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Thu July 02 2020

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Laing O'Rourke pre-tax losses fall 20%

19 Feb 19 Laing O’Rourke has posted a pre-tax loss of £43.6m for the year to 31st March 2018, representing a modest improvement on the previous year’s pre-tax loss of £54.3m.

Chief executive Ray O’Rourke
Chief executive Ray O’Rourke

Total revenue for the year was down 8% to £2,928.9m (FY 2017: £3,172.5m).

Underlying group earnings before interest and taxation (Ebit) was £1.1m (2017: £45.6m).

The Europe Hub, despite the continuing impact of the Canadian joint venture and exceptional items made a statutory profit before interest and tax of £10.3m (2017: Loss of £51.9m) on revenue of £2,115.6m (2017: £2,247.2m). It made a loss after tax of £7.8m (2017: £60.9m loss). Laing O’Rourke’s Europe Hub encompasses core operations in the UK, the United Arab Emirates and Canada.

The improvement was mainly due to a reduction in losses in Canada, where it has had problems on a PFI hospital project in Montreal.

A three-year refinancing deal with lenders for the UK business was completed on 15th February 2019.

The worldwide order book currently stands at £8.1bn (2017: £8.9bn).

Chief executive Ray O’Rourke was satisfied overall. “We met our key performance targets through a concerted effort across the company to increase our efficiencies and embrace innovation,” he said.

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He added: “Getting to this point has not been easy, and we have no doubt that the road ahead will be no less challenging. Key to our strategy has been completion of the refinancing of our UK business in February 2019 and our Australian business earlier in 2018. We have maintained our commitment to keep all of our stakeholders, including clients and those in our supply chain, regularly informed of our progress and intentions. In return, we have been gratified by the loyal support we have received in recent years. We see our success, in steps large and small, as a way to inspire confidence and investment in the construction sector at a time when our competitors and members of our supply chain are facing unprecedented obstacles.”

Group chairman Sir John Parker, who was appointed in November 2017, said:  “In my first year as chairman of Laing O’Rourke, I have experienced first-hand the mounting challenges to the construction industry, which only increases the resolve of the board to continue to drive innovation, build strong relationships with all of our stakeholders, and influence realistic risk and reward policies in public sector procurement. 

“There is no question that government, financial institutions and industry must work together to correct systemic barriers and outdated practices to revitalise an industry that would benefit greatly from progressive thought and action. Perhaps never before has strong leadership been needed as much as it is needed now.”

The company said that it was getting better at paying its suppliers on time. In its financial review, it said: “The UK business aspires to paying its supply chain partners in line with the best within the market. The UK businesses reported its first set of payments practice data on 30 October 2018, for the six months to 30 September 2018. The average age of payments was 53 days with 46 per cent paid over terms. The business is making progress in improving both metrics.”

In September 2017, Laing O’Rourke Corporation re-domiciled its tax jurisdiction from Cyprus to Jersey but asserts that it “pays the appropriate amount of tax in all countries where we operate”.

Laing O’Rourke’s 2018 accounts have been overdue since October. The company attributed the delay in filing to “the extensive assessments on all contracts, warranties, claims and Brexit implications by banks, sureties, other financial stakeholders and their advisers (EY, Grant Thornton) and our auditors PWC against the background of the recent severe challenges faced by the construction sector". 

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