Adelaide, South Australia.
The AUD$56 million Auckland Electrication project has
Laing ORourke, 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 rst trains have run on the newly electried 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 electrication infrastructure assets and a
custom-built bre-optical telecommunications network.
Following the restructuring of governance arrangements for
Sydneys 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.

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 ight.

Laing ORourke | Annual Review 2014

We also continued our strong working relationship with


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

55

STRATEGIC REPORT

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.

As part of the Territory Alliance in Australias Northern Territory,


a partnership between Laing ORourke, 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.

HUB PERFORMANCE CONTINUED

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 ORourke 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 electrication and heavy haul
markets. In Queensland we secured the AUD$110 million
Bauhinia Electrication Project with key client Aurizon.
The project involves 110km of rail electrication, linking
Xstrata Coals 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 GAS


Laing ORourke 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 signicant result of this focus, and following a close working
relationship with the client, Australia Pacic LNG (APLNG),
the northern regions APLNG project in Queensland has
signicantly increased during the period to be worth more than
AUD$1 billion, conrming its status as a landmark project for
the Australia Hub in size, complexity and sector importance.
Laing ORourkes 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 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.

56

Laing ORourke | Annual Review 2014

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 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 ORourke 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 signicance.

HONG KONG
Rail 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 Kongs 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 ORourke
was the 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
3,300m of ofce space and parking facilities for 30 cars.
Laing ORourke 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-prot
organisations, to create a more cohesive society by recognising
organisations who excel in corporate social responsibility.
Laing ORourkes Caring Company application was sponsored
by Oxfam, with whom Laing ORourke will partner during the
course of our involvement in the scheme.

STRATEGIC REPORT

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


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

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.

OUTLOOK
With 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 mediumterm 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 ofce 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, reecting our vision of being the company
of 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.

Laing ORourke | Annual Review 2014

57

SAFETY AND SUSTAINABILITY: OVERVIEW

SAFETY AND
SUSTAINABILITY
PERFORMANCE

0.18

9,960

Group AFR1
(2012/13: 0.21)

Prot per head


(2012/13: 12,800)

0.29

6%

To protect the health and safety of everyone involved in or


affected by our operations, eliminating all accidents by 2020.

Group DIFR2
(2012/13: 0.35)

Women in senior
leadership positions

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.

2.71
Group AAFR3
(2012/13: 3.19)

12.1m
Health and safety training
(2012/13: 8.9m)

59.9m
Investment in training,
development, education
networks, R&D and DfMA
(2012/13: 49.4m)
l

Corporate donations
(2012/13: 429k)

21.8m
Training, development
and education networks
(2012/13: 19.4m)

58

The 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.

38.1m
R&D and DfMA
(2012/13: 30.0m)

456k

HEALTH AND SAFETY

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 ORourke 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.

Laing ORourke | Annual Review 2014

PEOPLE

To minimise the negative impacts of our operations


and maximise the quality of the built environment for
future generations.

To 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.

INDUSTRY

COMMUNITY

To grow our business by delivering superior engineering


strategies that meet the needs of individual clients, while
responding to the wider challenges facing our industry.

To work with the communities in which we operate to


deliver truly transformational projects that enable economic
progression and leave behind a positive public legacy.

STRATEGIC REPORT

ENVIRONMENT

Laing ORourke | Annual Review 2014

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 ORourke, the degree to which that impact is a
positive one is increasingly coming to dene 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 CONDUCT


Our Global Code of Conduct sets out our standards for working
together and with others and denes 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.

60

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 conicts 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 RESPONSIBILITIES


In 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 reect the key challenges and opportunities identied 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 PERFORMANCE
The management of key sustainability issues is monitored at
every level of the business through the governance framework
outlined (right). Specic 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.

Laing ORourke | Annual Review 2014

STRATEGIC REPORT

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 dened set of behaviours (including engagement in
and understanding of our sustainability agenda).

GOVERNANCE
We 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 GECs
objectives in their respective jurisdictions. These include targets
relating to health and safety, human capital and other key
performance indicators.

GLOBAL CODE OF CONDUCT


The rulebook for how we do business: our updated
Global Code of Conduct was published in 2014.

ABOUT THIS REPORT


This report describes our activities for the 2013/14 nancial
year. Specically, it addresses the issues we regard as
having the greatest material impact on the sustainability
of our business.
The gures published within this section are sourced from
centralised and hub-specic databases. The Laing ORourke
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.

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.

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 identied as
business-critical are enforced across the Group.

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.

This 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,
ofces and other facilities.

Laing ORourke | Annual Review 2014

AUDIT AND ASSURANCE

61

SAFETY AND SUSTAINABILITY: OVERVIEW CONTINUED

NUMBER OF EMPLOYEES ON
DEVELOPMENT PROGRAMMES
Apprentices
Graduates
Scholars and Cadets
Young Guns
Guns
Masters Students
Total

EMPLOYEE TOTALS
2014

2013

279
164
193
47
30
35
748

265
186
135
32
30
21
669

2014

2013

11%
11%
13%
11%
10%
44%

7%
10%
15%
8%
14%
46%

STAFF LENGTH OF SERVICE


Less than 6 months
6 months to 1 year
1-2 years
2-3 years
3-5 years
5 years +

Europe Hub
Australia Hub
GROUP

Staff

Workforce

Total
2014

Total
2013

3,884
2,149
6,033

6,543
2,736
9,279

10,427
4,885
15,312

11,208
4,143
15,351

EMPLOYEES: STAFF TO
WORKFORCE RATIO
Staff
Workforce

2014

2013

39%
61%

39%
61%

STAFF: MALE TO FEMALE RATIO


Male
Female

2014

2013

80%
20%

81%
19%

ATTRITION
All Leavers

STAFF AGE PROFILE


25 and under
26-35
36-45
46-55
Over 55

Monthly paid
2014

2013

9%
30%
28%
22%
11%

8%
30%
29%
22%
11%

WORKFORCE AGE PROFILE


25 and under
26-35
36-45
46-55
Over 55

2014

2013

10%
30%
28%
21%
11%

10%
31%
29%
20%
10%

Europe Hub
Australia Hub
Group

2014

2013

14.6%
31.8%
21.0%

20.1%
27.1%
22.6%

Voluntary Leavers
Europe Hub
Australia Hub
Group

2014

2013

11.4%
16.7%
13.4%

11.5%
15.2%
12.8%

SUMMARY OF CARBON EMISSIONS1


UK2
2008/09
(baseline)

Scope 1
Scope 2
Total (Scope 1 and 2)
Scope 3 (Excl waste)
Total (Scope 1,2 and 3)
Waste (Scope 3 excluded from baseline)

80,833
17,600
98,433
8,230
106,663

Australia3

2012/13

2013/14
(provisional)

2010/11
(baseline)

41,626
11,416
53,042
4,481
57,523
1,258

37,800
12,000
49,800
4,500
54,300
1,200

19,159
6,538
25,697
N/A
25,697
N/A

Hong Kong4

2011/12

2012/13

2012/13

19,828
6,711
26,539
N/A
26,539

35,860
6,570
42,430
N/A
42,430
N/A

5,028
7,423
12,451
N/A
12,451
N/A

1. All gures are absolute.


2. All gures up to and including 2012/13 CEMARS accredited. 2013/14 to be veried through CEMARS, accreditation process later in the year.
3. Australia results include all projects regardless of operational control. Does not include subcontractor emissions. All gures veried under the NGER Act.
4. Not externally veried.

62

Laing ORourke | Annual Review 2014

EUROPE HUB

ENGINEERING SUSTAINABLE FUTURES

We 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.

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.

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.

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.

ENGINEERING SUSTAINABLE FUTURES


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.

HEALTH AND SAFETY

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.

We 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.

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.)

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 ORourke 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.

There is little doubt those in the 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.

On 1 October 2013, new health and safety legislation came


into effect in the UK, introducing signicant changes to the
classication 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 ORourke continues to observe the previous (more
stringent) regulations in measuring its performance. To apply
the revised criteria now without restating historical data
would articially enhance the results going forward.
We believe this would be counterproductive.

COMMUNICATION AND ENGAGEMENT

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.

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.

Laing ORourke | Annual Review 2014

63

STRATEGIC REPORT

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.

LOW
VALUE
HIGH
FOR
QUALITY CARBON
CAREERS LIVING 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 sitebased employees and the factors that contribute to safe,
healthy, rewarding careers.

PROCESS IMPROVEMENTS AND


POSITIVE INDICATORS
While 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
identied. The most successful projects engage the workforce
in decision-making and encourage feedback. Team roles and
responsibilities are clearly dened, operations are well planned
and the right resources are available. Most importantly, major
risks are identied 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 risk


The benets 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.

64

In addition, the health and safety function will carry out intense
two-week audits of high-risk operations on a bi-monthly basis.
The 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 DEVELOPMENT


During 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 specically 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 qualied to deliver
this programme.

HEALTH AND WELLBEING


We 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
benets 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 t for
work, 94 were t but given some restrictions to duties and
10 were t with permanent restrictions to duties. There were
no RIDDOR reportable health issues detected.
Our offering also includes an employee assistance programme,
work-specic manual handling training, random and withcause drug and alcohol testing, counselling and rehabilitation
support. We also deliver targeted campaigns on identied 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
ofces, and include risk assessments on access, space,
lighting, heating, ventilation and hygiene facilities.

Laing ORourke | Annual Review 2014

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 qualied to deliver
the course.

ENVIRONMENT

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 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-efcient vehicles and
machinery. Our Select Plant business has one of the youngest
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
signicantly 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 ofces. 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 Crossrails
Carbon Working Group which seeks to encourage consistent
high standards across the industry.

Laing ORourke | Annual Review 2014

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 benets of our digital engineering
capability) we can achieve a 35 per cent reduction in lifetime
carbon emissions.
The efciencies of our factory delivery model and the impact
of enhanced 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 efcient in use, contributing
to a 15 per cent reduction.

Certied 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.

WASTE
We 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 landll 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.

WATER
We 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 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 efuent, and is much
quicker and therefore less energy-intensive.

65

STRATEGIC REPORT

We 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 efciency of the buildings and infrastructure
we create.

CARBON
A 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
efciency of the completed asset where we believe we can
deliver the greatest long-term value.

SAFETY AND SUSTAINABILITY: EUROPE HUB CONTINUED

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 SOURCING
Our 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 Certication) accredited materials
and collect chain of custody information, as required, on each
project. This is veried through environmental audits and other
assessment standards, including BREEAM. There were no
non-conformances identied in 2013/14.

BES 6001
Our Explore Industrial Park (EIP) facility retained good status
under BREs responsible sourcing standard, BES 6001. This
means that projects using our products will automatically
achieve BREEAM points. We are now seeking to extend this
certication 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 incidents
By 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.

External recognition
During 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.

PEOPLE
As 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 signicantly 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 identied that required
further analysis. This resulted in ve immediate adjustments
with three scheduled for further review. All relate to monthly
paid staff, with no adjustments required within the weeklypaid population.

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 Childrens
Health Park project team has been using Siltbusters Big pHil
to treat concrete wash-out and efuent 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 accreditation


We are committed to the highest standards of environmental
compliance and management. All Laing ORourke Group
businesses operate to ISO 14001-accredited environmental
management systems.

YOUNG GUNS
Fast-tracking talent: members of our Young Guns
leadership development programme at Explore
Industrial Park.

66

Laing ORourke | Annual Review 2014

NEW SKILLS FOR A NEW GENERATION


In October, we celebrated the graduation of the 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 Governments
Trailblazer initiative which gives businesses the
opportunity to develop programmes to address emerging
skills requirements in their sectors.

We have also launched a trainee scheme for steel-xers,


designed to meet the growing need for our site-based
employees to work with more complex methodologies.

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.

New technologies
As 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 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
specic 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 prociency in order to progress.

Academic partnerships
Through 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 ORourke 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 efciency in buildings, structural
concrete solutions, digital technologies and automation.
In the 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
APPRENTICESHIP+
Four years on: the rst entrants to our bespoke
Apprenticeship+ programme celebrate their graduation.
Launched in 2009, the scheme exposes participants to a
broad range of experiences.

Laing ORourke | Annual Review 2014

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.

67

STRATEGIC REPORT

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 specications. On completion, participants will achieve
an internationally recognised qualication along with Level 1
(or equivalent) English and Maths.

SAFETY AND SUSTAINABILITY: EUROPE HUB CONTINUED

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 condential 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 people


Through this exercise, a number of common themes were
identied. Staff remain loyal to the company and passionate
about their work. However, the business is emerging from a
period of signicant 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 needs


We have already taken a number of steps to address these
concerns. We are reviewing our approach to 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 peopledevelopment 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@
LaingORourke 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
signicantly underrepresented.

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 ORourke 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 exible working, which was
not regarded by the Laing ORourke 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 exible working options.

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 Fair
As a rst step, Laing ORourke will align itself to CITBs Be Fair
framework. Developed by Constructing Equality, Be Fair is an
industry-specic 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 Life
In May, Laing ORourke pledged its full support to the UK
Governments 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.

Laing ORourke | Annual Review 2014

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 RELATIONS
Laing ORourke 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 inuence an individuals
duties. We accept and support the role of trade unions and the
assistance they can provide our employees and us.

