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  • Annual Review 2012

    Engineering the future

    Laing ORourke Corporation

    Laing ORourke plcBridge PlaceAnchor BoulevardCrosswaysDartford, KentDA2 6SNUnited KingdomT +44(0) 1322 296 200F +44(0) 1322 296 262www.laingorourke.com

    UK contact address

    Laing ORourke 2012, all rights reserved.

    Laing OR

    ourke|Annual R

    eview 2012

    EnginEERingExCELLEnCE

    Over the following pages we discuss some of the major trends directly influencing the way we think about the development of the modern world, the opportunities for our industry, and the role Laing ORourke is playing in providing the solutions tothe engineering challenges that lieahead.

    Cover image: Cannon Place, London, UK

    The priority for the engineering and construction industry is to provide the essential building and infrastructure services needed to secure a sustainable future. Around the world millions of people depend on the continuing stability and prosperity provided by a reliable, fit-for-purpose built environment.

  • Production of this reportThis report is printed by an EMAS-certified Carbon Neutralcompany, whose Environmental Management system is certified 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 certified. The pulp for each is bleached using an Elemental Chlorine Free (ECF) process.

    Dr. gavin DaviesMechanical Engineering Discipline Lead gavindavies@laingorourke.com

    Dr. Andrew Harris Chemical and Process Engineering Discipline Lead atharris@laingourke.com

    Dr. Phillip CartwrightElectrical Engineering Discipline Lead pcartwright@laingorourke.com

    Professor Robert MairChair of the Engineering Excellence Group rmair@laingorourke.com

    David Scott Structural Engineering Discipline Lead davidscott@laingorourke.com

    Mark Shirburne-DaviesArchitectural Discipline Lead mshirburne-davies @laingorourke.com

    From left to right

    ii Laing ORourke|Engineering excellence

    EnginEEring + EntErprisE =ValuE CrEation

    Engineering Excellence group The Engineering Excellence Group (EnEx.G) was established in 2011 to bring together world-class professionals drawn from academia and industry asafocus for creating innovative client solutions andpartnering with external consultants at the highest levelsin order to differentiate Laing ORourke and demonstrate our core capabilities. The Group also manages and participates in collaborative research anddevelopment projects with the Laing ORourke engineering centres sited at our partnering universities.

    The EnEx.G has four primary roles:

    1. Deliver: internal consultancy The EnEx.G is an intellectual resource for Laing ORourkes design and delivery businesses. Its expertise covers benchmark design, manufacturing and construction processes, troubleshooting operational issues, providing thought-leadership to assist in winning major new projects through novel alternative approaches, and generating fresh perspectives on existing projects to create additional value.

    Examples in the year include:

    122 Leadenhall Street: steelwork temperature assessment and review of conflicting estimates ofstructural steelwork temperature.

    London Gateway Port: review of compaction and scour protection.

    Francis Crick Institute: assessment of use ofphotovoltaics.

    2. Collaborate: External advisoryThe EnEx.G provides a collaborative and complementary problem-solving service to generate goodwill and loyalty among valued clients, our supply chain, delivery partners, governments and other organisations, including charities and not-for-profit organisations.

    Laing ORourkes innovative approach is an integral part ofits entrepreneurial culture. We have developed our potential for innovation by establishing a unique in-house engineering consultancy, the Engineering Excellence Group. Staffed by some of the worlds leading industry innovators, it is actively supporting our growth agenda. Over time itwilllead toasignificant expansion of Laing ORourkes capabilities, performance, client satisfaction and profitability acrossour sectors.

    Operating model

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    Structural

    CivilsElectrical and mechan

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    Engineering consultants

    University partnerships

    Research institutions

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    Laing ORourke 2012, all rights reserved.

    The Francis Crick Institute, London, UK

  • Examples in the year include:

    Engagement with consultants (Atkins) on opportunities to address the marine and energy markets through better engineering.

    ARUP Laing ORourke geotechnical knowledge-sharing workshop.

    Thames Water manhole innovation.

    3. Innovate: research and development The EnEx.G identifies and manages Laing ORourkes research agenda to innovate across our target sectors and markets, including extending our Design for Manufacture and Assembly (DfMA) capabilities into new product areas. It takes a largely participative approach via partnerships with leading universities and other research providers, complemented by our own commercialised in-house research and development capability.

    Examples in the year include:

    Imperial College London: PhD in wireless distributed sensorsin system commissioning.

    University of Oxford: PhD in phase-change materialsfor energy storage in buildings.

    University of Cambridge: PhD in fibre-optics intunnelling and deep excavations.

    4. Educate: supporting education networks The EnEx.G participates in Laing ORourkes existing education networks and leads the development of new ones, as well as mentoring graduate engineering trainees, junior and senior engineers, technical and

    Itsprincipal role is to devise engineering strategies to create competitive advantage for LaingORourke and to drive industry-wide innovation.

    construction specialists, project managers and management from across the business. Acting as thought leaders, the engineering discipline leads support the development of stimulating education and training programmes to inspire and equip the next generation to be more radical in advancing ourinnovation agenda. This approach builds on the existing education platforms that Laing ORourke has established with our partner universities.

    Examples in the year include:

    The University of Cambridge Masters in Construction Engineering andImperial College London Masters inSystemsEngineering and Innovation.

    Key staff will rotate through the EnEx.G, providing youngengineers with increased motivation and specialist expertise.

    Experienced project personnel will gain the opportunity to convert their site learnings into future innovation.

    Leadership and organisationThe EnEx.G is led by Professor Robert Mair and is made up of engineering discipline leads in key fields heavy civil, structural, mechanical, electrical, electronic, and chemical process and manufacturing working in adynamic and boundary-less environment, operating outside normal business and project governance. Itsprincipal role is to devise engineering strategies tocreate competitive advantage for Laing ORourke and to drive industry-wide innovation.

    Laing ORourke|Engineering excellence iii

  • iv Laing ORourke|Engineering excellence Laing ORourke|Engineering excellence v

    ThE roLE of EngInEErIngIn a rapIdLy EvoLvIngworLd

    By ray orourke KBE, founding Chairman and Chief Executive, Laing orourke

    The industry is experiencing unprecedented transformation, driven bya number of dynamic forces that arecausing engineers to fundamentally rethink the way buildings and infrastructure are funded, designed, constructed and operated.

    Laing ORourke sees these shifting trends as a significant opportunity to challenge and change the way things are done, to step the pace of innovation up a gear.

    While clients will ultimately drive developments bydemanding more cost-effective projects, faster schedules, safer and more sustainable solutions and higher quality work, it is our role to anticipate these requirements, exploit new tools, take risks and be thefirst to try something different. Thats the only waytogrow confidence in alternative ideas.

    These new approaches include the use of Building Information Modelling (BIM) to analyse astructures design before we set foot on-site, orDesign for Manufacture and Assembly (DfMA) to reduce construction and installation time, or biomimetic engineering, where solutions are inspired by the naturalenvironment around us. Nature has had billionsof years to get it right, so theres a lot it can teach us about smarter ways of working.

    Progressive thinking is vital for solving the issues ofthemodern world from congestion and high accidentrates on roads to the growing number of airpassengers. Aviation is central to the globalisation ofmany countries, and airport authorities are under pressure to create large-scale terminals that are flexibleand integrated, offering greater security than ever before, while at the same time enhancing the passenger experience.

    End-users must be at the heart of engineering and construction endeavours. Nowhere is this more true than in the development of medical facilities, where the buildings and landscaping themselves are almost as critical to convalescence as themedicines and staff. For example, changes in government targets mean that many health authorities must find ways to improve their existing buildings in order to deliver efficiencies while offering bettercare and protection to patients.

    As engineers, we can help galvanise communities andput cities on the map. It is a richly rewarding and inspiring role. Contemporary and spacious convention centres, such as the newly reopened Brisbane Conference and Exhibition Centre, attract prestigious trade and commercial visitors; vibrant retail sites become destinations in their own right; inspiring schools, such as those we are building through DfMAin the UK and Australia, make towns andvillages places where families want to settle; andtransport infrastructure not just airports, but railtoo boosts tourism and improves import and export capacity.

    AtLaing ORourke, we believe it is important to leverage our expertise into the design and planning, toensure that the asset is efficient and highly functional for those who will be using it. For this to be effective, however, clients need to invite construction firms to the table from the word go.

    Engineering is about constantly setting new standards for what environments should be like and adapting, challenging and evolving the parameters of construction in line with the world around us.

    The challenges facing global societies are different today from 20 or even ten years ago. A fast-expanding population is becoming more demanding not just about where they go and how they get there, but whattheir destination looks and feels like.

    Schools, hospitals, city centres and surrounding infrastructure can no longer simply do the job by meeting basic standards. The built environment is expected to push boundaries, inspire and amaze, relaxand reassure, and make our lives easier.

    On top of this, governments, councils and land ownersare constrained by strict environmental goalsand pressures.

    Engineering has a pivotal role to play in creatively meeting the charge for efficiency and sustainability. Andjust as social and political needs are advancing, sothe construction industry must break away from traditional processes.

    The world over, forums and government groups are debating what infrastructure their countries need and what the priorities are, namely: faster, more reliable and cost-effective construction.

    As engineers, our challenge is to tackle these issues and help people work, travel, get quality medical help, gain an education and enjoy their leisure time. We must ask ourselves: is the traditional method actually the bestmethod? If we dont have theanswers to hand, wecan find them through innovation, collaboration, determination and well-thought-outresearch.

    Low-carbon technologies are steering the industry to design passive buildings that are comfortable and high quality, and to do so with as little environmental impact as possible not just in the construction phase, but over the life of the building. Around 60 per cent of global industrial waste is from the construction and demolition of buildings; the built environment accounts for 60 per cent of all electricity used in the developed world and 40 per cent of total energy consumed.

    Engineering has a pivotal role to playin creatively meeting the charge for efficiency and sustainability. Andjust as social and political needs are advancing, sothe construction industry must break away from traditional processes.

  • vi Laing ORourke|Engineering excellence Laing ORourke|Engineering excellence vii

    addrEssIng ThE sKILLsshorTagE

    By dr andrew harris

    Engineering recruitment is being severely hit by skills shortages, endangering the global economic recovery seen in key sectors like construction, manufacturing and energy and leaving businesses short of the qualified staff that are vital for their corporate development.

    Warnings have come from leading industry figures in education, employment and management across the engineering sector. They argue that a growing proportion of global engineering-based employers are struggling to fill vacancies as qualified candidates are difficult to source at a time when the need for their services is intensifying.

    The shortage has created a near doubling of recruitment activity in the past year, particularly in Australia and parts of Asia and South America, placing the demand for professional engineers under greater pressure. Clearly, leaving these vacancies open could put the brakes on the economic recovery.

    While many global engineering firms have expressed concern over the issue, not enough are taking progressive and innovative steps to reverse the trend. For example, if central governments are to meet the demands of the new energy age, feed the economic growth engines and replace ageing infrastructure, the private sector must find a more joined-up approach to working with public-sector departments and educational establishments.

    With the challenges ahead of us, it is clear the industry must make engineering a more attractive proposition for young people. It is vital for the long-term health of the profession that we build enthusiasm among teenagers as they make choices about their future careers.

    In its joint report, Engineering the Future, published in2009, National Grid and the Royal Academy of Engineering highlighted the task we face as an invisible industry. Despite teenagers ranking engineering highly as a sector they would consider working in, manylacked real understanding of what engineers actually do. Worse still, it revealed that the proportion ofparents and teachers recommending engineering asa career isfalling.

    Two major themes emerged from this research. Firstly, public attitudes to engineering are very important to young people as they contemplate career paths. Role-model organisations and engineering heroes, recounting everyday experiences have a huge influence. Therefore, itis essential to promote the advancements engineering contributes to society, increasing its attractiveness to a diverse pool of talent. Otherwise oursiren call to young people may be drowned out bythe din of public opinion.

    Secondly, positive experiences with industry and academia are vital for building a young persons early enthusiasm for engineering, from that first thought about their choice of career right through to the point where they accept their first job or embark on their first development programme. Unfortunately, many young people have uninspiring early encounters with industry, denting its broader appeal as these negative perceptions are shared among family and friends.

    It is essential that we present the industry as engaging andrewarding, both professionally and financially.

    There is no easy answer to helping young people get more out of their limited exposure to engineering. Our strategy must be more coherent and its implementation more consistent. In recent years, Laing ORourke has been at the forefront of a number of excellent programmes set out to actively engage and develop young people to look on engineering as a career of choice and a provider of solutions to the challenges of the modern world.

    Alongside academic institutions, professional bodies and other partners, progressive employers like Laing ORourke are working hard to improve their engagement with young people through greater exposure to education and research and development opportunities. Others need to quickly follow their lead inbecoming a catalyst for the enthusiasm of youth.

    The battle for talent is particularly harshly felt in Australia, where an increasing need for infrastructure iscoupled with an acute shortage of building and engineering professionals as a result of the resources boom, particularly in remote areas, a low number of graduates and an ageing workforce.

    With Australias relatively small population and tight migration requirements, the pool of talent to choose fromfor the countrys biggest infrastructure challenges is always in high demand. And its not just engineers

    Ultimately, organisations that demonstrate clear career paths and a vision to push boundaries can engage creative, passionate people from a young age.

    that are urgently sought, but project and construction managers, safety advisers and planners.

    The Australian Federal Government held a Senate Committee enquiry into the issue, and the Australian Constructors Association concluded, on behalf of Laing ORourke and other members, that resolving the shortage will not be easy.

    So, how do we tackle the problem? Domestic training will remain critical, as will an expansion of apprenticeship-level schemes. Perhaps the engineering-based organisations that will best weather the storm are those that can quickly draw on skilled personnel from overseas, Europe or the Middle East, forexample. Research from Engineers Australia shows that more than 50 per cent of the Australian engineering workforce was born overseas.

    Ultimately, organisations that demonstrate clear career paths and a vision to push boundaries can engage creative, passionate people from a young age. The possibility that their ideas and innovations will one day drive the industry forward and develop the inspiring and stimulating environments in which we live and work will surely be too attractive a prospect to turn down.

    about the author: Dr Andrew Harris is Chemical and Process Engineering Discipline Lead in Laing ORourkes Engineering Excellence Group. Based in Australia, Andrew has moved between industry and academia throughout hiscareer, and was formerly an associate professor ofchemical and biomolecular engineering at the University of Sydney.

  • Laing ORourke is determined to use the momentum around BIM to effect atransformational change, through which the industry becomes more integrated across the entire lifespan ofa project, from feasibility toconstruction to operation and, ultimately, decommissioning.

    viii Laing ORourke|Engineering excellence Laing ORourke|Engineering excellence ix

    ModELprofEssIonaLs ThE rIsEof BuILdIngInforMaTIonModELLIng

    By david scott

    The widespread acceptance of the benefits of Building Information Modelling (BIM) in the past 12 months is the light-bulb moment the industry has beenwaiting for. It has quickly become the hottest topic in construction and those who remain reluctant will be left behind. The Royal Institution of Chartered Surveyors has called on the profession toget its act together and adopt it.

    Increasingly, client organisations are demanding its use on their capital projects, as they struggle to balance the urgent need to replace ageing infrastructure with budget deficits. In the UK public sector, BIM is to become mandatory on all contracts. The compelling argument isits potential to make significant savings.

    Yet the term BIM is limiting, because it suggests a narrow application, when the reality is that it can beused on any type of project we deliver. At Laing ORourke, we believe it is about more than simply creating models. Yes, the visualisation is hugely important to understanding and interrogating a concept, but the most important letter in BIM is theI it is about unlocking the power of information tocreate knowledge and insight.

    Used from the earliest stages of a project, BIM facilitates better design whether the project is an iconic skyscraper like 122 Leadenhall Street in London, a standardised school solution or a railway station. It enables different parties to work together using a single data source, creating more informed and unified delivery teams, while allowing the supply chain to see beyond their own activities to a more holistic view of theclients objectives.

    Fundamental to achieving true BIM is having the right blend of technical and cultural platforms. An inclusive environment based on openness, collaboration and knowledge-sharing needs to be underpinned by consistent processes and access points, giving anyone connected with a project the ability to easily navigate around the model and explore the data. This allows the whole team to physically see the project build sequence to an incredible level of detail, measuring progress, homing in on specific areas of concern and interrogating the different interfaces, using the same core process. Itsaves time, money and misunderstanding.

    Breakthrough success will come from a better appreciation of the roles that people and processes have to play, alongside state-of-the-art technologies. Forward-thinking project leaders are vital to embedding this culture. Meanwhile training off- and on-site delivery teams to practically embed BIM into business processes will aid take-up and at the same time add a new dimension to the skills of our professionals. Similarly, it is critical toestablish the necessary protocols with consultants, subcontractors and other supply chain partners achieving consistency at every interface.

    From a technology perspective, the industry tends to design using bespoke software, without common platforms or conventions. True BIM requires information to be combined into a single working model. This provides real value to the client at handover stage, acting as a virtual operation and maintenance manual for their capital asset, which can significantly optimise the performance of its systems and facilities.

    The benefits of BIM can be multiplied by earlier contractor engagement on a project. Put simply, if a project can be built virtually in a BIM world, it is possible to build it in the real world, offering guarantees on price and programme much earlier by significantly managing out risk. BIM provides the ability to go beyond the delivery phase to explore lifecycle analysis and energyperformance, creating a greater understanding of those early decisions that impact on operational cost.

    Laing ORourke is determined to use the momentum around BIM to effect a transformational change, through which the industry becomes more integrated across the entire lifespan of a project, from feasibility toconstruction to operation and, ultimately, decommissioning. The Group understands that barriersof data ownership and intellectual property exist. However, it believes that through the careful selection ofpartners, it will ensure those it works withshare the same collaborative philosophy, reap equal benefits and create sustainable and valuable relationships with clients. It is challenge and changeatits most visionary.

    about the author: David Scott is a globally renowned expert in structural engineering, with a particular specialism in tall buildings. He is Structural Engineering Discipline Lead in Laing ORourkes Engineering Excellence Group, developing and delivering innovative and sustainable engineering solutions. David was previously a principal at Arup NewYork, working on the World Trade Center masterplan and the Freedom Tower. He led the post-9/11 industry review of design standards andprocedures for tall buildings.

    122 Leadenhall Street, City of London

  • Laing ORourke|Engineering excellence xi

    fasTEr, BETTEr, for LEss how dfMa IsTransforMIngConsTruCTIon

    By dr phillip Cartwright anddrgavin davies

    Its not just a clich: time really is money. Increasingly, governments anddevelopers want and need more forless and as quickly as possible.

    A new retail development that falls behind schedule, for instance, or a delayed commercial venture awaiting the arrival of tenants, represents a huge commercial risk.

    Beyond cost-savings, councils need schools to open in time for the new academic year in order to hit education targets; developers and architects expect their ideas to be flawlessly executed as their visions come to life; and any process that reduces the safety risks inherent in construction will be applauded.

    Our response to these issues is Design for Manufacture and Assembly (DfMA), which is revolutionising how we evolve towns and cities within challenging restraints.

    The approach is structured and simple, but the end product remains of high (if not better) quality, with tightly controlled factory processes ensuring accuracy andconsistency.

    DfMA produces precast and preassembled buildings and their component parts from columns, beams andwalls to sleepers, cladding and building systems to a cost, time and specification with which traditionalconstruction processes cannot compete.

    At the heart of DfMA is early planning and investment both financially and in terms of resourcing. In-depth up-front speculation and analysis of potential issues provide clarity and greater certainty. That insight and visibility of progress, from every dimension of the Building Information Model all the way to thefactory, ishugely valuable to clients and constructors alike. It instils confidence in the ideas, methodologies and programme, with concerns addressed before on-site work starts.

    People think about DfMA in the context of buildings, but there is enormous potential to introduce it beyond civil engineering and construction. It is completely foreseeable that modular assembly could inform the build of facilities for electricity and power generation and other utilities. Laing ORourke has already, for example, applied DfMA to large water-retaining tanks, which have traditionally been constructed by pouring concrete in situ, requiring alonger installation period and a larger team.

    A wildly contrasting environment to a sewage treatment works, Londons ultra-luxurious One Hyde Park usedDfMA throughout, from the risers to the bathroompods. In the residential sector, there are exciting possibilities to implement these ideals in densely populated urban environments in mega cities such asShanghai and Singapore, which are crying out for efficient, economic and attractive modular housing. Really, offsite manufacturing works at any end of thescale.

    A number of factors make DfMA an especially suitable solution for schools and Private Finance Initiative (PFI) projects, principally the reliability and robustness of the finished product and the reduction in noise during the build process, which suits such sensitive environments. Likewise its flexibility is a major advantage: walls and columns can be repositioned, and layouts adjusted. If necessary, a school can be easily transformed into a council office block, which could be modified into a commercial unit.

    In rural New South Wales, Australia, the Federal Governments BER (Building the Education Revolution) programme required more than 300 schools to be built in 18 months. It sounds an impossible task, but with in-depth early planning, you can have one school built, delivered from the factory to the site, and installed on the foundations within a week.

    DfMA produces precast and preassembled buildings and their component parts from columns, beams and walls to sleepers, cladding and building systems to a cost, timeand specification with which traditional construction processes cannot compete.

    While DfMA is not yet a broadly familiar concept in Australian construction, it has proved to be a highly innovative solution to the many problems of working inremote areas. Firstly, doing the preparatory work in factory conditions overcomes the very real challenge ofa lack of qualified and appropriately skilled local tradespeople. For example, in the Pilbara, a resource-rich region in Western Australia, infrastructure project sites might be hundreds of kilometres from the nearest city.

    Equally, extremes of weather from baking heat to tropical cyclones to flooding can bring work to a stopand present safety risks to our workforce. DfMA minimises the amount of work that needs to be done inthese conditions.

    On this basis, employing DfMA sounds like common sense. It is. But it remains a far from widespread practice in some markets it is groundbreaking and we are challenged by a limited awareness and experience of the concept, and a reluctance to acknowledge the value it can add versus more traditional lowest-price decision-making. Gradually, clients are acclimatising, but it is a massive cultural shift and it is our job as engineers to persuade, educate and reassure.

    In sectors such as energy and aerospace, these principles have been common practice for ten or 15 years. Therefore, just imagine what a game-changer itwould be if it became the first-choice process across the construction industry.

    about the authors: In Laing ORourkes Engineering Excellence Group, Dr Phillip Cartwright is the Electrical Engineering Discipline Lead and Dr Gavin Davies is the Mechanical Engineering Discipline Lead. Dr Cartwright is the former Head of Electrical Power and Control Systems for Rolls-Royce and Dr Davies worked with Arup for 17years, specialising in the investigation and development of energy-efficient solutions.

    x Laing ORourke|Engineering excellence

    Dagenham Park Church of England School, UK

  • xii Laing ORourke|Engineering excellence Laing ORourke|Engineering excellence xiii

    By professor robert Mair, Chair of the Engineering Excellence group

    If you were to take a look at any surveyof the worlds most innovative companies, by industry, you will notice a glaring omission. Aconstruction business has never featured on such alist.

    One of Laing ORourkes aims or perhaps a side-effect of it in setting up the Engineering Excellence Group (EnEx.G) is to correct this oversight.

    For it is an oversight. Every day, the best businesses in the industry demonstrate remarkable innovation at every stage of the design and build process. What weve perhaps been less successful at, as an industry and as acompany, is proactively demonstrating and sharing ourinnovative thinking and problem-solving with clients, colleagues and young people making career choices, across professions and through the supply chain.

    The EnEx.G brings together some of the worlds mostrespected figures from industry and academia. Multidisciplinary and multinational, we have the privilege of operating across boundaries and outside normal business and project governance, in the search for new ways to challenge and change the industry.

    It really is a ministry of all the talents in engineering heavy civil, structural, mechanical, electrical, chemical and manufacturing. There is almost unlimited opportunity to adopt step-change technologies from other engineering industries, from oil and gas to aerospace and nuclear, and apply them to Laing ORourkes traditional sectors.

    What we wont be doing is providing a complete design service for the business. Our value is in putting together the right combination of skills within the company and also externally as an extension of the university connections we have and the engineering organisations with whom weve worked closely.

    The EnEx.G aims to raise the bar of engineering. It will do this in four main ways:

    Internal consultancy. We will deal with specific technical problems that arise on particular projects and bring the best engineering knowledge to bear on these. We will also work with business units to support bids, offering new ways to deliver projects. In both cases, the emphasis is on innovation.

    External advisers. As trusted engineering advisers, we will proactively go to existing and prospective clients with novel engineering approaches to solving problems. Well do this with engineering organisations with whom we already collaborate closely.

    research and development. Laing ORourke supports and engages with universities in countries where weoperate. The role of the EnEx.G is to interact withtheseinstitutions and support research projects, ensuring they are delivering value toLaing ORourke.

    supporting education networks. In addition to our work with universities, Laing ORourkes Partnering withSchools programme allows our project teams to interact with younger students, promoting the excitement of the industry to those considering the nextsteps in their education. The EnEx.G is involved with internal talent development programmes, such as Young Guns and Guns, building skills thatwill develop tomorrows leaders.

    There is huge demand for smarter, quicker, more efficient and more economical ways of delivering projects. The EnEx.G can bring in transferable solutions from other sectors. For instance, one thing were researching at the University of Cambridge, which is closely supported by Laing ORourke, is the concept ofsmart infrastructure. In aerospace or automotive industries, theuse of sensors is widespread. Rolls-Royce

    engineers in Derby know exactly where their engines areflying all over theworld and can monitor theirperformance.

    The opportunities for sensor technology in the infrastructure and construction industry are equally promising. A tunnel or bridge, for example, might haveembedded sensors that tell designers, owners and constructors how its performing during its life, orafaade might have sensors to tell us a buildings energyconsumption.

    Perhaps the most significant way the EnEx.G can contribute is to highlight sustainable solutions to the most important problems facing our clients, and more broadly, our communities.

    Finally, I believe an increasingly key role for the EnEx.G will be to act as engineering champions and ambassadors outside our profession. We need to be able to communicate persuasively the importance of engineering not just to clients, but governments, teachers, students and opinion formers in all fields.

    If we want to challenge and change the status quo and we do we need to prove to people that there really is abetter way.

    about the author: Professor Robert Mair is Chair of Laing ORourkes Engineering Excellence Group, which was established in January 2011. He combines this role with his responsibilities asHead of Civil and Environmental Engineering at the University of Cambridge, where hehas worked since 1998. He is a specialist in geotechnical engineering anddeep excavation, tunnels and large underground spaces. He formed his own company, Geotechnical Consulting Group, in 1983.

    The Engineering Excellence group value creation model: innovation, people development, research andorganisational development

    Improved Laing ORourke brand reputation in the marketplace

    New income streams

    Proactive business initiative

    Better ability to attract and retain outstanding staff

    New ideas and thinking from outside the industry to support our growth and development

    Competitive advantage

    Ability to x problems faster and improve prot performance

    Performance enhancements on complex and technical projects,

    delivering increased margins

    Entrance to new markets and sectors

    More complex build programmes with greater

    prot potential secured

    Growth and development for the whole Laing ORourke Group, leading to industry-wide transformation

    Thought leadership

    Education

    Facilitation of cultural and performance improvements

    Government-matched funding and support

    Enhanced technical expertise

    Enhanced innovation capability

    EnEx.G=

    valuecreation

    a nEwsupErgroup dELIvErIng IndusTry InnovaTIon

    The Engineering Excellence Group brings together some ofthe worlds mostrespected figures from industry and academia. Multidisciplinary and multinational, we have the privilege ofoperating across boundaries and outside normal business and project governance, in the search for new ways to challenge and change the industry.

  • The Engineering Excellence group

  • Production of this reportThis report is printed by an EMAS-certified Carbon Neutralcompany, whose Environmental Management system is certified 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 certified. The pulp for each is bleached using an Elemental Chlorine Free (ECF) process.

    Dr. gavin DaviesMechanical Engineering Discipline Lead gavindavies@laingorourke.com

    Dr. Andrew Harris Chemical and Process Engineering Discipline Lead atharris@laingourke.com

    Dr. Phillip CartwrightElectrical Engineering Discipline Lead pcartwright@laingorourke.com

    Professor Robert MairChair of the Engineering Excellence Group rmair@laingorourke.com

    David Scott Structural Engineering Discipline Lead davidscott@laingorourke.com

    Mark Shirburne-DaviesArchitectural Discipline Lead mshirburne-davies @laingorourke.com

    From left to right

    ii Laing ORourke|Engineering excellence

    EnginEEring + EntErprisE =ValuE CrEation

    Engineering Excellence group The Engineering Excellence Group (EnEx.G) was established in 2011 to bring together world-class professionals drawn from academia and industry asafocus for creating innovative client solutions andpartnering with external consultants at the highest levelsin order to differentiate Laing ORourke and demonstrate our core capabilities. The Group also manages and participates in collaborative research anddevelopment projects with the Laing ORourke engineering centres sited at our partnering universities.

    The EnEx.G has four primary roles:

    1. Deliver: internal consultancy The EnEx.G is an intellectual resource for Laing ORourkes design and delivery businesses. Its expertise covers benchmark design, manufacturing and construction processes, troubleshooting operational issues, providing thought-leadership to assist in winning major new projects through novel alternative approaches, and generating fresh perspectives on existing projects to create additional value.

    Examples in the year include:

    122 Leadenhall Street: steelwork temperature assessment and review of conflicting estimates ofstructural steelwork temperature.

    London Gateway Port: review of compaction and scour protection.

    Francis Crick Institute: assessment of use ofphotovoltaics.

    2. Collaborate: External advisoryThe EnEx.G provides a collaborative and complementary problem-solving service to generate goodwill and loyalty among valued clients, our supply chain, delivery partners, governments and other organisations, including charities and not-for-profit organisations.

    Laing ORourkes innovative approach is an integral part ofits entrepreneurial culture. We have developed our potential for innovation by establishing a unique in-house engineering consultancy, the Engineering Excellence Group. Staffed by some of the worlds leading industry innovators, it is actively supporting our growth agenda. Over time itwilllead toasignificant expansion of Laing ORourkes capabilities, performance, client satisfaction and profitability acrossour sectors.

    Operating model

    Exte

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    advis

    ory Internal consultancy

    Education

    Research

    and d

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    opm

    ent

    Pro

    cess

    /che

    mica

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    Chief engineering adviser

    Structural

    CivilsElectrical and mechan

    ical

    M

    ater

    ials

    Tech

    nolog

    ies pa

    rtners

    Engineering consultants

    University partnerships

    Research institutions

    solut

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    Laing ORourke 2012, all rights reserved.

    The Francis Crick Institute, London, UK

  • Laing ORourke|Annual Review 2012 1

    Overview ii Engineering excellence (inlay booklet)2 Performance highlights4 Our business model Engineering the future6 Europe Hub summary14 Australia Hub summary

    Strategy 1818 Chairman and Chief Executives statement20 Vision, mission and strategy24 Key performance indicators

    Group performance 2626 Financial and business review Safety and sustainability review31 Foreword32 Health and safety36 People39 Environment42 Marketplace46 Risk management

    Hub performance 5454 Europe Hub62 Australia Hub

    Governance 7070 Senior leadership team72 Corporate governance

    Financial statements 7878 Directors, Officers and Advisers79 Directors Report81 Independent Auditors Report82 Financial statements123 Contacts

    More information is available online at: www.laingorourke.com For the latest news visit: www.infoworks.laingorouke.com

    In this report

    Overview Group performanceStrategy Hub performance Governance Financial statements

    Welcome to Laing ORourkes 2012 Annual Review.

    Laing ORourke is a globally diverse engineering enterprise with a commitment to delivering Excellence Plus performance, founded on 164 years of experience. We fund, design, manufacture, construct and maintain the built environment providing the facilities to accommodate, educate, employ, transport, care for and sustain communities.

    Our business model comprises the full range of engineering, construction and specialist products and services. Through our fully integrated offer we are delivering single-source solutions across the client value chain for some of the worlds most prestigious public and private organisations.

    Our collaborative approach combines discipline in delivery with the continuous pursuit of innovation: working with customers from concept to completion, advising on and providing the best ways to successfully complete projects and achieve greatest value for all stakeholders employees, customers, communities andshareholders.

    We are implementing a long-term strategy which aims to create sustainable growth by meeting the economic, social and environmental challenges of our rapidly changing world, targeting high-growth markets and sectors that complement our values and capabilities.

  • Laing ORourke|Annual Review 2012 3

    1. Our independent 2012 employee engagement survey score, an aggregate measure of employees confidence and belief in: our futuredirection, personal career growth opportunities, safe and responsible working practices, reward and recognition systems, andquality of management.

    2. Number of reportable incidents resulting in morethan three days absence per 100,000 working hours.

    Operational highlights

    Outlook

    Strategy execution gathering pace with prestigious project awards in Europe and Australia 122 Leadenhall Street, Alder Hey Hospital and Crossrail in theUK and Chevron Gorgon in Australia.

    Successful completion of high-profileprojects including programme management of London 2012 Olympic and Paralympic Park.

    Over 700 new roles created in theAustralia Hub to support major infrastructure projects.

    Increased focus on risk and reward profiling of opportunity pipeline to maintain quality of projects.

    Mission Zero safety campaign launched in Australia Hub, following successful roll-out in Europe and Middle East.

    Design for Manufacture and Assembly (DfMA) methodology delivering efficiencies in project delivery and performance improvements in operations.

    Continued focus on human capital agenda, with substantialcommitment in engineering capability and education partnerships.

    Strengthened corporate governance framework through better integration of core processes and increasing capability in financial, investment and risk management functions.

    Although little growth in managed revenue and pre-tax earnings can be expected for the Group in the 2012/13 period, given the current market conditions, a return to growth in sales overamedium-term timeframe isanticipated, assuming satisfactory completion of projects now in delivery.

    Good future revenue visibility anda record pipeline of contract opportunities in key sectors, including nuclear, mining, and oiland gas.

    A higher rate of return on equity is planned for the Group with theanticipated benefit of delivery efficiencies derived from the widespread deployment of DfMA, plus greater cost effectiveness across all support functions.

    Laing ORourke remains on track to deliver its 2012/13 financial targets and, beyond these, is well-positioned to achieve its strategic objectives over the medium to long term.

    Overview

    25mInvested in education, DfMA and R&D

    Employee engagement1

    (%)

    30

    60

    90

    201220112010

    74 7373

    Accident Frequency Rate (AFR)2

    0.1

    0.3

    0.5

    20122011201020092008

    0.190.23 0.24

    0.12

    0.18

    Safety and sustainability

    2 Laing ORourke|Annual Review 2012

    Performance highlights

    Financial highlights

    Managed revenue increased 7.6 per cent to 4.3 billion.

    Pre-exceptional earnings before interest and taxes at 54 million.

    Maintained strong gross cash position of 601 million following debt repayment of 57 million.

    Improvement in net cash position of 38 million to 321 million.

    Gross margin, pre-exceptional items at 9.1 per cent reflecting quality of project portfolio and cost efficiencies.

    Order book of 8.2 billion creatinggood medium-term earnings visibility.

    Strategy execution with major projects secured in new growth territories, including Hong Kong and Canada.

    1. Managed revenue includes share of joint ventures revenue, inter-segment revenue and revenue from managed operations.

    2. EBIT includes profit from operations, net non-operating income/expense and excludes joint venture interest and tax.

    3. Gross margin percentage is stated pre-exceptional items.

    4. Financial capacity includes gross cash and undrawncommitted facilities.

    Managed revenue1

    (billion)

    Managed revenueRevenue including share of joint ventures

    2

    4

    6

    20122011201020092008

    4.2

    3.64.0

    3.3

    4.3

    3.5

    5.0

    4.14.3

    3.5

    Gross margin3

    (%)

    4

    8

    12

    20122011201020092008

    7.14.0

    10.2

    9.1

    7.4

    4.3

    10.1

    Financial capacity4

    (million)

    400

    800

    1,200

    20122011201020092008

    646

    751 762793

    905

    Earnings before interest and tax2

    (million)

    Pre-exceptional itemsPost-exceptional items

    40

    80

    120

    20122011201020092008

    4.288

    51

    40

    54

    34

    115

    98

    110

    67

    Cash balances(million)

    Gross cashNet funds

    300

    600

    900

    20122011201020092008

    477

    136

    619

    283

    601

    321

    619

    174

    716

    270

    Order book(billion)

    4

    8

    12

    20122011201020092008

    9.3

    8.1 8.2

    10.0

    8.2

    Laing ORourke has sustained a resilient performance by focusingon delivering profitable growth.

    We continue tobuild on our commitment to Excellence Plus performance in every aspectof our activities.

  • 4 Laing ORourke|Annual Review 2012 Laing ORourke|Annual Review 2012 5

    Targeting dynamic growth sectors

    Through two major geographic Hubs

    Buildings

    Business Commercial Offices

    Data Centres Industrial Science & Research

    Lifestyle Hotels

    Residential Retail Sport & Leisure

    Social Infrastructure Defence Education Healthcare Law & Order

    Transport

    Aviation Highways Marine Commuter Rail

    Power

    Generation Networks New Nuclear Renewables

    Utilities & Waste

    Sewage Utility Networks Waste Water Treatment

    Mining & Natural Resources

    Coal & Mineral Processing Heavy-Haul Rail Labour Accommodation Materials Transport Minerals Handling

    Oil & Gas

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

    Europe HubCovering principal operations in Abu Dhabi, Canada, Dubai, SaudiArabia and the United Kingdom.

    Australia HubCovering principal operations in Australia, Hong Kong, New Zealand andSouth East Asia.

    Overview

    Our business model

    World-class capabilities spanning the client value chain

    Investment and Development ServicesInvestment and development services comprises the UK and Australia-based property development, and structured property and infrastructure financing activities. These cover the full range ofpreconstruction services including feasibility studies and investment appraisals, lifecycle costs and management, through to complex Private Finance Initiative (PFI)and Public Private Partnership (PPP) investment arrangements and management.

    Construction ServicesConstruction services comprises the fullrange of building and refurbishment activities, providing a complete project delivery solution. Capabilities include buildability studies, Design for Manufacture and Assembly, remediation and enabling works, logistics management, integrated construction delivery, building technologies installation and testing and commissioning of major building projects.

    Infrastructure ServicesInfrastructure services comprises the full range of civil engineering and programme management expertise on major infrastructure projects. Activities include commuter and heavy-haul rail, power generation and distribution, water and utilities networks, mining and natural resources infrastructure services across the lifecycle of capital assets, from feasibility through planning, design andimplementation to maintenance.

