Laing O'Rourke reports £47.2m EBIT for the year to 31 March 2019

Laing O’Rourke has issued its Annual Report and Consolidated Financial Statements for the year ended 31 March 2019

Statement from CEO Ray O’Rourke on filing of Laing O’Rourke’s FY19 annual accounts:

Knowing how hard our people have worked in the past year, I am pleased to present a review that acknowledges the value of their dedication and business acumen.

As promised, Laing O’Rourke continues to address the challenges of ongoing market uncertainty and resulting hesitancy in both the public and private sectors. We remain committed to the core conditions that will help us lead a very different construction industry.

It should be clear that Laing O’Rourke is dedicated to navigating the real challenges of the present while progressing fundamental change in our company, and indeed the industry as a whole.

We are continually grateful to our clients, suppliers and other stakeholders whose support has provided us with enormous opportunities, despite the complex times.

Ray O’Rourke, CEO

From the FY19 Annual Review:

• Group Managed revenue of £3.3bn.
• Global earnings before interest and tax (EBIT) improved by £74.7m to a profit of £47.2m.
• The Europe Hub businesses (UK, Middle East, Canada) closed the 2019 trading year with a £76.1m EBIT result. This was an improvement of £65.8m on the prior year.
• The Australia Hub contributed £1.9m ($3.2 AUD) EBIT.
• Significant progress has been made in refinancing the Group, with the UK business completing a three-year refinancing exercise in February 2019.
• The Australian business refinanced after its FY19 year-end, completing the process with lenders on 5 July 2019. The renewal date for these facilities is now 31 December 2021, aligned with the UK.
• The Group demonstrated its ability to generate cash flow with an improvement in the net funds position of £43.8m to give a position at the year-end of £132.9m
• Losses from the Canadian Hospital PFI have ceased.
• At the year-end, the Group had an order book of £7.6 billion.

- In Australia, this includes several of the nation’s largest defence and urban transport projects, as well as new works in the mining sector; and

- In the UK, there has been considerable success in securing complex projects in a range of sectors, including The Factory; a new cultural space in Manchester,  LD11, further data centre works for repeat client Equinix, Soho Place, a mixed-use scheme in London and further early engagement works (on Pre- Contract Services Agreements) to bring a series of residential schemes to market, particularly in Manchester.

• The business has insulated its operations against Brexit via detailed scenario and contingency planning, with mitigation plans for talent and skills retention, labour availability, and plant and equipment imports.
• The Annual Report notes no adverse Brexit impact on current, live projects. While the UK Government has foreshadowed future public works to stimulate the economy in a post-Brexit environment, contract finalisation in 2019 has slowed as the market awaits a decision on leaving the EU.

Chairman’s Comment

Group Chairman Sir John Parker GBE FREng praised the management team and employees for consistent delivery, closing off legacy contracts, pursuing its transformation agenda and delivering credible profits.

However, he added,

UK construction remains in a troubled state. A number of key lending banks have signalled their exit from the sector; thankfully a few remain committed.

The livelihood of some three million UK employees and the well-being of those who support and depend upon them must be secured. The country’s sustainable economic recovery and the vital need to renew our infrastructure requires the driving force of a modern and successful construction sector.

There is now a crucial opportunity for the public sector to reform procurement processes and modernise commercial models. This can reset the ‘tone from the top’ within the industry and its broader customer base.

At the same time, construction can no longer be driven by old standards and outmoded thinking. That is why we as a Board enthusiastically support the ongoing innovative and transformational agenda of Laing O’Rourke.

FY20 Updated Guidance - UK

As a private business, the Group continues to provide regular financial updates with its clients, suppliers and stakeholders.

As we enter the latter half of the FY20 trading year, Laing O’Rourke can confirm:

• UK businesses are all performing to plan and delivering forecast margins;
• Half-year (30 September 2019) EBIT for the UK businesses is forecast at £39.6 million; and
• Gross margin of 7.6% is being achieved across the portfolio.

The Group Annual Review is available to read in full here.