The Construction Workers Compensation Scheme


Laing ORourke 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.

One such example is our E6 structural 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 benets 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 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.

INDUSTRY

On our Bristol Royal Inrmary project, the technology is


being used to record hazards in three dimensions. A simplied
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.

We are beginning to see the business-wide benets 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 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.

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-specic
challenges, repeatability is fundamental to its successful
commercial application.

Advanced manufacturing

Laing ORourke | Annual Review 2014

During 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.

69

STRATEGIC REPORT

When approached by a trade union, we offer the ofcial slot


within our site inductions to advertise the benets 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.

Evolving product solutions

SAFETY AND SUSTAINABILITY: EUROPE HUB CONTINUED

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 CHAIN
We appreciate the value our suppliers bring to our operations
and are committed to maintaining productive relationships that
benet 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 ORourke 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 practice


We 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 conicts 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
Organizations Core Conventions.

Prompt payment
We 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
ORourke 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 enterprises


In August 2013, it was revealed that over 63 per cent of Laing
ORourkes procurement spend through UK central government
contracts is invested in small-to-medium enterprises ranking
us second in the industry.

COMMUNITY
By supporting local employment and business opportunities we
enrich the lives of those we work alongside, while beneting
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 inuence childrens 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 ofces develop structured
strategies to support engagement, employment, development
and diversity tailored to the specic needs of the
surrounding community.

Supporting skills

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.

In 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.

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 certication programme. WRAP
(Worldwide Responsible Accredited Production) is a not-forprot 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.

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.

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.

70

Laing ORourke | Annual Review 2014

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-prot
organisations beneting. For example, equipment from the old
school was salvaged and donated to the Salfordian Trust for
recycling and reuse.

Volunteering

MANCHESTER CENTRAL LIBRARY


AND TOWN HALL, UK

The construction of the Leadenhall Building in the City of


London has brought signicant benets to the surrounding
community with workers and locals actively encouraged
to develop their skills. To date, 123 subcontractors have
started National Vocational Qualications (NVQs) and
26 apprenticeships have been completed.

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 ORourke and Crown House Technologies completed
a fully rewired electrical 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

The project has supported ve paid undergraduate placements,


with an additional 22 young people beneting from work
experience. 57 jobs were advertised locally and 44 taster
days provided for underrepresented groups.

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.

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.

At Glan Clwyd Hospital, the project team refurbishing the


childrens 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.

Through the National Skills Academy for Construction,


Laing ORourke 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
exibility to include smaller projects and align their activities
to a recognised framework.

Corporate charities

This approach is particularly benecial 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.

In October 2013, Laing ORourke 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.

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.

Laing ORourke | Annual Review 2014

We 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 Scheme

Laing ORourke 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.

71

STRATEGIC REPORT

In Manchester, Laing ORourke and its subcontractors


have employed a total of 72 apprentices on the citys
Town Hall and Library Complex Transformation project
exceeding the clients target of 66.

Volunteering 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-prot organisations and donated
134,279 worth of materials.

SAFETY AND SUSTAINABILITY: AUSTRALIA HUB

AUSTRALIA HUB
During 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 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.

The health and safety function continues to support the work


of the safety differently committee. Led by Grifth 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 certicate 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 rst ever climate
survey. In total, 2,612 people participated. Areas of strength
identied 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 Grifth University to rene its contents.

TRAINING AND DEVELOPMENT


In 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 agship
ve-day scheme also provides participants with a nationally
recognised Certicate IV qualication. To date 421 individuals
have passed.

HEALTH AND SAFETY

In addition, 760 people have completed our two-day safety


management system module (a component of supervisor
safety essentials).

We 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.

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 INNOVATION


The Our People mobile app is an industry-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.

EPIC IN AUSTRALIA
Upstanding members of the community: at least
4,000 people beneted during the year through our
engagement with not-for-prot organisations.

72

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.

Laing ORourke | Annual Review 2014

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 nished product was sent to the homes of all our people
in time for the new year.

SYSTEMS AND PROCESSES


In 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.

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.

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 WELLBEING


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.

COMMUNICATION
Effective (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 Dont 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 nding a model example of SiD from within the business.

During 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 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 testing


In 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.

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 signicantly reduced workers
exposure to the risk of falls from height.

Laing ORourke | Annual Review 2014

73

STRATEGIC REPORT

MISSION ZERO PERFORMANCE


IMPROVEMENTS

SAFETY AND SUSTAINABILITY: AUSTRALIA HUB CONTINUED

ENVIRONMENT
Through 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 ORourke 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-efcient 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 sourcing
The 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.

74

OUR PEOPLE APP


An industry-rst innovation: the Our People app gives
employees at the workface access to vital information.

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 rened its structure, with training delivered in all
workplaces. The web-based platform is accessible to all staff
from our intranet.

Laing ORourke | Annual Review 2014

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.

To better understand the factors informing our peoples views,


we commissioned a series of condential 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.

Assurance and accreditation


We are committed to the highest standards of environmental
compliance and management. All Laing ORourke Group
businesses operate to ISO 14001-accredited environmental
management systems.

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.

PEOPLE

Working 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.

DEVELOPMENT

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.

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 Australias 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 qualications
required at each stage and illustrate the multiple paths for
progression within the organisation.

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 ORourke and others
provides undergraduates with an accelerated progression path.
Along with nancial support, students benet 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 dened set of questions relating
to personal fullment and motivation, pride in the company
and condence 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.

Laing ORourke | Annual Review 2014

AUGMENTED REALITY
Blending the actual and virtual worlds, augmented reality
benets our site teams and can enhance engagement
with clients and communities, helping them to visualise
a project before its delivered.

75

STRATEGIC REPORT

We 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.

SAFETY AND SUSTAINABILITY: AUSTRALIA HUB CONTINUED

DIVERSITY
Work continues on rening 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 exible working policy, which
provides employees with a range of options to enable them to
balance their duties, family commitments and personal needs.
Briengs 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 benets
include 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.

INDUSTRY
Our commitment to innovation and collaboration denes 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.

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 benet 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.

INNOVATION
Our 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 benets 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 ORourke 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 inll 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 CHAIN
STABILOR
A cost-effective alternative to imported inll materials,
Stabilor binds soil materials in-situ, reducing capital
expenditure particularly on projects in remote locations.

76

To 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.

Laing ORourke | Annual Review 2014

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 ORourke 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.

Attendees were given an early introduction to Mission Zero,


the Next Gear and, for the 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.

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.
Beneciaries included sick colleagues and their families,
Help Kids Like Nick, Juvenile Diabetes, Soldier On, Careight,
the Leukaemia Foundation, Black Dog Institute and
McGrath Foundation.
In Hong Kong, we raised 12,689 for mens cancer charity,
Movember. 29 employees participated, ranking fourth overall
among fundraising teams across the island. The business also
participated in the Mdcins Sans Frontires orienteering
competition, achieving an award of excellence. A further 2,166
volunteering hours were spent supporting our communities.

Corporate charities
We 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

COMMUNITY
We have performed well against the targets set out in our
sustainability roadmap. To engage our people in these
objectives, workshops and briengs have been delivered to
90 per cent of sites and ofces 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.

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.

During the year, 44 per cent of our projects supported notfor-prot organisations in helping people in need. It is
estimated that over 4,000 people have directly beneted
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-prot organisations. Laing ORourkes 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 conrmed 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.

Laing ORourke | Annual Review 2014

77

STRATEGIC REPORT

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.

Our partnership will enable NIYLA to establish an indigenous


young professionals network of which Laing ORourke 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 ORourke staff
will also have the opportunity to engage in, and learn from,
NIYLA initiatives.

RISK MANAGEMENT

PROACTIVELY AND EFFECTIVELY


MANAGING RISK

GROUP RISK MANAGEMENT


The effective management of risks
and opportunities is fundamental to
the delivery of the Groups objectives,
achievement of sustainable growth,
protection and enhancement of its
reputation, and upholding the required
standards of corporate governance
HOW LAING OROURKE MANAGES RISK
The Groups structured approach to risk management is based
on the principle of prevention through early identication.
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, 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-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 Groups 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 Groups core business processes and
mandated policies, can be found on page 80.

78

The Board considers Laing ORourkes 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 Groups
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 specic
circumstances of their respective operating environments.
In doing so, they must always adhere to the underlying
principles of the Groups 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 nancial
performance of projects and is overseen by the commercial
function. Reporting structures and mechanisms ensure
that project risks are continually monitored and signicant
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 CONTROLS
This 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 nancial loss or organisational disruption.

Laing ORourke | Annual Review 2014

THE PROCESS
BOARD
GROUP EXECUTIVE COMMITTEE
SUBCOMMITTEES
1. IDENTIFYING RISKS

The process evaluates identied risks to ascertain


the degree of nancial and non-nancial 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 identied risks
to be prioritised for action.

LAING OROURKES
Laing ORourkes
assessment
ASSESSMENT OF STRATEGIC,
of
strategic,
nancial,
FINANCIAL, OPERATIONAL
operational
and project
AND PROJECT
RISKSrisks

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
Groups internal audit processes. The Audit
Committee evaluates the effectiveness of risk
controls deployed and reports its ndings to the
Group Executive Committee and the Board on a
regular basis.

3. DETERMINING MANAGEMENT ACTIONS


REQUIRED
Existing and additional risk controls will be
agreed and responsibilities assigned to
appropriate risk-owning management forums
for implementation.

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

Laing ORourke | Annual Review 2014

79

STRATEGIC REPORT

Risks are identied 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.

2. ANALYSING RISKS AND CONTROLS TO


MANAGE IDENTIFIED RISKS

RISK MANAGEMENT CONTINUED

OPERATIONAL RISK MANAGEMENT


CORE PROCESS

ENABLING PROCESS

A standard approach to the key business decisions


and activities, delivering effective governance,
organisational diligence and consistency for nding,
winning and delivering projects

Best-in-class project delivery to assure greater


predictability in operational and nancial performance

Salesforce CRM System


Opportunity pipeline tracking
Key sectors contact management
Process gateway governance permission to bid

OPERATIONAL GOVERNANCE
Global Code of Conduct
Laing ORourke 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 ORourke 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 policies
Our Group policies underpin the Global Code of Conduct and
are based on government laws and regulations that impact
upon every Laing ORourke business and every employee.
The policies establish and dene 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 ORourke policies.

Project Quality Management System


The 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 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 Process
Core Process enables accountable business leaders to fully
understand the critical sign-off procedures in bidding for and

80

Required minimum standards and skill-sets


Best practice procedures functional toolkits
Continuous improvement formal feedback process

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
Groups chance of success in the tendering phases.

Enabling Process
Enabling 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 dened
circumstances, and by specic 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-specic 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 Procedures


Business Unit and Function-specic 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.

Laing ORourke | Annual Review 2014

SUMMARY OF PRINCIPAL RISKS


The Groups principal risks are
identied over the following pages,
together with a description of how
we mitigate them

Further information on our nancial risks can be found in


note 32 to the 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.

Mitigation:
Health and safety is a key focus for Laing ORourke and mitigation occurs at every level
of the Groups 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 prole,
could impact the Groups future
protability and its reputation with
clients, suppliers and employees.

Mitigation:
The Groups approach to project selection is guided by a detailed set of protocols known
as Core Process. This has dened 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 prole pre-contract. Regular tender review meetings are held to check progress,
understand the win strategy and interrogate the contract risk prole.

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 nancial loss or
reputational damage.

Mitigation:
Risk mitigation starts with work-winning and project selection as described above.
Laing ORourkes 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.

Key:
Increase in risk during 2013/14
No change in risk during 2013/14
Decrease in risk during 2013/14

Laing ORourke | Annual Review 2014

81

STRATEGIC REPORT

HEALTH, SAFETY AND SUSTAINABILITY


Risk/Impact:
Through our activities we could
cause signicant harm to employees,
suppliers, clients, members of the
public or the environment, which
could lead to injuries, health issues,
nancial loss or damage to the
Groups reputation.

RISK MANAGEMENT CONTINUED

SUPPLY CHAIN AND JOINT VENTURE PARTNERS


Risk/Impact:
Non-delivery by our supply chain or
joint venture partners through either
poor performance or nancial failure
could impact the Groups ability to
deliver projects on time, on budget
and to the right quality, and result in
nancial loss or reputational damage.

Mitigation:
The Group seeks to work independently wherever possible and only participates in joint
ventures to full 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 specic delivery needs, the risk is
mitigated through a robust selection process, including reviews to assess 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 nancial failure risk.
Joint ventures are only established when the Groups interests are complementary to
those of its partners. Laing ORourke undertakes a thorough evaluation process to
determine the 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 Groups ability to meet
current commitments, deliver projects
and grow the business as planned.

Mitigation:
Human capital is a primary component of Laing ORourkes 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 ORourke in attracting
leading graduates.

FINANCIAL
Risk/Impact:
Inability to secure funding
in the form of cash bonding facilities
could impact the Groups ability
to bid work, make investments or
meet its ongoing liquidity needs, which
could adversely impact protability,
cash ow and future growth.