    Support ServicesSupport services comprises Group businesses dedicated to supporting majorcapital assets during construction, and through ongoing operation and maintenance. Capabilities include the provision of heavy plant, cost and programme quantification and modelling tools, Building Information Modelling and digital prototyping through to the provisionof a broadening range ofbusiness services for assets after theyhave been constructed.

    Engineering Consultancy Engineering consultancy comprises theEngineering Excellence Group, an internal advisory body providing research, innovation, expertise, advice and direction individually and as a taskforce. The group is responsible for driving Design for Manufacture and Assembly, collaborating with technology, supply chain and educational partners to support clients needs. Capabilities include civil, structural, materials, mechanical, electrical, chemical and process engineering.

    Manufacturing and Modular SolutionsManufacturing and modular solutions comprises offsite factory operations utilising 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.

  • 6 Laing ORourke|Annual Review 2012

    Focused on delivery excellence

    Laing ORourke|Annual Review 2012 7

    Engineering the future

    Number of active projects

    254Order book

    5.5bnNumber of staff

    12,028

    Overview

    2

    1

    45

    3

    9

    8 76

    Principal officesUnited Kingdom1. Cardiff 2. Dartford 3. Motherwell 4. Explore Industrial Park5. Manchester

    United Arab Emirates6. Abu Dhabi 7. Dubai

    Saudi Arabia8. Riyadh

    Canada9. Toronto

    London 2012 Olympic and Paralympic Park

    The UK construction industry, spearheaded by the Olympic Delivery Authority (ODA) and its delivery partner, CLM, of which Laing ORourke was a key partner, achieved one of the most complex feats of programme management ever undertaken. Once aderelict and polluted wasteland of 670acres, the Olympic and Paralympic Park in Stratford, East London, has beendelivered on time and to agreed budgets. HM Governments Department of Culture, Media and Sport acknowledged the accomplishment, saying it sent a clear signal to the worldabout Britains ability to design and deliver large-scale infrastructure projects tothe highest standard.

    Europe HubOur Europe Hub comprises Laing ORourkes operations in key building and infrastructure sectors and construction markets, and has valuable relationships with prestigious clientorganisations.

    The Group is one of the leading construction solution providers in our chosen sectors. Our aim is to leverage thescale and efficiencies of our vertically integrated delivery businesses to generate profitable 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 territories with the right strategic and cultural fit.

  • Europe Hub continued

    Laing ORourke|Annual Review 2012 9

    122 Leadenhall Street, City of London

    A landmark in the making

    Towering 224 metres above the City of London, 122 Leadenhall Street is set to become one of the UKs tallest and most iconic buildings. The shimmering wedge-shaped structure was designed byworld-renowned architects Rogers Stirk Harbour + Partners and is being delivered by Laing ORourke for British Land and OxfordProperties.

    The geometry of the 52-storey skyscraper makes it theoretically unstable. Exceptional engineering skills were necessary therefore, to develop a construction methodology that enabled the building to stay upright with tolerances of plus or minus 20mm required on all but five of itsfloors.

    Using multidimensional Building Information Modelling (BIM) technology, Laing ORourke devised an innovative delivery strategy that harnesses the benefits of offsite manufacturing. This virtual construction approach allowed theclient to visualise our solution in intricate detail.

    Critically, by integrating data from the architects and structural engineers, theteam was able to achieve the early design coordination needed to meet sucha challenging programme. The model also combines information from keytrades to ensure the compatibility ofthe differentpackages.

    The intense public interest in the development leaves no room for logistical error. Its high-profile location characterised by narrow and densely populated streets along with the sites remarkably tight footprint, represent considerable obstacles.

    To work around these constraints, much of the structure including the cores, basement and building services will be constructed off site. However, with components of up to 26 metres in length this creates itsown challenges. Once again, the teamused BIM to perfect its strategy forjust-in-time assembly.

    Now in delivery phase, the project is piloting the application of radio frequency identification (RFID) software which uses data tags attached to building components to allow them to be tracked through manufacture, supply and installation. This will enable preventative action in the event of any delays downstream.

    When integrated with BIM, RFID can be used to render a data-rich replica of the project in real time. Going forward, this technology will be used to enhance project controls and against these develop robust key performance indicators.

    Overview

    8 Laing ORourke|Annual Review 2012

    At least 83 per cent of construction works will takeplace off site, reducing the delivery schedule by approximately six months.

    Design and engineering

    The structures distinct asymmetrical shape a response to planning requirements to maintain views of St Pauls Cathedral meant settlement both in the foundations andthrough compression of its elements would be irregular. The solution was to design the building to be erected slightly off the vertical so that it would settle in its correct form. This made theconstruction process exceptionally challenging. Working with tall building expert, Bill Baker of Skidmore, Owings & Merrill, Laing ORourke came up withan innovative alternative. Now, when the building reaches the 19th floor, steel along the sloping face will be tensioned to pull the structure back to the vertical. This process will be repeated every sevenstoreys.

    An iconic building

    The 224 metre building will become one of the most recognisable in the square mile, occupying a prominent site directly opposite the distinctive Lloyds of London headquarters.

    The developments tapering shape, which when viewed from the west will appear to lean away from St Pauls Cathedral, delivers varied sizes of floor plates, all offering spectacular views over London. Practical completion of the shell and core is scheduled formid-2014.

  • Europe Hub continued

    Laing ORourke|Annual Review 2012 11

    From the very outset, the project team has been excellent. Throughout the design process, the team listened carefully to what we said and worked tirelessly to get this project off the ground and, through engagement sessions, identified the key drivers and aspirations of teachers, students and communities to deliver a building that is not only fit for purpose, but also within budget.

    Simon Weaver, Headteacher, Dagenham Park

    Church of England School

    fulfilling an ongoing role as facilities manager for the site. This meant lifecycle considerations were key in selecting the building systems which were delivered through a highly modularised approach toensure optimum performance.

    The London Borough of Barking and Dagenham operates a progressive environmental policy, which was integral tothe project brief. The team was tasked with meeting a number of ambitious targets, including a BREEAM excellent rating for the building and surrounding site along with annual operational CO2 emissions of 27kg per square metre.

    This was supported through the application of DfMA in particular the use of precast concrete components, which deliver enhanced thermal efficiency and air-tightness. In addition, a range of other technologies was implemented, including a high-performing building envelope with solar control, mixed-mode ventilation with heat recovery and a rainwater harvestingsystem.

    Delivered without a single reportable safety incident, the completed building achieved exceptional standards of air-tightness.

    A testament to the strength of collaboration on the project, the Local Education Partnership formed between the London Borough of Barking and Dagenham, Laing ORourke and the Thames Partnership for Learning will continue as a method of delivering other much needed socialinfrastructure.

    Dagenham Park Church of England School, London, UK

    A school for the future

    Overview

    A 10,000 square metre performing arts school, delivered through the construction phase in just 16 months thanks to a combination of innovation and collaboration.

    To meet the clients demanding programme and challenging environmental targets, our Design for Manufacture and Assembly (DfMA) solution was deployed to the greatest extent possible.

    The schools integrated faade and structural system was erected within six months of site operations commencing, allowing an early start of fit-out packages. This was made possible by input from in-house Building Information Modelling (BIM) specialists to ensure exacting specifications were achieved ahead ofinstallation.

    With the initial period allocated to planning and design, the team worked closely with teachers, pupils and the client to understand and incorporate their needs. The result is a functional and efficient structure instilled with a unique sense ofcharacter.

    The new building is arranged around a performance hall and resource hub, with flexible classrooms located on the perimeter. The space in between creates two connected atria that provide open learning and social areas, as well as natural light and ventilation. This also allows passive supervision of students betweenlessons.

    The contract was procured under a Private Finance Initiative (PFI), with Laing ORourke

    10 Laing ORourke|Annual Review 2012

    Efficient build techniques

    70 per cent of the building constructed off site, resulting in an incredibly fast and efficientbuild and one of the most environmentally sustainable schools in the country.

    Air-tightness

    Delivered without a single reportable safety incident, the completed building achieved exceptional levels of air-tightness a key measure of its thermal and operational efficiency.

  • 12 Laing ORourke|Annual Review 2012

    Europe Hub continued

    Laing ORourke|Annual Review 2012 13

    Centre Hospitalier de lUniversit de Montral, Canada

    A new vision for healthcare

    One of the largest healthcare projects in the world, this 225,000 square metre development will see the delivery of a 21-storey teaching hospital and an 11-storey research facility in the centre of Montral. The CAD$2.1 billion deal represents the most valuable social infrastructure Public Private Partnership (PPP) inCanadas history and is the firstventure for the Group in this growingmarket.

    The acclaimed Centre Hospitalier de lUniversit de Montral (CHUM) brings together around 35 medical disciplines and receives approximately half a million patients a year. This substantial redevelopment is part of an action plan to strengthen its reputation for world-class training, research and treatment by consolidating these activities into onestate-of-the-art location.

    As the centrepiece of the Quartier de la Sant regeneration strategy, the project will play a significant role in shaping the citys future vision. The first phase will be delivered in 2016, with the second handed over in 2020.

    When complete, CHUM will provide 772 single-bed rooms, together with a new energy centre. A patient-centred approach is at the heart of our strategy, with the hospitals architectural concept embracing the principles of sustainable development to LEED (Leadership in Energy and Environmental Design) gold level.

    The building is designed to capture asmuch natural light as possible, whileproviding welcoming open spaces and exceptional views over Montral. Intended as a friendly place of healing and wellbeing, art will be an integral part of theCHUM environment, as a means to humanise thesurroundings.

    The Collectif Sant Montral, of which Laing ORourke is one of four equity partners, is responsible for designing and constructing the development andmaintaining it over a 30-year period. Tofinance the scheme, the consortium raised CAD$1.37 billion through the sale ofsecured bonds.

    Laing ORourkes UK and Canadian teams worked across multiple disciplines to bring this complex transaction to a successful close, with our Explore Investments business leading the commercial and financial aspects of the contract.

    Now a year into this nine-year scheme, CHUM has already received a number ofprestigious accolades. In 2011, Project Finance International recognised the development as North American Project Bond Deal of the Year. At the same event, the consortium was awarded top prize Overall North American Project Finance Deal of the Year. Earlier, in London, the project also received the Bond Deal of theYear award.

    Overview

    As the centrepiece of theQuartier de la Sant regeneration strategy, theproject will play a significant role in shaping Montrals future vision.

    A world-class teaching hospital

    The mission of the Laing ORourke/OHL construction joint venture, is to design, build, finance and maintain CHUM. Two separate project construction phases will take place over a nine-year period, commencing in 2011. This all-inclusive project in a single venture will deliver aworld-class teaching hospital gearedtothe needs of a community inwhich itplays a major role. It will beinaugurated in 2016 and is valued atCAD$2.1 billion overall.

    The deal of the year

    To fund the development, the Collectif Sant Montral, of which Laing ORourke isa20 per cent member, raised CAD$1.37 billion through the sale ofsecured bonds, representing the largest rated bond transaction for a hospital in the world. In 2011, Project Finance International recognised the development as North American Project Bond Deal of the Year. At the same event, the consortium was awarded top prize Overall North American Project Finance Deal of the Year.

  • 6

    4

    2

    35 1

    Principal officesAustralia1. Brisbane 2. Darwin 3. Perth 4. Port Hedland 5. Sydney

    South East Asia6. Hong Kong

    Engineering the future

    Laing ORourke|Annual Review 2012 15

    Growing a diversif ied project portfolioLaing ORourke has been active in Australia since 2004 and is now integrating the global

    capabilities of the wider Group to provide a distinctive proposition based on superior quality of design and delivery.

    Australia Hub

    Botany Bay

    The Australia Hub has been named preferred bidder for the Port of Sydneys Terminal 3, an AUD$150 million infrastructure development on the newly reclaimed Botany Bay platform part ofaplanned expansion to cater for the forecast increase in trade demand over the next 20 years.

    Number of active projects

    90Order book

    2.7bnNumber of staff

    5,324

    14 Laing ORourke|Annual Review 2012

    Overview

    We are growing a diversified project portfolio by taking leading positions in carefully targeted sectors and markets, predominantly in building and social infrastructure, 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.

  • Transportation

    Transportation is an important aspect of the gas business. Liquified natural gas is transported in specially designed, purpose-built ships with double hulls protecting the cargo systems from damage or leaks. Taking the gas to cryogenic temperatures, to reduce volumes, increases thetanker capacity, and therefore increases the commercial viability of transporting it over long distances.

    Storage

    Laing ORourke is deploying Design for Manufacture and Assembly techniques to modularise the construction of the cryogenic tanks, consisting of a quick-assembly external structure which swiftlybecomes water tight wheninstalled on site, allowing the internal welding and other finishing activities to take place in dry conditions.

    Australia Hub continued

    Laing ORourke|Annual Review 2012 17

    Overview

    16 Laing ORourke|Annual Review 2012

    Ichthys LNG Project, Northern Territory, Australia

    Fuelling future growth Located 200 kilometres off the coast of Western Australia, the Ichthys Gas Field is one of the regions most significant energy reserves. Over the next 40 years it is expected to yield around 8.4 million tonnes of liquefied natural gas (LNG) and 1.6 million tonnes of liquefied petroleum gas (LPG) annually along with 100,000 barrels of natural gasoline a day.

    After undergoing preliminary processing offshore, the gas will be exported via an 889 kilometres subsea pipeline (the longest in the southern hemisphere) to onshore facilities in Darwin. To deliver this infrastructure, a workforce of more than 3,000 will be required bringing substantial social andeconomic benefits to the area.

    Laing ORourke has been selected to deliver one of the largest and most complex components of the AUD$34billion programme. In joint venture with Kawasaki Heavy Industries, the business will engineer, procure and construct a network of four massive cryogenic tanks, the largest two of which will span 165,000 cubic metres. The tanks will cool the gas tobelow -160C, liquefying it for storage and transportation.

    The AUD$750 million project marks the culmination of a five-year partnership between Laing ORourke and the Japanese engineering giant, during whichthe two organisations worked closely together to develop highly automated, modularised technical solutions for the oil and gas industry.

    In April, Laing ORourke also began workon an AUD$330 million project todeliver a 4,300-bed accommodation village. The high-quality establishment will incorporate indoor and outdoor recreational facilities, an on-site facilities management complex and medical centre providing a home away from home for Ichthys growingworkforce.

    Once again, innovative strategies have been implemented to achieve the most sustainable outcomes. Considerable attention has been paid to the design, to ensure the development integrates with its surrounding environment. Laing ORourke will also ensure the project maximises local employment opportunities with particular focus on indigenous participation.

    Extraction

    The Ichthys Gas Field in the Browse Basin off the Western Australian Coast first demonstrated its potential to be aworld-classenergy reserve in 2000. Since then, resource estimates have grown to12.8tcf of gas and 527 million barrels of high-value condensate.

    Accommodation

    Laing ORourkes INPEX Ichthys LNG Contracts, which commenced in 2012, include the construction of a AUD$330 million accommodation village that will cater for 4,300 workers. Superior Design for Manufacture and Assembly solutions and supply chain management will beessential to the speed of delivery, meaning the first 1,500 beds will be ready for occupation by April 2013.

  • 18 Laing ORourke|Annual Review 2012 Laing ORourke|Annual Review 2012 19

    Strategy

    Chairman and Chief Executives statement

    In response to client needs and challenging markets, the Group has developed a targeted focus to position the business for the future.

    Safety and sustainable developmentSafety will always sit at the core of Laing ORourke in both its corporate culture and its planning and project delivery. Although we have made significant progress in establishing a behaviourally based safety culture across the Group over the past seven years, and we remain an industry leader, I am disappointed to report that our global Accident Frequency Rate (AFR) was 0.24, up 0.01 on the previous year. During the year we instituted Mission Zero globally, with a corresponding recalibration of information reporting systems across all our operations. In Europe, we also conducted safety reviews with

    all our subcontractors. We will continue to drivemeasurable improvements to become an accident-free business by 2020.

    Sustainable development is embodied in our delivery methodology and our long-held vision to challenge and change the industry in key sustainability areas. With the mandated adoption of Design for Manufacture and Assembly (DfMA) in our building sectors, and a growing application on our heavy infrastructure projects, we are beginning to realise benefits in onsite recycling. As well, our shorter programmes have reduced carbon emissions and water usage. We are also investing in cleaner-fuel vehicles.

    Our success is the result of our investment in research and development, industry and education partnerships, and employee-led community liaison programmes. DfMA is the construction industrys most sustainable engineering solution, and will keep Laing ORourke at the vanguard of best practice. In the period under review we spent 7 million on R&D and DfMA.

    Government institutions and the communities adjacent to our projects are rightly demanding greater responsibility from construction providers in their funding, procurement, design and core construction activities. In response, we launched our Global Code of Conduct followed by a comprehensive training programme for all employees.

    Excellence Plus performanceLaing ORourkes reputation as a delivery-focused business is based on ourintegrated approach. The Groups human capital management agenda for maintaining and developing the skills and capabilities of its employees is a key factor in sustaining our success.

    A series of tailored leadership development programmes build the required engineering, project and functional management competencies. The Groups strategic alliances with its university partners are providing exceptional learning experiences for our brightest engineering talent.

    Alongside our site-based apprenticeship and accreditation schemes, we continued to deliver training across the spectrum of our project and functional disciplines to better support the recruitment, retention and engagement of a talented, safe and responsible workforce. The Group invested 25 million in education, DfMA and research and development activities in the period.

    In our annual employee engagement survey, we posted an industry-leading performance with a73per cent aggregate score. This placedLaing ORourke once again inthetop quartile of global high-performingcompanies.

    Laing ORourke continues to invest in newprocesses and technologies. The Group has moved quickly to capture a leading advantage in digital modelling andcost planning, and to achieve greateraffordability and quality for

    theconstruction and operation of our projects. Additionally, cost reduction measures are being rigorously implemented. To remove wasteful and resource-intensive practices, we have introduced automation technologies for the offsite manufacturing of key components. Taken together, these actions will assist the Group in winning new business and managing workloads.

    Strategy and performanceWe continued to develop the Groups innovation capability with further investments in the expansion of the Engineering Excellence Group, which included key professional appointments. Our focus on large-scale and complex engineering and construction programmes will create sustainable enterprise value.

    To address industry-wide time, cost and quality shortcomings in project delivery, we accelerated the deployment of our innovative DfMA methodology across all tendering-stage contracts. One result was the doubling of production outputs for ourExplore Manufacturing business. Our profile as apremier constructor was enhanced by major wins including 122 Leadenhall Street and Alder Hey Hospital in the UK and, in Australia, the Chevron Gorgon and Australia-Pacific LNG projects.

    We continued to build a culture of Excellence Plus performance to increase financial returns, meet the needs of the Groups clients, develop and grow our people, and act responsibly. We made good progress. We have driven for cost efficiencies to improve competitiveness, and executed value-enhancing acquisitions and divestments. We have created value through a profitable return on sales and, importantly, continued to generate strong cash flows.

    TheGroups capital allocation supports investment in our operations, generates returns for shareholders, strengthens the balance sheet, and funds business development for the long term. We will continue with our policy of balance sheet conservatism to retain our covenant quality with key financial stakeholders. Weremain well-positioned to respond rapidly to changing markets.

    Corporate governanceOver the past two years we have strengthened our corporate governance

    and internal controls. We have complemented our expertise with broader corporate development, engineering and functional specialisms to ensure the right balance of experience and talent.

    Although the current business environment is severely testing, I am confident we have the correct combination of leadership and management to prosper.

    During the year, George Rose, formerly Group Finance Director of BAE Systems, joined us in a non-executive capacity as Chairman of both the Europe Hub Board and Audit Committee. Roger Seshan, a former director with Scottish Power, was appointed Group Asset Optimisation and Supply Chain Director, and a member of the Group Executive Committee. Andy Friend, former CEO of John Laing PLC, was appointed Group Strategy Director. Howard Shiplee, Construction Director for the London 2012 Olympic Delivery Authority, also joined the Group to leverage the programme management capability built up through our delivery partner involvement with CLM.

    After 32 years with the Group, our fellow Shareholder Bernard Dempsey, Deputy Chairman, retired from the business. I thank him for his outstanding contributions to the Board and the growth and success ofthe Group.

    OutlookUncertain global economic conditions are expected to continue, with sales growth remaining a challenge. Despite this trend, we are confident that 2013 will bring stronger activity, with China and the emerging nations continuing to drive their aggressive economic development plans.

    We expect major government and private-sector investment to continue indevelopment territories in Australia, Canada and Hong Kong, where we are well-placed to generate substantial business, alongside demand fromQatar, where investment to boost international trade is increasing.

    SummaryThe success of Laing ORourke is built on the hard work, creativity and commitment of its employees. Once again during the year I was pleased to formally recognise a number of our highest performers through our annual Excellence Plus Awards. On behalf of the Board I thank all our people for their dedication, ingenuity and sense

    of purpose. As a result of their actions during the year, we have taken significant steps towards our goal of creating an enduring engineering enterprise built on a culture of Excellence Plusperformance.

    Laing ORourkes growth and performance are also directly attributable to the quality of our clients, supply chain partners and stakeholders. I thank them for their continued support and trust in our strategy and approach.

    I was particularly gratified to successfully conclude our involvement in the delivery of the infrastructure and venues for the London 2012 Olympic and Paralympic Games. By handing over the park ahead of schedule and below budget, we showcased the collective talents of the UK construction industry on a global stage. Laing ORourke was honoured to be involved.

    The Group continues to sustain its Australian resilience, competitiveness and capability. In addition to its well-established position in its core UK and Australian markets, weare consolidating strong competitive positions in new markets. Our capability is generating a unique portfolio of building and infrastructure projects. Through our success in developing talent and diversifying our capability, we will attract clients through radical solutions that only Laing ORourke can deliver.

    Ray ORourke KBEChairman and Chief Executive

  • Laing ORourke|Annual Review 2012 21

    Strategy

    20 Laing ORourke|Annual Review 2012

    The Laing ORourke Groups activities are underpinned by our unique character. This is described in our vision, mission and strategy. Together they form a compelling and relevant 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 purpose. Based on the values of the founding shareholders, it is clear, powerful and relevant to the business challenges of today and tomorrow.

    Our mission and strategy focus on specific high-value sectors and markets. We employ our vertically integrated business model to deliver directly for clients and, behind this approach, we 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 operation and management.

    VisionLaing ORourkes well-established vision provides a clear definition of the future state we wish to attain. As a result of the significant changes in our core construction markets we have undertaken a review of our strategic options to ensure they continue to align with the vision. Whilst the vision defines the destination, our commitment to engineering our future through Excellence Plus performance guides all our decisions and actions and is embedded in the Groups missionstatement.

    MissionThe mission describes the overall goal and philosophy that underpins our activities, and is key to the achievement of our vision.

    A globally focused and enduring engineering enterprise applies the knowledge and methods of an integrated set of engineering disciplines to the design and construction of the built environment. It utilises the application of automated processes, intellectual capital and fit-for-purpose organisational resources to create sustainable value. The goal is a human-technological alliance in which learning takes place at every level.

    Excellence Plus performance is verified in every aspect of the way the Group does business client value, human capital management, financial performance and responsible behaviour. By consistently applying the four key elements of Excellence Plus performance in all our operations globally, we will achieve our vision to be the company of first choice for all stakeholders, able to challenge and change the poor practices synonymous with construction and compete alongside world-leading businesses.

    StrategyThe Group strategy provides the framework which defines the direction and shape we will pursue over the medium to long term. 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 financial and non-financial resources to achieve the required state.

    Through our Group strategy, the following intent guides our actions:

    Laing ORourke is a successful company with a long history of offering engineering and construction solutions for like-minded clients. As a result, today we are an international service provider and our business portfolio spans the entire client value chain. We are able to provide integrated capabilities at every stage in thelifecycle of the built environment.

    Vision, mission and strategy

    A globally focused engineering enterprise

    Our vision:

    To be the company of first choice for all stakeholders. To challenge and change construction worldwide. To belean and agile in the adoption of processes to compete with world-leading businesses.

    Our mission:

    To become a globally focused and enduring engineering enterprise through our commitment toExcellence Plusperformance.

    Our values:

    Make safety personal and work responsibly Lead by example Work as one team through collaboration

    Find or follow a better way Deliver on our promises, aim to exceed

    Our strategy:

    What we will do: Drive the efficiency and integration ofthe Groups core engineering, construction and infrastructure delivery business to support clientsneeds.

    Improve financial returns through arelentless focus on efficiency and cashgeneration across all businessactivities.

    How we will do it: Deliver sustainable growth by embedding a culture of Excellence Plus performance which encompasses:

    Client value Human capital management Financial performance Responsible behaviour

    Key Group Executive Committee objectives:

    Increase sector-specific engineering expertise

    Establish Design for Manufacture and Assembly (DfMA) as our core delivery approach

    Implement efficiency and cost-effectiveness programmes

    Invest in and grow our human capital as a direct employer

    Improve our safety and sustainability performance

    Sustain our home market position

    Expand in higher-growth international markets

    Integrated business unit delivery plans

  • 22 Laing ORourke|Annual Review 2012 Laing ORourke|Annual Review 2012 23

    Strategy

    Key Group Executive Committee ObjectivesThe Groups strategic framework contains seven key Group Executive Committee objectives. These emanate from our vision, mission and strategy, and constitute the short-term actions required to shape the business portfolio 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.

    Integrated business unit delivery plansIntegrated business unit delivery planning is a quarterly process that includes a policy deployment matrix to ensure a clear line of sight between the Laing ORourke Board and Group Executive Committee approved strategic and financial plans, and the tactical execution of these. The Groups corporate governance framework is an integral tool for ensuring adherence to overall strategy and provides the mechanism for rapid issue-resolution caused by unforeseen deviation from the agreed plans due to non-performance or off-plan opportunitiesarising.

    How we deliverLaing ORourke is committed to the development of a culture based on Excellence Plus performance. The four cornerstones of this approach are client focus, human capital management, financial performance and responsible behaviour.

    1. Client focusThe Groups priority is to fully understand the needs of its clients and deliver on its promises throughout the life of the engineering and construction services provided. Programme adherence metrics against major contract milestones, together with qualitative client satisfaction survey results, are key indicators of our performance in this regard.

    2. Human capital managementThe Groups pursuit of Excellence Plus financial and operational performance is dependent on the quality and commitment of its people. It is critical the Group attracts, develops and retains the best talent in the marketplace to ensure project

    delivery within the tight tolerances of quality, time, cost, safety and sustainability required by clients. The key indicator ofperformance in this regard, beyond financial metrics, is the level of enterprise-wide employee engagement. It 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, responsible behaviour and financial performance.

    3. Financial performanceThe Group sets stretching financial targets as part of its annual budget planning process to improve cost and sales performance and drive profit and cash generation. These are derived from our consolidated financial statements, and include order book, managed revenue, earnings before tax and operating cash flow.

    4. Responsible behaviourBy working according to our guiding principles and complying with the high standards set out in our Global Code of Conduct, the Group will sustain long-term business success. In line with our vision, we also seek to encourage more ethical behaviour on an industry-wide basis. The Code underpins all our business activities globally, and metrics are used to track and provide continuous improvement in safety, ethical conduct, environmental performance, and diversity and inclusion.

    Our approach to internal audit and controlOur internal control processes ensure that key issues are escalated through the management team, ultimately to the Board if appropriate. They provide a common framework across the Group for operational and financial controls, and are reviewed on a regular basis by the Board. The business policies and processes detailed within the Global Code of Conduct and LOR Way draw on global best practice and their application is mandated across the organisation.

    Core and Enabling Processes are two such examples, and promote the application of best practice in the tendering, procurement and delivery phases of projects, facilitating continuous

    Drive the efficiency and integration of Laing ORourkes core engineering, construction and infrastructure delivery businesses to support clients needs.Over the coming years we will boost our share of available business by targeting long-term strategic client relationships by deeply understanding their needs in each of our core markets, recognising that those can and will change over time. Through greater application of Design for Manufacture and Assembly (DfMA) as our core delivery methodology, we will be lean and agile as a business, in line with our vision. This will enable us to provide solutions that extend over a greater proportion of the client value chain. Offering a broader set of lifecycle services provides secure, higher-margin income on an ongoing basis and is less affected by cyclical fluctuations than the traditional contracting model.

    While offering competitive client propositions, we will develop enterprise-wide value from the cross-selling effects that result from cooperation between closely linked Laing ORourke businesses. In the future we will seek to further reinforce and expand the integration between businesses and countries by identifying our clients vital needs, prioritising our capabilities, and creating long-term demand for our products and services. This approach will also allow us to better anticipate and respond

    to global trends in areas such as demographic developments and climate change, deploying our talent where it generates greatest value.

    The degree of globalisation in our business operations will create a broader business base to shield us from economic fluctuations in, or an over-reliance on, any one market.

    We will seek to continually expand our businesses, concentrating exclusively on countries with high growth rates and socio-economic environments that align with our company values and operating approach. Accordingly, our efforts are targeted at various regions that meet our criteria for growth and where we are able to mobilise efficiently and effectively.

    We will extend our footprint in Australia where substantial investments are planned in mining and transport infrastructure. Also we will seek to grow our presence in Canada, where markets are benefiting from a number of economic, social and environmentalfactors.

    In the future, we will continue to differentiate ourselves from the competition on the basis of our technical skills and capabilities in engineering and construction offering our clients total solutions. We will look to develop a licence to operate in selective infrastructure sectors on a global basis, for example in rail, and increasingly in oil and gas, and power generation.

    The action plans to achieve this will differ for each sector, leveraging the experience of our industry talent plus significant in-house resources in plant and equipment.

    The strategic focus is not based on the sole pursuit of opportunities in one particular type of sector, but on a varied building and infrastructure portfolio spanning both public and private sectors. This allows us to be more resilient in overcoming challenges in the future as a result of changing market dynamics.

    Improve financial returns through arelentless focus on efficiency and cashgeneration across all businessactivities.The current economic environment is driving up levels of competition and therefore the Group will increase its focus on generating improved financial returns by focusing on efficiency and cashgeneration.

    Our organisational effectiveness programmes and cost reduction initiatives aim to ensure that our management operations remain efficient and effective, improving the competitiveness of the Group and thereby enhancing its ability to win future business.

    All the Groups business units and functional disciplines will strive to eliminate non-value-adding activities through the eradication of duplication and disposal of non-core operations. This must be achieved whilst concurrently maintaining the commitment to Excellence Plus performance in terms of project delivery, client satisfaction, responsible behaviour and financial performance.

    To achieve this in 2012/13 and beyond we will recruit, retain and develop the very best talent. We will embed best-in-class processes, systems and methodologies in areas including governance and risk management, capital allocation, DfMA, brand and marketing, safety and sustainability, technology, corporate reporting and human capital management. These provide the key enablers that underpin the delivery of our financial and non-financial goals.

    Vision, mission and strategy continued

    improvement across the Group. It considers the whole-life implications of project execution from inception to delivery into service and eventual decommissioning, and its application is critical to our capability in delivering projects to schedule, cost and quality.

    The Groups Project Quality Management System is set out in the Corporate Governance section on page 77.

    Our approach to risk managementThe 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. The Groups risk management framework, including principal financial and operational risks is set out on pages 47 to 53.

    Laing ORourke continues to buildonits position as one of the worlds largest privately owned and geographically diverse engineering andconstruction companies, focusedon delivering sustainable growth through its commitment toExcellence Plus performance.

  • Strategy

    24 Laing ORourke|Annual Review 2012

    Earnings before interest and tax2

    (million)

    Pre-exceptional itemsPost-exceptional items

    20122011201020092008

    88

    5140

    54

    34

    115

    98110

    67

    40

    80

    120

    Net funds position(million)

    20122011201020092008

    136

    283

    321

    174

    270

    100

    200

    300

    Laing ORourke|Annual Review 2012 25

    Key performance indicators

    Financial performance

    Client focus Human capital management

    Responsible behaviour

    Order book(billion)

    20122011201020092008

    9.38.1 8.2

    10.0

    8.2

    4

    8

    12

    Managed revenue1

    (billion)

    Managed revenueRevenue including share of joint ventures

    20122011201020092008

    4.23.6

    4.03.3

    4.3

    3.5

    5.0

    4.1 4.33.5

    2

    4

    6

    The Board uses a range of financial and non-financial indicators across our business units to monitor the Groups aggregated performance against its Excellence Plus target and key Group Executive Committee objectives.

    1. Managed revenue includes share of joint ventures revenue, inter-segment revenue and revenue from managed operations.

    2. EBIT includes profit from operations, net non-operating income/expense and excludes joint venture interest and tax.

    Definition: Order book represents the amount of secured orders from customers in the year. It is a key measure of in-year performance and also provides visibility of future earnings. It also acts as a useful indicator of the diversity of the portfolio of futurework to be completed.

    Comment: At the end of the 2011/12 performance period the Group order book stood at 8.2 billion, marginally above the prior years level. With significant new contract awards in core rail, mining, and oil and gas sectors this was a creditable performance given the continuing pressure on public-sector capital funding.

    Definition: The amount of earnings before interest and taxes is a key measure of the operating profitability of all revenue-generating business units which is comparable over time. It provides a valuable benchmark in terms both of progress against internally set business targets and of performance relative to external competitors.

    Comment: EBIT performance during the year was impacted by continued strong performance inthe Europe Hub being dampened by a challenging year in the Australia Hub.

    Definition: Managed revenue represents the amount of sales generated from the provision of engineering and construction-related services, including the Groups share of joint ventures.

    Comment: The 7.6 per cent like-for-like increase in Group managed revenue this year has been primarily driven by 18.6 per cent growth in the Australia Hub.

    Definition: The net funds position at the year-end is a key factor in evaluating the Groups cash flow 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.

    Comment: During the year, the Group repaid57 million of its borrowings using cashfrom its profitable and highly cash-generative businesses.

    Definition: 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, which equates to approximately one working lifetime.

    During the year, we took significant steps to align our health and safety approach globally. This resulted in a restatement of the Group AFR KPI for previous years to bring the Australia Hub data into line with the EuropeHub.

    Comment: The AFR for the year was 0.24. This result still reflects an industry-leading performance relative to our peers, meriting the investment in leadership time andresources given to all aspects of safety management. Health and safety is the Groups number-one priority, constituting ourlicence to do business. Welead the construction sector in the implementation of abehaviourally based approach to safety to ensure all our activities are managed and controlled in a safe and responsible way.

    The Group sets stretching financial targets as part of its annual budget planning process to improve performance from both a costs and sales perspective to drive profit and cash generation. These are derived from the Groups consolidated financial statements. By working according to our

    guiding principles and complying with the high standards set out inour Global Code of Conduct, the Group will sustain long-term business success. Inline with our mission, we also seekto encourage more ethical behaviour on an industry-wide basis.

    The Groups priority is to fully understand the needs of its clients and deliver on its promises throughout the life of the engineering and construction services provided. Programme adherence metrics against major contract milestones, together with qualitative client satisfaction survey results are key indicators of our performance in this regard.

    The Groups target state of Excellence Plus financial 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 talentin the marketplace to ensure project delivery within the tight tolerances of quality, time, cost, safety and sustainability required by clients.

    Programme adherence

    Performance: The Groups goal is an overall year-on-year improvement in programme adherence relating to key delivery milestones on its major construction and infrastructure contracts. These metrics are contract-specific and subject to variations in interpretation, therefore aggregated data is not presented.

    Definition: Programme adherence tracks the fulfilment of key delivery milestones against the primary contract commitments agreed with clients prior to the commencement of the delivery phase of the project.

    Comment: The years target was achieved for the Europe Hub, but not achieved for the Australia Hub where a number of legacy contracts underperformed against programme.

    The metrics for programme adherence included 57 projects drawn from a representative sample of the mandatory contract reviews prepared as part of the Core Process within the Groups Quality Management System.

    Client satisfaction

    Performance: The Groups goal is an overall year-on-year improvement in client satisfaction on its major construction and infrastructure contracts. These metrics are contract-specific and subject to variations in interpretation, therefore aggregated data is not presented.

    Definition: Client satisfaction data is collected on key client opinions relating to the Groups operational performance on client-funded projects. 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.

    Comment: The years target was achieved.

    The data for client satisfaction included projects drawn from a representative sample of the mandatory contract reviews prepared as part of the Enabling Process within the Groups Quality Management System.

    Human capital management

    Performance: The 2012 Group employee engagement score was 73 per cent, compared to a global normof 57 per cent. This once again placedus in the top quartile ofglobal highperforming companies for the motivation and commitment of theworkforce.

    Definition: 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 financial performance.

    Comment: The Group undertakes a number ofimportant human capital initiatives to retain and develop staff, and their effectiveness is highlighted by a low staff turnover for voluntaryleavers.

    We undertake an annual employee engagement survey using an accredited third-party provider, Ipsos MORI, to provide independent analysis and peer group benchmarking.

    Accident Frequency Rate (AFR)Accident Frequency Rate (AFR)

    20122011201020092008

    0.19

    0.23 0.24

    0.12

    0.18

    0.1

    0.2

    0.3

  • Laing ORourke|Annual Review 2012 27

    Group performance

    26 Laing ORourke|Annual Review 2012

    The Group has a diversified international portfolio of public and private sector work and is not overly reliant on the dynamics of any particular sector or territory.

    limited domestic capability to satisfy it. Weare beginning to build long-term strategic partnerships with global clients to provide them with surety of delivery.

    Clients around the world are continuing to challenge the construction industry toprovide more cost-effective answers totheir needs, as they seek to generate greater value from restricted investment budgets. This increased level of expectation has not been fully recognised by the industry, with limited innovation to deliver a higher-quality built environment at a lower cost.

    We have continued to grow our engineering capability to respond to our clients needs in this regard, and meet our corporate responsibility to advance the wider industry through sustainable development. During the year we have seen our investments in our manufacturing capability and our in-house consultancy (the Engineering Excellence Group) successfully responding to these demands from our clients.

    ResultsLaing ORourke continued to deliver good overall financial performance in 2011/12, despite our businesses in Australia having a disappointing year. We improved underlying profitability in the Europe Hub which allowed us to continue to reduce borrowings whilst keeping our cash over600 million.

    In the period the Group increased earnings before exceptional items by 5.3 per cent to 54.0 million (2010/11: 51.3 million).

