Update on Laing O'Rourke financial statements 2017 - 18 (FY18)29.10.18
Laing O’Rourke today confirmed its business turnaround is complete. However, it is not able to file its 2017-2018 (FY18) Annual Report until Christmas at the earliest, due to delays associated with historic turbulence in the construction sector.
In 2018, the construction industry has experienced the collapse of a number of companies, large and small. This has impacted the approach of banks, insurers, regulators and auditors – and ultimately will prevent Laing O’Rourke closing out its formal statements in the coming weeks.
Despite the delay to sign-off and publication, Laing O’Rourke continued its successful strategic plans in FY18 – and will post a profit for both its UK operations, and globally.
• UK businesses are all performing to plan and delivering forecast margins;
• Half-year (unaudited) EBIT* for Laing O'Rourke UK was £29 million; and
• Full-year UK EBIT is forecast at £70 million.
Globally, Laing O’Rourke has £8.6 billion** in high-quality, secured and anticipated work. This has been achieved through:
• Intense focus on core markets and sectors;
• Enhanced bidding and process discipline;
• Client engagement with Laing O'Rourke's offsite manufacturing (DfMA 70:60:30) operating model;
• A unique, fully-integrated, direct-delivery business with in-house specialist subsidiaries; and
• An experienced, long-term senior leadership team.
Laing O’Rourke has insulated its UK businesses against Brexit uncertainty.
In the UK, 100% of FY19 revenue and 70% of FY20 revenue, is already under contract. Cost reduction measures introduced three years ago continue, and are exceeding targets.
Chief Executive Ray O'Rourke said despite meeting all performance targets, the business was disappointed to have been ‘defeated by process’; with the FY18 accounts delayed.
“Our industry has witnessed the demise of a number of companies and the withdrawal of significant funding this year. This has put enormous pressure on parties across the sector, and slowed down all regulatory, financial and administrative processes,” he said.
“Three million jobs in the UK rely on construction, and we have nation-building infrastructure to deliver. It is a tragedy to see the industry starved of oxygen like this.
“We have built a pipeline of high-quality projects. Laing O’Rourke is committed to play its part, to drive enhanced confidence and investment in the sector.”
Laing O’Rourke completed the refinance of its Australian businesses in mid-2018, and now has an outline agreement with its primary banking partners for UK refinancing.
“As a private company, we have continued to brief all our stakeholders – clients and the supply chain – regularly, keeping them fully appraised at all times. We appreciate the loyal support we’ve had over recent years.”
Laing O’Rourke is committed to returning to top-quartile payment performance for all of our supply chain, with its turnaround now complete.
Laing O’Rourke Construction Limited has published an average time to pay invoices of 53 days. This comprises:
• 24 per cent paid within 30 days;
• 35 per cent paid within 31-60 days; and
• 41 per cent paid in more than 61 days (but 58 per cent of all invoices are paid within agreed terms).
“We will focus on improving payments to our supply chain during the next financial year,” Mr O’Rourke said.
He said Government must also play its part to:
• Reset costly and inefficient procurement policies;
• Remove outdated adversarial contracts and security instruments; and
• Settle its own accounts promptly. Laing O’Rourke directly employs its UK construction workforce.
* Earnings Before Interest & Taxes
**Based on current exchange rates where 1 GPB = 1.839 AUD and 4.73 AED