Mitigation:
Our experienced in-house treasury management team takes a prudent approach to
liquidity and constantly monitors and maintains sufcient cash reserves and available
bank facilities to meet liabilities and 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 signicant impact on the number
of new projects, thus affecting the
Groups protability.

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 ORourke also focuses on sustainable relationships with key clients, government
departments and related regulatory authorities.

CONDUCT, COMPLIANCE & REPUTATION


Risk/Impact:
Damage to the Groups reputation
through poor conduct or acts of fraud,
bribery, corruption or anticompetitive
behaviour can all adversely impact
corporate reputation and result in
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 Groups expectations and
each individuals obligations. The Group also provides a condential 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 inuencers and opinion formers.

82

Laing ORourke | Annual Review 2014

CORPORATE GOVERNANCE

COMMITTED TO GOOD
GOVERNANCE AND ETHICAL
BUSINESS PRACTICE

Good corporate governance is integral to the shareholders and


Boards objective to sustain an organisational culture based
on the Groups vision and values, placing strong emphasis on
upholding the highest standards of business conduct, ethics
and integrity amongst the Groups 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.

The companys 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 reect
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.

CORPORATE GOVERNANCE FRAMEWORK


As a large privately owned, internationally focused engineering
and construction group, Laing ORourke aspires to the highest
standards of governance. For that reason, the Board seeks to
ensure that the Groups 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 Groups businesses operate within an established and
externally benchmarked corporate governance framework
that is underpinned by the Groups vision and values (see
page 19). A key function of Laing ORourkes corporate
governance framework is the identication, management
and mitigation of operational and 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 Groups
affairs. The current terms of reference of the Board and its
various committees and subcommittees are set out overleaf.

Laing ORourke | Annual Review 2014

83

GOVERNANCE

Laing ORourke 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

CORPORATE GOVERNANCE CONTINUED

CORPORATE GOVERNANCE FRAMEWORK


Independent Assurance
1. BOARD OF DIRECTORS

2. AUDIT COMMITTEE

3. GROUP EXECUTIVE COMMITTEE

5. SAFETY AND SUSTAINABLE DEVELOPMENT


COMMITTEE

4. GROUP MANAGEMENT COMMITTEE

9. EUROPE HUB EXECUTIVE COMMITTEE


6. HUMAN CAPITAL COMMITTEE
11. BUSINESS UNIT/FUNCTIONAL COMMITTEES

7. INVESTMENT COMMITTEE

10. AUSTRALIA HUB EXECUTIVE COMMITTEE

8. ENGINEERING EXCELLENCE GROUP (EnEx.G)

11. BUSINESS UNIT/FUNCTIONAL COMMITTEES


12. PROJECT GOVERNANCE

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 Groups 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
identied in a schedule of reserved matters for its prior approval.
These include changes to the Groups capital structure; approval
of material mergers, acquisitions and disposals; signicant
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 Groups
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.

2 AUDIT COMMITTEE
The Audit Committee provides an element of independent
assurance to the Board regarding the management of the
Groups affairs and oversees the Groups 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 nancial statements
and formal communications relating to the Groups
nancial performance.
Reviewing signicant nancial reporting issues and
accounting policies and disclosures in nancial reports.
Reviewing the effectiveness of the Groups internal control
procedures and risk management systems.
Considering how the Groups internal audit requirements
shall be satised and making recommendations to the Board.
Making recommendations to the Board on the appointment
or reappointment of the Groups external auditors.
Ensuring that an effective whistleblowing procedure is
in place.

The Board is composed of directors providing an appropriate


balance of skills, experience, independence and diverse
backgrounds. In addition to Ray ORourke, 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.

84

Laing ORourke | Annual Review 2014

3 GROUP EXECUTIVE COMMITTEE (GEC)


The GEC is responsible to the Board for the day-to-day
management of the Groups operations and creating
sustainable shareholder value through the management by
the Hub Executive Committees (see page 86) of the Groups
constituent businesses. Its role includes recommending to the
Board the Groups overall business strategy and driving its
implementation, driving the Groups 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 Groups 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.

Main responsibilities:
Recommending the Groups overall strategy to the Board.
Approving material acquisitions and disposals, material
contracts and bids, major capital expenditure projects
and budgets.
Overseeing the Groups succession planning.
Overseeing the Groups corporate governance and
compliance arrangements.
Recommending the Groups 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
Groups 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 Groups strategy and
monitoring excellence plus performance.
Coordinating the Groups 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).

Laing ORourke | Annual Review 2014

A 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 COMMITTEE


This 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 Groups 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 Groups
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 Groups recruitment and resource
mobilisation plans to meet operational demands in the eld.
Establishing and developing the Groups general policy on
employee remuneration.
Considering legal and regulatory developments affecting
human capital management.

85

GOVERNANCE

The GEC has further delegated authority to a series of


subcommittees which focus on particular Group-wide matters.

5 SAFETY AND SUSTAINABLE DEVELOPMENT


COMMITTEE

CORPORATE GOVERNANCE CONTINUED

7 INVESTMENT COMMITTEE
The 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 Groups 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.

9 EUROPE HUB EXECUTIVE COMMITTEE


This 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.

Main responsibilities:

10 AUSTRALIA HUB EXECUTIVE COMMITTEE

Proposing the Groups investment strategy to the GEC and


monitoring the implementation of the investment policy
and procedures.
Monitoring compliance with legislation, rules and regulations
affecting the Groups investment activities.
Considering and recommending to the GEC for approval the
appointment of external investment advisers, managers of
the companys 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.

This 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.

8 ENGINEERING EXCELLENCE GROUP (EnEx.G)


The EnEx.G is chaired by the Group Chairman and led by the
Groups 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 Groups 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-prot entities) to generate goodwill, loyalty and
new opportunities.
Leading the research agenda to innovate across the Groups
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.

86

The Board has established a culture


and approach to governance and
business ethics that have been
adopted across the business, positively
inuencing 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 OROURKE KBE
CHAIRMAN

Laing ORourke | Annual Review 2014

11 BUSINESS UNIT/FUNCTIONAL COMMITTEES

Effectiveness

As 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.

All 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 sufcient 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 Chairmans time
commitments are dealt with by the Board.

12 PROJECT GOVERNANCE

Tender and post-tender review boards

The review boards are responsible for ensuring the nancial


integrity of the project pre-delivery phase and are supported
by appropriate project controls to assure the achievement of
pre-agreed nancial targets during all stages of construction.

Project delivery review boards


Project 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 ORourkes
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.

An induction programme is agreed for all new directors aimed


at ensuring that they are able to develop an understanding and
awareness of the companys 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 Groups principal operations in order to
meet employees and gain an understanding of the Groups
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, nancial performance relative to the business
plan, business development, corporate responsibility and
client/stakeholder relations.

Independent assurance
The nancial statements are independently assured by external
auditors PricewaterhouseCoopers. The Groups 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 ORourkes operations.
This includes ensuring that efcient and effective control
processes are in place to identify, manage and, to the
greatest extent possible, mitigate business risk across
the Groups operations.
The independent external auditors report to the members of
Laing ORourke Corporation Limited and the Board of Directors,
on the nancial position of the Group. Their audit opinion on the
nancial statements is set out on page 95 of this Annual Review.
Additional independent assurance and accreditation is also
carried out on the Groups position and statements pertaining
to business risk and its health, safety and sustainable
development performance.

Laing ORourke | Annual Review 2014

87

GOVERNANCE

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 nance, commercial and other
key supporting functions, and client-side representatives
as appropriate.

BOARD OF DIRECTORS

In addition to the Group Chairman, Ray ORourke,


and Group Chief Executive, Anna Stewart, the
current members of the Board are:

CHRISTAKIS KLERIDES
DIRECTOR

VICTOR PAPADOPOULOS
DIRECTOR

STELIOS S ANASTASIADES
DIRECTOR

Age 63. Joined the Board in September


2007, when Laing ORourke Corporation
was incorporated in Cyprus. Fellow of
the UK Chartered Association of Certied
Accountants. As a senior partner of
KPMG, he specialised in banking, 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 nancial, shipping, property
and IT sectors as well as participating in
corporate governance committees.

Age 61. Joined the Board in September


2007, when Laing ORourke Corporation
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 Groups trade nance and capital
market operations in the Middle East and
Asia, developing a substantial network
of operations involving ofces in Moscow,
Mumbai, Bangkok and Hong Kong. In
more recent times, he has served on the
boards of several international nancial
institutions and private equity groups.

Age 60. Joined the Board in September


2007, when Laing ORourke Corporation
was incorporated in Cyprus. He is a
qualied mechanical engineer with a
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.

88

Laing ORourke | Annual Review 2014

SENIOR LEADERSHIP TEAM

The senior team has the breadth of expertise


and depth of experience necessary to maintain
our strategic focus

RAY OROURKE KBE


CHAIRMAN

DES OROURKE
DEPUTY CHAIRMAN

GEORGE ROSE
NON-EXECUTIVE CHAIRMAN,
EUROPE HUB

JIM SLOMAN OAM


EXECUTIVE CHAIRMAN, AUSTRALIA HUB

ANNA STEWART
GROUP CHIEF EXECUTIVE

CALLUM TUCKETT
GROUP DIRECTOR,
FINANCE AND COMMERCE

CATHAL OROURKE
MANAGING DIRECTOR, AUSTRALIA HUB

PAUL WESTBURY CBE


GROUP TECHNICAL DIRECTOR

JOHN OCONNOR
GROUP DIRECTOR, HUMAN CAPITAL

Laing ORourke | Annual Review 2014

GOVERNANCE

89

SENIOR LEADERSHIP TEAM CONTINUED

Despite continuing economic challenges, the senior


team have remained resolute in their focus on
driving implementation of our strategy, sustaining
a protable performance from our core business
operations, while upholding the highest standards
of business conduct

1 RAY OROURKE KBE


CHAIRMAN
Committee membership 1,3,6,8
Age 67. Major shareholder and founder
of the Laing ORourke Group. He chairs
the Group Executive Committee and is
responsible for leading the strategic
direction and operational management
of the Groups business activities.
Ray founded R ORourke & 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 todays
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

2 DES OROURKE
DEPUTY CHAIRMAN
Committee membership 3, 9
Age 65. Shareholder and co-founding
director of the Laing ORourke Group.
Des provides Board-level support to the
Chairman and Group Chief Executive in
their operational management of the
Groups business activities. Des has a
proven track record in project delivery,
mobilising large teams of people onto
complex projects around the world.

3 GEORGE ROSE

4 JIM SLOMAN OAM

NON-EXECUTIVE CHAIRMAN,
EUROPE HUB

EXECUTIVE CHAIRMAN,
AUSTRALIA HUB

Committee membership 2,9

Committee membership 3,5,10

Age 62. Joined Laing ORourke 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 condence in the integrity of
our processes and procedures relating to
internal control and corporate nancial
reporting. This includes a continuous
review of our nancial internal reporting
systems and the work of the external
auditor. The Audit Committee also
plays a key role in enterprise-wide
risk management.

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-prole roles in the engineering and
construction industry, including Chief
Operating Ofcer responsible for the
delivery of the Sydney Olympic and
Paralympic Games in 2000.

A chartered management accountant,


Georges 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.

Other appointments Independent


Director of Goodman PLUS Trust,
Non-Executive Director of ISIS Holdings
Pty Ltd, Chairman of MI Associates
Pty Ltd

Other appointments Non-Executive


Director of Genel Energy PLC and
Experian PLC

COMMITTEE MEMBERSHIP

4. GROUP MANAGEMENT COMMITTEE

8. ENGINEERING EXCELLENCE GROUP (EnEx.G)

1. BOARD OF DIRECTORS

5. SAFETY AND SUSTAINABLE DEVELOPMENT


COMMITTEE

9. EUROPE HUB EXECUTIVE COMMITTEE

2. AUDIT COMMITTEE
3. GROUP EXECUTIVE COMMITTEE

90

6. HUMAN CAPITAL COMMITTEE


7. INVESTMENT COMMITTEE

10. AUSTRALIA HUB EXECUTIVE COMMITTEE


11. BUSINESS UNIT/FUNCTIONAL COMMITTEES
12. PROJECT GOVERNANCE

Laing ORourke | Annual Review 2014

5 ANNA STEWART

7 CATHAL OROURKE

GROUP CHIEF EXECUTIVE


Committee membership 1,3,4,6,9
Age 50. Joined the Group with the
acquisition of Laing Construction by
R ORourke & 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
Groups 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.

6 CALLUM TUCKETT

Committee membership 3,5,6,10


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 hubs 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 ORourke 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
Groups senior leadership development
programmes Young Guns and Guns
in 2003 and 2008 respectively.

8 PAUL WESTBURY CBE


GROUP TECHNICAL DIRECTOR

GROUP DIRECTOR, FINANCE


AND COMMERCE
Committee membership 3,4,7,10
Age 39. Joined the Group with the
acquisition of Laing Construction by
R ORourke & 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 Groups 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 ORourkes 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.

Committee membership 3,4,5,8


Age 44. Paul joins Laing ORourke 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 organisations
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
ofcer. Prior to his appointment as CEO,
Paul was managing director for the
European business, overseeing all of the
regions ofces and activities. He joined
Buro Happold in 1991 having graduated
from Jesus College, Cambridge with a
rst-class degree in engineering science.
In 2000 he became the consultancys
youngest-ever principal when he was
made a partner and director at 30.