    We continued to selectively execute our diversified growth plans across both hubs and within our chosen sectors. Following

    successful market entry to Canada and Hong Kong in the previous financial period with significant project wins, we have secured excellent wins in the period in mining, and oil and gas.

    During the year we achieved financial close as joint constructor and equity partner under a structured Alternative Finance Procurement (AFP) scheme to build the most valuable social infrastructure public-private-partnership venture in Canadas history, raising the largest rated bond transaction for a hospital in the world in the process.

    We have reinforced our management team in the Middle East, as the region is now starting to see very fragile signs of recovery. We see a strong opportunity pipeline in Qatar as the government is looking to convert the states primary wealth in natural resources into secondary wealth in property and infrastructure tobroaden international trade links.

    TheGroup has also focused resources inthe nuclear sector in the UK, establishing long-term relationships withnuclear operators and bidding formajor civil engineering packages ontheUK Governments nuclear new-buildprogramme.

    We are delighted to have recently been appointed preferred bidder with our partner, Bouygues TP, for the 2 billion-plus main civils package at Hinkley Point C for client EDF Energy.

    Our managed revenue increased by 7.6per cent to 4.3 billion, ahead of thegeneral industry performance, demonstrating the resilience of our integrated business model in challenging

    conditions. Increased managed revenue and order book strength is evidence of the slow rate of recovery we started to see last year. The overall global economic picture is mixed, with some markets recovering and others stalling as countries continue to restrict public spending to address concerns over their static economies and indebtedness.

    The Board continues to rigorously exercise its policy of being highly selective in the contracts it pursues, only bidding for work which directly supports the Groups strategy execution and delivers acceptable margins.

    The Group has a diversified international portfolio of public and private sector work and is not overly reliant on the dynamics of any particular sector or territory. We are therefore well equipped to manage market fluctuations and deliver profit-generating revenues irrespective of individual markets and sectors. Indeed, since the acquisition of the Laing Construction business over adecade ago, the Group has consistently posted annual profits, which is a clear testament to its strength and resilience, particularly through the downturn of the last few years.

    Financial summary

    Managed revenue1

    4.3bnOrder book

    8.2bnEarnings before exceptional items, interest and taxes2

    54mGross margin3

    9.1%Cash and cash equivalents

    601mNet funds

    321m

    Financial and business review

    Overview In the context of the market conditions facing our industry across theworld the business has performed strongly, generating profits and cash, replenishing its order book and increasing managed revenue in both the Europe and Australia Hubs. We also took a number of steps to reduce overheads through the removal of excess capacity across the Group, the fullbenefit of which will only be seen in2013/14. We expect the prevailing conditions to continue in Europe until credit confidence is fully restored and we expect the twin-track economy in Australia to continue through the next trading period.

    Our core UK construction business continues to perform well, despite increasing competition due to the lower number of available project opportunities. The Middle East is performing steadily and our new Canadian business is already cash-generative, and we expect to see the profitable benefits of our investments there over the coming years.

    The Australia Hub has had another challenging year and we expect the benefits from the actions taken at the end of last year, particularly the strengthening of the management team and embedding of our Core Process methodology, to return the business to profit in the coming

    year. We continue to invest in the heavy mining, and oil and gas infrastructure growth opportunities in the region and the order book has improved following significant project wins in the region. Our embryonic Hong Kong business isalready experiencing success.

    The Group continues to take advantage of the longer-term perspective presented by our private-ownership status with a measured programme of investments. This year these included taking full control of the Bison Group of companies to support our Design for Manufacture and Assembly (DfMA) agenda and continuing investment in recruiting graduates and other trainees, alongside our ongoing investment in people development programmes. We believe that continuing toinvest through the downturn strengthens and future-proofs the Groups offering.

    We believe that our clients are increasingly seeking delivery partners of solid covenant with broad capability and scale to provide them surety of delivery over the lifecycle of their assets, from the design and delivery stage, through to aftercare and eventual decommissioning.

    We are seeing the demand for these full-service solutions increasing in growth markets like Australia and Canada, with

    Anna StewartGroup Director of Finance and Commerce

    Order book by sector(%)

    1 Building 22%2 Social Infrastructure 37%3 Transport 25%4 Oil & Gas 7%

    5 Mining & Natural Resources 5%6 Utilities & Waste 4%

    1

    3

    4

    56

    2

    1. Managed revenue includes share of joint ventures revenue, inter-segment revenue and revenue from managed operations.

    2. EBIT includes profit from operations, net non-operating income/expense and excludes joint venture interest and tax.

    3. Gross margin percentage is stated pre-exceptionalitems.

  • 28 Laing ORourke|Annual Review 2012 Laing ORourke|Annual Review 2012 29

    Group performance

    Gross marginGross margins have fallen slightly to 9.1 per cent (2010/11: 10.2 per cent) but thisstill constitutes a strong performance. Effective cost management and efficiencies in project delivery have played a significant role in sustaining gross margin throughout the recession. We have also reduced the time-related costs associated with traditional construction delivery activities through greater deployment of our DfMA delivery methodology onto projects. The gross margin result posted in the previous period was also positively impacted by ahigh number of major projects reaching completion, which in some cases triggered the release of performance incentive payments under contract settlement terms.

    A strong gross margin result is important as it is a key indicator of performance andearnings quality in engineering and construction, acting as both a financial and qualitative measure of the project portfolio, as well as validating our delivery approach. We expect more modest gross margin returns in the next couple of years as our product mix changes while at the same time the reductions to our overhead spend profile should ensure our operating profit performance is not negatively impacted as a result.

    Exceptional itemsWe continue to closely monitor theGroups exposure to land and developments and have recognised a non-cash 21.2 million impairment, which is included within the years exceptional items. During the year a debt outstanding was only partially recovered after a client went into administration, causing a 2.6 million loss to be recognised.

    We have continued to benefit from our selective sales approach, where making our Core Process mandatory for the commercial bidding stages of a project has improved our historical conversion rates. However, the market remains highly competitive and our current conversion rates are a testament to the determination and desire of our work-winning and business development teams to secure the majority of the contracts we select to bid.

    We expect the current challenging market conditions to prevail in the short to medium term; however our analysis indicates that opportunity levels are better than they were 1218 months ago. Accordingly we are experiencing consistently high-quality tender opportunities as our work-winning teams prioritise projects to repeat and build our order book.

    Cost managementWe remain focused on improving the cost base of our operations. In line with our mission to create a lean and agile business, we benefited in the current year from cost-saving measures implemented last year. These initiatives have allowed us to continue our long-term investments to develop our people and establish the Engineering Excellence Group. We consistently monitor and review our cost base and reduce our overhead base. These initiatives have, and will continue to, improve the Groups financial capacity.

    Our property portfolio is regularly reviewedfor impairment and was significantly impacted by the decline in commercial real estate values during the downturn. Urban property values in the UK, Ireland and Australia remain subdued and further impairments were recognised during the year to ensure our valuations remain appropriate.

    The Group has no plans to purchase new development sites or add to its real estate portfolio. Our priority is to invest equity to complete our current projects over an appropriate period that will benefit from the recovery, or take minority equity stakes in developments to support our core construction business. Over the next two years, the Groups equity, invested in development sites, will increase as we build-out projects in Australia which have been substantially de-risked by lettings and sales. We believe this prudent approach to property development allied to our strengthening net funds position reduces the risk profile of the Group.

    On securing full control of the Bison Group of companies an exceptional gain of 4.2 million was made on acquisition, primarily because the deferred tax asset of 5.0 million could be utilised immediately within the Laing ORourke Group, although it was of no immediate use to other purchasers. The gain is recorded asan exceptional item within other operatingincome.

    Further details are provided in note 4tothe financial statements.

    Discontinued operationThe Board decided to close its German finished stone products business and sell the assets during the year. The business has been classified as a discontinued operation and costs of 5.0 million were recognised in relation to the expected sale of the business, together with atrading loss of 1.1 million, which ultimately led toa loss from discontinued operations of6.1 million in the year. Thebusiness assets are expected to besold in 2012/13.

    Cash generationThe Group continues to be highly cash- generative, ending the financial year withgross cash of 601 million. In an environment of low interest earned on cash balances, the strong cashflow generated from our core construction activities has been used to repay 57million of debt. This was a continuation of our debt reduction strategy, and by year-end we achieved our objective of only having Group borrowings to finance plant hire assets orour land and development businesses. Joint venture borrowings solely relate to non-recourse debt from Public Private Partnership (PPP) and Private Finance Initiatives (PFI) investments.

    We believe that the Groups people and technology investments enhance the accuracy and understanding of project costs at both the individual and aggregate level, through the addition of key personnel, systems and processes. We have reduced our reliance on external cost advisers whose focus was almost exclusively on the analysis of selling prices. Given our direct-employer, self-delivery capability and our in-house global procurement expertise, together with the Groups ownership of its plant and equipment, we are able to access the key constituents of cost and the supply chain to a greater extent, and thereby determine a more comprehensive understanding of the underlying cost drivers of our products and services.

    We continue to invest in our secure, web-based cost database, Insite, which provides an unrivalled benchmarking and cost planning capability for over 600 projects with a combined value in excess of 15 billion. Originally limited to UK operations, during the year we extended this capability across the rest of the Group. In the next year we are further expanding its functionality to include schedule data.

    Laing ORourke continues to be at the forefront of the application of Building Information Modelling (BIM) technology. Working with our global software providers, we have developed a unique capability to deliver accurate quantification and pricing of projects via multidimensional models. Thesame model is used to demonstrate our understanding of the construction process, logistics and programme, providing our clients with confidence in our ability to deliver complex projects.

    Our use of BIM places us at the leading edge of the industry, from its use supporting greater understanding and

    We continue to effectively manage liquidity risk and demonstrate resilience in a tough economic climate, which has been demonstrated by improving our net funds position by 13.6 per cent at the year-end to 321million.

    The Groups excellent cash performance has been achieved while maintaining our exemplary payment record with our supply chain. During the year we made significant progress in enhancing our responsiveness to the payment of suppliers, improving the number of days billing from suppliers outstanding at 31 March from 25 days to 21 days. This is an industry-leading performance relative to our major UK competitors, directly supporting the UK Governments agenda to speed up the payment process to support the SME (small and medium enterprise) construction market.

    Creditor days

    20122011201020092008

    2925

    21

    28 29

    12

    24

    36

    Order bookThe Groups order book increased slightly to 8.2 billion at the year-end. The pipeline of secured work has been replenished with high-quality project wins despite an increasingly competitive environment. Significant contract wins in the oil and gas sector have been achieved in Australia. In Europe a win at Alder Hey Hospital, further sections of the Crossrail project and 122 Leadenhall Street comprise the most significant additions to the work pipeline.

    Our businesses have improved the order book by focusing on reappointments by existing clients, as well as helping to improve market and sector diversification in the portfolio by securing a number of new client accounts.

    cost certainty at project inception, throughout the design development phase into construction, where improved process and performance lead to an efficient and sustainable facilities management solution.

    The Group continues to incur set-up costs during the roll-out of its DfMA agenda, in particular in research and development to optimise the efficient production methods and products manufactured at our facilities at Explore Industrial Park and Oldbury. These costs are currently being expensed but will, over time, be offset by the substantial savings generated from more efficient project delivery. We are now seeing significant benefits from DfMA at the project level. These advantages confirm our belief that DfMA improves safety, reduces construction costs and drives quality for the benefit of our clients and the Group. The Groups investment in DfMA also leads to ongoing energy consumption reductions for our clients. Examples of this can be seen in a number of schools constructed by the Group around the UK, where the precise nature of the approach has ensured the completed buildings are highly energy-efficient. Unsurprisingly, weare seeing DfMA as a significant differentiator in business development andwork-winning.

    Financing and treasuryWe continue to hold sufficient financial capacity to take advantage of opportunities and weather any economic or operational challenges. Our cash and committed credit lines to which the Group has access for funding purposes were 762 million (2010/11: 751 million).

    We are using our funds prudently to secure work that meets or exceeds our targeted rates of return, and to provide

    Financial and business review continued

    With our financial strength, engineering and construction capabilities, underpinned by a highly skilled and talented workforce, the business is well positioned to bid, win anddeliver the worlds largest and most complex construction projects.

    Hinkley Point C Nuclear Power Station

    In joint venture with Bouygues TP, Laing ORourke has been appointed preferred bidder to deliver the main civil engineering works for the proposed new Hinkley Point C Nuclear Power Station in Somerset, UK, subject to planning consent and the outcome of the final investment decision by EDF Energy at the end of 2012.

  • 30 Laing ORourke|Annual Review 2012

    Financial and business review continued

    the levels of resilience necessary to shield us from any further market shocks that could arise in the future.

    Our centralised treasury function has continued to execute Laing ORourkes strategy of reducing gross debt levels to minimise interest costs, while maintaining appropriate Group-level liquidity.

    Successful implementation of our growth strategy is dependent on credit support from our banking and surety bonding partners. This is particularly true in some of our territories where there is a heavy reliance on the provision of contract bonding and banking guarantees, particularly for Private Finance Initiatives(PFIs).

    Our finance and commercial teams have significantly strengthened relationships with our bonding and banking stakeholders to renew and extend the necessary facilities to meet our current and future requirements, particularly in Australia where a new three-year facility has been agreed. The Group has also successfully renegotiated and extended the terms of the debt facility for the Explore Living UK homebuilding business.

    The Group regularly reviews its bonding and banking requirements and we have continued to broaden our base of key providers to support our strategic growthobjectives.

    In the coming year we will continue to ensure our treasury function 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 ofour core markets and to ensure we areoptimising the Groups significant cashposition.

    Taxation The Group benefited from an income taxcredit of 11.4 million during the year (2010/11: charge 5.5 million). The tax credit is principally due to the recognition of tax assets in respect of losses in Australia and the receipt of income tax refunds in the UK which recognise the significant research and development investments the Group has made in theUK.

    Our five-year effective corporation tax rate, including joint ventures, is running at22.4 per cent.

    A significant proportion of our earnings was also generated in lower-tax environments, principally on completion of construction projects in the United Arab Emirates. During the year, the Group was a net income tax payer in Europe, paying 4.3 million, primarily in the UK. We expect the Group to be a net tax payer in 2012/13 at a rate similar to the UK prevailing tax rate.

    InsuranceLast year the Group placed its UK insurance broking with Marsh, given their technical expertise in underwriting engineering-based projects, combined with global market coverage. Building on the success of this relationship, this year we consolidated our insurance brokers and subsequently appointed Marsh as our brokers in the Middle East, Canada andAustralia.

    In 2010/11 we placed a three-year programme of multi-class insurances with QBE and our own Guernsey-based captive insurer. During 2011/12 the Group continued to benefit from low levels of claims, although we carefully monitor the balance between insurance risk retained by the Group and that which we purchase in the external market. Our insurance profile closely tracks and correlates with our safety performance, which this year was again low with a rolling Accident Frequency Rate of 0.24. We remain comfortable with the level of insurance risk we are carrying internally.

    GoodwillThe Group carries 335 million of goodwill in the consolidated balance sheet. Goodwill is not amortised under IFRS, but is tested annually for impairment.

    In accordance with IAS 36 the recoverable amount has been tested by reference to four-year forecasts, discounted at the Groups estimated weighted average cost of capital (WACC). This test demonstrated that the recoverable value exceeded the carrying amount. Details of this test can be found in note 13 to the financial statements.

    Pension schemesThe Group runs a number of defined contribution pension schemes with various providers in Europe and Australia.

    OutlookIn 2011/12 we continued to generate profits, while posting a strong work-winning performance despite the ongoing macro-economic and sector challenges inour core markets. The Group is not complacent and will continue to seek ways to improve efficiency andproductivity.

    The Group made significant steps in strengthening its corporate governance, with the appointment of George Rose as Chairman of the newly formed Audit Committee and the strengthening of the internal Audit function. We will continue to strengthen our corporate governance framework through rigorous compliance testing of our Core Processes, particularly in the bidding and delivery phases of the project lifecycle.

    Our controlled diversification strategy by sectors, territories and brands stabilises the earnings profile of the Group despite various market fluctuations. Diversification also provides exposure to growth markets and Canada, Australia and the Middle East are all expected to deliver a greater proportion of the Groups revenue, profit and workload over the next decade. We also expect the sector mix in our workload to become more balanced between infrastructure and building as we grow our infrastructure capability. Over the longer term the Group is also seeking to build a significant facilities management capability to support our clients with their asset lifecycle requirements. Our strong balance sheet and competitive position will enable the Group to create good returns on a long-term basis.

    We are on track to deliver our 2012/13 targets and are once again seeing the benefits of our vertically integrated business model. We continue to be selective but decisive in the opportunities we pursue and intend to improve the profitable performance of the business.

    Our financial objectives remain unchanged: to deliver rates of return above our cost of capital by efficiently deploying our skills and services into a controlled portfolio of markets and sectors. With our financial strength, engineering and construction capabilities, underpinned by a highly skilled and talented workforce, the business is well-positioned to bid, win anddeliver the worlds largest and most complex construction projects.

  • Group performance

    Laing ORourke|Annual Review 2012 31

    Safety and sustainability review

    In a time of diminishing natural resources, our sector consumes far more than its fair share. Levels of innovation have not kept pace with the marketplace. As a consequence traditional construction practices are wasteful and inefficient and the built environment is the single biggest source of global carbon emissions.

    Over the past decade, we have seen a transformation in attitudes to health and safety. Across the industry, businesses are maintaining accident frequency rates once thought unattainable as yesterdays aspirations become todays minimum standards. But in spite of these efforts we continue to expose our workforce to unacceptable levels of risk.

    This reality is, in part, the reason that not enough young people are pursuing careers in construction and engineering. In some growth markets the skills shortage is bordering on chronic threatening the development of the wider economy.

    The way we manage these interconnected issues will have a material impact on the success of our business. We must be truthful about the scale of the challenge, committed to finding the right solutions and prepared to admit that we do not have all the answers.

    Innovation and ingenuity will take us much of the way. But if we are to attract the talent we need to maintain this momentum, we must do more to perpetuate an image of our industry as enlightened, inclusive, safe andsustainable.

    Our approachOver the years, our approach to sustainability has evolved and matured, responding to the changing landscape around us. As we have grown, so have our responsibilities. But in spite of this, our overarching priorities remain the same.

    To protect the health and safety of everyone involved in or affected by our operations, eliminating all accidents by2020.

    To attract, develop and retain world-class talent, creating an environment that inspires our people to give their best and makes human capital one ofour greatest differentiators.

    To minimise the negative impacts ofouroperations and maximise the quality of the built environment for futuregenerations.

    To achieve the competitive advantage by delivering maximum value to all our stakeholders clients, suppliers, communities and the wider industry.

    It is practically impossible to imagine a world without construction and engineering. The buildings and infrastructure around us shape our existence, providing us with ways to live, learn, work and more. Yet in the face of todays social, economic and environmental challenges, it is clear we cannot take our sustainability for granted.

    Performance highlights

    Mission Zero safety campaign launched in Australia and HongKong, following successful roll-out across Europe Hub.

    Achieved an employee engagement score of 73 per cent1, against a global average of 57 per cent2.

    Published our Global Code ofConduct, with 100 per cent of employees successfully completing associatedtraining.

    UK business accredited for the second year under the Certified Emissions Measurement and Reduction Scheme (CEMARS).

    Good progress made in Australia against our government-accredited Reconciliation Action Plan. Through our involvement inthe Australian Employment Covenant, we have pledged tohire 700 indigenous employees.

    1. This figure is calculated on a like-for-like basis against the criteria applied in previous surveys. During the year we added a number of new engagement questions, resulting in an overall score of 69 per cent. Going forward this will be adopted as our benchmark.

    2. Average engagement score for organisations surveyed by Ipsos MORI during the year.

  • 32 Laing ORourke|Annual Review 2012 Laing ORourke|Annual Review 2012 33

    Group performance

    Our goalTo protect the health and safety of everyone involved in or affected byour operations, eliminating all accidents by 2020.

    Our approachOur industry is getting safer. But many people still believe that accidents are an unavoidable part of what we do. Laing ORourke does not accept this view. We believe we can eliminate all forms of harm from our operations and through our Mission Zero agenda weve set ourselves the target of achieving this by 2020.

    We have made good progress against ourhealth and safety objectives in recent years, supported by a culture of personal commitment and individual empowerment. This will provide us with a solid foundation for meeting the challenges ahead.

    However, we recognise that the same approach that got us to where we are will not, in itself, take us to where we want to be. We must adopt more innovative ways of thinking to eliminate all risk from our processes and the people who apply them.

    Taking nothing for granted, we will need to look to models of best practice from other industries, as well as examples of excellence within our own business.

    To this end, we have begun reviewing thecharacteristics of high-reliability organisations companies that operate virtually accident-free. We have also commissioned an independent study of our Wales & West construction division, which has consistently maintained one ofthe lowest incident rates in the Group.

    The aim of this exercise was to identify theconditions of a culture of safety and replicate these, where applicable, across the business. Visible commitment from the top, close relationships between the leadership team and employees at all levels, and a stable workforce and supply chain were found to be the dominant factors.

    The year in reviewDuring the year we took significant steps to align our health and safety approach across both operating Hubs. This resulted in a restatement of the Group Accident Frequency Rate (AFR) for previous years, to bring the Australia Hub data into line with the Europe Hub.

    GovernanceOur governance framework is made up of a network of boards, all ultimately accountable to the Chairman and Chief Executive.

    Reporting to the Group Executive Committee (GEC), our Europe and Australia Hub Executive Committees are responsible for setting the strategic direction of our health, safety and sustainability agendas, allocating investment and monitoring performance.

    Our Human Capital Committee is chaired by the Chairman and Chief Executive and leads the Groups people and organisational agendas. The Boards main priority is to mitigate capability risk through targeted attraction, retention and development of a highly skilled, globally mobile workforce.

    Our Safety and Sustainable Development Committee a sub-committee of the GEC ensures risks and opportunities associated with safety and sustainability are given the highest priority within theGroup.

    The operational management of health, safety and sustainability is delegated to Hub-level safety and sustainability leadership forums. Chaired by the HubChief Executive Officer, the forums are made up of theleaders of each of therelevant businessunits.

    Business unit safety and sustainability leadership forums are responsible for ensuring Hub-level strategy is implemented within each business unit. Chaired by the respective business unit leader, the forums are attended by senior personnel accountable for safety and sustainability.

    In Australia the EPIC (Environment, People, Industry and Community) Senior Executive Standing Committee is chaired by the Hub Chief Executive Officer. The committee oversees strategy development foreach of the core components of oursustainability agenda, sanctions investment and monitors performance. Specific actions are delegated to panels accountable for eachof the above areas.

    About this reportThis report describes our activities for the2011/12 financial year. Specifically, it addresses the issues we regard as having the greatest material impact on the sustainability of our business. We have grouped these under four key headings: health and safety, people, environment and marketplace.

    The figures published within these sections are sourced from centralised andHub-specific databases, and unless otherwise stated represent the consolidated global operations of the Laing ORourke Group.

    Given the geographic spread of our operations it is not always practical or appropriate to adopt uniform initiatives and measures. In particular, the scope of our sustainability activities will necessarily vary according to the size and maturity of our international businesses.

    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. Local variations relating to the definition and measurement of performance data can, in some instances, make the task of reconciling figures extremely complex. However, every effort has been made to overcome this.

    Audit and assuranceThis report has been independently assured by sustainability experts, Two Tomorrows, 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, offices and other facilities.

    Safety and sustainability review continued

    Health andsafety

    Performance indicators

    Investment in health and safety training

    1.3mTraining days provided

    22,930Investment in IIF since launch1

    8.5mGroup AFR2

    0.24Group DIFR3

    0.42Group AAFR4

    2.97Hazard and near-misses reported5

    36,877

    In October, we celebrated our first ever global health and safety awareness day. This marked the official launch of MissionZero in Australia and Hong Kong, following its successful roll-out across ourEurope andMiddle East businesses in2010.

    The campaign was extremely well received in our Australia Hub where a range of new programmes and initiatives has been introduced, alongside tried and tested practices from our Europe Hub.

    To date, 3,439 employees and subcontractors in the Australia Hub have completed Mission Zero training. In Hong Kong, our West Kowloon Terminus Station (South) project recorded the lowest AFR across the entire 26km-long Express Rail Link scheme, beating its original target by 25 per cent. Our Middle East business ended the year with an AFR of 0.01 its best performance since 2003.

    Despite these successes, we were deeply saddened by the loss of a colleague, who was killed in October during track laying operations on our North-South Railway project in Saudi Arabia. A thorough investigation was carried out following theincident, which concluded that a failure to apply the correct procedures was thecause.

    1. Includes delegate and attendance costs.

    2. AFR (Accident Frequency Rate): an accident resulting in more than three days absence from work.

    3. DIFR (Disabling Incident Frequency Rate): an accident resulting in the loss of one ormore shifts.

    4. AAFR (All Accident Frequency Rate): any accident at all, from serious injuries tominor incidents.

    5. UK only, reporting introduced in Australia Hub inApril 2012.

    Mission Zero

    Mission Zero is launched in Australia and Hong Kong through our first ever global health and safety awareness day. Now embedded in our Europe Hub, there are two key targets attached to Mission Zero:

    a 0.1 DIFR (an accident resulting inthe loss of one ormore shifts) by 2015;

    a 0.1 AAFR (any accident at all, from serious injuries to minor incidents) by 2020.

  • 34 Laing ORourke|Annual Review 2012 Laing ORourke|Annual Review 2012 35

    Group performance

    hazards arising from particular activities are controlled.

    In addition to our routine occupational health provision, we held a range of wellbeing events across the business. Inthe UK, these included a know your numbers blood pressure campaign along with tests for diabetes, cholesteroland other lifestyle-related issues. Our lung-health checks saw morethan 200 individuals volunteer forstop-smokingadvice.

    One of the main occupational hazards in Australia and the Middle East is the heat. In desert regions, respiratory infections caused by dust and humidity are also a key concern. In both these businesses we run strict monitoring processes in parallel with awareness-raising programmes.

    Health screeningsDuring the year, 4,960 UK employees received health screenings, ranging from safety-critical medicals to lifestyle check-ups, with over 98 per cent considered fitto work. 218 individuals were referred to our occupational health service for assistance to stay at or return to work. Inmost of these cases, action was taken as a precautionary measure following exposure to hand-arm vibration.

    In the Middle East, 6,746 screenings took place; two employees were declared unfit for work and 197 were referred to local hospitals for additional assistance. Among these 250 surveillance checks were conducted for safety-critical or at-riskworkers.

    There were no RIDDOR-reportable health issues detected.

    Drug and alcohol testingLaing ORourke operates a zero-tolerance approach to drug and alcohol misuse. This is enforced through random and with-cause testing, along with pre-employment checks. Disciplinary action up to and including dismissal will be taken against anyone found in breach of our drugs and alcohol policy.

    In the UK 1,404 individuals were tested, with 86 returning positive results representing a failure rate of 6.1 per cent. Cannabis was the cause in 67.4 per cent ofcases. In Australia, the regulatory requirements associated with heavy civilengineering operations mean our workforce are subject to routine checks.

    During the year, 197,290 tests were carried out, with 215 failures (0.1 per cent) 167of which were for alcohol.

    We are committed to supporting any employee seeking help for substance abuse. Rehabilitation is delivered through independent counselling services, backed by a programme of regular testing. During the year 110 employees volunteered in confidence for assistance.

    Training and awarenessOur ability to eliminate all accidents from our operations relies, inherently, on the commitment of our people. During the year we delivered 22,930 health and safety development days across the Group.

    Incident and Injury Free Through our Incident and Injury Free (IIF) programme we have delivered a step-change in attitudes to safety, underlining the personal responsibility we each have to ourselves and others. After launching IIF Phase 4 in Europe in 2010, the programme was rolled out across our Australia Hub in 2011 under the banner Mission Zero Behavioural Safety.

    During the year 11,161 individuals attended IIF or Mission Zero briefings, including our own employees and colleagues from client organisations, consultancies and our supply chain. Inaddition, more than 300 senior staffattended advanced-level safety leadershipworkshops.

    IIF for DesignersIn 2011 we developed a revised version ofour IIF for Designers programme aimed at providing professionals (working for us and our partners) with the skills to manage out risk through innovative solutions. There are 45 employees qualified to deliver these modules across the Group.

    Hazard and near-miss reportingWe have made concerted efforts to increase risk-awareness within our workforce by focusing on the importance of hazard and near-miss reporting. This has resulted in an exponential rise in the number of such incidents recorded with a total of 36,877 in our Europe Hub (compared with 7,176 the previous year).

    In April 2012, we launched the initiative inour Australian Hub, with dedicated briefings at all workplaces. While there hasbeen an uptake in reporting, the process is yet to become fully

    embedded.291 hazards and near-misseswere registered.

    High-potential incidentsWe have also strengthened our incident reporting procedures with the inclusion ofa new high-potential category. Any occurrence that could have resulted in afatality (but by chance did not) will be investigated in the same manner as an actual fatality. This process will act as an early-warning system, enabling us to take vital preventative action.

    Safer systemsA number of improvements have been made to our systems and processes during the year to ensure they work harder to support our Mission Zero ambitions.

    Safety Management System (SMS)reviewAs our safety blueprint, particular attention has been given to enhancing theusability and effectiveness of our SMS. The new system is more closely aligned toour Core and Enabling Processes (the protocols that govern our bidding and delivery activities). It therefore includes greater emphasis on designing out risk at pre-award stage along with enhanced guidance on the application ofoffsite manufacturing and onsite assembly methodologies.

    More than 400 employees were consulted as part of this exercise and a compulsory online training module is being developed ahead of its launch in the summer.

    Safer Systems of WorkOur Safer Systems of Work initiative was introduced in 2011 to improve the quality of site-based operational communications, such as toolbox talks. As part of this, all individuals responsible for writing or reviewing method statements or risk assessments must now attend a one-daycourse.

    Audit and assuranceWe are reviewing our audit and inspection process to ensure it is accurately reflecting levels of compliance, while enabling us to identify opportunities for improvement. In June, we will pilot a newexternal assurance protocol, which focuses on supporting better performance as well as assuring compliance. This will be rolled out shortly afterwards.

    There were no other fatalities associated with any of our operations during the year.

    We are also disappointed to report that our year-end Group AFR rose to 0.24 from 0.23 in 2011. A number of factors have contributed to this decline and our focus for the period ahead will be to take decisive action to reverse this trend.

    In this regard weremain committed to our integrated delivery model and direct employment approach as the most reliable means of ensuring the correct levels of competency and commitment on our sites. We also work closely with our supply chain partners to share learning and discourage a high turnover of labour.

    Additionally in our Australia Hub, we believe greater levels of awareness have resulted in a more rigorous approach to reporting. Overtime, however, we anticipate this will produce a much improved performance. Itis worth noting that incident rates within our infrastructure division are consistently lower than in other parts of the business. This can be explained by higher rates of directly employed labour.

    Leadership, communication andcommitmentOur positive health and safety first culture relies on visible commitment from our leaders. It is vital that all our people understand not only what we expect of them, but what they in turn can expect ofus.

    With this in mind, we have taken a number of steps to drive greater engagement with our workforce and openup lines of communication so that everyone feels empowered to take responsibility for their safety.

    Safety commitment interviewsIn February, our UK business introduced compulsory one-to-one safety commitment interviews for all new-starters and transfers, including subcontractors.

    The aim of these sessions is to ensure that everyone on our projects understands our approach to health and safety. As part of the process, inductees must confirm their commitment to our Mission Zero vision. Anyone failing to do so will be refused entry to the site.

    Delivered wherever possible by the project leader, the interviews are also designed to strengthen relationships between management and the workforce, encouraging a culture of care and mutual respect. In total, 3,790 interviews have

    Safety and sustainability review continued

    taken place so far, with two failures. This figure includes our directly employed workforce as well as subcontractors.

    New directors safety toursWe have made a number of changes to the format of our directors safety tours to improve their effectiveness including a much stronger emphasis on workforceinteraction.

    Directors must also assess the extent towhich innovation is being applied to manage out risk at the earliest stages andhow well different disciplines (such asplanning, procurement, commercial and design) understand the part they areexpected to play.

    Focus projectsDuring the year a number of sites across the Group were identified as focus projects (those entering a high-risk phase or performing poorly). As part of this process, they were reviewed by the relevant Hub board and action plans weredeveloped.

    Health and wellbeingA key priority of our Mission Zero agenda is the prevention of work-related illness and the management of safety risks associated with poor health in the workplace. As a minimum, we have aresponsibility to ensure every employee isfit to carry out their duties and that

    Innovation

    Managing out risk through our Design for Manufacture and Assembly solution using automated processes in controlled environments we are making our activities safer,less wasteful andmore sustainable.

  • Laing ORourke|Annual Review 2012 37

    Group performance

    People

    Performance indicators

    Employee engagement score

    73%Percentage of employees receiving performance appraisals

    89% Investment in training and development

    7.2m Training and development days provided

    40,958Staff: male to female ratio

    81:19Employees: staff to workforce ratio

    36:64

    36 Laing ORourke|Annual Review 2012

    Our goalTo attract, develop and retain world-class talent, creating an environment that inspires our people to give their best and makes human capital one ofour greatestdifferentiators.

    Our approachIn the UK, the number of 1619 year-olds in our industry has halved since the recession, while nearly one-fifth of the workforce is within ten years of retirement. At the same time, Australias resources boom coupled with an ageing and relatively small population has led to asevere skills shortage.

    There is little doubt that unless this trend is reversed, the growth of our sector and the wider economy will be impacted. Short-term fixes, such as international recruitment, will not be sufficient in the long run to address this issue.

    It is clear, therefore, that if we are to build a sustainable pipeline of talent, a more enduring solution must be found. To this end, we are working closely with schools and colleges to inspire more young people to consider careers in construction, while investing in world-class engineering education through our academic partnerships.

    Meanwhile, our increasingly sophisticated delivery processes will demand much more of our workforce. To maintain the required levels of competency, it is vital we are able to attract and retain the very best people by offering rewarding careers, with real development opportunities.

    The year in reviewWe have taken decisive steps to accelerate our human capital strategy, starting with aroot and branch review of the processes that underpin it. Through this exercise we have identified a number of priorities keyamong these is the way in which we measure and monitorperformance.

    While significant progress was made in 2011 with the global roll-out of a single-source employee profiling system, it is clear more needs to be done to improve the quality of this information and, in particular, the way it is generated andanalysed.

    This data informs our decisions on reward, promotion and mobilisation along with our investment in training and development. It is critical therefore that it provides us with an accurate picture of our peoples capabilities.

    Safety and sustainability review continued

    People

    A broad-based pipeline ofindustry talent: the winners of our Excellence Plus awards celebrate with Chairman and Chief Executive,Ray ORourke. Meanwhileacross the Group we have invested 7.2 million in a range of site-based training and professional development.

    The personal insights of our line managers, leaders and human resources professionals provide us with a valid starting point, but are not truly meaningful unless balanced against fact-based criteria.

    Work has begun to bring greater discipline to our progress-tracking activities, particularly in relation to our high-potential employees. With the launch of our Big Guns leadership programme later in the year, we will pilot a new approach that fully integrates both qualitative and quantitative information to ensure we areaccurately identifying and actively developing our top performers.

    Meeting the skills challenge During the year we launched an unprecedented drive to recruit qualified professionals to staff major infrastructure projects in the northern and western areas of our Australia business. In this period 716 new starters joined the business. Of these, 153 were from outside the country. 45 were existing Laing ORourke employees who transferred from other operating regions.

    In total 61 employees were transferred between operating regions on long-term assignments. Among these were a number of senior personnel, deployed into different parts of the business to meet requirements for specific sector or functional expertise.

    Employee engagementOur employee engagement score is, in essence, a measure of how satisfied our people are in their jobs. We therefore regard it as a key indicator of our business performance and as such have formally linked it to the reward levels of our seniorexecutives.

    It is a testament to the commitment andprofessionalism of our people that, despite ongoing market difficulties, we have once again achieved an exceptional result with a score of 73 per cent against a global average of 57 per cent.

    This figure is tracked through our annual staff survey, which is delivered on our behalf by leading independent research specialists, Ipsos MORI. The survey covers a range of subjects, including safety and sustainability, communication, leadership, business strategy, career development and line management.

    The combined responses are passed to our leadership team, who develop action plans to address the areas most in need of improvement. In the interests of open and transparent communication, we publish the results in full on our intranet. We also update our employees throughout the year on how our activities are progressing.

    Performance managementThe relatively low profit margins in ourindustry make productivity a key sustainability issue. To ensure each of our employees is working constructively and demonstrably towards our business objectives, we operate a stringent goal-setting and appraisal process. In2011/12, 89 per cent of staff completed year-endperformance reviews.

    These two-way feedback sessions are also designed to ensure our people enjoy stimulating careers that enable them to achieve their professional ambitions. Tothis end, we have developed a more structured approach to identifying training needs, which will be formally aligned to the appraisal process.

    We have also launched a set of career toolkits for project delivery disciplines and supporting functions. These contain structured information on the capabilities and qualifications required at each stage of development giving employees a clear view of where they are and what they need to do to progress.

    So far we have published nine, with moreplanned for the year ahead. Withinthe next 12 months we aim to havedevelopment plans in place for everyemployee, based around the relevanttoolkit.

    Employees on development programmes

    562Apprentices

    207Scholars and cadets

    140Graduates

    135Young Guns

    43Guns

    29Masters

    8Total employees

    Staff Workforce Employees

    Europe Hub 4,435 7,593 12,028 Australia Hub 1,832 3,492 5,324 Group 6,267 11,085 17,352

    Workforce age profile1

    25 and under 11%2635 33%3645 28%4655 18%Over 55 10%

    100%

    Staff age profile

    25 and under 8%2635 31%3645 28%4655 21%Over 55 12%

    100%

    Staff length of service

    Less than 6 months 6%6 months to 1 year 13%1-2 years 12%2-3 years 5%3-5 years 20%5 years + 44%

    100%

    1. In compliance with local regulations this figuredoes not include Saudi Arabia based workforce.

  • 38 Laing ORourke|Annual Review 2012 Laing ORourke|Annual Review 2012 39

    Group performance

    Particular focus has been given recently tothe importance of effective line management in driving strong performance. To support this we have launched a number of new training programmes that focus on leadership, mentoring, career coaching and effectivecommunication.

    Learning and developmentThe training and development of our people remains one of our most significant areas of investment. We havean established suite of in-house programmes to meet our trades-based and professional skills requirements. Thisis augmented where required by external providers.

