Laing O’Rourke grows revenue and underlying EBIT for FY22 while adding £1.1BN to order book.
19.10.22Headline results:
- Underlying Group revenue up 20% to £3.0bn (FY21: £2.5bn)
- Pre-exceptional EBIT up 26% to £95.5m (FY21: £76.0m)
- Post-exceptional EBIT of £19.8m following a non-cash write down of a receivable in Australia, relating to a legacy project dispute
- £1.1 billion increase in the global order book to £9.0bn (FY21 £7.9bn)
- Lowest net debt in six years with net cash up by a further £63.0m to £339.1m
- Repayment of all bank debt in Australia, and the successful refinancing of core UK bank debt to just one sustainability-linked facility
- Certainty and resilience remained in focus with 93% of expected current year revenue secured or anticipated, with further order book growth during H1 FY23.
Summary
Laing O’Rourke’s global accounts for FY22 (year ended 31 March 2022) show increases in underlying Group revenue of 20% to £3.0bn (FY21: £2.5bn) and pre-exceptional EBIT by 26% to £95.5m (FY21: £76.0m), and more than a billion-pound increase in the global order book to £9.0bn (FY21 £7.9bn).
Key UK project wins during the period included Everton’s new 52,000 seat stadium at Bramley-Moore Dock in Liverpool and the redevelopment of Olympia and The Whiteley in west London, as well as Shepperton Studios for Pinewood and the Stephen A. Schwartzman Centre for the Humanities project at Oxford University. The specialist structures business unit Expanded secured the civil works supporting HS2’s Old Oak Common station.
In Australia during FY22, the business won the enabling works contracts for Melbourne’s Suburban Rail Loop and Melbourne Airport Rail, Inland Rail packages in NSW and Queensland, the Western Tunnelling Package for Sydney Metro, and Byford Rail Extension in Western Australia.
The Group has continued to build its resilience, and now has its lowest level of net debt in six years, with debt reduced by c. £160m since March 2020. During the period, the UK core bank debt was repaid and refinanced and a new £35m unsecured Revolving Credit Facility was put in place.
In Australia, the Group has adjusted a receivable related to a confidential and long-running arbitration from A$187m in FY21 to A$59m in FY22. This is a non-cash write down for the accounts with the complex hearings (into a legacy project delivered 2012-2017) expected to run into FY24.
It results in a post-exceptional EBIT figure for the Group of £19.8m.
Sustainability and innovation
During FY22, the Group continued to make good progress against its stated sustainability goals.
Laing O’Rourke has more than halved its global scope 1 & 2 carbon emissions since 2020 while the group’s Technology & Innovation teams continue to develop solutions to advance clients’ needs, and reduce the embodied and operational carbon in projects.
The Group has built on its inclusion agenda with the launch of industry-leading, equal paid parenthood entitlements for women and men. On top of Laing O’Rourke’s commitment to 50-50 gender representation by 2033, global targets are in place to increase the number of women in senior operational roles, to help fast-track cultural change in construction.
Last week, the Australian business was recognised for its commitment to sustainability, winning four major categories at the national Infrastructure Sustainability Council (ISC) annual awards.
Operating forecast
Despite economic and market uncertainty, the Group’s order book has continued to grow since the close of FY22 accounts. At the end of August 2022, the business had £9.7bn in orders, with 93% of expected FY23 revenue either secured or anticipated, and 82% of expected FY24 revenue at the secured, anticipated, or preferred bidder stage.
I am pleased to present these results, which show strong underlying performance across the Group as we continue to drive disciplined, resilient operations. Our teams around the globe have worked tirelessly to deliver for our customers, harnessing the benefits of our unique operating model to maintain project progress and embed modern methods, while managing the effects of a challenging global economy.
Rowan Baker said.
“The result is a strong, year-on-year improvement across our key financial metrics, with a 20% increase in pre-exceptional revenues and a 26% increase in the underlying earnings before interest and tax to £95.5m. We’ve recorded impressive order book growth through FY22, and even further in the first half of FY23.
“Our performance is bolstered by a more robust balance sheet where net cash further improved by £63.0m to £339.1m alongside the repayment of all bank debt in our Australia Hub and successful refinancing of our core UK bank debt. In the period all remaining shareholder loans were converted to equity, demonstrating the owners’ commitment to our strategic plan.
“This update from FY22 places us in a very strong position to secure an increasing share of future work in our priority sectors, while we continue to invest in areas that will modernise the industry.”
Comment from Chief Executive, Ray O’Rourke KBE:
“Laing O’Rourke’s results for FY22 reaffirm our confidence in our operating model, which is firmly understood and valued by clients. On an underlying basis, the business continues to go from strength to strength, with a growing order book, growing revenue, and increasing net cash.
“Our ‘one business, two hubs’ structure operates with transparency, agility and certainty, guided by our core values of care, integrity and courage. We remain focused on accelerating the realisation of our strategic vision for 2025 – and have achieved strong results in advancing digital operations, development of our people, sustainability, inclusion, and wellbeing.
“There remains much for us to do to fully unleash the huge potential of our business to support economic recovery, transform productivity and create the green infrastructure that is urgently required to protect the planet.”
Group Chair, Sir John Parker GBE FREng:
“While new external challenges have undoubtedly emerged, I am proud of the continued efforts and dedication of the people of Laing O’Rourke and the Group leadership team.
“Our FY22 performance and FY23 outlook is testament to our focus on delivering certainty for our clients, powered by an inherent resilience. We continually adjust our plans to safeguard this.
“In both operating Hubs, we are witnessing continued commitments from governments to invest in infrastructure as part of their post-covid economic recovery plans.
“We have a key role to play in delivering new social infrastructure that meets the world’s net zero mandate, and I stand by my assessment that the sector probably has the best opportunities ahead of it, that it has seen in the last 50 years, as long as major public works programmes continue to be prioritised for the benefit of our communities.”