Laing ORourke | Annual Review 2014

9 JOHN OCONNOR
GROUP DIRECTOR,
HUMAN CAPITAL
Committee membership 3,4,6
Age 48. Joined the extended Group with
the acquisition of Laing Construction by
R ORourke & Son in 2001. John was
appointed Group Director, Human Capital
effective 1 September 2014, and was
most recently Commercial Director for
Laing ORourkes 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 qualied as
a Chartered Surveyor in 1990, and is a
Fellow of the Royal Institute of Chartered
Surveyors. After spending the rst part
of his career working in the UK, he went
on to support the Groups 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.

91

GOVERNANCE

Other appointments Non-Executive


Director of Babcock International PLC,
UK Government British Business
Ambassador

MANAGING DIRECTOR,
AUSTRALIA HUB

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 UKs New Years Honours list and
awarded a CBE (Commander of the
Order of the British Empire).

DIRECTORS, OFFICERS AND ADVISERS

Directors

R G ORourke KBE
S Anastasiades
C Klerides
V Papadopoulos
A M Stewart

Company
secretary

PricewaterhouseCoopers Corporate Secretarial Services Limited


Julia House
3 Themistocles Dervis Street
CY-1066 Nicosia
Cyprus

Company number

190393

Registered office

Julia House
3 Themistocles Dervis Street
CY-1066 Nicosia
Cyprus

UK contact
address

Laing ORourke plc


Bridge Place
Anchor Boulevard
Admirals Park
Crossways
Dartford
Kent DA2 6SN
United Kingdom

Independent
auditors

PricewaterhouseCoopers Limited
Julia House
3 Themistocles Dervis Street
CY-1066 Nicosia
Cyprus

Bankers

Lloyds Bank Corporate Markets


Bank of Scotland plc
10 Gresham Street
London EC2V 7HN
United Kingdom

Santander
17 Ulster Terrace
Regents Park
London NW1 4PJ
United Kingdom

HSBC
8 Canada Square
London E14 5HQ
United Kingdom

Commonwealth Bank
Darling Park Tower 1
201 Sussex Street
Sydney NSW 2000
Australia

Insurance
advisers

Marsh Limited
Tower Place
London EC3R 5BU
United Kingdom

Insurers

QBE European Operations


Plantation Place
30 Fenchurch Street
London EC3M 3BD
United Kingdom

92

Laing ORourke | Annual Review 2014

STRATEGIC REPORT
for the year ended 31 March 2014

The Board of Directors present their strategic report on the


Laing ORourke Corporation Limited consolidated group
(the Group) for the year ended 31 March 2014.

Review of the business


The Groups 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 Groups 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:

FINANCIALS

C KLERIDES
DIRECTOR

Laing ORourke | Annual Review 2014

93

DIRECTORS REPORT
for the year ended 31 March 2014

The Board of Directors present their annual report together


with the audited financial statements of the Laing ORourke
Corporation Limited consolidated group (the Group) for the
year ended 31 March 2014.

Financial risks are detailed on pages 124 to 128 in note 32 to


the financial statements.

Share capital

General information

Details of the Companys share capital are set out on page 123
in note 29 to the financial statements.

The Company is a wholly owned subsidiary of Suffolk


Partners Corporation, a company incorporated in the
British Virgin Islands.

Statement of Directors responsibilities for the


Annual Review

Branches outside Cyprus


Laing ORourke 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 Groups 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 ORourke 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 Groups 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 Groups 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.

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
Groups 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
Groups 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 Groups 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 Groups
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 ORourke 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:

Risk management
Details of the Groups policies and procedures for managing
risk are set out on pages 78 to 82.

C KLERIDES
DIRECTOR

Key judgements and estimation uncertainty are detailed on


page 106 in note 2.24 to the financial statements.

94

Laing ORourke | Annual Review 2014

INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF


LAING OROURKE CORPORATION LIMITED
Report on the consolidated financial statements

Opinion

We have audited the accompanying consolidated financial


statements of Laing ORourke 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.

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.

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.

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 Companys 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

We believe that the audit evidence we have obtained is sufficient


and appropriate to provide a basis for our audit opinion.

Laing ORourke | Annual Review 2014

95

FINANCIALS

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 entitys 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 entitys 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.

Report on other legal requirements

CONSOLIDATED INCOME STATEMENT


for the year ended 31 March 2014

Note

Preexceptional
items
2014
m

Exceptional
items
(note 4)
2014
m

3,574.3

Total
2014
m

Restated
Preexceptional
items
2013
m

Restated
Exceptional
items
(note 4)
2013
m

Restated1
Total
2013
m

3,574.3

3,563.2

3,563.2

(247.7)

(227.0)

Continuing operations
Total revenue
Less: share of joint ventures
and associates revenue
Revenue
Cost of sales
Gross profit
Administrative expenses
Other operating
(expense)/income
Operating profit
Share of post-tax (loss)/profit of
joint ventures and associates
Profit from operations
Net non-operating expense
Finance income
Finance expense

(247.7)
3

3,326.6
(3,044.2)

(3.3)

3,326.6
(3,047.5)

3,336.2
(3,044.8)

(14.1)

3,336.2
(3,058.9)

282.4
(219.0)

(3.3)

279.1
(219.0)

291.4
(226.8)

(14.1)
(2.6)

277.3
(229.4)

2.3

(3.4)

(1.1)

1.2

1.8

3.0

65.7

(6.7)

59.0

65.8

(14.9)

50.9

15

(3.0)

62.7
(1.2)

9
10

6.8
(9.7)

(2.9)

(2.6)

11

58.6
(10.9)

(6.7)
0.9

51.9
(10.0)

77.9
(16.8)

(20.9)
3.6

57.0
(13.2)

47.7

(5.8)

41.9

61.1

(17.3)

43.8

(0.2)

(2.5)

(2.7)

(6.7)

(2.9)

Profit for the year from


continuing operations
Discontinued operations
Loss for the year from
discontinued operations

(227.0)

Net financing expense


Profit before tax
Income tax expense

28

(3.0)

15.1

(6.0)

9.1

56.0
(1.2)

80.9
(0.4)

(20.9)

60.0
(0.4)

6.8
(9.7)

9.1
(11.7)

9.1
(11.7)
(2.6)

Profit for the year

47.7

(5.8)

41.9

60.9

(19.8)

41.1

Attributable to:
Owners of the Parent
Non-controlling interests

47.1
0.6

(5.8)

41.3
0.6

60.1
0.8

(19.8)

40.3
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.

96

Laing ORourke | Annual Review 2014

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME


for the year ended 31 March 2014

Note

Profit for the year


Other comprehensive income:
Items that may be subsequently
reclassified to profit or loss
Exchange differences on
translating foreign operations
Available-for-sale financial assets
Cash flow hedges
Share of other comprehensive
income of investments accounted
for using the equity method
Other comprehensive income
for the year, net of tax

Exceptional
items
(note 4)
2014
m

47.7

(5.8)

Total
2014
m

Restated
Preexceptional
items
2013
m

41.9

60.9

Restated
Exceptional
items
(note 4)
2013
m

(19.8)

Restated1
Total
2013
m

41.1

(30.3)
1.0
(1.1)

(30.3)
1.0
(1.1)

7.3
0.3
1.1

7.3
0.3
1.1

15

(10.6)

(10.6)

1.2

1.2

11

(41.0)

(41.0)

9.9

9.9

Total comprehensive income


for the year
Attributable to:
Owners of the Parent
Non-controlling interests

Preexceptional
items
2014
m

30
30

6.7

(5.8)

0.9

70.8

(19.8)

51.0

6.3
0.4

(5.8)

0.5
0.4

69.8
1.0

(19.8)

50.0
1.0

6.7

(5.8)

0.9

70.8

(19.8)

51.0

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

Laing ORourke | Annual Review 2014

97

CONSOLIDATED STATEMENT OF FINANCIAL POSITION


as at 31 March 2014

2014
m

Restated1
2013
m

13
15
15
17
18
27
23
21

333.8
14.7
58.7
287.0
48.4
28.3
44.8
0.2
815.9

345.9
47.8
57.0
271.3
59.0
26.5
24.8
0.3
832.6

22
23
19
20
16
28

133.6
509.0
0.6
2.0

0.2
690.7
1,336.1
2,152.0

289.7
528.3
0.7
2.8
4.2
6.6
713.8
1,546.1
2,378.7

24
25
26
20

(165.4)
(1,145.6)
(7.9)

(16.0)

(1,334.9)

(152.6)
(1,352.6)
(13.9)
(0.7)
(18.1)
(1.2)
(1,539.1)

24
25
26
27

(116.7)
(64.5)
(36.6)
(5.3)
(223.1)
(1,558.0)
594.0

(121.8)
(71.0)
(25.3)
(6.4)
(224.5)
(1,763.6)
615.1

29
29
30
30
30
30

286.4
(0.4)
(6.8)
21.8
291.1
592.1
1.9
594.0

286.4
(1.4)
1.1
55.7
270.3
612.1
3.0
615.1

Note

Assets
Non-current assets
Intangible assets
Investments in joint ventures and associates
Loans to joint ventures
Property, plant and equipment
Investment property
Deferred tax assets
Trade and other receivables
Restricted financial assets
Total non-current assets
Current assets
Inventories
Trade and other receivables
Available-for-sale financial assets
Derivative financial instruments
Other investments
Assets held-for-sale
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Current liabilities
Borrowings
Trade and other payables
Provisions
Derivative financial instruments
Current tax liabilities
Liabilities held-for-sale
Total current liabilities
Non-current liabilities
Borrowings
Trade and other payables
Provisions
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium
Fair value reserve
Hedging reserve
Foreign currency translation reserve
Retained earnings
Total equity attributable to owners of the Parent
Non-controlling interests
Total equity

28

30

1. Re-presented for the adoption of IFRS 10, 11, 12 and IAS 27 and 28: see note 2.3.

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 OROURKE KBE
DIRECTOR

C KLERIDES
DIRECTOR

The notes on pages 101 to 135 form part of these financial statements.

98

Laing ORourke | Annual Review 2014

CONSOLIDATED STATEMENT OF CASH FLOWS


for the year ended 31 March 2014

Note

28

51.9

57.0
(3.7)

6.7
55.3
(5.0)

2.9
3.0
(48.5)
112.8
(83.7)
(2.0)
93.4
(9.7)
(17.3)
66.4

14.3
54.3
(2.5)
0.1
2.6
(9.1)
(20.5)
(47.9)
71.8
0.5
116.9
(11.7)
(4.6)
100.6

(18.2)
(2.0)
(6.1)
0.3
5.8
18.4

14.0
4.2

(2.8)
0.2
6.2
21.7
41.7

(32.0)
(6.3)

2.8

20.3
0.1
1.7

0.6
(4.7)
0.6
9.2
13.2
5.5

53.9
(86.5)
29.4
(41.7)
(1.5)
(20.5)
(66.9)
41.2
713.8
(64.3)
690.7

58.9
(57.2)

(39.6)
(0.6)

(38.5)
67.6
629.6
16.6
713.8

4
5

15

13
19

15
15
15

30
12

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
Short-term bank deposits

33

644.7
46.0
690.7

677.6
36.2
713.8

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.

Laing ORourke | Annual Review 2014

99

FINANCIALS

Cash flows from operating activities


Profit before tax from continuing operations
Loss before tax from discontinued operations
Adjustments for:
Non-cash exceptional items
Depreciation and amortisation
Profit on disposal of property, plant and equipment
Loss on disposal of intangibles
Net financing costs
Share of post tax profit of joint ventures and associates
Increase in trade and other receivables
Decrease/(increase) in inventories
(Decrease)/increase in trade and other payables and provisions
Other
Cash generated from operations
Interest paid
Tax paid
Net cash generated from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Acquisition of subsidiaries, net of cash acquired
Proceeds from disposal of available-for-sale financial assets
Proceeds from disposal of non-current assets held-for-sale
Proceeds from sale of property, plant and equipment
Proceeds from sale of intangibles
Proceeds from sale of investment property
Proceeds from disposal of other investments
Proceeds from disposal of joint ventures and associates
Loans to joint ventures and associates
Loans repaid by joint ventures and associates
Interest received
Distributions received from joint ventures and associates
Net cash generated from investing activities
Cash flows from financing activities
Proceeds from new bank loans
Repayments of bank loans
Proceeds from re-financing existing property, plant and equipment
Finance lease principal repayments
Dividends paid to non-controlling interests
Dividends paid
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at end of year

Restated1
2013
m

2014
m

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


for the year ended 31 March 2014

Note

At 1 April 2012 (restated)

Share capital
and share
premium
m

Other
reserves
m

Retained
earnings
m

Total
shareholders
equity
m

Noncontrolling
interests
m

Total
equity
m

286.4

45.7

230.0

40.3

562.1

2.6

564.7

40.3

0.8

41.1

9.7

9.7

0.2

9.9

9.7

40.3

50.0

1.0
(0.6)

51.0
(0.6)

286.4

55.4

270.3

612.1

3.0

615.1

41.3

41.3

0.6

41.9

(40.8)

(0.2)

(41.0)

Profit for the year


Other comprehensive income
after tax
Total comprehensive income
for the year
Dividends paid

12

At 31 March 2013 (restated)


Profit for the year
Other comprehensive income
after tax
Total comprehensive income
for the year
Dividends paid
At 31 March 2014

12

(40.8)

(40.8)

41.3
(20.5)

0.5
(20.5)

0.4
(1.5)

0.9
(22.0)

14.6

291.1

592.1

1.9

594.0

286.4

Additional disclosure and details are provided in note 30.