    To ensure maximum returns for us and our employees we proactively support past and present participants of our high-potential programmes. During the year we conducted an extensive talent review of all current and former apprentices, graduates, cadets, scholars, Young Guns and Guns along with our top 200 senior executives.

    We currently have 562 employees on development programmes across the Group. In 2011/12 we invested 7.2 million in40,958 training days (up from 4.7 million lastyear).

    In the coming months we will launch Big Guns. The programme, which follows on from Young Guns and Guns, is a key element of our long-term succession strategy and underlines our commitment to grow our leaders from within. Drawn from an elite group of exceptionally capable professionals, our Big Guns will be trained to take on executive roles at Group and Hub level.

    EducationWe continue to invest in world-class education not only to grow our own talent but, more broadly, to help build the skills and mindsets our industry will need to meet future engineering challenges profitably and sustainably.

    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 develop thenext generation of industry innovators, challenging candidates to rethink current practices. In 2011, eight Laing ORourke employees were accepted onto thecourses.

    At the other end of the educational spectrum, we are working with schools and colleges to attract more young people to construction and engineering. Through a range of learning experiences

    Safety and sustainability review continued

    and vocational guidance, our project teams help students make informed career choices by providing an exciting insight into the many different roles our industry offers.

    DiversityConstruction and engineering is still regarded as a predominantly male domain. Laing ORourke is committed to challenging and changing this negative image by encouraging diversity at every level and honouring its responsibilities as an equal opportunities employer.

    Our approach is outlined in our Global Code of Conduct and associated policies, which mandate the fair and impartial treatment of all existing and prospective employees in relation to selection, promotion and development. We also operate strict policies against bullying, harassment and discrimination.

    In 2012 we began monitoring ethnic diversity through our employee profiling system. We also track gender ratios across the business with particular focus on our talent programmes.

    Industrial relationsThe changing industrial relations landscape in Australia has had a sector-wide impact, to which Laing ORourke has not been immune. During the year, union activity brought work on a number of our projects in Queensland to a halt, while the business renegotiated its workplace agreements.

    In response, we have strengthened our industrial relations risk management and compliance capability with a number of key appointments. We have also established a national working group toassess our policies and procedures.

    Laing ORourke was not subject to any industrial action elsewhere in the Group.

    Scholars

    Building the skills and mindsets our industry willneed to meet the engineering challenges of the future by investing in world-class education, we are currently supporting 140 undergraduates through our scholars and cadets programmes.

    Our goalTo minimise the negative impacts ofour operations and maximise the quality of the built environment for future generations.

    Our approachIn its present form our industry is not sustainable. Neither are the products we deliver. Traditional construction methods are carbon-intensive and the built environment is the single biggest source of global CO2 emissions. Collectively, our sector consumes around one-third of the worlds natural resources, generating vast amounts of waste and pollution in theprocess.

    As governments rightly take tough measures to tackle these issues and energy and commodity prices rise on the back of diminishing reserves those that cannot evolve will find themselves unable to compete in the emerging low-carboneconomies.

    All of this is compelling us to rethink the way we design, engineer, construct and operate our buildings and infrastructure putting our innovation activities firmly on the agenda.

    With our environmental and commercial objectives becoming increasingly aligned, we continue to embed our Design for Manufacture and Assembly (DfMA) approach across our operations. Coupled with the application of technologies such as Building Information Modelling (BIM), this methodology has the potential to significantly minimise negative impacts in delivery and maximise efficiency in use.

    The year in reviewIn 2011, our Australia business registered under the National Greenhouse and Energy Reporting Act for the first time recording Scope 1 and 2 emissions for the 2010/11 financial year of19,159.15 tCO2e and 6,538.49 tCO2e respectively.

    To ensure full compliance with these regulations, a training programme was rolled out by the legal and environmental teams. The focus now will be to agree long-term reduction targets for this part ofthe organisation, while embedding arobust system for reporting subcontractor emissions, as required under thelegislation.

    In July 2012, the Australian Governments carbon tax will come into effect. Laing ORourke does not currently exceed the threshold for liability (emissions over 25,000 tCO2e per year). We are, however, exposed to price increases through our supply chain as the manufacture of steel, aluminium, cement and glass produces significant amounts of greenhouse gasses.

    Estimates of the impact on overall construction costs between now and 2020 vary from 1.4 per cent to 2 per cent. Laing ORourke has commissioned sustainability experts, Netbalance, to conduct further research into the potential effect on ouroperations.

    Having demonstrated continued performance improvements, our UK business was accredited for the second time under the Certified Emissions Measurement and Reduction Scheme (CEMARS).

    Environment

    Performance indicators

    Waste diverted from landfill (UK)

    94.8%

    Summary of carbon emissions

    UK Australia

    2008/9 (Baseline) 2010/11

    2011/12(Provisional)1

    2008/9 (Baseline) 2010/112 2011/12

    Scope 1 80,833 47,931 53,360 N/A 19,159Scope 2 17,600 16,057 11,059 N/A 6,538Total (Scope 1 & 2) 98,433 63,988 64,419 N/A 25,697Scope 3 (Excl. waste) 8,230 4,573 4,587 N/A N/A N/ATotal (Scope 1, 2 & 3) 106,663 68,561 69,006 0 25,697Waste (Scope 3 excluded from baseline) 5,150 4,180 N/A N/A N/A

    1. To be verified through CEMARS accreditation process in July 2012.

    2. At year-end the NGER Act reporting period was 75 per cent complete. This figure therefore does not encompass the full financial year.

  • Laing ORourke|Annual Review 2012 41

    Group performance

    40 Laing ORourke|Annual Review 2012

    Working with the National Community Wood Recycling Project (NCWRP) in the UK, we have recycled more than 500 tonnes of wood, helping to fund 50 permanent jobs in the process. The NCWRP is a network of social enterprises that provides a collection service for wood waste, while giving disadvantaged people employment and training opportunities.

    Assurance and accreditationWe are committed to the highest standards of environmental compliance and management. All Laing ORourke Group businesses operate to ISO14001-accredited environmental management systems.

    Responsible sourcingOur Explore Manufacturing business has been awarded good status under BREs responsible sourcing standard, BES 6001. It is the first time composite precast concrete components have been certified under the scheme and will mean automatic BREEAM points for projects using these products.

    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. Our approach toresponsible sourcing is outlined through 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 reusable materials, wherever practical.

    We also require our timber suppliers to provide 100 per cent FSC (Forest Stewardship Council) or PEFC (Programme for the Endorsement of Forest Certification) accredited materials and collect chain of custody information, as required, on each project.

    While we do not rigorously monitor the use of recycled content, we expect to achieve aminimum of 20 per cent across the board and can increase this where required.

    Certified Emissions Measurement andReduction Scheme (CEMARS)For the second year in succession, our UK business has received CEMARS accreditation, demonstrating a sustained reduction in our greenhouse gas emissions. As part of this process, companies must open up their carbon management and measurement processes to external scrutiny.

    This not only provides us with assurance on the accuracy of our CO

    2 data, but assists with our placement on other performance league tables such as the UK Governments Carbon Reduction Commitment scheme, which assesses how well organisations manage their energy use. The first of these was published in 2011, with Laing ORourke ranking in the top 15 per cent.

    Systems and processesIn Europe, we have made substantial changes to our ISO 14001-certified environmental management system. To ensure our sites are as energy and waste efficient as possible, the new system provides enhanced guidance on project preparation. Significantly, we have increased the focus on environmental design particularly in relation to meeting BREEAM requirements.

    Safety and sustainability review continued

    In 2010 we set ourselves the target of cutting our carbon footprint by 15 per cent1 by 2012. We have fallen short of this target, with an 11.7 per cent reduction. This is due to the increased proportion of infrastructure projects across our portfolio and the resulting rise in heavy plant use which has meant our total energy consumption (particularly of red diesel) has gone up.

    To further support our efforts, we have invested in a more fuel-efficient vehicle fleet and made sustained efforts to limit site CO2 emissions, supported by improved guidelines for project teams. In line with the UK Governments targets, we are now working towards a 30 per cent reduction by 2020 and 80 per cent by 2050.

    WasteWe continue to focus on driving down waste and are working towards a 50 per cent reduction by 2020 (against 2009/10 figures). During the year, our UK operations generated 145,724 cubic metres of construction waste, against a baseline of259,498 cubic metres.

    Our primary objective is to eliminate waste at source through the increased application of DfMA, supported by best practice on our sites and within our supply chain. By using automated processes to manufacture components in a controlled environment, we are able to manage materials much more efficiently and return would-be waste back into production.

    Where waste arises during construction, we operate strict protocols, including mandatory recycling targets. In the UK we diverted 94.8 per cent of waste from landfill during the year a 4.5 per cent improvement on 2011 and 12 per cent ahead of our 2012 target. By 2020 we aim to recycle 100 per cent of non-hazardous waste.

    While the regulations do not encompass the CO

    2 emissions associated with the construction process itself, innovations indesign and materials use will be criticalin meeting mandated levels of operationalefficiency.

    Design for Manufacture and Assembly(DfMA)In this regard, our DfMA solution offers inherent advantages through efficient use of thermal energy and vastly enhanced air-tightness.

    Concrete has a natural ability to store significant amounts of heat, especially unrendered. The superior quality of finish means that exposed concrete is suitable for use on DfMA-built structures.

    Through careful management of internal airflow, the absorption and release of this energy can be influenced, reducing the need for artificial temperature control. Thestandards achieved through factory-controlled construction helps ensure, for example, that joints are more exact and therefore more airtight.

    These benefits were recognised in 2011 when our schools design won the Chartered Institution of Building Services Engineers Passive (Energy-Related) Product of the Year. Our recently completed Irlam and Caddishead Community High School achieved an air-tightness of 1.29. With rates of 7 or 8 not uncommon, this is an excellent result.

    To further interrogate the value of this approach, we have established a set of environmental indicators. Evidence collected so far suggests that construction waste and site CO

    2 emissions can be more than halved compared with traditional practices.

    Building Information Modelling (BIM)The advantages of our DfMA approach are reinforced by the application of BIM a digital prototyping tool that enables usto integrate data about a buildings design, construction and future function to develop the most efficient methods of delivery and operation.

    This virtual construction approach has obvious benefits at project stage where it serves to reduce waste and error. But the technology has wider-ranging functions.

    When BIM is integrated with a buildings energy model, it has the capacity to predict real performance in operation. Not only can it enhance design, this information can be incorporated into facilities management systems to streamline building services.

    The UK Governments definition of a zero-carbon home relates to its modelled performance. This includes anticipated emissions arising from heating, cooling, lighting and ventilation but excludes cooking and electrical appliances.

    But real energy use is often very different to modelled. Recognising the disparity, enlightened clients are shifting their focus beyond compliance toward more holistic solutions. Likewise, many Private Finance Initiative (PFI) entities are asking investors to take on energy performance risk in their contracts.

    The 3Ts modelWe have begun pioneering a real energy modelling approach at our Brighton 3Ts Hospital project in the UK. Working with consultants, we are developing highly detailed occupancy data that includes expected usage patterns for each part ofthe building. This is based on in-depth

    Plans are in place to conduct a similar exercise in Australia in the coming months. During the year, the Hubs environmental reporting procedures werereviewed by its board in an effort toimprove governance and compliance. Inaddition, a manual is currently being developed by Select Plant Hire, in conjunction with our procurement team, to enable sites to set up and dismantle ina more sustainable way.

    Environmental incidentsThere were no environmental prosecutions during the year in review. One infringement notice was served to the Transport Express Joint Venture (of which Laing ORourke Australia is a partner) for a Category 2 incident relating to sediment contamination of stormwater run-off from site during a period of heavy rainfall. Four environmental notices were served in the Middle East.

    There were no Category 1 environmental incidents anywhere in the Group. There were 21 Category 2 incidents and 300 Category 3. 324 environmental hazards and near-misses were reported in the UK and 37 in the Middle East. In 2011/12 we conducted 258 internal audits.

    Training and awarenessWe have developed a bespoke in-house course, accredited by the Institute of Environmental Management and Assessment. All UK-based environment advisers have now been trained to associate level.

    In Australia, we rolled out a senior managers environmental training programme. The first 12 sessions took place in March, with the remainder to be completed by June. The course will be delivered on an ongoing quarterly basis ineach region within the Hub.

    We continue to deliver environment launches on all new UK projects to ensure teams fully understand their responsibilities and are aware of any specific risks relating to local biodiversityor the nature of the workbeing undertaken.

    Towards zero-carbon constructionIn 2016, legislation will come into effect inthe UK requiring all new homes to be zero-carbon. The government has also outlined ambitions to include new schools within these parameters. By 2019 the law is expected to extend to cover all new developments public, commercial anddomestic.

    Responsible sourcing

    Recognising best practice in the sustainable procurement and production of construction materials, Explore Manufacturing is awarded good status under BREs responsible sourcing standard. It is the first time composite precast concrete components have beencertified underthescheme.

    Foresterhill

    The UKs best new eco-friendly industrial building of the year, innovations applied at Foresterhill Energy Centre will cut running costs by 39 per cent, representing annualsavings of almost3 million.

    1. All carbon reduction targets are normalised by turnover and measured against 2008/09 baseline.

  • Laing ORourke|Annual Review 2012 43

    Group performance

    42 Laing ORourke|Annual Review 2012

    The year in reviewAs a statement of our commitment to the highest standards of ethical business practice, we published our Global Code of Conduct in 2011. This document sets out our standards for working together and with others and describes the way we manage the social, economic and environmental impacts of our operations.

    To ensure our people understand their responsibilities, the Code provides practical guidance on issues such asbribery and corruption, equal opportunities and human rights, safety, sustainability and security. Anyone found in breach of the Code will be subject todisciplinary action, up to and includingdismissal.

    A copy of the document has been sent toevery member of staff, along with an individual link to our online commitment pledge. To date, 96.2 per cent of employees have signed the pledge. As part of our induction process, all new recruits will beexpected to follow suit.

    To coincide with the launch, we also introduced a new independent ethics helpline for anyone wishing to raise a concern. So far 25 cases have been reported (21 of which are now closed). None involve significant misconduct or represent a material risk to the business.

    Anti-bribery and corruptionThe UK Governments Bribery Act came into effect in July 2011, significantly strengthening the legal framework

    forprosecution both in Britain and internationally. The Act imposes wide-ranging requirements on companies to actively prevent bribery and corruption.

    Laing ORourke has established a framework for ensuring full compliance across the Group. This includes the introduction of an anti-bribery and corruption policy, gifts and hospitality and conflict of interest registers, and compulsory training for all staff. Globally, 100 per cent employees have successfully completed the module.

    Supporting shared goalsWe recognise that we do not operate in isolation and what benefits the wider industry, benefits us. To this end, we are committed to playing our part in supporting a safe, sustainable and profitable sector.

    In 2012, our Australia Hub Chief Executive Officer joined with Chevron and 60 other CEOs and senior managers from organisations involved in the Gorgon LNGproject off the Western Australia coast to agree to work together toset a new national benchmark for construction safety. The Chevron-operated scheme is the largest resource project in the countrys history.

    In July Laing ORourke played a key role in the UK Governments inaugural construction summit, which discussed the industrys role in driving economic growth and debated ways to create sustainable momentum.

    Safety and sustainability review continued

    Marketplace

    Code of Conduct

    As a statement of our commitment to the highest standards of ethical business practice, we launched our Global Code of Conduct in 2011.

    Our goalTo achieve the competitive advantage by delivering maximum value to all our stakeholders clients, suppliers, communities and the wider industry.

    Our approachLaing ORourke prides itself on never standing still. An important part of our culture is our collective sense of responsibility to always seek ways to improve. This philosophy manifests itself in our vision and values to continually challenge ourselves and the wider industry to change from within.

    Our strategy is straightforward: increase our work pipeline by building enduring relationships with clients who look to us for construction and engineering solutions that consistently meet their needs and add greatest value.

    These endeavours matter most to the growth of our business. They require strong leadership and a workforce with the capabilities and commitment to deliver on our promises.

    The quality of our products and services is, without doubt, paramount. But our standing in the marketplace is built as much on what we do as how we do it. Our reputation for honesty and integrity in all our dealings is central to our success. It is defined by the actions of each of our employees and measured in the trust our stakeholders place in us.

    Performance indicators

    Employees who completed anti-bribery and corruption training

    100%Employees who signedthe Code of Conduct commitment pledge

    96.2%Donations to charity (corporate)

    299,546 Donations to charity (employees)

    278,851Volunteer days (employees)

    1,507University partnerships

    Europe HubCardiff UniversityImperial College LondonMassachusetts Institute of TechnologyUniversity College LondonUniversity of CambridgeUniversity of Loughborough University of Oxford University of Swansea

    Australia Hub Curtain University James Cook UniversityMt Eliza Business School, MelbourneUniversityQueensland University of TechnologyUniversity of NewcastleUniversity of New South Wales University of QueenslandUniversity of Sydney University of Technology Sydney University of Western Australia

    monitoring of other similar hospitals. Tominimise actual carbon emissions, themodel encompasses all energy use (including specialist equipment) not just regulated consumption.

    Future applicationWhile the 3Ts model is more comprehensive than anything in existence to date, this experience will enable us to improve the efficiency of other buildings. In particular, there is potential to apply thesame methodology to our schools design where energy consumption andoccupancy patterns are less complex. We are currently exploring theseopportunities with our research partners, using this learning to build our capability evenfurther.

    External recognitionEnergy efficiency In 2012, our Foresterhill Energy Centre project in Aberdeen was recognised by BREEAM as the UKs leading eco-friendly industrial building, achieving an excellent rating of 83.32 per cent the highest in itscategory.

    Located on the Foresterhill Health Campus, the new facility provides the site with around 90 per cent of its peak electricity needs. With operational efficiency a key client objective, a holistic environmental approach was adopted from the outset.

    Detailed assessments were carried out at design stage in collaboration with lead consultant, Mott MacDonald, to ensure all energy-saving options were explored. The

    result is a 39 per cent reduction in running costs (representing a current annual saving of 2.95 million) and a 16 per cent cut in consumption.

    Sustainable designDelivered through our DfMA approach, the Mint Hotel Tower of London has demonstrated outstanding levels of operational efficiency. In 2011, the building received the Future Design Awardfor Sustainability at the EuropeanHotel Design Awards.

    Laing ORourke worked closely with architects, Bennetts Associates, to incorporate a range of innovations at design and construction stage. This included the use of passive and active low-energy systems, delivering a 40 per cent improvement on the excellent standard for buildings of this category. It also achieved an energy performance certification (EPC) rating of B, which is exceptional for a fully air-conditioned four-star hotel.

    Other renewable technologies, such as photovoltaic panels and ground-source heat pumps, have contributed to a 30 per cent reduction in carbon emissions significantly exceeding the latest planning requirements. The 11-storey hotel also features the largest living wall in Europe. The attractive installation is made up of 45 self-watering planting cells and helps to insulate the building.

    Mint Hotel Tower of London, UK

    Delivered through our DfMA approach, the Mint Hotel Tower of London achieved a 40 per cent improvement on the excellent standard for buildings of its category.

  • 44 Laing ORourke|Annual Review 2012 Laing ORourke|Annual Review 2012 45

    Group performance

    Our customersOur customers are unquestionably our most important stakeholder group. They create the pipeline of work that sustains our business.

    During the year we established a central team to assess the way we manage our external relationships. These findings are now being developed into an expanded governance framework, designed to bring greater alignment and control to our decision-making so that we are always working with the right partners, in the rightway.

    A key objective of this exercise is to define what best value means to our clients and, against these criteria, establish a system of checks and balances to ensure our offering is consistently the most attractive. This will be supported by the roll-out of a policy deployment matrix which outlines clear rules of engagement, along with a comprehensive training programme for customer-facing staff.

    Measuring our performance We regard client satisfaction as a key indicator of our business performance, and are committed to achieving year-on-year improvement. This is primarily measured through a combination of programme adherence metrics and stakeholder surveys.

    Adherence to key delivery milestones is tracked on all major construction and infrastructure projects through mandatory contract reviews. To measure overall performance we have interrogated a representative sample of 57 projects across the Group. This years target was achieved in our Europe Hub. In Australia, however, a number of legacy contracts failed to meet the required deadlines.

    Data on key client opinions is collected through stakeholder surveys. These are conducted during and on completion of the relevant project, and provide customers with an opportunity to sharetheir views on our strengths and

    Safety and sustainability review continued

    weaknesses. In assessing overall performance for the year, we reviewed a representative sample ofsurveys, which satisfactorily met our expectations.

    QualityIn an increasingly value-conscious market, quality is what sets successful brands apart. Laing ORourke operates robust processes to ensure predictable outcomes that satisfy our clients and drive ongoing improvement. We are continually refining our ISO 9001-certified quality management system to ensure our standards keep pace with expectations and this year carried out a major revision of our quality manual and associated policy documentation.

    Our suppliersOur suppliers play a vital role in supporting our business activities, and our reputation depends on the quality and value of the services they deliver. For this reason we work closely with our trading partners to ensure they share our values.

    Our procurement strategy is based on a dynamic system that harnesses the benefits of long-term relationships, while promoting competition. We continually monitor the performance of our suppliers, who are categorised (depending on the scale of our investment) as strategic, preferred or transactional. As circumstances change, businesses may move up, down, on or off this framework. This flexibility incentivises high levels of productivity and opens up opportunities for new entrants.

    Our supplier relationships are founded on collaboration and respect as borne out in our industry-leading payment record. During the year we improved our responsiveness from 25 to 21 days between billing and payment.

    Ethical partnershipsAs a condition of engagement, we expect our suppliers to comply with all applicable national and international regulations. This includes legislation relating to working hours, wages, welfare and human rights along with the principles outlined through the International Labour Organisations Core Conventions.

    Commitment to our own health, safety, environmental and people development objectives is an important factor in the selection process and key trades must agree to work to strict targets. In this regard, we believe in supporting our partners through training and knowledge-sharing, and hold regular forums to communicate clear expectations.

    EngagementIn September, the UK business hosted its inaugural national supply chain forum bringing together our top 20 tier-one partners to discuss how to improve safety across the industry. Going forward, these will take place every six months. We also held seven regional forums in 2011/12.

    Significant steps were taken during the year to align our procurement practices globally. For the first time, our Australia Hub hosted supplier health and safety forums in Sydney, Brisbane and Perth. These included a two-hour behavioural safety workshop and also covered our approach to procurement, design, quality and sustainability.

    Our communitiesWith operations around the world, Laing ORourke plays an important part in many different communities. Through these interactions we are committed to creating

    local employment and business opportunities that support our ambition to build a broad-based pipeline of industryskills.

    As part of the Designed for Life: Building for Wales healthcare framework we have achieved an average local spend of 95.98 per cent, with a rate of 99.68 per cent on our Cardiff Royal Infirmary project.

    In Manchester, we have committed to supporting 66 new apprenticeships, within our business and across the supply chain, through the redevelopment of the citys Town Hall and Central Library. Laing ORourke will also provide opportunities for a further 19 existing apprentices.

    Our Barnsley Building Schools for the Future project has created 43 local apprenticeships. The team has also provided over 60 NVQ opportunities for our directly employed staff and supply chain, and delivered more than 80 accredited training courses.

    The Laing ORourke National Skills Academy for Construction developed for the Barnsley scheme was the first in the UK. This CITB-ConstructionSkills initiative aims to raise the standard of industry training by working with local communities and schools to offer apprenticeships and work placements.

    In Australia we are working in regional and remote areas to support the economic development of indigenous communities. Through our involvement with the Australian Employment Covenant, we have pledged to hire 700 Aboriginal andTorres Strait Islander employees.

    Laing ORourke is a member of the Indigenous Procurement Council and inAugust we joined the Australian Indigenous Minority Supplier Council. Through this networking scheme, we have developed a relationship with Outsource Personnel, who specialise in recruiting site-based indigenous staff. Our preferred supplier for office consumables, Corporate Express, is also a member ofthe AMISC.

    Community engagement As good neighbours, we encourage our people to support the needs of those they work alongside. This year, we have seen significant increase in community activities with 278,851 raised for charitable causes by employees (up from 158,696) and 1,507 volunteer days (up from 677). In addition, 26,365-worth of materials wasdonated.

    Corporate charitiesAs passionate believers in the transformational power of learning, we have selected Cancer Research UK and the Integrated Education Fund in Northern Ireland as our designated corporate charities. In 2011/12 we donated 299,546.

    Considerate constructionAs a benchmark of good practice, we actively participate in the UKs Considerate Contractors Scheme (CCS). This year wewon 22 CCS awards and achieved anaverage score of 35/40, representing standards that are consistently high levelabove compliance.

    Apprentices

    Providing young people with viable careers: our projects at Manchester Town Hall and Barnsley Building Schools for the Future will support over 120 apprenticeships.

    Indigenous Opportunities

    Laing ORourke employees on the award-winning Strategic Indigenous Housing and Infrastructure Program in Australias Northern Territory.

    Through our involvement in the Australian Employment Covenant, we have pledged to hire 700 indigenous employees across the business.

  • 46 Laing ORourke|Annual Review 2012 Laing ORourke|Annual Review 2012 47

    Risk management

    How Laing ORourke managesriskThe Groups structured approach to risk management is based on the principle of prevention through early identification. Detailed analysis and decisive action planning are carried out to remove or mitigate the potential for and impact ofkey risks before they actually occur. Asrisks and uncertainties do materialise, this structured approach also ensures actual issues are effectively dealt with.

    The Groups shareholders and senior management are committed to the proactive protection and optimisation of its assets, which include human, financial and strategic resources, through the consistent application of an effective risk management process, augmented where necessary by insurance. Equally, the Group is also committed to the effective management of material operational risks, covering important non-financial and reputational issues arising in connection with health and safety, environmental impact and business conduct.

    The Board has overall responsibility for ensuring that risk is effectively managed across the Group to guarantee full compliance with the appropriate legislative and regulatory 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 the business operations as well as a comprehensive oversight of how they are being managed. Further information on the activities of these committees, together with the Groups core business processes and mandated policies can be found on pages72 to 77.

    The Group Executive Committee has accountability for the system implementation of risk management, and reports regularly to the Board directors on the key sources of risk, the monitoring of their status and the corresponding

    mitigation plans. It is also responsible fordelegating the management of the Groups most significant risks to the respective business units, using the Groups mandated policies and processes, providing guidance andintervention as necessary.

    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 specific 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 the established control procedures.

    Internal controlsThis system of internal risk control is designed to manage rather than eliminate the risk of detrimental business impact to achieve business objectives, and therefore can only ever provide reasonable assurance against the possibilities of material financial loss or organisationaldamage.

    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 ofcorporate governance.

    1. Identifying risksA globally mandated methodology is consistently applied to identify material risks at a Group, business unit, functional and project-delivery level. The risk mitigation process is an integral component of the executive management of the Group and is applied continuously through the forums that constitute the Groups governance framework, and isupdated at least monthly as part ofBoard and GroupExecutive Committeemeetings.

    2. Analysing risks and controls to manage identified risks The process evaluates identified risks toascertain the degree of financial and non-financial impact on the Group, together with the root causes and levelofoccurrence. Consideration of theappropriate controls required to successfully mitigate the risks is also undertaken, which enables identified risksto be prioritised for action.

    3. Determining management actions requiredExisting and additional risk controls will be agreed and responsibilities assigned to appropriate risk-owning management forums for implementation.

    4. Reporting and monitoringThis 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 the findings to the Board and Group Executive Committee at least every fourmonths.

    The process

    1.Identifying risks

    2.Analysing risks and controls to manage identified risks

    4.Reportingand monitoring

    3.Determining managementactions required

    Laing ORourkes assessment of

    strategic, financial, operational and

    project risks

    Group performance

  • Exchange rates

    Description:The increasing globalisation of our business activities involves foreign currency denominated transactions, andthe translation of the net assets andincome statements of overseas subsidiaries and equity-based project investments. The Group is exposed to anumber of foreign currencies including the Canadian dollar, Australian dollar and the United Arab Emirates Dirham.

    Impact:This potentially exposes the Group to significant exchange rate volatility in respect to foreign currency translation exposures and may have an adverse impact on the Groups financial performance and condition.

    Mitigation:To protect itself against adverse exchange rate fluctuations, it is Group policy to enter into forward currency contracts and borrow or deposit funds in foreign currencies to provide a short-term hedge against significant transactional foreign currency exposure. The Group does not hedge the translation effect of exchange rate movements on foreign subsidiary income statements as these are deemed as long-term investments.

    Investment

    Description:The Groups expanding capabilities andstrategic diversification require investment in fixed capital assets suchas Explore Industrial Park. Certain types of work, particularly PFI-funded infrastructure projects, require us to bear a proportion (typically 50 per cent but occasionally reaching 100 per cent) of the financial risk.

    Impact:Investment risk has been shown to be particularly significant and potentially damaging in very large, one-off investment projects. This is because suchprojects are especially prone toissues such as cost overruns and schedule delays that mean the costs ofservicing debt can become larger thanthe revenues available to pay interestonandreduce the debt.

    Mitigation:The Investment Committee and leadership of the finance function constantly monitor investment needs against strategic targets, and review capital investment programmes to ensure funding requirements can bemet from approved sources withinagreed funding limits.

    Interest rates

    Description:The Group is exposed to interest rate risks in relation to some of our debt-based funding of operations and corporate developments. Interest rate risk potentially affects the value of bonds, and is therefore a major risk to bondholders. As interest rates increase, the opportunity cost of holding a bond decreases since investors are able to realise greater yields by switching to other investments that reflect the higherinterest rate.

    Impact:The Groups failure to anticipate interest rate issues may reduce its ability to secure future funding from approved banking providers, impairing the Groupsattractiveness from a credit provision perspective. This could have amaterial adverse effect on the Groups financial viability.

    Mitigation:The Group uses a number of financial instruments, including interest rate swaps, to manage our exposure to fluctuating interest rates and mitigate impact on our equity. Bank bonding relationships are constantly monitored and investor communications are undertaken periodically to provide greater awareness of forecast movements in interest rates.

    48 Laing ORourke|Annual Review 2012

    Financial and strategic risks

    Laing ORourke is exposed to a number of financial and strategic risks. Their mitigation is undertaken by the Groups finance, strategy and governance teams, working to principles set and overseen by the Group Executive Committee.

    Risk management continued

    Funding liquidity

    Description:The Group finances its operations primarily using retained profits, working capital and bank funding. This exposes the Group to liquidity risk in respect to its ability to fund operations and growth. This stems from the lack of marketability of an investment due to concerns regarding macro-economic conditions at a global or country level, or arising from lenders concerns regarding the cash-generative nature of the company.

    Impact:The Group is exposed to the risk of lack of investment funding to either realise a project opportunity, fulfil an acquisition target or meet its ongoing financial needs. Such a lack could adversely impact revenues, earnings, cash flows and overall financial position.

    Mitigation:With an experienced in-house treasury management team, the Group takes a prudent approach to liquidity and

    maintains sufficient cash reserves and available bank facilities to meet liabilities and financing needs as they fall due. Procedures are in place to monitor and forecast cash usage and other highly liquid current assets, together with committed credit facilities, to ensureadequacy.

    We had 161 million (2011: 132 million) of undrawn committed borrowing facilities at the year-end.

    Credit

    Description:The higher the perceived credit risk of the Group, the higher the potential rate of interest that investors will demand forlending capital. The credit risk profile of the Group is calculated based on its overall ability to repay. This calculation includes the Groups collateral assets, revenue-generating ability and taxingauthority.

    Impact:The Groups credit exposure is primarily attributable to its loan assets, trade and other receivables totalling 494.7 million

    (2011: 631.9 million). The risk of payment defaults by clients could adversely impact the Groups overall income and cashflow position, impactingits coverage ratio and hence itsongoing ability to service its debt obligations with investors, and attract new funding as required.

    Mitigation:The Group has no significant concentrations of credit risk and has policies in place to ensure that sales are only made to clients with an appropriate credit history or payment profile. The

    age profile of receivables is continually monitored. Trade debt one year past itsdue date but not impaired amounts to 5.4 million (2011: 3.9 million).

    We hold cash reserves and other forms of liquid assets with high-credit-quality financial institutions. Our finance function is not a profit centre and does not enter into speculative proprietary transactions. Details of the Groups financial instruments can be found in note 32 to the financial statements.

    Inflation

    Description:The Group is exposed to inflation rate fluctuations in the countries where it operates. Cost inflation in the construction sector is influenced by higher commodity pricing which becomes apparent through an increase in the price of products and services procured through the supply chain.

    Impact:Exposure to potential inflation increases can cause higher operational costs inrelation to goods and services procuredinthese jurisdictions to supportproject delivery. These could havea negative impact on profit marginsand financial performance.

    Mitigation:We manage costs very rigorously to ensure the optimisation of our assets. We also employ a number of initiatives, including a proprietary inflation-modelling system, to ensure we have accurate forecasting of supply chain costs based on potential inflation scenarios. This assures greater revenueand profit certainty at theproject delivery level.

    Laing ORourke|Annual Review 2012 49

    Summary of principal risks

    The Groups principal risks are identified over the following pages, together with a description of how we mitigate these.

    Group performance

  • Health and safety

    Description:Safety is Laing ORourkes number-one priority and the Group has set out a long-term ambition to eliminate all accidents from the organisation by 2020. Achieving this will not only remove adverse consequences for affected individuals but will reduce project delays, help in attracting and retaining the very best talent, and act as an advantage in winning work.

    Impact:Failure to maintain the highest levels of safety management can result in harm to the Groups employees, contractors,

    communities adjacent to our project sitesand factory operations, as well asdamage to the environment. Occupational health risks to employees and contractors are numerous and can lead to long-term health issues, fines and penalties, an impact on Group reputation and an inability to attract skilled people.

    Mitigation:Mitigation of this risk occurs at every level of the Groups governance framework. Our documented Safety Management System, containing organisational details of compulsory procedural, behavioural and training requirements, is continually

    reviewed and updated when required. During the year in review the Group globalised its Mission Zero safety campaign an integrated programme to eradicate all accidents from our business by 2020.

    A key challenge for the future is to ensure that the required behaviours are consistently applied at all levels of the Group globally and under all circumstances. Ultimately, it is the responsibility of every employee, partner and subcontractor to ensure that their health and safety remains a priority.

    Political, economic and regulatory

    Description:The Groups businesses are directly impacted by government policy or regulatory developments in any of the countries and jurisdictions in which it operates, especially with regard to public infrastructure investment programmes. Therefore changes in policy, particularly regarding economic stimulus and funding regimes, can impact the Groups pipeline, revenue, profitability and cash-flow position. Likewise, its licence to operate in these jurisdictions is dependent on compliance with regulations throughthe global application of a codeof acceptable business ethics.

    Impact:While the construction industry by its nature lags the economic cycle, there can be a high degree of variability between different publicly funded markets. Potential impacts include termination of existing contracts, deterioration in government relationships, corresponding reduction in contract awards, restriction of operations, imposition of special taxes or requirements for local ownership. Political and economic instability can also result in restrictions onavailable funding as lenders withdraw from the construction sector.

    Mitigation:The Group seeks to maintain a diverse portfolio of projects for both private and public clients in a number of sectors and geographic markets. The Strategy

    Committee monitors exposure to single sources of public-sector work and advises the Group Executive Committee of risks and mitigating actions as required.

    With governments worldwide reducing budget deficits by cutting spending and raising taxes, particularly in the Groups core UK and Australian markets, the operating environment will remain challenging for a period of at least 24months. The Group will continue tomonitor regulatory and political developments on a ongoing basis. Inthe past 12 months the Group has increased public affairs activity to develop more sustainable relationships with key government departments and related regulatory authorities.

    50 Laing ORourke|Annual Review 2012 Laing ORourke|Annual Review 2012 51

    Talent and capability

    Description:The Group is subject to significant competition from national and multinational firms with substantial resources. Therefore the Groups ability to compete is based on its ability to recruit, develop and retain the appropriate skills. The locations of the Groups operations can also be in remote regions or in countries where it is increasingly difficult to recruit suitably qualified people.

    Impact:The Groups strategic plans call for new capabilities to be developed or existing ones to be extended into new markets by having the very best talent in place. Failure to attract, develop and retain the right skills could significantly impair

    the companys ability to meet current commitments and grow the business as planned.

    Mitigation:As a primary component of Laing ORourkes strategy, a comprehensive human capital agenda has been devised to support the above objectives, focused on attraction, retention and development of the industrys most talented people, and the effective deployment of this resource across the Group. It is the responsibility of the Group Executive Committee, primarily through its global human capital and engineering agendas, to ensure an appropriate suite of reward and development structures is in place for all employee groups. Innovative

    partnerships with universities and a range of benefit schemes help position Laing ORourke as a progressive employer of choice.

    The Group also seeks to promote employee mobility across business units and countries and works in partnership with the industry, particularly design and architectural consultancies and practices, to build understanding of our engineering and delivery methodologies. The Group also seeks constructive dialogue with trade unions and otheremployee representatives througha progressive approach toindustrial relations.

    Project selection and delivery

    Description:Selecting and securing projects with anattractive risk and reward profile is akey determinant of the Groups financial performance. The Groups ability to compete for contracts depends to a large extent on its intellectual property rights and technical know-how, together with the practical applications and effectiveness of engineering innovations like DfMA anditsability to offercorresponding improvements inprogramme performance, at a competitive price, tooutstanding levels of quality, safety and sustainability.

    Impact:The costs of tendering for major projects are significant, with no guarantee of success, and difficulties encountered during the delivery phase of any project can result in irrecoverable

    additional costs. Failure to meet delivery timetables and budgets may affect operational performance, impact cash flows, increase capital costs and reduce profitability, as well as harming the Groups reputation and financial condition.

    Mitigation:The Groups approach to project selection is guided by a detailed set of protocols known as Core Process and an associated project management approach Enabling Process. These allow accountable decision makers, at every level of the governance framework (depending on the size andcomplexity of the project under consideration) to understand the critical sign-off procedures in bidding for a project and the formal requirements that must be observed to secure optimum performance in the delivery phases.

    The mandatory application of Core and Enabling Processes and the DfMA methodology will result in greater surety ofdelivery leading to improved operating margin. To mitigate against cost, both in the bidding and delivery phases, Building Information Modelling (BIM) and digital prototyping technologies are used to achieve time and cost-certainty through afull visualisation of the build sequence.