The notes on pages 101 to 135 form part of these financial statements.

100

Laing ORourke | Annual Review 2014

NOTES TO THE FINANCIAL STATEMENTS


for the year ended 31 March 2014

General Information

Laing ORourke 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 Groups 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
Groups interest in joint arrangements and associates.

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 Groups 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:
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


accounting periods beginning on or after 1 January 2013)

Standards that are not yet effective and have been earlyadopted by the Group:
a)

IFRS 10, Consolidated Financial Statements, (effective for


accounting periods beginning on or after 1 January 2014)

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)

Laing ORourke | Annual Review 2014

Amendments to IFRS 10, 11 and 12, Transition guidance,


(effective for accounting periods beginning on or after
1 January 2014)

e)

Amendments to IAS 27, Separate Financial Statements,


(effective for accounting periods beginning on or after
1 January 2014)

f)

Amendments to IAS 28, Associates and Joint ventures,


(effective for accounting periods beginning on or after
1 January 2014)

g)

Amendments to IAS 36, Impairment of assets on


recoverable amount disclosures, (effective for accounting
periods beginning on or after 1 January 2014)

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 Groups accounting periods commencing on
or after 1 April 2014.

101

FINANCIALS

a)

d)

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

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 Groups 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.

Significant Accounting Policies continued

Standards that are not yet effective and have not been earlyadopted 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,


(effective for accounting periods beginning on or after
1 January 2017)

f)

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 Groups investment in associates
includes goodwill identified on acquisition, net of any
accumulated impairment loss. The Groups share of
its associates post-acquisition profits or losses is
recognised in the income statement, and its share of postacquisition movements in other comprehensive income
is recognised in the statement of other comprehensive
income. If the Groups 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.

IFRS 9, Financial Instruments, (effective for accounting


periods beginning on or after 1 January 2018)

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.

102

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
Groups share of the post-acquisition profits or
losses and movements in other comprehensive
income. When the Groups 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 Groups 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.

Laing ORourke | Annual Review 2014

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 Groups
interest in the entity. The Groups share of unrealised
gains arising from transactions with associates is
eliminated against the investment in the associate.
The Groups 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
Groups 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 ORourke
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.

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.

Laing ORourke | Annual Review 2014

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
Other buildings
Plant, equipment and vehicles

2%
2%
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 Groups 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
Groups 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
Computer software and licences

8-10 years
2-4 years

103

FINANCIALS

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:

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.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

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 availablefor-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 Groups 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 noncurrent 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.

104

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 Groups 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.

Laing ORourke | Annual Review 2014

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.

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 Groups contributions are charged to the income statement
in the year to which they relate.

Laing ORourke | Annual Review 2014

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.

105

FINANCIALS

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).

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 Groups liability for current tax is calculated using tax rates
and laws that have been enacted or substantially enacted by the
reporting date.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

Significant Accounting Policies continued

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 managements
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 Groups 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.

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 Groups 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
arms 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 Groups 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
Managements 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.

106

Laing ORourke | Annual Review 2014

Trading Analysis
Europe Hub
2014
m

Australia Hub
2014
m

Corporate
Management
& Treasury
2014
m

Total Group
2014
m

Performance by geography:
Managed revenue
Less: Inter-segment revenue

2,585.8
(627.0)

1,808.2
(193.8)

14.5
(13.4)

4,408.5
(834.2)

Total revenue
Less: Share of joint ventures and associates revenue

1,958.8
(247.7)

1,614.4

1.1

3,574.3
(247.7)

Revenue

1,711.1

1,614.4

1.1

3,326.6

Profit from operations post-exceptional items


Profit before tax post-exceptional items

45.9
42.0

42.1
38.7

(32.0)
(28.8)

56.0
51.9

EBIT post-exceptional items


EBITDA post-exceptional items

43.3
79.4

42.1
60.2

(32.0)
(30.9)

53.4
108.7

Profit from operations pre-exceptional items


Profit before tax and exceptional items

49.7
45.8

45.0
41.6

(32.0)
(28.8)

62.7
58.6

EBIT pre-exceptional items


EBITDA pre-exceptional items

47.1
83.2

45.0
63.1

(32.0)
(30.9)

60.1
115.4

Restated
Europe Hub
2013
m

Restated
Australia Hub
2013
m

Restated
Corporate
Management
& Treasury
2013
m

Restated
Total Group
2013
m

2,554.9
(603.0)

1,820.8
(211.5)

15.2
(13.2)

4,390.9
(827.7)

Total revenue
Less: Share of joint ventures and associates revenue

1,951.9
(227.0)

1,609.3

2.0

3,563.2
(227.0)

Revenue

1,724.9

1,609.3

2.0

3,336.2

Profit from operations post-exceptional items


Profit before tax post-exceptional items

53.9
50.3

30.4
27.3

(24.3)
(20.6)

60.0
57.0

EBIT post-exceptional items


EBITDA post-exceptional items

51.7
86.9

30.1
48.2

(24.3)
(23.3)

57.5
111.8

Profit from operations pre-exceptional items


Profit before tax and exceptional items

69.3
65.6

35.9
32.9

(24.3)
(20.6)

80.9
77.9

67.1
102.3

35.6
53.7

(24.3)
(23.3)

78.4
132.7

EBIT pre-exceptional items


EBITDA pre-exceptional items

Laing ORourke | Annual Review 2014

107

FINANCIALS

Managed revenue
Less: Inter-segment revenue

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

Trading Analysis continued

EBIT and EBITDA Reconciliation:

Note

Profit from operations


Adjusted for:
Net non-operating expense
JV net finance income
JV tax expense

Preexceptional
items
2014
m

62.7

8
15
15

(1.2)
(2.0)
0.6
60.1

EBIT
Depreciation
Amortisation
EBITDA

5
5

52.0
3.3
115.4

Exceptional
items
(note 4)
2014
m

(6.7)

(6.7)

(6.7)

Total
2014
m

Restated
Preexceptional
items
2013
m

56.0

80.9

(1.2)
(2.0)
0.6

(0.4)
(2.4)
0.3

53.4

78.4

52.0
3.3

51.2
3.1

108.7

132.7

Restated
Exceptional
items
(note 4)
2013
m

Restated
Total
2013
m

(20.9)

60.0

(0.4)
(2.4)
0.3

(20.9)

57.5

(20.9)

51.2
3.1
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).

Exceptional Items
2014
m

2013
m

Impairment of land and developments


Impairment of investment property
Gain on renegotiation of debt
Closure costs

3.3
3.4

22.7
0.6
(2.4)
2.5

Exceptional costs before tax


Income tax credit on exceptional items

6.7
(0.9)

23.4
(3.6)

5.8

19.8

Exceptional costs after tax

Impairment of land and developments


During the year the Directors reviewed the carrying value of the Groups 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 Groups 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 Groups 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.

108

Laing ORourke | Annual Review 2014

Operating Profit

Operating profit is stated after charging/(crediting):


Staff costs
Depreciation of property, plant and equipment:
Owned assets
Under finance leases
Operating lease rentals and short term hires:
Property, plant and equipment
Amortisation of other intangible assets
Profit on disposal of plant and equipment
Loss on disposal of intangibles
Research and development expenditure
Foreign exchange losses/(gains)
Investment property income
Cost of inventories recognised as an expense:
Amount of inventories recognised as an expense
Amount of inventories written off as an expense
Auditors remuneration (see below)

Note

6
17

13

18

2014
m

Restated
2013
m

940.6

867.1

26.7
25.3

28.4
22.8

73.4
3.3
(5.4)

38.1
3.4
(2.5)

80.3
3.1
(2.7)
0.1
30.0
(3.6)
(2.4)

190.6
3.3
2.7

75.5
21.9
2.4

2014
m

2013
m

Fees payable to the Companys auditor for the audit of:


The Companys annual financial statements and consolidated financial statements
The Companys subsidiaries pursuant to legislation

0.3
0.9

0.3
0.9

Auditors remuneration

Note

Total audit fees

1.2

1.2

Fees payable to the Companys auditor and its associates for other services:
Services relating to taxation
All other services

0.8
0.7

0.8
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 Companys
statutory audit firm PricewaterhouseCoopers Limited Cyprus.

Staff Costs and Employee Numbers


2014
Number

2013
Number

The average monthly number of employees (including Directors) during the period was:
Europe Hub
Australia Hub

10,427
4,885

11,208
4,143

Total number of employees

15,312

15,351

2014
m

2013
m

835.4
66.3
38.9

773.6
57.2
36.3

940.6

867.1

Aggregate remuneration and related costs, including Directors:


Wages and salaries
Social security costs
Other pension costs

At 31 March 2014 1.7m (2013: 1.4m) was payable in respect of defined contribution schemes and included in other payables
(note 25).

Laing ORourke | Annual Review 2014

109

FINANCIALS

Number of employees

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

Staff Costs and Employee Numbers continued

Transactions with key management personnel


The Groups 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:
Aggregate remuneration and related costs, including Directors:
Salaries and other short-term employee benefits

2014
m

2013
m

8.3

4.1

Directors remuneration
The total remuneration of the Directors (included in key management personnel compensation above) was as follows:
Aggregate remuneration and related costs, including Directors:
Salaries and other short-term benefits

2014
m

2013
m

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).

Other Operating (Expense)/Income


2014
m

Exceptional gain on renegotiation of debt (see note 4)


Loss on sale of subsidiary
Exceptional impairment on investment properties
Loss on sale of investment properties
Investment income
Rents received
Research and development expenditure credit
Other operating income

(3.4)
(0.7)

1.1
1.8
0.1

2.4
(0.2)
(0.6)

0.1
0.8

0.5

(1.1)

3.0

Net Non-operating Expense


2014
m

Loss on sale of property


(Loss)/profit on sale of investments
Impairment of investments

Restated
2013
m

Restated
2013
m

(0.4)
(0.8)

(0.2)
0.1
(0.3)

(1.2)

(0.4)

Finance Income

Bank interest
Other interest and similar income

2014
m

Restated
2013
m

4.3
2.5

7.4
1.7

6.8

9.1

2014
m

Restated
2013
m

5.0
3.7
1.0

7.4
3.3
1.0

9.7

11.7

10 Finance Expense

Interest payable on bank loans and overdrafts


Finance lease charges
Other interest payable and similar charges

110

Laing ORourke | Annual Review 2014

11 Income Tax
2014
m

Restated
2013
m

Cyprus corporation tax


Current tax on income for the year
Foreign tax
Current tax on income for the year
Adjustment in respect of prior years

0.5

0.3

21.3
(3.6)

16.5
(3.3)

Total current tax

18.2

13.5

Net origination of temporary differences


Impact of change in tax rate

(8.6)
0.4

(0.3)

Total deferred taxation

(8.2)

(0.3)

Tax expense for the year

10.0

13.2

51.9

57.0

Tax at the UK corporation tax rate of 23% (2013: UK 24%)


Effects of
lower overseas tax rates
other expenditure that is not tax deductible
adjustments in respect of prior years
impact of unrecognised losses
tax effect of joint ventures
impact of change in UK tax rate
other adjustments

11.9

13.7

(1.3)
2.8
(4.4)
(0.5)
0.7
0.5
0.3

(0.3)
1.4
(3.3)
3.3
(0.3)
(0.3)
(1.0)

Total tax charge

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

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 Groups 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.
2014
Before-tax
amount
m

Exchange differences on translating


foreign operations
Available-for-sale financial assets
Cash flow hedges
Share of other comprehensive income of
joint ventures and associates

(30.3)
1.0
(1.5)

2013 Restated

Tax credit
m

Net-of-tax
amount
m

Before-tax
amount
m

0.4

(30.3)
1.0
(1.1)

(10.6)

(10.6)

1.2

(41.4)

0.4

(41.0)

10.5

Laing ORourke | Annual Review 2014

7.3
0.4
1.6

Tax expense
m

(0.1)
(0.5)

(0.6)

Net-of-tax
amount
m

7.3
0.3
1.1
1.2
9.9

111

FINANCIALS

Tax effects relating to each component of comprehensive income

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

12 Dividends
Interim dividends paid of 2,278 per ordinary share (2013: nil).

2014
m

2013
m

20.5

Computer
software and
licences
m

Total
m

The Directors do not recommend the payment of a final dividend (2013: nil).