    Regular project selection and review meetings are held to check progress against KPIs, and any deviations from the programme are acted upon quickly and appropriately. The Groups multi-market presence, investment in research and development of approach, practical applications of engineering innovations andcost reduction programmes also contribute to efficiency improvements inthis respect.

    Operational risks

    Laing ORourke has robust and proven systems in place covering tendering, project delivery, business unit and support services activities. Our overall aim is to proactively mitigate key risks to minimise adverse effects and realise growth opportunities.

    Risk management continued

    Group performance

  • Joint ventures

    Description:Some of the Groups activities are undertaken through joint venture partnership arrangements with third-party organisations to better facilitate the funding and delivery of complex projects on an international basis. Risks are inherent in any jointly controlled entity where no single party has majority control.

    Impact:Failure to implement consistent standards and processes in joint ventures can lead to higher costs,

    lower productivity, health, safety and environmental failures, all of which can have a negative bearing on the Groups operational performance, financial condition and reputation.

    Mitigation:The Group seeks to work independently wherever possible and only participate in joint ventures to accelerate its strategic objectives or meet expected project benefits. Joint venture partnerships are only established inwhichthe Groups interests are complementary to those of its partners.

    Laing ORourke undertakes a thorough evaluation process to determine the financial, operational and reputational integrity of the joint venture partners before committing to any formal arrangement. Once established, it implements robust governance procedures to ensure full compliance with all contractual terms and practices within the joint venture.

    Supply chain

    Description:The Group is dependent upon the delivery of materials by suppliers, and the provision of engineering and construction services in a timely and satisfactory manner, and in full compliance with contractual terms and conditions.

    Impact:The use of specialist subcontractors and suppliers does expose the Group to the possibility of non-delivery, whether through financial constraints or other causes, severely impairing their ability to meet Group obligations. In addition, they can cause disruption to operations due to delays, or increased costs may arise if key contractors are not available to meet delivery needs or fall behind the programme. The highly specialist nature of some providers materials and services means that in some instances alternative sources are not readily

    available. Clearly this would impact the Groups ability to meet its contractual commitments to clients.

    Mitigation:A significant proportion of projects isself-delivered by Group companies, reducing the reliance on third-party service providers. Occasionally specialist engineering and construction contractors are used on a number of the Groups projects to meet specific delivery needs. This risk is mitigated through a robust and fully audit-trailed selection process, which includes fact-based analysis of thefinancial and operational viability ofpreferred supply chain partners. Thelist of preferred suppliers is also regularly reviewed to ensure all third-party materials and services providers are complying fully with Group procurement and operating standards, applicable laws and industry regulations.

    Accountability also rests with the individual project leaders in cooperation with the commercial and finance functions. Critical subcontractors and suppliers are assessed for financial robustness before being contractually engaged. Full contingency planning is also undertaken.

    The Group also ensures that it adheres to contractually agreed payment terms to avoid heightening this risk. The Group suffered very few supplier failures in the year under review despite the difficult trading conditions in the construction industry. However, bankruptcies are more likely the longer difficult trading conditions persist. Therefore, as the Group executes its diversification strategy and introduces new suppliers in this respect, supply chain risk will need careful management in the future.

    Risk management continued

    Laing ORourke|Annual Review 2012 5352 Laing ORourke|Annual Review 2012

    Brand reputation

    Description:Protection and enhancement of the Groups brand reputation with clients and stakeholders directly affects its ability to tender for projects in specific sectors and markets to secure a future pipeline of prestigious projects and client relationships. It has very clear principles governing the way in which itconducts its business and expects allemployees and partners to act in accordance with its published code ofbusiness ethics and established systems and processes.

    Impact:Delivery delays, poor asset performance post-handover, industrial accidents or stakeholder dissatisfaction, failure to prevent acts of fraud, bribery, corruption

    or anti-competitive behaviour can all adversely impact corporate reputation.

    Mitigation:Mitigation occurs at every level of the governance framework in accordance with our published Global Code of Conduct. The Groups internal control environment is designed to promote policy adherence and prevent unlawful activities. Continuous awareness programmes ensure high levels ofunderstanding of the Groups expectations and individuals obligations.

    In addition, we use a range of strategic advisers to protect and enhance our brand and reputation in the eyes of keybusiness influencers and opinion formers. The Group also implements a

    defined sustainability agenda furtherinformation can be found onpages 31 to 45.

    At an operational level it employs a rigorous branding methodology, and has mandated a consistent set of marketing and business development guidelines in the tendering stages to ensure consistency of presentation ofbrand and visual identity attributes.

    The LOR Way (Core and Enabling Processes) has been mandated across all global project sites to ensure a standardised approach to project delivery based on project controls and a continuous improvement loop, helping to reduce the risks associated with poor or non-delivery.

    Security and business integrity

    Description:Laing ORourke is committed to protecting human and financial capital, and safeguarding the communities in which we operate.

    Impact:Failure to prevent acts of fraud, bribery, corruption and anti-competitive behaviour have potential impacts which

    include financial loss, prosecution, fines, penalties and reputational damage.

    Mitigation:The Group has very clear codes of business conduct underpinned by prescriptive policies detailing the manner in which it conducts business and expects employees to act in accordance with the Groups vision and principles. Communications awareness

    programmes ensure continual visibility and understanding across the Group.

    Implementing robust security and fraud control systems safeguards the business against activities that would put it at risk. We specifically concentrate on preventing abuse of intellectual property, confidential company data and threats to the physical security of our personnel and assets.

    Group performance

  • Laing ORourke|Annual Review 2012 5554 Laing ORourke|Annual Review 2012

    market entry last year, the Group believes it can further build on its position by targeting growth in core construction and infrastructure sectors, using our balance sheet to support bids on a number of key projects in 2012/13 and beyond.

    Middle EastIn the Middle East, the United Arab Emirates market remained subdued, although we are optimistic that our long-term presence in the region, coupled with the goodwill that has been generated by remaining there, despite the severity of the downturn, will stand us in good stead when the upturn happens. Growth opportunities are emerging in Qatar, as the government continues to convert the wealth generated from the worlds third largest reserve of natural

    gas into infrastructure development to stimulate broader trade links with the region and diversify its economic growth. The award of the FIFA World Cup tournament in 2022 is also presenting a strong pipeline of contract opportunities in the delivery ofmajor stadia and infrastructure, the attractiveness of which will depend ontheprocurement routes adopted.

    Strategic prioritiesThe Group is one of the leading engineering and construction solution providers in its chosen sectors. Our aim isto leverage the scale and efficiencies ofour vertically integrated delivery businesses and our competitive advantage in Design for Manufacture and Assembly (DfMA), while optimising

    the value of our supply chain relationships to deliver projects on time, on budget and to anunrivalled level of quality. We will complement this approach by building leading positions in selective growth-oriented sectors and territories with theright strategic and cultural fit.

    We will increasingly pursue multidisciplinary projects which encompass the full range of our service offering from programme management, civil and structural engineering, manufacturing and construction services, mechanical and electrical engineering andoperational maintenance. These increasingly large and complex infrastructure-based projects offer greater 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 the Groups focus will remain inCanada and selected regions in the Middle East, where the pipeline of opportunities, preferred procurement routes and working practices all play toour core strengths as an integrated construction provider.

    Financial performanceThe Hub sustained a strong managed revenue performance of 2.8 billion (including share of joint ventures and associates), up 65 million on the previous year (2010/11: 2.7 billion), withpre-exceptional earnings before interest and taxes of 82.8 million (2010/11: 67.1 million). The managed revenue and profit outcomes were made up of good performances in our core construction and social infrastructure businesses which benefited from our integrated delivery model, backed by access to the UKspremier offsite manufacturing and modular assembly capabilities. Margin performance declined slightly as previous higher-margin negotiated projects have reverted to market levels driven by the increasingly fierce price competition strategies being pursued by several providers. The average size of projects has also reduced, which clearly reduces margin potential relative to the larger programmes of work previously available.

    Financial highlights

    Managed revenue

    2.8bnOrder book

    5.5bnGross margin

    12.7%

    Hub performance

    MarketplaceUKAs previously forecast, there was an overall contraction in core UK construction and infrastructure markets during the year under review, with lower volumes of available work caused by the dampened expectations of the UK Governments comprehensive spending review and the continuing fiscal pressures in the Eurozone adversely affecting confidence levels in the UK. This caused inevitable reductions in previously buoyant sectors like health and education, where margin pressure increased as competitors chased feweropportunities. Despite these macro-economic issues, there was ongoing investment in well-established schemes, including Crossrail, and continuing optimism surrounding the nuclear new-build programme, both of which remain attractive to the Group. The UK chancellors autumn statement did bring some positive signs that public sector capital investment programmes willrecommence, with the commitment to High Speed 2 the most notable expression of this intent. The 2 billion Private Finance Initiative-backed schools programme, albeit in a different PFI format to previous models, and thepreviously announced National Infrastructure Plan, with over 500 potential projects with an estimated value in excess of 250 billion over five years, represent a significant pipeline of opportunity for the Group over the medium term.

    In this type of market environment, theGroups operational diversity is a significant strength, allowing us to better optimise our assets through mobilisation into higher-performing markets. At the same time this provides revenue protection from an over-concentration onany one market or sector.

    The subdued private-sector investment environment carried over from the previous year, particularly in the UK, although the commercial office and mixed-use sector did start to show some signs of recovery within the M25 region of the South East of England, with a number of prestigious schemes coming to market in the period. This plays to the Groups unparalleled strength in building and structural engineering capabilities. It is still too early to predict with any certainty if these early signs of recovery will evolve into a more sustained period of growth.

    InternationalCanadaIn Canada, the Alternative Financing Procurement (AFP) market, which shares many characteristics with the Public Private Partnership approach in the UK, continued to be an important driver of growth, particularly in Ontario and Quebec, where both state governments have announced comprehensive plans to invest heavily in long-term programmes for social infrastructure, energy and rail in particular. Following our successful

    1 2 3

    Senior management

    1. George RoseChairman, Europe Hub

    2. Roger Robinson Chief Executive Officer, Europe Hub

    3. Paul Collins Finance Director, Europe Hub

    Managed revenue(%)

    1 Europe Hub 65%2 Australia Hub 35%

    1

    2

    Near-term priorities

    Leverage the benefits of DfMA and our integrated approach todelivery

    Selectively extend our international reach into markets with the right strategic fit

    Enhance engineering capabilities to meet increasingly complex client demands

    Reduce controllable costs to industry-leading levels

    Drive our Mission Zero safety strategy relentlessly

    We have increased the quality anddiversity of our project portfolio by focusing our attention on opportunities where we can bring our engineering, manufacturing and direct delivery skills to bear and create sustainable returns.Roger RobinsonChief Executive Officer, Europe Hub

    Europe Hub:Abu Dhabi, Canada, Dubai, Saudi Arabia and the United Kingdom

    Hub performance

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    Hub performance

    1

    4

    7

    2

    5

    8

    3

    6

    9

    Despite these market factors, the Hub posted a strong operational performance which helped to offset the changing market dynamics. This was, in part, as a direct result of the collective benefits of a number of contracts in the final stages of delivery or completing during the period, with favourable out-turns triggering bonus incentives in some cases, the most notable being the successful programme management of the London 2012 Olympic and Paralympic stadia and parkinfrastructure.

    The deployment of our mandated DfMA optimisation strategy has also helped us maintain operating margin at the project level which would have otherwise come under pressure from supply-chain impacts. This has allowed us to avoid bidding forlower-margin work at a time when competition in the market remains intense. We further tightened our selectivity criteria, basing our UK activities progressively around our DfMA methodology and integrated delivery model.

    The performance was also helped by acontinued focus on controllable cost reduction as parts of the construction business rescaled its support activities inline with the prevailing market demand, helping to reduce overhead strain. Our infrastructure business had a solid performance overall, although a small number of projects did impact negatively on profitability.

    The Hubs year-end order book was 5.5billion, with 2.9 billion of new work secured during the period, providing good visibility of future earnings. We have stepped up our efforts to rebuild the future pipeline beyond 2013, achieving a number of prestigious contract wins. Inaddition, at the year-end we had a pipeline of in-bid opportunities worth approximately 3 billion.

    Operational performanceSafety remains the Groups number-one priority. During the year the Hub maintained its industry-leading safety performance, posting an Accident Frequency Rate (AFR) of 0.12. This equates to a business that isconsistently working more than one million working hours between reportable accidents, which ranks the Group alongside the very best in our industry.

    This excellent safety performance is one of many benefits we derive directly from

    Our approach to business development and work-winning has 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 permit to bid governance procedures in the tendering stages is proving highly effective in securing profitable work as the continuing strength in our order book has clearly demonstrated. This strategy was accelerated by the integration of our in-house cost planning activities to maximise the return on the investment we aremaking in state-of-the-art Building Information Modelling technologies.

    We continue to be committed to the human capital agenda and sustained investment levels in the development of our workforce. Our recently published employee engagement score marks LaingORourke 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 exists across the Group. We also continued to support the Australia Hub by recruiting and exporting sector expertise to seize the significant 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 wefurther enhanced our reputation for world-class client solutions on time, on budget and to the exacting quality, safety and sustainability standards demanded.

    BuildingIn our core construction business we continued to deliver essential social infrastructure to transform the health and education services footprint for many communities across the UK. This included the commencement and completion of major construction phases of complex hospital, healthcare and medical research facilities across the UK, including the future-proofed Forth Valley Royal Hospital in Scotland, the main hub and ward buildings at the North Staffordshire Hospital and the final phase of the Tunbridge Wells Hospital in Kent.

    We made further progress in generating profitable revenues from framework agreements. Over the year we completed

    our integrated business model. By controlling delivery of the major work packages on a project through the use ofin-house resources, our construction leaders directly influence 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 number of new initiatives were launched to support our Mission Zero objective, to eradicate all lost-time incidents from our business by 2020. A number of our clients are also seeing the direct benefit of our approach, and we are beginning to see tangible examples of this behaviourally based methodology being more widely adopted across the industry.

    Our core UK-based engineering and construction businesses all performed

    significant milestones on the Designed for Life: Building for Wales healthcare framework, a scheme which offers the Group good revenue visibility over its lifetime. Successes included handover of the emergency care unit at Prince Charles Hospital in Merthyr Tydfil and additional contracts secured at Cardiff Royal Infirmary. We also secured major works packages at Bristol Royal Infirmary and the extension to the Bristol Royal Hospital for Children, working collaboratively with the commissioning health authority to support approval of the funding business case by the UK Department of Health.

    Similarly, we continued to deliver state-of-the-art school facilities for local education authorities under existing Building Schools for the Future (BSF) frameworks across both the north and south of England, inSalford, Barnsley, Newham and Barking and Dagenham. A particularly noteworthy performance was Dagenham Park Church of England Schoolwhich set new milestones in quality and energy efficiency against adelivery programme that achieved a50per cent time reduction against the original schedule.

    in line with expectations, generating strong cash flows, and continuing to deliver tothe bottom line despite the ongoing market difficulties. The 2011/12 reporting period has been a year of steady improvement at Explore Industrial Park, with a concerted focus on the productivity, quality and safety of our operations. Wedoubled production volumes with a corresponding 40 per cent improvement in labour efficiency, as clients increasingly recognise the incremental value offered by our Design for Manufacture and Assembly proposition. We still have a long way to go to achieve wide scale adoption, but the direction of travel is positive.

    We have also added to our capabilities incomplex geotechnical solutions to support project delivery activities and provide competitive advantage in the bidding of new opportunities.

    We further developed our market-leading sustainable schools proposition based onthe UK Department for Educations challenge to create education infrastructure faster, better and for considerably less than the previous scheme. The solution will leverage the Groups unique in-house manufacturing capability to deliver school facilities that are predominantly constructed off site for rapid onsite assembly, achieving a minimum 30 per cent saving in unit cost, with greater savings achievable forlarge multi-school build programmes. Theunprecedented air-tightness of thesestructures makes them incredibly energy efficient and we are now actively marketing this value proposition with local and central government departments, and are confident that it will lead to a wider recognition of the flexible application of DfMA techniques to a range of public-sector construction requirements. For these reasons we are confident in our ability to secure work on large parts of the 2 billion PFI priority schools programme.

    We benefited from the first fragile signs ofrecovery in the UK commercial property sector, particularly in central London during the year, with the award of the

    Hub performance continued

    1. Howard Shiplee, CBE Programme Management Leader

    3. Nick DownBusiness Unit Leader, Middle East

    5. Mark RichardsonHead of Human Capital Management

    7. Mike LewisBusiness Unit Leader, Crown House Technologies

    9. Philip WainwrightBusiness Unit Leader, SelectPlant Hire

    2. Paul Lynchehaun Health, Safety and Environment Leader

    4. Andrew JacksonBusiness Unit Leader, Canada

    6. Andy CromptonBusiness Unit Leader, Infrastructure

    8. Callum TuckettBusiness Unit Leader, Construction

    10. Paul GrammerCommercial Leader

    Trinity, Leeds, UK

    This 350 million Land Securities development inthe heart of Leeds was the first major retail project to get the green light after the start of the recession. With a build period of three years, when complete it will be home to more than 120 retailers and restaurants.

    10

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    Hub performance

    Hub performance continued

    prestigious contract to build the iconic 122 Leadenhall Street in the heart of the City of London for clients British Land and Oxford Properties. This followed a hard-fought contest, in which our appointment was, to a large extent, based on the innovative use of Building Information Modelling and the extensive adoption of preassembly techniques to significantly enhance programme efficiency through a material reduction in the delivery schedule and waste volumes, without any compromise on quality or safety.

    During the year we also commenced the transformation of Manchesters iconic Grade II-listed Central Library and Town Hall, a complex combination of refurbishment, restoration and significant contemporary enhancements to a 1930s landmark. Working closely with English Heritage, the contract is already delivering economic benefits to the surrounding communities, including the creation of 66project-initiated apprenticeships and aprocurement model that directly boosts local businesses.

    InfrastructureThrough our infrastructure business we continued to take advantage of the investment opportunities in the key sectors of power, rail and utility networks in particular. We underlined our expertise

    We were recently appointed preferred bidder with our partner Bouygues TP for the main civil engineering works package at Hinkley Point C.

    The decision by Horizon (a joint venture between E.ON UK and RWE Npower) tocancel its investment on the Wylfa B Project in Wales and withdraw from future participation was disappointing news. However, our strategic partnership with Toshiba Westinghouse and Shaw is supporting the UK Government to explore alternative funding sources to help secure the much-needed energy security required by the UK over the longer term.

    for working in live air environments by meeting and, in some cases, exceeding significant delivery milestones at Heathrow Terminal 2A, despite the challenge of keeping the adjacent air infrastructure operational throughout the project.

    In rail we continue to be engaged on threeof the UKs largest commuter railprojects for Crossrail, Manchester Metrolink and Edinburgh Trams. We are pursuing further opportunities on these schemes and with Network Rail, where we have established strong working relationships with the client organisations. Crossrail provided our largest contract award to date on this scheme, when wewere awarded the construction of Liverpool Street Station and Tottenham Court Road with intensive construction work planned to commence later in 2012.

    A significant completion in the period was Cannon Place, which won the prestigious Institution of Civil Engineers 2012 London Building Award. Engineering challenges on this complex project included constructing over and around two important live railway stations, above a London Underground tunnel structure, on a site of significant archaeological interest.

    The UK water and wastewater market isalso strategically important to LaingORourkes plans and we are

    Programme managementAs a leading influence in the CLM consortium, our programme management team successfully completed delivery on the London 2012 Olympic and Paralympic Park, producing another exceptional operational performance with commissioning and handover completed to schedule and on budget. The exemplary record of achievements over the course of this project has provided aglobal showcase of the British construction industry. We have been leveraging the experience and reputation gained on this scheme by actively marketing our programme management services in new markets, including the

    currently designing and delivering complex sewage treatment infrastructure at Beckton and Crossness for Thames Water. Both projects received Royal Society for the Prevention of Accidents (RoSPA) Gold awards in 2012, and were also commended by the Considerate Contractors Scheme, and the client, Thames Water, for the exemplary health and safety performance and community liaison initiatives employed.

    Regulated markets are less cyclical andthe margin potential less volatile andwe have made senior leadership appointments to access these markets. We are formalising our delivery business capability in utility networks, like power distribution, where we already possess significant expertise backed up by the technology platforms, specialist plant andequipment needed to efficiently deploy and manage resources on the multidisciplinary programmes of work typical of these markets.

    Similarly we launched our targeted offer infacilities management during the year and gained our first contract with Barking and Dagenham Schools, utilising the expertise gained in advanced delivery techniques, visualisations and commercial and technical data gained in the design and construction phases of a project to provide the client with a whole-of-life offer.

    As the UKs port capacity continues to increase, Laing ORourkes engineering skills are leading the construction of Europes newest and largest deep-water development at London Gateway Port.

    The Groups strategic growth plans are predicated on establishing a significant delivery presence in the buoyant global energy sector; therefore the UKs investment plans to replace ageing power generation infrastructure with a fleet of new nuclear plants provides high earnings potential. We are one of only a few UK contractors with the specialist direct delivery capabilities and reputation for quality needed to perform to the exacting standards of the nuclear generation, processing and storage industry.

    Pan Am Games in Ontario, Canada. The Olympic Delivery Authoritys Director of Construction, Howard Shiplee, joined the Group during the year to lead our drive inprofessional management services.

    Specialist servicesOur Crown House Technologies business added significant offsite manufacturing capacity during the year, opening a new facility at Oldbury in the Midlands. Since coming on-stream ithashad early involvement in the preconstruction phase to deliver the mechanical and electrical infrastructure at Heathrows Terminal 2A. Over 300 complex riser modules, covering 31,000 cubic metres of building services,

    Beckton and Crossness Sewage Treatment Works, UK

    Using an innovative DfMAsolution for the aeration and final settlement tanks, Laing ORourke is leading the project to upgrade existing facilities and build new capacity at one of Europes largest sewage treatment works on opposing banks of the River Thames at Beckton and Crossness. The project is on track to hand over to the client by the end of 2012 under budget and an impressive three months ahead of Thames Waters deadline.

    Bristol Royal Infirmary, UK

    Laing ORourke signed acontract in 2011 to redevelop the Bristol Royal Infirmary and construct the extension tothe Bristol Royal Hospital for Children, aspart of the Building a Better Bristol programme to offer the highest standard of clinical care in the region.

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    Hub performance

    The Francis Crick Institute, London, UK

    Laing ORourke is constructing The Francis Crick Institute, and is scheduled to complete the project in 2015. Workon the shell started in June 2011 and will take two years to complete. In line with our commitment to considerate construction, representatives from local community groups are regularly consulted on thebuild programme to ensure any issues are quickly resolved.

    Hub performance continued

    have been designed and manufactured, and are currently being installed by a combined Crown House Technologies and Select Plant Hire team, creating the main distribution system within the terminal. They also consolidated their market-leading position in business data solutions, handing over a30,000 square metre tier-four rated data centre, just20 months after the project commenced, to one of the worlds leadingfinancial institutions.

    Our Select Plant Hire business also had asuccessful year providing a range of innovative heavy plant and lifting solutions, including the tower crane fleet and expertise that is making possible the construction of Europes tallest structure, the Shard, in central London.

    infrastructure solutions provider and a developer, to ensure we have the right sponsorship arrangements in place for successful market entry.

    The longer-term outlook for the Middle East remains positive with global demand for oil and gas continuing to increase, and we expect market activity to start to show signs during the coming year. Laing ORourke has an outstanding track record of delivering high-quality projects in the region, including the Atlantis Hotel, Dubai Airport and the Al Zeina residential and mixed-use development on Al Raha Beach in Abu Dhabi.

    Therefore, as global confidence returns, we believe the number of planned projects expected to come to market willincrease, with the most active market being Qatar, where we are focusing our attention. With our strong brand recognition and track record spanning over three decades in the region, Laing ORourke is well-positioned to benefit when the upturn happens. Wehave maintained our core construction and support services capabilities in the region, with new leadership to bring greater market knowledge to our opportunity selection process.

    CanadaWe believe we can establish a strong business in Canada that over time could contribute a material proportion of the Groups revenue and earnings volumes. The construction industry, in terms of gross domestic product (GDP), is similar in size to the UK and continues to grow, supported by strong political belief in the strength and viability of the Alternative Financing Procurement (AFP) market. Forthe five-year period beginning 2012, we expect the Canadian construction market to maintain year-on-year growth ofover four per cent.

    AFPs, particularly in Canadas healthcare sector, play to one of the Groups major strengths of undertaking complex financing arrangements. 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

    The Middle EastOutside the UK, we are still active, but to asmaller scale than in previous years in Dubai and Abu Dhabi, and will only cautiously pursue opportunities that meet our rigorous financial requirements. Dubai remains heavily constrained by continued debt-restructuring and the negative impact of a stagnant global economy. While Dubais well-publicised property collapse has had wider growth implications across the region, a more measured development approach is evident in Abu Dhabi, Sharjah, Qatar and Oman. This is supported by resurgent oil and gasprices, continued investment, and increased output from the regions LNG producers. Qatar in particular represents new growth prospects for

    investors like Laing ORourke. As an integral part of the international consortium, CHUM Collectif, Laing ORourke commenced delivery of Canadas largest Public Private Partnership (PPP) healthcare scheme and the worlds second largest hospital the Centre Hospitalier lUniversit, Montral as a major investor and delivery partner.

    OutlookOver the past year we have accelerated Laing ORourkes strategy to differentiate our offering as an integrated engineering and construction provider through the deployment of our proven Design for Manufacture and Assembly delivery approach. We will continue to progress this strategy in 2012/13 seeking an opportunity pipeline that maximises the

    Laing ORourke, with a major programme of development for the 2022 FIFA World Cup, including stadia and supporting infrastructure, where the Group has asignificant track record of delivery.

    During the year Austrak, the Groups modular rail track work business, established a manufacturing facility inDubai to design and manufacture concrete sleeper track panels for export to Australia to support the rapid growth inour commuter and heavy-haul rail delivery businesses there.

    Elsewhere in the region there is emerging visibility of the opportunity pipeline as client conversion of projects gathers momentum. We have established a joint venture partnership with a leading Qatar

    client benefits of our integrated business model and engineering expertise. In parallel, we will continue to serve our existing clients effectively through Excellence Plus performance on their projects.

    The UK public sector will remain challenging, although we believe a number of infrastructure investment programmes will commence over the next12-month period to provide the required improvements to the built environment and act as a stimulus to economic development in the lead up tothe next general election. Priority sectors will remain power, transport, utilities and commercial buildings, wherewe have significant competitive advantage over both our domestic andinternational competitors.

    Manchester Town Hall Complex, UK

    In September 2011, LaingORourke and ManchesterCity Council agreeda 95 million programme of works that will transform two Grade II-listed architectural icons, Manchester Town Hall and the Central Library, into a unique 21st century public services complex.

    Sharjah Malls, UAE

    Laing ORourke is constructing two shopping malls for retail group Majid Al Futtaim, which are scheduled for completion in summer 2012. Precast concrete structural members and walls were used, alongside Crown House Technologies preassembled modular mechanical systems.

  • Laing ORourke|Annual Review 2012 63

    and true multidisciplinary capabilities. Laing ORourkes established presence inAustralia means it is well-positioned topursue a number of resources and transport-based infrastructure and building projects as they come to the market over the coming years.

    InternationalHong KongFollowing the Groups successful entry into the Hong Kong construction market in 2010, the competitive environment toughened during the year in review, as incumbent construction providers pursued more aggressive bidding strategies

    to counter new market entrants. This was expected behaviour and the Group prioritised delivery of existing rail projects to support reputation-building in the region.

    As Hong Kong seeks to build much closer trade links with the Chinese mainland, the importance of infrastructure in the next tenyears is undeniable, with the share ofinfrastructure projects set to rise from 20 per cent to 40 per cent of the total construction market by 2017. As a series of major infrastructure projects comes to market during this period, the Group continues to believe it is well-placed to take advantage of the opportunity pipeline on a selective basis.

    Strategic prioritiesLaing ORourke has had a presence in Australia since 2004, strengthening its position with the acquisition of the Barclay Mowlem construction business in 2006. We are now an established tier-oneengineering and construction group providing design, delivery, operation and maintenance services to the building, infrastructure and resources markets. The Hub is integrating the global capabilities of the wider Group to provide a differentiated infrastructure proposition relative to the incumbent construction providers, based on quality, delivery surety and innovation.

    Over time we will grow a diversified project portfolio based on taking leading positions in carefully targeted geographies and sectors, predominantly in mining and materials handling, oil and gas, rail, power and building, where demand is being driven by the growing requirements of thenew-world economies adjacent to theregion, and the domestic growth this is fuelling.

    We are creating and fostering a culture of controlled autonomy to attract and retain the very best people through encouraging and rewarding high achievement. Wecall this Excellence Plus performance. This approach occurs within a robust governance framework where clear policies and codes are set guiding financialperformance, business conduct, risk management, health and safety, sustainability and people development.

    Financial performanceThe year in review proved to be another challenging one for the Australia Hub as we continued to take the decisive actions necessary to close out the performance issues on legacy projects. Simultaneously we accelerated the pace of operational integration and growth in a business that we believe will become a significant revenue and profit generator over the long term. The Hub is focused predominantly on delivering solutions in the building and heavy infrastructure markets where Laing ORourke has quickly established a strong brand and reputation. It has the necessary critical mass to satisfy the qualification criteria of some of the worlds largest resources-related companies, and where it is backed by the international skills base, financial and operational assets ofan increasingly globally focused parentorganisation.

    Managed revenue for the year was 1.5 billion (2010/11: 1.3 billion), with a pre-exceptional loss before interest and tax of 28.8 million (2010/11: 15.8 million loss). Although revenue levels were

    Financial highlights

    Managed revenue

    1.5bnOrder book

    2.7bnGross margin

    3.7%

    Hub performance continued

    MarketplaceAustraliaThe Australian economy continued to outperform every other major advanced economy, driven primarily by the continuing demand for the regions natural resources wealth. The main engines of this growth were the mining sector and the accelerating capital investment of the oil and gas producers, as they continue tocater to the voracious appetite for minerals and energy of the new Asian industrial powerhouses.

    Public-sector investment did scale back from the peaks seen in the last two years as state governments implemented austerity measures to balance budget deficits, however, public sector spending in real terms will continue to stay well above the historic levels of the last few decades. As a result, the social infrastructure sector, particularly in health, remained buoyant, as a number of major new hospital schemes came to market, although educational construction dropped back as the Building the Education Revolution programme and other stimulus works of 2009/2011 concluded.

    Taken together these trends reflect the Australian construction markets compound growth range of between four and five per cent per annum, with the key drivers being investment in resources for

    energy and manufacturing purposes, the transport infrastructure to support it, utilities infrastructure, particularly in thegas pipeline and water sectors, healthcare, and slow recovery in the commercial property sector.

    In the transport sector, growth continued in heavy-haul rail, port and, airport capacity alongside the continuing infrastructure improvements being made to the various state passenger rail networks. In mining, Chinas, Indias and, to a growing extent, Brazils reliance on imports of higher-quality coking coal and iron ore also continued during the year, with the corresponding increase in the capacity required to extract, process, handle and transport these record volumes. Unsurprisingly the value ofconstruction work in these sectors increased, providing a valuable pipeline offuture opportunities for the Group.

    In the oil and gas markets the massive AUD$40 billion Chevron Gorgon and AUD$32 billion INPEX/Total Ichthys LNG projects commenced during the year, and the Group successfully targeted multiple opportunities with these immense gas facilities, including the relatively new specialism of advanced worker accommodation villages.

    Australias forecast growth in key construction sectors plays to the Groups diversification strategy, core engineering

    1 2

    Senior management

    1. Jim Sloman Executive Chairman, Australia Hub

    2. Steve Hollingshead Chief Executive Officer, Australia Hub

    3. Mark WilsonFinance Director, Australia Hub

    Managed revenue(%)

    1 Australia Hub 35%2 Europe Hub 65%

    1

    2

    Near-term priorities

    Pursue a selective project procurement strategy to provide balance sheet resilience

    Strengthen the efficiency andintegration of the core delivery businesses

    Continue investment focus on rail and infrastructure

    Attract, grow and up-skill our professional capabilities, including the direct workforce, to meet growing demands of clients

    Drive our Mission Zero safety strategy relentlessly

    We tackled the years challenges head- on and have positioned the business well to take advantage of the strong growth opportunities in the next phase of Laing ORourkes development.Steve HollingsheadChief Executive Officer, Australia Hub

    Australia Hub:Australia, Hong Kong, New Zealand and South East Asia

    Hub performance

    3

    62 Laing ORourke|Annual Review 2012

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    Hub performance

    5

    1

    4

    2 3

    6

    sustained, rising slightly over the previous year, profit performance fell short of its budgeted target. This outcome was impacted by anumber of events that suppressed the headline figure. These included a series of delays in contract schedules due to industrial relations tensions and labour disputes, plus client contract interruptions caused by economic uncertainties and compliance issues associated with major infrastructure development. This was compounded by the legacy commercial terms on historical contracts procured prior to 2011, as well as costs related tothe completion of the organisational and procedural restructure of the business to better support the opportunity pipeline in high-growth, high-margin sectors.

    The aggregate impact of these events was a material contraction in the gross margin rate to 3.7 per cent (2010/11: 9.7per cent). Investment costs associated with resourcing major bidding activities ingrowth sectors like healthcare, mining,and oil and gas also increased administrative expenses. We believe the underlying performance justifies our focuson higher-margin heavy engineering sectors, while maintaining a lean overhead at the corporate and project delivery levels. Weexpect to deliver an enhanced gross margin performance in the next financial period as a consequence of ourfocus oncost efficiency and strict discipline in project selection and the procurement approach.

    The Hubs year-end order book stood at 2.7 billion, with the bulk of the new work awarded in the year provided by mining, port-side minerals-handling and oil and gas infrastructure, including valuable repeat client business, with 85 per cent of budgeted work secured for the year ahead. Since the year-end we have been

    sleeper production capacity by taking advantage of our manufacturing presence in the Middle East. The new Austrak factory in Dubai is operational and has already exported tens of thousands of precast products back to Australia to meet growing demand. The Group is also exploring opportunities to promote this business in African markets where growth in mining and natural resources infrastructure is gathering pace.

    One of the key constraints in the Australian construction industry is the shortage of engineering professionals andskilled operatives. The competing dynamics of huge construction-related investment, vast geography, and a relatively small population are all serving tocompound the issue. Laing ORourkes progressive human capital agenda has proved highly effective in mitigating this risk to the Groups operations. In-house mobilisation of talent, creative campaigns

    awarded additional contracts, and the pipeline is set for strong growth as we take advantage of major opportunities launching over the next 12-month period. The full deployment of the Group-wide governance model for procuring and delivering work across all business units and functional disciplines, known as Core and Enabling Processes, is already having a positive impact although it will take several years for the full benefits of this system to be fully realised.

    Operational performanceDuring the year we continued the reorganisation of the core business inAustralia to accelerate the pace of integration of our operations, and leverage the advantages of common systems and processes at a corporate level. Having now achieved critical scale and sector-based brand recognition in these markets, the focus in the year has been on increasing the efficiency of our operations, particularly the pricing of risk during the procurement phase, as well as in the construction delivery phases on projects.

    A number of changes occurred at a senior management level during the financial

    to support our recruitment drive, the attractiveness of our innovative training and development programmes, our unrelenting focus on the health and safety of our workers, the broad career opportunities we can offer new hires, and the innovation our brand is synonymous with are all proving to be key differentiators in the war for talent intheregion. We are increasingly being recognised as a natural career destination for world-class engineers inour majorsectors.

    During the year the business completed the full adoption of the Groups behaviourally based safety programme, Mission Zero, which has proved hugely successful in reducing the rolling Accident Frequency Rate (AFR) to industry-leading levels in the Europe Hub. Health and safety remains a core business value. Itisan area where we simply will not countenance compromise and have

    year and beyond. The Board is confident that the senior team now assembled in the Hub is providing a stable base on which to build and capitalise on the significant growth opportunities that lie ahead. The team, under Chief Executive Officer Steve Hollingsheads experienced leadership, has achieved a better span of control andconsistency across the various geographic regions where it operates. This has been underpinned by full deployment of the necessary Core and Enabling Processes and supporting governance to provide the checks and balances in the bidding, securing and delivery of projects.

    Our business is underwritten by the quality of the buildings and infrastructure we deliver. Therefore our near-term priorities are focused on globally exploiting our in-house engineering and manufacturing capabilities, in particular our Design for Manufacture and Assembly (DfMA) methodology, to create real competitive advantage through the project delivery phases, where time, cost and quality are the key determinants of repeat client business. During the year we took the decision to expand Austraks concrete

    therefore been increasing the resources necessary to improve site safety. Our wider sustainability programme is now firmly embedded in our operations and during the year we made significant community-level progress as the first construction group in Australia to put in place an accredited Reconciliation Action Plan (RAP) to support positive engagement with Australias indigenous population.

    InfrastructureIn rail infrastructure, new opportunities remain abundant as state budgets focus on network replacements and upgrades, particularly in New South Wales, Victoria and South Australia. In the medium to long term, continued population growth incapital cities will necessitate ongoing infrastructure investment in metro rail links, as well as in heavy-haul freight hubs,to feed the multiple demands of thesurrounding Asian industrial and manufacturing markets. Rail is a sector

    Hub performance continued

    1. Liam CumminsRegion Director, Western Australia

    4. John GreenHealth, Safety and Environment Leader

    2. Mike RobinsManaging Director, Hong Kong Region Director, Queensland and Northern Territory

    5. Annabel CrookesHead of Human Capital Management and Legal

    3. Cathal ORourkeRegion Director, New South Wales, Australian Capital Territory, Victoria and New Zealand

    6. John OConnorCommercial Leader

    Brisbane Airport, Australia

    Laing ORourke has been involved in Brisbane Airport at every development stage since the construction of the original domestic terminal 30 years ago. We are delivering a new nine-storey car park at the domestic terminal, providing 5,250 additional spaces and additional airside and ground transport infrastructure to cater for exponential passenger growth.

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    Hub performance

    Hub performance continued

    where Laing ORourke possesses truly global expertise and has a current portfolio of active projects with strong visibility of future workload.

    We are a partner in the Novorail Alliance, delivering 50 complex rail infrastructure projects valued at more than AUD$1 billion over a five-year period, as part of the capacity and reliability renewal of Sydneys rail network. We also continued work in Adelaide on a network electrification project that will be the central feature of South Australias investment programme in metropolitan public transport infrastructure. Laing ORourke is also performing multiple packages of work onthe Southern Sydney Freight Line toseparate freight and commuter rail services on the complex Sydney network. This adds to analready buoyant urban and freight rail portfolio now spanning New South Wales, Queensland, Victoria, South Australia, Western Australia, and the Northern Territory as well as New Zealand and Hong Kong.

    Resources-related infrastructure continued to be a major driver of Laing ORourkes construction work in Australia, with all major players in the

    advanced economies. With a number of schemes having received committed investment or under construction, we see huge potential in this sector. Success is dependent on the quality and strategic fitof the construction and technology alliances forged to deliver an integrated civil and process engineering solution on these complex schemes. Therefore, during the year the Group signed a number of prestigious joint venture agreements with some of the worlds leading providers ofoil and gas processing technology, creating a number of market-leading consortiums. These relationships will beinvaluable in securing major packages ofwork on the growing number of LNG schemes set to come to the market in themedium term. The most significant development in theyear was the commencement of the massive Chevron Gorgon LNG Project. Itis one of the worlds largest natural gasprojects and the largest single infrastructure project in Australia. Global infrastructure projects of the scale of Gorgon will be an important pillar of the Australian economy for the next four decades. It will naturally require outstanding levels of technological and engineering expertise, as well as a focus on health and safety and environmental controls due to its remote location in the wilderness protected zone of Barrow Island. Laing ORourke was therefore delighted to secure the contract to deliver

    coal, iron ore, alumina, liquefied natural gas (LNG) and coal-seam gas (CSG)sectors increasing their investment to meet record export demands, particularly from China and thesurrounding regions, as Asia rapidly transforms itself into the engine of world growth. Australian mining, minerals and oil and gas producers have embarked upon new projects as well as advancements toexisting infrastructure to service higherproduction levels along with the necessary pit-to-port logistics to make processing and transportation more efficient. Laing ORourke is engaged at every step of this value chain on both sides of the Australian continent.

    BHP Billiton, a repeat client of the Group,is investing in major mining-related infrastructure to construct vital rail, port and processing facilities to underpin its expansion programme. As a result we were awarded heavy-haul rail work on BHP Billitons Rapid Growth Project 5b/6a in the Pilbara region, renamed the Port Hedland Inner Harbour and Jimblebar projects. Meanwhile, 5,000 kilometres due east, the Infrastructure North business unit secured a project with the BHP Billiton/Mitsubishi (BMA) Alliance at their

    the general utilities facility located in the south east corner of the LNG site. When complete, it will comprise the permanent waste water treatment plant combined with associated bridging, power, waste and storage facilities.

    We also signed the integrated design andconstruction contract to deliver the Howard Springs Accommodation Village for the INPEX/Total consortiums Ichthys LNG project off Darwin. Mobilisation of the project is already underway. This hasbeen followed up more recently with the contract to deliver four immense cryogenic storage tanks on the same project, further showcasing our technical delivery capabilities on this strategic AUD$32 billion project. Work to construct the mainland infrastructure to support the Curtis Island LNG project for APLNG continued during the year inreview. The value of the opportunities associated withthe LNG projects being pursued by the Group is estimated at overAUD$2 billion alone, for activities such as construction of tanks, accommodation villages, transport and marine facilities andthe provision of other civil and mechanicalservices.

    In the coal seam gas (CSG) market, work on the Kenya Water Treatment Plant at Chinchilla in Queensland for client QGC also progressed well against programme during the year. This is the second of three water plants being delivered for QGC in Queensland, with the smaller

    Broadmeadow facility near Moranbah, Queensland to deliver brownfield works and extend the life of existing coal mining operations at that site.

    During the period we secured a further wharf infrastructure contract for the Port of Newcastle, to supply, manufacture, construct and install additional coal-handling facilities at what is already theworlds largest coal export terminal. Thiswill be the fourth consecutive berth that Laing ORourke has delivered to adjacent sites for the regions most prestigious consortia.

    Elsewhere in the marine sector we prefabricated and installed steel berthing components to the new Berth 7 at Geraldton Port and successfully completed the Townsville Marine Precinct, with then Queensland Premier, Anna Bligh, describing the project as a major engineering feat and a credit to all who worked on it, at theofficial opening ceremony.

    In the oil and gas sector, LNG developments in Australia and neighbouring regions share a positive long-term outlook based on rising energy demand, plus a recovery in the worlds

    Windibri facility complete and the largest of the trio Northern Water Treatment Plant in design phase. These plants all house the processing infrastructure needed to purify water released during the clients mining and capture of coal-seam gas. Theutilities sector will also provide new sources of work, particularly in water and power, where we have a considerable track record of achievement.

    Building Australias commercial property construction market remained weak although there were early signs of recovery during the financial year, driven by a gradual improvement in credit conditions and underlying demand. Despite this outlook, the Group has continued todeliver a number of prestigious developments, leveraging itsreputation asa high-quality builder, particularly intheSydney and Brisbane markets.

    During the year work continued on the McLachlan and Ann Street development in the Brisbane central business district suburb of Fortitude Valley where Laing ORourke has gainedcity council approval to develop commercial and residential towers above retail facilities as part of the AUD$250 million mixed-use development. Laing ORourke, as developer and constructor, has also completely let the Ann Street towers 19,000 square metres of commercial space, while off-plan sales have been strong, with in excess of 70 per cent ofthe 234 available

    Austrak

    The new Austrakprecast sleeper manufacturing facility inDubai became fully operational during the year and has already exported tens of thousands of products toAustralia.

    Kenya Water Treatment Plant

    A Laing ORourke and General Electric consortium is constructing a state-of-the-art water treatment plant on Queensland Gas Companys Kenya property near Chinchilla with ultimate capacity of 100 million litres per day.

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    Hub performance

    Hub performance continued

    apartments pre-sold within months of the commencement ofthe scheme.

    We also made operational progress on Brisbane Airports multi-storey car park and terminal access project, linking the terminal and AirTrain to the new parking facility, the largest of its kind in Australia.

    Neighbouring this site we are also delivering Qantas Airways new high-technology catering facility. To underline our credentials in delivering works in busy urban environments with complex stakeholder needs, we delivered the Barangaroo Headland Park early works package, preparing the Sydney Harbour site for its eventual transformation back to its pre-1836 form, as part of a centrepiece redevelopment of the CBD foreshore.

    Laing ORourke successfully completed its first Australian high-security data centre facility in Sydneys western suburbs for amultinational technology provider, once again benefiting from our globally focused mechanical and electrical expertise in high-performing facilities. We completed the Brisbane Convention and Exhibition

    During the year in review, Laing ORourke was formally awarded a major rail contract, in joint venture with Kier andKaden, to deliver the 901 SIL East Projectas part of the multi-billion dollar programme to develop a high-speed Express Rail Link between Hong Kong and mainland China to meet the demands of a growing commuter population. Laing ORourke is now delivering three major infrastructure packages for metro rail operator MTR Corporation, including two to support the massive redevelopment ofWest Kowloon and a further facility at Admiralty Station. These will prepare the Hong Kong network for connection to theExpress Rail Link into mainland China. The Laing ORourke projects have been repeatedly recognised over the period forintroducing the highest levels of safetydiscipline into the challenging, underground work programmes. Other sections of these new mass transit and fast rail links will be launched in due course and we will continue to selectively tender for work on these schemes.

    Elsewhere in Hong Kong, the local construction market is expected to grow at five per cent per annum over the next five years on the back of major public-sector transport and infrastructure programmes, designed to encourage

    Centre, which has received high praise since its official opening during the year, following recovery from significant setbacks caused by the devastating floods of the previous year. Located in a unique urban cultural and entertainment precinct in theheart of Brisbane, it is a world-class, purpose-built venue already renowned forits operational and service excellence.

    Social infrastructure, particularly in healthcare, remains an area of significant strength for the business. We currently have a number of projects under consideration, building on the Groups capabilities in social infrastructure development honed in the UK market, coupled with our unrivalled Public Private Partnership (PPP) investment expertise, working in partnership with the preeminent PPP financial advisers in Australasia. During the year we reached practical completion of stage one of a multi-purpose health facility at Winton in remote western Queensland, as well as the completion of the Nepean hospital expansion at Penrith for the New South Wales Government, delivering new wards,

    economic activity and forge better links with mainland China. With our global experience in these infrastructure markets,we believe we will continue to besuccessful in securing a share of the future pipeline of work.

    OutlookAlthough Laing ORourkes Australian contracting business has underperformed financially against expectations, senior management firmly believes the concerted actions it is instituting in the Hub will build the resilience of the business. Wewill continue to work to increase the size and strengthen the quality of the order book, while underpinning our focuson quality of delivery for clients, supporting significant growth over the second half of this decade.

    The infrastructure markets in which LaingORourke is most active will remain buoyant as private-sector investment grows in line with increasing levels of confidence. The Groups preparatory workin previous years to establish a strong presence in critical heavy infrastructure sectors like rail and resources-related infrastructure, where inward investment isforecast to peak over the coming years, provides assurances that we will be a major

    operating theatres, outpatient clinics and a chapel, helping to enhance our reputation in the sector.

    Our specialist Select Plant Hire business enjoyed another good year withhigh deployment rates on our heavy infrastructure projects, continuing to impress with its growth in the tower cranemarket, as we have done in other jurisdictions. This self-delivery capability, where we have direct control of deployment, supports the surety of delivery while advancing our drive to achieve increased site safety across ourentire project portfolio.

    Hong KongOur business in Hong Kong delivered a good operational performance, building on the high-quality joint ventures which successfully secured a number of significant rail contracts with MTR Corporation in the previous year. Weexpect Hong Kong to post solid returns for the Australia Hub over the medium term, and therefore remain confident that it will secure additional workin the next period to underpin itsfuture profitability.

    and active industry participant over the same period.

    This diversified approach will provide the necessary resilience by shielding us from the emergence of a so-called two speed economy, as growth in resource exports offsets declining levels of investment in the building and social infrastructure sectors and public-sector investment is curtailed. At the same time we believe ourclient-focused strategy will provide areal alternative to the traditional marketincumbents through a focus on engineering excellence, safety, quality anddelivery discipline.

    Chevron Gorgon LNG Project, Australia

    In 2012, Chief Executive Officer of the Australian Hub, Steve Hollingshead (left), joined with Chevron and 60 other CEOs and senior managers of companies involved in theGorgon LNG project to agree a new national benchmark for construction safety.

    Mass Transit Railway, Hong Kong

    In a three-way joint venture with leading Chinese contractors Hsin Chong and Paul Y, Laing ORourke secured a 260 million rail infrastructure contract as part of the Express Rail Link project for MTR in Hong Kong.

  • Laing ORourke|Annual Review 2012 71

    Governance

    70 Laing ORourke|Annual Review 2012

    4. Roger SeshanGroup Asset Optimisation and Supply Chain DirectorAge 41. Joined the Group and was appointed a director in January 2012. Inthis new role Roger directs the Groups supply chain relationships, organisational and asset optimisation, legal, internal audit and security. He will ensure we have the right strategic partnerships, organisational structures andasset utilisation plans in place to unlock value for the Group.

    Roger is a qualified corporate lawyer witha wealth of commercial development experience gained with Scottish Power onlarge-scale infrastructure transactions, project structures and regulatory frameworks, covering renewable, gas andcoal-powered generation. He also has over 12 years of practice experience as a solicitor and partner of an international law firm.

    Committee membership: 3,4,5,6,7,8

    5. George RoseNon-Executive DirectorAge 60. Joined Laing ORourke in September 2011 as a Non-Executive Director. Reporting to the Chairman and Chief Executive, he is Chairman of the Europe Hub and has oversight responsibility for the Audit Committee, with the objective of enhancing confidence in the integrity of our processes and procedures relating to internal control andcorporate financial reporting. Thisincludes a continuous review of our financial internal reporting systems and the workofthe external auditor. The AuditCommittee also plays a key role inenterprise-wide risk management.

    A chartered management accountant, Georges previous roles include finance director of Leyland DAF UK and subsequently director, Group Control ofDAF NV located in The Netherlands. Hewas also director of financial control and accounting at British Aerospace and went on to the new position of director offinance and treasury. Following this, George was appointed to the Board ofBAE Systems PLC as group finance director. He retired from BAE Systems atthe end of March 2011.

    Committee membership: 8,10

    Other appointments: Non-Executive Director of National Grid PLC, Genel Energy PLC

    6. Jim Sloman OAMExecutive Chairman, Australia HubAge 67. Joined the Group and appointed a director in 2010. He is responsible for strategy and setting corporate direction, as well as leading 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-profile roles in the engineering and construction industry, including Chief Operating Officer responsible for the delivery of the Sydney Olympic and Paralympic Games in 2000.

    Governance membership: 5,11

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

    7. Roger RobinsonChief Executive Officer, Europe HubAge 61. Joined the Group and appointed a director in 2009. Became Chief Executive Officer of the Europe Hub in2010 and is a member of the Group Executive Committee. Roger has a broadexecutive remit covering strategic business development and operational management across the Groups largest and most complex project delivery activities. Prior to joining Laing ORourke he was Executive Director for Construction Services and a main board member of Carillion PLC. He is a Fellow of the Institution of Civil Engineers, and has worked for major contractors throughout his career.

    Committee membership: 3,4,5,6,8,10

    8. Steve HollingsheadChief executive Officer, Australia HubAge 56. Appointed Chief Executive Officer, Australia Hub in January 2011. He is a member of the Group and Australia Hub Executive Committees. Steve has a broad executive remit covering strategic business development and operational management across the Groups most growth-oriented infrastructure markets. Steve joined R ORourke & Son Ltd in 1989 as a project manager and has held a number of senior positions in the Group over the last 20 years.

    Governance membership: 3,4,5,6,8,11

    1. Ray ORourke KBEChairman and Chief ExecutiveAge 65. Major Shareholder and founder ofthe Laing ORourke Group. He chairs the Group Executive Committee and isresponsible for leading the strategic direction and operational management ofthe 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. Rayhas a passion for developing and promoting engineering and project delivery talent to meet global construction challenges, and has a keen focus on safety performance.

    Committee membership: 1,2,3,4,5,6,8,9

    Other appointments: Non-Executive Director of Anglo American

    2. Des ORourkeDeputy ChairmanAge 63. Shareholder and co-founding director of the Laing ORourke Group. Des provides Board-level support to the Chairman and Chief Executive in the 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.

    Committee membership: 1,3,4,5,6,10

    3. Anna StewartGroup Director of Finance and CommerceAge 48. Joined the Group with theacquisition of Laing Construction by RORourke & Son in 2001. She was appointed Group Commercial Director in2004 and Group Director of Finance and Commerce in March 2010. Anna isresponsible for theGroups finance, commercial and work-winning functions, as well as supporting business development andGroup strategy formulation. She isamember of the Group Executive Committee and all of its subcommittees.

    Anna was a Commercial Director at Laing Limited, where she had been employed ina number of senior commercial and general management roles since joining as a trainee in 1982.

    Committee membership: 3,4,5,6,7,8,10,11

    Other appointments: from 1 November 2012, Non-Executive Director of Babcock International PLC

    1 5

    3 74 8

    2 6

    Senior leadership team

    Group

    The senior team has the breadth of expertise and depth of experience necessary to maintain ourstrategic focus. Despite difficult market conditions, they continued to drive implementation of our strategy, while in parallel delivering a profitable performance from our corebusiness operations.

    Committee Membership:1. Group Shareholders

    2. Board of Directors

    3. Group Executive Committee

    4. Safety and Sustainable Development Committee

    5. Human Capital Committee

    6. Strategy Committee

    7. Investment Committee

    8. Audit Committee

    9. Engineering Excellence Group

    10. Europe Hub Executive Committee

    11. Australia Hub Executive Committee

    9. Andy Friend Group Strategy Director

    10. Ceri Richards Chief Officer, Investments and Corporate Finance

    11. Chris Wilkinson Group Human Capital Management Director

    9 10

    11

  • 72 Laing ORourke|Annual Review 2012 Laing ORourke|Annual Review 2012 73

    Corporate governance

    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 recently launched Global Code of Conduct. This code provides detailed guidance on a range ofstandards, including compliance with the UK Bribery Act 2010.

    The UK Corporate Governance CodeAs a privately owned, internationally focused construction group, Laing ORourke is required to demonstrate compliance relating to a number of ways in which it is governed, covering topics laid down in the Financial Reporting Councils UK Corporate Governance Code published in June 2010. The Board and Audit Committee have considered the terms of the Code and its potential impact on the companys corporate governance procedures, and have applied the appropriate principles to ensure the Board

    discharges these governance duties within the relevant statutory and regulatory provisions of the Code. It is the view ofthe Audit Committee and the Board that the company seeks to comply as appropriate with the Code throughout theyear under review recognising the private ownership structure of the Group. The formation of the Audit Committee within the year is a further example of theprogress being made in this regard.

    Effective Board committeesThe Group operates a unitary Board structure, with one group of individuals collectively responsible for promoting thesuccess of the company. There aresignificant advantages to a diverse, privately owned organisation like Laing ORourke in operating a unitary board structure. It allows the Board to engage more quickly and meaningfully with executive-level management at the Group and hub level in providing strategic direction and entrepreneurial leadership. To ensure the Board exercises effective oversight, and is able to provide suitable resolution where any tensions or conflicts of interest may arise, appropriate reliance is placed

    on a number of subcommittees comprising an appropriate balance of executive, andmore independent, Non-Executive Directors. These committees allow the unitary Board to balance the dual accountabilities of driving the business commercially and maintaining oversight ofbusiness conduct and performance.

    1. Group Shareholders (Shareholders)

    As the Groups majority equity Shareholder, the Chairman and Chief Executive is ultimately accountable for the workings and leadership of the company on behalf of the Shareholders. He is responsible for leading and managing the business within the authorities delegated by them.

    The Groups organisation and structure is established and overseen by the Shareholders and is based on the principles of efficiency, effectiveness and control. As the diagram (Corporate Governance Framework on page 74) illustrates, the Shareholders have delegated authority to a series of standing committees onspecific matters pertinent to the successful management of the company. The Groups Shareholders areset out onpage 70.

    2. Board of Directors (Board)The Board is primarily responsible for ensuring that the Groups accounts are true and fair using suitable accounting standards and judgments, ensuring internal controls are adequate and determining whether the Group is a going concern. They also have responsibility for approving the Annual Review and ensuring compliance with Cyprus company law (where the Group is registered) and otherapplicable legislation.

    An effective Board and its associated committees are central in providing the necessary checks and balances required to operate the Groups corporate governance regime. They consist of directors with an appropriate balance of skills, experience, independence and diverse backgrounds to enable them to discharge their duties and responsibilities effectively.

    Authority for the day-to-day running oftheGroup is delegated to the Group Executive Committee. In addition to RayORourke the current members of theBoard of Directors are Christakis Klerides, Victor Papadopoulos and SteliosAnastasiades.

    3. Group Executive Committee (GEC)

    The GEC is responsible to the Board and Shareholders for creating sustainable Shareholder value through the management of the constituent businesses within the governance framework. Their role includes oversight responsibility for formulation and development of the Groups strategy, the allocation of the requisite levels of financial and human capital resources to deliver it, as well as reviewing and monitoring the performance of management, the integrity of financial information, and internal controls and risk management. The internal risk assurance function reports to the GEC on a regular basis. The members of the GEC are set out on pages 70 and 71.

    The GEC has further delegated authority to a series of subcommittees which focus on particular Group-wide functions and business units.

    Main responsibilities: The Groups overall strategy;

    Financial statements and Shareholder dividend policy;

    Material acquisitions and disposals, material contracts, major capital expenditure projects and budgets;

    Risk management and internal controls (supported by the Audit Committee);

    Succession planning and appointment implementation;

    The Groups corporate governance and compliance arrangements;

    Corporate policies.

    1 2 3

    Laing ORourke shareholders are committed to achieving corporate governance standards 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.

    In addition to Ray ORourke, the current members of the Board are:

    1. Christakis KleridesDirectorAge 61. Joined the Board in September 2007, when Laing ORourke Corporation was incorporated in Cyprus. Fellow of theUK Chartered Association of Certified Accountants. As a senior partner of KPMG he specialised in banking, finance 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 a Minister he introduced a major tax reform and oversaw the harmonisation with EU laws, the taxation, shipping and competition laws of Cyprus. Since 2003he was involved in a number of directorships in quoted companies in London, Oslo and Cyprus in financial, shipping, property and IT sectors as wellas participating in corporate governance committees.

    2. Victor PapadopoulosDirectorAge 59. Joined the Board in September 2007, when Laing ORourke Corporation was incorporated in Cyprus.

    An experienced senior banking executive, founding member ofthe London Forfaiting Company and previously Chief Executive of LFC Cyprus, spearheading the Groups trade finance and capital market operations in the Middle East and Asia, developing a substantial network of operations involving offices in Moscow, Mumbai, Bangkok and Hong Kong. In more recent times he has served on the boards of several international financial institutions and private equity groups.

    3. Stelios S AnastasiadesDirectorAge 58. Joined the Board in September 2007, when Laing ORourke Corporation was incorporated in Cyprus. A qualified mechanical engineer with a first-class honours BSc (Eng) from Queen Mary College, and MSc and DIC from ImperialCollege London. He is currently managing director of KONE Elevators Cyprus Ltd and is President of the Cyprus Lifts Association. He is also VicePresident of the Nicosia Chamber ofCommerce and Industry, and is amember of the Cyprus Technical Chamber and the Labour Court.

    Board of Directors

    Governance

  • Laing ORourke|Annual Review 2012 75

    Governance

    74 Laing ORourke|Annual Review 2012

    4. Safety and Sustainable Development Committee

    A subcommittee of the GEC, this forumensures 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 company 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 impacting safety and SD management.

    5. Human Capital CommitteeThe committee is chaired by the Chairman and Chief Executive, with members drawn from the GEC and relevant business unit and functional disciplines. The main purpose of the committee is to lead theformulation and endorsement of the Groups people and organisation agenda, and ensure total alignment with Group business strategy. The committee is also responsible for making recommendations to the Shareholders regarding remuneration levels and succession planning on an annual basis.

    Main responsibilities: Setting guidelines for the types of skills, experience and diversity of human capital necessary to achieve the Groups strategic goals;

    Making recommendations as to the composition of senior management committees and forums, including theirterms of reference, to ensure the appropriate mix of skills, experience and knowledge of the business;

    Ensuring the human resources function regularly reviews and updates talent and succession plans;

    Ensuring the necessary investment in development and education activities, including the Guns programmes and education networks to meet current and future talentrequirements;

    Oversees the Groups recruitment and resource mobilisation plans to meet operational demands in the field;

    Establishing and developing the Groups general policy on employeeremuneration;

    Determining specific remuneration packages for specialist disciplines;

    Considering legal and regulatory developments impacting human capitalmanagement.

    6. Strategy CommitteeThe Strategy Committee is chaired bytheGroup Strategy Director, and itsother members are drawn from senior management specialising in corporate development and market appraisal. Themain purpose of the committee istoformulate the Groups global corporatestrategy, and to set objectives and priorities to deliver it. In addition, it recommends the prioritisation of projects and business development opportunities, and approves funding for new ventures forultimate sanction by the GEC.

    Main responsibilities: Develop, review, assess and advise on the companys medium and long-term business strategy, having regard to theinterests of its Shareholders, customers, employees and other stakeholders before its submission forapproval to the Board;

    Monitor the implementation of the strategy approved by the Board;

    Help identify and advise management on new business opportunities outside the Groups current activities;

    Review proposed acquisitions and disposals of companies, assets and businesses (including by way of joint venture or partnership in any legal form) before submission for approval to theBoard;

    Work closely with and provide advice to the companys Chairman and Chief Executive on matters of corporate activity relating to the company or itscompetitors;

    Monitor information disclosure on issues related to strategy;

    Review the annual SWOT analysis ofthe company.

    7. Investment CommitteeThe committee is chaired by the Chief Officer, Investments and Corporate Finance, and is responsible for investment and treasury policy decisions. It oversees the commercial prioritisation of development and 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.

    Main responsibilities: Determine and agree with the Board the companys framework or broad policy for investment and monitor the implementation of the investment policy and procedures;

    Receive investment reports from management in a form approved bythecommittee;

    Monitor compliance with legislation, rules and regulations affecting the companys investment activities;

    Consider appointment of external investment advisers, managers of the companys investments and/or custodians, and approve any such appointments with the Board, including agreeing remuneration, approving engagement terms; and monitoringperformance;

    Consider all investment and divestment proposals (whether or not Board approval is also required). Where Board approval is required, the committee will make recommendations to the Board in relation to each proposal. In the case of all other proposals, the committee is authorised to approve or reject without reference to the Board;

    Approve internal processes relating to investment transactions, including the documentation required to be completed and records to be maintained;

    Review its own performance, composition and terms of reference toensure that it is operating effectively and recommend any changes that itconsiders necessary to the Board forapproval.

    8. Audit CommitteeThe Audit Committee oversees theGroups financial reporting, risk management and internal controls and provides a formal reporting link with the external auditors. The Groups external auditors are PricewaterhouseCoopers.

    Main responsibilities: Monitoring the integrity of the financial statements and formal communications relating to the Groups financial performance;

    Reviewing significant financial reporting issues and accounting policies and disclosures in financial reports;

    Reviewing the effectiveness of the Groups internal control procedures andrisk management systems;

    Considering how the Groups internal audit requirements shall be satisfied and making recommendations to theBoard;

    Making recommendations to the Board on the appointment or re-appointment of the Groups external auditors;

    Ensuring that an effective whistle-blowing procedure is in place.

    9. Engineering Excellence Group(EnEx.G)

    The EnEx.G is chaired and led by theGroups 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 uscompetitive advantage and, ultimately, drive industry-wide transformation.

    Main responsibilities: See front inlay booklet.

    The Groups businesses operate withinan established and externally benchmarked corporate governance framework that is underpinned by the Groups vision and values (see pages 20 to 23). A key function of Laing ORourkes corporate governance framework is theidentification, management and mitigation of operational and financial risks. At every governance level we ensure the necessary committee processes are functioning correctly, in line with developments in company laws, corporate governance and best practice.

    The companys governance framework isbased on the leadership principles in theUK Corporate Governance Code. Thecore 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.

    1. Group Shareholders

    2. Board of Directors

    Independent Assurance

    Independent Assurance

    13. T

    end

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    nd p

    ost

    -ten

    der

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    iew

    Bo

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    s

    14. P

    roje

    ct D

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    Rev

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    4. Safety and Sustainable Development Committee

    5. Human Capital Committee

    6. Strategy Committee

    7. Investment Committee

    8. Audit Committee

    9. Engineering Excellence Group

    10. Europe Hub Executive Committee

    11. Australia Hub Executive Committee

    12. Business Unit/ Functional Committees

    12. Business Unit/ Functional Committees

    3. Group Executive Committee

    Corporate Governance Framework

    Corporate governance continued

    The Board has clear terms of reference that reflect principles contained in the Code, and cover the following:

    Strategy reviewing and agreeingstrategy;

    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 theGroup;

    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 theperformance of the Group and theproper delegation of authority;

    People ensuring the Group is managed by individuals with the necessary skills and experience, andthat senior appointments are managed effectively.

    Group Hub Business Unit Project

  • 76 Laing ORourke|Annual Review 2012 Laing ORourke|Annual Review 2012 77

    Governance

    Corporate governance continued

    EffectivenessAll directors are advised regularly of likely time commitments and are asked to seek approval from the Board if they wish to take on additional external appointments. The ability of individual directors to allocate sufficient time to the discharge oftheir responsibilities is considered as part of the directors annual performance review process overseen by the Chairman. Any issues concerning the Chairmans time commitment are dealt with by the Board.

    An induction programme is agreed for all new directors aimed at ensuring that they are able to develop an understanding and awareness of the companys governance structure and Core and Enabling Processes, its people and businesses. Inaddition 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 isprovided for individual directors as required. The Chairman, with the assistance of the Group Director of Finance and Commerce, is responsible forensuring that directors are supplied withiPad-based information in a timely mannerthat is in a form and of a quality appropriate to enable them to discharge their duties. In the normal course of business, such information is provided ina regular report to the Board that includes information on operational matters, strategic developments, reports on the performance of Group operations, financial performance relative to the business plan, business development, corporate responsibility and client/ stakeholder relations.

    Independent assuranceThe effectiveness and integrity of the Groups governance framework is monitored by the Groups internal risk and audit function and other external advisers as appropriate. The financial statements are independently assured by external auditors PricewaterhouseCoopers. The Groups internal risk and audit function provides assurance to the Shareholders and the Group Executive Committee

    ofthe adequacy of the internal control environment across all of Laing ORourkes operations. This includes ensuring that efficient 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, the Shareholders and Board of Directors, on the financial position of the Group. Their audit opinion of the financial statements is set out on page 81 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.

    Operational governance:Project Quality Management SystemThe Core and Enabling Processes and functional toolkits are a set of standards and procedures that guide and direct The LOR Way for finding, 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 processgateways, to achieve maximumperformance and control across the entire lifecycle of a project.

    Core ProcessCore Process enables accountable business leaders to fully understand the critical sign-off procedures in bidding for and securing a project, and the formal governance approach which must beobserved to secure optimum performance. It is also a vital tool forestablishing accurate and reliable assessments of risk and opportunity incommercial, design, health, safety and environment, and Design for Manufacture and Assembly activities. Core Process is mandatory and is rigorously followed for all projects.

    A key element of Core Process is our centrally managed and governed client relationship management system Salesforce which captures key information in relation to the opportunities

    the Group is pursuing, and also acts as arepository for key documentation. Information captured in Salesforce is used across the business to aid collaboration and provide reporting at all governance levels. Opportunity pipeline information tothis 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 ProcessEnabling Process helps accountable project leaders to fully understand the minimum requirements, in terms of operational procedures, for assuring success in project design and delivery. Italso supports project leaders to ensurethat their teams have the necessary skill-sets to meet these minimum requirements, allowing them toallocate clear responsibilities to team members. Adherence to Enabling Process is alsomandatory, and it is only permissible to omit elements in clearly defined circumstances, and by specific dispensation from an accountable director.

    Key elements of Enabling Process are thefunctional toolkits, which enable accountable functional leaders and their teams to deploy current best practice procedures consistently, executing project-specific plans in an integrated anddisciplined manner. At the end of aproject, formal feedback is captured which ensures we are continually assimilating the best and most current ways of working.

    10. Europe Hub Executive Committee

    This hub-level executive committee hasprimary 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. It is also responsible for setting the strategic direction for health, safety and sustainable development activities and monitoring performance.

    11. Australia Hub ExecutiveCommittee

    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 the construction, infrastructure and specialist services businesses and key supporting functions. The committee is also responsible for setting the strategic direction for health, safety and sustainable development activities and monitoring performance.

    12. Business Unit/FunctionalCommittees

    As subcommittees of the main hub-level executive committees (10 and 11) these forums have delegated authority for the day-to-day management of individual business unit operations, ensuring the alignment of business plans with strategic targets and that operational performance is in line with, or ahead of, approved budget plans.

    13. Tender and post-tender reviewboards

    These governance forums are chaired by the commercial and project delivery leads on each tender, and membership consists of key client and delivery-side project representatives as well as accountable senior management from key finance, commercial and supporting functions.

    The review boards are responsible for ensuring the financial integrity of the project pre-delivery phase and are supported by appropriate project controls to assure the achievement of pre-agreed financial targets during all stages of construction.

    14. 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 ofallprojects, whatever their scale andcomplexity.

    Through the Core and Enabling Processes (Laing ORourkes approved business quality management system) the project boards ensure project activities are performed in linewith legislation, regulations, codes of practice and the requirements of BS EN ISO9001:2008 quality management assuranceaccreditations.

    Continual improvement is achieved through the implementation of business objectives, audits, data analysis, corrective and preventive actions andmanagement reviews.

    We continue to evolve our governance arrangements in line with the changing needs of our business strategy and the constant pursuit of best practice.

    Core ProcessA standard approach to the key business decisions and activities, delivering effective governance, organisational diligence and consistency for finding, winning and delivering projects

    Enabling ProcessBest-in-class project delivery to assure greater predictability in operational and financial performance

    Enabling Process Key contacts management Process gateway governance permission to bid

    Salesforce CRM System Opportunity pipeline tracking Key contacts management Process gateway governance permission to bid

  • Directors, Officers and Advisers

    Financial statements

    Directors R G ORourke KBE C Klerides V Papadopoulos S Anastasiades

    Company secretary

    PricewaterhouseCoopers Associates LimitedJulia 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 1st Floor 25 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

    Directors Report for the year ended 31 March 2012

    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 2012.

    Principal activities The Groups principal activities are:

    Capital Property development

    Housebuilding

    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

    A list of principal subsidiaries, jointly controlled entities, jointly controlled operations and associates can be found on pages 121 to 122 in note 38 to the financial statements.

    Laing ORourke Corporation Limited did not operate through any branches during the year.

    A review of the Groups activities and performance for the year is presented on pages 1 to 69.

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

    Results and dividends The results for the year are set out in the Consolidated Income Statement on page 82 and show a profit for the year after tax of 28.7 million (2011: 21.4 million).

    The Company paid interim dividends of 8.8 million during the year (2011: 8.8 million). The Directors do not recommend the payment of a final dividend (2011: nil).

    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.

    Payment of creditors Whilst the Group does not follow a formal code of practice, its policy for the period to 31 March 2013 for all suppliers is to fix terms of payment when agreeing the terms of each business transaction, to ensure that the supplier is aware of those terms, and to abide by the agreed terms of payment. The number of days billing from suppliers outstanding to the Group as at 31 March 2012 was 21 days (2011: 25 days).

    Directors and their interests The current membership of the Board is as set out on page 73. 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 118 to 119 in note 35 to the financial statements.

    Charitable contributions During the year the Group contributed 0.3 million (2011: 0.4 million) to its nominated charities.

    Research and development Details of the Groups research and development activities are set out in the Engineering Excellence inlay booklet.

    Risk management Details of the Groups policies and procedures for managing risk are set out on pages 48 to 53.

    Key judgements and estimation uncertainty are detailed on page 91 in note 2.24 to the financial statements.

    Financial risks are detailed on pages 112 to 117 in note 32 to the financial statements.

    Share capital Details of the Companys share capital are set out on page 111 in note 29 to the financial statements.

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

    78 Laing ORourke|Annual Review 2012 Laing ORourke|Annual Review 2012 79

    Financial statements

  • Directors Report continued

    Financial statements continued

    Statement of Directors responsibilities for the Annual Review Company law in Cyprus requires the Directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Group and of the 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 29 June 2012 and signed on its behalf by:

    C Klerides Director

    Independent Auditors Report to the Members of Laing ORourke Corporation Limited

    Report on the consolidated financial statements We have audited the accompanying consolidated financial statements of Laing ORourke Corporation Limited (the Company) and its subsidiaries (the Group) on pages 82 to 122 which comprise the consolidated statement of financial position as at 31 March 2012, 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 notes.

    Board of Directors responsibility for the consolidated financial statements The Companys Board of Directors is responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and the requirements of the Cyprus Companies Law, Cap. 113, and for such internal control as the Board of Directors determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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

    An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the 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.

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

    Opinion In our opinion, the consolidated financial statements give a true and fair view of the financial position of Laing ORourke Corporation Limited and its subsidiaries as at 31 March 2012, and of their financial performance and their cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU and the requirements of the Cyprus Companies Law, Cap. 113.

    Report on other legal and regulatory requirements Pursuant to the requirements of the Auditors and Statutory Audits of Annual and Consolidated Accounts Law of 2009, we report the following:

    We have obtained all the information and explanations we considered necessary for the purposes of our audit.

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

    The Companys financial statements are in agreement with the books of account.

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

    In our opinion, the information given in the report of the Board of Directors on pages 79 and 80 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 Law of 2009, 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.

    Androulla S Pittas Certified Public Accountant and Registered Auditor for and on behalf of

    PricewaterhouseCoopers Limited Certified Public Accountants and Registered Auditors Nicosia, 29 June 2012

    80 Laing ORourke|Annual Review 2012 Laing ORourke|Annual Review 2012 81

    Financial statements

  • Consolidated Income Statement for the year ended 31 March 2012

    Financial statements continued

    Continuing operations Note

    Pre- exceptional

    items2012

    m

    Exceptional items (note 4)

    2012m

    Total2012

    m

    Restated pre-exceptional

    items 2011

    m

    Restated exceptional

    items (note 4) 2011

    m

    Restated (1) total

    2011m

    Total revenue 3,544.6 3,544.6 3,313.1 3,313.1Less: share of joint ventures revenue (639.6) (639.6) (309.5) (309.5)

    Revenue 3 2,905.0 2,905.0 3,003.6 3,003.6Cost of sales (2,641.0) (17.2) (2,658.2) (2,697.1) (2,697.1)Gross profit 264.0 (17.2) 246.8 306.5 306.5Administrative expenses (238.9) (3.8) (242.7) (260.9) (7.2) (268.1)Other operating income 7 1.1 4.2 5.3 1.0 1.0Operating profit 5 26.2 (16.8) 9.4 46.6 (7.2) 39.4Share of post-tax profit of joint ventures and associates 15 25.5 (2.8) 22.7 Profit from operations 51.7 (19.6) 32.1 46.6 (7.2) 39.4Net non-operating income/(expense) 8 0.2 0.2 (0.6) (3.6) (4.2)

    Finance income 9 6.0 6.0 7.6 7.6Finance expense 10 (14.9) (14.9) (12.9) (12.9)

    Net financing expense (8.9) (8.9) (5.3) (5.3)Profit before tax 43.0 (19.6) 23.4 40.7 (10.8) 29.9Income tax benefit/(expense) 11 7.9 3.5 11.4 (6.3) 0.8 (5.5)Profit for the year from continuing operations 50.9 (16.1) 34.8 34.4 (10.0) 24.4Discontinued operations Loss for the year from discontinued operations 28 (1.1) (5.0) (6.1) (3.0) (3.0)Profit for the year 49.8 (21.1) 28.7 34.4 (13.0) 21.4Attributable to: Equity holders of the Parent 49.5 (21.1) 28.4 34.0 (13.0) 21.0Non-controlling interests 0.3 0.3 0.4 0.4 49.8 (21.1) 28.7 34.4 (13.0) 21.4

    (1) Re-presented for discontinued operations: see note 2.3.