13 Intangible Assets
Goodwill
m

Brands
m

Cost
At 1 April 2013 (restated)
Acquisitions
Additions
Disposals
Exchange differences

339.3
1.0

(11.3)

2.7

(0.5)

22.9

2.0
(1.8)
(0.9)

364.9
1.0
2.0
(1.8)
(12.7)

At 31 March 2014

329.0

2.2

22.2

353.4

1.1

(0.1)

2.2
0.3

(0.4)

15.7
3.0
(1.8)
(0.4)

Accumulated amortisation and impairment


At 1 April 2013 (restated)
Amortisation for the year
Disposals
Exchange differences

19.0
3.3
(1.8)
(0.9)

1.0

2.1

16.5

19.6

Net book value at 31 March 2014

328.0

0.1

5.7

333.8

Cost
At 1 April 2012 (restated)
Acquisitions
Additions
Disposals
Exchange differences

336.2

3.1

2.6

0.1

17.9
4.3
2.0
(1.6)
0.3

356.7
4.3
2.0
(1.6)
3.5

At 31 March 2013 (restated)

339.3

2.7

22.9

364.9

Accumulated amortisation
At 1 April 2012 (restated)
Amortisation for the year
Impairment
Disposals
Exchange differences

0.8

0.3

1.9
0.3

14.1
2.8

(1.3)
0.1

At 31 March 2014

At 31 March 2013 (restated)

16.8
3.1
0.3
(1.3)
0.1

1.1

2.2

15.7

19.0

Net book value at 31 March 2013 (restated)

338.2

0.5

7.2

345.9

Net book value at 31 March 2012 (restated)

335.4

0.7

3.8

339.9

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.

112

Laing ORourke | Annual Review 2014

13 Intangible Assets continued


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

Australia
United Kingdom

2014
m

2013
m

48.4
279.6

59.3
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 Groups 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 managements 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:

Administrative expenses

2014
m

2013
m

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 ORourke KBE and H D ORourke, who are also beneficiaries of the trusts which
ultimately own Suffolk Partners Corporation. The assets acquired were:
Book value
acquired
m

Total identifiable net assets acquired

Fair value
acquired
m

19.0
1.4
(0.6)
(13.2)

0.7

(0.1)

19.7
1.4
(0.6)
(13.2)
(0.1)

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 Groups 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 ORourke 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.

Laing ORourke | Annual Review 2014

113

FINANCIALS

Property, plant and equipment


Cash and cash equivalents
Trade and other payables
Borrowings
Deferred tax liabilities

Fair value
adjustments
m

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

15 Investments in Joint Ventures and Associates


Joint ventures
equity
investments
m

Associates
equity
investments
m

Loans
to joint
ventures
m

Cost
At 1 April 2013 (restated)
Loans advanced
Loans repaid
Exchange differences

2.3

13.3

83.4
2.8
(0.2)
(1.6)

At 31 March 2014

84.4

Total
m

99.0
2.8
(0.2)
(1.6)

2.3

13.3

Share of post-acquisition results


At 1 April 2013 (restated)
Share of results for the year after tax
Share of change in fair value of cash flow hedges (net of taxation)
Distributions received
Exchange differences

5.0
(3.0)
(6.8)
(21.7)
(1.1)

0.8

(2.7)

At 31 March 2014

(27.6)

(1.9)

Net book value at 31 March 2014

(25.3)

11.4

84.4

70.5

Cost
At 1 April 2012 (restated)
Equity investment disposals
Loans advanced
Loans repaid
Impairment
Exchange differences

2.4
(0.1)

13.3

81.0

4.7
(0.6)
(2.6)
0.9

96.7
(0.1)
4.7
(0.6)
(2.6)
0.9

At 31 March 2013 (restated)

2.3

13.3

83.4

99.0

9.2
9.1
(0.6)
(13.2)
0.5

0.1

0.7

Share of post-acquisition results


At 1 April 2012 (restated)
Share of results for the year after tax
Disposals
Distributions received
Exchange differences

100.0

5.8
(3.0)
(6.8)
(21.7)
(3.8)

(29.5)

9.3
9.1
(0.6)
(13.2)
1.2

At 31 March 2013 (restated)

5.0

0.8

5.8

Net book value at 31 March 2013 (restated)

7.3

14.1

83.4

104.8

Net book value at 31 March 2012 (restated)

11.6

13.4

81.0

106.0

The Groups 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 Groups obligation to fund net liabilities of a joint venture or associate exceeds the amount loaned, a provision is
recorded (see note 26).
The Groups investments in joint ventures and associates are presented in the statement of financial position as:
2014
m

Investments in joint ventures and associates


Loans to joint ventures
Provisions

14.7
58.7
(2.9)

47.8
57.0

70.5

104.8

No impairment losses to equity investments were brought forward at 31 March 2014 or charged in the year (2013: nil).

114

Laing ORourke | Annual Review 2014

Restated
2013
m

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.
Canal
Aldar Laing
Emirates
Harbour
ORourke
Precast Development
Construction Construction
Company
LLC
LLC
Limited
2014
2014
2014
m
m
m

Health
CLM
Montreal
Delivery
Collective
Partner CJV Limited
Limited Partnership
2014
2014
m
m

Private
Finance
Initiatives Other joint
(PFIs)
ventures Associates
2014
2014
2014
m
m
m

Total
2014
m

Revenue
Depreciation and
amortisation
Other expenses/(income)

0.4

5.0

0.3

83.0

146.9

12.1

247.7

(1.0)
0.4

(0.4)
(3.8)

0.1

(86.1)

(146.4)

(14.9)

(1.4)
(250.7)

Operating (loss)/profit
Net finance income

(0.2)

0.8

0.4

(3.1)
0.6

0.5
1.4

(2.8)

(4.4)
2.0

(Loss)/profit before tax


Tax expense

(0.2)

0.8

0.4
(0.1)

(2.5)

1.9
(0.5)

(2.8)

(2.4)
(0.6)

0.3

(2.5)

1.4

(2.8)

(3.0)

(Loss)/profit after tax

(0.2)

0.8

Other comprehensive
income

(0.8)

(0.5)

0.7

(0.6)

(6.7)

Total comprehensive
income

(1.0)

0.3

0.7

0.3

(3.1)

(5.3)

0.8

0.9

8.6

10.9

0.5

21.7

Dividends received from


joint ventures

(2.8)

(2.7)

(10.6)

(2.7)

(13.6)

4.4

4.4

2.8

0.5
0.6

11.1

372.3

0.1

3.3
384.1

5.4
0.4

1.5
4.2

0.2
0.1

44.6
39.1

51.7
46.6

3.5
1.1

7.8

106.9
99.3

Total assets

8.6

6.8

11.1

0.3

83.7

470.6

4.6

12.3

598.0

(1.1)

(1.4)

(0.1)

(0.2)

(89.9)

(23.7)

(7.2)

(0.1)
(0.1)

(0.1)
(123.7)

(0.5)

(36.8)

(441.6)
(8.5)

(0.7)

(442.3)
(45.8)

(1.1)

(1.9)

(36.9)

(0.2)

(89.9)

(473.8)

(7.2)

(0.9)

(611.9)

7.5

4.9

(25.8)

0.1

(6.2)

(3.2)

(2.6)

11.4

(13.9)

Financial commitments

Capital commitments

Current liabilities
Borrowings
Other current liabilities
Non-current liabilities
Borrowings
Other non-current liabilities
Total liabilities
Net assets/(liabilities)

Laing ORourke | Annual Review 2014

115

FINANCIALS

Non-current assets
Goodwill
Property, plant and
equipment
Other non-current assets
Current assets
Cash and cash equivalents
Other current assets

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

15 Investments in Joint Ventures and Associates continued


Canal
Aldar Laing
Emirates
Harbour
ORourke
Precast Development
Construction Construction
Company
LLC
LLC
Limited
2013
2013
2013
m
m
m

Health
CLM
Montreal
Delivery
Collective
Partner CJV Limited
Limited Partnership
2013
2013
m
m

Private
Finance
Initiatives
(PFIs)
2013
m

Other joint
ventures Associates
2013
2013
m
m

Restated
Total
2013
m

Revenue
Depreciation and
amortisation
Other expenses
Exceptional items
(see note 4)

2.3

6.3

8.7

62.5

126.1

21.1

227.0

(1.9)
(3.8)

(0.6)
(4.6)

(6.6)

(58.4)

(126.5)

(11.6)

(2.5)
(211.5)

(6.0)

(6.0)

Operating (loss)/profit
Net finance income

(3.4)

1.1

(6.0)

2.1

4.1
0.4

(0.4)
2.0

9.5

7.0
2.4

Profit/(loss) before tax


Tax expense

(3.4)

1.1

(6.0)

2.1
(0.3)

4.5

1.6
(0.4)

9.5
0.4

9.4
(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

4.4

4.4

8.2

0.8
1.3

11.4

386.6

0.9

9.0
400.2

2.5
0.8

1.3
5.2

0.8
11.0

25.7
58.9

30.9
60.9

5.0
4.9

10.3

66.2
152.0

11.5

8.6

11.4

11.8

84.6

478.4

9.9

15.6

631.8

(2.1)

(2.7)

(0.1)

(3.3)

(77.1)

(39.8)

(9.7)

(0.5)

(0.5)
(134.8)

(0.5)

(37.8)

(435.6)
(0.2)

(1.0)

(436.6)
(38.5)

(9.7)

(1.5)

(610.4)

Non-current assets
Goodwill
Property, plant and
equipment
Other non-current assets
Current assets
Cash and cash equivalents
Other current assets
Total assets
Current liabilities
Borrowings
Other current liabilities
Non-current liabilities
Borrowings
Other non-current liabilities

Total liabilities

(2.1)

(3.2)

(37.9)

(3.3)

(77.1)

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

(475.6)

16 Other Investments
Fair Value

2014
m

2013
m

At 1 April
Disposals

4.2
(4.2)

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.

116

Laing ORourke | Annual Review 2014

17 Property, Plant and Equipment


Group owner
occupied
property
m

Other land
and buildings
m

Plant,
equipment
and vehicles
m

Total
m

Cost
At 1 April 2013 (restated)
Additions
Acquisitions
Disposals
Transfer between categories
Exchange differences

16.5

19.7

(0.7)

26.9
0.9

(1.8)
(1.3)
(1.1)

508.3
78.5
0.2
(50.7)
1.3
(33.5)

551.7
79.4
19.9
(52.5)

(35.3)

At 31 March 2014

35.5

23.6

504.1

563.2

Accumulated depreciation
At 1 April 2013 (restated)
Depreciation charge for the year
Disposals
Transfer between categories
Exchange differences

1.8
0.3

16.9
1.6
(1.4)
(2.8)
(0.8)

261.7
50.1
(37.8)
2.8
(16.2)

280.4
52.0
(39.2)

(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
At 1 April 2012 (restated)
Additions
Disposals
Transferred to disposal group classified as held-for-sale
Exchange differences

16.3

0.2

26.6
0.4
(0.6)

0.5

490.9
70.0
(58.3)
(4.5)
10.2

533.8
70.4
(58.9)
(4.5)
10.9

At 31 March 2013 (restated)

16.5

26.9

508.3

551.7

1.6
0.2

15.2
1.7
(0.4)

0.4

259.0
49.3
(47.8)
(4.0)
5.2

275.8
51.2
(48.2)
(4.0)
5.6

Accumulated depreciation
At 1 April 2012 (restated)
Depreciation charge for the year
Disposals
Transferred to disposal group classified as held-for-sale
Exchange differences
At 31 March 2013 (restated)

16.9

261.7

280.4

14.7

10.0

246.6

271.3

Net book value at 31 March 2012 (restated)

14.7

11.4

231.9

258.0

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
Accumulated depreciation at 1 April

172.7
(49.7)

256.1
(101.3)

Net book value at 1 April


Additions/acquisitions
Refinanced assets/transfers in
Cost of disposals/transfers out
Depreciation on disposals/transfers out
Depreciation charge for the year
Exchange differences

123.0
61.3
22.5
(22.7)
12.3
(25.3)
(7.7)

154.8
38.3

(124.3)
75.2
(22.8)
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.

Laing ORourke | Annual Review 2014

117

FINANCIALS

1.8

Net book value at 31 March 2013 (restated)

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

18 Investment Property
Freehold
2014
m

Net book value at 1 April


Transfers in
Disposals
Exceptional fair value adjustment
Exchange differences
Net book value at 31 March

Freehold
2013
m

59.0
7.7
(14.8)
(3.4)
(0.1)

38.8
22.4
(1.7)
(0.6)
0.1

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 Groups investment properties are let under non-cancellable operating lease agreements. The leases have varying terms,
escalating clauses and renewal rights. The Groups future operating lease income commitments comprise:
2014
m

2013
m

1.3
2.7
15.3

1.7
2.5
14.9

19.3

19.1

2014
m

2013
m

0.7
(0.3)
(0.1)
0.3

3.5
(2.8)

At 31 March

0.6

0.7

Available-for-sale financial assets include the following:


Unlisted securities

0.6

0.7

Expiry date:
Due within one year
Due between one and five years
Due after more than five years

19 Available-For-Sale Financial Assets


At 1 April
Disposals
Exchange differences
Net gains transferred to equity

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
Forward foreign exchange contracts

0.1
1.9

1.6
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.