    Consolidated Statement of Comprehensive Income for the year ended 31 March 2012

    Note

    Pre- exceptional

    items2012

    m

    Exceptional items

    (note 4)2012

    m

    Total2012

    m

    Restated pre- exceptional

    items 2011

    m

    Restated exceptional

    items (note 4) 2011

    m

    Restated total

    2011m

    Profit for the year 49.8 (21.1) 28.7 34.4 (13.0) 21.4Other comprehensive income after tax: Exchange differences on translating foreignoperations (3.7) (3.7) 12.0 12.0Available-for-sale financial assets (0.4) (0.4) 0.8 0.8Share of other comprehensive income of joint ventures and associates 1.4 1.4 (1.6) (1.6)Other comprehensive income for the year, net of tax 11 (2.7) (2.7) 11.2 11.2Total comprehensive income for the year 47.1 (21.1) 26.0 45.6 (13.0) 32.6Attributable to: Equity holders of the Parent 30 46.5 (21.1) 25.4 45.3 (13.0) 32.3Non-controlling interests 30 0.6 0.6 0.3 0.3 47.1 (21.1) 26.0 45.6 (13.0) 32.6

    The notes on pages 86 to 122 form part of these financial statements.

    Consolidated Statement of Financial Position as at 31 March 2012

    Assets Note 2012

    m2011

    m

    Non-current assets Intangible assets 13 339.8 341.3Investments in joint ventures and associates 15 54.6 51.4Loans to joint ventures 15 72.8 55.3Other investments 16 4.2 4.5Property, plant and equipment 17 256.1 276.5Investment property 18 38.8 22.1Deferred tax assets 27 11.3 20.1Trade and other receivables 23 20.0 37.3Restricted financial assets 21 0.4 0.8Total non-current assets 798.0 809.3Current assets Inventories 22 274.3 277.3Trade and other receivables 23 453.6 594.6Available-for-sale financial assets 19 3.5 10.3Derivative financial instruments 20 0.2 4.6Deferred tax assets 27 15.1 Current tax assets 0.5 1.4Assets held for sale 28 13.8 Cash and cash equivalents 600.6 619.3Total current assets 1,361.6 1,507.5Total assets 2,159.6 2,316.8Liabilities Current liabilities Borrowings 24 (97.9) (86.4)Trade and other payables 25 (1,227.3) (1,312.5)Provisions 26 (7.5) (14.7)Derivative financial instruments 20 (0.7) Deferred tax liabilities 27 (3.4) Current tax liabilities (8.4) (14.8)Liabilities held for sale 28 (4.9) Total current liabilities (1,350.1) (1,428.4)Non-current liabilities Borrowings 24 (181.3) (250.1)Trade and other payables 25 (30.1) (18.9)Provisions 26 (28.8) (19.7)Deferred tax liabilities 27 (4.6) (18.6)Total non-current liabilities (244.8) (307.3)Total liabilities (1,594.9) (1,735.7)Net assets 564.7 581.1Equity Share capital 29 Share premium 29 286.4 319.4Fair value reserve 30 (1.7) (1.3)Foreign currency translation reserve 30 47.4 50.0Retained earnings 30 230.0 210.4Total equity attributable to equity holders of the Parent 562.1 578.5Non-controlling interests 30 2.6 2.6Total equity 564.7 581.1

    The financial statements were approved by the Board of Directors on 29 June 2012 and were signed on its behalf by:

    R G ORourke KBE Director C Klerides Director

    The notes on pages 86 to 122 form part of these financial statements.

    82 Laing ORourke|Annual Review 2012 Laing ORourke|Annual Review 2012 83

    Financial statements

  • Consolidated Statement of Cash Flows for the year ended 31 March 2012

    Financial statements continued

    Note 2012

    m 2011

    m

    Cash flows from operating activities Profit before tax from continuing operations 23.4 29.9Loss before tax from discontinued operations 28 (6.6) (4.0)Adjustments for: Non-cash exceptional items 4 21.8 13.8Depreciation and amortisation 54.2 57.9Profit on disposal of property, plant and equipment (4.5) (5.9)Net financing costs 8.9 5.8Share of post-tax profit of joint ventures and associates (22.7) Decrease in trade and other receivables 154.9 36.6Increase in inventories (30.1) (26.3)(Decrease)/increase in trade and other payables and provisions (71.5) 28.1Other 6.5 (2.1)Cash generated from operations 134.3 133.8Interest paid (14.9) (13.4)Tax paid (4.3) (7.8)Net cash generated from operating activities 115.1 112.6Cash flows from investing activities Purchase of property, plant and equipment (18.5) (17.4)Purchase of intangible assets 13 (1.4) (4.3)Purchase of investments 16 (0.3)Acquisition of subsidiaries, net of cash acquired (6.9) 2.5Payments to acquire joint ventures and associates 15 (0.3) (2.0)Disposal of available-for-sale financial assets 19 6.2 0.1Disposal of property, plant and equipment 15.9 26.7Disposal of investment property 18 0.3 Disposal of subsidiaries (0.6)Loans to joint ventures and associated companies 15 (34.7) (65.3)Loans repaid by joint ventures and associates 15 0.2 0.6Interest received 6.1 7.5Distributions received from joint ventures and associated companies 15 30.7 28.2Net cash used in investing activities (2.4) (24.3)Cash flows from financing activities Proceeds from new bank loans 36.8 27.6Repayments of bank loans (81.3) (141.8)Finance lease principal repayments (44.8) (43.9)Reduction in share premium 29 (33.0) (20.1)Dividends paid to non-controlling interests 30 (0.6) (0.4)Dividends paid 12 (8.8) (8.8)Net cash used in financing activities (131.7) (187.4)Net decrease in cash and cash equivalents (19.0) (99.1)Cash and cash equivalents at beginning of year 619.3 716.0Effect of exchange rate fluctuations on cash held 0.3 2.4Cash and cash equivalents at end of year 600.6 619.3

    Non-cash transactions principally relate to new hire purchase and finance lease agreements taken out during the year amounting to 31.2m (2011: 48.4.m).

    Cash and cash equivalents comprise: Cash at bank and on hand 565.7 586.0Short-term bank deposits 33 34.9 33.3 600.6 619.3

    The notes on pages 86 to 122 form part of these financial statements.

    Consolidated Statement of Changes in Equity for the year ended 31 March 2012

    Note

    Share capital & share

    premiumm

    Other reserves

    m

    Retained earnings

    m

    Total shareholders

    equity m

    Non-controlling

    interestsm

    Total equity

    m

    At 1 April 2010 339.5 37.4 198.2 575.1 2.7 577.8Total comprehensive income for the year 11.3 21.0 32.3 0.3 32.6Reduction in share premium 29 (20.1) (20.1) (20.1)Dividends paid 12 (8.8) (8.8) (0.4) (9.2)At 31 March 2011 319.4 48.7 210.4 578.5 2.6 581.1Total comprehensive income for the year (3.0) 28.4 25.4 0.6 26.0Reduction in share premium 29 (33.0) (33.0) (33.0)Dividends paid 12 (8.8) (8.8) (0.6) (9.4)At 31 March 2012 286.4 45.7 230.0 562.1 2.6 564.7

    Additional disclosure and details are provided in note 30.

    The notes on pages 86 to 122 form part of these financial statements.

    84 Laing ORourke|Annual Review 2012 Laing ORourke|Annual Review 2012 85

    Financial statements

  • Notes to the Financial statements for the year ended 31 March 2012

    Financial statements continued

    1 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 78. The nature of the Groups operations and its principal activities are set out in note 38 and in the Operating and Financial Review on pages 26 to 30. The consolidated financial statements of the Company for the year ended 31 March 2012 comprise the Company and its subsidiaries (together referred to as the Group) and the Groups interest in associates and jointly controlled entities.

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

    2.2 Basis of preparation The Group consolidated financial statements are presented in pounds sterling, rounded to the nearest hundred thousand and include the results of the holding company and its subsidiary undertakings for the year ended 31 March 2012. 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 ventures and associates are set out below.

    The following standards, amendments and interpretations became effective in the year ended 31 March 2012 and have been adopted:

    a) IAS 24 (Revised), Related Party Disclosures, (effective for accounting periods beginning on or after 1 January 2011)

    b) Amendment to IFRIC 14, Pre-payments of a minimum funding requirement, (effective for accounting periods beginning on or after 1 January 2011)

    c) IFRIC 19, Extinguishing Financial Liabilities with Equity Instruments, (effective for accounting periods beginning on or after 1 July 2010)

    Each standard has been reviewed, the impact on the Group financial statements of adopting these new standards, amendments and interpretations has been determined to be minimal.

    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 2012.

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

    a) Amendment to IFRS 7, Disclosures Transfers of financial assets, (effective for accounting periods beginning on or after 1 July 2011)

    b) Amendment to IFRS 7, Disclosures Offsetting assets and financial liabilities, (effective for accounting periods beginning on or after 1 July 2013)

    c) IFRS 9, Financial Instruments, (effective for accounting periods beginning on or after 1 January 2015)

    d) IFRS 10, Consolidated Financial Statements, (effective for accounting periods beginning on or after 1 January 2013)

    e) IFRS 11, Joint Arrangements, (effective for accounting periods beginning on or after 1 January 2013)

    f) IFRS 12, Disclosures of Interests in Other Entities, (effective for accounting periods beginning on or after 1 January 2013)

    g) IFRS 13, Fair Value Measurement, (effective for accounting periods beginning on or after 1 January 2013)

    h) Amendment to IAS 1, Presentation of other comprehensive income, (effective for accounting periods beginning on or after 1 July 2012)

    i) Amendments to IAS 12, Deferred tax Recovery of underlying assets, (effective for accounting periods beginning on or after 1 January 2012)

    j) IAS 19 (revised 2011), Employee benefits, (effective for accounting periods beginning on or after 1 January 2013)

    k) IAS 27, Separate Financial Statements, (effective for accounting periods beginning on or after 1 January 2013)

    l) IAS 28, Associates and Joint ventures, (effective for accounting periods beginning on or after 1 January 2013)

    m) Amendment to IAS 32, Offsetting assets and financial liabilities, (effective for accounting periods beginning on or after 1 January 2014)

    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 overleaf:

    2 Significant Accounting Policies continued IFRS 9 is expected to replace IAS 39 Financial Instruments: Recognition and Measurement from 2015, subject to EU adoption. IFRS 9 is being completed in stages, new requirements for impairments and hedge accounting are expected to be added to the standard later in 2012. The requirements of IFRS 9 in issue at 31 March 2012 would result in the Groups available-for-sale financial assets being reclassified as this is a category that will no longer exist under the new standard. The assets will be measured either at amortised cost or fair value through profit or loss, as a result movements in the fair value of these assets would no longer be recognised in other comprehensive income. Retrospective application of this standard would result in the closing balance of the fair value reserve (1.7m) being transferred to retained earnings.

    IFRS 10, 11, 12 and IAS 27 & 28 are effective for periods beginning on or after 1 January 2013 but can be early adopted if all applied simultaneously once endorsed by the EU. The new standards and amendments were developed to eliminate the choice of accounting treatments available for interests in other entities and allow for further comparability between financial statements of different companies. With the application of this suite of standards certain of the Groups jointly controlled entities will change from being equity accounted to being proportionately consolidated. The change in treatment of these entities will have no impact on the Groups net assets or EBIT, but will affect the presentation of the joint ventures balances in the primary financial statements.

    2.3 Re-presentation of comparative information On 9 February 2012 the Directors resolved to dispose of the Groups interest in Naturstein Vetter GmbH, the Groups German operations. The carrying value is expected to be recovered principally through a sale transaction within one year rather than through continuing use and accordingly the Groups German operations have been classified as a discontinued operation held for sale from 9 February 2012. As a result the comparative information for the year ended 31 March 2011 has been re-presented to show all amounts relating to the Groups German operations in accordance with IFRS 5, Non current assets held for sale and discontinued operations, see note 28.

    2.4 Basis of consolidation a) The Group financial statements include the accounts

    of the Company and subsidiaries controlled by the Company. Control exists where the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account. Subsidiaries are consolidated from the date on which effective control is transferred to the Group and are deconsolidated from the date control ceases.

    The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group falling within the scope of IFRS 3, Business Combinations. The consideration transferred for the acquisition of a subsidiary is 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.

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

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

    e) Intra-Group balances and transactions together with any unrealised gains arising from intra-Group transactions are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with jointly controlled entities and jointly controlled operations are eliminated to the extent of the 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.

    86 Laing ORourke|Annual Review 2012 Laing ORourke|Annual Review 2012 87

    Financial statements

  • Notes to the Financial statements continued

    Financial statements continued

    2 Significant Accounting Policies continued 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 profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets such as equities classified as available-for-sale are included in the fair value reserve in equity.

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

    i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

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

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

    On consolidation, exchange differences arising from the translation of the net investment in foreign operations, and of borrowings designed as hedges of such investments, are taken to other comprehensive income. When a foreign operation is partially disposed of, or sold, exchange differences that were recorded in other comprehensive income are recognised in the income statement as part of the gain or loss on sale.

    Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

    2.6 Property, plant and equipment Property, plant and equipment are reported at historical cost less accumulated depreciation and any recognised impairment loss. Land is not depreciated. Where parts of an item of property, plant and equipment have different useful lives, they

    are accounted for as separate items. Cost comprises purchase price and directly attributable costs. Depreciation is calculated on the straight-line method to write down the cost to their residual values over their estimated useful lives as follows:

    Group owner occupied property 2%Other buildings 2%Plant, equipment and vehicles 6%50%

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

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

    Gains and losses on disposal are recognised within cost of sales, administrative expenses or non-operating income/expense in the income statement as appropriate.

    2.7 Goodwill and other intangible assets Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the 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 810 years Computer software and licences 24 years

    Impairment of non-financial assets Assets that have an indefinite useful life are not subject to amortisation and are tested for impairment annually. Assets that are subject to amortisation or depreciation are reviewed for impairment or reversal of previous 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 Significant Accounting Policies continued 2.8 Investment property Investment properties are held for long-term rental yields and are not occupied by the Group. Acquired investment properties are initially measured at cost, being the fair value of consideration given to acquire the property. The cost of self-constructed investment properties include all directly attributable costs. Completed investment properties are stated at fair value, which is supported by market evidence, as assessed annually by the chief surveyor or by qualified external valuers at three year intervals. Depreciation is not provided on investment properties. Changes in fair values are recorded in the income statement as part of non-operating income/expense.

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

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

    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 bank loans and overdrafts 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 private housing and commercial property is recognised on legal completion of the sale.

    88 Laing ORourke|Annual Review 2012 Laing ORourke|Annual Review 2012 89

    Financial statements

  • Notes to the Financial statements continued

    Financial statements continued

    2 Significant Accounting Policies continued 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 as an expense immediately.

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

    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 post the appointment as preferred bidder are included within receivables. The PFI/PPP bid costs are expensed on reimbursement at financial close. Any surplus on reimbursement of costs compared with those recorded in receivables is recognised in the income statement.

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

    2.18 Leases and hire purchase commitments Assets obtained under hire purchase contracts and leases, where a significant portion of the risks and rewards of ownership is transferred to the Group, are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased asset and the present value of the minimum lease payments. Lease payments are apportioned between the liability and finance charge to produce a constant rate of interest on the finance lease balance outstanding. Assets held for use in such leases are included in Property, plant and equipment (note 17) and are depreciated to their residual values over the estimated useful lives or the lease term as appropriate and are adjusted for impairment losses. Obligations under such agreements are included in Borrowings (note 24).

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

    2.19 Pension costs The Group operates a defined contribution pension scheme 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.

    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 nor 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 balance sheet date.

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

    Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

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

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

    Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

    2 Significant Accounting Policies continued 2.22 Exceptional items Exceptional items are defined as items of income or expenditure which, in the opinion of the Directors, are material and unusual in nature or of such significance that they require separate disclosure on the face of the consolidated income statement in accordance with IAS 1, Presentation of Financial Statements.

    2.23 Trading analysis Trading analysis information is based on the Groups internal reporting structure of two operational hubs. Further information on the business trading activities is set out in the Financial and business review on pages 26 to 30. Trading analysis results represent the contribution directly attributable for the different hubs to profit of the Group. Transactions between hubs are conducted at arms length market prices.

    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 recovery of pre-contract costs, changes in work scopes, contract programmes and maintenance liabilities.

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

    c) Impairment of goodwill Determining whether goodwill is impaired requires an estimation of the value in use of the cash generating units to which the goodwill has been allocated. The value in use calculation requires an estimation to be made of the timing and amount of future cash flows expected to arise

    from the cash generating unit, and a suitable discount rate in order to calculate the present value. The discount rate used, carrying value of goodwill and further details of the impairment loss calculation are included in note 13.

    d) Taxation The Group is subject to tax in a number of jurisdictions and judgement is required in determining the worldwide provision for income taxes including 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.

    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. A detailed review was completed at 31 March 2012 which resulted in an exceptional impairment of 21.2m being recognised. Further details are included in note 4.

    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 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.

    90 Laing ORourke|Annual Review 2012 Laing ORourke|Annual Review 2012 91

    Financial statements

  • Notes to the Financial statements continued

    Financial statements continued

    3 Trading Analysis

    Performance by geography:

    Europe Hub 2012

    m

    Australia Hub 2012

    m

    Total Group2012

    m

    Managed revenue 2,787.3 1,524.6 4,311.9 Less: Inter-segment revenue (623.7) (143.6) (767.3)Total revenue 2,163.6 1,381.0 3,544.6Less: Share of joint ventures and associates revenue (418.0) (221.6) (639.6)Revenue 1,745.6 1,159.4 2,905.0 Profit from operations post-exceptional items 66.6 (34.5) 32.1Profit for the year before tax post-exceptional items 62.1 (38.7) 23.4 EBIT post-exceptional items 69.5 (35.1) 34.4EBITDA post-exceptional items 105.4 (17.0) 88.4 Profit from operations pre-exceptional items 79.9 (28.2) 51.7Profit for the year before tax and exceptional items 75.4 (32.4) 43.0 EBIT pre-exceptional items 82.8 (28.8) 54.0EBITDA pre-exceptional items 118.7 (10.7) 108.0

    Restated Europe Hub

    2011 m

    Restated Australia Hub

    2011 m

    Restated total Group

    2011m

    Managed revenue 2,722.6 1,285.7 4,008.3 Less: Inter-segment revenue (548.4) (146.8) (695.2)Total revenue 2,174.2 1,138.9 3,313.1Less: Share of joint ventures and associates revenue (141.2) (168.3) (309.5)Revenue 2,033.0 970.6 3,003.6 Profit from operations post-exceptional items 54.7 (15.3) 39.4Profit for the year before tax post-exceptional items 49.8 (19.9) 29.9 EBIT post-exceptional items 56.3 (15.8) 40.5EBITDA post-exceptional items 96.2 1.8 98.0 Profit from operations pre-exceptional items 61.9 (15.3) 46.6Profit for the year before tax and exceptional items 60.6 (19.9) 40.7 EBIT pre-exceptional items 67.1 (15.8) 51.3EBITDA pre-exceptional items 107.0 1.8 108.8

    3 Trading Analysis continued

    EBIT and EBITDA Reconciliation Note

    Pre-exceptional

    items2012

    m

    Exceptionalitems

    (note 4)2012

    m

    Total2012

    m

    Restated pre-

    exceptional items 2011

    m

    Restatedexceptional

    items(note 4)

    2011m

    Restatedtotal

    2011m

    Profit from operations 51.7 (19.6) 32.1 46.6 (7.2) 39.4 Adjusted for: Net non-operating income/(expense) 8 0.2 0.2 (0.6) (3.6) (4.2)JV net finance (income)/expense 15 (5.0) (5.0) 2.8 2.8JV tax expense 15 7.1 7.1 2.5 2.5EBIT 54.0 (19.6) 34.4 51.3 (10.8) 40.5 Depreciation 5 51.7 51.7 55.4 55.4Amortisation 5 2.3 2.3 2.1 2.1EBITDA 108.0 (19.6) 88.4 108.8 (10.8) 98.0

    There is no material difference between revenue by origin and revenue by destination. Revenue includes 2,426.0m on construction contracts (2011: 2,366.6m) calculated on the definition included in IAS 11, Construction Contracts. Revenue arising from the sale of goods and services amounted to 479.0m (2011: 637.0m).

    Contracts in progress at the balance sheet date comprise contract costs incurred plus recognised profits less losses of 4,693.4m (2011: 4,497.8m).

    92 Laing ORourke|Annual Review 2012 Laing ORourke|Annual Review 2012 93

    Financial statements

  • Notes to the Financial statements continued

    Financial statements continued

    4 Exceptional Items

    2012

    m 2011

    m

    Impairments of land and developments 21.2 7.2Impairment of Group owner occupied property 2.0 3.0Closure costs 3.0 Receivables impairment 2.6 Gain on acquisition of a business (4.2) Disposal of subsidiary 3.6Exceptional costs before tax 24.6 13.8Income tax credit on exceptional items (3.5) (0.8)Exceptional costs after tax 21.1 13.0

    Impairments 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 external 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 21.2m (2011: 7.2m).

    Impairment of Group owner occupied property and closure costs An independent external valuation was performed on the Groups quarrying and land assets held by Naturstein Vetter GmbH in Germany on 31 March 2011. As a result of this valuation the land and buildings were impaired by 3.0m in the prior reporting period. Following the approval of the Groups management and shareholders on 9 February 2012 to sell Naturstein Vetter GmbH the assets were reclassified as held for sale (see note 28) and as a result a further 2.0m impairment was recognised. Additional closure costs of 3.0m were also recognised, 0.9m for write down of inventories and 2.1m in relation to employee redundancies. Both of these exceptional items have been recognised within discontinued operations in the income statement.

    Receivables impairment During the year a debt outstanding from a client was only partially recovered after the client went into administration, causing a 2.6m loss to be recognised.

    Exceptional gain on acquisition of a business On 30 January 2012 the Group secured full control of Bison Holdings Limited and Bison Manufacturing Limited (Bison), recognising an exceptional gain of 4.2m on acquisition. The gain was primarily due to a 5.0m deferred tax asset held by Bison at acquisition which could be utilised immediately within the Laing ORourke Group but was of no immediate use to other purchasers. The gain is recorded as an exceptional item within other operating income. Further details of the acquisition are provided in note 14 of the financial statements.

    Disposal of subsidiary In the previous reporting period the Group sold 100 per cent of the share capital of Eigen Technical Services Private Limited, a company incorporated in India, incurring a 3.6m loss on sale.

    5 Operating Profit

    Note 2012

    m

    Restated2011

    m

    Operating profit is stated after charging/(crediting): Staff costs 6 733.9 711.9Depreciation of property, plant and equipment: 17

    Owned assets 23.4 26.3Under finance leases 28.3 29.1

    Impairment of plant and equipment 17 1.0 Operating lease rentals and short-term hires:

    Property, plant and equipment 79.3 71.4Amortisation of other intangible assets 13 2.3 2.1Profit on disposal of plant and equipment (3.9) (6.4)Foreign exchange (gains)/losses (1.3) 4.8Investment property income 18 (1.7) (1.1)Cost of inventories recognised as an expense:

    Exceptional items 4 21.2 7.2Auditors remuneration (see below) 2.2 2.1

    The Groups German operations have been classified as discontinued during the current year. Items of expenditure in the prior reporting period previously recognised as part of operating profit have been reallocated to discontinued operations on the face of the income statement. This includes staff costs (2.4m), depreciation of owned assets (0.4m), exceptional impairment of plant and equipment (3.0m) and foreign exchange losses (0.2m).

    Depreciation per note 17 includes 0.2m (2011: 0.4m) on assets reclassified as discontinued operations in the current period therefore not included in operating profit in the income statement.

    Auditors remuneration

    2012

    m2011

    m

    Fees payable to the Companys auditor for the audit of: The Companys annual accounts and consolidated financial statements 0.3 0.4The Companys subsidiaries pursuant to legislation 0.9 0.7

    Total audit fees 1.2 1.1Fees payable to the Companys auditor and its associates for other services:

    Services relating to taxation 0.8 0.3All other services 0.2 0.7

    Total non-audit fees 1.0 1.0Total fees 2.2 2.1

    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.

    94 Laing ORourke|Annual Review 2012 Laing ORourke|Annual Review 2012 95

    Financial statements

  • Notes to the Financial statements continued

    Financial statements continued

    6 Staff Costs and Employee Numbers

    2012

    Number

    Restated2011

    Number

    Number of employees The average monthly number of employees (including the Directors) during the period was: Europe Hub 10,937 11,526Australia Hub 3,810 3,438Total number of employees 14,747 14,964

    2012

    m

    Restated2011

    m

    Aggregate remuneration and related costs, including Directors: Wages and salaries 666.9 643.6Social security costs 34.9 37.0Other pension costs 32.1 31.3 733.9 711.9

    At 31 March 2012 1.4m (2011: 1.5m) was outstanding on defined contribution schemes.

    Transactions with key management personnel The Groups key management personnel include the four Directors and eight (2011: six) other members who served on the Group Executive Committee during the year.

    The compensation of key management personnel is as follows:

    2012

    m 2011

    m

    Salaries and other short-term employee benefits 4.4 3.0Post-retirement benefits Termination benefits 0.6 4.4 3.6

    Directors remuneration The total remuneration of the Directors (included in key management personnel compensation above) was as follows:

    2012

    m 2011

    m

    Salaries and other short-term benefits 0.5 0.4

    None of the Directors are accruing benefits under a defined contribution scheme (2011: nil). No post-retirement benefits were paid on behalf of Directors (2011: nil).

    7 Other Operating Income

    2012

    m2011

    m

    Exceptional gain on acquisition of a business (see note 4) 4.2 Investment income 0.8 0.8Rents received 0.2 0.2Other operating income 0.1 5.3 1.0

    8 Net Non-Operating Income/(Expense)

    2012

    m2011

    m

    Exceptional loss on sale of subsidiary (see note 4) (3.6)Profit/(loss) on sale of property 0.6 (0.6)Impairment of investments (0.4) 0.2 (4.2)

    9 Finance Income

    2012

    m2011

    m

    Bank interest 4.9 6.6Other interest and similar income 1.1 1.0 6.0 7.6

    10 Finance Expense

    2012

    m

    Restated2011

    m

    Interest payable on bank loans and overdrafts 8.7 8.0Finance lease charges 4.7 4.9Other interest payable and similar charges 1.5 14.9 12.9

    96 Laing ORourke|Annual Review 2012 Laing ORourke|Annual Review 2012 97

    Financial statements

  • Notes to the Financial statements continued

    Financial statements continued

    11 Income Tax

    2012

    m

    Restated2011

    m

    Cyprus corporation tax Current tax on income for the year 0.6 0.3Foreign tax Current tax on income for the year 5.7 9.2Adjustment in respect of prior years (2.4) (0.8)Total current tax 3.9 8.7 Net origination of temporary differences (14.6) (2.7)Impact of change in tax rate (0.7) (0.5)Total deferred taxation (15.3) (3.2)Tax (benefit)/expense for the year (11.4) 5.5

    The overall tax benefit for the year of 11.4m (negative rate 48 per cent) is explained relative to the UK statutory rate of 26 per cent below:

    Total tax reconciliation Profit before tax 23.4 29.9

    Tax at the UK corporation tax rate of 26% (2011: UK 28%) 6.1 8.4Effects of lower overseas tax rates (9.0) (6.4) other expenditure that is not tax deductible 1.4 1.7 adjustments to prior years (5.3) (0.8) unutilised losses 2.3 5.8 tax effect of joint ventures (5.3) (1.8) impact of change in tax rate (0.7) (0.5) other adjustments (0.9) (0.9)Total tax (credit)/charge (11.4) 5.5

    The total tax benefit for the year of 11.4m includes an exceptional tax credit of 3.5m (2011: 0.8m) in relation to tax allowable exceptional expenditure for impairments of land and developments, impairment of owner occupied property and disposal of a subsidiary (see note 4).

    A number of changes to the UK Corporation tax system were announced in the March 2012 UK Budget Statement. A resolution passed by Parliament on 26 March 2012 reduces the main rate of Corporation Tax from 26 per cent to 24 per cent from 1 April 2012. The effect of this change is to reduce the UK deferred tax liability provided at the balance sheet date by 0.7m.

    Legislation to reduce the main rate of corporation tax from 24 per cent to 23 per cent from 1 April 2013 is expected to be included in the Finance Act 2012. Further reductions to the main rate are proposed to reduce the rate to 22 per cent from 1 April 2014. These further changes had not been substantively enacted at the balance sheet date and, therefore, are not included in these financial statements.

    Tax effects relating to each component of comprehensive income 2012 2011

    Before-tax amount

    m

    Tax expense

    m

    Net-of-tax amount

    m

    Before-tax amount

    m

    Tax expense

    m

    Net-of-tax amount

    m

    Exchange differences on translating foreign operations (3.7) (3.7) 12.0 12.0Available-for-sale financial assets (0.5) 0.1 (0.4) 1.2 (0.4) 0.8Share of other comprehensive income of joint ventures and associates 1.4 1.4 (1.6) (1.6) (2.8) 0.1 (2.7) 11.6 (0.4) 11.2

    12 Dividends

    2012

    m2011

    m

    Interim dividends paid of 972 per ordinary share (2011: 972). 8.8 8.8

    Dividends declared and paid during the year were in respect of the 2009/10 performance period. The Directors do not recommend the payment of a final dividend (2011: nil).

    13 Intangible Assets

    Goodwillm

    Brands m

    Computer software and

    licencesm

    Totalm

    Cost At 1 April 2011 335.9 2.6 16.3 354.8Additions 1.4 1.4Disposals (0.1) (0.1)Transferred to disposal group classified as held for sale (0.1) (0.1)Exchange differences 0.3 0.1 0.4At 31 March 2012 336.2 2.6 17.6 356.4Accumulated amortisation and impairment At 1 April 2011 1.5 12.0 13.5Amortisation for the year 0.4 1.9 2.3Impairment 0.8 0.8Disposals (0.1) (0.1)Exchange differences 0.1 0.1At 31 March 2012 0.8 1.9 13.9 16.6Net book value at 31 March 2012 335.4 0.7 3.7 339.8Cost At 1 April 2010 321.8 2.4 12.3 336.5Acquisitions 12.3 12.3Additions 4.3 4.3Disposals (1.6) (0.3) (1.9)Exchange differences 3.4 0.2 3.6At 31 March 2011 335.9 2.6 16.3 354.8Accumulated amortisation At 1 April 2010 1.1 10.3 11.4Amortisation for the year 0.3 1.8 2.1Disposals (0.1) (0.1)Exchange differences 0.1 0.1At 31 March 2011 1.5 12.0 13.5Net book value at 31 March 2011 335.9 1.1 4.3 341.3

    Net book value at 31 March 2010 321.8 1.3 2.0 325.1

    Current year impairment During the year the Group fully impaired goodwill of 0.8m which related to an Irish telecoms utility business. Contingent consideration of 0.6m was written back and both amounts were recognised in net non-operating income/expense.

    Prior year acquisition and disposal of goodwill On 15 March 2011 the Group disposed of its 100 per cent holding of Eigen Technical Services Private Limited, a company incorporated in India, see note 4.

    On 29 October 2010 the Group acquired Laing ORourke Insurance Limited, a company incorporated in Guernsey, for a total consideration of 25m.

    98 Laing ORourke|Annual Review 2012 Laing ORourke|Annual Review 2012 99

    Financial statements

  • Notes to the Financial statements continued

    Financial statements continued

    13 Intangible Assets continued Impairment tests for cash-generating units containing goodwill The following units have significant amounts of goodwill

    2012

    m 2011

    m

    Australia 56.5 56.1United Kingdom 278.9 279.0Ireland 0.8 335.4 335.9

    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 (2011: 3 per cent) thereafter, discounted at the Groups estimated pre-tax weighted average cost of capital of 12.5 per cent (2011: 12.5 per cent). Budgeted gross margins are based on past performance and managements market expectations. The estimated perpetual growth rate of 3 per cent (2011: 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 a prudent estimate from listed industry competitors, adjusted for changes in capital structures.

    As at 31 March 2012, 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 items in the income statement:

    2012

    m 2011

    m

    Cost of sales 1.5Administrative expenses 2.3 0.6 2.3 2.1

    14 Business Combinations On 30 January 2012, R ORourke & Son Limited, a subsidiary of the Group, increased its shareholding from 19.9 per cent to 100 per cent in Bison Holdings Limited and Bison Manufacturing Limited (Bison). Bison designs and manufactures pre-stressed concrete hollowcore floors, staircases, lift shafts, terraces, walls and columns. The acquisition was made as part of Laing ORourkes on-going Design for Manufacture and Assembly (DfMA) strategy.

    Due to the significant debts of Bison it was previously valued at nil, however the acquisition included a restructuring of Bisons bank facilities so that they were no longer a liability of the company on the date of acquisition. The acquisition was made for 7.8m cash which was fully paid. The acquisition was made for 4.2m less than the fair value of the assets acquired primarily because a deferred tax asset of 5.0m could be utilised immediately within the Laing ORourke Group but was of no immediate use to other purchasers. The gain is included as an exceptional item in the consolidated income statement within other operating income (see note 7).

    Under acquisition accounting no fair value adjustments were deemed to be required. The assets acquired were:

    Book and Fair value

    acquiredm

    Property, plant and equipment 7.9Deferred tax asset 5.0Inventories 1.5Trade and other receivables 4.0Cash and cash equivalents 0.9Trade and other payables (7.3)Total identifiable net assets acquired 12.0Total cash consideration (7.8)Gain on acquisition 4.2

    From the date of acquisition to 31 March 2012, Bison contributed 4.2m to revenue, and 0.4m loss to the Groups operating profit and profit before tax. If Bison had been acquired on 1 April 2011 the Groups revenue would have been 2,936.6m, operating profit 8.1m and profit before tax 21.9m.

    15 Investments in Joint Ventures and Associates

    Joint ventures

    equity investments

    m

    Associates equity

    investments m

    Loans to joint ventures

    mTotal

    m

    Cost At 1 April 2011 19.2 13.0 86.5 118.7Equity investment purchases 0.3 0.3Loans advanced 34.7 34.7Loans repaid (0.2) (0.2)Impairment (1.2) (1.2)Exchange differences (4.5) (4.5)At 31 March 2012 19.2 13.3 115.3 147.8Share of post-acquisition results At 1 April 2011 (16.1) (16.1)Share of results for the year after tax 22.7 22.7Distributions received (30.7) (30.7)Exchange differences 1.8 0.1 1.9At 31 March 2012 (22.3) 0.1 (22.2)Net book value at 31 March 2012 (3.1) 13.4 115.3 125.6Net book value at 31 March 2011 3.1 13.0 86.5 102.6

    Cost At 1 April 2010 16.3 12.2 18.9 47.4Equity investment purchases 2.0 2.0Loans advanced 65.3 65.3Loans repaid (0.6) (0.6)Exchange differences 0.9 0.8 2.9 4.6At 31 March 2011 19.2 13.0 86.5 118.7Share of post-acquisition results At 1 April 2010 15.2 15.2Share of results for the year after tax Distributions received (28.2) (28.2)Exchange differences (3.1) (3.1)At 31 March 2011 (16.1) (16.1)Net book value at 31 March 2011 3.1 13.0 86.5 102.6

    Net book value at 31 March 2010 31.5 12.2 18.9 62.6

    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:

    2012

    m2011

    m

    Investments in joint ventures and associates 54.6 51.4Loans to joint ventures 72.8 55.3Provisions (1.8) (4.1) 125.6 102.6

    No impairment losses to equity investments were brought forward at 31 March 2012 or charged in the year (2011: nil).

    100 Laing ORourke|Annual Review 2012 Laing ORourke|Annual Review 2012 101

    Financial statements

  • Notes to the Financial statements continued

    Financial statements continued

    15 Investments in Joint Ventures and Associates continued The analysis of revenue, income, assets and liabilities of the Groups interest in joint ventures and associates is set out below:

    Joint ventures

    2012m

    Associates2012

    m

    Total2012

    m

    Joint ventures

    2011 m

    Associates 2011

    m

    Total2011

    m

    Revenue 639.4 0.2 639.6 309.4 0.1 309.5Expenses (611.9) (0.1) (612.0) (304.2) (304.2)Exceptional item (see note 4) (2.8) (2.8) Operating profit 24.7 0.1 24.8 5.2 0.1 5.3Net finance income/(expense) 5.1 (0.1) 5.0 (2.7) (0.1) (2.8)Profit before tax 29.8 29.8 2.5 2.5Tax expense (7.1) (7.1) (2.5) (2.5)Profit after tax 22.7 22.7 Non-current assets Goodwill 4.4 4.4 4.4 4.4Property, plant and equipment 28.2 28.2 72.7 0.4 73.1Other non-current assets 249.6 0.8 250.4 116.8 0.4 117.2Current assets Cash and cash equivalents 202.8 202.8 44.7 44.7Other current assets 164.9 9.6 174.5 102.3 9.3 111.6Total assets 645.5 14.8 660.3 336.5 14.5 351.0Current liabilities Borrowings (43.7) (43.7) (6.7) (6.7)Other current liabilities (161.3) (0.2) (161.5) (131.1) (0.2) (131.3)Non-current liabilities Borrowings (404.5) (1.2) (405.7) (131.1) (1.3) (132.4)Other non-current liabilities (39.1) (39.1) (64.5) (64.5)Total liabilities (648.6) (1.4) (650.0) (333.4) (1.5) (334.9)Net (liabilities)/assets (3.1) 13.4 10.3 3.1 13.0 16.1Financial commitments 0.2 0.2Capital commitments

    16 Other Investments

    Fair Value 2012

    m 2011

    m

    At 1 April 4.5 4.2Additions 0.3Impairment (0.3) At 31 March 4.2 4.5

    In the prior reporting period the Group purchased 0.3m of convertible loan notes issued by a company which develops construction related technology. During the year to 31 March 2012 this investment was fully impaired and the loss recognised in the consolidated income statement. At 31 March 2012 the book value of Other investments equated to fair value.