118

Laing ORourke | Annual Review 2014

21 Restricted Financial Assets


Restricted cash deposits

2014
m

2013
m

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
Development land and work in progress
Raw materials and consumables
Finished goods and goods for resale

2014
m

2013
m

122.4
8.2
3.0

277.7
8.4
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

Amounts expected to be recovered within one year:


Gross amounts due from customers on construction contracts
Trade receivables
Prepayments and accrued income
Other receivables
Amounts expected to be recovered after more than one year:
Gross amounts due from customers on construction contracts
Trade receivables
Other receivables
Total trade and other receivables

2014
m

Restated
2013
m

349.6
90.7
32.1
36.6

331.4
124.1
32.1
40.7

509.0

528.3

35.5
2.4
6.9

17.5
2.4
4.9

44.8

24.8

553.8

553.1

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.

Laing ORourke | Annual Review 2014

119

FINANCIALS

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.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

24 Borrowings
Amounts expected to be settled within one year:
Bank loans
Finance lease obligations
Amounts expected to be settled after more than one year:
Bank loans
Finance lease obligations
Total borrowings

2014
m

2013
m

123.0
42.4

119.6
33.0

165.4

152.6

33.1
83.6

72.4
49.4

116.7

121.8

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:

Less than one year


Between one and five years
More than five years

Restated
Interest
2013
m

Restated
Principal
2013
m

Restated
Minimum
lease
payments
2013
m

Interest
2014
m

Principal
2014
m

Minimum
lease
payments
2014
m

4.1
5.7

42.4
80.2
3.4

46.5
85.9
3.4

2.6
2.0

33.0
48.7
0.7

35.6
50.7
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

Amounts expected to be settled within one year:


Advance payments on construction contracts
Trade payables
Other tax and social security
Other payables
Accruals and deferred income
Amounts expected to be settled after more than one year:
Advance payments on construction contracts
Trade payables
Other payables
Accruals and deferred income
Total trade and other payables

2014
m

Restated
2013
m

348.2
225.6
43.2
73.2
455.4

355.3
333.7
25.0
87.5
551.1

1,145.6

1,352.6

23.3
26.6
1.8
12.8

20.4
20.8
3.0
26.8

64.5

71.0

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.

120

Laing ORourke | Annual Review 2014

26 Provisions
Insurance
technical
provisions
m

Employee
provisions
m

Joint venture
provisions
m

Total
provisions
m

At 1 April 2013 (restated)


Provisions created
Provisions utilised

33.4
3.4

5.8
0.2
(1.2)

2.9

39.2
6.5
(1.2)

At 31 March 2014

36.8

4.8

2.9

44.5

Disclosed within:
Current liabilities
Non-current liabilities

2.5
34.3

2.5
2.3

2.9

7.9
36.6

36.8

4.8

2.9

44.5

At 1 April 2012 (restated)


Provisions created
Provisions utilised

29.4
4.6
(0.6)

5.1
0.7

34.5
5.3
(0.6)

At 31 March 2013 (restated)

33.4

5.8

39.2

Disclosed within:
Current liabilities
Non-current liabilities

10.9
22.5

3.0
2.8

13.9
25.3

33.4

5.8

39.2

Insurance provisions relate to provisions held by the Groups captive insurer Laing ORourke 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
Groups 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

2.3
33.6
(7.6)

2.5
24.0

(12.9)

7.6

(6.4)

(10.6)
33.6

(3.9)
24.0

Deferred tax assets/(liabilities)

28.3

26.5

(5.3)

(6.4)

23.0

20.1

17.1
11.2

19.8
6.7

(5.3)

(0.4)
(6.0)

17.1
5.9

19.4
0.7

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
More than one year

Laing ORourke | Annual Review 2014

121

FINANCIALS

Property, plant and equipment


Other temporary differences
Offsetting of deferred tax balances

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

27 Deferred Tax Assets and Liabilities continued


Movements in deferred tax assets and liabilities during the year
As at
1 April
2013
(restated)
m

Property, plant and equipment


Other temporary differences
Tax losses carried forward

Recognised
in income
m

Recognised
in equity
m

As at
31 March
2014
m

(3.9)
24.0

(5.7)

(6.7)
14.9

0.4

(10.6)
33.6

20.1

(5.7)

8.2

0.4

23.0

Recognised
in equity
m

As at
31 March
2013
(restated)
m

As at
1 April
2012
(restated)
m

Property, plant and equipment


Other temporary differences
Tax losses carried forward

Exchange
and other
movements
m

Exchange
and other
movements
m

Recognised
in income
m

(7.9)
14.0
12.3

2.0

4.0
8.6
(12.3)

(0.6)

(3.9)
24.0

18.4

2.0

0.3

(0.6)

20.1

Other items relate to Laing ORourke 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:

Tax losses

2014
m

2013
m

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 Groups German operations following the approval to sell by the
groups 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.

Assets of disposal group classified as held-for-sale


Property, plant and equipment
Other current assets
Liabilities of disposal group classified as held-for-sale
Trade and other payables
Other current liabilities

2014
Total
m

2013
Total
m

0.2

5.7
0.9

0.2

6.6

(1.1)
(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
Investing cash flow

(0.4)
0.1

(3.2)
3.9

(0.3)

0.7

122

Laing ORourke | Annual Review 2014

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
Expenses
Exceptional items (see note 4)

2.1
(3.3)
(2.5)

Loss before tax of discontinued operations


Income tax benefit

(3.7)
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

9,000

286.4

At 1 April 2013 and at 31 March 2014

The authorised share capital of Laing ORourke 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

At 1 April 2012 (restated)

286.4

Profit for the year


Other comprehensive
income after tax

0.3

Fair value
reserve
m

(1.7)

Hedging
reserve
m

Foreign
currency
translation
reserve
m

47.4

230.0

40.3

1.1

8.3

Total
Retained shareholders
earnings
equity
m
m

Noncontrolling
interests
m

Total
equity
m

562.1

2.6

564.7

40.3

0.8

41.1

9.7

0.2

9.9

Total comprehensive
income for the year
Reduction in share
premium
Dividends paid

0.3

1.1

8.3

40.3

50.0

1.0

51.0

(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

41.3

41.3

0.6

41.9

1.0

(7.9)

(33.9)

(40.8)

(0.2)

(41.0)

Total comprehensive
income for the year
Dividends paid

1.0

(7.9)

(33.9)

41.3
(20.5)

0.5
(20.5)

0.4
(1.5)

0.9
(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 Groups 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 Groups 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.

Laing ORourke | Annual Review 2014

123

FINANCIALS

Profit for the year


Other comprehensive
income after tax

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

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 Groups 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 Groups financial risk
management policies is to minimise potential adverse effects on financial performance and net assets.
The Groups 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 Groups 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


Trade and other receivables
Available-for-sale
financial assets
Derivative financial
instruments
Restricted financial assets
Cash and cash equivalents

21.8
318.6

62.6
0.3

140.9

11.3

29.2

0.9

19.7

2.0

84.4
522.9

0.6

0.6

0.1
0.2
398.6

9.6

1.9

195.3

7.0

0.3

30.8

36.0

13.1

2.0
0.2
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
Trade and other payables

(212.4)
(725.3)

(1.1)

(69.7)
(298.2)

(38.5)

(1.3)

(30.9)

(66.6)

(5.4)

(282.1)
(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.

124

Laing ORourke | Annual Review 2014

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


Other investments
Trade and other receivables
Available-for-sale
financial assets
Derivative financial
instruments
Restricted financial assets
Cash and cash equivalents

19.2
4.2
289.1

64.2

1.8

138.1

52.5

32.4

0.6

17.6

0.6

83.4
4.2
532.7

0.7

0.7

0.2
0.2
357.9

7.6

2.6

237.5

0.1
10.9

5.0

47.5

32.6

14.8

2.8
0.3
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
Derivative financial
instruments
Trade and other payables

(147.3)

(127.1)

(274.4)

(774.5)

(3.0)

(0.7)
(437.7)

(55.0)

(1.9)

(46.1)

(68.8)

(12.2)

(0.7)
(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

At 31 March 2013 (restated)


Bank loans
Finance lease obligations

Between
one and
two years
m

After
two years
m

Effective
interest
rate
%

156.1
126.0

123.0
42.4

20.5
33.1

12.6
50.5

3.52%
4.28%

282.1

165.4

53.6

63.1

3.86%

192.0
82.4

119.6
33.0

14.0
27.2

58.4
22.2

4.82%
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.

Laing ORourke | Annual Review 2014

125

FINANCIALS

At 31 March 2014
Bank loans
Finance lease obligations

Total
m

Within
one year
m

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

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 Groups non-current liabilities including interest is as follows:

At 31 March 2014
Between one and less than two years
Between two and less than five years
Five or more years
At 31 March 2013 (restated)
Between one and less than two years
Between two and less than five years
Five or more years

Trade
and other
payables
m

Bank loans
m

Finance
leases
m

Total
m

47.3
11.4
5.8

21.5
3.5
11.1

35.9
49.9
3.5

104.7
64.8
20.4

64.5

36.1

89.3

189.9

49.7
15.6
5.7

16.7
57.5
4.7

28.5
22.2
0.7

94.9
95.3
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:

Expiring within one year


Expiring between one and two years
Expiring in more than two years

2014
m

Restated
2013
m

77.8

3.5

105.6

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 Groups 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

Not past due


Past due 0-30 days
Past due 31-120 days
Past due 121-365 days
More than one year

Impairment
2014
m

Restated
Gross
receivables
2013
m

Restated
Impairment
2013
m

79.7
7.7
3.1
1.4
2.4

(1.2)

83.4
17.9
16.3
5.4
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.

126

Laing ORourke | Annual Review 2014

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 Groups financial assets and liabilities that are measured at fair value at 31 March 2014.
Fair value measurement 2014

Other investments
Derivative financial instruments
Available-for-sale financial assets

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

0.6

2.0

2.0
0.6

0.7

2.1

4.2

4.2
2.1
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 Groups financial instruments at 31 March 2014 and 31 March 2013 are as follows:

Other investments
Derivative financial instruments
Available-for-sale financial assets
Loans and receivables
Financial liabilities measured at amortised cost

Fair value
2014
m

Carrying
amount
2014
m

2.0
0.6
607.3
(1,449.4)

2.0
0.6
607.3
(1,449.4)

Restated
Fair value
2013
m

Restated
Carrying
amount
2013
m

4.2
2.1
0.7
616.1
(1,673.6)

4.2
2.1
0.7
616.1
(1,673.6)
FINANCIALS

The carrying and fair values of the Groups 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.

Laing ORourke | Annual Review 2014

127

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

32 Financial Instruments continued


32.6 Capital Risk Management
The Groups objectives when managing capital are to safeguard the Groups 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 Groups 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:

Restricted financial assets

2014
m

2013
m

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 Groups management of its insurable risks a proportion of this risk is managed through self insurance programmes
operated by its captive insurance subsidiary company, Laing ORourke 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 ORourke 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 Groups future aggregate minimum lease payments comprise:

Future operating lease expenditure commitments:


Due within one year
Due between one and five years
Due after more than five years

Land and
buildings
2014
m

Other
2014
m

Land and
buildings
2013
m

Other
2013
m

21.6
58.7
104.6

4.0
1.4

27.2
76.7
132.2

5.7
5.5

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).

128

Laing ORourke | Annual Review 2014

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

Joint ventures

2013 (restated)

Income
earned
in year
m

Receivable
at year-end
m

Income
earned
in year
m

Receivable
at year-end
m

239.1

7.4

105.6

27.1

Expenses paid
in year
m

Payable at
year-end
m

Expenses paid
in year
m

Payable at
year-end
m

0.5

Purchase of goods and services provided by related parties


2014

Joint ventures

2013 (restated)

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 ORourke KBE and H D ORourke, 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 ORourke KBE and H D ORourke, 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.

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 Groups 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 ORourke 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 ORourke 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.

Laing ORourke | Annual Review 2014

129

FINANCIALS

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 ORourke KBE and H D ORourke, who are also the beneficiaries of the trusts which ultimately own Suffolk Partners
Corporation. Further details are provided in note 14.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

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 ORourke 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 ORourke
KBE and H D ORourke.

37 Reconciliation of Net Cash Flow to Movement in Net Funds


2014
m

Restated
2013
m

41.2
74.3

67.6
37.9

Change in net funds resulting from cash flows


New finance leases
Non-cash exceptional items
Acquisitions
Foreign exchange translation differences

115.5
(90.8)

(13.2)
(42.3)

105.5
(39.0)
9.4

13.0

Movement in net funds in the year


Net funds at 1 April

(30.8)
439.4

88.9
350.5

Net funds at 31 March

408.6

439.4

Increase in cash and cash equivalents for the year


Cash inflow from debt and lease financing

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
Laing ORourke Bachy Soletanche JV
Laing ORourke Hsin Chong Paul Y JV
Laing ORourke Kier Kaden JV
LORRCRPT JV
Strategic Indigenous Housing and Infrastructure
Program Alliance

Equity method
Equity method
Equity method
Equity method
Equity method

Joint operation
Joint operation
Joint operation
Joint operation
Joint operation

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.

130

Laing ORourke | Annual Review 2014

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

345.8
51.5
59.1
268.0
59.0
26.5
24.8
0.3

0.1
(3.7)
(2.1)
3.3

345.9
47.8
57.0
271.3
59.0
26.5
24.8
0.3

Total non-current assets

835.0

(2.4)

832.6

Current assets
Inventories
Trade and other receivables
Available-for-sale financial assets
Derivative financial instruments
Other investments
Assets held-for-sale
Cash and cash equivalents

289.7
499.4
0.7
2.8
4.2
6.6
684.0

28.9

29.8

289.7
528.3
0.7
2.8
4.2
6.6
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
Trade and other payables
Provisions
Derivative financial instruments
Current tax liabilities
Liabilities held-for-sale

(152.6)
(1,295.1)
(15.5)
(0.7)
(18.1)
(1.2)

(57.5)
1.6

(152.6)
(1,352.6)
(13.9)
(0.7)
(18.1)
(1.2)

Total current liabilities

(1,483.2)

(55.9)

(1,539.1)

Non-current liabilities
Borrowings
Trade and other payables
Provisions
Deferred tax liabilities

(121.8)
(70.6)
(25.3)
(6.4)

(0.4)

(121.8)
(71.0)
(25.3)
(6.4)

Total non-current liabilities

(224.1)

(0.4)

(224.5)

(1,707.3)

(56.3)

(1,763.6)

Total liabilities
Net assets

615.1

615.1

Equity
Share capital
Share premium
Fair value reserve
Hedging reserve
Foreign currency translation reserve
Retained earnings

286.4
(1.4)
1.1
55.7
270.3

286.4
(1.4)
1.1
55.7
270.3

Total equity attributable to owners of the Parent


Non-controlling interests

612.1
3.0

612.1
3.0

Total equity

615.1

615.1

Laing ORourke | Annual Review 2014

131

FINANCIALS

Assets
Non-current assets
Intangible assets
Investments in joint ventures and associates
Loans to joint ventures
Property, plant and equipment
Investment property
Deferred tax assets
Trade and other receivables
Restricted financial assets

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

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
Less: share of joint ventures and associates revenue

3,566.9
(339.3)

(3.7)
112.3

3,563.2
(227.0)

Revenue
Cost of sales

3,227.6
(2,942.7)

108.6
(116.2)

3,336.2
(3,058.9)

284.9
(229.4)
3.6

(7.6)

(0.6)

277.3
(229.4)
3.0

Operating profit
Share of post-tax profit of joint ventures and associates

59.1
1.1

(8.2)
8.0

50.9
9.1

Profit from operations


Net non-operating expense

60.2
(0.4)

(0.2)

60.0
(0.4)

Finance income
Finance expense

8.9
(11.7)

0.2

9.1
(11.7)

Gross profit
Administrative expenses
Other operating income

Net financing expense

(2.8)

0.2

(2.6)

Profit before tax


Income tax expense

57.0
(13.2)

57.0
(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

Total
2013
(previously
stated)
m

Change in
treatment of
certain JAs
m

Total
2013
(restated)
m

41.1

41.1

38.3 Impact of change in accounting policy on the consolidated statement of comprehensive income

Profit for the year


Other comprehensive income:
Items that may be subsequently reclassified to profit or loss
Exchange differences on translating foreign operations
Available-for-sale financial assets
Cash flow hedges
Share of other comprehensive income of investments accounted for using the
equity method

7.6
0.3
1.1

(0.3)

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
Non-controlling interests

50.0
1.0

50.0
1.0

51.0

51.0

132

Laing ORourke | Annual Review 2014

7.3
0.3
1.1

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
Loss before tax from discontinued operations
Adjustments for:
Non-cash exceptional items
Depreciation and amortisation
Profit on disposal of property, plant and equipment
Loss on disposal of intangibles
Net financing costs
Share of post tax profit of joint ventures and associates
Increase in trade and other receivables
Increase in inventories
Increase in trade and other payables and provisions
Other

14.9
52.9
(2.5)
0.1
2.8
(1.1)
(32.9)
(47.9)
68.9
(0.1)

(0.6)
1.4

(0.2)
(8.0)
12.4

2.9
0.6

14.3
54.3
(2.5)
0.1
2.6
(9.1)
(20.5)
(47.9)
71.8
0.5

Cash generated from operations

108.4

8.5

116.9

Interest paid
Tax paid

(11.7)
(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
Purchase of intangible assets
Payments to acquire joint ventures and associates
Proceeds from disposal of available-for-sale financial assets
Proceeds from sale of property, plant and equipment
Proceeds from sale of intangibles
Proceeds from sale of investment property
Proceeds from disposal of joint ventures and associates
Loans to joint ventures and associates
Loans repaid by joint ventures and associates
Interest received
Distributions received from joint ventures and associates

(29.4)
(6.3)
(3.9)
2.8
20.3
0.1
1.7
0.6
(4.9)
2.3
8.9
23.3

(2.6)

3.9

0.2
(1.7)
0.3
(10.1)

(32.0)
(6.3)

2.8
20.3
0.1
1.7
0.6
(4.7)
0.6
9.2
13.2

Net cash generated from investing activities

15.5

(10.0)

5.5

Cash flows from financing activities


Proceeds from new bank loans
Repayments of bank loans
Finance lease principal repayments
Dividends paid to non-controlling interests

58.9
(57.2)
(39.4)
(0.6)

(0.2)

58.9
(57.2)
(39.6)
(0.6)

Net cash used in financing activities

(38.3)

(0.2)

(38.5)

Net increase in cash and cash equivalents


Cash and cash equivalents at beginning of year
Effect of exchange rate fluctuations on cash held

69.3
600.6
14.1

(1.7)
29.0
2.5

67.6
629.6
16.6

Cash and cash equivalents at end of year

684.0

29.8

713.8

57.0
(3.7)

57.0
(3.7)

(11.7)
(4.6)

Laing ORourke | Annual Review 2014

133

FINANCIALS

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.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

39 Principal Subsidiaries, Joint Arrangements and Associates


Group interest
in ordinary
voting shares

Principal subsidiaries

Principal activity

Austrak Pty Limited


Bison Manufacturing Limited
Crown House Technologies Limited
Expanded Limited

Manufacture of construction products


Manufacture of precast concrete
Mechanical and electrical contracting
Civil and structural engineering, piling
and demolition
Holding company
Property development
Commercial property development
Residential development
Residential development
Manufacture of construction products
Overseas contracting
Building contracting, civil engineering,
infrastructure and plant hire
Holding company
Holding company
Building contracting
Building contracting, civil engineering
and infrastructure
Building contracting, civil engineering
and infrastructure
Civil engineering and infrastructure
Holding company
Building contracting
Building contracting and
civil engineering
Holding company
Service company
Utilities contracting
Finished stone products
Holding company
Plant hire and operations
Finished stone products

Explore Capital Limited


Explore Investments Australia Pty Limited
Explore Investments Limited
Explore Living Limited
Explore Living Balls Park Limited
Explore Manufacturing Limited
John Laing International Limited
Laing ORourke Australia Construction
Pty Limited
Laing ORourke Australia Holdings Limited
Laing ORourke Australia Pty Limited
Laing ORourke Canada Limited
Laing ORourke Construction Limited
Laing ORourke Construction Hong Kong
Limited
Laing ORourke Infrastructure Limited
Laing ORourke Ireland Holdings Limited
Laing ORourke Ireland Limited
Laing ORourke Middle East
Holdings Limited
Laing ORourke plc
Laing ORourke Services Limited
Laing ORourke Utilities Limited
Naturstein Vetter GmbH
ORourke Investments Holdings (UK) Limited
Select Plant Hire Company Limited
Vetter UK Limited

134

Principal place of business

100%
100%
100%

Australia
England and Wales
England and Wales

100%
100%
100%
100%
100%
100%
100%
100%

England and Wales


England and Wales
Australia
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales

100%
100%
100%
100%

Australia
Cyprus
Australia
Canada

100%

England and Wales

100%
100%
100%
100%

Hong Kong
England and Wales
Cyprus
Ireland

100%
100%
100%
100%
100%
100%
100%
100%

Cyprus
England and Wales
England and Wales
England and Wales
Germany
England and Wales
England and Wales
England and Wales

Laing ORourke | Annual Review 2014

39 Principal Subsidiaries, Joint Arrangements and Associates continued


Joint ventures

Principal activity

Aldar Laing ORourke Construction LLC


Alder Hey SPV Limited
Barnsley SPV One Limited
Barnsley SPV Two Limited
Barnsley SPV Three Limited
Barnsley Local Education Partnership Limited
CLM Delivery Partner Limited
Emirates Precast Construction LLC
Health Montreal Collective CJV
Limited Partnership
Health Montreal Collective
Limited Partnership
Newham Transformation Partnership Limited
Newham Learning Partnership Project
Co Limited
S&W TLP Project Co One Limited
S&W TLP Project Co Two Limited
S&W TLP Education Partnership Limited
Thames Partnership for Learning Limited
TPFL Project Co One Limited
TPFL Regeneration Limited

Construction and project management


PFI accommodation operator hospital
PFI accommodation operator schools
PFI accommodation operator schools
PFI accommodation operator schools
PFI accommodation operator schools
Delivery partner for 2012 Olympics
Manufacture of precast concrete

Group
ownership
interest

49%
40%
40%
40%
40%
40%
37.5%
40%

Principal place of business

United Arab Emirates


England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
United Arab Emirates

Building and civil engineering

50%

Canada

PFI accommodation operator hospital


PFI accommodation operator schools

25%
68%

Canada
England and Wales

PFI accommodation operator schools


PFI accommodation operator schools
PFI accommodation operator schools
PFI accommodation operator schools
PFI accommodation operator schools
PFI accommodation operator schools
Affordable housing

68%
40%
40%
40%
40%
80%
80%

England and Wales


England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales

The Laing ORourke 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 ORourke 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

Civil engineering
Civil engineering
Rail infrastructure
Infrastructure and building construction
Infrastructure and building construction
Infrastructure and building construction
Mining infrastructure
Civil engineering

50%
45%
50%
50%
55%
43%
67.5%
60%

England and Wales


England and Wales
Australia
Hong Kong
Hong Kong
Hong Kong
Australia
England and Wales

Housing construction
Civil engineering
Civil engineering

33.3%
75%
50%

Australia
England and Wales
England and Wales

FINANCIALS

BYLOR
Heathrow East Terminal Project
HILOR JV
Laing ORourke Bachy Soletanche JV
Laing ORourke Hsin Chong Paul Y JV
Laing ORourke Kier Kaden JV
LORRCRPT JV
M-Pact Manchester
Strategic Indigenous Housing and
Infrastructure Program Alliance
Tamesis Main Works
Tamesis Thermal Hydrolysis Plant

Associates

North East Business Park Pty Limited

Property development

Laing ORourke | Annual Review 2014

25%

Australia

135

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

136

Australia Hub offices


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
UNITED ARAB EMIRATES
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
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

Laing ORourke | Annual Review 2014

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 Kings Road
Quarry Bay
Hong Kong
Tel: +852 (0) 2721 0143
Fax: +852 (0) 2721 0807

LAING OROURKES CAPABILITIES

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 ORourke 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

WORLD-CLASS CAPABILITIES
Project investment services
The Groups global project development,
structured property and infrastructure
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 consultancy
Our 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.

Traditional Construction
Concept

Feasibility

Funding

Design &
Engineering

Site
Preparation

Construction

Fit-out
& Finishing

Testing &
Commissioning

Laing ORourkes Unique Business Offering


Concept

Feasibility

Funding

Design & Engineering

Site Preparation

Manufacture

Assembly

Fit-out & Finishing

Testing & Commissioning

Completion

Time

Target

70%

DfMA deployment

60%

onsite labour reduction

30%
time saving

Completion

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
Design for Manufacture and Assembly
(DfMA) component libraries allows us to
set design parameters before concept
design. This drives efciencies 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 management
Laing ORourkes 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 costefcient 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 industryleading brands including Austrak, Bison,
Modulor and Redispan.

Construction services
We offer a full range of building and
refurbishment services to provide a
complete project delivery solution.
Capabilities include buildability studies,
Design for Manufacture and Assembly
(DfMA), remediation and enabling works,
logistics management, integrated
construction delivery, building
technologies installation and testing, and
commissioning of major building projects.

Infrastructure services

Plant and logistics management


Select Plant is one of the industrys
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 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 worlds
leading heavy industrial equipment and
machinery manufacturers as an accredited
installation and maintenance provider.

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 technologies
The Group, which includes Crown House
Technologies, is one of the industrys
leading building and infrastructure
technology services integrators. We are
redening 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

Civil engineering
We 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, posttensioning, 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.

Laing ORourke provides a fully populated


asset management system derived from
the digitally engineered model and
proactively supports efcient 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.

Production of this report


This report is printed by an EMAS-certied Carbon Neutral company,
whose Environmental Management System is certied 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 certied. The pulp for each is bleached using an
Elemental Chlorine Free (ECF) process.
Written, designed and produced by Laing ORourke Corporate
Communications and Black Sun Plc.

SEE OVERLEAF FOR LAING OROURKES CAPABILITIES


OR VISIT: WWW.LAINGOROURKE.COM

Laing ORourke 2014, all rights reserved

LAING OROURKE CORPORATION


UK contact address:
Laing ORourke 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