    17 Property, Plant and Equipment Group owner

    occupied property

    m

    Other land and buildings

    m

    Plant, equipment

    and vehiclesm

    Totalm

    Cost At 1 April 2011 21.2 26.7 508.9 556.8Additions 1.6 0.2 47.9 49.7Acquisitions 7.9 7.9Disposals (1.5) (0.4) (57.1) (59.0)Transferred to disposal group classified as held-for-sale (12.2) (11.7) (23.9)Exchange differences (0.7) 0.7 At 31 March 2012 16.3 26.5 488.7 531.5Accumulated depreciation At 1 April 2011 7.2 13.7 259.4 280.3Depreciation charge for the year 0.2 1.7 50.0 51.9Impairment 2.0 1.0 3.0Disposals (1.5) (0.2) (45.9) (47.6)Transferred to disposal group classified as held-for-sale (6.0) (6.0) (12.0)Exchange differences (0.3) 0.1 (0.2)At 31 March 2012 1.6 15.2 258.6 275.4Net book value at 31 March 2012 14.7 11.3 230.1 256.1 Cost At 1 April 2010 20.3 28.8 510.8 559.9Additions 0.1 2.0 63.6 65.7Disposals (0.3) (2.6) (64.1) (67.0)Exchange differences 1.1 (1.5) (1.4) (1.8)At 31 March 2011 21.2 26.7 508.9 556.8Accumulated depreciation At 1 April 2010 3.6 14.7 250.4 268.7Depreciation charge for the year 0.6 1.9 53.3 55.8Impairment 3.0 3.0Disposals (0.3) (2.1) (43.4) (45.8)Exchange differences 0.3 (0.8) (0.9) (1.4)At 31 March 2011 7.2 13.7 259.4 280.3Net book value at 31 March 2011 14.0 13.0 249.5 276.5

    Net book value at 31 March 2010 16.7 14.1 260.4 291.2

    Exceptional impairment charges were made during the year of 2.0m (2011: 3.0m) (see note 4).

    102 Laing ORourke|Annual Review 2012 Laing ORourke|Annual Review 2012 103

    Financial statements

  • Notes to the Financial statements continued

    Financial statements continued

    17 Property, Plant and Equipment continued Finance leases: Included in plant, equipment and vehicles are assets held under finance leases at the following amounts:

    2012

    m 2011

    m

    Cost at 1 April 264.6 252.4Accumulated depreciation at 1 April (99.2) (96.0)Net book value at 1 April 165.4 156.4Additions/acquisitions 28.5 48.4Cost of disposals/transfers out (37.3) (38.0)Depreciation on disposals/transfers out 26.3 26.6Depreciation charge for the year (28.3) (29.1)Exchange differences 0.2 1.1Net book value at 31 March 154.8 165.4

    Finance lease terms are between one and five years, see note 24 for ageing of finance lease obligations.

    Additions of assets under finance leases in the year are lower than new lease agreements taken out by 2.7m as the Group repaid certain of its leases and entered into new agreements with a different provider.

    18 Investment Property

    Freehold 2012

    m

    Freehold2011

    m

    Net book value at 1 April 22.1 21.9Transfers in 17.4 0.3Disposals (0.3) Exchange differences (0.4) (0.1)Fair value adjustments Net book value at 31 March 38.8 22.1

    Investment property income earned by the Group, all of which was received under operating leases, amounted to 1.7m (2011: 1.1m) and is shown as revenue in the income statement. Direct operating expenses arising on the investment properties in the year amounted to 0.3m (2011: 0.3m).

    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:

    2012

    m 2011

    m

    Expiry date: Due within one year 1.5 0.9Due between one and five years 2.5 2.5Due after more than five years 16.1 16.7 20.1 20.1

    19 Available-For-Sale Financial Assets

    2012

    m2011

    m

    At 1 April 10.3 9.1Disposals (6.2) (0.1)Exchange differences (0.2) (0.1)Net (losses)/gains transferred to equity (0.4) 1.4At 31 March 3.5 10.3

    Available-for-sale financial assets include the following: Listed securities 2.8 9.6Unlisted securities 0.7 0.7 3.5 10.3

    The fair value of available-for-sale financial assets is determined from quoted prices in active markets.

    20 Derivative Financial Instruments 2012 2011

    Assetsm

    Liabilities m

    Assetsm

    Liabilitiesm

    Current portion: Foreign exchange fair value hedges 0.1 0.8 Forward foreign exchange contracts 0.1 (0.7) 3.8 Total derivative financial instruments 0.2 (0.7) 4.6

    Foreign Exchange Fair Value Hedges The Group borrows funds in foreign currencies to hedge the foreign currency exposure of future income. The highly probable forecast income is expected to be received at various dates over the next nine months. No gains or losses were recognised in the period to 31 March 2012 (2011: nil). There were no ineffective portions to be recognised in the profit or loss account arising from fair value hedges (2011: 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.

    21 Restricted Financial Assets

    2012

    m2011

    m

    Restricted cash deposits 0.4 0.8

    At 31 March 2012 0.4m (2011: 0.8m) 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.

    104 Laing ORourke|Annual Review 2012 Laing ORourke|Annual Review 2012 105

    Financial statements

  • Notes to the Financial statements continued

    Financial statements continued

    22 Inventories

    2012

    m 2011

    m

    Development land and work in progress 257.9 263.5Raw materials and consumables 10.4 11.6Finished goods and goods for resale 6.0 2.2 274.3 277.3

    Development land and work in progress at 31 March 2012 includes assets to a value of 193.2m (2011: 197.2m) 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 1.0m (2011: increased by 3.6m).

    Inventories carried at fair value less costs to sell at 31 March 2012 had a carrying value of 8.9m (2011: 10.5m).

    23 Trade and Other Receivables

    2012

    m 2011

    m

    Amounts expected to be recovered within one year: Gross amounts due from customers on construction contracts 247.2 439.7Trade receivables 137.4 115.0Prepayments and accrued income 29.5 23.7Other receivables 39.5 16.2 453.6 594.6Amounts expected to be recovered after more than one year: Gross amounts due from customers on construction contracts 7.4 6.5Trade receivables 2.6 7.1Other receivables 10.0 23.7 20.0 37.3Total trade and other receivables 473.6 631.9

    At 31 March 2012, trade and other receivables include retentions of 94.1m (2011: 98.8m) relating to construction contracts of which 7.4m (2011: 6.5m) are non-current assets.

    For construction contracts in progress at 31 March 2012, 356.1m (2011: 376.9m) was received as an advance and is included within advance payments on construction contracts in trade and other payables (see note 25).

    The net losses recognised via write off or impairment of trade and other receivables in the year to 31 March 2012 amounted to 12.1m (2011: 6.1m), 9.5m has been recognised in cost of sales and 2.6m in administrative expenses. At 31 March 2012 the bad debt provision for trade receivables amounted to 15.6 million (2011: 6.0m) and for other receivables amounted to nil (2011: 0.1m).

    24 Borrowings

    2012

    m2011

    m

    Amounts expected to be settled within one year: Bank loans 65.3 49.4Finance lease obligations 32.6 37.0 97.9 86.4Amounts expected to be settled after more than one year: Bank loans 132.2 192.1Finance lease obligations 49.1 58.0 181.3 250.1Total borrowings 279.2 336.5

    Finance lease obligations Finance lease obligations are payable as follows:

    Interest2012

    m

    Principal2012

    m

    Minimum lease

    payments2012

    m

    Interest 2011

    m

    Principal2011

    m

    Minimum lease

    payments2011

    m

    Less than one year 2.9 32.6 35.5 4.1 37.0 41.1Between one and five years 2.5 49.1 51.6 3.6 57.7 61.3More than five years 0.3 0.3 5.4 81.7 87.1 7.7 95.0 102.7

    Obligations under finance leases are secured by legal charges on certain non-current assets of the Group with an original cost of 256.1m (2011: 264.6m) and total net book value of 154.8m (2011: 165.4m).

    106 Laing ORourke|Annual Review 2012 Laing ORourke|Annual Review 2012 107

    Financial statements

  • Notes to the Financial statements continued

    Financial statements continued

    25 Trade and Other Payables

    2012

    m 2011

    m

    Amounts expected to be settled within one year: Advance payments on construction contracts 356.1 376.9Trade payables 257.8 250.2Other tax and social security 32.9 31.9Other creditors 109.0 113.1Accruals and deferred income 471.5 540.4 1,227.3 1,312.5Amounts expected to be settled after more than one year: Trade payables 11.0 5.8Other creditors 2.2 2.1Accruals and deferred income 16.9 11.0 30.1 18.9Total trade and other payables 1,257.4 1,331.4

    At 31 March 2012, trade and other payables include retentions of 80.8m (2011: 101.6m) relating to construction contracts of which 10.3m (2011: 5.8m) are non-current liabilities.

    26 Provisions Insurance technical

    provisionsm

    Employee provisions

    m

    Joint venture provisions

    m

    Total provisions

    m

    At 1 April 2011 25.3 5.0 4.1 34.4Provisions created 5.2 0.1 0.5 5.8Provisions utilised (1.1) (2.8) (3.9)At 31 March 2012 29.4 5.1 1.8 36.3

    Disclosed within: Current liabilities 3.0 2.7 1.8 7.5Non-current liabilities 26.4 2.4 28.8 29.4 5.1 1.8 36.3

    At 1 April 2010 4.4 4.4Provisions created 10.4 1.5 4.1 16.0Provisions utilised (0.9) (0.9)Business acquired 14.9 14.9At 31 March 2011 25.3 5.0 4.1 34.4

    Disclosed within: Current liabilities 7.5 3.1 4.1 14.7Non-current liabilities 17.8 1.9 19.7 25.3 5.0 4.1 34.4

    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 Group provides in full for obligations to remedy net liabilities of jointly controlled entities in excess of amounts already loaned. At 31 March 2012 these provisions amounted to 1.8m (2011: 4.1m) 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

    Assets2012

    m

    Assets2011

    m

    Liabilities2012

    m

    Liabilities 2011

    m

    Net2012

    m

    Net2011

    m

    Property, plant and equipment 0.1 5.4 (8.0) (12.5) (7.9) (7.1)Intangible assets 0.1 (0.3) (0.2)Other items 14.0 14.5 (5.8) 14.0 8.7Tax losses carried forward 12.3 0.1 12.3 0.1Deferred tax assets/(liabilities) 26.4 20.1 (8.0) (18.6) 18.4 1.5

    Disclosed within: Current assets/(liabilities) 15.1 (3.4) 11.7 Non-current assets/(liabilities) 11.3 20.1 (4.6) (18.6) 6.7 1.5 26.4 20.1 (8.0) (18.6) 18.4 1.5

    Movements in deferred tax assets and liabilities during the year

    As at 1 April 2011

    m

    Exchange and other

    movementsm

    Recognised in income

    m

    Recognised in equity

    m

    As at 31 March

    2012m

    Property, plant and equipment (7.1) (1.7) 0.9 (7.9)Intangible assets (0.2) 0.2 Other items 8.7 3.1 2.1 0.1 14.0Tax losses carried forward 0.1 (0.1) 12.3 12.3 1.5 1.5 15.3 0.1 18.4

    As at 1 April 2010

    m

    Exchange and other

    movementsm

    Recognised in income

    m

    Recognised in equity

    m

    As at 31 March 2011

    m

    Property, plant and equipment (8.6) 0.1 1.4 (7.1)Intangible assets (0.4) 0.2 (0.2)Other items 5.6 1.0 2.5 (0.4) 8.7Tax losses carried forward 0.1 0.1 (3.3) 1.1 4.1 (0.4) 1.5

    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:

    2012 m

    2011 m

    Tax losses 12.2 13.1

    The Group has unrecognised deferred tax assets of 12.2m 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 themselves.

    108 Laing ORourke|Annual Review 2012 Laing ORourke|Annual Review 2012 109

    Financial statements

  • Notes to the Financial statements continued

    Financial statements continued

    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 of the Groups management and shareholders on 9 February 2012 to sell Naturstein Vetter GmbH. The completion date for the transaction is expected in the next six months.

    Held-for-sale assets relate to certain items of plant and equipment held by Laing ORourke Australia Holdings Limited, a subsidiary of the Group, which were purchased for use in constructing a railway. The held-for-sale assets are no longer required by the Group and the carrying value is expected to be recovered by sale within the next year, hence the assets have been reclassified from Property, Plant and Equipment to held-for-sale in accordance with IFRS 5, Assets Held-for-Sale and Discontinued Operations.

    2012 2012 2012 2011

    Discontinued operations

    mHeld for sale

    m Total

    m Total

    m

    Assets of disposal group classified as held-for-sale Property, plant and equipment 7.1 4.8 11.9 Inventory 1.3 1.3 Other current assets 0.6 0.6 9.0 4.8 13.8

    Liabilities of disposal group classified as held-for-sale Trade and other payables (3.8) (3.8) Other current liabilities (1.1) (1.1) (4.9) (4.9)

    Cumulative income or expense recognised in other comprehensive income relating to disposal group classified as held for sale Foreign exchange translation adjustments (4.0) (4.0)

    Cash flows of discontinued operations Operating cash flow (0.5) (0.5) Investing cash flow 0.1 0.1 Financing cash flow (0.4) (0.4)

    Analysis of the results of discontinued operations, and the result recognised on re-measurement of disposal groups

    Discontinued Operations

    2012

    m 2011

    m

    Revenue 5.2 7.0Expenses (6.8) (8.0)Exceptional items (2.1) (3.0)Loss before tax of discontinued operations (3.7) (4.0)Income tax (expense)/benefit (0.1) 1.0Loss after tax of discontinued operations (3.8) (3.0)Pre-tax loss recognised on the re-measurement of assets of disposal group (2.9) Income tax benefit 0.6 Post-tax loss recognised on the re-measurement of assets of disposal group (2.3) Loss for the year from discontinued operations (6.1) (3.0)

    Closure costs and re-measurement of assets of disposal group are included as exceptional items, see note 4.

    29 Share Capital and Premium

    Number of 1 shares

    Share premium

    m

    At 1 April 2011 9,000 319.4Reduction in share premium (33.0)At 31 March 2012 9,000 286.4

    On 2 November 2011 Laing ORourke Corporation Limited passed a resolution to reduce its share premium by 37.7m.

    The authorised share capital of Laing ORourke Corporation Limited at 31 March 2012 was 18,000 ordinary shares of 1 each (2011: 18,000 shares).

    30 Reconciliation of Movements in Shareholders Equity

    Called-up share capital

    m

    Share premium

    m

    Fair value reserve

    m

    Foreign currency

    translation reserve

    m

    Retained earnings

    m

    Total shareholders

    equity m

    Non-controlling

    interestsm

    Total equity

    m

    At 1 April 2010 339.5 (2.1) 39.5 198.2 575.1 2.7 577.8Total comprehensive income for the year 0.8 10.5 21.0 32.3 0.3 32.6Reduction in share premium (20.1) (20.1) (20.1)Dividends paid (8.8) (8.8) (0.4) (9.2)At 31 March 2011 319.4 (1.3) 50.0 210.4 578.5 2.6 581.1Total comprehensive income for the year (0.4) (2.6) 28.4 25.4 0.6 26.0Reduction in share premium (33.0) (33.0) (33.0)Dividends paid (8.8) (8.8) (0.6) (9.4)At 31 March 2012 286.4 (1.7) 47.4 230.0 562.1 2.6 564.7

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

    Foreign currency translation reserve The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations, as well as from the translation of liabilities and the cumulative net change in the fair value of instruments that hedge the 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.

    110 Laing ORourke|Annual Review 2012 Laing ORourke|Annual Review 2012 111

    Financial statements

  • Notes to the Financial statements continued

    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 2012, 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 (2011: 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 Financial Instruments continued 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:

    Pounds sterling value of equivalent currency (m)

    2012 GBP

    2012EUR

    2012AUD

    2012AED

    2012 SAR

    2012Other

    2012 Totalm

    Loans to joint ventures 15.1 65.9 34.3 115.3Other investments 4.2 4.2Trade and other receivables 236.6 3.8 107.0 67.3 43.2 1.8 459.7Available-for-sale financial assets 3.5 3.5Derivative financial instruments 0.2 0.2Restricted financial assets 0.2 0.1 0.1 0.4Cash and cash equivalents 415.5 10.2 97.3 12.9 8.0 56.7 600.6Total financial assets 671.8 83.5 238.6 80.3 51.2 58.5 1,183.9 Borrowings (192.6) (68.1) (6.9) (11.6) (279.2)Derivative financial instruments (0.7) (0.7)Trade and other payables (795.3) (4.7) (287.4) (84.5) (3.6) (49.0) (1,224.5)Net financial (liabilities)/assets (316.1) 78.8 (116.9) (4.2) 40.7 (2.8) (320.5)

    Other borrowings in 2012 and 2011 relate entirely to USD loans. Other cash and cash equivalents include 31.1m held in CAD and 20.8m held in HKD. Other trade and other payables include 16.3m held in CAD and 27.5m held in HKD.

    Pounds sterling value of equivalent currency (m)

    2011 GBP

    2011EUR

    2011AUD

    2011AED

    2011 SAR

    2011Other

    2011 Totalm

    Loans to joint ventures 2.0 71.5 13.0 86.5Other investments 4.5 4.5Trade and other receivables 201.0 65.8 169.7 111.7 61.6 4.5 614.3Available-for-sale financial assets 10.2 0.1 10.3Derivative financial instruments 0.5 4.1 4.6Restricted financial assets 0.8 0.8Cash and cash equivalents 379.8 3.9 163.1 52.2 0.2 20.1 619.3Total financial assets 587.8 152.2 350.0 163.9 61.8 24.6 1,340.3 Borrowings (227.7) (0.6) (75.6) (1.9) (16.1) (14.6) (336.5)Trade and other payables (843.2) (12.5) (247.7) (159.3) (13.2) (23.6) (1,299.5)Net financial (liabilities)/assets (483.1) 139.1 26.7 2.7 32.5 (13.6) (295.7)

    Of the total foreign currency borrowings of 86.6m (2011: 108.8m), the amount of borrowings used to finance overseas operations amounts to 86.6m (2011: 108.8m).

    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 per cent at the balance sheet date, the profit for the year and equity would have reduced by 2.0m (2011: 0.1m). This sensitivity analysis takes into account the tax impact and the forward exchange contracts in place.

    112 Laing ORourke|Annual Review 2012 Laing ORourke|Annual Review 2012 113

    Financial statements

  • Notes to the Financial statements continued

    Financial statements continued

    32 Financial Instruments continued 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 2012 Total

    m

    Within one year

    m

    Between one and two years

    m

    After two years

    m

    Effective interest rate

    %

    Bank loans 197.5 65.3 58.9 73.3 4.19Finance lease obligations 81.7 32.6 27.4 21.7 4.83 279.2 97.9 86.3 95.0 4.59

    At 31 March 2011 Bank loans 241.5 49.4 101.2 90.9 3.51Finance lease obligations 95.0 37.0 28.2 29.8 4.12 336.5 86.4 129.4 120.7 3.62

    If interest rates had been 1 per cent higher during the period, profit and equity would have reduced by 2.1m (2011: 2.4m). This sensitivity analysis takes into account the tax impact.

    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 2012

    Trade and other

    payablesm

    Bank loans m

    Finance leases

    m Total

    m

    Between one and less than two years 24.5 69.8 29.0 123.3Between two and less than five years 5.6 74.1 22.6 102.3Five or more years 6.7 6.7 30.1 150.6 51.6 232.3

    At 31 March 2011 Between one and less than two years 16.1 106.1 30.5 152.7Between two and less than five years 2.1 87.1 30.8 120.0Five or more years 0.7 5.7 0.3 6.7 18.9 198.9 61.6 279.4

    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:

    2012

    m 2011

    m

    Expiring within one year 79.4 129.7Expiring between one and two years 81.7 Expiring in more than two years 2.2 161.1 131.9

    32 Financial Instruments continued 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

    2012m

    Impairment 2012

    m

    Gross receivables

    2011m

    Impairment2011

    m

    Not past due 95.7 71.1 Past due 030 days 23.3 23.7 Past due 31120 days 9.8 11.6 Past due 121365 days 5.8 11.9 (0.1)More than one year 21.0 (15.6) 9.8 (5.9) 155.6 (15.6) 128.1 (6.0)

    Receivables at 31 March 2012 that are more than one year past due date but not impaired amount to 5.4m (2011: 3.9m). The Group believes that there is no material exposure in respect of these balances.

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

    114 Laing ORourke|Annual Review 2012 Laing ORourke|Annual Review 2012 115

    Financial statements

  • Notes to the Financial statements continued

    Financial statements continued

    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 2012.

    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.

    Financial instruments measured at fair value:

    Fair value measurement 2012 Fair value measurement 2011

    Level 1

    m Level 2

    mLevel 3

    mTotal

    mLevel 1

    mLevel 2

    m Level 3

    m Total

    m

    Other investments 4.2 4.2 4.5 4.5Derivative financial instruments (0.5) (0.5) 4.6 4.6Available-for-sale financial assets 3.5 3.5 10.3 10.3 3.5 (0.5) 4.2 7.2 10.3 4.6 4.5 19.4

    Reduction in Other investments valued in accordance with Level 3 of the fair value hierarchy relates solely to the full impairment of convertible loan notes. See note 16 for further details.

    The fair value movements on Other investments, available-for-sale financial assets and derivative financial instruments are recognised in the statement of comprehensive income.

    The carrying and fair values of the Groups financial instruments at 31 March 2012 and 31 March 2011 are as follows:

    Fair value2012

    m

    Carrying amount

    2012 m

    Fair value 2011

    m

    Carrying amount

    2011m

    Other investments 4.2 4.2 4.5 4.5Derivative financial instruments (0.5) (0.5) 4.6 4.6Available-for-sale financial assets 3.5 3.5 10.3 10.3Loans and receivables 575.0 575.0 700.8 700.8Financial liabilities measured at amortised cost (1,503.7) (1,503.7) (1,636.0) (1,636.0)

    The carrying and fair values of the Groups financial instruments were not materially different at 31 March 2012.

    Loans, receivables and financial liabilities are valued at their amortised cost which is deemed to reflect fair value due to their short-term nature.

    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 and to maintain an optimal capital structure to reduce the cost of capital.

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

    The Group regularly forecasts its cash position to management on both a short-term and long-term basis. Performance against forecasts 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 2012 the Group had net funds of 321.4m (2011: 282.8m); see note 37.

    The Group complied with all externally imposed capital requirements which it is subject to during the two years to 31 March 2012.

    33 Assets Charged as Security for Liabilities and Collateral Accepted as Security for Assets Financial assets pledged to secure liabilities are as follows:

    2012

    m2011

    m

    Restricted financial assets 0.4 0.8

    Financial assets pledged as short-term collateral and included within cash equivalents were 34.9m (2011: 33.3m).

    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) that 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 (2011: nil).

    116 Laing ORourke|Annual Review 2012 Laing ORourke|Annual Review 2012 117

    Financial statements

  • Notes to the Financial statements continued

    Financial statements continued

    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 3.2m (2011: 6.3m) 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:

    Land and buildings

    2012m

    Other 2012

    m

    Land and buildings

    2011 m

    Other2011

    m

    Expiry date: Due within one year 31.9 5.5 24.8 2.3Due between one and five years 83.3 10.5 68.5 3.5Due after more than five years 167.7 161.2 282.9 16.0 254.5 5.8

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

    The Group has committed to provide its share of further equity funding and subordinated debt investments in PPP special purpose entities amounting to 35.8m (2011: 21.9m).

    35 Related Party Transactions and Balances Identity of related parties The Group has a related party relationship with its major shareholder, subsidiaries, jointly controlled entities, jointly controlled operations, 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 2012 2011

    Income earned in year

    m

    Receivable at year-end

    m

    Income earned in year

    m

    Receivable at year-end

    m

    Jointly controlled entities 61.0 41.2 67.4 18.9

    Purchase of goods and services provided by related parties 2012 2011

    Expenses paid in year

    m

    Payables at year-end

    m

    Expenses paid in year

    m

    Payables at year-end

    m

    Jointly controlled entities 2.7 1.0 19.1 2.0

    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.

    35 Related Party Transactions and Balances continued Property Leases During the year, the Group incurred expenditure of 3.6m (2011: 3.6m) from Sycamore Properties Limited, 2.2m (2011: 2.0m) from Mark Holding & Finance Limited and 5.9m (2011: 5.9m) from Steetley Investments Limited in respect of amounts due under lease agreements for premises occupied by the Group. The interests in Sycamore Properties Limited, Mark Holding & Finance Limited and Steetley Investments Limited are 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 was nil (2011: nil). No amounts were written off in the period by either party in respect of amounts payable under the agreements entered into.

    Share acquisition On 30 January 2012 the Group increased its ownership of Bison Holdings Limited and Bison Manufacturing Limited from 19.9 per cent to 100 per cent. As part of the acquisition the Group acquired a 60.2 per cent shareholding from Suffolk Partners (Two) Limited for 4.1m. The immediate and ultimate parent company of Suffolk Partners (Two) Limited and Laing ORourke Corporation Limited is Suffolk Partners Corporation. Further details are provided in note 14.

    Loans During the year, the ultimate parent company, Suffolk Partners Corporation, repaid 7.5m loaned by the Group (2011: borrowed 2.3m). The loan is subject to interest at commercial rates. At the year-end the balance outstanding was 12.4m (2011: 19.1m).

    During the year, the Group acquired a minority share of a syndicated senior debt facility jointly repayable from Southside and City Developments Limited and KDC Properties Limited for 6.0m. The Groups interest in the senior debt facility ranks pari-passu with other lenders, who are financial institutions. During the year an additional loan of 0.7m was made to Southside and 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 and City Developments Limited. At the year-end the fair value of the amounts outstanding was 7.1m (2011: nil). No amounts were written off in the period by either party in respect of amounts payable under the agreements entered into.

    During the year, the Group loaned 1.0m (2011: 2.0m) to Augur Investments Limited. Suffolk Partners Corporation is the ultimate parent company of Laing ORourke Corporation Limited and a 50 per cent shareholder of Augur Investments Limited. The loan is subject to interest at commercial rates. At the year-end the balance outstanding was 3.2m (2011: 2.0m).

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

    Loans to and from joint ventures and associates At 31 March 2012 loans to joint ventures amounted to 115.3m (2011:86.5m) and loans from joint ventures amounted to 6.6m (2011: 23.8m). During the normal course of business the Group provided services to, and received management fees from certain joint ventures and associates amounting to 0.2m (2011: 0.2m). Amounts due to and from joint ventures and associates at 31 March 2012 are disclosed within trade and other receivables and trade and other payables in notes 23 and 25 respectively.

    118 Laing ORourke|Annual Review 2012 Laing ORourke|Annual Review 2012 119

    Financial statements

  • Notes to the Financial statements continued

    Financial statements continued

    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

    2012

    m 2011

    m

    Decrease in cash and cash equivalents for the year (19.0) (99.1)Cash inflow from debt and lease financing 89.3 158.1Change in net funds resulting from cash flows 70.3 59.0New finance leases (31.2) (48.4)Foreign exchange translation differences (0.5) 2.3Movement in net funds in the year 38.6 12.9Net funds at 1 April 282.8 269.9Net funds at 31 March 321.4 282.8

    38 Principal Subsidiaries, Jointly Controlled Entities and Associates

    Principal subsidiaries Principal activity

    Group interest in ordinary voting

    shares Country of incorporation or registration

    Bison Manufacturing Limited Manufacture of precast concrete 100% England and Wales Crown House Technologies Limited Mechanical and electrical contracting 100% England and Wales Expanded Limited Civil and structural engineering, piling

    and demolition 100% England and Wales

    Explore Capital Limited Holding company 100% England and Wales Explore Investments Australia Pty Limited Property development 100% Australia Explore Investments Limited Commercial property development 100% England and Wales Explore Living plc Residential development 100% England and Wales Explore Living Balls Park Limited Residential development 100% England and Wales Explore Manufacturing Limited Manufacturing construction products 100% England and Wales John Laing International Limited Overseas contracting 100% England and Wales Laing ORourke Australia Construction Pty Limited

    Construction, infrastructure, rail and plant hire

    100% Australia

    Laing ORourke Australia Holdings Limited Holding company 100% Cyprus Laing ORourke Australia Pty Limited Holding company 100% Australia Laing ORourke Canada Limited Building contracting 100% Canada Laing ORourke Construction Limited Building contracting 100% England and Wales Laing ORourke Infrastructure Limited Civil engineering and infrastructure 100% England and Wales Laing ORourke Ireland Holdings Limited Holding company 100% Cyprus Laing ORourke Ireland Limited Building contracting 100% Ireland Laing ORourke Middle East Holdings Limited Building and civil engineering 100% Cyprus Laing ORourke plc Holding company 100% England and Wales Laing ORourke Services Limited Service company 100% England and Wales Laing ORourke Utilities Limited Utilities contracting 100% England and Wales Naturstein Vetter GmbH Finished stone products 94% Germany ORourke Investments Holdings (UK) Limited Holding company 100% England and Wales Select Plant Hire Company Limited Plant hire and operations 100% England and Wales Vetter UK Limited Finished stone products 94% England and Wales

    120 Laing ORourke|Annual Review 2012 Laing ORourke|Annual Review 2012 121

    Financial statements

  • United Kingdom dartfordBridge Place 1 & 2 Anchor Boulevard Crossways Dartford Kent DA2 6SN United Kingdom Tel: +44 (0)1322 296200 Fax: +44 (0)1322 296262

    CambridgeshireBarford Road Little Barford St Neots Cambridgeshire PE19 6WB United Kingdom Tel: +44 (0)1480 402500 Fax: +44 (0)1480 402572

    CardiffBuilding 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

    Leeds3320 Century Way Thorpe Park Leeds LS15 8ZB United Kingdom Tel: +44 (0)113 2840250 Fax: +44 (0)113 2607054

    manchesterArchway 3 Birley Fields Greenheys Lane West Hulme Manchester M15 5QJ United Kingdom Tel: +44 (0)161 2276000 Fax: +44 (0)161 2276199

    newcastleRushwood Balliol Business Park Benton Lane Newcastle upon Tyne NE12 8EW United Kingdom Tel: +44 (0)191 2381430 Fax: +44 (0)191 2381431

    Scotland 21 Woodhall Eurocentral Holytown Motherwell ML1 4YT United Kingdom Tel: +44 (0)1698 731000 Fax: +44 (0)1698 731001

    SteetleyExplore Industrial Park Off A619 Worksop Nottinghamshire S80 3DT United Kingdom Tel: +44 (0)1777 353000 Fax: +44 (0)1777 353027

    Canada401 Bay Street Suite 1600 Toronto M5H 2Y4 Ontario Canada Tel: +1416 (0)646 5167

    United arab emirateSabu dhabiLadies Beach PO Box 110800 Abu Dhabi United Arab Emirates Tel: +971 (0)25017 017 Fax: +971 (0)25017 018

    dubaiAl Shoala Building 5th Floor Block A PO Box 25948 Dubai United Arab Emirates Tel: +971 (0)42949 944 Fax: +971 (0)42949 049

    Europe Hub offices Australia Hub offices

    aUStraLia neW SoUtH WaLeSSydneyLevel 4 Innovation Place 100 Arthur Street North Sydney NSW 2060 Australia Tel: +61 (0)2 9903 0300 Fax: +61 (0)2 9903 0333

    Hunter ValleyCnr 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 operationsJunction St Telarah NSW 2333 Australia Tel: +61 (0)2 4932 3636 Fax: +61 (0)2 4932 3680

    QUeenSLandbrisbane Principal officeLevel 4 Mincom Building 192 Ann Street Brisbane QLD 4000 Australia Tel: +61 (0)7 3223 2300 Fax: +61 (0)7 3223 2303

    brisbaneLevel 3 200 Adelaide Street Brisbane QLD 4000 Australia Tel: +61 (0)7 3012 3300

    WeStern aUStraLiaPerthLevel 3 43-47 Burswood Road Burswood WA 6100 Australia Tel: +61 (0)8 9362 7111 Fax: +61 (0)8 9362 7100

    nortHern territorY darwin24 Sandgroves Crescent Winnellie NT 0820 Australia Tel: +61 (0)8 8984 3477 Fax: +61 (0)8 8984 4325

    Hong Kong11/F Kerry Centre 683 Kings Road Quarry Bay Hong Kong Tel: +852 (0) 2721 0143 Fax: +852 (0) 2721 0807

    Notes to the Financial statements continued

    Financial statements continued

    38 Principal Subsidiaries, Jointly Controlled Entities and Associates continued

    Jointly controlled entities Principal activity Group ownership

    interest Country of incorporation or registration

    Aldar Laing ORourke Construction LLC Construction & project management 49% United Arab Emirates Australia Transport Express Rail track construction 70% Australia Barnsley SPV One Limited PFI accommodation operator schools 40% England and Wales Barnsley SPV Two Limited PFI accommodation operator schools 40% England and Wales Barnsley SPV Three Limited PFI accommodation operator schools 40% England and Wales Barnsley Local Education Partnership Limited PFI accommodation operator schools 40% England and Wales CLM Delivery Partners Limited Delivery partner for 2012 Olympics 37.5% England and Wales Emirates Precast Construction LLC Building and civil engineering 40% United Arab Emirates Health Montreal Collective CJV Limited Partnership

    Building and civil engineering 50% Canada

    Health Montreal Collective Limited Partnership

    PFI accommodation operator hospital 25% Canada

    Laing ORourke BSGL JV Rail Infrastructure 50% Hong Kong LORRCRPT JV Mining infrastructure 67.5% Australia Luggage Point Alliance Water treatment plant construction 50% Australia Mid West Rail JV Upgrade of railway civil and track

    laying works 25% Australia

    Newham Transformation Partnership Limited PFI accommodation operator schools 68% England and Wales Newham Learning Partnership Project Co Limited

    PFI accommodation operator schools 68% England and Wales

    RGP5 JV Construction of rail duplication, rail bridges, camps and associated earth works

    50% Australia

    S&W TLP Project Co One Limited PFI accommodation operator schools 40% England and Wales S&W TLP Project Co Two Limited PFI accommodation operator schools 40% England and Wales S&W TLP Education Partnership Limited PFI accommodation operator schools 40% England and Wales Strategic Indigenous Housing and Infrastructure Program Alliance

    Housing construction 33.3% Australia

    TPFL Project Co Limited PFI accommodation operator schools 80% England and Wales Thames Partnership for Learning Limited PFI accommodation operator schools 80% England and Wales

    The Laing ORourke Corporation Limited Group has greater than 50 per cent ownership interest in a number of jointly controlled entities. These ownership interests do not constitute control as the voting power attached to each of these ownership interests is 50 per cent or less.

    All of the above jointly controlled entities have a year-end of 31 March with the exception of Aldar Laing ORourke Construction LLC and CLM Delivery Partners Limited which have 31 December year-ends.

    Jointly controlled operations

    Costain Laing ORourke Farringdon Civil engineering 50% England and Wales Heathrow East Terminal Project Civil engineering 45% England and Wales M-Pact Ireland Civil engineering 50% Ireland M-Pact Manchester Civil engineering 60% England and Wales Thames Water Laing ORourke Omega JV Civil engineering 50% England and Wales

    Associates

    North East Business Park Pty Limited Property development 25% Australia

    122 Laing ORourke|Annual Review 2012 Laing ORourke|Annual Review 2012 123

    Contacts

  • 124 Laing ORourke|Annual Review 2012

    notes

  • Production of this reportThis report is printed by an EMAS-certified Carbon Neutralcompany, whose Environmental Management system is certified 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 certified. The pulp for each is bleached using an Elemental Chlorine Free (ECF) process.

    Dr. gavin DaviesMechanical Engineering Discipline Lead gavindavies@laingorourke.com

    Dr. Andrew Harris Chemical and Process Engineering Discipline Lead atharris@laingourke.com

    Dr. Phillip CartwrightElectrical Engineering Discipline Lead pcartwright@laingorourke.com

    Professor Robert MairChair of the Engineering Excellence Group rmair@laingorourke.com

    David Scott Structural Engineering Discipline Lead davidscott@laingorourke.com

    Mark Shirburne-DaviesArchitectural Discipline Lead mshirburne-davies @laingorourke.com

    From left to right

    ii Laing ORourke|Engineering excellence

    EnginEEring + EntErprisE =ValuE CrEation

    Engineering Excellence group The Engineering Excellence Group (EnEx.G) was established in 2011 to bring together world-class professionals drawn from academia and industry asafocus for creating innovative client solutions andpartnering with external consultants at the highest levelsin order to differentiate Laing ORourke and demonstrate our core capabilities. The Group also manages and participates in collaborative research anddevelopment projects with the Laing ORourke engineering centres sited at our partnering universities.

    The EnEx.G has four primary roles:

    1. Deliver: internal consultancy The EnEx.G is an intellectual resource for Laing ORourkes design and delivery businesses. Its expertise covers benchmark design, manufacturing and construction processes, troubleshooting operational issues, providing thought-leadership to assist in winning major new projects through novel alternative approaches, and generating fresh perspectives on existing projects to create additional value.

    Examples in the year include:

    122 Leadenhall Street: steelwork temperature assessment and review of conflicting estimates ofstructural steelwork temperature.

    London Gateway Port: review of compaction and scour protection.

    Francis Crick Institute: assessment of use ofphotovoltaics.

    2. Collaborate: External advisoryThe EnEx.G provides a collaborative and complementary problem-solving service to generate goodwill and loyalty among valued clients, our supply chain, delivery partners, governments and other organisations, including charities and not-for-profit organisations.

    Laing ORourkes innovative approach is an integral part ofits entrepreneurial culture. We have developed our potential for innovation by establishing a unique in-house engineering consultancy, the Engineering Excellence Group. Staffed by some of the worlds leading industry innovators, it is actively supporting our growth agenda. Over time itwilllead toasignificant expansion of Laing ORourkes capabilities, performance, client satisfaction and profitability acrossour sectors.

    Operating model

    Exte

    rnal

    advis

    ory Internal consultancy

    Education

    Research

    and d

    evel

    opm

    ent

    Pro

    cess

    /che

    mica

    l

    Chief engineering adviser

    Structural

    CivilsElectrical and mechan

    ical

    M

    ater

    ials

    Tech

    nolog

    ies pa

    rtners

    Engineering consultants

    University partnerships

    Research institutions

    solut

    ions

    pro

    vide

    rs

    Glob

    al co

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    Laing ORourke 2012, all rights reserved.

    The Francis Crick Institute, London, UK

    LA005_Cover.pdfLA005_2_bookletLA005_3_overviewLA005_4_case_studiesLA005_5_strategyLA005_6_FinancialLA005_7_sustainabilityLA005_8_RiskLA005_9_HubLA005_10_GovernanceLA005_11_accounts